UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ________to_________
Commission file number
(Exact name of registrant as specified in its charter)
(Former Name of Registrant as Specified in its Charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (zip code)
(Registrant's telephone number, including area code)
The Registrant does not have any securities registered pursuant to Section 12(b) of the Exchange Act.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)
x
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| None |
| 1 |
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated filer o | Accelerated filer o | |
| Smaller reporting company | ||
| Emerging growth Company |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes x
Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.
| Class | Outstanding at May 15, 2024 | |
| Common Stock, par value $0.0001 | shares |
Documents incorporated by reference: None
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PART II - OTHER INFORMATION
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about:
| · | our lack of significant revenues and history of losses, |
| · | our ability to continue as a going concern, |
| · | our ability to raise additional working capital as necessary, |
| · | our ability to satisfy our obligations as they become due, |
| · | the failure to successfully commercialize our product or sustain market acceptance, |
| · | the reliance on third party agreements and relationships for development of our business, |
| · | the control exercised by our management, |
| · | the impact of government regulation on our business, |
| · | our ability to effectively compete, |
| · | the possible inability to effectively protect our intellectual property, |
| · | the lack of a public market for our securities and the impact of the penny stock rules on trading in our common stock should a public market ever be established. |
You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in this report, in Part I. Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2023 and our other filings with the Securities and Exchange Commission. Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
OTHER PERTINENT INFORMATION
Unless specifically set forth to the contrary, when used in this report the terms “the “Company,” “we,” “our,” “us,” and similar terms refers to Alpha Investment, Inc.
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ITEM 1. FINANCIAL STATEMENTS
Alpha Investment Inc
Condensed Consolidated Balance Sheets
(Unaudited)
| As of | As of | |||||||
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Total Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued management fees - related party | ||||||||
| Distribution payable | ||||||||
| Notes payable - short-term | ||||||||
| Notes payable - related party | ||||||||
| Judgments and settlements payable | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Temporary Equity: | ||||||||
| Series 2018 Convertible Preferred Stock ($ par value), net of discounts of $ | ||||||||
| Temporary Equity, net | ||||||||
| Stockholders' Equity: | ||||||||
| Preferred stock ($ par value), shares | ||||||||
| Series A Convertible Preferred stock ($ par value), shares authorized; shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Series AA Convertible Preferred stock ($ par value), shares authorized, and issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Common stock, ($ par value), shares authorized; and shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Equity | ( | ) | ( | ) | ||||
| Non-controlling interest in variable interest entities | ( | ) | ( | ) | ||||
| Total Stockholders' Equity | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
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ALPHA INVESTMENT INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months | Three Months | |||||||
| Ended | Ended | |||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Income: | ||||||||
| Sales/Revenue | $ | $ | ||||||
| Total Income | ||||||||
| General and Administrative Expenses: | ||||||||
| Management fee - related party | ||||||||
| Administrative expenses | ||||||||
| Professional fees | ||||||||
| Total General and Administrative Expenses | ||||||||
| Loss from Operations | ( | ) | ( | ) | ||||
| Other Income/Expense: | ||||||||
| Other revenue | ||||||||
| Judgment payable | ( | ) | ||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Total Other Expense | ( | ) | ( | ) | ||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Amortization of discounts on Series 2018 preferred stock and redeemable common stock | ( | ) | ( | ) | ||||
| Net Loss Attributable to Common Stockholders | $ | ( | ) | $ | ( | ) | ||
| Basic and Diluted Loss Per Share | $ | ( | ) | $ | ( | ) | ||
| Basic and Diluted Weighted Average Number of Common Shares Outstanding | ||||||||
See notes to unaudited condensed consolidated financial statements.
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Alpha Investment Inc
Statement of Changes in Stockholders' Equity (Deficit)
For the Three Months Ended March 31, 2024 and 2023
| Series A | Series AA | Non- | ||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Preferred Stock | Paid-in | controlling | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Interest | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Stockholder contribution | — | — | — | |||||||||||||||||||||||||||||||||||||
| Distributions due to non-controlling interest | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Amortization of discount on redeemable preferred stock | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Series A | Series AA | Non- | ||||||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Preferred Stock | Paid-in | controlling | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Interest | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Stock exchange | — | — | ||||||||||||||||||||||||||||||||||||||
| Stockholder contribution | — | — | — | |||||||||||||||||||||||||||||||||||||
| Distributions due to non-controlling interest | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Amortization of discount on redeemable preferred stock | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements.
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ALPHA INVESTMENT INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months | Three Months | |||||||
| Ended | Ended | |||||||
| March 31, | March 31, | |||||||
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | ( | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in interest receivable | ||||||||
| Increase in accrued management fees - related party | ||||||||
| Decrease in accounts payable and accrued expenses | ||||||||
| Increase in notes payable-short term | ||||||||
| Increase in notes payable - related party | ||||||||
| Increase in judgments & settlements payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Net cash from investing activities | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from stockholder contribution | ||||||||
| Net cash provided by (used in) financing activities | ||||||||
| Net increase (decrease) in cash | ||||||||
| Cash and restricted cash at beginning of quarter | ||||||||
| Cash and restricted cash at end of quarter | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid during year for: | ||||||||
| Interest | $ | $ | ||||||
| Income Taxes | $ | $ | ||||||
| Schedule of Non-Cash Investing and Financing Activities: | ||||||||
| Distribution due to non-controlling interest | $ | $ | ||||||
| Amortization of discount on redeemable preferred stock | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
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ALPHA INVESTMENT INC
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Alpha Investment Inc, formerly GoGo Baby, Inc. (the “Company”) was incorporated on February 22, 2013 under the laws of the State of Delaware to develop, create, manufacture and market, toys for small children which would be designed to attach to car seats and amuse and entertain children during a drive, without distracting the attention of the driver. The Company, however, encountered significant constraints in raising sufficient capital to fully implement its business plan.
To better reflecting management’s shifted focus of the Company’s business to real estate and other commercial lending, on March 30, 2017, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Delaware Secretary of State changing its name from “Gogo Baby, Inc.” to “Alpha Investment Inc.” The name change and a corresponding change in the Company’s OTC markets trading symbol from GGBY to ALPC received approval from FINRA and became effective as of April 19, 2017.
On March 11,
2019, the Company, through Alpha Mortgage Notes I, LLC (the “SPV”) entered into an operating agreement with Alameda
Partners LLC, a Utah limited liability company (“Alameda Partners”). Alameda Partners acquired a ten percent (10%)
equity interest in the SPV in exchange for a payment of $
On July 30, 2020, Alpha entered a joint venture transaction
with Parsons Energy Group, LLC (“Parsons”) with respect to leasehold mining rights then held by Parsons on approximately
On July 21, 2021, the Company and Parsons entered into an Unwinding Agreement (the “Unwinding Agreement”), pursuant to which the joint venture was unwound. Under the Unwinding Agreement, Parsons returned the Series 2020 Preferred Shares to the Company for cancellation and the Company assigned the Interest in Legacy Sand back to Parsons and exchanged mutual releases.
NOTE 2 – GOING CONCERN
Future issuances of the Company’s equity or
debt securities will be required for the Company to continue to finance its operations and continue as a going concern. The Company’s
present revenues are insufficient to meet operating expenses. The financial statements of the Company have been prepared assuming that
the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has an accumulated deficit of $
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the
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Company's Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for future periods or the full year.
Principles of Consolidation
The condensed consolidated financial statements include
the accounts of the Company, Alpha Mortgage Notes I, LLC, which is controlled by the Company through its
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. The Company is required to make judgments and estimates about the effect of matters that are inherently uncertain. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, deferred income tax asset valuations and loss contingences. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Although, we believe our judgments and estimates are appropriate, actual future results may be different; if different assumptions or conditions were to prevail, the results could be materially different from our reported results.
Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid
investments with maturities of three months or less at the time of acquisition. As of March 31, 2024, the Company had $
Loans Receivable, net and Allowance for Losses
The Company records its investments in loans receivable at the lower of cost or fair value. Costs are the gross loan receivables less unamortized costs of issuance and deferred origination fees. Origination fees collected at the time of investment are recorded against the loans receivable and amortized into net interest income over the lives of the related loans. Issuance costs incurred are capitalized along with the initial investment and amortized against net interest income over the lives of the related loans.
When a loan receivable is placed on non-accrual status, the related interest receivable is charged to bad debt of the current period. If a non-accrual loan is returned to accrual status, the accrued interest existing at the date the residential loan is placed on non-accrual status and interest during the non-accrual period are recorded as interest income as of the date the loan no longer meets the non-accrual criteria.
The Company maintains an allowance for loan losses on its investments in real estate loans receivable for estimated credit impairment. Management’s estimate of losses is based on several factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded first as a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are recognized as income.
Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property on an individual loan receivable basis. Management has no active loans receivable as of March 31, 2024 and December 31, 2023.
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Income Taxes
The Company accounts for its income taxes in accordance with FASB Accounting Standards Codification (“ASC”) No. 740, "Income Taxes". Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.
Accounting for Uncertainty in Income Taxes
The Company applies the provisions of ASC Topic 740-10-25, Income Taxes – Overall – Recognition (“ASC Topic 740-10-25”) with respect to the accounting for uncertainty of income tax positions. ASC Topic 740-10-25 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-25 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of March 31, 2024, tax years since 2018 remain open for IRS audit. The Company has received no notice of audit from the Internal Revenue Service for any of the open tax years.
Revenue Recognition and Investment Income
Origination fees collected at the time of investment are recorded against the loans receivable and amortized into net interest income over the lives of the related loans. Issuance costs incurred are capitalized along with the initial investment and amortized against net interest income over the lives of the related loans. The Company records interest income in accordance with ASC subtopic 835-30 "Imputation of Interest", using the effective interest method. The Company had no interest income for the three months ended March 31, 2024 and 2023.
When a loan is placed on non-accrual status, the related interest receivable is charged to bad debt of the current period. If a non-accrual loan is returned to accrual status, the accrued interest existing at the date the residential loan is placed on non-accrual status and interest during the non-accrual period are recorded as interest income as of the date the loan no longer meets the non-accrual criteria.
The Company suspends recognizing interest income when it is probable that the Company will be unable to collect all payments according to the contractual terms of the underlying agreements. Management considers all information available in assessing collectability. Collectability is measured on a receivable-by-receivable basis by either the present value of estimated future cash flows discounted at the effective rate, the observable market price for the receivable or the fair value of the collateral if the receivable is collateral dependent. Large groups of smaller balance homogeneous receivables, such as pre-settlement funding transactions, are collectively assessed for collectability. Receivables, including those arising from the sale of loan origination services, is charged off when in the Company's judgment, the receivable or portion of the receivable is considered uncollectible.
Payments received on past due receivables and finance
receivables the Company has suspended recognizing interest income on are applied first to principal and then to accrued interest. Interest
income on past due receivables and finance receivables, if received, is recorded when received. The Company generally does not resume
recognition of interest income once it has been suspended. At December 31, 2021, the Company evaluated the collectability of its loans
and lines of credit receivable, in light of economic conditions during the Covid-19 pandemic, established an allowance account to bring
these to $
From time to time the Company may make available for
use its mailing lists and customer lists to other firms in the same or complimentary markets. For the period ended March 31, 2024, the
Company received $
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Variable Interest Entity
The Company holds a
Fair Value
The carrying amounts reported in the balance sheet for cash, accounts payable and notes payable approximate their estimated fair market value based on the short-term maturity of this instrument. The carrying value of the Company’s loans receivable approximate fair value because their terms approximate market rates.
Basic loss per share is computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding for the year. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. shares underlying convertible preferred stock were excluded from the computation of diluted loss per share for the three months ended March 31, 2024 and 2023, because their impact was anti-dilutive.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and loans receivable. The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits.
Recently Issued and Adopted Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Alpha Mortgage Notes, LLC
Litigation
We are currently involved in the following legal proceedings:
Steven T. Matthiesen and
Joanna K. Matthiesen, jointly and severally v. Tmothy Fussell et al. In the United States District Court, Southern District of Florida,
Case No. 21CV62334. This breach of contract matter resulted in a default judgment against the Defendants in 2022 of $
12
Fusion Lodgings LLC v. PLC
et al, In the District Court, 160th Judicial District, Dallas County, TX, Cause No. DC-20-09139. This breach of contract
matter resulted in a default judgment against the Defendants of $
Supplemental complaint for
financial relief in regards to collections, In the circuit court of the eleventh judicial circuit in and for Miami-Dade County, Florida,
case #2021-20869-CA01, seeking $
Advisory Agreement
In June 2019, the Company entered into an advisory agreement, pursuant to which it agreed to compensate a third-party advisor a percentage of future capital raises facilitated by the advisor. Compensation includes non-refundable cash, cash compensation based on a percentage of capital raised. The advisor may elect to receive certain percentage-based fees in the form of equity. Upon the closing of a transaction, the advisor will receive five-year warrants to purchase a number of shares of common stock equal to 8% of the number of shares issue in the transaction at a strike price of the transaction value as defined the agreement. As of the date of this report, no amounts have been earned and no equity instruments have been issued as transaction-based fees pursuant to this agreement.
NOTE 5 – RELATED PARTY TRANSACTIONS
Management Fee
The Company pays its parent company, Omega Commercial
Finance Corp (“Omega”) management fees pursuant to a corporate governance management agreement executed on June 1, 2017.
Note Payable
On October 14, 2020, the Company issued a promissory
note in the amount of $
Note Payable – short term
On June 29, 2022, the Company issued a promissory
note in the amount of $
NOTE 6 – STOCKHOLDERS’ EQUITY
Temporary Equity
On November 27, 2017, shares of Series
2018 Convertible Preferred stock were issued at a value of $ per share to one entity in exchange for cash of $
13
Preferred Stock
Series A: as of March 31, 2024 and December 31, 2023, the Company has outstanding shares of Series A Preferred Stock, par value $.
Series AA – as of March 31, 2024 and December 31, 2023, the Company has outstanding shares of Series AA Preferered Stock held by Omega Commercial.
Common Stock
At March 31, 2024 and December 31, 2023, the Company had outstanding shares of its common stock, par value $.
Capital Contributions
During the
three months ended March 31, 2024 and 2023, Omega Commercial Finance Corp paid expenses on behalf of the
Company of $
Common Stock Warrants
There are no outstanding warrants as of March 31, 2024 and December 31, 2023.
NOTE 7 – SUBSEQUENT EVENTS
Effective May 7, 2024, the Company dismissed BF Borgers as its independent registered public accounting firm (See 8-K filed May 5, 2024 on the SEC website).
Effective May 9, 2024 the Company engaged Bush and Associates Inc. as their new independent registered public accounting firm.
The Company has evaluated subsequent events through the date the financial statements were issued. The Company has determined that there are no such events that warrant disclosure or recognition in the consolidated financial statements presented herein.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included in “Item 8. Financial Statements and Supplementary Data.” In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors.
Results of Operations
General
We have recognized $1,650 of income for the three months ended March 31, 2024, compared to no revenue for the same period in 2023. As of March 31, 2024, the Company had an accumulated deficit of approximately $11.1 million.
The following table provides selected consolidated balance sheet data as of March 31, 2024.
| Balance Sheet Data: | 3/31/2024 | |||
| Cash | $ | 297 | ||
| Loan receivable and accrued interest receivable, net of discounts | 0 | |||
| Total assets | 297 | |||
| Current liabilities | 5,019,540 | |||
| Total liabilities | 5,019,540 | |||
| Temporary equity | 463,708 | |||
| Shareholders' equity | (5,482,951 | ) | ||
Three Months Ended March 31, 2024 as compared to three months ended March 31, 2023
For the three months ended March 31, 2024, we generated $1,650 in income, compared to $0 in 2023. We incurred $106,885 in operating expenses during the 2024 period, compared to $95,200 in 2023.
Liquidity and Capital Resources
During the three months ended March 31, 2024, Omega, the principal stockholder of the Company, paid expenses on behalf of the Company of $28,110. During the three months ended March 31, 2023, Omega made cash contributions of $8,250.
Critical Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. The Company is required to make judgments and estimates about the effect of matters that are inherently uncertain. The Company regularly evaluates estimates and assumptions related to the valuation of the allowance for loan losses, loss contingencies, useful life and recoverability of long-lived assets, deferred income tax asset valuations and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Although, we believe our judgments and estimates are appropriate, actual future results may be different; if different assumptions or conditions were to prevail, the results could be materially different from our reported results.
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Loans Receivable, net and Allowance for Losses
The Company records its investments in loans receivable at cost less unamortized costs of issuance and deferred origination fees. Origination fees collected at the time of investment are recorded against the loans receivable and amortized into net interest income over the lives of the related loans. Issuance costs incurred are capitalized along with the initial investment and amortized against net interest income over the lives of the related loans.
When a loan receivable is placed on non-accrual status, the related interest receivable is reversed against interest income of the current period. If a non-accrual loan is returned to accrual status, the accrued interest existing at the date the residential loan is placed on non-accrual status and interest during the non-accrual period are recorded as interest income as of the date the loan no longer meets the non-accrual criteria.
The Company maintains an allowance for loan losses on its investments in real estate loans receivable for estimated credit impairment. Management’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded first as a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are recognized as income.
Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property on an individual loan receivable basis.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company, we are not required to include disclosure under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As of March 31, 2024, our Chief Executive Officer (our principal executive and financial officer) conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures; as is defined in Rule 13a-15(e) of Exchange Act. We recognize that there are material weaknesses related to our internal controls. Therefore, our Chief Executive Officer has concluded that our disclosure controls and procedures were not effective, as of the end of the period covered by this Annual Report on Form 10-K. This includes ensuring that information required to be disclosed was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Furthermore, to provide reasonable assurance that information required to be disclosed is accumulated and communicated as appropriate to allow timely decisions regarding required disclosure.
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Management’s Report on Internal Control over Financial Reporting
Our Chief Executive Officer (our principal executive and financial officer) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. We have designed our internal controls to provide reasonable assurance that our financial statements are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP), and include those policies and procedures that:
| · | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets; |
| · | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and |
| · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Our Chief Executive Officer (our principal executive and financial officer) conducted an evaluation of the effectiveness of our internal controls over financial reporting as of March 31, 2024. In making this evaluation, the Chief Executive Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in its 2013 Internal Control — Integrated Framework.
Based on this evaluation, our Chief Executive Officer has concluded that our internal controls over financial reporting were not effective as of the end of the period covered in this Quarterly Report on Form 10-K. The Chief Executive Officer has concluded that the financial statements included in this report fairly present in all material respects our financial position and results of operations.
This Quarterly Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. The Chief Executive Officer’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2024, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
We are currently involved in the following legal proceedings:
Steven T. Matthiesen and Joanna K. Matthiesen, jointly and severally v. Tmothy Fussell et al. In the United States District Court, Southern District of Florida, Case No. 21CV62334. This breach of contract matter resulted in a default judgment against the Defendants in 2022 of $1,514,000 plus fees and costs. This case remains pending as to Defendants Timothy Fussell and Partners South Holdings, LLC only.
Fusion Lodgings LLC v. PLC et al, In the District Court, 160th Judicial District, Dallas County, TX, Cause No. DC-20-09139. This breach of contract matter resulted in a default judgment against the Defendants of $1,000,000 plus fees and costs.
Supplemental complaint for financial relief in regards to collections, In the circuit court of the eleventh judicial circuit in and for Miami-Dade County, Florida, case #2021-20869-CA01, seeking $144,147 plus 6% interest from 2013. A settlement agreement is currently in place and the debt serviced by a third party.
We are not aware of any other pending or threatened material legal or administrative proceedings arising in the ordinary course of business. We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.
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ITEM 1A. RISK FACTORS
Risk factors describing the major risks to our business can be found under Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2022. There has been no material change in our risk factors from those previously discussed in the Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our operations.
ITEM 5. OTHER INFORMATION
See ITEM 1A above.
ITEM 6. EXHIBITS
| 101.INS | XBRL Instance Document * |
| 101.SCH | XBRL Taxonomy Extension Schema Document * |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document * |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document * |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document * |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document * |
* Filed herein
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ALPHA INVESTMENT INC.
| /s/ Todd C. Buxton | Chief Executive Officer, Acting Chief Financial Officer and Director | May 20, 2024 | ||
| TODD C. BUXTON | Title (Principal Executive, financial and Accounting Officer | Date |
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