Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - Alternative Energy & Environmental Solutions, Inc.Financial_Report.xls
EX-32.1 - CERTIFICATION - Alternative Energy & Environmental Solutions, Inc.f10q1012ex32i_alternative.htm
EX-31.1 - CERTIFICATION - Alternative Energy & Environmental Solutions, Inc.f10q1012ex31i_alternative.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
 
FORM 10-Q
_______________
 
  (Mark One)
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended October 31, 2012
 
or 
 
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from ______to______.
 
333-170118
(Commission File Number)
 
ALTERNATIVE ENERGY AND ENVIRONMENTAL SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
 27-2830681
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
100 Europa Drive
Chapel Hill, NC
 
27517
(Address of principal executive offices
 
(Zip Code)
 _______________
 
919-933-2720
 (Registrant’s telephone number, including area code)
_______________
 
n/a
 (Former name, former address and former fiscal year, if changed since last report)
 
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 x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
 
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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
 
Large Accelerated Filer   o Accelerated Filer   o Non-Accelerated Filer   o (Do not check if a smaller reporting company)     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 o No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock: As of December 17, 2012, there were 6,025,850 shares, $.0001 par value per share, of common stock outstanding.
 
 
 

 
 
ALTERNATIVE ENERGY AND ENVIRONMENTAL SOLUTIONS, INC.

Quarterly Report on Form 10-Q for the
Period Ended October 31, 2012
 
INDEX
 
PART I-- FINANCIAL INFORMATION
 
     
Item 1.
Financial Statements
1
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
11
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
14
Item 4.
Control and Procedures
14
     
PART II-- OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
15
Item 1A.
Risk Factors
15
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
15
Item 3.
Defaults Upon Senior Securities
15
Item 4.
Mine Safety Disclosures
15
Item 5.
Other Information
15
Item 6.
Exhibits
16
     
SIGNATURES
17
 
 
 

 
 
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Forward-looking statements discuss matters that are not historical facts.  Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions.  Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees.  Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties.  Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements.  These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management, any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors.  Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements.  In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report.  All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

CERTAIN TERMS USED IN THIS REPORT

When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Alternative Energy & Environmental Solutions, Inc.  “SEC” refers to the Securities and Exchange Commission.
 
Except as otherwise indicated, the information presented in this 10-Q reflects our 3-for-1 forward stock split, which became effective as of August 22, 2012.
 
 
 

 
 
ALTERNATIVE ENERGY & ENVIRONMENTAL SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
 
CONTENTS
 
PAGE
1
CONDENSED BALANCE SHEETS AS OF OCTOBER 31, 2012 (UNAUDITED) AND AS OF JULY 31, 2012
     
PAGE
2
CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 31, 2012 AND 2011, AND FOR THE PERIOD FROM JUNE 10, 2010 (INCEPTION) TO OCTOBER 31, 2012 (UNAUDITED)
     
PAGE
3
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIENCY) FOR THE PERIOD FROM JUNE 10, 2010 (INCEPTION) TO OCTOBER 31, 2012 (UNAUDITED)
     
PAGE
4
CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED OCTOBER 31, 2012 AND 2011 AND FOR THE PERIOD FROM JUNE 10, 2010 (INCEPTION) TO OCTOBER 31, 2012 (UNAUDITED)
     
PAGES
5 - 10
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 
 
 
 

 
 
PART I—FINANCIAL INFORMATION
 
Item 1.       Financial Statements.
 
Alternative Energy & Environmental Solutions, Inc.
(A Development Stage Company)
Condensed Balance Sheets
             
ASSETS
   
October 31,
 2012
   
July 31,
 2012
 
   
(Unaudited)
       
             
Current Assets
           
Cash   $ 245     $ 434  
Total Assets
  $ 245     $ 434  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                 
Current Liabilities
               
Accounts Payable & Accrued Expenses   $ 178,029     $ 139,402  
Accrued Interest Payable     1,251       937  
Loan payable Notes Payable     20,000       20,000  
Total  Liabilities
    199,280       160,339  
                 
Commitments and Contingencies (See Note 4)
               
                 
Stockholders' Deficiency
               
Preferred stock, $0.0001 par value; 10,000,000 shares authorized,
               
none issued  and outstanding     -       -  
Common stock, $0.0001 par value; 100,000,000 shares authorized, 18,077,550 shares
               
and 18,077,550  issued and outstanding, respectively     1,808       1,808  
Additional paid-in capital
    786,093       782,193  
Deficit accumulated during the development stage
    (986,936 )     (943,906 )
Total Stockholders' Deficiency
    (199,035 )     (159,905 )
Total Liabilities and Stockholders' Deficiency
  $ 245     $ 434  
 
See accompanying notes to unaudited condensed financial statements
 
 
1

 
 
Alternative Energy & Environmental Solutions, Inc.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
                   
   
For the Three Months Ended
   
For the period from June 10, 2010
 
   
October 31,
2012
   
October 31,
2011
   
(Inception) to October 31,
2012
 
Operating Expenses
                 
Professional fees
  $ 18,557     $ 27,943     $ 168,916  
Consulting Expense
    13,500       13,500       728,360  
General and administrative
    7,982       8,161       81,713  
Total Operating Expenses
    40,039       49,604       978,989  
                         
LOSS FROM OPERATIONS BEFORE INCOME TAXES
    (40,039 )     (49,604 )     (978,989 )
                         
Other Income / (Expense)
                       
Interest Expense
    (2,991 )     (973 )     (7,947 )
                         
Total Other Income / (Expense) - net
    (43,030 )     (50,577 )     (986,936 )
                         
Provision for Income Taxes
    -       -       -  
                         
NET LOSS
  $ (43,030 )   $ (50,577 )   $ (986,936 )
                         
Net Loss Per Share  - Basic and Diluted
  $ (0.00 )   $ (0.00 )        
                         
Weighted average number of shares outstanding
  during the period - Basic and Diluted
    18,077,550       18,037,548          
 
See accompanying notes to unaudited condensed financial statements
 
 
2

 
 
Alternative Energy & Environmental Solutions, Inc.
(A Development Stage Company)
Condensed Statement of Changes in Stockholders' Equity/(Deficiency)
For the period from June 10, 2010 (Inception) to October 31, 2012
(Unaudited)
                                                 
                                 
Deficit
             
                     
 
   
accumulated
         
Total
 
   
Preferred Stock
    Common stock    
Additional
paid-in
   
during the
development
   
Subscription
   
Stockholders'
Equity/
 
   
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
stage
   
Receivable
   
(Deficiency)
 
                                                 
Balance June 10, 2010
    -     $ -       -     $ -     $ -     $ -     $ -     $ -  
                                                                 
Common stock issued for cash to founders ($0.0001 per share)                     15,000,000       1,500       (1,000 )     -       -       500  
                                                                 
Common stock issued for cash ($0.75/ per share)
    -       -       3,037,548       304       759,072       -       (54,000 )     705,376  
                                                                 
Stock Offering Costs
    -       -       -       -       (15,000 )     -       -       (15,000 )
                                                                 
In kind contribution of services
    -       -       -       -       2,100       -       -       2,100  
                                                                 
Net loss for the period June 10, 2010 (inception) to July 31, 2010
    -       -       -       -       -       (212,440 )     -       (212,440 )
                                                                 
Balance, July 31, 2010
    -       -       18,037,548       1,804       745,172       (212,440 )     (54,000 )     480,536  
                                                                 
Collection of stock subscription receivable
    -       -       -       -       -       -       54,000       54,000  
                                                                 
Stock Offering Costs
    -       -       -       -       (4,175 )     -       -       (4,175 )
                                                                 
In kind contribution of services
    -       -       -       -       15,600       -       -       15,600  
                                                                 
Net loss for the year ended July 31, 2011
    -       -       -       -       -       (577,294 )     -       (577,294 )
                                                                 
Balance, July 31, 2011
    -       -       18,037,548       1,804       756,597       (789,734 )     -       (31,333 )
                                                                 
Common stock issued for cash ($0.75/ per share)
    -       -       40,002       4       9,996       -       -       10,000  
                                                                 
In kind contribution of services
    -       -       -       -       15,600       -       -       15,600  
                                                                 
Net loss for the year ended July 31, 2012
    -       -       -       -       -       (154,172 )     -       (154,172 )
                                                                 
Balance, July 31, 2012
    -       -       18,077,550       1,808       782,193       (943,906 )     -       (159,905 )
                                                                 
In kind contribution of services
    -       -       -       -       3,900       -       -       3,900  
                                                                 
Net loss for the three months ended October 31, 2012
    -       -       -       -       -       (43,030 )     -       (43,030 )
                                                                 
Balance, October 31, 2012
    -     $ -       18,077,550     $ 1,808     $ 786,093     $ (986,936 )   $ -     $ (199,035 )
 
See accompanying notes to unaudited condensed financial statements
 
 
3

 
 
Alternative Energy & Environmental Solutions, Inc.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
         
   
For the Three Months Ended
   
For the period from June 10, 2010
 
   
October 31,
 2012
   
October 31,
 2011
   
(Inception) to October 31,
 2012
 
Cash Flows Used in Operating Activities:
                 
Net Loss
  $ (43,030 )   $ (50,577 )   $ (986,936 )
  Adjustments to reconcile net loss to net cash used in operations
                       
    In-kind contribution of services
    3,900       3,900       37,200  
  Changes in operating assets and liabilities:
                       
    Increase in accounts payable and accrued expenses
    38,941       31,395       179,280  
Net Cash Used In Operating Activities
    (189 )     (15,282 )     (770,456 )
                         
Cash Flows From Financing Activities:
                       
Proceeds from note payable
    -       10,000       20,000  
Proceeds from issuance of common stock, net of offering costs
    -       -       750,701  
Net Cash Provided by Financing Activities
    -       10,000       770,701  
                         
Net Increase (Decrease) in Cash
    (189 )     (5,282 )     245  
                         
Cash at Beginning of Period
    434       5,956       -  
                         
Cash at End of Period
  $ 245     $ 674     $ 245  
                         
Supplemental Disclosure of Cash Flow Information:
                       
                         
Cash paid for interest
  $ -     $ -     $ -  
Cash paid for taxes
  $ -     $ -     $ -  
 
See accompanying notes to unaudited condensed financial statements
 
 
4

 
 
Alternative Energy & Environmental Solutions, Inc.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2012
(UNAUDITED)
 
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information.  Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

It is management’s opinion however, that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statements presentation.  The results for the interim period are not necessarily indicative of the results to be expected for the year.

Alternative Energy and Environmental Solutions, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Nevada on June 10, 2010 to market an innovative new biotechnology that utilizes nutrient stimulants – organic microbes – to extract coalbed methane more efficiently in high-production as well as from low-producing, depleted and abandoned coalmines in the U.S. Coalbed methane is a clean-burning natural gas used for heating in homes and is used to generate electricity.

Activities during the development stage include developing the business plan and raising capital.

(B) Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make 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 and revenues and expenses during the reported period.  Actual results could differ from those estimates. Significant estimates include valuation of equity based on transactions and the valuation on deferred tax assets.

(C) Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.  At October 31, 2012 and July 31, 2012, the Company had no cash equivalents.
 
 
5

 
Alternative Energy & Environmental Solutions, Inc.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2012
(UNAUDITED)

(D) Loss Per Share

In accordance with the accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.
 
Since the Company reflected a net loss for the three months ended October 31, 2012 and 2011, the effect of 6,155,100 and 6,075,096 warrants, respectively, is anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.
 
(E) Income Taxes

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to 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 those temporary differences are expected to be recovered or settled.  Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

(F) Business Segments

The Company operates in one segment and therefore segment information is not presented.

(G) Revenue Recognition

The Company will recognize revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”.  In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.
 
 
6

 
Alternative Energy & Environmental Solutions, Inc.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2012
(UNAUDITED)

(H) Recent Accounting Pronouncements

In December 2011, FASB issued Accounting Standards Update 2011-11, Balance Sheet - Disclosures about Offsetting Assets and Liabilities” to enhance disclosure requirements relating to the offsetting of assets and liabilities on an entity's balance sheet. The update requires enhanced disclosures regarding assets and liabilities that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective for annual and interim periods beginning on or after January 1, 2013. The update only requires additional disclosures, as such, we do not expect that the adoption of this standard will have a material impact on our results of operations, cash flows or financial condition.

In July 2012, FASB issued Accounting Standards Update 2012-01, Balance Sheet – Subtopic 954-430, Health Care Entities—Deferred Revenue, requires that a continuing care retirement community recognize a deferral of revenue when a contract between a continuing care retirement community and a resident stipulates that (1) a portion of the advanced fee is refundable if the contract holder’s unit is reoccupied by a subsequent resident, (2) the refund is limited to the proceeds of reoccupancy, and (3) the legal environment and the entity’s management policy and practice support the withholding of refunds under condition (2). Questions have arisen in practice about cases where the refund depends on reoccupancy. The objective of this Update is to clarify the reporting for refundable advance fees received by continuing care retirement communities. The amendments in this update are effective for fiscal periods beginning after December 15, 2013. Early adoption is permitted. The amendments in this Update should be applied retrospectively by recording a cumulative-effect adjustment to opening retained earnings (or unrestricted net assets) as of the beginning of the earliest period presented.

In July 2012, FASB issued Accounting Standards Update 2012-02, Balance Sheet- Intangibles- Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment is an Amendment to FASB Accounting Standards Update 2011-08.  The objective of the amendments in this Update is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent.  The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.

 
7

 
Alternative Energy & Environmental Solutions, Inc.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2012
(UNAUDITED)
 
NOTE 2
NOTES PAYABLE

On August 23, 2011, the Company issued an unsecured promissory note in the amount of $10,000 due August 23, 2012 and bearing interest at a rate of 6% per annum.   Interest on the outstanding principal balance is payable quarterly in arrears on the last day of each calendar quarter. The Company is currently in default of this note and expects to make the necessary payments whenever the Company is able to make such payments.

On December 28, 2011, the Company issued an unsecured promissory note in the amount of $10,000 due December 28, 2012 and bearing interest at a rate of 6% per annum.   Interest on the outstanding principal balance is payable quarterly in arrears on the last day of each calendar quarter. The Company is currently in default of this note and expects to make the necessary payments whenever the Company is able to make such payments.

NOTE 3
STOCKHOLDERS’ EQUITY/(DEFICIENCY)

(A) Common Stock and Warrants Issued for Cash

During the year ended July 31, 2012 the Company issued 40,002 units of common stock for $10,000 ($0.25/unit).  Each unit consisted of one share of common stock and two warrants to purchase common stock for a total of 40,002 shares of common stock and 80,004 warrants to purchase common stock at an exercise price of $0.83 per share.

For the period ended July 31, 2010, the Company issued 3,037,548 units, for cash. Each unit consisted of one share of common stock and two warrants to purchase common stock for a total of 3,037,548 shares of common stock and 6,075,096 warrants to purchase common stock for $759,376($0.25/share) less stock offering costs of $15,000.  In addition, the Company also received the right to immediately call the warrants if the Company’s common stock trades for a period of 20 consecutive days at an average trading price of $1.00 per share or greater (see Note 3(C)). Of the total funds raised, $54,000 was recorded as a subscription receivable.  The $54,000 was received August 4, 2010 and $4,175 of stock offering costs were recorded.
 
The Company also issued 15,000,000 shares of common stock to its founders for $500 ($0.0001 per share) (See note 5).

(B) In-Kind Contribution

For the three months ended October 31, 2012, a shareholder of the Company contributed services having a fair value of $3,900 (See Note 5).

For the year ended July 31, 2012, a shareholder of the Company contributed services having a fair value of $15,600 (See Note 5).

For the year ended July 31, 2011, a shareholder of the Company contributed services having a fair value of $15,600 (See Note 5).

For the year ended July 31, 2010, a shareholder of the Company contributed services having a fair value of $2,100 (See Note 5).
 
 
8

 
Alternative Energy & Environmental Solutions, Inc.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2012
(UNAUDITED)
 
(C) Warrants

The following tables summarize all warrant grants for the period ended October 31, 2012, and the related changes during these periods are presented below.
 
   
Number of Warrants
   
Weighted Average Exercise Price
 
Warrants
           
Balance at July 31, 2012
   
6,155,100
   
 $
0.83
 
Granted
   
-
     
0.83
 
Exercised
   
-
         
Forfeited
   
-
         
Balance at October 31, 2012
   
6,155,100
     
      0.83 
 
Warrants exercisable at October 31, 2012
   
6,155,100
   
$
0.83
 
October 31, 2012
               
 
Of the total warrants outstanding, 6,155,100 are fully vested, exercisable and non-forfeitable.
 
These warrants are immediately exercisable at $0.83 per share and are immediately callable by the Company if the Company’s common stock trades for a period of 20 consecutive days at an average trading price of $1.00 per share or greater.  This option gives the Company the right, but not the obligation to repurchase the shares of common stock (See Note 3(A)).  During the year ended July 31, 2012, the average trading price exceeded $1.00 per share and the options are callable by the Company, although none have been called to date.

(C) Stock Split

On August 22, 2012, a three–for-one forward stock split was declared effective for stockholders of record on June 5, 2012. Per share and weighted average amounts have been retroactively restated in the accompanying financial statements and related notes to reflect this stock split.

NOTE 4
COMMITMENTS

On June 4, 2010, the Company entered into a consulting agreement with a related party to receive administrative and other miscellaneous services.  The Company is required to pay $4,500 a month.  The agreement is to remain in effect unless either party desires to cancel the agreement.
 
NOTE 5 
RELATED PARTY TRANSACTIONS

For the three months ended October 31, 2012, a shareholder of the Company contributed services having a fair value of $3,900 (See Note 3(B)).
 
 
9

 
Alternative Energy & Environmental Solutions, Inc.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2012
(UNAUDITED)
 
For the year ended July 31, 2012, a shareholder of the Company contributed services having a fair value of $15,600 (See Note 3(B)).

For the year ended July 31, 2011, a shareholder of the Company contributed services having a fair value of $15,600 (See Note 3(B)).

For the year ended July 31, 2010, a shareholder of the Company contributed services having a fair value of $2,100 (See Note 3(B)).

On June 18, 2010, the Company issued 15,000,000 shares of common stock to its founders having a fair value of $500 ($0.0001/share) in exchange for cash provided (See Note 3 (A)).

On June 4, 2010, the Company entered into a consulting agreement with Tryon Capital Ventures, LLC (“Tryon”), a related party, to receive administrative and other miscellaneous services.  Peter Coker is a 50% owner of Tryon.  The Company is required to pay $4,500 a month.  The agreement is to remain in effect unless either party desires to cancel the agreement.

NOTE 6 
GOING CONCERN
 
As reflected in the accompanying unaudited financial statements, the Company is in the development stage with limited operations, a working capital and stockholders’ deficiency of $199,035, used cash in operations of $770,456 from inception and has a net loss since inception of $986,936. This raises substantial doubt about its ability to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

NOTE 7
SUBSEQUENT EVENT
 
On November 13, 2012, the Company received $6,034 from an unrelated party. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on demand.
 
 
10

 
 
Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following plan of operations provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.
 
Overview
 
The Company was incorporated in the State of Nevada on June 10, 2010 to bring to market and license its innovative new biotechnology for the environmentally friendly and cost-effective extraction of natural gas (coalbed methane) from low-producing, depleted and abandoned coal mines in the U.S. Using organic stimulants to increase the availability of natural gas, the new AEES technology could help licensees tap a market with potential.
 
Coalbed methane is a clean-burning natural gas used for heating and electricity generation. According to the U.S Geological Survey, natural gas reserves from the Powder River Basin of Montana and Wyoming alone approach 22 trillion cubic feet (Tcf.) Between 1997 and 2007, the number of wells drilled for natural gas extraction in this area reached 22,000. With the U.S. energy industry aggressively trying to adopt cleaner, renewable energy sources, coalbed methane is becoming an extremely valuable fuel. Operators in the Powder River Basin area are seeking innovative new biotechnology for the efficient and cost-effective extraction of this natural gas from coalmines that are underperforming.
 
The Company plans to market its biotechnology to the 100 or so coalmine and natural gas concerns in the Power River Basin area. The business strategy is to license this innovative solution for cost-effective and efficient coalbed methane extraction from the 50 percent or more of the existing wells that are abandoned, depleted or under-producing. This technology can also be used on high-production wells to keep them at top capacity for far longer.
 
History

On July 8, 2011, we entered into an agreement (the "Merger Agreement") with U.S. EcoFuels, Inc., a Florida corporation ("ECO"), National Invest & Trade, Ltd., a Nevada corporation ("NIT") and Allen N. Sharpe the sole owner of NIT pursuant to which ECO would merge into a subsidiary to be formed by the Company (the “Merger”).  Currently, NIT is ECO's sole shareholder, but we anticipated that ECO would issue shares to settle outstanding obligations before the merger closed. The target date in the Merger Agreement for closing the merger was September 30, 2011, which was not met because ECO has failed to deliver audited financial statements and meet other closing conditions on time.  On March 1, 2012, the Company terminated the Merger Agreement for breach by the other parties in connection with their failure to fulfill the conditions to closing by the date specified in the Merger Agreement.

On May 22, 2012, the Company, Scott Williams and David Callan (the “Sellers”) and Peter Coker (the “Purchaser”) entered into and closed a stock purchase agreement (the “Stock Purchase Agreement”), whereby the Purchaser purchased from the Sellers 14,700,000 shares of common stock of the Company, par value $0.0001 per share (the “Shares”), representing approximately 81.5% of the issued and outstanding shares of the Company, for an aggregate purchase price of $490 (the “Purchase Price”).
 
 
11

 
 
In connection with the closing of the Stock Purchase Agreement, on May 22, 2012, Scott Williams, Dave Callan and John Tilger each submitted to the Company a resignation letter pursuant to which they resigned from their respective positions as directors of the Company. In addition, Scott Williams resigned from his position as President and Chief Executive Officer of the Company and Dave Callan resigned from his position as Chief Financial Officer and Secretary of the Company. The resignations of Mr. Williams, Mr. Callan and Mr. Tilger were not a result of any disagreements relating to the Company’s operations, policies or practices.

Recent Developments

On May 22, 2012,  by a consent to action without meeting by unanimous consent of the board of directors of the Company (the “Board”), the Board accepted the resignations of Mr. Williams, Mr. Callan and Mr. Tilger and appointed Peter Coker to serve as the President, Chief Executive Officer, Chief Financial Officer and sole director of the Company.
 
On August 22, 2012, a three–for-one forward stock split became effective for stockholders of record on June 5, 2012.

Alternative Energy & Environmental Solutions, Inc. is a development-stage company with no operations or revenues.
 
Limited Operating History
 
We have not previously demonstrated that we will be able to expand our business. We cannot guarantee that the expansion efforts described in this annual report will be successful. Our business is subject to risks inherent in growing an enterprise, including limited capital resources and possible rejection of our renovation services offering.
 
Our independent auditors have issued a going concern opinion that raises substantial doubt about our ability to continue as a going concern. As reflected in the financial statements in this Form 10-Q, we are a development stage company with limited operations. We had a net loss of $986,936  since inception (June 10, 2010) through October 31, 2012. We incurred professional fees totaling $168,916, consulting fees totaling $728,360, and general and administrative expenses of $81,713  for the same period, inception through October 31, 2012. Cash on hand as of October 31, 2012 was $245.
  
Results of Operation

Revenue: Revenues for the quarter ended October 31, 2012 were $0, compared with $0, in the quarter ended October 31, 2011, reflecting no change, which was primarily attributable to the lack of ability to secure a strategic partner.
 
Total Operating Expenses: Total operating expenses for the quarter ended October 31, 2012 were $40,039 compared with $49,604 in the quarter ended October 31, 2011, reflecting a decrease of $9,565.  The decrease in fiscal 2012 was primarily attributable to the lack of ability to secure a strategic partner.
 
Net loss: We incurred a net loss of $43,030 in the quarter ended October 31, 2012, compared to a net loss of $50,577  in the same period for 2011.
 
 
12

 
 
Liquidity and Capital Resources

We raised cash to grow our business through a private placement that was completed on July 31, 2010. If we determine that we need more money to build our business, we will seek alternative sources, like a second private placement of securities or loans from our officers or others. At the present time, we do not have enough cash to continue operations for 12 months and we have not made any arrangements to raise additional cash. We are actively seeking a seeking a strategic partner to merge with or sell to. If we are unable to find an investor or strategic partner or buyer, we will either have to suspend or cease our expansion plans entirely. Other than as described in this Form 10-Q, we have no other financing plans.
 
On June 18, 2010 we issued 15,000,000 shares of common stock to Scott Williams, the President and Chief Executive Officer of the Company, pursuant to the exemption from registration set forth in section 4(2) of the Securities Act of 1933. Mr. Williams, the founder of the Company, contributed $500 for the 15,000,000 shares.
 
We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.

As reflected in the accompanying audited financial statements, the Company is in the development stage with limited operations, working capital deficiency, used cash in operations of $770,456  from inception and has a net loss since inception of $986,936.  This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Critical Accounting Policies

We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application.
 
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”).  Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to 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 those temporary differences are expected to be recovered or settled.  Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 
Recent Accounting Pronouncements
 
In December 2011, FASB issued Accounting Standards Update 2011-11, Balance Sheet - Disclosures about Offsetting Assets and Liabilities” to enhance disclosure requirements relating to the offsetting of assets and liabilities on an entity's balance sheet. The update requires enhanced disclosures regarding assets and liabilities that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective for annual and interim periods beginning on or after January 1, 2013. The update only requires additional disclosures, as such, we do not expect that the adoption of this standard will have a material impact on our results of operations, cash flows or financial condition.
 
 
13

 
 
In July 2012, FASB issued Accounting Standards Update 2012-01, Balance Sheet – Subtopic 954-430, Health Care Entities—Deferred Revenue, requires that a continuing care retirement community recognize a deferral of revenue when a contract between a continuing care retirement community and a resident stipulates that (1) a portion of the advanced fee is refundable if the contract holder’s unit is reoccupied by a subsequent resident, (2) the refund is limited to the proceeds of reoccupancy, and (3) the legal environment and the entity’s management policy and practice support the withholding of refunds under condition (2). Questions have arisen in practice about cases where the refund depends on reoccupancy. The objective of this Update is to clarify the reporting for refundable advance fees received by continuing care retirement communities. The amendments in this update are effective for fiscal periods beginning after December 15, 2013. Early adoption is permitted. The amendments in this Update should be applied retrospectively by recording a cumulative-effect adjustment to opening retained earnings (or unrestricted net assets) as of the beginning of the earliest period presented.
 
In July 2012, FASB issued Accounting Standards Update 2012-02, Balance Sheet- Intangibles- Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment is an Amendment to FASB Accounting Standards Update 2011-08.  The objective of the amendments in this Update is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent.  The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance.

Off Balance Sheet Transactions

None.
 
Item 3.       Quantitative and Qualitative Disclosures About Market Risk

Smaller reporting companies are not required to provide the information required by this item.
 
Item 4.       Controls and Procedures

Disclosure Controls and Procedures
 
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 ("Exchange Act"), the Company carried out an evaluation, with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses in its internal control over financial reporting.
 
 
14

 
 
During the assessment of the effectiveness of internal control over financial reporting as of October 31, 2012, our management identified material weaknesses related to the lack of requisite U.S. generally accepted accounting principles (GAAP) expertise of our Chief Financial Officer and our internal bookkeeper. This lack of expertise to prepare our financial statements in accordance with U.S. GAAP without the assistance of the outside accounting consultant hired to ensure that our financial statements are prepared in accordance with U.S. GAAP constitutes a material weakness in our internal control over financial reporting. In order to mitigate the material weakness, we engaged an outside accounting consultant to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity to U.S. GAAP. This outside accounting consultant is a certified public accountant in the U.S. and has significant experience in the preparation of financial statements in conformity with U.S. GAAP. We believe that the engagement of this consultant will lessen the possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis, and we will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate. We expect to continue to rely on this outside consulting arrangement to supplement our internal accounting staff for the foreseeable future. Until such time as we hire the proper internal accounting staff with the requisite U.S. GAAP experience, however, it is unlikely we will be able to remediate the material weakness in our internal control over financial reporting.
 
Changes in Internal Controls over Financial Reporting
 
There were no changes that occurred to our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
PART II - OTHER INFORMATION
 
Item 1.       Legal Proceedings.
 
None.

Item 1A.    Risk Factors

Smaller reporting companies are not required to provide the information required by this item. 
 
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Item 3.       Defaults Upon Senior Securities.

None.

Item 4.       Mine Safety Disclosures.

Not applicable.

Item 5.       Other Information.
 
None.
 
 
15

 
 
Item 6.       Exhibits
 
Exhibit Number
 
Description
31.1
 
Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1
 
Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS (*)
 
XBRL Instance Document
  
101.SCH (*)
 
XBRL Taxonomy Schema
     
101.CAL (*)
 
XBRL Taxonomy Calculation Linkbase
     
101.DEF (*)
 
XBRL Taxonomy Definition Linkbase
     
101.LAB (*)
 
XBRL Taxonomy Label Linkbase
     
101.PRE (*)
 
XBRL Taxonomy Presentation Linkbase
  
In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.
 
* Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
16

 
 
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 thereunto duly authorized.
 
 
ALTERNATIVE ENERGY & ENVIRONMENTAL SOLUTIONS, INC.
   
Date: December 17, 2012
By:  
/s/ Peter Coker
   
Peter Coker
   
President and  Chief Executive Officer
(Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer)
 
 
17