FORM 10-QSB
EDLAM ACQUISITION CORPORATION
INDEX
Page
PART I. Financial Information 3
Unaudited Condensed Balance Sheets - June 30, 2001 3
and December 31, 2000
Unaudited Condensed Statements of Operations for the 4
Three Months and Six Months Ended March 31,
2001 and for the Period From Inception on December 23,
1999 through March 31, 2001
Unaudited Condensed Statements of Cash Flows for the Six 5
Months Ended March 31, 2001 and for the Period From
Inception on December 23, 1999 through March 31, 2001
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis 10
PART II. Other Information 11
Signatures 11
2
PART I. FINANCIAL INFORMATION
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
2001 2000
________ ___________
CURRENT ASSETS:
Cash in bank $ 9,671 $ 80
Receivable from former Subsidiary 9,527 -
________ ___________
Total Current Assets 19,198 80
________ ___________
$ 19,198 $ 80
________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 5,428 $ 235
Accrued liabilities 66,522 -
________ ___________
Total Current Liabilities 71,950 235
________ ___________
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,
16,100,000 and 500,000 shares issued
and outstanding, respectively 16,100 500
Capital in excess of par value 88,051 1,500
Deficit accumulated during the
development stage (156,903) (2,155)
________ _________
Total Stockholders' Equity (Deficit) (52,752) (155)
________ _________
$ 19,198 $ 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 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,
2001 2000 2001 2000 2001
__________________________________________________
REVENUE $ - $ - $ - $ - $ -
EXPENSES:
General and Administrative 44,041 150 154,748 1,035 156,903
______ ___ _______ _____ _______
LOSS BEFORE INCOME
TAXES (44,041) (150) (154,748) (1,035) (156,903)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
_______ ___ _______ _____ _______
NET LOSS $ (44,041) $ (150) $(154,748) $(1,035) $(156,903)
_______ ___ _______ _____ _______
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.03)
_______ ___ _______ _____ _______
The accompanying notes are an integral part of these unaudited
condensed financial statements.
4
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,
2001 2000 2001
_____________________________________
Cash Flows Provided by Operating Activities:
Net loss $ (154,748) $ (1,035) $ (156,903)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Noncash expense 67,000 - 67,000
Changes is assets and liabilities:
Increase (decrease) in accounts payable 5,428 (550) 5,428
Increase in accounts payable - related party 235 - -
Increase in accrued liabilities 66,522 - 66,522
________ _______ __________
Net Cash Provided (Used) by
Operating Activities (16,033) (1,585) (17,953)
________ _______ __________
Cash Flows Provided by Investing Activities:
Loan made for parent (9,527) - (9,527)
________ _______ __________
Net Cash Provided (Used) by
Investing Activities (9,527) - (9,527)
________ _______ __________
Cash Flows Provided by Financing Activities:
Proceeds from issuance of common stock 80,151 - 82,151
Payments for repurchase of common stock (45,000) - (45,000)
________ _______ __________
Net Cash Provided by Financing Activities 35,151 - 37,151
________ _______ _________
Net Increase (Decrease) in Cash 9,591 (1,585) 9,671
Cash at Beginning of Period 80 2,000 -
________ _______ __________
Cash at End of Period $ 9,671 $ 415 $ 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, 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.
For the six months ended June 30, 2000:
None
The accompanying notes are an integral part of these unaudited
condensed financial statements.
5
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 March 2001, Triden Telecom, Inc., acquired approximately a
68% 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. On January 18, 2001,
The Company 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. 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 at June 30 2001, and results of operations and
cash flows for the three and six months ended June 30, 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 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 results of operations for the periods ended June
30, 2001 and 2000 are not necessarily indicative of the operating
results for the full year.
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 7]
Income Taxes - The Company accounts for income taxes in
accordance with FASB Statement No. 109, "Accounting for Income
Taxes [See Note 4]
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.
6
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
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 financial
statements would not have been significant.
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 1,750,000
common shares of the Company. During July 2001, and reflected
in these financial statements, the Company's entered into a
rescission agreement wherein the Company received back and
cancelled the 1,750,000 common shares issued in the acquisition.
During May 2001, the Company advanced Digitec $9,527 for
operations. As of June 31, 2001 the Company has not received
repayment of the advance.
NOTE 3 - 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, 2001.
Common Stock - During December 1999, in connection with its
organization, the Company issued 500,000 shares of its previously
authorized, but unissued common stock. The shares were issued
for cash of $2,000 (or $.004 per share).
During January 2001, Triden Telecom, Inc., purchased 11,000,000
share of the Company's common stock for $55,151 (or $.005 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, 500,000 shares of the Company's common stock at a
total redemption price of $45,000 (or $.09 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.
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. During July 2001, and reflected in
these financial statements, the Company's entered into a
rescission agreement wherein the Company received back and
cancelled the 1,750,000 common shares issued in the acquisition.
(See Note 2).
During January 2001, the Company sold 2,500,000 share of common
stock to investors for $25,000 ($.01 per share).
7
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3 - STOCKHOLDERS EQUITY [Continued]
During January 2001, the Company issued 2,600,000 shares of
common stock valued at $52,000 in connection with employment
agreements (See Note 12).
Stock Options - During January 2001, the Company recorded $15,000
in compensation expense in accordance with Accounting Principle
Bulletin No. 25 for 1,500,000 options to purchase common shares
at $.01 per share, issued in connections with employment
agreements (See Note 12). The options vested immediately and are
exercisable through January 5, 2006.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 Accounting
for Income Taxes [FASB 109]. FASB 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. At June 30, 2001 and
December 31, 2000, the total of all deferred tax assets were
approximately $50,000 and $0 and the total of the deferred tax
liabilities were $0 and $0. 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 $50,000 and $0 as of June 30, 2001 and December 31,
2000, which has been offset against the deferred tax assets. The
net increase in the valuation allowance during the six months
ended June 30, 2001 amounted to approximately $50,000.
As of June 30, 2001, the Company has net tax operating loss
[NOL] carryforwards available to offset its future income tax
liability. The NOL carryforwards have been used to offset
deferred taxes for financial reporting purposes. The Company
has federal NOL carryforwards of approximately $150,000 that
expire in 2019 and 2021.
NOTE 5 - 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
1,750,000 shares of common stock valued at $.02 per share, the
issuance of 1,000,000 options to purchase the Company's common
stock at $.01 per share 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
8
EDLAM ACQUISITION CORPORATION
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 5 - COMMITMENTS AND CONTINGENCIES [Continued]
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 850,000 shares of common stock valued
at $.02 per share, the issuance of 500,000 options to purchase
the Company's common stock at $.01 per share. 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. The employment agreement also
provides for disability and death benefits
NOTE 6 - 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 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.
NOTE 7 - 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,
2001 2000 2001 2000 2001
______________________________________________________
Loss from continuing
operations applicable to
common shareholders
(Numerator) $ (44,041) $ (150) $(154,748) $ (1,035) $(156,903)
_______ _____ _______ ______ ________
Weighted average
number of common
outstanding used
in loss per share
during the period
(Denominator) 16,100,000 500,000 14,341,436 500,000 5,014,054
__________ _______ __________ _______ _________
Dilutive earnings (loss) per share was not presented, as its
effect is anti-dilutive.
At June 30, 2001 and 2000, the Company had outstanding common
stock purchase options for 1,500,000 and 0 shares, respectively
(see Note 3), which were not included in the loss per share
computation because their effect would be anti-dilutive.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND PLAN OF OPERATION
Edlam Acquisition Corporation was incorporated on December
23, 1999 under the laws of the state of Nevada. On January 18,
2001, Edlam issued 11,000,000 shares of common stock to Triden
Telecom, Inc., a Nevada corporation ("Triden"), in exchange for
$55,151 cash. Concurrently with the stock sale, Edlam entered
into a Stock Exchange Agreement with Digitec Information Systems,
Inc., a Texas corporation ("Digitec"), whereby Edlam issued
1,750,000 shares of common stock to James M. Roberts, Digitec's
sole shareholder, in exchange for Mr. Roberts' 1,000 shares of
Digitec common stock. As a negotiated element of the foregoing
transactions, Edlam redeemed from its pre-existing shareholders
500,000 shares of common stock at a total redemption price of
$45,000. Consequently, Digitec became a wholly owned subsidiary
of Edlam, and Edlam became a majority owned subsidiary of Triden.
In July 2001, Edlam and James M. Roberts mutually rescinded
the Stock Exchange Agreement whereby Edlam acquired Digitec.
Consequently, the 1,750,000 shares issued in the acquisition were
returned to Edlam and cancelled, and all agreements between Edlam
and Mr. Roberts were terminated. Prior to the rescission Edlam
advanced to Digitec $9,527 for operations. Edlam has made a
demand for repayment of this amount, but no payment was received
as of the date of this report.
Results of Operations - Six Months Ended June 30, 2001
Edlam had no revenue from continuing operations for the six-
month period ended June 30, 2001, and the period from inception
on December 23, 1999 through June 30, 2001.
Edlam had general and administrative expenses of $154,748
for the six-month period ended June 30, 2001, and $1,035 for the
six months ended June 30, 2000, which consisted of general
corporate administration, executive salaries, legal and
professional expenses, and accounting and auditing costs. The
substantial increase in expense is attributable to a non-cash
expense for common stock issued to executive officers under
employment agreements valued at $52,000, a non-cash expense in
the amount of $15,000 representing the difference between the
exercise price and fair value of shares underlying options issued
to executive officers, and $66,522 of accrued and unpaid
compensation due executive officers under employment agreements.
As a result of the foregoing factors, Edlam realized a net
loss of $154,748 for the six months ended June 30, 2001, as
compared to a net loss of $1,035 for the six months ended June
30, 2000.
Liquidity and Capital Resources
At June 30, 2001, Edlam had $9,671 in cash, a receivable
from Digitec in the amount of $9,527, accounts payable of $5,428,
and $66,522 in accounts payable to executive officers for
compensation under existing employment agreements. Each of the
executive officers has agreed to accrue payment of their
compensation under their employment agreements until Edlam has
the capital resources to pay their compensation.
Edlam's current operating plan is to engage in the business
of reselling of telecommunications systems and services,
including, business phone systems, cellular service and
equipment, paging, and video conferencing. Management is in the
process of negotiating reseller agreements with providers of
these products and services with a view to implementing a
marketing program once agreements are finalized and employees are
retained to sell and install the telecommunications products.
Management believes that its current cash needs can be met with
the limited cash on hand so long as compensation to executive
officers is deferred. However, once Edlam commences a marketing
program for telecommunications services and products its need for
capital may change dramatically. To the extent capital is not
derived from operating revenue, Edlam will seek debt or equity
financing for its operations. There is no assurance that
financing will be available on terms acceptable to Edlam. To the
extent financing is not available for its operations, Edlam's
ability to pursue its business plan will be severely limited.
10
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 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: September 26, 2001 /s/ Robert S. Hardy
President and Chief Executive Officer
Date: September 26, 2001 /s/ Holly V. Grant
Chief Financial Officer
11 |
