10QSB 1 delta10qsb123103.txt 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. 5 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