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 December 31, 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 /X/ NO / / 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 February 10, 2006 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 December 31, 2005 and March 31, 2005 2 Statements of Operations for the Three and Nine Month Periods Ended December 31, 2005 and 2004 3 Statements of Cash Flows for the Nine Months Ended December 31, 2005 and 2004 4 Notes to the Financial Statements 5 Item 2. Management's Discussion and Analysis or Plan of Operations 6-8 Item 3. Controls and Procedures 9 Part II. OTHER INFORMATION Item 1. Legal Proceedings 9 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 Form 8-K 9 Signatures 1 PART I. FINANCIAL INFORMATION Item 1. Financial Statements EMERGING DELTA CORPORATION BALANCE SHEETS ASSETS December 31, March 31, 2005 2005 ------------ ------------ (unaudited) CURRENT ASSETS: Cash and cash equivalents $ 7,183 $ 52,593 ------------ ------------ Total current assets 7,183 52,593 OFFICE EQUIPMENT, cost 5,629 5,629 Less - Accumulated depreciation (4,690) (3,283) ------------ ------------ Office equipment, net 939 2,346 ------------ ------------ Total assets $ 8,122 $ 54,939 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,000 $ 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 (290,692) (248,327) ------------ ------------ Total stockholders' equity 5,122 47,487 ------------ ------------ Total liabilities and stockholders' equity $ 8,122 $ 54,939 ============ ============ 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, 2005 2004 2005 2004 ------------- ------------- ------------- ------------- INTEREST INCOME $ 662 $ 574 $ 128 $ 254 COSTS AND EXPENSES (43,027) (113,119) (18,541) (38,665) ------------- ------------- ------------- ------------- LOSS BEFORE TAX PROVISION (42,365) (112,545) (18,413) (38,411) TAX PROVISION -- -- -- -- ------------- ------------- ------------- ------------- NET LOSS $ (42,365) $ (112,545) $ (18,413) $ (38,411) ============= ============= ============= ============= BASIC AND DILUTED LOSS PER SHARE $ (0.97) $ (2.58) $ (0.42) $ (0.88) ============= ============= ============= ============= 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 ---------------------- 2005 2004 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ (42,365) $(112,545) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 1,407 1,407 Changes in current assets and liabilities: Increase (decrease) in accounts payable (4,452) 15,772 Decrease in prepaid expenses -- 423 --------- --------- CASH USED IN OPERATING ACTIVITIES (45,410) (94,943) --------- --------- DECREASE IN CASH AND CASH EQUIVALENTS (45,410) (94,943) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 52,593 161,659 --------- --------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 7,183 $ 66,716 ========= ========= 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 U.S. generally accepted accounting principles 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 discontinued 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 of the product 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 fiscal year 2005, 5 but there can be no assurance that the reverse merger will be consummated. If the ALCiS merger is not consummated, it is likely that the Company's remaining assets will be depleted and the Company will be unable to continue operations unless it receives a cash infusion from some as yet unidentified source. Though a public shell corporation, with no assets still would have some value, without any operating funds to expend to search for opportunities, it is unlikely the Company would be able to realize any remaining value from its public status and may be forced to dissolve. 2. SIGNIFICANT ACCOUNTING POLICIES ------------------------------- The financial statements as of December 31, 2005 and for each of the nine and three month periods ended December 31, 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 December 31, 2005 the results of operations for the nine and three months ended December 31, 2005 and 2004 and the cash flows for the nine months ended December 31, 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 nine and three months ended December 31, 2005 total amounts paid the two directors were $3,750 and $ -0- respectively, compared to nine and three months ended December 31, 2004 of $33,750 and $11,250 respectively. In 2005 the two directors have discontinued 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 Nine and Three Month Periods Ended December 31, 2005 compared to December 31, 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 nine and three months ended December 31, 2005 of $662 and $128 respectively compared to the nine and three months ended December 31, 2004 of $574 and $254 respectively. 6 Costs and expenses for the nine and three months ended December 31, 2005 were $43,027 and $18,541 respectively compared to the nine and three months ended December 31, 2004 of $113,119 and $38,665 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. A summary of the costs and expenses for the nine and three months ended December 31, 2005 and 2004 are as follows: For the Nine Months Ended For the Three Months Ended December 31 December 31 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Consulting fees - management $ 3,750 $ 33,750 $ -- $ 11,250 Consulting fees - third parties -- 50,000 -- 15,000 Legal expense 12,774 4,870 6,742 911 Travel expense 18,572 15,985 8,682 8,600 Accounting and audit expense 3,425 3,272 1,620 1,208 Office expense 1,328 2,462 157 777 Transfer agent fees 1,358 1,350 458 450 Other expenses 1,820 1,430 882 469 ----------- ----------- ----------- ----------- Total costs and expenses $ 43,027 $ 113,119 $ 18,541 $ 38,665 =========== =========== =========== =========== 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 nine and three months ended December 31, 2005 total amounts paid the two directors were $3,750 and $-0-, respectively, compared to nine and three months ended December 31, 2004 of $33,750 and $11,250 respectively. In 2005 the two directors have discontinued 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 nine and three months ended December 31, 2004 of $50,000 and $15,000, 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 nine and three months ended December 31, 2005 of $42,365 and $18,413 respectively compared to the nine and three months ended December 31, 2004 of $112,545 and $38,411 respectively. The Company expects to incur additional losses, at least for the near term, until 7 such time that a business opportunity is completed. The Company's cash position has been reduced by the current period's losses from $52,593 as of March 31, 2005 to $7,183 as of December 31, 2005. The Company's two directors who serve as Chief Executive Officer and Chief Financial Officer have discontinued 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 $7,183 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 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 of the product 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 fiscal year 2005, but there can be no assurance that the reverse merger will be consummated. If the ALCiS merger is not consummated, it is likely that the Company's remaining assets will be depleted and the Company will be unable to continue operations unless it receives a cash infusion from some as yet unidentified source. Although a public shell corporation with no assets would still have some value, without any operating funds to expend to search for opportunities, it is unlikely the Company would be able to realize any remaining value from its public status and may be forced to dissolve. 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. 8 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. 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 was filed with the Company's September 30, 2005 Form 10-QSB. 9 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 September 30, 2005 Form 10-QSB (b) Reports on Form 8-K None 10 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 February 10, 2006. 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 February 10, 2006. 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 11