U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-30365-C
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EMERALD CAPITAL INVESTMENTS, INC.
(Name of Small Business Issuer as specified in its charter)
Delaware 36-3693936
(State or other jurisdiction of (I.R.S. employer
incorporation or organization identification No.)
330 East Main Street, Barrington, IL 60010
(Address of principal executive offices)
Registrant's telephone no., including area code: (708) 990-0244
N/A
Former name, former address, and former fiscal year, if changed
since last report.
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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
.
Common Stock outstanding at November 5, 1996 - 5,808,698 shares of $.001 par
value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
EMERALD CAPITAL INVESTMENTS, INC.
For the Quarter ended September 30, 1996.
The following financial statements and schedules of the registrant and
its consolidated subsidiaries are submitted herewith:
PART I - FINANCIAL INFORMATION
Page of
Form 10-QSB
Item 1. Financial Statements:
Balance Sheet--September 30, 1996 3
Statements of Operations--for the three months and nine months
ended September 30, 1996 and September 30, 1995 4
Statements of Cash Flows--for the three months and nine months
ended September 30, 1996 and September 30, 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II - OTHER INFORMATION
Page
Item 1. Legal Proceedings 9
Item 2. Changes in the Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Results of Votes of Security Holders 9
Item 5. Other Information 9
Item 6(a). Exhibits 9
Item 6(b). Reports on Form 8-K 9
2
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Balance Sheet
September 30, 1996
(Unaudited)
Assets
Current assets - cash $ 17,626
Liabilities and Stockholders' Equity
Current liabilities - accounts payable $ 270
Stockholders' equity:
Common stock - $.001 par value.
100,000,000 shares authorized;
5,808,698 shares issued and
outstanding, respectively 5,809
Additional paid-in capital 2,600,656
Retained deficit (2,589,109)
Total stockholders' equity 17,356
Total liabilities and stockholders'
equity $ 17,626
See accompanying notes to financial statements.
3
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Amounts Since
December 29,
1995
(Commencement
Three Months Ended Nine Months Ended of the
September 30, September 30, Development
1996 1995 1996 1995 Stage)
<S> <C> <C> <C> <C> <C>
Revenue $ - - - - -
Selling, general and administrative 308 - 5,604 - 5,604
Loss from continuing operations (308) - (5,604) -
(5,604)
Discontinued operations:
Loss from discontinued operations - (401,834) - (1,078,620) -
Income on disposal of discontinued
operations - - - - -
Loss from discontinued operations - (401,834) - (1,078,620) -
Net loss $(308) (401,834) (5,604) (1,078,620) (5,604)
Net loss per share continuing
operations $(.00) (.00) (.00) (.00) (.00)
Net loss per share discontinued
operations (.00) (.07) (.00) (.20) (.00)
$(.00) (.07) (.00) (.20) (.00)
Weighted average number of shares
outstanding 5,808,698 5,480,787 5,808,698 5,374,033 5,808,698
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Amounts Since
December 29,
1995
(Commencement
Nine Months Ended of the
June 30, Development
1996 1995 Stage)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (5,604) (1,078,620) (5,604)
Adjustment to reconcile net loss
to net cash used in operating
activities:
Loss on discontinued operations - 1,078,620 -
Decrease in accounts payable (6,770) - (6,770)
Net cash used in
operating activities (12,374) - (12,374)
Cash flows from investing activities -
Payments on receivable 30,000 -
30,000
Cash flows from financing activities - - - -
Net increase in cash 17,626 - 17,626
Cash, beginning of period - - -
Cash, end of period $ 17,626 - 17,626
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
EMERALD CAPITAL INVESTMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
(1) The unaudited financial statements include the accounts of Emerald Capital,
Inc., and include all adjustments (consisting of normal recurring items)
which are, in the opinion of management, necessary to present fairly the
financial position as of September 30, 1996 and the results of operations
for the three and nine months ended September 30, 1996 and 1995, cash flows
for the nine months ended September 30, 1996 and 1995 and cumulative
amounts since inception of the development stage through September 30,
1996. The results of operations for the three and nine months ended
September 30, 1996 are not necessarily indicative of the results to be
expected for the entire year.
(2) Income (loss) per common share is based on the weighted average number of
shares outstanding during the period.
6
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Prior to December 29, 1995, the Company had been involved in the business
of recycling used tires and designing, manufacturing and marketing shredding
equipment. The Company's tire recycling and shredding equipment operations were
unsuccessful and the Company generated significant losses during 1994 and 1995.
During 1995 the Company funded its operations with loans from a commercial banks
from management and other individuals. By November 1995, the Board of Directors
had concluded that the Company did not have the capital, or the ability to
obtain capital necessary to continue its current operations. The Company's Board
of Directors initiated efforts to sell the Company's WRTI and CTR operations.
The Company was able to interest one of its directors and several other
individuals in purchasing WRTI and CTR.
Effective December 29, 1995, the Company sold all of its shares of WRTI and
CTR for $30,000 and the payment and or assumption of liabilities. As a result of
such sale, the Company's total liabilities, on a consolidated basis, decreased
from $1,758,308 to $6,665.
The Company currently has no active business operations and is seeking
investments in other business entities.
The financial statements attached hereto present WRTI and CTR for both 1996
and 1995 as discontinued operations.
As a result of the matters described above, the Company's historical
financial statements and this Management's Discussion and Analysis are not
necessarily reflective of the Company's future operations or financial
condition.
Financial Condition
Total assets at September 30, 1996 were $17,626, all of which was cash.
This reflects the sale of WRTI and CTR on December 29, 1995. On September 30,
1996, the Company had total liabilities of $270. All of its previously
liabilities, which had been reflected on its consolidated financial statements,
were paid by or assumed by the Buyers of WRTI and CTR. The Company intends to
use such cash to pay for various filing fees and professional fees relating to
its reporting obligations and to fund the costs which may arise from seeking new
business opportunities.
It is likely that the Company will be required to raise additional capital
in order to attract and potential acquisition partner but there can be no
assurance that the Company will be able to raise any additional capital. It is
also likely that any future acquisition will be made through the issuance of
7
<PAGE>
shares of the Company's common stock which will result in the dilution of the
percentage ownership of the current shareholders.
Results of Operations
As stated above, the Company sold WRTI and CTR on December 29, 1995 and has
treated them as discontinued operations. Therefore, the revenues of WRTI and CTR
have been excluded from the Statement of Operations which is included in the
financial statements attached hereto. Therefore, excluding the operations of
WRTI and CTR, the Company had no revenues during 1996 or 1995.
The Company's total loss for the three months ended September 30, 1996 was
$308. Its loss for the nine months ended September 30, 1996 was $5,604.
It is unlikely that the Company will be able to generate any revenues
unless and until it acquires an operating company, of which there can be no
assurance.
Plan of Operation
Commencing in the fourth quarter of 1995, the Company's Plan of Operation
was essentially the plan to sell its WRTI and CTR operation. Effective December
29, 1995 these operations were sold. The Company's current plan of operation is
to acquire another operating company. It is likely that any acquisition will be
a "reverse merger" acquisition whereby the Company acquires a larger company by
issuing shares of the Company's common stock to the shareholders of the larger
company. Although the Company would be the surviving or parent company from a
corporate law standpoint, the shareholders of the larger company would be the
controlling shareholders of the Company and the larger company would be treated
as the survivor or parent company from an accounting point of view. It can be
expected that any company which may desire to be acquired by the Company will do
so as method of potentially becoming a public company more quickly and less
expensively than if such company undertook its own public offering. The Company
has not identified any potential acquisition target and there can be no
assurance that it will be able to acquire any other company. Furthermore, even
if the Company is able to acquire another company, there can be no assurance
that the Company will ever operate at a profit.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. To the best knowledge of the Company's
management, the Company is not a party to any legal proceeding or
litigation.
Item 2. Changes in the Rights of the Company's Security Holders. None.
Item 3. Defaults by the Company on its Senior Securities. None.
Item 4. Submission of Matters to Vote of Security Holders. No matter was
submitted to a vote of the Company's security holders for the quarter
ended September 30, 1996.
Item 5. Other Information.
Item 6(a). Exhibits. None.
Item 6(b). Reports on Form 8-K. None filed.
9
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the Company has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: November 5, 1996 EMERALD CAPITAL INVESTMENTS, INC.
By /s/ Frank H. Ross, III
Frank H. Ross, III
President/Principal Executive Officer
Principal Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EMERALD
CAPITAL INVESTMENTS, INC.'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 17,626
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,626
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,626
<CURRENT-LIABILITIES> 270
<BONDS> 0
0
0
<COMMON> 5,809
<OTHER-SE> 11,547
<TOTAL-LIABILITY-AND-EQUITY> 17,626
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 308
<TOTAL-COSTS> 308
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 308
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
