Parallel Industries (EAPH) 10QSB/A 2004 Q2 Quarterly report (small business) (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-QSB/A

Amendment No. 1

[X] Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended June 30, 2004
or

[  ] Transition Report under Section 13 or 15 (d) of
the Securities Exchange Act of 1934

Commission file No. 000-30641

L.A.M. PHARMACEUTICAL, CORP.

(Exact name of registrant as specified in its charter)

Delaware	52-2278236
(State of incorporation)	(I.R.S. Employer Identification Number)

800 Sheppard Avenue West,
Commercial Unit 1
Toronto, Ontario, Canada M3H 6B4

(Address of principal executive offices) (Zip Code)

(877) 526-7717

(Registrant’s telephone number, including area code)

Check 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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES [X]           NO [  ]

As of August 10, 2004, we had 58,690,713 issued and outstanding shares of common stock.

1

Purpose

This Form 10-QSB/A, which amends the Form 10-QSB for the period ended June 30, 2004 of L.A.M. Pharmaceutical, Corp. is being filed solely to amend and restate the information required by Item 1 of Part I of Form 10-QSB.

INDEX

		Page
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements
	Balance Sheets at June 30, 2004 (Unaudited) and December 31, 2003		4
	Statements of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended June 30, 2004 and 2003 (Unaudited)		5
	Statements of Operations for the Three Months Ended June 30, 2004 and 2003 (Unaudited)		6
	Statements of Operations for the Six Months Ended June 30, 2004 and 2003 (Unaudited)		6
	Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003 (Unaudited)		7
	Notes to Financial Statements		9
Section 302 Certification of CEO
Section 906 Certification of CEO

PART I
FINANCIAL INFORMATION

Item. 1	Financial Statements
	See the financial statements filed as part of this report (pages 4 to 11).

2

L.A.M. PHARMACEUTICAL, CORP.

(A DELAWARE CORPORATION)
Lewiston, New York

FINANCIAL REPORTS
AT
JUNE 30, 2004

3

L.A.M. PHARMACEUTICAL, CORP.
(A DELAWARE CORPORATION)
Lewiston, New York

BALANCE SHEETS

	(Unaudited and
	Restated)			(Restated)
	June 30,			December 31,
	2004			2003
ASSETS
Current Assets
Cash and Cash Equivalents	$	399,504		$	25,132
Accounts Receivable, net		8,109			8,936
Inventory		463,207			482,667
Prepaid Expenses		100,607			73,560
Total Current Assets		971,427			590,295
Property and Equipment - Net of Accumulated Depreciation		86,803			100,020
Other Assets
Patents and Trademarks - Net of Accumulated Amortization		641,702			591,543
Total Assets	$	1,699,932		$	1,281,858
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts Payable and Accrued Expenses	$	716,204		$	1,027,561
Current Portion of Deferred Royalty Revenue		93,750			—
Total Current Liabilities		809,954			1,027,561
Other Liabilities
Due to Stockholders		149,545			149,545
Deferred Royalty Revenue		94,860			207,360
Total Liabilities		1,054,359			1,384,466
Stockholders’ Equity (Deficit)
Common Stock - - $.0001 Par; 150,000,000 and 50,000,000 Shares Authorized, Respectively; 50,724,473 and 45,809,364 Shares Issued and Outstanding, Respectively		5,072			4,581
Additional Paid-In Capital		32,946,362			29,022,904
Accumulated Deficit		(32,305,861	)		(29,130,093	)
Total Stockholders’ Equity (Deficit)		645,573			(102,608	)
Total Liabilities and Stockholders’ Equity (Deficit)	$	1,699,932		$	1,281,858

The accompanying notes are an integral part of these financial statements.

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L.A.M. PHARMACEUTICAL, CORP.
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

					Additional					Total
	Number		Common		Paid-In		Accumulated			Stockholders’
	Of Shares		Stock		Capital		Deficit			Equity (Deficit)
Balance - December 31, 2002 (Restated)		27,511,412	$	2,751	$	25,952,644	$	(26,411,739	)	$	(456,344	)
Capital Contribution – Interest Expense		—		—		4,306		—			4,306
Stock Options Granted - Compensation for Services Rendered		—		—		22,360		—			22,360
Common Shares Issued - Compensation for Services Rendered		335,000		33		94,541		—			94,574
Conversion of Convertible Notes		1,736,734		174		510,426		—			510,600
Receivable on Option Exercise		—		—		15,708		—			15,708
Net Loss for the Period (Unaudited)		—		—		—		(1,429,175	)		(1,429,175	)
Balance – June 30, 2003 (Unaudited and Restated)		29,583,146	$	2,958	$	26,599,985	$	(27,840,914	)	$	(1,237,971	)
Balance - December 31, 2003 (Restated)		45,809,364	$	4,581	$	29,022,904	$	(29,130,093	)	$	(102,608	)
Capital Contribution – Interest Expense		—		—		3,738		—			3,738
Stock Options Granted - Compensation for Services Rendered		—		—		740,376		—			740,376
Common Shares Issued - Compensation for Services Rendered		481,560		48		416,189		—			416,237
Sale of Shares Under the Stock Subscription Agreements		300,000		30		1,221,980		—			1,222,010
Premium on the Issuance of Warrants		—		—		627,635		—			627,635
Warrant Exercise		2,133,549		213		259,160		—			259,373
Receivable on Option Exercise		—		—		580		—			580
Receivable on Sale of Stock Subscription Agreements		—		—		94,000		—			94,000
Common Stock Issued in Settlement of Lawsuit		2,000,000		200		559,800		—			560,000
Net Loss for the Period (Unaudited)		—		—		—		(3,175,768	)		(3,175,768	)
Balance – June 30, 2004 (Unaudited and Restated)		50,724,473	$	5,072	$	32,946,362	$	(32,305,861	)	$	645,573

The accompanying notes are an integral part of these financial statements.

5

L.A.M. PHARMACEUTICAL, CORP.
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended
	June 30,
	(Restated)
	2004			2003
Revenues
Licensing Revenue	$	37,500		$	—
Net Sales		17,266			22,777
		54,766			22,777
Expenses
Cost of Sales		4,259			6,497
General and Administrative		448,729			176,891
Marketing and Business Development		1,138,173			283,981
Research and Development		32,895			44,559
Depreciation and Amortization		17,901			17,032
Warrant Premium		2,928			—
Total Expenses		1,644,885			528,960
Loss Before Other Expenses		(1,590,119	)		(506,183	)
Other Expenses
Interest Expense		(1,869	)		(2,153	)
Provision for Arbitration Settlement		—			(3,132	)
Total Other Expenses		(1,869	)		(5,285	)
Net Loss for the Period	$	(1,591,988	)	$	(511,468	)
Net Loss per Common Share - Basic and Diluted	$	(0.03	)	$	(0.02	)
Weighted Average Number of Common Shares Outstanding – Basic and Diluted		50,403,814			29,583,146

The accompanying notes are an integral part of these financial statements.

6

L.A.M. PHARMACEUTICAL, CORP.
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF OPERATIONS (UNAUDITED)

	Six Months Ended
	June 30,
	(Restated)
	2004			2003
Revenues
Licensing Revenue	$	37,500		$	—
Net Sales		35,902			53,621
		73,402			53,621
Expenses
Cost of Sales		8,222			13,285
General and Administrative		646,616			350,939
Marketing and Business Development		1,303,755			353,213
Research and Development		64,134			123,882
Depreciation and Amortization		35,070			33,899
Warrant Premium		627,635			—
Total Expenses		2,685,432			875,218
Loss Before Other Expenses		(2,612,030	)		(821,597	)
Other Expenses
Interest Expense		(3,738	)		(4,446	)
Lawsuit Settlement		(560,000	)		—
Provision for Arbitration Settlement		—			(603,132	)
Total Other Expenses		(563,738	)		(607,578	)
Net Loss for the Period	$	(3,175,768	)	$	(1,429,175	)
Net Loss per Common Share - Basic and Diluted	$	(0.06	)	$	(0.05	)
Weighted Average Number of Common Shares Outstanding – Basic and Diluted		49,145,124			29,426,131

7

L.A.M. PHARMACEUTICAL, CORP.
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended
	June 30,
	(Restated)
	2004			2003
Cash Flows from Operating Activities
Net Loss for the Period	$	(3,175,768	)	$	(1,429,175	)
Adjustments to Reconcile Net Loss for the Period to Net Cash Flows from Operating Activities:
Depreciation and Amortization		35,070			33,899
Capital Contributions:
Premium on the Issuance of Warrants		627,635			—
Deemed Interest Expense on Loans from Stockholders		3,738			4,306
Deferred Royalty Revenue		(18,750	)		—
Share and Option Grants to Consultants		1,093,508			116,934
Share Issuance for Lawsuit Settlement		560,000			—
Provision for Arbitration Settlement		—			603,132
Changes in Assets and Liabilities:
Accounts Receivable		827			3,324
Inventory		19,460			31,426
Prepaid Expenses		(27,047	)		(62,571	)
Accounts Payable and Accrued Expenses		(248,252	)		451,023
Net Cash Flows from Operating Activities		(1,129,579	)		(247,702	)
Cash Flows from Investing Activities
Purchase of Property and Equipment		—			(1,495	)
Investment in Patents and Trademarks – Net		(72,012	)		(24,934	)
Net Cash Flows from Investing Activities		(72,012	)		(26,429	)
Cash Flows from Financing Activities
Proceeds from Exercise of Stock Options		580			15,708
Proceeds from the Sale of Shares Under Share Subscription Agreements		1,316,010			—
Proceeds from Exercise of Warrants		259,373			—
Advances from Stockholders		—			163,898
Repayments to Stockholders		—			(103,390	)
Net Cash Flows from Financing Activities		1,575,963			76,216
Net Change in Cash and Cash Equivalents		374,372			(197,915	)
Cash and Cash Equivalents - Beginning of Period		25,132			210,214
Cash and Cash Equivalents - End of Period	$	399,504		$	12,299

The accompanying notes are an integral part of these financial statements.

-continued-

8

L.A.M. PHARMACEUTICAL, CORP.
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CASH FLOWS (UNAUDITED) – continued

	Six Months Ended
	June 30, 2004
	2004		2003
Non-Cash Investing and Financing Activities
Debentures Converted to Common Stock	$	—	$	510,600
SUPPLEMENTAL DISCLOSURE
Interest Paid	$	—	$	—
Income Taxes Paid	$	—	$	—

The accompanying notes are an integral part of these financial statements.

9

L.A.M. PHARMACEUTICAL, CORP.
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS

Note A - Basis of Presentation

The condensed financial statements of L.A.M. Pharmaceutical, Corp. (the “Company”) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s Form 10-KSB and other reports filed with the SEC.

The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year as a whole. Factors that affect the comparability of financial data from year to year and for comparable interim periods include non-recurring expenses associated with market launch of new products, costs incurred to raise capital, acquisitions of patents and trademarks, and stock options and awards.

Note B - Accounting Policies

Revenue Recognition

Licensing Revenue Recognition

The Company recognizes royalty revenue based on royalty reports or related information received from the licensee and when collectability is reasonably assured.

Sales Revenue Recognition

The Company recognizes sales revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable when the product has been shipped to the customer, the sales price is fixed or determinable and collectibility is reasonably assured. The Company reduces revenue for estimated customer returns.

Method of Accounting

The Company maintains its books and prepares its financial statements on the accrual basis of accounting.

Note C - Inventory

Inventory at period end consisted of the following:

	June 30,		December 31,
	2004		2003
IPM Wound Gel™	$	461,082	$	480,542
Raw Materials		2,125		2,125
Inventory	$	463,207	$	482,667

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L.A.M. PHARMACEUTICAL, CORP.
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS

Note D - Share and Option Grants

The Company has stock option plans under which employees, non-employee directors, consultants and investors may be granted options to purchase shares of the Company’s common stock. Options have varying vesting and expiration dates.

The Company has elected to follow Accounting Principles Board Opinion (APB) No. 25 and related interpretations in accounting for its stock-based compensation made to its employees. APB No. 25 requires no recognition of compensation expense for most of the stock-based compensation arrangements provided by the Company, namely, broad-based employee stock purchase plans and option grants where the exercise price is equal to or less than the market value at the date of grant. However, APB No. 25 requires recognition of compensation expense for variable award plans over the vesting periods of such plans, based upon the then-current market values of the underlying stock. In contrast, Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of FASB Statement No. 123, requires recognition of compensation expense for grants of stock, stock options, and other equity instruments, over the vesting periods of such grants, based on the estimated grant-date fair values of those grants. The Company generally uses the straight-line method of amortization for stock based compensation.

Had compensation cost for these plans been determined consistent with SFAS No. 123, the Company’s net loss and net loss per share would have been adjusted to the following pro forma amounts:

	For the three months ended				For the six months ended
	June 30,				June 30,
	2004		2003		2004		2003
Net loss
As reported	$	1,591,988	$	511,468	$	3,175,768	$	1,429,175
Pro forma	$	1,591,988	$	506,987	$	3,175,768	$	1,432,693
Net Loss per share
As reported	$	0.03	$	0.02	$	0.06	$	0.05
Pro forma	$	0.03	$	0.02	$	0.06	$	0.05

Note E - Restatement

     In the course of reviewing the Company’s financial statements a mechanical error was discovered in the calculation of the Company’s non-cash compensation expense on the issuance of option grants and the non-cash premium expense on warrants issued in connection with the Company’s private placement in the first six months of 2004. The restatement to the financial statements resulted in an additional loss of $726,662 for the three months ended June 30, 2004 and $1,333,862 for the six months ended June 30, 2004. The restatement had no effect on the net loss for the three and six months ended June 30, 2003 and on total shareholders’ equity at June 30, 2004 or 2003.

     In addition Note D – Share and Option Grants has been restated to correct the as reported and pro forma net loss for the three and six months ended June 30, 2004.

11

Item 6. Exhibits and Reports on Form 8-K

     Exhibits

Exhibit 31.1	Certification by Joseph T. Slectha, President, Chief Executive Officer, Principal Financial Officer and Chief Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	Certification by Joseph T. Slectha, President, Chief Executive Officer, Principal Financial Officer and Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002

     Reports on Form 8-K

None          

SIGNATURES

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

	L.A.M. PHARMACEUTICAL, CORP.
October 13, 2004	By:	/s/ Joseph T. Slechta
		Joseph T. Slechta, President, Chief Executive Officer, Principal
		Financial Officer and Chief Accounting Officer

12