10-Q 1 v132354_10q.htm Unassociated Document
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, 2008
 
¨
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)

(914) 631-5265
(Registrant’s Telephone Number, Including Area Code)
 
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 
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 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 14, 2008, the registrant had 22,156,280 outstanding shares of common stock.
 
 
 
 
 Page
PART I. FINANCIAL INFORMATION
 
ITEM 1. Financial Statements 
1
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
8
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk  
10
ITEM 4T. Controls and Procedures 
10
PART II. OTHER INFORMATION
   
ITEM 1. Legal Proceedings 
11
ITEM 1A. Risk Factors
11
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 
11
ITEM 3. Defaults upon Senior Securities 
11
ITEM 4. Submission of Matters to a Vote of Security Holders 
11
ITEM 5. Other Information 
11
ITEM 6. Exhibits 
11
SIGNATURES 
12
 
 
Alpha-En Corporation
(Formerly Avenue Entertainment Group, Inc. and Subsidiaries)
Index to Consolidated Financial Statements
 
 
Page
Consolidated Balance Sheet as of September 30, 2008 (Unaudited)
  
and December 31, 2007
 2
   
Consolidated Statement of Operations for the three and
  
nine months ended September 30, 2008 and 2007 (unaudited)
 3
   
Consolidated Statement of Cash Flows for the nine
  
months ended September 30, 2008 and 2007 (unaudited)
 4
   
Notes to Consolidated Financial Statements (unaudited)
 5
 
1
 
ALPHA-EN CORPORATION
(FORMERLY AVENUE ENTERTAINMENT GROUP, INC.)
CONSOLIDATED BALANCE SHEET

   
September 30, 2008
  
December 31, 2007
  
   
 (Unaudited)
       
ASSETS
              
               
Current assets
              
Cash
 
$
18,115
 
$
23,562
 
Prepaid Expenses
    
-
    
12,351
 
               
TOTAL ASSETS
 
$
18,115
 
$
35,913
 
               
LIABILITIES AND STOCKHOLDERS' DEFICIT
              
               
Current liabilities
              
Accounts payable and accrued liabilities
  
$
150,005
 
$
36,481
 
Due to related party
    
15,422
   
18,422
 
               
Total Current Liabilities
    
165,427
   
54,903
 
Loan payable - officer
    
3,565
   
47,568
 
               
TOTAL LIABILITIES
    
168,992
   
102,471
 
               
STOCKHOLDERS' DEFICIT:
              
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; 19,796,030 and 11,582,000 shares issued and
             
outstanding as of September 30, 2008 and 2008, respectively
    
197,960
   
115,820
 
Additional paid-in capital
    
7,327,853
   
7,245,713
 
Accumulated deficit
    
(7,577,807
)
  
(7,358,708
)
Stock subscription receivable
    
(29,500
)
  
-
  
Treasury stock, at cost (798,918 shares of
              
common stock)
    
(69,383
)
  
(69,383
)
               
TOTAL STOCKHOLDERS' DEFICIT
   
(150,877
)
  
(66,558
)
               
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 
$
18,115
 
$
35,913
 

See notes to consolidated financial statements
 
2
 
ALPHA-EN CORPORATION
(FORMERLY AVENUE ENTERTAINMENT GROUP, INC.)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

   
Three Months Ended
  
Nine Months Ended
  
 
  
September 30,
  
September 30,
  
 
  
2008
  
2007
  
2008
  
2007
  
                     
Revenues
 
$
-
  
$
1,295
 
$
3,000
  
$
9,782
 
                           
General and administrative expenses  
    
31,546
   
35,099
   
222,099
   
56,116
 
                           
Net loss
 
$
(31,546
)
$
(33,804
)
$
(219,099
)
$
(46,334
)
                           
Net loss per share - basic and diluted  
    
*
   
*
 
$
(0.02
)
  
*
 
                           
Weighted average common shares outstanding -
                          
basic and diluted  
    
19,047,370
   
10,362,149
   
14,070,457
   
10,334,887
 

* Less than $.01 per share
 
See notes to consolidated financial statements
 
3
 
ALPHA-EN CORPORATION
(FORMERLY AVENUE ENTERTAINMENT GROUP, INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

   
Nine Months Ended
  
   
September 30,
  
   
2008
  
2007
  
           
Cash Flows From Operations
         
Net loss
    
(219,099
)
  
(46,334
)
Adjustments to reconcile net loss to net cash
              
used in operating activities:
              
Changes in operating assets and liabilities:
              
Prepaid expenses
    
12,351
   
(28,657
)
Accounts payable and accrued expenses
    
113,524
   
1,956
 
               
Net cash used in operating activities
    
(93,224
)
  
(73,035
)
               
Cash Flows From Financing Activities
             
Increase in loans payable - officer
    
30,777
   
46,895
 
Decrease in due to related party
    
(3,000
)
  
(9,782
)
Proceeds from sales of common stock (net of
             
subscriptions receivable of $29,500 in 2008
              
and $25,000 in 2007)
    
60,000
   
34,986
 
               
Net cash provided by financing activities
   
87,777
   
72,099
 
               
Decrease in cash from operations
    
(5,447
)
  
(936
)
               
Cash - Beginning of period
    
23,562
   
1,448
 
               
Cash - End of period
  
$
18,115
  
$
512
  
               
Noncash Transaction:
              
Common stock issued in exchange for
             
cancellation of loan - payable officer
  
$
74,780
        
 
See notes to consolidated financial statements.
 
4
 
Alpha-En Corporation
Notes to Consolidated Financial Statements
September 30, 2008
(Unaudited)

1. Organization and Operations
 
alpha-En Corporation (formerly Avenue Entertainment Group, Inc.) (the “Company”) was incorporated in Delaware on March 7, 1997 and had operated through its wholly-owned subsidiaries, Avenue Pictures, Inc. and its subsidiaries (“Avenue Pictures”) and Wombat Productions, Inc. (“Wombat”).
 
From May 2, 2006, the Company has been inactive.
 
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 notes 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 the Company's Form 10-KSB for the year ended December 31, 2007. 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.
 
5

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.
 
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 consolidated 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 had incurred operating losses, has 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. 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. Common Stock
 
On July 3, 2008, subsequent to the increase in authorized shares of common stock, the Company issued 3,739,030 shares of the Company’s common stock to officers/directors, from the remainder of the subscription agreement dated September 27, 2007, in exchange for approximately $75,000 paid by the cancellation of the loan payable-officer.
 
On June 13, 2008, the Board of Directors approved a private placement of up to 10,000,000 shares of common stock of the Company at a purchase price of $.02 per share.
 
6

Under the private placement, in July and August 2008, the Company sold an aggregate of 3,000,000 shares of common stock for $60,000. In addition, on July 15, 2008, the Company sold 1,475,000 shares of common stock to an officer/director for a subscription receivable of $29,500.
 
On October 15, 2008, an additional 3,025,000 shares of the Company’s common stock were sold to the officer/director under the private placement.
 
6. Fair Value Measurements
 
Effective January 1, 2008, the Company adopted both SRAS 157 and SFAS 159 without any effect.
 
Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS157), defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require the use of fair value measurements. A fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability, or, in the absence of a principal market, the most advantageous market for the asset of liability.
 
SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement 115” (“SFAS 159”), permits an entity to elect to measure various financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses on items for which the fair value option has been elected should be reported in earnings at each subsequent reporting date.
 
7. Related Party Transactions
 
As of September 30, 2008, Loan payable – officer was $3,564, payable on demand, with interest at 5%, per annum.
 
7
 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included in this report. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements.
 
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 as a director of ours 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 Chief Executive Officer and Chairman of the Board, 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. Since Gene Feldman’s resignation, we have been substantially inactive. All monies disbursed by us from May 2006 to date were used to pay for directors and officers’ insurance premiums and the cost of maintaining our public company status. During that period, we have had no employees, other than our officers 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. We have no current operations and do not expect to have revenue from operations in the near future. Our present focus is to acquire a target company or business seeking the perceived advantages of being a publicly-held corporation.
 
On April 30, 2008, our board of directors and stockholders owning a majority of our outstanding shares of common stock, the only classes of our voting securities outstanding as of the record date, voted to approve an amendment to our certificate of incorporation to (a) increase the aggregate number of authorized shares of our common stock from 15 million to 35 million shares and (b) change our name to alpha-En Corporation. On June 9, 2008, we filed the certificate of amendment to our certificate of incorporation, thereby effecting the changes. Pursuant to the corporate name change, effective July 22, 2008, our company’s trading symbol was changed from “PIXG” to “ALPE.”
 
 
Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007
 
Operations for the three months ended September 30, 2008 and 2007 are not comparable because, commencing in late 2007, we started the process of bringing our SEC filings current whereas during most of 2007, the company was dormant.

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007
 
Operations for the nine months ended September 30, 2008 and 2007 are not comparable because, commencing in late 2007, we started the process of bringing our SEC filings current whereas during most of 2007, the company was dormant.
 
8
 
As of September 30, 2008, we had negative working capital of $147,312 compared to negative working capital of $14,726 at September 30, 2007.

We do not have sufficient funds to continue our operating activities. Future operating activities are expected to be funded by sales of common stock to and loans from officers, directors and major stockholders.
 
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 three and nine months ended September 30, 2008. 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 accounts payable and accrued liabilities 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 our 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.
 
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 diluted shares outstanding during the period.
 
9
 
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 asses will not be realized.
 
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, 2008, 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.

Changes in Internal Control over Financial Reporting

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.
 
10
 
 
ITEM 1. Legal Proceedings 

We are not the subject of any material pending legal proceedings and, to the knowledge of our management, no material proceedings are presently contemplated against us by any federal, state or local governmental agency. Further, to the knowledge of our management, no director or executive officer is party to any action which any has an interest adverse to us.


There are no material changes in the risk factors previously disclosed in our annual report on Form 10-KSB for the year ended December 31, 2007.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 

Unregistered Sales of Equity Securities during the Three Months ended September 30, 2008 

In the quarter ended September 30, 2008, we sold an aggregate of 3,000,000 shares of our common stock for $60,000, or $.02 per share, to 4 accredited investors. Of these shares, 1,250,000 were purchased by Steven M. Payne, our President, 500,000 were purchased by George McKeegan, our Vice President and Secretary, and 1,475,000 were purchased by Jerome I. Feldman, our Chairman, Chief Executive Officer, Chief Financial Officer and Treasurer under a subscription agreement.


None.


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)
   
3.3
By Laws. (1)
   
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
   
31.2
Certification of 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 our 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 our quarterly report on Form 10-Q, filed with the U.S. Securities and Exchange Commission on August 14, 2008.

11
 
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 14, 2008

ALPHA-EN CORPORATION
 
/s/ Jerome I. Feldman
 
Jerome I. Feldman
 
Chairman, Chief Executive Officer, Chief Financial Officer and Treasurer
 
(principal executive officer; principal financial and accounting officer)
 
12