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 December
31, 1998
[ ] 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 33-61894-FW
STARSHIP CRUISE LINE, INC.
(Exact Name of small Business issues as specified in its Charter)
EMERGING BETA CORPORATION
(Former Name)
Delaware 72-1235450
(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)
(504) 524-1801
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the Registrant (i) 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 (of for such shorter period that the
Registrant was required to file such reports) and (ii) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
Preferred Stock, $1.00 par value 15,000
Common Stock, $1.00 par value 54,900
-------------------
Title of Class Number of Shares outstanding
at December 31, 1998
Exhibit Index - NONE.
STARSHIP CRUISE LINE, INC.
BALANCE SHEETS
ASSETS
December 31, March 31,
1998 1998
Current Assets
Cash and cash equivalents $ 929,096 $ 290,457
Interest Receivable -- --
Total Current Assets 929,096 290,457
Construction in progress 2,074,660 9,156
Other Assets - organization costs 70 280
Total Assets $ 3,003,826 $ 299,893
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable $ 225,000 $ --
Accounts Payable 908,702 5,502
Total Current Liabilities $ 1,133,702 $ 5,502
Stockholders' Equity:
Preferred Stock, $1.00 par value;
2,000,000 shares authorized;
15,000 shares subscribed, issued
and outstanding 15,000 --
Common Stock, $1.00 par value; 20,000,000 shares authorized; 54,900 and 43,600
shares issued and outstanding
at December 31, 1998 and March 31, 1998, respectively 54,900 43,600
Additional Paid-in Capital 1,864,431 252,231
Accumulated Deficit (64,207) (1,440)
Total Stockholders' Equity 1,870,124 294,391
Total Liabilities and Stockholders' Equity $ 3,003,826 $ 299,893
The accompanying notes are an integral part of these
financial statements.
2
STARSHIP CRUISE LINE, INC.
STATEMENT OF OPERATIONS
FOR THE FOR THE FOR THE FOR THE
NINE MONTHS NINE MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED ENDED ENDED
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1997
REVENUES -
Interest Income $ 10,412 $ 12,312 $ 5,682 $ 4,105
COSTS AND EXPENSES
General and Administrative 55,919 9,820 49,221 3,028
TOTAL COSTS AND EXPENSES 55,919 9,820 49,221 3,028
NET INCOME (LOSS) (45,507) 2,492 (43,539) 1,077
PREFERRED STOCK DIVIDEND (17,260) -- (17,260) --
NET INCOME (LOSS) AVAILABLE FOR
COMMON SHAREHOLDERS $ (62,767) $ 2,492 $ (60,799) $ 1,077
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 45,903 43,600 50,483 43,600
INCOME (LOSS) PER
COMMON SHARE $ (1.37) $ .06 $ (1.20) $ .02
The accompanying notes are an integral part of
these financial statements.
3
STARSHIP CRUISE LINE, INC.
STATEMENT OF CASH FLOWS
FOR THE FOR THE FOR THE FOR THE
NINE MONTHS NINE MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED ENDED ENDED
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1997
CASH FLOW FROM
OPERATING ACTIVITIES
Net Income (Loss) $ (45,507) $ 2,492 $ (43,539) $ 1,077
Add item not affecting
cash-amortization 210 210 70 70
Adjustments to reconcile
net income (loss)
to net cash used by
operating activities
(Increase) decrease
interest receivable -- 1,995 -- 792
Increase (decrease) in
accounts payable 903,200 (1,050) 908,262 --
Total Cash Flow From
Operating Activities 857,903 3,647 864,793 1,939
CASH FLOW USED BY
INVESTMENT ACTIVITIES
(Increase) decrease in
project design cost (2,065,504) __ (1,836,800) --
CASH FLOW FROM
FINANCING ACTIVITIES
Proceeds from issuing Preferred
Stock; 15,000 shares 1,500,000 -- 1,500,000 --
Proceeds for exercise of
stock options; 6,300 shares 88,500 -- 88,500 --
Proceeds from issuing common
stock; 5,000 shares 50,000 -- 50,000 --
Preferred Stock dividend (17,260) -- (17,260) --
Increase (Decrease) in
notes payable 225,000 -- 225,000 --
Total Cash Flows from
financing activities 1,846,240 -- 1,846,240 --
INCREASE (DECREASE) IN CASH 638,639 3,647 874,233 1,939
CASH BALANCE - BEGINNING 290,457 290,600 54,863 292,308
CASH BALANCE - ENDING $ 929,096 $ 294,247 $ 929,096 $ 294,247
The accompanying notes are an integral part of
these financial statements.
4
STARSHIP CRUISE LINE, INC.
NOTES TO FINANCIAL STATEMENTS
(All information as of December 31, 1998 and 1997 is unaudited)
1. DESCRIPTION OF ORGANIZATION
Starship Cruise Line, Inc., formerly, Emerging Beta 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 their discretion,
believe to be good opportunities. The Company has recently entered the
dinner cruise business, see Note 4.
2. SIGNIFICANT ACCOUNTING POLICIES
Organizational costs relating to the expenses of incorporation will be
amortized on a straight-line basis over five years.
The start up expenses related to the dinner cruise business are expensed
in period incurred.
The financial statements for the three and nine months ended December 31,
1998 and 1997 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 December
31, 1998, the results of operations for the three and nine months ended
December 31, 1998 and 1997 and the cash flows for the three and nine
months ended December 31, 1998 and 1997.
The results of operations for the nine months ended December 31, 1998 are
not necessarily indicative of the results of operations to be expected
for the full fiscal year ending March 31, 1999.
3. RELATED PARTY TRANSACTIONS
The Company pays a consulting fee to the Vice President of Finance for
financial services which includes office space and clerical services. In
the nine months ended December 31, 1998 and 1997, $10,500 and $6,750 in
consulting fees was billed to the Company.
4. CONSTRUCTION IN PROGRESS
The Company is planning a dinner cruise vessel to operate on the
Mississippi Gulf Coast in support of the gaming and resort industry. The
total estimated cost of the project is $6.2 million. The Company began
construction on the vessel in July 1998 and completion is scheduled for
August 1999. As of December 31, 1998, interest capitalized during
construction is $3,827.
5. CONVERTIBLE PREFERRED STOCK
The Preferred Stock bears annual dividends of $10.00 per share payable
quarterly in arrears. Each preferred share is convertible into one share
of common stock. The Company has the option to redeem the preferred
shares in whole or part at a price of $100.00 plus accrued dividends as
of December 31, 2001; and the obligation to redeem all shares at a price
of $100.00 on December 31, 2004, plus accrued dividends. The holders of
the preferred shares have no voting rights except at any time the
equivalent of three quarterly dividends are unpaid or company fails to
make any mandatory redemption of the preferred shares the number of
directors of the Company will be increased by two and elected by the
preferred shareholders.
5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL
CONDITION
The Company commenced construction of a dinner cruise vessel in July 1998
(see Note 4 above). The dinner cruise vessel is approximately 35%
complete at December 31, 1998 and scheduled to begin operations in
September 1999.
The funding of the dinner cruise vessel is a combination of new equity
and debt financing. The Company has raised $1,500,000 from the issuance
of 15,000 shares of 10% convertible preferred shares at a price of $100;
$50,000 from the issuance of 5,000 shares of common stock; and $88,500
from the exercise of stock options for 6,300 shares by the founders of
the Company. The Company has bank financing in place for the construction
financing that is secured by the vessel and the personal guarantee of
Burt H. Kenan, director and founder of the Company. The Company has
borrowed $225,000 under the construction bank financing at December 31,
1998. The note is due at completion of construction in August 1999 and
interest rate is 7.75%. The Company has several alternatives for
permanent financing which should be finalized within the next 90 days.
The Company feels this funding is adequate to provide the working capital
required to complete the dinner cruise vessel and the start up operations
until the vessel is in operation in September 1999.
The Company is expensing the start up cost related to the new dinner
cruise vessel operation including marketing, advertising and
administrative expenses in accordance with recent accounting standards.
These expenses account for the operating loss for the periods ending
December 31, 1998. The Company has not recorded the income tax benefit of
the operating losses due to the uncertainty of future profitable
operations.
The Company has evaluated the impact of year 2000 issues. The computer
hardware and software for support of the dinner cruise vessel operation
is being purchased currently and will include the capability to handle
the year 2000 issues.
6
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On November 21, 1998 the Company sold 15,000 shares of Preferred Stock
for $100 per share to one accredited individual.
On November 16, 1998 the Company sold 5,000 shares of Common Stock to
an employee for $10.00 per share.
On October 29, 1998 four officers and directors exercised all 6,300
employee outstanding stock options at the following prices:
SHARES PER SHARE
4,300 $15.00
2,000 $12.00
All of the above share sales were made without payment of commissions.
The Company relied on the exemption of Section 4(2) of the Securities
Act of 1993.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
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*
3.4 Amendment to Certificate of Incorporation (Name Change) Filed
herewith.
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*
* Incorporated by reference to such exhibit as filed with the Company's
registration statement on Form SB-2, file no. 33- 61894-FW (the "Registration
Statement") on April 29, 1993.
(b) Reports on Form 8-K: None
7
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.
Date: February 12, 1999 By: /s/ Jerry W. Jarrell
--------------------
Jerry W. Jarrell
Chief Financial Officer (chief financial officer and
accounting officer and duly authorized officer)