SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 30, 2001.
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______ to ______ .
Commission file number: 33-2128-D
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TORCHMAIL COMMUNICATIONS, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 95-2312900
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
268 West 400 South, Suite 300, Salt Lake City, UT 84101
(Address of principal executive office) (Zip Code)
(801) 575-8073
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or 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
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The number of outstanding shares of the issuer's common stock, $0.001 par value
(the only class of voting stock), as of November 7, 2001 was 754,675.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................................4
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.............................4
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................5
SIGNATURES.....................................................................6
INDEX TO EXHIBITS..............................................................7
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ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Torchmail Communications, Inc., a
Delaware corporation and predecessors unless otherwise indicated. Unaudited,
condensed interim financial statements including a balance sheet for the Company
as of the quarter ended September 30, 2001, and statements of operations, and
statements of cash flows for the interim periods up to the date of such balance
sheet and the period from inception of development stage on August 21, 1999,
through September 30, 2001, are attached hereto as Pages F-1 through F-5 and are
incorporated herein by this reference.
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INDEX TO FINANCIAL STATEMENTS
PAGE
Consolidated Balance Sheet...................................................F-2
Statements of Unaudited Consolidated Operations..............................F-3
Statement of Unaudited Consolidated Cash Flows...............................F-4
Notes to Unaudited Financial Statements......................................F-5
F-1
Torchmail Communications, Inc.
(A Development Stage Company)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 2001
Unaudited
September 30, 2001
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ASSET
CURRENT ASSETS
Cash $ -
Investments - available for sale 12,500
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Total Current Assets 12,500
TOTAL ASSETS $ 12,500
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 25,835
Accounts Payable - Parent corporation 5,036
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Total Current Liabilities 30,871
TOTAL LIABILITIES 30,871
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SHAREHOLDERS' EQUITY/ (DEFICIT)
Preferred stock, $.001 par value, 10,000,000 shares authorized; issued
and outstanding -0- shares -
Common stock, $0.001 par value, 200,000,000 shares authorized,
issued and outstanding 754,675 755
Additional Paid in Capital 184,940
Deficit accumulated during the development stage (204,066)
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Total Stockholders' Equity (Deficit) (18,371)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) $ 12,500
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See Notes To Financial Statements.
F-2
Torchmail Communications, Inc.
(A Development Stage Company)
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
From inception of
development stage
For the Three months (August 21, 1999)
ended For the Six months ended to
September 30, September 30 September 30,
2001 2000 2001 2000 2001
--------- ----------- ----------- ------------ -----------------
Sales $ - $ - $ - $ - $ -
General and Administrative 43,371 1,672 77,099 7,113 497,008
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Income (Loss) From Operations (43,371) (1,672) (77,099) (7,113) (497,008)
Other Income (Expense)
Refund of funds previously expended - 3,008 - 8,340 194,382
Interest income - 1,829 - 4,437 7,329
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Total Other Income (Expense) - 4,837 - 12,777 201,711
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Net gain (loss) (43,371) 3,165 (77,099) 5,664 (295,297)
Income taxes - - - - -
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Net before extraordinary items (43,371) 3,165 (77,099) 5,664 (295,297)
Extraordinary items- gain on
settlement of debt, net of $0 taxes - - - - 91,231
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Net Income (Loss) $(43,371) $ 3,165 $ (77,099) $ 5,664 $ (204,066)
========= =========== =========== ============ =================
Income (Loss) per share $ (0.06) $ 0.05 $ (0.17) $ 0.10
Weighted average shares outstanding* 730,000 58,000 441,500 58,000
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* Reverse 1 for 100 split adjusted
See Notes to Financial Statements.
F-3
Torchmail Communications, Inc.
(A Development Stage Company)
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
From
inception of
Development
Stage on
August 21,
For the Six months ended 1999 through
September 30, September 30,
2001 2000 2001
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Cash Flows from Operating Activities
Net Gain (Loss) $ (77,099) $ 5,664 $ (204,066)
Adjustments to reconcile to net cash provided in
operating activities:
Increase (decrease) in refunds receivable - (1,963) -
Increase (decrease) in accounts payable 25,835 10,628 25,835
Issuance of stock for services 46,228 - 46,228
Increase (decrease) in other current liabilities - - 6,967
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Net Cash Provided (Used in) Operating Activities (5,036) 14,329 (125,036)
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Cash Flow from Investing Activities - - -
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Cash Flow from Financing Activities
Issuance of common stock for cash - - 120,000
Increase (decrease) in related party payables 5,036 - 5,036
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Net Cash Provided by Financing Activities 5,036 - 125,036
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Net Change in Cash - 14,329 -
Cash at the Beginning of Period - 193,413 -
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Cash at the End of Period $ - $ 207,742 $ -
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Supplemental Disclosures
Interest paid $ - $ - $ -
Income taxes paid - - -
See Notes to Financial Statements
F-4
TORCHMAIL COMMUNICATIONS, INC.
(A Development Stage Company)
Notes to the Unaudited Condensed Financial Statements
September 30, 2001
NOTE 1 - PRELIMINARY NOTE
The accompanying condensed financial statements have been prepared
without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and disclosures normally
included in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. These financial statements reflect all adjustments,
consisting of normal recurring adjustments, which, in the opinion of
management, are necessary to present a fair statement of the results
for the periods included. It is suggested that these financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10KSB
for the period ended March 31, 2001.
NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
During the six months ended September 30, 2001:
1.) The Company issued 464,400 shares of common stock for services of
$46,228.
2.) The Company issued 50,000 shares of common stock in exchange for
investments, available for sale of $12,500
3.) The Company issued 85,600 shares of common stock in exchange
for advances made in behalf of the Company which eliminated a
related party payable of $6,967.
NOTE 3 - ISSUANCES OF STOCK
During the six months ended September 30, 2001, the Company issued the
following shares of common stock:
1.) 20,000 shares of restricted common stock, 10,000 shares to Mr.
Rowan Campbell and 10,000 shares to Ms. Christina Barnes, in
conjunction with their appointment to the board of directors.
2.) 500,000 shares of restricted common stock to Hudson Consulting
Group Inc. for consulting services rendered to the Company and
for payments made on the Company's behalf of incurred
expenses.
3.) 50,000 shares of restricted common stock to CyberEnergy, Inc.
pursuant to a stock purchase agreement for the purchase of
500,000 shares of CyberEnergy valued at $12,500.
4.) 30,000 restricted shares of common stock to Mr. Bobby Welch for
services rendered in finding a merger candidate.
F-5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operations
As used herein the term "Company" refers to Torchmail Communications, Inc., a
Delaware corporation, its consolidated entities, and its predecessors, unless
the context indicates otherwise. The Company emerged from bankruptcy on August
21, 1999. The Company is currently a shell company whose purpose is to acquire
operations by acquisition, merger or through forming its own start-up business.
The Company is in the process of attempting to identify and acquire a favorable
business opportunity. On March 22, 2000, the Board of Directors accepted the
terms of an agreement to provide a controlling interest of ERLY's common stock
to Hudson Consulting Group, Inc. for $120,000 cash. The Company was then merged
into Torchmail Communications, Inc. on January 24, 2001, for the purpose of
changing the domicile of the Company from California to Delaware. As part of the
merger for the purpose of changing domicile, the Company also affected a
reverse-split of its outstanding shares. Shareholders of ERLY stock received 1
share of Torchmail Communications, Inc. stock for each 100 shares of ERLY stock.
Uneven shares were rounded up. The Company is presently seeking a merger
candidate. The Company is uncertain as to its ability to locate an adequate
merger candidate and since the Company has relatively no assets, its ability to
remain a going concern is questionable. Currently, Hudson Consulting Group, Inc.
pays expenses as incurred by the Company.
The Company's plan of operation for the coming year is to identify and acquire a
favorable business opportunity. The Company does not plan to limit its options
to any particular industry, but will evaluate each opportunity on its merits.
Since the Company has no operations at present, its cash needs are minimal. The
Company believes it can meet its cash needs for the foreseeable future from its
current assets or from payments made in its behalf by Hudson Consulting Group,
Inc.
The Company has no plans for the purchase or sale of any plant or equipment
during the coming fiscal year.
The Company was briefly a holding company but is now, at the time of this
filing, a development stage company and currently has no employees. The Company
has no current plans to make any changes in the number of employees.
PART II-OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES
The following is a list of all unregistered securities sold by the Company
within the period covered by this report, including, where applicable, the
identity of the person who purchased the securities, title of the securities,
and the date sold.
On August 8, 2001, the Company issued 30,000 restricted shares of common stock
to Mr. Bobby Welch for services rendered in finding a merger candidate, pursuant
to section 4(2) of the Securities Act of 1933 in an isolated private transaction
by the Company which did not involve a public offering. The Company made this
offering based on the following factors: (1) The issuance was an isolated
private transaction by the Company which did not involve a public offering; (2)
there was only one offerree who was issued stock for services; (3);
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there were no subsequent or contemporaneous public offerings of the stock; (4)
the stock was not broken down into smaller denominations; and (5) the
negotiations for the issuance of the stock took place directly between the
offeree and the Company.
On September 24, 2001, the Company issued 10,000 shares of common stock to Rowan
Campbell and 10,000 shares of common stock to Christina Barnes for services as
directors of the Company, pursuant to section 4(2) of the Securities Act of 1933
in an isolated private transaction by the Company which did not involve a public
offering. The Company made this offering based on the following factors: (1) The
issuance was an isolated private transaction by the Company which did not
involve a public offering; (2) there were only two offerrees who was issued
stock for services; (3); there were no subsequent or contemporaneous public
offerings of the stock; (4) the stock was not broken down into smaller
denominations; and (5) the negotiations for the issuance of the stock took place
directly between the offerees and the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of Regulation S-B
are listed in the Index to Exhibits on page 6 of this Form 10-QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K. No reports were filed on Form 8-K during the
quarter.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 7th day of November, 2001.
Torchmail Communications, Inc.
/s/ Rowan S. Campbell
______________________________
Rowan S. Campbell, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Rowan S. Campbell
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Rowan S. Campbell, President & Director November 7, 2001
/s/ Christina Barnes
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Christina Barnes, Director November 7, 2001
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INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
3(i) * Articles of Incorporation of Torchmail
Communications, Inc. (Incorporated by
reference from Form 14C filed 12/19/2000).
3(ii) * Agreement of Merger of Erly Industries, Inc.
into Torchmail Communications, Inc.
(Incorporated by reference from Form 10-QSB
filed August 1, 2001).
* Incorporated by reference from previous filings of the Company.
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