Subsequent Events

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On October 1, 2023, in a matter relating to the Company’s business previously conducted under the subsidiary Deluxe Sheet Metal Inc, (“Deluxe”), an amendment to the lease of a now vacant building leased by Deluxe was executed with the landlord Envision South Bend LLC (“Envision”). The amendment called for a return of the building to Envision upon payment of back rent owed, with the promised backed by a stipulated liability by the Company in an amount totaling the total rent and related expenses owed under the full term of the lease. Payment of the back rent owned was due October 31, 2023, however the Company did not make the required payment, and talks between the Company and Envision are proceeding on a possible further resolution agreeable to both parties.

On October 31, 2023, the Company granted 25,000 shares of our Class A common stock to the Chief Financial Officer.

On November 6, 2023, MSM entered into an Amended Forbearance agreement extending the forbearance period until November 22, 2023, which was then subsequently amended to January 12, 2024.

On November 8, 2023, the Company and certain of its subsidiaries (collectively, the “Borrowers”) entered into a Standard Merchant Cash Advance Agreement for gross proceeds of $1,050,000 with Meged Funding Group, an unrelated third-party financial institution, for the purchase and sale of future receipts pursuant to which the Company sold in the aggregate $1,480,500 in future receipts of the Borrowers for gross proceeds of $1,050,000. The financing arrangement includes issuance costs of $50,000 and has an effective interest rate of 41%.

On November 17, 2023, the Company entered into a purchase agreement (the “Purchase Agreement”) and related registration rights agreement (the "Registration Rights Agreement") with Ionic Ventures, LLC (“Ionic Ventures”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Ionic Ventures to purchase up to an aggregate of $32,000,000 of shares of our Class A common stock over the 36-month term of the Purchase Agreement. Ionic Ventures' obligation to purchase shares under the Purchase Agreement is subject to the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of the registration statement, our Class A common stock shall be listed or quoted on the Nasdaq Capital Market and all securities to be issued to Ionic Ventures pursuant to the Purchase Agreement shall have been approved for listing on the Nasdaq Capital Market, and our representations and warranties shall be true and correct in all material respects as of the commencement date.

On December 9, 2023, in a matter relating to the Company’s subsidiary, Quality Circuit Assembly, Inc. (“QCA”), the Company received a complaint filed in the Superior Court of Santa Clara County, State of California (Case number 23CV428025) by KW FUND VI-SVRD PORTFOLIO, LLC (“KW”), a landlord of a vacant facility rented by QCA but never occupied, seeking damages from QCA as Tenant and from the Company as guarantor for default on the lease. KW

seeks $900,000 in damages. The Company and QCA have answered the complaint, and discovery is proceeding, and in addition the parties are in contact regarding possible terms of settlement.

On December 20, 2023, Direct Tech Sales, LLC d/b/a RCA Commercial Electronics, an Indiana limited liability company (“DTS”), and DTI Services Limited Liability Company d/b/a RCA Commercial Electronics, an Indiana limited liability company (“DTI” and together with “DTS, individually and collectively, jointly and severally, the “Borrowers”), both of which entities are subsidiaries of Alpine 4 Holdings, Inc., a Delaware corporation (“Alpine 4”) entered into a Loan and Security Agreement (“Loan Agreement”) with North Mill Capital LLC, d/b/a SLR Business Credit, a Delaware limited liability company (the “Lender”). Additionally, and in connection with the Loan Agreement, Alpine 4 entered into a Corporate Guaranty with the Lender, and DTS entered into a Collateral Assignment Agreement with the Lender pursuant to which DTS granted to the Lender a security interest in certain collateral of DTI.

On December 27, 2023, the Company and certain of its subsidiaries (collectively, the “Borrowers”) entered into a Standard Merchant Cash Advance Agreement for gross proceeds of $500,000 with AEC GAP Capital, an unrelated third-party financial institution, for the purchase and sale of future receipts pursuant to which the Company sold in the aggregate $745,000 in future receipts of the Borrowers for gross proceeds of $500,000. The financing arrangement includes issuance costs of $38,500 and has an effective interest rate of 41%.

On January 12, 2024, the Company and the following subsidiaries of the Company, Morris Sheet Metal Corp. ("Morris"), JTD Spiral ("JTD"), Morris Enterprises, LLC ("MorrisE"), Morris Transportation LLC ("MorrisT"), and Deluxe Sheet Metal, Inc. ("Deluxe" and together with Morris, JTD, Morris E, and MorrisT, the "Sellers"), entered into an asset purchase agreement (the "Agreement") with Bright-MSM Newco, Inc., an Indiana corporation ("Bright"), relating to the sale by the Company of the assets of the Sellers, and the assumption by Bright of certain liabilities of the Sellers. Pursuant to the Agreement, the Company agreed to sell to Bright and Bright agreed to purchase from the Seller 100% ownership of the assets of the Subsidiaries (the "Assets"), other than certain excluded assets (the "Excluded Assets"). Bright agreed to assume and to discharge certain liabilities of the Sellers (the "Assumed Liabilities") on the terms and subject to the conditions set forth in the Agreement. Pursuant to the Agreement, the consideration paid by Bright for the Assets (the “Purchase Price”) was (a) $1,577,488.97, and (b) the assumption of the Assumed Liabilities. At the closing, Bright agreed to pay off certain obligations of the Sellers, and retained $157,748.90 as a “Holdback Amount (10% of the cash portion of the Purchase Price).” The parties to the Agreement agreed that if there are no claims asserted by Bright under the Agreement within one year of the closing, Bright would pay the Holdback Amount to the Company.

On January 15, 2024, in a matter relating to the Company’s subsidiary, Excel Construction Services, LLC (“Excel”), the Company received a complaint filed in the District Court of Twin Falls County, State of Idaho (Case number CV42-24-0190) by Newport Edgewater LLLP (“Newport”), a landlord of a facility rented by Excel, seeking damages from Excel as Tenant and from the Company as guarantor for default on the lease. Newport seeks the total amount owed under the lease over its entire term. On February 29, 2024, a default judgement was entered in the matter against Excel and the Company in an amount of $1,862,391.17, about which the Company is currently contesting before the court the circumstances leading to the default judgement having been issued.

Effective February 22, 2024, the Compensation Committee of the Company approved the issuance of new Stock Options to be distributed to the Company's employees and executives with the total amount of Stock Options to be issued to be 3,725,000. Of the 3,725,000 options that were issued, 700,000 options were issued to the Chief Executive Officer, 600,000 options were issued to the Chief Operating Officer, 550,000 options were issued to the VP of Investor Relations, and 300,000 options were issued to the Chief Financial Officer.

On March 15, 2024, the Board of Directors (the “Board”) of the Company approved the Company’s plan to wind-down its wholly owned subsidiary Thermal Dynamics International, Inc. (“TDI”) to strengthen the Company’s core business and focus the Company’s resources and equipment on businesses and investments that are more strategic and profitable. The Board’s determination will have no impact on the Company’s other wholly owned subsidiaries.

For the twelve months ended December 31, 2023, the Company’s revenues from TDI are expected to be approximately $8.5 million. The Company intends to wind down the operations of TDI over approximately three months, subject to discussions with customers and suppliers of the business. In connection with approval of the plan to exit the business, the Company is expected to incur total non-cash expenses of between $10 million and $12 million, including impairment of intangible assets of approximately $11 million and impairment of a portion of property, plant and equipment of approximately $1 million. Management anticipates that these expenses will be excluded in calculating the Company’s non-

GAAP financial performance measures to be reported for 2024. In connection with the wind-down of TDI, the Company also expects to incur other transition costs of approximately $500,000, including advisor fees.

On April 12, 2024, in a matter relating to the Company’s prior purchase of Horizon Well Testing, LLC (“HWT”), the Company and HWT were named as third-party defendant in a complaint filed in the District Court of Creek County, State of Oklahoma (Case number CJ-2018-11) by U.S. Energy Devlopment Corporation (“US Energy”), seeking damages associated with liens filed by the original owner of HWT against the property interests of US Energy, who is now seeking unspecified damages greater than $75,000. The Company believes that the prior owner of HWT is personally liable to US Energy for any harm caused to US Energy, and is in communication with US Energy about removing HWT and the Company as named defendants to the lawsuit.

On April 15, 2024, in a matter related to the Company’s subsidiary Excel Construction Services LLC (“Excel”), Excel filed a voluntary petition of bankruptcy with the U.S. Bankruptcy Court, District of Idaho (Twin Falls) (Bankruptcy Petition #: 24-40194-NGH). Excel’s business is currently quiesed, and the bankruptcy petition is presently working though the Chapter 7 liquidation process.