U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 000-29123
EDLAM ACQUISITION CORPORATION
(Exact name of small business issuer as specified in its charter)
Nevada 87-0644409
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
613 Chase Drive, Tyler, Texas 75771
(Address of principal executive offices)
(903) 509-0372
(Issuer's telephone number)
Not Applicable
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [x] No []
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity. As of March 31, 2002, there were 161,000 shares of common stock
outstanding.
Transitional Small Business Format: Yes [ ] No [X]
FORM 10-QSB
EDLAM ACQUISITION CORPORATION
INDEX
Page
PART I. Item 1. Financial Information 3
Unaudited Condensed Balance Sheets - March 31, 2002 3
and December 31, 2001
Unaudited Condensed Statements of Operations for the Three 4
Months Ended March 31, 2002 and 2001 and for the Period From
Inception on December 23, 1999 through March 31, 2002
Unaudited Condensed Statements Of Comprehensive Income (Loss) 5
for the Three Months Ended March 31, 2002 and 2001, and for the
Period From Inception on December 23, 1999 through March 31, 2002
Unaudited Condensed Statements of Cash Flows for the Nine Months 6
Ended March 31, 2002 and 2001 and for the Period From Inception on
December 23, 1999 through March 31, 2002
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis 15
PART II. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 16
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
March 31, December 31,
2002 2001
----------- -----------
CURRENT ASSETS:
Cash in bank $ 14 $ -
Marketable securities 8,940 -
Receivable - related party 5,357 5,357
----------- -----------
Total Current Assets $ 14,311 $ 5,357
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Bank overdraft $ - $ 190
Accounts payable 7,919 7,195
Advances - related party 19,049 750
Accrued liabilities 369,574 133,610
Notes payable - related party 5,000 5,000
----------- -----------
Total Current Liabilities 401,542 146,745
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value, 10,000,000
shares authorized, no shares issued and outstanding - -
Common stock, $.001 par value, 50,000,000
shares authorized,161,000 and 161,000
shares issued and outstanding 161 161
Capital in excess of par value 103,990 103,990
Unrealized holding (loss) (5,960) -
Accumulated deficit (485,422) (245,539)
----------- -----------
Total Stockholders' Equity (Deficit) (387,231) (141,388)
----------- -----------
$ 14,311 $ 5,357
----------- -----------
Note: The balance sheet at December 31, 2001 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
3
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three From Inception
Months Ended on December 23,
March 31, 1999 through
------------------- March 31,
2002 2001 2002,
-------- -------- --------
REVENUE $ - $ - $ -
EXPENSES:
General and administrative 239,819 110,707 485,170
-------- -------- --------
LOSS FROM OPERATIONS (239,819) (110,707) (485,170)
-------- -------- --------
OTHER INCOME (EXPENSE)
Interest income 1 - 1
Interest expense (65) - (253)
-------- -------- --------
Total Other Income (Expense) (64) - (252)
-------- -------- --------
LOSS BEFORE INCOME TAXES (239,883) (110,707) (485,422)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
-------- -------- --------
NET LOSS $(239,883) $(110,707) $(485,422)
======== ======== ========
LOSS PER COMMON SHARE $ (1.49) $ (.88) $ (6.24)
======== ======== ========
The accompanying notes are an integral part of these financial
statements.
4
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Three From Inception
Months Ended on December 23,
March 31, 1999 through
------------------- March 31,
2002 2001 2002,
-------- -------- ---------
NET (LOSS) $(239,883) $(110,707) $ (485,422)
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized holding (loss)
marketable securities (5,960) - (5,960)
Plus: reclassification adjustment for
losses included in net income - - -
-------- -------- ---------
COMPREHENSIVE INCOME (LOSS) $(245,843) $(110,707) $ (491,382)
======== ======== =========
The accompanying notes are an integral part of these financial
statements.
5
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
NET INCREASE (DECREASE) IN CASH
For the Three From Inception
Months Ended on December 23,
March 31, 1999 through
----------------------- March 31,
2002 2001 2002
---------- ---------- ----------
Cash Flows Provided by Operating Activities:
Net loss $(239,883) $(110,707) $(485,422)
Adjustments to reconcile net loss to
net cash used by operating activities:
Allowance for uncollectible receivable - - 9,527
Non-cash expense - 67,000 67,000
Changes is assets and liabilities:
(Increase) in related party receivable - - (5,357)
Increase in accounts payable 724 - 7,919
Increase in accrued liabilities 235,964 32,882 369,574
Increase in accounts payable - related party 3,399 - 4,149
---------- ---------- ----------
Net Cash (Used) by Operating Activities 204 (10,825) (32,610)
---------- ---------- ----------
Cash Flows Provided by Investing Activities:
Advances to former subsidiary - - (9,527)
Investment in marketable securities (14,900) - (14,900)
---------- ---------- ----------
Net Cash Provided by Investing Activities (14,900) - (24,427)
---------- ---------- ----------
Cash Flows Provided by Financing Activities:
Increase in bank overdraft (190) - -
Proceeds from advances - related party 14,900 - 14,900
Proceeds from note payable - related party - 5,000
Proceeds from issuance of common stock - 80,151 82,151
Repurchase of common stock - (45,000) (45,000)
---------- ---------- ----------
Net Cash Provided by Financing Activities 14,710 35,151 57,051
---------- ---------- ----------
Net Increase (Decrease) in Cash 14 24,326 14
Cash at Beginning of Period - 80 -
---------- ---------- ----------
Cash at End of Period $ 14 $ 24,406 $ 14
========== ========== ==========
[Continued]
6
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
[Continued]
For the Three From Inception
Months Ended on December 23,
March 31, 1999 through
-------------------- March 31,
2002 2001 2002
-------- -------- --------
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period ended March 31, 2002:
The Company recorded an unrealized loss of $5,960 on marketable securities
held for sale.
For the period ended March 31, 2001:
In January 2001, the Company issued 26,000 shares of common stock for
non-cash services valued at $52,000, or $2.00 per share.
In January 2001, the Company granted options to purchase 15,000 shares of
common stock at $1.00 per share. The beneficial feature of $15,000 was
expensed and an increase to additional paid in capital recorded.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
7
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Edlam Acquisition Corporation ("the Company") was organized
under the laws of the State of Nevada on December 23, 1999. The Company has
not commenced planned principal operations and is considered a development
stage company as defined in SFAS No. 7. The Company is seeking potential
business ventures. The Company has, at the present time, not paid any
dividends and any dividends that may be paid in the future will depend upon
the financial requirements of the Company and other relevant factors.
During Janurary 2001, Triden Telecom, Inc., acquired an approximately 68%
interest in the Company wherein the Company effectively became a subsidiary
of Triden through the acquisition of 110,000 shares of the Company's common
stock.
On January 18, 2001, the Company acquired all of the issued and outstanding
shares of Digitec Information Systems, Inc. ("Subsidiary") which was
organized under the laws of the State of Texas on March 26, 1990. On July
13, 2001 and reflected in the accompanying financial statements, the
Company and Subsidiary rescinded the merger. [See Note 2]
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share". [See Note 10]
Income Taxes - The Company accounts for income taxes in accordance with
FASB Statement No. 109, "Accounting for Income Taxes [See Note 7]
Cash and Cash Equivalents - For purposes of the financial statements, the
Company considers all highly liquid debt investments purchased with a
maturity of three months or less to be cash equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported
amount of revenues and expenses during the reported period. Actual results
could differ from those estimated.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations", SFAS No. 142,
"Goodwill and Other Intangible Assets", SFAS No. 143, "Accounting for Asset
Retirement Obligations", and SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", were recently issued. SFAS No. 141, 142,
143 and 144 have no current applicability to the Company or their effect on
the financial statements would not have been significant.
Marketable Securities - Investments in available-for-sale securities are
carried at fair value. Unrealized gains and losses, net of the deferred tax
effects, are included as a separate element of stockholders' equity.
Realized gains and losses are based on the difference between sales price
and actual cost of the securities and are included in earnings.
Restated financial statements - reverse stock split -In October 2001, the
Company effected a 1-for-100 reverse stock split. These financial
statements have been restated to reflect this stock split for all periods
presented.
8
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Restated financial statements - rescinded merger- For the three months
ended March 31, 2001, the Company reported on a consolidated basis. The
Company rescinded the merger agreement with Digitec In July 2001. The
Company has restated its statements of operations and statements of cash
flows for the three months ended March 31, 2001 to reflect the rescission.
Comprehensive Income - The Company has adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income."
Change in control - In January 2001, the Company issued 110,000 shares of
common stock for cash. This represented a change in control of the Company.
The former officers/directors resigned and new officers/directors were
elected.
Stock Based Compensation - The Company accounts for its stock based
compensation in accordance with Statement of Financial Accounting Standard
No. 123 "Accounting for Stock-Based Compensation." This statement
establishes an accounting method based on the fair value of equity
instruments awarded to employees as compensation. However, companies are
permitted to continue applying previous accounting standards in the
determination of net income with disclosure in the notes to the financial
statements of the differences between previous accounting measurements and
those formulated by the new accounting standard. The Company has adopted
the disclosure only provisions of SFAS No. 123, and accordingly, the
Company has elected to determine net income using previous accounting
standards. Equity instruments issued to non-employees are valued based on
the fair value of the services received or the fair value of the equity
instruments given up which ever is more reliably measurable.
Condensed Financial Statements - The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position, results of operations and cash
flows at March 31, 2002 and 2001 and for the periods then ended have been
made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles in the United States of America have been condensed or omitted.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's December 31, 2001 audited financial statements. The results of
operations for the periods ended March 31, 2002 and 2001 are not
necessarily indicative of the operating results for the full year.
NOTE 2 - ACQUISITION / RESCISSION
On January 18, 2001 the Company entered into a Stock Exchange agreement and
acquired all of the outstanding shares of Digitec Information Systems, Inc.
(Digitec), in a business combination accounted for as a purchase, through
the issuance of 17,500 common shares of the Company. During July 2001, and
reflected in these financial statements, the Company entered into a
rescission agreement wherein the Company received back and cancelled the
17,500 common shares issued in the acquisition. During May 2001, the
Company advanced Digitec $9,527 for operations. At March 31, 2002, the
Company had not received repayment of the advance and established an
allowance of $9,527 for uncollectible receivables. [See Note 3]
9
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED NOTES TO FINANCIAL STATEMENTS
NOTE 3 - NOTES RECEIVABLE - RELATED PARTY
The Company had made advances related to an acquisition which was later
rescinded [See Note 2]. At March 31, 2002, a balance of $9,527 was due. The
Company has established an allowance for uncollectible receivables of
$9,527 at March 31, 2002.
During the year ended December 31, 2001, the Company had paid $5,357 for
the personal expenses of an officer of the Company. The officer signed a
note and agreed to repay the Company. The terms of the note include monthly
payments of $461 beginning in June 2002 with interest of six percent on the
outstanding balance.
NOTE 4 - ACCRUED LIABILITIES
Accrued liabilities consist of the following at:
March 31, December 31,
2002 2001
----------- -----------
Accrued payroll $ 355,928 $ 119,179
Accrued payroll taxes 13,400 14,243
Accrued Interest 246 188
----------- -----------
Accrued liabilities $ 369,574 $ 133,610
----------- -----------
In January 2001, the Company entered into employment agreements with two of
its officers. One agreement stated that the officer is to receive a base
salary of $100,000 per annum with a ten percent increase each January. The
officer is to receive a one-time bonus of $200,000 on January 18, 2002. The
officer is also to receive a 3% stock bonus. The second agreement stated
the officer is to receive a base salary of $25,000 per annum. The accrued
payroll and payroll taxes relate to the unpaid compensation according to
the employment agreements.
NOTE 5 - STOCKHOLDERS EQUITY
Preferred Stock - The Company has authorized 10,000,000 share of preferred
stock, $.001 par value, with such rights, preferences and designations and
to be issued in such series as determined by the Board of Directors. No
shares are issued and outstanding at March 31, 2002.
Common Stock - The Company has authorized 50,000,000 shares of common
stock, $.001 par value. At March 31, 2002, 161,000 shares of common stock
were issued and outstanding.
During January 2001, Triden Telecom, Inc., purchased 110,000 shares of the
Company's common stock for $55,151, or $.50 per share. As a negotiated
element of the stock sale the Company agreed to redeem from its
pre-exsisting stockholders, on a pro rata basis, 5,000 shares of the
Company's common stock at a total redemption price of $45,000, or $9.00 per
share. The sale resulted in a change in control of the Company wherein the
Company became a majority owned subsidiary of Triden Telecom, Inc. The
former officers of the Company resigned and new officers were appointed.
10
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED NOTES TO FINANCIAL STATEMENTS
NOTE 5 - STOCKHOLDERS EQUITY [Continued]
On January 18, 2001 the Company entered into a Stock Exchange agreement and
acquired all of the outstanding shares of Digitec Information Systems, Inc.
(Digitec), in a business combination accounted for as a purchase through
the issuance of 17,500 common shares of the Company. During July 2001, and
reflected in these financial statements, the Companies entered into a
rescission agreement wherein the Company received back and cancelled the
17,500 common shares issued in the acquisition. [See Note 2].
During January 2001, the Company sold 25,000 shares of common stock to
investors for $25,000, or $1.00 per share.
During January 2001, the Company issued 26,000 shares of common stock
valued at $52,000, or $2.00 per share, in connection with employment
agreements [See Note 8].
During December 1999, in connection with its organization, the Company
issued 5,000 shares of its previously authorized, but unissued common
stock. The shares were issued for cash of $2,000, or $.40 per share.
Stock Options - During January 2001, in accordance with Accounting
Principles Board Opinion No. 25, the Company recorded $15,000 in
compensation expense for options to purchase 15,000 (post-split) shares of
common stock at $1.00 per share, issued in connection with employment
agreements [See Note 8]. The options vested immediately and are exercisable
through January 5, 2006. The options may only be exercised in lots of 1,000
or more.
A summary of the status of the options granted under the stock option plan
and other agreements at March 31, 2002, and changes during the three months
then ended are presented in the table below:
Weighted Average
Shares Exercise Price
------------ ------------
Outstanding at beginning of period 15,000 $ 1.00
Granted - -
Exercised - -
Forfeited - -
Expired - -
------------ ------------
Outstanding at end of period 15,000 $ 1.00
------------ ------------
Exercisable at end of period 15,000 $ 1.00
------------ ------------
Weighted average fair value
of options granted - $ -
------------ ------------
The fair value of each option granted is estimated on the date granted
using the Black-Scholes option pricing model, with the following
weighted-average assumptions used for grants during the year ended December
31, 2001: risk-free interest rate of 4.8%, expected dividend yield of zero,
expected life of five years, and expected volatility of zero%.
11
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED NOTES TO FINANCIAL STATEMENTS
NOTE 5 - STOCKHOLDERS EQUITY [Continued]
Options Outstanding Options Exercisable
--------------------------------------------- ----------------------------
Weighted-Average Weighted-Average Weighted-Average
Range of Number Remaining Exercise Number Exercise
Exercise Prices Outstanding Contractual Life Price Exercisable Price
- --------------- ----------- ---------------- ---------------- ----------- ----------------
$ 1.00 15,000 4.00 years $ 1.00 15,000 $ 1.00
Stock Options - During the period presented in the accompanying financial
statements, the Company has granted options under employment agreements.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123. "Accounting for Stock-Based
Compensation." Accordingly, only the beneficial price of the option has
been expensed.
NOTE 6 - RELATED PARTY TRANSACTIONS
Notes receivable - During the year ended December 31, 2001, the Company
paid $5,357 of personal expenses of an officer. The officer agreed to repay
the Company with interest beginning in June 2002. [See Note 3]
Note Payable - During September 2001, the Company borrowed $5,000 from
their Parent company, Triden Telecom, Inc. The note accrues interest at 6%
per annum and is due September 1, 2002. As of March 31, 2002, accrued
interest amounted to $188.
Line of Credit - The Board of Directors of the Company have approved the
extension of a line of credit in the amount up to $150,000 to
officers/directors of the Company. As of March 31, 2002, no borrowings have
been extended.
Advances from related party - During the three months ended March 31, 2002,
the Company received $14,900 in advances from a related party. The advance
is non-interest bearing and is due upon demand.
NOTE 7 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". SFAS
No. 109 requires the Company to provide a net deferred tax asset or
liability equal to the expected future tax benefit or expense of temporary
reporting differences between book and tax accounting and any available
operating loss or tax credit carryforwards. The Company has available at
March 31, 2002 and March 31, 2001, respectively, unused operating loss
carryforwards of approximately $485,000 and $181,000 which may be applied
against future taxable income and which expire in various years through
2022.
12
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED NOTES TO FINANCIAL STATEMENTS
NOTE 7 - INCOME TAXES [Continued]
The amount of and ultimate realization of the benefits from the deferred
tax assets for income tax purposes is dependent, in part, upon the tax laws
then in effect, the Company's future earnings, and other future events, the
effects of which cannot presently be determined. Because of the uncertainty
surrounding the realization of the deferred tax assets, the Company has
established a valuation allowance of $97,000 and $186,802 as of March 31,
2002 and 2001, which has been offset against the deferred tax assets. The
net increase in the valuation allowance during the three months ended March
31, 2002 and 2001 amounted to approximately $48,000 and $186,802,
respectively.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Employment agreement - During January, 2001, the Company entered into a
five year employment agreement with its newly appointed President. The
agreement provides for salaries totaling $100,000 per year increasing 10%
per year on the amount received in salary the previous year, a one time
payment of $200,000 on the first anniversary of the date of this agreement,
the issuance of 17,500 shares of common stock valued at $2.00 per share,
the granting of options to purchase 10,000 shares of common stock at $1.00
per share (restated for stock split - the original pre-split amounts were
1,000,000 shares at $.01) and a 3% stock bonus as may be determined from
time to time by the Board of Directors of the Company, taking into account
the performance of the Company in relation to the annual business plan. The
agreement also contains a termination with cause provision that would
entitle the President to receive one half of the remaining salaries under
the agreement if terminated with cause. The President cannot be terminated
without cause during the term of the agreement. The employment agreement
also provides for disability and death benefits.
During January 2001, the Company entered into a five-year employment
agreement with its newly appointed Chief Financial Officer. The agreement
provides for salaries totaling $25,000 per year, the issuance of 8,500
shares of common stock valued at $2.00 per share, the granting of options
to purchase 5,000 shares of common stock at $1.00 per share (restated for
stock split - the original pre-split amounts were 500,000 shares at $.01).
The agreement also contains a termination without cause provision that
would entitle the Chief Financial Officer to receive one half of the
remaining salaries under the agreement if terminated without cause. The
employment agreement also provides for disability and death benefits.
NOTE 9 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has incurred losses
since its inception, has current liabilities in excess of current assets
and has not yet been successful in establishing profitable operations.
These factors raise substantial doubt about the ability of the Company to
continue as a going concern. In this regard, management is proposing to
raise any necessary additional funds not provided by operations through
additional sales of its common stock. There is no assurance that the
Company will be successful in raising this additional capital or achieving
profitable operations. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
13
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED NOTES TO FINANCIAL STATEMENTS
NOTE 10 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for
the periods presented:
For the Three From Inception
Months Ended on December 23,
March 31, 1999 through
------------------- March 31,
2002 2001 2002
-------- -------- --------
Loss from continuing operations
available to common shareholders
(numerator) $(239,883) $(110,707) $(485,422)
===============================
Weighted average number of
common shares outstanding used
in loss per share for the period
(denominator) 161,000 125,633 77,743
===============================
Dilutive earnings (loss) per share was not presented, as its effect is
anti-dilutive.
At March 31, 2002 and 2001, the Company had options outstanding to purchase
15,000 shares of common stock at $1.00 per share [See Note 5], which were
not included in the loss per share computation because their effect would
be anti-dilutive.
14
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations - Three Months Ended March 31, 2002
Edlam generated no revenue from operations for three-month periods ended
March 31, 2002 and 2001. General and administrative expenses were $239,819 for
the three months ended March 31, 2002 and $110,707 for the comparable period in
2001. The substantial increase in such expenses is attributable primarily to an
increase of $236,749 in executive compensation accrued in the first quarter of
2002, which remained unpaid at March 31, 2002, so that the total amount of
accrued payroll due executive officers at March 31, 2002, was $355,928.
Due to the foregoing, Edlam realized a net loss of $239,883 in the first
quarter of 2002, compared to a net loss of $110,707 for the comparable period in
2001. Edlam does not expect to generate any revenue unless and until it acquires
an interest in an operating company.
Liquidity and Capital Resources
At March 31, 2002, Edlam had $14,311 in current assets and $401,542 in
current liabilities giving it a working capital deficit of $387,231. The
receivable from related party arose from advances of personal expenses made by
Edlam for the benefit of Robert S. Hardy, an officer and director, which is
represented by a note bearing interest at six percent per annum payable in
monthly installments of $461 commencing in June 2002. Our current liabilities
include a note payable to Triden Telecom, Inc., our parent corporation, in the
amount of $5,000 bearing interest at six percent per annum due in September
2002, and advances by Triden Telecom totaling $19,049, which are non-interest
bearing. We also have accrued payroll to our executive officers in the amount of
$355,928. In 2001 the board of directors also approved a line of credit in the
amount of $150,000 to officers and directors of Edlam, but no funds have been
advanced under this line of credit.
Edlam does not have sufficient cash to meet its operational needs for the
next twelve months. Management will attempt to raise additional capital through
advances from related parties, debt financing, equity financing or a combination
of financing options. Currently, there are no understandings, commitments or
agreements for such an infusion of capital and there be no assurances to that
effect. Unless Edlam can obtain additional financing, its ability to continue as
a going concern is doubtful. Our need for capital may change dramatically if and
during that period, it acquires an interest in a business opportunity.
Edlam's current operating plan is to handle the administrative and
reporting requirements of a public company, and search for potential businesses,
products, technologies and companies for acquisition. At present, Edlam has no
understandings, commitments or agreements with respect to the acquisition of any
business venture, and there can be no assurance that Edlam will identify a
business venture suitable for acquisition in the future. Further, there can be
no assurance that Edlam would be successful in consummating any acquisition on
favorable terms or that it will be able to profitably manage any business
venture it acquires.
Forward-Looking Statements
This Form 10-QSB includes, without limitation, certain statements
containing the words "believes", "anticipates", "estimates", "intends", and
words of a similar nature, constitute "forward-looking statements" within the
15
meaning of the Private Securities Litigation Reform Act of 1995. This Act
provides a "safe harbor" for forward-looking statements to encourage companies
to provide prospective information about themselves so long as they identify
these statements as forward looking and provide meaningful, cautionary
statements identifying important factors that could cause actual results to
differ from the projected results. All statements other than statements of
historical fact made in this Form 10-QSB are forward-looking. In particular, the
statements herein regarding industry prospects and future results of operations
or financial position are forward-looking statements. Forward-looking statements
reflect management's current expectations and are inherently uncertain. Edlam's
actual results may differ significantly from management's expectations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K. None
Exhibits. None
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.
EDLAM ACQUISITION CORPORATION
Date: July 11, 2002 By: /s/ Robert S. Hardy
President and Chief Executive Officer
Date: July 11, 2002 By: /s/ Holly V. Grant
Chief Financial Officer
16