10-Q 1 v241379_10q.htm FORM 10-Q Unassociated Document
 
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)
x
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2011

¨
Transition Report under Section 13 or 15(d) of the Exchange Act for the Transition Period from ________ to ___________

Commission File Number: 0-53258

ADELMAN ENTERPRISES, INC.
(Exact name of small business issuer as specified in its charter)

HIGHTOWER ACQUISITION CORPORATION.
(Former name of registrant)

Delaware
(State or other jurisdiction of incorporation or
organization)
20-5572680
(I.R.S. Employer Identification No.)
 
798 Moorpark Avenue
Moorpark, CA 93021
Issuer's Telephone Number:  (818) 436-0410
(Address and phone number of principal executive offices)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or 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 (ss.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 x
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer
¨
Accelerated filer
¨
       
Non-accelerated filer
¨
Smaller reporting company
x

Check whether the issuer is a “shell company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934.  Yes ¨   No x

The Registrant has 15,445,100 shares of Common stock, par value $.0001 per share issued and outstanding as of  September 30, 2011. There currently is no public market for the Company’s Stock.

Traditional Small Business Disclosure Format (check one)  Yes ¨   No x

 
 

 

INDEX TO QUARTERLY REPORT

     
Page
PART I
FINANCIAL INFORMATION
   
       
Item 1.
Financial Statements (Unaudited)
   
       
 
Condensed Consolidated Balance Sheets
   
 
For the Period Ending September 30, 2011 and December 31, 2010
 
3
       
 
Condensed Consolidated Statements of Operations
   
 
For the Three and Nine Months Ended September 30, 2011 and 2010 and for the period from September 13, 2006 (Inception) to September 30, 2011
 
4
       
 
Condensed Consolidated Statements of Cash Flows
   
 
For the Nine Months Ended September 30, 2011 and 2010 and for the period from September 13, 2006 (Inception) to September 30, 2011
 
5
       
 
Notes to Condensed Consolidated Financial Statements
 
6
       
Item 2.
Management's Discussion and Analysis and Plan of Operation
 
13
       
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
16
       
Item 4.
Controls and Procedures
 
16
       
PART II
OTHER INFORMATION
   
       
Item 1A.
Risk Factors
 
17
       
Item 6.
Exhibits
 
17
       
Signatures
   
18
 
 
2

 

ADELMAN ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
FOR THE PERIOD ENDING SEPTEMBER 30, 2011 AND DECEMBER31, 2010
(UNAUDITED)

   
September 30,
2011
   
December 31,
2010
 
             
ASSETS
           
             
CURRENT ASSETS
           
             
Cash
  $ 91     $ 1,507  
                 
Due from Related Party
    10,725       15,354  
                 
Prepaid Expenses
    146,554       218  
                 
Total Current Assets
    157,370       17,079  
                 
Property and Equipment, net
    4,038       4,985  
                 
Intangible Assets, net
    57,504       -  
                 
Deposits, Long-term
    490       2,170  
                 
TOTAL ASSETS
  $ 219,402     $ 24,234  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
               
                 
CURRENT LIABILITIES
               
                 
Accounts Payable
  $ 89,894     $ 6,593  
                 
Due To Related Party
    141,200       25,000  
                 
Accrued Expenses
    123,248       22,702  
                 
TOTAL LIABILITIES
    354,342       54,295  
                 
STOCKHOLDERS’ EQUITY (DEFICIT)
               
                 
Preferred stock, par value $0.0001 per share
               
                 
Authorized – 20,000,000 shares,
               
none issued and outstanding
    -       -  
                 
Common stock, par value $0.0001 per share
               
                 
Authorized – 100,000,000 shares, 15,445,100 and 15,080,300 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively.
    1,545       1,508  
                 
Additional paid-in capital
    479,906       185,460  
                 
Deficit accumulated during development stage
    (616,391 )     (217,029 )
                 
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
    (134,940 )     (30,061 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
  $ 219,402     $ 24,234  

 
3

 

ADELMAN ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
AND FOR THE PERIOD FROM SEPTEMBER 13, 2006 (INCEPTION) TO SEPTEMBER 30, 2011
(UNAUDITED)

   
For the Three
Months Ended
September 30,
2011
   
For the Three
Months
Ended
September
30, 2010
   
For the Nine
Months Ended
September 30,
2011
   
For the Nine
Months
Ended
September
30, 2010
   
For the period
from September
13, 2006
(Inception) to
September 30,
2011
 
                               
REVENUE
  $ 15,000     $ -     $ 20,000     $ -     $ 20,000  
EXPENSES
                                       
Salaries and Wages
    358       18,945       76,398       18,945       2,143  
Rent
    2,343       14,250       8,607       11,500       41,857  
Legal and Professional Fees
    32,360       5,701       98,212       6,399       114,778  
Amortization
    18,735       -       20,996       -       20,996  
Other Expenses
    20,810       58,321       75,880       82,077       332,043  
Total Expenses
    74,606       97,217       280,093       118,921       511,817  
OTHER INCOME AND EXPENSE
                                       
Interest Expense
    (135,574 )     -       (138,905 )     -       (138,905 )
Sub-lease Income
    -       -       436       -       16,056  
LOSS BEFORE INCOME TAXES
  $ 195,180     $ 97,217     $ 398,562     $ 118,921     $ 614,666  
Income Tax Expense
    800       800       800       800       1,725  
NET (LOSS)
    (195,980 )     (98,017 )     (399,362 )     (119,721 )     (616,391 )
Basic and diluted loss per share
  $ 0.01     $ 0.01     $ 0.03     $ 0.01          
Weighted average number of shares outstanding, basic and diluted
    15,279,322       14,951,789       15,176,659       8,115,804          

 
4

 

ADELMAN ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
AND FOR THE PERIOD FROM SEPTEMBER 13, 2006 (INCEPTION) TO SEPTEMBER 30, 2011
(UNAUDITED)

   
For the Nine
Months Ended
September 30,
2011
   
For the Nine
Months Ended
September 30,
2010
   
For the period
from September
13, 2006
(Inception) to
September 30,
2011
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net (Loss)
  $ (399,362 )   $ (119,721 )   $ (616,391 )
Stock issued for services
    8,000       -       9,667  
Stock issued in lieu of interest
    260,000       -       260,000  
                         
Adjustment to reconcile net loss to net cash used by operating activities:
                       
Depreciation
    1,445       135       1,858  
Amortization
    20,996       -       20,996  
Stock issued for rent
    -       19,000       19,000  
Contributed organizational expenses
    -       -       650  
Changes in operating assets and liabilities:
                       
Due from  related party
    4,629       (11,771 )     (10,725 )
Prepaid Expenses
    (146,336 )     (4,750 )     (146,554 )
Deposits
    1,680       (2,170 )     (490 )
Accounts Payable
    83,301       -       89,894  
Accrued Expenses
    100,546       4,225       123,248  
Net Cash Used In Operating Activities
    (65,101 )     (115,052 )     (248,847 )
CASH FLOWS FROM INVESTING ACTIVITIES
                       
Intangible Assets
    (50,000 )     -       (50,000 )
Purchase of Property and Equipment
    (498 )     (2,197 )     (5,896 )
Acquisition of Anthus
    (4,817 )     -       (4,817 )
NET CASH USED IN INVESTING ACTIVITIES
    (55,315 )     (2,197 )     (60,713 )
CASH FLOWS FROM FINANCING ACTIVITIES
                       
Proceeds from issuance of common stock
    2,800       120,223       168,526  
Redemption of common stock
    -       (75 )     (75 )
Proceeds from related party note
    116,200       -       141,200  
NET CASH PROVIDED BY FINANCING ACTIVITIES
    119,000       120,148       309,651  
INCREASE IN CASH AND CASH EQUIVALENTS
    (1,416 )     2,899       91  
CASH AND CASH  EQUIVALENTS - BEGINNING OF PERIOD
    1,507       500       -  
CASH AND CASH EQUIVALENTS - END OF PERIOD
  $ 91     $ 3,399     $ 91  
NON-CASH INVESTING AND FINANCING ACTIVITIES
                       
Common stock issued for licensing agreements
  $ 28,500     $ -     $ 28,500  
                         
Cash Paid For:
                       
Interest
    -       -       -  
Income Taxes
    -       -       -  

 
5

 
 
ADELMAN ENTERPRISES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
(UNAUDITED)

 
1.
NATURE OF OPERATIONS & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
 
Organization & Nature of Operations

Adelman Enterprises, Inc. (“the Company”) is designed to become a diversified global media and technology company. Currently, it has one subsidiary, Anthus, LLC (“Anthus”) and one joint venture affiliate, Menache Adelman LLC (“Menache Adelman”).

The Company, through Anthus, has received limited revenues from operations during 2011. No other revenues have been generated since the Company’s inception.

Preparation of Interim Condensed Consolidated Financial Statements

These interim condensed consolidated financial statements for the periods ended September 30, 2011 and 2010 have been prepared by the Company's management, without audit in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). In the opinion of management, these interim condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments, unless otherwise noted) necessary to present fairly the Company's financial position, results of operations and cash flows for the fiscal periods presented. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in these interim financial statements pursuant to the SEC's rules and regulations, although the Company's management believes that the disclosures are adequate to make the information presented not misleading. The financial position, results of operations and cash flows for the interim periods disclosed herein are not necessarily indicative of future financial results. These interim condensed consolidated financial statements should be read in conjunction with the annual financial statements and the notes thereto included in the Company's most recent Annual Report on Form 10K for the fiscal year ended December 31, 2010.  The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

Consolidation

Effective April 11, 2011, the Company completed its acquisition of Anthus. The consolidated financial statements include the accounts of the Company and Anthus (from April 11, 2011 through September 30, 2011). All intercompany balances and transactions have been eliminated in consolidation.

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 certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on the Company’s historical results as well as management’s future expectations.  The Company’s actual results could vary materially from management’s estimates and assumptions.

 
6

 

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Property and Equipment

Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of three to five years for computer equipment, and three to seven years for office furniture and equipment. Leasehold improvements, if any, would be amortized over the lesser of the lease term of the useful life of the improvements.

Non-Cash Equity Issuances

The Company periodically issues shares of common stock in exchange for, or in settlement of, services. Management values the shares issued in such transactions at either the then market value of its common stock, as determined by the Board of Directors and after taking into consideration factors such as the volume of shares issued or trading restrictions, or the value of the services received, whichever is more readily determinable.

Revenue Recognition

The company currently recognizes revenue from the rendering of video production, editing and graphic design services through its wholly owned subsidiary, Anthus, as services are performed.

Income Taxes

The company uses the asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

Fair Value of Financial Instruments

In accordance with the reporting requirements of ASC Topic 825, Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. The estimated fair value of cash, accounts payable and other accrued expenses approximate their carrying amounts due to the nature and short maturity of these instruments.  The Company considers the carrying value of its financial instruments to approximate their fair value due to the short maturity of these instruments.

 
7

 

ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. Any such valuation adjustments are applied consistently over time.  At this time, management does not plan to adopt fair value accounting for nonfinancial assets or liabilities.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period.

Recent Pronouncements

There are no recently issued accounting standards with pending adoptions that the Company’s management currently anticipates will have any material impact upon its financial statements.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company sustained a net loss of $399,362 for the nine months ended September 30, 2011. The Company's current financial resources are not considered adequate to fund its planned operations.  These conditions raise substantial doubt about its ability to continue as a going concern.  The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company's continuation as a going concern currently is dependent upon timely procuring significant external debt and/or equity financing to fund its immediate and near-term operations, and subsequently realizing operating cash flows from implementation of its business ventures, the Anthus Channel and the motion capture technology.

Operating Lease

On March 1, 2011, the Company vacated its offices on Bonsai Avenue and entered into a new short-term lease agreement on a 1,180 square foot building located at 798 Moorpark Avenue, Moorpark, CA  93021. This building is owned by the Redevelopment Agency of the City of Moorpark (Redevelopment Agency).  The term is month to month and had a lease rate of $800 through August 31, 2011. Effective September 1, 2011, the rent increased to $900 per month.

 
2.
ACQUISITION OF ANTHUS

The acquisition by the Company of Anthus, LLC occurred on April 11, 2011.  Anthus was wholly owned by Charles Adelman, and in April, 2011, ownership of Anthus was transferred to the Company. Anthus is a development-stage company incorporated in Delaware in June 2009 by Charles Adelman, president of Anthus and President/CEO of the Company. Anthus is developing the Anthus Channel, a 24/7 global broadcast television network focused on health, wellness, positivity and philanthropy. The basis of the network will be an advanced online social networking system that will create a bridge for advertisers to their target audience, providing a link between broadcast, mobile and web. Anthus had limited operations through the acquisition date. As a result, Anthus was transferred to the company for no consideration. As a result of the acquisition, the Company assumed liabilities of Anthus which totaled $4,817.

 
8

 
 
 
3.
RELATED PARTY TRANSACTIONS

As of September 30, 2011, there are balances due to and from four different entities.

A.           Anthem Pictures: Charles Adelman is 51% owner and President of Anthem Pictures. Anthem Pictures sub-leased part of the building located at 5214 Bonsai Ave, Moorpark, CA 93021. Anthem Pictures owed the Company rent in the amount of $2,150 and $5,920 as of September 30, 2011 and December 31, 2010, respectively. This total is included in Due from Related Party on the condensed Balance Sheets.

B.           Daniel Kass:  Daniel Kass is on the Board of Directors of the Company and owns 8% of the current outstanding shares. Mr. Kass  loaned the Company a total of $25,000 as of December 31, 2010 and a total of $138,440 as of September 30, 2011 for Company operating expenses at 6% interest, to be paid out of any bridge funding or funds out of a successful public offering.  This total is included in Due to Related Party on the condensed Balance Sheets.

C.           Helen Jepsen:  Helen Jepsen is a shareholder of the Company. Mrs. Jepsen has loaned the Company a total of $2,974 for Company travel expenses during the 9 months ended September 30, 2011 at 6% interest, to be paid out of any bridge funding or funds out of a successful public offering.  This total is included in Due to Related Party on the condensed Balance Sheets.

D.           Menache Adelman:  Adelman Enterprises is 40% owner in Menache Adelman. As of September 30, 2011, Menache Adelman owed the Company $8,166. This total is included in Due from Related Party on the condensed Balance Sheets.

 
4.
COMMITMENTS & CONTINGENCIES
 
Operating Lease

On March 1, 2011, the Company vacated its offices on Bonsai Avenue and entered into a new short-term lease agreement on a 1,180 square foot building located at 798 Moorpark Avenue, Moorpark, CA  93021. This building is owned by the Redevelopment Agency of the City of Moorpark (Redevelopment Agency).  The term is month to month at a lease rate of $800 for the first six months and increasing to $900 in month seven.

Menache Adelman

In addition to the balances listed above, on April 24, 2010, the Company executed a joint venture agreement (the “Joint Venture Agreement”) with Menache, LLC, a California limited liability company (the “Operating Agreement”) containing the governing provisions and intentions for creating a new Delaware limited liability company, Menache Adelman.  On April 30, 2010, the Company entered into an operating agreement with Menache Adelman, conditioned on money being raised for Menache Adelman by the Company and certain patents being transferred to Menache Adelman by Menache, LLC.

The initial members of Menache Adelman and their ownership percentages are:

 
9

 

Menache, LLC
    60 %
Adelman Enterprises, Inc.
    40 %

Pursuant to the terms of the original agreement between the parties, the Company received this 40% interest on the promise of delivering $3.5 million to fund Menache Adelman, of which a minimum of $350,000 was due no later than May 31, 2011.  If the Company could not provide those funds, the 60% owner of Menache Adelman, Menache, LLC, had the right to dissolve Menache Adelman and revert the patent rights back to Menache, LLC.  The agreement between the companies has been amended a number of times, as set forth below.  As of September 30, 2011, the Company has not remitted any funds to Menache Adelman.

The Company committed to funding operations for Menache Adelman for the first year in the amount of $3,500,000. In addition, the Company is required to pay $66,667 to Alberto Menache, a member of the Board of Managers of Menache Adelman, for future consulting services. The use of these funds will be to complete the commercialization of the technology as well as to facilitate deployment of the technology for licensing to productions and other industries.  The Company originally committed to initial funding of at least $350,000 to Menache Adelman no later than October 24, 2010.  Pursuant to a number of amendments the funding deadline was extended to October 31, 2011. The Company was unable to meet this deadline. As a result, Menache LLC has the right to effect the liquidation of Menache Adelman with the ownership of the patents reverting to Menache LLC.

Success Bonus

Management intends to pay a bonus dependent on the degree of success the Company may derive from fundraising efforts being carried out through a public offering of stock as described in the Company’s Form S-1 and related amendments which have been filed with the Securities & Exchange Commission. As of this date, the degree of success is uncertain therefore no amount has been calculated or accrued.

 
5.
INCOME TAXES

As of September 30, 2011, the Company had a net operating loss carryforward of approximately $480,000, which would result in a deferred tax asset of approximately $165,000.  Since the Company has not yet started to generate income, this amount is not currently expected to be realized, and accordingly, the company has fully offset this deferred tax asset with a valuation allowance.

Unused net operating loss carryforwards will begin to expire in 2026.

The company has not and does not expect to report any uncertain tax positions in tax returns filed since their inception in 2006.

 
6.
COMMON STOCK ISSUANCES

During the quarter ended June 30, 2011, 5,000 shares of the Company’s common stock were issued in exchange for the license on a song. The transaction was valued at $2.50 per share for a total transaction cost of $12,500.

During the quarter ended September 30, 2011, shares of the Company’s common stock were issued as follows:

 
10

 

1.  The Company entered into an agreement whereby 20,000 shares were issued and an obligation to pay $50,000 was incurred in exchange for the licensing of a music library consisting of 211 songs for the period of one year. The shares were valued at $0.80 per share for a total transaction cost of $66,000.
 
2.  225,000 shares were issued to the Company’s general counsel to provide an extension of time to pay outstanding invoices until the Company’s S-1 registration statement becomes effective and sufficient proceeds are available to pay the balance. The transaction was valued at $0.80 per share for a total transaction cost of $180,000 and will be amortized over the period of time currently expected for the S-1 to become effective.
 
3.  100,000 shares were issued to Menache, LLC to provide an extension of time to fund Menache-Adelman, LLC. The transaction was valued at $0.80 per share for a total transaction cost of $80,000 and will be amortized through October 31, 2011, the period of time through with Menache, LLC has granted an extension of time to fund Menache-Adleman, LLC.
 
4.  10,000 shares were issued to special advisers to the Company. These transactions were valued at $0.80 per share for a total transaction cost of $8,000.
 
5.  4,800 shares were issued to company advisers for cash totaling $2,800.
 
 
7.
OPERATING SEGMENT INFORMATION

The following is key information about each of the Company’s operating segments for the nine months ended September 30, 2011 and 2010:

   
Adelman
Enterprises
   
Anthus
   
Consolidated
 
REVENUES FROM EXTERNAL CUSTOMERS
                 
2011
  $ -     $ 20,000     $ 20,000  
2010
  $ -     $ -     $ -  
                         
REVENUES FROM OTHER OPERATING SEGMENTS
                       
2011
  $ -     $ -     $ -  
2010
  $ -     $ -     $ -  
                         
SEGMENT PROFIT OR (LOSS)
                       
2011
  $ (403,006 )   $ 3,644     $ (399,362 )
2010
  $ (119,721 )     N/A, (1)   $ (119,721 )
                         
CAPITAL EXPENDITURES
                       
2011
  $ 498     $ -     $ 498  
2010
  $ 2,197       N/A, (1)   $ 2,197  
                         
(1)   Anthus was not a part of the Company until April 2011.

 
11

 
 
 
8.
SUBSEQUENT EVENTS

1. Subsequent to September 30, 2011, the Company issued 20,000 shares of common stock to an individual in consideration for help with corporate compliance.

 
2. Subsequent to September 30, 2011, an individual joined the Anthus team as Executive Vice President of Creative Development and was issued 200,000 shares of common stock.

3. On October 24, 2011, the Company filed Form S-1.

4. On November 3, 2011, the Company filed Form S-1/A.

 
12

 

ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 
FORWARD-LOOKING STATEMENTS

You should read this section together with our financial statements and related notes thereto included elsewhere in this report. In addition to the historical information contained herein, this report contains forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are not based on historical information but relate to future operations, strategies, financial results or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. Certain statements contained in this Form 10-Q, including, without limitation, statements containing the words "believe," "anticipate," "estimate," "expect," "are of the opinion that" and words of similar import, constitute "forward-looking statements." You should not place any undue reliance on these forward-looking statements.
 
You should be aware that our results from operations could materially be affected by a number of factors, which include, but are not limited to the following: economic and business conditions, our ability to control costs and expenses, access to capital, and our ability to meet contractual obligations. There may be other factors not mentioned above or included elsewhere in this report that may cause actual results to differ materially from any forward-looking information.

BUSINESS DEVELOPMENT

The Company, through its subsidiary Anthus, has received limited revenues from operations during 2011. No other revenues have been generated prior to this year. The following is a description of the Company’s plan of operation for the remainder of the fiscal year.

The Company intends to be a diversified global media and technology company developing the Anthus Channel with purpose driven content, mobile platforms and social networking.  The Company's objective is to be the leading custom-content producing, technology-based, socially conscious media company.

In the early stages of development the Company’s business will be significantly dependent on the Company’s management team.  The Company’s success will be particularly dependent upon: Charles Adelman, Douglas Ridley and Bob Denton.

The Company plans to expand its business through the introduction of a social media platform and by soliciting carriage providers to gain commitments for channel placement of Anthus.  The Company plans to implement an online distribution outlet for the network that will expand the reach of programming and increase audience share.  The Company believes that it will be able to develop a customer base comprised of home consumers and viewers of television programming and develop a large customer base through the marketing and promotion of the television channel and the online presence.  The Company believes that its programming and delivery avenues offer advantages over competitive companies and products.

Employees

The Company has three executive officers: Charles Adelman, President and Chief Executive Officer, Douglas Ridley, Chief Operating Officer, Bob Denton, Chief Financial Officer and one employee, Jessica Adelman. The Company does not have any other employees, but expects that to hire additional personnel as the company expands.

 
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RESULTS OF OPERATIONS – THREE MONTHS ENDED SEPTEMBER 30, 2011 TO THE THREE MONTHS ENDED SEPTEMBER 30, 2010

Revenue

During the three months ended September 30, 2011, the Company generated $15,000 of revenue through its wholly owned subsidiary, Anthus, LLC for video production services. No revenue was earned in the three month period ended September 30, 2010.

Expenses

The Company incurred salary and wage expenses totaling $358 and $18,945 for the three months ended September 30, 2011 and 2010, respectively. Sufficient capital was available in the fourth quarter of 2010 and first quarter of 2011 to pay modest salaries to the Company’s management during those times. Since that time, management has forgone payment of wages until such time that sufficient capital is again available. The increase in salaries and wages was the result of timing as to when management received compensation. No amounts are due to management as of September 30, 2011 for periods prior to that time where compensation was not paid and instead a bonus will be paid based on the degree of success the Company may derive from fundraising efforts being carried out through a public offering of stock as described in the Company’s Form S-1 and related amendments which have been filed with the Securities & Exchange Commission.

The Company incurred rent expense totaling $2,343 and $14,250 for the three months ended September 30, 2011 and 2010, respectively. The decrease in rent expense was the result of management moving the Company’s operations into a building with a much lower monthly rental rate.

The Company incurred legal and professional fees totaling $32,360 and $5,701 for the three months ended September 30, 2011 and 2010, respectively. The increase in legal and professional fees was primarily the result of paying for the services related to the audit of the Company’s financial statements as of and for the year ended December 31, 2010 as a result of the Company becoming an active operating company in April 2010.

The Company incurred other expenses of $20,810 and $58,321 for the three months ended September 30, 2011 and 2010, respectively. The decrease in other expenses was primarily the result of decreased travel related expenses and general office expenses.

Net Loss

As a result of the aforementioned, the Company’s net loss increased to $195,980 for the three month period ended September 30, 2011 as compared to $98,017 for the three month period ended September 30, 2010.

RESULTS OF OPERATIONS – NINE MONTHS ENDED SEPTEMBER 30, 2011 TO THE NINE MONTHS ENDED SEPTEMBER 30, 2010

Revenue

During the nine months ended September 30, 2011, the Company generated $20,000 of revenue through its wholly owned subsidiary, Anthus, LLC for video production services. No revenue was earned in the nine month period ended September 30, 2010.

 
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Expenses

The Company incurred salary and wage expenses totaling $76,398 and $18,945 for the nine months ended September 30, 2011 and 2010, respectively. Sufficient capital was available in the fourth quarter of 2010 and first quarter of 2011 to pay modest salaries to the Company’s management during those times. Since that time, management has forgone payment of wages until such time that sufficient capital is again available. The increase in salaries and wages was the result of timing as to when management received compensation. No amounts are due to management as of September 30, 2011 for periods prior to that time where compensation was not paid and instead a bonus will be paid based on the degree of success the Company may derive from fundraising efforts being carried out through a public offering of stock as described in the Company’s Form S-1 and related amendments which have been filed with the Securities & Exchange Commission.

The Company incurred rent expense totaling $8,607 and $11,500 for the nine months ended September 30, 2011 and 2010, respectively. The decrease in rent expense was the result of management moving the Company’s operations into a building with a much lower monthly rental rate.

The Company incurred legal and professional fees totaling $98,212 and $6,399 for the nine months ended September 30, 2011 and 2010, respectively. The increase in legal and professional fees was primarily the result of paying for the services related to the audit of the Company’s financial statements as of and for the year ended December 31, 2010 as a result of the Company becoming an active operating company in April 2010 and additionally due to legal expenses which have been incurred relative to the Company’s Form S-1 filings.

The Company incurred other expenses of $75,880 and $82,077 for the nine months ended September 30, 2011 and 2010, respectively. The decrease in other expenses was primarily the result of an increase in marketing, filing, interest, payroll, service and computer charges in 2011 and a decrease in outside services, office supplies, and travel expenses.

Other Income and Expense

Other income and expenses consisted of $436 and $0 of sub-lease income for the nine month periods ended September 30, 2011 and 2010, respectively.

Net Loss

As a result of the aforementioned, the Company’s net loss increased to $399,362 for the nine month period ended September 30, 2011 as compared to $119,721 for the nine month period ended September 30, 2010.

LIQUIDITY & CAPITAL RESOURCES

The Company incurred losses since we began operating our business and as of September 30, 2011, we had an accumulated deficit of $616,391. As of September 30, 2011 we had cash of $91. The Company has raised a total of $170,768 through the private placement of 15,081,300 shares of common stock. Additionally, the Company has issued 363,800 shares of common stock in exchange for services and intangible assets. As of September 30, 2011, Dan Kass has loaned the Company a total of $138,440 for operating expenses and Helen Jepsen loaned the Company a total of $2,974. Both loans are at 6% interest, to be paid out of any bridge funding or funds out of a successful public offering.

 
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OFF BALANCE SHEET ARRANGEMENT

The Company does not engage in any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial conditions, revenues, results of operations, and liquidity or capital expenditures.

CRITICAL ACCOUNTING POLICIES

Use of Estimates

The discussion and analysis of our financial conditions and results of operations are based upon our 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, 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 that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our financial statements.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company's current financial resources are not considered adequate to fund its planned operations.  This condition raises substantial doubt about its ability to continue as a going concern.  The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company's continuation as a going concern currently is dependent upon timely procuring significant external debt and/or equity financing to fund its immediate and near-term operations, and subsequently realizing operating cash flows from implementation of its business ventures, the Anthus Channel and the motion capture technology.

Value of Stock Issued for Services

We may issue shares of our common stock in exchange for, or in settlement of, services. Our management values the shares issued in such transactions as determined by the Board of Directors and after taking into consideration factors such as volume of shares issued or trading restrictions, or the value of the services rendered, whichever is more readily determinable.

ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Based on the nature of our current operations, we have not identified any issues of market risk at this time.

ITEM 4. 
CONTROLS AND PROCEDURES

The principal executive officer and principal financial officer of the Company, (“the Certifying Officers”) with the assistance of advisors, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in section 240.13a-14(c) and 240.15d-14(c) under the Exchange Act) within 90 days prior to the filing of this report. Based upon the evaluation, the Certifying Officers concludes that the Company’s disclosure controls and procedures are not effective in timely alerting management to material information relative to the Company which is required to be disclosed in its periodic filings with the SEC. This is due to the lack of employing internal resources sufficiently knowledgeable in accounting and SEC disclosures.

During the three months ended September 30, 2011 there were no significant changes in the Company’s internal controls.

 
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PART II

ITEM 1A. 
RISK FACTORS

The Company was unable to meet its funding deadline with respect to Menache Adelman LLC, possibly hindering its access to certain technology owned by that company.

The Company was unable to meet its funding obligations to Menache Adelman LLC on October 31, 2011, as required under the terms of the Operating Agreement of Menache Adelman, LLC.  As a result, Menache LLC has the right to effect the liquidation of Menache Adelman with the ownership of the patents reverting to Menache LLC.  The Company believes that it can implement its business plan despite the possible reversion of the patents to Menache LLC.  However, to the extent that the Company’s results of operations were dependent on the use of technology owned by Menache Adelman LLC to provide unique content, the Company will need to seek a different channel for accessing such technology.  There can be no assurance that the Company will be able to obtain access to the motion capture technology previously owned by Menache Adelman LLC.

ITEM 6. 
EXHIBITS
 
 
31.1
Certification of CEO Pursuant to Securities  Exchange Act Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 
31.2
Certification of CFO Pursuant to Securities  Exchange Act Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 
32.1
Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 
32.2
Certification of CFO Pursuant to 18 U.S.C. Section 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.

 
ADELMAN ENTERPRISES, INC.
 
 (Registrant)
   
Dated: November 21, 2011
 
 
Charles Adelman,
 
President and Chief Executive Officer
   
Dated: November 21, 2011
 
 
Robert L. Denton,
 
Chief Financial Officer

 
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