UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: June 30, 2003
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________ to _______
Commission file number: 033-09472-D
E'PRIME AEROSPACE CORPORATION
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(Name of small business issuer in its charter)
Colorado 59-2802081
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 S. Washington
Ave. Unit 34, Titusville, FL 32780
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (321) 269 - 0900
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock - No
Par Value
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 [_]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]
The issuer had zero ($0.00) revenues for its most recent fiscal year.
As of June 30, 2003, the registrant has outstanding 825,299,046 shares of common
stock and 12,471,800 "B" Stock Purchase Warrants.
DOCUMENTS INCORPORATED BY REFERENCE
Form 8K filed 8/25/06 to report the change of control of voting stock, the
resignation of Directors and election of a new Chairman and Directors and
Officers is incorporated by reference into Part II of this Quarterly Report on
Form 10 QSB/A.
Transitional Small Business Disclosure Format (Check one): Yes [_] No [X]
E'PRIME AEROSPACE CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Index to Quarterly Report on Form 10QSB/A
Page
PART I FINANCIAL INFORMATION
Item 1 Unaudited Condensed Financial Statements
Balance Sheet as of June 30, 2003 and June 30, 2002 4
Income Statement for the three and nine months ended June
30, 2003 and June 30, 2002 5
Statement of Cash Flow for the nine months ended June 30,
2003 and June 30, 2002 6
Notes to unaudited condensed financial statements 7
Item 2 Management discussion and analysis of Financial Condition
and Results of Operations 10
Item 3 Controls and Procedures 10
PART II OTHER INFORMATION
Item 1 Legal Proceedings 11
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds. 11
Item 3 Defaults Upon Senior Securities 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 11
SIGNATURES ` 12
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
The consolidated financial statements of E'Prime Aerospace Corporation and
subsidiaries (collectively, the Company), included herein were prepared, without
audit, pursuant to rules and regulations of the Securities and Exchange
Commission. Because certain information and notes normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America were condensed or omitted pursuant to such rules
and regulations, these financial statements should be read in conjunction with
the financial statements and notes thereto included in the audited financial
statements of the Company as included in the Company's Form 10-KSB/A for the
year ended September, 30, 2003.
E'PRIME AEROSPACE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
FOR THE NINE MONTHS ENDED JUNE 30
Nine Months Nine Months
Ended Ended
6/30/03 6/30/02
------------- ---------------
ASSETS
Cash and cash equivalents $ 142 (a) $ 142
Prepaid expenses 2,400 2,400
Properrty & Equip 235,237 237,361
------------- ---------------
Total Assets $ 237,779 $ 239,903
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Notes payable (Note 4) 342,426 986,728
Accounts payable 392,723 389,681
Judgement payable 141,241 (b) 137,161
Accrued salaries and payroll taxes 2,007,033 (c) 2,097,711
Accrued interest 494,844 1,089,123
Accrued rent 27,000 0
Accrued officers' salaries 3,330,898 2,781,580
Accrued consulting fees 123,866 123,866
Due to related parties 851,074 891,855
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Total Current Liabilities $ 7,711,106 $ 8,497,705
Commitments and contingencies (Note 7)
Stockholders' Deficit
Common Stock 11,994,479 10,477,758
Additional paid-in capital 212,000 212,000
Deficit accumulated during the development stage (19,679,806) (18,947,560)
------------- ---------------
Total Stockholders' Deficit $ (7,473,327) $ (8,257,802)
------------- ---------------
Total Liabilities and Stockholders' Deficit $ 237,779 $ 239,903
============= ==============
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Notes to Balance Sheet
(a) Cash is adjusted for $142 audit correction of prior year balance.
(b) Judgements payable includes reclasss of $137,161 prior year adjustment from
Accrued salaries.
(c) Accrued salaries includes reclasss of $137,161 prior year adjustment to
Judgements payable.
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The accompanying notes are an integral part of these financial statements.
4
E'PRIME AEROSPACE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHS ENDED JUNE 30
Cumulative for
the
period from
Three Months Three Months Nine Months Nine Months February 20, 1986
Ended Ended Ended Ended (inception) to
6/30/03 6/30/02 6/30/03 6/30/02 June 30, 2003
---------------- -------------- ----------- ------------ ----------------
Service revenues $ 0 $ 0 $ 0 $ 0 $ 5,000
---------------- -------------- ----------- ------------ ----------------
Total revenues $ 0 $ 0 $ 0 $ 0 $ 5,000
Expenses
Officers Salaries 137,500 137,500 412,500 412,500 5,082,686
Depreciation 531 531 1,593 1,593 198,224
Interest expense 10,034 10,034 30,102 (64,512) 1,810,874
General and administrative 29,098 59,833 88,283 110,831 12,017,638
Write off of receivable from
affiliate 0 0 0 0 1,495,523
---------------- -------------- ----------- ------------ ----------------
Total expenses $ 177,163 $ 207,898 $ 532,478 $ 460,412 $ 20,604,945
Net loss $ (177,163) $ (207,898) $ (532,478) $ (460,413) $ (20,599,945)
Basic earnings per share
Net loss per common share (0.0002) (0.0006)
Weighted average shares
outstanding 820,496,310 820,496,310
The accompanying notes are an integral part of these financial statements.
5
E'PRIME AEROSPACE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30
Cumulative for the
period from
Nine Months Nine Months February 20, 1986
Ended Ended (inception) to
6/30/03 6/30/02 June 30, 2003
------------ ------------- -------------------
Operating Activities
Net loss $ (532,478) $ (460,413) $ (20,599,945)
Adjustments to reconcile net loss to net
cash
(used) by operating activities:
Depreciation and amortization 1,593 1,593 198,224
Loss on disposition of vehicles and
equipment 0 0 32,683
Loss on sale of asset held for sale 0 0 14,000
Write-off of amount due from affiliate 0 0 1,495,523
Write-off of Accrued expenses 0 0 446,824
Write-off of note payable 0 0 145,425
Shares issued for services rendered 18,245 75,976 3,132,812
Shares issued for interest and finance fee 0 0 1,850,475
Shares issued for settlement of litigation 0 0 1,115,023
Changes in operating assets and
liabilities:
Prepaid expenses 0 0 0
Accrued salaries-officers 412,500 412,500 3,404,532
Accounts payable (602) (160,191) 21,334
Accrued salaries, wages and payroll taxes 1,902 (a) 11,786 1,966,547
Judgements payable 4,073 (b) 0 141,234
Accrued interest payable 26,029 91,395 305,804
Accrued rent 27,000 0 168,000
------------ ------------- -------------------
Net cash (used) by operating activities $ (41,739) $ (27,354) $ (6,161,506)
Investing Activities
Equipment acquisitions 0 0 (325,100)
Proceeds from disposition of vehicles 0 0 30,307
Proceeds from sale of asset held for sale 0 0 46,000
------------ ------------- -------------------
Net cash (used) by investing activities $ 0 $ 0 $ (248,793)
Financing Activities
Proceeds from issuance of notes payable 0 0 2,156,683
Advances from shareholders and others 41,739 27,354 1,781,302
Repayment of notes payable 0 0 (79,277)
Proceeds from issuance of common stock 0 0 2,553,991
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Net cash provided by financing activities $ 41,739 $ 27,354 $ 6,412,699
(Decrease) in cash 0 0 2,400
Cash at beginning of period 142 (c) 142 142
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Cash at end of period $ 142 $ 142 $ 2,542
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Notes to Cash Flow
(a) Accrued Salaries is adjusted for $137,161 audit correction of prior year
balance (see BS note c).
(b) Judgements payable is adjusted for $137,161 audit correction of prior year
balance (see BS note b).
(c) Beginning cash is adjusted for $142 audit correction of prior year balance
(see BS note a).
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The accompanying notes are an integral part of these financial statements.
6
E'PRIME AEROSPACE CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
Note 1 ORGANIZATION AND OPERATIONS
E'Prime Aerospace Corporation (the Company or EPAC) has been in the development
stage since its incorporation in Florida on February 20, 1986. The Company is
engaged in seeking to provide a reliable and comprehensive payload and satellite
launching service to industry and government, both domestic and foreign.
On October 12, 1987, the Company was acquired by E'Prime Aerospace Corporation
(Colorado), formerly known as Bangor Investments, Inc., in a business
combination accounted for as a reverse acquisition. Technically, E'Prime
Aerospace Corporation (Colorado) (E'Prime - Colorado) issued 496,800,000 of its
share for the Company. Prior to the combination, E'Prime - Colorado had
30,200,000 shares outstanding of which 17,700,000 shares had been issued to its
organizer for $14,500 and 12,500,000 shares had been issued in a public
offering. The proceeds of the public offering, net of cost of the offering, were
$202,267. During the period, E'Prime - Colorado was in existence prior to the
reverse acquisition, its only activity was to raise equity capital for the
purpose of acquiring other entities and it had incurred a deficit of $15,631.
Thus, at the date of the reverse acquisition, E'Prime - Colorado had net assets
of $201,136. For accounting purposes, the reverse acquisition is reflected as if
the Company issued its stock (30,200,000 shares) for net assets of E'Prime -
Colorado. The net assets of E'Prime were not adjusted in connection with the
reverse acquisition since they were monetary in nature and principally consisted
of a loan to the Company.
On July 1, 1992, the Company formed E'Prime Aerospace Corporation of Delaware a
non-operating subsidiary.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financials include the accounts of the Company and its wholly
owned subsidiaries. All significant intercompany transactions and balances have
been eliminated in consolidation.
Note 2 Income Taxes
The Company uses the asset and liability method of accounting for income taxes.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statements carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. The
deferred tax assets resulting principally from operating losses have not been
recognized.
7
E'PRIME AEROSPACE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2003
Loss Per Share
Basic and diluted net loss per common shares has been calculated based upon the
weighted average number of common shares outstanding.
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 disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Accordingly, actual results could differ from those estimates.
Common Stock issued for Services or Payment of Debt
Common stock issued for services or in payment of debt is recorded at the
estimated value of the stock at the dates of issuance based upon reported market
prices or the value of the services.
Recent Accounting Pronouncements
The adoption of recent accounting pronouncements by the Company did not have an
impact on its consolidated results of operations, financial position or cash
flows.
Additional Notes to Consolidated Financial Statements are essentially the same
as those stated in the Company's 10KSB for the year ended September 30, 2002.
During the period the company issued 335,794 shares as payment for professional
services rendered to the company.
PRIOR PERIOD ADJUSTMENTS:
The accompanying financial statement for the quarter ended June 30, 2003 has
been restated to (1) correct an understatement of rent expense due to an error
in the computation of annual rental expense and (2) correct for an overstatement
of operating expenses that were no longer required to be shown as liabilities.
8
E'PRIME AEROSPACE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2003
The effect of prior period accounting errors relating to under and over accrual
of expenses resulted in the following net changes as of June 30, 2003:
Three Months Three Months
Ended Ended
6/30/03 6/30/03
as previously as restated (incr)/decr
------------------- ------------------- --------------
reported
Balance Sheet
ASSETS
Cash and cash equivalents $ 142 $ 142 (a) $ 0
Prepaid expenses 2,400 2,400 0
Properrty & Equip 235,237 235,237 0
------------------- ------------------- --------------
Total Assets $ 237,779 $ 237,779 $ 0
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Notes payable 342,425 342,426 1
Accounts payable 392,722 392,723 1
Judgement payable 141,241 (b) 141,241
Accrued salaries and payroll taxes 2,111,133 2,007,033 (c) (104,100)
Accrued interest 512,018 494,844 (17,174)
Accrued rent 27,000 27,000
Accrued officers' salaries 3,330,898 3,330,898
Accrued consulting fees 123,866 123,866 0
Due to related parties 4,223,197 851,074 (3,372,123)
------------------- ------------------- --------------
Total Current Liabilities $ 7,705,361 $ 7,711,106 $ 5,745
Stockholders' Deficit
Common Stock 11,994,479 11,994,479 0
Additional paid-in capital 212,000 212,000 0
Deficit accumulated during the development stage (19,674,061) (19,679,806) (5,745)
------------------ ------------------- -------------
Total Stockholders' Deficit $ (7,467,582) (7,473,327) (5,745)
Total Liabilities and Stockholders' Deficit $ 237,779 237,779 0
- -------------
Notes to Balance Sheet:
(a) Judgements payable includes reclasss of $137,161 prior year adjustment from
Accrued salaries
(b) Accrued salaries includes reclasss of $137,161 prior year adjustment to
Judgements payable
Statement of Operations
Service revenues $ 0 $ 0 $ 0
------------------- ------------------- --------------
Total revenues $ 0 $ 0 $ 0
Expenses
Officers Salaries 137,500 137,500 0
Depreciation 531 531 0
Interest expense 10,034 10,034 0
General and administrative 27,184 29,098 (1,914)
Write off of receivable from affiliate 0 0
------------------- ------------------- --------------
Total expenses $ 175,249 $ 177,163 $ (1,914)
Net loss $ (175,249) $ (177,163) $ (1,914)
9
Item 2. Management's Discussion and Analysis.
Liquidity and Capital Resources
Over the past several years, the Company has expended substantial funds in
the development of its business. Sources of capital during this time have
included stock sales, advances from shareholders and short term funding. As of
June 30, 2003, the Company has a working capital deficit of $7,473,327.
In order to complete its development and reach full operational capability
and, in order to satisfy existing liabilities, the Company will need to obtain
substantial additional capital. Management is currently engaged in negotiations
to secure the necessary funds to complete implementation of its launch
technology, repay existing liabilities and fund facility construction.
Results of Operations
Since its inception, the Company has been in the development stage.
Accordingly, the Company has not generated any revenues from operations and has
not projected significant revenues until its development stage is completed and
financing can be obtained for its operations. Through the quarter ended June 30,
2003, the Company has incurred an accumulated deficit of $19,679,806.
Item 3. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer, our
CEO, and Chief Financial Officer, our CFO, evaluated the effectiveness of our
disclosure controls and procedures as defined by Items 307 of Regulation S-B (17
CFR 228.307) and 308 of Regulation S-B (17 CFR 228.308) under the Securities and
Exchange Act as of June 30, 2003. Based on its evaluation, our CEO and CFO
concluded that, as of June 30, 2003, our disclosure controls and procedures were
(1) designed to ensure that material information relating to us is made known to
our CEO and CFO by others within the Company, particularly during the period in
which this report was being prepared and (2) effective, in that they provide
reasonable assurance that information required to be disclosed by us in reports
that we file or submit under the Securities and Exchange Act is recorded,
processed, summarized, and reported with in the time periods specified in the
Securities and Exchange Commission's rules and forms. On August 21, 2006, Doug
Oldham was appointed Chairman, President and Chief Executive Officer of E'Prime
Aerospace Corporation while Jean Oldham was appointed as Director and interim
Secretary. Effective August 21, 2006, Bob Davis, then-Chairman , Chief Executive
Officer and President, while remaining as a Director,resigned as Chairman, CEO
and President, Betty Davis resigned as Director, Secretary and Treasurer and
Richard Elrod resigned as Director. As a result, our new Board of Directors
appointed Leslie Shealey as Acting Chief Financial Officer and principal
accounting officer for purposes of evaluating our disclosure controls and
procedures, as described above, and for signing the Section 302 and 906
certifications included with this Quarterly Report on Form 10-QSB. Changes in
Internal Controls No change in our internal controls over financial reporting
(as defined in Items 307 of Regulation S-B (17 CFR 228.307) and 308 of
Regulation S-B (17 CFR 228.308) under the Securities and Exchange Act) occurred
during the period covered by this report that materially affected, or is
reasonably likely to materially affect, our internal controls over financial
reporting.
10
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
The Company has been subject to legal proceedings and claims that have
arisen in the ordinary course of business. While these claims have not and are
not expected to have a material effect on the financial position of the Company,
several of the claims from vendors have resulted in judgements against the
company. As of December 31, 2002 these judgements total $141,249
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
Certificate of Incorporation. Filed in the Company's Registration Statement
on Form S-18 (File No. 33-9472-D) and incorporated herein by reference.
Restated By-laws of the Company. Filed in the Company's Registration
Statement on Form S-18 (File No. 33-9472-D ) and incorporated herein by
reference.
(a) Exhibits included herein:
31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
32.2 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
11
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
E'Prime Aerospace Corporation (Registrant)
By: /s/ James D Oldham III
------------------------------------------
James D Oldham III
Chief Executive Officer and President
Date: December 12, 2006
By: /s/ Leslie Shealey
------------------------------------------
Leslie Shealey
Chief Financial Officer
Date: December 12, 2006
12