RISK FACTORS
An investment in our Shares involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus, including information in the section of this prospectus entitled
Special Note Regarding Forward-Looking Statements
. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of our common stock could decline, and you may lose all or part of your investment.
Risks Related to Our Business
We have a limited operating history upon which an evaluation of our prospects can be made.
Alpha Investment was incorporated on February 22, 2013 under the name GoGo Baby, Inc. 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 such business plan. The Company only shifted its business focus to commercial estate and other asset-based lending activities upon completion of the Control Share Acquisition on March 17, 2017. To date, he Company has realized only minimal revenues therefrom and has no operating history in its present line of business upon which an evaluation of our future prospects can be made. Based upon current plans, we expect to incur operating losses in future periods as we incur expenses associated with the implementation of our new business plan. Further, we cannot guarantee that we will be successful in realizing revenues from our new line of business or in achieving or sustaining positive cash flow at any time in the future. Any such failure could result in the possible closure of our business or force us to seek additional capital through loans or additional sales of our equity securities to continue business operations, which would dilute the value of any Shares you purchase.
We have a history of losses, our accountants expressed doubts about our ability to continue as a going concern and we require additional capital to execute our business plan.
As of the date of this prospectus, we have not yet achieved profitable operations. We have accumulated losses, a working capital deficiency and we expect to incur further losses in the implementation of our current business plan, all of which, according to our accountants, casts substantial doubt about our ability to continue as a going concern. We will require additional funds through the receipt of conventional sources of capital or through future sales of our Shares, until such time as our revenues are sufficient to meet our cost structure, and ultimately achieve profitable operations. These actions will result in dilution of the ownership interests of existing stockholders and may further dilute our book value, and that dilution may be material.
We may use the proceeds of the Direct Offering to pay for our expenses even if our business is terminated and this means you may lose your entire investment.
Any funds raised in from the Direct Offering may be used immediately for our incurred expenses, even if we are later unable to fully implement our business plan. If this occurs, you may not receive your entire investment back because either we have used it to pay for offering costs or we have decided to liquidate and we are required to pay for other debts and liabilities. You may lose your entire investment.
Any loans we make may be highly illiquid therefore we may not be able to liquidate such investments in a timely manner.
Any loans we make may be highly illiquid with no established market, and there can be no assurance that we will be able to liquidate such investments in a timely manner. Although loans and other investments we seek to make may generate current income, the return of capital and the realization of gains, if any, from such investments generally will occur only upon the partial or complete realization or disposition of such loan or investment.
Any Loans that are believed to fall under our commercial real estate propriety lending model can fail at any time if the following criteria is not properly vetted by ALPC. This covers the following four areas of our lending risk:
·
Conservative Lending Platform
. These conservative lending parameters often referred to as A Paper inherently contain the least amount of risk in that it undergoes very conservative underwriting and offers the lowest rates of returns.
11
·
Alt-A Loans
. These loans offer a bit more leeway than A Paper loans such as slightly higher loan amounts compared to the value of the property and garner slightly higher interest rates from the borrower as compared to the A Paper Loans.
·
Bridge Loans
. Commercial bridge loans are a flexible loan arrangement intended to provide short term financing until an exit strategy, such as a refinance or sale can be executed. These loans also garner higher interest rates.
·
Hard Money Loans
. A hard money loan is primarily secured and underwritten by the commercial real estate asset itself and not primarily as much on the borrower. These types of loans bring in higher rates than most other lending categories.
Loans made by us may become uncollectible and large amounts of uncollectible debt may materially affect our performance.
The loans made by may be highly illiquid and involve substantial risks. Many, and possibly all, of the loans will not be personally guaranteed. We will attempt to use information to help eliminate uncollectible debt resulting from bankruptcy, but no assurance can be made that we will be able to do so. If our debt portfolio contains a large portion of uncollectible debt, our performance may be negatively affected. In addition, if any borrower defaults on a loan, we may be required to expend monies in connection with foreclosure proceedings and other remedial actions which could adversely affect our performance. Certain loans may be affected negatively by economic, political, interest rate and other risks, any of which could result in an adverse change in the value of the asset that is used as collateral for the loan.
We intend to use leverage as part of our investment strategy which may substantially increase our risk of loss.
We have anticipated that certain loans will be originated or purchased using leverage available to us, thus increasing both net returns as well as risk. Although the use of leverage as part of our investment strategy may enhance returns and increase the number of investments that can be made, it may also substantially increase our risk of loss.
Our investment strategy is dependent upon servicers to originate and administer loans; failure of our servicers to originate loans in sufficient quantity and quality may cause us to fail to effectively implement our investment strategy.
We will be largely dependent upon servicers (i.e., third-party firms that specialize in loan origination and servicing) to originate and administer loans in our portfolio. Should our servicers fail to originate the loans in sufficient quantity and quality, we will be unable to effectively implement our investment strategy. Should such servicers fail to properly administer and service loans, including monitoring borrowers compliance with the terms of the relevant loan documents, collecting and forwarding loan payments to us, and adequately pursuing and protecting our rights under the loan documents, any such failure could have a material adverse effect on us and our investment operations. In addition, should any servicer default on its guaranty, if any, of a borrowers obligation to repay a loan, such default could significantly harm our business, results of operations, financial condition and prospects.
In addition to servicers, we may retain mortgage brokers to introduce loans to us that satisfy our investment criteria, and pay commissions to such mortgage brokers based on the value of such loans. Some of these mortgage brokers may be deemed to be affiliates of management. We believe that all commissions payable to such persons or other affiliates of management will be reasonable and consistent with industry standards.
We may appraise loans at a value that is materially different from the value ultimately realized.
We intend to make and value loans, in part, on the basis of information and data gathered from independent appraisal professionals. Although we expect to evaluate all such information and data and may seek independent corroboration when appropriate and reasonably available, we are not in a position to confirm the completeness, genuineness or accuracy of such information and data, and in some cases, complete and accurate information may not be available. It is possible that the appraised value of a loan may differ materially from the actual value ultimately realized by us with respect to such loan.
Our loan portfolio may be concentrated which could lead to increased risk.
It is possible that the portfolio of loans we make or any loan portfolio we may acquire will likely be concentrated in a limited number of loan investments. Thus, our stockholders may have limited diversification. In addition, if we make an investment in a single transaction with the intent of refinancing or selling a portion of the investment, there is a risk that we will be unable to successfully complete such a financing or sale. This could lead to increased risk as a result of having an unintended long-term investment and reduced diversification.
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We intend to make collateralized real estate loans which will subject us to various risks associated with the real estate industry.
We intend to make loans collateralized by real estate. Therefore, an investment in us may be subject to certain risks associated with the real estate industry in general. These risks include, without limitation: possible declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds; overbuilding; extended vacancies of properties; increases in competition, property taxes and operating expenses; changes in zoning laws; costs resulting from the clean-up of, and liability to third parties for damages resulting from, environmental problems; casualty or condemnation losses; uninsured damages from floods, earthquakes or other natural disasters; limitations on and variations in rents; and changes in interest rates. To the extent that our investments, or the assets of underlying or collateralizing our investments, are concentrated geographically, by property type or in certain other respects, we may be subject to the foregoing risks to a greater extent.
If third parties default or enter bankruptcy, we could suffer losses.
We may engage in transactions in securities and financial instruments that involve counterparties. Under certain conditions, we could suffer losses if counterparty to a transaction were to default or if the market for certain securities and/or financial instruments were to become illiquid. In addition, we could suffer losses if there were a default or bankruptcy by certain other third parties, including brokerage firms and banks with which we do business, or to which securities have been entrusted for custodial purposes.
We may make loans or purchase investments in foreign countries which may lead to additional risks not inherent to domestic lending.
We may make loans or purchase investments in foreign countries, some of which may prove to be unstable. As with any investment in a foreign country, there exists the risk of adverse political developments, including nationalization, acts of war or terrorism, and confiscation without fair compensation. Furthermore, any fluctuation in currency exchange rates will affect the value of investments in foreign securities or other assets and any restrictions imposed to prevent capital flight may make it difficult or impossible to exchange or repatriate foreign currency. In addition, laws and regulations of foreign countries may impose restrictions or approvals that would not exist in the United States and may require financing and structuring alternatives that differ significantly from those customarily used in the United States. Foreign countries also may impose taxes on us. We will analyze risks in the applicable foreign countries before making such investments, but no assurance can be given that a political or economic climate, or particular legal or regulatory risks, might not adversely affect our investments.
Purchases of investment securities could make us subject to the Investment Company Act.
As part of our business, we intend to purchase commercial mortgage-backed securities and other commercial real estate-related debt investments, as well as engage in various direct participation equity ownership opportunities. Notwithstanding the foregoing, we intend to operate our business so that we do not become subject to the Investment Company Act. Accordingly, we do not plan to primarily engage in the business of investing, reinvesting or trading in securities and we do not plan to acquire investment securities (such as the above-referenced commercial mortgage-backed securities) having a value exceeding 40% of the value of the Companys total assets. In the event we were to do so or to not comply with the foregoing limitations, we could inadvertently be subject to the requirements of the Investment Company Act, which could be costly and harm our business and financial results.
We currently rely on our executive officers and the loss of either of their services could have an adverse effect on the Company.
Until we further build up our management infrastructure, our success depends in large part upon the services of our officers, Todd C. Buxton, our CEO and Timothy R. Fussell, Ph.D., our President. The loss of either of their services would currently have a material adverse effect on Alpha Investment. We are not party to an employment agreement with our either of our executive officers and do not anticipate having key man insurance in place on them in the foreseeable future. Moreover, our CEO also serves as CEO of Omega. While we do not believe that such position will materially interfere with his duties at Alpha Investment or pose any conflict of interest, there can be no assurance given in this regard.
If we are unable to attract and retain additional personnel in the commercial lending field, our ability to compete will be harmed.
Attracting and retaining qualified personnel in the commercial lending field will be critical to our success, and competition for qualified personnel is intense. We may not be able to attract and retain such personnel on acceptable terms given the competition for such personnel. The inability to attract and retain qualified personnel could harm our business and our ability to compete.
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We will face significant competition and if we are unable to effectively compete, our business, results of operations, financial condition and prospects may be seriously harmed.
The commercial lending field is highly competitive and we will face significant competition from other lenders, including banks, insurance companies and other lenders, many of which have significantly longer operating histories and financial resources than does Alpha Investment. We believe that we will be able to effectively compete based on our ability to leverage on the industry experience, platforms and resources of Omega and its affiliates, in order to expedite and facilitate our ability to underwrite and structure complex financing transactions and enable Alpha Investment to develop and implement customized creative capital solutions for other lenders, mortgage bankers, borrowers, and owners. However, there can be no assurance given that we can successfully do so and if we are unable to effectively compete, our business, results of operations, financial condition and prospects may be seriously harmed.
If the investor in the $2,500,000 Private Offering exercises its right to cause the Company to repurchase the Shares subscribed for, our financial condition may be harmed.
On September 20, 2017, we consummated the sale of 166,667 Shares to a single accredited investor for $2,500,000 or $15.00 per Share in the $2,500,000 Private Offering. At closing, the aggregate gross proceeds of $2,500,000 were deposited in the escrow account of the Escrow Agent, purchasers counsel. Pursuant to the terms of the $2,500,000 Private Offering, the purchaser has the right, exercisable through December 24, 2017, to cause the company to repurchase the Shares at the purchase price paid. If the purchaser exercises that right, the proceeds from the $2,500,000 Private Offering will not be released to the Company and accordingly, pending completion of the Direct Offering, our financial condition and business operations may be harmed.
Risks Related to the Companys Relationship with its Directors, Officers and Principal Stockholder
The Company does not have a policy that expressly prohibits its directors, officers and principal stockholders or their respective affiliates from engaging in their own commercial real estate lines of credit and or in business activities common with those conducted by the Company.
The Company does not have a policy that expressly prohibits its directors, officers, principal stockholders or their respective affiliates from engaging for their own account in business activities of the types conducted by the Company. The Companys code of business conduct and ethics contains a conflict of interest policy that prohibits its directors and executive officers, or whoever provides services to the Company, from engaging in any transaction that involves an actual conflict of interest with the Company,
provided
,
however
, that once the Company adds independent directors to its board, any such conflict may by a majority vote of independent directors.
ALPC, as a company, has limited experience in commercial lending and accordingly, will be dependent in significant part on its principal stockholder, Omega and its affiliates to generate loans through their net work of commercial real estate professionals.
ALPC, as a company, has limited experience in commercial lending and accordingly, will be dependent in significant part on its principal stockholder, Omega and its affiliates to generate loan referrals. In addition, Omega If Omega and its affiliates are not able to do so, if their business is harmed for any reason or if there is an adverse development in the relationship between Alpha Investment and the lender financing program, our business, results of operations, financial condition and prospects may be seriously harmed
There are various conflicts of interest in the Companys relationships involving its directors and officers, which could result in decisions that are not in the best interest of the Companys stockholders. The ability of the directors and its officers and employees to engage in other business activities may reduce the time the director and officers spend managing the Companys business.
The Company is subject to conflicts of interest arising out of its relationship with directors and officers. The Company has and may enter commercial real estate lines of credit with its directors and officers. The Company has invested in and may in the future invest in, or acquire, certain investments through CRE lines of credit with its directors and officers. In addition, our Chief Executive Officer occupies a similar position with Omega, our principal stockholder. There can be no assurance that any procedural protections will be sufficient to assure that these transactions will be made on terms that will be at least as favorable to the Company as those that would have been obtained in an arms length transaction.
The Company currently has a total of $8,600,000 outstanding in unsecured commercial real estate lines of credit executed with Partners South Holdings LLC and Partners South Corporation, both of which are owned by the Chairman of the Company.
The Company currently has a total of $8,600,000 outstanding in unsecured commercial real estate lines of credit executed with Partners South Holdings LLC and Partners South Corporation, both of which are owned by the Chairman of the Company. The occurrence of a default under any of the lines of credit would have a material adverse effect on our business, financial condition and results of operations, including, among other matters, an adverse effect on our ability to raise additional capital in the Direct Offering contemplated hereby.
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The Company's business may be adversely affected if its reputation, the reputation of its directors, officers or principal stockholder or the reputation of counterparties with whom the Company associates, is harmed.
The Company may be harmed by reputational issues and adverse publicity associated with the Company, or its directors, officers or principal stockholder. Issues could include real or perceived legal or regulatory violations or could be the result of a failure in performance, risk-management, governance, technology or operations, or claims related to employee misconduct, conflict of interests, ethical issues or failure to protect private information, among others. Similarly, market rumors and actual or perceived association with counterparties whose own reputation is under question could harm the Company's business. Such reputational issues may depress the market price of the Company's capital stock or have a negative effect on the Company's ability to attract counterparties for its transactions, or otherwise adversely affect the Company.
Risks Related to Our Status as a Public Company
We are and will continue to be subject to the periodic reporting requirements of the Exchange Act that require us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to earn a profit.
We are and after the date of this prospectus we will continue to be required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. The costs charged by professionals for accounting and legal services in connection with these reports cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our auditors and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our Shares, if a market ever develops, could drop significantly.
Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public and we have identified material weaknesses in our internal controls and concluded that our internal controls are not effective..
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rule 13a-15(f) under the Exchange Act, internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, 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 and includes those policies and procedures that:
●
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
●
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 of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and
●
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company
s assets that could have a material effect on the financial statements.
We will be required to include a report of management on the effectiveness of our internal control over financial reporting. We expect to incur additional expenses and diversion of managements time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the management certification requirements.
We do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identify other deficiencies that we may not be able to timely remediate. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.
15
Based on the most recent evaluation of our internal controls as of March 31, 2018, management concluded that our disclosure controls and procedures were not effective at the reasonable assurance level in that:
●
We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
●
We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Our Chief Executive Officer evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
The Jobs Act has reduced the information that the Company is
required to disclose.
Under the Jobs Act, the information that the Company will be required to disclose has been reduced in a number of ways.
As a company that had gross revenues of less than $1 billion during the Companys last fiscal year, the Company is an
emerging growth company
, as defined in the Jobs Act (an
EGC
). The Company will retain that status until the earliest of (a) the last day of the fiscal year which the Company has total annual gross revenues of $1,000,000,000 (as indexed for inflation in the manner set forth in the Jobs Act) or more; (b) the last day of the fiscal year of following the fifth anniversary of the date of the first sale of the common stock pursuant to an effective registration statement under the Securities Act; (c) the date on which the Company has, during the previous three year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which the Company is deemed to be a
large accelerated filer
, as defined in Rule 12b-2 under the Exchange Act or any successor thereto. As an EGC, the Company is relieved from the following:
●
The Company is excluded from Section 404(b) of Sarbanes-Oxley Act (
Sarbanes-Oxley
), which otherwise would have required the Company
s auditors to attest to and report on the Company
s internal control over financial reporting. The Jobs Act also amended Section 103(a)(3) of Sarbanes-Oxley to provide that (i) any new rules that may be adopted by the PCAOB requiring mandatory audit firm rotation or changes to the auditors report to include auditor discussion and analysis (each of which is currently under consideration by the PCAOB) shall not apply to an audit of an EGC; and (ii) any other future rules adopted by the PCAOB will not apply to the Companys audits unless the SEC determines otherwise.
●
The Jobs Act amended Section 7(a) of the Securities Act to provide that the Company need not present more than two years of audited financial statements in an initial public offering registration statement and in any other registration statement, need not present selected financial data pursuant to Item 301 of Regulation S-K for any period prior to the earliest audited period presented in connection with such initial public offering. In addition, the Company is not required to comply with any new or revised financial accounting standard until such date as a private company (i.e., a company that is not an
issuer
as defined by Section 2(a) of Sarbanes-Oxley) is required to comply with such new or revised accounting standard. Corresponding changes have been made to the Exchange Act, which relates to periodic reporting requirements, which would be applicable if the Company were required to comply with them.
●
As long as the Company is an EGC, the Company may comply with Item 402 of Regulation S-K, which requires extensive quantitative and qualitative disclosure regarding executive compensation, by disclosing the more limited information required of a
smaller reporting company
.
●
In the event that the Company registers its common stock under the Exchange Act as it intends to do, the Jobs Act will also exempt the Company from the following additional compensation-related disclosure provisions that were imposed on U.S. public companies pursuant to the Dodd-Frank Act: (i) the advisory vote on executive compensation required by Section 14A(a) of the Exchange Act; (ii) the requirements of Section 14A(b) of the Exchange Act relating to shareholder advisory votes on
golden parachute
compensation; (iii) the requirements of Section 14(i) of the Exchange Act as to disclosure relating to the relationship between executive compensation and our financial performance; and (iv) the requirement of Section 953(b)(1)of the Dodd-Frank Act, which requires disclosure as to the relationship between the compensation of the Companys chief executive officer and median employee pay.
16
Our status as an emerging growth company under the Jobs Act may make it more difficult to raise capital as and when we need it.
Because of the exemptions from various reporting requirements provided to us as an
emerging growth company
and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our business, results or operations, financial condition and prospects may be materially and adversely affected.
Risks Related to Our Shares and this Offering
You will experience immediate and substantial dilution as a result of this Direct Offering and may experience additional dilution in the future.
If you purchase Shares in the Direct Offering, you will incur immediate and substantial dilution of $8.18 per Share, representing the difference between the assumed initial public offering price of $15.00 per Share and our pro forma net tangible book value per Share as of December 31, 2017 after giving effect to consummation of the October Private Offering and the Direct Offering, assuming all the Shares offered hereby in the Direct Offering are sold.
We do not expect to pay cash dividends in the foreseeable future.
We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the foreseeable future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.
The future issuance of equity or of debt securities that are convertible into equity will dilute our Share capital.
We may choose to raise additional capital in the future, depending on market conditions, strategic considerations and operational requirements. To the extent that additional capital is raised through the issuance of Shares or other securities convertible into Shares, our stockholders will be diluted. Future issuances of our common stock or other equity securities, or the perception that such sales may occur, could adversely affect the trading price of our common stock and impair our ability to raise capital through future offerings of Shares or equity securities. No prediction can be made as to the effect, if any, that future sales of common stock or the availability of common stock for future sales will have on the trading price of our common stock.
The ability of Omega, our principal stockholder, to effectively control our business may limit or eliminate minority stockholders ability to influence corporate affairs.
Omega, our principal stockholder, will own, assuming the sale of all 33,333,333 Shares offered in the Direct Offering, approximately 48.3% of our issued and outstanding common stock. Accordingly, they will be able to effectively control the election of directors, as well as all other matters requiring stockholder approval. The interests of Omega may differ from the interests of other stockholders with respect to the issuance of Shares, business transactions with other companies, selection of other directors and other business decisions. The minority stockholders have no way of overriding decisions made by Omega. This level of control may also have an adverse impact on the market value of our Shares because Omega may institute or undertake transactions, policies or programs that result in losses may not take any steps to increase our visibility in the financial community and
/
or may sell sufficient numbers of Shares to significantly decrease our price per Share.
Our Certificate of Incorporation and Bylaws provide for indemnification of officers and directors at our expense and limit their liability that may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit of officers and/or directors.
Our Certificate of Incorporation and Bylaws provide for the indemnification of our officers and directors. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933, as amended (the Securities Act) and is therefore, unenforceable.
17
The offering price of the Shares and the other terms of the Direct Offering have been arbitrarily determined by the Company.
The offering price of the Shares and other terms of the Direct Offering have been arbitrarily determined by the Company and bear no relationship to the Companys assets, book value, potential earnings or any other recognized criterion of value.
In addition, no investment banker, appraiser, or other independent third party has been consulted concerning the offering price for the Shares or the fairness of the offering price used for the Shares.
The Shares in the Direct Offering are being offered and sold on a self-underwritten, best efforts basis.
The Shares in the Direct Offering are being offered and sold in a direct public offering on a
self-underwritten, best efforts
basis, which means (a) no minimum number of Shares need be subscribed for in order for the Company to consummate the sale of any of the Shares and utilize the proceeds therefrom; and (b) the Company will not use the services of an underwriter and our executive officers and directors will attempt to sell the Shares directly to investors. Subscription proceeds for Shares sold in the Direct Offering will be paid directly to the Company and will not be held in a segregated or escrow account. Moreover, the Direct Offering is self-underwritten and accordingly, there is no lead underwriter who would undertake a due diligence or comparable examination of the Company, its business and affairs.
Because our management will have broad discretion over the use of the net proceeds from the sale of Shares in the Direct Offering, you may not agree with how we use them and the proceeds may not be invested successfully.
We intend to use the net proceeds from the sale of the Shares in the direct Offering to support core business operations in the commercial real estate lending and asset backed financing sectors, strategic acquisition of cash flowing real estate companies and or real estate holdings, as well as to expand administrative and support staff, as needed and for working capital and other general corporate purposes. Therefore, our management will have broad discretion as to the use of the net proceeds from the Direct Offering. Accordingly, you will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the such proceeds are being used appropriately. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for the Company.
A liquid trading market for our Shares may not develop and be sustained.
Our Shares are quoted on the OTCPink tier of the over-the counter market operated by OTC Markets Group under the symbol
ALPC
. However, the trading market for our Shares has been extremely limited, there have only been minimal and sporadic public quotations for our Shares and there are no recent closing quotations for our Shares. A liquid trading market for our Shares may never develop or be sustained following the Direct Offering. If a liquid market for our common stock does not develop, or if developed, is not sustained, it may be difficult for you to sell Shares you purchase in the Direct Offering without depressing the market price for the Shares or at all. In addition, quotation of our securities on the OTCPink may limit the liquidity and price of our securities more than if our securities were quoted or listed on the OTCQX or OTCQB tiers of the over-the-counter market, the Nasdaq Stock Market or other national securities exchange. Further, institutional and other investors may have investment guidelines that restrict or prohibit investing in securities traded on the OTCPink tier of the over-the counter market. These factors may have an adverse impact on the trading and price of our common stock, if a liquid market develops and is sustained.
The market price for our common stock, assuming a liquid trading market develops and is sustained, may be particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history and lack of profits which could lead to wide fluctuations in our Share price. You may be unable to sell your Shares at or above your purchase price, which may result in substantial losses to you.
The market for our common stock, assuming a liquid trading market develops and is sustained may be characterized by significant price volatility when compared to seasoned issuers, and we expect that our Share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our Share price is attributable to a number of factors. First, as noted above, our common stock is sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of Shares by our stockholders may disproportionately influence the price of those Shares in either direction. The price for our Shares could, for example, decline precipitously in the event that a large number of our common stock are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or
risky
investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products and services. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their Shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our common stock will sustain their current market prices, or as to what effect that the sale of Shares or the availability of common stock for sale at any time will have on the prevailing market price.
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If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.
The trading market for our common stock, assuming a liquid market develops and is sustained, will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no or few securities or industry analysts commence coverage of us, the trading price for our Shares would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our target studies and operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
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