UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.
20549




FORM
10-Q




þ    QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934




For
the quarterly period ended March 31, 2009




Or




o    TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934




Commission
file number 0-21982





ALLEGRO
BIODIESEL CORPORATION


(Exact
name of registrant as specified in its charter)




DELAWARE
            41-1663185(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification Number)6033
      West Century Blvd., Suite 1090
              Los
      Angeles, California 90045
            90045(Address
      of principal executive offices)
            (Zip
      Code)





Registrant’s
telephone number, including area code:(310) 670-2093





(Not
applicable)


(Former
name, former address and former fiscal year, if changed since last
report)




Indicate
by checkmark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.   Yes þNo o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes oNo o




Indicate
by checkmark 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. (Check One)





Large
      accelerated filer
            o
            
            Accelerated
      filer
            oNon-accelerated
      filer
            o
            
            Smaller
      reporting company
            þ(Do
      not check if smaller reporting company)




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12 b-2 of the Exchange Act).   Yes þNo o





As of
May 8, 2009 the registrant had 28,847,667 shares of Common Stock
outstanding.












PART I -- FINANCIAL INFORMATION




ITEM
I -- FINANCIAL STATEMENTS


ALLEGRO
BIODIESEL CORPORATION


CONSOLIDATED
BALANCE SHEETS


March
      31, 2009
              
              December
      31, 2008(Unaudited)
              
              (Audited)AssetsCurrent
      assets:Cash
      and cash equivalents
              $
              520,953
              
              
              $
              48,339Other
      current assets
              
              9,738
              
              
              
              7,820Total
      current assets
              
              530,691
              
              
              
              56,159Investments
              
              788,550
              
              
              
              788,550Other
              
              25,896
              
              
              
              25,896Total
      assets
              $
              1,345,137
              
              
              $
              870,605Liabilities
      and Shareholders’ DeficitCurrent
      liabilities:Accounts
      payable
              
              190,032
              
              
              
              319,978Accrued
      expenses
              
              471,953
              
              
              
              469,560Accrued
      dividends
              
              5,224,949
              
              
              
              4,715,501Due
      to Ocean Park Advisors, LLC.
              
              
              65,000
              
              
              
              216,440Total
      current liabilities
              
              5,951,934
              
              
              
              5,721,479Total
      liabilities
              
              5,951,934
              
              
              
              5,721,479Shareholders’
      deficit:Convertible
      preferred stock, $0.01 par value:50,000,000
      shares authorized - 23,581,440 and 23,860,112 sharesissued
      and outstanding shares at March 31, 2009 and December 31, 2008,
      respectively
              
              262,766
              
              
              
              265,553Common
      stock, $0.01 par value:150,000,000
      shares authorized - 28,847,667 and 28,919,779 sharesissued
      and outstanding shares at March 31, 2009 and December 31, 2008,
      respectively
              
              280,174
              
              
              
              280,895Additional
      paid in capital
              
              317,459,598
              
              
              
              317,395,124Accumulated
      deficit
              
              (322,609,335
              )
              
              
              (322,792,446
              )Total
      shareholders’ deficit
              
              (4,606,797
              )
              
              
              (4,850,874
              )Total
      liabilities and shareholders' deficit
              $
              1,345,137
              
              
              $
              870,605


See
accompanying Notes to Consolidated Financial Statements.


1


ALLEGRO
BIODIESEL CORPORATION


CONSOLIDATED
STATEMENTS OF OPERATIONS


(UNAUDITED)




Three
      Months Ended March 31,2009
                        
                        
                        2008General
      and administrative
                        
                        
                        193,111
                        
                        
                        
                        544,106Operating
      loss
                        
                        
                        (193,111
                        )
                        
                        
                        (544,106
                        )Interest
      expense
                        
                        
                        -
                        
                        
                        
                        (67,094
                        )Interest
      income
                        
                        
                        206
                        
                        
                        
                        8,538Other,
      net
                        
                        
                        946,430
                        
                        
                        
                        15Income
      (loss) before income taxes
                        
                        
                        753,525
                        
                        
                        
                        (602,647
                        )Income
      taxes
                        
                        
                        -
                        
                        
                        
                        -Net
      income (loss) from continuing operations
                        
                        
                        753,525
                        
                        
                        
                        (602,647
                        )Discontinued
      operations, net of income taxes
                        
                        
                        -
                        
                        
                        
                        (5,650,783
                        )Net
      income (loss)
                        
                        
                        753,525
                        
                        
                        
                        (6,253,430
                        )Dividends
      on preferred stock
                        
                        
                        (570,414
                        )
                        
                        
                        (581,096
                        )Net
      income (loss) available to common shareholders
                        
                        $
                        183,111
                        
                        
                        $
                        (6,834,506
                        )Net
      income (loss) per shareBasic:Continuing
      operations
                        
                        $
                        0.01
                        
                        
                        $
                        (0.03
                        )Discontinued
      operations
                        
                        
                        
                        
                        
                        $
                        (0.24
                        )Diluted:Continuing
      operations
                        
                        $
                        0.00
                        
                        
                        $
                        (0.03
                        )Discontinued
      operations
                        
                        
                        
                        
                        
                        $
                        (0.24
                        )Weighted
      average number of common shares used in per share
      calculations:Basic
                        
                        
                        28,755,373
                        
                        
                        
                        23,433,434Diluted
                        
                        
                        68,116,024
                        
                        
                        
                        23,433,434








See
accompanying Notes to Consolidated Financial Statements.


2


ALLEGRO
BIODIESEL CORPORATION


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(UNAUDITED)


Three
      Months Ended March 31,2009
                  
                  
                  2008Cash
      flows from operating activities:Net
      income (loss)
                  
                  $
                  753,525
                  
                  
                  $
                  (6,253,430
                  )Adjustments
      to reconcile net income (loss) to net cash from operating
      activities:Depreciation
      and amortization
                  
                  
                  -
                  
                  
                  
                  -Impairment
      charges
                  
                  
                  -
                  
                  
                  
                  5,443,586Gain
      on sale of equity interest in PAAL
                  
                  
                  -
                  
                  
                  
                  (125,000
                  )Stock-based
      compensation and other
                  
                  
                  -
                  
                  
                  
                  110,674Bad
      debt expense
                  
                  
                  -
                  
                  
                  
                  61,730Creditor
      and note receivable settlements
                  
                  
                  -
                  
                  
                  
                  (7,974
                  )Accretion
      of convertible notes payable and amortization of debt
    discount
                  
                  
                  -
                  
                  
                  
                  49,834Changes
      in operating assets and liabilities:Accounts
      receivable
                  
                  
                  -
                  
                  
                  
                  (1,758
                  )Inventory
                  
                  
                  -
                  
                  
                  
                  9,941Prepaid
      expenses and other assets
                  
                  
                  (1,918
                  )
                  
                  
                  40,052Accounts
      payable
                  
                  
                  (129,946
                  )
                  
                  
                  (23,570
                  )Due
      to Ocean Park Advisors, LLC.
                  
                  
                  (151,440
                  )
                  
                  
                  54,678Accrued
      expenses
                  
                  
                  2,393
                  
                  
                  
                  (41,494
                  )Net
      cash provided by (used in) operating activities
                  
                  
                  472,614
                  
                  
                  
                  (682,731
                  )Cash
      flows from investing activities:Capital
      expenditures
                  
                  
                  -
                  
                  
                  
                  (15,435
                  )Proceeds
      from sale of equity interest in PAAL
                  
                  
                  -
                  
                  
                  
                  125,000Net
      cash provided by investing activities
                  
                  
                  -
                  
                  
                  
                  109,565Cash
      flows from financing activities:Proceeds
      from repayment of issued promissory note
                  
                  
                  -
                  
                  
                  
                  225,000Payments
      on line of credit and notes payable
                  
                  
                  -
                  
                  
                  
                  (150,000
                  )Net
      cash provided by financing activities
                  
                  
                  -
                  
                  
                  
                  75,000Net
      change in cash and cash equivalents
                  
                  
                  472,614
                  
                  
                  
                  (498,166
                  )Cash
      and cash equivalents at beginning of period
                  
                  
                  48,339
                  
                  
                  
                  874,693Cash
      and cash equivalents at end of period
                  
                  $
                  520,953
                  
                  
                  $
                  376,527Supplemental
      disclosure of cash flow information:Cash
      paid during the period for interest
                  
                  $
                  -
                  
                  
                  $
                  150,012Cash
      paid during the period for income taxes
                  
                  $
                  -
                  
                  
                  $
                  -Supplemental
      disclosure of non-cash investing and financing activities:Conversion
      of convertible debt into common stock
                  
                  $
                  -
                  
                  
                  $
                  1,000,000Conversion
      of accrued dividends into common stock
                  
                  $
                  60,967
                  
                  
                  $
                  521,548


See
accompanying Notes to Consolidated Financial Statements.  3
  ALLEGRO
BIODIESEL CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009


(UNAUDITED)




1. Business





Allegro
Biodiesel Corporation (“Allegro”, “we,” “us” or “Company”) is a publicly-traded
shell company which from September 20, 2006 through September 9, 2008 owned a
biodiesel production facility that used renewable agricultural-based feedstock
(primarily soybean oil) to produce biodiesel fuel (the “Pollock
Facility”).





During
2007, the biodiesel industry experienced a significant increase in the cost of
soybean oil. The increase in the cost of soybean oil had a significant negative
effect on our profit margins and cash flows. Given these economic conditions, on
October 15, 2007 we adopted a Company-wide cost reduction plan to reduce our
costs. We also significantly reduced, and then halted, production at the Pollock
Facility during the fourth quarter of 2007.





Due to
the continuing difficult conditions in the biodiesel industry described above,
during the second quarter of 2008, the independent member of our board of
directors recommended to our stockholders to approve the sale (the “Sale”) of
100% of the membership interests of our wholly owned subsidiary, Vanguard
Synfuels, LLC (“Vanguard”), to Consolidated Energy Holdings, LLC, a Louisiana
limited liability company (“CEH”).





As a
consequence of the Sale, we have reduced our outstanding liabilities and
eliminated our secured debt. While we no longer have any operating assets, and
are considered a “shell company” under the rules and regulations of the
Securities and Exchange Commission, we continue to operate as a publicly-traded
corporation with non-operating assets, including cash and our equity investment
in Community Power Corporation (“CPC”).  In February 2009, we
increased our cash balance significantly due to our receipt of an arbitration
award relating to our 2006 acquisition of Vanguard totaling $875,428 in cash
plus accrued interest of $63,900, and 519,736 shares of our common
stock.  The escrow proceeds received have been classified as “Other,
net” in the accompanying statement of operations.





As of
March 31, 2009, we had negative working capital of $5,421,243. Included as a
reduction to working capital is $5,224,949 of accrued dividends which the
Company may pay, at its option, in shares of its Series A convertible preferred
stock.





Management
is actively seeking strategic alternatives, including the pursuit of additional
financing for acquisitions and evaluating potential strategic transactions.
However, due to the current economic environment, we cannot assure our current
and future stockholders that there will be adequate funds available when needed
and on acceptable terms, or that a strategic alternative can be
arranged.  We are also attempting to sell our minority interest in
CPC.  If we are unable to arrange for a strategic alternative, obtain
additional financing, or sell our minority interest in CPC by fourth quarter of
2009, we will not be able to operate as a going concern and will likely be
forced to liquidate and wind-up the Company.





The
consolidated financial statements have been prepared on a going concern basis
which contemplates the realization of assets and the settlement of liabilities
in the normal course of business.  The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.





2. Basis
of Presentation and Significant Accounting Policies





Basis
of Presentation


The
consolidated financial statements of Allegro are unaudited and have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information, pursuant to the
rules and regulations of the Securities and Exchange Commission. Notes to the
financial statements which would substantially duplicate the disclosures
contained in the audited financial statements for the most recent fiscal year
2008 as reported in the Company's Form 10-K have been omitted.  The results
of operations for the three month periods ended March 31, 2009 and 2008 are not
necessarily indicative of the results to be expected for the full year. All
accounts and intercompany transactions have been eliminated in consolidation. In
the opinion of management, the consolidated financial statements include all
adjustments, consisting of normal recurring accruals, necessary to present
fairly the Company's financial position, results of operations and cash flows.
These statements should be read in conjunction with the financial statements and
related notes which are part of the Company's Annual Report on Form 10-K for the
year ended December 31, 2008.




4




Net
Income (Loss) per Share


Basic net
income (loss) per share is calculated by dividing net income (loss) by the
weighted average common shares outstanding during the period. Diluted net income
(loss) per share reflects the potential dilution to basic EPS that could occur
upon conversion or exercise of securities, options or other such items to common
shares using the treasury stock method, based upon the weighted average fair
value of our common shares during the period. The following table sets forth
potential shares of common stock that are not included in the diluted net loss
per share calculation because to do so would be anti-dilutive for the periods
indicated below:




Three
      months endedMarch
      31,2009
            
            
            
            2008Convertible
      preferred stock - Series A
            
            
            --
            
            
            
            39,014,910Convertible
      preferred stock - Series B
            
            
            --
            
            
            
            1,413,900--
            
            
            
            40,428,810




The following is a
reconciliation of the numerator and denominator of basic earnings per share
("EPS") to the numerator and denominator of diluted EPS for the 2009
period.




Net
      income
            
            
            Shares
            
            
            Per
      share(Numerator)
            
            
            (denominator)
            
            
            amountBasic
      EPS
            
            $
            181,111
            
            
            
            28,755,373
            
            
            $
            0.01Effect
      of convertible preferred stock
            
            
            -
            
            
            
            39,360,651
            
            
            
            (0.00
            )Diluted
      EPS
            
            $
            181,111
            
            
            
            68,116,024
            
            
            $
            0.00




Recent
Accounting Pronouncement
 In June
2008, the FASB ratified EITF Issue No. 07-5, Determining whether an Instrument
(or Embedded Feature) is indexed to an Entity’s Own Stock (“EITF
07-5”).  EITF 07-5 is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years.  Early application is not permitted.  ITF
07-5provides a new two-step model to be applied in determining whether a
financial instrument or an embedded feature is indexed to an issuer’s own stock
and thus able to qualify for the SFAS No. 133 paragraph consolidated financial
position, results of operations or cash flows.





3. Discontinued
Operation





In
September 2006, the Company acquired Vanguard. The Company committed to a plan
to sell Vanguard, which was approved by the board of directors, during the
second quarter of 2008. In accordance with SFAS 144, Vanguard’s financial
results have been classified as a discontinued operation in our consolidated
financial statements for all periods presented.  Accordingly, the
condensed consolidated financial statements have been revised for all periods
presented to reflect the Vanguard biodiesel business as a discontinued
operation. Unless noted otherwise, discussions in the notes to the consolidated
financial statements pertain to our continuing operations.





The
financial results of Vanguard included in discontinued operation are as follows
for the three months ended March 31, 2008:




Sales
            
            $
            55,014Income
      taxes
            
            
            --Loss
      from discontinued operations after income taxes
            
            $
            5,650,783





During
the three months ended March 31, 2008, the Company incurred impairment charges
totaling $5,443,586 related to Vanguard’s biodiesel facility and intangible
assets.





4. Common
Stock





During
the three months ended March 31, 2009, 278,672 shares of Series A convertible
preferred stock together with accrued dividends of $60,967 were converted
into 447,627 shares of common stock at the original conversion price of $0.76
per share.





In
February 2009, 519,736 shares of the Company’s common stock were awarded to us
in connection of the arbitration award relating to our 2006 acquisition of
Vanguard. The underlying shares will be cancelled by the
Company.













5




ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





This
quarterly report on Form 10-Q of Allegro Biodiesel Corporation (“Allegro”, “we,”
“us” or “Company”) for the three months ended March 31, 2009, contains
forward-looking statements, principally in this Section and “Business.”
Generally, you can identify these statements because they use words like
“anticipates,” “believes,” “expects,” “future,” “intends,” “plans,” and similar
terms. These statements reflect only our current expectations. Although we do
not make forward-looking statements unless we believe we have a reasonable basis
for doing so, we cannot guarantee their accuracy and actual results may differ
materially from those we anticipated due to a number of uncertainties, many of
which are unforeseen, including, among others, the risks we face as described in
this filing. You should not place undue reliance on these forward-looking
statements which apply only as of the date of this annual report. These
forward-looking statements are 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, and are intended to be covered by the safe harbors
created thereby. To the extent that such statements are not recitations of
historical fact, such statements constitute forward-looking statements that, by
definition, involve risks and uncertainties. In any forward-looking statement
where we express an expectation or belief as to future results or events, such
expectation or belief is expressed in good faith and believed to have a
reasonable basis, but there can be no assurance that the statement of
expectation of belief will be accomplished.





We
believe it is important to communicate our expectations to our investors. There
may be events in the future, however, that we are unable to predict accurately
or over which we have no control. The risk factors listed in this filing provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward-looking
statements. Factors that could cause actual results or events to differ
materially from those anticipated, include, but are not limited to our ability
to complete a strategic transaction on terms acceptable to us in a timely
fashion and our ability to adequately manage our cash while we do
so.




Overview





We are a
publicly-traded shell company.  From September 20, 2006, through
September 9, 2008 we owned a biodiesel production facility that used renewable
agricultural-based feedstock (primarily soybean oil) to produce biodiesel fuel
(the “Pollock Facility”).





During
2007, the biodiesel industry experienced a significant increase in the cost of
soybean oil. The increase in the cost of soybean oil had a significant negative
effect on our profit margins and cash flows. Given these economic conditions, on
October 15, 2007 we adopted a Company-wide cost reduction plan to reduce our
costs. We also significantly reduced, and then halted, production at the Pollock
Facility during the fourth quarter of 2007.





Due to
the continuing difficult conditions in the biodiesel industry described above,
during the second quarter of 2008, the independent member of our board of
directors recommended to our stockholders to approve the sale (the “Sale”) of
100% of the membership interests of our wholly owned subsidiary, Vanguard
Synfuels, LLC (“Vanguard”), to Consolidated Energy Holdings, LLC, a Louisiana
limited liability company (“CEH”). Two of our former executive officers, Darrell
Dubroc and Tim Collins hold membership interests in CEH. As reported in our Form
8-K dated September 9, 2008, the Sale was completed on September 9,
2008.





Pursuant
to the Sale, CEH assumed substantially all of the liabilities of Vanguard,
including (i) approximately $2.9 million in senior secured debt with First South
Farm Credit, ACA (“First South”); (ii) approximately $589,000 in trade payables
and accrued liabilities; (iii) obligations of Allegro and/or Vanguard under
existing employment agreements with employees of Allegro and of Vanguard; and
(iv) $258,000 in accrued compensation for certain Allegro employees that
accumulated since our Company-wide expense reduction plan through the date of
the Sale.





During
2008, we notified the Former Vanguard Members of our demand for indemnification
under the 2006 Contribution Agreement, and of our claim upon the escrow deposit
under the Escrow Agreement we entered into with them on September 20, 2006 (the
“Escrow Account”). We alleged that the Former Vanguard Members made certain
misrepresentations with respect to the closing balance sheet of Vanguard, dated
September 15, 2006, namely overstating inventory assets and understating current
liabilities. The total amount of this claim was approximately $1.1
million.





During
2008, we received $200,326 in proceeds and the return of 124,961 shares of our
common stock from the Escrow Account. In February 2009, we received an
arbitration award regarding the balance of our claims against the Escrow Account
consisting of an additional $875,428 in cash plus $63,900 of accrued interest,
and 519,736 shares of our common stock.




6




As a
consequence of the Sale, we have reduced our outstanding liabilities and
eliminated our secured debt, as described above. While we no longer have any
operating assets, and are considered a “shell company” under the rules and
regulations of the Securities and Exchange Commission, we continue as a
publicly-traded corporation with non-operating assets, including cash and our
equity investment in Community Power Corporation
(“CPC”).





Management
is actively seeking strategic alternatives, including the pursuit of additional
financing for acquisitions and evaluating potential strategic transactions.
However, due to the current economic environment, we cannot assure our current
and future stockholders that there will be adequate funds available when needed
and on acceptable terms, or that a strategic alternative can be
arranged.  We are also attempting to sell our minority interest in
CPC.  If we are unable to arrange for a strategic alternative, obtain
additional financing, or sell our minority interest in CPC by the fourth quarter
of 2009, we will not be able to continue as a going concern and will likely be
forced to liquidate and wind-up the Company.





Our
consolidated financial statements have been prepared on a going concern basis
which contemplates the realization of assets and the settlement of liabilities
in the normal course of business.  The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should we be unable to continue as a going
concern.





Unless
otherwise noted, the following discussions of our results of operations include
the results from continuing operations only.





Results
of Operations for the Three Months Ended March 31, 2009, compared to the
Three Months Ended March 31, 2008





Due to
the halting of production at the Pollock Facility in 2007, and the consummation
of the Sale in September 2008, we did not generate sales from continuing
operations for the three months ended March 31, 2009 and 2008.





Selling,
General and Administrative


Our
selling, general and administrative expenses include personnel costs, the costs
of corporate functions, accounting, transaction costs, legal, insurance,
consulting, and non-cash stock-based compensation.





Selling,
general and administrative expenses decreased to $193,111 during the first
quarter of 2009, from $544,106 in the comparable period of 2008.  The
change was primarily attributable to a reduction in stock-based compensation of
$110,674, a reduction of $96,762 and $114,968 in management fees paid to OPA and
salaries, respectively.  As a result of the Sale, salaries have
ceased.





Interest
Expense


Interest
expense decreased to $0 during the first quarter of 2009 from $67,094 in the
same period of 2008.  During the first quarter of 2008, we incurred
interest expense including the amortization of a debt discount on a $1,000,000
note outstanding which was converted into common stock during 2008.




Interest
Income


During
the first quarter of 2009 we generated interest income of $206 compared to
$8,538 during the comparable period of 2008.  The decrease was
attributable to lower average cash balances resulting from the cessation of
business operations discussed above.





Other,
net


Other,
net was $946,430 during the first quarter of 2009, compared to $15 in the
comparable period of 2008.  During the first quarter of 2009, we
received $939,328 in proceeds and common stock from the Escrow
Account.





Discontinued
Operation


During
the second quarter of 2008, the board of directors approved the Sale and on
September 9, 2008, we completed the Sale. We accounted for the Sale as a
discontinued operation in accordance with SFAS No. 144 “Accounting for the
Impairment or Disposal of Long Lived Assets.”  Accordingly, the
consolidated financial statements as of and for the three months ended March 31,
2008, have been revised to reflect Vanguard as a discontinued
operation.





During
the first quarter of 2008, Vanguard generated sales of $55,014 and incurred a
loss from discontinued operations of $5,650,783 which included impairment
charges totaling $5,443,586 for Vanguard’s biodiesel facility and intangible
assets.  See Note 3 to the consolidated financial statements for
further information regarding the classification of Vanguard as a discontinued
operation.





7


Liquidity
and Capital Resources





Our
principal sources of liquidity consist of cash and cash equivalents. Our
principal short-term and long-term liquidity requirements include costs to
operate a publicly-traded company and the exploration of strategic alternatives,
including potential mergers or acquisitions.





During
the first three months of 2009, we increased our cash balance significantly due
to our receipt of an arbitration award relating to our 2006 acquisition of
Vanguard totaling $875,428 in cash plus accrued interest of $63,900, and 519,736
shares of our common stock, as discussed above.





At March
31, 2009, our cash and cash equivalents totaled $520,953, and we had negative
working capital of $5,421,243.  Included in working capital is
$5,224,949 of accrued dividends on our Series A preferred stock, which we may
pay at our option in shares of stock or cash.





On
November 21, 2007, we issued a convertible promissory note to Monarch Pointe
Fund, Ltd. (“Monarch Pointe”), a fund managed by M.A.G. Capital, LLC (“MAG”) for
$1,000,000. The proceeds of this loan were used to make a minority investment in
CPC. The note was due on March 31, 2008, and was convertible into our common
stock at any time at either party’s election at a conversion price of $0.65 per
share. On March 31, 2008, we converted the principal of the note, together with
accrued interest, into 1,577,113 shares of our common stock.





We
believe that our existing sources of liquidity, including the receipt of the
proceeds from the Escrow Account should be sufficient to fund our continuing
operations into the fourth quarter of 2009. We are currently seeking additional
financing to fund our business and are attempting to sell our minority interest
in CPC.  We cannot assure you that such a financing can be obtained or
completed by us on favorable terms, or at all, or that we will be successful in
selling our minority interest in CPC.  If we cannot accomplish any of
these actions, or complete a strategic transaction by the fourth quarter of
fiscal 2009, we will likely be forced to wind-up and liquidate the
Company.





Operating
Activities


Cash
provided by operating activities was $472,614 for the first three months of
2009, compared to cash used of $682,731 for the same period of 2008. Operating
cash flows for the first quarter of 2009 reflects our net income of
$753,525 offset by changes in working capital of $280,911.  The
changes in working capital are primarily attributable to reductions in accounts
payable and amounts due to OPA





Operating
cash flows for the first three months of fiscal 2008 reflect our net loss of
$6,253,430, offset by changes in working capital of $37,849 and non-cash
expenses (impairment of goodwill and intangible assets for our discontinued
operation and stock-based compensation) of $5,532,850.





Investing
Activities


We did
not generate cash from investing activities during the first three months of
2009.  Cash provided by investing activities was $109,565 for the
first three months of 2008.  This amount resulted from the receipt of
proceeds from the sale of an equity interest we held in Port Asset Acquisition,
LLC, an entity we previously formed for the purpose of acquiring assets at the
Port of Alexandria, partially offset by capital expenditures of
$15,435.





Financing
Activities


We did
not generate cash from financing activities during the first three months of
2009. Cash provided by financing activities was $75,000 for the first three
months of fiscal 2008.  This amount resulted from a contractual principal
payment of $150,000 on our term loan with our former lender, First South, and
received $225,000 in proceeds from the repayment of a note
receivable.





Off
Balance Sheet Arrangements





We have
no off-balance sheet arrangements.


8


ITEM
4. CONTROLS AND PROCEDURES





(a)
            Evaluation
      of disclosure controls and
procedures.





As of
March 31, 2009, we carried out an evaluation, under the supervision and with the
participation of management, including our Chief Executive Officer and Principal
Financial and Accounting Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based
upon that evaluation, our Chief Executive Officer and Principal Financial and
Accounting Officer concluded that our disclosure controls and procedures were
effective as of March 31, 2009, to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.





(b)
            Changes
      in internal controls over financial
reporting.





There
were no changes in our internal controls over financial reporting during the
quarter ended March 31, 2009, that materially affected or are reasonably likely
to materially affect our internal control over financial reporting.





PART
II — OTHER INFORMATION




Item
6.  Exhibits





Exhibit
      No.31.1
            
            Certification
      of the Chief Executive Officer and Chief Accounting Officer pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200232.1
            
            Certification
      of the Chief Executive Officer and Chief Accounting Officer pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002






9




ALLEGRO
BIODIESEL CORPORATION





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.




ALLEGRO
BIODIESEL CORPORATION





By:  /s/
W. Bruce Comer III





W. Bruce
Comer III


Chief
Executive Officer (Principal Executive Officer and Principal Financial and
Accounting Officer)


Date: May
8, 2009












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