Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
ý
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
|
For
the quarterly period ended March 31,
2008
|
o
|
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
|
For
the transition period from
to
|
Commission
File Number: 001-33354
Alpha
Security Group Corporation
(Exact
name of registrant as specified in its charter)
Delaware
|
03-0561397
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.)
|
328
West 77th
Street
New
York, New York 10024
(Address
of Principal Executive Offices) (Zip Code)
212-877-1588
(Registrant’s
Telephone Number, Including Area Code)
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Exchange Act 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 ý 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
the 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 Smaller reporting
company ý
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ý No o
There
were 7,580,000 shares of the Registrant’s common stock issued and outstanding as
of May 19, 2008.
TABLE
OF CONTENTS
|
|
Page
No.
|
Part
I.
|
Financial
Information
|
2
|
Item
1.
|
Financial
Statements
|
|
|
Condensed
Balance Sheets as of March 31, 2008 (unaudited) and December 31,
2007
|
2
|
|
Condensed
Statement of Income for the three months ended March 31, 2008 and
March
31, 2007, and for the period from April 20, 2005 (date of inception)
to
March 31, 2008 (unaudited)
|
3
|
|
Condensed
Statement of Stockholders’ Equity for the period from April 20, 2005 (date
of inception) to March 31, 2008
|
4
|
|
Condensed
Statement of Cash Flows for the three months ended March 31, 2008
and
March 31, 2007, and from April 20, 2005 (date of inception) to March
31,
2008 (unaudited)
|
5
|
|
Notes
to Condensed Financial Statements
|
6
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
14
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
16
|
Item
4T.
|
Controls
and Procedures
|
16
|
Part
II.
|
Other
Information
|
17
|
Item
1.
|
Legal
Proceedings
|
17
|
Item
1A.
|
Risk
Factors
|
17
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
17
|
Item
3.
|
Default
Upon Senior Securities
|
17
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
17
|
Item
5.
|
Other
Information
|
17
|
Item
6.
|
Exhibits
|
17
|
|
Signatures
|
18
|
PART
I- FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
ALPHA
SECURITY GROUP CORPORATION
(A
CORPORATION IN THE DEVELOPMENT STAGE)
CONDENSED
BALANCE SHEET
|
|
March 31, 2008
|
|
December 31, 2007
|
|
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash
|
|
$
|
16,351
|
|
$
|
8,726
|
|
Investment
in trust account
|
|
|
60,933,914
|
|
|
60,578,630
|
|
Prepaid
expenses & taxes
|
|
|
700
|
|
|
17,342
|
|
Total
current assets
|
|
|
60,950,965
|
|
|
60,604,698
|
|
Deferred
tax asset
|
|
|
198,115
|
|
|
150,220
|
|
Property
& equipment, net of depreciation
|
|
|
7,679
|
|
|
6,099
|
|
Total
assets
|
|
$
|
61,156,759
|
|
$
|
60,761,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
Accrued
expenses and taxes
|
|
$
|
111,984
|
|
$
|
75,235
|
|
Income
taxes payable
|
|
|
166,575
|
|
|
-
|
|
Deferred
underwriting fees
|
|
|
1,800,000
|
|
|
1,800,000
|
|
Notes
payable - stockholder
|
|
|
250,000
|
|
|
250,000
|
|
Total
liabilities
|
|
|
2,328,559
|
|
|
2,125,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, subject to possible redemption, 2,099,400 shares, at redemption
value of $9.70 per share
|
|
|
20,364,180
|
|
|
20,364,180
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
Preferred
stock, $.0001 par value, authorized 1,000,000 shares, none
issued
|
|
|
|
|
|
|
|
Common
stock, $.0001 par value, authorized 30,000,000 shares; issued and
outstanding 7,580,000 shares at March 31, 2008 and December 31, 2007
|
|
|
758
|
|
|
758
|
|
Additional
paid-in capital
|
|
|
37,488,281
|
|
|
37,488,281
|
|
Earnings
accumulated during the development stage
|
|
|
974,981
|
|
|
782,563
|
|
Total
stockholders' equity
|
|
|
38,464,020
|
|
|
38,271,602
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$
|
61,156,759
|
|
$
|
60,761,017
|
|
See
accompanying notes to financial statements.
ALPHA
SECURITY GROUP CORPORATION
(A
CORPORATION IN THE DEVELOPMENT STAGE)
CONDENSED
STATEMENT OF INCOME (UNAUDITED)
|
|
For
the
|
|
For
the period from
|
|
|
|
Three months
ended
March 31, 2008
|
|
Three months
ended
March 31, 2007
|
|
April 20, 2005
(inception) to
March 31, 2008
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Interest
and dividend income
|
|
$
|
540,574
|
|
$
|
37,660
|
|
$
|
2,635,104
|
|
|
|
|
|
|
|
|
|
|
|
|
Formation
and operating costs
|
|
|
(158,351
|
)
|
|
(25,722
|
)
|
|
(697,654
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes
|
|
|
382,223
|
|
|
11,938
|
|
|
1,937,450
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
189,805
|
|
|
-
|
|
|
962,469
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
192,418
|
|
$
|
11,938
|
|
$
|
974,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding
|
|
|
7,580,000
|
|
|
1,846,667
|
|
|
3,650,678
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per share
|
|
$
|
0.03
|
|
$
|
0.01
|
|
$
|
0.27
|
|
See
accompanying notes to financial statements.
ALPHA
SECURITY GROUP CORPORATION
(A
CORPORATION IN THE DEVELOPMENT STAGE)
CONDENSED
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
|
|
For
the period from April 20, 2005 (inception) to March 31,
2008
|
|
|
|
|
|
|
|
|
|
Earnings
(deficit)
|
|
|
|
|
|
Common stock
|
|
Additional paid-in
|
|
accumulated during the
|
|
Stockholders'
|
|
|
|
Shares
|
|
Amount
|
|
capital
|
|
development stage
|
|
equity (deficiency)
|
|
Common
shares issued July 18, 2005 at $.0156
|
|
|
1,600,000
|
|
$
|
160
|
|
$
|
24,840
|
|
$
|
-
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - 2005
|
|
|
|
|
|
|
|
|
|
|
|
(11,140
|
)
|
|
(11,140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2005
|
|
|
1,600,000
|
|
$
|
160
|
|
$
|
24,840
|
|
$
|
(11,140
|
)
|
$
|
13,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss - 2006
|
|
|
|
|
|
|
|
|
|
|
|
(23,905
|
)
|
|
(23,905
|
)
|
Redemption
- September 15, 2006
|
|
|
(20,000
|
)
|
|
(2
|
)
|
|
(310
|
)
|
|
|
|
|
(312
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2006
|
|
|
1,580,000
|
|
$
|
158
|
|
$
|
24,530
|
|
$
|
(35,045
|
)
|
$
|
(10,357
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
of private placement - March 21, 2007
|
|
|
|
|
|
|
|
|
3,200,000
|
|
|
|
|
|
3,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares issued March 28, 2007 at $10 per share
|
|
|
6,000,000
|
|
|
600
|
|
|
59,999,400
|
|
|
|
|
|
60,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
subject to possible redemption
|
|
|
|
|
|
|
|
|
(20,364,180
|
)
|
|
|
|
|
(20,364,180
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
of the Offering
|
|
|
|
|
|
|
|
|
(5,371,569
|
)
|
|
|
|
|
(5,371,569
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income - 2007
|
|
|
|
|
|
|
|
|
|
|
|
817,608
|
|
|
817,608
|
|
Proceeds
of options sold
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2007
|
|
|
7,580,000
|
|
$
|
758
|
|
$
|
37,488,281
|
|
$
|
782,563
|
|
$
|
38,271,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income-January 1-March 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
192,418
|
|
|
192,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
March 31, 2008
|
|
|
7,580,000
|
|
|
758
|
|
$
|
37,488,281
|
|
$
|
974,981
|
|
$
|
38,464,020
|
|
See
accompanying notes to financial statements.
ALPHA
SECURITY GROUP CORPORATION
(A
CORPORATION IN THE DEVELOPMENT STAGE)
CONDENSED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
For the period from
April 20, 2005
|
|
For the three months ended
|
|
|
|
(Inception) to
March 31, 2008
|
|
March 31, 2008
|
|
March 31, 2007
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
974,981
|
|
$
|
192,418
|
|
$
|
24,501
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net income to
net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
719
|
|
|
420
|
|
|
-
|
|
Increase
in investment in Trust Account
|
|
|
(2,627,409
|
)
|
|
(540,574
|
)
|
|
(33,303
|
)
|
Increase
in deferred tax asset
|
|
|
(198,115
|
)
|
|
(47,895
|
)
|
|
-
|
|
(Increase)
decrease in prepaid expenses/other receivables
|
|
|
(700
|
)
|
|
16,642
|
|
|
(9,224
|
)
|
Increase
in income taxes payable
|
|
|
166,575
|
|
|
166,575
|
|
|
|
|
Increase
in accounts payable and
accrued expenses
|
|
|
111,984
|
|
|
36,749
|
|
|
3,536
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash (used in) operating activities
|
|
|
(1,571,965
|
)
|
|
(175,665
|
)
|
|
(14,490
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Payment
to trust account
|
|
|
(60,002,831
|
)
|
|
-
|
|
|
(60,002,831
|
)
|
Withdrawals
from trust account
|
|
|
1,696,326
|
|
|
185,290
|
|
|
-
|
|
Purchase
of equipment
|
|
|
(8,398
|
)
|
|
(2,000
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) investing activities
|
|
|
(58,314,903
|
)
|
|
183,290
|
|
|
(60,002,831
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
Payment
of expenses of offering
|
|
|
(3,571,569
|
)
|
|
-
|
|
|
(3,250,009
|
)
|
Proceeds
from sale of common stock
|
|
|
25,000
|
|
|
-
|
|
|
-
|
|
Proceeds
from notes payable - stockholder(s)
|
|
|
250,000
|
|
|
-
|
|
|
250,000
|
|
Proceeds
from initial public offering
|
|
|
60,000,000
|
|
|
-
|
|
|
60,000,000
|
|
Proceeds
from private placement
|
|
|
3,200,000
|
|
|
-
|
|
|
3,200,000
|
|
Proceeds
from sale of option
|
|
|
100
|
|
|
-
|
|
|
-
|
|
Repayment
of notes payable - stockholders
|
|
|
-
|
|
|
-
|
|
|
(187,802
|
)
|
Payment
of deferred offering costs
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Redemption
of stock
|
|
|
(312
|
)
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing
activities
|
|
|
59,903,219
|
|
|
-
|
|
|
60,012,189
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash
|
|
|
16,351
|
|
|
7,625
|
|
|
(5,132
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- beginning of period
|
|
|
-
|
|
|
8,726
|
|
|
7,119
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- end of period
|
|
$
|
16,351
|
|
$
|
16,351
|
|
$
|
1,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for income taxes
|
|
$
|
993,634
|
|
$
|
70,596
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual
of deferred offering costs
|
|
$
|
1,800,000
|
|
$
|
|
|
$
|
1,890,000
|
|
See
accompanying notes to financial statements.
ALPHA
SECURITY GROUP CORPORATION
(a
corporation in the development stage)
NOTES
TO
FINANCIAL STATEMENTS
March
31,
2008
1.
Organization, Proposed Business Operations and Summary of Significant Accounting
Policies
Basis
of
Presentation
The
condensed financial statements at March 31, 2008 and for the periods ended
March 31, 2008 and 2007 are unaudited and have been prepared by the Company
in accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions to Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments (consisting of normal adjustments) have been made that are necessary
to fair presentation have been included. Operating results for the interim
period presented are not necessarily indicative of the results to be expected
for a full year.
These
unaudited condensed interim financial statements should be read in conjunction
with the audited financial statements and notes thereto for the period ended
December 31, 2007 included in the Company’s Annual Report on Form 10-K
filed with the U.S. Securities and Exchange Commission on April 15, 2008. The
December 31, 2007 balance sheet and the statement of stockholders’ equity
for the period ended December 31, 2007 have been derived from these audited
financial statements. The accounting policies used in preparing these unaudited
financial statements are consistent with those described in the
December 31, 2007 audited financial statements.
Nature
of
Operations
Alpha
Security Group Corporation (the “Company”) was incorporated in the State of
Delaware on April 20, 2005 as a blank check company formed to acquire, through
a
merger, capital stock exchange, asset acquisition or other similar business
combination, one or more businesses in the U.S. homeland security or defense
industries or a combination thereof.
At
March
31, 2008, the Company had not yet commenced any operations. All activity through
March 31, 2008 relates to the Company’s formation, a private placement and the
public offering described below. The Company has selected December 31 as its
fiscal year-end.
The
registration statement for the Company’s initial public offering (the “Public
Offering”) was declared effective on March 23, 2007. On March 21, 2007, the
Company completed a private placement (the “Private Placement”) and received net
proceeds of $3,200,000. The Company consummated the Public Offering on March
28,
2007 and received net proceeds of $54,628,431. The Company’s management has
broad discretion with respect to the specific application of the net proceeds
of
the Private Placement and the Public Offering (collectively the “Offerings”) (as
described in Note 2), although substantially all of the net proceeds of the
Offerings (exclusive of working capital) are intended to be generally applied
toward consummating a business combination with a target company. As used
herein, a “target business” shall include an operating business in the U.S.
homeland security or defense industries, or a combination thereof, and a
“business combination” shall mean the acquisition by the Company of such a
target business. There is no assurance that the Company will be able to effect
a
business combination successfully.
At
March
31, 2008, $60,933,914 is being held in a trust account (“Trust Account”) at JP
MorganChase, New York, New York, maintained by American Stock Transfer &
Trust Company, the Company’s transfer agent. This amount includes the net
proceeds of the Public Offering and the Private Placement (including interest
thereon), interest earned since the public offering was declared effective
which
has not yet been withdrawn for working capital needs and $1,800,000 of deferred
underwriting compensation fees (the “Discount”) which will be paid to Maxim
Group LLC if, and only if, a business combination is consummated, but which
will
be forfeited in part if public stockholders elect to have
their shares redeemed for cash and in full if a business combination is not
consummated.
ALPHA
SECURITY GROUP CORPORATION
(a
corporation in the development stage)
NOTES
TO
FINANCIAL STATEMENTS
March
31,
2008
1.
Organization, Proposed Business Operations and Summary of Significant Accounting
Policies (continued)
The
funds
in the Trust Account will be invested until the earlier of (i) the consummation
of the Company’s first business combination or (ii) the liquidation of the Trust
Account as part of a plan of dissolution and liquidation approved by our
stockholders. Up to $1,825,000 of interest income on the Trust Account may
be
used to fund the Company’s working capital including payments for business,
legal and accounting, due diligence on prospective acquisitions and continuing
general and administrative expenses.
The
Company, after signing a definitive agreement for the acquisition of a target
business, will submit such transaction for stockholder approval. In the event
that public stockholders owning 35% or more of the outstanding stock excluding
for this purpose, those persons who were stockholders prior to the Offerings
vote against the business combination, the business combination will not be
consummated. All of the Company’s stockholders prior to the Offerings, including
all of the officers and directors of the Company (“Initial Stockholders”), have
agreed to vote their 1,580,000 founding shares of common stock in accordance
with the vote of the majority-in-interest of all other stockholders of the
Company with respect to any business combination. After consummation of the
Company’s first business combination, all of these voting safeguards will no
longer be applicable.
With
respect to the first business combination which is approved and consummated,
any
Public Stockholder who voted against
the business combination may demand that the Company redeem his or her shares.
The per share redemption price will
equal $10 per share plus the pro-rata share of any accrued interest earned
on
the Trust Account, net of: (i) taxes payable
on interest income earned on the Trust Account, State of Delaware franchise
taxes, repayment of $250,000 of an additional
officer loan made prior to closing of the Public Offering by Steven M. Wasserman
(such loan was to be repaid within
90
days of the closing of the Public Offering, but has not been repaid through
March 31, 2008) and (ii) up to $1,825,000 of interest earned on the Trust
Account released
to the Company to fund its working capital. Accordingly, Public Stockholders
holding 34.99% of the aggregate number
of
shares owned by all Public Stockholders may seek redemption of their shares
in
the event of a business combination.
Such Public Stockholders are entitled to receive their per share interest in
the
Trust Account computed without
regard to the shares held by Initial Stockholders. In the event that more than
20% of the Public Stockholders exercise
their redemption rights, a proportional percentage of the common stock held
by
the Company’s Initial Stockholders
will automatically, and without any further action required by the Company
or
such stockholders, be forfeited and
cancelled upon consummation of the business combination. The percentage of
shares forfeited will be equal to the percentage
of redemptions above 20% and will be pro rata among the Initial Stockholders
on
the 1,580,000 shares owned by them.
The
Company’s Amended and Restated Certificate of Incorporation provides for
mandatory liquidation of the Trust Account
as part of a stockholder-approved plan of dissolution and liquidation in the
event that the Company does not consummate
a business combination within 18 months from the date of the consummation of
the
Offering, or 24 months from
the
consummation of the Public Offering if a letter of intent, agreement in
principle or definitive agreement has been executed
within 18 months after consummation of the Public Offering and the business
combination has not yet been consummated within such 18 month period. In the
event of such liquidation, the amount in the Trust Account will be distributed
to the holders of the shares sold in the Public Offering. The Company’s initial
business combination must be for assets or with a target business the fair
market value of which is at least equal to 80% of the Company’s net assets at
the time of such acquisition (exclusive
of Maxim Group LLC’s deferred underwriting compensation, including interest
thereon, held in the trust account).
Steven M. Wasserman, Chief Executive Officer, President and Co-Chairman of
the
board of directors and Constantinos Tsakiris, a director of the Company,
purchased warrants to purchase an aggregate of 3,200,000 shares of common
stock in the Private Placement for an aggregate purchase price of $3,200,000
or
$1.00 per warrant. The Private Placement
warrants are exercisable on the later of (i) the completion of a business
combination or (ii) March 23, 2008.
ALPHA
SECURITY GROUP CORPORATION
(a
corporation in the development stage)
NOTES
TO
FINANCIAL STATEMENTS
March
31,
2008
1.
Organization, Proposed Business Operations and Summary of Significant Accounting
Policies (continued)
Cash
and Cash Equivalents
The
Company considers all highly liquid instruments with original maturities of
three months or less when purchased to be
cash
equivalents. Such cash and cash equivalents, may exceed federally insured
limits. The Company maintains its accounts
with financial institutions with high credit ratings.
Income
Taxes
The
Company recorded a deferred tax asset of $198,115 and $150,220 at March 31,
2008
and December 31, 2007, respectively,
for the tax effect of temporary differences, aggregating $582,692 and $441,823
In recognition of the uncertainty
regarding the ultimate amount of income tax benefits to be derived, the Company
recorded
a valuation allowance of $56,348
and
$43,658 at March 31, 2008 and December 31, 2007 respectively. The effective
tax
rate differs from the statutory rate of 34% due to the effect of state and
local
income taxes.
On
January 1, 2007 the Company adopted FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes
—
an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the
accounting for uncertainty in tax positions
recognized in a company’s financial statements in accordance with SFAS No. 109,
“Accounting for Income Taxes.”
FIN 48 requires that the impact of a tax position be recognized in the financial
statements if it is more likely than not
that
the tax position will be sustained on tax audit, based on the technical merits
of the position. FIN 48 also provides guidance
on derecognition of tax positions that do not meet the “more likely than not”
standard, classification of tax assets and liabilities, interest and penalties,
accounting in interim periods, disclosure and transition.
The
adoption of FIN 48 had no effect on our financial condition or results of
operations
since the company has not identified any uncertain tax positions.
The
Company recognizes interest and penalties related to uncertain tax positions
in
income tax expense. All tax years
remain
open to examination by the major taxing jurisdictions to which it is
subject.
Share-Based
Payments
The
Company accounts for share-based payments in accordance with Statement of
Financial Accounting Standards No.
123R
(“SFAS No. 123R”) as of the date of issuance of the warrants described in Note
2.
Recently
Issued Accounting Pronouncements
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards No. 141(R) “Business
Combinations”. This statement establishes principles and requirements for how
the acquirer of a business recognizes and measures in its financial statements
the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. The Statement also provides guidance
for recognizing and measuring the goodwill acquired in the business combination
and determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. The guidance will become effective as of the beginning of a
company’s fiscal year beginning after December 15, 2008.
Management
does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.
ALPHA
SECURITY GROUP CORPORATION
(a
corporation in the development stage)
NOTES
TO
FINANCIAL STATEMENTS
March
31,
2008
1.
Organization, Proposed Business Operations and Summary of Significant Accounting
Policies (continued)
Income Per
Common Share
Income per
share is computed by dividing net income by the weighted-average number of
shares of common stock outstanding
during the period. Shares of common stock issuable upon the exercise of options
and warrants at March
31,
2008 (9,410,000 shares) are excluded from the computation since such options
and
warrants are contingently exercisable.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of expenses
during the reporting period. Actual results
could differ from those estimates.
2.
Public Offering and Private Placement
On
March
28, 2007 the Company sold 6,000,000 units to the public at a price of $10.00
per
unit. Each unit consists of one
share
of the Company’s common stock, $.0001 par value, and one Redeemable Common Stock
Purchase Warrant (“Warrant”).
Each Warrant entitles the holder to purchase from the Company one share of
common stock at an exercise price
of
$7.50 commencing the later of (i) the completion of a business combination
with
a target business or (ii)
March 23, 2008, and expires March 23, 2011. The Warrants will be redeemable
by
the Company at a price of $0.01 per
warrant upon 30 days notice after the Warrants become exercisable, only in
the
event that the closing price of the common
stock is at least $14.25 per share for any 20 trading days within a 30 trading
day period ending on the third day prior
to
the date on which notice of redemption is given.
On
March
21, 2007, Steven M. Wasserman, Chief Executive Officer, President and
Co-Chairman of the board of directors
and Constantinos Tsakiris, a director, acquired warrants to purchase an
aggregate of 3,200,000 shares of common stock
from the Company in a Private Placement. The total purchase price for the
warrants was $3,200,000 or $1.00 per warrant.
The Warrants included in the Private Placement have terms identical to the
Warrants included in the Offering.
Under
the
terms of the Company’s warrant agreement, no public warrants will be exercisable
unless at the time of exercise
a registration statement relating to common stock issuable upon exercise of
the
warrants is effective and current, a prospectus
is available for use by the public stockholders and those shares of common
stock
have been registered or been deemed
to
be exempt from registration under the securities laws of the state of residence
of the holder of the warrants. The holders
of the Warrants issued in the Private Placement will be able to exercise their
Warrants even if, at the time of exercise,
a prospectus relating to the common stock issuable upon exercise of such
Warrants is not current. In
addition, in no event will the registered holders of the Warrants issued in
the
Public Offering or the Private Placement
be entitled to receive a net cash settlement of stock or other consideration
in
lieu of physical settlement in shares of
the
Company’s common stock. As such, the Company has determined that the public
warrants should be classified in stockholders’
equity in accordance with the guidance of EITF 00-19 (“EITF 00-19”), Accounting
for
Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company’s Own Stock.
The
Company will use its best efforts to cause a registration statement to become
effective on or prior to the commencement of the warrant exercise period and
to
maintain the effectiveness of such registration statement until the expiration
of the
Warrants. If the Company is unable to maintain the effectiveness of such
registration until the expiration of the Warrants and therefore is unable to
deliver registered shares, the Warrants may become worthless.
ALPHA
SECURITY GROUP CORPORATION
(a
corporation in the development stage)
NOTES
TO
FINANCIAL STATEMENTS
March
31,
2008
3. Note
payable, stockholder
The
Company issued an unsecured promissory note to Steven Wasserman, a related
party, totaling $250,000 on March
28,
2007. The Note does not bear interest and was to be repaid in full ninety days
thereafter and such repayment has not been made. Due to the short-term nature
of
the
promissory note, the fair value of the note approximates its carrying
value.
4. Commitments
The
Company has agreed to pay to an affiliated third party, $7,500 a month for
24
months for office space and general and
administrative expenses.
Upon
completion of the Public Offering, the Company sold to the representative of
the
underwriters, for $100, an option
to
purchase up to a total of 105,000 units. The units issuable upon exercise of
this option are identical to those offered in the Public Offering. This option
is exercisable at $11.00 per unit commencing after 180 days from March 23,
2007
and
expiring March 23, 2012. The 105,000 units (the 105,000 shares of common stock
and the 105,000 warrants underlying
such units, and the 105,000 shares of common stock underlying such warrants)
have been deemed compensation
by the National Association of Securities Dealers (“NASD”) and are therefore
subject to a 180-day lock-up pursuant to Rule 2710(g)(1) of the NASD Conduct
Rules. Additionally, the option may not be sold, transferred, assigned,
pledged
or hypothecated for a 24-month period (including the foregoing 180-day period)
following March 23, 2007 (the effective
date of the prospectus pertaining to the Public Offering). However, the option
may be transferred to any underwriter
and selected dealer participating in the Public Offering and their bona fide
officers or partners. This represents an
amended agreement between the Company and the representative of the
underwriters, revising their original agreement which provided for the issuance
of an option to purchase 420,000 units with a lock-up period of one-year. The
option may expire
unexercised and the underlying warrants unredeemed if the Company fails to
maintain an effective registration statement
covering the units (including the common stock and warrants) issuable upon
exercise of the option. There are no circumstances
upon which the Company will be required to net cash settle the
option.
The
Company has accounted for this purchase option as a cost of raising capital
and
has included the instrument as equity
in
its financial statements. Accordingly, there is no net impact on the Company’s
financial position or results of operations, except for the recording of the
$100 proceeds from the sale. The Company has estimated, based upon a Black
Scholes
model, that the fair value of the purchase option on the date of sale was
approximately $4.46 per unit (a total value of $468,300), using an expected
life
of five years, volatility of 47.60% and a risk-free rate of 4.75%. The
volatility calculation is based on the average volatility of 12 companies in
the
U.S. homeland security and defense industries during the
period from March 14, 2002 to March 15, 2007. Because the Company did not have
a
trading history, the Company needed to estimate the potential volatility of
its
unit price, which depended on a number of factors which could not be ascertained
at the time. The Company used these companies because management believed that
the volatility of these companies
was a reasonable benchmark to use in estimating the expected volatility for
the
Company’s units. Although an expected life of five years was used in the
calculation, if the Company does not consummate a business combination within
the
prescribed time period and it liquidates, the option will become
worthless.
The
Company has engaged the representative of the underwriters, on a non-exclusive
basis, as its agent for the solicitation
of the exercise of the warrants. To the extent not inconsistent with the
guidelines of the NASD and the rules and regulations of the Securities and
Exchange Commission, the Company has agreed to pay the representative for bona
fide
services rendered a cash commission equal to 5% of the exercise price for each
warrant exercised more than one year after
the
effective date of the prospectus if the exercise was solicited by the
representative.
In addition to soliciting, either orally or in writing, the exercise of the
warrants, the representative’s services may
also
include disseminating information,
ALPHA
SECURITY GROUP CORPORATION
(a
corporation in the development stage)
NOTES
TO
FINANCIAL STATEMENTS
March
31,
2008
4.
Commitments (continued)
either
orally or in writing, to warrant holders about the Company or the market
for the Company’s securities, and assisting in the processing of the exercise of
the warrants. No compensation will be paid to the representative upon the
exercise of the warrants if:
|
· |
the
market price of the underlying shares of common stock is lower than
the
exercise price;
|
|
· |
the
holder of the warrants has not confirmed in writing that the
representative solicited the
exercise;
|
|
· |
the
warrants are held in a discretionary
account;
|
|
· |
the
warrants are exercised in an unsolicited transaction;
or
|
|
·
|
the
arrangement to pay the commission is not disclosed in the prospectus
provided to warrant holders at the time of exercise.
|
5.
Income Taxes
The
Company’s provision for (benefit from) income taxes is as follows:
|
|
3 months ended
|
|
Year ended
|
|
|
|
March
31, 2008
|
|
December 31, 2007
|
|
Current:
|
|
|
|
|
|
Federal
|
|
$
|
148,009
|
|
$
|
574,837
|
|
|
|
|
|
|
|
|
|
State
|
|
|
89,691
|
|
|
348,047
|
|
|
|
|
|
|
|
|
|
Total
Current
|
|
$
|
237,700
|
|
$
|
922,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(29,823
|
)
|
$
|
(93,658
|
)
|
|
|
|
|
|
|
|
|
State
|
|
|
(18,072
|
)
|
|
(56,562
|
)
|
|
|
|
|
|
|
|
|
Total
deferred
|
|
$
|
(47,895
|
)
|
$
|
(150,220
|
)
|
|
|
|
|
|
|
|
|
Total
provision
|
|
$
|
189,805
|
|
$
|
772,664
|
|
ALPHA
SECURITY GROUP CORPORATION
(a
corporation in the development stage)
NOTES
TO
FINANCIAL STATEMENTS
March
31,
2008
Significant
components of the Company’s deferred tax asset are as follows:
|
|
March 31, 2008
|
|
December 31, 2007
|
|
|
|
|
|
|
|
Expenses
deferred for income tax purposes
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
|
(47,895
|
)
|
|
(43,658
|
)
|
|
|
|
|
|
|
|
|
Total
deferred tax asset
|
|
$
|
198,115
|
|
$
|
150,220
|
|
A
reconciliation of the Company’s income tax provision (benefit) at the federal
statutory rate to the actual income tax provision (benefit) is as
follows:
|
|
March 31, 2008
|
|
December 31, 2007
|
|
|
|
|
|
|
|
Federal
income tax rate
|
|
|
34.00
|
%
|
|
34.00
|
%
|
|
|
|
|
|
|
|
|
State
& local tax rate
|
|
|
10.90
|
%
|
|
10.90
|
%
|
|
|
|
|
|
|
|
|
Valuation
Allowance
|
|
|
3.70
|
%
|
|
3.70
|
%
|
|
|
|
|
|
|
|
|
Effective
Tax Rate
|
|
|
48.60
|
%
|
|
48.60
|
%
|
Deferred
income taxes represent the net tax effects of temporary differences between
the
carrying amounts of assets and liabilities for financial reporting purposes
and
amounts used for income tax purposes. The Company had net deferred tax assets
of
approximately $198,115 on March 31, 2008 and $150,220 on December 31, 2007
partially offset by valuation allowances. A valuation allowance was established
for the realizability of certain tax benefits considering the expected future
taxable income of the Company.
ALPHA
SECURITY GROUP CORPORATION
(a
corporation in the development stage)
NOTES
TO
FINANCIAL STATEMENTS
March
31,
2008
6.
Preferred Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock with such
designations, voting and other rights and preferences, as may be determined
from
time to time by the Board of Directors.
7.
Stockholders’
Equity
On
September 8, 2006, the Company redeemed 20,000 shares of its common stock at
a
price of $0.0125 per share.
On
September 15, 2006, the Company effected a 0.80 for 1 reverse stock split.
All
share numbers herein reflect this adjustment.
On
January 16, 2007, the Company filed its Third Amended and Restated Certificate
of Incorporation with the State of Delaware,
reducing its authorized capitalization from 100,000,000 shares of common stock,
par value $.0001 per share, and
1,000,000 shares of preferred stock, par value $.0001 per share, to 30,000,000
shares of common stock, par value $.0001
per share, and 1,000,000 shares of preferred stock, par value $.0001 per share.
Such reduction has been given retroactive
effect in these financial statements.
On
February 7, 2007, the Company filed its Fourth Amended and Restated Certificate
of Incorporation with the State of Delaware,
amending the restriction against the Company proceeding with a business
combination from disallowing such a transaction
if the holders of less than 30% of the number of shares sold in the Public
Offering vote against a business combination
and subsequently exercise their dissolution rights, increasing such percentage
to 35%.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward
Looking Statements
This
Quarterly Report on Form 10-Q includes forward-looking statements within the
meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934,
as amended. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements
are subject to known and unknown risks, uncertainties and assumptions about
us
that may cause our actual results,
levels of activity, performance or achievements to be materially different
from
any future results, levels of activity, performance
or achievements expressed or implied by such forward-looking statements. In
some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described under "Risk Factors" (pages
16-36) in our final
prospectus dated March 23, 2007, as amended, relating to the Public Offering,
and in our other Securities and Exchange Commission filings. The following
discussion should be read in conjunction with our Financial Statements and
related Notes thereto included elsewhere in this report.
Overview
We
were
formed on April 20, 2005, to serve as a vehicle to acquire one or more domestic
or international operating businesses in the U.S. homeland security or defense
industries or a combination thereof, through a merger, capital stock
exchange,
asset acquisition or other similar business combination. Our initial business
combination must be with a target business or businesses whose fair market
value
is equal to at least 80% of our net assets at the time of such acquisition.
Since our offering, we have been actively searching for a suitable business
combination candidate. We currently have not entered into any definitive
agreement with any potential target businesses. We are not engaged in, and
will
not engage in, any substantive commercial business until we consummate an
initial transaction. We intend to utilize cash derived from the proceeds of
our
recently completed public offering and private placement, our capital stock,
debt or a combination thereof, in effecting a business combination. restricting
our ability
to obtain additional financing while such securities were
outstanding.
We
cannot
assure investors that we will find a suitable business combination in the
allotted time.
Results
of Operations for The Three-Month Periods Ended March 31, 2008 and March 31,
2007
We
reported net income of $192,418 for the three-month period ended March 31,
2008.
Net income consisted of interest income of $540,574 reduced by of $158,351
of
operating expenses. Operating expenses consisted of consulting and professional
fees of $43,867, insurance expense of $16,113, travel expense of $38,990,
Delaware franchise fees of $15,563 and other operating costs of
$43,818.
The
trust
account earned interest of $540,574 during the three months ended March 31,
2008, none of which is attributable to common stock subject to possible
redemption. We had $60,933,914 in trust as of March 31, 2008.
Until
we
enter into a business combination, we will not generate operating
revenues.
We
reported net income of $11,938 for the three-month period ended March 31, 2007.
Net income consisted of interest income of $37,660 reduced by of $25,722 of
operating expenses. Operating expenses consisted of travel expense of $12,508,
Delaware franchise fees of $10,552 and other operating costs of
$2,662.
The
trust
account earned interest of $37,660 during the three months ended March 31,
2007,
none of which is attributable to common stock subject to possible redemption.
We
had $60,036,134 in trust as of March 31, 2007.
Liquidity
and Capital Resources
On
March
21, 2007, we sold to Steven M. Wasserman (500,000 warrants), our Chief Executive
Officer, President and Co-Chairman
of the board of directors, and Constantinos Tsakiris (2,700,000 warrants),
a
former director, an aggregate of 3,200,000
warrants in a private placement for $1.00 per warrant or aggregate consideration
of $3,200,000. The warrants in the
private placement have identical terms to the warrants included in
the
units offered as part of the public offering. On March 28, 2007, we consummated
our initial public offering of 6,000,000
units at a purchase price of $10.00 per unit or gross proceeds of $60,000,000.
Each unit in the public offering consisted
of one share of common stock and one redeemable common stock purchase warrant.
Each warrant entitles the holder
to
purchase from us one share of common stock at an exercise price of $7.50 per
share. Prior to the closing, Steven M.
Wasserman loaned us $250,000 for expenses of the public offering, which loan
will be repaid within 90 days of the closing.
On
March
28, 2007, the closing date of our public offering, $60,002,831 was placed in
the
Trust Account at JP Morgan
Chase New York, New York. This amount includes net proceeds of the public
offering of $54,628,431 and the private
placement of $3,200,000 plus interest of $2,831 thereon. The funds in the Trust
Account will be invested until the earlier
of (i) consummation of a business combination or (ii) the liquidation of the
Trust Account as part of a plan of distribution
and liquidation approved by our stockholders.
In
addition to the net proceeds from the sale of the units in this offering and
the
sale of warrants in our private placement,
on the closing date of the public offering the trust account included $1,800,000
of deferred underwriting compensation to be paid to Maxim Group LLC with accrued
interest if and only if a business combination is consummated, and
$90,000 of deferred legal fees to be paid, without contingency, from interest
income earned on the trust account released
to us.
While
funds are held in the trust account, they will only be invested in Treasury
Bills issued by the United States government having a maturity of 180 days
or
less or money market funds meeting the criteria under Rule 2a-7 under the
1940
Act.
Interest earned will be applied in the following order of priority:
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payment
of taxes on trust account interest
income;
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payment
of State of Delaware franchise
taxes;
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·
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repayment
of up to $250,000 of an additional officer loan made prior to the
closing
of this offering by Steven M. Wasserman;
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·
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our
working capital requirements before we complete a business combination
and, if necessary, funding the costs of our potential dissolution
and
liquidation;
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solely
if we complete a business combination, interest on the amount of
deferred
underwriters' compensation payable
to the underwriters; and
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·
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the
balance, if any, to us if we complete a business combination or to
our
public stockholders if we do not complete a business
combination.
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We
believe that the interest income earned on trust account funds in the period
before we effect a business combination will be sufficient to fund the costs
and
expenses relating to our liquidation and dissolution if we do not consummate
a
business
combination.
We
will
use substantially all of the net proceeds of the public offering and from the
private placement, and interest income earned on the funds in the trust account,
to acquire a target business, including identifying and evaluating prospective
acquisition candidates, selecting the target business, and structuring,
negotiating and consummating the business
combination. Costs and expenses incurred prior to the consummation of a business
combination, including those that
relate to a business combination that is not consummated, will be paid from
the
interest earned on funds held in the trust
account (to the extent such interest is released to us). To the extent that
our
capital stock is used in whole or in part as consideration
to effect a business combination, the proceeds held in the trust account as
well
as any other net proceeds not expended
will be used to finance the operations of the target business.
We
believe that the funds available to us from interest income earned on the trust
account ($1,825,000) will be sufficient
to allow us to operate for at least 24 months or March 2009, assuming that
a
business combination is not consummated
during that time. Over this time period, the following estimated expenditures
are anticipated: $400,000 of expenses
for legal, accounting and other expenses attendant to the structuring,
negotiating and
consummation of a business combination, $500,000 of expenses for identification,
evaluation and
due
diligence investigation of a target business, $180,000 for administrative
services and support payable to an affiliated third party ($7,500 per month
for
24 months), $100,000 of expenses in legal and accounting fees relating to our
SEC
reporting obligations, $150,000 for directors' and officers' liability insurance
and $495,000 for general working capital
that will be used for miscellaneous expenses and reserves, deferred legal fees
of $90,000, costs of dissolution and liquidation
and reserves, if any, which we currently estimate to be approximately $50,000
to
$75,000, potential deposits, down
payments or funding of a "no-shop" provision in connection with a particular
business combination and key-man insurance.
We
do not
believe we will need to raise additional funds in order to meet the expenditures
required for operating our business
prior to consummating a business combination. However, we may need to raise
additional funds through a private offering
of debt or equity securities if such funds are required to consummate a business
combination.
In
addition to the above described allocation of interest accrued on the trust
account, at March 31, 2008, we had funds aggregating $16,351 held outside of
the
trust account.
Off-Balance
Sheet Arrangements
We
do not
have any off-balance sheet arrangements.
Contractual
Obligations
We
do not
have any long-term debt, capital lease obligations, operating lease obligations,
purchase obligations or other long-term liabilities.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
This
information has been omitted based on the Company’s status as a smaller
reporting company.
ITEM
4T. CONTROLS AND PROCEDURES
An
evaluation of the effectiveness of our disclosure controls and procedures as
of
March 31, 2008 was made under the supervision and with the participation of
our
management, including our principal executive and principal financial officer.
Based on that evaluation, our chief executive officer and principal financial
officer concluded that our disclosure controls and procedures are effective
as
of the end of the period covered by this report to ensure that information
required to be disclosed by us in reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. During the most recently completed fiscal quarter, there has been
no
significant change in our internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
Compliance
with Section 404 of the Sarbanes-Oxley Act of 2002
This
quarterly report does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of our
registered public accounting firm due to a transition period established by
the
rules of the Securities and Exchange Commission for newly public
companies.
Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002 (the “Act”), beginning with our
Annual Report on Form 10-K for the fiscal year ending December 31, 2008, we
will
be required to furnish a report by our management on our internal control over
financial reporting. This report will contain, among other matters, an
assessment of the effectiveness of our internal control over financial reporting
as of the end of our fiscal year, including a statement as to whether or not
our
internal control over financial reporting is effective. This assessment must
include disclosure of any material weaknesses in our internal control over
financial reporting identified by management. If we identify one or more
material weaknesses in our internal control over financial reporting, we will
be
unable to assert our internal control over financial reporting is effective.
This report will also contain a statement that our independent registered public
accountants have issued an attestation report on management’s assessment of such
internal controls and conclusion on the operating effectiveness of those
controls.
Management
acknowledges its responsibility for internal controls over financial reporting
and seeks to continually improve those controls. In order to achieve compliance
with Section 404 of the Act within the prescribed period, we are currently
performing the system and process documentation and evaluation needed to comply
with Section 404, which is both costly and challenging. We believe our process,
which began in 2007 and continues in 2008 for documenting, evaluating and
monitoring our internal control over financial reporting is consistent with
the
objectives of Section 404 of the Act.
PART
II- OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
None.
ITEM
1A. RISK FACTORS
This
information has been omitted based on the Company’s status as a smaller
reporting company.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM
5. OTHER INFORMATION
None.
ITEM
6. EXHIBITS
Exhibit No.
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Description
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31.1
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Certification
of the Chief Executive Officer and Chief Financial Officer (Principal
Executive and Financial Officer) pursuant to Rule 13a-14(a) of the
Securities Exchange Act, as amended.
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32.1
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Certification
of the Chief Executive Officer and Chief Financial Officer (Principal
Executive and Financial Officer) pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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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.
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ALPHA
SECURITY GROUP CORPORATION
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May
20, 2008
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By:
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/s/
Steven M. Wasserman
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Steven
M. Wasserman
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Chief
Executive Officer and Chief Financial Officer (Principal
Executive and Financial
Officer)
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