10QSB - 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 March 31, 2001: 17,850,000
shares of common stock.
Transitional Small Business Format: Yes [ ] No [ X ]
FORM 10-QSB
EDLAM ACQUISITION CORPORATION
INDEX
Page
PART I. Financial Information 3
Unaudited Condensed Balance Sheets - 3
March 31, 2001 and December 31, 2000
Unaudited Condensed Statements of 4
Operations for the Three Months Ended
March 31, 2001 and for the Period From
Inception on December 23, 1999 through
March 31, 2001
Unaudited Condensed Statements of Cash 5
Flows for the Three Months Ended March
31, 2001 and for the Period From
Inception on December 23, 1999 through
March 31, 2001
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis 16
PART II. Other Information 16
Signatures 18
2
PART I. FINANCIAL INFORMATION
EDLAM ACQUISITION CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2001 2000
___________ ___________
CURRENT ASSETS:
Cash in bank $ 38,850 $ 80
Accounts receivable, net of allowance of
$15,000 and $0, respectively 65,300 -
Inventory 44,895 -
___________ ___________
Total Current Assets 149,045 80
PROPERTY AND EQUIPMENT, net 45,323 -
GOODWILL, net 293,923 -
___________ ___________
$ 488,291 $ 80
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 171,421 $ -
Accounts payable - related party 235 235
Accrued liabilities 94,378 -
Current portion of notes payable 123,155 -
Current portion of notes payable
- related party 141,249 -
Current portion of capital lease 2,891 -
___________ ___________
Total Current Liabilities 533,329 235
___________ ___________
LONG-TERM OBLIGATIONS:
Capital lease, less current portion 7,215 -
Notes payable, less current portion 7,123 -
___________ ___________
Total Liabilities 547,667 235
___________ ___________
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, 17,850,000 and 500,000
shares issued and outstanding 17,850 500
Capital in excess of par value 103,801 1,500
Accumulated deficit (181,027) (2,155)
___________ ___________
Total Stockholders' Equity (Deficit) (59,376) (155)
___________ ___________
$ 488,291 $ 80
___________ ___________
Note: The balance sheet at December 31, 2000 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
3
EDLAM ACQUISITION CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three months ended
March 31,
______________________________
2001 2000
___________ ___________
SALES, net of returns and discounts $ 174,020 $ -
COST OF GOODS SOLD 129,707 -
___________ ___________
Gross profit 44,313 -
___________ ___________
OPERATING EXPENSES:
Selling expense 5,182 -
General and administrative expenses 209,550 885
___________ ___________
Total Operating Expenses 214,732 885
___________ ___________
LOSS FROM OPERATIONS (170,419) (885)
___________ ___________
OTHER INCOME (EXPENSE):
Interest (expense) (8,453) -
___________ ___________
Total Other Income (Expense) (8,453) -
___________ ___________
LOSS FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES (178,872) (885)
CURRENT TAX EXPENSE (BENEFIT) - -
DEFERRED TAX EXPENSE - -
___________ ___________
NET LOSS $ (178,872) $ (885)
___________ ___________
LOSS PER COMMON SHARE $ (.01) $ (.00)
___________ ___________
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
4
EDLAM ACQUISITION CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
_____________________________
2001 2000
_____________ ____________
Cash Flows from Operating Activities:
Net loss $ (178,872) $ (885)
_____________ ____________
Adjustments to reconcile net income
to net cash used by operations:
Depreciation and amortization 15,845 -
Non-cash expense 67,000 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (3,002) -
(Increase) decrease in inventory (19,811) -
Increase (decrease) in accounts payable 26,880 (550)
Increase (decrease) in accrued expenses 45,973 -
_____________ ___________
Total Adjustments 132,885 (550)
_____________ ___________
Net Cash (Used) by Operating Activities (45,987) (1,435)
_____________ ___________
Cash Flows from Investing Activities:
Purchase of property and equipment - -
_____________ ___________
Net Cash (Used) by Investing Activities - -
_____________ ___________
Cash Flows from Financing Activities:
Proceeds from notes payable- related party 59,500 -
Payments on related party notes payable (8,754) -
Payments on notes payable (750) -
Payments on capital leases (390) -
Proceeds from common stock issuances 80,151 -
Payments to repurchase common stock (45,000) -
_____________ ___________
Net Cash Provided by Financing Activities 84,757 -
_____________ ___________
Net Increase (Decrease) in Cash 38,770 (1,435)
Cash at Beginning of Period 80 2,000
_____________ ___________
Cash at End of Period $ 38,850 $ 565
_____________ ___________
[Continued]
5
EDLAM ACQUISITION CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[Continued]
For the Three Months Ended
March 31,
_____________________________
2001 2000
_____________ ____________
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ 2,504 $ -
Income taxes $ - $ -
Supplemental Disclosure of Non-Cash Investing and Financing
Activities:
For the three months ended March 31, 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.
During January 2001 the Company purchased all the issued and
outstanding shares of Digitec information systems, Inc. for
1,750,000 shares of common stock (See Note 2).
For the three months ended March 31, 2000:
None
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
6
EDLAM ACQUISITION CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Edlam Acquisition Corporation (Parent) was
organized under the laws of the State of Nevada on December 23,
1999. On January 18, 2001, Parent acquired all of the issued and
outstanding shares of Digitec Information Systems, Inc.
(Subsidiary) organized under the laws of the State of Texas on
March 26, 1990 (See Note 2). The Subsidiary markets
telecommunication services and equipment including business phone
systems, pager and cellular phones. 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 March 2001,
Triden Telecom, Inc., acquired approximately a 62% interest in
the Company wherein the Company effectively became a subsidiary
of Triden, through the acquisition of 11,000,000 shares of
Parent's common stock, (See Note 2).
Condensed Consolidated Financial Statements - The accompanying
consolidated 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 consolidated financial position
at March 31 2001, and results of operations and cash flows for
the three months ended March 31, 2001 and 2000 have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements
and notes thereto included in the company's December 31, 2000
audited financial statements. The consolidated results of
operations for the periods ended March 31, 2001 and 2000 are not
necessarily indicative of the operating results for the full
year.
Consolidation - All significant inter-company transactions
between the parent and subsidiary have been eliminated in
consolidation.
Inventory - Inventory is carried at the lower of cost or market,
as determined on the first-in, first-out (FIFO) method.
Property and Equipment - Property and equipment are stated at
cost. Expenditures for major renewals and betterments that
extend the useful lives of property and equipment are
capitalized, upon being placed in service. Expenditures for
maintenance and repairs are charged to expense as incurred.
Depreciation of equipment is computed for financial statement
purposes on a straight-line basis over the estimated useful lives
of the assets, which range from three to fifteen years.
Leasehold improvements are amortized over the lease period or the
estimated useful life of the improvements.
Goodwill - Goodwill represents the excess of the cost of
purchasing the subsidiary over the fair market value of the net
liabilities at the date of acquisition, and is being amortized on
the straight-line method over 5 years. Amortization expense
charged to operations for the three months ended March 31, 2001
was $12,072.
Revenue Recognition - The Company recognizes revenue at the time
of delivery of the product or completion of the services to be
provided.
Advertising Costs - Costs incurred in connection with advertising
and promotion of the Company's products are expensed as incurred.
Advertising costs amounted to $5,182 and $0 for the three months
ended March 31, 2001 and 2000.
7
EDLAM ACQUISITION CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
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
14]
Income Taxes - The Company accounts for income taxes in
accordance with FASB Statement No. 109, "Accounting for Income
Taxes (see Note 11)
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. 136, "Transfers of Assets to a
not for profit organization or charitable trust that raises or
holds contributions for others", SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - deferral of the
effective date of FASB Statement No. 133 (an amendment of FASB
Statement No. 133.)," SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - and
Amendment of SFAS No. 133", SFAS No. 139, "Recission of SFAS No.
53 and Amendment to SFAS No 63, 89 and 21", and SFAS No. 140,
"Accounting to Transfer and Servicing of Financial Assets and
Extinguishment of Liabilities", were recently issued. SFAS No.
136, 137, 138, 139 and 140 have no current applicability to the
Company or their effect on the unaudited condensed consolidated
financial statements would not have been significant.
NOTE 2 - ACQUISITION
Acquisition - 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 1,750,000 common shares of the Company. The results
of operations of Digitec is included in the accompanying
financial statements since the date of Acquisition. The total
value of the 1,750,000 common shares issued in the acquisition
was $17,500, which exceeded the fair market value of the net
liabilities of Digitec by $305,995. The excess is recorded as
goodwill and is being amortized over 5 years.
8
EDLAM ACQUISITION CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3 - ACCOUNTS RECEIVABLE
Accounts receivable consists of trade receivables arising in the
normal course of business as follows at March 31, 2001 and
December 31, 2000:
March 31, December 31
2001 2000
____________ ___________
Trade accounts receivable $80,300 $ -
Less: allowance for doubtful
accounts (15,000) -
____________ ___________
$65,300 $ -
____________ ___________
All of the Company's accounts receivable are pledged as
collateral in connection with the Company's notes payable.
NOTE 4 - INVENTORY
The following is a summary of inventory recorded at the lower of
cost or market, less a reserve for obsolescence at March 31, 2001
and December 31, 2000:
March 31, December 31,
2001 2000
____________ ___________
Finished Goods $59,895 $ -
Less:
reserve for obsolescence (15,000) -
____________ ___________
$44,895 $ -
____________ ___________
The Company's inventory is pledged as collateral in connection
with the Company's notes payable.
NOTE 5 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment less
accumulated depreciation as of March 31, 2001 and December 31,
2000:
2000 1999
____________ ___________
Furniture $40,160 $ -
Vehicles 29,818 -
Equipment 13,225 -
Leasehold improvements 16,004 -
____________ ___________
99,207 -
Less:
accumulated depreciation (53,884) (-)
____________ ___________
$45,323 $ -
____________ ___________
Depreciation and amortization expense for the three months
ended March 31, 2001 and 2000 amounted to $3,773 and $0,
respectively.
The Company's property and equipment is pledged as collateral
in connection the Company's notes payable.
9
EDLAM ACQUISITION CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 - LEASE PAYABLE
Operating Leases - The Company leases its office and
production facility under an operating lease expiring in
January 2009 from an entity owned by a shareholder of the
Company.
The future minimum lease payments for non-cancelable operating
leases having remaining terms in excess of one year as of
March 31, 2001 are as follows:
Year ending December 31 Lease Payments
2001 24,750
2002 33,000
2003 33,000
2004 33,000
Thereafter 134,750
______________
Total Minimum Lease Payments $ 258,500
______________
Lease expense charged to operations was $8,250, and $0 for the
three months ended March 31, 2001 and 2000. |
