SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 2002.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from __________________ to
___________________.
Commission file number: 33-61892-FW
EMERGING DELTA CORPORATION
(Exact name of small business issuer in its charter)
DELAWARE 72-1235451
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
220 Camp Street, New Orleans, Louisiana 70130
(Address of principal executive offices) (Zip Code)
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 /X/ NO / /
The number of shares outstanding of the issuer's classes of Common Stock as of
September 30, 2002:
Common Stock, $1.00 Par Value - 43,600 shares
EMERGING DELTA CORPORATION
Index to Form 10-Q
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of September 30, 2002 and March 31, 2002
Statements of Operations for the Six and Three Months Ended
September 30, 2002 and 2001
Statements of Cash Flows for the Six Months Ended September
30, 2002 and 2001
Notes to the Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Controls and Procedures
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART I. FINANCIAL STATEMENTS
Item 1. Financial Statements
EMERGING DELTA CORPORATION
BALANCE SHEETS
ASSETS
September 30, March 31,
2002 2002
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 291,750 $ 296,946
---------------- -------------
Total Assets $ 291,750 $ 296,946
================ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,500 $ 1,500
STOCKHOLDERS' EQUITY:
Preferred Stock, $1.00 par value; 2,000,000 shares authorized;
no shares subscribed, issued and outstanding $ --- ---
Common Stock, $1.00 par value; 20,000,000 shares authorized;
43,600 shares issued and outstanding 43,600 43,600
Additional Paid-in Capital 252,214 252,214
Retained Deficit (5,564) (368)
-------------- -------------
Total Stockholders' Equity 290,250 295,446
Total Liabilities and Stockholders' Equity $ 291,750 $ 296,946
=============== =============
The accompanying notes are an integral part of these financial statements.
EMERGING DELTA CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
For the Six For the Six For the Three For the Three
Months Ended Months Ended Months Ended Months Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
INTEREST INCOME $ 2,153 $ 6,177 $ 1,097 $ 3,682
COSTS AND EXPENSES (7,349) (7,321) (3,346) (3,030)
----------- ----------- ------------ --------------
INCOME (LOSS) BEFORE TAX PROVISION (5,196) (1,144) (2,249) 652
TAX PROVISION --- --- --- ---
----------- ----------- ------------ ------------
NET INCOME (LOSS) $ (5,196) $ (1,144) $ (2,249) $ 652
============ ============ ============= =============
BASIC AND DILUTED EARNINGS (LOSS)
PER SHARE $ (0.12) $ (0.03) $ (0.05) $ 0.01
============ ============ ============= ==============
WEIGHTED AVERAGE NUMBER OF BASIC
AND DILUTED SHARES OUTSTANDING 43,600 43,600 43,600 43,600
============ ============ ============= ==============
The accompanying notes are an integral part of these financial statements.
EMERGING DELTA CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six For the Six
Months Ended Months Ended
September 30, 2002 September 30, 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (5,196) $ (1,144)
Adjustments to reconcile net loss to
net cash used in operating activities:
Increase (decrease) in accounts payable --- (1,500)
Increase (decrease) in income tax payable --- (368)
Decrease (increase) in interest receivable --- (672)
--------------- ---------------
CASH USED IN OPERATING ACTIVITIES (5,196) (3,684)
--------------- --------------
DECREASE IN CASH (5,196) (3,684)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 296,946 303,841
--------------- --------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 291,750 $ 300,157
=============== ==============
The accompanying notes are and integral part of these financial statements.
EMERGING DELTA CORPORATION
NOTES TO FINANCIAL STATEMENTS
(All information as of September 30, 2002 and 2001 is unaudited)
1. DESCRIPTION OF ORGANIZATION:
---------------------------
Emerging Delta Corporation (the "Company") was incorporated under the laws of
the State of Delaware on February 10, 1993, for the purpose of seeking out
business opportunities, including acquisitions, that the Board of Directors, in
its discretion, believes to be good opportunities. Coincident with the formation
of the Company, one similar company, managed by the same officers and directors,
is engaged in the same business. The Company will be heavily dependent on the
skills, talents, and abilities of its management to successfully implement its
business plan. An affiliate of a director is expected to be the source for most
business opportunities submitted to the Company. Due to its currently limited
funds, it is likely that the Company will not be able to compete with larger and
more experienced entities for business opportunities which are less risky and
are more attractive to such entities; business opportunities in which the
Company ultimately participates will likely be highly risky and speculative.
The Company's proposed business is sometimes referred to as a "blind pool"
because investors entrust their investment monies to the Company's management
before they have a chance to analyze any ultimate use to which their money may
be directed. Consequently, the Company's potential success is heavily dependent
on the Company's management, which will have virtually unlimited discretion in
searching for and entering into a business opportunity.
2. SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------
The financial statements as of September 30, 2002, and for the six and three
months ended September 30, 2002 and 2001 are unaudited, but in the opinion of
the management of the Company, contain all adjustments, consisting of only
normal recurring accruals, necessary to present fairly the financial position at
September 30, 2002, the results of operations for the six and three months ended
September 30, 2002 and 2001 and the cash flows for the six months ended
September 30, 2002 and 2001.
The results of operations for the six months ended September 30, 2002 are not
necessarily indicative of the results of operations to be expected for the full
fiscal year ending March 31, 2003.
3. RELATED PARTY TRANSACTIONS:
--------------------------
Officers and directors are compensated based on actual time and expenses devoted
to the Company's business. During the respective periods ended September 30,
2002 and 2001, a consulting fee of $750 per month was paid to the Company's
Treasurer.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company has commenced no operations and has no activities. Interest
income for the six and three months ended September 30, 2002 was $2,153 and
$1,097 respectively compared to the six and three months ended September 30,
2001 of $6,177 and $3,682 respectively. The decrease in interest income in 2002
is due to lower interest rates compared to 2001. Costs and expenses for the six
and three months ended September 30, 2002 was $7,349 and $3,346 respectively
compared to the six and three months ended September 30, 2001 of $7,321 and
$3,030 respectively. The costs and expenses for the six months ended September
30, 2002 and 2001 each include the annual bank investment fee of $1,250 that was
fully expensed in these periods.
IMPORTANT FACTORS RELATING TO FORWARD-LOOKING STATEMENTS
In connection with forward-looking statements contained in this Form 10-QSB and
those that may be made in the future by or on behalf of the Company which are
identified as forward-looking by such words as "believes," "intends" or words of
a similar nature, the Company notes that there are various factors that could
cause actual results to differ materially from those set forth in any such
forward-looking statements. The forward-looking statements contained in this
Form 10-QSB were prepared by management and are qualified by, and subject to,
significant business, economic, competitive, regulatory and other uncertainties
and contingencies, all of which are difficult or impossible to predict and many
of which are beyond the control of the Company. Accordingly, there can be no
assurance that the forward-looking statements contained in this Form 10-QSB will
be realized or the actual results will not be significantly higher or lower.
These forward-looking statements have not been audited by, examined by, compiled
by or subjected to agreed-upon procedures by independent accountants, and no
third-party has independently verified or reviewed such statements. Readers of
this Form 10-QSB should consider these facts in evaluating the information
contained herein. In addition, the business and operations of the Company are
subject to substantial risks which increase the uncertainty inherent in the
forward-looking statements contained in this Form 10-QSB. The inclusion of the
forward-looking statements contained in this Form 10-QSB should not be regarded
as a representation by the Company or any other person that the forward-looking
statements contained in this Form 10-QSB will be achieved. In light of the
foregoing, readers of this Form 10-QSB are cautioned not to place undue reliance
on the forward-looking statements contained herein.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. We maintain
disclosure controls and procedures designed to provide reasonable assurance that
information required to be disclosed in the reports we file with the SEC is
recorded, processed, summarized and reported within the time periods specified
in the rules of the SEC. Within 90 days prior to the filing of the Quarterly
Report on Form 10QSB, we carried out an evaluation, under the supervision and
the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, of the design and operation of these disclosure
controls and procedures pursuant to the Exchange Act Rule 13a-14. Based upon
that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to the company (including our
consolidated subsidiaries) required to be included in our periodic SEC filings.
(b) Changes in internal controls. There were no significant changes in
internal controls or other factors that could significantly affect our internal
controls subsequent to the date of our evaluation.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
On August 22, 2002, Emerging Delta Corporation ("Delta")and
Emerging Gamma Corporation ("Gamma") entered into an agreement with
Allen F. Campbell ("Campbell") whereby:
1. Burt H. Keenan and D. B. H. Chaffe agreed to sell 80% of their
shares, 6,856 shares and 2,496 shares respectively, of Delta and
Gamma to Campbell for $1.25 per share, which is equal to 100% of
the cash that Keenan and Chaffe paid for those shares.
2. Three of the four Delta and Gamma current directors, Burt H.
Keenan, D. B. H. Chaffe III and Daniel Killeen agreed to resign as
directors and to vote for Campbell's designated slate of directors
to fill those vacancies. Jerry W. Jarrell will remain as a director
and chief financial officer.
3. Campbell will be granted stock options to purchase 4,300 shares
each of Delta and Gamma at an exercise price of $15.00 per share.
These options will replace the stock options currently granted to
the directors who are resigning.
4. Delta Gamma Acquisition LLC, a company controlled by Campbell
("DGA"), would commence a tender offer to purchase shares (the
"Shares") of Delta and Gamma. Shareholders of Delta and Gamma would
be offered three choices under the terms of the tender offer:
1. To stand pat and not tender any Shares.
2. To tender 40% of their Shares of both Delta and Gamma at
$12.50 per Share.
3. To tender 80% of their Shares of both Delta and Gamma at
$12.50 per Share.
The Tender Offer described above commenced September 16, 2002 and
expired October 8, 2002. The total shares tendered by shareholders
of each of Delta and Gamma were 1,760.
The Tender Offer documents were filed with Form 8-K on September
16, 2002, and describe in more detail the terms and conditions of
the tender offer and the views of management with respect to the
tender offer.
5. The above agreements result in Campbell and DGA together owning
11,112 shares of each of Delta and Gamma or 25.5% of the issued and
outstanding shares of each company.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3. Certificate of Incorporation and Bylaws
*3.1 Restated Certificate of Incorporation
*3.2 Bylaws
*3.3 Proposed Certificate of Amendment to the
Restated Certificate of Incorporation
10. Material Contracts
*10.1 1993 Stock Option Plan
*10.2 Form of Stock Option Agreements with Messrs.
Keenan, Killeen, Jarrell and Chaffe with
Schedule of Details
**99.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
*Filed with Registration Statement on Form SB-2, File No. 33-61892-FW (the
Registration Statement) and incorporated by reference.
**Filed herewith
(b) Reports on Form 8-K.
August 8, 2002
The Company engaged Pannell Kerr Forster of Texas P.C.
to serve as its Independent public accountants for
fiscal year 2002 and notified Arthur Andersen LLP it
would no longer serve as its independent public
accountants.
September 16, 2002
On September 16, 2002, Delta Gamma Acquisition LLC, a
company controlled by Allen Campbell, commenced a
tender offer to purchase shares of Emerging Delta and
Emerging Gamma Corporation. See Item 5 Other
Information above for the results of the tender offer
and the Form 8-K for detailed information regarding
the tender offer and the tender documents.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on November 14, 2002.
EMERGING DELTA CORPORATION
By: /S/ BURT H. KEENAN
--------------------------
Burt H. Keenan
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities on November 14, 2002.
By: /S/ BURT H. KEENAN Chairman of the Board, Chief
------------------------------ Executive Offier and Director
Burt H. Keenan
By: /S/ D. B. H. CHAFFE III Director
------------------------------
D. B. H. Chaffe III
By: /S/ DANIEL B. KILLEEN Director
------------------------------
Daniel B. Killeen
By: /S/ JERRY W. JARRELL Chief Financial Officer, Secretary
------------------------------ and Director
Jerry W. Jarrell
Certification of
Chief Executive Officer
of Emerging Delta Corporation
I, Brooks Mims Talton, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Emerging Delta
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: November 14, 2002
/S/ BURT H. KEENAN
--------------------------
Burt H. Keenan
Chief Executive Officer
Certification of
Chief Financial Officer
of Emerging Delta Corporation
I, Gary McBride, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Emerging Delta
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: November 14, 2002
/S/ JERRY W. JARRELL
--------------------------
Jerry W. Jarrell
Chief Financial Officer