ALPHA ENERGY INC (Form: 10-Q, Received: 07/29/2022 17:16:58)

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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended March 31, 2022.

☐	Transition Report under Section 13 or 15(d) of the Exchange Act

	For the Transition Period from to

Commission File Number: 000-55586

Alpha Energy, Inc.

(Exact Name of Registrant as Specified in its Charter)

Colorado

90-1020566

(State of other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

14143 Denver West Parkway, Suite 100,

Golden, CO 80401

(Address of principal executive offices) (Zip Code)

Registrant's Phone: 800-819-0604

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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	☐
Non-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 ☐ No ☒

18,824,106 shares outstanding.

	TABLE OF CONTENTS	Page

	PART I – FINANCIAL INFORMATION
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

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.
Consolidated Balance Sheets
(Unaudited)

	March 31, 2022			December 31, 2021


Assets
Current assets:
Cash and cash equivalents	$	1,077,966		$	217
Prepaid assets and other current assets		25,000			23,750
Total current assets		1,102,966			23,967

Noncurrent assets:
Oil and gas property, unproved, full cost		653,605			145,791

Total assets	$	1,756,571		$	169,758

Liabilities and Stockholders' Deficit

Current liabilities:
Accounts payable and accrued expenses	$	251,462		$	270,250
Accounts payable and accrued expenses - related parties		227,332			228,668
Interest payable		76,045			77,563
Advances from related parties		-			628,550
Note payable - related party		-			65,000
Subscription liability		1,281,600			-
Derivative liability		356,275			145,041
Convertible note payable		1,210,000			1,210,000
Total current liabilities		3,402,714			2,625,072

Convertible credit line payable – related party, net of discount of $9,984 and $11,100, respectively		158,344			157,228
Senior secured convertible notes payable, related party, net of discount of $198,766		1,121,193			-
Asset retirement obligation		918			918
Total liabilities		4,683,169			2,783,218

Commitments and contingencies

Stockholders' deficit:
Preferred stock, 10,000,000 shares authorized:
Series A convertible preferred stock, $0.001 par value, 2,000,000 shares authorized and 0 shares issued and outstanding		-			-
Common stock, $0.001 par value, 65,000,000 shares authorized and 18,824,106 shares issued and outstanding		18,824			18,824
Additional paid-in capital		2,802,634			2,739,634
Accumulated deficit		(5,748,056	)		(5,371,918	)
Total stockholders' deficit		(2,926,598	)		(2,613,460	)

Total liabilities and stockholders' deficit	$	1,756,571		$	169,758

See accompanying notes to the unaudited consolidated financial statements.

Alpha Energy, Inc.
Consolidated Statements of Operations
For the three months ended March 31, 2022 and 2021
(Unaudited)

	March 31, 2022			March 31, 2021

Oil and gas sales	$	-		$	-

Lease operating expenses		1,876			-
Gross loss		(1,876	)		-

Operating expenses:
Professional services		148,688			11,919
Board of director fees		48,000			48,000
General and administrative		149,330			229,503
Gain on settlement of accounts payable		-			(120,250	)
Total operating expenses		346,018			169,172
Loss from operations		(347,894	)		(169,172	)

Other income (expense):
Interest expense		(25,486	)		(73,912	)
Gain (loss) on change in fair value of derivative liabilities		(2,758	)		13,304
Total other income (expense)		(28,244	)		(60,608	)

Net loss	$	(376,138	)	$	(229,780	)

Loss per share:
Basic	$	(0.02	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.01	)

Weighted average shares outstanding:
Basic		18,824,106			18,187,900
Diluted		19,256,426			18,336,228

See accompanying notes to the unaudited consolidated financial statements.

Alpha Energy, Inc.
Consolidated Statements of Stockholders' Deficit
For the three months ended March 31, 2022 and 2021
(Unaudited)

	Common Stock				Additional		Accumulated			Total Stockholders'
	Shares		Amount		Paid-in Capital		Deficit			Deficit

Balance, December 31, 2021		18,824,106	$	18,824	$	2,739,634	$	(5,371,918	)	$	(2,613,460	)
				.
Stock-based compensation		-		-		63,000		-			63,000

Net loss		-		-		-		(376,138	)		(376,138	)

Balance, March 31, 2022		18,824,106	$	18,824	$	2,802,634	$	(5,748,056	)	$	(2,926,598	)


Balance, December 31, 2020		18,145,428	$	18,145	$	2,061,635	$	(4,301,180	)	$	(2,221,400	)

Stock issued for settlement of liabilities		90,000		90		89,910		-			90,000

Stock-based compensation		48,000		48		47,952		-			48,000

Net loss		-		-		-		(229,780	)		(229,780	)
		-
Balance, March 31, 2021		18,283,428	$	18,283	$	2,199,497	$	(4,530,960	)	$	(2,313,180	)

See accompanying notes to the unaudited consolidated financial statements.

Alpha Energy, Inc.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2022 and 2021
(Unaudited)

	March 31, 2022			March 31, 2021


Cash flows from operating activities:
Net loss	$	(376,138	)	$	(229,780	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		63,000			48,000
Amortization of debt discount		10,826			2,754
(Gain) loss on change in fair value of derivative liabilities		2,758			(13,304	)
Gain on settlement of accounts payable		-			(120,250	)
Write off of option contract associated with oil and gas properties		-			85,500
Asset retirement obligation expense		-			19
Default interest added to note payable		-			50,000
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(1,250	)		25,000
Accounts payable		(18,788	)		(2,289	)
Accounts payable-related party		(1,336	)		32,250
Interest payable		14,660			3,408
Net cash used in operating activities		(306,268	)		(118,692	)

Cash flows from investing activities:
Acquisition of oil and gas property		(507,814	)		-
Deposits for purchase of oil and gas properties		-			(10,000	)
Net cash used in investing activities		(507,814	)		(10,000	)

Cash flows from financing activities:
Advances from related parties, related party		110,235			129,000
Proceeds from senior secured convertible notes payable, related party		499,996			-
Proceeds from unexecuted subscription agreements		1,281,600			-
Net cash provided by financing activities		1,891,831			129,000

Net change in cash and cash equivalents		1,077,749			308

Cash and cash equivalents, at beginning of period		217			-

Cash and cash equivalents, at end of period	$	1,077,966		$	308

Supplemental disclosures of cash flow information:
Cash paid for interest	$	-		$	17,750
Cash paid for income taxes	$	-		$	-

Supplemental disclosure of non-cash investing and financing activities:
Expenses paid on behalf of the Company by related party	$	-		$	13,244
Oil and gas payments made by related party on behalf of the Company	$	-		$	65,500
Stock issued for settlement of accounts payable	$	-		$	90,000
Debt discount on senior secured convertible notes payable - related party	$	208,476		$	-
Advances and other liabilities converted to senior secured convertible notes payable, related party	$	819,963		$	-

See accompanying notes to the unaudited consolidated financial statements.

ALPHA ENERGY, INC.

NOTES TO 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 months ended March 31, 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 months ended March 31, 2022 and 2021, there were 263,992 and 0 shares issuable from the senior secured convertible notes payable and 168,328 and 148,328 shares issuable from the convertible credit line payable which were considered for their dilutive effects but were determined to be anti-dilutive due to the Company’s net loss, respectively.

The reconciliation of basic and diluted loss per share is as follows:

	Three months ended
	March 31, 2022			March 31, 2021

Basic net loss	$	(376,138	)	$	(229,780	)
Add back: (Gain) loss on change in fair value of derivative liabilities		2,758			(13,304	)
Diluted net loss	$	(373,380	)	$	(243,084	)

Basic and dilutive shares:
Weighted average basic shares outstanding		18,824,106			18,187,900
Shares issuable from convertible credit line payable		168,328			148,328
Shares issuable from senior secured convertible notes payable		263,992			-
Dilutive shares		19,256,426			18,336,228

Loss per share:
Basic	$	(0.02	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.01	)

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.

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 34 well bores and related assets under the PSA with cash payments of $507,814. The Company is entitled to receive the proceeds of production from January 1, 2022 under the terms of the PSA and Progressive is required to operate the properties and transfer ownership and royalty decks to Company following a one-month transition period. Under the PSA we are obligated to make a further payment of three (3%) percent of the net revenue from new wells drilled until Progressive receives an additional $350,000.

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 $88,956 and $58,244 during the three months ended March 31, 2022 and 2021, respectively. The advances are unsecured, non-interest bearing and are payable on demand. During the three months ended March 31, 2022, the Company repaid $10,000 of the advances and converted $413,206 of advances to a senior secured convertible note due February 24, 2024.

The Company received advances from Jay Leaver, President of the Company, totaling $31,280 and $149,500 during the three months ended March 31, 2022 and 2021, respectively. The advances are unsecured, non-interest bearing and is payable on demand. During the three months ended March 31, 2022, the Company converted $325,580 of advances to a senior secured convertible note due February 24, 2024.

As of March 31, 2022 and December 31, 2021, there was $0 and $628,550 of short-term advances due to related parties, respectively.

Accounts Payable and Accrued Expenses - Related Parties

As of March 31, 2022, there was $227,332 of accounts payable related parties which consisted of $203,484 due to Leaverite Exploration, Inc. d/b/a Leaverite Consulting (“Leaverite Exploration”), a corporation wholly-owned by our President, Jay Leaver pursuant to a consulting agreement, $5,558 due to former CFO John Lepin, $12,500 due to Fidare Consulting Group pursuant to a consulting agreement and $5,790 due to Staley Engineering LLC for consulting services

As of December 31, 2021, there was $228,668 of accounts payable related parties which consisted of $203,484 due to Leaverite Exploration, $4,394 due to former CFO John Lepin, $10,000 due Kelloff Oil &Gas, LLC, a limited liability company and $5,790 due to Staley Engineering LLC for consulting services.

Notes Payable - Related Party

On December 3, 2020, the Company executed a promissory note for $65,000 with the Jay Leaver, our President. The unsecured note matured three years from date of issuance and bore interest at a rate of 5% per annum. As of December 31, 2021, the note payable had unpaid accrued interest in the amount of $13,003. On February 23, 2022, the promissory note was amended to a principal amount of $406,750, which includes the original $65,000 plus additional advances of $325,580, and accrued interest of $16,170. An additional $110,235 was advanced during the three months ended March 31, 2022 maturing February 23, 2025. In February 2022, Mr. Leaver advanced an additional $500,000 to the Company. On February 25, 2022, Mr. Leaver’s $406,750 promissory note and $500,000 advance were assigned to 20 Shekels, Inc, a corporation wholly-owned by Marshwiggle, LLC, a limited liability company jointly owned by Mr. Leaver and his spouse and on February 25, 2022 the Company issued $906,750 of its secured senior secured convertible notes due February 24, 2024, bearing interest at a rate of 7.25% per annum (the “7.25% Note”) in exchange for the prior obligations. The 7.25% Note is convertible into shares of the Company’s Common Stock at $5.00 per share. See Note 6 - Convertible Credit Line Payable and Senior Securied convertible Notes Payable - Related Party.

NOTE 5 – COMMON STOCK

The Company is authorized to issue 75,000,000 shares of its capital stock, consisting of 10,000,000 shares of preferred stock, par value $0.001 per share, and 65,000,000 shares of common stock, par value $0.001 per share.

The Company compensates each of its directors with 4,000 shares of common stock each month. During the three months ended March 31, 2022, the Company recorded stock compensation of $48,000 for directors which was recorded in additional paid in capital, but has not recorded the share compensation as issued and outstanding as of the date hereof

During the three months ended March 31, 2022, the Company recorded stock compensation in the amount of $15,000 for Kelloff Oil & Gas, LLC.

During the three months ended March 31, 2022, the Company received cash proceeds of $1,281,600 from investor subscriptions to purchase common stock at a purchase price of $1.00 per share recorded as a current liability.

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 $1,500,000 and matures on June 1, 2023. The outstanding balance accrues interest at a rate of 7% per annum and the outstanding balance is convertible to common stock of the Company at the lesser of the close price of the common stock as quoted on the OTCBB on the day interest is due and payable immediately preceding the conversion or $4.00. The Company analyzed the conversion option in the convertible line of credit for derivative accounting consideration under ASC 815, Derivative and Hedging, and determined that the transaction does qualify for derivative treatment. The Company evaluated the new convertible credit line for debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt modification as the borrowing capacity under the new credit line is greater than the borrowing capacity under the original credit line. There were no fees paid to the creditor and no unamortized deferred costs on the original credit line. Accordingly, no expense was recognized in connection with the transaction. On August 8, 2021, the Company received $20,000 in cash proceeds from the credit line. During the three months ended March 31, 2022, the Company amortized $1,116 of the discount as interest expense. As of March 31, 2022, and December 31, 2021, the unamortized discount was $9,984 and $11,100, respectively. The outstanding principal balance on the convertible credit line as of March 31, 2022 and December 31, 2021 amounted to $168,328. See discussion of derivative liability in Note 7 – Derivative Liability.

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 $5,000,000. The Senior Convertible Note is convertible at any time after the date of issuance into shares of the Company’s common stock at a fixed conversion price of $5.00 per share. Upon conversion of the convertible note into the Company’s common stock, the noteholder would be issued 1,000,000 shares of the Company’s common stock. Interest on the Convertible Note shall be paid to the investors at a rate of 7.25% per annum, paid on a quarterly basis, and the maturity date of the Convertible Note is two years after the issuance date. The Convertible Note purports to be secured by certain oil and gas leases, lands, minerals and other properties of the Company, subject to prior liens and security interests. See Note 4 – Related Party Transactions. $413,206 from a related party were exchanged for a Convertible Note. Due to the variable conversion price in the convertible credit line, this fixed senior secured convertible note is treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative liability was $65,262, which was recorded as a discount on the senior secured convertible notes payable. During the three months ended March 31, 2022, the Company amortized $3,040 of the discount as interest expense. As of March 31, 2022, the unamortized discount was $62,222. The outstanding principal balance on the convertible credit line as of March 31, 2022 amounted to $413,206. See discussion of derivative liability in Note 7 – Derivative Liability.

On February 25, 2022, Mr. Leaver assigned a $406,750 promissory note and advances of $500,000 to 20 Shekels, an affiliated Company. On the same day, the assigned promissory note and advance totaling $906,750 were transferred into a secured senior secured convertible note. The convertible note bears interest at 7.25% and matures on February 25, 2024. The note is convertible into shares of the Company at $5.00 per share. Due to the variable convertible credit line, this fixed senior secured convertible note are treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative liability was $143,214, which was recorded as a discount on the senior secured convertible notes payable. During the three months ended March 31, 2022, the Company amortized $6,670 of the discount as interest expense. As of March 31, 2022, the unamortized discount was $136,544. The outstanding principal balance on the convertible credit line as of March 31, 2022 amounted to $906,753. See discussion of derivative liability in Note 7 – Derivative Liability.

As of March 31, 2022, the senior secured convertible notes payable balance, net of discount was $1,121,193 with accrued interest of $8,616.

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 March 31, 2022 and December 31, 2021:

Level 1

Level 2

Level 3

Fair Value at

March 31, 2022

Liabilities:

Derivative liability

140,732

356,275

Level 1

Level 2

Level 3

Fair Value at

December 31, 2021

Liabilities:

Derivative liability

145,041

Utilizing Level 3 Inputs, the Company recorded a loss on fair market value adjustments related to convertible credit line payable and senior secured notes payable for the three months ended March 31, 2022 of $2,758. The fair market value adjustments as of March 31, 2022 were calculated utilizing the Black-Scholes option pricing model using the following assumptions: exercise price of $1.00 - $5.00, computed volatility of 300% - 329% and discount rate of 1.63% - 1.72%.

A summary of the activity of the derivative liability is shown below at March 31, 2022:

Balance at December 31, 2021	$	145,041
Debt discount on senior secured notes payable		208,476
Loss on change in derivative fair value adjustment		2,758
Balance at March 31, 2022	$	356,275

NOTE 8 – SUBSEQUENT EVENT

On April 8, 2022, John Lepin resigned as director, officer and employee of the Company.

Subsequent to March 31, 2022, the Company received cash proceeds of $479,970 from investor subscriptions to purchase common stock at a purchase price of $1.00 per share recorded as a current liability.

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 March 31, 2022, we had total current assets of $1,102,966 and total current liabilities of $3,402,714.

The Company used $306,268 of cash in operating activities during the three months ended March 31, 2022, compared to $118,692 used in operations during the same period in 2021. Net cash used in operating activities during the three months ended March 31, 2022 was mainly comprised of our $376,138 net loss during the period, adjusted by a non-cash charges of $2,758 for loss on change in fair value of derivative liabilities, stock-based compensation of $63,000, amortization of debt discounts of $10,826 and changes in operating assets and liabilities of $6,714. Net cash used in operating activities during the three months ended March 31, 2021 was mainly comprised of our $229,780 net loss during the period, adjusted by a non-cash charges of $120,250 gain on settlement of accounts payable, $13,304 for gain on change in fair value of derivative liabilities, stock-based compensation of $48,000, amortization of debt discounts of $2,754, 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 $19 and changes in operating assets and liabilities of $58,369.

The Company used cash of $507,814 for investing activities during the three months ended March 31, 2022 which consisted of $507,814 for the acquisition of oil and gas property. The Company used cash of $10,000 for investing activities during the three months ended March 31, 2022 related to deposits for oil and gas properties.

The Company generated cash of $1,891,831 from financing activities during the three months ended March 31, 2022 which consisted of $110,235 in proceeds from advances from related parties, $499,996 from senior secured convertible notes payable from related party and $1,281,600 in proceeds from unexecuted subscription agreements. The Company generated cash of $129,000 from financing activities during the three months ended March 31, 2021 which consisted of $129,000 advances from related party.

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 no revenues during the three months ended March 31, 2022 and 2021. Total operating expenses were $346,018 during the three months ended March 31, 2022 compared to $169,172 during the same period in 2021. The increase in operating expenses was due to a $136,769 increase in professional fees which were offset by $80,173 decrease in general and administrative expenses and a $120,250 gain on settlement of accounts payable in 2021.

Off-Balance sheet arrangements

As of March 31, 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	Contractual Investment Agreement with Jay Leaver for $906,750 of 7.25% Senior Notes dated as of February 25, 2022.
	10.2	Contractual Investment Agreement with AEI Management, LLC for $413,206 of 7.25% Senior Notes dated as of February 25, 2022.
	31.1	Centification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as a adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Centification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as a adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	Centification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2	Centification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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: July 29, 2022

	Alpha Energy, Inc.

	By:	/s/ Jay Leaver
		Jay Leaver, Principal Executive Officer, Principal Financial Officer

Exhibit 10.1

CONTRACTUAL INVESTMENT AGREEMENT

This Contractual Investment Agreement (“Agreement”) is made this 25^th day of February 2022, by and between Alpha Energy, Inc.(“the Company”), a publicly traded Colorado Corporation (Colorado filing number 2013155940) at 4162 Meyerwood Dr., Houston, TX. 77025, USA and 20 Shekels, Inc. at (hereinafter “Investor”, also considered to be participant in a group of other investors each and all of whom has entered into this Agreement as an “arm’s length” Agreement between the parties hereto, and not as a result of any offer made by the Company to them for the purchase and sale of any of the Company’s securities, collectively referred to as the “Investor Group”). This Agreement is made by and between the Company and the Investor, for the reasons clearly set forth and for no other.

WHEREAS, the Company, as a publicly traded and fully reporting company under Securities and Exchange Commission (“SEC”) Rule 12 (g), and as a result thereof is required to file, on an annual basis, certain quarterly and annual reports, specifically denominated as “10 Qs” and “10 Ks, to remain in current reporting status, and WHEREAS, the Company has certain mandatory past filings due under this regulatory regime, such filings to be adequately completed requiring significant expenditures in accounting, auditing, legal, EDGAR filing and administrative expenses, and WHEREAS, the Company has filings to be adequately completed requiring significant expenditures in accounting, auditing, legal, administrative expenses, and WHEREAS the Company shall incur significant start up, acquisition, and operational costs, which, when taken together with the aforedescribed expenses, are expected to approximate $5,000,000, and WHEREAS, the Investor Group is willing jointly to provide such funding as is set forth above in the amount of $5,000,000 to the Company, in terms of contributions made by the Investor Group participants, jointly and severally, such contributions totaling the needed $5,000,000 to complete the aforementioned operational and filing expenses, and WHEREAS, the parties hereto have agreed that as consideration for the provision of the needed funding amount of $5,000,000 Investor Group shall receive a Convertible Promissory Note at a rate per annum of seven and twenty-five hundredth percent (7.25%), from the date of this Convertible Promissory Note (“Convertible Note”), with a conversion feature into Company’s common stock at $5.00 per share. Upon conversion of the Convertible Note into Company common stock, the Noteholders would be issued 1,000,000 shares by the Company to the participants of the Investor Group, jointly and severally, for a total receipt of the needed $5,000,000.


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NOW THEREFORE, the parties hereto agree as follows:

WARRANTIES OF INVESTOR

Investor hereby warrants that they have full authority and legal capacity to lawfully provide to the Company their portion of the needed $5,000,000 required for the Company’s completion of all matters requisite for the aforementioned mandated SEC filings and acquisition and operational costs, and that they will do so in accordance with the terms of this Agreement, and that their full contribution constitutes funds of their own, and they further warrant that the funds are from their sole origin and come from no other source.

Investor further warrants that while they have had available to them all public information lodged with the SEC in reference to the Company, these funds are being provided for the specific purpose referenced in this Agreement, namely the provision of funds for the needed SEC filings, and acquisition and operational costs and not as a general investment in the Company. The investment described herein is made for the sole purpose described herein.

Investor further warrants that either (i) appurtenant to this Agreement they have not received now, nor shall they ever seek to receive, any “non-public” information in reference to the Company in relation to this Agreement or at any other time, or (ii) the Investors have executed a company NDA (dated 6/1/2020), not to disclose material, nonpublic information, or trade in the open markets upon receiving material, nonpublic information.

Investor further warrants that they shall take reasonable steps to ensure that this $5,000,000 investment shall be used by the Company for the purposes recited herein relating to the aforementioned mandated filings and acquisition and operational costs and for no other purpose.


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WARRANTIES OF THE COMPANY

The Company warrants that is a duly formed and licensed corporation, formed in the State of Colorado and currently in good standing in all respects, bearing the Colorado filing number 2013155940 and that it is fully compliant with reference to all filings required by the State of Colorado.

The Company also warrants that it is a fully reporting Rule 12 (g) company under the aforesaid SEC Rule and that its securities are currently traded in the public market and that it is in the process of completing all mandated filings with the SEC, the completion of such filings being the complete and sole reason for it having entered into this Agreement.

The Company warrants that it has full authority to issue $5,000,000 in the form of a Senior Secured Convertible Promissory Note at a rate per annum of seven and twenty-five hundredth percent (7.25%), from the date of this Senior Secured Convertible Promissory Note (“Convertible Note”), with a conversion feature into Company’s common stock at $5.00 per share. Upon conversion of the Convertible Note into Company common stock, the Noteholders would be issued 1,000,000 shares by the Company to the Investors, jointly and severally, for a total receipt of the needed $5,000,000. and that the shares so Contemplated for issuance by this Agreement and that the issuance of such shares as are contemplated hereby shall breach no pre-existing agreement or condition. The Company further warrants that the $5,000,000 funding contemplated by this Agreement shall be used exclusively for the accounting, auditing, legal, EDGAR filing, and administrative costs involved in completing the mandated filings with the SEC, and for the aforementioned acquisition and operational costs, and for no other purpose. The Company assumes full responsibility to ensure that these funds are used for this and no other purpose and shall allow the Investors to examine the relevant Company records to determine and ensure that the funds have been so exclusively used.

OBLIGATIONS OF THE INVESTOR

Upon signature to this Agreement, Investor as a participant in the Investor Group, jointly, shall be obligated to provide to the Company $5,000,000 USD (in total or in part pursuant to the amount subscribed herein) in good and free funds, and shall, forthwith, cause this amount of funding to be wired to the Company in accordance with the details in the enumerated wiring instructions set forth in Exhibit “B” hereto or in some other form suitable to the Company as detailed in Exhibit “C”.


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Once the funds described above have been so wired to the credit of the Company, Investors shall have fully completed and fulfilled all of their obligations, other than the ongoing obligations referred to under Warranties of Investors in this Agreement and shall, as a result, be issued a dually executed Convertible Promissory Note.

OBLIGATIONS OF THE COMPANY

Once the $5,000,000 funding amount has been received by the Company, the Company shall have the obligation to cause its Secretary/Board of Directors to issue the Convertible Promissory Note at a rate per annum of seven and twenty-five hundredth percent (7.25%), from the date of this Convertible Promissory Note (“Convertible Note”), with a conversion feature into Company’s common stock at $5.00 per share. Upon conversion of the Convertible Note into Company common stock, the Noteholders would be issued 1,000,000 shares by the Company to the Investors, jointly and severally, for a total receipt of the needed $5,000,000.

MISCELLANEOUS PROVISIONS

GOVERNING LAW: This Agreement shall be interpreted and enforced in accordance with the Laws of the State of Colorado, in all respects as to both its making and performance, and any and all disputes arising from, or relating to, this Agreement shall be interpreted, in all respects, under the laws of the State of Colorado.

JURISDICTION: All parties hereto agree that this Agreement is to be subject to the jurisdiction of the State of Colorado in all respects, including personal jurisdiction, and all parties affixing their signatures hereto agree, by the affixing of such signatures, that they are doing business in Colorado for the purpose of personal jurisdiction as required by the laws of the State of Colorado.

VENUE: All parties hereto agree, jointly and severally, that the appropriate venue for the resolution of any disputes which may arise under this Agreement shall be that of Adams County, Colorado, whether any such proceeding is lodged in any Court of the State of Colorado in Adams County or in any Court of the United States found at that location.


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SUPERSEDENCE: This Agreement, when signed by the parties, supersedes any and all previous agreements by and between the parties hereto, whether oral or in writing. This Agreement constitutes the full and complete agreement by and between the parties hereto.NOTICES: Any and all notices made by any of the parties to this Agreement may be made by regular U.S. Mail, certified U.S. Mail, express delivery, fax transmission, or by properly sent electronic (“email’) transmission. Any and all such notices shall be remitted to the addresses reflected herein for each and all of the parties. The Notices to be remitted to any of the Investors herein shall be sent to the actual address, facsimile address, and/or electronic (“email”) as any and all Investors shall set such addresses forth on Exhibit “A” hereto.

NON-ASSIGNABILITY: This Agreement may not be assigned by any party hereto to any third party without the express written permission of all parties hereto. Upon such agreement, any assignment so made shall be deemed valid.

NON- WAIVER OF BREACH: No failure by any party hereto to enforce any singular obligation under this Agreement shall prejudice and such party’s right to enforce any other right or obligation under this Agreement.

ARM’S LENGTH AGREEMENT: This Agreement as made by and between the parties hereto is made only for the purposes found within the four corners of this Agreement, and for no other reason or other intended purpose.

THIS AGREEMENT MAY BE EXECUTED IN IDENTICAL COUNTERPARTS, such counterparts shall be deemed to constitute one and the same Agreement.

[SIGNATURE PAGE TO FOLLOW]


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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the

___ day of ____________, 2022.

Alpha Energy, Inc.	INVESTOR HEREIN: 20 Shekels, Inc.
4162 Meyerwood Dr.
Houston, Texas 77025
	(More fully identified on Exhibit “A”)


By: _________________________________	By: _________________________________
John Lepin, CFO	Jay Leaver, President
Alpha Energy, Inc.	20 Shekels, Inc.

APHE – CIA 2022

Exhibit “A”

SUBSCRIPTION AGREEMENT

Alpha Energy, Inc.

(February 2022)

The purchase of a Convertible Note involves a high degree of risk. Only Investors who are

able to afford the risk of loss of their entire investment should purchase a Convertible Note.

These securities have not been registered with the U.S. Securities and Exchange

Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”),

and are being offered in reliance on exemptions from registration provided in Section

4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder and

preemption from the registration and qualification requirements

(other than provisions) of applicable state laws under the National

Securities Markets notice filing and fee Improvement Act of 1996.

These securities have not been approved or disapproved by the SEC or any state and other

regulatory authority, nor has the SEC or any state and other regulatory authority

passed on the accuracy and adequacy of this disclosure document

or endorsed the merits of this offering. Any representation to the

contrary is a criminal offense.

This Subscription Agreement (“Agreement”) constitutes the undersigned’s irrevocable offer to purchase from Alpha Energy, Inc., a Colorado corporation (the “Company”), an convertible promissory note (the “Convertible Note”) in the principal amount set forth on the signature page of this Agreement, subject to the terms and conditions set forth in this Agreement. The undersigned hereby delivers to the Company the full purchase price for the subscription for the Shares in the form of a check or wire transfer to the wiring instructions attached as Exhibit “B”. The undersigned understands and agrees that this Subscription Agreement constitutes the binding obligation of the undersigned to deliver the full purchase price to the Company for the portion of the subscription accepted by the Company. The undersigned will be notified by the Company whether, and to what extent, the undersigned’s subscription has been accepted. The Company reserves the right in its sole discretion to reject all or part of any subscription. If a subscription is not accepted in whole for any other reason, the subscription amount that was not accepted will be returned to the undersigned without interest. The undersigned understands and agrees that this subscription is irrevocable. On execution by both parties, this Agreement shall become a bilateral agreement binding on both the undersigned and the Company. Each part of this Agreement must be completed by the undersigned and, by execution below, the undersigned acknowledges and understands that the Company is relying on the accuracy and completeness hereof in complying with the obligations under applicable securities laws.

Convertible Notes

The Company was originally formed under the laws of the state of Colorado as a limited liability company and subsequently converted to a Colorado corporation. Copies of the Company’s articles of incorporation, bylaws, and shareholder agreements will be provided to the undersigned upon request. The Company is offering the Convertible Notes as investment securities only and not with a view to, or for resale in connection with, any distribution thereof. These securities are “restricted” (within the meaning of the Securities Act) and are subject to limitations on transfer as set forth in state and federal laws and in the articles of incorporation, bylaws, and shareholder agreements. Investors in the Convertible Notes will be creditors of the Company and on conversion of the Convertible Note they will be issued shares of the Company’s common stock (the “Common Stock”) and become stockholders of the Company “Stockholders”).

APHE – CIA 2022- Exhibit “A”

Subscription Agreement

Suitability Information

Representations of Subscriber. The undersigned hereby represents and warrants as follows:

(a) The undersigned has received and read the Company’s business plan and power point presentation (the “Offering Materials”), together with additional information and documentation provided pursuant thereto, including information furnished on his request. The undersigned understands and acknowledges that such information contains certain forward- looking statements and information relating to the Company that are based on the beliefs of management, as well as assumptions made by and information currently available to management, and that when used in the offering information, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” and similar expressions, as they relate to the Company and its management, are intended to identify forward-looking statements. The undersigned understands and acknowledges that these statements reflect the current view of the Company respecting future events and are subject to certain risks, uncertainties, and assumptions, including the risks and uncertainties noted, and that, should one or more of such risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the Offering Materials as anticipated, believed, estimated, expected, and intended. The undersigned understands the risks associated with a business enterprise with no revenue and limited capitalization in a highly competitive business characterized by rapid technological change.

(b) The undersigned has had sufficient interactions with the Company’s management and has been provided with supporting documentation, if requested, which he has read and understands, in order to make an informed investment decision. The undersigned is basing his decision to invest solely on the information provided and has not relied on any other representations made by the Company and its affiliates.

(c) The undersigned understands that an investment in a Convertible Note is speculative and involves numerous significant risks, the occurrence of any one of which could result in the loss of his entire investment. The undersigned is fully cognizant of, and understands all of, the risks relating to a purchase of a Convertible Note, including those risks set forth in the Offering Materials.

(d) The undersigned understands that the Company is in the process of raising up to $5,000,000 for the purposes set forth in the Offering Materials and for general working capital.

(e) The undersigned’s overall commitment to investments that are not readily marketable is not disproportionate to his individual net worth, and his investment in a Convertible Note will not cause his overall commitment to become excessive.

(f) The undersigned has adequate means of providing for his financial requirements, both current and anticipated, and has no need for liquidity in an investment in a Convertible Note.

(g) The undersigned was at no time solicited by any leaflet, public promotional meeting, circular, newspaper and magazine article, internet contact, radio and television advertisement, and any other form of general advertising and solicitation in connection with the offer, sale, and purchase of a Convertible Note through this Agreement.

APHE – CIA 2022- Exhibit “A”

Subscription Agreement

(h) The undersigned can bear and is willing to accept the economic risk of losing his entire investment.

(i) The undersigned is acquiring a Convertible Note for his own account and for investment purposes only and has no present intention, agreement, and arrangement for the distribution, transfer, assignment, resale, and subdivision of a Convertible Note or of the Common Stock, either currently or after the passage of a fixed or determinable period or on the occurrence or nonoccurrence of any predetermined event and circumstance.

(j) The undersigned has such knowledge and experience in financial and business matters that he is capable of evaluating the Company, the proposed activities thereof, and the risks and merits of investing in a Convertible Note and is not using a purchaser representative (as defined in Regulation D) in connection with the evaluation of such risks and merits, or the undersigned and his purchaser representatives listed below, together, have such knowledge and experience in financial and business matters that they are capable of evaluating the Company, the proposed activities thereof, and the risks and merits of investing in a Convertible Note.

(k) If a resident of the United States, the undersigned is a resident of the state set forth on the signature page of this Agreement and has a principal residence within such state, maintains a driver’s license and voter registration only within such state, pays income taxes (when applicable) only to such state, and intends to remain a citizen of such state for the foreseeable future, or if the undersigned cannot make this representation, his reason is satisfactory to the Company, in its sole and absolute discretion.

(l) The undersigned is an “accredited investor” as defined under Rule 501 of Regulation D of the Securities Act, as summarized in Exhibit “A”.

(m) The undersigned understands the offering has not been registered under the Securities Act and applicable state and other securities laws, that the Convertible Notes are subject to significant restrictions on transfer under such securities laws, and that the undersigned cannot sell, distribute, and otherwise transfer the Convertible Note or the Common Stock unless the Convertible Note or Common Stock is registered under the Securities Act and applicable state and other securities laws or unless an exemption from registration is available. The undersigned may, therefore, be required to hold the Convertible Note until maturity and, if converted, the Common Stock for an indefinite period.

(n) The undersigned acknowledges that neither the SEC nor the securities commission of any state or other federal agency has made any determination as to the merits of purchasing the Convertible Notes.

(o) All information that the undersigned has provided to the Company and its agents and representatives concerning his suitability to invest in the Company is complete, accurate, and correct as of the date of the signature on the last page of this Agreement, including information concerning his personal financial affairs and business position and the knowledge and experience of the undersigned and his advisers.

(p) The undersigned acknowledges that this Agreement may be accepted or rejected, in whole or in part, by the Company and that, to the extent the subscription may be rejected, the accompanying subscription payment will be refunded without payment of interest and without deduction of expenses.

APHE – CIA 2022- Exhibit “A”

Subscription Agreement

(q) The undersigned acknowledges and agrees that no portion of the Offering Materials may be reproduced and redistributed, except to his advisers, without the Company’s prior written consent, which consent may be withheld and conditioned in the Company’s sole discretion. The undersigned will not, without the Company’s prior written permission and consent, use any of the information in the Offering Materials for any purpose whatsoever other than evaluating a potential purchase of a Convertible Note.

(r) Neither the undersigned nor any of his affiliates will effect any transactions in the Convertible Note or Common Stock while in possession of material, nonpublic information regarding the Company.

2. Additional Information. The undersigned acknowledges that he has previously been advised of the opportunity to review all of the pertinent facts concerning the Company and to obtain any additional information that he may request, to the extent the Company possesses or can obtain such information without unreasonable effort and expense. The undersigned has been provided with all materials and information requested by him and his representatives, including any information requested to verify any information furnished, and he has been provided the opportunity for direct communication with the Company and its representatives regarding the purchase made hereby, including the opportunity to ask questions of and receive answers from the Company’s management.

Representations Regarding Exemptions and Restrictions on Transfer.

(a) In connection with the undersigned’s acquisition of a Convertible Note, he represents that the Convertible Note is being acquired without a view to, or for resale in connection with, any distribution of the Convertible Note or the Common Stock and any interest therein without registration and other compliance under the Securities Act and that he has no direct or indirect participation in any such undertaking or in the underwriting of such an undertaking.

(b) The undersigned acknowledges that the Convertible Note must be held and may not be sold, transferred, and otherwise disposed of for value unless subsequently registered under the Securities Act or an exemption from such registration is available; the Company is under no obligation to register the Convertible Note or the Common Stock under the Securities Act or under Section 12 of the Securities Exchange Act of 1934, as amended, except as expressly agreed to in writing by the Company; no assurance is given that the exemption provided by Rule 144 under the Securities Act and any other exemption will be available; and the Convertible Note and certificate, if any, representing the Common Stock and the Company’s stock transfer records will bear a legend listing the restriction on the sale of the Convertible Note and Common Stock.

(c) The undersigned understands that the Convertible Note and the Common Stock have not been registered, but they are being acquired by reason of a specific exemption under the Securities Act as well as under certain state statutes for transactions by an issuer not involving any public offering and that any disposition of the Convertible Note may, under certain circumstances, be inconsistent with this exemption and may make the undersigned an “underwriter” within the meaning of the Securities Act.

(d) The undersigned understands that the resale of the Convertible Note or Common Stock must be effected in reliance on exemptions from registration under the Securities Act and applicable state securities laws. The undersigned understands that such an exemption may not be available, and, in such case, the undersigned would not be able to resell the Convertible Note and Common Stock held.

APHE – CIA 2022- Exhibit “A”

Subscription Agreement

4. Indemnity. The undersigned hereby agrees to indemnify the Company, the Company’s controlling persons, and any person participating in the offering and to hold them harmless from and against all liability, damage, cost, and expense (including reasonable attorneys’ fees) incurred on account of and arising out of:

(a) any inaccuracy in the undersigned’s declarations, representations, and warranties set forth herein or made by him to the Company in connection with his subscription;

(b) the disposition of the Convertible Note and the Common Stock that the undersigned will receive, contrary to his declarations, representations, and warranties set forth herein and to the provisions of the articles of incorporation, bylaws, and shareholder agreements; and

(c) any action, suit, and proceeding based on: (i) the claim that said declarations, representations, and warranties made by the undersigned were inaccurate and misleading or otherwise cause for obtaining damages and redress from the Company; (ii) the disposition of the Convertible Note or Common Stock contrary to the terms hereof; and (iii) the breach by the undersigned of any part of this Agreement.

5. Setoff. Notwithstanding the provisions of the last preceding section and the enforceability thereof, the undersigned hereby grants to the Company the right to a setoff against any amounts payable by the Company to the undersigned, for whatever reason, of all damages, costs, and expenses (including reasonable attorneys’ fees) that are incurred on account and arising out of any of the items referred to in clauses (a) through (c) of the last preceding section.

6. Miscellaneous. The undersigned further understands, acknowledges, and agrees that:

(a) This Agreement shall be construed in accordance with, and governed by, the laws of the state of Colorado.

(b) This Agreement constitutes the entire agreement between the parties respecting the subject matter hereof.

(c) Notwithstanding any of the representations, warranties, acknowledgments, and agreements made herein by the undersigned, he does not waive any rights granted to him under federal and state securities laws.

(d) This Agreement does not entitle the undersigned to any rights as a holder of the Convertible Note or Common Stock purchasable hereunder for which he has not fully paid.

(e) All subscription payments should be made payable to “Alpha Energy, Inc.” The Company will thereafter deliver the Convertible Note subscribed for pursuant to this Agreement.

(Subscription details, signatures, and contact information on following page.)

APHE – CIA 2022- Exhibit “A”

Subscription Agreement

Alpha Energy, Inc.

SUBSCRIPTION AGREEMENT COUNTERPART SIGNATURE PAGE

Subscription Details

The undersigned hereby subscribes for the Convertible Note set forth below and agrees to be bound by the terms of this Subscription Agreement:

Principal Amount of Convertible Note Subscribed For $ 854,300.21

Subscriber:

20 Shekels, Inc.
Full Name of Person or Entity		Date


Signature of Person or Entity Authorized Representative		Signature of Joint Subscriber, If Any

		President
Street Address		Title of Authorized Representative Signing for Entity


City, State, and Zip		Tax Identification or Social Security Number


E-mail Address		Daytime Telephone Number

Title to be held as follows:	☐	Community Property	☐	Joint Tenants, with Right of Survivorship
	☐	Tenants in Common	☐	Separate Property
	☐	Tenants by the Entirety

☐

Other (corporation, single person, trust, etc., please indicate)

corporation

Purchaser Representatives, if any:


Full Name		Full Name


Number and Street		Number and Street


City, State and Zip Code		City, State and Zip Code

ACCEPTANCE OF SUBSCRIPTION

The foregoing subscription is hereby accepted this ___________________________ 2022.

ALPHA ENERGY, INC.

By:______________________________________________

Name: John F. Lepin

Its: CFO

APHE – CIA 2022- Exhibit “A”

Subscription Agreement

Please complete this certificate if you are a corporation, general or limited partnership, limited liability company, or trust.

CERTIFICATE OF PARTNERSHIP, CORPORATION, OR OTHER ENTITY

The undersigned, 20 Shekels, Inc. (“Subscriber”), a corporation organized under the laws of the state of Colorado, with its principal offices located at the address set forth below, hereby certifies as follows to induce Alpha Energy, Inc. (the “Company”) to accept the undersigned’s offer to purchase a secured convertible promissory note (“Convertible Note”):

1. Pursuant to valid and legally binding documents filed at the time and in the manner required by the laws of the state under which Subscriber was organized as stated above, Subscriber was formed on _1/25/2022_______.

2. Subscriber wasorganized to engage in the business of __technology___________________. Since its organization, Subscriber’s business activities have included the following: _holding assets_.

3. Subscriber: (a) was not organized or reorganized for the specific purpose of acquiring the Convertible Note; and (b) has made substantive and substantial investments before the date hereof, and each beneficial owner thereof has and will share in the same proportion in each investment.

4. The offer to purchase the Convertible Note to be sold by the Company has been approved by the governing authority of Subscriber in accordance with the power vested in it by applicable law and the documents under which Subscriber was organized and exists.

5. Subscriber has determined that the purchase of the Convertible Note is consistent with its purposes and policies, is of benefit to it, and involves risks that it can reasonably bear.

6. If Subscriber is a trust, in an attachment hereto please identify each grantor and beneficiary and indicate the circumstances under which the trust is revocable by the grantor.

7. On request of the Company, Subscriber shall deliver a certified copy of resolutions duly adopted by the board of directors, general partners, trustees, or other governing authority of Subscriber and provide further evidence of the authority and power of Subscriber to make the investment described herein.

The undersigned has caused this document to be executed by its representative, hereunto duly authorized as of , 2022.

		20 Shekels, Inc.
Address:		Name of Subscriber


		Signature of Authorized Signatory

APHE – CIA 2022- Exhibit “A”

Subscription Agreement

EXHIBIT “A” TO SUBSCRIPTION AGREEMENT

Accredited Investor as defined in § 230.501 of the Securities Act of 1933:

(1)

Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Securities Act; Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Securities Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investor;

(2)

Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

(3)

Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

(4)

Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

(5)

Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of calculating net worth under this paragraph (5):

(a)

The person’s primary residence shall not be included as an asset;

(b)

Indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and

(c)

Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;

(6)

Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

(7)

Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in §230.506(b)(2)(ii); and

(8)

Any entity in which all of the equity owners are accredited investor.

APHE – CIA 2022 – Exhibit “A”

Subscription Agreement - Exhibit “A”

Exhibit “C”

INVESTOR CONTRIBUTION

Investor: 20 Shekels, Inc.

Investor shall make the following contribution(s):

Source	Amount
Promissory Note dated 2/22/2022 between 20 Shekels as Holder and Alpha Energy, Inc. as Maker, to be tendered to the Company by Assignment.	$ 406,754.38
Cash contribution, to be wired to Company as per Exhibit “B”	$ 499,995.62
Total	$ 906,750.00	= 181,350 shares @ $5/share

APHE – CIA 2022 – Exhibit “C”

Investor Contribution

[INSERT NOTE + Exhibits]

APHE – CIA 2022 – Exhibit “A”

Subscription Agreement - Exhibit “A”

Exhibit 10.2

CONTRACTUAL INVESTMENT AGREEMENT

This Contractual Investment Agreement (“Agreement”) is made this 25^th day of February, 2022 by and between Alpha Energy, Inc.(“the Company”), a publicly traded Colorado Corporation (Colorado filing number 2013155940) at 4162 Meyerwood Dr., Houston, TX. 77025, USA and AEI Management, Inc. at (hereinafter “Investor”, also considered to be participant in a group of other investors each and all of whom has entered into this Agreement as an “arm’s length” Agreement between the parties hereto, and not as a result of any offer made by the Company to them for the purchase and sale of any of the Company’s securities, collectively referred to as the “Investor Group”). This Agreement is made by and between the Company and the Investor, for the reasons clearly set forth and for no other.


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APHE – CIA 2022

NOW THEREFORE, the parties hereto agree as follows:

WARRANTIES OF INVESTOR

Investor further warrants that either (i) appurtenant to this Agreement they have not received now, nor shall they ever seek to receive, any “non-public” information in reference to the Company in relation to this Agreement or at any other time, or (ii) the Investors have executed a company NDA, not to disclose material, nonpublic information, or trade in the open markets upon receiving material, nonpublic information.


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APHE – CIA 2022

WARRANTIES OF THE COMPANY

OBLIGATIONS OF THE INVESTOR


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APHE – CIA 2022

OBLIGATIONS OF THE COMPANY

MISCELLANEOUS PROVISIONS


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APHE – CIA 2022

NOTICES: Any and all notices made by any of the parties to this Agreement may be made by regular U.S. Mail, certified U.S. Mail, express delivery, fax transmission, or by properly sent electronic (“email’) transmission. Any and all such notices shall be remitted to the addresses reflected herein for each and all of the parties. The Notices to be remitted to any of the Investors herein shall be sent to the actual address, facsimile address, and/or electronic (“email”) as any and all Investors shall set such addresses forth on Exhibit “A” hereto.

THIS AGREEMENT MAY BE EXECUTED IN IDENTICAL COUNTERPARTS, such counterparts shall be deemed to constitute one and the same Agreement.

[SIGNATURE PAGE TO FOLLOW]


Initials		Initials

APHE – CIA 2022

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the

25^th day of February 2022.

Alpha Energy, Inc.	INVESTOR HEREIN: AEI Management, Inc.
4162 Meyerwood Dr.
Houston, Texas 77025

	(More fully identified on Exhibit “A”)

By: _________________________________	By: _________________________________
John Lepin, CFO	Harry McMillan, President
Alpha Energy, Inc.

APHE – CIA 2021