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, 2003.
[ ] 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, 2003:
Common Stock, $1.00 Par Value - 43,600 shares
EMERGING DELTA CORPORATION
Index to Form 10-QSB
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Balance Sheets as of December 31, 2003 and March 31, 2003 2
Statements of Operations for the Three and Nine Month Periods
Ended December 31, 2003 and 2002 3
Statements of Cash Flows for the Nine Months Ended December 31,
2003 and 2002 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 7
Item 2. Changes in Securities and Use of Proceeds 7
Item 3. Defaults Upon Senior Securities 7
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 8
Signatures 9
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EMERGING DELTA CORPORATION
BALANCE SHEETS
ASSETS
December 31, March 31,
2003 2003
------------ ------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 182,038 $ 272,642
Prepaid expenses -- 1,060
------------ ------------
Total current assets 182,038 273,702
OFFICE EQUIPMENT, cost 5,629 --
Less - Accumulated depreciation (938) --
------------ ------------
Office equipment, net 4,691 --
------------ ------------
Total assets $ 186,729 $ 273,702
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,955 $ 4,755
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 50,000 shares authorized;
no shares subscribed, issued and outstanding -- --
Common stock, $1.00 par value; 200,000 shares authorized;
43,600 shares issued and outstanding 43,600 43,600
Additional paid-in capital 252,214 252,214
Accumulated deficit (111,040) (26,867)
------------ ------------
Total stockholders' equity 184,774 268,947
------------ ------------
Total liabilities and stockholders' equity $ 186,729 $ 273,702
============ ============
The accompanying notes are an integral part of these financial statements.
2
EMERGING DELTA CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
For the Nine For the Nine For the Three For the Three
Months Ended Months Ended Months Ended Months Ended
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
INTEREST INCOME $ 1,898 $ 3,282 $ 485 $ 1,129
COSTS AND EXPENSES (86,071) (16,393) (17,374) (9,044)
-------------- -------------- -------------- --------------
LOSS BEFORE TAX PROVISION (84,173) (13,111) (16,889) (7,915)
TAX PROVISION -- -- -- --
-------------- -------------- -------------- --------------
NET LOSS $ (84,173) $ (13,111) $ (16,889) $ (7,915)
============== ============== ============== ==============
BASIC AND DILUTED LOSS
PER SHARE $ (1.93) $ (0.30) $ (0.39) $ (0.18)
============== ============== ============== ==============
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
----------------------
2003 2002
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (84,173) (13,111)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 938 --
Changes in current assets and liabilities:
Increase (decrease) in accounts payable (2,800) --
Decrease (increase) in prepaid expenses 1,060 --
--------- ---------
CASH USED IN OPERATING ACTIVITIES (84,975) (13,111)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to office equipment (5,629) --
--------- ---------
CASH USED IN INVESTING ACTIVITIES (5,629) --
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (90,604) (13,111)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 272,642 296,946
--------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 182,038 $ 283,835
========= =========
The accompanying notes are and 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, 2003.
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 was formed, which is managed by
the same officers and directors and 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.
On November 26, 2002 management control of the Company was changed in connection
with a tender offer. New management intends to continue operating the Company as
a blind pool, as further described herein.
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, 2003 and for each of the nine month
periods ended December 31, 2003 and 2002 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, 2003 the results of operations for the nine months ended December
31, 2003 and 2002 and the cash flows for the nine months ended December 31, 2003
and 2002.
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3. RELATED PARTY TRANSACTIONS
--------------------------
Officers and directors are compensated based on actual time and expenses devoted
to the Company's business. During the nine months ended December 31, 2003
consulting fees of $27,000 were paid to the Company's Chief Executive Officer.
There were no similar payments in the nine months ended December 31, 2002.
During each of the respective periods ended December 31, 2003 and 2002,
consulting fees of $6,750 were paid to the Company's Treasurer and Secretary.
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
Nine and Three Month Periods Ended December 31, 2003 compared to December 31,
2002
The Company has commenced no operations and has no activities other than seeking
out potential business opportunities. Interest income for the nine and three
months ended December 31, 2003 was $1,898 and $485 respectively compared to the
nine and three months ended December 31, 2002 of $3,282 and $1,129 respectively.
The decrease in interest income in 2003 is due to lower interest rates and lower
cash balances compared to 2002. Costs and expenses for the nine and three months
ended December 31, 2003 was $86,071 and $17,374 respectively compared to the
nine and three months ended December 31, 2002 of $16,393 and $9,044
respectively. Costs and expenses consist primarily of consulting fees and legal
expenses. Consulting fees in the nine and three months ended December 31, 2003
were $34,250 and $11,250 respectively compared to the nine and three months
ended December 31, 2002 of $6,750 and $2,250 respectively. The increase in 2003
is due to the $3,000 monthly consulting fee paid to the Company's Chief
Executive Officer. The increase in other costs and expenses during the nine and
three months ended December 31, 2003 compared to the nine and three months ended
December 31, 2002 is primarily due to legal and travel expenses incurred in
connection with a potential business acquisition and expenses related to
shareholder meetings in 2003.
6
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 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.
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
7
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
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
**31 Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
**32 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
8
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 12, 2004.
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 12, 2004.
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
9