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
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____to____
Commission file number: 00-32691
ILN Pelham Corporation
(Exact name of registrant as specified in its charter)
TEXAS 76-0676168
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15007 Grove Gardens, Houston, TX 77082
(Address of principal executive offices (zip code))
888-854-0661
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the last 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 the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding at September 30, 2001
Common Stock, par value $0.0001 5,000,000
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ILN PELHAM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
September 30, 2001
(unaudited)
ASSETS
CASH $ -
Deferred tax asset, less valuation allowance of $235 -
---------
TOTAL ASSETS $ -
=========
LIABILITIES AND DEFICIENCY IN ASSETS
LIABILITIES $ -
Accrued professional fees 300
---------
TOTAL LIABILITIES 300
---------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
DEFICIENCY IN ASSETS
Preferred Stock, $.0001 par value, 20,000,000 shares
authorized; none outstanding $ -
Common Stock, $.0001 par value, 100,000,000 shares
authorized; 5,000,000 shares issued and outstanding 500
Additional paid-in capital 1,738
Stock subscription receivable (1,000)
Deficit accumulated during the development stage (1,538)
---------
TOTAL DEFICIENCY IN ASSETS ( 300)
---------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS $ -
=========
See accompanying notes.
ILN PELHAM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT DURING THE DEVELOPMENT STAGE
For the period from inception (April 2, 2001) to September 30, 2001
(unaudited)
For the three April 2, 2001
months ending (inception)
September 30, 2001 September 30, 2001
EXPENSES
Organizational expenses $ - $ 300
Professional fees 300 1,238
-------- ---------
NET LOSS BEFORE INCOME TAX - $(1,538)
INCOME TAXES - -
-------- ---------
NET LOSS AND ACCUMULATED DEFICIT DURING THE
DEVELOPMENT STAGE $ (300) $(1,538)
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(BASIC AND DILUTED) 5,000,000 5,000,000
========= =========
NET LOSS PER SHARE (BASIC AND DILUTED) $ (0.00) $ (0.00)
========= =========
See accompanying notes.
ILN PELHAM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
For the period from inception (April 2, 2001) to September 30,2001
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,538)
Adjustments to reconcile net loss to net
cash used by operating activities:
Increase in accrued professional fees 300
---------
NET CASH USED BY OPERATING ACTIVITES (1,238)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital Contributed 1,238
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,238
---------
NET INCREASE IN CASH AND EQUIVALENTS FOR THE PERIOD
AND CUMULATIVE DURING THE DEVELOPMENT STAGE -
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD -
---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ -
=========
SUPPLEMENTAL DISCLOSURES
Interest paid $ -
Income taxes paid $ -
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES
Common stock issued for stock subscriptions receivable $ 1,000
---------
See accompanying notes.
The accompanying unaudited financial statements of the Company have
been prepared inaccordance with Rule 10-01 of Regulation S-X
promulgated by the Securities and Exchange Commission and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, the Company has made all adjustments
necessary for a fair presentation of the results of the interim periods,
and such adjustments consist of only normal recurring adjustments.
The results of operations for such interim periods are not necessarily
indicative of results of operations for a full year.
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY
ILN Pelham Corporation (A Development Stage Company)(the
Company) was incorporated in Texas on April 2, 2001, to serve
as a vehicle to effect a merger, exchange of capital stock,
asset acquisition or other business combination with a domestic
or foreign private business. At September 30, 2001, the Company
had not yet commenced any formal business operations. The
Company's fiscal year end is December 31.
The Company's ability to commence operations is contingent upon
its ability to identify a prospective target business and raise
the capital it will require through the issuance of equity
securities, debt securities, bank borrowings or a combination
thereof.
USE OF 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 and disclosures of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those
estimates.
INCOME TAXES
The Company follows Statement of Financial Accounting Standards
No. 109 (FAS 109), "Accounting for Income Taxes". FAS 109 is
an asset and liability approach that requires the recognition
of deferred tax assets and liabilities for the expected future
tax consequences of the difference in events that have been
recognized in the Company's financial statements compared to
the tax returns.
ADVERTISING
Advertising costs will be expensed as incurred.
NET LOSS PER COMMON SHARE
Basic net loss per common share is computed by dividing net
loss applicable to common shareholders by the weighted-average
number of common shares outstanding during the period.
Diluted net loss per common share is determined using the
weighted-average number of common shares outstanding during the
period, adjusted for the dilutive effect of common stock
equivalents, consisting of shares that might be issued upon
exercise of common stock options. In periods where losses are
reported, the weighted-average number of common shares
outstanding excludes common stock equivalents, because their
inclusion would be anti-dilutive.
CASH AND CASH EQUIVALENTS
The company considers all highly liquid investments with
original maturities of three months or less to be cash
equivalents.
DEVELOPMENT STAGE COMPANY
The Company has been devoting its efforts to activities
such as raising capital, establishing sources of information,
and developing markets for its planned operations. The
Company has not yet generated any revenues and, as such,
it is considered a development stage company.
NOTE 2. RELATED PARTY TRANSACTIONS
The Company issued 5,000,000 shares of common stock to ILN
Industries, LLC, which is 100% owned by the President and
sole director of the Company in April 2001. These shares
were issued for a total value of $1,000.
ILN Industries, LLC, the Company's sole shareholder
contributed capital in the amount of $1,238, per a signed
agreement dated April 2, 2001. The agreement calls for
ILN Industries, LLC to provide the following services,
without reimbursement from the Company, until the Company
enters into a business combination as described in Note 1:
a. Location and review of potential target companies
b. Payment of all corporate, organizational, and other
costs incurred by the Company.
NOTE 3. INCOME TAXES
At September 30, 2001, the Company had a net operating loss of
approximately $1,538. This loss may be used offset federal
income taxes in future periods. However, if subsequently
there are ownership changes in the Company, as defined in
Section 382 of the Internal Revenue Code, the Company's
ability to utilize net operating losses available before
the ownership change may be restricted to a percentage of
the market value of the Company at the time of the ownership
change. Therefore, substantial net operating loss
carryforwards could, in all likelihood, be limited or
eliminated in future years due to a change in ownership as
defined in the Code. The utilization of the remaining
carryforwards is dependent on the Company's ability to
generate sufficient taxable income during the carryforward
periods and no further significant changes in ownership.
The Company computes deferred income taxes under the
provisions of FASB Statement No. 109 (SFAS 109), which
requires the use of an asset and liability method of
accounting for income taxes. SFAS No. 109 provides for the
recognition and measurement of deferred income tax benefits
based on the likelihood of their realization in future years.
A valuation allowance must be established to reduce deferred
income tax benefits if it is more likely than not that, a
portion of the deferred income tax benefits will not be
realized. It is Management's opinion that the entire
deferred tax benefit of $235 resulting from the net operating
loss may not be recognized in future periods. Therefore, a
valuation allowance equal to the deferred tax benefit of
$235 has been established, resulting in no deferred tax
benefits as of the balance sheet date.
NOTE 4. GOING CONCERN AND MANAGEMENT'S PLANS
As shown in the accompanying financial statements, the
Company incurred a net loss of $1,538 for the period from
inception (April 2, 2001) to September 30, 2001. The ability of
the Company to continue as a going concern is dependent upon its
ability to obtain financing and achieve profitable operations.
The Company anticipates meeting its cash requirements through
the financial support of its shareholders until such time as
it finds a merger partner. The financial statements do not
include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
NOTE 5. STOCKHOLDER'S EQUITY
SALE OF SHARES
In April 2001, the Company issued 5,000,000 shares of common
stock for a total of $1,000. A stock subscription receivable
was recorded in connection with this transaction.
CAPITAL CONTRIBUTED
In April 2001, the sole shareholder of the Company contributed
$1,238 to pay for the Company's organizational expenses and
audit fees.
PREFERRED STOCK
The Board of Directors is authorized to establish the rights
and preferences of preferred stock. To date, the Board of
Directors has not established those rights and preferences.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has registered its common stock on a Form 10-SB
registration statement filed pursuant to the Securities Exchange Act
of 1934 (the "Exchange Act") and Rule 12(g) thereof. The Company
files with the Securities and Exchange Commission periodic and
episodic reports under Rule 13(a) of the Exchange Act, including
quarterly reports on Form 10-QSB and annual reports Form 10-KSB.
The Company was formed to engage in a merger with or acquisition
of an unidentified foreign or domestic private company which desires to
become a reporting company whose securities have been registered under
the Exchange Act. The Company may be deemed to meet the definition of
a "blank check" company contained in Section (7)(b)(3) of the Securities
Act of 1933, as amended.
Management believes that there are perceived benefits to being
a reporting company which may be attractive to foreign and domestic
private companies.
These benefits are commonly thought to include
(1) the ability to use securities to make
acquisition of assets or businesses;
(2) increased visibility in the financial
community;
(3) the facilitation of borrowing from
financial institutions;
(4) improved trading efficiency;
(5) the potential for shareholder liquidity;
(6) greater ease in subsequently raising capital;
(7) compensation of key employees through
options for stock for which there may be a public market;
(8) enhanced corporate image; and,
(9) a presence in the United States capital market.
A private company which may be interested in a business
combination with the Company may include
(1) a company for which a primary purpose of becoming a
reporting company is the use of its securities for the
acquisition of assets or businesses;
(2) a company which is unable to find an underwriter of its
securities or is unable to find an underwriter of securities
on terms acceptable to it;
(3) a company which wishes to become a reporting company with
less dilution of its common stock than would occur normally
upon an underwriting;
(4) a company which believes that it will be able obtain
investment capital on more favorable terms after it has
become a reporting company;
(5) a foreign company which may wish an initial entry into the
United States securities market;
(6) a company seeking one or more of the other benefits believed
to attach to a reporting company.
As of the date hereof, the Company has not entered into an
agreement for a business combination. When a business combination is
effected, if at all, the Company will file notice of such transaction with
the Securities and Exchange Commission on Form 8-K. Persons reading this
Form 10-QSB are advised to see if the Company has subsequently filed a
Form 8-K.
ILN Industries, LLC has agreed to pay all of the Company expenses
until a business combination is effected, without repayment.
The Company is authorized to enter into a definitive agreement
with a wide variety of private businesses without limitation as to their
industry or revenues. It is not possible at this time to predict with
which private company, if any, the Company will enter into a definitive
agreement or what will be the industry, operating history, revenues,
future prospects or other characteristics of that company.
The Company does not intend to trade its securities in the
secondary market until completion of a business combination. It is
anticipated that following such occurrence the Company will take the
steps required to cause its common stock to be admitted to quotation
on the NASD OTC Bulletin Board or, if it then meets the financial and
other requirements thereof, on the Nasdaq SmallCap Market, National
Market System or regional or national exchange.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the
Company is unaware of such proceedings contemplated against it.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
-- Certificate of Incorporation filed as an
exhibit to the Company's registration statement on
Form 10-SB filed on May 8, 2001 and is incorporated
herein by reference.
-- By-Laws filed as an exhibit to the Company's
registration statement on Form 10-SB filed on May 8,
2001 which is incorporated herein by reference.
-- Agreement with ILN Industries, LLC filed
as an exhibit to the Company's registration statement
on Form 10-SB filed on May 8, 2001 which is
incorporated herein by reference.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the
Company during the quarter.
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.
ILN Pelham Corporation
By: /S/ Henry Jan
President
Dated: October 1, 2001