U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-19490
EMERALD CAPITAL HOLDINGS, INC.
(Exact name of Issuer as specified in charter)
DELAWARE 22-3096351
(State or other jurisdiction of (I.R.S. Employer
Identification No.)
incorporation or
organization)
4195 S. Tamiami Trail, #140, Venice, Fl. 34293
(Address of principal executive offices)(zip code)
(941) 484 5995
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
par value
$.001, 1991 Warrants.
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d)
of the Exchange Act during the past 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 _____
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation
S-B contained in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in a definitive proxy or information statements
incorporated by
reference in Part III of this Form 10-QSB or any amendment to this Form 10-QSB.
[__X___]
The issuer's aggregate revenues, excluding discontinued operations, for the
quarter
ended March 31, 1998 were $0._________.
As of March 31, 1998 (I) the aggregate market value of the shares of the
registrant's
common stock held by non-affiliates of the registrant was not available as the
Company was awaiting listing on the OTC Bulletin Board; (ii) 1,419,533 shares
of the
Registrant's common stock were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
EMERALD CAPITAL HOLDINGS, INC.
BALANCE SHEET
(UNAUDITED)
March 31,1998
ASSETS
Current Assets
Cash
$ -
Accounts Receivable, net
$ -
Prepaid Expenses and other
$ -
Property, Plant and Equipment, net
$ -
Notes Receivable
$ 16,000
Other Assets
$ -
_________
$ 16,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank Notes Payable
$ 144,506
Notes Payable Stockholders
$ 297,722
Notes Payable other
$ 50,000
Accounts Payable
$ 206,513
Accrued Expenses
$ -
$ 698,741
Stockholders Equity
Preferred Stock, $.001 par value
authorized 2,000,000 shares,
none outstanding
$ -
Common Stock, $.001 par value,
authorized 100,000,000 shares,
issued and outstanding, 1,419,553
$ 1,418
Additional paid-in-capital
$ 21,291,838
Deficit
$(
21,991,997)
Due from Shareholder
$ -
$ (698,741)
See accompanying notes to financial statements.
EMERALD CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
March 31,
1998
1997
Sales
$ -
$ 22,773
Cost of Goods Sold
$ -
-
Selling, general &
administrative expenses
$ -
86,148
Depreciation and Amortization
$ -
724
Operating (Loss)
$ -
(64,099)
Other (Income) Expenses
Interest and other expenses
$ -
8,820
Inerest and other income
$ -
-
Net (Loss) from continuing
operations
$ -
(72,919)
Net (Loss) from discontinued
$ -
operations
-
Loss per Common Share
From continued operations
$ -
(72,919)
From discontinued operations
$ -
Net (loss) per share
$ -
(72,919)
Loss per Common Share
From continued operations
$ -
$ -
Discontinued operations
$ -
$ (0.05)
Net (loss) per share
$ -
$ (0.05)
Weighted Average number of
common shares used in
computation of net (loss)
per share
1,419,553
1,344,553
See accompanying notes to the financial statements.
EMERALD CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(UNAUDITED)
Common Stock
Additional
Cumulative
Shares
Amount
Paid-in-Capital
Translation
___________________________________
Adjustment
Balance at December 31, 1996
1,344,553
$ 1,343
$ 21,277,746
$ -
Issuance of Shares for cash
Issuance of Shares in
connection with consulting
$ -
and legal services
Issuance in settlement of debt
Net (Loss)
$ -
$ -
$ -
$ -
Balance at December 31, 1997
1,419,553
$ 1,343
$ 21,277,746
$ -
Issuance of Shares for cash
Issuance of Shares in
connection with consulting
$ -
and legal services
Issuance in settlement of debt
_________
____________
______________
__________
Net (Loss)
$ -
$ -
$ -
$ -
Balance at March 31, 1998
1,419,553
$ 1,418
$ 21,277,746
$ -
See accompanying notes to financial statements.
EMERALD CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(UNAUDITED)
Due from
Deficit
Total
Stockholder
Balance at December 31, 1996
$ (20,000)
$(22,365,302)
$ (1,106,213)
Issuance of Shares in
connection with consulting
-
and legal services
Issuance in settlement of debt
Net (Loss)
$ -
$ (72,919)
$ (72,919)
Balance at December 31, 1997
$ (20,000)
$(22,438,221)
$ (1,179,132)
Issuance of Shares in
connection with consulting
-
$ -
$ -
and legal services
Issuance in settlement of debt
Net (Loss)
$ -
$ -
$ -
Balance at March 31, 1998
$ (20,000)
$(22,438,221)
$ (1,179,132)
See accompanying notes to financial statements.
EMERALD CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31
March 31
OPERATING ACTIVITIES
1998
1997
Net (Loss)
$ -
$ (72,919)
Non-cash adjustments:
Depreciation & Amortization
$ -
$ 724
Common stock issued for
services
$ -
Cash provided (used) by
changes in assets
$ -
Accounts Receivable
$ (16,498)
$ (2,393)
Inventories
$ -
$ -
Prepaid Expenses & other
$ -
$ -
Accounts payable &
accrued expenses
$ 25,784
$ 73,120
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES
$ -
$ (1,468)
INVESTING ACTIVITIES
$ -
Decrease in property &
$ -
equipment
$ (3,040)
$ -
Other assets
$ (3,570)
$ -
NET CASH PROVIDED (USED)
$ -
BY INVESTING ACTIVITIES
$ 2,676
$ -
$ -
FINANCING ACTIVITIES
$ -
Net increase in short term
$ -
borrowing
$ 18,100
$ 1,000
Proceeds (repayments) long-term
$ -
debt and revolving line-of-credit
$ -
$ -
NET CASH PROVIDED BY FINANCING
ACTIVITIES
$ 18,100
$ 1,000
$ -
NET INCREASE (DECREASE) IN CASH
$ -
CASH EQUIVALENTS
$ -
$ (468)
CASH AND CASH EQUIVALENTS, beginning
$ -
$ 737
$ -
CASH AND CASH EQUIVALENTS,ending
$ -
$ 269
See accompanying notes to financial statements.
EMERALD CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended
March 31
March 31
1998
1997
Net (Loss)
$ -
$ (161,928)
Non-cash adjustments:
Depreciation & Amortization
$ -
$ 1,448
Common stock issued for
$ -
services
$ -
$ 14,167
Cash provided (used) by
changes in assets & liabilities
$ -
Accounts Receivable
$ (16,498)
$ (1,132)
Inventories
$ -
$ -
Prepaid Expenses & other
$ -
$ -
Accounts payable &
accrued expenses
$ 206,513
$ 146,240
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES
$ 190,015
$ (1,205)
INVESTING ACTIVITIES
Decrease in property &
equipment
$ (3,040)
$ -
Other assets
$ (3,570)
$ -
NET CASH PROVIDED (USED)
$ -
BY INVESTING ACTIVITIES
$ (6,610)
$ -
$ -
FINANCING ACTIVITIES
$ -
Net increase in short term
$ -
borrowing
$ 18,100
$ 1,000
Proceeds (repayments) long-term
$ -
debt and revolving line-of-credit
$ -
$ -
Net proceeds of common stock issued
NET CASH PROVIDED BY FINANCING
ACTIVITIES
$ 18,100
$ 1,000
$ -
NET INCREASE (DECREASE) IN CASH
$ -
CASH EQUIVALENTS
$ -
$ (205)
CASH AND CASH EQUIVALENTS, beginning
$ -
$ 737
$ -
CASH AND CASH EQUIVALENTS,ending
$ -
$ 532
See accompanying notes to financial statements.
EMERALD CAPITAL HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDING MARCH 31, 1998
EMERALD CAPITAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Business:
Emerald Capital Holdings, Inc. (Company or Emerald) is a holding company the
intent
of which is to acquire, manage and develop businesses in a variety of sectors.
The
Company has no operations. The Company is seeking acquisitions. See -
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Subsequent Events."
Background
The Company has significantly restructured its business and has closed or sold
all
unprofitable operations. See "Certain Transactions" and "Management's
Discussion
and Analysis of Financial Condition and Operations" and "Subsequent Events."
The Company may in the future utilize the SportAde name, beverage concept and
trademark for an isotonic sports drink from its former beverage subsidiary,
SportAde,
Inc. to enter the beverage business, or to sell, license the name and concept
for or
otherwise develop a beverage business.
On March 29, 1996, the Company effected a one-for-one hundred twenty reverse
stock
split, previously approved by a majority of the Company's Common Stock holders.
All
share information described herein reflects such reverse stock split except as
otherwise
noted.
Principles of Consolidation:
The consolidated financial statements include the accounts of Emerald Capital
Holdings, Inc. include the accounts of Emerald Capital Holdings, Inc.
Preparation of Financial Statements
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.
Per Share Data:
In 1996, the shareholders of the Company approved a one for one hundred and
twenty
reverse stock split. All share and per share amounts have been retroactively
adjusted.
Net loss per share of common stock is computed based on net loss, and the
weighted
average number of common shares outstanding. Common stock equivalents are anti-
dilutive for all periods presented and accordingly are not included in the
computation.
Cash Equivalents:
The Company considers all highly liquid debt securities with a maturity of
three months
or less when purchased to be cash equivalents for the purposes of the statement
of
cash flows.
Inventories:
Inventories, if noted, are stated at the lower of cost (first-in, first-out
method) or market.
Property and Equipment:
Property and equipment is stated at cost, less accumulated depreciation.
Depreciation
is computed using the straight-line method over the useful lives of the assets,
which
range from three to thirty years.
Cost in Excess of Net Assets Acquired:
Cost in excess of net assets acquired is being amortized on a straight-line
basis over
period of ten years. The Company, on an ongoing basis, evaluates the
operations
using undiscounted estimated future cash flows of the acquired businesses and
assesses recoverability of the recorded amounts of cost in excess of net assets
acquired. Provisions for impairment are recorded upon the Company's
determination
that cash flows of the acquired business will be insufficient to recover the
associated
cost in excess of net assets acquired.
Income Taxes:
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109. The statement requires the recognition
of
deferred tax assets and liabilities for the expected future tax consequences
of
temporary differences between the carrying amounts and tax basis of assets and
liabilities.
Future Accounting Pronouncements:
In March 1995, the Financial Accounting Standards Board issued Statement No.
121
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of," the Statement requires, among other things, impairment loss of
assets to
be held and gains for losses from assets that are expected to be disposed of be
included as a component of income from continuing operations before taxes on
income. The Company will adopt the Statement as of January 1, 1996 and its
implementation is not expected to have a material effect.
In October 1995, the Financial Accounting Standards Board issued Statement No.
123
"Accounting for Stock-Based Compensation." The Statement establishes a fair
value
method for accounting for stock-based compensation plans either through
recognition
or disclosure. The Company does not presently intend to adopt the fair value
based
method, but instead will, beginning in 1996, disclose the effects of the
calculation
required by the Statement.
Financial Condition and Liquidity
The Company's continued existence is dependent on its ability to acquire, merge
or
conclude a reverse merger, and/or obtain additional financing. Management's
plans in
regard to these matters are described below. The financial statements do not
include
any adjustments that might result from the outcome of this uncertainty.
The Company incurred a loss of $0 and consumed no cash in operating activities
for
the period ended March 31, 1998 and had a working capital deficiency of
$(682,741)
and a capital deficit of $(21,991,997) at March 31, 1998.
The Company has no paid employees and no operations.
If the Company cannot conclude an acquisition, merger, reverse merger, or
become
relisted on the OTC Bulletin Board, the Company would consider a corporate
reorganization or liquidation.
Historically, certain affiliates of the Company and others have made advances
to meet
the Company's short-term cash needs. At March 31, 1998, convertible
promissory
notes owed to such persons aggregated approximately $300,000. In addition,
all
accrued salaries and deferred payments, including all reimbursable expenses,
have
been forgiven by an affiliate.
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Equipment (net) $0
_____________
Total (net) $0
============
NOTE D - SUBSIDIARIES AND ACQUISITIONS
The Company discontinued all operations as of December 31, 1997, and wrote off
all
assets leasehold improvements. See "Certain Transactions" and Note J.
NOTE F - COMMON AND PREFERRED STOCK
(1) During 1996, 677,667 shares of common stock were issued by the Company in
a
private placement and for conversion of debt. The Company received cash
proceeds
of $294,000.
NOTE G - STOCK OPTIONS, WARRANTS AND RIGHTS
Stock Option Plan:
The Company's Stock Option Plan (the "Plan"), as amended, provides for the
grant of
up to 528 options to purchase common stock to directors, officers and other key
employees of the Company. No options have been granted in 1995, 1996, 1997.
Non-Plan Options
No options have been granted in 1995,1996, 1997.
Warrants and Rights:
The Company's 1991 Warrants expired on December 31, 1997. No 1991 Warrants
have been exercised.
NOTE H - DISCONTINUED AND DIVESTED OPERATIONS
In 1996, the Company discontinued all of its operations as of December 31 1997.
NOTE I - BUSINESS SEGMENTS
Not applicable as the Company has no operations as of March 31, 1998:
NOTE J - COMMITMENTS AND CONTINGENCIES
The Company utilizes at no cost minimum office facilities. It believes that
its facilities
are suitable for its present operations. If required, the Company believes that
additional
space is available at favorable rental rates.
Legal Proceedings:
The Company is a plaintiff and defendant in several legal proceedings the
outcome of
which is uncertain. The Company cannot estimate whether the positive or adverse
outcome of such proceedings would have a material effect on the Company's
business.
Consulting and Employment Agreements
None.
NOTE K - INCOME TAXES
At December 31,1997, the Company had net operating loss carry forwards for
income
tax purposes of approximately $$18,000,000 which expire substantially from 2005
through 2010.
Deferred income taxes are comprised principally of the following at March 31,
1998:
Net operating loss carry forwards $6,500,000
Deferred tax asset valuation
allowance $(6,500,000)
Net deferred tax asset $ -0-
============
Realization of any portion of the net deferred tax asset, of approximately
$6,500,000 at
March 31, 1998, is not considered more likely than not and accordingly, a
valuation
allowance has been provided for such amount. Changes in ownership of greater
than
50% which occurred as a result of the Company's initial public offering and
subsequent
stock issuances resulted in a substantial annual limitation being imposed upon
the
future utilization of the net operating losses for U.S. tax purposes.
NOTE L - SUBSEQUENT EVENTS
(a) As of January 1, 1998, the Company sold its interest in AccuMed, Inc. for
a note
payable to the Company.
EMERALD CAPITAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE M - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist principally of cash, accounts
receivable,
accounts payable and accrued expenses, and notes payable. The carrying amounts
of
such financial instruments as reflected in the consolidated balance sheet
approximate
their value as of March 31, 1998. The estimated fair value is not necessarily
indicative
of the amounts the Company would realize in a current market exchange or of
future
earnings or cash flows.
NOTE N - SUPPLEMENTAL CASH FLOW INFORMATION
The following are supplemental disclosures to the Consolidated Statements of
Cash
Flows:
Year ended December 31,
1997 1996
Interest paid for 1997 and 1996 $ 0 $2,538
Non-cash investing and financing activities:
Common stock (677,667 shares for 1996) in a private 0 $178,860
placement, convertible note conversion
and for legal and other services.
Common stock (42,260 shares) issued in
settlement of accounts payable. 0 $236,366
Units issued for forgiveness of debt 0 $263,000
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's consolidated revenues were $0 for the period ended March 31,
1998. Prior year revenues were from discontinued operations and are not
comparable.
Financial Condition and Liquidity
The Company's continued existence is dependent on its ability to acquire, merge
or
conclude a reverse merger, and/or obtain additional financing. Management's
plans in
regard to these matters are described below. The financial statements do not
include
any adjustments that might result from the outcome of this uncertainty.
The Company incurred a loss of $0 and consumed no cash in operating activities
for
the quarter ended March 31, 1998 and had a working capital deficiency of
$(682,741)
and a capital deficit of $(21,991,997) at March 31, 1998.
The Company has no paid employees and no operations.
If the Company cannot conclude an acquisition, merger, reverse merger, or
become
relisted on the OTC Bulletin Board, the Company would consider a corporate
reorganization or liquidation.
Historically, certain affiliates of the Company and others have made advances
to meet
the Company's short-term cash needs. At March 31, 1998, convertible
promissory
notes owed to such persons aggregated approximately $300,000. In addition,
all
accrued salaries and deferred payments, including all reimbursable expenses,
have
been forgiven by an affiliate.
Inflation
As the Company has no operations presently, there are no inflationary
considerations.
SIGNATURES
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates
indicated.
Signature
Title
Date
/s/ Robert Springer
Chairman
(Acting Principal Executive Officer, Acting Chief Financial
Officer)
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
EMERALD CAPITAL
HOLDINGS, INC.
BY: _
_____________________
Rob
ert Springer
Cha
irman
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates
indicated.
Signature
Title
Date
Robert Springer
Chairman
(Acting Principal Executive Officer, Acting Chief Financial
Officer)
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
3.1 Amended and Restated Certificate of Incorporation of the Company, as
filed with the Secretary of
State of Delaware on August 14, 1991(1)
3.1a Amended Certificate of Incorporation of the Company, as filed with the
Secretary of State of
Delaware on June 7, 1995. (7)
3.1b Certificate of Amendment to Amended and Restated Certificate of
Incorporation, as amended (7)
3.2 Bylaws of the Company(2)
3.3 Certificate of Retirement of Preferred Stock as filed with the
Secretary of State of Delaware(3)
3.4 Amendment to By-Laws of the Company(6)
4.1 Warrant Agreement, dated as of August 13, 1991, among the Company,
American Stock Transfer
& Trust Co. ("American") and Stratton(1)
4.2 First Amendment, dated October 30, 1992, to Warrant Agreement, dated
August 13, 1991, among
the Company, American and Stratton(3)
4.3 Warrant Agreement, dated February 16, 1993, between the Company and
American(5)
4.4 Form of First Amendment to Warrant Agreement to be entered into
between the Company and
American(5)
4.5 Specimen Common Stock Certificate(2)
4.6 Class A Warrant Agreement, dated October 12, 1993, between the Company
and AWH(5)
4.7 Class B Warrant Agreement, dated October 12, 1993, between the Company
and AWH(5)
4.8 Form of Class C Warrant(6)
4.9 Form of Class D Warrant(6)
10.1 Amended and Restated 1990 Stock Option Plan(4)
10.2 Form of Indemnification Agreement with Officers and Directors(3)
10.3 Indemnification Agreement, dated August 17, 1991,
between the Company and Robert Springer(1)
10.4 Form of Confidential Information and Intellectual
Property Rights Agreement(2)
10.5 AccuMed Acquisition Agreement (6)
