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 June 30, 1997
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, Suite 206 Barrington, IL 60010
(Address of principal executive offices)
Registrant's telephone no., including area code: (847) 382-1100
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 September 9, 1997 - 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 June 30, 1997.
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--June 30, 1997 3
Statements of Operations--for the three months and six months
ended June 30, 1997 and June 30, 1996 4
Statements of Cash Flows--for the three months and six months
ended June 30, 1997 and June 30, 1996 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 10
Item 2. Changes in the Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Results of Votes of Security Holders 10
Item 5. Other Information 10
Item 6(a). Exhibits 10
Item 6(b). Reports on Form 8-K 10
2
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Balance Sheet
June 30, 1997
(Unaudited)
Assets
Current assets - cash $ 9,049
==========
Liabilities and Stockholders' Equity
Current liabilities $ 0
-----------
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 (2,597,416)
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Total stockholders' equity 9,049
Total liabilities and stockholders'
equity $ 9,049
============
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 Six months Ended of the
June 30, June 30, Development
---------------------- ----------------------- Stage)
1997 1996 1997 1996
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Revenue $ - - - - -
Selling, general and 1,173 5,296 3,688 5,672 14,286
administrative --------- -------- ------ --------- -------
Net loss $(1,173) (5,296) (3,688) (5,672) (14,286)
======= ====== ====== ====== =======
Net loss per share
(.00) (.07) (.00) (.20) (.00)
---- ---- ---- ---- ----
Weighted average number of
shares outstanding 5,808,698 5,808,698 5,808,698 5,808,698 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
Six months Ended of the
June 30, Development
1997 1996 Stage)
---- ---- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (3,688) (5,672) (14,286)
Decrease in accounts payable - (3.968) (6,665)
------------ ------------ --------
Net cash used in
operating activities (3,388) (9,640) (20,951)
------------ ------------ ---------
Cash flows from investing activities -
Payments on receivable - 30,000 30,000
Cash flows from financing activities - - - -
------------- ------------ ---------
Net (decrease) increase in cash (3,688) 20,360 9,049
Cash, beginning of period 12,737 - -
-------------- ------------ ----------
Cash, end of period $ 9,049 $ 20,360 $ 9,049
============== ============ =========
</TABLE>
See accompanying notes to financial statements.
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 June 30, 1997 and the
results of operations for the three and six months ended June 30, 1997
and 1996, cash flows for the six months ended June 30, 1997 and 1996
and cumulative amounts since inception of the development stage
through June 30, 1997. The results of operations for the three and six
months ended June 30, 1997 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
The Company currently has no operations. 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 bank 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
reverse merger acquisitions of other business entities.
Financial Condition
Total assets at June 30, 1997 were $9,049, all of which was cash. At June
30, 1997, the Company had no liabilities. 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 any 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
shares of the Company's common stock which will result in the dilution of the
percentage ownership of the current shareholders.
Results of Operations
The Company has generated no revenues since the sale of the WRTI/CTR
operations and assets. The Company will not generate any revenues, if ever,
until and unless it merges with an operating company or raises additional
capital for its own operations. There can be no assurance that either of such
events will happen.
The Company's total loss for the three months ended June 30, 1997 was
$1,173 compared to $5,296 for the three months ended June 30, 1996.
The Company's total loss for the six months ended June 30, 1997 was $3,688
compared to $5,672for the three months ended June 30, 1996.
7
<PAGE>
Plan of Operation
The Company currently has no operations. The Company believes that in order
to commence active operations, it must acquire an operating company. The Company
intends to look for, investigate and, if warranted, acquire an interest in
another company ("Potential Business Opportunity"). As of the date hereof, the
Company has entered into a non-binding Letter of Intent with a Florida based
corporation which involves a potential acquisition transaction with one party
however, there is no assurance that the Letter of Intent will result in a
definitive agreement. If these discussions do not result in a definitive
agreement, the Company will continue to look for other Potential Business
Opportunities. It is likely that the Company will be required to raise
additional funds in order to attract a Potential Business Opportunity. There can
be no assurance that the Company will be able to raise additional capital in
sufficient amounts to enable it to acquire a suitable Potential Business
Opportunity.
In some instances, a Potential Business Opportunity may involve the
acquisition of or merger with a corporation which does not need substantial
additional cash but which desires to establish a public trading market for its
Common Stock. Some companies with Potential Business Opportunities may seek to
become a public company through merging with, being acquired by or selling their
assets to an existing public company. There are numerous reasons why an existing
privately-held company would seek to become a public company through a merger or
acquisition rather than doing its own public offering. Such reasons include, but
are not limited to, avoiding the time delays involved in a public offering;
retaining a larger share of voting control of the publicly-held company;
reducing the cost factors incurred in becoming a public company; and avoiding
any dilution requirements set forth under various states' blue sky laws.
Although there is not currently a public market for the Company's common stock,
the Company is a reporting company and does have a base of public shareholders.
The Company does not propose to restrict its search for Potential Business
Opportunities to any particular industry or any particular geographic area and
may, therefore, engage in essentially any business to the extent of its limited
resources. It is anticipated that knowledge of Potential Business Opportunities
will be made known to the Company by various sources, including its officers and
directors, professional advisors such as attorneys and accountants, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals. The Company may compensate such
parties for services rendered.
There can be no assurance that the Company will ever acquire a Potential
Business Opportunity. Even if the Company is able to acquire a Potential
Business Opportunity, there can be no assurance that any such acquisition will
be profitable to the Company or its Stockholders. Stockholders should be aware
that an investment in the Company could result in a total loss of an investors
investment.
The analysis of a Potential Business Opportunity will be undertaken by or
under the supervision of the officers and directors of the Company. Inasmuch as
the Company will have only limited funds available to it in its search for
Potential Business Opportunities, the Company will not be able to expend
significant funds on a complete and exhaustive investigation of such business or
opportunity. The Company will, however, investigate, to the extent believed
reasonable by its management, such Potential Business Opportunities.
Prior to making a decision to acquire or participate in a Potential
Business Opportunity, the Company will obtain written materials regarding the
Potential Business Opportunity containing such items as a description of
products, services, and company history; management resumes; financial
information; available projections with related assumptions upon which they are
based; evidence of existing patents, trademarks, or
8
<PAGE>
service marks or rights thereto; present any proposed forms of compensation to
management; a description of transactions between the prospective entity and its
affiliates during relevant analysis of risks and competitive conditions; and
other information deemed relevant.
It is anticipated that the investigation of specific Potential Business
Opportunities and the negotiation, drafting, and execution of relevant
agreements, disclosure documents, and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys,
and others. If a decision is made not to participate in a specific Potential
Business Opportunity, the costs theretofore incurred in the related
investigation would not be recoverable. Furthermore, even if an agreement is
reached for the participation in a specific Potential Business Opportunity, the
failure to consummate that transaction may result in the loss to the Company of
the related costs incurred.
The Company will have unrestricted flexibility in seeking, analyzing, and
participating in Potential Business Opportunities. In its efforts, the Company
will consider the following kinds of factors:
(a) Potential for growth, indicated by new technology, anticipated market
expansion, or new products;
(b) Competitive position as compared to other firms engaged in similar
activities;
(c) Strength of management;
(d) Capital requirements and anticipated availability of required funds to be
provided by the Company from future operations through the sale of
additional securities, through joint ventures or similar arrangements or
from other sources;
(e) Other relevant factors.
The Company is unable to predict when, or if, it may acquire a Potential
Business Opportunity. It expects, however, that the analysis of specific
proposals and the selection of a Potential Business Opportunity may take several
months or more.
The manner in which the Company participates in a Potential Business
Opportunity will depend upon the nature of the opportunity, the respective needs
and desires of the Company and the promoters of the opportunity, and the
relative negotiating strength of the Company and such promoters. The exact form
or structure of the Company's participation in a Potential Business Opportunity
or venture will be dependent upon the needs of the particular situation. The
Company's participation may be structured as an asset purchase agreement, a
lease, a license, a joint venture, a partnership, a merger or acquisition of
securities. Generally, issuance of the Company's securities in an acquisition
would be undertaken in reliance upon one or more exemptions from the
registration provisions of applicable federal securities laws, including the
exemptions provided for non-public or limited offerings, distributions to
persons resident in only one state, and analogous exemptions provided under
state securities laws. Shares issued in a reorganization transaction based upon
these exemptions would be considered "restricted" securities under the
Securities Act of 1933 and Rule 144 promulgated thereunder, could not generally
be resold for a period of one year, and would be subject to certain other
restrictions. However, the Company may agree in any such transaction to register
securities to be issued either at the time of the transaction or at certain
specified times thereafter.
9
<PAGE>
The Company's management have been rendering services without receiving
cash compensation because of the Company's limited cash position. The Company
will likely compensate its management with securities for services rendered to
the Company. Such securities may include shares of common stock or options to
purchase shares of common stock.
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 June 30, 1997.
Item 5. Other Information.
Item 6(a). Exhibits. None.
Item 6(b). Reports on Form 8-K. None filed.
10
<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: September ___, 1997 EMERALD CAPITAL INVESTMENTS, INC.
By: /s/ Frank H. Ross, III
Frank H. Ross, III
President/Principal Executive Officer
By: /s/ Douglas P. Morris
Douglas P. Morris
Principal Financial Office
11
<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>
<MULTIPLIER> 1
<CURRENCY> 9,049
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-1-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 9,049
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,049
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,049
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 9,049
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,049
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1173
<LOSS-PROVISION> (1,173)
<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>
