XOTC:DENG Delta Entertainment Group Inc Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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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 March 31, 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 May 21, 2012 the issuer had outstanding 36,306,536 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


 

 

March 31

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

Assets

Current Assets:

 

 

 

 

 

 

 

Cash

 

$

17,646

 

$

34

 

Accounts receivable

 

 

1,650

 

 

1,650

 

Prepaid expenses

 

 

700

 

 

894

 

Inventory

 

 

7,359

 

 

9,912

 

Advance royalty payments

 

 

8,750

 

 

20,000

 

 

 

 

36,105

 

 

32,490

 

 

 

 

 

 

 

 

 

Computer equipment, net

 

 

1,560

 

 

1,707

 

Total Assets

 

$

37,665

 

$

34,197

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity (Deficit)

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

21,464

 

$

19,107

 

Accounts payable - related party

 

 

45,395

 

 

35,634

 

Accrued liabilities

 

 

23,258

 

 

13,643

 

Notes payable

 

 

28,500

 

 

28,500

 

Convertible notes payable, net of unamortized

 

 

 

 

 

 

 

discount of $72,639 and $45,833, respectively

 

 

55,861

 

 

32,667

 

Convertible notes payable-related party

 

 

85,900

 

 

95,900

 

Total Current Liabilities

 

 

260,378

 

 

225,451

 

Total Liabilities

 

 

260,378

 

 

225,451

 

 

 

 

 

 

 

 

 

Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

Common stock, $0.001 par value, 100,000,000 shares authorized,
32,268,202 and 30,904,384 shares issued and outstanding, respectively

 

 

32,272

 

 

30,905

 

Additional Paid in Capital

 

 

509,521

 

 

252,792

 

Accumulated Deficit

 

 

(764,506

)

 

(474,951

)

Total Stockholders’ Equity (Deficit)

 

 

(222,713

)

 

(191,254

)

Total Liabilities and Stockholders’ Equity (Deficit)

 

$

37,665

 

$

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

 

 

 

Ended March 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

Revenue

 

$

31,380

 

$

1,550

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

16,560

 

 

1,079

 

 

 

 

 

 

 

 

 

Gross profit

 

 

14,820

 

 

471

 

 

 

 

 

 

 

 

 

General administrative expenses

 

 

277,075

 

 

29,417

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(262,255

)

 

(28,946

)

 

 

 

 

 

 

 

 

Other Expense

 

 

 

 

 

 

 

Interest expense

 

 

(27,300

)

 

(33

)

 

 

 

 

 

 

 

 

Net Loss

 

 

(289,555

)

 

(28,979

)

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Common Share

 

$

(0.01

)

$

(0.00

)

 

 

 

 

 

 

 

 

Basic and Diluted Weighted Average Common Shares Outstanding

 

 

31,476,369

 

 

30,044,315

 


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 Three Months

 

 

 

Ended March 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

 

 

Net loss

 

$

(289,555

)

$

(28,979

)

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

 

 

 

 

 

 

 

Shares issued for services

 

 

121,382

 

 

 

Shares issued for services- related parties

 

 

43,066

 

 

150

 

Warrant expense

 

 

13,648

 

 

 

Amortization of debt discount

 

 

23,194

 

 

 

Depreciation

 

 

147

 

 

99

 

Changes in Assets and Liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

 

 

4,385

 

Prepaid expenses

 

 

194

 

 

4,000

 

Inventory

 

 

2,553

 

 

 

Advance royalty

 

 

11,250

 

 

 

Accounts payable

 

 

2,357

 

 

5,312

 

Accounts payable-related party

 

 

9,761

 

 

3,334

 

Accrued liabilities

 

 

9,615

 

 

 

Net Cash Provided (Used) by Operating Activities

 

 

(52,388

)

 

(11,699

)

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

 

Proceeds from convertible notes payable

 

 

50,000

 

 

8,000

 

Repayment of convertible notes payable-related party

 

 

(10,000

)

 

 

Proceeds from sale of common stock

 

 

30,000

 

 

 

Net Cash Provided by Financing Activities

 

 

70,000

 

 

8,000

 

 

 

 

 

 

 

 

 

Net Increase in Cash

 

 

17,612

 

 

(3,699

)

 

 

 

 

 

 

 

 

Cash at Beginning of Period

 

 

34

 

 

7,993

 

Cash at End of Period

 

$

17,646

 

$

4,294

 

 

 

 

 

 

 

 

 

Supplemental Disclosures:

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

 

$

 

Cash paid for interest

 

$

 

$

 

 

 

 

 

 

 

 

 

Non Cash Investing and Financing Activities

 

 

 

 

 

 

 

Beneficial conversion feature

 

$

50,000

 

$

 

Common stock issued for repayment of note payable

 

$

 

$

3,000

 


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


- 4 -



DELTA ENTERTAINMENT GROUP, INC.

NOTES TO UNDAUDITED CONSOLIDATED FINANCIAL STATEMENTS


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


Delta Entertainment Group Inc. (“Delta”, 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.


Use of Estimates


The preparation of financial statements in conformity with GAAP 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 materially from these estimates.


Principles of Consolidation


The consolidated financial statements include the accounts of Delta and its wholly owned subsidiaries Creative, PearlBrite and Captivating. All intercompany accounts and transactions have been eliminated in consolidation.


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 months ended March 31, 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 March 31, 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.


- 5 -



DELTA ENTERTAINMENT GROUP, INC.

NOTES TO UNDAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Note 2 – Asset Purchase Agreement


On June 3, 2011 Pearl Brite Concepts, Inc., our wholly owned subsidiary, entered into a Bill of Sale with Pearl White Professional Teeth Whitening LLC. (the “Seller”) which provided in part for Pearl Brite Concepts to acquire substantially all of the assets of the Seller used in connection with the sale of its teeth whitening system which are marketed under the names “PearlBrite” and “Pearl White Professional Teeth Whitening”. The asset purchase was determined to constitute a business under ASC 805 and therefore business combination accounting has been followed.


The purchase price for the assets was $70,000 (the “Purchase Price”) of which $44,400 was paid at closing. The remaining portion of the Purchase Price will be paid pursuant to the terms and conditions of two $10,000 non interest bearing promissory notes and an 8% convertible note payable from a related party in the amount of $5,600. Pearl Brite Concepts had agreed to pay the Seller $10,000 within five calendar days following delivery by the Seller of Seller’s audited financial statements in accordance with Generally Accepted Accounting Principles and as required by the rules and regulations as promulgated by the Securities and Exchange Commission in connection with the acquisition of a business entity. The Company had also agreed to pay the balance of the purchase price ($10,000) pursuant to the terms and conditions of a second promissory note which provided for four monthly payments of $2,500 commencing July 3, 2011 and continuing on the third day of each month thereafter. In December 2011, the Company and the seller amended the repayment terms on the two promissory notes whereby the monthly payments due on the note are $1,500 per month until the note is paid in full. As of March 31, 2012 and December 31, 2011 the remaining balance on the two $10,000 non-interest bearing promissory notes was $13,500. The $5,600 8% convertible note had not been converted or repaid as of March 31, 2012.The promissory notes are secured by all of the current and after-acquired assets, tangible or intangible, of Pearl Brite Concepts related to the operations and sales of either the Pearl Brite or Pearl White Professional Teeth Whitening systems.


The purchase was allocated to inventory valued at $3,479, which represented the original cost basis, with the balance of the purchase price being allocated to the intangible asset Customer List with an estimated life of two years. At December 31, 2011, the Company performed an evaluation of the carrying value of the Customer list and recorded a full impairment in the amount of $66,521.


Following is an unaudited proforma income statement as if the asset purchase had been consummated as of January 1, 2011


 

 

Historical

 

 

 

For the three months ended March 31,

 

 

 

 

2012

 

 

2011

 

 

 

 

 

 

 

 

 

Revenue

 

$

31,380

 

$

21,307

 

Net Income (Loss)

 

$

(289,555

)

$

(25,713

)

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Common Share

 

$

(0.01

)

$

(0.00

)

 

 

 

 

 

 

 

 

Basic and Diluted Weighted Average Common  Shares Outstanding

 

 

31,476,369

 

 

30,044,315

 


Note 3 – 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 notes were entered into, we recognized a beneficial conversion feature in the amount of $50,000. The beneficial conversion feature is being amortized to interest expense over the term of the note using the effective interest method. At March 31, 2012, $10,694 of the discount had been amortized to interest expense and the unamortized discount on the note is $39,306.


Additionally, at March 31, 2012, we have an unamortized discount on a note payable of $33,333 reflected which arose in relation to a $50,000 convertible note payable entered into in November 2011. $12,500 of the discount was amortized to interest expense for the three months ended March 31, 2012.


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.


- 6 -



DELTA ENTERTAINMENT GROUP, INC.

NOTES TO UNDAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Note 4 – Related Party


Convertible Notes Payable – related party


In February 2012, the Company repaid $10,000 on a $50,000 convertible related party note. As of March 31, 2012 and December 31, 2011, the convertible notes payable related party balance was $85,900 and $95,900, respectively.


Accounts payable – related party


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


 

·

Accounts payable related party of 17,956 and $20,195, respectively

 

 

 

 

·

Accrued wages related party of $27,439 and $15,439, respectively


Note 5 – Equity


In January 2012, the Company issued 56,667 shares of common stock at $0.27 per share for officer and director compensation of $15,300. The Company issued 13,700 shares of common stock at $0.27 per share for consulting services of $3,699. The Company also issued 500,000 shares of common stock at $0.20 per share for services provided by a consultant of $100,000. The entire fair value was recorded to expense during the three months ended March 31, 2012.


For the three months ended March, 2012, the Company issued 69,444 warrants for services provided at a fair value of $13,648. 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 $0.20, term of 3 years, expected volatility of 279.14%, and a discount rate of 0.35%. The entire fair value was recorded to expense during the three months ended March 31, 2012.


In February 2012, the Company issued 56,667 shares of common stock at $0.29 per share for officer and director compensation of $16,433. The Company issued 18,450 shares of common stock at $0.29 per share for consulting services of $5,350. The entire fair value was recorded to expense during the three months ended March 31, 2012.


In March 2012, the Company issued 56,667 shares of common stock at $0.20 per share for officer and director compensation of $11,333. The Company issued 61,667 shares of common stock at $0.20 per share for consulting services of $12,333. The entire fair value was recorded to expense during the three months ended March 31, 2012. The Company also issued 600,000 shares of common stock for cash proceeds of $30,000.


Note 6 – Subsequent Events


Management has evaluated subsequent events, and the impact on the reported results and disclosures.


In April 2012, the holder of two $50,000 convertible notes payable 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 8,333 shares for advisory compensation.


In May 2012, the Company received proceeds of $25,000 through a private placement and have issued 125,000 shares of common stock at $.20 per share.


In May 2012, the Company issued 75,001 shares of common stock for officer, director, and advisory compensation.


On May 1, 2012 the Company issued 400,000 shares of common stock for the conversion of the balance of $40,000 on a $50,000 convertible note payable.


- 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 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 Months Ended March 31, 2012 and 2011


We generated revenues for the three months ended March 31, 2012 and 2011 of $31,380 and $1,550, respectively. The increase in the current period is primarily due to the revenues generated from sales of our teeth whitening products which did not exist as of March 31, 2011 given our acquisition occurred in June 2011.


Our cost of sales for the three months ended March 31, 2012 were $16,560 versus $1,079 for the three months ended March 31, 2011.


During the three months ended March 31, 2012 we incurred general and administrative expenses of $277,075 as compared to $29,417 for the three months ended March 31, 2011. 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 incur similar expenses in the same period of the prior year and we expect to incur these expenses going forward.


Liquidity


As of March 31, 2012 we had cash of $17,646 as compared to cash at December 31, 2011 of $34. We had total current assets at March 31, 2012 of $36,105 as compared to $32,490 at December 31, 2011. The increase in cash and other current assets is primarily attributable to $30,000 in proceeds from a private placement during the three months ended March 31, 2012. Our operations to date have primarily been funded through convertible notes payable and advances from a related party. Our total current liabilities at March 31, 2012 were $260,378 as compared to $225,451 at December 31, 2011. The increase in the current liabilities is due to the lack of revenues sufficient to fund our operations requiring us to borrow funds.


We have a deficit in working capital of $224,273 as of March 31, 2012 as compared to a deficit in working capital at December 31, 2011 of $192,961.


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.


- 8 -



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.


PART II – OTHER INFORMATION


Item 1. Legal Proceedings.


The Company may from time to time be involved in legal proceedings arising from the normal course of business.   As of the date of this report, the Company is not currently involved in any legal proceedings.


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.


- 9 -



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 70,367 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.


In February 2012 we issued 75,117 shares of common stock at $.29 per share for officer, director, and advisory compensation.


In March 2012 we issued 118,334 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.


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.


In November 2011, we issued an 8% convertible promissory note in the amount of $50,000.


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.


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.


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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 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.


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:  May 21, 2012

By  /s/ Leonard Tucker

Leonard Tucker

President and Chief Executive and Financial Officer


- 11 -


XOTC:DENG Quarterly Report 10-Q Filling

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XOTC:DENG Quarterly Report 10-Q Filing - 3/31/2012
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