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 and
Exchange Act of 1934.
For the quarterly period ended June 30, 2004.
(_) Transition report pursuant to Section 13 or 15(d) of the Exchange Act
for the transition period from _________ to _________.
Commission File Number: 0-32477
EAST DELTA RESOURCES CORP.
(Exact name of registrant as specified in charter)
DELAWARE 98-0212726
(State of or other jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
447 St. Francois Xavier St.
Montreal, Quebec, Canada
(Address of Principal Executive Offices)
(514) 844-3510
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(former name, if changed since last report)
Check whether the registrant: (1) has filed all reports required to be filed by
Section 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 the number of shares outstanding of each of the issuer's classes of
stock as of June 30, 2004.
31,749,575 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
1
EAST DELTA RESOURCES CORP.
--------------------------
(A Development Stage Enterprise)
--------------------------------
INDEX TO FORM 10-QSB
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
Balance Sheets as of June 30, and March 31, 2004 3
Statements of Operations for the three months ended June
30, 2004 and 2003, and the period August 27, 1997 (date of
incorporation) to June 30, 2004
4
Statement of Stockholders' Equity for the three months ended June 30, 2004
5
Statements of Cash Flows for the three months ended June
30, 2004 and 2003 and the period August 27, 1997 (date of
incorporation) to June 30, 2004
6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations (including cautionary statement) 12
Item 3. Controls and Procedures 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Securities Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
2
EAST DELTA RESOURCES CORP.
--------------------------
(A Development Stage Enterprise)
--------------------------------
CONSOLIDATED BALANCE SHEETS
ASSETS June 30, 2004
- ------ (unaudited) March 31, 2004
-------------- ---------------
CASH AND CASH EQUIVALENTS $ 347,728 $ 51,926
OTHER ASSETS 2,961 1,200
--------- ---------
TOTAL $ 350,689 $ 53,126
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accrued and other liabilities $ 193,004 $ 4,958
Due to affiliate -- 27,559
Note payable to stockholder 5,000 --
--------- ---------
Total current liabilities 198,004 32,517
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock - $0.0001 par value; 50,000,000 shares authorized;
31,749,575 shares issued and outstanding 3,175 1,137
Additional paid-in capital 363,175 120,663
Deferred compensation (144,500) (44,000)
Deficit accumulated during the development stage (69,165) (57,191)
--------- ---------
Total stockholders' equity 152,685 20,609
--------- ---------
TOTAL $ 350,689 $ 53,126
========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
EAST DELTA RESOURCES CORP.
--------------------------
(A Development Stage Enterprise)
--------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
August 27, 1999
For the three For the three (date of
months ended months ended incorporation)
June 30, 2004 June 30, 2003 to June 30, 2004
------------------ ----------------- ------------------
REVENUES: $ - $ - $ -
------------------ ----------------- ------------------
EXPENSES:
Stock based expenses 4,000 - 8,000
Loss from impairment of intangibles - - 19,823
Other 7,974 1,105 41,342
------------------ ----------------- ------------------
Total expenses 11,974 1,105 69,165
------------------ ----------------- ------------------
NET LOSS $ (11,974) $ (1,105) $ (69,165)
================== ================= ==================
Net Loss Per Share-
Basic and Diluted $ (.00) $ (.00)
================== =================
Weighted Average Number of
Shares Outstanding $ 11,366,250 1,000,000
================== =================
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
EAST DELTA RESOURCES CORP.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
Deficit
Accumulated
Common Stock Additional During the
------------------ Paid-In Deferred Development
Shares Amount Capital Compensation Stage Total
------ ------ ------- ------------ ----- -----
Balances, March 31, 2004 11,366,250 $ 1,137 $120,663 $ (44,000) $(57,191) $20,609
Acquisition of Affiliated
Entity (see Note A) 20,383,325 2,038 242,512 (104,500) -- 140,050
Amortization of deferred
compensation -- -- -- 4,000 -- 4,000
Net Loss -- -- -- -- (11,974) (11,974)
----------- ------- -------- --------- -------- --------
Balances, June 30, 2004 31,749,575 $ 3,175 $363,175 $(144,500) $(69,165) $152,685
=========== ======= ======== ========= ======== ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
EAST DELTA RESOURCES CORP.
--------------------------
(A Development Stage Enterprise)
--------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the period
August 27, 1997
For the three For the three (date of
months ended months ended incorporation) to
June 30, 2004 June 30, 2003 June 30, 2004
---------------- ---------------- --------------------
Cash Flows From Operating Activities:
Net loss $ (11,974) $ (1,105) $ (69,165)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock based compensation, consulting and rent 4,000 -- 8,000
Loss from impairment of intangible assets -- -- 19,823
Cash received in acquisition of affiliates 190,041 -- 192,218
Increase (decrease) in accrued and other liabilities (4,945) -- 13
Other (1,320) -- (2,520)
--------- --------- ---------
Net Cash Provided by (used in) Operating Activities 175,802 (1,105) 148,369
--------- --------- ---------
Cash Flows From Investing Activities -- -- --
--------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from the issuance of common stock -- -- 51,800
Advances from affiliate 120,000 -- 147,559
--------- --------- ---------
Net Cash Provided by Financing Activities 120,000 -- 199,359
--------- --------- ---------
Net Increase (decrease) In Cash and Cash Equivalents 295,802 (1,105) 347,728
Cash and Cash Equivalents at Beginning of Period 51,926 3,000 --
--------- --------- ---------
Cash and Cash Equivalents at End of Period $ 347,728 $ 1,895 $ 347,728
========= ========= =========
Supplemental disclosure of non-cash investing and
financing activities -
Deferred compensation and additional paid in capital $ -- $ -- $ 48,000
========= ========= =========
Acquisition of net assets of Amingo Resources, Inc. $ -- $ -- $ 22,000
========= ========= =========
Acquisition of nets assets of affiliate (see Note A) $ 140,050 $ -- $ 140,050
========= ========= =========
Supplemental disclosure of cash flow information cash paid for
Interest $ -- $ -- $ --
========= ========= =========
Income Taxes $ -- $ -- $ --
========= ========= =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
6
EAST DELTA RESOURCES CORP.
--------------------------
(A Development Stage Enterprise)
--------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE A - NATURE OF OPERATIONS AND BACKGROUND
East Delta Resources Corp. was initially incorporated under the laws of the
state of Delaware as AVIC Technologies, LTD on March 4, 1999, and changed its
name to East Delta Resources Corp ("the "Predecessor") on May 5, 2004.
Prior to June 30, 2004, the Predecessor, for various reasons, had abandoned its
business plan to participate in the building industry in China and other parts
of Asia and was in the process of seeking other opportunities to maximize
shareholder value. Towards this goal, on June 30, 2004, the Predecessor acquired
Omega Resources, Inc., ("Omega"), a related party by virtue of common ownership
and management. Omega. which was initially incorporated under the laws of the
state of Delaware as Top Soil, International, LTD on August 27, 1997, and
changed its name to Omega Resources, Inc. on April 22, 2004 is in the business
of gold exploration, development and production in China.
Because the Predecessor has elected to proceed with the implementation of
Omega's business plan, the transaction has been reflected as a reverse
acquisition and a recapitalization with Omega succeeding to the name of East
Delta Resources Corp. and being treated as the acquirer for financial statement
purposes. In connection therewith, the Predecessor issued 11,366,250 shares of
its common stock to the stockholders of Omega in exchange for all of Omega's
issued and outstanding common shares on the date of the transaction. Also, and
because of the nature of common control, the assets and liabilities of the
Predecessor and Omega were combined using their historical cost basis. On the
date of the transaction, the Predecessor had 20,383,325 shares outstanding, and
a deficit accumulated during the development stage of approximately $1,459,000
which amount was eliminated against the Predecessor's additional paid in capital
immediately before the combination.
East Delta is in the development stage as defined in Financial Accounting
Standards Statement No. 7. Accordingly, certain of its accounting policies and
procedures have not yet been established.
Basis of Presentation
- ---------------------
Our accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim financial information and the instructions to Form 10-QSB
and Rule 10-1 of Regulation S-X of the Securities and Exchange Commission (the
"SEC"). Accordingly, these consolidated financial statements do not include all
of the footnotes required by accounting principles generally accepted in the
United States of America. In our opinion, all adjustments (consisting of normal
and recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three months ended June 30, 2004 are
not necessarily indicative of the results that may be expected for the entire
fiscal year. The accompanying consolidated financial statements and the notes
thereto should be read in conjunction with our audited financial statements as
of March 31, 2004 and for the years ended March 31, 2004 and 2003 that will be
included in our 8-K/A filing and/or the audited financials of AVIC Technologies,
Ltd (also known as the Predecessor) as of December 31, 2003 and for the years
ended December 31, 2003 and 2002 included in the Form 10-KSB filing of AVIC
Technologies, Ltd.
7
Principles of Consolidation
- ---------------------------
The accompanying consolidated financial statements include the accounts of East
Delta, its wholly owned subsidiary, Amingo Resources, Inc. and its majority
owned subsidiary, Jinping Amingo Resources, Inc. which is a Chinese sino-foreign
joint venture limited liability company (collectively, "we", "us", "our"). All
significant inter-company accounts and balances have been eliminated in
consolidation. With respect to our investment in the joint venture, we have not
presented a minority interest in the accompanying consolidated financial
statements because our joint venture partners are not responsible for funding
operating deficits If the joint venture generates positive results of operations
in the future, the amount of such income allocated to the minority members will
be adjusted for previous losses incurred by such entity to the extent that their
minority interest balances are positive.
Use of Estimates
- ----------------
The preparation of consolidated financial statements in accordance with
generally accepted accounting principles requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements. The reported amounts of revenues and expenses during the reporting
period may be affected by the estimates and assumptions we are required to make.
Actual results could differ significantly from those estimates
Net Loss Per Share
- ------------------
We compute net loss per share in accordance with SFAS No. 128 "Earnings per
Share" ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98").
Under the provisions of SFAS No. 128 and SAB 98, basic net loss per share is
computed by dividing the net loss available to common stockholders for the
period by the weighted average number of common shares outstanding during the
period. Diluted net loss per share is computed by dividing the net loss for the
period by the number of common and common equivalent shares outstanding during
the period. When they are anti-dilutive, common stock equivalents are not
considered in the loss per share calculations; accordingly basic and diluted net
loss per share are identical for each of the periods in the accompanying
consolidated financial statements.
Stock-Based Compensation
- ------------------------
We have adopted Statement of Financial Accounting Standards No. 148 "Accounting
for Stock-Based Compensation - Transition and Disclosure" (SFAS No. 148). This
statement amends FASB statement No. 123, "Accounting for Stock Based
Compensation". It provides alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for employee
stock based compensation. It also amends the disclosure provision of FASB
statement No. 123 to require prominent disclosure about the effects on reported
net income of an entity's accounting policy decisions with respect to
stock-based employee compensation. As permitted by SFAS No. 123 and amended by
SFAS No. 148, we continue to apply the intrinsic value method under Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," to account for our stock-based employee compensation arrangements.
8
Foreign Currency Translation
- ----------------------------
The assets and liabilities of our foreign subsidiaries (which were formed during
the year ended March 31, 2004) are translated into U.S. dollars at exchange
rates in effect at the balance sheet dates. Revenue and expense items are
translated into U.S. dollars at the average exchange rate for the years.
Translation adjustments were not applicable for the three months ended June 30,
2003 and were not material for the three months ended June 30, 2004.
Income Taxes
- ------------
We compute income taxes in accordance with Financial Accounting Standards
Statement No. 109 "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109,
deferred taxes are recognized for the tax consequences of temporary differences
by applying enacted statutory rates applicable to future years to differences
between the financial statement carrying amounts and the tax basis of existing
assets and liabilities. Also, the effect on deferred taxes of a change in tax
rates is recognized in income in the period that included the enactment date.
NOTE B - GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. We are in the development stage
and will require a significant amount of capital to proceed with our business
plan. Our ability to continue as a going concern is ultimately contingent upon
our ability to attain profitable operations through the successful development
of our business model and/or the integration of an operating business. In
addition, our ability to continue as a going concern must be considered in light
of the problems, expenses and complications frequently encountered by entrance
into established markets and the competitive environment in which we operate.
Since inception, our operations have been funded through sales of public and
private equity and affiliate advances, and we expect to continue to seek
additional funding through private or public equity and debt financing. We
believe the acquisition discussed at Note A will assist us in our efforts to
raise capital. However there is no assurance that we will be successful in
raising adequate equity and/or debt capital, or that any such capital raised
will be adequate to meet our commitments. These factors, among others, indicate
that we may be unable to continue as a going concern for a reasonable period of
time. Our consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
the amounts and classification of liabilities that might be necessary should we
be unable to continue as a going concern.
NOTE C - INCOME TAXES
We recognized losses for both financial and tax reporting purposes during each
of the periods in the accompanying consolidated statements of operations.
Accordingly, no provision for income taxes and/or deferred income taxes payable
have been provided for in the accompanying consolidated financial statements.
At June 30, 2004, we had net operating loss carryforwards for income tax
purposes. Assuming that the business combination discussed at Note A does not
trigger a "change in control" (as defined by Internal Revenue Service rules and
regulations), these carryforwards will be available to offset future taxable
9
income generated through June 30, 2024. The deferred income tax asset arising
from these net operating loss carryforwards is not recorded in the accompanying
balance sheet because we established a valuation allowance to fully reserve such
asset as its realization did not meet the required asset recognition standard
established by SFAS 109.
NOTE D - RELATED PARTY TRANSACTIONS
At June 30, 2004, accrued and other liabilities includes approximately $114,000
owed to various stockholders (one of whom is currently our President and
Director) for services rendered and expenses incurred. The amounts are
unsecured, non-interest bearing and due on demand.
In 2003, the Predecessor rented office space from a stockholder under a month to
month lease arrangement that required monthly consideration of $3,500 (or
$42,000 for the year). Since, the $42,000 has not yet been paid, the amount
remains in accrued and other liabilities in the accompanying June 30, 2004
balance sheet.
During the quarter ended June 30, 2004, our Predecessor reduced the amount of
space rented and simultaneously entered into a one year lease agreement with our
landlord. As consideration for rent in 2004, we are obligated to issue 60,000
shares of our common stock resulting in non-cash rent expense of $1,500 for the
second quarter of 2004 on the Predecessor's books. Not rent was recorded on the
books of Omega during such period as the value of such rent was not material.
During the quarter ended June 30, 2004 the Predecessor recorded officer
compensation of approximately $10,500, which was considered to represent the
fair value of the services provided to us by our officer during this period. No
compensation was recorded on the books of Omega during such period as the value
of such services was not significant.
NOTE E - OTHER SIGNIFICANT TRANSACTIONS
During the period between April 1, 2004 and June 30, 2004, the Predecessor and
East Delta had other significant transactions as follows:
o Effective May 15, 2004, the Predecessor entered an agreement with an
investor relations consulting firm. As consideration for their
services, we have agreed to pay a monthly retainer of $6,500 for a
period of six months, and issue 200,000 warrants that enable them to
purchase 200,000 shares of our common stock for a price of $.50 per
share at anytime through April 30, 2009. No compensation was required
to be recorded as a result of the issuance of these warrants.
Effective July 15, 2004, the agreement was terminated by us for cause.
o The Predecessor completed a private placement of its stock which
resulted in total proceeds of approximately $373,000 and the issuance
of 4,418,750 shares of common stock to various individuals that was
exempt from registration under the Securities Act of 1933. The
offering was not underwritten.
o On June 15, 2004 the Predecessor entered into a contract with an
unrelated entity to provide investor relations services through
December 15, 2004. As consideration for such services, we have agreed
to pay a monthly retainer of $5,000 and issue a total 300,000 shares
of our common stock (one third of which are to be issued on July 1,
September 1 and November 1, 2004). As a result of this agreement we
will recognize stock based compensation of approximately $114,000
during the term of the agreement; of which $104,500 has been included
in deferred compensation in the accompanying June 30, 2004
consolidated balance sheet. The agreement, which may be terminated by
either party upon 30 days written notice, will automatically extend
for a period of an additional six months, absent such notice.
10
o The Predecessor issued 743,575 shares of our common stock for certain
consulting services with regards to market strategy and public
relations. As a result of the issuance of these shares the Predecessor
recognized approximately $189,000 of stock based compensation during
the period January 1, 2004 to June 30, 2004. These expenses were
eliminated as of June 30, 2004 (date of acquisition) for the reasons
discussed at Note A.
o On April 1, 2004, the Predecessor entered a two year agreement with a
consultant. As consideration for services rendered, the Predecessor
has agreed to pay the consultant a total of $250,000 over the term of
the agreement as follows:
Amounts due on November 1, 2004 $ 70,000
Amount due on June 1, 2005 70,000
Amount due on December 1, 2005 60,000
Amount due on May 1, 2006 50,000
---------
Total $ 250,000
The Predecessor recognized expense of approximately $31,300 under this
agreement during the period April 1, 2004 to June 30, 2004. These
expenses were eliminated as of June 30, 2004 (date of acquisition) for
the reasons discussed at Note A.
NOTE E - OTHER WARRANTS
In addition to the 200,000 warrant discussed in Note E above, at June 30, 2004,
we have also issued 3,000,000 warrants that enable the holder to purchase
3,000,000 shares of our common stock for a price of $0.10 per share at anytime
through January 31, 2009. The warrants were issued by the Predecessor to a
consultant for services primarily relating to the acquisition discussed at Note
A, and the Predecessor recognized $300,000 of stock based compensation during
the period January 1, 2004 to June 30, 2004. These expenses were eliminated as
of June 30, 2004 (date of acquisition) for the reasons discussed at Note A.
11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
New Business Direction
In January 2004, our Board of Directors decided that we should reorganize and
reorient the company to profit from the recent worldwide strong revival of
interest in precious minerals. Towards this goal, on February 4, 2004, we signed
an agreement to acquire 100% of the common stock of Omega Resources, Inc.
("Omega"), a related party by virtue of common ownership and management. The
acquisition, which was consummated on June 30, 2004, will permit us to undertake
a new business direction towards mineral exploration and mining as Omega is in
the business of gold exploration, development and production in China. Because
we elected to proceed with the implementation of Omega's business plan, the
transaction has been reflected as a reverse acquisition and a recapitalization
with Omega succeeding to our name (i.e. East Delta Resources Corp) and being
treated as the acquirer for financial statement purposes. In connection
therewith, because of the nature of common control, our assets and liabilities
were combined with Omega's assets and liabilities using their historical cost
basis, and our deficit previously accumulated through June 30, 2004 was
eliminated through a reduction of stockholders' equity as of the acquisition
date.
As a result of the transaction above, the following discussion and analysis
should be read in conjunction with our consolidated financial statements as of
and for the quarters ended June 30, 2004 and 2003 included in this Form 10-QSB,
the consolidated financial statements of Omega as of March 31, 2004 and for the
years ended March 31, 2004 and 2003 included in Form 8-K/A that is being
prepared for filing, and the financial statements of AVIC Technologies, Ltd.
(our name before we changed it to East Delta Resources Corp on May 5, 2004) as
of December 31, 2003 and for the years ended December 31, 2003 and 2002. Also,
because Omega has a fiscal year end of March 31, the management discussion and
analysis below is for the three months ended June 30, 2004 and 2003.
Readers are referred to the cautionary statement below that addresses forward-
looking statements.
Our operations have been fairly minimal to date, and we have not generated any
revenues. Accordingly, we are considered to be in the development stage as
defined in Financial Accounting Standards Board Statement No. 7.
Three months ended June 30, 2004 and 2003
- -----------------------------------------
During the three months ended June 30, 2004 and 2003, we did not generate any
revenue and our expenses were not material. This is because our primary focus
during these periods was to locate and consummate a business combination so that
we could begin to develop our business model.
Since Inception
- ---------------
We have not generated any revenues since our inception on August 27, 1997, and
have incurred expenses of approximately $69,200 since such date. These expenses
arise primarily from the following:
o $8,000 of stock based consulting expenses that arose from amortization
of deferred stock compensation recorded for the fair value of shares
we issued to certain officers and shareholders for consulting
services.
o Approximately $14,000 of travel resulting from our efforts to
implement our business plan in China.
12
o Approximately $19,800 of goodwill impairment that resulted from the
acquisition of Amingo Resources, Inc. (a related entity) in December
2003.
o Approximately $20,000 of start up costs incurred by our Chinese
subsidiary in connection with the establishment of the Joint Venture.
About our new Business
Our objective is to profit from the recent worldwide strong revival of interest
in precious metals. Our primary activity will be in gold exploration,
development and production. We also plan to participate in other mineral
exploration and mining, specifically, nickel, zinc and lead. The geographic
focus is in growth mining regions in Southeast Asia, primarily in China. Our
goal is to establish ourselves, in these areas, as a major force in the mining
industry by bringing together a network of financing sources, management
expertise, the latest mining technology and extensive local industry contacts.
Business Strategy
We plan to develop our business mostly through acquisitions and/or joint
ventures with local participants, in which they will have substantial equity and
management control. Priority will be given to the more advanced potential mining
properties, where most of the exploration and pre-feasibility study work have
already been completed. The objective is to become the owner of producing mines
in the shortest term possible. With profit potential adequately demonstrated and
funding available, a new plant can be in production as quickly as twelve months.
Accomplishments to-date
As our initial entry into the mining business, we previously acquired 100% of
the common shares of Amingo Resources Inc. ("Amingo"). Amingo is a Canadian
based company whose major work is in gold exploration and mining development in
China and whose principals have been exploring in China for over five years. Our
efforts for the immediate term will be directed to develop Amingo and its
Chinese properties.
In February, 2004, Amingo signed a Joint Venture Contract with the provincial
and county governments of Guizhou Province and Jinping County, respectively, to
explore and mine gold within their territories. Under the terms of the
agreement, Amingo has acquired rights to develop a 72 square kilometer property
in the county, and is eligible to earn up to 84% of the net revenues extracted
from this particular property. In early May, 2004 the Guizhou Provincial
Industrial and Commercial Administrative Bureau had approved the "Joint Venture"
for Guizhou Amingo Resources Inc. The success of this venture is fully dependant
on us obtaining the necessary financing, and no assurances can be given that
sufficient funding will be found, and even if such funding is located, that the
venture will result in any viable ore bodies being uncovered and profitably
mined.
With respect to such financing, we have agreed to contribute up to $1,000,000 to
fund the Joint Venture's early stage preliminary exploration activities. We are
to pay this amount in the following minimum installments:
o $600,000 by December 31, 2004
o $400,000 by December 31, 2005
13
As of June 30, 2004, we had invested approximately $150,000 in the Joint
Venture; approximately $20,000 of which was used to pay various start-up
expenses prior to March 31, 2004. The remaining amount is being held in a bank
account in China and accordingly has been included in cash and cash equivalents
in the accompanying consolidated balance sheet. During the period July 1, 2004
to August 15, 2004, we invested an additional $150,000 in the Joint Venture.
Liquidity
At the end of the quarter, on June 30, 2004, we have approximately $348,000 in
cash, and currently do not have sufficient cash to pay our commitments, and
other expenses over the next twelve months. Unless we are able to (1) generate
cash flow from operations; (2) locate a strategic partner; or (3) secure
additional financing, we will ultimately exhaust our cash, and will be unable to
fund any significant additional expenditures or implement our business plan.
CAUTIONARY STATEMENT
This Form 10-QSB, press releases and certain information provided periodically
in writing or orally by our officers or our agents contain statements which
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act, as amended and Section 21E of the Securities Exchange Act of
1934. The words expect, anticipate, believe, goal, plan, intend, estimate and
similar expressions and variations thereof if used are intended to specifically
identify forward-looking statements. Those statements appear in a number of
places in this Form 10-QSB and in other places, particularly, Management's
Discussion and Analysis or Results of Operations, and include statements
regarding the intent, belief or current expectations us, our directors or our
officers with respect to, among other things: (i) our liquidity and capital
resources; (ii) our financing opportunities and plans and (iii) our future
performance and operating results. Investors and prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements as a
result of various factors. The factors that might cause such differences
include, among others, the following: (i) any material inability to successfully
internally develop our products; (ii) any adverse effect or limitations caused
by Governmental regulations; (iii) any adverse effect on our positive cash flow
and ability to obtain acceptable financing in connection with our growth plans;
(iv) any increased competition in business; (v) any inability to successfully
conduct our business in new markets; and (vi) other risks including those
identified in our filings with the Securities and Exchange Commission. We
undertake no obligation to publicly update or revise the forward looking
statements made in this Form 10-QSB to reflect events or circumstances after the
date of this Form 10-QSB or to reflect the occurrence of unanticipated events.
ITEM 3 - CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the specified time periods. As of the end of the period covered
by this report, our Chief Executive/Accounting Officer evaluated the
effectiveness of our disclosure controls and procedures. Based on the
evaluation, which disclosed no significant deficiencies or material weaknesses,
our Chief Executive/Accounting Officer concluded that our disclosure controls
and procedures are effective as of the end of the period covered by this report.
There were no changes in our internal control over financial reporting that
occurred during our most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.
14
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
During the quarter ending June 30, 2004, the Predecessor had the following
issuances of unregistered securities:
o An aggregate of 4,418,750 shares of common stock to two accredited
investors under a private equity placement that was exempt from
registration under Rule 506 and to some non U.S. persons in an off
shore transaction under Regulation S promulgated under the Securities
Act of 1933. The offering resulted in proceeds of approximately
$373,000 and was not underwritten. No commissions were paid.
o 743,575 shares of common stock for consulting services valued at
$189,000 to a U.S. corporation in transaction that was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933,
in asmuch as this was a non public offering limited to one service
provider.
o 11,366,250 shares of common stock valued at $4,887,500 to five non
U.S. persons in an off shore transaction that was exempt from
registration under Regulation S promulgated under the Securities Act
of 1933. The shares were issued to the owners of Omega at the date of
the business combination discussed above. No commissions were paid.
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Securities Holders
Pursuant to a Written Consent of a Majority of our shareholders
authorizing a change of our name from AVIC Technologies, Ltd. to East Delta
Resources Corp, all required filings and procedures were undertaken and
completed, and the name was changed in May 2004.
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
Exhibits -
31.1 Section 302 Certification
32.1 Section 906 Certification
Reports on Form 8-K - Form 8-K filed on July 15, 2004 reporting Items
2 and 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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Victor Sun President and CEO August 23, 2004
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Victor Sun
15