UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
|
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended September 30, 2010
|
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from _______________ to _______________
Commission
File Number 001-12885
ALPHA-EN
CORPORATION
(Exact
Name of Registrant as Specified in Its Charter)
|
|
|
|
|
Delaware
|
|
95-4622429
|
|
(State
or Other Jurisdiction
|
|
(I.R.S.
Employer
|
|
of
Incorporation or Organization)
|
|
Identification
No.)
|
|
|
120 White Plains Road,
Tarrytown, New York
|
10591
|
|
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
|
(914)
631-5265
(Registrant’s
Telephone Number, Including Area Code)
Indicate by
check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for
such shorter period that the registrant was
required to file such reports), and (2) has been subject
to such filing requirements for the past 90
days. Yes x No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes ¨ No ¨ (not
required)
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
|
Large
Accelerated Filer o
|
Accelerated
Filer o
|
| |
|
|
Non-accelerated
Filer o
|
Smaller
Reporting Company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No x
As
of November 12, 2010, there were 27,821,030 shares of the issuer’s common stock
outstanding.
|
|
|
Page
|
|
PART
I. FINANCIAL INFORMATION
|
|
|
ITEM
1.
|
Financial
Statements
|
1
|
|
ITEM
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
9
|
|
ITEM
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
12
|
|
ITEM
4.
|
Controls
and Procedures
|
13
|
|
PART
II. OTHER INFORMATION
|
|
|
ITEM
1.
|
Legal
Proceedings
|
14
|
|
ITEM
1A.
|
Risk
Factors
|
14
|
|
ITEM
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
14
|
|
ITEM
3.
|
Defaults
upon Senior Securities
|
14
|
|
ITEM
4.
|
Reserved
|
14
|
|
ITEM
5.
|
Other
Information
|
14
|
|
ITEM
6.
|
Exhibits
|
14
|
|
SIGNATURES
|
15
|
ITEM
1. Financial Statements
Alpha-En
Corporation
Index
to Consolidated Financial Statements
|
|
Page
|
|
|
|
|
Consolidated
Balance Sheet as of September 30, 2010 (unaudited) and December 31,
2009
|
2
|
|
|
|
|
Consolidated
Statement of Operations for the three and nine months ended September 30,
2010 and 2009 (unaudited)
|
3
|
|
|
|
|
Consolidated
Statement of Cash Flows for the nine months ended September 30, 2010 and
2009 (unaudited)
|
4
|
|
|
|
|
Notes
to Consolidated Financial Statements (unaudited)
|
5
|
ALPHA-EN
CORPORATION
CONSOLIDATED
BALANCE SHEET
|
|
|
September 30,
2010
|
|
|
December 31,
2009
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash
|
|
$ |
179 |
|
|
$ |
2,175 |
|
|
Prepaid
expenses
|
|
|
7,819 |
|
|
|
3,069 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
7,998 |
|
|
|
5,244 |
|
|
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
|
250,000 |
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$ |
257,998 |
|
|
$ |
255,244 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
|
$ |
101,112 |
|
|
$ |
71,482 |
|
|
Loan payable -
stockholder/officer
|
|
|
28,992 |
|
|
|
137,401 |
|
|
Note
payable
|
|
|
4,978 |
|
|
|
1,607 |
|
|
Due to related
party
|
|
|
3,630 |
|
|
|
4,713 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
138,712 |
|
|
|
215,203 |
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value,
2,000,000 shares authorized; none issued
|
|
|
|
|
|
|
|
|
|
Class B common stock, no par
value, 1,000,000 shares authorized; none
issued
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value,
35,000,000 shares authorized; 27,821,030 and
25,821,030 shares issued and outstanding as of September 30,
2010 and December 31, 2009, respectively
|
|
|
278,210 |
|
|
|
258,210 |
|
|
Additional paid-in
capital
|
|
|
7,718,103 |
|
|
|
7,578,103 |
|
|
Accumulated
deficit
|
|
|
(7,807,644 |
) |
|
|
(7,726,889 |
) |
Treasury stock, at cost (798,918
shares of common stock)
|
|
|
(69,383 |
) |
|
|
(69,383 |
) |
|
|
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS'
EQUITY
|
|
|
119,286 |
|
|
|
40,041 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$ |
257,998 |
|
|
$ |
255,244 |
|
See notes
to consolidated financial statements
ALPHA-EN
CORPORATION
CONSOLIDATED
STATEMENT OF OPERATIONS
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
60 |
|
|
$ |
423 |
|
|
$ |
1,082 |
|
|
$ |
2,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
expenses
|
|
|
(21,822 |
) |
|
|
(24,540 |
) |
|
|
(81,837 |
) |
|
|
(98,852 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(21,762 |
) |
|
$ |
(24,117 |
) |
|
$ |
(80,755 |
) |
|
$ |
(95,929 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and
diluted
|
|
|
* |
|
|
$ |
* |
|
|
|
* |
|
|
$ |
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding - basic
and diluted
|
|
|
27,821,030 |
|
|
|
25,821,030 |
|
|
|
26,758,759 |
|
|
|
25,205,645 |
|
|
*
|
Less
than $.01 per share
|
See notes
to consolidated financial statements
ALPHA-EN
CORPORATION
CONSOLIDATED
STATEMENT OF CASH FLOWS
(Unaudited)
| |
|
Nine
Months Ended
|
|
|
|
|
September
30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Operations
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(80,755 |
) |
|
$ |
(95,929 |
) |
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss
to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
9,783 |
|
|
|
(7,673 |
) |
|
Accounts payable and accrued
expenses
|
|
|
29,630 |
|
|
|
13,570 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating
activities
|
|
|
(41,342 |
) |
|
|
(90,032 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing
Activities
|
|
|
|
|
|
|
|
|
|
Payments of note
payable
|
|
|
(11,162 |
) |
|
|
6,343 |
|
|
Increase in loan payable -
stockholder/officer
|
|
|
51,591 |
|
|
|
67,213 |
|
|
Decrease in due to related
party
|
|
|
(1,083 |
) |
|
|
(2,923 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities
|
|
|
39,346 |
|
|
|
70,633 |
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in
cash
|
|
|
(1,996 |
) |
|
|
(19,399 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash - Beginning of
period
|
|
|
2,175 |
|
|
|
22,172 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash - End of
period
|
|
$ |
179 |
|
|
$ |
2,773 |
|
|
|
|
|
|
|
|
|
|
|
|
Noncash
Transaction:
|
|
|
|
|
|
|
|
|
Payment of loan payable -
stockholder/officer for issuance of common
stock
|
|
$ |
160,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of intangible assets for
issuance of common stock
|
|
|
|
|
|
$ |
250,000 |
|
See notes
to consolidated financial statements
Alpha-En
Corporation
Notes to
Consolidated Financial Statements (Unaudited)
1.
Organization and Operations
Alpha-En
Corporation (Company) was incorporated in Delaware on March 7, 1997 and had
operated through its wholly-owned subsidiaries, Avenue Pictures, Inc. and its
subsidiaries and Wombat Productions, Inc., through May 2, 2006.
From May
2, 2006, through February 24, 2009, the Company had been inactive.
On
February 25, 2009, the Company was granted a license for an exclusive,
worldwide, transferable, perpetual license to use certain proprietary technology
for the processing of lithium for use in batteries and other
fields.
Commencing
in October 2010, working through a third party, we conducted a series of tests
to determine if the process works and, based on the results, we believe that the
process is workable and commercially feasible. We intend to hire a management
team to implement this process in the upcoming months.
2.
Summary of Significant Accounting Policies
Basis of
presentation
The accompanying unaudited financial
statements and related notes have been prepared in accordance with accounting
principles generally accepted in the United States for interim financial
statements and with the rules and regulations under Regulation
S-X of the Securities and Exchange
Commission for Form 10-Q. Accordingly, they do not include all of
the information and footnotes required by accounting
principles generally accepted in the United States for complete financial statements
presentation. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary to present fairly the
financial position,
results of operations and
cash flows for interim
financial statements have
been included. These financial statements
should be read in conjunction with the financial statements of the Company
together with the Company's management discussion and analysis in Item 2 of this report and in
the Company's Form 10-K for
the year ended December 31,
2009. Interim results are
not necessarily indicative of the results for a full year.
Consolidated
Financial Statements
The
Company's consolidated financial statements include all the accounts of the
Company and its wholly-owned subsidiaries. All material intercompany accounts
and transactions have been eliminated.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures 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.
Intangible
Assets
Intangible
assets are recorded at fair value and, as they an indefinite life, will not be
amortized. The carrying value of the intangible assets will be
evaluated by management for impairment at least annually or upon the occurrence
of an event which may indicate that the carrying amount may be greater than its
fair value. If impaired, the Company will write down such
impairment. In addition, the useful life of the intangible assets
will be evaluated by management at least annually or upon the occurrence of an
event which may indicate that the useful life may be definitive and the Company
will commence amortization over such useful life.
New
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective accounting
pronouncements, if adopted, would have a material effect on the accompanying
financial statements.
3.
Going Concern and Management’s Plans
The
accompanying consolidated financial statements have been prepared assuming that
Company will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The
Company has incurred operating losses, negative working capital and no operating
cash flow and future losses are anticipated.
The
Company’s plan of operations, to raise equity financing, even if successful, may
not result in cash flow sufficient to finance and expand its business and
generate sales from the License (see Note 4). These factors raise
substantial doubt about the Company’s ability to continue as a going
concern. Realization of assets is dependent upon future operations of
the Company, which in turn is dependent upon management’s plans to meet its
financing requirements and the success of its future
operations. These financial statements do not include any adjustments
related to the recoverability and classification of asset amounts or the amounts
and classification of liabilities that might be necessary should the Company be
unable to continue existence.
4.
Intangible Assets
On
February 25, 2009, the Company was granted an exclusive, worldwide,
transferable, perpetual license (License) to use certain proprietary technology
for the processing of lithium for use in batteries and other
fields. A patent application relating to the licensed technology is
pending.
In
exchange for the License, the Company:
(1)
issued
1,000,000 shares of common stock of the Company;
(2)
issued an additional 2,000,000 shares of common stock of the Company, which are
restricted and subject to forfeiture if there has not been at least $1,000,000
in total commercial sales of licensed products within three years
(Threshold);
(3) will
pay royalties of $1.00, per kilogram, of lithium products manufactured and sold,
payable quarterly;
(4) will
pay royalties of $.10, per kilogram, of excess products manufactured and sold,
payable quarterly;
(5) will
grant options to purchase up to a total of 19% (inclusive of previously issued
shares) of the issued and outstanding shares of the Company upon the issuance of
any additional shares after the date of the License. These options
are exercisable at the same prices as the shares sold or values received for
five years from each grant date. These grants are only issuable if
the Threshold is met.
Upon a
transfer of the entire License, the Company shall pay the licensor a fee equal
to 19% of all compensation received on the transfer.
The
License has been recorded at its fair value of $250,000 based on the
management’s projected net cash flows to be realized from sales of products
under the License.
5.
Notes Payable
On March
10, 2010, in connection with the purchase of directors and officers liability
insurance, the Company borrowed $14,532, payable in nine equal monthly
installments of $1,690 through December 2010, including interest of 11.04%, per
annum.
6.
Related Party Transactions
As of
September 30, 2010, loan payable – stockholder/officer of $ 28,992 is payable on
demand, with interest at 5%, per annum.
On May
25, 2010 the Company issued 2,000,000 share of its common stock in payment of
$160,000 of the loan payable-stockholder/officer.
In
October 2010, the Company borrowed an additional $4,500 from the
stockholder/officer.
An
officer of the Company provides administrative space without rent.
7.
Income Taxes
As of
September 30, 2010, management has evaluated and concluded that there are no
significant uncertain tax positions required recognition in the Company’s
consolidated financial statements.
8. Adoption
of Accounting Policies
During
the nine months ended September 30, 2010, the Company adopted the following
accounting policies, without a material impact on the consolidated financial
statements:
In
February 2010, the FASB issued ASU No. 2010-09, which is included in the
Codification under ASC 855, “Subsequent Events” (ASC 85). This update removes
the requirement for an SEC filer to disclose the date through which subsequent
events have been evaluated.
In
January 2010, the FASB issued ASU No. 2010-06, which is included in the
Codification under ASC 820, “Fair Value Measurements and Disclosures” (ASC 820).
This update requires the disclosure of transfers between the observable input
categories and activity in the unobservable input category for fair value
measurements. The guidance also requires disclosures about the inputs and
valuation techniques used to measure fair value.
ITEM 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations
This
Management’s Discussion and Analysis of Financial Condition and Results of
Operations section and other parts of this report contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), which statements involve risks and
uncertainties. These statements relate to our future plans, objectives,
expectations and intentions. These statements may be identified by the use of
words such as “may”, “could”, “would”, “should”, “will”, “expects”,
“anticipates”, “intends”, “plans”, “believes”, “estimates”, and similar
expressions. Our actual results and the timing of certain events may differ
significantly from the results and timing described in the forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, those factors discussed or referred to in the annual
report on Form 10-K for the year ended December 31, 2009 and in subsequent
period reports filed with the U.S. Securities and Exchange Commission, including
this report. The following discussion and analysis of our financial condition
and results of operations should be read in light of those factors and in
conjunction with our accompanying financial statements, including the notes
thereto.
Background
and Overview
Our
company cut back daily operations in late 2005 and essentially ceased daily
operations in May 2006. In September 2005, we sold certain assets to
Cary Brokaw Productions, and subsequently ceased the business of producing
feature films, television films and made-for-television/cable
movies. Cary Brokaw also resigned from our board and as our Chief
Executive Officer, President and Chief Financial Officer. Gene
Feldman assumed certain duties previously held by Mr. Brokaw, including becoming
our Chairman of the Board.
In May
2006, Gene Feldman was diagnosed with lymphoma and resigned from his position
with us. On August 25, 2006, Gene Feldman passed away. On September
1, 2006, Mr. Feldman’s nephew, Michael D. Feldman, stepped in to become our
Chairman and Chief Executive Officer, and Jerome I. Feldman, Gene Feldman’s
brother and Michael D. Feldman’s father, became our Chief Financial Officer,
Treasurer and Vice Chairman of the Board. In the following year,
Michael D. Feldman resigned from his positions with us as an officer and
director, and Jerome I. Feldman became our Chairman, Chief Executive Officer and
Chief Financial Officer. From the date of Gene Feldman’s resignation
through the date we entered into a Technology License Agreement (as described
below), we have been substantially inactive. All monies disbursed by
us from 2006 through 2009 were used to pay the previously-incurred accounting
fees and for the payment of directors and officers’ insurance
premiums. During that period, we have had no employees and our board
of directors has not met.
Effective
May 2006, we sold our remaining assets to the estate of Gene Feldman, pursuant
to an agreement between Gene Feldman and us in early 2006; however, the actual
closing of the transaction did not occur until January 2007.
Metallic
Lithium Technology License
On
February 25, 2009, we entered into a Technology License Agreement with the
Amendola Family Trust, a trust created by Steven Amendola. Pursuant
to the License Agreement, we acquired an exclusive, worldwide, perpetual license
to use certain proprietary technology for manufacturing metallic lithium for use
in batteries and other fields. We believe this technology allows for
the manufacture of metallic lithium more efficiently and more inexpensively than
current methods. Lithium batteries are used in cell phones, digital
cameras, i-pods and many other high technology devices and
applications.
More
broadly, the License Agreement grants to us the rights to use, further license,
sublicense and subcontract the technology to third parties for the purification,
manufacture, purchase of components, quality inspection, assembly, testing,
installation, commissioning and operation of the manufacturing process and sale
of metallic lithium in or for batteries and related devices and other
fields. A patent application relating to the licensed technology is
pending.
In
consideration for the license grant, we issued 1,000,000 shares of our common
stock to the Amendola Family Trust, and have agreed to pay the licensor a
royalty of: (i) $1.00 per kilogram of lithium product manufactured and sold, and
(ii) in the event sodium is produced out of the manufacture of lithium, $0.10
per kilogram of sodium manufactured and sold. The royalty is payable
by us quarterly and subject to audit rights by the licensor.
Additionally,
we have agreed to issue to the Amendola Family Trust a further 2,000,000 shares
of our common stock, but which shares are restricted and subject to forfeiture
if there has not been at least $1,000,000 in total commercial sales of licensed
products by February 25, 2012 (three years after the date of the License
Agreement).
We have
also agreed to issue to the Amendola Family Trust, an option, exercisable only
in the event commercial sales reach $1,000,000 as noted above and for five years
after the date of the License Agreement, to purchase up to such number of shares
of our common stock (“option shares”) such that the option shares, when added to
the number of shares of common owned by the Amendola Family Trust or any of its
affiliates prior to exercise of the option, will be equal to 19% of the total
number of outstanding shares of our common stock after the exercise of the
option, at an exercise price that is the same price as then current sales by us
of our shares during the term of the License Agreement.
We expect
our future operations will be centered around metallic lithium battery
technology (an estimated market in excess of $1.0 billion according to
independent industry sources). No assurance can be given, however,
that we will be successful in these efforts.
Metallic
lithium is distinguishable from other existing forms of battery technology in
that it has a higher energy density than zinc or nickel compounds used in
conventional batteries. The market for metallic lithium is now in
excess of $1.0 billion according to independent industry sources and, we
believe, steadily increasing. There are a number of much larger and
more established firms in the business of manufacturing metallic
lithium. It is our belief that utilizing our new patent pending
process we would have a significant advantage in manufacturing costs over the
existing companies in the field, although no assurance can be
given.
Commencing
in October 2010, working through a third party, we conducted a series of tests
in a production environment to determine if the process covered by the Amendola
patent works. The testing involved feeding lithium carbonate solution
into an electrolysis tank containing a liquid metal cathode and an anode
suspended in the lithium carbonate solution. Based on the results of
this preliminary testing, we believe that the process is workable and can be
scaled-up to a commercially feasible level. We intend to bring in a seasoned
management team in the upcoming months to take the necessary steps to implement
this process.
Results
of Operations
Three
Months Ended September 30, 2010 Compared to Three Months Ended September 30,
2009
Operations
for the three months ended September 30, 2010 and 2009 consisted principally of
maintaining our public company status.
Net loss
for the three months ended September 30, 2010 was $21,762, compared to a loss of
$24,117 for the three-month period ended September 30, 2009. We had
no operations during either period and expenses consisted primarily of legal and
accounting fees.
Nine
Months Ended September 30, 2010 Compared to Nine Months Ended September 30,
2009
Operations
for the nine months ended September 30, 2010 and 2009 consisted principally of
maintaining our public company status.
Net loss
for the nine months ended September 30, 2010 was $80,755, compared to a loss of
$95,929 for the nine-month period ended September 30, 2009. We had no
operations during either period and expenses consisted primarily of legal and
accounting fees.
Liquidity
and Capital Resources
As of
September 30, 2010, we had negative working capital of $130,714, compared to
negative working capital of $226,413, at September 30, 2009.
We do not
have sufficient funds to continue our operating activities. Future operating
activities are expected to be funded by loans from officers, directors and major
shareholders, until we begin to raise capital from non-officers or non-directors
or generate cash flows from operations.
Off-Balance
Sheet Arrangements
As of the
date of this report, we have not entered into any transactions with
unconsolidated entities in which we have financial guarantees, subordinated
retained interests, derivative instruments or other contingent arrangements that
expose us to material continuing risks, contingent liabilities or any other
obligations under a variable interest in an unconsolidated entity that provides
us with financing, liquidity, market risk or credit risk support.
Impact
of Inflation
We
believe that inflation has not had a material impact on our results of
operations for the nine months ended September 30, 2010. We cannot
assure you that future inflation will not have an adverse impact on our
operating results and financial condition.
Application
of Critical Accounting Policies and Estimates
The
significant accounting policies that we believe are the most critical to aid in
fully understanding and evaluating our reported financial results are as
follows:
Consolidated
Financial Statements
Our
consolidated financial statements include the accounts our company and our
wholly-owned subsidiaries. All material intercompany accounts and transactions
have been eliminated.
Fair
Value of Financial Instruments
Our
carrying values of cash, accounts payable and accrued expenses, loan payable,
note payable and due to related party approximate their fair values because of
the short-term maturity of these instruments.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures 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. Significant estimates had included
those had related to valuation of accounts receivable, film costs and accrued
expenses.
Intangible
Assets
Intangible assets, consisting of a
license for an exclusive, worldwide, transferable, perpetual license to use
certain proprietary technology for the processing of lithium for use in
batteries and other fields, have been recorded at fair value and, as
they have an indefinite life, will not be amortized. The carrying
value of the intangible assets will be evaluated by us for impairment at least
annually or upon the occurrence of an event which may indicated that the
carrying amount may be greater than its fair value. If impaired, we
will write down such impairment. In addition, the useful life of the
intangible assets will be evaluated by us at least annually or upon the
occurrence of an event which may indicate that the useful life may be definitive
and we will commence amortization over such useful life.
We have evaluated the fair value of our
intangible assets and determined that it exceeds the carrying value based on our
knowledge of the potential use of the lithium that we plan to produce in the
existing market. Although are at an early stage of bringing the lithium process
to produce revenues and cannot fore cast revenues, we believe that the net cash
flow to be derived from the lithium will exceed the carrying
value.
Income
(Loss) per Common Share
Basic net
income (loss) per share was computed by dividing the net income (loss) for the
period by the basic weighted average number of shares outstanding during the
period. Diluted net income (loss) per share was computed by dividing the net
income (loss) for the period by the weighted average number and any potentially
dilutive securities outstanding during the period.
Share-Based
Compensation
We
recognize compensation expense for all share-based payment awards made to
employees, directors and others based on the estimated fair values on the date
of the grant. Options are valued using the Black-Scholes Option-Pricing Model
using the market price of our common stock on the date of valuation, an expected
dividend yield of zero, the remaining period or maturity date of the warrants
and the expected volatility of our common stock.
Deferred Income
Taxes
Deferred
income taxes are provided for temporary differences between financial statement
and income tax reporting under the liability method, using expected tax rates
and laws that are expected to be in effect when the differences are expected to
reverse. A valuation allowance is provided when it is more likely
than not, that the deferred tax assets will not be realized.
New
Accounting Pronouncements
We do not
believe that any recently issued, but not yet effective accounting
pronouncements, if adopted, would have a material effect on the accompanying
consolidated financial statements.
ITEM 3. Quantitative and Qualitative
Disclosures About Market Risk
Not
required.
Evaluation of Disclosure Controls and
Procedures
We carried out an evaluation, under the
supervision and with the participation of our management, including our Chief
Executive Officer and our Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that
evaluation, our Chief Executive Officer and the Chief Financial Officer have
concluded that our disclosure controls and procedures were not effective as of
September 30, 2010, based on their evaluation of these controls and
procedures. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in reports it
files or submits under the Exchange Act is accumulated and communicated to
management, including its principal executive officer or officers and principal
financial officer or officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.
We have identified certain matters that
constitute material weakness (as defined under the Public Company Accounting
Oversight Board Auditing Standard No. 2) in our internal controls over
financial
reporting. The
material weaknesses that we have identified relate to the fact that that our
overall financial
reporting structure,
internal accounting information systems and current staffing levels are not
sufficient to support our financial reporting requirements. We are working to remedy
our deficiency.
Changes in Internal Control over
Financial
Reporting
There
were no changes in our internal controls over financial reporting identified in
connection with the evaluation of such internal controls that occurred during
our last fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial
reporting.
ITEM 1. Legal
Proceedings
None
There are
no material changes in the risk factors previously disclosed in our annual
report on Form 10-K for the year ended December 31, 2009.
ITEM 2. Unregistered Sales of Equity
Securities and Use of Proceeds
There
were no sales of unregistered securities during the three months ended September
30, 2010.
ITEM 3. Defaults upon Senior
Securities
None
None
The
exhibits listed in the following Exhibit Index are filed as part of this
quarterly report.
Exhibit Number and
Description
|
|
3.1
|
Restated
Certificate of Incorporation. (1)
|
|
|
3.2
|
Certificate
of Amendment of the Restated Certificate of Incorporation.
(2)
|
|
|
31.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act.
|
|
|
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act.
|
_____________
|
|
(1)
|
Incorporated
by reference to the exhibits included with registration of securities on
Form 10-SB, filed with the U.S. Securities and Exchange Commission on
April 10, 1997.
|
|
|
(2)
|
Incorporated
by reference to the exhibits included with quarterly report on Form 10-Q,
filed with the U.S. Securities and Exchange Commission on August 14,
2008.
|
SIGNATURES
In accordance with Section 13 or 15(d)
of the Securities Exchange
Act of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 15,
2010
|
|
ALPHA-EN
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Jerome I.
Feldman
|
|
|
|
Chairman,
Chief Executive Officer, Chief Financial Officer and
Treasurer
|
|
|
|
(principal executive officer and
principal financial and accounting
officer)
|