Direct Investment Holdings Group, Inc. - Quarter Report: 2021 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the quarterly period ended September 30, 2021

Or

For the transition period from   ______ to ______

Commission File Number 000-11777

DIRECT INVESTMENT HOLDINGS GROUP, INC.

(formerly, FIRST EQUITY PROPERTIES, INC.) 

(Exact Name of Registrant as Specified in Its Charter)

150 S. Pine Island Rd

Suite 300

Plantation, FL 33324

(Address of principal executive offices) (Zip Code)

(855) 456-9782

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☑   Yes   ☐  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). ☑   Yes      ☐  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ☐ Yes  ☑   No

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

DIRECT INVESTMENT HOLDINGS GROUP, INC.

(formerly First Equity Properties, Inc.)

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

The accompanying notes are an integral part of these financial statements.

The accompanying notes are an integral part of these financial statements. 

 The accompanying notes are an integral part of these financial statement 

The accompanying notes are an integral part of these financial statements.

DIRECT INVESTMENT HOLDINGS GROUP, INC.

(formerly First Equity Properties, Inc.) 

NOTES TO FINANCIAL STATEMENTS

NOTE 1.      ORGANIZATION AND BASIS OF PRESENTATION

Organization and business

Direct Investment Holdings Group, Inc. (formerly First Equity Properties, Inc.) is a Nevada based corporation organized in December 19, 1996 and the Company is headquartered in Plantation, FL. The Company’s principal line of business and source of revenue is currently investments and interest on notes receivable. The Company is currently in the business of real estate investing. Direct Investment Holdings Group, Inc. is a publicly traded company; however, no trading market presently exists for the shares of common stock and its value is therefore not determinable.

The name of the Company was changed to Direct Investment Holdings Inc. effective November 2, 2021 with the Secretary of State of Nevada. 

Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included.

These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2020.  Operating results for the nine months period ended September 30, 2021 are not necessarily indicative of the results that may be expected for any subsequent quarter or for the fiscal year ending December 31, 2021.

Cost capitalization

Costs related to planning and developing a project are capitalized and classified as Real Estate development costs in the Consolidated Balance Sheets. We capitalized certain operating expenses until development is substantially complete, but no later than one year from the cessation of major development activity.

Newly issued accounting pronouncements

We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our statements, including that which we have not yet adopted. We do not believe that any such guidance will have a material effect on our financial position or results of operation.

NOTE 2. CHANGE OF CONTROL

A Stock Purchase Agreement (the “Agreement”) was completed as of April 7, 2021, by and among A Way Financial, Inc., a Delaware Business Corporation (the “Purchaser”) and TPS Income, Inc., and Nevada Sea Investments, Inc. (the “Sellers”).

Sellers were, prior to the transaction closing the beneficial owner of the following shares of the Company:  (i) TPS Income, Inc. (“TPS”) owned 37.48%; and (ii) Nevada Sea Investments, Inc. (“Nevada Sea”) owned 37.82% of 1,057,628 shares of all issued and outstanding shares of the Company’s Common Stock which were held in the respective name of the Sellers.  As of the completion of the closing on April 7, 2021, the shares formerly owned by Sellers are owned by the Purchaser.  

On November 2, 2021, the Company name was changed to Direct Investment Holdings, Inc. 

 DIRECT INVESTMENT HOLDINGS GROUP, INC.

(formerly First Equity Properties, Inc.)

NOTES TO FINANCIAL STATEMENTS

NOTE 3. NOTE RECEIVABLE AND ACCRUED INTEREST - RELATED PARTY

In connection with change of control, note receivable - Carmel Realty, Inc., a related party was purchased by Direct Mortgage Investors, Inc., a related party. The note receivables calls for yearly payment of interest income at 1% per annum, through maturity on April 7^th, 2025. 

  Schedule of note receivable and accrued interest - related party

NOTE 4. RELATED PARTIES TRANSACTIONS

Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis due to the absence of free market forces that naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in best interest of our company.

The Company had an administrative agreement, through change in control, with Market Associates Corp., an affiliated entity, for accounting and administrative services.

NOTE 5. FEDERAL INCOME TAXES

The Company accounts for income taxes in accordance with Accounting Standards Codification, (“ASC”) No. 740, “Accounting for Income Taxes”. ASC 740 requires an asset and liability approach to financial accounting for income taxes. In the event differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities result in deferred tax assets, ASC 740 requires an evaluation of the probability of being able to realize the future benefits indicated.

Recognition of the benefits of deferred tax assets will require the Company to generate future taxable income. There is no assurance that the Company will generate earnings in future years.

NOTE 6. OTHER MATTERS 

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and across our portfolio. While we did not experience significant disruptions during 2020 from the COVID-19 pandemic, we are unable to predict the impact the COVID-19 pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties.

NOTE 7. SUBSEQUENT EVENTS 

The Company has evaluated subsequent events through November 15, 2021, the date the financial statements were available to be issued and has determined that there are none to be reported.

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “project”, “result”, “should”, “will” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected by the forward-looking statements. We caution you that while forward-looking statements reflect our good-faith beliefs when we make them, they are not guarantees of future performance and are impacted by actual events when they occur after we make such statements. Accordingly, investors should use caution in relying on forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

Change of Control Transaction

1.       A Stock Purchase Agreement (the “Agreement”) has been made and entered into and closing completed as of 4/7/2021, by and among A Way Financial Inc., a Delaware Business Corporation (the “Purchaser”) and TPS Income, inc., and nevada SEA investments, inc (the “Sellers”).

2.       Sellers were, prior to the transaction closing the beneficial owner of the following shares of Direct Investment Holdings Group, Inc. (“FEPI”) Common Stock: (i) TPS Income, Inc. (“TPS”) owned 37.48%; and (ii) Nevada Sea Investments, Inc. (“Nevada Sea”) owned 37.82% of 1,057,628 shares of all issued and outstanding shares of FEPI Common Stock (“Shares”). The Shares were held in the respective names of the Sellers.

3.       As of completion of the closing, the shares formerly owned by Sellers are owned by the Purchaser.

4.       The Company, in connection with the change in control, the $750,523 note receivable was purchased by Direct Mortgage Investors Inc. from Direct Investment Holdings Group, Inc. on April 7^th, 2021.

Related parties

We apply ASC Topic 805, “Business Combinations”, to evaluate business relationships. Related parties are persons or entities who have one or more of the following characteristics, which include entities for which investments in their equity securities would be required, trust for the benefit of persons including principal owners of the entities and members of their immediate families, management personnel of the entity and members of their immediate families and other parties with which the entity may deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests, or affiliates of the entity.

Results of Operations

The following discussion is based on our Statement of Operations within our Financial Statements as presented in Part 1, Item 1 of this report for the nine months ended September 30, 2021 and 2020. The discussion is not meant to be an all-inclusive discussion of the changes within our operations. Instead, we have focused on the significant items relevant to obtain an understanding of the changes in our operations.

The results of operations for the nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

Our sole source of income is from the interest received on affiliated receivables. Expenses are primarily related to professional and administrative fees.

Comparison of the three months ended September 30, 2021 to the same period ended 2020.

We reported net loss applicable to common shareholders of ($2,854) for the three months ended September 30, 2021 as compared to a net loss to common shareholders of ($484) for the same period ended 2020.

Comparison of the nine months ended September 30, 2021 to the same period ended 2020.

We reported net loss applicable to common shareholders of ($32,738) for the nine months ended September 30, 2021 as compared to a net loss to common shareholders of ($31,271) for the same period ended 2020.

Liquidity and Capital Resources

General

Our principal liquidity needs for the next twelve months are funding of normal recurring expenses of legal and administrative fees.

Our principal source of cash is proceeds from interest income on our note receivables. The following impacted our balance sheet as of September 30, 2021:

Our note receivable– related party, Direct Mortgage Investors Inc. purchased  the note receivable from Direct Investment Holdings Group, Inc. on April 7^th, 2021.

Our cash and cash equivalents remained the same in 3rd quarter 2021.

Our accounts payable – increased by payments $ 11,333 in the 3^rd quarter 2021. 

PART II – OTHER INFORMATION 

The following exhibits are filed with this report or incorporated by reference as indicated.

SIGNATURES

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