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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the fiscal year ended September 30, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
Commission file number 0-9563
ALPHA PETROLEUM EXPLORATION CORPORATION
----------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
New York 23-2090563
- ------------------------------- ------------------------
(State or Other Jurisdiction of (IRS Employer I.D. No.)
Incorporation or Organization)
3401 N. Tamiami Trail, Suite 207, Naples, FL 34103
----------------------------------------------------------
Address of Principal Executive Offices Including Zip Code
Registrant's telephone number including area code: (941) 263-4223
Securities registered pursuant to Section 12(b) of the Exchange Act: None.
Securities registered pursuant to Section 12(g) of the Exchange Act: Common
Stock.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ ] No [X].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant on September 30, 2000, was
approximately $0. As of September 30, 2000, the Company had a stockholder's
deficit of $372,244.00.
As of September 30, 2000, 120,697 shares of Common Stock, $0.01 par
value, were outstanding.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Alpha Petroleum Exploration Corporation (the "Company") was incorporated under
the laws of the State of New York in 1968. From 1977 to 1983, the Company was
engaged in the exploration for and development of oil and gas both for its own
account and through limited partnerships. The Company acted primarily as an
investor. In 1984, the Company sold its oil and gas properties. The Company has
been inactive since 1988.
GENERAL BUSINESS
The Company intends to begin operating again. The Company has acquired interests
in several other "development stage" businesses. The Company believes that it
can enhance the value of the businesses in which the Company has acquired an
interest by adding business development and management support, as well as
financing and market knowledge. The Company's strategy is to grow through
acquisitions, particularly (but not exclusively) in the area of information
technology, including Internet, e-commerce, telecommunications, networking,
software and information services. Information technology is one of the fastest
growing sectors in the United States economy. The Internet, in particular, is a
device which has allowed information technology businesses to grow at a rapid
pace. New companies can position themselves as leaders in their respective
markets, often attracting key strategic partners and customers. These new
companies often build category-defining brands that create competitive
advantage. The Company intends to invest in businesses that the Company believes
will have the greatest potential to become leading information technology
businesses.
The Company is currently in the process of reinstating itself as a corporation
in "good standing" with the United States Securities and Exchange Commission.
The mailing address for the Company is 3401 N. Tamiami Trail, Suite 207, Naples,
Florida 34103. After the Company becomes compliant with New York and the SEC,
the Company intends to effect a private placement offering in which the Company
hopes to raise $1,500,000. The raising of such funds would allow the Company to
begin implementing its plan of business described above.
The Company has acquired interest in the following companies: Polo Energy
Corporation, Alpha Technologies Associates, Inc.; and Journey Entertainment
Corporation. These companies are described as follows:
POLO ENERGY CORPORATION
The Company owns fifty-five percent (55%) of Polo Energy Corporation ("Polo").
Polo was incorporated in Nevada in 1990 and then merged into a Delaware
corporation in 2001. The business of Polo will be to acquire oil and gas
properties in Texas, Oklahoma and other oil-producing states. Polo owns 6,522
units of Class A, Series 1 units of Benex Oil and Gas Company, LLC representing
a share in its Koi Chush #1 well in Atoka County, Oklahoma. This well is
currently unproductive. Polo is currently in the process of looking for
leaseable properties which would allow Polo to drill for and exploit gas
reserves. Polo is also in the process of making technical presentations to
potential drilling partners.
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ALPHA TECHNOLOGIES ASSOCIATES, INC.
The Company owns fifty-five percent (55%) of Alpha Technologies Associates,
Inc., a Delaware corporation ("ATA"). ATA is a holding company which holds
interests in the following businesses:
I-COVER CORPORATION
ATA owns twenty-six percent (26%) of I-Cover Corporation, a Delaware
corporation ("I-Cover"). I-Cover was incorporated in February, 2000.
I-Cover is a development-stage company that is developing a product
that will be known as the "I-Cover device". The "I-Cover" device is a
bookbinding device and book cover that would allow digital printers to
bind high-class hard covered books in a surrounding where conventional
heavy binding equipment is not available. I-Cover intends to design,
patent and market the I-Cover device.
INSTANT E-COMMERCE CORP.
ATA owns twenty-seven percent (27%) of Instant E-Commerce Corporation,
a Delaware corporation ("IEC"). IEC was incorporated in June, 1999 and
remains a "development stage" company. IEC is developing technology to
allow its customers flexible and fast methods to set up secure and
effective electronic shopping over the Internet. Specifically, IEC is
attempting to establish a comprehensive set of payment methods to allow
for greater flexibility when shopping "on-line".
HELP SET COMMUNICATION CORPORATION.
ATA owns twenty-seven percent (27%) of Help Set Communication
Corporation, a Delaware corporation ("Help Set"). Help Set was
incorporated in February, 2000. Help Set is attempting to become a part
of the electronic commerce and targeted advertising business. Help Set
plans to provide these services through electronic devices like
personal digital assistants ("PDA's") and client software. Client
software and PDAs would provide vehicles for the on-line purchasing of
products and services. They also would provide the means to identify
customers and send information in secure form. All users can also
utilize their PDA's for already existing services such as e-mail,
pages, faxes, voice mail, etc. Help Set also plans to provide the
server software environment and all the programs needed for development
customized applications for the users of the PDA's.
LINUX CE, INC.
ATA owns thirty-five percent (35%) of Linux CE, Inc., a Delaware
corporation ("Linux""). Linux is attempting to create an improved
operating system for consumer electronic products. Currently, the
operating systems available for consumer electronics are based on
proprietary code. The Company believes that the proprietary code
operating systems is not an acceptable system, as companies will not
want to drive their businesses into a situation such as that which
exists in the personal computer industry. Linux is attempting to
improve this technology.
FRUIT WASH CORPORATION.
ATA owns thirty-six percent (36%) of Fruit Wash Corporation, a Delaware
corporation ("Fruit Wash"). Fruit Wash will be a manufacturer of a
fruit and vegetable cleanser which removes preservatives from fruit and
vegetables efficiently and safely. Treated fruits and vegetables can
cause allergic symptoms and skin irritations in many people, who must
wear disposable gloves
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when handling the produce. Fruit Wash is developing a cleansing liquid
which would safely and effectively wash away preservatives and
pesticides from the surface of fruits and vegetables.
EMPLOYEES
The Company currently has no full-time employees.
PRODUCTS/SERVICES
The Company currently manufacturers no products and performs no
services.
CUSTOMERS
The Company currently has no customers.
PATENTS AND INTELLECTUAL PROPERTY
The Company currently has no patents or intellectual property.
ITEM 1A. RISK FACTORS
Non-Compliance with SEC. The Company has not complied with any SEC
requirements since 1988. Although the Company is attempting to regain
its "good standing" status with the SEC, there can be no guaranty that
the Company will be able to do so.
New Business Venture. The Company has been dormant for over ten (10)
years. Therefore, the Company should be regarded as one with little or
no operating history. The Company's profitability is subject to all of
the risks inherent in the development of any new business enterprise,
including the lack of an extensive operating history. There can be no
assurance that the Company can operate profitably or that it will
continue to do so for any length of time.
No Market/No Liquidity. There will be no active market to trade the
common stock of the Company. As a result, any stock ownership should be
viewed as illiquid in nature. The Company does plan to attempt to have
its shares listed on the NASDAQ "Bulletin Board", but there is no
assurance that the Company will be able to do so.
Limitation on Director and Officer Liability; Indemnification. In
accordance with New York law, the Company's Articles of Incorporation
and By-Laws contain provisions providing for the maximum
indemnification provided under New York law for its officers,
directors, employees and agents. As a result of the inclusion of such
provisions, the Company may not be able to recover monetary damages
against officers, directors, employees and agents of the Company for
actions taken by them, and, with respect to officers and directors,
which actions are ultimately found not to have violated the specific
provisions enumerated above, although it may be possible to obtain
injunctive or other equitable relief with respect to certain actions.
If equitable remedies are found not to be available to the Company in
any particular case, the Company may not have an effective remedy
against the challenged conduct.
Key Personnel. The Company's performance will depend significantly upon
the personal efforts and abilities of Roland Jermyn. The loss of the
services of Mr. Jermyn could have an adverse effect on the Company.
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Subsequent Sales of Equity Securities. The success of the Company is
contingent upon raising funds in the near future. The Company intends
to complete a "private placement" offering of its shares. There is no
assurance that the Company will be able to complete such private
placement or otherwise raise the necessary funds to effect its business
plan. The subsequent offering of securities by the Company may be made
on terms and conditions as the Company deems appropriate.
Competition. There is widespread competition in the technology
industry. There is no guaranty that the Company will be able to
effectively compete in the technology industry.
Acquisitions Involve Numerous Risks. Acquisitions involve numerous
risks, including the following:
- difficulties in integration of the operations, technologies,
and products of the acquired companies;
- the risk of diverting management's attention from normal daily
operations of the business;
- potential difficulties in completing projects associated with
purchased inprocess research and development;
- risks of entering markets in which we have no or limited
direct prior experience and where competitors in such markets have
stronger market positions; and
- the potential loss of key employees of the acquired company.
Mergers and acquisitions of companies are inherently risky, and no
assurance can be given that our previous or future acquisitions will be
successful and will not materially adversely affect our business,
operating results or financial condition.
Employees. The Company's success will be dependent on its ability to
obtain and retain employees. At this time, the Company has no
employees. Competition to hire employees can be intense. There is no
assurance that the Company will be able to successfully hire employees.
ITEM 2. PROPERTIES
The Company's principal office is located at 3401 N. Tamiami Trail,
Suite 207, Naples, Florida 34103.
ITEM 3. LEGAL PROCEEDINGS
None. The Company is in default of two promissory notes with a
principal amount totaling $116,113. However, the Company believes that
the statute of limitations involving the promissory notes has expired
and that, therefore, the holders of the promissory notes have no legal
ability to enforce the notes.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fiscal year covered by this report.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Due to the fact that the Company has been "inactive" since 1988, shares
of the Company are not currently traded on any market. Once the Company
has been brought into "good standing" with the Securities and Exchange
Commission, the Company intends to have its securities traded on the
NASDAQ "bulletin board".
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data is for the three fiscal years
ended September 30, 2000. Reference is made to the financial statements attached
hereto for additional information.
2000 1999 1998
--------- --------- ---------
Revenues $ -0- $ -0- $ -0-
Loss $(104,385) $(115,417) $ (64,726)
Loss Per Share $ (0.86) $ (0.96) $ (0.54)
Total Assets $ 100 $ 100 $ 100
Long Term Obligations $(372,344) $(322,459) $(270,352)
The Company has never paid dividends on its common stock and it is
highly unlikely that it will do so in the foreseeable future.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Results of Operations
As the Company has been inactive since 1988, the Company has had no
revenue or any other type of income since 1988. Similarly, the Company
has had virtually no general and administrative expenses since 1988.
During the year ended September 30, 2000, the only activity of the
Company involved discussions with various technology-driven companies
in Finland for the Company to assist in their capital raising activity.
Liquidity and Capital Resources
There are no known trends or known demands, commitments, events or
uncertainties that will result in or that are reasonably likely to
result in the Company's liquidity increasing or decreasing in any
material way. As previously stated, the Company's proposed business
activities are dependent upon a successful completion of a proposed
private placement offering. If a private placement offering cannot be
completed, the Company will not be able to carry out its business plan.
The Company does not have any material commitments for capital
expenditures. Again, the Company is investigating possible business
combinations with other companies. However, the
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Company's ability to enter into any business combinations is contingent
upon its ability to raise funds through a private placement offering of
its common stock.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to the financial statements attached hereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Position
---- --- --------
Roland Jermyn 59 Director, President and Treasurer
John Picciano 53 Director
Heister H. Linn 52 Director
ROLAND JERMYN.
Mr. Jermyn is the President, Treasurer and Director of the Company. He
also served as President of the Company from 1978 until 1987. Mr.
Jermyn graduated from Dartmouth College in 1963. He also attended
Stanford University Business School and St. Edmond Hall at Oxford. From
1969 to 1977, Mr. Jermyn worked as an insurance broker and real estate
broker. From 1977 to 1986, Mr. Jermyn worked as a long-term planner for
Psychiatric Hospitals of America. Since 1985, Mr. Jermyn has been the
advisor to the Number One Irrevocable Trust dated June 25, 1985 and the
advisor to the Number Two Irrevocable Trust dated December 27, 1986.
JOHN PICCIANO
Mr. Picciano is a director of the Company. Mr. Picciano is Chief
Engineer Officer of Oglethorpe, Inc., the company which managers "The
Willough", a mental health hospital in Naples, Florida. Mr. Picciano
has served as chief executive officer of several inpatient mental
facilities, rehabilitation programs and long-term care centers. Mr.
Picciano served as a Catholic priest in the Diocese of Orlando for ten
years prior to his leaving the priesthood to work in the mental health
care industry.
HEISTER H. LINN
Mr. Linn is a practicing orthodontist. He has had his own practice
since 1976. Prior to becoming an orthodontist, Mr. Linn worked for
Block Drug Company and Upjohn Pharmaceutical Company. Mr. Linn has been
involved in several business ventures, including owning a racquetball
and fitness club as well as a rental property and land development
company. In 1999, Mr. Linn filed for protection under Chapter 13 of the
United States Bankruptcy Code. Mr. Linn's bankruptcy filing was
voluntarily withdrawn in February, 2001.
ITEM 11. EXECUTIVE COMPENSATION
Since 1988, Mr. Jermyn, President of the Company, has worked without
compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 30, 2000, certain
information with respect to each beneficial owner of more than five
percent (5%) of the Company; each named Executive Office; and all
directors and officers of the Company as a group.
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Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Outstanding Shares
------------------------ ------------------ -----------------------------
Drumore Corporation 19,163 15.88%
Chestnut Corporation 18,552 15.37%
Robert H. Chappell 12,704 10.53%
Ken Hardesty 10,490 8.69%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of September 30, 2000, Drumore Corporation owned 15.88%of the issued
and outstanding shares of the Company. Mr. Jermyn is a member of the
Board of Directors and is 100% shareholder of Drumore Corporation. Mr.
Jermyn is also the President and a Director of the Company.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules.
Report of Independent Auditors.
Consolidated Balance Sheets at September 30, 2000 and 1999.
Consolidated Statements of Operations for each of the years
ended September 30, 2000, 1999 and 1998.
Consolidated Statements of Stockholders' Deficit for each of
the fiscal years ended September 30, 2000, 1999 and 1998.
Consolidated Statements of Cash Flows for each of the fiscal
years ended September 30, 2000, 1999 and 1998.
Notes to Consolidated Financial Statements.
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K during the
period covered by this report.
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ALPHA PETROLEUM EXPLORATION CORPORATION
TABLE OF CONTENTS
Page
Report of Independent Auditors ............................. 1
Financial Statements:
Consolidated Balance Sheets................................. 2
Consolidated Statements of Operations....................... 3
Consolidated Statements of Stockholders' Deficit............ 4
Consolidated Statements of Cash Flows....................... 5
Notes to Consolidated Financial Statements.................. 6-9
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REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
Alpha Petroleum Exploration Corporation
Naples, Florida
We have audited the accompanying consolidated balance sheets of Alpha
Petroleum Exploration Corporation and its Subsidiary [the "Company"] as of
September 30, 2000 and 1999, and the related consolidated statements of
operations, stockholders' deficit, and cash flows for each of the three years in
the period ended September 30, 2000. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Alpha Petroleum Exploration Corporation and Subsidiary as of September 30, 2000
and 1999 and the consolidated results of their operations and their cash flows
for each of the three years in the period ended September 30, 2000, in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
3 to the consolidated financial statements the Company had a working capital
deficit of $416,021 as of September 30, 2000. The Company has had no income
producing activity since 1989 and has an accumulated deficit of $7,122,345 as of
September 30, 2000. These factors raise substantial doubt about Alpha Petroleum
Exploration Corporation's ability to continue as a going concern. Management's
plan in regard to these matters are described in Note 3. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
MOORE STEPHENS, P.C.
Certified Public Accountants.
New York, New York
May 21, 2001
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ALPHA PETROLEUM EXPLORATION CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30,
---------------------------------
2000 1999
------------ ------------
ASSETS:
Cash $ 100 $ 100
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT:
CURRENT LIABILITIES:
Accounts Payable $ 73,832 $ 40,321
Notes Payable 116,133 116,133
Interest Payable 220,471 188,566
Accrued Tax Liabilities 5,685 5,291
------------ ------------
TOTAL CURRENT LIABILITIES 416,121 350,311
------------ ------------
COMMITMENTS AND CONTINGENCIES -- --
------------ ------------
STOCKHOLDERS' DEFICIT:
Common Stock, Par Value $.01 Per Share, [Authorized,
40,000,000 Shares; 120,697 Shares Issued and Outstanding] 1,207 1,207
Additional Paid-in Capital 6,705,117 6,650,617
Accumulated Deficit (7,122,345) (7,002,035)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT (416,021) (350,211)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 100 $ 100
============ ============
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements.
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ALPHA PETROLEUM EXPLORATION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED
------------------------------------------------
SEPTEMBER 30,
------------------------------------------------
2000 1999 1998
---------- ---------- ----------
REVENUES $ -- $ -- $ --
GENERAL AND ADMINISTRATIVE EXPENSE 88,011 99,821 50,000
INTEREST EXPENSE 32,199 29,295 28,064
STATE FRANCHISE TAX EXPENSE 100 490 325
---------- ---------- ----------
NET LOSS $ (120,310) $ (129,606) $ (78,389)
========== ========== ==========
BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK $ (1.00) $ (1.07) $ (.65)
========== ========== ==========
BASIC AND DILUTED WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING 120,697 120,697 120,697
========== ========== ==========
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements.
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ALPHA PETROLEUM EXPLORATION CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
COMMON STOCK ADDITIONAL TOTAL
------------------------ PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
-------- -------- ----------- ----------- -------------
BALANCE - OCTOBER 1, 1997 120,697 $ 1,207 $ 6,537,307 $(6,794,040) $ (255,526)
Company Expenses Paid by
Stockholders -- -- 50,000 -- 50,000
Net Loss for the year ended
September 30, 1998 -- -- -- (78,389) (78,389)
-------- -------- ----------- ----------- -----------
BALANCE - SEPTEMBER 30, 1998 120,697 1,207 6,587,307 (6,872,429) (283,915)
Company Expenses Paid by
Stockholders -- -- 63,310 -- 63,310
Net Loss for the year ended
September 30, 1999 -- -- -- (129,606) (129,606)
-------- -------- ----------- ----------- -----------
BALANCE - SEPTEMBER 30, 1999 120,697 1,207 6,650,617 (7,002,035) (350,211)
Company Expenses Paid by
Stockholders -- -- 54,500 -- 54,500
Net Loss for the year ended
September 30, 2000 -- -- -- (120,310) (120,310)
-------- -------- ----------- ----------- -----------
BALANCE - SEPTEMBER 30, 2000 120,697 $ 1,207 $ 6,705,117 $(7,122,345) $ (416,021)
======== ======== =========== =========== ===========
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements.
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ALPHA PETROLEUM EXPLORATION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED
------------------------------------------------
SEPTEMBER 30,
------------------------------------------------
2000 1999 1998
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (120,310) $ (129,606) $ (78,389)
Adjustments to Reconcile Net Loss to
Net Cash Provided by Operating Activities:
Increase in Accounts Payable 33,511 40,321 --
Increase in Interest Payable 31,905 28,425 27,372
Decrease in Accrued Tax Liabilities -- (3,810) --
State Franchise Tax 100 490 325
Interest and Penalty Accruals 294 870 692
Company Expenses Paid by Stockholders 54,500 63,310 50,000
---------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES -- -- --
---------- ---------- ----------
NET INCREASE IN CASH -- -- --
CASH - BEGINNING OF YEARS 100 100 100
---------- ---------- ----------
CASH - END OF YEARS $ 100 $ 100 $ 100
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the years for:
Income Taxes $ -- $ 3,810 $ --
Interest $ -- $ -- $ --
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Note 9.
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements.
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ALPHA PETROLEUM EXPLORATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[1] ORGANIZATION AND NATURE OF OPERATIONS
Alpha Petroleum Exploration Corporation ["Alpha" or the "Company"] was
incorporated under the laws of the State of New York in 1968 and has been
primarily inactive since 1989.
In March 1997, the Company formed a 100% owned subsidiary, Polo Energy
Corporation ["Polo"]. Polo's business was planned to be the investment in oil
and gas production on an international basis. Polo has been inactive in the
years presented in the accompanying financial statements.
[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company are presented in accordance with
generally accepted accounting principles in the United States. A summary of the
more significant policies are presented below.
CASH AND CASH EQUIVALENTS - The Company considers highly liquid investments,
with an original maturity of three months or less, to be cash equivalents. The
Company did not have any cash equivalents at September 30, 2000 or 1999.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements. Actual results could differ from those estimates.
CONSOLIDATION POLICY - The consolidated financial statements include the
accounts of Alpha and its subsidiary. All significant intercompany balances and
transactions have been eliminated. Investments in companies in which the company
has a 20% to 50% interest are carried at cost, adjusted for the company's
proportionate share of their undistributed earnings or losses.
EARNINGS PER SHARE - Basic earnings [loss] per share is computed by dividing
income [loss] available to common stockholders by the weighted average number of
common shares outstanding during the period. Diluted earnings per share reflects
the amount of earnings for the period available to each share of common stock
outstanding during the reporting period, while giving effect to all dilutive
potential common shares that were outstanding during the period, such as common
shares that could result from the potential exercise or conversion of securities
into common stock. The computation of diluted earnings per share does not assume
conversion, exercise, or contingent issuance of securities that would have an
antidilutive effect on per share amounts [i.e., increasing earnings per share or
reducing loss per share]. The dilutive effect of outstanding options and
warrants and their equivalents are reflected in dilutive earnings per share by
the application of the treasury stock method which recognizes the use of
proceeds that could be obtained upon exercise of options and warrants in
computing diluted earnings per shares. The Company had no potentially dilutive
securities outstanding for any of the years presented in the accompanying
financial statements.
COMPREHENSIVE INCOME - Comprehensive income is the total of (1) net income
(loss) plus (2) all other changes in net assets arising from nonowner sources,
which are referred to as other comprehensive income. The Company had no items of
other comprehensive income for any year in the three year period ended September
30, 2000.
ADVERTISING EXPENSE - It is the Company's policy to expense advertising costs as
incurred.
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ALPHA PETROLEUM EXPLORATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #2
[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]
STOCK OPTIONS AND SIMILAR EQUITY INSTRUMENTS - On August 1, 1998, the Company
adopted the disclosure requirements of Statement of Financial Accounting
Standards ["SFAS"] No. 123, "Accounting for Stock-Based Compensation," for stock
options and similar equity instruments [collectively "Options"] issued to
employees and directors, however, the Company will continue to apply the
intrinsic value based method of accounting for options issued to employees
prescribed by Accounting Principles Board ["APB"] Opinion No. 25, "Accounting
for Stock Issued to Employees" rather than the fair value based method of
accounting prescribed by SFAS No. 123. SFAS No. 123 also applies to transactions
in which an entity issues its equity instruments to acquire goods and services
from non-employees. Those transactions must be accounted for based on the fair
value of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable.
[3] GOING CONCERN
As of September 30, 2000, the Company had a working capital deficit of $416,021
and an accumulated deficit of $7,122,345. Further, the Company has had no income
producing activity since 1989. These factors cause substantial doubt about
Alpha's ability to continue as a going concern.
The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. The continuation
of the Company as a going concern is dependent upon the Company's ability to
meet its present and future financing requirements. Management is in the process
of seeking equity financing.
During 1997, the Company initiated plans to reinstate itself as a corporation in
good standing with the Secretary of State of New York and the Securities and
Exchange Commission, in order to allow it to branch into new business fields.
The Company's reinstatement plans will follow the basic course outlined below:
[1] The Company filed its delinquent New York State Franchise Tax Returns from
1988 through 1998 and paid the taxes, assessed penalties and interest.
[2] The Company will file its Form 10-K, for September 30, 2000, with the
Securities and Exchange Commission ["SEC"].
[3] The Company plans to initiate stock swaps with Finnish companies in order to
market Finnish technologies and products on a global basis.
[4] The Company plans to raise the capital necessary to market this Finnish
technology through private offerings of its common stock.
Upon its reinstatement the Company will seek to identify companies which are
capable of being market leaders in segments of the information technology
industry and which are at a stage of development that would benefit from the
Company's business development and management support, financing, and market
knowledge. The Company will invest in companies in which it can purchase a large
enough stake to enable it to have significant influence over the management and
policies of the company and to realize a large enough return to compensate it
for its investment of management time and effort, as well as capital.
Management believes that actions presently being taken to revise the Company's
operating and financial status provide the opportunity for the Company to
continue as a going concern. There can be no assurances that management will be
successful in the implementation of its plans. The financial statements do not
include any adjustments in the event the Company is unable to continue as a
going concern.
F-7
18
ALPHA PETROLEUM EXPLORATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #3
[4] NOTES PAYABLE
Notes payable represent two notes payable to former directors of the Company,
aggregating $116,113, which are in default. Interest has been accrued from the
issue date through September 30, 2000, at prime plus two percent and is
reflected in the accompanying balance sheets under the caption interest payable.
The weighted average interest rate as of September 30, 2000 and 1999 was 10% and
9.83%, respectively. Interest expense amounted to $31,905, $28,425 and $27,372
for the years ended September 30, 2000, 1999 and 1998, respectively.
[5] STOCK SPLIT
On April 26, 2001, the Board of Directors authorized a 1 for 286 reverse stock
split of common stock to shareholders of record on April 26, 2001. All
references in the accompanying financial statements to the number of common
shares and per share amounts have been restated to reflect the stock split.
[6] INCOME TAXES
Under generally accepted accounting principles, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which temporary differences are expected to be
recovered or settled. Generally accepted accounting principles requires the
establishment of a deferred tax asset for all deductible temporary differences
and operating loss carry forwards. The Company has available at September 30,
2000, approximately $1,894,000 of unused operating loss carryforwards that may
be applied against future taxable income and that expire in various years from
2001 to 2012. Approximately $82,000 of that amount will expire in the year 2001.
At September 30, 2000, based on the amount of federal and state operating loss
carryforwards, the Company would have had a deferred tax asset of approximately
$777,000. However, because of the uncertainty that the Company will generate
income in the future sufficient to fully or partially utilize these carry
forwards, a valuation allowance of $777,000 has been established. Accordingly,
no deferred tax asset is reflected in these financial statements. The allowance
is approximately $562,000 less than the allowance at September 30, 1999, due to
the expiration of certain net operating losses first incurred in 1985.
[7] LOSS PER SHARE
Loss per share of common stock is based on weighted average number of common
shares outstanding for each period presented. The Company has 120,697 shares of
common stock issued and outstanding at September 30, 2000.
[8] CONTINGENCIES
Management believes that there is no pending or threatened litigation against
the Company at September 30, 2000, which could have a material effect on the
consolidated financial statements.
[9] RELATED PARTY TRANSACTIONS
The Company is funding its reinstatement process through the auspices of certain
stockholders including the Drumore Corporation ["Drumore"]. Drumore is owned
one-hundred percent by a majority stockholder of the Company.
A group of individuals has advanced funds to the Company on behalf of Drumore,
in order to pay the legal, accounting, audit, tax and other costs incurred in
connection with this effort.
F-8
19
ALPHA PETROLEUM EXPLORATION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #4
[9] RELATED PARTY TRANSACTIONS [CONTINUED]
These funds are being advanced to and/or for Drumore and are reflected as
expenses of the Company, with an offsetting credit to additional paid-in
capital. Such expenses amounted to $54,500, $63,310 and $50,000 for the years
ended September 30, 2000, 1999 and 1998.
On April 26, 2001, the Company issued 1,279,303 shares of post-split stock to
Drumore. These shares were issued as compensation for the expenses paid on
behalf of the Company.
[10] NEW AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ["FASB"] issued Statement
of Financial Accounting Standards No. 133 ["SFAS 133"], "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 [as amended by SFAS
138 in June 2000] establishes new standards of accounting and reporting for
derivative instruments and hedging activities. SFAS No. 133 requires that all
derivatives be recognized at fair value in the statement of financial position,
and that the corresponding gains or losses be reported either in the statement
of operations or as a component of comprehensive income, depending on the type
of hedging relationship that exists. In July 1999, the Financial Account
Standards Board issued SFAS No. 137 ["SFAS 137"], "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of SFAS 133." SFAS
137 deferred the effective date of SFAS 133 until the first quarter of fiscal
years beginning after June 15, 2000. The Company does not currently hold
derivative instruments or engage in hedging activities. The Company expects the
adoption of SFAS 133, SFAS 137 and SFAS 138 will not have a material impact on
its financial statements and related disclosures.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ["SAB 101"], "Revenue Recognition in Financial Statements." SAB
101 provides guidance on applying accounting principles generally accepted in
the United States to revenue recognition in financial statements and is
effective in the fourth quarter of all fiscal years beginning after December 15,
1999. The Company's accounting policies are consistent with the requirements of
SAB 101, so the implementation of SAB 101 did not have an impact on the
Company's operating results.
In April 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44 ["FIN 44"], "Accounting for Certain Transactions Involving
Stock Compensation," an interpretation of APB Opinion No. 25. FIN 44 is
effective for transactions occurring after July 1, 2000. The application of FIN
44 did not have an impact on the Company's financial statements.
[11] FAIR VALUE OF FINANCIAL INSTRUMENTS
In assessing the fair value of financial instruments, the Company has used a
variety of methods and assumptions, which are based on estimates of market
conditions and risks existing at that time. For all financial instruments,
including cash, accounts payable and notes payable, it was estimated that the
carrying amount approximated fair value for these financial instruments because
of their short maturities.
[12] SUBSEQUENT EVENTS
On April 9, 2001, the Company invested in several newly incorporated companies.
The Company acquired 100% of Journey Entertainment Corp. which will be fully
consolidated in future periods. The Company also invested in Fruit Wash
Corporation and Linux CE, Inc., which will be accounted for using the equity
method.
. . . . . . . . .
F-9
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ALPHA PETROLEUM EXPLORATION
CORPORATION
By: /S/ Roland M. Jermyn
-------------------------------
Roland M. Jermyn, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company in the
capacities and on the dates so indicated.
/S/ Roland M. Jermyn
- ------------------------------------- June 29, 2001
Roland M. Jermyn, Director
Principal Executive Officer, and
Principal Financial Officer