eLayaway, Inc. - FORM 10-Q - October 28, 2010

Attached files

file	filename
EX-32.2 - EXHIBIT 32.2 - eLayaway, Inc.	ex32-2.htm
EX-31.1 - EXHIBIT 31.1 - eLayaway, Inc.	ex31-1.htm
EX-31.2 - EXHIBIT 31.2 - eLayaway, Inc.	ex31-2.htm
EX-32.1 - EXHIBIT 32.1 - eLayaway, Inc.	ex32-1.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

______________________

FORM 10-Q

______________________

x	QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010

q	TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _____ TO_____

Commission File number: 333-148516

eLayaway, Inc. (f/k/a Tedom Capital, Inc.)

(Exact name of registrant as specified in its charter)

Delaware	20-8235863
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

1625 Summit Lake Drive, Suite 205, Tallahassee, Florida 32317

(Address of principal executive offices)

850-219-8210

(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 27, 2010, the registrant had 18,414,118 shares of its Common Stock outstanding.

TABLE OF CONTENTS

eLAYAWAY, INC.


	Part I – Financial Information
Item 1	Financial Statements
	Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009	3
	Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2010 (unaudited)	4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 (unaudited)	5
	Notes to the Unaudited Consolidated Financial Statements (unaudited)	7
Item 2	Management’s Discussion and Analysis or Plan of Operation	19
Item 3	Quantitative and Qualitative Disclosures about Market Risk	21
Item 4	Controls and Procedures	21
	Part II – Other Information
Item 1	Legal Proceedings	22
Item 2	Unregistered Sales Of Equity Securities And Use Of Proceeds	22
Item 3	Defaults Upon Senior Securities	23
Item 4	Submission Of Matters To A Vote Of Security Holders	23
Item 5	Other Information	23
Item 6	Exhibits	23

ITEM 1

eLAYAWAY, INC. (fka Tedom Capital, Inc.)

and SUBSIDIARIES

Consolidated Balance Sheets

	September 30,			December 31,
	2010			2009
	(unaudited)
ASSETS

Current assets
Cash	$	58,005		$	30,983
Segregated cash for customer deposits		76,374			162,508
Prepaid expenses		25,671			25,682
Total current assets		160,050			219,173

Fixed assets, net		21,250			54,290

Intangibles, net		4,814			14,481

Other assets		10,000			-

Total assets	$	196,114		$	287,944

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

Current liabilities
Capitalized leases	$	-		$	2,974
Notes and convertible notes payable, net of discounts		113,203			175,703
Note payable to related parties, net of discounts		78,181			15,300
Accounts payable		449,369			418,008
Accounts payable to related parties		49,777			20,138
Accrued liabilities		447,863			381,895
Deposits received from customers for layaway sales		157,375			111,428
Total current liabilities		1,295,768			1,125,446

Long-term liabilities
Other liabilities		28,784			-
Total liabilities		1,324,552			1,125,446

Commitments and contingencies (Note 9)

Shareholders' equity (deficiency)
Preferred stock, par value $0.001, 50,000,000 shares authorized
Series A preferred stock, $0.001 par value, 1,854,013 shares designated, issued and outstanding (liquidation value $1,200,000)		1,854			1,854
Series B preferred stock, $0.001 par value, 2,788,368 shares designated, issued and outstanding (liquidation value $1,770,000)		2,788			2,788
Series C preferred stock, $0.001 par value, 3,142,452 shares designated, issued and outstanding (liquidation value $3,251,050)		3,142			3,142
Series D preferred stock, $0.001 par value, 1,889,594 shares designated, 186,243 and 132,242 issued and outstanding at September 30, 2010 and December 31, 2009, respectively (liquidation value $295,750)		186			132
Common stock, par value $0.001, 100,000,000 shares authorized, 18,362,490 and 9,221,517 shares issued and outstanding, respectively		18,363			9,222
Additional paid-in capital		10,020,882			6,442,411
Accumulated deficit		(11,175,653	)		(7,297,051	)

Total shareholders' equity (deficiency)		(1,128,438	)		(837,502	)

Total liabilities and shareholders' equity (deficiency)	$	196,114		$	287,944

See accompanying notes to consolidated financial statements.

eLAYAWAY, INC. (f/k/a Tedom Capital, Inc.)

and SUBSIDIARIES

Consolidated Statements of Operations

(unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009

Sales	$	14,909		$	34,312		$	63,645		$	117,592
Cost of sales		76,629			139,188			224,690			397,517

Gross loss		(61,720	)		(104,876	)		(161,045	)		(279,925	)

Selling, general and administrative expenses (includes $137,953 and $2,979,841 of stock-based compensation and settlements for each of the three and nine months ended September 30, 2010 and none for the other periods presented)		395,647			167,365			3,664,776			649,765

Loss from operations		(457,367	)		(272,241	)		(3,825,821	)		(929,690	)

Other income (expense)
Interest expense		(34,439	)		(2,268	)		(52,781	)		(4,195	)
Total other income (expense), net		(34,439	)		(2,268	)		(52,781	)		(4,195	)

Net loss	$	(491,806	)	$	(274,509	)	$	(3,878,602	)	$	(933,885	)


Basic and diluted net loss per share	$	(0.03	)	$	(0.03	)	$	(0.26	)	$	(0.10	)

Weighted average shares outstanding - basic and diluted		18,284,338			9,221,517			14,844,324			9,221,517

See accompanying notes to consolidated financial statements.

eLAYAWAY, INC. (f/k/a Tedom Capital, Inc.)

and SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2010 and 2009

(unaudited)

	2010			2009

Cash flows from operating activities
Net loss	$	(3,878,602	)	$	(933,885	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		39,977			58,395
Amortization of intangibles		9,667			86,605
Amortization of debt discounts		28,750			-
Loss on conversion of accrued payroll into warrants		10,136			-
Loss on conversion of accounts payable into warrants		22,898			-
Issuance of warrants for services		79,030			-
Common stock granted for services		2,862,243			-
Issuance of options for services		5,534			-
Changes in operating assets and liabilities
(Increase) Decrease in:
Segregated cash for customer deposit		86,134			(80,227	)
Prepaid expenses		11			(915	)
Increase (Decrease) in:
Accounts payable		121,213			207,605
Accounts payable to related parties		29,639			-
Accrued expenses		139,933			373,659
Long-term liability		28,784			-
Deposits received from customers for layaway sales		45,947			(80,337	)
Net cash used in operating activities		(368,706	)		(369,100	)

Cash flows from investing activities
Purchase of property and equipment		(6,938	)		-
Net cash used by investing activities		(6,938	)		-

Cash flows from financing activities
Proceeds from related party loans		100,025			175,703
Proceeds from loans		165,000			-
Repayment of capitalized leases		(2,974	)		(4,112	)
Proceeds from sales of Series D preferred stock		60,000			100,000
Series D preferred cost offering cost		(3,000	)		-
Common stock offering cost		(1,500	)		-
Expenses paid by shareholders		6,115			-
Proceeds from sale of Series C preferred stock		-			105,001
Sale of common stock		79,000			-
Net cash provided by financing activities		402,666			376,592

Net increase in cash		27,021			7,492

Cash at beginning of year		30,983			7,567

Cash at end of year	$	58,004		$	15,059

See accompanying notes to consolidated financial statements.

eLAYAWAY, INC. (f/k/a Tedom Capital, Inc.)

and SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2010 and 2009

(unaudited)

	2010		2009

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest	$	13,891	$	4,195
Taxes paid	$	-	$	-

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Settlement of accounts payable with Series D preferred stock	$	25,750	$	-
Issuance of note payable for lease deposit	$	10,000	$	-
Conversion of payroll into warrants	$	73,962	$	-
Conversion of accounts payable into warrants	$	64,102	$	-
Converstion of notes payable to common stock	$	125,000	$	-
Debt discounts for beneficial conversion features value	$	148,340	$	-
Debt discounts for warrants issued with debt	$	30,054	$	-

See accompanying notes to consolidated financial statements.

eLAYAWAY, INC. (f/k/a Tedom Capital, Inc.)

and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2010

NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

eLayaway, Inc. (f/k/a Tedom Capital, Inc., the “Company”, “we”, “us”, “our” or “eLayaway”) is a Delaware corporation formed on December 26, 2006. On April 16, 2010, Tedom Capital, Inc. changed its name to eLayaway, Inc.

On March 17, 2010, the Company formed Tedom Acquisition Corp. (“TAC”), a Florida corporation, for the purpose of a reverse triangular merger with eLayawayCOMMERCE, Inc. (f/k/a eLayaway, Inc., “eLCOMMERCE”). On April 12, 2010, eLCOMMERCE merged with TAC with eLCOMMERCE as the surviving subsidiary of the Company. (See Note 7)

eLCOMMERCE was a Florida limited liability company that was formed on September 8, 2005 in Florida. On September 1, 2009, the Managing Members of the Florida limited liability company filed with the State of Florida to convert the Company to a corporation. For accounting purposes, the conversion to a corporation was treated as a recapitalization and reflected retroactively for all periods presented in the accompanying consolidated financial statements. On April 19, 2010, eLayaway, Inc. changed its name to eLayawayCOMMERCE, Inc.

Prior to the formation of eLCOMMERCE, the research and development of the eLayaway concept operated under the entity Triadium, LLC. The investors and founders of Triadium, LLC then formed eLayaway, LLC to commercialize the eLayaway business concept. There were no assets or liabilities contributed to eLayaway from Triadium, LLC at the time of formation of eLayaway, LLC.

In April 2007, the Company formed eLayaway Australia Pty, Ltd., an Australian company. This entity is 97% owned by eLayaway and has been inactive since inception.

On February 18, 2009, the Company acquired MDIP, LLC (“MDIP”), for nominal consideration, from its three founders, who are also the founders of eLayaway. MDIP holds the intellectual property rights related to the electronic payment systems and methods for which a non-provisional patent application was filed on October 17, 2006 for a Letters Patent of the United States and assigned a Utility Patent application Serial No. 11/550,301.

On March 25, 2009, one of the founders of eLayaway assigned the “eLayaway” trademark to the Company for nominal consideration including $6,468 of legal fees paid by the Company in 2006.

On March 29, 2010, MDIP was dissolved.

On July 28, 2010, eLayawaySPORTS, Inc. (eLSPORTS”), a Florida corporation, was formed as a subsidiary of the Company.

Basis of Presentation

The accompanying unaudited consolidated financial statements of eLayaway, Inc. and Subsidiaries have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The results of operations for the interim period ended September 30, 2010 shown in this report are not necessarily indicative of results to be expected for the full fiscal year ending December 31, 2010. In the opinion of the Company’s management, the information contained herein reflects all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s results of operations, financial position and cash flows. The unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Form 8-K filed on April 16, 2010 and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Nature of Operations

The eLayaway ® concept is an online payment system that allows consumers to pay for the products and services they want using manageable periodic payments thereby making their purchase affordable and easy to budget. Payments are automatically drafted from the consumer’s checking account via Automated Clearing House (“ACH”) on the schedule set by the consumer at the time of purchase. Like traditional layaway of the past, delivery of the product or service occurs upon payment in full. Although the payment process and supporting services are handled by eLayaway®, the merchant handles the order fulfillment.

Principles of Consolidation

The consolidated financial statements include the accounts of eLayaway and its wholly-owned subsidiaries, eLCOMMERCE, eLSPORTS and MDIP, LLC (until dissolved on March 29, 2010) and majority owned subsidiary eLayaway Australia Pty, Ltd. All significant inter-company balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, depreciable lives of the website and property and equipment, valuation of share-based payments and the valuation allowance on deferred tax assets.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses escrow liability and short term loans the carrying amounts approximate fair value due to their short maturities.

Effective January 1, 2008, we adopted accounting guidance for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

We currently measure and report at fair value our intangible assets. The fair value of intangible assets has been determined using the present value of estimated future cash flows method. The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2010:

	Balance at September 30, 2010		Quoted Prices in Active Markets for Identical Assets		Significant other Observable Inputs		Significant Unobservable Inputs
			(Level 1)		(Level 2)		(Level 3)
Assets:
Website	$	-		-	$	-	$	-
Trademarks		4,814		-		-		4,814
Total Financial Assets	$	4,814		-	$	-	$	4,814

Following is a summary of activity through September 30, 2010 of the fair value of intangible assets valued using Level 3 inputs:

Balance at January 1, 2010	$	14,481
Amortization of intangibles		(9,667	)
Ending balance at September 30, 2010	$	4,814

Net Earnings (Loss) Per Share

In accordance with ASC 260-10, “Earnings Per Share”, basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Dilutive common stock equivalent shares which may dilute future earnings per share consist of warrants to purchase 580,625 shares of common stock, convertible notes convertible into 1,100,000 common shares and 7,971,075 preferred shares which are mandatorily convertible on a one for one basis to common stock upon the meeting of certain conditions. Equivalent shares are not utilized when the effect is anti-dilutive.

Segment Information

In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company does not have any operating segments as of September 30, 2010.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued ASC 105-10, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162” (“SFAS No. 168”). Under ASC 105-10, the “FASB Accounting Standards Codification” (“Codification”) becomes the source of authoritative U. S. GAAP to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.

ASC 105-10 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. On the effective date, the Codification supersedes all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. The adoption of ASC 105-10 did not have to an impact on the Company’s consolidated financial statements.

In June 2009, the Securities and Exchange Commission’s Office of the Chief Accountant and Division of Corporation Finance announced the release of ASC 805-10 (Staff Accounting Bulletin (SAB) No. 112). This staff accounting bulletin amends or rescinds portions of the interpretive guidance included in the Staff Accounting Bulletin Series in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and Securities and Exchange Commission rules and regulations. Specifically, the staff updated the Series in order to bring existing guidance into conformity with recent pronouncements by the Financial Accounting Standards Board, namely, ASC 805-10, Business Combinations, and ASC 810-10 Non-controlling Interests in Consolidated Financial Statements. The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission’s official approval. They represent interpretations and practices followed by the Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the Federal securities laws.

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company sustained net losses of $3,878,602 (includes $2,979,841 of stock-based compensation and settlements) and used cash in operating activities of $368,706 for the nine months ended September 30, 2010. The Company had a working capital deficiency, stockholders’ deficiency and accumulated deficit of $1,135,718, $1,128,438 and $11,175,653, respectively, at September 30, 2010. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from third parties to sustain its current level of operations. The Company, through its private placements, raised $79,000 from April 20, 2010 through July 6, 2010 (see note 7), and an additional $265,028 in cash received under promissory notes in 2010 through September 30, 2010 (see Note 3). In July 2010, the Company discontinued its private placement and is currently evaluating future funding opportunities. No assurance can be given that the Company will be successful in these efforts.

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 – NOTES AND CONVERTIBLE NOTES PAYABLE, AND NOTES PAYABLE RELATED PARTIES, NET OF DISCOUNTS

Notes and convertible notes payable, net of discounts, classified as current consists of the following:

Notes and Convertible Notes Payable
			Unamortized			Principal, net
	Principal		Discount			of discounts
Hillside Properties	$	10,000	$	-		$	10,000
Gary Kline (Convertible)		165,000		(112,500	)		52,500
Premier Bank Lending Center		50,703		-			50,703
Total	$	225,703	$	(112,500	)	$	113,203


Notes Payable to Related Parties
			Unamortized			Principal, net
	Principal		Discount			of discounts
Ventana Capital Partners, Inc.	$	20,000	$	-		$	20,000
Lakeport Business Services, Inc.		20,325		-			20,325
Robert Salie (Convertible)		25,000		(18,750	)		6,250
Salie Family Limited Partnership		50,000		(18,394	)		31,606
Total	$	115,325	$	(37,144	)	$	78,181

On March 12, 2009, the Company secured a note for $50,703 from Premier Bank Lending Center. The note matures on March 12, 2010, bears interest at a rate of 6%, and has monthly interest only payments. On March 12, 2010, Premier Bank Lending Center renewed the note for $50,703 to the Company. The note matures on September 12, 2010, bears interest at a rate of 6.50% and has monthly interest only payments. The note is in default but the Company is in negotiations with the lender to extend the note.

On June 30, 2009, the Company secured a note for $25,000 from Lewis Digital, Inc. (“Lewis Digital”) which matures on July 1, 2010, has interest at 15% per annum, with interest only payments quarterly. The principal of Lewis Digital is a shareholder of the Company. On April 16, 2010, Lewis Digital converted this note to 50,000 shares of common stock of eLayaway, Inc.

On September 10, 2009, the Company obtained an unsecured convertible note for $100,000 from William Neal Davis (“Davis”). The one-year note requires monthly interest payments based on 12% per annum. The conversion is at the option of Davis for 62,973 shares of Series D preferred stock or $1.58 per share. Warrants for 120% of the 62,973 shares, or 75,567 warrants, with an exercise price of $0.25, were also issued but do not vest unless and until the note is converted. There was no fair value assigned to the warrants and there was no beneficial conversion value of the conversion feature of the note at the note date since the conversion price of $1.58 per share equals the $1.58 recent selling price of the Series D preferred stock. The warrants were exchanged for 37,784 common shares as part of the warrant exchange in April 2010 (see Note 7). On April 16, 2010, Davis converted this note to 200,000 shares of common stock of eLayaway, Inc.

On November 2, 2009, the Company secured a note for $15,300 from Bruce Harmon (“Harmon”), CFO and Director of the Company (see Note 6 - Related Parties). The note bears interest at a rate of 12%. The note matures on January 1, 2010. Harmon has agreed in an addendum to the note to defer interest payments until maturity and extended the maturity date to January 1, 2011. On June 29, 2010, an addendum to the note to add an advance of $5,025 from Harmon to the Company was added.

On February 10, 2010, the Company entered into a Promissory Note with Hillside Building, LLC, the landlord for the Company’s office space, for $10,000. The amount is related to the required deposit for the office space. The note has a one year term and accrues interest at the rate of 7% per annum.

On April 6, 2010, the Company entered into a Convertible Promissory Note with an individual (the “Holder”) for $100,000. The note has a one year term and accrues or pays, at the option of the Holder, interest at 12% per annum. The note was transferred to the Parent company after the reverse merger and is convertible at the option of the Holder into common stock of the public Parent company at $0.25 per share on or after the maturity date of the loan. On August 9, 2010, the Company executed an addendum to the April 6, 2010 convertible promissory note. The addendum facilitates $65,000 additional working capital for the Company. The addendum also modifies the previous terms and conditions by providing a conversion rate of $0.165 per share. This modification is considered a debt extinguishment for accounting purposes due to the increase of the fair value of the embedded conversion option on the modification date before the change of the conversion rate and after the rate change. All prior debts and related discounts were removed and the Company recorded a new debt of $165,000. The Company recorded $135,000 as a Debt Discount related to the Beneficial Conversion Feature of the new note which is amortized over the term of the one year note and accordingly, two months of interest of $22,500 were recorded as of September 30, 2010.

On June 18, 2010, the Company issued a promissory note in exchange for cash for $20,000 from Ventana Capital Partners, Inc. (“Ventana”), a related party that is under contract to assist the Company in its reverse merger, investor and public relations, and other pertinent roles. Additionally, the contract obligated Ventana to raise an initial $1,500,000. Ventana, due to its ownership, is a principal stockholder of the Company. The note bears interest at a rate of 1% per month. The note matures after an additional $100,000 in funding is raised. Ventana, and its principal, Ralph Amato, required that Douglas Salie, CEO and Chairman of the Company, use 500,000 of his personal restricted common stock in the Company as collateral at a conversion rate of $0.04 per share. In August 2010 this note was amended to increase the funding amount required for repayments to $200,000 from $100,000.

On July 6, 2010, the Company issued a Convertible Promissory Note with Dr. Robert Salie (“Dr. Salie”), the father of the Company’s CEO, for $25,000. The principal is due in one year or upon the receipt of $150,000 in common stock sales, whichever comes first. Interest accrues at the rate of 12%. The note is convertible at the option of Dr. Salie into common stock at $0.25 per share on or after the maturity date of the loan. The Company recorded $13,340 as a Debt Discount relating to the Beneficial Conversion Feature and $11,660 as a Debt Discount related to the 50,000 warrants that were issued as a loan fee with this debt. The Company amortized $6,250 to interest expense through September 30, 2010 based on the one year term of the note.

On September 22, 2010, the Company issued a Promissory Note with the Salie Family Limited Partnership, which is controlled by Dr. Salie, for $50,000. The principal is due in one year or upon the receipt of $450,000 in common stock sales, whichever comes first. Interest accrues at the rate of 12%. As a condition of the financing, the Company issued 100,000 warrants for common stock at the exercise price of $0.33 per share. The warrants have a five year life. The Company recorded $18,394 for the relative fair value of the warrants as a Debt Discount which will be amortized over the term of the one year note. For the period ended September 30, 2010, no amortization was recorded as it was immaterial. (See Note 7.)

NOTE 4 – CAPITALIZED LEASE

Capitalized lease consist of the following:

	September 30,		December 31,
	2010		2009

Hancock Bank	$	-	$	2,974
Total		-		2,974
Less: Current portion		-		(2,974	)
Long-term portion	$	-	$	-

The two-year lease for a telephone system was originated in May 2008.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Other

On February 10, 2010, the Company entered into an agreement with Ventana Partners, Inc. to facilitate the acquisition of the shares of a public company which eLayaway would utilize for a reverse merger. On July 7, 2010, the Company entered into an agreement with Garden State Securities, Inc. (“GSS”) as advisor to the Company. On August 18, 2010, the Company entered into a subsequent engagement agreement with GSS to act as an exclusive selling/placement agent for the Company.

NOTE 6 – RELATED PARTIES

Harmon, CFO and Director of the Company, is a note holder of the Company (see Note 3 – Notes Payable). Accounts payable of $37,438 was due to our CFO’s company and himself personally, at September 30, 2010, for CFO services and advances to the Company.

Ventana, a significant shareholder, is a note holder of the Company (see Note 3 – Notes Payable). Accounts payable of $11,840 was due to this significant shareholder at September 30, 2010, for contracted services to the Company.

Dr. Salie, father of the Company’s CEO and Chairman, is a note holder of the Company (see Note 3 – Notes Payable).

There is another $499 due to an officer of the Company.

NOTE 7 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company authorized 50,000,000 shares of preferred stock and has designated five Series as Series A, B, C, D and E. Series A, B, C, and D of preferred stock are non-voting and have liquidation preference over common stock with liquidation preference value equal to the price paid for each preferred share. The Series A, B, C, and D preferred stock are mandatorily and automatically convertible on a one for one basis to common stock upon the earlier of (i) the effectiveness of the sale of the Company’s common stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended, other than a registration relating solely to a transaction under rule 145 under the Securities Act or to an employee benefit plan of the corporation, with aggregate proceeds to the Company and/or selling stockholders (prior to deduction of underwriter commissions and offering expenses) of at least $20,000,000, (ii) a sale of substantially all assets of the Company, or (iii) the event whereby the average closing price per share of common stock of the Company, as reported by such over-the-counter market, interdealer quotation service or exchange on which shares of common stock of the Company are primarily traded (if any), equals or is greater than $10.00 per share, for thirty (30) consecutive trading days. Upon the automatic conversion of Series A, B, C, and D preferred stock to common stock, the shares are entitled to piggyback registration rights.

In September 2009, the Company issued a Private Placement Memorandum (“PPM”) to secure up to $3,000,000 with the issuance of Series D preferred stock at a par value of $1.588. If all shares of the PPM were fully issued, they would represent 10% of the outstanding stock of the Company, assuming a conversion of all preferred stock. The PPM was discontinued in early July 2010. In the nine months ended September 30, 2010, the Company sold 37,785 Series D shares for cash of $60,000 and issued 16,216 Series D shares to settle $25,750 of liabilities. The Company incurred $3,000 of offering costs. There was no gain or loss on the settlement.

On August 12, 2010, the Company’s Board of Directors approved the filing of a Certificate of Designation of the Preferences and Rights of Series E Preferred Stock of eLayaway, Inc. (“Certificate of Designation”) with the Department of State of the State of Delaware authorizing the creation of a new series of preferred stock designated as “Series E Preferred Stock” pursuant to the authority granted to the Board of Directors under the Company’s Amended and Restated Certificate of Incorporation and Section 151 of the Delaware General Corporation Law. The Certificate of Designation was filed with the Delaware Department of State on August 13, 2010. The Certificate of Designation created 2,500,000 shares of Series E Preferred Stock. Each holder of Series E Preferred Stock will be entitled to participate in dividends or distributions payable to holders of the Company’s common stock at a rate of the dividend payable to each share of Common Stock multiplied by the number of shares of Common Stock that each share of such holder’s Series E Preferred Stock is convertible into. Each share of Series E Preferred Stock is convertible, at the option of the holder of the Series E Preferred Stock, into three (3) shares of the Company’s common stock. Shares of the Series E Preferred Stock will be issued to certain officers of the Company as the Board determines if (i) the average closing price per share of the Company’s Common Stock equals or is greater than $50 per share for the preceding 20 trading days, (ii) the Company earns $0.50 per share EBITDA in any twelve consecutive months, (iii) the Company stock is trading on a U.S. Exchange such as AMEX, NASDAQ, or NYSE, or (iv) controlling interest of the Company is acquired by a third party. Each shares of Series E Preferred Stock will be entitled to three (3) votes on all matters submitted to a vote of the stockholders of the Company (“Enhanced Voting Rights”). Upon the liquidation, dissolution or winding up of the Company, the holders of the Series E Preferred Stock will participate in the distribution of the Company’s assets with the holders of the Company’s Common Stock pro rata based on the number of shares of Common Stock held by each (assuming conversion of all shares of Series E Preferred Stock). Due to the Enhanced Voting Rights, following the issuance of shares of Series E Preferred Stock, the holders of the Series E Preferred Stock may be able to exercise voting control over the Company. In such case, the holders of the Series E Preferred Stock may gain the ability to control the outcome of corporate actions requiring stockholder approval, including mergers and other changes of corporate control, going private transactions, and other extraordinary transactions. The concentration of voting control in the Series E Preferred Stock could discourage investments in the Company, or prevent a potential takeover of the Company which may have a negative impact on the value of the Company’s securities. In addition, the liquidation rights granted to the holders of the Series E Preferred Stock will have a dilutive effect on the distributions available to the holders of the Company’s common stock.

Common Stock

The Company is authorized to issue 100,000,000 shares of common stock. The common stock is voting.

On the April 12, 2010 there was a deemed issuance by the Company of 1,786,515 common shares to the pre-merger shareholders of Tedom. (See Recapitalizations below.)

In April 2010, the Company granted 5,613,485 fully vested shares of common stock for services rendered. The shares were valued at $2,806,743 or $0.50 per share based on the contemporaneous selling price of common stock discussed below. The expense was recognized on the grant date.

On April 20, 2010, the Company started a new private placement funding procurement effort to sell up to 3,000,000 common shares of the Company at $0.50 per share for maximum gross proceeds of $1,500,000. The minimum investment per purchaser is $50,000 and there is no minimum amount that must be raised by the Company for the offering to close. The Company will pay a 10% finder’s fee to persons who assist with the sale of the Company shares. In the nine months ended September 30, 2010, the Company sold 158,000 shares of common stock for cash of $79,000 under this private placement.

On April 16, 2010, the Company issued 250,000 shares of common stock for the conversion of $125,000 of notes payable from two investors. These notes were previously not convertible to common stock. The note with Neal Davis for $100,000 was convertible to 62,972 shares of Series D preferred stock. Since the conversion price was equal to the contemporaneous common stock sale price of $0.50, there was no gain or loss on conversion.

In April 2010, the Company issued 1,182,973 shares of common stock in exchange for the cancellation of 2,365,946 warrants as part of the merger and recapitalization. The value of the warrants exceeded the value of the shares and accordingly there was no expense recognized for this exchange.

On July 6, 2010, the Company received $20,000 under the private placement funding and issued 40,000 shares of restricted common stock.

In July 2010, the Company became obligated to issue 50,000 common shares each month to Garden State Securities for services as discussed below as part of one year of monthly payments. The shares in July were valued at the private placement price of $.50 per share or $25,000, the shares in August and September are valued at the then $0.26 and $0.35, respectively, quoted trading price of the Company's common stock or $13,000 and $17,500, respectively, since the private placement terminated in early July 2010. The share values are recognized as expense on the issuance dates.

During the nine months ended September 30, 2010 the Company paid $1,500 of offering costs relating to the sale of common stock and $3,000 of offering costs relating to the sale of Series D preferred shares.

Recapitalizations

In February 2009, as a condition of separation, the Company negotiated, for no consideration, the return to treasury of 1,547,772 common shares of the Company held by the Company’s former CEO and member of the founding group. The returned shares were reissued pro rata to all the common and preferred stockholders. This transaction was treated as a recapitalization of the Company and reflected retroactively for all periods presented.

On September 1, 2009, the Company converted to a corporation from an LLC. This conversion was treated as a recapitalization and reflected retroactively for all periods presented.

On March 19, 2010, the Company executed a Merger Agreement with Tedom Capital, Inc., a Delaware corporation, to facilitate a reverse triangular merger with Tedom Acquisition Corporation, a wholly-owned subsidiary of Tedom. As a condition of the merger, the shareholders, both common and preferred, of eLayaway, convert on a one-to-one basis to the identical capital structure in Tedom and persons holding warrants of 2,365,945 common shares of eLayaway will receive 1,182,973 common shares of Tedom. Tedom filed a Form 8-K on March 25, 2010 to reflect the Merger Agreement. The Merger closed on April 12, 2010 (the “Merger Date”). The Company accounted for this transaction as a recapitalization of the Company as the common shareholders of eLayaway obtained an approximate 76% voting control and management control of Tedom as a result of the merger. On the Merger Date there was a deemed issuance by the Company of 1,786,515 common shares to the pre-merger shareholders of Tedom. Due to an Asset Purchase and Sale Agreement in Tedom there were no assets or liabilities existing in Tedom at the Merger Date. On April 19, 2010, Tedom filed with FINRA for the change of its name and symbol. The effect of the recapitalization has been retroactively applied to all periods presented in the accompanying consolidated financial statements.

Stock Warrants

The Company has granted warrants to non-employee individuals and entities. Warrant activity for non-employees for the nine months ended September 30, 2010 is as follows:

							Weighted
				Weighted			Average
				Average			Remaining		Aggregate
	Number			Exercise			Contractual		Intrinsic
	of Warrants			Price			Terms		Value

Outstanding at December 31, 2009		2,165,945			$	0.25
Granted		559,895			$	0.25
Exercised		-			$	-
Exchanged for shares		(2,365,945	)		$	0.25
Expired		-			$	-

Outstanding at September 30, 2010		359,895			$	0.24		4.86		$	25,655

Exercisable at September 30, 2010		359,895			$	0.24		4.86		$	25,655

Weighted Average Grant Date Fair Value					$	0.39

In April 2010, the Company granted 200,000 warrants to a legal service provider in exchange for $64,102 of accounts payable. The warrants were valued at $0.435 per warrant of $87,000 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.50
Expected Term	5 Years
Expected Volatility	116%
Dividend Yield	0
Risk Free Interest Rate	0.995%

The expected term equals the contractual terms for this non-employee grant. The volatility is based on comparable volatility of other companies since the Company was not yet trading and had no historical volatility. The Company recognized a loss of $22,898, which is included in operations.

On May 16, 2010, the Company granted warrants for 21,500 shares of common stock for services to be rendered through December 2010. The warrants expire in 5 years and are exercisable at $0.01 per share. The warrants were valued at $0.493 per warrant or $10,557 using a Black-Scholes option pricing model with the following assumptions:

Stock Price	$0.50
Expected Term	5 Years
Expected Volatility	117%
Dividend Yield	0
Risk Free Interest Rate	0.995%

The expected term equals the contractual terms for this non-employee grant. The volatility is based on comparable volatility of other companies since the Company was not yet trading and had no historical volatility. The Company recognizing the $10,557 expense over the service period through December 2010. As of September 30, 2010, the Company recognized $2,111 of expense which is included in operations.

On July 6, 2010, the Company issued a convertible promissory note for $25,000 with a related party related to our CEO. The terms of the note is for repayment after an additional $150,000 in common stock sales or one year, whichever occurs first. The interest rate is 12% per annum and accrues until the expiration of the note. The note has a conversion option at the rate of $0.25 per share. In addition, 50,000 warrants for common stock were granted as an issuance fee with an exercise price of $0.25. The warrants have a life of five years. The warrants were valued at $0.437 per warrant or $21,850 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.50
Expected Term	5 Years
Expected Volatility	118%
Dividend Yield	0
Risk Free Interest Rate	0.81%

The expected term equals the contractual term for this non-employee grant. The volatility is based on comparable volatility of other companies since the Company was not yet trading and had no historical volatility. The Company computed the relative fair value of the warrant as $11,660 and a beneficial conversion value of $13,340 and has recorded both value as debt discounts to be amortized into interest expense over the one year term of the note.

On July 6, 2010, the Company contracted with GSS, a FINRA member firm, as a non-exclusive financial advisor. The term of the agreement is for twelve months and provides for a monthly fee of $5,000, 50,000 warrants for common stock with an exercise price equal to the previous ten day VWAP issued monthly, and 50,000 shares of restricted common stock issued monthly. The Company can terminate the agreement with thirty days notice after the initial ninety days. On July 8, 2010, 50,000 warrants were granted with an exercise price of $0.11 and valued at $0.462 per warrant or $23,100 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.50
Expected Term	5 Years
Expected Volatility	118%
Dividend Yield	0
Risk Free Interest Rate	0.82%

On July 7, 2010, the Company granted 28,395 warrants for common stock in exchange for a dispute over alleged accrued wages of $9,465 with a former employee. The warrants have an exercise price of $0.25. The warrants were valued at $0.437 per warrant or $12,409 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.50
Expected Term	5 Years
Expected Volatility	118%
Dividend Yield	0
Risk Free Interest Rate	0.82%

On July 12, 2010, the Company granted 10,000 warrants for common stock to an individual that was appointed to the Company’s Advisory Board. The warrants have an exercise price of $0.50. The warrants were valued at $0.411 per warrant or $4,110 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.50
Expected Term	5 Years
Expected Volatility	119%
Dividend Yield	0
Risk Free Interest Rate	0.81%

The expected term equals the contractual term for this non-employee grant. The volatility is based on comparable volatility of other companies since the Company was not yet trading and had no historical volatility. The Company recognized a loss of $4,110 immediately since this was a sign on bonus with no future service requirement.

On August 8, 2010, the Company granted to GSS 50,000 warrants with an exercise price of $0.28 and valued at $0.249 per warrant or $12,450 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.30
Expected Term	5 Years
Expected Volatility	120%
Dividend Yield	0
Risk Free Interest Rate	0.64%

On September 8, 2010, the Company granted to GSS 50,000 warrants with an exercise price of $0.20 and valued at $0.311 per warrant or $15,550 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.35
Expected Term	5 Years
Expected Volatility	128%
Dividend Yield	0
Risk Free Interest Rate	0.66%

On September 22, 2010, the Company issued as a loan fee to the Salie Family Limited Partnership (see Note 3 – Notes Payable and Note 6 – Related Parties) 100,000 warrants with an exercise price of $0.34 and valued at $0.291 per warrant or $29,100 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.35
Expected Term	5 Years
Expected Volatility	129%
Dividend Yield	0
Risk Free Interest Rate	0.73%

The expected term equals the contractual term for this non-employee grant. The volatility is based on comparable volatility of other companies since the Company was not yet trading and had no historical volatility. The Company computed the relative fair value of the warrant as $18,394 and has recorded the value as a debt discount to be amortized into interest expense over the one year term of the note.

The Company has granted warrants to employees. Warrant activity for employees the nine months ended September 30, 2010 is as follows:

					Weighted

			Weighted		Average
			Average		Remaining		Aggregate
	Number		Exercise		Contractual		Intrinsic
	of Warrants		Price		Terms		Value

Outstanding at December 31, 2009		-	$	-

Granted		220,730	$	0.2500
Exercised		-	$	-
Forfeited		-	$	-
Expired		-	$	-

Outstanding at September 30, 2010		220,730	$	0.2500		4.63	$	55,183

Exercisable at September 30, 2010		220,730	$	0.2500

Weighted Average Grant Date Fair Value			$	0.3800

In May 2010, the Company settled $73,962 of employee accrued payroll through the grant of 220,730, 5-year warrants exercisable at $0.25 per share. The warrants were valued at $0.381 per warrant or $84,098 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.50
Expected Term	2.5 Years
Expected Volatility	117%
Dividend Yield	0
Risk Free Interest Rate	1.05%

The expected term was computed using the simplified method based on a 5-year contractual term and immediate vesting. The volatility is based on comparable volatility of other companies since the Company was not yet trading and had no historical volatility. The Company recognized a loss of $10,136, which is included in operations.

Stock Options

The Company has granted options to employees. Options activity for the nine months ended September 30, 2010 is as follows:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number		Exercise		Contractual		Intrinsic
	of Options		Price		Terms		Value

Outstanding at December 31, 2009		-	$	-

Granted		435,000	$	0.2500
Exercised		-	$	-
Forfeited		-	$	-
Expired		-	$	-

Outstanding at September 30, 2010		435,000	$	0.2500		9.87	$	2,350

Exercisable at September 30, 2010		-	$	0.2500

Weighted Average Grant Date Fair Value			$	0.2500

On August 12, 2010, the Company’s Board of Directors approved the grant of stock options under the 2010 Stock Option Plan to the current employees of the Company. A total of 435,000 options were granted, each with an exercise price of $0.25 and a three year vesting period. The options were valued at $0.229 per option or $99,615 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.26
Expected Term	6.5 Years
Expected Volatility	120%
Dividend Yield	0
Risk Free Interest Rate	0.66%

The expected term is computed using the simplified method for employee grants. The volatility is based on comparable volatility of other companies since the Company had just begun trading and had no significant historical volatility. The Company will recognize the employee option expense of $99,615 over the three year vesting period. The Company recognized $5,534 through September 30, 2010.

NOTE 8 – CONCENTRATIONS

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments.

The Company places its temporary cash investments with financial institutions insured by the FDIC. No amounts exceeded federally insured limits as of September 30, 2010. There have been no losses in these accounts through September 30, 2010.

Concentration of Intellectual Property

The Company owns the trademark “eLayaway” and the related logo, and owns, through its subsidiary, MDIP, LLC, the U.S. utility patent pending rights, title and interest, filed on October 17, 2006, relating to the eLayaway business process. The Company’s business is reliant on these intellectual property rights. MDIP Assigned the Utility Patent Application to the Company in 2010.

NOTE 9 - ACQUISITION AND DISSOLUTION OF MDIP, LLC

On February 18, 2009, the Company acquired MDIP, for nominal consideration, from its three founders, who are also the founders of eLayaway. MDIP holds the intellectual property rights related to the electronic payment systems and methods for which a non-provisional patent application for Letters Patent of the United States which was filed on October 17, 2006, and assigned a Utility Patent application Serial No. 11/550,301 (see Note 1). For accounting purposes, the transaction is treated as an asset acquisition since there was no business in MDIP as it was just a holding entity for the assets. There was no value recorded for the assets acquired. On March 8, 2010, MDIP assigned the Utility Patent Application to eLayaway. On March 19, 2010, the Company filed with the State of Florida for the dissolution of MDIP and on March 29, 2010 MDIP was dissolved.

NOTE 10 – SUBSEQUENT EVENTS

In preparing these unaudited consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the issuance date.

On October 8, 2010, the Company issued 50,000 shares to GSS as per the agreement between GSS and the Company (see Note7). The shares are valued at the then $0.30 quoted trading price of the Company’s common stock or $15,000. The share values will be recognized as expense on the issuance date.

On October 8, 2010, the Company granted 50,000 warrants with an exercise price of $0.30 per share for common stock to Garden State Securities, Inc. in conjunction with their July 6, 2010 agreement discussed previously. The warrants were valued at $0.261 per warrant or $13,050 using a Black-Scholes option-pricing model with the following assumptions:

Stock Price	$0.30
Expected Term	5 Years
Expected Volatility	135%
Dividend Yield	0
Risk Free Interest Rate	0.45%

The expected term equals the contractual terms for this non-employee grant. The volatility is based on comparable volatility of other companies since the Company was not yet trading and had no historical volatility. The Company will recognize an expense of $13,050 on the issuance date since the warrant is earned.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” ”will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Form 8-K dated April 16, 2010 for the fiscal year ended December 31, 2009 and in our subsequent filings with the Securities and Exchange Commission.

THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. THESE FORWARD LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR ANTICIPATED RESULTS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" IN THIS “MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND ELSEWHERE IN THIS REPORT. THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH "SELECTED FINANCIAL DATA" AND THE COMPANY'S FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

Plan of Operation

The Company formerly known as Tedom Capital, Inc. (“Tedom”) was a startup company that was incorporated in Delaware on December 26, 2006 and was formed to provide home improvement loans to individuals. The stockholders of Tedom on March 26, 2010, approved a forward split of one share of common stock for three shares of common stock. On March 19, 2010, Tedom signed a Letter of Intent with eLayaway, Inc., a Florida corporation, to execute a reverse triangular merger (the “Merger”). On April 7, 2010, Tedom filed with the State of Delaware to authorize four classes of preferred stock (Series A, B, C and D). On April 12, 2010, Tedom and eLayaway, Inc. executed the Merger as noted in Form 8-K dated April 16, 2010. The change of officers and directors of the Company associated with the Merger were incorporated in the April 16, 2010 Form 8-K. On April 16, 2010, Tedom filed with the State of Delaware for a name change to eLayaway, Inc. (“eLayaway”). On April 19, 2010, eLayaway, Inc. filed with the State of Florida for a name change to eLayawayCOMMERCE, Inc. (“eLaCOMMERCE”). On April 20, 2010, eLayaway filed with FINRA for its name change and a symbol change. On May 24, 2010, FINRA notified eLayaway of its symbol change from TDOM.OB to ELAY.OB to be traded on the NASDAQ OTC Bulletin Board. The Florida-based Company is an online payment processor providing a layaway service for merchants and consumers.

Results of Operations

Three Months Ended September 30, 2010 Compared to the Three Months Ended September 30, 2009

Revenue. For the three months ended September 30, 2010, our revenue was $14,909, compared to $34,312 for the same period in 2009, representing a decrease of 56.5%. This decrease in revenue was primarily attributable to the effect of the deficiency in funding to provide further integration, the effect of a decrease in marketing, and a restructuring of fees for merchants.

Gross Loss. For the three months ended September 30, 2010, our gross loss was $61,720, compared to a gross loss of $104,876 for the same period in 2009, representing a decrease of 41.1%. This decrease in our gross loss resulted primarily from the reduction in cost of sales ($76,629 and $139,188, for the three months ended September 30, 2010 and 2009, respectively).

Selling, General and Administrative Expenses. For the three months ended September 30, 2010, selling, general and administrative expenses were $395,647 compared to $167,365 for the same period in 2009, an increase of 136.4%. This increase was primarily caused primarily by stock-based compensation and settlements (from $0 to $137,953, or 60.4% of the total increase) and increased professional fees (from $63,485 to $252,523).

Net Loss. We generated net losses of $491,806 for the three months ended September 30, 2010 compared to $274,509 for the same period in 2009, an increase of 79.0%, of which $137,953 for stock-based compensation represents 63.5% of the increase.

Nine months ended September 30, 2010 Compared to the nine months ended June 30, 2009

Revenue. For the nine months ended September 30, 2010, our revenue was $63,645, compared to $117,592 for the same period in 2009, representing a decrease of 45.9%. This decrease in revenue was primarily attributable to the effect of the deficiency in funding to provide further integration, the effect of a decrease in marketing, and a restructuring of fees for merchants.

Gross Loss. For the nine months ended September 30, 2010, our gross loss was $161,045, compared to a gross loss of $279,925 for the same period in 2009, representing a decrease of 42.5%. This decrease in our gross loss resulted primarily from the reduction in cost of sales ($224,690 and $397,517, for the nine months ended September 30, 2010 and 2009, respectively).

Selling, General and Administrative Expenses. For the nine months ended September 30, 2010, selling, general and administrative expenses were $3,664,776 compared to $649,765 for the same period in 2009, an increase of 464.0%. This increase was primarily caused by stock-based compensation and settlements (from $0 to $2,979,841, or 98.8% of the increase).

Net Loss. We generated net losses of $3,878,602 for the nine months ended September 30, 2010 compared to $933,885 for the same period in 2009, an increase of 315.3%, of which stock-based compensation accounted for 101.2% of the increase.

Liquidity and Capital Resources

General. At September 30, 2010, we had cash and cash equivalents of $58,005. We have historically met our cash needs through a combination of cash flows from operating activities, proceeds from private placements of our securities and loans. Our cash requirements are generally for selling, general and administrative activities. We believe that our cash balance is not sufficient to finance our cash requirements for expected operational activities, capital improvements, and partial repayment of debt through the next 4 months.

Our operating activities generated an increase in cash flow of approximately $27,022 for the nine months ended September 30, 2010, and we used cash in operations of approximately $369,100 during the same period in 2009. The principal elements of cash flow from operations for the nine months ended September 30, 2010 included a net loss of $3,878,602, offset by depreciation expense of $39,977, amortization expense of $9,667, and stock-based compensation and settlements of $2,979,841.

Cash generated in our financing activities was $402,666 for the nine months ended September 30, 2010, compared to cash generated of approximately $376,592 during the comparable period in 2009. This decrease was primarily attributed to a concentrated effort of capital procurement in 2009 compared to 2010.

Cash used in investing activities during the nine months ended September 30, 2010 was $6,938 compared to $0 during the same period in 2009. Zero investments were attributable to the Company not making acquisitions due to cash flow restrictions.

As of September 30, 2010, current liabilities exceeded current assets by 8.1 times. Current assets decreased from $219,173 at December 31, 2009 to $160,050 at September 30, 2010 whereas current liabilities increased from $1,125,446 at December 31, 2009 to $1,295,768 at September 30, 2010.

	Nine months ended
	September 30, 2010		September 30, 2009
Cash used in operating activities	$	(368,706)	$	(369,100)
Cash used in investing activities		(6,938)		-
Cash provided by financing activities		402,666		376,592
Net changes to cash	$	27,022	$	7,492

GOING CONCERN

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had sales of $63,645 and net losses of $3,878,602 ($2,979,841 represents stock-based compensation and settlements) for the nine months ended September 30, 2010 compared to sales of $117,592 and net loss of $933,885 for the nine months ended September 30, 2009. The Company had a working capital deficit, stockholders’ deficit, and accumulated deficit of $1,135,718, $1,128,438 and $11,175,653, respectively, at September 30, 2010. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company is highly dependent on its ability to continue to obtain investment capital from future funding opportunities to fund the current and planned operating levels. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to bring in income generating activities and its ability to continue receiving investment capital from future funding opportunities. No assurance can be given that the Company will be successful in these efforts.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As the Company is a “smaller reporting company,” this item is inapplicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the nine months ended September 30, 2010 covered by this Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management is still in the process of evaluating its internal controls over financial reporting, based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this on-going evaluation, management has concluded that the Company’s internal control over financial reporting were not effective as of September 30, 2010 under the criteria set forth in the Internal Control—Integrated Framework. The determination was made partially due to the small size of the company and a lack of segregation of duties.

Changes in Internal Control over Financial Reporting

Except as set forth above, there were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

The Company’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of October 27, 2010, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations except as follows:

There are no other proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

As of April 13, 2010, the Board of Directors of the Company approved the issuance of 5,613,485 restricted shares of the Company’s Common Stock to satisfy certain outstanding obligations of eLayaway, Inc., the Company’s wholly-owned subsidiary. In consideration of the shares issued, certain creditors cancelled the following obligations of eLayaway: (i) eLayaway’s obligation to issue 4,063,485 shares of common stock as a flat fee for investor relations services performed in connection with the merger of the Company’s wholly-owned subsidiary with and into eLayaway; (ii) eLayaway’s obligation to pay a fee of 300,000 shares of common stock as a flat fee for legal services performed in connection with the merger of the Company’s wholly-owned subsidiary with and into eLayaway and for future services; (iii) the obligation to pay a flat fee of 250,000 shares of common stock in exchange for future services to be performed for public relations; and (iv) the Company’s obligation to pay 1,000,000 shares to satisfy outstanding payment obligations to one of eLayaway’s officers.

On April 13, 2010, as part of the merger, the Company exchanged 2,365,946 warrants for common stock in the subsidiary into 1,182,973 shares of common stock of the Company. This transaction was cashless.

On April 16, 2010, the Company converted promissory notes with two third parties, $25,000 and $100,000, respectively, into 50,000 and 200,000 shares of common stock, respectively.

Between April 20, 2010 and September 30, 2010, the Company sold 158,000 shares of common stock with a purchase price of $0.50 per share for a total of $79,000.

In May 2010, the Company settled $73,962 of employee accrued payroll through the granting of 220,730 five year warrants for common stock exercisable at $0.25 per share.

On May 18, 2010, the Company granted 21,500 warrants for common stock with an exercisable price of $0.01 to a non-employee for services to be rendered through December 31, 2010.

On July 6, 2010, the Company granted 50,000 warrants for common stock to non-employee and related party as a condition of a convertible promissory note. The warrants have an exercise price of $0.25 with a five year life.

On July 7, 2010, the Company settled $9,465 of employee accrued payroll through the granting of 28,395 warrants for common stock exercisable at $0.25 per share.

On July 8, 2010, the Company granted to Garden State Securities, Inc. (“GSS”), a FINRA member firm, 50,000 five year warrants exercisable at $0.11. The Company also issued 50,000 shares of common stock to GSS with a value of $0.50 per share.

On July 12, 2010, the Company granted 10,000 warrants for common stock to an individual that was appointed to the Company’s Advisory Board. The five year warrants have an exercise price of $0.50.

On August 8, 2010, the Company granted to GSS 50,000 five year warrants exercisable at $0.28. The Company also issued 50,000 shares of common stock to GSS with a value of $0.26 per share.

On August 12, 2010, the Company’s Board of Directors approved the issuance of stock options under the 2010 Stock Option Plan to the current employees of the Company. A total of 435,000 options were issued, each with an exercise price of $0.25 and a three year vesting period.

On September 8, 2010, the Company granted to GSS 50,000 five year warrants exercisable at $0.20. The Company also issued 50,000 shares of common stock to GSS with a value of $0.35 per share.

On September 22, 2010, the Company, as a condition of a promissory note, granted to the Salie Family Limited Partnership, a related party, 100,000 five year warrants for common stock exercisable at $0.34.

On October 8, 2010, the Company granted to GSS 50,000 five year warrants exercisable at $0.30. The Company also issued 50,000 shares of common stock to GSS with a value of $0.30 per share.

The Securities were issued under through its officers, directors, and employees without commission under an exemption from registration under Rule 506 of Regulation D and/or Section 4(2) to accredited investors and less than 35 non-accredited investors.

Information set forth in Item 2.01 of this Current Report on Form 10-Q with respect to the issuance of unregistered equity securities in connection with the Merger is incorporated by reference into this Item 3.02.

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

Number	Description
3.1 (1)	Articles of Incorporation, as Amended
3.2 (1)	Bylaws
3.3 (2)	Certificate of Designation of the Preferences and Rights of Series E Preferred Stock
31.1 (3)	Certification of Chief Executive Officer of eLayaway, Inc. Required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 (3)	Certification of Chief Financial Officer of eLayaway, Inc. Required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 (3)	Certification of Chief Executive Officer of eLayaway, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63
32.2 (3)	Certification of Chief Financial Officer of eLayaway, Inc. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C. 63

(1) Previously filed with the Form 8-K filed on April 16, 2010 and is incorporated herein by reference.

(2) Previously filed with the Form 10-Q for the period ended June 30, 2010 and is incorporated herein by reference.

(3) Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

	ELAYAWAY, INC.


Date: October 28, 2010	By:	/s/ Douglas R. Salie
		Douglas R. Salie
		Chief Executive Officer

Date: October 28, 2010	By:	/s/ Bruce Harmon
		Bruce Harmon
		Chief Financial Officer

Attached files

eLayaway, Inc. Reports

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