UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

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(Mark One)

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

OR

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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File No. 0-28562

VERILINK CORPORATION

(Exact name of registrant as specified in its charter)

501 South Johnstone, Suite 501, Bartlesville, Oklahoma 74003

 (Address of Principal Executive Offices)

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(918) 336-1773

(Issuer Telephone number)

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(Former Name or Former Address if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes þ  No ¨

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  þ  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.

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

The number of shares outstanding of the Issuer’s common stock as of May 10, 2011, was 26,104,100 shares of common stock.

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FORM 10-Q

Verilink Corporation

TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION

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ITEM 1.  FINANCIAL STATEMENTS

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

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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ITEM 4. CONTROLS AND PROCEDURES

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PART II.  OTHER INFORMATION

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ITEM 1.  LEGAL PROCEEDINGS

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ITEM 1A. RISK FACTORS

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ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

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ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

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ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

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ITEM 5.  OTHER INFORMATION

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ITEM 6.  EXHIBITS

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SIGNATURES

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PART I.  FINANCIAL INFORMATION

References in this document to "us," "we," or "Company" refer to VERILINK CORPORATION.

ITEM 1.  FINANCIAL STATEMENTS

VERILINK CORPORATION

(A Development Stage Company)

BALANCE SHEETS

(Unaudited)

The accompanying notes are integral to these financial statements.

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VERILINK CORPORATION

(A Development Stage Company)

STATEMENTS OF EXPENSES

(Unaudited)

The accompanying notes are integral to these financial statements.

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VERILINK CORPORATION

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are integral to these financial statements.

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VERILINK CORPORATION

(An Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

(unaudited) 

Note 1 - Basis of Presentation

The accompanying unaudited interim financial statements of Verilink Corporation, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Verilink's Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for the year ended June 25, 2010 as reported in the Form 10-K have been omitted.

Note 2 -

Going Concern

The accompanying financial statements have been prepared on a going concern basis which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business and do not reflect adjustments that might result if we were not to continue as a going concern. Moreover, the company does not have any operations.  These factors raise substantial doubt about Verlink’s ability to continue as a going concern.

Note 3 – Related Party Transactions

As of March 31, 2011, the Company has advances from a shareholder of $45,089 from IACE Investments Two Inc., an 80% shareholder, for operating expenses paid on the Company’s behalf. The related party advances bear an interest rate of 8%, are unsecured and due on July 1, 2011.

Item 2.  Management’s Discussion and Analysis

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE LITIGATION REFORM ACT OF 1995. Statements contained in this filing that are not based on historical fact, including without limitation statements containing the words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect" and similar words, constitute "forward-looking statements". These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. These factors include, among others, the following: general economic and business conditions in which Verilink Corporation ("we", "Verilink" or “Company”) operates; technology changes; the competition we face; changes in our business strategy or development plans; existing governmental regulations and changes in, or our failure to comply with, governmental regulations; liability and other claims asserted against us; and other factors referenced in our filings with the Securities and Exchange Commission.

Description of Business.

Verilink Corporation is an development stage company that is engaged in the acquisition, exploration and development of mineral properties.   As of the date of this filing, we have not generated any revenues after emerging from Bankruptcy.  Due to depressed market conditions associated with the cost of acquiring oil and gas properties, the Company’s management elected to become an exploration stage company to acquire certain options on oil and gas leases at far more favorable terms than in the State of Colorado. As reported by the Company on Form 8K filed on February 10 2009, the Company entered into an Agreement with Osage Land to acquire certain oil and gas leases in Phillips County, State of Colorado.  Management is currently negotiating with several entities to determine if a joint venture or similar agreement is feasible to develop the leases. Verilink intends to conduct geophysical operations on approximately three (3) square miles of the leases covered under the Agreement.  This is commonly referred to as seismic testing and will be used to determine the location of any Niobrara gas structures.  If gas structures are determined to be present, Management for Verilink intends to evaluate their suitability with various professionals to determine if drilling is warranted.

Verilink Corporation was incorporated on October 26, 1986 in the state of Delaware.  We and our former subsidiary, Larscom Incorporated, a Delaware corporation, filed  Voluntary Petitions for Relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Northern District of Alabama (the “Court”), Case numbers 06-50866 and 06-80567 (the “Case” or “Cases”)..The Bankruptcy Court issued an Order Confirming the Second Amended Joint Plan of Reorganization on December 6, 2006.

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Pursuant to the Plan, on June 27, 2008, the Company implemented a 1/2581 reverse stock split; issued 25,000,000 restricted shares of common stock to IACE Investments Two, Inc.; issued 1,000,000 shares of common stock and 5,000,000 warrants to Venture Funds I, Inc.; issued 75,000 shares of common stock to the Bankruptcy Trustee; issued 100 shares of common stock to each class 7 unsecured creditor; and replaced all former directors and officer with James Ditanna.

On June 27, 2008, the Company’s symbol changed from “VERLQ” to “VERL” to reflect the emergence from Bankruptcy.

Verilink, as of the date of this report, is an exploration stage company that has not generated any revenue since emerging from Bankruptcy. Management recognizes the possibility that, if additional funds are not raised, Verilink’s assets could have to be liquidated or otherwise reduced.  

In January 2009, the Company began to negotiate with several oil and natural gas companies to acquire mineral interest to further explore and develop. On February 10, 2009, as reported on form 8K on February 10, 2009, Verilink entered into an Option Agreement (the “Agreement”) with Osage Land Company (“Osage Land”) to acquire 90% of the oil and gas leases covering approximately 3,912 acres of oil and gas leases located primarily in Phillips County, State of Colorado. The leases being acquired reserves a 1/8th  royalty to the mineral interest holders and 6.25% overriding royalty interest to Osage Land.  Verilink intends to conduct geophysical operations on at least two (2) square miles of the leases covered under the Agreement with Osage Land. As of the date of this filing, the Company has been unable to secure funding necessary to conduct any operations related to seismic testing. The Company is currently negotiating with energy exploration companies to determine if a joint venture or agreement is feasible to further develop the leases located in Colorado.  

The primary term of the leases is for a five (5) year period from 2007 to 2012.  Osage Land is to receive $80 per net mineral acre which was originally due on or before the 10th day of July 2009 but has now been extended to March 31, 2011, and will also receive a 10% carried working interest on the first well in each prospect or particular tract of land.  Osage Land will also receive the option to participate with a 10% working interest on each additional well within a prospect.  The option to exchange common shares for the payment obligation called for under the Agreement remains open and subject to further negotiation with Osage Land.  The Agreement contains customary representations, warnings, covenants and default conditions.  Subject to certain conditions and exceptions, the Agreement may be terminated prior to completion in the event that (a) the parties to the Agreement mutually consent to the termination, (b) a closing under the Agreement has not occurred prior to the close of business on July 10, 2009 as extended to March 31, 2011, (c) there is a failure to perform certain covenants, (d) there is a material breach, or (e) there exists certain title and/or environmental defects, as applicable.

Plan of Operations

As of December 31, 2010, the Company is continuing negotiations with a private natural resources exploration company regarding a potential joint venture or acquisition.

Liquidity and Capital Resources

Verilink had no cash at March 31, 2011.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our Chief Executive Officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to 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, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial

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statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Change In Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the nine months ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

Verilink is not currently a party to any legal proceeding.

Item 1A.  Risk Factors

There have been no material changes in our risk factors since June 25, 2010. See risk factors at June 25, 2010, within our Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.  Defaults Upon Senior Securities

None

Item 4.  Submission of Matters to a Vote of Securities Holders

None

Item 5.  Other Information

None

Item 6.  Exhibits

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VERILINK CORPORATION

Date: May 10, 2011

By:

/s/ James Ditanna

James Ditanna

Sole Director/President

(Principal Financial and Accounting Officer)

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