SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDING JUNE 30, 2005
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 000-51113
AEC I, INC.
(Exact name of registrant as specified in its charter)
Nevada 36-4452773
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105-3325 North Service Road
Burlington, Ontario
Canada L7N 3G2
(Address of principal executive offices)
Registrant's telephone number including area code: 905.332.3110
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common shares, $0.001 par value
Indicate by check mark whether THE REGISTRANT (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities 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 |_|
The number of common shares without par value outstanding on June 30, 2005 was
74,900,715 Shares.
AEC,1 INC.
Condensed Balance Sheet
Unaudited
June, 30 December, 31
2005 2004
- --------------------------------------------------------------------------------
ASSETS
Current
Cash 80,861 421,690
Deferred consulting costs 73,646 373,333
Prepaid expense and sundry assets 226,679 232,979
Marketable security 160,000 360,000
Investment in Related Party 100,000 100,000
Other
Property & equipment 331,148 313,317
Technology & patent assets 2,124,373 2,124,373
------------ ------------
$ 3,096,707 $ 3,925,692
============ ============
LIABILITIES
Current
Accounts payable & accrued liabilities 120,399 76,541
Loans payable 500,000 --
Due to director 481,718 504,629
------------ ------------
$ 1,102,117 $ 581,170
============ ============
MINORITY INTEREST 649,746 981,474
SHAREHOLDERS' EQUITY
Capital stock 37,893 37,893
Additional paid in capital 10,247,159 10,015,594
Accumulated other comprehensive income (211,627) 3,063
Deficit (8,728,582) (7,693,502)
------------ ------------
1,344,843 2,363,048
------------ ------------
------------ ------------
$ 3,096,707 $ 3,925,692
============ ============
See accompanying notes to the financial statements
AEC I, INC.
Condensed Statement of Operations
Unaudited
Six Months Ending June 30, Three Months Ending June 30,
------------------------------ ------------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
REVENUE $ -- $ -- $ -- $ --
------------- ------------- ------------- -------------
EXPENSES
Management fees 0 24,697 24,697
Professional fees 878,304 19,475 404,715 19,475
Consulting 289,687 2,914,571 122,120 2,422,685
Administration 255,207 237,586 134,446 37,406
Amortization 38,113 20,324
------------- ------------- ------------- -------------
$ 1,461,311 $ 3,196,329 $ 681,605 $ 2,504,263
------------- ------------- ------------- -------------
LOSS BEFORE THE UNDERNOTED $ (1,461,311) $ (3,196,329) $ (681,605) $ (2,504,263)
MINORITY INTEREST $ 426,241 $ 637,442 $ 208,696 $ 500,688
NET EARNINGS (loss) $ (1,035,070) $ (2,558,887) $ (472,909) $ (2,003,575)
------------- ------------- ------------- -------------
NET LOSS PER SHARE (0.01) (0.02) (0.01) (0.02)
WEIGHTED BASIC AVERAGE SHARES 74,900,715 130,847,668 74,900,715 130,847,668
============= ============= ============= =============
See accompanying notes to the financial statements
AEC I, INC.
Condensed Statement of Cash flow
Unaudited
Six Months Ending June 30 2005 2004
- --------------------------------------------------------------------------------
OPERATING
Net earnings (loss) $(1,035,070) $(2,558,887)
Services for stock $ 629,469 $ 227,000
other -5803
Minority Interest $ (426,241) $ (637,442)
Amortization $ 38,113
----------- -----------
$ (799,532) $(2,969,329)
=========== ===========
Accounts payable & accrued liabilities $ 43,858 $ 158,328
Prepaid expense (6,300) $ 974,084
Deferred Consulting
Comprehensive Income
----------- -----------
$ (761,974) $(1,836,917)
=========== ===========
FINANCING
Share subscription 2,753,200
Advances from director (22,911) 216,859
Loan to related party 252
LOAN PAYABLE 500,000 164,582
----------- -----------
477,089 3,134,893
=========== ===========
INVESTING
Purchase of intangible assets $ (55,944) $ (1,012)
----------- -----------
net increase in cash during the year $ (340,829) $ 1,296,715
----------- -----------
cash, opening $ 421,690 $ 415,547
----------- -----------
cash, closing $ 80,861 $ 1,712,259
----------- -----------
Non cash items
marketable securities 200,000 0
----------- -----------
deferred consulting 299,687 3,122,456
----------- -----------
Prepaid 0 76,511
----------- -----------
minority 331,728 63,939
----------- -----------
See accompanying notes to the financial statements
ALTERNATE ENERGY CORP.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited) June 30, 2005
1. GENERAL
The unaudited condensed statements have been prepared on the same basis as the
audited financial statements and, in the opinion of management, reflect all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation for each of the periods presented. The results of operations for
interim statements are not necessarily indicative of results to be achieved for
full fiscal years.
The consolidated financial statements present the accounts of AEC, I, Inc.,
Alternate Energy Corp. and 2040412 Ontario Inc. The consolidated entities will
hereinafter be referred to as the Company. All significant inter-company
accounts and transactions have been eliminated.
As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01
of Regulation S-X, the accompanying financial statements and related footnotes
have been condensed and do not contain certain information that will be included
in THE COMPANY'S annual financial statements and footnotes thereto. For further
information, refer to the financial statements and related footnotes for the
year ended December 31, 2004 included in THE COMPANY'S annual report on Form
10-KSB.
INCOME TAXES
The Company accounts for its income taxes under the liability method specified
by Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes. Deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities as measured by the enacted tax rates which will be in effect when
these differences reverse. Deferred tax expense is the result of changes in
deferred tax assets and liabilities.
In assessing the realizability of future tax assets, management considers
whether it is more likely than not that some portion or all of the future tax
assets will not be realized. The ultimate realization of future tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of future tax liabilities projected future taxable income and
tax planning strategies in making this assessment.
LOSS PER SHARE
THE COMPANY reports earnings per share in accordance with the provisions of SFAS
No. 128, EARNING PER SHARE. SFAS No 128 requires presentation of basic and
diluted earnings per share in conjunction with the disclosure of the methodology
used in computing such earnings per share. Basic earnings per share excludes
dilution and is computed by dividing income available to common shares by the
weighted average common shares outstanding during the period. Diluted earnings
per share takes into account the potential dilution that could occur if the
securities or other CONTRACTS to issue stock were exercised and converted to
common stock.
Basic weighted average shares outstanding June 30, 2005 were 74,900,715 December
31, 2004 - 74,870,715.
2. CAPITAL STOCK
No new shares were issued during this period.
ITEM. 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis should be read in conjunction with the
financial statements, and the notes thereto included herein. The information
contained below includes statements of AEC I's or management's beliefs,
expectations, hopes, goals and plans that, if not historical, are
forward-looking statements subject to certain risks and uncertainties that could
cause actual results to differ materially from those anticipated in the
forward-looking statements. Information included or incorporated by reference in
this Quarterly Report may contain forward-looking statements. This information
may involve known and unknown risks, uncertainties and other factors which may
cause our actual results, performance or achievements to be materially different
from the future results, performance or achievements expressed or implied by any
forward-looking statements. Forward-looking statements, which involve
assumptions and describe our future plans, strategies and expectations, are
generally identifiable by use of the words "may," "will," "should," "expect,"
"anticipate," "estimate," "believe," "intend" or "project" or the negative of
these words or other variations on these words or comparable terminology.
DESCRIPTION OF BUSINESS
We are an alternate energy holding company that provides specialized
solutions through our operating subsidiaries, referred to as our group
companies. We seek to grow both organically and by acquisition.
We incorporated as Environmental Motor Corp., a Delaware corporation, on
March 22, 2000. On July 3, 2001 we changed our name to Alternate Energy
Corporation. On September 27, 2002 we merged with Alternate Energy Corporation,
a Nevada corporation, for the purposes of changing our domicile to Nevada. In
February 2003, we entered into an agreement with COI Solutions, Inc., a public
company, to sell substantially all our assets in exchange for 104,870,715 shares
of COI's common stock. The sale of our assets included the sale of the name
"Alternate Energy Corporation," so on March 4, 2003 we changed our name to AEC
I, Inc.
Our activities range from complete operational control over the business
to involvement in the management of our group companies in which we maintain
controlling or significant holdings. We participate in the management of our
group companies by means of active membership on their boards of directors and
board committees. As a result, we are involved in matters of policy, strategic
planning, marketing, selecting and manning senior management positions,
approving investments and budgets, financing and the overall ongoing monitoring
of our group companies' performance. In addition to our representation on the
boards of directors of our group companies, we provide hands-on assistance to
the group companies' management in support of their growth. We view our hands-on
involvement in the operations of our group companies as a key element of our
business. Our group companies therefore benefit from the experience of our
management team in various areas in which they need support and leadership,
including, but not limited to, budgetary control, legal support, market
analysis, risk management, identifying joint venture opportunities,
introductions to potential customers and investors, business plan preparation,
strategic planning and research and development guidance.
We expect to continue to build and realize value for our shareholders
through the sale of a portion of our holdings in, or the issuance of shares by
any of our group companies to third parties, while simultaneously pursuing the
acquisition of, or investment in, new and existing companies and building our
group companies. We believe that this strategy provides the ability to increase
shareholder value as well as capital to support the growth of our group
companies.
We expect to make additional acquisitions in companies that design and
develop fuel cells, engines that run on alternative fuels, production of
alternate fuels and the production of materials used in alternate fuel
applications.
Since our formation we have made one acquisition, namely Alternate Energy
Corp. (ARGY). The business overview discussed below is presented in accordance
with our subsidiary and corporate operations.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND NEW ACCOUNTING PRONOUNCEMENTS
Management's discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires that we make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. At each balance sheet date, management evaluates its estimates. We
base our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances. Actual results may
differ from these estimates under different assumptions or conditions. The
estimates and critical accounting policies that are most important in fully
understanding and evaluating our financial condition and results of operations
include those listed below:
DEFERRED CONSULTING COSTS
Shares have been issued to service providers and consultants over the term of
contracts ranging from 1 to 2 years. Shares have been issued at the fair market
value price at date of contract signing and the expense will be amortized over
the term of the contract.
IMPAIRMENT OF INTANGIBLE ASSETS WITH INDEFINITE LIVES
On May 22, 2003, the Company adopted SFAS No 142, "Goodwill and Other Intangible
Assets." Under the new statement, the Company no longer amortizes intangible
assets with indefinite lives, but instead tests for impairment on at least an
annual basis. In accordance with SFAS No. 142, the Company evaluates the
carrying value of other intangible assets annually as of December 31 and between
annual evaluations if events occur or circumstances change that would more
likely than not reduce the fair value of the reporting unit below its carrying
amount. Such circumstances could include, but are not limited to, (1) a
significant adverse change in legal factors or in business climate, (2)
unanticipated competition, or (3) an adverse action or assessment by a
regulator. When evaluating whether the other intangible asset is impaired, the
Company compares the fair value of the reporting unit to which the other
intangible asset is assigned to its carrying amount. If the carrying amount of a
reporting unit exceeds its fair value, then the amount of the impairment loss
must be measured. The impairment loss would be calculated by comparing the
implied fair value of reporting unit to its carrying amount. In calculating the
implied fair value of the other intangible assets, the fair value of the
reporting unit is allocated to all of the other assets and liabilities of that
unit based on their fair values. The excess of the fair value of a reporting
unit over the amount assigned to its other assets and liabilities is the implied
fair value of its intangibles. The initial evaluation of the intangible assets
completed as of October 1, 2003 in accordance with SFAS No. 142 resulted in no
impairment losses. Additionally, the Company performed its periodic review of
its intangible assets for impairment as of December 31, 2004, and did not
identify any asset impairment as a result of the review.
STOCK OPTION PLANS
The Company applies the fair value based method of accounting prescribed by SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION in accounting for its stock
options granted to both employees and non-employees. As such, compensation
expense is recorded on the date of grant based on the fair market value of the
stock and expensed in the period which the option was granted.
RESULTS OF OPERATIONS
FOR FISCAL QUARTER ENDED JUNE 30, 2005,
COMPARED TO THE FISCAL QUARTER ENDED JUNE 30, 2004 REVENUES
For the fiscal quarter ended June 30, 2005 and June 30, 2004, AEC I had no
revenues.
EXPENSES
On a consolidated basis, we had total expenses of $681,605 and $2,504,263 in the
fiscal quarter ended June 30, 2005 and June 30, 2004, respectively. Nearly all
expenses occurred in our majority owned subsidiary, Alternate Energy Corporation
(AEC), where expenses for the fiscal quarter ended June 30, 2005 consisted of
$134,446 in administrative expenses, $122,120 in consulting fees, $404,715 in
professional fees and $20,324 in amortization. During the fiscal quarter ended
June 30, 2005, AEC's expenses decreased significantly comparative to the fiscal
quarter ended June 30, 2004, mostly due to consulting fees, which were
$2,914,571 in the 2004 period. The decrease is attributed to the utilization of
core consultants relative to the focus on research and development pertaining to
its hydrogen production system, its demonstration units and its marketing and
operation strategy. There were no substantial expenses attributable to AEC I
during this period.
Over the next 12 months, AEC anticipates that its expenses will not increase
substantially over its expenses in fiscal year 2004. AEC will continue as
planned in the goals set for the continued development, sales and marketing of
its hydrogen production system.
NET LOSS
On a consolidated basis we had a net loss of AEC had a net loss of $472,909 for
the fiscal quarter ended June 30, 2005, compared with a net loss of $2,003,575
for the fiscal quarter ended June 30, 2004. The decrease of $1,530,666 in the
net loss for the 2005 fiscal quarter compared to the 2004 fiscal quarter relates
mainly to the decrease in consulting fees in the 2005 period. Management
believes that, for the fiscal year ending December 31, 2005, AEC will only be
able to reduce its net loss if AEC can create and sustain significant revenues
from its hydrogen production system.
LIQUIDITY AND CAPITAL RESOURCES
Our financial statements have been prepared on a going concern basis that
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. We have incurred a net loss of
$472,909 and $2,003,575 for the quarters ended June 30, 2005 and June 30, 2004,
respectively. AEC had $80,861 in cash on hand as of June 30, 2005. Management
may obtain additional capital principally through the sale of our equity
securities of those of AEC. The realization of assets and satisfaction of
liabilities in the normal course of business is dependent upon AEC ultimately
obtaining profitable operations. However, no assurances can be given that AEC
will be successful in these activities. Should any of these events not occur,
the accompanying financial statements will be materially affected.
AEC is at present meeting its current obligations from financing activities.
However, due to no cash generated from operations, AEC currently does not
internally generated cash sufficient to pay all of its incurred expenses and
other liabilities. As a result, AEC is dependent on investor capital and loans
to meet its expenses and obligations. Although investor funds have allowed AEC
to meet its obligations in the recent past, there can be no assurances that
AEC's present methods of generating cash flow will be sufficient to meet future
obligations. Historically, AEC has, from time to time, been able to raise
additional capital, but there can be no assurances that AEC will be able to
raise additional capital in this manner.
Net cash used in operating activities was $(799,532) for the three month period
ended June 30, 2005.
Net cash obtained from financing activities was $0 for the three month period
ended June 30, 2005, compared with $0 for the three month period ended June 30,
2004.
On March 2, 2005, AEC entered into a private placement with certain accredited
investors whereby these investors have purchased $1,500,000 in convertible
notes, with Class A Warrants to purchase a number of shares equal to the number
of shares to which the Notes are convertible at a price of $.40 per share
expiring in 3 years and with Class B Warrants to purchase up to an additional
$1.5 million in AEC's common shares at 70% of the average closing bid price for
the 5 days preceding the notice to exercise and expiring 90 days after the
registration statement registering the shares has been declared effective. The
note carries an interest rate of 6%. Interest is payable quarterly in arrears in
either cash or stock of AEC, at AEC's discretion.
The Notes are convertible into shares of AEC at 70% of the average closing bid
price for the 5 days preceding the notice to convert with a floor of $.15 and a
ceiling of $.35 per share.
The Company has received $500,000 in cash from the investors and will receive an
additional $1,000,000 upon its registration statement filed with the SEC being
declared effective.
Class C Warrants are being issued to Westor Online, Inc., the placement agent
for the transaction. The warrant allows for the purchase of 400,000 shares at
$.40 per share and 400,000 shares at $1.00 per share, exercisable for 3 years
from the date of the closing. The investors are additionally getting 200,000
Class C Warrants.
In January 2004, AEC entered into a Securities Purchase Agreement with Palisades
Master Fund LP, Crescent International Ltd., Alpha Capital AG, Bristol
Investment Fund, Ltd., Ellis International Limited, Inc., Vertical Ventures,
LLC, Platinum Partners, Abraham Schwartz, Colbart Birnet, Chana Braun, Ronald
Nash, Marketwise Trading, West End Convertible Fund, and a trust account
pursuant to which AEC sold a total of 5,500,000 shares of common stock at a
price of $0.50 per share and warrants to purchase a total of 2,750,000 shares of
common stock at an exercise price of $0.85 per share. The warrants have a three
year term. AEC received gross proceeds of $2,750,000 from this transaction.
In December 2003, AEC entered into a Securities Purchase Agreement with LRG
Holdings Inc., Professional Traders Fund LLC, Generation Capital Associates,
First Mirage Inc., Truk Opportunity Fund LLC, pursuant to which AEC sold a total
of 1,060,000 shares of common stock at a price of $0.50 per share and warrants
to purchase a total of 471,112 shares of common stock and an exercise price of
$1.20 per share. The warrants have a three year term. AEC received gross
proceeds of $530,000 from this transaction.
May 22, 2003, AEC issued 104,870,715 shares of common stock to AEC 1, Inc. in
exchange for technology, products and licenses.
AEC expects to have sufficient cash to meet its short-term capital requirements.
However, there are no assurances that AEC will be able to raise sufficient funds
to meet long-term capital needs. AEC may also seek alternative sources of
financing, including from more conventional sources such as bank loans and
credit lines. Again, no assurances can be given that AEC will be able to meet
its needs through the sale of securities or otherwise. Further, the availability
of any future financing may not be on terms that are satisfactory to AEC.
From time to time, AEC may evaluate potential acquisitions involving
complementary businesses, content, products or technologies. AEC has no present
agreements or understanding with respect to any such acquisition. AEC's future
capital requirements will depend on many factors, including growth of AEC's
business, the success of its operations, economic conditions and other factors
including the results of future operations.
PLAN OF OPERATION
During the next twelve months we will be concentrating on supporting AEC's
efforts to bring its technologies to market. At the same time we will be
evaluating opportunities to acquire complementary technology. However, we will
be limited in doing so in order to ensure sufficient capital is available for
AEC.
Over the next twelve months, AEC will continue to focus on the development of
ICE (internal combustion engine) and fuel cell generator sets for demonstration
to investors and potential customers of AEC's hydrogen fuel production
capability. The ICE generators will use our hydrogen as fuel throughout the
demonstration, produced on the spot by AEC's hydrogen production unit the H2
1500-A1.
Our first alpha-stage unit, the H2 1500-A1, was recently demonstrated before two
separate multinational engine companies in the U.S. This mobile "road show" was
set up on-site with each organization, to review AEC's small scale, on-demand
Hydrogen Production technology and discuss business opportunities.
The company is on schedule with an accelerated product development timetable to
take advantage of several opportunities with targeted organizations. These
meetings are the beginning of a series of such meetings, whereby Alternate
Energy Corporation will be showcasing its hydrogen production technology to a
list of prospective commercial customers, potential licensees, select government
and institutional contacts and other interested commercial parties. These groups
have been pre-qualified as having a demonstrated need for clean, alternative
power.
These developments parallel AEC's recent work on its hydrogen production unit
for use with the Astris E8 alkaline fuel cell. The fuel cell and ICE platforms
are expected to provide AEC with multiple market opportunities and greater
revenue potential.
We have and will also continue to refine our hydrogen production process. Due to
the strict purity and volume requirements of a fuel cell, our technical team has
worked and continues to work in conjunction with a number of recognized
independent laboratories to ensure that outputs meet acceptable levels.
In order to accomplish and continue with these steps management estimates that
the Company we will require financing towards the end of Fiscal year ended 2005.
As the Company does not have any current revenue, such funds will come from
loans from officers and private placements of the Company's common stock.
ITEM 3. CONTROLS AND PROCEDURES.
As of the end of the period covered by this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
Principal Executive Officer and the Principal Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. The Company's disclosure controls and procedures are designed to
provide a reasonable level of assurance of achieving the Company's disclosure
control objectives. The Company's Principal Executive Officer and Principal
Accounting Officer have concluded that the Company's disclosure controls and
procedures are, in fact, effective at this reasonable assurance level. In
addition, we reviewed our internal controls, and there have been no significant
changes in our internal controls or in other factors that could significantly
affect those controls subsequent to the date of their last valuation or from the
end of the reporting period to the date of this Form 10-QSB.
PART II
ITEM 1. LEGAL PROCEEDINGS
This litigation has been settled. We neither admitted nor denied liability and
agreed to not violate the Federal securities laws in the future. There was no
penalty or other money paid by us to settle this matter. On October 22, 2004 we
sued Russell Rothman in the Ontario Superior Court of Justice (Case No.
04-CV-277760CM2). We are seeking the rescission of agreements between us and
Rothman, return of shares paid to him, and return of money paid. We had entered
into an agreement with Rothman for the purchase of certain technology related to
the production of hydrogen gas. Rothman represented to us that he had all right
title and interest in the technology and had the ability to sell the technology.
We alleged in our lawsuit that Rothman had in fact sold the technology to other
companies, and on more than one occasion, prior to entering into the agreement
with us. We additionally allege that the technology he purported to sell did not
work. We do not rely on the Rothman technology for the production of hydrogen.
We have developed our own proprietary processes for producing hydrogen. Rothman
has counterclaimed against us for breach of contract in the amount of $2 billion
and is asking for punitive damages in the amount of $10 million. We believe that
the counterclaim is completely without merit. Mr. Rothman's attorney has
withdrawn from the case and the Court has ordered Mr. Rothman to obtain new
counsel by July 28, 2005.
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS
In March 2005, the company entered into a private placement with certain
accredited investors whereby these investors have purchased $1,500,000 in
convertible notes, with Class A Warrants to purchase a number of shares equal to
the number of shares to which the Notes are convertible at a price of $.40 per
share expiring in 3 years and with Class B Warrants to purchase up to an
additional $1.5 million in the Company's common shares at 70% of the average
closing bid price for the 5 days preceding the notice to exercise and expiring
90 days after the registration statement registering the shares has been
declared effective. The note carries an interest rate of 6%. Interest is payable
quarterly in arrears in either cash or stock of the Company, at the Company's
discretion. The Company has received $500,000 in cash from the investors and
will receive an additional $1,000,000 upon its registration statement filed with
the SEC being declared effective.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) An 8-K has been filed on March 2, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, THE
REGISTRANT has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
DATED THIS 19th DAY OF AUGUST, 2005
ALTERNATE ENERGY CORP.
BY: /S/ BLAINE FROATS
-------------------------
BLAINE FROATS,
CHAIRMAN/CEO AND A MEMBER
OF THE BOARD OF DIRECTORS
BY: /S/ SEAN FROATS
-------------------------
SEAN FROATS,
PRESIDENT AND A MEMBER
OF THE BOARD OF DIRECTORS