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





Results of Operations



General

We have recognized income from related parties of approximately $18,000 for the nine months ended September 30, 2020, compared to $67,000 for the same period in 2019, resulting from the amortization of loan origination fees received in the form of cash and notes receivable, offset by the amortization of loan costs incurred. As of September 30, 2020, the Company had an accumulated deficit of approximately $4.5 million.





The following table provides selected consolidated balance sheet data as of
September 30, 2020.



Balance Sheet Data:                                               9/30/2020
Cash                                                                 47,056

Loan receivable and accrued interest receivable, net of discounts 1,456,952 Total assets

                                                      1,504,359
Accounts payable and accrued liabilities                            339.872
Total liabilities                                                   360,672
Temporary equity                                                    380.800
Shareholders' equity                                                762,887




                                        Three Months Ended           Nine Months Ended
                                        2020          2019          2020           2019
Interest Income                       $  11,393     $  13,112     $  33,612     $   78,112

Accretion of Loan Origination Fees 23,919 23,919 71,758 103,187 Amortization of Loan Issuance Costs (25,785 ) (25,785 ) (77,356 ) (103,141 ) Net Investment Income

$   9,527     $  11,246     $  28,015     $   78,158

Three Months Ended September 30, 2020 as compared to year ended September 30, 2019

For the three months ended September 30, 2020, we generated approximately $9,000 in net investment income, compared to $11,000 in 2019. Net investment income in 2020 resulted from interest income of $11,000, the amortization of loan origination fees of $24,000, offset by the amortization of loan costs of $26,000. Net investment income in 2019 consisted of interest income of $26,000, the amortization of loan origination fees of $24,000, offset by the amortization of loan costs of $26,000. We incurred $118,556 in operating expenses during the 2020 period, compared to $383,925 in 2019. Operating expenses decreased due to professional fees incurred in 2019 related to increased investment-related activity.

Nine Months Ended September 30, 2020 as compared to year ended September 30, 2019

For the nine months ended September 30, 2020, we generated approximately $28,000 in net investment income, compared to $78,000 in 2019. Net investment income in 2020 resulted from interest income of $34,000, the amortization of loan origination fees of $72,000, offset by the amortization of loan costs of $77,000. Net investment income in 2019 resulted from interest income of $78,000, the amortization of loan origination fees of $103,000, offset by the amortization of loan costs of $103,000. We incurred $603,526 in operating expenses during the 2020 period, compared to $1,176,517 in 2019. In 2019, the Company recognized interest expense of $620,000 related to the Jersey Walk financing, which was rescinded upon rescission of the Jersey Walk acquisition in June 2019, resulting in a gain on deconsolidation of $317,000 in 2019.







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Liquidity and Capital Resources

During the nine months ended September 30, 2020, Omega, the principal stockholder of the Company, made an additional capital contribution to the Company of $425,000, and $2.5 million was release from escrow and paid to an investor for redemption of common stock.





Critical Accounting Policies



Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. The Company is required to make judgments and estimates about the effect of matters that are inherently uncertain. The Company regularly evaluates estimates and assumptions related to the valuation of the allowance for loan losses, loss contingencies, useful life and recoverability of long-lived assets, deferred income tax asset valuations and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Although, we believe our judgments and estimates are appropriate, actual future results may be different; if different assumptions or conditions were to prevail, the results could be materially different from our reported results.

Loans Receivable, net and Allowance for Losses

The Company records its investments in loans receivable at cost less unamortized costs of issuance and deferred origination fees. Origination fees collected at the time of investment are recorded against the loans receivable and amortized into net interest income over the lives of the related loans. Issuance costs incurred are capitalized along with the initial investment and amortized against net interest income over the lives of the related loans.

When a loan receivable is placed on non-accrual status, the related interest receivable is reversed against interest income of the current period. If a non-accrual loan is returned to accrual status, the accrued interest existing at the date the residential loan is placed on non-accrual status and interest during the non-accrual period are recorded as interest income as of the date the loan no longer meets the non-accrual criteria.

The Company maintains an allowance for loan losses on its investments in real estate loans receivable for estimated credit impairment. Management's estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower's ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded first as a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are recognized as income.

Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property on an individual loan receivable basis.

Off-Balance Sheet Arrangements

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

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