EDGAR 10-K Filing

Company CIK: 1616736
Filing Year: 2023
Filename: 1616736_10-K_2023_0001515971-23-000091.json

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ITEM 1. BUSINESS
Item 1. Business
Overview
We intend to provide capital directly to borrowers seeking financing for commercial real estate properties either for refinancing or acquisitions. These loans will encompass originating performing commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt. Notwithstanding the foregoing, we intend to operate our business so that we do not become subject to the Investment Company Act of 1940, as amended. Accordingly, we do not plan to primarily engage in the business of investing, reinvesting, or trading in securities and we do not plan to acquire investment securities (such as commercial mortgage-backed securities) having a value exceeding 40% of the value of the Company’s total assets.
We expect to offer financing across a broad-spectrum of asset backed and commercial real asset type collateral of any property type such as office, retail, industrial, multi-family, and hospitality. The Company will coordinate its lending initiatives with outside commercial real estate loan brokers, which have access to commercial real estate owners seeking financing or refinancing opportunities, and with loan origination firms that have borrowers seeking loans. We believe that this will enable ALPC to broaden its access to new borrowers and to develop and implement financing solutions for these other lenders, mortgage bankers, borrowers, and owners. In the event the Company uses third party loan origination services and underwriters, the Company will cover these costs in accordance with industry standard practices. In addition, the Company from time to time will also engage in participating equity financing within strategic opportunistic projects and businesses that could bring added value to stockholders.
The Company expects to require substantial capital to fully fund and implement its operations. The Company plans to raise such capital through private or public offerings of equity, debt or other securities or through joint venture partnerships. There can be no assurance that the Company can successfully raise such capital or consummate any offering or joint venture partnerships on favorable terms or otherwise. If such efforts are not successful, then we may be unable to honor funding commitments or be forced to curtail our operations or consider other strategic alternatives.
Investment Strategy
To identify attractive lending opportunities, the Company expects to continue to deploy its capital through the origination of commercial mortgage loans, subordinate financing and other commercial real-estate related debt investments at attractive risk-adjusted yields. The Company targets lending opportunities that are secured by commercial real estate. The Company’s underwriting includes a focus on stressed in-place cash flows, debt yields, debt service coverage ratios, loan-to-value ratios, property quality and market and sub-market dynamics.
Alameda Partners Joint Venture
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 $1,000,000 to the Company and is the managing member of the SPV. The capital is intended for use in implementing the Company’s strategy of acquiring commercial real estate performing notes and support other related growth initiatives and assets acquisitions for the Company The principals of Alameda Partners have significant long-term of experience in the commercial real estate industry as property developers, owners, and managers and currently hold over $50 million in commercial real estate assets. Pursuant to the operating agreement for the SPV, Alameda Partners is entitled to monthly distributions in cash or stock equal to $10,000. As of December 31, 2022, the SPV has not completed any transactions.
Legacy Sand Joint Venture
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 1,200 acres located in Independence, Wisconsin.
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.
Capital Restructuring
In order to provide the Company with an improved capital structure effective June 30, 2021, the Company implemented a capital restructuring pursuant to which:
· Omega, our principal stockholder exchanged 28,600,999 shares of our common stock it held for 100,000 shares of newly designated Series AA Preferred Stock; and
· Holders of an additional 1,965,000 shares of our common stock contributed such shares to the capital of the Company.
Each share of Series AA Preferred Stock is convertible at the option of the holder into ten (10) shares of the Company’s common stock for an aggregate of 1,000,000 shares of common stock, subject to adjustment for stock splits, stock dividends and similar transactions. The Series AA Preferred Stock is entitled to share ratably in dividends declared on the Company’s common stock on an “as converted” basis.
Each share of Series AA Preferred Stock is entitled to 450 votes on each matter presented to stockholders (subject to adjustment for stock splits, stock dividends and similar transactions). Shares of Series AA Preferred Stock vote together shares of our common stock as a single class, except as required by Delaware law. Accordingly, Omega, as the holder of the Series AA Preferred Stock will effectively maintain control over the Company’s affairs following implementation of the capital restructuring and the consummation of this Offering.
Unless otherwise specifically indicted, all Share and per Share information in this annual report gives pro forma effect to implementation of the capital restructuring
Potential Effects of the COVID-19 Pandemic on our Business
Commercial mortgage lending may be subject to volatility during the COVID-19 pandemic and may be adversely affected by a number of factors, including, but not limited to, national, regional and local economic conditions; local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; retroactive changes to building or similar codes; pandemics; natural disasters and other acts of God. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans or loans, which could also cause us to suffer losses. Market volatility has been particularly heightened due to the COVID-19 global pandemic. COVID-19 has disrupted economic activities and could have a continued significant adverse effect on economic and market conditions including limited lending from financial institutions, depressed asset values, and limited market liquidity. At the present time, we are unable to estimate the potential adverse effect which the pandemic may have on our business, operations and financial condition.
Corporate History
We were incorporated in the State of Delaware on February 22, 2013, 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.
On March 17, 2017, Omega purchased 35,550,000 outstanding shares of the Company’s common stock (the “Control Share Sale”) from Malcolm Hargrave (35,000,000 shares), DTH International Corporation (500,000 shares) and Lisa Foster (50,000 shares) for aggregate consideration of $295,000. The Control Share Sale was consummated in a private transaction pursuant to a common stock purchase agreement entered between Omega and Mr. Hargrave, acting individually and on behalf of the other selling stockholders. Upon completion of the Control Share Sale, a “Change in Control” of the Company took place and in connection therewith, Mr. Hargrave resigned as our sole director and officer and Omega, as the new majority stockholder of the Company, elected Timothy R. Fussell, Ph.D. as President, Chairman of the Board and a director (Dr. Fussell stepped down from those positions in April 2020) and Todd C. Buxton, Omega’s then Chief Executive Officer, as Chief Executive Officer, Vice Chairman of the Board and a director.
In addition to the foregoing, new management elected to shift the Company’s business focus to real estate lending, which they believed offered better opportunities for shareholder growth. In connection therewith, on March 30, 2017, we filed a Certificate of Amendment to our Certificate of Incorporation with the Delaware Secretary of State changing our name from “Gogo Baby, Inc.” to “Alpha Investment Inc.” to better reflect our new business plan. 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.
Plan of Operations
Our core objective will be to achieve advantageous yields and consistent interest income on short to long term loans (“Loans”) covering all four lending categories such as prime, alt-A, bridge and hard money loans by:
● furnishing capital to make Loans primarily to borrowers such as commercial real estate developers and speculators, business owners, landlords and owners of core assets when traditional financing is unavailable to such borrowers for acquisitions, refinancing of commercial property loans; and
● making Loans directly to borrowers in the commercial real estate markets.
We plan to administer various financing programs with an emphasis on Loans secured by commercial real estate, such as office buildings, multi-family residences, shopping centers, industrial, and hotels. Loans may consist of senior debt loans, mezzanine or subordinated loans, preferred equity and other equity participation financing structures.
We intend to follow a “conservative lending” profile for our Loans. Our strategy is to seek low leveraged first lien senior debt mortgage loans and high debt service structured financing programs, as opposed to riskier, less secure, mezzanine or equity positions.
Business Objectives and Strategy
Our core business objective is to achieve advantageous and consistent rates of return from short to long term Loans to borrowers when traditional financing is unavailable to such borrowers for acquisitions, refinancing of commercial property loans and other asset backed transactions. We plan to focus on various alternative commercial real estate financings with an emphasis on Loans secured by commercial real estate and seek to invest in financing of core real estate assets that include office buildings, multi-family residences, shopping centers, and hospitality, plus ground up entitled land developments. The Loans may consist of senior debt loans, mezzanine or subordinated loans, preferred equity and other equity participation financing structures. We intend to follow a “conservative lending” profile for the Loans we fund, which means low loan to value and high debt service cover ratios. Our strategy is to seek Loans that are first lien, senior debt mortgage loans and specialty financing programs, as opposed to riskier, yet much more profitable, and less secure mezzanine or equity positions.
Use of Loan Servicers
In carrying out our business strategy, we will likely utilize third-party firms that specialize in Loan origination and servicing (“Servicers”). We intend to perform due diligence on each Servicer which we, directly or indirectly, plan to use in the origination and servicing of Loans, in order to evaluate the firm’s experience and expertise in originating and servicing Loans that satisfy our lending and investment criteria.
Use of Other Third-Party Service Providers
We will utilize other third parties to provide various ancillary services to us, such as real estate evaluation and land feasibility appraisal services, closing-legal and escrow title services.
Sale of Participations; Co-Investments and Participations
In the discretion of management, we may sell participation rights in the Loans we originate to other entities.
We may from time to time co-invest and or syndicate participation interest in loans as the administrative agent or buying a participation interest. We plan to only employ this strategy with seasoned well-established organizations in the commercial real estate (“CRE”) lending industry such as private trusts, real estate financing institutions, mutual funds, pension funds, investment houses, or hedge fund of funds. We believe that this will afford the Company with an additional opportunity to participate in well-structured transactions with organizations with proven track records involving originating, underwriting, and servicing.
The Commercial Real Estate Lending Product
Operationally, management believes the market for commercial mortgage loans will offer opportunities for the deployment of capital we raise. The CRE markets have suffered greatly in recent years beginning with the 2008 U.S. financial market crisis, which resulted in a steep and prolonged recession. However, as the lending markets have steadily recovered along with market leaders such as large banks Wells Fargo, JP Morgan Chase, Bank of America and Capital One, we believe the CRE lending landscape has now stabilized in select Centralized Business Districts known as “CBD’s” and afford extremely attractive opportunities for deploying capital. Thus, we will focus on positioning the Company to seize this opportunity within this market. We believe that our proposed business model is comparable to that currently being used by some of the top-level commercial real estate lender industry professionals. However, to compete and succeed within this industry, we plan to develop a proprietary pricing and lending model for the commercial real estate finance debt and equity markets. If we are able to do so, as to which no assurance can be given, we believe that we will have a strategic advantage to compete in the market.
Key Operational Highlights - CRE Loans
- The overall U.S. core property commercial real estate lending market is vast and accordingly, we believe there are significant business opportunities that will afford the Company continued growth.
- We expect that our lending model will allow for smaller increments of loans designed for quicker closings to permit investors to monitor development of the ongoing balance sheet and enable us to more rapidly achieve milestones.
- We plan to retain or use seasoned commercial real estate independent specialists to coordinate our loan underwriting model centered on mitigating loan-loss risks and to perform all other related and required third party due diligence.
- Since the securitization industry has standardized the underwriting criteria, we anticipate that it will allow for each third-party service provider we use to integrate and exchange information effectively and efficiently.
- We believe that we will have low cost and prudent leverage available to us to fund Loans.
- Our strategy has been developed with the input of experienced industry veterans.
The Commercial Real Estate Market Forecast
CBRE is forecasting a record 2022 for investment in commercial real estate due to the added momentum in the economic and real estate recoveries, fiscal stimulus projects, and a rebound of big cities and downtowns-as long as the pandemic is held at bay.
According to CBRE, it is anticipating a 4.6% gain in U.S. gross domestic product in 2022 as businesses and real estate hit their full stride in the recovery from the pandemic and related restrictions. Investment volumes are expected to increase 5% to 10% as low interest rates and the return of international travel create more demand.
“Our outlook for U.S. commercial real estate next year is positive due to a number of tailwinds overriding deterrents such as inflation,” said Richard Barkham, CBRE’s global chief economist and head of Americas Research. “COVID-19 flareups still pose a risk, but governments and health authorities appear to have made progress in containment and treatment. We see this rising tide further buoying the capital markets, multifamily, and the industrial and logistics sector, and aiding the burgeoning recoveries of the retail and office sectors.”
CBRE’s 2022 U.S. Real Estate Outlook is forecasting a record-breaking year for multifamily, citing solid fundamentals, heightened investor interest, ample liquidity, and a growing range of debt products. Overall occupancy and net effective rents are expected to be above pre-pandemic levels by the end of 2021. Even though there are some challenges facing the market, that overall health is expected to continue in the new year.
“The growing economy is boosting household formation, which had been artificially suppressed by the pandemic. New households are catalyzing demand for rentals, which is expected to match pace of new deliveries in 2022. We forecast multifamily occupancy levels to remain above 95% for the foreseeable future and nearly 7% growth in net effective rents next year,” according to the outlook.
CBRE also predicts construction to remain elevated in the near term, with completions this year reaching a new high and another 300,000-plus units delivered in 2022. Providing context, CBRE added that deliveries have averaged 206,000 units annually since 2010.
However, despite the strong demand for multifamily, CBRE said the volume of new Class A product coming online will limit the performance of those higher-quality communities. While Class A rents were most negatively affected during the COVID-19 crisis, there remains more room to recover. CBRE projects 8% growth in urban effective rents in the year ahead but a moderation to 3% in 2023.
Other key findings for multifamily from the CBRE 2022 U.S. Real Estate Outlook include:
· Urban properties are filling back up, with occupancy rates nearing the pre-pandemic levels, as the nation sees fewer restrictions on urban amenities, higher vaccination rates, and more workers returning to offices. As of the third quarter of 2021, urban vacancy rates averaged 5%, 70 basis points higher than the pre-pandemic level. They are expected to fall to 4% by the end of 2022;
· Investment volume for multifamily is expected to reach nearly $213 billion, a record, in 2021, which is above 2019’s $193 billion. CBRE is forecasting at least a 10% increase to $234 billion in 2022. Trends on the investment front include the acceptance of strong non-coastal markets and the growing interest in favoring ESG-compliant assets, especially from European investors; and
· The level of liquidity from the 2022 increased caps on multifamily purchase volumes for Fannie Mae and Freddie-$78 billion for each government-sponsored enterprise-should facilitate strong value growth, according to CBRE. It also expects foreign capital to return as well as liquid multifamily debt capital markets, including traditional lending sources and alternative lenders such as debt funds and mortgage REITs, to further stabilize and perhaps even compress cap rates even as interest rates increase.
· The CBRE outlook also highlighted trends to watch for 2022, including the growing single-family rental market and the return to the office.
· The attraction of single-family rentals is expected to increase for both investors and renters as more millennials reach the child-rearing life stages. This will push urban operators to focus more on Gen Z renters to fill the resulting vacancies.
· CBRE also anticipates that rising office occupancy will provide a boost for urban multifamily demand, projecting that office workers will spend an average 3.4 days a week in the office, down from the average 4.4 day per week average in 2018. Living near the office may longer be as important for renters, but it will still be a key consideration.
Loan Production Strategy
We have access to a database of top commercial real estate mortgage bankers nationwide through organizations such as Strategic Alliance Mortgage, LLC (“SAM”), which is a company comprised of the top independently owned commercial real estate mortgage banking firms located throughout the United States. Through SAM, firms utilize their shared national knowledge to execute superior capital market solutions for developers, commercial real estate investors, investment management firms, asset management firms, real estate investment trusts and private real estate equity firms with the goal of utilizing their production networks. We have focused on firms that have experienced loan origination back-office staff to ensure our CRE Loan services will be appropriately and professionally marketed. Also, management has a proprietary database of 50 to 100 mortgage bankers to market their CRE Loan products to and generate Loan production internally for consistent deal flow. In addition, we believe that as our operations expand, we potentially could establish and retain an in-house sales team.
Competition
A few much larger proven commercial real estate lenders such as JP Morgan Chase, Bank of America, Goldman, and Apollo Commercial Real Estate currently have established operations with large balance sheets and back office staff. However, we are a non-banking institution and are not regulated like the larger banks or typical CMBS lenders in that we are not “pigeon-holed” into securitizing our assets. Rather, we elect to use these industry standards and underwriting characteristics to originate loans, to consequently mitigate liquidly-risk (i.e. recapitalization) with the ability to hold these loans on the un-tainted balance sheet to garner stable income to yield strong growth and market share. However, as most of these lenders have far longer operating histories and significantly larger financial resources than we do, there can be no assurance given that we can effectively compete.
Employees
We currently have no employees other than our executive officers. As noted above, we intend to rely on third parties retained by us for services in areas such as loan origination and production, credit analysis, underwriting, due diligence, and loan servicing. As our operations grow, we may elect to bring certain, if not all of these services in house.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
Not applicable to a “smaller reporting company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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ITEM 1B. UNRESOLVED STAFF COMMENTS

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ITEM 2. PROPERTIES
Item 2. Properties
Our principal executive offices are located at 200 East Campus View Blvd. Suite 200 Columbus, OH 43235.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
We are not 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.
The Company is not aware of any additional litigation.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable to a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.
Part II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
Our Shares are quoted on the OTCPink tier of the over-the-counter market operated by OTC Markets Group, under the symbol “ALPC.” However, the market for our Shares has been extremely limited and there have only been minimal and sporadic public quotations for our Shares and there have been no recent closing quotations for our Shares. There can be no assurance given that a liquid public market for our Shares will develop and if developed, be sustained.
Holders
As of December 31, 2022, we had 9,724,401 shares of common stock issued and outstanding, and 456 shareholders of record of our common stock.
Dividends
The payment by us of dividends, if any, in the future rests within the discretion of our board of directors and will depend, among other things, upon our earnings, capital requirements and financial condition, as well as other relevant factors. We have not paid any dividends since our inception and we do not intend to pay any cash dividends in the foreseeable future, but intend to retain all earnings, if any, for use in our business.
Securities Authorized for Issuance under Equity Compensation Plans
Plan category
Number of securities to
be issued upon exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of securities remaining
available for future issuance under
equity compensation plans
(excluding securities reflected in
column (a))
Equity compensation plans approved by security holders
520,000
0.004
331,867
Equity compensation plans not approved by security holders
Total
520,000
0.004
331,867

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data
Not applicable to a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. 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 net losses of $(3,123,461) and $(2,124,279) for the years ended December 31, 2022 and 2021. As of December 31, 2022 and 2021, the Company had an accumulated deficit of $10,398,416 and $7,274,955.
The following table provides selected balance sheet data as of December 31, 2022 and 2021.
Consolidated Balance Sheet Data: 12/31/2022
12/31/2021
Cash $ -
$
Loans Receivable - related parties, net of discounts and allowances $ -
$ -
Loans Receivable, net of discounts and allowances $ -
$ -
Total assets $ -
$
Current liabilities $ 4,301,442
$ 1,156,223
Total liabilities $ 4,301,442
$ 1,156,223
Temporary equity $ 434,098
$ 410,410
Stockholders’ equity $ (4,735,540 )
$ (1,565,729 )
Year ended December 31, 2022 as compared to year ended December 31, 2021
For the year ended December 31, 2022, we generated no income, compared to net investment income of $33,830 in 2021. Net investment income in 2021 resulted from interest income of $68,278, reclassification of related party interest of $13,552 the amortization of loan origination fees of $36,000, offset by the amortization of loan costs of $84,000 We incurred $551,422 in operating expenses during the 2022 period, compared to $2,092,705 2021 period, reflecting our decreased level of operations and the creation of an allowance account of $1,383,380 to reflect revaluation of our loans receivables. In 2022 the Company recognized $2,518,000 in judgments and settlements and $30,529 in interest expense. In 2021, the Company recognized $20,927 in debt forgiveness, and $26,775 in net interest expense.
Interest Income $ - $ 68,278
Accretion of Loan Origination Fees - 36,000
Reclassification of related party interest total - 13,552
Amortization of Loan Issuance Costs - (84,000 )
Net Investment Income $ - $ 33,830
On December 31, 2021, the Company re-evaluated the Loans Receivable and Lines of Credit Receivable. Considering the lack of activity in projects associated with the loans and the economic stagnation of the construction markets in 2021, partially due to the pandemic, the Company added $1,383,380 to an allowance account to write down the values to $0. Going forward, loans will be evaluated under contemporary economic circumstances and recorded accordingly.
Liquidity and Capital Resources
During the year ended December 31, 2022, Omega, the principal stockholder of the Company, made additional capital contributions to the Company of approximately $73,650 in expenses paid on behalf of the Company.
During the year ended December 31, 2021, Omega, the principal stockholder of the Company, made additional capital contributions to the Company of $388,486 including $185,075 in expenses paid on behalf of the Company. The Company’s PPP Loan of $20,927 was forgiven, and the balance expensed.
Related Party Transactions
Loans receivable
The Company has extended lines of credit and loans to related parties. See Note 4 to consolidated financial statements.
Management fee and other expenses
During the years ended December 31, 2022 and 2021, Omega Commercial Finance Corp was accrued $150,000 in management fees pursuant to a corporate governance management agreement executed on June 1, 2017. Omega is to provide services related to facilitating the introduction of potential investors for compensation of no less than $150,000 per year, not to exceed $300,000 per year. The agreement remains in effect until cancelled by Omega.
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.
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. As of December 31, 2021, given the shifting economic conditions, the Company determined the likelihood of collecting these loans was significantly diminished and established an allowance account to write down the value of all receivables to $0.
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.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable to a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements
Index
Reports of Independent Registered Accounting Firm
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021
Consolidated Statement of Stockholders’ Equity for the Years Ended December 31, 2022 and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021
Notes to Consolidated Financial Statements
Reports of Independent Registered Accounting Firm ,
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020
Consolidated Statement of Stockholders’ Equity for the Years Ended December 31, 2021 and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Alpha Investment Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Alpha Investment Inc. (the "Company") as of December 31, 2022, the related statement of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s BF Borgers CPA PC
BF Borgers CPA PC (PCAOB ID 5041)
We have served as the Company's auditor since 2022
Lakewood, CO
June 20, 2023
Alpha Investment Inc
Condensed Consolidated Balance Sheets
As of As of
December 31, December 31,
ASSETS
Current Assets:
Cash $ 0 $ 588
Total Current Assets
Other Assets:
Loans receivable - related party, net of discounts - -
Loans receivable, net of discounts - -
Interest receivable - -
Total Other Assets - -
Property and Equipment, net:
Furniture and Equipment, net -
Total Property and Equipment, net -
TOTAL ASSETS $ - $ 904
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 602,416 $ 310,726
Accrued management fees - related party 450,000 300,000
Distribution payable 460,000 340,000
Notes payable - short-term 39,279 -
Notes payable - related party 231,747 205,497
Judgments payable 2,518,000 -
Total Current Liabilities 4,301,442 1,156,223
Total Liabilities 4,301,442 1,156,223
Temporary Equity:
Series 2018 Convertible Preferred Stock ($0.0001 par value), net of discounts of $116,481 and $140,169, respectively, 100,000 shares authorized; 36,667 shares issued and outstanding (liquidation value: $500,000) (See Note 7) 434,098 410,410
434,098 410,410
Stockholders' Equity:
Preferred stock ($0.0001 par value), 20,000,000 shares
Series A Convertible Preferred stock ($15.00 par value), 100,000 shares authorized; 1,167 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively 17,505 17,505
Series AA Convertible Preferred stock ($0.0001 par value), 100,000 shares authorized, 100,000 and -0- issued and outstanding as of December 31, 2022 and December 31, 2021, respectively
Common stock, ($0.0001 par value), 100,000,000 shares authorized; 9,724,401 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively
Additional paid-in capital 6,012,900 5,939,250
Accumulated deficit (10,398,416 ) (7,274,955 )
Total Equity (4,367,028 ) (1,317,217 )
Non-controlling interest in variable interest entities (368,512 ) (248,512 )
Total Stockholders' Equity (4,735,540 ) (1,565,729 )
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ - $ 904
Series A Convertible Preferred Stock
Alpha Investment Inc
Condensed Consolidated Statements of Operations
12 Months 12 Months
Ended Ended
December 31, December 31,
Income:
Net investment income - related parties $ - $ 33,830
Net investment income - -
Total Income - 33,830
General and Administrative Expenses:
Bad debt expense - 1,374,886
Management fee - related party 150,000 150,000
Administrative expenses 251,582 283,296
Professional fees 149,662 284,523
Total General and Administrative Expenses 551,244 2,092,705
Loss from Operations (551,244 ) (2,058,875 )
Other Expense:
Other income/expense (2,518,000 ) 20,927
Interest expense, net (30,529 ) (26,775 )
Total Other Expense (2,548,529 ) (5,848 )
Net Loss $ (3,099,773 ) $ (2,064,723 )
Amortization of discounts on Series 2018 preferred stock and redeemable common stock (23,688 ) (23,688 )
Net Income Attributable to Non-controlling Interests - (35,868 )
Net Loss Attributable to Common Stockholders $ (3,123,461 ) $ (2,124,279 )
Basic and Diluted Loss Per Share $ (0.32 ) $ (0.16 )
Basic and Diluted Weighted Average Number of Common Shares Outstanding 9,724,401 13,433,198
Alpha Investment Inc
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit)
(Audited)
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, 2020 40,290,400 $ 4,030 1,167 $ 17,505 - $ - $ 5,547,717 $ (164,380 ) $ (5,150,676 ) $ 254,196
Stock exchange (30,565,999 ) (3,057 ) - - 100,000 3,047 - - -
Stockholder contribution - - - - - - 388,486 - - 388,486
Distributions due to non-controlling interest - - - - - - - (120,000 ) - (120,000 )
Amortization of discount on redeemable preferred stock - - - -
- - (23,688 ) (23,688 )
Net loss - - - - - - - 35,868 (2,100,591 ) (2,064,723 )
Balance, December 31, 2021 9,724,401 $ 973 1,167 $ 17,505 100,000 $ 10 $ 5,939,250 $ (248,512 ) $ (7,274,955 ) $ (1,565,729 )
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, 2021 9,724,401 $ 973 1,167 $ 17,505 100,000 $ 10 $ 5,939,250 $ (248,512 ) $ (7,274,955 ) $ (1,565,729 )
Stockholder contribution - - - - - - 73,650 - - 73,650
Distributions due to non-controlling interest - - - - - - - (120,000 ) - (120,000 )
Amortization of discount on redeemable preferred stock - - - - - - - - (23,688 ) (23,688 )
Net loss - - - - - - -
(3,099,773 ) (3,099,773 )
Balance, December 31, 2022 9,724,401 $ 973 1,167 $ 17,505 100,000 $ 10 $ 6,012,900 $ (368,512 ) $ (10,398,416 ) $ (4,735,540 )
Common Stock
Series A Preferred Stock
Series AA Preferred Stock
Paid-In Capital
Non-Controlling Interest
Accumulated Deficit
Alpha Investment Inc
Condensed Consolidated Statements of Cash Flows
Twelve Months Twelve Months
Ended Ended
December 31, December 31,
Cash Flows from Operating Activities:
Net loss $ (3,099,773 ) $ (2,064,723 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation Expense
Bad debt expense
1,374,886
Accretion of origination fee income - 38,080
Amortization of deferred loan costs -
Payroll protection loan forgiveness - (20,927 )
Changes in operating assets and liabilities:
Increase in judgments payable 1,518,000 -
Increase in settlements payable 1,000,000 -
Increase in interest receivable - (71,910 )
Increase in accrued management fees - related party 150,000 150,000
Decrease in accounts payable and accrued expenses 291,690 167,929
Increase in interest payable 4,279 -
Increase in notes payable - related party 26,250 26,827
Net cash used in operating activities (109,238 ) (399,522 )
Cash Flows from Investing Activities:
Net cash from investing activities - -
Cash Flows from Financing Activities:
Proceeds from short term loan 35,000 -
Proceeds from stockholder contribution 73,650 388,486
Net cash provided by (used in) financing activities 108,650 388,486
Net increase (decrease) in cash (588 ) (11,036 )
Cash and restricted cash at beginning of year 11,624
Cash and restricted cash at end of year $ 0 $ 588
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 $ 120,000 $ 120,000
Amortization of discount on redeemable preferred stock $ 23,688 $ 23,688
Alpha Investment Inc.
Notes to the Consolidated Financial Statements
Years Ended December 31, 2022 and 2021
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Corporate History
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.
Alpha Mortgage Notes I
On March 11, 2019, the Company, through a newly formed LLC or Special Purpose Vehicle “SPV” called Alpha Mortgage Notes I, LLC executed an operating agreement with Alameda Partners LLC. Alameda Partners is a Utah Limited Liability Company which made a capital contribution of $1,000,000, which was paid to the Company, for 10% ownership of the SPV, and will be the managing member. The capital shall be used to implement the strategy of acquiring commercial real estate performing notes and support other related growth initiatives and assets acquisitions for the Company of which is positioning for its listing on the NASDAQ. The Members of Alameda Partners LLC have decades of experiences in the commercial real estate industry as property developers, owners, and managers and currently holds over $50-million in commercial real estate assets. They have been appointed as the Managing Members of the SPV, while ALPC controls and holds 90% ownership. In exchange for its 90% interest in the SPV, the Company is required to contribute 4,015,667 shares of common stock for the purchase of performing notes for the SPV. The special purpose vehicle was organized to acquire the membership interests, develop, own, hold, sell, lease, transfer, exchange, re-lend, manage and operate the underlying assets and conduct activities related thereto the ownership of commercial real estate mortgage notes and REO’s. The initial $1,000,000 was recorded as additional paid in capital on the accompanying consolidated balance sheet. Alameda Partners is entitled to monthly distributions in cash and stock equal to $10,000. For the years ended December 31, 2022 and 2021, the Company has recorded $460,000 and $340,000 of distributions as reductions to non-controlling interest, which has been accrued and included in Distributions Payable on the accompanying consolidated balance sheets as of December 31, 2022 and 2021. As of December 31, 2022 and 2021, Alpha Mortgage Notes I, LLC has not completed any transactions.
Legacy Sands
On July 29, 2021, the Company and Parsons entered into an Unwinding Agreement (the “Unwinding Agreement”), pursuant to which the Legacy Sands 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.
On June 2, 2020, the Company acquired a 19% membership interest in Legacy Sand Group, LLC (“Legacy”), which owns real property and mining rights comprised of approximately 1,200 acres that encompass an asset of 110 million tons of Tier 1 Northern White Fracking Sand in Wisconsin. As consideration for the acquisition, the Company issued 3,382 shares of 2020 Convertible Preferred Stock, which was convertible into 3,804,750 shares of the Company’s common stock. Pending Legacy Sand commencing operations and generating revenues, the Company was not been able to sufficiently establish the valuation of the Interest and the Series 2020 Preferred Shares to the satisfaction of its independent registered public accounting firm, in order to allow the Interest to be reflected as an asset on the Company’s balance sheet included in its periodic reports filed with the SEC under the Securities Act of 1934, as amended, which precipitated the aforementioned Unwinding Agreement.
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 used $109,238 and $399,522 in cash in operations, and incurred net losses of $3,099,773 and $2,064,723 during the years ended December 31, 2022 and 2021. The Company has an accumulated deficit of $10,398,416 and $7,274,955 as of December 31, 2022 and 2021, and requires capital for its contemplated operational and marketing activities to take place. The Company's ability to raise additional capital through the future issuances of common stock is unknown. Securing additional financing, the successful development of the Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, Alpha Mortgage Notes I, LLC, which is controlled by the Company through its 90% ownership interest, and Paris Med CP-LLC (“Paris Med”), variable interest entity for which the Company is deemed to be the primary beneficiary, (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.
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 allowance for doubtful receivables, 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.
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 added $0 and $1,383,380 to the allowance at December 31, 2022 and 2021.
Property and Equipment
Property and equipment are stated at cost. Equipment and fixtures are depreciated using the straight-line method over the estimated asset lives, 5 years. As at December 31, 2022 and 2021, the Company recorded $0 and $316 in property and equipment, net of $1,877 and $1,561 in accumulated depreciation. Depreciation expense was $316 and $316 in 2022 and 2021.
Mortgage Receivables
Equipment and Fixtures
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 consolidated 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 December 31, 2021, 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 following is a summary of the components of the Company’s net investment income for the years ended December 31, 2022 and 2021:
Interest Income $ - $ 68,278
Accretion of Loan Origination Fees - 36,000
Reclassification of related party interest total - 13,552
Amortization of Loan Issuance Costs - (84,000 )
Net Investment Income $ - $ 33,830
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 using the cash basis method of accounting. Additionally, the Company generally does not resume recognition of interest income once it has been suspended.
Variable Interest Entity
Paris Med
Omega Commercial Finance Corp.
Variable Interest Entity
The Company holds a 10% interest in Paris Med, of which the remaining 90% interest is held by the Company’s parent company. Through December 31, 2021, the Company has provided 100% of the funding to Paris Med, which has provided a construction loan to a third party. This loan receivable is the sole asset of Paris Med. The Company determined that Paris Med was a variable interest entity based on various qualitative and quantitative factors including but not limited to: 1) financing of Paris Med’s sole asset was received by the Company, which is disproportionate to the Company’s ownership interest and 2) the Company and Omega, a related party, organized the entity for the purpose of facilitating the Company’s activities. As of December 31, 2022 and 2021, the Company is considered the primary beneficiary because it has provided substantially all of its financial support and is the only party at risk. As of December 31, 2022 and 2021, Paris Med has total assets of $558,000, consisting solely of advances made pursuant to its third-party construction loan agreement, which is fully reserved, and no liabilities. 100% of the funding for the sole asset was provided by the Company and such amounts are eliminated in consolidation. See Note 4. For the year ended December 31, 2022, Paris Me had no activity. Fro the year ended December 31, 2021, , Paris Med had no activity other than accruing interest on outstanding principal. The Company will evaluate its investments in Paris Med each reporting period to determine if it is still the primary beneficiary, and if no longer considered the primary beneficiary, deconsolidate Paris Med in the period in which circumstances change or events occur causing a change in its assessment. The Company has not attributed any of its net loss or equity to non-controlling interest because Paris Med’s sole asset is amounts owed to the Company, which is eliminated in consolidation, and there was no material income earned or losses incurred to date by Paris Med.
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.
Incentive Plan
The Company’s Incentive Plan provides for equity incentives to be granted to its employees, executive officers or directors or to key advisers or consultants. Equity incentives may be in the form of stock options with an exercise price not less than the fair market value of the underlying Shares as determined pursuant to the Incentive Plan, restricted stock awards, other stock-based awards, or any combination of the foregoing. The Incentive Plan is administered by the board of directors, and initially 5,000,000 Shares were reserved for issuance pursuant to the exercise of awards under the Incentive Plan. The number of shares so reserved automatically adjusts upward on January 1 of each year, so that the number of shares covered by the Incentive Plan is equal to 15% of our issued and outstanding common stock. No shares were issued under the plan during the years ended December 31, 2022 and 2021. After the restructuring in February 2021, and as of December 31, 2022, there were 3,625,000 shares issued and 331,867 available for issuance under the plan.
Net Loss Per Share
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. 36,667 shares underlying convertible preferred stock were excluded from the computation of diluted loss per share for the year ended December 31, 2022. 36,667 shares underlying convertible preferred stock and 520,000 shares of common stock underlying common stock warrants were excluded from the computation of diluted loss per share for year ended December 31, 2021, 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. Management has added $0 and $1,383,380 to the allowance at December 31, 2022 and 2021.
Recently Issued 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 - LOANS RECEIVABLE, NET
Loans Receivable - Related Parties
Loan Agreement with Partners South Holdings LLC (Revolving Line of Credit)
On August 28, 2017, the Company entered into a loan agreement with Partners South Holdings LLC (“Borrower”), which is owned by Timothy R. Fussell, former President, Chairman of the Board and a director of the Company, for a revolving line of credit in the maximum principal sum of $3,600,000 for the purpose of financing real property construction costs and working capital needs. On January 28, 2020, this loan was amended to reduce the loan amount to $657,500. The loan is secured in full by a first position lien on any and all Real Property in which the Borrower has any interest in for such purposes. The maturity date of the loan is August 31, 2022 at which time the entire principal balance of the loan plus accrued interest thereon is due and payable. The annual fixed interest rate on the loan is 3.5% and all interest receivables are due at maturity. As of December 31, 2020, the amount of $477,500 had been advanced on the loan. The origination fees of $180,000 due to the Company have been added to the balance due on the loan and recorded as a discount against the loan to be amortized into income through the maturity date. During the years ended December 31, 2021, the Company recognized $36,000 of the origination fees, which are carried at $131,578 as of December 31, 2021. The Company also incurred loan issuance costs of $420,000, which were recorded as deferred issuance costs to be amortized as a reduction of interest income through the maturity date. During the years ended December 31, 2021, the Company recognized $47,068 of the deferred issuance costs, which are carried at $56,073 as of December 31, 2021. As of December 31, 2022 and 2021, the gross loan receivable balance is $0. The Company has established a full reserve against this loan until such time as the loan may be repaid.
Loan Agreement with Partners South Properties Corporation (Revolving Line of Credit)
On August 28, 2017, the Company entered into a loan agreement with Partners South Properties Corporation (“Borrower”), which is owned by Timothy R. Fussell, President, Chairman of the Board and a director of the Company, for a revolving line of credit in the maximum principal sum of $5,000,000 for the purpose of financing real property construction costs and working capital needs. On November 2, 2019, this loan was amended to reduce the loan amount to $250,000. The loan is secured in full by a first position lien on any and all Real Property in which the Borrower has any interest in for such purposes. The maturity date of the loan is August 31, 2022 at which time the entire principal balance of the loan plus accrued interest thereon is due and payable. The annual fixed interest rate on the loan is 3.5% and all interest receivables are due at maturity. As of December 31, 2022 and 2021, the gross loan receivable balance is $250,000. The Company has established a full reserve against this until loan until such time as the loan may be repaid.
The following is a summary of loans receivable - related parties as of December 31, 2022 and 2021:
Loans Receivable, Net - Schedule of Mortgage Receivables
Mortgage Receivables
Principal Amount Outstanding $ 907,500 $ 907,500
Unamortized Issuance Costs 56,073 56,073
Unaccreted origination fees (23,424 ) 23,424 )
Allowance (940,149 ) (940,149 )
Net Carrying Value $ - $ -
Loans Receivable
Paris Med
On May 2, 2018, the Company and Paris Med entered into agreements, pursuant to which Paris Med agreed to provide project financing in the amount of $158,216,541, to an unrelated third party consisting of three notes as follows:
1) Construction financing in the amount of $90,204,328, maturing in 10 years on June 30, 2028, including the construction period, and accruing interest at an annual rate of 5.5% during the construction period, and 4.5% upon conversion to a permanent loan. All interest receivables are due at maturity. As of December 31, 2019, Paris Med has made $558,000 of advances pursuant to the construction loan. The Company received loan origination fees, in the amount of $92,400, which is presented net of the underlying loan advances on the accompanying consolidated balance sheets and amortized into income over the terms of the underlying loans. During the years ended December 31, 2021 and 2020, the Company amortized $9,160 and $9,160 of the discount. As of December 31, 2021 and 2020, respectively, the loan is carried at $496,084 and $486,924, net of unamortized discount of $61,916 and $71,076. The Company has established a full reserve against this loan until such time as the loan may be repaid.
2) Equipment financing note in the amount of $24,715,986, payable monthly, accruing interest at an annual rate of 5.75%, and having terms approximating the lives of the underlying equipment. As of December 31, 2021 and 2020, no amounts have been advanced pursuant to the equipment financing note.
3) Operations financing, business line of credit in the amount of $23,932,625, accruing interest at an annual rate of 5.75%, maturing in 10 years. As of December 31, 2021 and 2020, no amounts have been advanced pursuant to the line of credit.
4) The notes are secured by the assignment of leases and fixed assets related to the project.
The Company has established a full reserve against this loan until such time as the loan is repaid.
The following is a summary of loans receivable as of December 31, 2022 and 2021.:
Loans Receivable, Net - Schedule of Loans Receivables
Loans Receivable
Principal Amount Outstanding $ 558,000 $ 558,000
Unaccreted Discounts (61,916 ) (61,916 )
Net Carrying Value $ 496,084 $ 486,924
Interest receivable 197,147 197,147
Less reserve (693,231 ) (693,231 )
Net Carrying Value $ - $ -
NOTE 5 - PROVISION FOR INCOME TAXES
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance. As of December 31, 2022 and 2021 the Company had a net operating loss carry-forward of approximately $4,818,374 and $2,753,651. Net operating loss carry-forwards incurred before 2018 generally expire twenty years from the date the loss was incurred, beginning in 2023, and losses incurred after 2018 are subject to annual limitations.
The Company is subject to United States federal and state income taxes at an approximate blended state and federal rate of 29%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:
December 31,
December 31,
Statutory rates (federal and state) 29 % 29 %
Permanent differences 0 % 0 %
Valuation allowance change and change in tax rate (29 )% (29 )%
Effective income tax rate 0 % 0 %
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred income tax assets and liabilities at December 31, 2022 and 2021 are as follows:
December 31,
December 31,
Net operating loss carryforward 1,397,328 1,397,328
Valuation allowance (1,397,328 ) (1,397,328 )
Net Deferred income tax asset - -
The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. The Company’s valuation allowance increased by $0 and $598,769 during the years ended December 31, 2022 and 2021. When circumstances change and which cause a change in management’s judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.
Current law limits the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Alpha Mortgage Notes, LLC
In exchange for its 90% interest in the Alpha Mortgage Notes, LLC, ("SPV") the Company is required to contribute 4,015,667 shares of common stock to be used by the SPV for the purchase of performing notes for the SPV. The SPV is required to make monthly distributions to its 10% member of $10,000 up until the time a purchase of the performing notes are made, and upon the acquisition of the six mortgages specified in the SPV's operating agreement, monthly payments of $150,000 per month from gross interest income received for 30 months; and 20% of any other future note purchases. The 10% partner will also receive an amount equal to 1% of the principal amounts received on each loan. During the years ended December 31, 2022 and 2021, the Company accrued distributions of $120,000 and $120,000. As of December 31, 2022 and 2021, $460,000 and $340,000 of minimum distributions were owed to the 10% partner.
Litigation
Judgements and Settlements Payable
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.
Judicial Ruling
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.
The Company is not aware of any additional litigation.
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.
During the year ended December 31, 2022 and 2021, the Company paid advisory fees of $0 and $75,500 to the third party advisor for services related to identifying potential investors, which is included in professional fees in the accompanying consolidated statement of operations.
NOTE 7 - RELATED PARTY TRANSACTIONS
Loans receivable
The Company has extended lines of credit and loans to related parties. See Note 3.
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. Omega is to provide services related to facilitating the introduction of potential investors for compensation of no less than $150,000 per year, not to exceed $300,000 per year. The agreement remains in effect until cancelled by Omega. During the years ended December 31, 2022 and 2021, the company accrued management fees of $150,000 and $150,000, which remain unpaid as of December 31, 2022.
Note Payable - related party
On October 14, 2020, the Company issue a promissory note in the amount of $175,000 to Partners South, Holdings, LLC. The note bears interest at an annual rate of 10% and matured on December 15, 2020. This note is currently in default, incurring interest at the default rate of 15% annually. As of December 31, 2022 and 2021, the Company recorded $231,746 and $205,496 in Notes payable - related party.
Note Payable - short term
Note Payable - Unrelated Party
On June 29, 2022, the Company issued a promissory note in the amount of $35,000 to an unrelated party. The note bears interest at an annual rate of 24% and matured on December 29, 2022. This note is currently in default, incurring interest at the default rate of 3.5% monthly on the unpaid balance. As of December 31, 2022 and 2021, the Company recorded $39,279 and $0 in Notes payable - short term.
NOTE 8 - STOCKHOLDERS’ EQUITY
Temporary Equity
On September 20, 2017, 166,667 shares of common stock were issued at a value of $15.00 per share to one company in exchange for cash of $2,500,000. Pursuant to the subscription agreement, and amendments, the investor has the right to require the Company to repurchase the shares for $2.5 million at any time through September 2020, which was initially December 2017. Accordingly, the amounts received are presented as a temporary equity as of December 31, 2019 and 2018. In December 2017, the Company negotiated and amended its agreement with the investor to extend this right through May 15, 2018. As part of this extension, the investor was granted warrants to purchase 170,000 shares of common stock for an exercise price of $15.00 per share over a five-year term. Because the shares are classified as a temporary equity, and the investors rights to require repurchase of the shares initially expired in 2017 the Company recorded the fair value of these warrants were recorded as a discount against the proceeds to be amortized as interest expense through February 2018, the initial extension date. In March 2018, the Company entered into a third amendment to the subscription agreement, extending the option period to May 15, 2018. The option was further extended in May and June 2018.
As consideration for the extensions, the Company’s parent company, Omega Commercial Finance Corporation, agreed to issue to the investor, 65,000 shares of its Series Z preferred stock, and the Company agreed to reimburse the investor for $21,894 of legal fees incurred related to the extension. The Company estimated the fair value of the Series Z preferred stock based on recent sales for cash, and recorded additional discounts of $184,394, including the accrued legal fees, against the common stock to be amortized into interest expense through the extended expiration of the option in May 2018. In October 2018, the option period was further extended to November 19, 2018. As consideration for the extension, the Company agreed to allow the investor to direct the investment of the restricted cash into one more investment types, such stock, money market accounts or similar investments. The investor was also granted the right to withdrawal any restricted cash in excess of $2.5 million. In November 2018, the option was further extended to January 12, 2019. In March 2019, the option period was extended to June 2019. In June 2019, the option period was extended to September 27, 2019. In September 2019, the option period was extended to February 2020. In January 2020, the option period was extended to September 2020. During the year ended December 31, 2018, the Company amortized the remaining $1,109,113 of the discount. As of December 31, 20 2019, the cash was held in an escrow account and the shares are carried at $2,500,000. During the year ended December 31, 2020, the investor exercised its right to require the Company to repurchase the shares for $2.5 million and $2.5 million was released from escrow and returned to the investor in exchange for the common stock.
On November 27, 2017, 16,667 shares of 2018 Convertible Preferred stock were issued at a value of $15.00 per share to one entity in exchange for cash of $250,000. The shares have 350,000 warrants attached, each warrant entitling the holder to one additional share with an exercise date of up to 5 years from the issuance date of the shares. The preferred stock is mandatorily redeemable 10 years after issuance. The Company allocated $236,897 the proceeds from the sale of the preferred stock to the warrants, which was recorded as a discount against the preferred stock and is to be amortized as a deemed dividend through the 10-year redemption date. The balance of the preferred stock reflected in temporary equity as of December 31, 2022 and 2021, is $434,098 and $410,410, net of unamortized discount of $116,481 ad $140,166.
Common Stock
During the year ended December 31, 2019, the Company sold 57,067 shares for gross proceeds of $946,005. In July 2019, the Company agreed to amend one of the subscription agreements and cancelled the sale 6,000 shares for cash consideration of $90,000.
In order to provide the Company with an improved capital structure effective June 30, 2021, the Company implemented a capital restructuring pursuant to which:
· Omega, our principal stockholder exchanged 28,600,999 shares of our common stock it held for 100,000 shares of newly designated Series AA Preferred Stock; and
· Holders of an additional 1,965,000 shares of our common stock contributed such shares to the capital of the Company.
Each share of Series AA Preferred Stock is convertible at the option of the holder into ten (10) shares of the Company’s common stock for an aggregate of 1,000,000 shares of common stock, subject to adjustment for stock splits, stock dividends and similar transactions. The Series AA Preferred Stock is entitled to share ratably in dividends declared on the Company’s common stock on an “as converted” basis.
Each share of Series AA Preferred Stock is entitled to 450 votes on each matter presented to stockholders (subject to adjustment for stock splits, stock dividends and similar transactions). Shares of Series AA Preferred Stock vote together with shares of our common stock as a single class, except as required by Delaware law. Accordingly, Omega, as the holder of the Series AA Preferred Stock, effectively maintains control over the Company’s affairs following implementation of the capital restructuring and the consummation of this Offering. Alpha’s current issued and outstanding common stock is 9,724,401.
Preferred Stock
During the year ended December 31, 2019, the Company sold 1,000 shares of Series A Convertible Preferred Stock for cash consideration of $15,000
Capital Contributions
Omega Commercial Finance Corp.
During the years ended December 31, 2022 and 2021, Omega Commercial Finance Corp, the Company’s parent company, made capital contributions to the Company totaling $73,650 and $388,486.
Common Stock Warrants
As of December 31, 2021, there were warrants outstanding to purchase 520,000 shares for an exercise price of $15.00 over five years. There has been no warrant activity during the years ended December 31, 2022 and 2021, and all warrants have expired.
As of December 31, 2022 there are no outstanding warrants.
As of December 31, 2022, there has been no warrant activity during the year and all outstanding warrants have expired.
NOTE 9 - SUBSEQUENT EVENTS
Subsequent to our year end, Timothy Fussill filed for bankruptcy in the Middle District of Florida.
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.
(The previous auditor has not consented to our inclusion in the 2022 filing)
Alpha Investment Inc.
Consolidated Balance Sheets
December 31,
ASSETS
Current Assets:
Cash $ 588 $ 11,624
Total Current Assets 11,624
Other Assets:
Loans receivable - related party, net of discounts and allowances - 737,389
Loans receivable, net of discounts and allowances - 486,924
Interest receivable net of allowances - 116,743
Total Other Assets - 1,341,056
Property and Equipment, net:
Furniture and Equipment, net
Total Property and Equipment, net
TOTAL ASSETS $ 904 $ 1,353,312
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 310,726 $ 142,796
Accrued management fees - related party 300,000 150,000
Distribution payable 340,000 220,000
Notes payable - related party 205,497 178,671
Total Current Liabilities 1,156,223 691,467
Payroll Protection Plan Loan - 20,927
Total Liabilities 1,156,223 712,394
Temporary Equity:
Series 2018 Convertible Preferred Stock ($15.00 par value), net of discounts of $140,169 and $163,854; 100,000 shares authorized; 36,667 and 36,667 issued and outstanding 410,410 386,722
Stockholders' Equity:
Preferred stock ($0.0001 par value), 20,000,000 shares authorized:
Series A Convertible Preferred Stock ($15.00 par value), 100,000 shares authorized; 1,167 and 1,167 shares issued and outstanding 17,505 17,505
Series AA Convertible Preferred stock ($0.0001 par value), 100,000 shares authorized, 100,000 and -0- issued and outstanding -
Common stock, ($0.0001 par value), 100,000,000 shares authorized; 9,724,401 and 40,290,400 shares issued and outstanding 4,030
Additional paid-in capital 5,939,250 5,547,717
Accumulated deficit (7,274,955 ) (5,150,676 )
Total Alpha Investment Inc. Equity (1,317,217 ) 418,576
Non-controlling interest (248,512 ) (164,380 )
Total Stockholders' Equity (1,565,729 ) 254,196
TOTAL LIABILITIES, TEMPORARY AND STOCKHOLDERS' EQUITY $ 904 $ 1,353,312
The accompanying notes are an integral part of these consolidated financial statements.
Alpha Investment Inc.
Consolidated Statements of Operations
Year Ended December 31,
Income:
Net investment income - related parties $ 33,830 $ 16,688
Net investment income - -
Total Income 33,830 16,688
General and Administrative Expenses:
Bad debt expense 1,374,886 -
Management fee - related party 150,000 150,000
Administrative expenses 283,296 630,480
Professional fees 284,523 292,441
Total General and Administrative Expenses 2,092,705 1,072,921
Loss from Operations (2,058,875 ) (1,056,233 )
Other Income (Expense):
Other income 20,927 -
Interest expense, net (26,775 ) (12,983 )
Total Other Income (Expense), net (5,848 ) (12,983 )
Net Loss Including Non-controlling Interests $ (2,064,723 ) $ (1,069,216 )
Amortization of discounts of 2018 Convertible Preferred Stock (23,688 ) (23,689 )
Net Income Attributable to Non-controlling Interests (35,868 ) (38,042 )
Net Loss $ (2,124,279 ) $ (1,130,947 )
Basic and Diluted Loss Per Share $ (0.16 ) $ (0.03 )
Weighted Average Outstanding Common Shares Basic and Diluted 13,493,188 40,290,400
The accompanying notes are an integral part of these consolidated financial statements.
Alpha Investment Inc
Consolidated Statements of Stockholders' Equity (Deficit)
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, 2019 40,290,400 $ 4,030 1,167 $ 17,505 - $ - $ 5,110,717 $ (82,422 ) $ (4,019,729 ) $ 1,030,101
Stockholder contribution - - - - - - 437,000 - - 437,000
Distributions due to non-controlling interest - - - - - - - (120,000 ) - (120,000 )
Amortization of discount on preferred stock - - - - - - - - (23,688 ) (23,688 )
Net loss - - - - - - - 38,042 (1,107,259 ) (1,069,217 )
Balance, December 31, 2020 40,290,400 $ 4,030 1,167 $ 17,505 - $ - $ 5,547,717 $ (164,380 ) $ (5,150,676 ) $ 254,196
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, 2020
40,290,400
$ 4,030
1,167
$ 17,505
-
$ -
$ 5,547,717
$ (164,380 )
$ (5,150,676 )
$ 254,196
Stock exchange
(30,565,999 )
(3,057 )
-
-
100,000
3,047
-
-
-
Stockholder contribution
-
-
-
-
-
-
388,486
-
-
388,486
Distributions due to non-controlling interest
-
-
-
-
-
-
-
(120,000 )
-
(120,000 )
Amortization of discount on preferred stock
-
-
-
-
-
-
-
-
(23,688 )
(23,688 )
Net loss
-
-
-
-
-
-
-
35,868
(2,100,591 )
(2,064,723 )
Balance, December 31, 2021
9,724,401
$
1,167
$ 17,505
100,000
$
$ 5,939,250
$ (248,512 )
$ (7,274,955 )
$ (1,565,729 )
The accompanying notes are an integral part of these consolidated financial statements.
Alpha Investment Inc
Consolidated Statements of Cash Flows
Year Ended December 31,
Cash Flows from Operating Activities:
Net loss $ (2,064,723 ) $ (1,069,216 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation Expense
Bad debt expense 1,374,886 -
Accretion of origination fee income 38,080 140,050
Amortization of deferred loan costs - -
Payroll protection loan forgiveness (20,927 ) -
Changes in operating assets and liabilities:
Decrease in interest receivable (71,910 ) (52,535 )
Increase in accrued management fees - related party 150,000 150,000
Increase (decrease) in accounts payable and accrued expenses 167,929 105,475
Increase in notes payable - related party 26,827 178,671
Net cash used in operating activities (399,522 ) (547,182 )
Cash Flows from Investing Activities:
Net cash provided by investing activities - -
Cash Flows from Financing Activities:
Redemption of common stock - (2,500,000 )
Proceeds from payroll protection loan
20,927
Proceeds from stockholder contribution 388,486 437,000
Net cash provided by (used in) financing activities 388,486 (2,042,073 )
Net increase (decrease) in cash (11,036 ) (2,589,255 )
Cash - beginning of year 11,624 2,600,879
Cash - end of year $ 588 $ 11,624
Supplemental Disclosure of Cash Flow Information:
Cash paid during year for:
Interest $ - $ -
Income Taxes $ - $ -
Schedule of Non-Cash Investing and Financing Activities:
Distributions due to non-controlling interest $ 120,000 $ 120,000
Amortization of discount on preferred stock $ 23,688 $ 23,689
PPP loan forgiveness $ (20,927 ) $ -
The accompanying notes are an integral part of these consolidated financial statements.
Alpha Investment Inc.
Notes to the Consolidated Financial Statements
Years Ended December 31, 2021 and 2020
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Corporate History
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 January 31, 2019, the Company, through Jersey Walk Phase I, LLC, entered into a Sale of Membership Interest Agreement (the “Purchase Agreement”) with CMT Developers LLC (“CMT”). Pursuant to the Purchase Agreement, the Company acquired 100% of CMT’s membership interests, in exchange for the issuance to CMT of 3,000,000 shares of common stock. During the due diligence on the refinancing of the property, the Company learned that certain of the representations and warranties of CMT in the Purchase Agreement with respect to the property were incorrect in various material respects. Based on the foregoing, effective June 7, 2019, the Company rescinded the Purchase Agreement in accordance with its terms and the 3,000,000 shares of common stock were returned to the Company. As of June 7, 2019, the Company deconsolidated CMT, recognizing a gain on deconsolidation of $316,774. The assets, liabilities and equity related to CMT, resulting in the gain on deconsolidation are summarized as follows:
Note Payable $ 15,500,000
Accrued Interest 232,500
Deferred Income 576,774
Common Stock Returned 29,222,500
Real Estate (44,800,000 )
Prepaid Expenses (105,000 )
Construction Loan Advances (310,000 )
Gain on Deconsolidation $ 316,774
On March 11, 2019, the Company, through a newly formed LLC or Special Purpose Vehicle “SPV” called Alpha Mortgage Notes I, LLC executed an operating agreement with Alameda Partners LLC. Alameda Partners is a Utah Limited Liability Company which made a capital contribution of $1,000,000, which was paid to the Company, for 10% ownership of the SPV, and will be the managing member. The capital shall be used to implement the strategy of acquiring commercial real estate performing notes and support other related growth initiatives and assets acquisitions for the Company of which is positioning for its listing on the NASDAQ. The Members of Alameda Partners LLC have decades of experiences in the commercial real estate industry as property developers, owners, and managers and currently holds over $50-million in commercial real estate assets. They have been appointed as the Managing Members of the SPV, while ALPC controls and holds 90% ownership. In exchange for its 90% interest in the SPV, the Company is required to contribute 4,015,667 shares of common stock for the purchase of performing notes for the SPV. The special purpose vehicle was organized to acquire the membership interests, develop, own, hold, sell, lease, transfer, exchange, re-lend, manage and operate the underlying assets and conduct activities related thereto the ownership of commercial real estate mortgage notes and REO’s. The initial $1,000,000 was recorded as additional paid in capital on the accompanying consolidated balance sheet. Alameda Partners is entitled to monthly distributions in cash and stock equal to $10,000. For the years ended December 31, 2021 and 2020, the Company has recorded $340,000 and $220,000 of distributions as reductions to non-controlling interest, which has been accrued and included in Distributions Payable on the accompanying consolidated balance sheets as of December 31, 2021 and 2020. As of December 31, 2021 and 2020, Alpha Mortgage Notes I, LLC has not completed any transactions.
On June 2, 2020, the Company acquired a 19% membership interest in Legacy Sand Group, LLC (“Legacy”), which owns real property and mining rights comprised of approximately 1,200 acres that encompass an asset of 110 million tons of Tier 1 Northern White Fracking Sand in Wisconsin. As consideration for the acquisition, the Company issued 3,382 shares of 2020 Convertible Preferred Stock, which is convertible into 3,804,750 shares of the Company’s common stock. The Company recorded its interest in Legacy at the estimated fair value of the preferred stock of $33,323,000.
However, despite using its best efforts, pending Legacy Sand commencing operations and generating revenues, the Company was not been able to sufficiently establish the valuation of the Interest and the Series 2020 Preferred Shares to the satisfaction of its independent registered public accounting firm, in order to allow the Interest to be reflected as an asset on the Company’s balance sheet included in its periodic reports filed with the SEC under the Securities Act of 1934, as amended.
Accordingly, on July 29, 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 used $399,522 and $547,182 in cash in operations, and incurred net losses of $2,064,723 and $1,069,216 during the years ended December 31, 2021 and 2020. The Company has an accumulated deficit of $7,274,955 and $5,150,676 as of December 31, 2021 and 2020, and requires capital for its contemplated operational and marketing activities to take place. The Company's ability to raise additional capital through the future issuances of common stock is unknown. Securing additional financing, the successful development of the Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, Alpha Mortgage Notes I, LLC, which is controlled by the Company through its 90% ownership interest, and Paris Med CP-LLC (“Paris Med”), variable interest entity for which the Company is deemed to be the primary beneficiary, (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.
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.
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 established an allowance of $1,383,380 and $250,000 as of December 31, 2021 and 2020.
Property and Equipment
Property and equipment are stated at cost. Equipment and fixtures are depreciated using the straight-line method over the estimated asset lives, 5 years. As at December 31, 2021 and 2020, the Company recorded $316 and $632 in property and equipment, net of $316 and $316 in accumulated depreciation, and recorded the same in expenses for the corresponding years.
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 consolidated 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 December 31, 2021, tax years since 2014 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 following is a summary of the components of the Company’s net investment income for the years ended December 31, 2021 and 2020:
Interest Income $ 68,278 $ 45,306
Accretion of Loan Origination Fees 36,000 74,523
Reclassification of related party interest total 13,552
Amortization of Loan Issuance Costs (84,000 ) (103,141 )
Net Investment Income $ 33,830 $ 16,688
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 using the cash basis method of accounting. Additionally, the Company generally does not resume recognition of interest income once it has been suspended.
Variable Interest Entity
The Company holds a 10% interest in Paris Med, of which the remaining 90% interest is held by the Company’s parent company. Through December 31, 2021, the Company has provided 100% of the funding to Paris Med, which has provided a construction loan to a third party. This loan receivable is the sole asset of Paris Med. The Company determined that Paris Med was a variable interest entity based on various qualitative and quantitative factors including but not limited to: 1) financing of Paris Med’s sole asset was received by the Company, which is disproportionate to the Company’s ownership interest and 2) the Company and Omega, a related party, organized the entity for the purpose of facilitating the Company’s activities. As of December 31, 2021 and 2020, the Company is considered the primary beneficiary because it has provided substantially all of its financial support and is the only party at risk. As of December 31, 2021 and 2020, Paris Med has total assets of $558,000, consisting solely of advances made pursuant to its third-party construction loan agreement, and had no liabilities. 100% of the funding for the sole asset was provided by the Company and such amounts are eliminated in consolidation. See Note 4. For the years ended December 31, 2021 and 2020, Paris Med had no activity other than accruing interest on outstanding principal. The Company will evaluate its investments in Paris Med each reporting period to determine if it is still the primary beneficiary, and if no longer considered the primary beneficiary, deconsolidate Paris Med in the period in which circumstances change or events occur causing a change in its assessment. The Company has not attributed any of its net loss or equity to non-controlling interest because Paris Med’s sole asset is amounts owed to the Company, which is eliminated in consolidation, and there was no material income earned or losses incurred to date by Paris Med.
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.
Incentive Plan
The Company’s Incentive Plan provides for equity incentives to be granted to its employees, executive officers or directors or to key advisers or consultants. Equity incentives may be in the form of stock options with an exercise price not less than the fair market value of the underlying Shares as determined pursuant to the Incentive Plan, restricted stock awards, other stock-based awards, or any combination of the foregoing. The Incentive Plan is administered by the board of directors, and initially 5,000,000 Shares were reserved for issuance pursuant to the exercise of awards under the Incentive Plan. The number of shares so reserved automatically adjusts upward on January 1 of each year, so that the number of shares covered by the Incentive Plan is equal to 15% of our issued and outstanding common stock. No shares were issued under the plan during the years ended December 31, 2021 and 2020. After the restructuring in February 2021, and as of December 31, 2021, there were 3,625,000 shares issued and 331,867 available for issuance under the plan.
Net Loss Per Share
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. 36,667 shares underlying convertible preferred stock and 520,000 shares of common stock underlying common stock warrants were excluded from the computation of diluted loss per share for year ended December 31, 2021 and 2020, 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. Management has established an allowance of $1,383,380 and $250,000 as of December 31, 2021 and 2020.
Recently Issued Accounting Pronouncements
Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825- 10), Recognition and Measurement of Financial Assets and Financial Liabilities. The provisions of the update require equity investments to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment. The update also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. It also eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities, and eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet. ASU No. 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. It also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The update requires separate presentation of financial assets and financial liabilities by category and form on the balance sheet or the accompanying notes to the financial statements. In addition, the update clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The adoption of this ASU did not have a material impact on the Company’s financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), Conforming Amendments Related to Leases. This ASU amends the codification regarding leases in order to increase transparency and comparability. The ASU requires companies to recognize lease assets and liabilities on the statement of condition and disclose key information about leasing arrangements. A lessee would recognize a liability to make lease payments and a right-of-use asset representing its right to use the leased asset for the lease term. The new lease guidance was effective for fiscal years beginning after December 15, 2018, and did not have a material effect on the Company’s financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments introduce an impairment model that is based on expected credit losses (“ECL”), rather than incurred losses, to estimate credit losses on certain types of financial instruments (ex. loans and held to maturity securities), including certain off-balance sheet financial instruments (ex. commitments to extend credit and standby letters of credit that are not unconditionally cancelable). The ECL should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Financial instruments with similar risk characteristics may be grouped together when estimating the ECL. The ASU also amends the current available for sale security impairment model for debt securities whereby credit losses relating to available for sale debt securities should be recorded through an allowance for credit losses. The amendments will be applied through a modified retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently planning for the implementation of this accounting standard. It is too early to assess the impact this guidance will have on the Company’s financial statements.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify the proper classification for certain cash receipts and cash payments, including clarification on debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, among others. The Company adoption of this amendment did not have a material impact on the Company’s Financial Statements.
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 - LOANS RECEIVABLE, NET
Loans Receivable - Related Parties
Loan Agreement with Partners South Holdings LLC (Revolving Line of Credit)
On August 28, 2017, the Company entered into a loan agreement with Partners South Holdings LLC (“Borrower”), which is owned by Timothy R. Fussell, former President, Chairman of the Board and a director of the Company, for a revolving line of credit in the maximum principal sum of $3,600,000 for the purpose of financing real property construction costs and working capital needs. On January 28, 2020, this loan was amended to reduce the loan amount to $657,500. The loan is secured in full by a first position lien on any and all Real Property in which the Borrower has any interest in for such purposes. The maturity date of the loan is August 31, 2022 at which time the entire principal balance of the loan plus accrued interest thereon is due and payable. The annual fixed interest rate on the loan is 3.5% and all interest receivables are due at maturity. As of December 31, 2020, the amount of $477,500 had been advanced on the loan. The origination fees of $180,000 due to the Company have been added to the balance due on the loan and recorded as a discount against the loan to be amortized into income through the maturity date. During the years ended December 31, 2021 and 2020, the Company recognized $36,000 and $36,217 of the origination fees, which are carried at $131,578 and $167,578 as of December 31, 2021 and 2020. The Company also incurred loan issuance costs of $420,000, which were recorded as deferred issuance costs to be amortized as a reduction of interest income through the maturity date. During the years ended December 31, 2021 and 2020, the Company recognized $47,068 and $103,141 of the deferred issuance costs, which are carried at $56,073 and $101,196 as of December 31, 2021 and 2020. As of December 31, 2021 and 2020, the gross loan receivable balance is $0 and $598,156. The Company has established a full reserve against this loan until such time as the loan is repaid.
Loan Agreement with Partners South Properties Corporation (Revolving Line of Credit)
On August 28, 2017, the Company entered into a loan agreement with Partners South Properties Corporation (“Borrower”), which is owned by Timothy R. Fussell, President, Chairman of the Board and a director of the Company, for a revolving line of credit in the maximum principal sum of $5,000,000 for the purpose of financing real property construction costs and working capital needs. On November 2, 2019, this loan was amended to reduce the loan amount to $250,000. The loan is secured in full by a first position lien on any and all Real Property in which the Borrower has any interest in for such purposes. The maturity date of the loan is August 31, 2022 at which time the entire principal balance of the loan plus accrued interest thereon is due and payable. The annual fixed interest rate on the loan is 3.5% and all interest receivables are due at maturity. As of December 31, 2021, and 2020, the gross loan receivable balance is $250,000. The Company has established a full reserve against this until loan until such time as the loan is repaid.
The following is a summary of loans receivable - related parties as of December 31, 2021 and 2020:
Principal Amount Outstanding $ 907,500 $ 907,500
Unamortized Issuance Costs 56,073 101,196
Unaccreted origination fees (23,424 ) (21,307 )
Allowance (940,149 ) (250,000 )
Net Carrying Value $ - $ 737,389
Loans Receivable
Paris Med
On May 2, 2018, the Company and Paris Med entered into agreements, pursuant to which Paris Med agreed to provide project financing in the amount of $158,216,541, to an unrelated third party consisting of three notes as follows:
1) Construction financing in the amount of $90,204,328, maturing in 10 years on June 30, 2028, including the construction period, and accruing interest at an annual rate of 5.5% during the construction period, and 4.5% upon conversion to a permanent loan. All interest receivables are due at maturity. As of December 31, 2019, Paris Med has made $558,000 of advances pursuant to the construction loan. The Company received loan origination fees, in the amount of $92,400, which is presented net of the underlying loan advances on the accompanying consolidated balance sheets and amortized into income over the terms of the underlying loans. During the years ended December 31, 2021 and 2020, the Company amortized $9,160 and $9,160 of the discount. As of December 31, 2021 and 2020, respectively, the loan is carried at $496,084 and $486,924, net of unamortized discount of $61,916 and $71,076. The Company has established a full reserve against this loan until such time as the loan is repaid.
2) Equipment financing note in the amount of $24,715,986, payable monthly, accruing interest at an annual rate of 5.75%, and having terms approximating the lives of the underlying equipment. As of December 31, 2021 and 2020, no amounts have been advanced pursuant to the equipment financing note.
3) Operations financing, business line of credit in the amount of $23,932,625, accruing interest at an annual rate of 5.75%, maturing in 10 years. As of December 31, 2021 and 2020, no amounts have been advanced pursuant to the line of credit.
4) The notes are secured by the assignment of leases and fixed assets related to the project.
The Company has established a full reserve against this loan until such time as the loan is repaid.
The following is a summary of loans receivable as of December 31, 2021 and 2020:
Principal Amount Outstanding $ 558,000 $ 558,000
Unaccreted Discounts (61,916 ) (71,076 )
Net Carrying Value $ 496,084 $ 486,924
Less reserve (496,084 ) -
Net Carrying Value $ - $ 486,924
NOTE 5 - PROVISION FOR INCOME TAXES
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance. As of December 31, 2021 and 2020 the Company had a net operating loss carry-forward of approximately $4,818,374 and $2,753,651. Net operating loss carry-forwards incurred before 2018 generally expire twenty years from the date the loss was incurred, beginning in 2023, and losses incurred after 2018 are subject to annual limitations.
The Company is subject to United States federal and state income taxes at an approximate blended state and federal rate of 29%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:
December 31,
December 31,
Statutory rates (federal and state) 29 % 29 %
Permanent differences 0 % 0 %
Valuation allowance change and change in tax rate (29 )% (29 )%
0 % 0 %
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred income tax assets and liabilities at December 31, 2021 and 2020 are as follows:
December 31,
December 31,
Net operating loss carryforward 1,397,328 798,559
Valuation allowance (1,397,328 ) (798,559 )
Net Deferred income tax asset - -
The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. The Company’s valuation allowance increased by $598,769 and $316,478 during the years ended December 31, 2021 and 2020. When circumstances change and which cause a change in management’s judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.
Current law limits the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Alpha Mortgage Notes, LLC
In exchange for its 90% interest in the Alpha Mortgage Notes, LLC, ("SPV") the Company is required to contribute 4,015,667 shares of common stock to be used by the SPV for the purchase of performing notes for the SPV. The SPV is required to make monthly distributions to its 10% member of $10,000 up until the time a purchase of the performing notes are made, and upon the acquisition of the six mortgages specified in the SPV's operating agreement, monthly payments of $150,000 per month from gross interest income received for 30 months; and 20% of any other future note purchases. The 10% partner will also receive an amount equal to 1% of the principal amounts received on each loan. During the years ended December 31, 2021 and 2020, the Company accrued distributions of $120,000 and $120,000. As of December 31, 2021 and 2020, $340,000 and $220,000 of minimum distributions were owed to the 10% partner.
Litigation
The Company is not presently involved in any litigation.
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. During the year ended December 31, 2021 and 2020, the Company paid advisory fees of $75,500 and $35,000 to the third party advisor for services related to identifying potential investors, which is included in professional fees in the accompanying consolidated statement of operations.
NOTE 7 - RELATED PARTY TRANSACTIONS
Loans receivable
The Company has extended lines of credit and loans to related parties. See Note 3.
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. Omega is to provide services related to facilitating the introduction of potential investors for compensation of no less than $150,000 per year, not to exceed $300,000 per year. The agreement remains in effect until cancelled by Omega. During the year ended December 31, 2019, Omega Commercial Finance Corp, the Company’s principal stockholder, and Omega Streets Capital, an affiliate entity, was paid a combined $369,680 in management and consulting fees pursuant to a corporate governance management agreement executed on June 1, 2017. The fee paid in 2019 is for services that were rendered throughout 2019. During the years ended December 31, 2021 and 2020, the company accrued management fees of $150,000 and $150,000, which remain unpaid as of December 31, 2021.
Note Payable
On October 14, 2020, the Company issue a promissory note in the amount of $175,000 to Partners South, Holdings, LLC. The note bears interest at an annual rate of 10% and matured on December 15, 2020. As of December 31, 2021 and 2020, the Company recorded $205,496 and $178,671 in Notes payable - related party.
NOTE 8 - STOCKHOLDERS’ EQUITY
Temporary Equity
On September 20, 2017, 166,667 shares of common stock were issued at a value of $15.00 per share to one company in exchange for cash of $2,500,000. Pursuant to the subscription agreement, and amendments, the investor has the right to require the Company to repurchase the shares for $2.5 million at any time through September 2020, which was initially December 2017. Accordingly, the amounts received are presented as a temporary equity as of December 31, 2019 and 2018. In December 2017, the Company negotiated and amended its agreement with the investor to extend this right through May 15, 2018. As part of this extension, the investor was granted warrants to purchase 170,000 shares of common stock for an exercise price of $15.00 per share over a five-year term. Because the shares are classified as a temporary equity, and the investors rights to require repurchase of the shares initially expired in 2017 the Company recorded the fair value of these warrants were recorded as a discount against the proceeds to be amortized as interest expense through February 2018, the initial extension date. In March 2018, the Company entered into a third amendment to the subscription agreement, extending the option period to May 15, 2018. The option was further extended in May and June 2018. As consideration for the extensions, the Company’s parent company, Omega Commercial Finance Corporation, agreed to issue to the investor, 65,000 shares of its Series Z preferred stock, and the Company agreed to reimburse the investor for $21,894 of legal fees incurred related to the extension. The Company estimated the fair value of the Series Z preferred stock based on recent sales for cash,
and recorded additional discounts of $184,394, including the accrued legal fees, against the common stock to be amortized into interest expense through the extended expiration of the option in May 2018. In October 2018, the option period was further extended to November 19, 2018. As consideration for the extension, the Company agreed to allow the investor to direct the investment of the restricted cash into one more investment types, such stock, money market accounts or similar investments. The investor was also granted the right to withdrawal any restricted cash in excess of $2.5 million. In November 2018, the option was further extended to January 12, 2019. In March 2019, the option period was extended to June 2019. In June 2019, the option period was extended to September 27, 2019. In September 2019, the option period was extended to February 2020. In January 2020, the option period was extended to September 2020. During the year ended December 31, 2018, the Company amortized the remaining $1,109,113 of the discount. As of December 31, 20 2019, the cash was held in an escrow account and the shares are carried at $2,500,000. During the year ended December 31, 2020, the investor exercised its right to require the Company to repurchase the shares for $2.5 million and $2.5 million was released from escrow and returned to the investor in exchange for the common stock.
On November 27, 2017, 16,667 shares of 2018 Convertible Preferred stock were issued at a value of $15.00 per share to one entity in exchange for cash of $250,000. The shares have 350,000 warrants attached, each warrant entitling the holder to one additional share with an exercise date of up to 5 years from the issuance date of the shares. The preferred stock is mandatorily redeemable 10 years after issuance. The Company allocated $236,897 the proceeds from the sale of the preferred stock to the warrants, which was recorded as a discount against the preferred stock and is to be amortized as a deemed dividend through the 10-year redemption date. The balance of the preferred stock reflected in temporary equity as of December 31, 2021 and 2020, is $410,410 and $386,722, net of unamortized discount of $140,169 and $163,854, respectively.
Common Stock
During the year ended December 31, 2019, the Company sold 57,067 shares for gross proceeds of $946,005. In July 2019, the Company agreed to amend one of the subscription agreements and cancelled the sale 6,000 shares for cash consideration of $90,000.
In February 2021, Omega Commercial Finance Corporation and holder of Common Shares of Alpha retired 31,070,000 of its Common Shares to treasury, in exchange for 100,000 shares of Series AA Preferred Stock (See below). Alpha’s current issued and outstanding common stock is 9,724,401.
Preferred Stock
During the year ended December 31, 2019, the Company sold 1,000 shares of Series A Convertible Preferred Stock for cash consideration of $15,000
Series AA Convertible Preferred Issuance
In February, 2021, Alpha issued 100,000 Series AA Convertible Preferred Shares to Omega Commercial Finance Corporation which represents 100% of the issued and outstanding Series AA Convertible Preferred Shares. Each share of Series AA Preferred Stock shall entitle the holder thereof to four hundred fifty (450) votes on all matters submitted to a vote of the stockholders of the Company. Each share of Series AA Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, into ten (10) fully paid and non-assessable shares of Common Stock (the “Conversion Amount”).
Capital Contributions
During the years ended December 31, 20211 and 2020, Omega Commercial Finance Corp, The Company’s parent company, made capital contributions to the Company totaling $388,486 and $437,000.
Common Stock Warrants
As of December 31, 2021, there are warrants outstanding to purchase 520,000 shares for an exercise price of $15.00 over five years. There has been no warrant activity during the years ended December 31, 2021 and 2020.
The following is a summary of warrants outstanding as of December 31, 2021:
Exercise Price
# of Shares
Expiration
$ 0.15
350,000
September 19, 2022
$ 0.15
170,000
December 14, 2022
520,000
Sale of Minority Interest in Subsidiary
During the year ended December 31, 2019, the Company sold a 10% interest in a newly formed subsidiary for $1,000,000. See Note 1.
NOTE 9 - SUBSEQUENT EVENTS
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 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of December 31, 2021, our Chief Executive Officer (our principal executive, financial and accounting 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 (our principal executive, financial and accounting 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.
Management’s Report on Internal Control over Financial Reporting
Our Chief Executive Officer (our principal executive, financial and accounting 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 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, financial and accounting officer) conducted an evaluation of the effectiveness of our internal controls over financial reporting as of December 31, 2021. In making this evaluation, the Chief Executive Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in its 2013 Internal Control - Integrated Framework.
Based on this evaluation, our Chief Executive Officer (our principal executive, financial and accounting officer) has concluded that our internal controls over financial reporting were not effective as of the end of the period covered in this Annual Report on Form 10-K. The Chief Executive Officer (our principal executive, financial and accounting 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 Annual 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.
Material Weakness in Internal Control Over Financial Reporting
A material weakness is a control deficiency or a combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Our Chief Executive Officer (our principal executive, financial and accounting officer) has concluded that, as of December 31, 2021, we did not maintain effective controls over the preparation, review, presentation and disclosure of our financial statements. Specifically, we noted the following.
● the Company did not maintain effective controls to identify and maintain segregation of duties to support the identification, authorization, approval, accounting for, and the disclosure of related-party transactions and significant unusual transactions. Specifically, one individual, the Chief Executive Officer, initiates related-party transactions and non-routine transactions. This Chief Executive Officer also reviews, evaluates, and approves these same transactions.
● the Company has not established a well-defined process for financial reporting. The process and its key attributes (e.g., overall timing, methodology, format, and frequency of analyses) are not formally documented, approved, or reviewed on a regular basis. Specifically, several instances of transactions were not properly recorded and the lack of timely reconciliations of account balances effected by the improperly recorded transactions.
● the Company does not have accounting policies and procedures to specify the correct treatment for estimating the allowance for doubtful accounts and bad debt expense of loans receivable. Specifically, a supporting analysis is not prepared for estimating the allowance for loan losses and bad debt expense.
Plan for Remediation of Material Weakness
We anticipate, contingent on cash funds available, that actions will be taken to strengthen the Company’s internal control over financial reporting and will, over time, address the related material weakness. However, because many of the controls in the Company’s system of internal controls rely extensively on manual review and approval, the successful operation of these controls may be required for several quarters prior to management being able to conclude that the material weakness has been remediated.
Limitations on the Effectiveness of Controls
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There have been no other changes in our internal control over financial reporting that occurred during our fiscal year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors and Executive Officers
The following table sets forth the name, age and position of each person who is a director or executive officer as of the date of this annual report.
Name Age Positions and Offices to be Held
Todd C. Buxton Chief Executive Officer, Vice Chairman and director
Todd C. Buxton has served as the Company’s Chief Executive Officer and Vice Chairman since April 2017 and as Omega’s Chief Executive Officer from April 2015 to March 2017. Mr. Buxton carries out initiatives to significantly improve the company's strategic operational execution and integration of new and existing subsidiaries with a goal to accelerate profitability, shareholder value and growth for the company. This includes planning the overall strategic business direction and facilitating creative development business models for Omega specifically within the capacity of the Omega's M&A contractual negotiations and internal business contract facilitation for sales transactions, mergers and acquisitions, and capital markets growth strategies. Prior to serving as Omega’s Chief Executive Officer, from 2010 through 2015, Mr. Buxton served in the same capacity for Bentley-Addison Capital Finance, which directly brokered and advised companies as an intermediary for commercial real estate financing opportunities. Mr. Buxton has a strong foundation in the commercial real estate construction management industry and real estate developer/contracting business as well as the information technology field going back to 1992. In January 2011, Mr. Buxton filed a petition for relief under Chapter 7 of the United States Bankruptcy Code in the Southern District of Ohio. In March 2014, Mr. Buxton filed a motion to dismiss the case prior to discharge, which was granted in May 2014.
The Company intends to retain a Chief Financial Officer and expand its board of directors to include a majority of “independent directors” in the proximate future.
Terms of Office
Our directors are appointed for a one-year term to hold office until the next annual meeting of our stockholders and until a successor is appointed and qualified, or until their removal, resignation, or death. Executive officers serve at the pleasure of the board of directors.
Director Independence
At present, our sole director is not “independent” as defined under Rule 10A-3(b)(1) under the Exchange Act.
Board Committees
Our board of directors does not currently have an audit committee, a compensation committee, or a corporate governance committee. As we expand our board in the future to add “independent” directors, we intend to establish such committees, all the members of which will be “independent” directors.
Code of Ethics
We have adopted a Code of Ethics that applies to employees, including our principal executive officer, principal financial officer, or persons performing similar functions.
Board of Directors Role in Risk Oversight
Members of the board of directors have periodic meetings with management and the Company’s independent auditors to perform risk oversight with respect to the Company’s internal control processes. The Company believes that the board’s role in risk oversight does not materially affect the leadership structure of the Company.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by or paid to our executive officers for 2022, 2021, and 2020.
SUMMARY COMPENSATION TABLE
Name and
principal position
Year
Salary
($)
Bonus
($)
Stock
Awards
(#)
Option
Awards
(#)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
($)
Todd C. Buxton, CEO
84,500
84,500
Timothy R. Fussell, President(1)
(1) Dr. Fussell resigned as an officer and director of the Company in August 2020.
Employment Agreements
The Company is presently not party to an employment agreement with its executive officer.
Outstanding Equity Awards at Fiscal Year-End Table
The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards outstanding as of December 31, 2022 for our executive officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS
STOCK AWARDS
Name
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Shares of
Stock That
Have Not
Vested
(#)
Market
Value of
Shares or
Shares of
Stock That
Have Not
Vested
($)
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Shares
or Other Rights
That Have Not
Vested
(#)
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Shares or
Other Rights
That Have
Not Vested
(#)
Todd C. Buxton, CEO
Compensation of Directors Table
The table below summarizes all compensation paid for our last completed fiscal year to each of our directors.
DIRECTOR COMPENSATION
Name
Fees Earned
or
Paid in Cash
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive
Plan
Compensation
($)
Non-Qualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
($)
Todd C. Buxton
Narrative Disclosure to the Director Compensation Table
We currently do not compensate our directors for their services as such. When we expand our board to include “independent” directors we intend to implement a plan and compensate them with a combination of cash and stock option awards, depending on our financial resources at that time.
Incentive Plan
Our Incentive Plan provides for equity incentives to be granted to our employees, executive officers or directors or to key advisers or consultants. Equity incentives may be in the form of stock options with an exercise price not less than the fair market value of the underlying Shares as determined pursuant to the Incentive Plan, restricted stock awards, other stock-based awards, or any combination of the foregoing. The Incentive Plan is administered by the board of directors. 331,867 Shares are reserved for issuance pursuant to the exercise of awards under the Incentive Plan. The number of shares so reserved automatically adjusts upward on January 1 of each year, so that the number of shares covered by the Incentive Plan is equal to 15% of our issued and outstanding common stock. As of the date of this report, we have granted restricted stock awards of 3,625,000 shares to six consultants in 2017. No grants have been awarded since that date.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date of this annual report, the beneficial ownership of our common stock by each director and executive officer, by each person known by us to beneficially own 5% or more of our common stock and by directors and executive officers as a group. Unless otherwise stated, the address of the persons set forth in the table is c/o the Company, 200 East Campus View Blvd., Suite 200, Columbus, OH 43235.
Names and addresses
Number of shares of
common stock
beneficially owned (#)
Percentage of Voting Power(1)
Directors and executive officers:
Todd C. Buxton
(2)
0.0
All executive officers and directors as a group (one person)
(2)
0.0
Other 5% percent beneficial owners:
Omega Commercial Finance Corp.
(2)
84.8
. Under the rules of the SEC, a person (or group of persons) is deemed to be a “beneficial owner” of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security.
(1) Based on 9,724,401 Shares, each having one vote per Share and 100,000 shares of Series AA Preferred Stock each having 450 votes per share outstanding as of the date of this annual report.
(2) Omega holds 1,390,000 Shares of record and beneficially owns 1,000,000 Shares issuable upon conversion of 100,000 shares of Series AA Preferred Stock held by it of record. The persons deemed voting or dispositive control over the Shares held by Omega are Jon S. Cummings IV, Chairman of Board, director and the majority shareholder of Omega, Mark Feanny, MD, a director of Omega and Clarence Williams, a director of Omega.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions
Related Party Transactions
During the years ended December 31, 2022 and 2021 Omega, the principal stockholder of the Company, made additional capital contributions to the Company of $73,650 and $338,486.
On August 28, 2017, the Company entered into two loan agreements with companies owned by Timothy R. Fussell, our then President, Chairman of the Board and a director of the Company. The first agreement, with Partners South Holdings LLC (“PSHL”), provides for a revolving line of credit in the maximum principal sum of $3,600,000 for the purpose of financing real property construction costs and working capital needs. The line of credit is secured by a pledge of all the limited liability company membership interests of PSHL. The maturity date of the line of credit is August 31, 2022 at which time the entire then outstanding principal balance plus accrued interest thereon is due and payable. The fixed interest rate on the loan is 3.5% to be paid quarterly on the first day of each calendar. As of December 31, 2022 and 2021, no amounts had been advanced under this line of credit. Origination fees of $180,000 due to the Company have been added to the outstanding balance due on the line of credit. At December 31, 2021, the Company established a full reserve against the outstanding balance, and at December 31, 2022 and 2021, the loan receivable balance was $0.
The second agreement, with Partners South Properties Corporation (“PSPC”), provides for a revolving line of credit in the maximum principal sum of $5,000,000 for the purpose of financing real property construction costs and working capital needs. The line of credit is secured by a pledge of all the capital stock of PSPC. The maturity date of the line of credit is August 31, 2022 at which time the entire then outstanding principal balance plus accrued interest thereon is due and payable. The fixed interest rate on the line of credit is 3.5% to be paid quarterly on the first day of each calendar quarter. At December 31, 2021, the Company established a full reserve against the outstanding balance and at December 31, 2022 and 2021, the loan receivable balance was $0.
Review, Approval and Ratification of Related Party Transactions
The Company does not have a policy that expressly prohibits its directors, officers, principal stockholders or their respective affiliates from engaging for their own account in business activities of the types conducted by the Company. The Company’s code of business conduct and ethics contains a conflict of interest policy that prohibits its directors and executive officers, or whoever provides services to the Company, from engaging in any transaction that involves an actual conflict of interest with the Company, provided, however, that once the Company adds independent directors to its board, any such conflict may by a majority vote of independent directors.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services
The total fees charged to the Company by our independent registered public accounting firm, BFBorgers CPA PC, for audit-related services, including quarterly reviews, were $33,000 and $26,000 for the years ended December 31, 2022 and 2021. The firm did not provide us with any tax or other services during either of such years.
The total fees charged to the Company by our previous independent registered public accounting firm, Ciro E. Adams, CPA, LLC, for audit-related services, including quarterly reviews, were $5,500 and $77,500 for the years ended December 31, 2022 and 2021. The firm did not provide us with any tax or other services during either of such years.
The SEC requires that before our independent registered public accounting firm is engaged by us to render any auditing or permitted non-audit related service, the engagement be either: (i) approved by our Audit Committee or (ii) entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided that the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service, and such policies and procedures do not include delegation of the Audit Committee’s responsibilities to management.
We do not have an audit committee. Our Board pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees paid during 2021 and 2020 were pre-approved by our Board.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits
Exhibit
Number
Description
3.1
Certificate of Incorporation, as amended (1)
3.2
Certificate of Designation of Series A Convertible Preferred Stock(2)
3.3
Certificate of Designation of Series 2018 Convertible Preferred Stock(2)
3.4
Certificate of Designation of Series 2020 Convertible Preferred Stock(2)
3.5
Form of Amended and Restated Certificate of Designation of Series 2020 Convertible Preferred Stock(2)
3.6
Form of Certificate of Designation of Series AA Convertible Preferred Stock(2)
3.7
By-Laws (1)
10.1
2017 Incentive Stock Plan (3) *
10.2
Subscription Agreement with Dr. Assia Benhacene (4)
10.3
Subscription Agreement with Hoosier Real Estate Investors, LLC (5)
10.4
Loan Agreement with Partners South Holdings, LLC (3)
10.5
Loan Agreement with Partners South Properties Corporation (3)
10.6
Code of Ethics (3)
10.7
Subscription Agreement with Inn Properties, LLC (3)
10.8
Corporate Governance Management Agreement with Omega Commercial Finance Corporation (3)
10.9
Purchase Agreement with Parsons Energy Group LLC(6)
10.10
First Amendment to Purchase Agreement with Parsons Energy Group LLC(6)
10.11
Unwinding Agreement with Parsons Energy Group LLC(7)
31.1
Sec. 302 Certification of CEO(8)
31.2
Sec. 302 Certification of CFO(8)
32.1
Sec. 906 Certification of CEO(8)
32.2
Sec. 906 Certification of CFO(8)
(1) Filed as exhibit to registrant’s Registration Statement on Form S-1 (File No. 333-198772) and incorporated herein by reference, as amended by an amendment thereto, filed as an exhibit to registrant’s Current Report on Form 8-K dated April 19, 2017 and incorporated herein by reference.
(2) Filed as exhibit to registrant’s Registration Statement on Form S-1 (File No. 333-236371) and incorporated herein by reference Previously filed.
(3) Filed as an exhibit to the registrant’s Registration Statement on Form S-1 (File No. 333-221183) and incorporated herein by reference.
(4) Filed as an exhibit to the registrant’s Current Report on Form 8-K dated September 5, 2017 and incorporated herein by reference.
(5) Filed as an exhibit to the registrant’s Current Report on Form 8-K dated September 25, 2017 and incorporated herein by reference.
(6) Filed as an exhibit to the registrant’s Current Report on Form 8-K dated July 22, 2020 and incorporated herein by reference.
(7) Filed as an exhibit to the registrant’s Current Report on Form 8-K dated July 30, 2021 and incorporated herein by reference.
(8) Filed herewith.
* Management compensation plan or arrangement.