8-K/A: BrooQLy Inc. Amends SEC Filing to Detail Acquisition of UAV and Autonomous Delivery Businesses from Alpine 4 Holdings

BrooQLy Inc. has filed an amended 8-K to include the required financial statements and pro forma information for its recent acquisition of Vayu (US) Inc., Impossible Aerospace Corporation, and Global Autonomous Corporation from Alpine 4 Holdings, Inc.

Summary

• BrooQLy Inc. completed the acquisition of Vayu (US) Inc., Impossible Aerospace Corporation (IAC), and Global Autonomous Corporation (GAC), collectively referred to as the Acquired Entities, from Alpine 4 Holdings, Inc. on April 1, 2025.
• The acquisition involved two asset purchase agreements, with BrooQLy acquiring certain intellectual property, equipment, inventory, contracts, and goodwill related to the Acquired Entities' businesses.
• The total purchase price consideration for the acquisition was $14,605,921, paid through two convertible notes: a $2,974,167 Vayu Note and an $11,631,754 GAC Note, both payable to Alpine 4 and GAC's minority shareholders.
• The Vayu Note also included the assumption of $387,598 in liabilities by BrooQLy.
• The convertible notes are designed to automatically convert into shares of BrooQLy's Class B Common Stock at a conversion price of $0.95 per share, upon BrooQLy filing an amendment to create Class B Common Stock, which occurred on May 14, 2025.
• The Acquired Entities, prior to the acquisition, reported a net loss of $2,304,702 for the year ended December 31, 2024, a significant improvement from a net loss of $17,867,256 in 2023 (which included a $12,209,832 impairment loss).
• For the three months ended March 31, 2025, the Acquired Entities had a net loss of $420,602, compared to a net loss of $684,260 for the same period in 2024.
• Product revenue for the Acquired Entities was minimal, at $10,345 in 2024 and $4,171 in 2023, with no product revenue reported for the three months ended March 31, 2025 and 2024.
• As of March 31, 2025, the Acquired Entities had a working capital deficit of $1,130,780 and invested equity of $(995,854), with cash balances of $9,532.
• The Acquired Entities' operations were substantially funded by intercompany transfers from Alpine 4, with net contributions of $1,974,877 in 2024 and $220,156 in Q1 2025.

Sentiment

Score: 3

Explanation: The financial health of the acquired entities prior to the acquisition was very poor, marked by significant losses, a going concern warning, and low liquidity. While the acquisition itself represents a strategic move for BrooQLy, the underlying assets were distressed, indicating a high-risk venture. The future success hinges on BrooQLy's ability to integrate and fund these operations effectively.

Positives

• The acquisition by BrooQLy Inc. provides a new operational structure and potential for future funding for the previously struggling UAV and autonomous delivery businesses.
• The Acquired Entities significantly reduced their net loss from $17,867,256 in 2023 to $2,304,702 in 2024, primarily due to the absence of a large impairment loss.
• Net loss for the Acquired Entities decreased in the first quarter of 2025 to $420,602, compared to $684,260 in the first quarter of 2024.

Negatives

• The Acquired Entities, prior to acquisition, faced substantial doubt about their ability to continue as a going concern due to expected net losses and significant cash outflows.
• The Acquired Entities reported a significant working capital deficit of $1,130,780 as of March 31, 2025.
• Cash and cash equivalents for the Acquired Entities were very low, at $9,532 as of March 31, 2025.
• Product revenue for the Acquired Entities was negligible, with $0 reported for the three months ended March 31, 2025 and 2024.
• Vayu (one of the Acquired Entities) defaulted on a $65,000 Economic Injury Disaster Loan (EIDL Loan) since December 2022.
• A stipulated settlement of $56,300 plus interest from October 2023 for a lawsuit against Vayu was never paid by Vayu, leading to an accrued liability.

Risks

• Substantial doubt exists about the ability of the Acquired Entities (as a carve-out) to continue as a going concern without raising additional capital, including capital provided by BrooQLy after the Asset Sales.
• Uncertainty related to product development and the generation of revenues and positive cash flows from the sale of Unmanned Aerial Vehicles (UAVs).
• Uncertainty related to the development and commercialization of Global Autonomous Corporation's (GAC) Autonomous Mesh Fulfillment Network.
• Dependence on outside sources of capital to fund projected growth and operating activities.
• Net operating loss carryforwards may be subject to limitation under Section 382 of the Internal Revenue Code, potentially impacting future tax benefits.
• Ongoing litigation, specifically a New York Supreme Court complaint against Vayu for a $56,300 settlement plus interest that remains unpaid.

Future Outlook

BrooQLy Inc. intends to alleviate any losses incurred from using the acquired assets through the future sale of debt or equity securities. The Acquired Entities, prior to the asset sales, expected to continue incurring net losses and significant cash outflows for at least the next 12 months, indicating a continued need for external capital.

Management Comments

• Kent Wilson, CEO / Chairman of Board, signed the report on behalf of BrooQLy Inc.

Industry Context

The acquisition positions BrooQLy Inc. in the Unmanned Aerial Vehicle (UAV) and autonomous delivery sectors, which are rapidly evolving industries with significant growth potential driven by advancements in drone technology, battery life, and autonomous systems. The mention of an 'Autonomous Mesh Fulfillment Network in Dubai' suggests a focus on innovative logistics solutions in a key global market. The financial struggles of the acquired entities prior to the acquisition highlight the capital-intensive and often challenging nature of scaling businesses in these high-tech sectors.

Corporate Governance

Legal Proceedings

• A complaint was brought in New York Supreme Court by the State of New York against Vayu in 2019 (prior to Alpine4's ownership) seeking a refund for two returned airframes. A settlement for $56,300 plus applicable interest was stipulated in October 2023, but the amount was never paid by Vayu, and is recorded as an accrued liability.

Related Party Transactions

• Alpine 4 Holdings, Inc. provided certain management and administrative services to the Acquired Entities, with costs reflected in General and administrative expenses.
• Alpine 4 performed cash management functions for the Acquired Entities, including providing cash for or direct payment of substantially all operating expenses.
• All transactions between the Acquired Entities and Alpine 4 were considered financing transactions, presented as 'Net contributions from Alpine4 entities' in cash flows and invested equity.
• Net contributions from Alpine4 entities totaled $1,974,877 for the year ended December 31, 2024, and $220,156 for the three months ended March 31, 2025.
• The allocation of costs from Alpine4 to the Acquired Entities for services like payroll, vendor payments, cash advances, and management/administrative services was based on actual costs incurred and a weighted average estimate of proportional revenue, headcount, total expenses, total assets, and number of subsidiaries sharing services.

Stakeholder Impact

• Shareholders of BrooQLy Inc. face potential dilution from the conversion of the Vayu and GAC Notes into Class B Common Stock, and further potential dilution from future capital raises.
• Alpine 4 Holdings, Inc. received convertible notes as consideration for the asset sales, providing them with a future equity stake or cash flow from BrooQLy.
• Employees of Vayu, Impossible Aerospace Corporation, and Global Autonomous Corporation are now part of BrooQLy Inc., with their future employment and operational focus shifting under the new ownership.
• Creditors of Vayu, particularly regarding the defaulted EIDL Loan and the unpaid legal settlement, may see their claims addressed by BrooQLy or remain with the carve-out entity of Alpine4, depending on the specific terms of the asset purchase agreements (BrooQLy assumed $387,598 in liabilities from Vayu APA, but the EIDL loan was not assumed).

Next Steps

• BrooQLy Inc. will proceed with the conversion of the Vayu Note and GAC Note into shares of its Class B Common Stock.
• BrooQLy Inc. plans to raise additional capital through the sale of debt or equity securities to fund the operations and development of the newly acquired assets.
• The Class B Common Stock issued from the convertible notes may be converted into shares of BrooQLy's Common Stock at a 1:1 ratio, at a rate of 20% per year, beginning 12 months after issuance.

Key Dates

Recommendation

Keywords

UAV, Unmanned Aerial Vehicles, VTOL, Vertical Take-Off and Landing, Autonomous Delivery, Aerospace, Acquisition, SEC Filing, 8-K/A, Financial Statements, BrooQLy Inc., Vayu (US) Inc., Impossible Aerospace Corporation, Global Autonomous Corporation, Alpine 4 Holdings Inc., Convertible Notes, Going Concern, Financial Reporting