UNITED STATES
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, 2005.
[ ] 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 as specified in its charter)
DELAWARE 72-1235451
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
111 Congress Avenue, Fourth Floor, Austin, Texas 78701
(Address of principal executive offices) (Zip Code)
(512) 391-4970
(Issuer's telephone number, including area code)
Check whether the issuer (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 / /
Indicate by checkmark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act.)
YES / / NO /X/
APPLICABLE ONLY TO CORPORATE ISSUER'S
State the number of shares outstanding of each of the issuer's classes of common
equity as of latest practical date:
43,600 shares of Common Stock, $1.00 Par Value as of November 11, 2005
Transitional Small Business Disclosure Format (check one): YES / / NO / X /
EMERGING DELTA CORPORATION
Index to Form 10-QSB
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Balance Sheets as of September 30, 2005 and March 31, 2005 2
Statements of Operations for the Three and Six Month Periods
Ended September 30, 2005 and 2004 3
Statements of Cash Flows for the Six Months Ended
September 30, 2005 and 2004 4
Notes to the Financial Statements 5
Item 2. Management's Discussion and Analysis or Plan of Operations 6
Item 3. Controls and Procedures 8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Unregistered Sales of Equity Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form8-K 10
Signatures
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EMERGING DELTA CORPORATION
BALANCE SHEETS
ASSETS
September 30, March 31,
2005 2005
------------- -------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 23,615 $ 52,593
Employee travel advances 2,682 --
------------- -------------
Total current assets 26,297 52,593
OFFICE EQUIPMENT, cost 5,629 5,629
Less - Accumulated depreciation (4,221) (3,283)
------------- -------------
Office equipment, net 1,408 2,346
------------- -------------
Total assets $ 27,705 $ 54,939
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,170 $ 7,452
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 (272,279) (248,327)
------------- -------------
Total stockholders' equity 23,535 47,487
------------- -------------
Total liabilities and stockholders' equity $ 27,705 $ 54,939
============= =============
The accompanying notes are an integral part of these financial statements.
2
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,
2005 2004 2005 2004
------------- ------------- ------------- -------------
INTEREST INCOME $ 534 $ 320 $ 271 $ 181
COSTS AND EXPENSES (24,486) (74,454) (14,621) (41,289)
------------- ------------- ------------- -------------
LOSS BEFORE TAX PROVISION (23,952) (74,134) (14,350) (41,108)
TAX PROVISION -- -- -- --
------------- ------------- ------------- -------------
NET LOSS $ (23,952) $ (74,134) $ (14,350) $ (41,108)
============= ============= ============= =============
BASIC AND DILUTED LOSS
PER SHARE $ (0.55) $ (1.70) $ (0.33) $ (0.94)
============= ============= ============= =============
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)
Six Months Ended
September 30
----------------------
2005 2004
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (23,952) $ (74,134)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 938 938
Changes in current assets and liabilities:
Decrease in accounts payable (3,282) (1,808)
(Increase) decrease in employee travel advances (2,682) 423
--------- ---------
CASH USED IN OPERATING ACTIVITIES (28,978) (74,581)
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (28,978) (74,581)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 52,593 161,659
--------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 23,615 $ 87,078
========= =========
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, 2005.
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.
The Company's two directors who serve as Chief Executive Officer and Chief
Financial Officer have agreed to discontinue their monthly fees effective May 1,
2005 to conserve the Company's remaining cash to be used to continue pursuing
business opportunities. The current cash balance should be adequate to enable
the Company to continue its operations for this fiscal year; however, if no
business acquisition is consummated in this fiscal year, it is likely the
Company will deplete its cash unless their is a cash infusion from some as of
yet unidentified source. During this fiscal year the directors will pursue other
means of raising additional funding for subsequent years.
On November 26, 2003 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.
The Company has entered into a preliminary agreement to acquire ALCiS Health,
Inc. ("ALCiS") via a reverse merger. The merger is subject to several conditions
precedent including the negotiation and execution of a definitive agreement of
merger. ALCiS has a new, proprietary, scientifically based pain relief cream.
ALCiS has emerged from the development stage and is focused on marketing of the
product at this time. The Company and ALCiS are in the process of raising the
funding required to complete the reverse merger. The Company is very hopeful
that this acquisition will be completed in the calendar year 2005, but there can
be no assurance that the reverse merger will be consummated.
5
2. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
The financial statements as of September 30, 2005 and for each of the six and
three month periods ended September 30, 2005 and 2004 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, 2005 the results of operations for the six and three
months ended September 30, 2005 and 2004 and the cash flows for the six months
ended September 30, 2005 and 2004.
3. RELATED PARTY TRANSACTIONS
--------------------------
Officers and directors are compensated based on actual time and expenses devoted
to the Company's business. The Company engages two directors to serve as Chief
Executive Officer and as Chief Financial Officer at the rate of $3,000 and $750
per month respectively. During the six and three months ended September 30, 2005
total amounts paid the two directors were $3,750 and $ -0- respectively,
compared to six and three months ended September 30, 2004 of $22,500 and $11,250
respectively. In 2005 the two directors have agreed to discontinue their monthly
fees effective May 1, 2005 to conserve the Company's remaining cash to be used
to continue pursuing business opportunities.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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
Six and Three Month Periods Ended September 30, 2005 compared to September 30,
2004
The Company has commenced no operations and has no activities other than seeking
out potential business opportunities. The Company earned interest income during
the six and three months ended September 30, 2005 of $534 and $271 respectively
compared to the six and three months ended September 30, 2004 of $320 and $181
respectively. The increase in interest income in 2005 is due to higher interest
rates.
Costs and expenses for the six and three months ended September 30, 2005 were
$24,486 and $14,621 respectively compared to the six and three months ended
September 30, 2004 of $74,454 and $41,289 respectively. The Company's costs and
expenses consist primarily of fees paid to the Company's management, third party
consulting fees, legal fees and travel expenses related to pursuing potential
business acquisitions.
6
A summary of the costs and expenses for the six and three months ended September
30, 2005 and 2004 are as follows:
For the Six Months Ended For the Three Months Ended
September 30, 2005 September 30, 2005
2005 2004 2005 2004
---------- ---------- ----------- -----------
Consulting fees - management $ 3,750 $ 22,500 $ -- $ 11,250
Consulting fees - third parties -- 35,000 -- 25,000
Legal expense 6,033 3,958 5,670 875
Travel expense 9,890 7,385 6,753 1,068
Accounting and audit expense 1,805 2,064 1,095 815
Office expense 1,015 1,660 184 1,325
Transfer agent fees 900 900 450 450
Other expenses 1,093 987 469 506
---------- ---------- ----------- -----------
Total costs and expenses $ 24,486 $ 74,454 $ 14,621 $ 41,289
========== ========== =========== ===========
The Company engages two directors to serve as Chief Executive Officer and
as Chief Financial Officer at the rate of $3,000 and $750 per month
respectively. During the six and three months ended September 30, 2005 total
amounts paid the two directors were $3,750 AND $-0-, respectively, compared to
six and three months ended September 30, 2004 of $22,500 and $11,250
respectively. In 2005 the two directors have agreed to discontinue their monthly
fees effective May 1, 2005 to conserve the Company's remaining cash to be used
to continue pursuing business opportunities.
The consulting fees to third parties for the six and three months ended
September 30, 2004 of $35,000 and $25,000, respectively, were to Altos Growth
Corporation for advisory services as discussed further below.
The legal and travel expense in 2004 was primarily related to the potential
acquisition of EZklick, Inc ("EZklick"). Effective May 24, 2004, the Company and
EZklick agreed to a Plan of Collaboration with the objective of acquiring
ownership of several independent grocery wholesale distribution centers
("IWDCs"), commonly called "Cash and Carry's". Furthermore, the agreement sets
forth the preliminary terms and conditions for a merger between the Company and
EZklick. After much time and effort spent on this venture it was not successful
and the agreement was terminated by mutual agreement of both parties effective
October 26, 2004.
Concurrently with the agreement with EZklick, the Company retained Altos
Growth Corporation of Los Altos, California, as a consultant to research the
IWDC industry, identify prospective candidates for acquisition, assist in
negotiating the terms and conditions of acquisitions and assist in securing debt
and equity financing that is needed in the Company's acquisition efforts. This
services agreement was terminated by mutual agreement of both parties effective
March 4, 2005.
The Company has reviewed several other business opportunities in 2005 and
2004. The Company currently has ongoing negotiations with one potential business
acquisition. There are no assurances that this acquisition will be successful.
The Company recognized net losses for the six and three months ended
September 30, 2005 of $23,952 and $14,350 respectively compared to the six and
three months ended September 30, 2004 of $74,134 and $41,108 respectively. The
Company expects to incur additional losses, at least for the near term, until
such time that a business opportunity is completed. The Company's cash position
has been reduced by the current period's losses from $53,000 as of March 31,
2005 to $24,000 as of September 30, 2005. The Company's two directors who serve
as Chief Executive Officer and Chief Financial Officer have agreed to
discontinue their monthly fees effective May 1, 2005 to conserve the Company's
remaining cash to be used to continue pursuing business opportunities. The
current cash balance of $24,000 should be adequate to enable the Company to
continue its operations for this fiscal year; however, if no business
acquisition is consummated in this fiscal year, it is likely the Company will
7
deplete its cash unless there is a cash infusion from some as yet unidentified
source. During this fiscal year the directors will pursue other means of raising
additional funding for subsequent years.
The Company currently has no significant commitments to which it is
contractually bound.
The Company has entered into a preliminary agreement to acquire ALCiS Health,
Inc. ("ALCiS") via a reverse merger. The merger is subject to several conditions
precedent including the negotiation and execution of a definitive agreement of
merger. ALCiS has developed a new, proprietary, scientifically based pain relief
cream. ALCiS has emerged from the development stage and is focused on marketing
of the product at this time. The Company and ALCiS are in the process of raising
the funding required to complete the reverse merger. The Company is very hopeful
that this acquisition will be completed in calendar year 2005, but there can be
no assurance that the reverse merger will be consummated.
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 control over financial reporting during out most recent completed
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
8
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
Code of Business and Ethical conduct. The Company's board of directors
adopted on October 25, 2005 a Code of Business and Ethical Conduct (the
"Code") as provided under Section 406 of the Sarbanes-Oxley Act of
2002. The Code applies to all of the company's directors, chief
executive officer, chief financial officer and all employees. The Code
is filed with the Company's September 30, 2005 Form 10-QSB as Exhibit
10.3
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits of the Company are included
herein.
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
**10.3 Code of Business and Ethical Conduct as adopted
pursuant to Section 406 of Sarbanes-Oxley Act of 2002
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 in original registration statement on Form SB-2, File
No. 33-61890-FW (the "Registration Statement") and
incorporated by reference.
**Filed with this Form 10-QSB
(b) Reports on Form 8-K
None
9
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized on November 14, 2005.
EMERGING DELTA CORPORATION
By: /S/ ALLEN F. CAMPBELL
-----------------------
Allen F. Campbell
Chairman
In accordance with 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, 2005.
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