SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: SEPTEMBER 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE EXCHANGE ACT
For the transition period from _____________ to ____________
Commission file number 000-30563
DELTA MUTUAL, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 14-1818394
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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335 GARDEN STREET, SUITE 4, HOBOKEN, NEW JERSEY 07030
(Address of principal executive offices)
(201) 653-7384
(Issuer's telephone number, including area code)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Outstanding at
CLASS SEPTEMBER 30, 2000
COMMON STOCK, PAR VALUE $0.001 557,000
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Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
Exhibit Index on Page 11 Page 1 of 15
ITEM 1. FINANCIAL STATEMENTS
Delta Mutual, Inc. - A Development Stage Company Balance Sheets
(Unaudited)
September 30, December 31,
2000 1999
---- ----
ASSETS
Cash $460 $5,383
------------- ------------
Total Assets $460 $5,383
============= ============
Liabilities and Shareholders' Deficiency
Accrued Liabilities $19,400 $2,700
Accrued Interest 14
------------- ------------
Total Liabilities 19,400 2,714
------------- ------------
Shareholders' Equity (Deficiency)
Loan from Shareholder - 4,950
Common Stock, Par Value $0.0001,
20,000,000 Shares Authorized
557,000 and 485,000 Shares Issued
and Outstanding at September 30,
2000 and December 31, 1999
Respectively 56 49
Paid In Capital 10,694 3,501
Deficit Accumulated During
Development (29,690) (5,831)
------------- ------------
Total Shareholder's Equity (Deficiency) (18,940) 2,669
------------- ------------
Total Liabilities and Shareholders'
Equity (Deficiency) $460 $5,383
============= ============
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See Accompanying Notes to Financial Statements
Delta Mutual, Inc. - A Development Stage Company Statements of Loss (Unaudited)
Since Inception
November 30, Nine Months Three Months
1999 through Ended September, Ended
September 30, 30 September, 30
2000 2000 2000
---- ---- ----
Revenue - - -
Expenses
Legal and Accounting $25,660 $21,467 $16,070
Services
Other Corporate Expenses 3,555 1,980 1,008
Interest 50 36 0
Taxes 425 375 185
------------------------------------------------------------
(Loss) for the Period $29,690 $23,858 $17,263
============================================================
Weighted Average Shares of Common Stock
Outstanding
Basic and Diluted 531,124 557,000
=========================================
(Loss ) per Common Share
Basic and Diluted $(0.045) $(0.031)
=========================================
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See Accompanying Notes to Financial Statements
Delta Mutual, Inc. - A Development Stage Company Statements of Cash Flows (Unaudited)
For the Period
Since Inception
November 17, Nine Months Three Months
1999 through Ended September 30, Ended September 30,
September 30, 2000 2000 2000
------------------ ---- ----
Operating Cash Flow
(Loss) For the Period ($29,690) ($23,858) ($17,264)
Less- Interest Accrued - (14) -
Less-Accrued Liabilities 19,400 16,700 16,000
--------------------------------------------------------------------
Net Cash Used by Operations (10,290) (7,172) (1,264)
--------------------------------------------------------------------
Financing
Sale of Common Stock 10,750 7,200 -
Repayment of Shareholder Loan - (4,950) -
--------------------------------------------------------------------
Net Cash From Financing 10,750 2,250 -
--------------------------------------------------------------------
Increase/Decrease In Cash 460 (4,922) (1,264)
Cash Beginning - 5,382 1,724
--------------------------------------------------------------------
Cash Ending $460 $460 $460
====================================================================
Cash Paid for Interest $50 $50 -
====================================================================
Cash Paid for Income Taxes $425 $425 $185
====================================================================
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See Accompanying Notes to Financial Statements
Statement of Shareholders' Equity
Form Inception ( November 17, 1999) to September 30, 2000 (Unaudited)
Common Paid in
Loan Shares Stock Capital Deficit Total
Balance at Inception - - - - -
Sale of Common Stock 485,000 $49 $3,501 $3,550
Loan From Shareholder 4,950 4,950
Deficit from Inception
to December 31, 1999 (5,831) (5,831)
--------------------------------------------------------------------------------------
Balance at
December 31, 1999 4,950 485,000 49 3,501 (5,831) 2,669
--------------------------------------------------------------------------------------
Sale of Common Stock 2,000 200 200
Deficit for the Period
From January 1 to
March 31, 2000 (4,206) (4,206)
--------------------------------------------------------------------------------------
Balance at
March 31, 2000 4,950 487,000 49 3,701 (10,037) (1,337)
--------------------------------------------------------------------------------------
Sale of Common Stock 70,000 7 6,993 7,000
Repayment of
Shareholder Loan (4,950) (4,950)
Deficit for the period
from April 1 to
June 30, 2000 (2,389) (2,389)
--------------------------------------------------------------------------------------
Balance at
June 30, 2000 - 557,000 56 10,694 (12,426) (1,676)
--------------------------------------------------------------------------------------
Deficit for the Period
July 1, 2000 to
September 30, 2000 (17,264) (17,264)
--------------------------------------------------------------------------------------
Balance at
September 30, 2000 - 557,000 $56 $10,694 $(29,690) $(18,940)
======================================================================================
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See Accompanying Notes to Financial Statements
Delta Mutual, Inc. - A Development Stage Company
Notes to Financial Statements
from Inception (November 17, 1999) to September 30, 2000 (Unaudited)
Note 1 - Organization and Summary of Significant Accounting Policies
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and Item 310(b) of Regulation SB. They do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the financial statements of the Company as of December 31,1999 and for the period since inception (November 17, 1999) then ended, including notes thereto included in the Company's Form 10-SB, as amended.
Organization:
The Company was incorporated in the State of Delaware on November 17, 1999.
Development Stage Operations:
The Company is in its start-up phase and has no operating history. From inception to September 30, 2000, the Company has not recognized any revenue; also, the Company has not capitalized any costs associated with its start-up.
Income Taxes:
The Company has not recognized any provision for the tax benefits associated with its loss from inception to September 30, 2000. Such loss may be carried forward for tax-return purposes. However, the Company is unable to predict the nature, timing and extent of near-term profitability; accordingly the Company presently intends to recognize such carryforward benefits when realized.
Note 2 - Development Stage Operations
The Company is in its start-up phase and has no operating history. The Company's business is subject to most of the risks inherent in the establishment of a new business enterprise. The likelihood of success of the Company must be considered in light of the expenses, difficulties, delays and unanticipated challenges encountered in connection with the formation of a new business, raising operating and development capital, and the marketing of a new product.
The Company presently does not have sufficient liquid assets to finance its anticipated funding needs and obligations. If fundraising activities are not successfully completed, the Company may not be able to meet its obligations as they become due and, accordingly, may not be able to continue its business operations as presently anticipated.
Note 3 - Common Stock
The Company has a single class of Common Stock with a par value of $0.0001 per September 30, 2000, 557,000 shares were issued and outstanding. The president of the Company was issued 300,000 shares in November of 1999.
Since inception, the Company issued shares of its stock to investors for cash as
follows:
Number of
Date of Issue Shares Amount
November, 1999 450,000 $50
December, 1999 35,000 3,500
March, 2000 2,000 200
April, 2000 50,000 5,000
May, 2000 20,000 2,000
---------- ----------
557,000 $10,750
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Such shares were issued without registration in reliance on exemptions in federal securities laws, including, in part, an exemption that permits issuance of stock up to $1 million without registration of the securities.
Note 4 - Related Party Transactions
In November 1999, the president of the Company made a short-term loan to the Company in the amount of $4,950. This loan was repaid in the second quarter of calendar 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION
The Company is in the initial stages of startup and is exploring the feasibility of raising sufficient capital to implement its business plan. The Company has been in the development stage since inception (November 17, 1999).
The Company has registered its common stock on a Form 10-SB registration statement filed pursuant Section 12(b) of the Securities Exchange Act of 1934 (the "Exchange Act"). The Company would like to have its common shares listed for quotation on the Over-the-Counter Bulletin Board (the "OTC-BB") system operated by the National Association of Securities Dealers. Management believes that the Company will be unable to raise sufficient capital to begin its operations until the Company's common shares are listed on the OTC-BB. To date, the Company has been unable to get its common shares listed on the OTC-BB. As such, the Company will remain essentially dormant until its shares are listed. Even if the Company obtains such a listing, there are no assurances the Company will be successful in raising sufficient capital to commence its operations.
The Company has, and will continue to have until it raises sufficient funds, limited capital with which to commence operational activities. At the present time, the Company has not commenced operations or any activities beyond the planning stage; furthermore, the Company is unable to predict at the present time when its initial startup stage will be complete and it will be able to commence any operational activities.
The Company has incurred, and will continue to incur, expenses relating to its operations. Specifically, as long as the Company is required to file reports under the Exchange Act, the Company will continue to incur accounting and legal fees relating to its filings. The Company enjoys the non-exclusive use of office, telecommunication and incidental supplies of stationary, provided by its officers. As of the date of this report, the Company has not received any revenues.
The Company must rely upon loans and investments from affiliates to pay its operating expenses. There are no assurances that such affiliates will continue to advance funds to the Company or will continue to invest in the Company's securities. In the event the Company is unable to obtain additional capital or funding it may be unable to pursue its business plan. During the twelve months following the filing of this report, management intends to seek a listing of the Company's common shares on the OTC-BB and conduct additional financings to raise the capital necessary to pursue the Company's business plan. As of the date of this report, the Company does not have any commitments for any such financings.
Once the Company completes its business planning and commences acquiring the assets and resources necessary to execute its business plan, the Company will need additional funding. No significant cash or funds are expected to be required for the Company to complete its business planning.
The Company does not anticipate that it will have a significant change in the number of employees until such time as it is able to begin its intended operations.
LIQUIDITY
At September 30, 2000, the Company had a working capital deficit of $18,940, compared to a working capital surplus of $2,669 at December 31, 1999. The decrease in working capital is the result of the net loss incurred during the nine months ended September 30, 2000.
From inception through September 30, 2000, the Company received $10,750 from the sale of its common stock.
Subsequent to September 30, 2000, management has provided the Company with approximately $7,500. As of the date of this report, management has not decided whether the funds will be accounted for as a loan or an equity investment. It is anticipated that the Company will continue to rely upon advances and/or equity investments from affiliates for the foreseeable future.
The following language is found in the notes of the Company's financial statements at December 31, 1999 (such statements being included in a previously filed Form 10-SB/A Amendment No. 1):
Note 2 - Development Stage Operations
The Company is in its start-up phase and has no operating history. The Company's business is subject to most of the risks inherent in the establishment of a new business enterprise. The likelihood of success of the Company must be considered in light of the expenses, difficulties, delays and unanticipated challenges encountered in connection with the formation of a new business, raising operating and development capital, and the marketing of a new product.
The Company presently does not have sufficient liquid assets to finance its anticipated funding needs and obligations. If fundraising activities are not successfully completed, the Company may not be able to meet its obligations as they become due and, accordingly, may not be able to continue its business operations as presently anticipated.
RESULTS OF OPERATIONS
During the nine months ended September 30, 2000, the Company recorded a loss of $23,858, of which $21,467 was the result of legal and accounting expenses incurred during the period. The legal and accounting expenses relate to the filing of the Company's Form 10-SB registration statement with the Securities and Exchange Commission and the preparation of the Company's Form 211 for submission to the OTC-BB, both of which occurred during the period.
During the nine months ended September 30, 2000, net cash used by operations was $7,172. During the period, the Company increased its accrued liabilities by $16,700. Net cash from financing activities during the nine months ended September 30, 2000 was $2,250. During the period the Company received $7,200 from the sale of common stock and repaid a shareholder loan in the amount of $4,950.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
On October 18, 2000, Daniel J. Baier, CPA, P.C. (the "Firm") resigned as the Company's independent public accountant and terminated any continuing services.
The resignation was caused by concern that the Firm's independence relating to future attest services may be impaired as a result of fees that had been unpaid as of October 18, 2000. If left unpaid, the Firm may have been considered to have accepted a contingent fee arrangement that neither the Firm nor the Company had intended.
The Company is sensitive to the concern of the auditor and has reluctantly acknowledged the resignation. Further, the Company is attempting to make payment of all fees owed.
Prior to the resignation of the Firm, the Company did not consult any other accountant regarding any of the matters identified in Item 304(a)(2) of Regulation S-B.
Daniel J. Baier, CPA, P.C. audited the Company's financial statements for the period from inception (November 17, 1999) to December 31, 1999. The Firm's report for the period did not contain an adverse opinion or a disclaimer of opinion, nor was the report qualified or modified as to uncertainty, audit scope or accounting principles except for an explanatory paragraph stating that the Company is in its start-up phase, has no operating history and does not have sufficient liquid assets to finance its anticipated funding needs and obligations. In addition, the explanatory paragraph states that if the Company is not successful in raising additional funds it may not be able to meet its obligations as they become due and the Company may not be able to continue its business operations. During the period of the engagement of the Firm there were no disagreements on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the Firm would have caused such firm to make reference to the subject matter of the disagreements in connection with its reports on the Company's financial statements. In addition, there were no such events as described under Item 304 of Regulation S-B during the period from
inception (November 17, 1999) to December 31, 1999 and the subsequent interim periods through October 18, 2000.
On November 10, 2000, the Company engaged Wiener, Goodman & Company, P.C. of Eatontown, New Jersey as its new independent public accountant. Prior to the engagement of Wiener, Goodman & Company, the Company did not consult that firm regarding any of the matters identified in Item 304(a)(2) of Regulation S-B.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
3.1 Certificate of Incorporation (1)<F1> N/A
3.2 Bylaws (1)<F1> N/A
3.2a Amendment to Article III, Section 1 of the Bylaws 13
16 Letter re: change in certifying accountant 14
27 Financial Data Schedule 15
<F1>
(1) Incorporated by reference to the Exhibits previously filed with the
Company's Form 10-SB/A Amendment No. 1 filed with the Securities and
Exchange Commission on June 15, 2000.
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(b) The following reports on Form 8-K were filed during the last quarter of the period covered by this report:
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DELTA MUTUAL, INC.
(Registrant)
Date: November 20, 2000 By: /s/ James Platek
----------------------- ------------------------------------
James Platek
President and Chief Executive Officer
Date: November 20, 2000 By: /s/ Bonnie Cunningham
----------------------- ------------------------------------
Bonnie Cunningham
Secretary and Treasurer
(Principal Financial and Chief
Accounting Officer)
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Article III, Section 1 of the Company's Bylaws has been amended and replaced in its entirety by the following:
Section 1. Number and Term. The corporation shall be managed by a Board of Directors, all of whom must be natural persons at least 18 years of age. Directors need not be residents of the State of Delaware or stockholders of the corporation. The number of directors of the corporation shall be not less than one nor more than twelve. Subject to such limitations, the number of directors may be increased or decreased by resolution of the Board of Directors, but no decrease shall have the effect of shortening the term of any incumbent director. Each director shall hold office until the next annual meeting of shareholders or until his successor has been elected and qualified.
November 20, 2000
Office of the Chief Accountant
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, NW
Washington, DC 20549
I would like to inform you that I have read the disclosures provided by Delta Mutual, Inc. (File #000-30563) in its filing of form 10-Q dated November 20, 2000 and that there are no disagreements regarding the statements made under Item 5 - Other Information.
Sincerely,
/s/ Daniel J. Baier Daniel J. Baier |
| ARTICLE 5 |
| THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| MULTIPLIER: 1 |
| CURRENCY: U.S. DOLLARS |
| PERIOD TYPE | 9 MOS |
| FISCAL YEAR END | DEC 31 2000 |
| PERIOD START | JAN 01 2000 |
| PERIOD END | SEP 30 2000 |
| EXCHANGE RATE | 1 |
| CASH | 460 |
| SECURITIES | 0 |
| RECEIVABLES | 0 |
| ALLOWANCES | 0 |
| INVENTORY | 0 |
| CURRENT ASSETS | 460 |
| PP&E | 0 |
| DEPRECIATION | 0 |
| TOTAL ASSETS | 460 |
| CURRENT LIABILITIES | 19,400 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 56 |
| OTHER SE | (18,940) |
| TOTAL LIABILITY AND EQUITY | 460 |
| SALES | 0 |
| TOTAL REVENUES | 0 |
| CGS | 0 |
| TOTAL COSTS | 0 |
| OTHER EXPENSES | 23,858 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 36 |
| INCOME PRETAX | (23,858) |
| INCOME TAX | 0 |
| INCOME CONTINUING | (23,858) |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | (23,858) |
| EPS BASIC | (0.045) |
| EPS DILUTED | (0.045) |