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 June 30, 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) 581-2040
(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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity: As of June 30, 2002, 161,000 shares of common stock were 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 - June 30, 2002 3
and December 31, 2001
Unaudited Condensed Statements of Operations for 4
the Three Months and Six Months Ended June 30, 2002
and 2001 and for the Period From Inception on December
23, 1999 through June 30, 2002
Unaudited Condensed Statements of Cash Flows for 6
the Six Months Ended June 30, 2002 and 2001 and for
the Period From Inception on December 23, 1999 through
June 30, 2002
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis 14
PART II. Other Information 15
Signatures 15
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
2002 2001
----------- -----------
CURRENT ASSETS:
Marketable securities $ 22,350 $ -
Receivable - related party 5,357 5,357
Prepaid assets 735 -
----------- -----------
Total Current Assets $ 28,442 $ 5,357
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Bank overdraft $ - $ 190
Accounts payable 2,900 7,195
Advances - related party 27,049 750
Accrued liabilities 403,542 133,610
Notes payable - related party 5,000 5,000
----------- -----------
Total Current Liabilities 438,491 146,745
----------- -----------
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 gain (loss) 7,450 -
Deficit accumulated during the
development stage (521,650) (245,539)
----------- -----------
Total Stockholders' Equity (Deficit) (410,049) (141,388)
----------- -----------
$ 28,442 $ 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 For the Six From Inception
Months Ended Months Ended on December 23,
June 30, June 30, 1999 Through
-------------------- ------------------- June 30,
2002 2001 2002 2001 2002
--------- --------- --------- --------- ---------
REVENUE $ - $ - $ - $ - $ -
--------- --------- --------- --------- ---------
EXPENSES:
General and Administrative 36,010 44,041 275,829 154,748 (521,115)
--------- --------- --------- --------- ---------
LOSS FROM OPERATIONS (36,010) (44,041) (275,829) (154,748) (521,115)
--------- --------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest Income - - 1 - 1
Interest (Expense) (218) (283) (536)
--------- --------- --------- --------- ---------
Total Other Income (Expense) (218) (282) - (535)
--------- --------- --------- --------- ---------
LOSS BEFORE TAXES (36,228) (44,041) (276,111) (154,748) (521,650)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
--------- --------- --------- --------- ---------
NET LOSS $ (36,228) $(44,041) $(276,111)$(154,748) $(521,650)
========= ========= ========= ========= =========
LOSS PER COMMON SHARE $ (.23) $ (.27) $ (1.71) $ (1.08) $ (5.54)
========= ========= ========= ========= =========
[Continued]
4
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Three For the Six From Inception
Months Ended Months Ended on December 23,
June 30, June 30, 1999 Through
-------------------- ------------------- June 30,
2002 2001 2002 2001 2002
--------- --------- --------- --------- ----------
NET (LOSS) $ (36,228) $(44,041) $(276,111)$(154,748) $ (521,650)
OTHER COMPREHENSIVE
INCOME (LOSS):
Unrealized holding gain
(loss) marketable securities 13,397 - 7,437 - 7,437
Plus: reclassification
adjustment or losses
included in net income - - - - -
--------- --------- --------- --------- ----------
COMPREHENSIVE
INCOME (LOSS) $ (22,831) $(44,041) $(268,674)$(154,748) $ (514,213)
--------- --------- --------- --------- ----------
The accompanying notes are an integral part of these
unaudited condensed financial statements.
5
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Six From Inception
Months Ended on December 23,
June 30, 1999 Through
----------------------- June 30,
2002 2001 2002
----------- ---------- ----------
Cash Flows Provided by Operating Activities:
Net loss $ (276,111) $(154,748) $(521,650)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Non-cash expense - 67,000 67,000
Allowance for bad debt - - 9,527
Changes is assets and liabilities:
(Increase) in related party receivable - - (5,357)
(Increase) in prepaid assets (735) - (735)
Increase (decrease) in accounts payable (4,295) 5,428 2,900
Increase in accounts payable - related party - 235 750
Increase in accrued liabilities 269,932 66,522 403,542
----------- ---------- ----------
Net Cash Provided (Used) by Operating Activities (11,209) (16,033) (44,023)
----------- ---------- ----------
Cash Flows Provided by Investing Activities:
Advances to former subsidiary - (9,527) (9,527)
Investment in marketable securities (14,900) - (14,900)
----------- ---------- ----------
Net Cash Provided (Used) by Investing Activities (14,900) (9,527) (24,427)
----------- ---------- ----------
Cash Flows Provided by Financing Activities:
Decrease in bank overdraft (190) - -
Proceeds from issuance of common stock - 80,151 82,151
Payments for repurchase of common stock - (45,000) (45,000)
Proceeds from related party advances 26,299 - 26,299
Proceeds from notes payable - related party - - 5,000
----------- ---------- ----------
Net Cash Provided by Financing Activities 26,109 35,151 68,450
----------- ---------- ----------
Net Increase (Decrease) in Cash - 9,591 9,671
Cash at Beginning of Period - 80 -
----------- ---------- ----------
Cash at End of Period $ - $ 9,671 $ -
=========== ========== ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the six months ended June 30, 2002:
None
For the six months ended June 30, 2001:
During January 2001, the Company issued 2,600,000 shares of common stock
valued at $.02 per share in connection with employment agreements.
During January 2001, the Company recorded compensation expense of $15,000
in connection with the issuance of 1,500,000 options issued to officers of
the Company at $.01 per share.
The accompanying notes are an integral part of these
unaudited condensed financial statements.
6
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED 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]
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 June 30, 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 June 30, 2002 and 2001 are not necessarily
indicative of the operating results for the full year.
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.
Restated financial statements - rescinded merger- For the six months ended
June 30, 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
six months ended June 30, 2001 to reflect the rescission.
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.
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", SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", and SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections", were recently issued. SFAS No. 141, 142, 143, 144
and 145 have no current applicability to the Company or their effect on the
financial statements would not have been significant.
7
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
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.
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.
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.
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]
Comprehensive Income - The Company has adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income."
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.
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 June 30, 2002, the
Company had not received repayment of the advance and established an
allowance of $9,527 for uncollectible receivables. [See Note 3]
8
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED 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 June 30, 2002, a balance of $9,527 was due. The
Company has established an allowance for uncollectible receivables of
$9,527 at June 30, 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:
June 30, December 31,
2002 2001
----------- -----------
Accrued payroll $ 389,678 $ 119,179
Accrued payroll taxes 13,400 14,243
Accrued Interest 246 188
----------- -----------
Accrued liabilities $ 403,542 $ 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 relates 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 June 30, 2002.
Common Stock - The Company has authorized 50,000,000 shares of common
stock, $.001 par value. At June 30, 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.
9
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED 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 June 30, 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%.
10
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED 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 June 30, 2002, accrued
interest amounted to $464.
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 six months ended June 30, 2002,
the Company received $26,299 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
June 30, 2002 and 2001, respectively, unused operating loss carryforwards
of approximately $522,000 and $150,000 which may be applied against future
taxable income and which expire in various years through 2022.
11
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED 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 $54,000 and $50,000 as of June 30,
2002 and 2001, which has been offset against the deferred tax assets. The
net increase in the valuation allowance during the three months ended June
30, 2002 and 2001 amounted to approximately $8,000 and $50,000,
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 and has not yet been successful in establishing
profitable operations. Further, the Company has current liabilities in
excess of current assets. 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.
12
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED 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 For the Six From Inception
Months Ended Months Ended on December 23,
June 30, June 30, 1999 through
------------------- -------------------- June 30,
2002 2001 2002 2001 2002
--------- -------- --------- --------- ---------
Loss from continuing operations
available to common shareholders
(numerator) $ (36,228) $(44,041) $(276,111) $(154,748) $(521,650)
========= ======== ========= ========= =========
Weighted average number of
common shares outstanding used
in loss per share for the period
(denominator) 161,000 161,000 161,000 143,414 94,123
========= ======== ========= ========= =========
Dilutive earnings (loss) per share was not presented, as its effect is
anti-dilutive.
At June 30, 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.
13
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OR PLAN OF OPERATION
Results of Operations - Six Months Ended June 31, 2002 and 2001
Edlam generated no revenue from operations for three-month periods ended
June 30, 2002 and 2001. General and administrative expenses were $275,829 for
the six months ended June 30, 2002 and $154,748 for the comparable period in
2001. The substantial increase in such expenses is attributable primarily to the
increase in executive compensation accrued in the first half of 2002, which
remained unpaid at June 30, 2002.
Due to the foregoing, Edlam realized a net loss of $276,111 for the six
months ended June 30, 2002, compared to a net loss of $154,748 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 June 30, 2002, Edlam had $28,442 in current assets and $438,491 in
current liabilities giving it a working capital deficit of $410,049. 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
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 $27,049, which are non-interest bearing. We also have accrued
payroll to our executive officers in the amount of $389,678. 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
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
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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. Included as Exhibit No. 99.1 is the certificate required by the
Sarbanes-Oxley Act of 2002.
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: August 14, 2002 By: /s/ Robert S. Hardy
President and Chief Executive Officer
Date: August 14, 2002 By: /s/ Holly V. Grant
Chief Financial Officer
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