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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 29, 1999
EMERGING ALPHA CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-61888-FW 72-1235449
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
220 Camp Street
New Orleans, Louisiana 70130
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (504) 524-1801
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<PAGE>
Item 2. Acquisition or Disposition of Assets
On October 29, 1999, pursuant to the terms of the Stock Purchase Agreement
by and among Emerging Alpha Corporation ("Emerging Alpha") and the stockholders
of Gas Jack, Inc., an Oklahoma corporation ("Gas Jack"), Emerging Alpha acquired
all of the outstanding capital stock of Gas Jack for $2.7 million cash. The
purchase price was financed through a $2.8 million term loan facility provided
by Hibernia National Bank to Emerging Alpha. In addition, Emerging Alpha and Gas
Jack entered into a $1.0 million working capital facility with Hibernia National
Bank primarily to be used to finance the working capital requirements of Gas
Jack.
Gas Jack is now a wholly owned subsidiary of Emerging Alpha and its
principal operating subsidiary. Gas Jack is a compressor manufacturer and
service provider. Gas Jack is based in Oklahoma City and has field operations in
Oklahoma, Texas, New Mexico, Kansas, Arkansas and Colorado.
In addition, on October 29, 1999, Emerging Alpha acquired all of the
outstanding units of GJ Measurement, L.L.C., an Oklahoma limited liability
company, for 33,333 shares of Emerging Alpha common stock. GJ Measurement is now
a wholly owned subsidiary of Emerging Alpha. GJ Measurement is a natural gas
measurement and testing service company based in Oklahoma City.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Gas Jack, Inc.:
Report of Independent Auditors
Balance Sheets as of December 31, 1998 and 1997 and September 30, 1999
(Unaudited)
Statements of Income for the Years Ended December 31, 1998 and 1997 and the
Nine Months Ended September 30, 1999 and 1998 (Unaudited)
Statements of Cash Flows for the Years Ended December 31, 1998 and 1997 and
the Nine Months Ended September 30, 1999 and 1998 (Unaudited)
Notes to Financial Statements
(b) Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheets as of September 30, 1999
Pro Forma Condensed Consolidated Statement of Income for the Year Ended
March 31, 1999 and the Nine Months Ended September 30, 1999
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(c) Exhibits
10.1 Stock Purchase Agreement, dated as of October 29, 1999, by and among
Emerging Alpha Corporation and the Stockholders of Gas Jack, Inc.
10.2 Loan Agreement, dated as of October 29, 1999, by and between Hibernia
National Bank and Emerging Alpha Corporation.
10.3 Loan Agreement, dated as of October 29, 1999, by and among Hibernia
National Bank, Emerging Alpha Corporation and Gas Jack, Inc.
<PAGE>
Item 8. Change in Fiscal Year.
Emerging Alpha intends to change its fiscal year end from March 31 to
December 31. This change will be effective December 31, 1999. Emerging Alpha
will file audited financial statements as of and for the nine months ended
December 31, 1999 in its Quarterly Report on Form 10-Q for the three months
ended December 31, 1999.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Gas Jack, Inc.
Oklahoma City, Oklahoma
We have audited the accompanying balance sheets of Gas Jack, Inc. (the
"Company") as of December 31, 1998 and 1997, and the related statements of
income, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1998 and
1997, and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
April 26, 1999
Deloitte & Touche LLP
F-1
<PAGE>
GAS JACK, INC.
Balance Sheets
<TABLE>
<CAPTION>
December 31, December 31, September 30,
1997 1998 1999
(Audited) (Audited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $79,538 $29,165 $66,880
Accounts receivable (net of allowance of
$27,003 and $20,000 in 1998 and 1997,
respectively) 369,068 398,254 455,575
Inventories 266,824 361,253 745,048
Other 48,746 28,296 10,875
Total current assets 764,176 816,968 1,278,378
Property and Equipment, at cost 3,928,194 4,719,655 4,901,240
Less accumulated depreciation (1,538,249) (1,878,344) (2,200,915)
Property and equipment, net 2,389,945 2,841,311 2,700,325
Other Assets 84,421 67,029 144,410
Total Assets 3,238,542 3,725,308 4,123,113
LIABILITES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $399,152 $317,834 $373,272
Notes payable, current portion 205,132 475,000 477,666
Other 137,109 48,593 4,328
Total current liabilities 741,393 841,427 855,266
Note Payable, long-term portion 182,344
Deferred Taxes, net 96,856 165,707 201,520
Stockholders' Equity:
Common stock- $.10 par value; 5,000,000 shares
authorized; 2,364,753 shares issued and
outstanding 236,475 236,475 236,475
Additional paid-in capital 2,093,657 2,093,657 2,093,657
Retained earnings 624,365 942,246 1,108,055
Less: Cost of treasury stock (506,204) (506,204) (506,204)
Notes receivable from stockholders (48,000) (48,000) (48,000)
Total stockholders' equity 2,400,293 2,718,174 2,883,983
Total Liabilities and Stockholders' Equity 3,238,542 3,725,308 4,123,113
</TABLE>
See notes to the financial statements.
F-2
<PAGE>
Gas Jack, Inc.
Statements of Income
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
1997 1998 1999 1998
(Audited) (Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Leasing revenue $2,201,309 $2,406,501 $1,891,467 $1,764,543
Sales - Compressors and parts 1,374,150 645,635 510,204 469,813
Other 177,468 215,726 141,215 167,627
Total Revenue 3,752,927 3,267,862 2,542,886 2,401,983
Cost of Sales and Expenses:
Cost of sales 814,440 382,946 307,880 282,665
Operating expenses 1,803,674 1,801,647 1,471,350 1,379,364
Depreciation expense 485,008 526,487 459,465 383,283
Interest expense 25,863 26,651 27,845 17,537
Total cost of sales and expenses 3,128,985 2,737,731 2,266,540 2,062,849
Income Before Taxes 623,942 530,131 276,346 339,134
Income Taxes 254,028 212,250 110,537 138,361
Net Income 369,914 317,881 165,809 200,773
</TABLE>
See notes to the financial statements.
F-3
<PAGE>
Gas Jack, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
1997 1998 1999 1998
(Audited) (Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income 369,914 317,881 165,809 200,773
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 485,008 526,487 459,465 383,283
Deferred taxes 107,404 68,851 35,813 44,829
Gain on sales of leased units (534,403) (223,653) (138,672) (162,188)
(Gain) loss on sales of vehicles and equipment (2,565) 1,847 1,847
Changes in assets and liabilities:
Accounts receivable (50,879) (29,186) (57,321) (37,265)
Inventories (5,924) (94,429) (383,795) 20,664
Other current assets (29,246) 20,450 17,421
Other assets (34,663) 17,392 (77,381) (85,223)
Accounts payable and accrued liabilities 258,728 (81,318) 91,251 23,897
Other current liabilities 24,008 (88,516) (44,265) (15,747)
Net cash provided by operating activities 587,382 435,806 68,325 374,870
Cash Flow from Investing Activities:
Additions to leased units (1,390,984) (1,194,669) (479,160) (1,025,442)
Additions to vehicles and equipment (71,542) (20,022) (61,870) (20,022)
Proceeds from sales of leased units 1,118,690 422,400 325,410 294,200
Proceeds from sales of vehicles and equipment 8,200 36,244 36,244
Net cash used in investing activities (335,636) (756,047) (215,620) (715,020)
Cash Flows from Financing Activities:
Proceeds from notes payable 175,000 375,000 303,000 375,000
Principal payments on notes payable (150,000) (105,132) (117,990) (105,132)
Principal payments on debentures payable to stockholders (250,000)
Issuance of notes receivable from stockholders (48,000)
Net cash provided by (used in) financing activities (273,000) 269,868 185,010 269,868
Net Change in Cash and Cash Equivalents (21,254) (50,373) 37,715 (70,282)
Cash and Cash Equivalents, beginning of period 100,792 79,538 29,165 79,538
Cash and Cash Equivalents, end of period 79,538 29,165 66,880 9,256
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest 47,193 23,686 27,845 17,537
Income taxes 144,592 143,399 74,724 93,532
Noncash transaction:
Common stock issued to employees 24,027
</TABLE>
See notes to financial statements.
F-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business - Gas Jack, Inc. (the "Company"), an Oklahoma
Corporation, is engaged in the manufacturing of the Gas Jack Compressor
that provides economical well head compression to mature, low pressure
natural gas wells. The compressors currently are sold and leased to natural
gas producers primarily in Oklahoma, Kansas, Texas, Arkansas and New
Mexico.
Basis of Presentation - 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.
Cash and Cash Equivalents - Cash and cash equivalents consist of cash in
banks and all short-term investments with initial maturities of three
months or less.
Inventories - Raw materials, work-in-progress, and finished goods are
stated at the lower of cost or market using the first-in, first-out method.
Property and Equipment - Property and equipment consist of compressors
currently being leased and available for lease. Property and equipment are
recorded at cost. Depreciation is computed using the straight-line method
based on the following estimated useful lives:
Gas Jack Compressors 7 years
Vehicles 5 years
Other Equipment 7 years
Revenue Recognition - Sales revenue is recorded upon shipment of sold
compressors. Revenues from lease and service agreements are recorded as
earned over the lives of the respective contracts.
Income Taxes - Deferred income taxes arise primarily from temporary
differences due to depreciation and from utilization of tax credits.
2. INVENTORIES
Inventories consist of the following at December 31, 1998 and 1997:
1998 1997
Raw materials $315,792 $222,639
Work-in-progress 45,461 44,185
-------- --------
$361,253 $266,824
======== ========
F-5
<PAGE>
3. NOTES PAYABLE
The Company has a $600,000 revolving line of credit with a bank which
expires June 30, 1999. Interest is to be paid monthly on outstanding
balances at the bank's reference rate (7.25% at December 31, 1998).
Collateral for the line of credit includes the Company's lease contracts,
inventory, leased Gas Jack Compressors, accounts receivable, equipment and
general intangibles. As of December 31, 1998, $475,000 had been drawn on
the line.
In March 1992, the Company completed a private placement for $250,000 in
debentures to certain stockholders. The Company repaid the debentures in
full on March 31, 1997.
4. INCOME TAXES
The components of income taxes are set forth as follows:
1998 1997
Current $143,399 $146,624
Deferred 68,851 107,404
-------- --------
Income taxes $212,250 $254,028
======== ========
The actual provision for income taxes differs from the amount computed by
applying the Federal tax rates due principally to expenses which are not
tax deductible and the effect of state taxes.
Deferred taxes relating to temporary differences are primarily the result
of tax depreciation being greater than book depreciation on equipment and
leased units.
The components of the net deferred taxes are as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Deferred tax assets:
Alternative minimum taxes $17,349 $36,147
Other 26,329 11,385
--------- ---------
Total deferred tax asset 43,678 47,532
Deferred tax liabilities:
Difference between book and tax basis of property
resulting from difference in book and tax depreciation (209,385) (144,388)
--------- ---------
Net deferred tax liability $(165,707) $ (96,856)
========= =========
</TABLE>
5. STOCK OWNERSHIP AND INCENTIVE STOCK OPTION PLANS
During 1992, the Company implemented a Stock Ownership Plan (the "Ownership
Plan") to reward employees for their service to the Company. Under the
Ownership Plan, 80,000 shares of $0.10 par value common stock were awarded
to the employees on July 1, 1992 by the Board of Directors, with
F-6
<PAGE>
a four-year vesting period. As of December 31, 1998 and 1997, 80,000 shares
were vested under the Ownership Plan. According to the Ownership Plan, all
shares vested are callable or putable within one year after the employee's
termination, based on the book value per share, as determined by the
quarter ended immediately preceding the exercise of the call or put.
Compensation expense amounts relating to the Ownership Plan were expensed
as of December 31, 1996.
The Company has an Incentive Stock Option Plan (the "Option Plan") and has
reserved 250,000 shares of the Company's common stock $.10 par value for
issuance under the Option Plan. The Option Plan limits participation to
employees, and the option exercise price is established by the Board of
Directors at a price not less than 100% of the fair value of the stock on
the date of grant for employees who own less than 10% of the total combined
voting power of all classes of stock of the Company. The option exercise
price for options granted to employees who own more than 10% of the total
combined voting power of all classes of stock of the Company is established
by the Board of Directors at a price not less than 110% of the fair value
of the stock on the date of grant, and such granted options expire five
years from the date of grant. The maximum aggregate fair value of common
stock for which any employee may be granted options which are exercisable
for the first time in any one calendar year shall not exceed $100,000.
Options granted under the Option Plan are exercisable at such times as the
Board of Directors shall determine, and the option period shall not be for
more than ten years from the date of grant. No options shall be granted
after the date which is ten years from the effective date of the Option
Plan.
The Company applies Accounting Principles Board Opinion 25, Accounting for
Stock Issued to Employees, and related interpretations in accounting for
its stock ownership and option plans, as permitted by Statement of
Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123 requires disclosure of pro forma net income as
if the Company had adopted the fair value provisions of SFAS No. 123. There
were no options nor shares granted under the Ownership Plan or Option Plan
for the years ended December 31, 1998 and 1997, respectively.
6. RELATED PARTIES
Included in other current assets are advances made to employees for travel
and entertainment costs. At December 31, 1998 and 1997, employee advances
totaled approximately $11,000 and $11,500, respectively. The Company sold
and leased certain units to another company affiliated through common
ownership and management. The sales and lease revenue from this affiliate
for 1998 and 1997 was approximately $97,000 and $89,000, respectively. The
accounts receivable at December 31, 1998 and 1997, from this affiliate were
approximately $10,300 and $7,300, respectively.
The Company obtained group insurance for all employees through this
affiliate during 1997 which amounted to approximately $51,000. Group
insurance was obtained from a third party during 1998.
The Company retained a firm in August 1997 to seek a suitable purchaser for
the Company. A retainer of $20,000 was paid by the Company and set up as a
note receivable from stockholders to be repaid from proceeds realized upon
the ultimate sale of the Company. Interest on the note accrues at 9.0%. The
Company also has a promissory note of $28,000 from an officer and
stockholder of the Company, payable in full on July 1, 2001. The interest
rate of that note is also 9.0% and the note is secured by 40,000 shares of
the Company's stock. Due to the related party nature of these transactions,
the Company has classified the notes receivable within the stockholders'
equity section of the financial statements rather than as a separate asset.
F-7
<PAGE>
7. LEASE AGREEMENTS
Facilities Leases - The Company has a month-to-month lease for its
manufacturing facilities.
Vehicle Leases - The Company leases certain pickup trucks with terms
ranging up to two years. As of December 31, 1998, future annual minimum
lease payments under noncancelable operating leases were approximately
$67,000 and $11,000 for 1999 and 2000, respectively.
Rent expense under all operating leases was approximately $110,000 and
$78,000 for 1998 and 1997, respectively.
8. MAJOR CUSTOMERS
During 1998, the Company had sales to one customer which amounted to
approximately 11% of the Company's total 1998 revenue. During 1997, the
Company had sales to one customer which amounted to approximately 18% of
the Company's total 1997 revenue.
9. GAS JACK COMPRESSOR LEASES
The Company leases Gas Jack Compressors to customers on terms ranging from
two weeks to one year. As of December 31, 1998, future minimum lease
payments receivable under noncancelable operating leases were approximately
$382,000 for 1999.
F-8
<PAGE>
Emerging Alpha Corporation and Subsidiaries
Pro Forma Unaudited Condensed Consolidated Balance Sheet
as of September 30, 1999
<TABLE>
<CAPTION>
Pro Forma
Gas Jack, Emerging GJ Pro Forma Consolidated
Inc. Alpha Measurement Entries Totals
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $66,880 $291,308 $(229,644) $128,544
Accounts receivable and other 466,450 (20,366) 446,084
Inventories 745,048 28,397 773,445
Total current assets 1,278,378 291,308 28,397 (250,010) 1,348,073
Property and Equipment, net 2,700,325 165,028 (50,433) 2,814,920
Other Assets 144,410 38,000 182,410
Total Assets 4,123,113 291,308 193,425 (262,443) 4,345,403
LIABILITES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accruals 377,600 600 17,135 395,335
Notes payable, current portion 477,666 22,310 382,334 882,310
Total current liabilities 855,266 600 39,445 382,334 1,277,645
Note Payable, long-term portion 182,344 2,200 2,057,656 2,242,200
Deferred Taxes, net 201,520 201,520
Stockholders' Equity 2,883,983 290,708 151,780 (2,702,433) 624,038
Total Liabilities and Stockholders' Equity 4,123,113 291,308 193,425 (262,443) 4,345,403
</TABLE>
See notes to unaudited pro forma condensed financial statements.
F-9
<PAGE>
Emerging Alpha Corporation and Subsidiaries
Pro Forma Unaudited Condensed Consolidated Statement of Income
For the year ended March 31, 1999
<TABLE>
<CAPTION>
Historical
Gas Jack Alpha March 31, 1999
Year Year Pro Forma
12/31/98 3/31/99 Pro Forma Consolidated
(Audited) (Audited) Entries Totals
<S> <C> <C> <C> <C>
Revenues $3,267,862 $15,633 $3,283,495
Cost of Sales and Expenses:
Cost of sales 2,184,593 14,256 2,198,849
and operating expenses
Depreciation expense 526,487 526,487
Interest expense 26,651 $246,749 273,400
Total cost of sales and expenses 2,737,731 14,256 246,749 2,998,736
Income Before Taxes 530,131 1,377 (246,749) 284,759
Income Taxes 212,250 -- (98,700) 113,550
Net Income 317,881 1,377 (148,049) 171,209
Earnings per Share:
Basic $0.02 $2.23
Diluted $0.02 $2.11
Weighted Average Number of Shares
Outstanding:
Basic 76,933 76,933
Diluted 81,233 81,233
</TABLE>
See notes to unaudited pro forma condensed financial statements.
F-10
<PAGE>
Emerging Alpha Corporation and Subsidiaries
Pro Forma Unaudited Condensed Consolidated Statement of Income
For the Nine Months Ended September 30, 1999
<TABLE>
<CAPTION>
Pro Forma
Historical Pro Forma Consolidated
Gas Jack Alpha Entries Totals
<S> <C> <C> <C> <C>
Revenues $2,542,886 $6,874 $2,549,760
Cost of Sales and Expenses:
Cost of sales 1,779,230 6,045 1,785,275
and operating expenses
Depreciation expense 459,465 459,465
Interest expense 27,845 177,205 205,050
Total cost of sales and expenses 2,266,540 6,045 177,205 2,449,790
Income Before Taxes 276,346 829 (177,205) 99,970
Income Taxes 110,537 (70,882) 39,655
Net Income 165,809 829 (106,323) 60,315
Earnings per Share:
Basic $0.01 $0.78
Diluted $0.01 $0.74
Weighted Average Number of Shares
Outstanding:
Basic 76,933 76,933
Diluted 81,233 81,233
</TABLE>
See notes to unaudited pro forma condensed financial statements.
F-11
<PAGE>
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited pro forma condensed consolidated financial statements
(the "Pro Forma Financial Statements) are based on adjustments to historical
consolidated financial statements of Emerging Alpha Corporation ("Alpha") to
give effect to the acquisitions described in Note 3 (the "Acquired Companies").
The pro forma statements of income assume all acquisitions described in Note 3
were consummated as of the beginning of the periods presented.
The historical financial statements of Alpha for the year ended March 31, 1999
and of Gas Jack for the year ended December 31, 1998 were used in preparing the
pro forma statements of income for the year ended March 31, 1999. The historical
financial statements of Alpha for the six months ended September 30, 1999 and of
Gas Jack for the nine months ended September 30, 1999 were used in preparing the
pro forma statements of income for the nine months ended September 30, 1999. The
pro forma statements of income do not include any results for GJ Measurement as
the amounts were immaterial and undeterminable. The pro forma statements of
income are not necessarily indicative of results that would have occurred had
the acquisitions been consummated as of the beginning of the periods presented
or that might be attained in the future. Certain information normally included
in the financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). The Pro Forma
Financial Statements should be read in conjunction with the historical
consolidated financial statements of the Company and "Management's' Discussion
and Analysis of Financial Condition and Results of Operations" included in the
Company's Annual Report on Form 10-K for the year ended March 31, 1999 and its
Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 1999 and
September 30, 1999 previously filed with the SEC.
(2) Earnings per Share
Basic earnings per share were computed by dividing net income by the weighted
average number outstanding during the periods assuming that the 33,333 shares of
common stock issued for the acquisition of GJ Measurement were issued at the
beginning of the periods. The diluted earnings per share were computed using the
same method as basic earnings except for including the 4,300 shares of Alpha
common stock options outstanding during the periods.
(3) Acquisitions
On October 29, 1999, pursuant to the terms of the Stock Purchase Agreement by
and among Emerging Alpha Corporation ("Emerging Alpha") and the stockholders of
Gas Jack, Inc., an Oklahoma corporation ("Gas Jack"), Emerging Alpha acquired
all of the outstanding capital stock of Gas Jack for $2.7 million cash. The
purchase price was financed through a $2.8 million term loan facility provided
by Hibernia National Bank to Emerging Alpha. In addition, Emerging Alpha and Gas
Jack entered into a $1.0 million working capital facility with Hibernia National
Bank primarily to be used to finance the working capital requirements of Gas
Jack.
In addition, on October 29, 1999, Emerging Alpha acquired all of the outstanding
units of GJ Measurement, L.L.C., an Oklahoma limited liability company, for
33,333 shares of Emerging Alpha common stock.
F-12
<PAGE>
(4) Adjustments to Historical Financial Statements
The following pro forma adjustments have been made to the historical financial
statements as if all the acquisitions described in Note 3 were consummated as of
the beginning of the periods presented:
(a) To reflect the additional equity issued, cash used, debt repaid, debt
incurred and related changes in interest expense resulting from the
acquisitions.
(b) To reflect the change in income taxes related to the pro forma
adjustments.
F-13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be filed on its behalf by the
undersigned hereunto duly authorized.
EMERGING ALPHA CORPORATION
Date: December 21, 1999 By: /s/ JERRY W. JARRELL
------------------------------
Jerry W. Jarrell
Chief Financial Officer
S-I
