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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

x       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

OR

 

o       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________to_________

 

Commission file number 333-198772

 

(Exact name of registrant as specified in its charter)

 

 

(Former Name of Registrant as Specified in its Charter)

 

Delaware   90-0998139
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)

 

200 East Campus View Blvd., Suite 200

ColumbusOH  43235

(Address of principal executive offices) (zip code)

 

305-704-3294

(Registrant's telephone number, including area code)

 

The Registrant does not have any securities registered pursuant to Section 12(b) of the Exchange Act. 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

x Yes o No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)

 

x Yes o No

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
None    

 

1 

 

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer     o   Accelerated filer     o
Non-accelerated filer     o   Smaller reporting company     x
    Emerging growth Company    o 

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

o Yex No

 

Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.

 

Class   Outstanding at November 10, 2023
Common Stock, par value $0.0001   11,224,401 shares

 

Documents incorporated by reference: None

 

 

 

 

 

 

 

 

2 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

  Page No.
Item 1. Financial Statements.  
Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022 5
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited) 6
Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited) 7
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited) 8
Notes to Unaudited Condensed Consolidated Financial Statements 9 – 16
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 17 – 18
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 18
Item 4. Controls and Procedures. 19

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings. 20
Item 1A. Risk Factors. 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 20
Item 3. Defaults Upon Senior Securities. 20
Item 4. Mine Safety Disclosures. 20
Item 5. Other Information. 20
Item 6. Exhibits. 20

 

 

 

 

 

 

 

 

 

 

 

 

3 

 

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about:

 

  · our lack of significant revenues and history of losses,

 

  · our ability to continue as a going concern,

 

  · our ability to raise additional working capital as necessary,

 

  · our ability to satisfy our obligations as they become due,

 

  · the failure to successfully commercialize our product or sustain market acceptance,

 

  · the reliance on third party agreements and relationships for development of our business,

 

  · the control exercised by our management,

 

  · the impact of government regulation on our business,

 

  · our ability to effectively compete,

 

  · the possible inability to effectively protect our intellectual property,

 

  · the lack of a public market for our securities and the impact of the penny stock rules on trading in our common stock should a public market ever be established.

 

You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in this report, in Part I. Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 and our other filings with the Securities and Exchange Commission. Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

 

OTHER PERTINENT INFORMATION

 

Unless specifically set forth to the contrary, when used in this report the terms “the “Company,” “we,” “our,” “us,” and similar terms refers to Alpha Investment, Inc.

 

4 

 

 

 

ITEM 1. FINANCIAL STATEMENTS

 

Alpha Investment Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

   As of   As of 
   September 30,   December 31, 
   2023   2022 
ASSETS          
Current Assets:          
Cash  $400   $   
Total Current Assets   400       
           
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            
TOTAL ASSETS  $400   $   
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities:          
Accounts payable  $698,718   $602,416 
Accrued management fees - related party   562,500    450,000 
Distribution payable   550,000    460,000 
Notes payable - short-term   50,304    39,279 
Notes payable - related party   255,592    231,747 
Judgments payable   2,662,147    2,518,000 
Total Current Liabilities   4,779,261    4,301,442 
           
Payroll Protection Plan Loan            
Total Liabilities   4,779,261    4,301,442 
           
Temporary Equity:          
Series 2018 Convertible Preferred Stock ($0.0001 par value), net of discounts of $134,247 and $140,169, respectively, 100,000 shares authorized; 36,667 shares issued and outstanding  (liquidation value: $500,000) (See Note 7)   451,864    434,098 
    451,864    434,098 
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 June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022, respectively   10    10 
Common stock, ($0.0001 par value), 100,000,000 shares authorized; 1,224,401 and 9,724,401 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively   1,123    973 
Additional paid-in capital   6,039,790    6,012,900 
Accumulated deficit   (10,830,641)   (10,398,416)
Total Equity   (4,320,349)   (4,367,028)
Non-controlling interest in variable interest entities   (458,512)   (368,512)
Total Stockholders' Equity   (5,230,725)   (4,735,540)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $400   $   

 

See notes to unaudited condensed consolidated financial statements.

 

5 

 

 

 

ALPHA INVESTMENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months   Three Months   Nine Months   Nine Months 
   Ended   Ended   Ended   Ended 
   September 30, 2023   September 30, 2022   September 30, 2023   September 30, 2022 
Income:                    
Net investment income - related parties  $   $   $   $ 
Net investment income                
Total Income                
                     
General and Administrative Expenses:                    
Management fee - related party   37,500    37,500    112,500    112,500 
Administrative expenses   25,065    63,556    75,123    186,222 
Professional fees   6,800    15,660    51,977    119,092 
Total General and Administrative Expenses   69,365    116,716    239,600    417,814 
Loss from Operations   (69,365)   (116,716)   (239,600)   (417,814)
                     
Other Expense:                    
Other income/expense           )   (144,147)   (2,518,000)
Interest expense, net   (10,237)   (8,662)   (30,713)   (21,787)
Total Other Expense   (10,237)   (8,662)   (174,860)   (2,539,787)
                     
Net Loss  $(79,602)  $(125,378)  $(414,460)  $(2,957,601)
                     
Amortization of discounts on Series 2018 preferred stock and redeemable common stock   (5,922)   (5,922)   (17,766)   (17,766)
                     
Net Income Attributable to Non-controlling Interests                        
                     
Net Loss Attributable to Common Stockholders  $(85,524)  $(131,300)  $(432,226)  $(2,975,367)
                     
Basic and Diluted Loss Per Share  $(0.01)  $(0.01)  $(0.04)  $(0.31)
                     
Basic and Diluted Weighted Average Number of  Common Shares Outstanding   11,724,401    9,724,401    10,510,115    9,724,401 

 

 

See notes to unaudited condensed consolidated financial statements.

 

  

 

6 

 

 

  

Alpha Investment Inc.

Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit)

For the Three and Nine Months Ended September 30, 2023 and 2022

 

                                                                                 
           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)
Stock exchange              —            —                                 
Stockholder contribution   —            —            —            32,600                32,600 
Distributions due to non-controlling interest   —            —            —                  (30,000)         (30,000)
Amortization of discount on redeemable preferred stock   —            —                                  (5,922)   (5,922)
Net loss   —            —            —                       (126,361)   (126,361)

Balance, March 31, 2022

   9,724,401   $973    1,167   $17,505    100,000   $10   $5,971,850   $(278,512)  $(7,407,238)  $(1,695,412)
                                                   
Stock exchange   —            —            —                                 
Stockholder contribution   —            —            —            41,050                41,050 
Distributions due to non-controlling interest   —            —            —                  (30,000)         (30,000)
Amortization of discount on redeemable preferred stock   —            —                                  (5,922)   (5,922)
Net loss   —            —            —                       (2,705,862)   (2,705,862)

Balance, June 30, 2022

   9,724,401   $973    1,167   $17,505    100,000   $10   $6,012,900   $(308,512)  $(10,119,022)  $(4,396,146)
                                                   
Stock exchange   —            —            —                                 
Stockholder contribution   —            —            —                                 
Distributions due to non-controlling interest   —            —            —                  (30,000)         (30,000)
Amortization of discount on redeemable preferred stock   —            —                                  (5,922)   (5,922)
Net loss   —            —            —                       (125,378)   (125,378)

Balance, September 30, 2022

   9,724,401   $973    1,167   $17,505    100,000   $10   $6,012,900   $(338,512)  $(10,250,322)  $(4,557,446)

 

           Series A   Series AA       Non-         
   Common Stock   Preferred Stock   Preferred Stock   Paid-in   controlling   Accumulated     
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Interest   Deficit   Total 
Balance, December 31, 2022   9,724,401   $973    1,167   $17,505    100,000   $10   $6,012,900   $(368,512)  $(10,398,416)  $(4,735,540)
Stockholder contribution   —            —            —            8,250                8,250 
Distributions due to non-controlling interest   —            —            —                  (30,000)         (30,000)
Amortization of discount on redeemable preferred stock   —            —            —                        (5,922)   (5,922)
Net loss   —            —            —                       (249,584)   (249,584)
Balance, March 31, 2023   9,724,401   $973    1,167   $17,505    100,000   $10   $6,021,150   $(398,512)  $(10,653,922)  $(5,012,796)
                                                   
Sale of common stock   1,500,000    150    —            —            1,350                1,500 
Stockholder contribution   —            —            —            8,250                8,250 
Distributions due to non-controlling interest   —            —            —                  (30,000)         (30,000)
Amortization of discount on redeemable preferred stock   —            —            —                        (5,922)   (5,922)
Net loss   —            —            —                       (85,273)   (85,273)
Balance, June 30, 2023   11,224,401   $1,123    1,167   $17,505    100,000   $10   $6,030,750   $(428,512)  $(10,745,117)  $(5,124,241)
                                                   
Sale of common stock   —           —            —                                 
Stockholder contribution   —            —            —            9,040                9,040 
Distributions due to non-controlling interest   —            —            —                  (30,000)         (30,000)
Amortization of discount on redeemable preferred stock   —            —            —                        (5,922)   (5,922)
Net loss   —            —            —                       (79,602)   (79,602)
Balance, September 30, 2023   11,224,401   $1,123    1,167   $17,505    100,000   $10   $6,039,790   $(458,512)  $(10,830,641)  $(5,230,725)

 

7 

 

 

 

ALPHA INVESTMENT INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine Months   Nine Months 
   Ended   Ended 
   September 30,   September 30, 
   2023   2022 
Cash Flows from Operating Activities:          
Net loss  $(414,460)  $(2,957,601)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation Expense         237 
Accretion of origination fee income            
Amortization of deferred loan costs            
Payroll protection loan forgiveness            
Changes in operating assets and liabilities:          
Increase in judgments payable   144,147    1,518,000 
Increase in settlements payable         1,000,000 
Increase in interest receivable            
Increase in accrued management fees - related party   112,500    112,500 
Decrease in accounts payable and accrued expenses   96,302    195,965 
Increase in interest payable   11,025    2,100 
Increase in notes payable - related party   23,845    19,688 
Net cash used in operating activities   (26,641)   (109,111)
           
Cash Flows from Investing Activities:          
Net cash from investing activities            
           
Cash Flows from Financing Activities:          
Proceeds from short term loan        35,000 
Proceeds from sale of stock   1,500      
Proceeds from stockholder contribution   25,540    73,650 
Net cash provided by (used in) financing activities   27,040    108,650 
           
Net increase (decrease) in cash   400    (461)
           
Cash and restricted cash at beginning of year         588 
           
Cash and restricted cash at end of year  $400   $127 
           
           
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  $90,000   $90,000 
Amortization of discount on redeemable preferred stock  $17,766   $17,766 

 

See notes to unaudited condensed consolidated financial statements.

 

8 

 

 

  

ALPHA INVESTMENT INC

NOTES TO CONDENSED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Alpha Investment Inc, formerly GoGo Baby, Inc. (the “Company”) was incorporated on February 22, 2013 under the laws of the State of Delaware to develop, create, manufacture and market, toys for small children which would be designed to attach to car seats and amuse and entertain children during a drive, without distracting the attention of the driver. The Company, however, encountered significant constraints in raising sufficient capital to fully implement its business plan.

 

To better reflecting management’s shifted focus of the Company’s business to real estate and other commercial lending, on March 30, 2017, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Delaware Secretary of State changing its name from “Gogo Baby, Inc.” to “Alpha Investment Inc.”. The name change and a corresponding change in the Company’s OTC markets trading symbol from GGBY to ALPC received approval from FINRA and became effective as of April 19, 2017.

 

On March 11, 2019, the Company, through Alpha Mortgage Notes I, LLC (the “SPV”) entered into an operating agreement with Alameda Partners LLC, a Utah limited liability company (“Alameda Partners”). Alameda Partners acquired a ten percent (10%) equity interest in the SPV in exchange for a payment of $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 June 30, 2022, the SPV has not completed any transactions. 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.

 

NOTE 2 – GOING CONCERN

 

Future issuances of the Company’s equity or debt securities will be required for the Company to continue to finance its operations and continue as a going concern. The Company’s present revenues are insufficient to meet operating expenses. The financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $10,830,641 as of September 30, 2023. During the nine months ended September 30, 2023, the Company used $26,641 of cash in operations and incurred a net loss of $414,460. The Company 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 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

 

Basis of Presentation

 

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for future periods or the full year.

 

9 

 

 

accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for future periods or the full year.

 

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of the Company, Alpha Mortgage Notes I, LLC, which is controlled by the Company through its 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 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.

 

Cash and Cash Equivalents

 

Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition. As of September 30, 2023, the Company has $400 in cash and no cash equivalents.

 

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 $1,633,380 as of September 30, 2023 and December 31, 2022.

 

10 

 

 

Property and Equipment

 

Property and equipment are stated at cost. Equipment and fixtures will be depreciated using the straight-line method over the estimated asset lives, 5 years. As at September 30, 2023 and December 31, 2022, the Company recorded $0 in property and equipment, and recorded $0  and $237 in depreciation expense at September 30, 2023 and 2022, respectively.

 

Income Taxes

 

The Company accounts for its income taxes in accordance with FASB Accounting Standards Codification (“ASC”) No. 740, "Income Taxes". Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.

 

Accounting for Uncertainty in Income Taxes

 

The Company applies the provisions of ASC Topic 740-10-25, Income Taxes – Overall – Recognition (“ASC Topic 740-10-25”) with respect to the accounting for uncertainty of income tax positions. ASC Topic 740-10-25 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-25 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of September 30, 2023, 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 Company has no income for the nine months ended September 30, 2023 and 2022.

 

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. At December 31, 2022, the Company evaluated the collectability of its loans and lines of credit receivable, in light of economic conditions during the Covid-19 pandemic, established an allowance account to bring these to $0. Accordingly, there is no imputed interest receivable for the nine months ended September 30, 2023.

 

11 

 

 

Variable Interest Entity

 

The Company holds a 10% interest in Paris Med, of which the remaining 90% interest is held by Omega.  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 June 30, 2023, 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, Paris Med has total assets of $0  because  the Company established a full reserve against this VIE until such time as the loan is repaid.  See Note 4.  For the nine months ended September 30, 2023, Paris Med had no activity. At December 31 2022 and September 30, 2023, the Company established a full reserve against this VIE until such time as the loan is repaid.

 

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.

 

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 nine months ended September 30, 2023 and 2022, 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 $1,633,380 as of September 30, 2023 and December 31, 2022.

 

Recently Issued and Adopted Accounting Pronouncements

 

Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.

 

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 cancellable). 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. For an emerging growth company, the amendments in the update are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. 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.

 

12 

 

 

 

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, 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 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 fixed interest rate on the loan is 3.5% and all interest receivables are due at maturity. As of December 31, 2021, $477,500 had been advanced on the loan, 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, and 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 six months ended June 30, 2022 and 2021, the Company recognized $0 and $20,667, of the deferred issuance costs, which are carried at $0 as of June 30, 2022 and December 31, 2021. As of September 30, 2023 and December 31, 2022, the Company has established a full reserve against this loan until such time as the loan is repaid; the gross loan receivable balance is $0.

 

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, receivable balance is $250,000. The Company has established a full reserve against the $250,000 receivable balance until such time as the loan is repaid. As of September 30, 2023 and December 31, 2022, the receivable balance is $0.

 

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 $90,204,328maturing in 10 years, 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.  As of December 31, 2020, 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.  

 

  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 September 30, 2023, 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 September 30, 2023, no amounts have been advanced pursuant to the line of credit.

 

13 

 

 

  

  4) The notes are secured by the assignment of leases and fixed assets related to the project.

 

In December 2022, the Company established a full reserve against this loan until such time as the loan is repaid. As of September 30, 2023 and December 31, 2022, the receivable balance is $0.

 

NOTE 5 - 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. For the nine months ended September 30, 2023, the Company accrued $90,000 of distributions. As of September 30, 2023 $550,000 of minimum distributions are owed to the 10% partner.

 

Litigation

 

We are currently involved in the following legal proceedings:

 

Steven T. Matthiesen and Joanna K. Matthiesen, jointly and severally v. Tmothy Fussell et al. In the United States District Court, Southern District of Florida, Case No. 21CV62334. This breach of contract matter resulted in a default judgment against the Defendants in 2022 of $1,514,000 plus fees and costs. This case remains pending as to Defendants Timothy Fussell and Partners South Holdings, LLC only.

Fusion Lodgings LLC v. PLC et al, In the District Court, 160th Judicial District, Dallas County, TX, Cause No. DC-20-09139. This breach of contract matter resulted in a default judgment against the Defendants of $1,000,000 plus fees and costs.

 

Supplemental complaint for financial relief in regards to collections, In the circuit court of the eleventh judicial circuit in and for Miami-Dade County, Florida, case #2021-20869-CA01, seeking $144,147 plus 6% interest from 2013. The Company is currently in negotiations with plaintiff,

 

Advisory Agreement

 

In June 2019, the Company entered into an advisory agreement, pursuant to which it agreed to compensate a third-party advisor a percentage of future capital raises facilitated by the advisor. Compensation includes non-refundable cash, cash compensation based on a percentage of capital raised. The advisor may elect to receive certain percentage-based fees in the form of equity. Upon the closing of a transaction, the advisor will receive five-year warrants to purchase a number of shares of common stock equal to 8% of the number of shares issue in the transaction at a strike price of the transaction value as defined the agreement. As of the date of this report, no amounts have been earned and no equity instruments have been issued as transaction-based fees pursuant to this agreement.

 

NOTE 6 – NOTE PAYABLE SHORT-TERM

 

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 September 30, 2023 and December 31, 2022, the Company recorded $50,304 and $39,279 in Notes payable – short term. As of September 30, 2023 and 2022, the Company recorded $11,025 and $4,279 in interest expense.

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

Loans receivable

 

The Company has extended lines of credit and loans to related parties. See Note 4.

 

14 

 

 

 

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 not to exceed $300,000 per year. The agreement remains in effect until cancelled by Omega. During the nine months ended September 30, 2023 and 2022, the company accrued management fees of $112,500. Total management fees of $562,500 and $450,000 remain unpaid as of September 30, 2023 and 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. The note is in default and due on demand. As of September 30, 2023 and December 31, 2022, the Company recorded $255,592 and $231,747 in Notes payable - related party

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

Temporary Equity

 

On November 27, 2017, 16,667 shares of Series 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. On January 15, 2018, the Company issued 20,000 shares of Series 2018 to Partners South Holding LLC for services provided at $15 per share, no warrants attached. 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 September 30, 2023 and December 31, 2022, was $451,864 and $434,098, net of unamortized discounts of $98,715 and $116,481, respectively.

 

Preferred Stock

 

Series A Convertible Preferred Stock.

 

In November 2017, the Company’s board of directors designated 100,000 authorized shares of Series A Convertible Preferred Stock (“Series A”). Each share of Series A has a par value of $15.00 and has no voting or dividend rights. Upon liquidation, dissolution or wining up, the holders of Series A shares are entitled to be paid out of the assets of the Company, if any, ratably with the common stock holders. Each share of Series A is convertible within one year of issuance into two shares of common stock of the Company. At any time after 180 days of issuance, the Company has the right, but not the obligation, to redeem all, but not less than all, of the outstanding Series A shares by paying cash, common stock, or a combination of both an amount equal to the par value of the Series A shares. On the one-year anniversary of issuance, the Company has an option to redeem the Series A shares for an amount equal to the par value of the Series A shares. There are 1,167 shares of Series A Convertible Preferred Stock outstanding as of September 30, 2023 and December 31, 2022.

 

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”). There are 100,000 shares of Series AA Convertible Preferred Stock outstanding as of September 30, 2023 and December 31, 2022.

 

Capital Contributions

 

During the nine months ended September 30, 2023, Omega Commercial Finance Corp made a cash contribution to the Company of $25,540. This was classified as capital contribution and recorded in additional paid-in capital.

 

15 

 

 

 

Common Stock

 

On May 10, 2023, Omega Worldwide, an unaffiliated company, purchased 1,500,000 shares of common stock, par value $0.0001, for $1,500 cash or $0.001/share.

 

Common Stock Warrants

 

As of September 30, 2023, there are no outstanding warrants.

 

On September 9, 2022, warrants outstanding to acquire 350,000 shares expired.

 

As of September 30, 2022, there are warrants outstanding to purchase 170,000 shares for an exercise price of $15.00 over five years, which expire on December 14, 2022.

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16 

 

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results.  The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included in “Item 8. Financial Statements and Supplementary Data.”  In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.  See “Forward-Looking Statements.”  Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors.

 

Results of Operations

 

General

 

We have recognized no income for the three months ended September 30, 2023, compared to no income for the same period in 2022,  As of September 30, 2023, the Company had an accumulated deficit of approximately $10.9 million.

 

The following table provides selected consolidated balance sheet data as of September 30, 2023.

 

Balance Sheet Data: 9/30/2023
Cash $ 400
Loan receivable and accrued interest receivable, net of discounts   0
Total assets   400
Current liabilities   4,779,261
Total liabilities   4,779,261
Temporary equity   451,864
Shareholders' equity   (4,778,861)

 

Three Months Ended September 30, 2023 as compared to Three Months Ended September 30, 2022

 

For the three months ended September 30, 2023, we generated no net investment income, compared to none in 2022.  We incurred $69,365 in operating expenses during the 2023 period, compared to $116,716 in 2022.

 

Nine Months Ended September 30, 2023 as compared to Nine Months Ended September 30, 2022

 

For the nine months ended September 30, 2023, we generated no net investment income, compared to none in 2022. We incurred $239,600 in operating expenses during the 2023 period, compared to $417,814 in 2022.

 

Liquidity and Capital Resources

 

During the nine months ended September 30, 2023, Omega, the principal stockholder of the Company, made additional capital contributions to the Company of $25,540 , compared to $73,650 in 2022. In addition, on May 10, 2023, , the Company received $1,500 from the sale of 1,500,000 shares of common stock, or $0.001/share, from an unrelated company. During the nine months ended September 30, 2022, the Company received .a short-term loan of $35,000 from an unrelated party, bearing interest of 24%, interest and principal of $39,200 due and payable on December 29, 2022, extendable for three months with payment of $2,100 in accrued interest. This loan is currently in default.

 

17 

 

 

 

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.

 

Off-Balance Sheet Arrangements

 

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company, we are not required to include disclosure under this item.

 

18 

 

 

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

As of September 30, 2023, our Chief Executive Officer (our principal executive and financial officer) conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as is defined in Rule 13a-15(e) of Exchange Act. We recognize that there are material weaknesses related to our internal controls. Therefore, our Chief Executive Officer has concluded that our disclosure controls and procedures were not effective, as of the end of the period covered by this Annual Report on Form 10-K. This includes ensuring that information required to be disclosed was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Furthermore, to provide reasonable assurance that information required to be disclosed is accumulated and communicated as appropriate to allow timely decisions regarding required disclosure.

 

Management’s Report on Internal Control over Financial Reporting

 

Our Chief Executive Officer (our principal executive and financial officer) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. We have designed our internal controls to provide reasonable assurance that our financial statements are prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP), and include those policies and procedures that:

 

  · pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets;

 

  · provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and

 

  · provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Our Chief Executive Officer (our principal executive and financial officer) conducted an evaluation of the effectiveness of our internal controls over financial reporting as of September 30, 2023. In making this evaluation, the Chief Executive Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in its 2013 Internal Control — Integrated Framework.

 

Based on this evaluation, our Chief Executive Officer has concluded that our internal controls over financial reporting were not effective as of the end of the period covered in this Quarterly Report on Form 10-K. The Chief Executive Officer has concluded that the financial statements included in this report fairly present in all material respects our financial position and results of operations.

 

This Quarterly Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. The Chief Executive Officer’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.

 

Changes in Internal Control over Financial Reporting

 

During the quarter ended September 30, 2023, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

19 

 

 

 

PART II

 

ITEM 1. 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 PartnersSouth Holdings, LLC only.

 

Fusion Lodgings LLC v. PLC et al, In the District Court, 160th Judicial District, Dallas County, TX, Cause No. DC-20-09139. This breach of contract matter resulted in a default judgment against the Defendants of $1,000,000 plus fees and costs.

 

Supplemental complaint for financial relief in regards to collections, In the circuit court of the eleventh judicial circuit in and for Miami-Dade County, Florida, case #2021-20869-CA01, seeking $144,147 plus 6% interest from 2013. The Company is currently in negotiations with plaintiff.

 

We are currently not aware of any additional pending or threatened material legal or administrative proceedings arising in the ordinary course of business.  We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.

 

ITEM 1A. RISK FACTORS

 

Risk factors describing the major risks to our business can be found under Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2021. There has been no material change in our risk factors from those previously discussed in the Annual Report on Form 10-K.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On May 10, 2023, Omega Worldwide, an unaffiliated company, purchased 1,500,000 shares of common stock, par value $0.0001, for $1,500 cash or $0.001/share.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable to our operations. 

 

ITEM 5. OTHER INFORMATION

 

See ITEM 1A above.

 

ITEM 6. EXHIBITS

 

Exhibit Number   Description
     
31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act*
31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act*
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

 

101.INS XBRL Instance Document *
101.SCH XBRL Taxonomy Extension Schema Document *
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB XBRL Taxonomy Extension Label Linkbase Document *
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document *

*     Filed herein

 

20 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

ALPHA INVESTMENT INC.

 

/s/ Todd C. Buxton   Chief Executive Officer, Acting Chief Financial Officer and Director   November 20, 2023
TODD C. BUXTON   Title (Principal Executive, financial and Accounting Officer   Date

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

 

 

 

 

 

 

 

 

 

Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Todd C. Buxton, Chief Executive Officer certifies that:

 

1. I have reviewed this quarterly report on Form 10-Q of Alpha Investment Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant) and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

 

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

  Date: November 20, 2023 /s/Todd C. Buxton  
  Todd C. Buxton  
 

Chief Executive Officer

(Principal Executive Officer)

 

 

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Todd C. Buxton Chief Financial Officer, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Alpha Investment Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant) and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

 

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

  Date:  November 20, 2023 /s/ Todd C. Buxton  
  Todd C. Buxton  
 

Acting Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Alpha Investment Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023 as filed with the Securities and Exchange Commission (the “Report”), I, Todd C. Buxton, Chief Executive Officer and Acting Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.         The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.         The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

November 20, 2023 /s/ Todd C. Buxton
  Todd C. Buxton, Chief Executive Officer
  (principal executive officer)

 

November 20, 2023 /s/ Todd C. Buxton
  Todd C. Buxton, Acting Chief Financial Officer
  (principal financial and accounting officer)

 

 

 

 

 

 

 

 

 

v3.23.3
Cover - shares
9 Months Ended
Sep. 30, 2023
Nov. 10, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2023  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --12-31  
Entity File Number 333-198772  
Entity Registrant Name Alpha Investment Inc.  
Entity Central Index Key 0001616736  
Entity Tax Identification Number 90-0998139  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 200 East Campus View Blvd.  
Entity Address, Address Line Two  Suite 200  
Entity Address, City or Town Columbus  
Entity Address, State or Province OH  
Entity Address, Postal Zip Code 43235  
City Area Code 305  
Local Phone Number 704-3294  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   11,224,401
v3.23.3
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current Assets:    
Cash $ 400
Total Current Assets 400
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 0 0
TOTAL ASSETS 400
Current Liabilities:    
Accounts payable 698,718 602,416
Accrued management fees - related party 562,500 450,000
Distribution payable 550,000 460,000
Notes payable - short-term 50,304 39,279
Notes payable - related party 255,592 231,747
Judgments payable 2,662,147 2,518,000
Total Current Liabilities 4,779,261 4,301,442
Payroll Protection Plan Loan
Total Liabilities 4,779,261 4,301,442
Temporary Equity:    
Series 2018 Convertible Preferred Stock ($0.0001 par value), net of discounts of $134,247 and $140,169, respectively, 100,000 shares authorized; 36,667 shares issued and outstanding  (liquidation value: $500,000) (See Note 7) 451,864 434,098
Stockholders' Equity:    
Common stock, ($0.0001 par value), 100,000,000 shares authorized; 1,224,401 and 9,724,401 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively 1,123 973
Additional paid-in capital 6,039,790 6,012,900
Accumulated deficit (10,830,641) (10,398,416)
Total Equity (4,320,349) (4,367,028)
Non-controlling interest in variable interest entities (458,512) (368,512)
Total Stockholders' Equity (5,230,725) (4,735,540)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 400
Series A Convertible Preferred Stock    
Stockholders' Equity:    
Preferred stock ($0.0001 par value), 20,000,000 shares 17,505 17,505
Series AA Convertible Preferred Stock    
Stockholders' Equity:    
Preferred stock ($0.0001 par value), 20,000,000 shares $ 10 $ 10
v3.23.3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 20,000,000 20,000,000
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 1,224,401 9,724,401
Common stock, shares outstanding 1,224,401 9,724,401
Series 2018 Convertible Preferred Stock    
Temporary equity, par value $ 0.0001 $ 0.0001
Temporary equity, net of discounts $ 134,247 $ 140,169
Temporary equity, shares authorized 100,000 100,000
Temporary equity, shares issued 36,667 36,667
Temporary equity, shares outstanding 36,667 36,667
Temporary equity, liquidation value $ 500,000 $ 500,000
Series A Convertible Preferred Stock    
Preferred stock, par value $ 15.00 $ 15.00
Preferred stock, shares authorized 100,000 100,000
Preferred stock, shares issued 1,167 1,167
Preferred stock, shares outstanding 1,167 1,167
Series AA Convertible Preferred Stock    
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 100,000 100,000
Preferred stock, shares issued 100,000 100,000
Preferred stock, shares outstanding 100,000 100,000
v3.23.3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Income:        
Net investment income - related parties
Net investment income
Total Income
General and Administrative Expenses:        
Management fee - related party 37,500 37,500 112,500 112,500
Administrative expenses 25,065 63,556 75,123 186,222
Professional fees 6,800 15,660 51,977 119,092
Total General and Administrative Expenses 69,365 116,716 239,600 417,814
Loss from Operations (69,365) (116,716) (239,600) (417,814)
Other Expense:        
Other income/expense (144,147) (2,518,000)
Interest expense, net (10,237) (8,662) (30,713) (21,787)
Total Other Expense (10,237) (8,662) (174,860) (2,539,787)
Net Loss (79,602) (125,378) (414,460) (2,957,601)
Amortization of discounts on Series 2018 preferred stock and redeemable common stock (5,922) (5,922) (17,766) (17,766)
Net Income Attributable to Non-controlling Interests
Net Loss Attributable to Common Stockholders $ (85,524) $ (131,300) $ (432,226) $ (2,975,367)
Basic and Diluted Loss Per Share $ (0.01) $ (0.01) $ (0.04) $ (0.31)
Basic and Diluted Weighted Average Number of  Common Shares Outstanding 11,724,401 9,724,401 10,510,115 9,724,401
v3.23.3
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) - USD ($)
Common Stock
Series A Preferred Stock
Series AA Preferred Stock
Paid-In Capital
Non-Controlling Interest
Accumulated Deficit
Total
Beginning balance, value at Dec. 31, 2021 $ 973 $ 17,505 $ 10 $ 5,939,250 $ (248,512) $ (7,274,955) $ (1,565,729)
Shares outstanding at Dec. 31, 2021 9,724,401 1,167 100,000        
Stock exchange
Stockholder contribution 32,600 32,600
Distributions due to non-controlling interest (30,000) (30,000)
Amortization of discount on redeemable preferred stock   (5,922) (5,922)
Net loss   (126,361) (126,361)
Ending balance, value at Mar. 31, 2022 $ 973 $ 17,505 $ 10 5,971,850 (278,512) (7,407,238) (1,695,412)
Shares outstanding at Mar. 31, 2022 9,724,401 1,167 100,000        
Beginning balance, value at Dec. 31, 2021 $ 973 $ 17,505 $ 10 5,939,250 (248,512) (7,274,955) (1,565,729)
Shares outstanding at Dec. 31, 2021 9,724,401 1,167 100,000        
Net loss             (2,957,601)
Ending balance, value at Sep. 30, 2022 $ 973 $ 17,505 $ 10 6,012,900 (338,512) (10,250,322) (4,557,446)
Shares outstanding at Sep. 30, 2022 9,724,401 1,167 100,000        
Beginning balance, value at Mar. 31, 2022 $ 973 $ 17,505 $ 10 5,971,850 (278,512) (7,407,238) (1,695,412)
Shares outstanding at Mar. 31, 2022 9,724,401 1,167 100,000        
Stock exchange
Stockholder contribution 41,050 41,050
Distributions due to non-controlling interest (30,000) (30,000)
Amortization of discount on redeemable preferred stock   (5,922) (5,922)
Net loss   (2,705,862) (2,705,862)
Ending balance, value at Jun. 30, 2022 $ 973 $ 17,505 $ 10 6,012,900 (308,512) (10,119,022) (4,396,146)
Shares outstanding at Jun. 30, 2022 9,724,401 1,167 100,000        
Stock exchange
Stockholder contribution
Distributions due to non-controlling interest (30,000) (30,000)
Amortization of discount on redeemable preferred stock   (5,922) (5,922)
Net loss   (125,378) (125,378)
Ending balance, value at Sep. 30, 2022 $ 973 $ 17,505 $ 10 6,012,900 (338,512) (10,250,322) (4,557,446)
Shares outstanding at Sep. 30, 2022 9,724,401 1,167 100,000        
Beginning balance, value at Dec. 31, 2022 $ 973 $ 17,505 $ 10 6,012,900 (368,512) (10,398,416) (4,735,540)
Shares outstanding at Dec. 31, 2022 9,724,401 1,167 100,000        
Stockholder contribution 8,250 8,250
Distributions due to non-controlling interest (30,000) (30,000)
Amortization of discount on redeemable preferred stock (5,922) (5,922)
Net loss   (249,584) (249,584)
Ending balance, value at Mar. 31, 2023 $ 973 $ 17,505 $ 10 6,021,150 (398,512) (10,653,922) (5,012,796)
Shares outstanding at Mar. 31, 2023 9,724,401 1,167 100,000        
Beginning balance, value at Dec. 31, 2022 $ 973 $ 17,505 $ 10 6,012,900 (368,512) (10,398,416) (4,735,540)
Shares outstanding at Dec. 31, 2022 9,724,401 1,167 100,000        
Net loss             (414,460)
Ending balance, value at Sep. 30, 2023 $ 1,123 $ 17,505 $ 10 6,039,790 (458,512) (10,830,641) (5,230,725)
Shares outstanding at Sep. 30, 2023 11,224,401 1,167 100,000        
Beginning balance, value at Mar. 31, 2023 $ 973 $ 17,505 $ 10 6,021,150 (398,512) (10,653,922) (5,012,796)
Shares outstanding at Mar. 31, 2023 9,724,401 1,167 100,000        
Stockholder contribution 8,250 8,250
Distributions due to non-controlling interest (30,000) (30,000)
Amortization of discount on redeemable preferred stock (5,922) (5,922)
Net loss   (85,273) (85,273)
Sale of common stock $ 150 1,350 1,500
Sale of common stock, shares 1,500,000            
Ending balance, value at Jun. 30, 2023 $ 1,123 $ 17,505 $ 10 6,030,750 (428,512) (10,745,117) (5,124,241)
Shares outstanding at Jun. 30, 2023 11,224,401 1,167 100,000        
Stockholder contribution 9,040 9,040
Distributions due to non-controlling interest (30,000) (30,000)
Amortization of discount on redeemable preferred stock (5,922) (5,922)
Net loss   (79,602) (79,602)
Sale of common stock  
Ending balance, value at Sep. 30, 2023 $ 1,123 $ 17,505 $ 10 $ 6,039,790 $ (458,512) $ (10,830,641) $ (5,230,725)
Shares outstanding at Sep. 30, 2023 11,224,401 1,167 100,000        
v3.23.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Cash Flows from Operating Activities:    
Net loss $ (414,460) $ (2,957,601)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation Expense 237
Accretion of origination fee income
Amortization of deferred loan costs
Payroll protection loan forgiveness
Changes in operating assets and liabilities:    
Increase in judgments payable 144,147 1,518,000
Increase in settlements payable 1,000,000
Increase in interest receivable
Increase in accrued management fees - related party 112,500 112,500
Decrease in accounts payable and accrued expenses 96,302 195,965
Increase in interest payable 11,025 2,100
Increase in notes payable - related party 23,845 19,688
Net cash used in operating activities (26,641) (109,111)
Cash Flows from Investing Activities:    
Net cash from investing activities
Cash Flows from Financing Activities:    
Proceeds from short term loan   35,000
Proceeds from sale of stock 1,500  
Proceeds from stockholder contribution 25,540 73,650
Net cash provided by (used in) financing activities 27,040 108,650
Net increase (decrease) in cash 400 (461)
Cash and restricted cash at beginning of year 588
Cash and restricted cash at end of year 400 127
Supplemental Disclosure of Cash Flow Information:    
Interest
Income Taxes
Schedule of Non-Cash Investing and Financing Activities:    
Distribution due to non-controlling interest 90,000 90,000
Amortization of discount on redeemable preferred stock $ 17,766 $ 17,766
v3.23.3
ORGANIZATION AND DESCRIPTION OF BUSINESS
9 Months Ended
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Alpha Investment Inc, formerly GoGo Baby, Inc. (the “Company”) was incorporated on February 22, 2013 under the laws of the State of Delaware to develop, create, manufacture and market, toys for small children which would be designed to attach to car seats and amuse and entertain children during a drive, without distracting the attention of the driver. The Company, however, encountered significant constraints in raising sufficient capital to fully implement its business plan.

 

To better reflecting management’s shifted focus of the Company’s business to real estate and other commercial lending, on March 30, 2017, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Delaware Secretary of State changing its name from “Gogo Baby, Inc.” to “Alpha Investment Inc.”. The name change and a corresponding change in the Company’s OTC markets trading symbol from GGBY to ALPC received approval from FINRA and became effective as of April 19, 2017.

 

On March 11, 2019, the Company, through Alpha Mortgage Notes I, LLC (the “SPV”) entered into an operating agreement with Alameda Partners LLC, a Utah limited liability company (“Alameda Partners”). Alameda Partners acquired a ten percent (10%) equity interest in the SPV in exchange for a payment of $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 June 30, 2022, the SPV has not completed any transactions. 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.

 

v3.23.3
GOING CONCERN
9 Months Ended
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
GOING CONCERN

NOTE 2 – GOING CONCERN

 

Future issuances of the Company’s equity or debt securities will be required for the Company to continue to finance its operations and continue as a going concern. The Company’s present revenues are insufficient to meet operating expenses. The financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $10,830,641 as of September 30, 2023. During the nine months ended September 30, 2023, the Company used $26,641 of cash in operations and incurred a net loss of $414,460. The Company 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 financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for future periods or the full year.

 

accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for future periods or the full year.

 

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of the Company, Alpha Mortgage Notes I, LLC, which is controlled by the Company through its 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 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.

 

Cash and Cash Equivalents

 

Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition. As of September 30, 2023, the Company has $400 in cash and no cash equivalents.

 

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 $1,633,380 as of September 30, 2023 and December 31, 2022.

 

Property and Equipment

 

Property and equipment are stated at cost. Equipment and fixtures will be depreciated using the straight-line method over the estimated asset lives, 5 years. As at September 30, 2023 and December 31, 2022, the Company recorded $0 in property and equipment, and recorded $0  and $237 in depreciation expense at September 30, 2023 and 2022, respectively.

 

Income Taxes

 

The Company accounts for its income taxes in accordance with FASB Accounting Standards Codification (“ASC”) No. 740, "Income Taxes". Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.

 

Accounting for Uncertainty in Income Taxes

 

The Company applies the provisions of ASC Topic 740-10-25, Income Taxes – Overall – Recognition (“ASC Topic 740-10-25”) with respect to the accounting for uncertainty of income tax positions. ASC Topic 740-10-25 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-25 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of September 30, 2023, 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 Company has no income for the nine months ended September 30, 2023 and 2022.

 

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. At December 31, 2022, the Company evaluated the collectability of its loans and lines of credit receivable, in light of economic conditions during the Covid-19 pandemic, established an allowance account to bring these to $0. Accordingly, there is no imputed interest receivable for the nine months ended September 30, 2023.

 

Variable Interest Entity

 

The Company holds a 10% interest in Paris Med, of which the remaining 90% interest is held by Omega.  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 June 30, 2023, 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, Paris Med has total assets of $0  because  the Company established a full reserve against this VIE until such time as the loan is repaid.  See Note 4.  For the nine months ended September 30, 2023, Paris Med had no activity. At December 31 2022 and September 30, 2023, the Company established a full reserve against this VIE until such time as the loan is repaid.

 

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.

 

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 nine months ended September 30, 2023 and 2022, 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 $1,633,380 as of September 30, 2023 and December 31, 2022.

 

Recently Issued and Adopted Accounting Pronouncements

 

Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.

 

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 cancellable). 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. For an emerging growth company, the amendments in the update are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. 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.

 

 

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.

 

v3.23.3
LOANS RECEIVABLE, NET
9 Months Ended
Sep. 30, 2023
Receivables [Abstract]  
LOANS RECEIVABLE, NET

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, 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 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 fixed interest rate on the loan is 3.5% and all interest receivables are due at maturity. As of December 31, 2021, $477,500 had been advanced on the loan, 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, and 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 six months ended June 30, 2022 and 2021, the Company recognized $0 and $20,667, of the deferred issuance costs, which are carried at $0 as of June 30, 2022 and December 31, 2021. As of September 30, 2023 and December 31, 2022, the Company has established a full reserve against this loan until such time as the loan is repaid; the gross loan receivable balance is $0.

 

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, receivable balance is $250,000. The Company has established a full reserve against the $250,000 receivable balance until such time as the loan is repaid. As of September 30, 2023 and December 31, 2022, the receivable balance is $0.

 

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 $90,204,328maturing in 10 years, 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.  As of December 31, 2020, 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.  

 

  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 September 30, 2023, 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 September 30, 2023, 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.

 

In December 2022, the Company established a full reserve against this loan until such time as the loan is repaid. As of September 30, 2023 and December 31, 2022, the receivable balance is $0.

 

v3.23.3
COMMITMENTS AND CONTINGENCIES
9 Months Ended
Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 5 - 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. For the nine months ended September 30, 2023, the Company accrued $90,000 of distributions. As of September 30, 2023 $550,000 of minimum distributions are owed to the 10% partner.

 

Litigation

 

We are currently involved in the following legal proceedings:

 

Steven T. Matthiesen and Joanna K. Matthiesen, jointly and severally v. Tmothy Fussell et al. In the United States District Court, Southern District of Florida, Case No. 21CV62334. This breach of contract matter resulted in a default judgment against the Defendants in 2022 of $1,514,000 plus fees and costs. This case remains pending as to Defendants Timothy Fussell and Partners South Holdings, LLC only.

Fusion Lodgings LLC v. PLC et al, In the District Court, 160th Judicial District, Dallas County, TX, Cause No. DC-20-09139. This breach of contract matter resulted in a default judgment against the Defendants of $1,000,000 plus fees and costs.

 

Supplemental complaint for financial relief in regards to collections, In the circuit court of the eleventh judicial circuit in and for Miami-Dade County, Florida, case #2021-20869-CA01, seeking $144,147 plus 6% interest from 2013. The Company is currently in negotiations with plaintiff,

 

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.

 

v3.23.3
NOTE PAYABLE SHORT-TERM
9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
NOTE PAYABLE SHORT-TERM

NOTE 6 – NOTE PAYABLE SHORT-TERM

 

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 September 30, 2023 and December 31, 2022, the Company recorded $50,304 and $39,279 in Notes payable – short term. As of September 30, 2023 and 2022, the Company recorded $11,025 and $4,279 in interest expense.

 

v3.23.3
RELATED PARTY TRANSACTIONS
9 Months Ended
Sep. 30, 2023
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 7 – RELATED PARTY TRANSACTIONS

 

Loans receivable

 

The Company has extended lines of credit and loans to related parties. See Note 4.

 

 

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 not to exceed $300,000 per year. The agreement remains in effect until cancelled by Omega. During the nine months ended September 30, 2023 and 2022, the company accrued management fees of $112,500. Total management fees of $562,500 and $450,000 remain unpaid as of September 30, 2023 and 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. The note is in default and due on demand. As of September 30, 2023 and December 31, 2022, the Company recorded $255,592 and $231,747 in Notes payable - related party

 

v3.23.3
STOCKHOLDERS’ EQUITY
9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 8 – STOCKHOLDERS’ EQUITY

 

Temporary Equity

 

On November 27, 2017, 16,667 shares of Series 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. On January 15, 2018, the Company issued 20,000 shares of Series 2018 to Partners South Holding LLC for services provided at $15 per share, no warrants attached. 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 September 30, 2023 and December 31, 2022, was $451,864 and $434,098, net of unamortized discounts of $98,715 and $116,481, respectively.

 

Preferred Stock

 

Series A Convertible Preferred Stock.

 

In November 2017, the Company’s board of directors designated 100,000 authorized shares of Series A Convertible Preferred Stock (“Series A”). Each share of Series A has a par value of $15.00 and has no voting or dividend rights. Upon liquidation, dissolution or wining up, the holders of Series A shares are entitled to be paid out of the assets of the Company, if any, ratably with the common stock holders. Each share of Series A is convertible within one year of issuance into two shares of common stock of the Company. At any time after 180 days of issuance, the Company has the right, but not the obligation, to redeem all, but not less than all, of the outstanding Series A shares by paying cash, common stock, or a combination of both an amount equal to the par value of the Series A shares. On the one-year anniversary of issuance, the Company has an option to redeem the Series A shares for an amount equal to the par value of the Series A shares. There are 1,167 shares of Series A Convertible Preferred Stock outstanding as of September 30, 2023 and December 31, 2022.

 

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”). There are 100,000 shares of Series AA Convertible Preferred Stock outstanding as of September 30, 2023 and December 31, 2022.

 

Capital Contributions

 

During the nine months ended September 30, 2023, Omega Commercial Finance Corp made a cash contribution to the Company of $25,540. This was classified as capital contribution and recorded in additional paid-in capital.

 

 

Common Stock

 

On May 10, 2023, Omega Worldwide, an unaffiliated company, purchased 1,500,000 shares of common stock, par value $0.0001, for $1,500 cash or $0.001/share.

 

Common Stock Warrants

 

As of September 30, 2023, there are no outstanding warrants.

 

On September 9, 2022, warrants outstanding to acquire 350,000 shares expired.

 

As of September 30, 2022, there are warrants outstanding to purchase 170,000 shares for an exercise price of $15.00 over five years, which expire on December 14, 2022.

 

v3.23.3
SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2023
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

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.

 

v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for future periods or the full year.

 

accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for future periods or the full year.

 

Principles of Consolidation

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of the Company, Alpha Mortgage Notes I, LLC, which is controlled by the Company through its 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

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 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.

 

Cash and Cash Equivalents

Cash and Cash Equivalents

 

Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition. As of September 30, 2023, the Company has $400 in cash and no cash equivalents.

 

Loans Receivable, net and Allowance for Losses

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 $1,633,380 as of September 30, 2023 and December 31, 2022.

 

Property and Equipment

Property and Equipment

 

Property and equipment are stated at cost. Equipment and fixtures will be depreciated using the straight-line method over the estimated asset lives, 5 years. As at September 30, 2023 and December 31, 2022, the Company recorded $0 in property and equipment, and recorded $0  and $237 in depreciation expense at September 30, 2023 and 2022, respectively.

 

Income Taxes

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

Accounting for Uncertainty in Income Taxes

 

The Company applies the provisions of ASC Topic 740-10-25, Income Taxes – Overall – Recognition (“ASC Topic 740-10-25”) with respect to the accounting for uncertainty of income tax positions. ASC Topic 740-10-25 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-25 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of September 30, 2023, 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

Revenue Recognition and Investment Income

 

Origination fees collected at the time of investment are recorded against the loans receivable and amortized into net interest income over the lives of the related loans. Issuance costs incurred are capitalized along with the initial investment and amortized against net interest income over the lives of the related loans. The Company records interest income in accordance with ASC subtopic 835-30 "Imputation of Interest", using the effective interest method. The Company has no income for the nine months ended September 30, 2023 and 2022.

 

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. At December 31, 2022, the Company evaluated the collectability of its loans and lines of credit receivable, in light of economic conditions during the Covid-19 pandemic, established an allowance account to bring these to $0. Accordingly, there is no imputed interest receivable for the nine months ended September 30, 2023.

 

Variable Interest Entity

Variable Interest Entity

 

The Company holds a 10% interest in Paris Med, of which the remaining 90% interest is held by Omega.  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 June 30, 2023, 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, Paris Med has total assets of $0  because  the Company established a full reserve against this VIE until such time as the loan is repaid.  See Note 4.  For the nine months ended September 30, 2023, Paris Med had no activity. At December 31 2022 and September 30, 2023, the Company established a full reserve against this VIE until such time as the loan is repaid.

 

Fair Value

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.

 

Net Loss Per Share

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 nine months ended September 30, 2023 and 2022, because their impact was anti-dilutive.

 

Concentration of Credit Risk

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 $1,633,380 as of September 30, 2023 and December 31, 2022.

 

Recently Issued and Adopted Accounting Pronouncements

Recently Issued and Adopted Accounting Pronouncements

 

Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.

 

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 cancellable). 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. For an emerging growth company, the amendments in the update are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. 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.

 

 

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.

v3.23.3
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative)
9 Months Ended 12 Months Ended
Sep. 30, 2023
USD ($)
Dec. 31, 2019
USD ($)
Jul. 30, 2020
a
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]      
Distributions payable to real estate partnerships $ 90,000    
Joint Venture | Parsons Energy Group, LLC      
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]      
Leasehold mining rights, acres | a     1,200
Alpha Investment Inc. | Alpha Mortgage Notes I, LLC      
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]      
Proceeds from contributed capital   $ 1,000,000  
Distributions payable to real estate partnerships   $ 10,000  
v3.23.3
GOING CONCERN (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]                  
Accumulated deficit $ 10,830,641           $ 10,830,641   $ 10,398,416
Net cash used in operating activities             26,641 $ 109,111  
Net income loss $ 79,602 $ 85,273 $ 249,584 $ 125,378 $ 2,705,862 $ 126,361 $ 414,460 $ 2,957,601  
v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Cash $ 400  
Allowance for doubtful accounts $ 1,633,380   1,633,380
Property and equipment, estimated useful life 5 years    
Property and equipment $ 0   0
Property and equipment, depreciation expense 0 $ 237  
Allowance for accounts and financing receivables     0
Variable interest entity, assets $ 400  
Shares Underlying Convertible Preferred Stock      
Shares excluded from computation of diluted loss per share 36,667 36,667  
Paris Med | Omega Commercial Finance Corp.      
Variable interest entity, ownership percentage in Paris MED 90.00%    
Paris Med | Variable Interest Entity      
Variable interest entity, assets     $ 0
Alpha Investment Inc. | Paris Med      
Variable interest entity, ownership percentage in Paris MED 10.00%    
Alpha Investment Inc. | Alpha Mortgage Notes I, LLC      
Managing member, ownership interest 90.00%    
v3.23.3
LOANS RECEIVABLE, NET (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended 12 Months Ended
May 02, 2018
Aug. 28, 2017
Jun. 30, 2022
Jun. 30, 2021
Dec. 31, 2021
Dec. 31, 2020
Sep. 30, 2023
Dec. 31, 2022
Jan. 28, 2020
Nov. 02, 2019
Partners South Holdings LLC                    
Financing Receivable, Past Due [Line Items]                    
Loan receivable in the form of a revolving line of credit   $ 3,600,000         $ 0 $ 0    
Reduction of loan receivable in the form of a revolving line of credit                 $ 657,500  
Interest rate   3.50%                
Advances of loan         $ 477,500          
Unamortized origination fees         180,000          
Deferred issuance costs         420,000          
Amortization of issuance costs     $ 0 $ 20,667            
Deferred issuance costs     $ 0   0          
Partners South Properties Corporation                    
Financing Receivable, Past Due [Line Items]                    
Loan receivable in the form of a revolving line of credit   $ 5,000,000                
Reduction of loan receivable in the form of a revolving line of credit                   $ 250,000
Interest rate   3.50%                
Maturity date   Aug. 31, 2022                
Loan receivable         $ 250,000          
Loan receivable, balance             $ 0 $ 0    
Paris Med                    
Financing Receivable, Past Due [Line Items]                    
Project financing to an unrelated third party $ 158,216,541                  
Paris Med | Construction Loans [Member]                    
Financing Receivable, Past Due [Line Items]                    
Financing receivable, commitment $ 90,204,328                  
Financing receivable, maturity maturing in 10 years                  
Advances on construction loan           $ 558,000        
Deferred income           $ 92,400        
Paris Med | Equipment Financing                    
Financing Receivable, Past Due [Line Items]                    
Financing receivable, commitment $ 24,715,986                  
Paris Med | Operations Financing                    
Financing Receivable, Past Due [Line Items]                    
Financing receivable, commitment $ 23,932,625                  
Financing receivable, maturity maturing in 10 years                  
v3.23.3
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2023
Dec. 31, 2019
Dec. 31, 2022
Loss Contingencies [Line Items]      
Distribution payable to noncontrolling interest $ 90,000    
Distributions payable 550,000   $ 460,000
Judicial Ruling      
Loss Contingencies [Line Items]      
Default judgement 1,514,000    
Judicial Ruling #2      
Loss Contingencies [Line Items]      
Default judgement 1,000,000    
Pending Litigation      
Loss Contingencies [Line Items]      
Damages sought, value 144,147    
Alpha Investment Inc. | Alpha Mortgage Notes I, LLC (SPV)      
Loss Contingencies [Line Items]      
Distribution policy, description   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.  
Distributions payable $ 550,000    
v3.23.3
NOTE PAYABLE SHORT-TERM (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Jun. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Short-Term Debt [Line Items]            
Maturity date     Dec. 29, 2022      
Interest expense $ 10,237 $ 8,662   $ 30,713 $ 21,787  
Notes Payable, Other Payables [Member]            
Short-Term Debt [Line Items]            
Note payable $ 50,304   $ 35,000 50,304   $ 39,279
Interest rate     24.00%      
Interest expense       $ 11,025 $ 4,279  
v3.23.3
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
1 Months Ended
Oct. 14, 2020
Jun. 30, 2017
Sep. 30, 2023
Dec. 31, 2022
Sep. 30, 2022
Related Party Transaction [Line Items]          
Management fee payable     $ 562,500 $ 450,000  
Note payable, related party     255,592 231,747  
Partners South Holdings LLC          
Related Party Transaction [Line Items]          
Note payable $ 175,000        
Interest rate 10.00%        
Maturity date Dec. 15, 2020        
Note payable, related party     255,592 231,747  
Corporate Governance Management Agreement | Omega Commercial Finance Corp. and Omega Streets Capital          
Related Party Transaction [Line Items]          
Commitment, description   Omega is to provide services related to facilitating the introduction of potential investors for compensation not to exceed $300,000 per year. The agreement remains in effect until cancelled by Omega.      
Accrued management fees     112,500   $ 112,500
Management fee payable     $ 562,500 $ 450,000  
v3.23.3
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)
1 Months Ended 9 Months Ended
May 10, 2023
Sep. 09, 2022
Nov. 27, 2017
Sep. 30, 2023
Dec. 31, 2022
Sep. 30, 2022
Feb. 28, 2021
Jan. 15, 2018
Nov. 30, 2017
Class of Stock [Line Items]                  
Proceeds from issuance of equity       $ 1,500          
Convertible Preferred Stock, net of discount       $ 451,864 $ 434,098        
Preferred stock, shares authorized       20,000,000 20,000,000        
Preferred stock, par value       $ 0.0001 $ 0.0001        
Number of warrants expired   350,000              
Number of warrants outstanding           170,000      
Exercise price           $ 15.00      
Term of warrants           5 years      
Number of warrants outstanding           Dec. 14, 2022      
Omega Worldwide LLC                  
Class of Stock [Line Items]                  
Sale of shares 1,500,000                
Sale of shares, value $ 1,500                
Sale of shares, price per share $ 0.001                
Omega Commercial Finance Corp.                  
Class of Stock [Line Items]                  
Capital contributions       $ 25,540          
Series A Convertible Preferred Stock                  
Class of Stock [Line Items]                  
Preferred stock, shares authorized       100,000 100,000       100,000
Preferred stock, par value       $ 15.00 $ 15.00       $ 15.00
Preferred stock, shares outstanding       1,167 1,167        
Series AA Convertible Preferred Stock                  
Class of Stock [Line Items]                  
Preferred stock, shares authorized       100,000 100,000   100,000    
Preferred stock, par value       $ 0.0001 $ 0.0001        
Preferred stock, shares outstanding       100,000 100,000        
Series 2018 Convertible Preferred Stock                  
Class of Stock [Line Items]                  
Temporary equity, shares issued     16,667            
Temporary equity, par value     $ 15.00            
Proceeds from issuance of equity     $ 250,000            
Temporary equity, additional disclosure     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.            
Amortization of discount     $ 236,897            
Convertible Preferred Stock, net of discount       $ 451,864 $ 434,098        
Unamortized discount       $ 98,715 $ 116,481        
Series 2018 Convertible Preferred Stock | Partners South Holdings LLC                  
Class of Stock [Line Items]                  
Temporary equity, shares issued               20,000  
Temporary equity, par value               $ 15  

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