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 March 31, 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
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(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: (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 May 14, 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 March 31, 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 1Financial Statements:
Balance Sheet--March 31, 1997 3
Statements of Operations--for the three months
ended March 31, 1997 and March 31, 1996 4
Statements of Cash Flows--for the three months
ended March 31, 1997 and March 31, 1996 5
Notes to Financial Statements 6
Item 2Management'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)
Consolidated Balance Sheet (Unaudited)
March 31, 1997
- ------------------------------------------------------------------------------
Assets
Current assets - cash $ 10,222
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- ------------------------------------------------------------------------
Liabilities and Stockholders' Equity
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 (2,596,243)
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Total stockholders' equity 10,222
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Total liabilities and stockholders' equity $ 10,222
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- ------------------------------------------
See accompanying notes to financial statements.
3
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Statement of Operations (Unaudited)
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Cumulative
Amounts
Since
December 29,
1995
(Commence-
Three Months Ended ment of the
March 31, Development
------------------------
1997 1996 Stage)
------------------------------------
Revenue $ - $ - $ -
Selling, general and administrative 2,515 376 13,113
------------------------------------
Net loss $ (2,515) $ 376 $ (13,113)
------------------------------------
Net loss per share $ (.00) $ (.00) $ (.00)
------------------------------------
Weighted average # of shares 5,809,000 5,809,000 5,809,000
outstanding
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- ------------------------------------------
See accompanying notes to financial statements.
4
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Statement of Cash Flows (Unaudited)
- ------------------------------------------------------------------------------
Cumulative
Amounts
Since
December 29,
1995
(Commence-
Three Months Ended ment of the
March 31, Development
------------------------
1997 1996 Stage)
------------------------------------
Cash flows from operating activities:
Net loss $ (2,515) $ (376) $ (13,113)
Decrease in accounts receivable - 30,000 30,000
Decrease in accounts payable - (6,665) (6,665)
------------------------------------
Net cash (used in) provided by
operating activities (2,515) 22,959 10,222
Cash flows from investing activities - - -
------------------------------------
Cash flows from financing activities - - -
------------------------------------
Net (decrease) increase
in cash (2,515) 22,959 10,222
Cash, beginning of year 12,737 - -
------------------------------------
Cash, end of year $ 10,222 $ 22,959 $ 10,222
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- ------------------------------------------
See accompanying notes to financial statements.
5
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
Notes to Financial Statements
- ------------------------------------------------------------------------------
(1) The unaudited financial statements include the accounts of Emerald Capital
Investments, 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 March 31, 1997 and the results
of operations and cash flows for the three months ended March 31, 1997 and
1996. The results of operations for the three months ended March 31, 1997
are not necessarily indicative of the results to be expected for the
entire year.
(2) Loss per share is based on the weighted average number of shares
outstanding during the period.
- ------------------------------------------------------------------------------
6
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
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 banks, from management and from 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.
Financial Condition
Total assets at March 31, 1997 were $10,222, all of which was cash. At March
31, 1997, the Company had no liabilities. The Company intends to use its 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 shares of the
Company's common stock which will result in the dilution of the percentage
ownership of the current shareholders.
7
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
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 March 31, 1997 was $2,515
compared to $376 for the three months ended March 31, 1996. The increase in
costs is attributed to SEC filings and to costs related to potential review of
potential acquisition candidates.
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.
8
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
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 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.
9
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
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.
10
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
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.
11
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
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 March 31, 1997.
Item 5. Other Information.
Item 6(a). Exhibits. None.
Item 6(b). Reports on Form 8-K. None filed.
12
<PAGE>
EMERALD CAPITAL INVESTMENTS, INC.
(A Development Stage Company)
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: May 14. 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 Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTS FROM
EMERALD CAPITAL INVESTMENTS, INC.'S FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> 10,222
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 10,222
<SECURITIES> 0
<RECEIVABLES> 0
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<CURRENT-ASSETS> 10,222
<PP&E> 0
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<TOTAL-ASSETS> 10,222
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<BONDS> 0
0
0
<COMMON> 5,809
<OTHER-SE> 4,413
<TOTAL-LIABILITY-AND-EQUITY> 10,222
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</TABLE>
