U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended | |
| Transition Report under Section 13 or 15(d) of the Exchange Act |
For the Transition Period from to |
Commission File Number:
Alpha Energy, Inc.
(Exact Name of Registrant as Specified in its Charter)
| | ||
(State of other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices) (Zip Code)
Registrant's Phone:
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or 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.
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).
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 the 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 | ☐ | Accelerated filer | ☐ | |
☐ | Smaller reporting company | |||
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
None |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of November 21, 2022, was
TABLE OF CONTENTS |
Page |
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PART I – FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
3 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operation |
13 |
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
15 |
Item 4. |
Controls and Procedures |
15 |
PART II – OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
15 |
Item 1A. |
Risk Factors |
15 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
15 |
Item 3. |
Defaults Upon Senior Securities |
15 |
Item 4. |
Mine Safety Disclosures |
15 |
Item 5. |
Other Information |
15 |
Item 6. |
Exhibits |
16 |
ITEM 1. FINANCIAL STATEMENTS
Page(s) |
|
Consolidated Balance Sheets (unaudited) |
4 |
Consolidated Statements of Operations (unaudited) |
5 |
Consolidated Statements of Stockholders' Deficit (unaudited) |
6 |
Consolidated Statements of Cash Flows (unaudited) |
7 |
Notes to the Consolidated Financial Statements (unaudited) |
8 |
Alpha Energy, Inc. |
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Consolidated Balance Sheets |
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(Unaudited) |
September 30, 2022 | December 31, 2021 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Joint interest billing receivable | ||||||||
Prepaid assets and other current assets | ||||||||
Total current assets | ||||||||
Noncurrent assets: | ||||||||
Property and equipment, net | ||||||||
Oil and gas property, unproved, full cost | ||||||||
Total noncurrent assets | ||||||||
Total assets | $ | $ | ||||||
Liabilities and Stockholders' Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Accounts payable and accrued expenses - related parties | ||||||||
Interest payable - related parties | ||||||||
Advances from related parties | ||||||||
Note payable - related party | ||||||||
Derivative liability | ||||||||
Convertible credit line payable – related party, net of discount of $ | ||||||||
Convertible note payable | ||||||||
Total current liabilities | ||||||||
Convertible credit line payable – related party, net of discount $ | ||||||||
Senior secured convertible notes payable, related party, net of discount of $ | ||||||||
Asset retirement obligation | ||||||||
Total liabilities | ||||||||
Commitments and contingencies | ||||||||
Stockholders' deficit: | ||||||||
Preferred stock, | shares authorized:||||||||
Series A convertible preferred stock, $ par value, shares authorized and shares issued and outstanding | ||||||||
Common stock, $ par value, shares authorized and and shares issued and outstanding, respectively | ||||||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total stockholders' deficit | ( | ) | ( | ) | ||||
Total liabilities and stockholders' deficit | $ | $ |
See accompanying notes to the unaudited consolidated financial statements. |
Alpha Energy, Inc. |
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Consolidated Statements of Operations |
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For the three and nine months ended September 30, 2022 and 2021 |
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(Unaudited) |
Three months ended | Nine months ended | |||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
Oil and gas sales | $ | $ | $ | $ | ||||||||||||
Lease operating expenses | ||||||||||||||||
Gross loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Operating expenses: | ||||||||||||||||
Professional services | ||||||||||||||||
Board of director fees | ||||||||||||||||
General and administrative | ||||||||||||||||
Gain on settlement of accounts payable | ( | ) | ||||||||||||||
Total operating expenses | ||||||||||||||||
Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Gain (loss) on change in fair value of derivative liabilities | ( | ) | ( | ) | ||||||||||||
Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Loss per share: | ||||||||||||||||
Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | ||||||||||||||||
Diluted |
See accompanying notes to the unaudited consolidated financial statements. |
Alpha Energy, Inc. |
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Consolidated Statements of Stockholders' Deficit |
||||||||||
For the nine months ended September 30, 2022 and 2021 |
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(Unaudited) |
Common Stock | Additional | Accumulated | Total Stockholders' | |||||||||||||||||
Shares | Amount | Paid-in Capital | Deficit | Deficit | ||||||||||||||||
Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
. | ||||||||||||||||||||
Stock-based compensation | ||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||||||
Balance, March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||
Stock-based compensation | ||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||||||
Balance, June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||
Stock issued for cash | ||||||||||||||||||||
Stock-based compensation | ||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||||||
Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
Balance, December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
Stock issued for settlement of liabilities | ||||||||||||||||||||
Stock-based compensation | ||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||||||
- | ||||||||||||||||||||
Balance, March 31, 2021 | ( | ) | ( | ) | ||||||||||||||||
Stock issued for cash | ||||||||||||||||||||
Stock-based compensation | ||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||||||
- | ||||||||||||||||||||
Balance, June 30, 2021 | ( | ) | ( | ) | ||||||||||||||||
Stock-based compensation | ||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||||||
Balance, September 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) |
See accompanying notes to the unaudited consolidated financial statements. |
Alpha Energy, Inc. |
Consolidated Statements of Cash Flows |
For the nine months ended September 30, 2022 and 2021 (Unaudited) |
September 30, 2022 | September 30, 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation expense | ||||||||
Stock-based compensation | ||||||||
Amortization of debt discount | ||||||||
(Gain) loss on change in fair value of derivative liabilities | ( | ) | ||||||
Gain on settlement of accounts payable | ( | ) | ||||||
Write off of option contract associated with oil and gas properties | ||||||||
Asset retirement obligation expense | ||||||||
Default interest added to note payable | ||||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Prepaid expenses and other current assets | ( | ) | ||||||
Accounts payable | ( | ) | ||||||
Accounts payable-related party | ( | ) | ||||||
Interest payable | ||||||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
Cash flows from investing activities: | ||||||||
Cash paid for purchase of equipment | ( | ) | ||||||
Acquisition of oil and gas property | ( | ) | ||||||
Deposits for purchase of oil and gas properties | ( | ) | ||||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from advances, related parties | ||||||||
Repayment of advances,related parties | ( | ) | ||||||
Proceeds from convertible credit line payable - related party | ||||||||
Payments on convertible credit line payable - related party | ( | ) | ||||||
Proceeds from note payable, related party | ||||||||
Proceeds from senior secured convertible notes payable, related party | ||||||||
Proceeds from the sale of common stock | ||||||||
Net cash provided by financing activities | ||||||||
Net change in cash and cash equivalents | ||||||||
Cash and cash equivalents, at beginning of period | ||||||||
Cash and cash equivalents, at end of period | $ | $ | ||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | $ | ||||||
Cash paid for income taxes | $ | $ | ||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Expenses paid on behalf of the Company by related party | $ | $ | ||||||
Oil and gas payments made by related party on behalf of the Company | $ | $ | ||||||
Stock issued for settlement of accounts payable | $ | $ | ||||||
Debt discount on senior secured convertible notes payable - related party | $ | |||||||
Advances and other liabilities converted to senior secured convertible notes payable, related party | $ | $ | ||||||
Debt discount from derivative liability | $ | $ |
See accompanying notes to the unaudited consolidated financial statements. |
Alpha Energy, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
NOTE 1 – BASIS OF PRESENTATION
The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2021 and 2020 which are included on the Form 10-K filed on April 4, 2022. In the opinion of management, all adjustments which include normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows for the periods shown have been reflected herein. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures which would substantially duplicate the disclosures contained in the audited consolidated financial statements for the years ended December 31, 2021, and 2020 have been omitted.
Principles of Consolidation
Our consolidated financial statements include our accounts and the accounts of our 100% owned subsidiary, Alpha Energy Texas Operating, LLC. All intercompany transactions and balances have been eliminated.
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 estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.
Basic and Diluted Loss per share
Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings (Loss) per Share”. Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For the three and nine months ended September 30, 2022 and 2021, there were
The reconciliation of basic and diluted loss per share is as follows:
Three months ended | Nine months ended | |||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
Basic net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Add back: (Gain) loss on change in fair value of derivative liabilities | ( | ) | ( | ) | ||||||||||||
Add back: Convertible debt interest | ||||||||||||||||
Diluted net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Basic and dilutive shares: | ||||||||||||||||
Weighted average basic shares outstanding | ||||||||||||||||
Shares issuable from convertible credit line payable | ||||||||||||||||
Shares issuable from senior secured convertible notes payable | ||||||||||||||||
Dilutive shares | ||||||||||||||||
Loss per share: | ||||||||||||||||
Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Fair Value of Financial Instruments
The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
The carrying amount of the Company’s financial instruments consisting of cash and cash equivalents, accounts payable, notes payable and convertible notes approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Reclassification
Certain reclassifications may have been made to our prior year’s financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.
Recently Issued Accounting Standards Not Yet Adopted
The Company has reviewed all recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that there are no recently issued accounting pronouncements that will have a significant effect on its financial statements.
NOTE 2 – GOING CONCERN
The Company’s interim unaudited consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has minimal cash or other current assets and does not have an established ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – OIL AND GAS PROPERTIES
On June 30, 2020, the Company entered into an option Agreement with Progressive Well Service, LLC (“Progressive”) to acquire oil and gas assets in Lincoln and Logan Counties in Central Oklahoma. On March 9, 2022, the Company closed on the acquisition of
The Company entered into a Letter of Intent with Chicorica, LLC on December 13, 2018 and extended the agreement through March 4, 2022. On March 1, 2022, the Company entered into an extension agreement with Chicorica to extend the Closing through August 5, 2022. In return, the Company must pay $
NOTE 4 – RELATED PARTY TRANSACTIONS
Advances from Related Party
The Company received advances from AEI Management, Inc., a Company owned by a significant shareholder, totaling $
The Company received advances from Jay Leaver, President of the Company, totaling $
As of September 30, 2022 and December 31, 2021, there was $
Accounts Payable and Accrued Expenses - Related Parties
As of September 30, 2022, there was $
As of December 31, 2021, there was $
Notes Payable - Related Party
On December 3, 2020, the Company executed a promissory note for $
NOTE 5 – COMMON STOCK
The Company is authorized to issue
The Company compensates each of its directors with
During the nine months ended September 30, 2022, the Company recorded stock compensation in the amount of $
On September 2, 2022, the Company entered into a six-month agreement with a consultant that includes the issuance of
During the nine months ended September 30, 2022, the Company issued
NOTE 6 – CONVERTIBLE CREDIT LINE PAYABLE AND SENIOR SECURED CONVERTIBLE NOTES PAYABLE – RELATED PARTY
Convertible Credit Line Payable
On June 1, 2021, the Company entered into a new convertible credit line agreement to borrow up to $
Senior Secured Convertible Notes Payable
On February 25, 2022, the Company entered into secured senior secured convertible note for the purchase and sale of convertible promissory notes (“Convertible Note”) in the principal amount of $
On February 25, 2022, Mr. Leaver assigned a $
As of September 30, 2022, the senior secured convertible notes payable balance, net of discount was $
NOTE 7 – DERIVATIVE LIABILITY
As discussed in Note 1, we measure certain financial assets and liabilities based upon the fair value hierarchy. The following table presents information about the Company’s financial liabilities, measured at fair value on a recurring basis, as of September 30, 2022 and December 31, 2021:
Level 1 | Level 2 | Level 3 | Fair Value at September 30, 2022 | |||||||||||||
Liabilities: | ||||||||||||||||
Derivative liability | $ | $ | $ | $ |
Level 1 | Level 2 | Level 3 | Fair Value at December 31, 2021 | |||||||||||||
Liabilities: | ||||||||||||||||
Derivative liability | $ | $ | $ | $ |
Utilizing Level 3 Inputs, the Company recorded a gain on fair market value adjustments related to convertible credit line payable and senior secured notes payable for the nine months ended September 30, 2022 of $
A summary of the activity of the derivative liability is shown below at September 30, 2022:
Balance at December 31, 2021 | $ | |||
Debt discount on senior secured notes payable | ||||
Gain on change in derivative fair value adjustment | ( | ) | ||
Balance at September 30, 2022 | $ |
NOTE 8 – SUBSEQUENT EVENTS
Subsequent to September 30, 2022, the Company paid $
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The discussion and analysis below includes certain forward-looking statements that are subject to risks, uncertainties and other factors, as described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, that could cause our actual growth, results of operations, performance, financial position and business prospects and opportunities for this fiscal year and periods that follow to differ materially from those expressed in or implied by those forward-looking statements. Readers are cautioned that forward-looking statements contained in this Quarterly Report on Form 10-Q should be read in conjunction with our disclosure under the heading “Disclosure Regarding Forward-Looking Statements” below.
General Business Development
The Company was formed on September 26, 2013 in the State of Colorado.
Business Strategy
Our strategy is to acquire producing properties that the Company can operate which have proven un-drilled locations available for further development. In the process of identifying drilling prospects, the Company will utilize the expertise of existing management and employ contract engineering firms available to further evaluate the properties.
The company is actively pursuing acquisition of additional properties in Oklahoma, Texas and New Mexico.
Liquidity and Capital Resources
As of September 30, 2022, we had total current assets of $2,190,408 and total current liabilities of $2,091,465.
The Company used $1,122,354 of cash in operating activities during the nine months ended September 30, 2022, compared to $281,298 used in operations during the same period in 2021. Net cash used in operating activities during the nine months ended September 30, 2022 was mainly comprised of our $1,204,191 net loss during the period, adjusted by a non-cash charges of $78,397 for gain on change in fair value of derivative liabilities, stock-based compensation of $237,720, amortization of debt discounts of $67,368 and changes in operating assets and liabilities of $145,776. Net cash used in operating activities during the nine months ended September 30, 2021 was mainly comprised of our $770,004 net loss during the period, adjusted by a non-cash charges of $120,250 gain on settlement of accounts payable, $24,299 for loss on change in fair value of derivative liabilities, stock-based compensation of $174,000, amortization of debt discounts of $4,215, write off of option contract associated with oil and gas properties of $85,500, default interest added to note payable of $50,000, asset retirement obligations expense of $56 and changes in operating assets and liabilities of $270,886.
The Company used cash of $1,220,512 for investing activities during the nine months ended September 30, 2022 which consisted of $1,165,212 for the acquisition of oil and gas property and cash paid for purchase of equipment of $55,300. The Company used cash of $60,000 for investing activities during the nine months ended September 30, 2021 related to deposits for oil and gas properties.
The Company generated cash of $3,084,736 from financing activities during the nine months ended September 30, 2022 which consisted of $120,236 in proceeds from advances, related party, $500,000 from senior secured convertible notes payable from related party and $2,504,500 in proceeds from the sale of common stock, which were offset by repayments on the convertible credit line of $30,000 and $10,000 repayments of advances, related party. The Company generated cash of $342,200 from financing activities during the nine months ended September 30, 2021 which consisted of $252,200 advances, related party, $65,00 of proceeds from note payable, related party, $20,000 in proceeds from convertible credit line payable, related party and $5,000 in proceeds from the sale of common stock.
Going Concern
The future of our company is dependent upon its ability to obtain financing and upon future profitable operations. Management has plans to seek additional capital through a private placement and public offering of its common stock, if necessary. See Note 2 to the unaudited consolidated financial statements for additional information.
Results of Operations
We generated revenue of $138,900 and $2,369 during the three months ended September 30, 2022 and 2021, respectively. Lease operating expenses were $229,099 and $7,303 during the three months ended September 30, 2022 and 2021, respectively. The increase in oil and gas sales and lease operating expenses was due to an increase in Alpha Energy Texas operations. Total operating expenses were $352,634 during the three months ended September 30, 2022 compared to $243,832 during the same period in 2021. The increase in operating expenses was due to a $77,982 increase in professional fees and $42,820 increase in general and administrative expenses which were offset by $12,000 decrease in board of director fees.
We generated revenues of $144,139 and $2,369 during the nine months ended September 30, 2022 and 2021. Lease operating expenses were $278,533 and $7,303 during the nine months ended September 30, 2022 and 2021, respectively. The increase in oil and gas sales and lease operating expenses was due to an increase in Alpha Energy Texas operations. Total operating expenses were $1,010,921 during the nine months ended September 30, 2022 compared to $625,965 during the same period in 2021. The increase in operating expenses was due to a $240,113 increase in professional fees and $48,593 increase in general administrative expenses which were offset by $24,000 decrease in board of director fees and a $120,250 gain on settlement of accounts payable in 2021.
Off-Balance sheet arrangements
As of September 30, 2022, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Policies
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. Our accounting policies are described in Note 1 to our audited consolidated financial statements for 2021 appearing in our Annual Report on Form 10-K for the year ended December 31, 2021.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls
The Company and its subsidiaries maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that complies with the requirements of the Exchange Act. The Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
You should carefully consider the factors discussed below in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which could materially affect our business, financial position, or future results of operations. The risks described below in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially, adversely affect our business, financial position, or future results of operations. There have been no material changes in the risk factors set forth in the Company’s Form 10K for the period ended December 31, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
See Item 1, Note 5 and Item 1, Note 6.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our operations.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following documents are included or incorporated by reference as exhibits to this report:
Exhibit Number |
Description |
|
10.1 | Revolving Credit Note | |
31.1 |
||
31.2 |
||
32.1 |
||
32.2 |
101.INS** |
Inline XBRL Instance |
101.SCH** |
Inline XBRL Taxonomy Extension Schema |
101.CAL** |
Inline XBRL Taxonomy Extension Calculation |
101.DEF** |
Inline XBRL Taxonomy Extension Definition |
101.LAB** |
Inline XBRL Taxonomy Extension Labels |
101.PRE** |
Inline XBRL Taxonomy Extension Presentation |
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
** XBRL |
information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 21, 2022
Alpha Energy, Inc. |
|||
By: |
/s/ Jay Leaver |
||
Jay Leaver, Principal Executive Officer, Principal Financial Officer |
Exhibit 10.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER THIS NOTE NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF THIS NOTE, WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
REVOLVING CREDIT NOTE
$500,000.00 | June 1, 2021 |
FOR VALUE RECEIVED, the undersigned, Alpha Energy, Inc., a Colorado corporation (the "Company”), hereby promises to pay to the order of AEI Acquisition Company, LLC a limited liability company, or its assigns (collectively, the "Noteholder”), in lawful money of the United States of America, and in immediately payable funds, the principal sum of One Million Five Hundred Thousand Dollars ($1,500,000.00), or such lesser amount as shall equal the aggregate unpaid principal amount of all funds advanced the Company by the Noteholder in accordance with the terms of this Note, on the date and in the amounts stated herein at any time on or after June 1, 2021, and to pay interest on the unpaid principal amount of this Note, in like money and funds, on the dates specified herein. Such advances shall be in the discretion of the Noteholder at the request of the Company. The Company may, from time to time, borrow, repay and reborrow under the terms of this Note up to but not exceeding the principal amount of this Note upon delivery to the Noteholder of a request of such advance of the proceeds of this Note. The amounts previously advanced to the Company by the Noteholder as set forth on Schedule A annexed to this Note which remains outstanding as of the date of this Note shall represent amounts advanced to the Company to date by the Noteholder under this Note, and shall be included in the sums due the Noteholder by the Company hereunder.
The principal hereof outstanding and any unpaid accrued interest thereon shall be due and payable on or before June 1, 2023 (the "Maturity Date”). This Note shall bear interest on the unpaid principal balance from time to time outstanding, until paid, 7% per annum calculated semi-annually on the interest payment dates. Interest shall be payable semi-annually on June 30 and December 31 of each year commencing with the first advance made hereunder. Payment of all amounts due hereunder shall be made at the address of the Noteholder set forth below.
The Company hereby authorizes the Noteholder to endorse on the Schedule annexed to this Note the amount and type of all revolving credit loans made to the Company, all renewals and payments of principal amounts in respect of such revolving credit loans, and the outstanding principal amount of all revolving credit loans; provided, however, that the failure to make such notation with respect to any revolving credit loan or payment shall not limit or otherwise affect the obligation of the Company under this Note.
Initials | 1 |
This note supersedes the original note in the amount of Five Hundred Thousand Dollars ($500,000) dated September 1,2017 and the Note Amendment Dated March 1, 2021.
1. PAYMENTS.
(a) Payment of all amounts due hereunder shall be made at the address of the Noteholder set forth below. In the event that the date for the payment of any amount payable under this Note falls due on a Saturday, Sunday or public holiday under the laws of the State of Texas, the time for payment of such amount shall be extended to the next succeeding business day and interest shall continue to accrue on any principal amount so effected until the payment thereof on such extended due date.
(b) All payments received on account of this Note shall be applied to the reduction of the unpaid principal balance of this Note. Interest shall be computed on the basis of a year of 360 days, for the actual number of days elapsed.
(c) If payment of the outstanding principal amount of this Note, together with all accrued unpaid interest thereon at the applicable rate of interest (as set forth herein), is not made on the Maturity Date, then interest shall accrue on the outstanding principal amount due under this Note and on any unpaid accrued interest due on this date of the payment in full of such amounts (including from and after the date of the entry of judgment in favor of the Noteholder in an action to collect this Note) at an annual rate equal to the lesser of 12% or the maximum rate of interest permitted by applicable law.
(d) The Holder shall have the right from time to time, and at any time during the period beginning on the date of this Agreement, to convert all or any part of the outstanding and unpaid principal and/or interest amount of this Note into fully paid and non- assessable shares of Common Stock, $0.001 par value ("Common Stock”), by delivering to the Company a notice of conversion in the form attached hereto as Schedule B; provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates , and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue. The conversion shall be valued as follows:
Initials | 2 |
(i) if the Company's Common Stock is not listed for trading on an exchange or quoted for trading on the OTC Bulletin Board or the Pink Sheets, Principal and Interest Shares shall be valued at the lesser of $1.50 per share or the fair market value as determined in good faith by the Company based upon the most recent arms-length transaction, or
(ii) if the Company's is listed for trading on an exchange or quoted for trading on the OTC Bulletin Board or the Pink Sheets, Principal and Interest Shares shall be valued at the lesser of (A) the closing price of the Common Stock as reported on the Company's primary market on the trading day immediately preceding the date the interest payment is due and payable, or (B) $1.50 per share.
2. PREPAYMENT. This Note may be prepaid, in whole or in part, without penalty with five days prior written notice to the Noteholder.
3. DEFAULT. If any of the following events (each an "Event of Default”) shall occur:
(a) The Company fails to pay the principal or interest accrued on, or any other amount at any time owing under, the Note as and when the same becomes due and payable and such default is not cured within 10 business days after notice of the occurrence of such default; or
(b) The Company defaults in the due observance or performance of or breach any of its covenants contained in this Note and such default is not cured within 10 business days after notice of the occurrence of such default; or
(c) The Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, trustee or similar official of or for itself or of or for all or a substantial part of its property, (ii) make an assignment for the benefit of its creditors, (iii) commence a voluntary case under the Federal Bankruptcy Code, as now or hereafter in effect (the "Code”), (iv) file a petition seeking to take advantage of any other bankruptcy, insolvency, moratorium, reorganization or other similar law of any jurisdiction ("Other Laws”), (v) acquiesce as to, or fail to controvert in a timely or appropriate manner, an involuntary case filed against the Company under the Code, or (vi) take any corporate action in furtherance of any of the foregoing; or
(d) A proceeding or involuntary case shall be commenced, without the application or consent of the Company in any court of competent jurisdiction (i) under the Code, (ii) seeking liquidation, reorganization, dissolution, winding up or composition or readjustment of its debts under any Other Laws, or (iii) seeking the appointment of a trustee, receive or similar official for it or for all or any substantial part of its assets, and any such proceeding or case shall continue dismissed, or unstated and in effect, for a period of 90 days; or
Initials | 3 |
(e) A final judgment for the payment of money shall be rendered by a court of competent jurisdiction against the Company, and the Company shall not discharge the same, or procure a stay of execution thereof within 30 days from the date of entry thereof and within such 30 day period or such longer period during which execution of such judgment shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal, and such judgment, together with all other judgments against the Company (including all subsidiaries), shall exceed in the aggregate $50,000 in excess of any insurance as to the subject matter of such judgments, as to which coverage has not been declined or the underlying claim rejected by the applicable insurer; or
(f) The liquidation or dissolution of the Company or any vote in favor thereof by the board of directors and stockholders of the Company; or
(g) An attachment or garnishment is levied against the assets of the Company involving an amount in excess of $1,500,000 and the lien created by such levy is not vacated, bonded or stayed within 10 business days after such lien has attached to such assets; or
(h) The Company defaults in the payment (regardless of amount) when due of the principal of, interest on, or any other liability on account of, any indebtedness of the Company(other than the Note) having an unpaid principal amount in excess of $50,000 or a default occurs in the performance or observance by the Company of any covenant or condition (other than for the payment of money) contained in any note (other than this Note) or agreement evidencing or pertaining to any such indebtedness, which causes the maturity of such indebtedness to be accelerated or permits the holder or holders of such indebtedness to declare the same to be due prior to the stated maturity thereof, or
(i) The Company sells all or substantially all of its assets or merges or is consolidated with another corporation in which the Company is not the surviving corporation, or the accounting acquirer in the event of a reverse merger; or
(j) A Change of Control of the Company occurs. For the purpose of this Note, a "Change of Control” shall mean a change in control (a) as set forth in Section 280G of the Internal Revenue Code or (b) of a nature that would be required to be reported in response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, such a change in control shall be deemed to have occurred at such time as:
i. any "person", other than the Noteholder becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's outstanding securities then having the right to vote at elections of directors; or,
initials | 4 |
ii. the individuals who at the date of this Note constitute the Board of Directors cease for any reason to constitute a majority thereof unless the election, or nomination for election, of each new director was approved by a vote of at least two thirds of the directors then in office who were directors at the date of this Note then, and in any such event, the Noteholder may by written notice to the Company declare the entire unpaid principal amount of this Note outstanding together with accrued interest thereon due and payable, and the same shall, unless such default be cured within 20 business days after such notice, forthwith become due and payable upon the expiration of such 20 day period, without presentment, demand, protest, or other notice of any kind, all of which are expressly waived.
4. SUITS FOR ENFORCEMENT AND REMEDIES. If any one or more Events of Default shall occur, the Noteholder may proceed to (i) protect and enforce Noteholder’s rights either by suit in equity or by action at law, or both, whether for the specific performance of any covenant, condition or agreement contained in this Note or in any agreement or document referred to herein or in aid of the exercise of any power granted in this Note or in any agreement or document referred to herein, (ii) enforce the payment of this Note, or (iii) enforce any other legal or equitable right of the Noteholder. No right or remedy herein or in any other agreement or instrument conferred upon the Noteholder is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company covenants and agrees that for so long as any portion of the indebtedness evidenced by this Note, whether principal, accrued and unpaid interest or any other amount at any time due hereunder, remains unpaid, the Company will:
(a) Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises and to comply in all material respects with all laws, regulations and orders of each governmental authority having jurisdiction over the Company;
(c) Promptly following the occurrence of an Event of Default furnish to the Noteholder a written statement of the Company’s President or Chief Financial Officer setting forth the details of such Event of Default and the action which the Company proposes to take with respect thereto;
(d) At all times maintain true and complete records and books of account in which all of the financial transactions of the Company are duly recorded in conformance with U.S. generally accepted accounting principles;
(e) Maintain the registration of the Company’s Common Stock under Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act”), and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports and other filings required to be filed by the Company after the date hereof pursuant to the Exchange Act.
initials | 5 |
(f) In the event the Company should issue the Noteholder Interest Shares, for as long as the Noteholder owns any Interest Shares, the Company will take such further action as any holder of Interest Shares may reasonably request, to the extent required from time to time to enable such holder to sell such Interest Shares without registration under the Act, including without limitation, within the requirements of the exemption provided by Rule 144.
6. RESTRICTIONS ON IDUCEMENT SHARES. The Inducement Shares may not be offered, sold or otherwise transferred unless (i) they first shall have been registered under the Act and applicable state securities laws or (ii) the Company shall have been furnished with an opinion of legal counsel (in form, substance and scope reasonably acceptable to the Company) to the effect that such sale or transfer is exempt from the registration requirements of the Act. Each certificate for Interest Shares that have not been so registered and that has not been sold pursuant to an exemption that permits removal of the applicable legend, shall bear a legend substantially in the following form, as appropriate:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS”
Upon the request of a holder of a certificate representing any Inducement Shares, the Company shall remove the foregoing legend from the certificate or issue to such Holder a new certificate therefor free of any transfer legend, if (i) with such request, the Company shall have received an opinion of counsel, reasonably satisfactory to the Company in form, substance and scope, to the effect that any such legend may be removed from such certificate or (ii) a registration statement under the Act covering such securities is in effect.
6. NOTICES. All notices required to be given to any of the parties hereunder shall be in writing and shall be deemed to have been sufficiently given for all purposes when presented personally to such party, sent by telecopier (with the original timely mailed), or sent by registered, certified or express mail, return receipt requested, to such party at its address set forth below:
If to the Company to: | Alpha Energy, Inc. |
c/o John Lepin | |
CFO, Alpha Energy Company | |
4162 Meyerwood Drive | |
Houston, TX 77025 | |
If to the Noteholder to: | AEI Acquisition Company, LLC |
c/o Harry McMillan | |
2600 E Southlake Blvd. | |
STE. 120-366 | |
Southlake, TX 76092 | |
Telecopier No. (817) 491-4955 |
or hereafter given to the other party hereto pursuant to the provisions of this Note.
initials | 6 |
7. EXCLUSIVE JURISDICTION AND VENUE. The Parties agree that the courts of the County of Tarrant, State of Texas shall have sole and exclusive jurisdiction and venue for the resolution of all disputes arising under the terms of this Note and the transactions contemplated herein. The Parties further that, in the event of litigation arising out of or in connection with this Note in this court, they will not contest or challenge the jurisdiction or venue of this court.
8. GOVERNING LAW. This Note shall be governed by and construed and interpreted in accordance with the laws of the State of Texas applicable to contracts made and to be performed entirely therein, without giving effect to the rules and conflicts of law.
9. CONFORMITY WITH LAW. It is the intention of the Company and of the Noteholder to conform strictly to applicable usury and similar laws. Accordingly, notwithstanding anything to the contrary in this Note, it is agreed that the aggregate of all charges which constitute interest under applicable usury and similar laws that are contract for, chargeable or receivable under or in respect of this Note, shall under no circumstances exceed the maximum amount of interest permitted by such laws, and any excess, whether occasioned by acceleration or maturity of this Note or otherwise, shall be canceled automatically, and if theretofore paid, shall be either refunded to the Company or credited on the principal amount of this Note.
10. ASSIGNABILITY: This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an "accredited investor” (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.
[Remainder of Page Left Blank
initials | 7 |
IN WITNESS WHEREOF, the Company has signed and sealed this Note and delivered it in the State of Texas as of June 1, 2021.
COMPANY | ||
Alpha Energy, Inc. | ||
John Lepin, CFO |
8 |
SCHEDULE A |
||||||||
TO AEI ACQUISITION REVOLOVING CREDIT NOTE |
||||||||
Type |
Date |
Type of Loan |
Amount |
Balance |
||||
-1,500,000.00 |
||||||||
Transfer |
09/01/2017 |
Advance |
68,366.00 |
-1,431,634.00 |
||||
Deposit |
09/26/2017 |
Advance |
17,000.00 |
-1,414,634.00 |
||||
Deposit |
11/08/2017 |
Advance |
4,000.00 |
-1,410,634.00 |
||||
Deposit |
12/01/2017 |
Advance |
1,500.00 |
-1,409,134.00 |
||||
General Journal |
01/12/2018 |
Advance |
1,500.00 |
-1,407,634.00 |
||||
Deposit |
01/25/2018 |
Advance |
150.00 |
-1,407,484.00 |
||||
Deposit |
02/22/2018 |
Advance |
15,000.00 |
-1,392,484.00 |
||||
Deposit |
03/30/2018 |
Advance |
4,930.00 |
-1,387,554.00 |
||||
Deposit |
05/11/2018 |
Advance |
14,265.61 |
-1,373,288.39 |
||||
Deposit |
08/03/2018 |
Advance |
15,000.00 |
-1,358,288.39 |
||||
Deposit |
08/23/2018 |
Advance |
10,100.00 |
-1,348,188.39 |
||||
Deposit |
09/25/2018 |
Advance |
13,000.00 |
-1,335,188.39 |
||||
General Journal |
12/31/2018 |
Paid |
-14,265.61 |
-1,349,454.00 |
||||
General Journal |
12/31/2018 |
Paid |
-10,100.00 |
-1,359,554.00 |
||||
General Journal |
03/01/2019 |
Paid |
-4,000.00 |
-1,363,554.00 |
||||
General Journal |
03/01/2019 |
Paid |
0.00 |
-1,363,554.00 |
||||
Check |
06/04/2019 |
Paid |
-3,750.00 |
-1,367,304.00 |
||||
Check |
07/23/2019 |
Paid |
-1,000.00 |
-1,368,304.00 |
||||
Check |
07/24/2019 |
Paid |
-2,250.00 |
-1,370,554.00 |
||||
General Journal |
08/26/2019 |
Advance |
13,000.00 |
-1,357,554.00 |
||||
Check |
10/01/2019 |
Paid |
-2,250.00 |
-1,359,804.00 |
||||
Check |
10/10/2019 |
Paid |
-6,500.00 |
-1,366,304.00 |
||||
Check |
10/10/2019 |
Paid |
-3,000.00 |
-1,369,304.00 |
||||
Check |
10/18/2019 |
Paid |
-114.99 |
-1,369,418.99 |
||||
Check |
10/18/2019 |
Paid |
-2.90 |
-1,369,421.89 |
||||
Check |
01/24/2020 |
Paid |
-2,000.00 |
-1,371,421.89 |
||||
Deposit |
06/15/2020 |
Advance |
3,000.00 |
-1,368,421.89 |
||||
Check |
06/25/2020 |
Paid |
-2,250.00 |
-1,370,671.89 |
||||
General Journal |
09/10/2020 |
Advance |
3,500.00 |
-1,367,171.89 |
||||
Deposit |
09/18/2020 |
Advance |
5,500.00 |
-1,361,671.89 |
||||
General Journal |
09/18/2020 |
Advance |
10,000.00 |
-1,351,671.89 |
initials | 9 |
Schedule B
Example Conversion Language
AEI ACQUISISTION COMPANY, LLC
2600 E Southlake Blvd.
Ste 120-366
Southlake, Texas, 76092
Date :___________________
John Lepin
4162 Meyerwood Drive
Houston, TX 77025
Re: Partial Conversion of 7% Revolving Credit line with Alpha Energy, Inc.;
Please let this letter serve as notice of our intent to convert $____________ of the 7% Revolving credit line into a total of ___________ shares of the common stock of Alpha Energy, Inc. The shares are being converted at $1.50 per share per paragraph 1(d) of the Revolving Credit Line.
Date of Revolver |
Principal |
Accrued Interest |
No. of Shares |
The total monetary portion of the Note and accrued and unpaid interest to be converted to common stock shall be $___________, leaving a principle balance of $__________ at _____________.
Please issue such shares and deliver them as set forth in the attached letter.
Thank you for your assistance in this matter.
Sincerely,
_____________________________
Harry McMillan
President of AEI Management, Inc.
as Managing Member of AEI Acquisition Company, LLC
initials | 10 |
EXHIBIT 31.1
CERTIFICATION
I, Jay Leaver, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Alpha Energy, Inc. (the "Company”);
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 Company as of, and for, the periods presented ire this report;
4.The Company’s other certifying officer 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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company 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 Company, 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 Company’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 Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
Date: November 21, 2022
/s/ Jay Leaver
Jay Leaver
Principal Executive Officer, Principal Financial Officer
EXHIBIT 31.2
CERTIFICATION
I, Jay Leaver, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Alpha Energy, Inc. (the "Company”);
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 Company as of, and for, the periods presented ire this report;
4.The Company’s other certifying officer 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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company 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 Company, 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 Company’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 Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
Date: November 21, 2022
/s/ Jay Leaver
Jay Leaver
Principal Executive Officer, Principal Financial 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 Energy, Inc. (the "Company”) on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report”), I, Jay Leaver, Principal Executive Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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 results of operations of the Company.
Date: November 21, 2022
/s/ Jay Leaver
Jay Leaver
Principal Executive Officer, Principal Financial Officer
EXHIBIT 32.2
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 Energy, Inc. (the "Company”) on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report”), I, Jay Leaver, Principal Executive Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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 results of operations of the Company.
Date: November 21, 2022
/s/ Jay Leaver
Jay Leaver
Principal Executive Officer, Principal Financial Officer