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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 January 31, 2011
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________________ to _________________
 
Commission File No.: 001-32044
 
TODAYS ALTERNATIVE ENERGY CORPORATION
(Exact name of registrant as specified in its charter)

Nevada
16-1576984
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

857 Post Road, Suite 397,
Fairfield, Ct. 06824
(Address of principal executive offices)
 
Issuer’s telephone number:   (888) 880-0994

Check whether the registrant filed all documents and reports required to be filed by Section 12, 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    ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filter ¨
 
Accelerated filter ¨
     
Non-accelerated filter ¨
(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  ¨   No  x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
 
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨
 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
As of March 8, 2011, there were 52,677,214 shares of our common stock issued and outstanding.
 
Transitional Small Business Disclosure Format:    Yes    ¨ No    x
 
 
 

 

 
Quarterly Report on Form 10-Q for the
 
Quarterly Period Ended January 31, 2011
 
Table of Contents
 
 
 
 
Page
 
PART I. FINANCIAL INFORMATION
 
 
Item 1. Financial Statements
 
3
 
Condensed Consolidated Balance Sheets as of January 31, 2011 (unaudited) and October  31, 2010:
 
3
 
Condensed Consolidated Statements of Operations for the Three Months Ended January 31, 2011 and 2010 and for the Period From November 1, 2007 (inception of development stage) through January 31, 2011 (unaudited):
 
4
 
Condensed Consolidated Statement of Stockholders’ Deficit for Period October 31, 2007 to January 31, 2011 (unaudited):
 
5
 
Condensed Consolidated Statements of Cash Flows for the Three Months Ended January 31, 2011 and 2010 and for the Period From November 1, 2007 (inception of development stage) through January 31, 2011 (unaudited):
 
6
 
Notes to Unaudited Condensed Consolidated Financial Statements January 31, 2011:
 
7
 
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  Controls and Procedures
 
14
 
 
 
 
 
PART II. OTHER INFORMATION
 
 
 
Item 1. Legal Proceedings
 
14
 
Item 1A Risk Factor
 
15
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
15
 
Item 3. Defaults upon Senior Securities
 
15
 
Item 4. Removed and Reserved
 
15
 
Item 5. Other Information
 
15
 
Item 6. Exhibits
 
15
 
 
 
 
 
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
 
 
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
 

 
2

 
 
PART 1:         FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

Todays Alternative Energy Corporation
 (A Development Stage Company)
Condensed Consolidated Balance Sheets
 
   
January 31,
   
October 31,
 
   
2011
   
2010
 
   
(unaudited)
       
Assets
           
  
  
 
  
  
 
  
Current assets:
           
Cash
 
$
37,690
   
$
4,446
 
Prepaid expense
   
975
     
1,463
 
Total current assets
   
 38,665
     
5,909
 
                 
Other assets:
               
Security deposit
   
7,478
     
-
 
Other deposits
   
46,522
     
-
 
Total other assets
   
54,000
     
-
 
                 
Total assets
 
$
92,665
   
$
5,909
 
                 
Liabilities and Stockholders' (Deficit)
               
                 
Current liabilities:
               
Accounts payable and accrued expenses
 
 $
975,565
   
 $
884,194
 
Due to officer
   
 2,399
     
-
 
Convertible notes payable, net of long term portion
   
1,439,365
     
1,367,165
 
Total current liabilities
   
2,417,329
     
2,251,359
 
                 
Long term portion of convertible notes payable (net of debt discount of $68,016 and $0 as of January 31, 2011 and October 31, 2010, respectively)
   
1,984 
     
 
                 
Stockholders' (deficit):
               
Preferred stock, $0.00001 par value, 10,000,000 authorized,10,000 shares of Series A issued and outstanding as of January 31, 2011 and October 31, 2010 and 77,000 and 80,000 shares of Series B issued and outstanding as of January 31, 2011 and October 31, 2010, respectively
   
1
     
1
 
Common stock, $0.00001 par value, 1,000,000,000 shares authorized, 47,183,930 and 43,371,079 shares issued and outstanding as of January 31, 2011 and October 31, 2010, respectively
   
472
     
434
 
Common stock to be issued
   
1
     
5
 
Additional paid-in capital
   
7,761,972
     
7,615,206
 
Deficit accumulated from November 1, 2007 (inception of development stage)
   
 (2,580,773
)
   
(2,352,775
)
Accumulated deficit
   
(7,508,321
)
   
(7,508,321
)
Total stockholders' (deficit)
   
(2,326,648
)
   
(2,245,450
)
                 
Total liabilities and deficiency in stockholders' equity
 
$
92,665
   
$
5,909
 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
 
3

 
 
Todays Alternative Energy Corporation
(A Development Stage Company)
Condensed Consolidated Statements of Operations
(Unaudited)

   
Three Months Ending
January 31,
   
From Inception of
Development Stage
on November 1, 2007
Through January 31,
 
   
2011
   
2010
   
2011
 
                   
Expenses:
                 
General and administrative expenses
  $ 122,162     $ 113,914     $ 1,626,462  
Total expenses
    122,162       113,914       1,626,462  
                         
Loss from operations
    (122,162 )     (113,914 )     (1,626,462 )
                         
Other expenses:
                       
Beneficial conversion feature expense
    (76,483 )     (72,600 )     (621,258 )
Interest expense
    (29,353 )     (23,091 )     (333,053 )
Total other expenses 
    (105,836 )     (95,691 )     (954,311 )
                         
Net loss before provision for income taxes
    (227,998 )     (209,605 )     (2,580,773 )
                         
Provision for income taxes
    -       -       -  
Net loss
  $ (227,998 )   $ (209,605 )   $ (2,580,773 )
                         
Net loss per weighted average share - basic and diluted
  $ (0.01 )   $ (0.01 )        
Weighted average number of shares - basic and diluted
    44,985,574       26,617,197          

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
 
4

 
 
Todays Alternative Energy Corporation
(A Development Stage Company)
Condensed Consolidated Statement of Stockholders’ Deficit
(Unaudited)

    
Preferred Stock
Series A and B
   
Common Stock
   
Common
Stock to 
be
   
Additional
Paid in
   
Deficit Accumulated
   
Accumulated
   
Total
Stockholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Issued
   
Capital
   
During the Development Stage
   
(Deficit)
   
(Deficit)
 
                                                       
Balance, October 31, 2007
   
-
   
$
-
     
46,353
   
$
46
   
$
-
   
$
5,866,824
   
$
-
   
$
(7,508,321
)
 
$
(1,641,451
)
                                                                         
Debt converted for shares 
                   
16,000
     
16
             
106,544
                     
106,560
 
                                                                         
Series A and common shares issued for services
   
10,000
     
10
     
26,725
     
27
             
285,285
                     
285,322
 
                                                                         
Beneficial conversion feature 
                                           
(55,990
)
                   
(55,990
)
                                                                         
Reclassification as a result of reincorporation
           
(10
           
(88
)
           
98
                     
-
 
                                                                         
Net loss
                                                   
(592,439
   
  
     
(592,439
                                                                         
Balance, October 31, 2008
   
10,000
   
$
-
     
89,078
   
$
1
   
$
-
   
$
6,202,761
   
$
(592,439
)
 
$
(7,508,321
)
 
$
(1,897,998
)
                                                                         
Shares issued in satisfaction of fraction shares resulting from 1-for-1,000 reverse stock split
                   
2,019
     
-
                                     
-
 
                                                                         
Debt converted for shares
                   
26,395,000
     
264
             
113,686
                     
113,950
 
                                                                         
Shares issued for services
                   
131,100
     
1
             
66,817
                     
66,818
 
                                                                         
Series B shares issued for legal settlement
   
92,000
     
1
                             
91,999
                     
92,000
 
                                                                         
Beneficial conversion feature
                                           
331,157
                     
331,157
 
                                                                         
Net loss
                                                   
(927,207
)
   
-
     
(927,207
)
                                                                         
Balance, October 31, 2009
   
102,000
   
$
1
     
26,617,197
   
$
266
   
$
-
   
$
6,806,420
   
$
(1,519,646
)
 
$
(7,508,321
)
 
$
(2,221,280
)
                                                                         
Debt converted for shares
                   
8,005,000
     
80
             
7,925
                     
8,005
 
                                                                         
Shares issued for services
                   
7,709,109
     
77
             
134,923
                     
135,000
 
                                                                         
Conversion of Series B shares for common shares
   
(12,000
           
1,039,773
     
11
     
4
     
(15
)
                   
-
 
                                                                         
Beneficial conversion feature
                                           
269,608
                     
269,608
 
                                                                         
Contributed services by former officers
                                           
394,679
                     
394,679
 
                                                                         
Accrued expenses forgiven by former officer
                                           
1,666
                     
1,666
 
                                                                         
300 shares of common stock to be issued to former officer 
                                   
1
                             
1
 
                                                                         
Net loss
                                                   
(833,129
)
           
(833,129
)
                                                                         
Balance, October 31, 2010
   
90,000
   
$
1
     
43,371,079
   
$
434
   
$
5
   
$
7,615,206
   
$
(2,352,775
)
 
$
(7,508,321
)
 
$
(2,245,450
)
                                                                         
Debt converted for shares
                   
2,300,000
     
23
             
2,277
                     
2,300
 
                                                                         
Beneficial conversion feature
                                           
144,500
                     
144,500
 
Conversion of Series B shares for common shares
   
(3,000
           
1,512,851
     
15
     
(4)
     
(11
)
                   
-
 
Net loss
                                                   
(227,998
)
           
(227,998
)
                                                                         
Balance, January 31, 2011
   
87,000
   
$
1
     
47,183,930
   
$
472
   
$
1
   
$
7,761,972
   
$
(2,580,773
)
 
$
(7,508,321
)
 
$
(2,326,648
)
 
 
5

 
 
Todays Alternative Energy Corporation
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
   
Three Months Ended
January 31,
   
From Inception of
Development Stage
on November 1, 2007
Through January 31,
 
   
2011
   
2010
   
2011
 
                   
CASH FLOWS FROM OERATING ACTIVITIES
                 
Net loss
  $ (227,998 )   $ (209,605 )   $ (2,580,773 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
Depreciation and amortization
    -       -       3,570  
Loss on disposition of fixed assets
    -       -       3,320  
Beneficial conversion feature expense
    76,483       72,600       621,258  
Shares issued for services provided
    -       -       487,140  
Shares issued for legal settlement
    -       -       92,000  
Shares to be issued for officer’s compensation
    -       -       1  
Shares issued for interest payment
    -       -       68,250  
Changes in operating assets and liabilities:
                       
Prepaid expenses
    488       -       1,025  
Other assets
    (54,000 )     -       (54,000 )
Accounts payable and accrued expenses
    91,372       66,457       576,192  
Due to officer
    2,399       -       2,399  
Net cash used in operating activities
    (111,256 )     (70,548 )     (779,618 )
                                  
Net cash used in investing activities
    -       -       -  
                         
Cash flows from financing activities:
                       
Proceeds from notes payable
    144,500       72,600       861,194  
Payments on notes payable
    -       (5,475 )     (48,922 )
Net cash provided by financing activities
    144,500       67,125       812,272  
                         
Net increase (decrease) in cash
    33,244       (3,423 )     32,654  
Cash and cash equivalents – beginning
    4,446       3,423       5,036  
Cash and cash equivalents – ending
  $ 37,690     $ -     $ 37,690  
                         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW:
                       
Interest paid
  $ -     $ -     $ -  
Income taxes paid
  $ -     $ -     $ -  
NON CASH INVESTING AND FINANCING ACTIVITIES:
                       
Contribution of accrued salaries by former officers
  $ -     $ -     $ 394,679  
Accrued expenses forgiven by former officer
  $ -     $ -     $ 1,666  
Debt converted to equity
  $ 2,300     $ -     $ 164,365  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
 
6

 
 
TODAYS ALTERNATIVE ENERGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JANUARY 31, 2011 AND 2010
     
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Todays Alternative Energy Corporation (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the unaudited condensed consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for the fiscal year ended October 31, 2010 as reported in the 10-K have been omitted.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Guaranteed Enzyme Miracle Corporation (“GEM”) and Bio-Extraction Services, Inc. (“BESI”). Significant inter-company accounts and transactions have been eliminated.

Nature of Business and History of Company

The Company business has two primary opportunities that it is developing. The Company has a green cleaning products business that is organized to use its scientific formulations to manufacture and sell a new line of powerful industrial strength environmentally friendly biodegradable cleaning products that contain natural non-toxic ingredients. The Company has a biodiesel business that is organized to use its extraction technology to convert waste cooking oil and grease into a biodiesel fuel ingredient that it intends to sell to biodiesel fuel producers. The Company’s biodiesel business is designed to eliminate environmental issues associated with disposing of waste cooking oil and grease.
 
Corporate Changes
 
On April 19, 2010, holders of the majority of the voting power of the outstanding stock of Bio-Solutions Manufacturing, Inc. as of April 16, 2010, voted in favor of changing the Company’s name to Todays Alternative Energy Corporation.  On June 9, 2010, the Company filed a certificate of amendment with the Secretary of State of Nevada in order to effect the name change.
 
Development Stage Company

As a result of impairing the value of the Company’s intangible assets, at October 31, 2007, the Company began implementing new plans to enter the biodiesel fuel market on November 1, 2007. As a result, the Company is a development stage enterprise, as defined by Accounting Standards Codification (the “Codification” or “ASC”) 915-10. The Company is devoting all of its present efforts in securing and establishing a new business, and its planned principle operations have not commenced, and, accordingly, no revenue has been derived during the organization period. From its inception of development stage through the date of these financial statements, the Company has not generated any revenues and has incurred significant operating expenses. Consequently, its operations are subject to all risks inherent in the establishment of a new business enterprise. For the period from November 1, 2007 (the inception of development stage) through January 31, 2011, the Company has accumulated losses of $2,580,773.

Use of Estimates

The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Loss per Share

Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Potentially dilutive shares of common stock realizable from the conversion of our convertible debentures of 2,559,074,784 and 1,492,085,358, respectively at January 31, 2011 and 2010, are excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive.
 
 
7

 
 
Reclassifications

Certain reclassifications have been made in prior year's financial statements to conform to classifications used in the current year.

Recent Accounting Pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its consolidated financial condition or the results of its operations.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. The Company has incurred losses since inception and has negative cash flows from operations. For the three months ended January 31, 2011, the Company has incurred net losses of $227,998 and has a stockholders’ deficit of $2,326,648 as of January 31, 2011. The future of the Company is dependent upon its ability to obtain additional equity or debt financing and upon future successful development and marketing of the Company’s products and services. Management is pursuing various sources of equity and debt financing. Although the Company plans to pursue additional financing, there can be no assurance that the Company will be able to secure such financing or obtain financing on terms beneficial to the Company. Failure to secure such financing may result in the Company’s inability to continue as a going concern and the impairment of the recorded long lived assets.

As of January 31, 2011, the Company employees consist of its Chief Executive Officer and a vice president. To conserve cash, minimize borrowing and minimize overhead costs, the Company is outsourcing certain administrative and operating activities under an arrangement that allows it to pay for the services with shares of the Company’s common stock. The Company continues to need to borrow cash from time to time in order to pay its operating costs while it seeks substantial financing needed to generate sales from its Biodiesel Division and Cleaning Division. The Company anticipates future losses from operations as a result of ongoing overhead expenses incurred while it attempts to resume selling activities.
 
These unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classifications of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

NOTE 2 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accrued expenses are comprised of the following:

   
January 31,
2011
     October 31,
2010
 
   
(unaudited)
       
             
Accounts payable
 
$
261,940
   
$
261,539
 
Salaries
   
59,298
     
66,814
 
Interest
   
416,360
     
387,186
 
Payroll taxes
   
70,182
     
74,367
 
Professional fees
   
147,992
     
77,992
 
Other
   
19,793
     
16,296
 
Total
 
$
975,565
   
$
884,194
 

NOTE 3 – CONVERTIBLE NOTES PAYABLE

   
January 31,
2011
   
October 31,
2010
 
 
 
(unaudited)
       
Convertible notes payable:
           
Convertible promissory note (a)
  $ 1,405,320     $ 1,333,120  
Convertible promissory note (b)
    400       400  
Convertible promissory note (c)
    33,645       33,645  
Convertible promissory note (d)
    30,000       -  
Convertible promissory note (e)
    40,000       -  
      1,509,365       1,367,165  
Less: discount on debt
    (68,016 )     -  
      1,441,349       1,367,165  
Less: current portion
    (1,439,365 )     (1,367,165 )
Long term debt
  $ 1,984     $ -  
 
 
8

 
 
 
a)
On November 29, 2006, the Company entered into a loan agreement with certain existing third-party lenders and a new lender, pursuant to which the Company borrowed approximately $164,000 and certain outstanding debt obligations were amended and restated. Under the loan agreement, the existing lenders received amended and restated secured convertible promissory notes in the aggregate principal amounts of $537,955 and $264,625, respectively, and the new lender received a convertible promissory note in the aggregate principal amount of $164,000. Under the loan agreement and the notes, each lender may, in its sole and absolute discretion, make additional loans to the Company, up to an aggregate total of $1,000,000 per lender. Each note was convertible into shares of the Company’s common stock at a conversion rate equal to the lower of (a) $0.05 per share, or (b) seventy percent (70%) of the three day average of the closing bid price of the Company’s common stock immediately prior to conversion, although such conversions could not be less than $0.01 per share, in any circumstances. In May 2008, the conversion price was amended to provide a fixed conversion price of $0.001 per share. In addition, the note holders cannot convert any principal or interest under the notes to the extent that such conversion would require the Company to issue shares of its common stock in excess of its authorized and unissued shares of common stock.  The notes were transferred to a single entity.  Each note accrues interest at an annual rate of eight percent (8%) and is payable on demand. During the three months ended January 31, 2011, the note holder converted $2,300 of note principal into 2,300,000 shares of Company common stock.
 
b)
On July 14, 2009, an unrelated third party investor acquired an interest in the November 26, 2006 loan agreement from the existing lender, since which the investor has made various conversions to the principal and interest outstanding.
 
c)
On May 26, 2010, an unrelated third party investor acquired an interest in the November 26, 2006 loan agreement from the existing lender, since which the investor has made various conversions to the principal and interest outstanding.
 
d)
On December 24, 2010, the Company sold and issued a convertible promissory note in the aggregate principal amount of $30,000 to a certain investor. The note matures on the two-year anniversary of the date of issuance and accrues interest at an annual rate of ten percent (10%). The note is payable in full on the maturity date unless previously converted into shares of Company common stock at a conversion price of $0.0001 per share. The Company recognized and measured an aggregate of $30,000 of the proceeds, which is equal to the intrinsic value of the imbedded beneficial conversion feature, to additional paid in capital and a discount against the note issued, with the discount being amortized over the note’s two-year term.
 
e)
On January 25, 2011, the Company sold and issued a convertible promissory note in the aggregate principal amount of $40,000 to a certain investor. The note matures on the two-year anniversary of the date of issuance and accrues interest at an annual rate of ten percent (10%). The note is payable in full on the maturity date unless previously converted into shares of Company common stock at a conversion price of $0.0001 per share. The Company recognized and measured an aggregate of $40,000 of the proceeds, which is equal to the intrinsic value of the imbedded beneficial conversion feature, to additional paid in capital and a discount against the note issued, with the discount being amortized over the note’s two-year term.

Beneficial conversion feature expenses of $76,483 and $72,600 were recorded in the three months ended January 31, 2011 and 2010, respectively and $621,258 was recorded from November 1, 2007 (the inception of development stage) through January 31, 2011, all of which were attributed to these loan agreements.

NOTE 4 - EQUITY TRANSACTIONS

Preferred Stock

During the three months ended January 31, 2011, a Series B preferred stock holder converted 3,000 shares of Series B Preferred Stock into 1,069,392 shares of common stock.
 
Common Stock

During the three months ended January 31, 2011, the Company issued 1,512,851 shares of common stock, including 443,459 common stock to be issued, in exchange for the conversion of Series B Preferred Stock.

As of January 31, 2011 and October 31, 2010, there were 47,183,930 and 43,371,079 shares of Company common stock issued and outstanding, respectively.

Warrants

During the three months ended January 31, 2011 and 2010, the Company did not issue any stock warrants or options.  As of January 31, 2011, no warrants or options are outstanding.
 
NOTE 5 - RELATED PARTY TRANSACTIONS

On November 9, 2010, Len Amato was appointed as the Company’s Chairman of the Board of Directors, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer. From 2007 to October 2010, Mr. Amato was a managing member of Interstellar Holdings, LLC, an investment banking firm that has provided financing under the Company’s November 29, 2006 loan agreement.
 
On December 20, 2010, the former Chief Financial Officer sold 10,000 shares of her Series A Preferred Stock in a private transaction to the Company’s current President, Chief Executive Officer and Chief Financial Officer.
 
 
9

 
 
At January 31, 2011, the Company owed its president $2,399 for invoices that he paid on its behalf.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

Operating Leases
  
In October 2010, the Company entered into a 64 month lease agreement for a 14,833 square foot facility in San Antonio, Texas. The lease contains real estate tax and operating escalations and a termination option after the third year. Monthly rental payments start five months after completion of leasehold improvements to the facility and receipt of a certificate of occupancy.
 
Rent expense for the three months ended January 31, 2011 and 2010 was $0.

Employment agreements

David Bennett and Patricia Spreitzer resigned as the Company’s President and Chief Financial Officer on November 9, 2010 and October 31, 2010, respectively and on November 9, 2010, the Company’s board of directors appointed Len Amato who will serve as the Company’s President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director.

NOTE 7 – SUBSEQUENT EVENTS

Since January 31, 2011, the Company has issued 435,586 shares of Company common stock in satisfaction of notices to convert 2,000 shares of Series B Preferred Stock.

Since January 31, 2011, the Company has issued 5,057,698 shares of Company common stock to consultants for services rendered.

On February 25, 2011, the Company sold and issued a convertible promissory note in the aggregate principal amount of $30,000 to a certain investor. The note matures on the two-year anniversary of the date of issuance and accrues interest at an annual rate of ten percent (10%). The note is payable in full on the maturity date unless previously converted into shares of Company common stock at a conversion price of $0.0001 per share.
 
 
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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this report. This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.

Various risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from expectations include, but are not limited to, those set forth under the section “Risk Factors” set forth in this report.

The forward-looking events discussed in this report, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. For these statements, we claim the protection of the “bespeaks caution” doctrine. All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.

General

Todays Alternative Energy Corporation (the “Company” or “we”) have two primary business opportunities that we are developing. Our green cleaning products business is organized to use our scientific formulations to manufacture and sell a new line of powerful industrial strength environmentally friendly biodegradable cleaning products that contain natural non-toxic ingredients. Our biodiesel business is organized to use extraction technology to convert waste cooking oil and grease into a biodiesel fuel ingredient that we intend to sell to biodiesel fuel producers. Our biodiesel business is designed to eliminate environmental issues associated with disposing of waste cooking oil and grease.
 
On June 9, 2010, we changed our name from “Bio Solutions Manufacturing, Inc.” to “Todays Alternative Energy Corporation” to better reflect the direction of our business.

On July 1, 2010, we announced plans to brand our new line of industrial strength, environmentally friendly biodegradable cleaning products with the GEM name, a Company-owned brand. The GEM brand name and the accompanying tagline, "Guaranteed Enzyme Miracle," call attention to the natural enzymes and other eco-friendly industrial strength ingredients in GEM cleansers that safely and quickly remove oil, grease and other stubborn stains. GEM products contain no ammonia, phosphates, dyes, artificial scents or toxins, and are biodegradable. GEM products will enter a large expanding market for green cleaners.

On October 6, 2010, we formed Guaranteed Enzyme Miracle Corporation, a Texas corporation, in which we will operate our green cleaning products business.

In October 2010, we entered into a lease agreement for a facility in San Antonio, Texas in which we will manufacture GEM products using our scientific formulations. We plan to market GEM products to American consumers directly and through retailers. We estimate that product sales will begin in the calendar second quarter of 2011. Product prices are planned to be competitive with branded household floor, carpet and drain cleaning products.

 Critical Accounting Policies

Our discussion and analysis of our financial conditions and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of financial statements requires managers to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates, including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience, and other assumptions as the basis for making judgments. Actual results could differ from those estimates. We believe the following critical accounting policies affect our more significant judgments and estimates in the preparation of our unaudited condensed consolidated financial statements.

Going Concern

The unaudited condensed consolidated financial statements contained in this report have been prepared assuming that we will continue as a going concern. Going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. We have incurred losses since inception and have negative cash flows from operations. For the years ended October 31, 2010 and 2009, we incurred net losses of $833,129 and $927,207, respectively, and we have a stockholders’ deficit of $2,245,450 as of October 31, 2010. For the three months ended January 31, 2011 and 2010, we incurred net losses of $227,998 and $209,605, respectively, and we have a stockholders’ deficit of $2,326,648 as of January 31, 2011. Our future is dependent upon our ability to obtain additional equity or debt financing and upon future successful development and marketing of our products and services. Management is pursuing various sources of equity and debt financing. Although we plan to pursue additional financing, there can be no assurance that we will be able to secure such financing or obtain financing on terms beneficial to us. Failure to secure such financing may result in our inability to continue as a going concern and the impairment of the recorded long lived assets.
 
 
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To conserve cash, minimize borrowing and minimize overhead costs, we are outsourcing certain administrative and operating activities under an arrangement that allows us to pay for the services with shares of our common stock. We continue to need to borrow cash from time to time in order to pay our operating costs while we seek substantial financing needed to generate sales from our Biodiesel Division and Cleaning Division. We anticipate future losses from operations as a result of ongoing overhead expenses incurred while we attempt to resume selling activities.

The financial statements contained in this report do not include any adjustments relating to the recoverability and classifications of recorded assets, or the amounts and classification of liabilities that might be necessary in the event we cannot continue in existence.

Revenue Recognition

Sales are recorded at the time title passes to the customer, which, based on shipping terms, generally occurs when the product is shipped to the customer. Based on prior experience, we reasonably estimate our sales returns and warranty reserves and both are recorded when such reserve estimates are required. Due to lack of sales, there currently are no such reserves recorded for sales returns or warranty reserves. Sales are presented net of discounts and allowances.

Results of Continuing Operations

Basis of Presentation

The results of operations set forth below for the three months ended January 31, 2011 and 2010 are those of the continuing operations of Todays Alternative Energy Corporation which includes GEM and BESI on a consolidated basis.

The following table sets forth, for the periods indicated, certain selected unaudited financial data from continuing operations:

   
Three Months Ended
January 31,
   
From Inception of
Development
Stage on
November 1, 2007
Through
 
   
2011
   
2010
   
January 31, 2011
 
Net sales
  $      -     $      -     $ -  
Cost of sales
    -       -       -  
                         
Gross profit
    -       -       -  
                         
Selling, general and administrative
    122,162       113,914       1,626,462  
                         
Operating loss
  $ 122,162     $ 113,914     $ 1,626,462  

Comparison of the Three Months Ended January 31, 2011 and 2010

Net sales. Net sales from operations were $0 for the three months ended January 31, 2011 and 2010.

Selling, general, and administrative. Selling, general, and administrative expenses were $122,162 for the three months ended January 31, 2011 compared to $113,914 for the three months ended January 31, 2010.  The increase of $8,248 or 7% was primarily due to the start of our developing a sales and marketing campaign for the Company's new line of industrial strength, environmentally friendly biodegradable cleaning products with the GEM name, a Company-owned brand.

Operating loss. Operating losses incurred were $122,162 for the three months ended January 31, 2011 compared to $113,914 for the three months ended January 31, 2010.  The increase of $8,248 or 7% was primarily due to the start of our developing a sales and marketing campaign for the Company's new line of industrial strength, environmentally friendly biodegradable cleaning products with the GEM name, a Company-owned brand.
 
 
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Loss from Beneficial Conversion Feature. Loss from beneficial conversion features was $76,483 for the three months ended January 31, 2011 compared to $72,600 for the three months ended January 31, 2010.  The increase of $3,883 or 5% was primarily due to an increase in net borrowings during the current three-month period.

Interest expense. Interest expense was $29,353 for the three months ended January 31, 2011 compared to $23,091 for the three months ended January 31, 2010.  The increase of $6,262 or 27% was primarily due to our having a greater amount of outstanding borrowings during the current three-month period.

Liquidity and Capital Resources

We have financed our operations, acquisitions, debt service, and capital requirements through cash flows generated from debt financing, and issuance of equity securities. Our working capital deficit at January 31, 2011 was $2,378,664 and $2,245,450 at October 31, 2010. We had cash of $37,690 at January 31, 2011 and $4,446 as of October 31, 2010.

We used $111,256 of net cash from operating activities for the three months ended January 31, 2011, compared to $70,548 in the three months ended January 31, 2010.

Net cash flows used in investing activities was $0 for the three months ended January 31, 2011, compared to using $0 in the three months ended January 31, 2010.

Net cash flows provided by financing activities were $144,500 for the three months ended January 31, 2011, compared to $67,125 in the three months ended January 31, 2010. The net cash provided by financing activities is from the proceeds from our lines of credit and notes payable, which are net of repayments.

Loan Agreement

On November 29, 2006, we entered into two separate loan agreement with certain lenders that provided for the potential for us to borrow up to $1,000,000 under each loan agreement. Under the loan agreements, the lenders received convertible promissory notes in the aggregate principal amounts of $164,000, $537,955 and $264,625, respectively, for loans made prior to the November 29, 2006 loan agreements. As a result of subsequent agreements between the lenders, a single lender now holds both $1,000,000 loan agreements. The lender may, in its sole and absolute discretion, make additional loans to us, up to an aggregate total of $2,000,000. Borrowings under the loan agreements bear interest at the rate of eight percent (8%) per annum and are payable on demand. Outstanding principal and accrued interest is also convertible into shares of our common stock at a fixed conversion rate of $0.001 per share as a result of a May 2008 amendment to the loan agreements. In addition, the lender cannot convert any principal or interest to the extent that such conversion would require us to issue shares of our common stock in excess of our authorized and unissued shares of common stock. The notes are secured by a first priority security interest in all of our assets. By their terms, the holder of the notes may not convert the notes to the extent such conversion would cause the holder to have acquired a number of shares of common stock that would exceed 4.99% of our then outstanding common stock.  Since July 2009, third party investors have acquired $41,000 in principal under the loan agreement. We have reduced the amount of unpaid principal and interest under the loan agreement through issuances of our common stock in satisfaction of conversion requests.

On December 24, 2010, January 25, 2011 and February 25, 2011, we sold and issued convertible promissory note in the aggregate principal amounts of $30,000, $40,000 and $30,000, respectively, to a certain investor. The notes mature on the two-year anniversary of the respective dates of issuance and accrue interest at an annual rate of ten percent. The notes are payable in full on the maturity dates unless previously converted into shares of our common stock at a conversion price of $0.0001 per share. The $100,000 in aggregate proceeds are being used to fund the development of our business.
 
Capital Requirements
 
The report of our independent accountants for the fiscal year ended October 31, 2010 states that we have incurred operating losses since inception and requires additional capital to continue operations, and that these conditions raise substantial doubt about our ability to continue as a going concern.

As of January 31, 2011, we had a working capital deficit of $2,378,664. Currently, we do not generate any revenues. To operate our biodiesel fuel ingredient production business, we need to construct or lease biodiesel plants and we will not generate any revenues from this business until we have established plants that are operational. The expected cost to build each biodiesel plant is $2.5 million and we do not have the capital to build such plants. In our green cleaning products business, we need to complete the build out of our leased space in San Antonio, Texas and buy production equipment in order to begin producing cleaning products to sell. We expect to begin generating revenues in our green cleaning products business once the production facility is fully operational and our sales and marketing campaigns our launched in our fiscal third quarter ended July 31, 2011. The expected cost to open a production facility is $400,000 and we are seeking the capital to begin buying production equipment. We raised $100,000 from the sales of convertible notes to an investor and expect to raise the remaining funds needed through additional sales of convertible notes. If we cannot raise additional debt and/or equity capital, we will be unable to generate any revenues.
 
 
13

 
 
We believe that, as of the date of this report, our existing working capital and cash flows generated from operations will be insufficient to fund our plan of operations over the next 12 months, and accordingly, we will need to continue to obtain additional financing.

As set forth above, we have entered into a secured loan agreement with a third party lender, under which the lender, in its sole and absolute discretion, can lend to us up to $2,000,000. However, such loans are completely discretionary with the lender, and as of the date hereof, we have received no commitment from the lender to advance us additional funds. We have sold unsecured convertible notes to an investor and seek to sell additional unsecured convertible notes, and as of the date hereof, we have received no firm commitment from investors to purchase additional notes from us.

In the event that our lenders do not advance us additional funds under the loan agreement and investors do not purchase additional unsecured convertible notes, we would need to seek additional debt or equity financing, strategic alliance, or a joint venture. Such additional financing, alliances, or joint venture opportunities might not be available to us, when and if needed, on acceptable terms or at all. If we are unable to obtain additional financing in sufficient amounts or on acceptable terms under such circumstances, our operating results and prospects could be adversely affected. In addition, any debt financings or significant capital expenditures require the written consent of our existing lenders.

 We intend to retain any future earnings to retire debt, finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes. The loan agreement with our lenders contains restrictions as to the payment of dividends.

Off-Balance Sheet Arrangements

None.
 
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this item.

ITEM 4 – CONTROLS AND PROCEDURES
 
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
 
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
 
Pursuant to Rule 13a-15(b) under the Exchange Act, the Company's management, consisting of Len Amato, the Company’s Chief Executive Officer and Chief Financial Officer (“CEO/CFO”), carried out an evaluation 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 three months ended January 31, 2011. Based upon that evaluation, the Company's CEO/CFO concluded that the Company's disclosure controls and procedures are not effective to ensure that information requiring disclosure 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 CEO/CFO, as appropriate, to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROLS
 
Our management, consisting of our CEO/CFO, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the three month period ended January 31, 2011. Based on that evaluation, our CEO/CFO concluded that no change occurred in the Company's internal controls over financial reporting during the three months ended January 31, 2011, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II: OTHER INFORMATION
 
ITEM 1 – LEGAL PROCEEDINGS

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not currently involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.
 
 
14

 
 
ITEM 1A – RISK FACTORS

As a “small reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended January 31, 2011, the Company issued 2,300,000 shares of common stock in payment of principal due on an unregistered convertible promissory note. The note and the shares were issued in a transaction that was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act, which exempts transactions of an issuer not involving a public offering.

During the three months ended January 31, 2011, the Company issued 1,512,851 shares of common stock in conversion of shares of Series B preferred stock. The preferred and common shares were issued in a transaction that was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act, which exempts transactions of an issuer not involving a public offering.
 
ITEM 3 – DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4 – REMOVED AND RESERVED
 
ITEM 5 – OTHER INFORMATION

On February 25, 2011, we sold and issued a convertible promissory note in the aggregate principal amount of $30,000 to a certain investor. The note matures on the two-year anniversary of the date of issuance and accrues interest at an annual rate of ten percent. The note is payable in full on the maturity date unless previously converted into shares of our common stock at an initial conversion price of $0.0001 per share. The $30,000 proceeds are being used to fund the development of our business.  A form of the note is attached to this Quarterly Report as Exhibit 4.1.

ITEM 6 - EXHIBITS
 
 
a.
(a)
The following exhibits are filed with this report.
       
   
4.1
Form of Convertible Promissory Note
       
   
10.1
Form of Convertible Promissory Note (Incorporated by Reference to the Company’s Current Report on Form 8-K, filed with the SEC on February 9, 2011)
       
   
10.2
Form of Convertible Promissory Note (Incorporated by Reference to the Company’s Current Report on Form 8-K, filed with the SEC on January 4, 2011)

 
31.1
Certification by Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes Oxley Section 302.

 
32.1
Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S. C. Section 1350.
 
 
15

 
 
SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:       March 8, 2011
/s/ Len Amato
 
By:  Len Amato
 
Its:  Chief Executive Officer, President, Chief Financial Officer and Director
(Principal Executive Officer and Principal Financial and Accounting Officer)
 
 
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