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iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
Delta Entertainment Group, Inc.
0001481199
10-Q
2012-09-30
false
--12-31
No
No
Yes
Smaller Reporting Company
Q3
2012
<p style="margin: 0pt; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Note
1 - Basis of Presentation and Interim Unaudited Consolidated Financial Statements</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.15pt">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”), </font> PearlBrite Concepts, Inc.(“PearlBrite”) and Captivating Cosmetics Corp(“Captivating”).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.15pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">PearlBrite
was formed in the state of Florida on May 31<sup>st</sup> 2011, The principal business purpose of Pearlbrite is to supply and
market professional teeth whitening products.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Captivating
was formed in the state of Florida on June 1<sup>st</sup> 2011 The principal business purpose of Captivating is to <font style="color: black">produce
and market color cosmetics, such as nail polish, lipstick and lip gloss) through mass market retailers. </font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.15pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Interim
Financial Statements</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; letter-spacing: -0.15pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 0pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i>Going
Concern</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="margin: 0pt; text-align: justify"></p>
<p style="margin: 0pt"></p>
<p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: normal 10pt Times New Roman, Times, Serif"><b>Note
2 – Convertible Notes Payable</b></font></p>
<p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: normal 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: normal 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: normal 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: normal 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: normal 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: normal 10pt Times New Roman, Times, Serif">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. </font></p>
<p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: normal 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="margin: 0pt; text-align: justify"></p>
1000
1500
2040000
1030000
50000
45833
<p style="margin: 0pt; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Note
4 - Related Party</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Convertible
Notes Payable – related party</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Notes
Payable – related party</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts
payable – related party</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">At
September 30, 2012 and December 31, 2011, accounts payable – related party consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Courier New, Courier, Monospace; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in; text-align: justify"></td><td style="width: 0.25in; text-align: justify"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts
payable
related
party
of
$14,509
and
$20,195,
respectively</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Courier New, Courier, Monospace; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in; text-align: justify"></td><td style="width: 0.25in; text-align: justify"><font style="font: 10pt Symbol">·</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accrued
wages
related
party
of
$29,126
and
$15,439,
respectively</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Stock
issued for services-related party</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="margin: 0pt; text-align: justify"></p>
14509
20195
29126
15439
510003
<p style="margin: 0pt; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Note
5 - Equity</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company also issued 75,000 shares of common stock for the purchase of inventory valued at $9,000.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="margin: 0pt; text-align: justify"></p>
23354
34
60781
1650
5161
894
13409
9912
20000
102705
32490
1190
1707
103895
34197
19359
13643
45900
95900
250399
225451
250399
225451
801323
252792
-985842
-474951
-146504
-191254
103895
34197
29505
19107
43635
35634
78500
28500
5000
28500
32667
38015
30905
188749
139026
25581
36971
81431
50047
19397
22990
107318
88979
6184
13981
511425
119267
132682
208295
-404107
-30288
-126498
-194314
-106784
-4998
-2497
-3272
-510891
-35286
-128995
-197586
-0.01
-0.00
-0.00
-0.01
35321350
37597659
30522922
30259009
-510891
-197586
186862
11000
517
336
59131
-4385
4267
-1411
-5503
-1684
20000
-17500
10398
18722
8216
12936
-146680
-122126
50000
75000
30000
170000
164300
23320
-2876
23354
34
7993
5117
525
67150
9450
25129
95833
-3200
8001
4667
5537
26032
-1032
-44018
50000
15000
12500
121800
-2500
-17500
50000
40000
25600
102500
3000
9000
12500
-45050
152777
4305
25129
38014205
30904384
38014205
30904384
50000
50000
8%
8%
.05
0.025
50000
50000
50000
3%
28500
10000
40000
45900
95900
12500
3%
67149
186862
1454818
75000
9000
600000
30000
0.05
200000
5000
<p style="margin: 0pt; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Note
3 – Notes Payable</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="margin: 0pt; text-align: justify"></p>
<p style="margin: 0pt"></p>
<p style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Note 6 - Subsequent Events</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On November 19, 2012, Mr. Tucker filed an Emergency
motion in Circuit Court to immediately modify or vacate the court order.</font></p>
<p style="margin: 0pt; text-align: justify"></p>
38014205