eLayaway 10-Q 2009 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2009

or

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:       333-148516

TEDOM CAPITAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-8235863
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
5699 Kanan Road, #251, Agoura Hills, CA	91301
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number:      (310) 335-5460

Indicate by check mark 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     X       No______

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer _____                                                                        Accelerated filer _____

Non-accelerated filer _____                                                                          Smaller reporting company  X    

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).  Yes _____  No    X    

As of November 5, 2009, the registrant had outstanding 7,595,505 shares of its $.001 par value common stock (its only class of common stock).

INDEX

PART I - FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 4T.	Controls and Procedures	14
PART II - OTHER INFORMATION		16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 6.	Exhibits	20
Signatures		21

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

INDEX TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Condensed Balance Sheets as of September 30, 2009 (Unaudited) and June 30, 2009	2
Condensed Statements of Operations for the Three Months Ended September 30, 2009 and 2008 (Unaudited)	3
Condensed Statement of Stockholders’ Deficit for the Three Months Ended September 30, 2009 (Unaudited)	4
Condensed Statements of Cash Flows for the Three Months Ended September 30, 2009 and 2008 (Unaudited)	5
Condensed Notes to Financial Statements for the Three Months EndedSeptember 30, 2009  (Unaudited)	6

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TEDOM CAPITAL, INC.

CONDENSED BALANCE SHEETS

	September 30, 2009			June 30, 2009
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	2,409		$	1,253
Loans held for investment, current portion		1,252			1,575
Prepaid loan costs		305			316
Prepaid expenses		19			48
TOTAL CURRENT ASSETS		3,985			3,192
LOANS HELD FOR INVESTMENT, LONG-TERM		8,096			8,029
TOTAL ASSETS	$	12,081		$	11,221
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
LIABILITIES
Line of credit	$	-		$	-
Accrued expenses		10,826			4,641
Accrued interest		422			-
Convertible note payable		20,000			-
TOTAL LIABILITIES		31,248			4,641
COMMITMENTS & CONTINGENCIES
STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, par value $0.001 per share
Authorized – 50,000,000 shares
Issued and outstanding – 7,595,505 shares		7,596			7,596
Additional paid-in capital		170,666			167,466
Accumulated deficit		(197,429	)		(168,482	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(19,167	)		6,580
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	12,081		$	11,221

The accompanying notes are an integral part of the financial statements

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TEDOM CAPITAL, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(UNAUDITED)

	2009			2008
INTEREST INCOME, NET	$	317		$	334
GENERAL AND ADMINISTRATIVE EXPENSES		28,042			37,222
NET OPERATING LOSS		(27,725	)		(36,888	)
OTHER EXPENSE – INTEREST		422			-
LOSS BEFORE INCOME TAXES		(28,147	)		(36,888	)
Income tax expense		800			800
NET LOSS	$	(28,947	)	$	(37,688	)
NET LOSS PER COMMON SHARE
Basic and diluted	$	(0.00	)	$	(0.00	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic and diluted		7,595,505			7,595,505

The accompanying notes are an integral part of the financial statements

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TEDOM CAPITAL, INC.

CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009

(UNAUDITED)

	Common Stock				Additional Paid-in		Accumulated			Total  Stockholders’
	Shares		Amount		Capital		Deficit			Deficit
Balance, June 30, 2009		7,595,505	$	7,596	$	167,466	$	(168,482	)	$	6,580
Contribution of rent		-		-		600		-			600
Contribution of services		-		-		2,600		-			2,600
Net loss for the three months
Ended September 30, 2009		-		-		-		(28,947	)		(28,947	)
Balance, September 30, 2009		7,595,505	$	7,596	$	170,666	$	(197,429	)	$	(19,167	)

The accompanying notes are an integral part of the financial statements

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TEDOM CAPITAL, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDING SEPTEMBER 30, 2009 AND 2008

(UNAUDITED)

	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)	$	(28,947	)	$	(37,688	)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Rent contributed by stockholder		600			600
Services contributed by stockholders		2,600			-
Changes in operating assets and liabilities:
Prepaid loan costs		11			10
Prepaid expenses		29			1,575
Accrued expenses		6,607			11,397
NET CASH (USED) BY OPERATING ACTIVITIES		(19,100	)		(24,106	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment of loans held for investment		256			216
NET CASH PROVIDED BY INVESTING ACTIVITIES		256			216
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt		20,000			-
NET CASH PROVIDED BY FINANCING ACTIVITIES		20,000			-
NET INCREASE IN CASH
		1,156			(23,890	)
CASH
AT THE BEGINNING OF THE PERIOD		1,253			78,475
CASH
AT THE END OF THE PERIOD	$	2,409		$	54,585
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Interest Paid	$	-		$	-
Taxes Paid	$	-		$	-

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TEDOM CAPITAL, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009

(UNAUDITED)

1. Organization and basis of preparation

Organization

Tedom Capital, Inc. (the "Company") was organized December 26, 2006 in Delaware as a loan company primarily focused on funding home improvement loans.  From inception through September 30, 2009, the Company has made three home improvement loans.

The accompanying interim financial statements for the three months ended September 30, 2009 have been prepared without audit and reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of financial position and the results of operations for the interim periods.  The statements have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such SEC rules and regulations.  Operating results for the three months ended September 30, 2009, are not necessarily indicative of the results that may be expected for the year ending June 30, 2010.

The balance sheet at June 30, 2009 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. The accompanying interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended June 30, 2009.

The Company has evaluated subsequent events through November 3, 2009, the date these consolidated condensed financial statements were issued.

2.  Significant accounting policies

Concentration Risk

Loans held for investment are unsecured at September 30, 2009.

Estimates and assumptions

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States which requires management to make  estimates and assumptions that effect the accounting for and recognition of assets, liabilities, stockholders’ equity, revenue and expenses. Estimates and assumptions are made because certain information is dependent on future events. Actual results could differ from those estimates.

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Recent accounting pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued ASC Statement No. 105,   the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“ASC 105”).  ASC 105 will become the single source authoritative nongovernmental U.S. generally accepted accounting principles (“GAAP”), superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force, and related accounting literature.  ASC 105 reorganized the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure.  Also included is relevant SEC guidance organized using the same topical structure in separate sections.  The Company adopted ASC 105 for the financial statements ended September 30, 2009.  The adoption of ASC 105 did not have an impact on the Company’s financial position or results of operations.

3.   Fair Value of Assets and Liabilities

Determination of Fair Value

At September 30, 2009, the Company calculated the fair value of its assets and liabilities for disclosure purposes only .

Valuation Hierarchy

ASC 820 establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date:

         Level 1.     Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 1 assets and liabilities include debt and equity securities and derivative financial instruments actively traded on exchanges, as well as U.S. Treasury securities and U.S. Government and agency mortgage-backed securities that are actively traded in highly liquid over the counter markets.

         Level 2.     Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs that are observable or can be corroborated, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 assets and liabilities include debt instruments that are traded less frequently than exchange traded securities and derivative instruments whose model inputs are observable in the market or can be corroborated by market observable data. Examples in this category are certain variable and fixed rate non-agency mortgage-backed securities, corporate debt securities and derivative contracts.

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         Level 3.     Inputs to the valuation methodology are unobservable but significant to the fair value measurement. Examples in this category include interests in certain securitized financial assets, certain private equity investments, and derivative contracts that are highly structured or long-dated.

Application of Valuation Hierarchy

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodology used to measure fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Loans Held for Investment.     Market prices are not available for the Company's loans held for investment, nor are market prices of similar loans available. The Company assessed that the fair value of this asset approximates its carrying value due to its short-term nature, the stated interest rate of the loans and the credit-worthiness of the borrowers at the time the loan was made and based on their payment history to date.

The method described above may produce a current fair value calculation that may not be indicative of net realizable value or reflective of future fair values. If readily determined market values became available or if actual performance were to vary appreciably from assumptions used, assumptions may need to be adjusted, which could result in material differences from the recorded carrying amounts. The Company believes its method of determining fair value is appropriate and consistent with other market participants. However, the use of different methodologies or different assumptions to value certain financial instruments could result in a different estimate of fair value.

The following table presents the fair value of financial instruments as of September 30, 2009, by caption on the condensed balance sheet and by ASC 820 valuation hierarchy described above.

Assets and liabilities measured at fair value on a recurring and nonrecurring basis at September 30, 2009:	Level 1			Level 2			Level 3				Total carrying value
Nonrecurring:
Loans held for investment		$	-		$	-		$	9,348			$	9,348
Convertible note payable			-			-			(20,000	)			(20,000	)
Total assets and liabilities at fair value		$	-		$	-		$	(10,652	)		$	(10,652	)

Level 3 Reconciliation:	Loans Held for Investment				Convertible Note Payable
Level 3 assets and liabilities at June 30, 2009:		$	9,604		$	-
Purchases, sales, issuances and settlements (net)			(256	)		20,000
Total level 3 assets and liabilities at September 30, 2009		$	9,348		$	20,000

4.   Loans held for investment

At September 30, 2009, loans held for investment consisted of the following:

Type of Loan	Number Outstanding	Aggregate Balance Outstanding	% of Loan Portfolio	Range of Interest Rates	Weighted Average of Interest Rates	Range of Remaining Term (years)	Weighted Average of Remaining Term (years)
Unsecured Loans	2	$9,348	100%	10% - 10.7%	10.6%	3.6 – 4.6	5.2
Unamortized Loan Costs	-	305	-	-	-	-	-
Total	2	$9,653	100%	10% - 10.7%	10.6%	3.6 – 4.6	5.2

No security is available on the unsecured loans.

5.   Line of credit

The Company has a $150,000 line of credit which bears interest at 8% per annum and has a term of 10 years. This line of credit will be available to make additional home improvement loans and for working capital and had a $0 balance as of September 30, 2009.

6.  Convertible Note Payable

On July 15, 2009, the Company borrowed $20,000 from Ameris, LLC (the “Lender”), as evidenced by an unsecured $20,000 Convertible 10% Promissory Note (the “Note”) issued to the Lender. The Note and accrued interest is due and payable on July 15, 2010 (the “Maturity Date”); provided, however, that if the Company completes a registered public offering prior to the Maturity Date: (i) the Company has the right to prepay (without penalty) all or any portion of the Note out of the proceeds of the registered public offering and (ii) the Lender has the right (but not obligation) to demand immediate payment of the entire amount of the Note out of the proceeds of the registered public offering.  The Maturity Date of the Note is subject to acceleration (at the Lender’s election) upon the occurrence of certain events of default.  After the occurrence of an event of default, the interest rate on the Note automatically increases to 12% per year or the maximum rate permitted by law.  At any time prior to the Maturity Date, the Lender has the right to convert all or any part of the principal and/or accrued interest of the Note into shares of the Company’s $0.001 par value common stock at the rate of $0.15 per share.   There is no material relationship between the Company or its affiliates and the Lender.

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At September 30, 2009 the principal and interest due under the Note was $20,000 and $422.  The Note and accrued interest could potentially be converted into 136,146 shares of the Company’s common stock.

7.   Related party transactions

Through February 2008, the Company has shared office space with Mr. Eric Grunfeld at $250 per month on a month-to-month basis.  During March 2008, the Company relocated along with Mr. Grunfeld and decreased the shared office expense to $200 per month on a month-to-month basis.  Mr. Grunfeld has waived reimbursement of the rental expense and as such, the amount has been added to additional paid-in capital.  Rent expense for each of the three months ended September 30, 2009 and 2008 was $600.

8.  Subsequent Events

On October 26, 2009, the Company borrowed an additional $18,500 from Ameris, LLC (the “Lender”), as evidenced by an unsecured $18,500 Convertible 10% Promissory Note (the “Note”) issued to the Lender. The Note is due and payable on October 26, 2010 (the “Maturity Date”); provided, however, that if the Company completes a registered public offering prior to the Maturity Date: (i) the Company has the right to prepay (without penalty) all or any portion of the Note out of the proceeds of the registered public offering and (ii) the Lender has the right (but not obligation) to demand immediate payment of the entire amount of the Note out of the proceeds of the registered public offering.  The Maturity Date of the Note is subject to acceleration (at the Lender’s election) upon the occurrence of certain events of default.  After the occurrence of an event of default, the interest rate on the Note automatically increases to 12% per year or the maximum rate permitted by law.  At any time prior to the Maturity Date, the Lender has the right to convert all or any part of the principal and/or accrued interest of the Note into shares of the Company’s $0.001 par value common stock at the rate of $0.15 per share.   There is no material relationship between the Company or its affiliates and the Lender.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Caution About Forward-Looking Statements

This Form 10-Q includes “forward-looking” statements about future financial results, future business changes and other events that have not yet occurred.  For example, statements like Tedom Capital, Inc. (referred to as “Tedom” “our” “we” or “us”) “expects,” “anticipates” or “believes” are forward-looking statements.  Investors should be aware that actual results may differ materially from Tedom’s expressed expectations because of risks and uncertainties about the future.  Tedom does not undertake to update the information in this Form 10-Q if any forward-looking statement later turns out to be inaccurate.  Details about risks affecting various aspects of Tedom’s business are discussed throughout this Form 10-Q and should be considered carefully.

Critical Accounting Policies

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.

Revenue Recognition

Interest income on our loans accrues by the effective interest method.  Interest revenue will generally be suspended when a loan is impaired or non-performing.  A loan will be considered non-performing when the payment of principal or interest is 120 days past due.  A loan will be deemed impaired when, based on current information and events; it is probable that we will be unable to collect all amounts due according to the terms of the loan.  We will not hold loans for resale, prepare loan documents or service any loans, but will assign impaired loans to a collection agency.  As a result, there will be no revenues from loan fees, collection fees or similar charges.

Loan Loss Reserves

When deemed necessary, we will establish a reserve for possible credit losses on loans.  Additions to the reserve are based on an assessment of certain factors including, but not limited to, estimated future losses on the loans and general economic conditions.  Actual losses on loans will be recorded as a charge-off or reduction of the loan loss reserve.  Subsequent recoveries of loan amounts previously charged off will be recorded as an increase to the loan loss reserve.

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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 at either the then market price of our common stock (if a reliable trading market exists) or 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.

Business Operations Overview

Loan and Portfolio Summary

As of September 30, 2009, our loan portfolio consisted of two unsecured loans in the initial aggregate principal amount of $13,491. Our loans are intended to be used for home improvements and are generally categorized as either secured by a deed of trust or unsecured.

The following table provides summary information as to our loan portfolio at September 30, 2009.

type of loan	number outstanding	aggregate balance outstanding	% of loan portfolio	range of interest rates	weighted average or interst rates	range of remaining term (years)	weighted averageof remaining terms (years)
Mortgage Loans	-0-	-0-	-0-	-0-	-0-	-0-	-0-
Unsecured Loans	2	$9,348	100%	10% - 10.7%	10.6%	3.6 – 4.6	5.2
TOTAL	2	$9,348	100.00%	10% - 10.7%	10.6%	3.6 – 4.6	5.2

No security is available on the unsecured loans.

As of September 30, 2009, we have invested in loans to improve real property located in Southern California. As a result of this geographical concentration of our mortgage portfolio, a further downturn in the local real estate markets in California could have a material adverse effect on us. The following table lists the geographic location of the home improvement projects currently funded, number of loans, aggregate balance outstanding and percentage of loan portfolio represented in each state as of September 30, 2009.

state	number of loans		aggregate balance outstanding		% of loan portfolio
Northern California		0	$	0
Southern California		2	$	9,348		100
TOTAL		2	$	9,348		100%

As of September 30, 2009, we had no loans that were non-performing.

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Results of Operations

Three-Month Periods Ended September 30, 2009 and 2008

During the three months ended September 30, 2009 we recognized a total of $317 of interest income as compared to $334 during the three months ended September 30, 2008.  During each period we had two loans outstanding. We made no new loans during the quarter and the aggregate principal balance of our outstanding loans as of September 30, 2009 was $9,348.  Interest rates ranged from 10% to 10.7% per annum.  None of the loans outstanding were in arrears or non-performing.

General and administrative expenses amounted to $28,464 for the three months ended September 30, 2009 consisting primarily of $23,511 of professional fees related to the preparation of our annual report on Form 10-K for the fiscal year ended June 30, 2009, $3,000 of consulting fees paid to our officers and $900 of licenses and permit fees. General and administrative expenses amounted to $37,222 for the three months ended September 30, 2008 consisting primarily of $28,069 of professional fees related to our Form10-K filing, $3,000 of consulting fees paid to our officers and $900 of licenses and permit fees.

We incurred a net operating loss of $28,947 for the three months ended September 30, 2009 as compared to $37,688 for the three months ended September 30, 2008.  The net operating loss incurred for the quarter ended September 30, 2008, is the result of significant general and administrative expenses relating to the preparation of our registration statement on Form SB-2 and limited revenues.

Liquidity and Capital Resources

We have incurred losses since we began operating our business and, as of September 30, 2009, we had an accumulated deficit of $197,429.  As of September 30, 2009 we had cash of $2,409 and working capital deficit of $27,263.

At this point, the $107,725 in gross proceeds received from the issuance of shares in our registered public offering has been exhausted and there are currently no plans to issue any of the  1,569,180 shares that remain available in that offering., We secured a $150,000 line of credit in July 2008 in order to increase our available capital to make additional home improvement loans and fund day-to-day operations.  As of September 30, 2009, there was no amount due under that line of credit agreement.

Our loan commitments will increase to the extent that there are future increases in our loan portfolio.  Revenues from the repayment of loans (in the form of interest income and principal repayment) would be expected to increase in proportion to the number and size of the loans we may make.  However, until interest income is sufficient to cover our operating expenses, we will be dependent on our line of credit and/or future debt or equity investments to sustain our operations and implement our business plan. If our line of credit is curtailed, or if we are unable to raise sufficient capital from other sources, we will be required to delay or forego some portion of our business plan, which would have a material adverse affect on our anticipated results from operations and financial condition.  There is no assurance that we will be able to maintain the necessary amounts of capital or that our estimates of future capital requirements will prove to be accurate.  As of September 30, 2009, our only committed source of additional capital was the line of credit.  Even with our line of credit, and any additional sources of capital we may obtain, outside financing may not be available in the amounts and/or at the times when we require them or on terms favorable to us or our stockholders.  Furthermore, such additional financing would likely take the form of bank loans, private placement of debt or equity securities or some combination of those sources.  The issuance of additional equity securities would dilute the stock ownership of our current investors while incurring loans, additional lines of credit or other debt would increase our capital requirements with possible loss of valuable assets if those debts were not repaid in accordance with their terms.

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Recent Financing Transactions

Since inception, we have been funded through outside capital investments.

The valuation of our common stock in both private sales and our initial public offering in early 2008 were the fair value as determined by the Board of Directors. We did not obtain contemporaneous valuations by an unrelated valuation specialist because, at the times of the issuances of stock, our efforts were focused on establishing our business and the financial resources for doing so were limited.

Determining the fair value of our stock in the early stage of our business and prior to commencing quotation on the OTC Bulletin Board in September, 2008 required various subjective judgments. While we did not utilize any specific methodology, we considered various significant factors in valuing these shares which included the early development of our lending business, Tedom’s net worth, the prospects for our business, the general condition of the housing market, the restricted nature of the shares being issued and the limited sources of capital available to us. The valuations of the private transactions were also influenced by arms-length negotiations between our Board of Directors and the unrelated investors. While the Board of Directors used its best judgment in evaluating these factors, there is inherent uncertainty in any such valuation.

During July 2009, we borrowed $20,000 from Ameris, LLC (the “Lender”), as evidenced by an unsecured $20,000 Convertible 10% Promissory Note (the “Note”) issued to the Lender. The Note is due and payable on July 15, 2010 (the “Maturity Date”); provided, however, that if we complete a registered public offering prior to the Maturity Date: (i) we have the right to prepay (without penalty) all or any portion of the Note out of the proceeds of the registered public offering and (ii) the Lender has the right (but not obligation) to demand immediate payment of the entire amount of the Note out of the proceeds of the registered public offering.  At September 30, 2009 the principal and interest due under the Note was $20,000 and $422, respectively.  At any time prior to the Maturity Date, the Lender has the right to convert all or any part of the principal and/or accrued interest of the Note into shares of the Company’s $0.001 par value common stock at the rate of $0.15 per share.   As of September 30, 2009, the Note and accrued interest could potentially be converted into 136,146 shares of our common stock.

Off-Balance Sheet Arrangements

Since our inception through September 30, 2009, we have not engaged in any off-balance sheet arrangements as defined in Item 303 of the SEC’s Regulation S-K.

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ITEM 4. Controls and Procedures

Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15 (e) and 15d-15 (e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under SEC's rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow for timely decisions regarding required disclosure.

As required by Sec Rule 15d-15 (b) we carried out an evaluation, under the supervision and with the participation of management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act 15d-14 as of the end of the fiscal quarter covered by this report. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC reports and to ensure that information required to be disclosed in our periodic SEC reports is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding disclosure as a result of any deficiency detected in our internal control over financial reporting.

As described more fully in our Annual Report on Form 10-K for the fiscal year ended June 30, 2009, our management periodically assesses our internal controls over financial reporting based upon the criteria set forth in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”).  Based on this assessment, including testing, our management determined that as of June 30, 2009 and as of September 30, 2009, we had the following material weaknesses in our internal control over financial reporting:

1.   Deficiencies in segregation of duties. Tedom lacked adequate segregation of duties in its financial reporting process, as its CFO currently serves only part time and is not a certified public accountant, yet is responsible for performing substantially all internal accounting and financial reporting functions.

2.   Deficiencies in Tedom’s written financial reporting procedures. Tedom has insufficient written policies and procedures in place for accounting and financial reporting which resulted in inconsistent preparation and review of account reconciliations and analyses on a timely basis.

3.   Relatively new Audit Committee. Tedom’s Audit Committee was not formed until October, 2007 and has not had the opportunity to be fully functional over an entire fiscal year period.

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Changes in Internal Control Over Financial Reporting

To address and remediate these material weaknesses discussed above, we are working to implement the following changes to our internal controls over financial reporting during the period covered by this report:

For the material weakness concerning deficiencies in segregation of duties, we intend to raise sufficient funds during the current fiscal year to hire an additional experienced accounting person to better monitor, maintain and assist the CFO in our internal accounting and financial reporting functions and increase the frequency of reconciliation of significant accounts.  

For the material weakness concerning deficiencies in the financial reporting process, we are working to develop and implement sufficient written policies and procedures to better insure timely decisions can be made regarding required disclosures by late 2009.

For the material weakness concerning our Audit Committee, the Committee will now serve for the entire fiscal year and will increase the number of meetings to carry out its financial review functions and interact with Tedom’s independent public accounting firm more effectively and timely. We expect these remedial actions to occur during the current fiscal year to allow our controls and procedures over financial reporting to be effective by the end of our current fiscal year.

Notwithstanding our assessment that our internal controls over financial reporting were not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in this report on Form 10-Q for the fiscal quarter ended September 30, 2009 accurately present our financial condition, results of operations and cash flows in all material respects.

Other than the items identified above, no change in Tedom’s control over financial reporting has occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Tedom’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1A.    Risk Factors.

You should carefully consider the following risk factors in evaluating our business.  We have described the risks we consider to be material, however, there may be additional risks that we view as not material or of which we are not presently aware.  If any of the events described below were to occur, our business, prospects, financial condition, results of operations or cash flow could be materially adversely affected.

Risks Related to our Business and Operations.

Due to our limited operating history we have generated only limited revenues and no profits from our current business operations, consequently our long term viability cannot be assured. We were formed in December, 2006 and have only carried on our business since January 15, 2007.  To date we have funded only three home improvement loans of which two remain outstanding. Due to this limited operating history in connection with our business plan, any prediction of future results of operation is difficult.  Our prospects must be evaluated with a view to risks encountered by a company in an early stage of development.  We can provide no assurance that we will be profitable, have a positive cash flow or otherwise be successful.

Need for Outside Capital.Our ability to continue operations is dependent upon our ability to successfully establish our business and secure additional funding sources and attain profitable operations.  To date, we have funded our current operations with proceeds from the sale of equity. Proceeds from our equity financings are not sufficient to sustain our operations or fund our long term capital needs.  Consequently, we may require additional capital to maintain business operations and satisfy our long term capital needs.  Other than our line of credit, we do not have any commitments to provide additional capital from third parties.  Additional financing, if needed may not be available to us in the desired amounts or on favorable terms, if at all.

Our current assets are not sufficient to satisfy our foreseeable cash requirements.As a service- oriented business, we will hold a limited amount of tangible assets other than cash and debt receivables.  While our current cash resources, including our line of credit, are deemed sufficient to satisfy our cash requirements over the next 12 months.  We may not have sufficient working capital available to both fund ongoing operations and expand our business over the long term.

We anticipate operating losses in the future.Until our loan portfolio reaches a size that results in loan repayments equaling or exceeding our operating expenses, we will experience continuing operating losses.  We estimate that a loan portfolio of $1,200,000 or more would generate sufficient revenues to cover our anticipated operating expenses.  Consequently, unless and until our portfolio of performing loans exceeds approximately $1,200,000, we will continue to realize operating losses.

Risks Related To Home Improvement Loans.

Our loan guidelines might not prevent underperforming or defaulted loans. In terms of selecting home improvement loan investments, we rely upon certain investment objectives and policies that may not prevent (i) the investment in loans that underperform due to a borrower’s inability to repay a loan in a timely manner, (ii) inadequate loan-to-value ratios, (iii) lack of understanding of local real estate markets, (iv) lack of mortgage insurance, (v) properties that are difficult to determine appropriate value, or (vi) inadequate loan diversification within our loan portfolio.  There is no assurance that we will be able to eliminate underperforming or bad debts even those which initially comply with our investment guidelines.

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Our loan’s deed of trust will typically be subordinated to other debt secured by the property. We will often make loans secured by a second or third trust deed on a residential property.  Typically the first trust deed will relate to the initial purchase of the home or building and will cover a substantial loan amount.  As a holder of a second or third trust deed, in case of a default, we will not recover any proceeds from the sale of the underlying home unless and until each superior trust deed is fully satisfied which would include any unpaid principal, interest and collection costs.  After all superior loans are paid in full, there may be insufficient proceeds from the sale of the residential property to fully repay the principal and interest secured by second or third trust deeds.

The proceeds from the foreclosure of a property may be less than its appraised value. We base our loan-to-value ratios on the then current appraised value of the property to collateralize our loan.  However, should there be a loan default necessitating a foreclosure action, the proceeds realized from a forced foreclosure sale often may be substantially less than the appraised value.  Similarly, general property value declines due to economic or interest rate factors could also lessen the amount realized from the sale of a residential property.  Any decrease between the value of a property as sold and the appraised value at the time our loan was made, would adversely affect our ability to collect our full loan principal and interest secured by the property.

Some loans may be unsecured which increases the risk of loss or extended terms, as personal assets and income of the borrower may be insufficient to repay the loan in full or on time. We will make unsecured loans based on a borrower’s credit history.  An unsecured loan carries the additional risk that if a default should occur, we will have only the borrower’s personal assets and salary from which to seek repayment.  We would have no right to force repayment from the sale of the residential property. It is likely that such personal assets and income would be insufficient to repay our loan in full with interest, or in a timely manner, which would result in our sustaining a loss or extended terms on our investment.

Risks related to a slow economy, declining home valuations and adjustable rate mortgages which can result in increased mortgage delinquencies or defaults. The possibility that a loan may be defaulted can depend on a number of factors including the state of the economy, unemployment rates, interest rates and residential valuations.  In an economic recession with  increasing unemployment, the likelihood of a home owner defaulting on his or her home improvement loan increases. In a housing slump, such as the current housing market, declining home valuations and slower housing turnover are typical which could result in increased mortgage delinquencies. Furthermore, mortgage loans with adjustable rates could readjust to higher interest rates which can cause an increase in mortgage delinquencies or defaults. Many of these factors will be difficult to assess at the time home improvement loans are made or could substantially change over a short period of time.  Due to our limited loan portfolio, a default or underperformance of one or more loans could have a material adverse effect on our business and revenues.

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We will have to compete with many mortgage lenders in a market of fewer borrowers which will make finding suitable equity loans more difficult.  The mortgage lending business is highly competitive and we compete for the availability of home improvement loans with many other persons, entities, institutional lenders and others engaged in the mortgage lending business that may have greater financial resources and experience.  In addition, in a period of flat or declining home values, fewer homeowners may be willing or able to secure additional home equity loans for home improvement or for any other purpose. Consequently, it may be more difficult for us to find suitable investment opportunities in the future.

Our loan interest rate is not adjustable and could result in below market rates.  The interest rates on our loans are not adjustable to current mortgage interest rates which are subject to abrupt and substantial fluctuations.  If prevailing interest rates rise above the average interest rate that our loan portfolio earns, our operations will be adversely affected.  Higher interest rates may have a chilling effect on the real estate market that, in turn, may result in poorer operating results.

Absence of mortgage insurance to cover diminution of property value. Many lenders require a borrower to acquire mortgage insurance which would offer some protection against a loss in case of a foreclosure on a loan encumbering property with insufficient equity to repay all sums owed.  We typically do not require a borrower to obtain mortgage insurance.  Consequently, we would not have insurance protection if there is an equity deficiency in the property securing our loan.

We are subject to extensive state regulation. The mortgage lending business is highly regulated.  Our current business in California is regulated by the Department of Real Estate.  Other states have differing regulations and rules that govern the activities of lenders who make loans to borrowers within that state.  Our failure to comply with all such regulations and rules in California or any other state may impact our ability to fund or enforce our loans in that state.  For example, if one of our loans is found to be usurious according to state law, we may become subject to penalties and our profitability could be materially impacted.

Limited property insurance coverage could reduce our return on investment.  Although we require each borrower to maintain comprehensive title, fire and casualty insurance on the properties securing our loans, and may arrange for earthquake insurance depending upon the relevant circumstances, losses resulting from acts of terrorism, war, earthquakes, floods, mudslides, other natural disasters or similar events are either uninsurable or not economically insurable.  In the event that the property, including any improvements on the property, securing one of our loans suffers losses resulting from one or more of these uninsured events, or such insurance is inadequate to cover rebuilding of a substantially similar home, we will experience a significant decrease in the value of our security interest and, as a result, may suffer a loss of principal and interest on the loan.

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Risks related to failure to obtain necessary approvals for home improvements. Since we plan to invest a substantial portion of our assets in loans made for the improvement or addition of residential and commercial property, we are indirectly subject to the risks particular to home improvement loans.  In many cases, a borrower will be required to obtain necessary permits from local, state and federal governmental and quasi-governmental agencies, such as home owner associations, unanticipated assessments related to utilities and infrastructure could occur in the approval process. In the event that a borrower fails to obtain the requisite permits or entitlements for property improvements, the borrower risks increased costs associated with such home improvements and a diminished market value for the property, which, in turn, adversely affects the value of our collateral.  The failure of local housing and development authorities or associations to grant approvals related to building or property improvements such as swimming pools, landscaping or building expansion, would reduce the potential customer base and the market value of the properties securing our loans.

Failure a contractor to complete a project would place our loans in jeopardy.  Since our loans will be made primarily for home or building improvements, the failure of one or more contractors to complete the improvements in a timely and satisfactory manner could jeopardize the timely repayment of our loans by the borrower.  To mitigate this potential problem, we will make loans at or near the beginning of a project but will not fund the loan until designated progress goals are met or the completion of the project occurs. In addition, we will require the borrower’s acceptance of the work performed. Despite these precautions, if improvement projects are not completed in a timely manner, if project costs exceed those budgeted or if work performed is unsatisfactory to the homeowner, the status of our loan and the repayment of any loan made could be adversely affected.

ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

As described above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Financing Transactions,” the Note was issued to the Lender on July 15, 2009.  Based on the sophistication of the Lender and the nature of the transaction, that issuance was exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) thereunder.

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ITEM 6.   Exhibits.

The following documents are filed as exhibits to this report:

Exhibit No.	Title
3.1	Certificate of Incorporation. (1)
3.2	Certificate of Amendment to the Certificate of Incorporation. (1)
3.3	Bylaws.  (1)
4	Form of Subscription Agreement.  (2)
10.1	Promissory Note dated February 14, 2007, in the principal amount of $11,500. (1)
10.2	Promissory Note dated May 19, 2007, in the principal amount of $10,491. (1)
10.3	Promissory Note dated February 7, 2008, in the principal amount of $3,000. (2)
10.4	Convertible 10% Promissory Note dated July 15, 2009, in the principal amount of $20,000. (3)
31.1	Rule 13a-14(a)/15d-14(a) Certification.
31.2	Rule 13a-14(a)/15d-14(a) Certification.
32	Section 1350 Certification

(1)	Incorporated by reference from the Company's Registration Statement on Form SB-2 (File No. 333-148516) filed with the Securities and Exchange Commission on January 8, 2008.
(2)	Incorporated by reference from Amendment No.1 to the Company’s Registration Statement on Form S-1 (File No. 333-148516) filed with the Securities and Exchange Commission on February 20, 2008.
(3)	Incorporated by reference from the Company’s Form 10-K for the fiscal year ended June 30, 2009.

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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.

	TEDOM CAPITAL, INC.
Dated:  November 5, 2009	By:	/s/ ERIC GRUNFELD
		Eric Grunfeld, Chief Executive Officer

Dated:  November 5, 2009	By:	/s/ JASON WEILERT
		Jason Weilert, Chief Financial Officer

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