-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MJj84pRXjJIDl8v99oHk7A2Zo7mnpoGfbAfu2X2v1IqSQem9WJBpU2MFgMmhO6/8 ec9mv5jX5TjVXQ1kEkWIZQ== 0000891554-99-002371.txt : 19991223 0000891554-99-002371.hdr.sgml : 19991223 ACCESSION NUMBER: 0000891554-99-002371 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991029 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMERGING ALPHA CORP CENTRAL INDEX KEY: 0000904147 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 721235449 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 033-61888-FW FILM NUMBER: 99779067 BUSINESS ADDRESS: STREET 1: 220 CAMP ST CITY: NEW ORLEANS STATE: LA ZIP: 70130 BUSINESS PHONE: 5045241801 MAIL ADDRESS: STREET 1: 220 CAMP ST CITY: NEW ORLEANS STATE: LA ZIP: 70130 8-K/A 1 FORM 8K/A - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 29, 1999 EMERGING ALPHA CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 33-61888-FW 72-1235449 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 220 Camp Street New Orleans, Louisiana 70130 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (504) 524-1801 - -------------------------------------------------------------------------------- Item 2. Acquisition or Disposition of Assets On October 29, 1999, pursuant to the terms of the Stock Purchase Agreement by and among Emerging Alpha Corporation ("Emerging Alpha") and the stockholders of Gas Jack, Inc., an Oklahoma corporation ("Gas Jack"), Emerging Alpha acquired all of the outstanding capital stock of Gas Jack for $2.7 million cash. The purchase price was financed through a $2.8 million term loan facility provided by Hibernia National Bank to Emerging Alpha. In addition, Emerging Alpha and Gas Jack entered into a $1.0 million working capital facility with Hibernia National Bank primarily to be used to finance the working capital requirements of Gas Jack. Gas Jack is now a wholly owned subsidiary of Emerging Alpha and its principal operating subsidiary. Gas Jack is a compressor manufacturer and service provider. Gas Jack is based in Oklahoma City and has field operations in Oklahoma, Texas, New Mexico, Kansas, Arkansas and Colorado. In addition, on October 29, 1999, Emerging Alpha acquired all of the outstanding units of GJ Measurement, L.L.C., an Oklahoma limited liability company, for 33,333 shares of Emerging Alpha common stock. GJ Measurement is now a wholly owned subsidiary of Emerging Alpha. GJ Measurement is a natural gas measurement and testing service company based in Oklahoma City. Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired Gas Jack, Inc.: Report of Independent Auditors Balance Sheets as of December 31, 1998 and 1997 and September 30, 1999 (Unaudited) Statements of Income for the Years Ended December 31, 1998 and 1997 and the Nine Months Ended September 30, 1999 and 1998 (Unaudited) Statements of Cash Flows for the Years Ended December 31, 1998 and 1997 and the Nine Months Ended September 30, 1999 and 1998 (Unaudited) Notes to Financial Statements (b) Pro Forma Financial Information Pro Forma Condensed Consolidated Balance Sheets as of September 30, 1999 Pro Forma Condensed Consolidated Statement of Income for the Year Ended March 31, 1999 and the Nine Months Ended September 30, 1999 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (c) Exhibits 10.1 Stock Purchase Agreement, dated as of October 29, 1999, by and among Emerging Alpha Corporation and the Stockholders of Gas Jack, Inc. 10.2 Loan Agreement, dated as of October 29, 1999, by and between Hibernia National Bank and Emerging Alpha Corporation. 10.3 Loan Agreement, dated as of October 29, 1999, by and among Hibernia National Bank, Emerging Alpha Corporation and Gas Jack, Inc. Item 8. Change in Fiscal Year. Emerging Alpha intends to change its fiscal year end from March 31 to December 31. This change will be effective December 31, 1999. Emerging Alpha will file audited financial statements as of and for the nine months ended December 31, 1999 in its Quarterly Report on Form 10-Q for the three months ended December 31, 1999. INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Gas Jack, Inc. Oklahoma City, Oklahoma We have audited the accompanying balance sheets of Gas Jack, Inc. (the "Company") as of December 31, 1998 and 1997, and the related statements of income, stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. April 26, 1999 Deloitte & Touche LLP F-1 GAS JACK, INC. Balance Sheets
December 31, December 31, September 30, 1997 1998 1999 (Audited) (Audited) (Unaudited) ASSETS Current Assets: Cash and cash equivalents $79,538 $29,165 $66,880 Accounts receivable (net of allowance of $27,003 and $20,000 in 1998 and 1997, respectively) 369,068 398,254 455,575 Inventories 266,824 361,253 745,048 Other 48,746 28,296 10,875 Total current assets 764,176 816,968 1,278,378 Property and Equipment, at cost 3,928,194 4,719,655 4,901,240 Less accumulated depreciation (1,538,249) (1,878,344) (2,200,915) Property and equipment, net 2,389,945 2,841,311 2,700,325 Other Assets 84,421 67,029 144,410 Total Assets 3,238,542 3,725,308 4,123,113 LIABILITES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $399,152 $317,834 $373,272 Notes payable, current portion 205,132 475,000 477,666 Other 137,109 48,593 4,328 Total current liabilities 741,393 841,427 855,266 Note Payable, long-term portion 182,344 Deferred Taxes, net 96,856 165,707 201,520 Stockholders' Equity: Common stock- $.10 par value; 5,000,000 shares authorized; 2,364,753 shares issued and outstanding 236,475 236,475 236,475 Additional paid-in capital 2,093,657 2,093,657 2,093,657 Retained earnings 624,365 942,246 1,108,055 Less: Cost of treasury stock (506,204) (506,204) (506,204) Notes receivable from stockholders (48,000) (48,000) (48,000) Total stockholders' equity 2,400,293 2,718,174 2,883,983 Total Liabilities and Stockholders' Equity 3,238,542 3,725,308 4,123,113
See notes to the financial statements. F-2 Gas Jack, Inc. Statements of Income
Nine Months Ended Years Ended December 31, September 30, 1997 1998 1999 1998 (Audited) (Audited) (Unaudited) (Unaudited) Revenues: Leasing revenue $2,201,309 $2,406,501 $1,891,467 $1,764,543 Sales - Compressors and parts 1,374,150 645,635 510,204 469,813 Other 177,468 215,726 141,215 167,627 Total Revenue 3,752,927 3,267,862 2,542,886 2,401,983 Cost of Sales and Expenses: Cost of sales 814,440 382,946 307,880 282,665 Operating expenses 1,803,674 1,801,647 1,471,350 1,379,364 Depreciation expense 485,008 526,487 459,465 383,283 Interest expense 25,863 26,651 27,845 17,537 Total cost of sales and expenses 3,128,985 2,737,731 2,266,540 2,062,849 Income Before Taxes 623,942 530,131 276,346 339,134 Income Taxes 254,028 212,250 110,537 138,361 Net Income 369,914 317,881 165,809 200,773
See notes to the financial statements. F-3 Gas Jack, Inc. Statements of Cash Flows
Nine Months Ended Years Ended December 31, September 30, 1997 1998 1999 1998 (Audited) (Audited) (Unaudited) (Unaudited) Cash Flows from Operating Activities: Net Income 369,914 317,881 165,809 200,773 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 485,008 526,487 459,465 383,283 Deferred taxes 107,404 68,851 35,813 44,829 Gain on sales of leased units (534,403) (223,653) (138,672) (162,188) (Gain) loss on sales of vehicles and equipment (2,565) 1,847 1,847 Changes in assets and liabilities: Accounts receivable (50,879) (29,186) (57,321) (37,265) Inventories (5,924) (94,429) (383,795) 20,664 Other current assets (29,246) 20,450 17,421 Other assets (34,663) 17,392 (77,381) (85,223) Accounts payable and accrued liabilities 258,728 (81,318) 91,251 23,897 Other current liabilities 24,008 (88,516) (44,265) (15,747) Net cash provided by operating activities 587,382 435,806 68,325 374,870 Cash Flow from Investing Activities: Additions to leased units (1,390,984) (1,194,669) (479,160) (1,025,442) Additions to vehicles and equipment (71,542) (20,022) (61,870) (20,022) Proceeds from sales of leased units 1,118,690 422,400 325,410 294,200 Proceeds from sales of vehicles and equipment 8,200 36,244 36,244 Net cash used in investing activities (335,636) (756,047) (215,620) (715,020) Cash Flows from Financing Activities: Proceeds from notes payable 175,000 375,000 303,000 375,000 Principal payments on notes payable (150,000) (105,132) (117,990) (105,132) Principal payments on debentures payable to stockholders (250,000) Issuance of notes receivable from stockholders (48,000) Net cash provided by (used in) financing activities (273,000) 269,868 185,010 269,868 Net Change in Cash and Cash Equivalents (21,254) (50,373) 37,715 (70,282) Cash and Cash Equivalents, beginning of period 100,792 79,538 29,165 79,538 Cash and Cash Equivalents, end of period 79,538 29,165 66,880 9,256 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest 47,193 23,686 27,845 17,537 Income taxes 144,592 143,399 74,724 93,532 Noncash transaction: Common stock issued to employees 24,027
See notes to financial statements. F-4 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business - Gas Jack, Inc. (the "Company"), an Oklahoma Corporation, is engaged in the manufacturing of the Gas Jack Compressor that provides economical well head compression to mature, low pressure natural gas wells. The compressors currently are sold and leased to natural gas producers primarily in Oklahoma, Kansas, Texas, Arkansas and New Mexico. Basis of Presentation - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents - Cash and cash equivalents consist of cash in banks and all short-term investments with initial maturities of three months or less. Inventories - Raw materials, work-in-progress, and finished goods are stated at the lower of cost or market using the first-in, first-out method. Property and Equipment - Property and equipment consist of compressors currently being leased and available for lease. Property and equipment are recorded at cost. Depreciation is computed using the straight-line method based on the following estimated useful lives: Gas Jack Compressors 7 years Vehicles 5 years Other Equipment 7 years Revenue Recognition - Sales revenue is recorded upon shipment of sold compressors. Revenues from lease and service agreements are recorded as earned over the lives of the respective contracts. Income Taxes - Deferred income taxes arise primarily from temporary differences due to depreciation and from utilization of tax credits. 2. INVENTORIES Inventories consist of the following at December 31, 1998 and 1997: 1998 1997 Raw materials $315,792 $222,639 Work-in-progress 45,461 44,185 -------- -------- $361,253 $266,824 ======== ======== F-5 3. NOTES PAYABLE The Company has a $600,000 revolving line of credit with a bank which expires June 30, 1999. Interest is to be paid monthly on outstanding balances at the bank's reference rate (7.25% at December 31, 1998). Collateral for the line of credit includes the Company's lease contracts, inventory, leased Gas Jack Compressors, accounts receivable, equipment and general intangibles. As of December 31, 1998, $475,000 had been drawn on the line. In March 1992, the Company completed a private placement for $250,000 in debentures to certain stockholders. The Company repaid the debentures in full on March 31, 1997. 4. INCOME TAXES The components of income taxes are set forth as follows: 1998 1997 Current $143,399 $146,624 Deferred 68,851 107,404 -------- -------- Income taxes $212,250 $254,028 ======== ======== The actual provision for income taxes differs from the amount computed by applying the Federal tax rates due principally to expenses which are not tax deductible and the effect of state taxes. Deferred taxes relating to temporary differences are primarily the result of tax depreciation being greater than book depreciation on equipment and leased units. The components of the net deferred taxes are as follows:
1998 1997 Deferred tax assets: Alternative minimum taxes $17,349 $36,147 Other 26,329 11,385 --------- --------- Total deferred tax asset 43,678 47,532 Deferred tax liabilities: Difference between book and tax basis of property resulting from difference in book and tax depreciation (209,385) (144,388) --------- --------- Net deferred tax liability $(165,707) $ (96,856) ========= =========
5. STOCK OWNERSHIP AND INCENTIVE STOCK OPTION PLANS During 1992, the Company implemented a Stock Ownership Plan (the "Ownership Plan") to reward employees for their service to the Company. Under the Ownership Plan, 80,000 shares of $0.10 par value common stock were awarded to the employees on July 1, 1992 by the Board of Directors, with F-6 a four-year vesting period. As of December 31, 1998 and 1997, 80,000 shares were vested under the Ownership Plan. According to the Ownership Plan, all shares vested are callable or putable within one year after the employee's termination, based on the book value per share, as determined by the quarter ended immediately preceding the exercise of the call or put. Compensation expense amounts relating to the Ownership Plan were expensed as of December 31, 1996. The Company has an Incentive Stock Option Plan (the "Option Plan") and has reserved 250,000 shares of the Company's common stock $.10 par value for issuance under the Option Plan. The Option Plan limits participation to employees, and the option exercise price is established by the Board of Directors at a price not less than 100% of the fair value of the stock on the date of grant for employees who own less than 10% of the total combined voting power of all classes of stock of the Company. The option exercise price for options granted to employees who own more than 10% of the total combined voting power of all classes of stock of the Company is established by the Board of Directors at a price not less than 110% of the fair value of the stock on the date of grant, and such granted options expire five years from the date of grant. The maximum aggregate fair value of common stock for which any employee may be granted options which are exercisable for the first time in any one calendar year shall not exceed $100,000. Options granted under the Option Plan are exercisable at such times as the Board of Directors shall determine, and the option period shall not be for more than ten years from the date of grant. No options shall be granted after the date which is ten years from the effective date of the Option Plan. The Company applies Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock ownership and option plans, as permitted by Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation. SFAS No. 123 requires disclosure of pro forma net income as if the Company had adopted the fair value provisions of SFAS No. 123. There were no options nor shares granted under the Ownership Plan or Option Plan for the years ended December 31, 1998 and 1997, respectively. 6. RELATED PARTIES Included in other current assets are advances made to employees for travel and entertainment costs. At December 31, 1998 and 1997, employee advances totaled approximately $11,000 and $11,500, respectively. The Company sold and leased certain units to another company affiliated through common ownership and management. The sales and lease revenue from this affiliate for 1998 and 1997 was approximately $97,000 and $89,000, respectively. The accounts receivable at December 31, 1998 and 1997, from this affiliate were approximately $10,300 and $7,300, respectively. The Company obtained group insurance for all employees through this affiliate during 1997 which amounted to approximately $51,000. Group insurance was obtained from a third party during 1998. The Company retained a firm in August 1997 to seek a suitable purchaser for the Company. A retainer of $20,000 was paid by the Company and set up as a note receivable from stockholders to be repaid from proceeds realized upon the ultimate sale of the Company. Interest on the note accrues at 9.0%. The Company also has a promissory note of $28,000 from an officer and stockholder of the Company, payable in full on July 1, 2001. The interest rate of that note is also 9.0% and the note is secured by 40,000 shares of the Company's stock. Due to the related party nature of these transactions, the Company has classified the notes receivable within the stockholders' equity section of the financial statements rather than as a separate asset. F-7 7. LEASE AGREEMENTS Facilities Leases - The Company has a month-to-month lease for its manufacturing facilities. Vehicle Leases - The Company leases certain pickup trucks with terms ranging up to two years. As of December 31, 1998, future annual minimum lease payments under noncancelable operating leases were approximately $67,000 and $11,000 for 1999 and 2000, respectively. Rent expense under all operating leases was approximately $110,000 and $78,000 for 1998 and 1997, respectively. 8. MAJOR CUSTOMERS During 1998, the Company had sales to one customer which amounted to approximately 11% of the Company's total 1998 revenue. During 1997, the Company had sales to one customer which amounted to approximately 18% of the Company's total 1997 revenue. 9. GAS JACK COMPRESSOR LEASES The Company leases Gas Jack Compressors to customers on terms ranging from two weeks to one year. As of December 31, 1998, future minimum lease payments receivable under noncancelable operating leases were approximately $382,000 for 1999. F-8 Emerging Alpha Corporation and Subsidiaries Pro Forma Unaudited Condensed Consolidated Balance Sheet as of September 30, 1999
Pro Forma Gas Jack, Emerging GJ Pro Forma Consolidated Inc. Alpha Measurement Entries Totals ASSETS Current Assets: Cash and cash equivalents $66,880 $291,308 $(229,644) $128,544 Accounts receivable and other 466,450 (20,366) 446,084 Inventories 745,048 28,397 773,445 Total current assets 1,278,378 291,308 28,397 (250,010) 1,348,073 Property and Equipment, net 2,700,325 165,028 (50,433) 2,814,920 Other Assets 144,410 38,000 182,410 Total Assets 4,123,113 291,308 193,425 (262,443) 4,345,403 LIABILITES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accruals 377,600 600 17,135 395,335 Notes payable, current portion 477,666 22,310 382,334 882,310 Total current liabilities 855,266 600 39,445 382,334 1,277,645 Note Payable, long-term portion 182,344 2,200 2,057,656 2,242,200 Deferred Taxes, net 201,520 201,520 Stockholders' Equity 2,883,983 290,708 151,780 (2,702,433) 624,038 Total Liabilities and Stockholders' Equity 4,123,113 291,308 193,425 (262,443) 4,345,403
See notes to unaudited pro forma condensed financial statements. F-9 Emerging Alpha Corporation and Subsidiaries Pro Forma Unaudited Condensed Consolidated Statement of Income For the year ended March 31, 1999
Historical Gas Jack Alpha March 31, 1999 Year Year Pro Forma 12/31/98 3/31/99 Pro Forma Consolidated (Audited) (Audited) Entries Totals Revenues $3,267,862 $15,633 $3,283,495 Cost of Sales and Expenses: Cost of sales 2,184,593 14,256 2,198,849 and operating expenses Depreciation expense 526,487 526,487 Interest expense 26,651 $246,749 273,400 Total cost of sales and expenses 2,737,731 14,256 246,749 2,998,736 Income Before Taxes 530,131 1,377 (246,749) 284,759 Income Taxes 212,250 -- (98,700) 113,550 Net Income 317,881 1,377 (148,049) 171,209 Earnings per Share: Basic $0.02 $2.23 Diluted $0.02 $2.11 Weighted Average Number of Shares Outstanding: Basic 76,933 76,933 Diluted 81,233 81,233
See notes to unaudited pro forma condensed financial statements. F-10 Emerging Alpha Corporation and Subsidiaries Pro Forma Unaudited Condensed Consolidated Statement of Income For the Nine Months Ended September 30, 1999
Pro Forma Historical Pro Forma Consolidated Gas Jack Alpha Entries Totals Revenues $2,542,886 $6,874 $2,549,760 Cost of Sales and Expenses: Cost of sales 1,779,230 6,045 1,785,275 and operating expenses Depreciation expense 459,465 459,465 Interest expense 27,845 177,205 205,050 Total cost of sales and expenses 2,266,540 6,045 177,205 2,449,790 Income Before Taxes 276,346 829 (177,205) 99,970 Income Taxes 110,537 (70,882) 39,655 Net Income 165,809 829 (106,323) 60,315 Earnings per Share: Basic $0.01 $0.78 Diluted $0.01 $0.74 Weighted Average Number of Shares Outstanding: Basic 76,933 76,933 Diluted 81,233 81,233
See notes to unaudited pro forma condensed financial statements. F-11 Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements (1) Basis of Presentation The accompanying unaudited pro forma condensed consolidated financial statements (the "Pro Forma Financial Statements) are based on adjustments to historical consolidated financial statements of Emerging Alpha Corporation ("Alpha") to give effect to the acquisitions described in Note 3 (the "Acquired Companies"). The pro forma statements of income assume all acquisitions described in Note 3 were consummated as of the beginning of the periods presented. The historical financial statements of Alpha for the year ended March 31, 1999 and of Gas Jack for the year ended December 31, 1998 were used in preparing the pro forma statements of income for the year ended March 31, 1999. The historical financial statements of Alpha for the six months ended September 30, 1999 and of Gas Jack for the nine months ended September 30, 1999 were used in preparing the pro forma statements of income for the nine months ended September 30, 1999. The pro forma statements of income do not include any results for GJ Measurement as the amounts were immaterial and undeterminable. The pro forma statements of income are not necessarily indicative of results that would have occurred had the acquisitions been consummated as of the beginning of the periods presented or that might be attained in the future. Certain information normally included in the financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Pro Forma Financial Statements should be read in conjunction with the historical consolidated financial statements of the Company and "Management's' Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K for the year ended March 31, 1999 and its Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 1999 and September 30, 1999 previously filed with the SEC. (2) Earnings per Share Basic earnings per share were computed by dividing net income by the weighted average number outstanding during the periods assuming that the 33,333 shares of common stock issued for the acquisition of GJ Measurement were issued at the beginning of the periods. The diluted earnings per share were computed using the same method as basic earnings except for including the 4,300 shares of Alpha common stock options outstanding during the periods. (3) Acquisitions On October 29, 1999, pursuant to the terms of the Stock Purchase Agreement by and among Emerging Alpha Corporation ("Emerging Alpha") and the stockholders of Gas Jack, Inc., an Oklahoma corporation ("Gas Jack"), Emerging Alpha acquired all of the outstanding capital stock of Gas Jack for $2.7 million cash. The purchase price was financed through a $2.8 million term loan facility provided by Hibernia National Bank to Emerging Alpha. In addition, Emerging Alpha and Gas Jack entered into a $1.0 million working capital facility with Hibernia National Bank primarily to be used to finance the working capital requirements of Gas Jack. In addition, on October 29, 1999, Emerging Alpha acquired all of the outstanding units of GJ Measurement, L.L.C., an Oklahoma limited liability company, for 33,333 shares of Emerging Alpha common stock. F-12 (4) Adjustments to Historical Financial Statements The following pro forma adjustments have been made to the historical financial statements as if all the acquisitions described in Note 3 were consummated as of the beginning of the periods presented: (a) To reflect the additional equity issued, cash used, debt repaid, debt incurred and related changes in interest expense resulting from the acquisitions. (b) To reflect the change in income taxes related to the pro forma adjustments. F-13 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be filed on its behalf by the undersigned hereunto duly authorized. EMERGING ALPHA CORPORATION Date: December 21, 1999 By: /s/ JERRY W. JARRELL ------------------------------ Jerry W. Jarrell Chief Financial Officer S-I -----END PRIVACY-ENHANCED MESSAGE-----