Alpine 4 Holdings Inc.
11/19/2024 | Press release | Distributed by Public on 11/19/2024 15:12
Non Reliance of Financial Report Form 8 K
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On November 15, 2024, the Board of Directors (the "Board") of Alpine 4 Holdings, Inc., a Delaware corporation (the "Company"), in conjunction with the Audit Committee of the Board and Management, determined that (1) a lease commencement date, as defined in ASC 842 Accounting for Leases, for an operating lease entered into in 2022 had not been met, and (2) the incremental borrowing rates used in accounting for certain operating leases entered into in 2022 were incorrect. As a result, right-of-use assets and lease liabilities as of June 30, 2022, September 30, 2022, December 31, 2022, March 31, 2023, June 30, 2023, and September 30, 2023, were overstated by material amounts. The Company is evaluating the impact of these items on the Company's operating expenses, loss from operations and adjusted EBITDA for FY 2022 and 2023. As such the Company determined that the consolidated financial statements in the Company's previously filed Quarterly Reports on Form 10-Q for the periods ended June 30 and September 30, 2022, the Annual Report on Form 10-K for the year ended December 31, 2022, as well as the Quarterly Reports on Form 10-Q for the periods ended March 31, June 30, and September 30, 2023, should no longer be relied upon.
The Company intends to amend its Quarterly Reports for the quarters ended June 30 and September 30, 2022, the Annual Report on Form 10-K for the year ended December 31, 2022, as well as the Quarterly Reports for the quarters ended March 31, June 30, and September 30, 2023, to reflect restatements of these consolidated financial statements.
The Chief Executive Officer and President, the Interim Chief Financial Officer, and the Audit Committee of the Board have discussed the matters disclosed in this Item 4.02 with the Company's auditors.
As part of the audit of the Company's financial statements for the year ended December 31, 2023, the Company engaged Rivers & Moorehead LLP ("Rivers") to provide an independent assessment of the IBR used on three operating leases that commenced in 2022. Their analysis involved determining a synthetic credit rating based on various financial metrics, such as Return on Capital, Net Debt/EBITDA, Current Ratio, and other financial ratios and indicators. Rivers determined a synthetic credit rating of CCC+ for unsecured debt, which, when adjusted for secured instruments, translated into a final rating of B. This rating formed the basis for a term structure of borrowing rates. During this analysis, management and the Company's prior auditors, RSM US LLP, identified an error related to one of Quality Circuit Assembly's leases, which had been recorded in our 2022 financial statements, but which had not commenced as of December 31, 2022, based on guidance from ASC 842 Accounting for Leases. This error led to an overstatement of both assets and liabilities by approximately $5 million. Although the impact is an equal decrease to the assets and liabilities, the amount is material, warranting a restatement to accurately reflect the Company's financial position.
In our prior 8-K filed on October 22, 2024, the Company stated, "The auditing process has been further complicated by differences in opinion between our previous and current auditors over several key accounting and financial reporting items." To clarify, there is no dispute between our previous and current auditors.