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EX-31 - SECTION 302 CERTIFICATION - Delta Entertainment Group, Inc.ex_31.htm
EX-32 - SECTION 906 CERTIFICATION - Delta Entertainment Group, Inc.ex_32.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


   X         QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2012


               TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT 


For the transition period from _______________ to _______________


Commission File Number  333-165719


Delta Entertainment Group, Inc.

(Exact name of small business issuer as specified in its charter)


Florida

27-1059780

(State or other jurisdiction of

(I.R.S. Employer

incorporation of organization)

Identification No.)


7546 La Paz Blvd. # 101 Boca Raton, FL 33433

(Address of principal executive offices)


(954) 449-2690

(Issuer’s telephone number)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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         


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)    Yes     X      No         


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.


 

Large accelerated filer        

Accelerated Filer        

 

Non-accelerated filer        

(Do not check if a smaller reporting company)

Smaller Reporting Company    X   


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes           No     X   


APPLICABLE ONLY TO CORPORATE ISSUERS


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: At November 14, 2012 the issuer had outstanding 38,014,205 shares of Common Stock, par value $.001 per share.




PART I – FINANCIAL INFORMATION


Item 1 Financial Statements


DELTA ENTERTAINMENT GROUP, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

 

 

September 30,

 

 

December 31,

 

 

 

2012

 

 

2011

 

Assets

 

Current Assets:

 

 

 

 

 

 

Cash

 

$

23,354

 

 

$

34

 

Accounts receivable

 

 

60,781

 

 

 

1,650

 

Prepaid expenses

 

 

5,161

 

 

 

894

 

Inventory

 

 

13,409

 

 

 

9,912

 

Advance royalty payments

 

 

 

 

 

20,000

 

 

 

 

102,705

 

 

 

32,490

 

Computer equipment, net

 

 

1,190

 

 

 

1,707

 

Total Assets

 

$

103,895

 

 

$

34,197

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity (Deficit)

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

29,505

 

 

$

19,107

 

Accounts payable and accrued liabilities-related party

 

 

43,635

 

 

 

35,634

 

Accrued liabilities

 

 

19,359

 

 

 

13,643

 

Note payable

 

 

78,500

 

 

 

28,500

 

Note payable-related party

 

 

5,000

 

 

 

 

Convertible note payable, net of discount

 

 

28,500

 

 

 

32,667

 

Convertible notes payable-related party

 

 

45,900

 

 

 

95,900

 

Total Current Liabilities

 

 

250,399

 

 

 

225,451

 

Total Liabilities

 

 

250,399

 

 

 

225,451

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

 

38,014,205 shares and 30,904,384 shares issued
as of September 30, 2012 and December 31, 2011

 

 

38,015

 

 

 

30,905

 

Additional Paid in Capital

 

 

801,323

 

 

 

252,792

 

Accumulated Deficit

 

 

(985,842

)

 

 

(474,951

)

Total Stockholders’ Equity (Deficit)

 

 

(146,504

)

 

 

(191,254

)

Total Liabilities and Stockholders’ Equity (Deficit)

 

$

103,895

 

 

$

34,197

 

 

The Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements


- 2 -



DELTA ENTERTAINMENT GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


 

 

For the Three Months

 

 

For the Nine Months

 

 

 

Ended September 30,

 

 

Ended September 30,

 

 

 

2012

 

 

2011

 

 

2012

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

139,026

 

 

$

25,581

 

 

$

188,749

 

 

$

36,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

50,047

 

 

 

19,397

 

 

 

81,431

 

 

 

22,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

88,979

 

 

 

6,184

 

 

 

107,318

 

 

 

13,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General administrative expenses

 

 

119,267

 

 

 

132,682

 

 

 

511,425

 

 

 

208,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(30,288

)

 

 

(126,498

)

 

 

(404,107

)

 

 

(194,314

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(4,998

)

 

 

(2,497

)

 

 

(106,784

)

 

 

(3,272

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

(35,286

)

 

 

(128,995

)

 

 

(510,891

)

 

 

(197,586

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Common Share

 

$

(0.00

)

 

$

(0.00

)

 

$

(0.01

)

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Weighted Average Common Shares Outstanding

 

 

37,597,659

 

 

 

30,522,922

 

 

 

35,321,350

 

 

 

30,259,009

 

 

The Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements


- 3 -



DELTA ENTERTAINMENT GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


 

 

For the Nine Months

 

 

 

Ended September 30,

 

 

 

2012

 

 

2011

 

Operating Activities:

 

 

 

 

 

 

Net loss

 

$

(510,891

)

 

$

(197,586

)

Adjustments to reconcile net loss to net cash provided (used) by operating activities:

 

 

 

 

 

 

 

 

Shares issued for services

 

 

186,862

 

 

 

11,000

 

Shares issued for services - related parties and accrued liabilities related party

 

 

67,150

 

 

 

9,450

 

Stock option expense

 

 

25,129

 

 

 

 

Debt discount

 

 

95,833

 

 

 

 

Depreciation

 

 

517

 

 

 

336

 

Changes in Assets and Liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(59,131

)

 

 

4,385

 

Prepaid expenses

 

 

(4,267

)

 

 

1,411

 

Inventory

 

 

5,503

 

 

 

1,684

 

Deposits

 

 

 

 

 

(3,200

)

Advance royalty

 

 

20,000

 

 

 

(17,500

)

Accounts payable

 

 

10,398

 

 

 

18,722

 

Accounts payable-related parties

 

 

8,001

 

 

 

4,667

 

Accrued wages- related parties

 

 

 

 

 

5,537

 

Accrued liabilities- related parties

 

 

 

 

 

26,032

 

Accrued liabilities

 

 

8,216

 

 

 

12,936

 

Net Cash Provided (Used) by Operating Activities

 

 

(146,680

)

 

 

(122,126

)

Investing Activities

 

 

 

 

 

 

 

 

Purchase of computer equipment

 

 

 

 

 

(1,032

)

Purchase of customer list

 

 

 

 

 

(44,018

)

 

 

 

 

 

 

(45,050

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from notes payable

 

 

50,000

 

 

 

15,000

 

Proceeds from notes payable-related party

 

 

12,500

 

 

 

121,800

 

Proceeds from convertible notes payable

 

 

50,000

 

 

 

 

Repayment of notes payable

 

 

 

 

 

(2,500

)

Repayment of notes payable-related party

 

 

(17,500

)

 

 

 

Proceeds from sale of common stock

 

 

75,000

 

 

 

30,000

 

Net Cash Provided by Financing Activities

 

 

170,000

 

 

 

164,300

 

Net Increase in Cash

 

 

23,320

 

 

 

(2,876

)

Cash at Beginning of Period

 

 

34

 

 

 

7,993

 

Cash at End of Period

 

$

23,354

 

 

$

5,117

 

Supplemental Disclosures:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

 

 

$

 

Cash paid for interest

 

$

525

 

 

$

 

Non Cash Investing and Financing Activities

 

 

 

 

 

 

 

 

Beneficial conversion feature

 

$

50,000

 

 

$

 

Common stock issued for repayment of related party note payable

 

$

40,000

 

 

$

 

Purchase of customer list through note payable

 

$

 

 

$

25,600

 

Common stock issued for repayment of note payable and accrued in

 

$

102,500

 

 

$

3,000

 

Common stock issued for purchase of inventory

 

$

9,000

 

 

$

 

Common stock issued for advance royalties

 

$

 

 

$

12,500

 

 

The Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements


- 4 -



DELTA ENTERTAINMENT GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1 – Basis of Presentation and Interim Unaudited Consolidated Financial Statements


Delta Entertainment Group Inc. (“Delta”, “We”, or the “Company”) was incorporated in the state of Florida on October 2, 2009. The principal business purpose of Delta is to operate as a holding company of its subsidiaries Creative Music Group, Inc. (“Creative”), PearlBrite Concepts, Inc. (“PearlBrite”) and Captivating Cosmetics Corp (“Captivating”).


Creative was formed in the state of Florida in October 2010. The principal business purpose of Creative is the management, promotion and development of recording artists and offer live music services.


PearlBrite was formed in the state of Florida on May 31st 2011, The principal business purpose of Pearlbrite is to supply and market professional teeth whitening products.


Captivating was formed in the state of Florida on June 1st 2011 The principal business purpose of Captivating is to produce and market color cosmetics, such as nail polish, lipstick and lip gloss) through mass market retailers.


Interim Financial Statements


The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required to be included in a complete set of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2012. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s 2011 Annual Report filed with the SEC on Form 10-K on April 16, 2012.


Going Concern


At September 30, 2012 the Company has a working capital deficit. As such, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company does not have sufficient working capital for its planned activities, which raises substantial doubt about its ability to continue as a going concern.


Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through short-term loans from related parties and additional equity investments, which will enable the Company to continue operations for the coming year.


Note 2 – Convertible Notes Payable


In January 2012, the Company received proceeds of $50,000 from an 8% convertible note payable. The note plus accrued interest is convertible into common stock at the rate of $.025 per share. Based on our share price on the date the note was entered into, we recognized a beneficial conversion feature in the amount of $50,000. The beneficial conversion feature was amortized to interest expense over the term of the note using the effective interest method. The note plus accrued interest of $1,000 was converted into 2,040,000 shares of common stock in April 2012. At that time, we expensed the remaining unamortized discount and recorded a total of $50,000 to interest expense as of September 30, 2012.


- 5 -



In November 2011, the Company received proceeds of $50,000 from an 8% convertible note payable. The note plus accrued interest is convertible into common stock at the rate of $.05 per share. Based on our share price on the date the note was entered into, we recognized a beneficial conversion feature in the amount of $50,000. The beneficial conversion feature was amortized to interest expense over the term of the note using the effective interest method. The note plus accrued interest of $1,500 was converted into 1,030,000 shares of common stock in April 2012. At that time, we expensed the remaining unamortized discount of $45,833 to interest expense.


As of September 30, 2012, $28,500 in convertible notes remain outstanding. These notes accrue interest at 8% per annum and are convertible at $0.10 per share.


The Company analyzed the convertible notes for derivative accounting consideration under FASB ASC 815-15 and FASB ASC 815-40. The Company determined the embedded conversion option in the convertible met the criteria for classification in stockholders equity under FASB ASC 815-15 and FASB ASC 815-40. Therefore, derivative accounting was not applicable for these convertible notes payable.


Note 3 – Notes Payable

 

In August 2012, the Company, through its subsidiary Pearlbrite, received proceeds $50,000 for the purpose of financing the purchase of inventory subject to purchase orders from a corporate customer. The note bears interest at the rate of 3% for the first thirty days and then at a rate of 1% for each additional ten day period. The note is secured by accounts receivable and all assets of the company and is due on collection of the accounts receivable.


In addition, $28,500 in notes payable remains outstanding as of September 30, 2012. These notes are unsecured, due on demand, and non-interest bearing.


Note 4 – Related Party


Convertible Notes Payable – related party


In February 2012 and May 2012, the Company repaid $10,000 and $40,000 was converted into common shares, respectively on a $50,000 convertible related party note. As of September 30, 2012 and December 31, 2011, the convertible notes payable related party balance was $45,900 and $95,900, respectively.


Notes Payable – related party


In July 2012, the Company, through its subsidiary Pearlbrite, received proceeds $12,500 for the purpose of financing the purchase of inventory subject to a purchase orders from a corporate customer. The note bears interest at the rate of 3% for the first thirty days and then at a rate of 1% for each additional ten day period. The note is secured by accounts receivable and is due on collection of the accounts receivable. As of September 30, 2012, there was $5,000 outstanding on the note.


Accounts payable – related party


At September 30, 2012 and December 31, 2011, accounts payable – related party consisted of the following:


 

·

Accounts payable related party of $14,509 and $20,195, respectively

 

·

Accrued wages related party of $29,126 and $15,439, respectively


Stock issued for services-related party


As of September 30, 2012 the Company has issued 510,003 shares of its common stock and recorded a total of $67,149 related to stock compensation.


- 6 -



Note 5 – Equity


During the nine months ended September 30, 2012, the Company issued 1,454,818 shares of its common stock for consulting fees of $186,862.


The Company also issued 75,000 shares of common stock for the purchase of inventory valued at $9,000.


During the nine months ended September 30, 2012 the Company issued 600,000 shares of common stock for proceeds of $30,000 in a private placement at a per share price of $0.05. In relation to the issuance, the Company also extended a warrant to the investor for the purchase of an additional 600,000 shares at $0.05. This warrant is exercisable immediately and expires on March 12, 2013.


During the nine months ended September 30, 2012 the Company issued 600,000 shares of common stock for proceeds of $30,000 in private placements at a per share price of $0.05.


During the nine months ended September 30, 2012 the Company issued 200,000 shares of common stock for proceeds of $10,000. In relation to the issuance the Company also extended a warrant to the investor for the purchase of an additional 200,000 shares at $0.10. This warrant is exercisable immediately and expires on June 6, 2013.


During the nine months ended September 30, 2012 the Company also issued 200,000 shares of common stock to a related party for proceeds of $5,000 at a per share price of $0.025.


For the nine months ended September 30, 2012, the Company issued 152,777 warrants for services provided at a fair value of $25,129. The fair value of the warrants were determined using a Black-Scholes option valuation model using the following key assumptions: exercise price of $0.25, stock price of between $.07 and $0.20, term of 3 years, expected volatility of 280%, and a discount rate of 0.35%. The fair value recorded to expense during the three months and nine months ended September 30, 2012 was $4,305 and $25,129.

 

Note 6 – Subsequent Events


On November 5, 2012, Michelle Tucker the Company’s former president and wife of Leonard Tucker our current president, in connection with pending divorce proceedings [Case No. 10-011803(37/91) filed in the Circuit Court of the Seventeenth Judicial Circuit, in and for Broward County, Florida] obtained an ex parte temporary injunction prohibiting Mr. Tucker from transferring, issuing, liquidating, buying or selling shares of the Company’s common stock and any subsidiary of the Company.


On November 19, 2012, Mr. Tucker filed an Emergency motion in Circuit Court to immediately modify or vacate the court order.


- 7 -



Item 2. Management’s Discussion and Analysis of Financial Condition and Plan of Operation.


Overview


Delta Entertainment Group, Inc. (the “Company”, the “Registrant”, “Delta Entertainment” or “Delta”) was incorporated in the state of Florida in October 2009. Until April, 2011, the Company’s business strategy was to acquire, develop and represent up and coming artists in the entertainment field through its operating subsidiary Creative Music Group, Inc. To date, we have not been successful in this endeavor. When Marshall Freeman stepped down as our president and director, Leonard Tucker was appointed as the Company’s sole officer and a director. Mr. Tucker investigated multiple business opportunities and chose to focus on the teeth whitening industry. In furtherance thereof, in June 2011, the Company, through its wholly owned subsidiary, Pearl Brite Concepts, Inc. acquired a teeth whitening company which is marketed under the name “PearlBrite”.


We currently have three subsidiaries, PearlBrite Concepts, Inc, Captivating Cosmetics Corp. dba TG Cosmetics and Creative Music Group, Inc.


Creative Music Group, Inc. is a service-based company focused on artist management services for recording artists. It has limited operations.


PearlBrite Concepts, Inc. (“PearlBrite”) is a non dental cosmetic teeth whitening company specializing in providing turnkey professional solutions and products for salons, spas, tanning facilities, and other professional establishments as well as an at home kit and pen for consumers. TG Cosmetics (“TG Cosmetics”) is engaged in the business of producing, outsourcing, packaging, marketing, distributing, advertising, promoting, merchandising and selling cosmetic products to the mass markets, including, but not limited to, nail polish, lipstick, eyeliners, mascara, make-up and related accessories. To date, TG Cosmetics has not conducted meaningful operations


Results of Operations

 

Three and Nine months Ended September 30, 2012 and 2011

 

We generated revenues for the three months ended September 30, 2012 and 2011 of $139,026 and $25,581, respectively. We generated revenues for the nine months ended September 30, 2012 and 2011 of $188,749 and $36,971 respectively. The increase in the current year periods are primarily due to revenues generated from sales of our teeth whitening products.

 

Our cost of sales for the three months ended September 30, 2012 were $50,047 versus $19,397 for the three months ended September 30, 2011. The cost of sales for the nine months ended September 30, 2012 and 2011 were $81,431 and $22,990, respectively. The increase in cost of sales was also due to the teeth whitening product sales.

 

During the three months ended September 30, 2012 we incurred general and administrative expenses of $119,267 as compared to $132,682 for the three months ended September 30, 2011. For the nine months ended September 30, 2012 and 2011, we incurred general and administrative expenses of $511,425 and $208,295 respectively. The increase in general and administrative expenses for the current year is due to an increase in Officers’ and Directors compensation, other compensation, professional fees, and marketing expenses. We did not begin to incur similar expenses in the same period of the prior year until June 2011 and we expect to incur these expenses going forward.

 

Liquidity

 

As of September 30, 2012 we had cash of $23,354 as compared to cash at December 31, 2011 of $34. We had total current assets at September 30, 2012 of $102,705 as compared to $32,490 at December 31, 2011. Our operations to date have primarily been funded through convertible notes payable and advances from a related party as we have not yet generated revenues sufficient to fund our operating costs. Our total current liabilities at September 30, 2012 were $250,399 as compared to $225,451 at December 31, 2011. The increase in the current liabilities is due to revenues insufficient to fund our operations requiring us to borrow funds.

 

We have a deficit in working capital of $147,694 as of September 30, 2012 as compared to a deficit in working capital at December 31, 2011 of $192,961.


- 8 -



Off-balance sheet arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


Item 4. Controls and Procedures.


Disclosure Controls and Procedures. Our principal executive and financial officer, based on his evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, has concluded that (i) our disclosure controls and procedures are effective for ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

FORWARD-LOOKING INFORMATION


The statements contained in this Quarterly Report on Form 10-Q that are not historical fact are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The Company wishes to caution the reader that these forward-looking statements that are not historical facts are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved. While sometimes presented with numerical specificity, these projections and other forward-looking statements are based upon a variety of assumptions relating to the business of the Company, which, although considered reasonable by the Company, may not be realized. Because of the number and range of assumptions underlying the Company’s projections and forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of the Company, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this report. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. Therefore, the actual experience of the Company and the results achieved during the period covered by any particular projections or forward-looking statements may differ substantially from those projected. Consequently, the inclusion of projections and other forward-looking statements should not be regarded as a representation by the Company or any other person that these estimates and projections will be realized, and actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate.


- 9 -



PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

On November 5, 2012, Michelle Tucker the Company’s former president and wife of Leonard Tucker our current president, in connection with pending divorce proceedings [Case No. 10-011803(37/91) filed in the Circuit Court of the Seventeenth Judicial Circuit, in and for Broward County, Florida] obtained an ex parte temporary injunction prohibiting Mr. Tucker from transferring, issuing, liquidating, buying or selling shares of the Company’s common stock and any subsidiary of the Company.


On November 19, 2012, Mr. Tucker filed an Emergency motion in Circuit Court to immediately modify or vacate the court order.

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. However, they are more fully disclosed in the Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission on April 16, 2012.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


We have issued shares of our common stock and other securities for services rendered and capital formation. We have relied on the exemptive provisions of Section 4(2) of the Securities Act.


In the months of January through March 2011, we issued 45,000 shares of common stock at $.01 per share for officer and director compensation. We also issued 300,000 shares for repayment of a $3,000 advance from a shareholder.


In the months of April through September 2011, we issued 90,000 shares of common stock at $.10 per share for officer and director compensation.


In the months of June and July 2011, we issued 50,000 shares of common stock for advisory compensation and 125,000 shares for the purchase of a licensing agreement. The aforementioned shares were all issued at $.10 per share.


In August 2011, we issued 10,000 shares of common stock at $.10 per share and 12,157 shares of common stock at $.16 per share for advisory compensation. We also issued 200,000 shares of common stock for cash proceeds of $20,000.


In September 2011, we issued 5,714 shares of common stock at $.35 per share and 10,000 shares of common stock at $.10 per share for advisory compensation. We also issued 100,000 shares of common stock for cash proceeds of $10,000.


In October 2011, we issued 15,000 shares of common stock at $.05 per share for officer and director compensation. We also issued 19,532 shares of common stock at $.0512 per share for advisory compensation.


In November 2011, we issued 21,666 shares of common stock at $.15 per share for officer, director, and advisory compensation.


In December 2011, we issued 19,444 shares of common stock at $.23 per share and 43,056 share of common stock at $.27 per share for officer, director, and advisory compensation.


In January 2012 we issued 120,371 shares of common stock at $.27 per share for officer, director, and advisory compensation.


On January 18, 2012 we issued 500,000 shares of common stock at $.20 per share for a three year endorsement, promotional, and advisory agreement.


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In February 2012 we issued 75,114 shares of common stock at $.29 per share for officer, director, and advisory compensation.


In March 2012 we issued 126,667 shares of common stock at $.20 per share for officer, director, and advisory compensation.

 

On March 16, 2012, we issued 600,000 shares of common stock in a private placement for proceeds of $30,000.


In April 2012, the holder of two $50,000 convertible notes payable issued in November 2011 and January 2012 elected to convert the principal and accrued interest into shares of common stock. In relation the conversion, the Company issued 3,070,000 shares of common stock.


In April 2012, the Company issued 130,001 shares of common stock at $0.12 per share for officer, director, and advisory compensation.


In May 2012, the Company issued 171,667 shares of common stock at $.07 per share for officer, director, and advisory compensation. Also in May 2012, the holder of $40,000 of convertible notes payable-related party elected to convert the principal balance into shares of common stock. In relation to the conversion the Company issued 400,000 shares of common stock. During the month of May the Company issued 100,000 shares of common stock for cash of $5,000 in a private placement and also 75,000 shares of common stock for the purchase of $9,000 worth of inventory.


In June 2012, the Company issued 166,000 shares of common stock at $.075 per share for officer, director, and advisory compensation. The Company issued 300,000 shares of common stock for $15,000 cash, and 200,000 shares for cash of $5,000 in private placements. In relation to the private placements, the Company issued options to two of the investors as follows: 600,000 shares of common stock at $.05 and 200,000 shares of common stock at $.10. The options were exercisable immediately and have a one year life.


In July 2012, the Company issued 276,667 shares of common stock at $.03 per share for officer, director, and advisory compensation.


In August 2012, the Company issued 196,667 shares of common stock at $.05 per share for officer, director, and advisory compensation.


In September 2012, the Company issued 201,667 shares of common stock at $.08 per share for officer, director, and advisory compensation.


We have also issued the following debt obligations:


In June 2011, the Company issued an 8% convertible promissory note in the amount of $28,500.


On various dates between January and September 2011, we received proceeds from 8% convertible notes payable in the aggregate amount of $73,500.


In May 2011, through our subsidiary Pearlbrite, we received proceeds from an 8% convertible note payable of $5,600. The note plus accrued interest is convertible into shares of Pearlbrite at the rate of $.0001.


In July 2011, through our subsidiary Captivating, we received proceeds from an 8% convertible note payable of $7,500. The note plus accrued interest is convertible into shares of Captivating at the rate of $.0001.


In September 2011, through our subsidiary Pearlbrite, we received proceeds from an 8% convertible note payable of $2,800. The note plus accrued interest is convertible into shares of Pearlbrite at the rate of $.0001.


During September 2011, through ours our subsidiary Creative subsidiary, we received proceeds from an 8% convertible note payable in the amount of $9,500. The note accrues interest at the rate of 8% per annum. The note is convertible into shares of our subsidiary common stock at the rate of $.001.


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With respect to the sale of all unregistered securities:


 

·

the sale was made to a sophisticated or accredited investor, as defined in Rule 502;

 

 

 

 

·

we gave the purchaser the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which we possessed or could acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished;

 

 

 

 

·

at a reasonable time prior to the sale of securities, we advised the purchaser of the limitations on resale in the manner contained in Rule 502(d)2; and

 

 

 

 

·

neither we nor any person acting on our behalf sold the securities by any form of general solicitation or general advertising;


Item 3. Defaults Upon Senior Securities


None.


Item 4. Mine Safety Disclosures


Not Applicable


Item 5. Other information


None.

 

Item 6. Exhibits

 

(a)

The following exhibits are filed herewith pursuant to Item 601 of Regulation S-K.

 

 

 

 

31

Section 302 Certification of Chief Executive and Financial Officer

 

32

Section 906 Certification

 

101*

Interactive Date Files of Financial Statements and Notes.


* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.



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 Entertainment Group, Inc.


Dated: November 19, 2012

By/s/ Leonard Tucker

President and Chief Executive and Financial Officer


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