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, 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.)
4424 Gaines Ranch Loop #415, Austin, Texas 78735
(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
December 31, 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 Page
----
Balance Sheets as of December 31, 2002 and March 31, 2002 2
Statements of Operations for the Three and Nine Months Ended
December 31, 2002 and 2001 3
Statements of Cash Flows for the Nine Months Ended
December 31, 2002 and 2001 4
Notes to the Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
Item 3. Controls and Procedures 7
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities and Use of Proceeds 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EMERGING DELTA CORPORATION
BALANCE SHEETS
ASSETS
December 31, March 31,
2002 2002
------------ ------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 283,835 $ 296,946
------------ ------------
Total Assets $ 283,835 $ 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
Accumulated Deficit (13,479) (368)
------------ ------------
Total Stockholders' Equity 282,335 295,446
------------ ------------
Total Liabilities and Stockholders' Equity $ 283,835 $ 296,946
============ ============
The accompanying notes are an integral part of these financial statements.
2
EMERGING DELTA CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
December 31 December 31,
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
INTEREST INCOME $ 1,129 $ 1,672 $ 3,282 $ 7,849
COSTS AND EXPENSES (9,044) (3,780) (16,393) (11,101)
-------- -------- -------- --------
LOSS BEFORE TAX PROVISION (7,915) (2,108) (13,111) (3,252)
TAX PROVISION -- -- -- --
-------- -------- -------- --------
NET LOSS $ (7,915) $ (2,108) $(13,111) $ (3,252)
======== ======== ======== ========
BASIC AND DILUTED LOSS
PER SHARE $ (0.18) $ (0.05) $ (0.30) $ (0.07)
======== ======== ======== ========
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.
3
EMERGING DELTA CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
December 31
----------------------
2002 2001
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (13,111) $ (3,252)
Adjustments to reconcile net loss to
net cash used in operating activities:
Increase (decrease) in accounts payable -- (750)
Increase (decrease) in income tax payable -- (368)
Decrease (increase) in interest receivable -- (210)
--------- ---------
CASH USED IN OPERATING ACTIVITIES (13,111) (4,580)
--------- ---------
DECREASE IN CASH (13,111) (4,580)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 296,946 303,841
--------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 283,835 $ 299,261
========= =========
The accompanying notes are an integral part of these financial statements.
4
EMERGING DELTA CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF ORGANIZATION
---------------------------
The financial statements included herein, which have not been audited pursuant
to the rules and regulations of the Securities and Exchange Commission, reflect
all adjustments which, in the opinion of management, are necessary to present a
fair statement of the results for the interim periods on a basis consistent with
the annual audited financial statements. All such adjustments are of a normal
recurring nature. The results of the operations for the interim periods are not
necessarily indicative of the results to be expected for an entire year. Certain
information, accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the Company's audited financial
statements included in the Company's Annual Report on Form 10-KSB for the year
ended March 31, 2002.
General Business and Nature of Operations
- -----------------------------------------
Emerging Delta Corporation (the "Company" or "Delta") 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. 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 December 31, 2002, and for the three and nine
months ended December 31, 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
December 31, 2002, the results of operations for the three and nine months ended
December 31, 2002 and 2001 and the cash flows for the nine months ended December
31, 2002 and 2001.
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 December 31, 2002
and 2001, a consulting fee of $750 per month was paid to the Company's
Treasurer.
5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
You must read the following discussion of the plan of the operations and
financial condition of the Company in conjunction with its financial statements,
including the notes, included in this Form 10-QSB filing. The Company's
historical results are not necessarily an indication of trends in operating
results for any future period.
Overview
The Company was incorporated in 1993 for the purpose of seeking out business
opportunities, including acquisitions, that the Board of Directors, in its
discretion, believes to be good opportunities. 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.
The Company's current focus is on seeking out business opportunities. The
Company has created a web site, found at www.cleanpublicshellco.com, to assist
in finding business opportunities. The Company has begun the process of
contacting potential referral sources with respect to potential acquisitions.
Results of Operations
Three and Nine Month Periods Ended December 31, 2002 compared to December 31,
2001
The Company has commenced no operations and has no activities. Interest income
for the three and nine months ended December 31, 2002 was $1,129 and $3,282
respectively compared to the three and nine months ended December 31, 2001 of
$1,672 and $7,849 respectively. The decrease in interest income in 2002 is due
to lower interest rates compared to 2001. Costs and expenses for the three and
nine months ended December 31, 2002 was $9,044 and $16,393 respectively compared
to the three and nine months ended December 31, 2001 of $3,780 and $11,101
respectively. Costs and expenses consist primarily of consulting fees paid to
the Company's treasurer of $2,250 per quarter and $6,750 for each of the nine
months ended December 31, 2002 and 2001. The increase in costs and expenses
during the three months and nine months ended December 31, 2002 is due to legal
expenses incurred in connection with the August 22, 2002 tender offer to
purchase the shares of Delta and expenses related to developing a web site for
the Company.
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.
6
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 our Quarterly
Report on Form 10-QSB, 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 that is 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.
7
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 MATTERS 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 III 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. Dermott S. L. Butler and Lawrence M. Cottingham have
agreed to serve as directors.
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 ("DGA"), a company controlled by
Campbell, 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 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 each of Delta and Gamma or 25.5% of the issued and
outstanding shares of each company.
8
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
*3.1 Restated Certificate of Incorporation
*3.2 Bylaws
*3.3 Proposed Certificate of Amendment to the Restated
Certificate of Incorporation
*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 18 U.S.C. Section 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
**99.2 Certification Pursuant to 18 U.S.C. Section 1350, as
adopted 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 of Form 8-K.
None
9
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 February 14, 2003.
EMERGING DELTA CORPORATION
By: /S/ ALLEN F. CAMPBELL
-----------------------
Allen F. Campbell
Chairman
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 February 14, 2003.
By: /S/ ALLEN F. CAMPBELL Chairman of the Board and Director
-------------------------
Allen F. Campbell
By: /S/ JERRY W. JARRELL Chief Financial Officer, Secretary and Director
-------------------------
Jerry W. Jarrell
10