<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended JUNE 30, 1998 Commission File Number 33-21409
------------- --------
DELTA CLEARING CORP.
--------------------
(exact name of registrant as specified in its charter)
DELAWARE 13-3456486
-------- ----------
(state or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
525 WASHINGTON BOULEVARD
JERSEY CITY, NEW JERSEY 07310
------------------------ -----
(address of principal executive offices) (zip code)
(201) 418-8900
--------------
(telephone number)
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
--- ---
This Form 10-Q pertains to 250,000 put and call option contracts on U.S.
Treasury securities to be issued from time to time by Delta Clearing Corp.
Indicate number of shares outstanding of each of the issuer's classes of
common stock as of August 13, 1998: 900,000 SHARES OF COMMON STOCK, PAR VALUE
$.01 PER SHARE.
<PAGE>
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION PAGE
----
ITEM 1 Financial Statements
Statements of Financial Condition
at June 30, 1998 and December 31, 1997 2
Statements of Operations,
six months ended June 30, 1998 and 1997 3
Statements of Operations,
three months ended June 30, 1998 and 1997 4
Statements of Cash Flows,
six months ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
ITEM 1 - 5 Not Applicable 12
ITEM 6 Exhibits and Reports on Form 8-K 12
SIGNATURE 13
<PAGE>
DELTA CLEARING CORP.
STATEMENTS OF FINANCIAL CONDITION
JUNE 30, 1998 AND DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
(UNAUDITED)
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 3,694,807 $ 2,872,259
Margin accounts of participants 114,559,544 62,909,574
Investment in U.S. Treasury securities,
at amortized cost -- 1,948,178
Prepaid expenses and other current assets 242,470 203,110
------------- -------------
Total current assets 118,496,821 67,933,121
OFFICE FURNITURE AND EQUIPMENT - At cost, net of accumulated depreciation of
$381,522 at June 30, 1998 and $333,236 at December 31, 1997 202,235 218,506
CAPITALIZED SOFTWARE DEVELOPMENT COSTS - At cost, net of amortization of
$87,120, at June 30, 1998 and $30,270 at December 31, 1997 382,509 353,128
OTHER ASSETS 25,849 25,849
------------- -------------
TOTAL ASSETS $ 119,107,414 $ 68,530,604
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Margin Payable $ 114,559,544 $ 62,909,574
Accounts payable and accrued expenses 494,022 349,416
Deferred revenue 53,961 42,438
------------- -------------
Total current liabilities 115,107,527 63,301,428
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SUBORDINATED BORROWINGS 3,200,000 3,200,000
------------- -------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 2,500,000 shares authorized,
900,000 shares issued and outstanding 9,000 9,000
Additional paid-in-capital 9,210,600 9,210,600
Accumulated deficit (8,400,828) (7,081,214)
------------- -------------
Total stockholders' equity 818,772 2,138,386
Less unamortized deferred stock options (18,885) (109,210)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 119,107,414 $ 68,530,604
============= =============
</TABLE>
See Notes to Financial Statements.
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<PAGE>
DELTA CLEARING CORP.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
- ------------------------------------------------------------------------------
1998 1997
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REVENUES:
Clearing Fees:
Repurchase and reverse repurchase agreements $ 195,529 $ 541,638
Options 150 2,750
Investment Income 115,329 132,530
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Total revenues 311,008 676,918
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EXPENSES:
Clearing expenses 243,300 624,370
Employee compensation and benefits 716,216 612,989
Professional fees 168,233 246,495
Depreciation and amortization 195,461 71,274
Occupancy 74,272 74,936
Interest expense 90,277 36,872
Other 142,862 193,523
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TOTAL EXPENSES 1,630,621 1,860,459
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NET LOSS $(1,319,613) $(1,183,541)
=========== ===========
NET LOSS PER SHARE BASIC $ (1.47) $ (1.32)
=========== ===========
See Notes to Financial Statements.
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<PAGE>
DELTA CLEARING CORP.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
- ------------------------------------------------------------------------------
1998 1997
----------- -----------
REVENUES:
Clearing Fees:
Repurchase and reverse repurchase agreements $ 152,382 $ 200,172
Options -- 750
Investment Income 54,744 65,073
----------- -----------
Total revenues 207,126 265,995
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EXPENSES:
Clearing expenses 158,235 287,615
Employee compensation and benefits 351,423 294,477
Professional fees 78,329 132,800
Depreciation and amortization 74,666 35,564
Occupancy 37,452 36,950
Interest expense 44,231 22,176
Other 86,855 133,323
----------- -----------
TOTAL EXPENSES 831,191 942,905
----------- -----------
NET LOSS $ (624,065) $ (676,910)
=========== ===========
NET LOSS PER SHARE BASIC $ (0.69) $ (0.75)
=========== ===========
See Notes to Financial Statements.
-4-
<PAGE>
DELTA CLEARING CORP.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,319,613) $(1,183,541)
Adjustments to reconcile net loss to
net cash used in operating activities:
Accretion of interest on investments in
U.S. Treasury securities (51,822) (90,515)
Depreciation and amortization 195,461 71,274
(Increase) Decrease in prepaid expenses
and other current assets (39,360) 74,273
Increase (Decrease) in deferred revenue 11,523 (27,089)
Increase in accounts payable and
accrued expenses 144,606 567,869
----------- -----------
Net cash used in operating activities (1,059,205) (587,729)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from (payments for):
Purchase of U.S. Treasury securities -- (4,710,551)
Maturity of U.S. Treasury securities 2,000,000 4,853,000
Purchase of office furniture and equipment (32,015) (27,881)
Capitalized software development costs (86,232) --
----------- -----------
Net cash provided by investing activities 1,881,753 114,568
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of subordinated debt -- 1,125,500
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 822,548 652,339
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 2,872,259 1,670,883
----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 3,694,807 $ 2,323,222
=========== ===========
SUPPLEMENTAL CASH FLOWS DISCLOSURES:
Interest paid $ -- $ --
=========== ===========
</TABLE>
See Notes to financial statements.
-5-
<PAGE>
DELTA CLEARING CORP.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
1. BASIS OF PRESENTATION:
----------------------
The accompanying unaudited financial statements have been prepared in
accordance with applicable requirements for the preparation of quarterly
reports on Form 10-Q. In the opinion of management of Delta Clearing Corp.
(the "Company") all adjustments (consisting of only normal recurring accruals)
that are necessary for a fair presentation of the financial position and
results of operations for the interim periods have been included. Such results
of operations are not necessarily indicative of the results to be anticipated
for the entire year or any other interim period.
2. COMMITMENTS AND CONTINGENCIES:
------------------------------
The Company currently provides two services to its customers
("Participants"): The clearance and settlement of transactions involving U.S.
Treasury and mortgage-backed securities sold under agreement to repurchase and
U.S. Treasury and mortgage-backed securities purchased under agreement to
resell (collectively "Repos"); and the issuance, clearance and settlement of
put and call options written on U.S. Treasury securities ("Options"). In
conjunction with the Company's Options business, the Company has the authority
to issue up to 250,000 option contracts. The Company issues each put option or
call option and interposes itself in each transaction, acting as writer to
each purchasing Participant and as the purchaser of a matching put or matching
call from each writing Participant. The Company acts solely as an intermediary
in principal transactions, maintaining a "matched book" for both Repos and
Options. The Company, therefore, is not subject to market risk with respect to
these transactions, except to a limited extent in the event of a default by a
Participant in the performance of its obligations. To control this risk, the
Company collects, on a daily or intra-day basis, margin from Participants who
clear and settle Repos or Options through the Company which is deemed
sufficient to cover adverse movements in the value of these positions. To
further control this risk, the Company enforces compliance with its clearing
agency procedures (the "Procedures"), which mandate regulatory and internal
guidelines, control maximum system exposure and establish Participant capital
adequacy standards.
The Company maintains a credit enhancement facility (the "CEF") which is
currently comprised of a $100 million surety bond issued by MBIA Insurance
Corporation ("MBIA"), (with maximum coverage of any Participant equal to $30
million), to secure payment of the obligations owed to the Company by a
Participant in the event of a failure by a Participant in connection with any
financial deficiency associated with the liquidation of a Participant account
with regard to such Participant's default. The credit facility provides an added
measure of protection for the Company and is not a requirement under Section 17A
of the Securities Exchange Act of 1934. Under the credit enhancement facility
agreement, as amended, the Company is required to maintain a net worth (excess
of all assets over all liabilities, excluding up to $4 million of subordinated
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<PAGE>
notes issued to shareholders of the Company) of $4 million. At June 30, 1998 the
net worth of the Company as defined under the CEF was $4,018,772. Since the
Company continues to incur losses, MBIA was notified that a reduction of the net
worth maintenance requirement would be necessary. On August 13, 1998, the
Company was granted such a reduction to $3,500,000. The Company will continue to
monitor the net worth requirement under the CEF and shall request additional
reductions in the net worth requirement, or request additional subordinated
borrowings from shareholders at such time as the Board of Directors of the
Company deems necessary. The Company believes attaining continued relief from
MBIA or securing additional borrowings from shareholders sufficient to maintain
the CEF is achievable for the foreseeable future. Under the terms of the
Procedures, each Participant account is a party to the CEF and the Company is
the beneficiary. Accordingly, any reimbursement obligation arising as a
consequence of a draw under the CEF becomes the obligation of the individual
defaulting Participant. The credit enhancement facility expires on January 27,
2001.
At June 30, 1998 and 1997, the Company had a matched book of Repos with
notional amounts of $15.852 billion and $22.584 billion, respectively. At June
30, 1998 and 1997, the Company had no issued matched put and call options on
U.S. Treasury securities outstanding.
On October 18, 1995, the Company purchased various software and hardware
relating to the operation of its clearing business (the "Platform") from Exco
RMJ Trading Corp. (a subsidiary of Exco, plc.) for $250,000. This amount is
included in office furniture and equipment on the statements of financial
condition. As additional compensation for its purchase of the Platform and in
consideration for an agreement from Exco RMJ Trading Corp. not to compete with
the Company, the Company agreed to pay 20% of its pre-tax operating income
(exclusive of interest income) for five full fiscal years from the date of
purchase and certain other amounts up to an additional maximum price of $2.25
million. Through June 30, 1998, no contingent amounts have been paid to Exco
RMJ Trading Corp.
The Company leases its principal executive office space under a lease
that expires on February 4, 2007. The lease agreement calls for the Company to
make rental payments totaling approximately $1,333,000 over the remaining term
of the lease.
On June 30, 1998, the Company had subordinated borrowings from shareholders
in amounts totaling $2,604,000 from Intercapital Group Limited (INCAP) and
$596,000 from Dow Jones Markets Holdings, Inc. These amounts are payable on
demand, and bear interest payable equal to the London Interbank Offered Rate
("LIBOR") for three-month deposits of U.S. dollars. On May 6, 1998, INCAP, the
holder of subordinated notes totaling $2,604,000 payable by the Company,
amended such notes to provide that INCAP shall not be entitled to make demand
for payment on or prior to January 1, 2000. At June 30, 1998, LIBOR was
5.7188%. In connection with the increase in subordinated debt extended by two of
its existing shareholders INCAP and Dow Jones, the Company issued stock options
during 1997 to these shareholders. These options grant INCAP and Dow Jones the
right to purchase 691,068 and 158,203 shares, respectively, of the Company's
common stock. The options are exercisable at any time, at a price of $.01 per
share and expire on December 31, 1998. The options are valued at $219,600, which
represents the change in the book value of the shares held by the third
shareholders (Expo plc) assuming all options were exercised and the additional
shares issued. The options are being amortized over a one-year period, which
represents the term of the additional subordinated debt.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The Company commenced operations on January 12, 1989 immediately
following the issuance of the Company's Clearing Agency Order (the "Order") by
the Securities and Exchange Commission ("the Commission"). Also following the
issuance of the Order, the Company commenced solicitation of a number of
qualified financial institutions as Participants. At June 30, 1998, 28
Participants were enrolled and authorized by the Company for clearance and
settlement of Repos transactions while 36 Participants were enrolled and
authorized by the Company for clearance and settlement of Options
transactions. These Participant enrollment levels reflect little change from
June 30, 1997 as the Company continues to focus on the development and
enhancement of new and existing services rather than an expansion of its
Participant base. During the three months ended June 30,1998, the Company's
clearance and settlement services for mortgage backed Repos continued to
experience modest growth through its second full quarter of operation.
Additionally, the Company's U.S. Treasury Repos product realized a modest
resurgence in activity throughout the three month period. The resurgence in
U.S. Treasury Repos activity was, in part, the result of the complimentary
mortgage backed Repos services now offered by the Company. The Company
anticipates that a renewed growth in its Participant base may occur should
interest in the Company's new and existing services continue. The ability of
the Company to continue to develop market share is still to be determined.
Regarding the company's Options business, efforts to reintroduce these clearance
and settlement services have not met with success. Through May 31, 1998 the
Company experienced only minimal activity and performed an evaluation of the
cost / benefit associated with continuing to offer such services. As a
consequence of that evaluation, effective June 1, 1998, the Company notified the
Commission that it was no longer cost beneficial to continue offering such
services, and until further notice would not accept Options trades for clearance
and settlement.
The Company has performed a comprehensive review of its computer
applications to consider the potential impact of date sensitive calculations
related to the year 2000 ("Y2K"). As a result of this review, the Company has
determined that the operational systems relating to its Repos applications are
in full Y2K compliance. However, the Company has adopted a Y2K project plan to
provide comprehensive documentation in support of this assertion. This project
plan undertakes to acquire all vendor Y2K compliance certifications and, where
applicable, to upgrade to certified versions of vendor software. Additionally,
all requisite testing and potential modifications are contemplated for such
upgrades. Upgrades will be performed in accordance with current operation
system and database maintenance agreements. To further ensure compliance with
regard to these applications the Company has appointed a Y2K committee that
has adopted a rigorous agenda for monthly reevaluation of ongoing and new
transactions in a test environment. This test environment will provide a
complete universe of transaction types to identify any diversion from Y2K
compliance. The Y2K committee is comprised of Company personnel and it is
anticipated that internal staff will largely complete this project. The
Company does not expect to spend any significant amounts with outside
contractors relative to the completion of these tasks.
-8-
<PAGE>
Regarding the operational systems relating to the Company's Options
application, Y2K conversion will be required. The Company has developed a plan
to rewrite the Options application onto the platform currently utilized by the
Repos applications. As discussed above, the Company has determined that it is
no longer cost beneficial to continue offering such services, and until
further notice will not accept Options trades for clearance and settlement.
Should the Company decide to re-introduce the Options business, it will
implement the Options application rewrite plan. Management believes that with
the planned rewrite of the Options application, the Y2K compliance issue will
be resolved and will not pose significant operational problems for the
Company. Rewrite and testing of the Options application is expected to cost
approximately $100,000. Approximately 90% of this estimate relate to internal
staff costs. Management believes that all costs associated with Y2K will not
have a material effect on the Company's financial condition.
For the six months ended June 30, 1998, the Company cleared approximately
$529 billion notional of matched U.S. Treasury Repos versus approximately
$1,617 billion for the six months ended June 30, 1997. While the Company
continued to experience the effects of competition associated with these
services, some market share was regained during the current period. Such
resurgence, as mentioned, above may be attributable, in part, to the
complimentary mortgage backed Repos services now offered by the Company.
During the six months ended June 30, 1998, the Company continued to experience
moderate growth in activity relative to its mortgage backed Repos service,
clearing approximately $74 billion where the Company did not offer such
service in the six months ended June 30, 1997.
The Company also issued 50 matched option contracts to Participants
during the six months ended June 30, 1998. However, as discussed above,
effective June 1, 1998, the Company elected to discontinue acceptance of
Options trades for clearance and settlement. Since activity relative to the
Company's Options business was at best minimal, the Company does not
anticipate any noticeable reduction in revenue as a result of this decision.
On June 30, 1998, margin accounts of Participants held by the Company
amounted to approximately $115 million. During the six months ended June 30,
1998 margin accounts of Participants held by the Company fluctuated from a
high of about $160 million to a low of approximately $56 million due to
Participants' clearing activity.
For the six months ended June 30, 1998 and 1997, the Company reported
total revenue of $311,008 and $676,918, respectively, reflecting a decrease of
approximately 54% in 1998. This decrease included an approximate 64% decrease
in clearing fees earned on the clearance and settlement by the Company of
Repos to $195,529 in 1998 from $541,638 in 1997. U.S. Treasury Repos clearing
fees decreased to $127,160 in 1998 from $541,638 in 1997, primarily reflecting
the effects of competition, but mitigated however, by the modest resurgence of
activity as discussed above. The Company's mortgage backed Repos service,
introduced by the Company on October 20, 1997, accounted for $68,369 of clearing
fee revenue during the six months ended June 30, 1998. Options clearing fees
fell from $2,750 in 1997 to $150 in 1998 reflecting only sporadic instances of
trades submitted to the Company for clearance and settlement in both the six
months ended June 30, 1998 and
-9-
<PAGE>
1997. Investment income of $115,329 in 1998 decreased approximately 13% from
$132,530 in 1997 as a result of lower available funds for investment.
Clearing expenses are comprised, principally, of fees payable to the
providers of the Company's CEF, as well as fees charged by the Company's
clearing bank. The cost of the CEF amounted to $124,918 for the six months
ended June 30, 1998 and $418,750 for the six months ended June 30, 1997. This
decrease of approximately 70% was the result of a fee reduction granted by the
CEF provider in April 1997 coupled with the Company's decision to effectuate a
60% reduction in the coverage amount maintained under the CEF from $250
million to $100 million in December 1997. The decision to reduce the coverage
amount was based on the volume of clearance activity. As the volume of
clearance activity increases, the Company will reevaluate the coverage amount
and increase such when and if deemed appropriate. Clearing bank fees were also
significantly reduced decreasing approximately 60% from $205,620 in 1997 to
$81,932 in 1998 reflecting the diminished volume of clearance activity
experienced by the Company. For the six months ended June 30, 1998, the
Company also incurred other clearing costs amounting to $36,450 for pricing
services purchased by the Company to facilitate its mortgage backed Repos
business. Such costs were not present during the six months ended June 30,
1997.
Professional fees decreased approximately 32% to $168,233 for the six
months ended June 30, 1998 versus $246,495 in 1997. In 1997 the Company
continued the development of several new products incurring significant legal
expense relative to regulatory rule filings with the Commission. While
additional development occurred in 1998, such activity was much reduced.
Employee compensation and benefits during the six months ended June 30, 1998,
increased by approximately 17% to $716,216 versus $612,989 in 1997. This
increase was the result of the Company's creation of an internal systems
development department in the second half of 1997. Depreciation and
amortization increased approximately 174% from $71,274 for the six months
ended June 30, 1997 to $195,461 in 1998. Included in 1998 is $90,325 of
amortization of options issued to shareholders as well as $56,850 of amortized
software development costs. Such amortization of options and software
development costs was not present during the six months ended June 30, 1997.
Depreciation of the Company's fixed assets amounted to $48,286 in 1998 versus
$71,274 in 1997. This approximate 32% decrease reflects certain systems
components having become fully depreciated in the current period. Interest
Expense increased approximately 145% from $36,872 for the six months ended June
30, 1997 to $90,277 for the six months ended June 30, 1998. This increase is the
result of a three-fold increase in subordinated borrowings in 1998 vs. 1997.
Other expenses decreased approximately 26% in 1998 to $142,862 from $193,523 in
1997. This decrease reflects the Company's continued efforts to cut costs in the
area of other general and administrative expenses.
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<PAGE>
The Company's liquidity currently comes from two sources. The liquidity
for the clearance of Repos is provided through the Participant's performance
of their agreements and, to the extent required, a liquidity facility in the
amount of $250 million provided by the Bank of New York. All other liquidity
needs are met through the Company's capital resources of approximately $.8
million obtained from the issuance of its Common Stock in 1989. Due to
operating losses associated with the Company's Repos clearing services and
increased competition in this area, the Company's capital has been reduced.
Through June 30, 1998, the Company had obtained subordinated borrowings from
shareholders in amounts totaling $2,604,000 from Intercapital Group Limited and
$596,000 from Dow Jones Markets Holdings, Inc., payable on demand. On May 6,
1998, Intercapital Group Ltd. agreed to amend the earliest demand date on its
notes to January 1, 2000.
While the Company expects that its existing capital resources and
subordinated borrowings will be sufficient to meet its capital and liquidity
requirements for the foreseeable future, the Company's management has engaged
in active discussions with a number of institutions with respect to such
institutions obtaining an equity shareholding in the Company. While management
cannot predict the success of these discussions or the timing of equity
participation, if any, it is the Company's intention to secure additional
capital through such equity participation. In the interim, on April 3, 1998,
the Company entered into an agreement with Intercapital Group Ltd. whereby
Intercapital Group Ltd. affirmed that it would make available financial
resources to the Company in order for the Company to maintain compliance with
the CEF through January 1, 1999. Such financial resources are to be made
available at such time and in such amounts as the Board of Directors of the
Company identifies, which is commensurate with the then prevailing level of
business activity effected through and by the Company. At June 30, 1998 the net
worth of the Company as defined under the CEF was $4,018,772. Since the Company
continues to incur losses, MBIA was notified that a reduction of the net worth
maintenance requirement would be necessary. On August 13, 1998, the Company was
granted such a reduction to $3,500,000. The Company will continue to monitor the
net worth requirement under the CEF and shall request additional reductions in
the net worth requirement, or request additional subordinated borrowings from
shareholders at such time as the Board of Directors of the Company deems
necessary. The Company believes attaining continued relief from MBIA or securing
additional borrowings from shareholders sufficient to maintain the CEF is
achievable for the foreseeable future. In addition to these measures, management
hopes that new related products, such as mortgage backed Repos, recently
introduced, coupled with additional products planned for the future, will
continue to reinvigorate the growth of its existing clearance services while
providing additional sources of revenue.
-11-
<PAGE>
DELTA CLEARING CORP.
PART II. OTHER INFORMATION
ITEM 1 - 5 NOT APPLICABLE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit No.
-----------
27 Financial Data Schedule
(B) FORM 8-K
No reports on Form 8-K have been filed during the quarter
for which this Report is filed.
-12-
<PAGE>
DELTA CLEARING CORP.
SIGNATURE
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, on August 13, 1998.
DELTA CLEARING CORP.
By: /s/Stephen Lynner
----------------------
Stephen K. Lynner
President
By: /s/Ronald Buckner
---------------------------
Ronald H. Buckner
Chief Financial Officer
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,694,807
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 118,496,821
<PP&E> 202,235
<DEPRECIATION> 381,522
<TOTAL-ASSETS> 119,107,414
<CURRENT-LIABILITIES> 115,107,527
<BONDS> 3,200,000
0
0
<COMMON> 9,000
<OTHER-SE> 790,887
<TOTAL-LIABILITY-AND-EQUITY> 119,107,414
<SALES> 195,679
<TOTAL-REVENUES> 311,008
<CGS> 0
<TOTAL-COSTS> 1,049,793
<OTHER-EXPENSES> 580,828
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,319,613)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,319,613)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,319,613)
<EPS-PRIMARY> (1.47)
<EPS-DILUTED> (1.47)
</TABLE>
