Exhibit 99.1
Constant Investments, Inc.
Financial Statements
(With Supplementary Information)
and Independent Auditor’s Report
December 31, 2024
Constant Investments, Inc.
Index
| Page | |
| Independent Auditor’s Report | F-2 – F-3 |
| Financial Statements | |
| Balance Sheets | F-4 |
| Statements of Operations | F-5 |
| Statements of Changes in Stockholder’s Equity | F-6 |
| Statements of Cash Flows | F-7 |
| Notes to Financial Statements | F-8 – F-12 |
| Supplementary Information | |
| Schedules of Computation of Adjusted Net Worth | F-14 |
F-1
Board of Directors
Constant Investments, Inc.
La Mirada, California
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Constant Investments, Inc. (the Company), which comprise the balance sheet as of December 31, 2024 and the related statements of operations, changes in stockholder’s equity and cash flows for the year then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of Constant Investments, Inc. as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Constant Investments, Inc. and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Constant Investments, Inc.’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
F-2
Auditor’s Responsibilities for the Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
| ● | Exercise professional judgment and maintain professional skepticism throughout the audit. | |
| ● | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. | |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Constant Investments, Inc.’s internal control. Accordingly, no such opinion is expressed. | |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. | |
| ● | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Constant Investments, Inc.’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information (Computation of Adjusted Net Worth) is presented for purpose of additional analysis as required by the Uniform Financial Reporting Standard issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General, and is not a required part of the financial statements.
Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued a report Dated March 27, 2025 on our consideration of Constant Investments, Inc.’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Constant Investments, Inc.’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Constant Investments, Inc.’s internal control over financial reporting and compliance.
/s/ Global First Accounting Group, Inc
March 27, 2025
Los Angeles, California
Kyung Soo Lee – Partner
Global First Accounting Group, Inc
F-3
Balance Sheet
December 31, 2024
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 229,026 | ||
| Trade account securities | 1,613,539 | |||
| Accounts receivable | 244,912 | |||
| Note receivable | 243,789 | |||
| Mortgage loans held for sale | 9,579,296 | |||
| Total current assets | 11,910,562 | |||
| Furniture and equipment | 25,427 | |||
| Allowance for depreciation | (18,374 | ) | ||
| Right-of-use assets | 242,379 | |||
| Allowance for amortization - ROU | (242,379 | ) | ||
| Security deposit | 1,663 | |||
| Total non-current assets | 8,716 | |||
| Total | $ | 11,919,278 | ||
| Liabilities and Stockholder’s Equity | ||||
| Current liabilities | ||||
| Accrued expenses | $ | 334,905 | ||
| Income tax payable | 32,000 | |||
| Warehouse lines payable | 9,363,751 | |||
| Due to shareholders | 50,000 | |||
| Current portion of lease liabilities | - | |||
| Total current liabilities | 9,780,656 | |||
| Long-term lease liabilities | - | |||
| Total liabilities | 9,780,656 | |||
| Stockholder’s equity | ||||
| Common stock - no par value, 19,000 authorized; 10,000 shares issued and outstanding - stated value | 1,000 | |||
| Paid in capital | 1,202,874 | |||
| Retained earnings | 934,748 | |||
| Total stockholder’s equity | 2,138,622 | |||
| Total | $ | 11,919,278 | ||
The accompanying notes to the financial statements are an integral part of these financial statements
F-4
Statements of Operations
Year Ended December 31, 2024
| Revenue | ||||
| Loan fees and gain on sale of mortgage loans | $ | 3,731,141 | ||
| Total revenues | 3,731,141 | |||
| Expenses | ||||
| Advertising and promotion | 20,040 | |||
| Commission and direct loan costs | 2,576,808 | |||
| Salaries and payroll taxes | 868,593 | |||
| Office and administration costs | 156,135 | |||
| Rent expenses | 112,725 | |||
| Insurance | 11,260 | |||
| Professional services | 28,661 | |||
| Total expenses | 3,774,222 | |||
| Income (loss) from operations | (43,081 | ) | ||
| Other income (expense): | ||||
| Unrealized gain (loss) - trade account securities | 233,510 | |||
| Dividend and interest income | 34,295 | |||
| Investment expenses | (13,440 | ) | ||
| Income (loss) before income taxes | 211,284 | |||
| Provision for income taxes | 31,800 | |||
| Net Income (loss) | $ | 179,484 | ||
The accompanying notes to the financial statements are an integral part of these financial statements
F-5
Statements of Changes In Stockholder’s Equity
Year Ended December 31, 2024
Common Stock | Paid-In Capital | Retained Earnings | Total | |||||||||||||
| Balance at December 31, 2023 | $ | 1,000 | $ | 1,202,317 | $ | 755,264 | $ | 1,958,581 | ||||||||
| Capital Contribution | 557 | 557 | ||||||||||||||
| Stockholder distribution | - | |||||||||||||||
| Net Income | 179,484 | 179,484 | ||||||||||||||
| Balance at December 31, 2024 | $ | 1,000 | $ | 1,202,874 | $ | 934,748 | $ | 2,138,622 | ||||||||
The accompanying notes to the financial statements are an integral part of these financial statements
F-6
Statements of Cash Flows
Year Ended December 31, 2024
| Cash flows from operating activities | ||||
| Net income | $ | 179,484 | ||
| Adjustments to reconcile net Income to net cash provided (used) in operating activities | ||||
| Depreciation and amortization | 3,314 | |||
| Amortization expense - ROU assets | 52,109 | |||
| Repayment of ROU lease liabilities | (54,899 | ) | ||
| Restricted cash | 125,000 | |||
| Accounts receivable | (188,268 | ) | ||
| Mortgage loans held for sale | (4,637,115 | ) | ||
| Security deposit | 6,765 | |||
| Accrued expenses | 259,985 | |||
| Payroll and payroll taxes payable | (11,950 | ) | ||
| Income tax payable | 31,000 | |||
| Warehouse line payable | 4,546,676 | |||
| Net cash provided (used) in operating activities | 312,101 | |||
| Cash flows from investing activities | ||||
| Note receivable | 126,211 | |||
| Trade account securities | (712,817 | ) | ||
| Net cash provided (used) in investing activities | (586,606 | ) | ||
| Cash flows from financing activities | ||||
| Capital contribution | 557 | |||
| Due to shareholders | 50,000 | |||
| Net cash provided (used) by financing activities | 50,557 | |||
| Net increase (decrease) in cash | (223,948 | ) | ||
| Cash, beginning of year | 452,974 | |||
| Cash, end of year | $ | 229,026 | ||
| Supplemental disclosure of cash flow information | ||||
| Taxes paid | $ | 800 | ||
| Interest paid | $ | - | ||
The accompanying notes to the financial statements are an integral part of these financial statements
F-7
Notes to Financial Statements
December 31, 2024
Note 1 - Business and summary of significant accounting policies
Business
Constant Investments, Inc. (the “Company”) is a California Corporation. The Company was incorporated in 2011 and is based in Buena Park, California. The Company operates under a DBA Mortgage One Group.
The Company is engaged as a mortgage lender that funds and processes financing and refinancing of real estate loans and sells them to investors.
Licensing and regulations
The Company is regulated by California and other various states’ Division of Real Estate, Nationwide Multistate Licensing System (NMLS) and the United States Department of Housing and Urban Development (“HUD”). HUD requires the Company to conform to certain net worth, liquid assets and other conditions and requirements and to follow certain specific regulations issued from time to time by HUD.
Cash and equivalents
Cash and cash equivalents include cash on hand and cash in checking and savings accounts with banks. All unrestricted liquid short-term investments and certificate of deposit with a maturity of three months or less are considered cash equivalents. The Company maintains its cash accounts at major financial institutions that are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. During the year ended December 31, 2024, the Company had cash deposits in excess of the FDIC insurance limits. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.
Trade Account Securities
The Company invested in stocks and bonds of publicly traded companies, with fair market value of $1,613,539.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, generally ranging from three to seven years. Expenditures for major renewals and improvements that extend the useful lives of property and equipment are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. For the years ended December 31, 2024, depreciation and amortization expense was $3,314.
F-8
Constant Investments, Inc.
Notes to Financial Statements
December 31, 2024
Revenue recognition
The Company assists individuals and others in obtaining long term trust deed (mortgage) financing. Revenue is recognized upon the loan is funded. Any offsetting costs or expenses are also recognized when the loans are funded. Gain or loss on the sale of loans held for sale is recognized at the time of the sale of the loan and is included in revenue.
Accounts receivable
Accounts receivable consists of fees earned on loans that have been funded prior to year end.
Loan loss obligations
The Company sells loans it originates to investors without recourse so that the risk of loss or default by the borrower is generally transferred to the investor. However, the Company is required by these investors to make certain representations relating to credit information, loan documentation and collateral. To the extent the Company does not comply with such representations, the Company may be required to repurchase loans or indemnify the investors for any losses from borrower defaults. If this were to occur, the Company’s financial condition would be severely impacted. As of the audit date, no event that would severely impact the financial condition of the Company has occurred.
Market risk
The Company originated the majority of its mortgage loans in the State of California. The concentration of mortgage loans originated in California increases the risk that any adverse economic, regulatory or other developments that may occur in California may adversely affect the Company’s results of operations or financial condition.
The Company generates the vast majority of its revenue from the origination of mortgage loans. Although the Company’s management closely monitors market conditions, such activities are sensitive to fluctuations in prevailing interest rates and real estate markets, and any significant adverse changes in prevailing interest rates or real estate markets could have an adverse impact on the Company’s results of operations or financial condition.
Evidence of ownership interest in an entity
Common stock is a financial instrument that is evidence of ownership interest in an entity. Other evidences include preferred stock, partnership agreements, certificates of interest or participation, or warrants or options to subscribe to or purchase stock from the issuing entity. The Company has not issued any preferred stock, partnership agreements, certificates of interest or participation, or warrants or options to subscribe to or purchase stock from the issuing entity.
Advertising and promotion
Advertising costs are expensed as incurred. Advertising expense was $20,040 for the year ended December 31, 2024.
F-9
Constant Investments, Inc.
Notes to Financial Statements
December 31, 2024
Income taxes
The stockholder of the Company has revoked election to be taxed as a sub-chapter S Corporation and the Company files its federal and state income tax returns as C Corporation beginning January 1, 2024. Provisions for income taxes are based on taxes payable or refundable for the current year and changes in deferred taxes. Deferred taxes result from temporary differences between the amount of taxable income and pre-tax financial income and between tax bases of assets and liabilities and in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. When it is deemed necessary, a valuation allowance is established to reduce a deferred tax asset to the amount expected to be realized. When the effect of the deferred taxes is not material, no deferred tax provision is accrued.
The Company recognizes the tax benefit from uncertain tax positions only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Base on its evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in the financial statements.
When necessary, the Company recognizes interest and penalties associated with tax matters as part of operating expenses and includes accrued interest and penalties with accrued expenses in the balance sheet. No such interest or penalties were recognized during the years ended December 31, 2024.
The income tax provision (benefit) for the year ended December 31, 2024 was as follows:
| Current tax expense | Federal | $ | 24,000 | State | $ | 7,800 | Total | $ | 31,800 | ||||||||
| Deferred tax expense (benefit) | Federal | $ | 0 | State | $ | 0 | Total | $ | 0 | ||||||||
| Tax provision | $ | 31,800 |
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Subsequent events
The Company has evaluated subsequent events through March 27, 2025, which is the date the financial statements were available to be issued. No recognized or non-recognized subsequent events were noted.
F-10
Constant Investments, Inc.
Notes to Financial Statements
December 31, 2024
Leases
Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use. Each lease payment is allocated between the lease liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the lease liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s life and the lease term on a straight-line basis.
Lease payments included in the measurement of the lease liability include the net present value of the following:
| ● | Fixed payments (including in-substance fixed payments), less any lease incentives receivable; | |
| ● | Variable lease payments that are based on an index or a rate; | |
| ● | Amounts expected to be payable by the lessee under residual value guarantee; | |
| ● | The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and | |
| ● | Payments of penalties for terminating the lease if the lease term reflects the lessee exercising that option. |
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used. The incremental borrowing rate is the rate that the lessee would have to pay to borrow at prevailing interest rates, market precedents and the Company’s specific credit spread on similar terms and security.
Short-term leases (less than 12 months) or low value assets are recorded as an expense on a straight-line basis.
Right-of-use assets are initially measured at cost, comprising the following:
| ● | The amount of the initial measurement of the lease liability, | |
| ● | Any lease payments made at or before the commencement date less any lease incentives received, | |
| ● | Any initial direct costs; and | |
| ● | Restoration costs. |
The right-of-use assets are typically depreciated on a straight-line basis over the lease term, unless the Company expects to obtain ownership of the leased asset at the end of the lease. The lease term consists of:
| ● | The non-cancellable period of the lease, | |
| ● | Periods covered by options to extend the lease, where we are reasonably certain to exercise the option; and | |
| ● | Periods covered by options to terminate the lease, where we are reasonably certain not to exercise the option. |
If the Company expects to obtain ownership of the leased asset at the end of the lease, then the Company depreciates the right-of-use asset over the underlying asset’s estimated useful life. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
F-11
Constant Investments, Inc.
Notes to Financial Statements
December 31, 2024
Note 2 - Leases
Operating leases
The Company leases its office spaces under noncancelable lease agreements. The agreement expiration dates ranging from month to month basis to less than 12 months.
Note 3 – Mortgage loans held for sales
The Company originates all of its residential real estate loans with the intent to sell them in the secondary market. Loans held for sale consist primarily of residential first and second mortgage loans that are secured by residential real estate throughout California.
The Company records mortgage loans held for sale at the lower of cost or market. The Company’s mortgage loans are sold to third-party purchase with anti-fraud, warranty and limited early payment default provisions. When a loan sale settles, the difference between the selling price and the carrying value of the loan is recorded as revenue in the statement of operations.
Loans held for sale are pledged as collateral under the Company’s warehouse line of credit. The Company relies substantially on the secondary mortgage market as all of the loans originated are sold into this market.
Note 4 – Warehouse line of credit
The Company maintains three warehouse lines of credit agreements with financial institutions with a total written capacity of $18,180,000 at December 31, 2024. At December 31, 2024, the Company had $9,363,751 outstanding under the agreements, which were collateralized by the Company’s notional amount of mortgage loans held for sale of $9,579,296. Under the agreements, the financial institutions will advance between 99% and 100% of the committed price of the loan, not to exceed the loan amount. All advances are due upon sale of the loans collateralizing such advances.
The lines/facilities may only be used to fund pre sold and pre approved secured real estate loans. The Company uses the lines to fund real estate loans and then deliver/sell them to an investor (secondary market). The loans are also collateral for the warehouse lines. When the loans are purchased by an investor, the warehouse bank is repaid immediately. The loans on the warehouse line must be paid off within 45 to 90 days of funding. The lines are renewed on an annual basis.
The Company is required to maintain certain financial covenants under the provisions of the agreements at December 31, 2024.
Note 5 – Related party transactions
At December 31, 2024, the Company’s stockholders advanced to the Company, in the amount of $50,000, which is included in current liabilities.
Note 6 – Note receivable
During the year, the Company has one loan that management has the intent and ability to hold for the foreseeable future or until maturity or payoff. The Note receivable has 14% annual fixed interest rate and have maturity through 2025.
F-12
Supplementary Information in Relation to
the Financial Statements as a Whole
F-13
Computation of adjusted net worth
To determine compliance with
HUD net worth requirements
Year Ended December 31, 2024
| COMPUTATION OF NET WORTH REQUIRED | ||||
| FHA servicing portfolio FYE December 31, 2024 | $ | - | ||
| ADD: | ||||
| FHA Originations | 1,081,384 | |||
| FHA Purchases | - | |||
| LESS: | ||||
| FHA loan originations retained at the fiscal year end | - | |||
| FHA purchased retained at the end of fiscal year | - | |||
| Total adjusted FHA loan activity | 1,081,384 | |||
| NET WORTH REQUIRED | ||||
| Minumum net worth required | $ | 1,000,000 | ||
| Additional net worth required | - | |||
| Net worth required | $ | 1,000,000 | ||
| NET WORTH | ||||
| Stockholders equity per the balance sheet | $ | 2,138,622 | ||
| LESS: Unacceptable assets Security deposits | 1,663 | |||
| Adjusted net worth for HUD requirement purposes | 2,136,959 | |||
| Adjusted net worth ABOVE amount required | $ | 1,136,959 | ||
| LIQUIDITY | ||||
| Cash and cash equivalents | $ | 229,026 | ||
| Required net worth for HUD | 1,000,000 | |||
| Liquidity required (20%) | 200,000 | |||
| Liquidity ABOVE amount required | $ | 29,026 | ||
See Independent Auditor’s Report.
F-14
Constant Investments, Inc.
Financial Statements
(With Supplementary Information)
and Independent Auditor’s Report
December 31, 2025
F-15
Constant Investments, Inc.
Index
| Page | |
| Independent Auditor’s Report | F-17 - F-18 |
| Financial Statements | |
| Balance Sheets | F-19 |
| Statements of Operations | F-20 |
| Statements of Changes in Stockholder’s Equity | F-21 |
| Statements of Cash Flows | F-22 |
| Notes to Financial Statements | F-23 - F-26 |
| Supplementary Information | |
| Schedules of Computation of Adjusted Net Worth | F-28 |
F-16
Board of Directors
Constant Investments, Inc.
Plano, Texas
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Constant Investments, Inc. (the Company), which comprise the balance sheet as of December 31, 2025 and the related statements of operations, changes in stockholder’s equity and cash flows for the year then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of Constant Investments, Inc. as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Constant Investments, Inc. and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Constant Investments, Inc.’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
F-17
Auditor’s Responsibilities for the Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
| ● | Exercise professional judgment and maintain professional skepticism throughout the audit. | |
| ● | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. | |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Constant Investments, Inc.’s internal control. Accordingly, no such opinion is expressed. | |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. | |
| ● | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Constant Investments, Inc.’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information (Computation of Adjusted Net Worth) is presented for purpose of additional analysis as required by the Uniform Financial Reporting Standard issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General, and is not a required part of the financial statements.
Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued a report Dated March 30, 2026 on our consideration of Constant Investments, Inc.’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Constant Investments, Inc.’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Constant Investments, Inc.’s internal control over financial reporting and compliance.
/s/ Global First Accounting Group, Inc
March 30, 2026
Los Angeles, California
Kyung Soo Lee – Partner
Global First Accounting Group, Inc
F-18
Balance Sheet
December 31, 2025
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 685,366 | ||
| Trade account securities | 1,786,774 | |||
| Accounts receivable | 143,858 | |||
| Mortgage loans held for sale | 5,208,775 | |||
| Total current assets | 7,824,773 | |||
| Furniture and equipment | 25,427 | |||
| Allowance for depreciation | (22,112 | ) | ||
| Right-of-use assets | 33,396 | |||
| Allowance for amortization - ROU | (4,174 | ) | ||
| Security deposit | 1,663 | |||
| Total non-current assets | 34,200 | |||
| Total | $ | 7,858,973 | ||
| Liabilities and Stockholder’s Equity | ||||
| Current liabilities | ||||
| Accrued expenses | $ | 65,986 | ||
| Income tax payable | 17,660 | |||
| Warehouse lines payable | 5,058,228 | |||
| Due to shareholders | 90,000 | |||
| Current portion of lease liabilities | 17,741 | |||
| Total current liabilities | 5,249,615 | |||
| Long-term lease liabilities | 11,554 | |||
| Total liabilities | 5,261,169 | |||
| Stockholder’s equity | ||||
| Common stock - no par value, 19,000 authorized; 10,000 shares issued and outstanding - stated value | 1,000 | |||
| Paid in capital | 1,415,674 | |||
| Unrealized gain (loss) on equity securities | 181,606 | |||
| Retained earnings | 999,524 | |||
| Total stockholder’s equity | 2,597,804 | |||
| Total | $ | 7,858,973 |
The accompanying notes to the financial statements are an integral part of these financial statements
F-19
Statements of Operations
Year Ended December 31, 2025
| Revenue | ||||
| Loan fees and gain on sale of mortgage loans | $ | 3,218,560 | ||
| Interest income | 379,193 | |||
| Total revenues | 3,597,753 | |||
| Expenses | ||||
| Advertising and promotion | 14,600 | |||
| Commission and direct loan costs | 2,298,671 | |||
| Salaries and payroll taxes | 735,764 | |||
| Office and administration costs | 408,978 | |||
| Rent expenses | 72,570 | |||
| Insurance | 25,678 | |||
| Professional services | 22,394 | |||
| Total expenses | 3,578,655 | |||
| Income (loss) from operations | 19,098 | |||
| Other income (expense): | ||||
| Dividend and interest income | 60,378 | |||
| Investment expenses | ||||
| Income (loss) before income taxes | 79,476 | |||
| Provision for income taxes | 14,700 | |||
| Net Income (loss) | $ | 64,776 | ||
The accompanying notes to the financial statements are an integral part of these financial statements
F-20
Statements of Changes In Stockholder’s
Equity
Year Ended December 31, 2025
| Common Stock | Paid-In Capital | Unrealized Gain (Loss) | Retained Earnings | Total | ||||||||||||||||
| Balance at December 31, 2024 | $ | 1,000 | $ | 1,202,874 | $ | - | $ | 934,748 | $ | 2,138,622 | ||||||||||
| Capital Contribution | 212,800 | 212,800 | ||||||||||||||||||
| Stockholder distribution | - | |||||||||||||||||||
| Unrealized Gain (Loss) | 181,606 | 181,606 | ||||||||||||||||||
| Net Income | 64,776 | 64,776 | ||||||||||||||||||
| Balance at December 31, 2025 | $ | 1,000 | $ | 1,415,674 | $ | 181,606 | $ | 999,524 | $ | 2,597,804 | ||||||||||
The accompanying notes to the financial statements are an integral part of these financial statements
F-21
Statements
of Cash Flows
Year Ended December 31, 2025
| Cash flows from operating activities | ||||
| Net income | $ | 64,776 | ||
| Adjustments to reconcile net Income to net cash provided (used) in operating activities | ||||
| Depreciation and amortization | 3,738 | |||
| Amortization expense - ROU assets | 4,174 | |||
| Repayment of ROU lease liabilities | (4,100 | ) | ||
| Accounts receivable | 101,054 | |||
| Mortgage loans held for sale | 4,370,521 | |||
| Security deposit | - | |||
| Accrued expenses | (268,920 | ) | ||
| Income tax payable | (14,340 | ) | ||
| Warehouse line payable | (4,305,523 | ) | ||
| Net cash provided (used) in operating activities | (48,620 | ) | ||
| Cash flows from investing activities | ||||
| Note receivable | 243,789 | |||
| Trade account securities | 8,371 | |||
| Net cash provided (used) in investing activities | 252,160 | |||
| Cash flows from financing activities | ||||
| Capital contribution | 212,800 | |||
| Due to shareholders | 40,000 | |||
| Net cash provided (used) by financing activities | 252,800 | |||
| Net increase (decrease) in cash | 456,340 | |||
| Cash, beginning of year | 229,026 | |||
| Cash, end of year | $ | 685,366 | ||
| Supplemental disclosure of cash flow information | ||||
| Taxes paid | $ | 29,040 | ||
| Interest paid | $ | - | ||
The accompanying notes to the financial statements are an integral part of these financial statements
F-22
Notes to Financial Statements
December 31, 2025
Note 1 - Business and summary of significant accounting policies
Business
Constant Investments, Inc. (the “Company”) is a California Corporation. The Company was incorporated in 2011 and is based in Plano, Texas. The Company operates under a DBA Mortgage One Group.
The Company is engaged as a mortgage lender that funds and processes financing and refinancing of real estate loans and sells them to investors.
Licensing and regulations
The Company is regulated by California, Texas, and other various states’ Division of Real Estate, Nationwide Multistate Licensing System (NMLS) and the United States Department of Housing and Urban Development (“HUD”). HUD requires the Company to conform to certain net worth, liquid assets and other conditions and requirements and to follow certain specific regulations issued from time to time by HUD.
Cash and equivalents
Cash and cash equivalents include cash on hand and cash in checking and savings accounts with banks. All unrestricted liquid short-term investments and certificate of deposit with a maturity of three months or less are considered cash equivalents. The Company maintains its cash accounts at major financial institutions that are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. During the year ended December 31, 2025, the Company had cash deposits in excess of the FDIC insurance limits. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.
Trade Account Securities
The Company invested in stocks and bonds of publicly traded companies, with fair market value of $1,786,774.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, generally ranging from three to seven years. Expenditures for major renewals and improvements that extend the useful lives of property and equipment are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. For the years ended December 31, 2025, depreciation and amortization expense was $3,738.
Revenue recognition
The Company assists individuals and others in obtaining long term trust deed (mortgage) financing. Revenue is recognized upon the loan is funded. Any offsetting costs or expenses are also recognized when the loans are funded. Gain or loss on the sale of loans held for sale is recognized at the time of the sale of the loan and is included in revenue.
Accounts receivable
Accounts receivable consists of fees earned on loans that have been funded prior to year end.
Loan loss obligations
The Company sells loans it originates to investors without recourse so that the risk of loss or default by the borrower is generally transferred to the investor. However, the Company is required by these investors to make certain representations relating to credit information, loan documentation and collateral. To the extent the Company does not comply with such representations, the Company may be required to repurchase loans or indemnify the investors for any losses from borrower defaults. If this were to occur, the Company’s financial condition would be severely impacted. As of the audit date, no event that would severely impact the financial condition of the Company has occurred.
F-23
Constant Investments, Inc.
Notes
to Financial Statements
December 31, 2025
Market risk
The Company originated the majority of its mortgage loans in the State of California. The concentration of mortgage loans originated in California increases the risk that any adverse economic, regulatory or other developments that may occur in California may adversely affect the Company’s results of operations or financial condition.
The Company generates the vast majority of its revenue from the origination of mortgage loans. Although the Company’s management closely monitors market conditions, such activities are sensitive to fluctuations in prevailing interest rates and real estate markets, and any significant adverse changes in prevailing interest rates or real estate markets could have an adverse impact on the Company’s results of operations or financial condition.
Evidence of ownership interest in an entity
Common stock is a financial instrument that is evidence of ownership interest in an entity. Other evidences include preferred stock, partnership agreements, certificates of interest or participation, or warrants or options to subscribe to or purchase stock from the issuing entity. The Company has not issued any preferred stock, partnership agreements, certificates of interest or participation, or warrants or options to subscribe to or purchase stock from the issuing entity.
Advertising and promotion
Advertising costs are expensed as incurred. Advertising expense was $14,600 for the year ended December 31, 2025.
Income taxes
The stockholder of the Company has revoked election to be taxed as a sub-chapter S Corporation and the Company files its federal and state income tax returns as C Corporation beginning January 1, 2024. Provisions for income taxes are based on taxes payable or refundable for the current year and changes in deferred taxes. Deferred taxes result from temporary differences between the amount of taxable income and pre-tax financial income and between tax bases of assets and liabilities and in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. When it is deemed necessary, a valuation allowance is established to reduce a deferred tax asset to the amount expected to be realized. When the effect of the deferred taxes is not material, no deferred tax provision is accrued.
The Company recognizes the tax benefit from uncertain tax positions only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Base on its evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in the financial statements.
When necessary, the Company recognizes interest and penalties associated with tax matters as part of operating expenses and includes accrued interest and penalties with accrued expenses in the balance sheet. No such interest or penalties were recognized during the years ended December 31, 2025.
The income tax provision (benefit) for the year ended December 31, 2025 was as follows:
| Current tax expense | Federal | $ | 10,000 | State | $ | 4,700 | Total | $ | 14,700 | |||||||||
| Deferred tax expense (benefit) | Federal | $ | 0 | State | $ | 0 | Total | $ | 0 | |||||||||
| Tax provision | $ | 14,700 |
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Subsequent events
The Company has evaluated subsequent events through March 30, 2026, which is the date the financial statements were available to be issued. No recognized or non-recognized subsequent events were noted.
F-24
Constant Investments, Inc.
Notes to Financial Statements
December 31, 2025
Leases
Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use. Each lease payment is allocated between the lease liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the lease liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s life and the lease term on a straight-line basis.
Lease payments included in the measurement of the lease liability include the net present value of the following:
| ● | Fixed payments (including in-substance fixed payments), less any lease incentives receivable; | |
| ● | Variable lease payments that are based on an index or a rate; | |
| ● | Amounts expected to be payable by the lessee under residual value guarantee; | |
| ● | The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and | |
| ● | Payments of penalties for terminating the lease if the lease term reflects the lessee exercising that option. |
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used. The incremental borrowing rate is the rate that the lessee would have to pay to borrow at prevailing interest rates, market precedents and the Company’s specific credit spread on similar terms and security.
Short-term leases (less than 12 months) or low value assets are recorded as an expense on a straight-line basis.
Right-of-use assets are initially measured at cost, comprising the following:
| ● | The amount of the initial measurement of the lease liability, | |
| ● | Any lease payments made at or before the commencement date less any lease incentives received, | |
| ● | Any initial direct costs; and | |
| ● | Restoration costs. |
The right-of-use assets are typically depreciated on a straight-line basis over the lease term, unless the Company expects to obtain ownership of the leased asset at the end of the lease. The lease term consists of:
| ● | The non-cancellable period of the lease, | |
| ● | Periods covered by options to extend the lease, where we are reasonably certain to exercise the option; and | |
| ● | Periods covered by options to terminate the lease, where we are reasonably certain not to exercise the option. |
If the Company expects to obtain ownership of the leased asset at the end of the lease, then the Company depreciates the right-of-use asset over the underlying asset’s estimated useful life. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
F-25
Constant Investments, Inc.
Notes to Financial Statements
December 31, 2025
Note 2 – Leases
Operating leases
The Company leases its office spaces under noncancelable lease agreements. The agreements expiration dates ranging from month to month basis to September 2027. The Company’s weighted average discount rate for its leases is 6.5%.
Right of use asset, net of amortization, and lease liability as of December 31, 2025 are as follows:
| Right-of-use asset, net of amortization | $ | 29,222 | ||
| Lease liabilities (current) | 17,741 | |||
| Lease liabilities ( non-current) | 11,554 |
The following is a schedule of the Company’s future minimum annual lease commitments under noncancelable operating leases for the five years subsequent to December 31, 2025 as thereafter:
| Year Ending December 31, | ||||
| 2026 | 17,756 | |||
| 2027 | 13,317 | |||
| Total lease payments | 31,073 | |||
| Less discount for net present value | (1,778 | ) | ||
| Present value of lease liabilities | $ | 29,295 | ||
Note 3 – Mortgage loans held for sales
The Company originates all of its residential real estate loans with the intent to sell them in the secondary market. Loans held for sale consist primarily of residential first and second mortgage loans that are secured by residential real estate throughout California.
The Company records mortgage loans held for sale at the lower of cost or market. The Company’s mortgage loans are sold to third-party purchase with anti-fraud, warranty and limited early payment default provisions. When a loan sale settles, the difference between the selling price and the carrying value of the loan is recorded as revenue in the statement of operations.
Loans held for sale are pledged as collateral under the Company’s warehouse line of credit. The Company relies substantially on the secondary mortgage market as all of the loans originated are sold into this market.
Note 4 – Warehouse line of credit
The Company maintains two warehouse lines of credit agreements with financial institutions with a total written capacity of $18,000,000 at December 31, 2025. At December 31, 2025, the Company had $5,058,228 outstanding under the agreements, which were collateralized by the Company’s notional amount of mortgage loans held for sale of $5,208,775. Under the agreements, the financial institutions will advance between 99% and 100% of the committed price of the loan, not to exceed the loan amount. All advances are due upon sale of the loans collateralizing such advances.
The lines/facilities may only be used to fund pre sold and pre approved secured real estate loans. The Company uses the lines to fund real estate loans and then deliver/sell them to an investor (secondary market). The loans are also collateral for the warehouse lines. When the loans are purchased by an investor, the warehouse bank is repaid immediately. The loans on the warehouse line must be paid off within 45 to 90 days of funding. The lines are renewed on an annual basis.
The Company is required to maintain certain financial covenants under the provisions of the agreements at December 31, 2025.
Note 5 – Related party transactions
At December 31, 2025, the Company’s stockholders advanced to the Company, in the amount of $90,000, which is included in current liabilities.
F-26
Supplementary Information in Relation to
the Financial Statements as a Whole
F-27
Computation of adjusted net worth
To determine compliance with
HUD net worth requirements
Year Ended December 31, 2025
| COMPUTATION OF NET WORTH REQUIRED | ||||
| FHA servicing portfolio FYE December 31, 2025 | $ | - | ||
| ADD: | ||||
| FHA Originations | - | |||
| FHA Purchases | - | |||
| LESS: | ||||
| FHA loan originations retained at the fiscal year end | - | |||
| FHA purchased retained at the end of fiscal year | - | |||
| Total adjusted FHA loan activity | - | |||
| NET WORTH REQUIRED | ||||
| Minumum net worth required | $ | 1,000,000 | ||
| Additional net worth required | - | |||
| Net worth required | $ | 1,000,000 | ||
| NET WORTH | ||||
| Stockholders equity per the balance sheet | $ | 2,597,804 | ||
| LESS: Unacceptable assets | ||||
| Security deposits | 1,663 | |||
| Adjusted net worth for HUD requirement purposes | 2,596,141 | |||
| Adjusted net worth ABOVE amount required | $ | 1,596,141 | ||
| LIQUIDITY | ||||
| Cash and cash equivalents | $ | 685,366 | ||
| Required net worth for HUD | 1,000,000 | |||
| Liquidity required (20%) | 200,000 | |||
| Liquidity ABOVE amount required | $ | 485,366 |
See Independent Auditor’s Report.
F-28