##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
  þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2005
 o
    
    Transition report under Section 13 or 15(d) of the
Exchange Act
For the transition period from  to
 Commission File Number 000-50531
 CEA Acquisition Corporation
  Delaware
    
    20-0308891(State or other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)
 
  
  þ o
 þ o
  o þ




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PagePart I: Financial Information:Item 1
Financial Statements (Unaudited):Balance Sheets
    
    3Statements of Operations
    
    4Statements of Stockholders Equity
    
    5Statements of Cash Flows
    
    6Summary of Significant Accounting Policies
    
    7Notes to Financial Statements
    
    8Item 2  Managements Discussion and Analysis or Plan of Operation
    
    12Item 3  Controls and Procedures
    
    14Part II. Other InformationItem 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    15Item 6  Exhibits
    
    15Signatures and Certifications
    
    16Ex-31.1 Section 302 CertificationEx-31.2 Section 302 CertificationEx-32.1 Section 906 CertificationEx-32.2 Section 906 Certification
  2




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##### Table of Contents



CEA Acquisition Corporation
(a corporation in the development stage)
 
 Balance Sheets
 September 30,
    
    
    December 31,2005
    
    
    2004(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    84,337
    
    
    $
    512,299U.S. Government Securities held in Trust Fund (Note 2)
    
    
    21,093,001
    
    
    
    20,694,933Accrued interest receivable, Trust Fund (Note 2)
    
    
    73,577
    
    
    
    51,064Prepaid expenses
    
    
    22,400
    
    
    
    6,750Total current assets
    
    
    21,273,315
    
    
    
    21,265,046Deferred acquisition costs (Note 2)
    
    
    187,372
    
    
    
    Total assets
    
    $
    21,460,687
    
    
    $
    21,265,046Liabilities and Stockholders EquityCurrent liabilities:Accrued expenses
    
    $
    127,193
    
    
    $
    31,827Common stock, subject to possible conversion,
804,598 shares at conversion value (Note 2)
    
    
    4,231,202
    
    
    
    4,147,127Commitment (Note 5)Stockholders equity (Notes 2, 3, 6 and 7)Preferred stock, $.0001 par value, Authorized
1,000,000 shares; none issuedCommon stock, $.0001 par valueAuthorized 20,000,000 sharesIssued and outstanding 4,900,000 shares
(which includes 804,598 subject to
possible conversion)
    
    
    490
    
    
    
    490Additional paid-in capital
    
    
    17,183,408
    
    
    
    17,267,483Deficit accumulated during development stage
    
    
    (81,606
    )
    
    
    (181,881
    )Total stockholders equity
    
    
    17,102,292
    
    
    
    17,086,092Total liabilities and stockholders equity
    
    $
    21,460,687
    
    
    $
    21,265,046
 See accompanying summary of significant accounting policies and notes to unaudited financial
statements.
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CEA Acquisition Corporation
(a corporation in the development stage)
 
 Statements of Operations (Unaudited)
 Period fromThree months
    
    
    Three months
    
    
    Nine months
    
    
    Nine months
    
    
    October 14, 2003ended
    
    
    ended
    
    
    ended
    
    
    ended
    
    
    (inception) toSept. 30, 2005
    
    
    Sept. 30, 2004
    
    
    Sept. 30, 2005
    
    
    Sept. 30, 2004
    
    
    Sept. 30, 2005Expenses:General and administrative
expenses (Note 5)
    
    $
    (135,524
    )
    
    $
    (82,162
    )
    
    $
    (320,661
    )
    
    $
    (305,644
    )
    
    $
    (729,630
    )Operating loss
    
    $
    (135,524
    )
    
    $
    (82,162
    )
    
    $
    (320,661
    )
    
    $
    (305,644
    )
    
    $
    (729,630
    )Interest income
    
    $
    166,904
    
    
    $
    39,747
    
    
    $
    420,936
    
    
    $
    135,658
    
    
    $
    648,024Net income (loss)
    
    $
    31,380
    
    
    $
    (42,415
    )
    
    $
    100,275
    
    
    $
    (169,986
    )
    
    $
    (81,606
    )Accretion of Trust Fund
relating to common
stock subject to
possible conversion
    
    
    33,209
    
    
    
    26,324
    
    
    
    84,075
    
    
    
    49,427
    
    
    
    150,855Net income (loss) attributable
to common
stockholders
    
    $
    (1,829
    )
    
    $
    (68,739
    )
    
    $
    16,200
    
    
    $
    (219,413
    )
    
    $
    (232,461
    )Basic and fully diluted income
(loss) per share
    
    $
    (.00
    )
    
    $
    (.01
    )
    
    $
    .00
    
    
    $
    (.04
    )Weighted average common shares
outstanding
    
    
    4,900,000
    
    
    
    4,900,000
    
    
    
    4,900,000
    
    
    
    4,166,822
 See accompanying summary of significant accounting policies and notes to unaudited financial statements.
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CEA Acquisition Corporation
(a corporation in the development stage)
 
 Statements of Stockholders Equity (Unaudited)
 Additional
    
    
    Deficit accumulatedPreferred Stock
    
    
    Common Stock
    
    
    Paid - In
    
    
    during theShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    development stage
    
    
    TotalBalance, October 14, 2003 (inception)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Sale of 875,000 shares of common
stock to
initial stockholders
    
    
    
    
    
    
    
    
    
    
    875,000
    
    
    
    87
    
    
    
    24,913
    
    
    
    
    
    
    
    25,000Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (147
    )
    
    
    (147
    )Balance, December 31, 2003
    
    
    
    
    
    
    
    
    
    
    875,000
    
    
    
    87
    
    
    
    24,913
    
    
    
    (147
    )
    
    
    24,853Sale of 4,025,000 units and
underwriter
option, net of underwritersdiscount
and
offering expenses (includes 804,598
shares
subject to possible
conversion)
    
    
    
    
    
    
    
    
    
    
    4,025,000
    
    
    
    403
    
    
    
    17,286,247
    
    
    
    
    
    
    
    17,286,650Accretion of Trust Fund relating to
common
stock subject to
possible conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,677
    )
    
    
    
    
    
    
    (43,677
    )Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (181,734
    )
    
    
    (181,734
    )Balance, December 31, 2004
    
    
    
    
    
    
    
    
    
    
    4,900,000
    
    
    
    490
    
    
    
    17,267,483
    
    
    
    (181,881
    )
    
    
    17,086,092Accretion of Trust Fund relating to
common
stock subject to
possible conversion
(unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84,075
    )
    
    
    
    
    
    
    (84,075
    )Net income for the period (unaudited)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,275
    
    
    
    100,275Balance, September 30, 2005
(unaudited)
    
    
    
    
    
    $
    
    
    
    
    4,900,000
    
    
    $
    490
    
    
    $
    17,183,408
    
    
    $
    (81,606
    )
    
    $
    17,102,292
 See accompanying summary of significant accounting policies and notes to unaudited financial statements.
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CEA Acquisition Corporation
(a corporation in the development stage)
 
 Statements of Cash Flows (Unaudited)
 Nine months
    
    
    Nine months
    
    
    October 14, 2003ended
    
    
    ended
    
    
    (inception) toSept. 30, 2005
    
    
    Sept. 30, 2004
    
    
    Sept. 30, 2005Cash Flows from Operating ActivitiesNet income (loss)
    
    $
    100,275
    
    
    $
    (169,986
    )
    
    $
    (81,606
    )Adjustments to reconcile net income (loss) to net cash used in operating activities:Gain on maturity of U.S. Government Securities held in Trust Fund
    
    
    (395,026
    )
    
    
    (98,750
    )
    
    
    (565,968
    )Changes in operating assets and liability:
    
    
    (294,751
    )
    
    
    (268,736
    )
    
    
    (647,574
    )Increase in prepaid expenses
    
    
    (15,650
    )
    
    
    (48,780
    )
    
    
    (22,400
    )Increase in accrued interest receivable
    
    
    (22,513
    )
    
    
    (33,433
    )
    
    
    (73,577
    )Increase (decrease)in accrued expenses
    
    
    (25,900
    )
    
    
    1,499
    
    
    
    5,927Net cash used in operating activities
    
    
    (358,814
    )
    
    
    (349,450
    )
    
    
    (737,624
    )Cash Flows from Investing ActivitiesPurchase of U.S. Government Securities held in Trust
Fund
    
    
    (126,003,042
    )
    
    
    (41,153,005
    )
    
    
    (187,851,033
    )Maturity of U.S. Government Securities held in Trust
Fund
    
    
    126,000,000
    
    
    
    20,626,000
    
    
    
    167,324,000Deferred acquisition costs
    
    
    (66,106
    )
    
    
    
    
    
    
    (66,106
    )Net cash used in investing activities
    
    
    (69,148
    )
    
    
    (20,527,005
    )
    
    
    (20,593,139
    )Cash Flows from Financing ActivitiesProceeds from public offering of 4,025,000 units, net
    
    
    
    
    
    
    21,487,715
    
    
    
    21,487,815Deferred registration costs
    
    
    
    
    
    
    
    
    
    
    (97,715
    )Proceeds from sale of shares of common
stock to initial stockholders
    
    
    
    
    
    
    
    
    
    
    25,000Proceeds from note payable, stockholder
    
    
    
    
    
    
    21,200
    
    
    
    94,300Repayment of note payable, stockholder
    
    
    
    
    
    
    (94,300
    )
    
    
    (94,300
    )Net cash provided by financing
activities
    
    
    
    
    
    
    21,414,615
    
    
    
    21,415,100Net increase (decrease) in cash and cash equivalents
    
    
    (427,962
    )
    
    
    538,160
    
    
    
    84,337Cash and cash equivalents at beginning of the period
    
    
    512,299
    
    
    
    238
    
    
    
    Cash and cash equivalents at end of the period
    
    $
    84,337
    
    
    $
    538,398
    
    
    $
    84,337Supplemental disclosure of non-cash activity:Accretion of Trust Fund relating to common stock
subject to possible conversion
    
    $
    84,075
    
    
    $
    49,427
    
    
    $
    150,855Accrued acquisition costs
    
    $
    121,266
    
    
    $
    
    
    
    $
    121,266
 See accompanying summary of significant accounting policies and notes to unaudited financial statements.
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CEA Acquisition Corporation
(a corporation in the development stage)
 
 Summary of Significant Accounting Policies
 Cash & Cash
Equivalents
    
    The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.Income Taxes
    
    The Company follows Statement of Financial Accounting Standards No.
109 (SFAS No. 109), Accounting for Income Taxes which is an
asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events
that have been recognized in the Companys financial statements or tax
returns. The Company has a net operating loss carryforward of
approximately $82,000 available to reduce any future income taxes. The
tax benefit of this loss, approximately $32,000, has been fully offset by a
valuation allowance due to the uncertainty of its realization.Net Income/(Loss )
Per Share
    
    Basic net income/(loss) per share is calculated by dividing net
income/(loss) by the weighted average number of common shares
outstanding during each period. No effect has been given to potential
issuances of common stock from warrants or the underwriter option in
the diluted computation as the effect would not be dilutive.Use of Estimates
    
    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.Reclassification
    
    Certain items have been reclassified from prior periods to conform with
the current period presentation.
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CEA Acquisition Corporation
(a corporation in the development stage)
 
 Notes to Unaudited Financial Statements
 1.
    
    Basis of
Presentation
    
    The accompanying financial statements are unaudited and have been
prepared in accordance with accounting principles generally accepted in
the United States of America for interim financial information and with
instructions to Form 10-QSB. Accordingly, certain information and
footnote disclosures normally included in audited financial statements
prepared in accordance with accounting principles generally accepted in
the United States of America have been omitted pursuant to such rules
and regulations. These financial statements should be read in
conjunction with the audited financial statements that were included in
the Companys Form 10-KSB for the year ended December 31, 2004.
In the opinion of management, all adjustments (consisting primarily of
normal accruals) have been made that are necessary to present fairly the
financial position of the Company. Operating results for the interim
periods presented are not necessarily indicative of the results to be
expected for a full year.2.
    
    Organizationand Business
Operations
    
    The Company was incorporated in Delaware on October 14, 2003 as a
blank check company, the objective of which is to acquire an operating
business in the entertainment, media and communications industry.
On February 19, 2004, the Company consummated an Initial Public
Offering (Offering) and raised net proceeds of $21,390,100 which is
discussed in Note 3. The Companys management has broad discretion
with respect to the specific application of the net proceeds of this
Offering, although substantially all of the net proceeds of this Offering
are intended to be generally applied toward consummating a business
combination with a operating business in the entertainment, media and
communications industry (Business Combination). Furthermore, there
is no assurance that the Company will be able to successfully effect a
Business Combination. An amount of $21,166,578 and $20,745,997
(which includes accrued interest of $73,577 and $51,064) as of
September 30, 2005 and December 31, 2004 respectively, is being held
in an interest bearing trust account (Trust Fund) until the earlier of (i)
the consummation of its first Business Combination or (ii) liquidation of
the Company. Under the agreement governing the Trust Fund, funds
will only be invested in United Stated government securities (treasury
bills) with a maturity of 180 days or less. The remaining net proceeds
(not held in trust) may be used to pay for business, legal and accounting
due diligence on prospective acquisitions and continuing general and
administrative expenses.
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CEA Acquisition Corporation
(a corporation in the development stage)
 Notes to Unaudited Financial Statements
 The Company has signed a definitive agreement for the acquisition of a target business (see below) and will
submit such transaction for stockholder approval. In the event that public stockholders owning 20% or more of
the shares sold in the Offering vote against the Business Combination and exercise their conversion rights
described below, the Business Combination will not be consummated. All of the Companys stockholders prior to
the Offering, including all of the officers and directors of the Company (Initial Stockholders), have agreed
to vote their 875,000 founding shares of common stock in accordance with the vote of the majority in interest
of all other stockholders of the Company (Public Stockholders) with respect to any Business Combination.
After consummation of the Companys Business Combination, these voting safeguards will no longer be applicable.With respect to a Business Combination which is approved and consummated, any Public Stockholder who voted
against the Business Combination may demand that the Company convert his shares. The per share conversion
price will equal the amount in the Trust Fund as of the record date for determination of stockholders entitled
to vote on the Business Combination divided by the number of shares of common stock held by Public
Stockholders at the consummation of the Offering. Accordingly, Public Stockholders holding 19.99% of the
aggregate number of shares owned by all Public Stockholders may seek conversion of their shares in the event
of a Business Combination. Such Public Stockholders are entitled to receive their per share interest in the
Trust Fund computed without regard to the shares held by Initial Stockholders. In this respect, $4,231,202
and $4,147,127 (which includes accretion of Trust Fund) has been classified as common stock subject to
possible conversion at September 30, 2005 and December 31, 2004, respectively.The Companys Certificate of Incorporation provides for mandatory liquidation of the Company, without
stockholder approval, in the event that the Company does not consummate a Business Combination within 18
months from the date of the consummation of the Offering (such date would be August 19, 2005), or 24 months
from the consummation of the Offering (such date would be February 19, 2006) if certain extension criteria
have been satisfied. During August 2005, the Company signed two separate letters of intent with companies for
a Business Combination and anticipate signing a definitive agreement with one of those two companies. As a
result of having signed these letters of intent, the Company has satisfied the extension criteria and now has
until February 19, 2006 to complete a Business Combination. In the event of liquidation, it is likely that
the per share value of the residual assets remaining available for distribution (including Trust Fund assets)
will be
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CEA Acquisition Corporation
(a corporation in the development stage)
 Notes to Unaudited Financial Statements
 less than the Offering price
per share in the Offering
due to costs related to the
Offering (assuming no value
is attributed to the
warrants contained in the
Units in the Offering
discussed in Note 3).On August 22, 2005, the
Company entered into an
Agreement and Plan of
Merger, as amended (Merger
Agreement), with etrials
Worldwide, Inc., a Delaware
corporation (etrials) and
certain stockholders of
etrials (Signing
Stockholders). As a result
of the merger, etrials will
be the surviving corporation
and will be a wholly owned
subsidiary of the Company.
etrials is a leading
provider of recently
developed technologies
created specifically for
drug and medical device
development called
eClinical software and
related professional
services. Traditionally,
the functions to which
eClinical software applies
have been performed using
paper forms and manual
processes. Integrated
eClinical software
applications both span and
support the entire clinical
trial process and are
intended to replace the
paper forms and manual
processes.Pursuant to the Merger
Agreement, the holders of
securities of etrials
outstanding immediately
before the merger will
receive, in exchange for
such securities, an
aggregate of 7,400,000
shares of the Companys
common stock and warrants to
purchase an aggregate of
4,250,000 shares of the
Companys common stock,
subject to increase or
decrease in certain
circumstances. The warrants
to be issued to the etrials
security holders will be
identical in form to the
warrants sold by the Company
in its initial public
offering. The Merger
Agreement provides that
1,400,000 shares of common
stock to be issued to the
etrials stockholders are to
be placed in escrow to
secure indemnification
rights of the Company
pursuant to the Merger
Agreement and will not be
released unless and until
the Companys common stock
trades at $7.00 or more for
a specified period of time
prior to February 19, 2008.3. Offering
    
    The Company sold
4,025,000 units (Units) in
the offering, which includes
all of the 525,000 Units
subject to the underwriters
over allotment option. Each
Unit consists of one share
of the Companys common
stock, $.0001 par value, and
two Redeemable Common Stock
Purchase Warrants
(Warrants). Each Warrant
will entitle the holder to
purchase from the Company
one share of common stock at
an exercise price of $5.00
commencing the later of the
completion of a Business
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CEA Acquisition Corporation
(a corporation in the development stage)
 Notes to Unaudited Financial Statements
 Combination with a
target business or one year
from the effective date of
the Offering and expiring
four years from the
effective date of the
Offering. The Warrants will
be redeemable at a price of
$.01 per Warrant upon 30
days notice after the
Warrants become exercisable,
only in the event that the
last sale price of the
common stock is at least
$8.50 per share for any 20
trading days within a 30
trading day period ending on
the third day prior to date
on which notice of
redemption is given. In
connection with this
Offering, the Company issued
an option for $100 to the
representative of the
underwriters to purchase
350,000 units at an exercise
price of $9.90 per Unit. In
addition, the warrants
underlying such Units are
exercisable at $6.40 per
share.4. Note Payable,     Stockholder
    
    The Company issued a
$60,000 unsecured
non-interest bearing
promissory note to a
stockholder on October 22,
2003. The stockholder
advanced additional amounts
aggregating $34,300 through
January 31, 2004. The note
and advance were paid in
full on March 3, 2004 from
the net proceeds of the
Offering.5. Commitment
    
    The Company presently
occupies office space
provided by an affiliate of
one of the Initial
Stockholders. Such
affiliate has agreed that,
until the acquisition of a
target business by the
Company, it will make such
office space, as well as
certain office and
secretarial services,
available to the Company, as
may be required by the
Company from time to time.
The Company pays such
affiliate $7,500 per month
for such services commencing
from February 19, 2004, the
effective date of the
Offering. Amounts of
$67,500 for the nine month
period ended September 30,
2005, $55,086 for the nine
months ended September 30,
2004 and$145,086 for the period from
October 14, 2003 (inception)
to September 30, 2005 are
included in general and
administrative expenses for
such services.6. Preferred Stock
    
    The Company is
authorized to issue
1,000,000 shares of
preferred stock with such
designations, voting and
other rights and preferences
as may be determined from
time to time by the Board of
Directors.7. Common Stock
    
    In January 2004, the
Companys Board of Directors
authorized 1.666666 to one
forward stock split of its
common stock. All
references in the
accompanying financial
statements to the numbers of
shares have been
retroactively restated to
reflect the transaction.At September 30, 2005, there
were 9,100,000 shares of
common stock reserved for
issuance upon exercise of
redeemable warrants and
underwriters unit purchase
option.
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ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
  Forward Looking Statements
         12




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13




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ITEM 3. CONTROLS AND PROCEDURES.
  14




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PART II.
 OTHER INFORMATION
 
 ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
     
 ITEM 6: EXHIBITS
      15




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SIGNATURES
  CEA ACQUISITION CORPORATIONDated: November 10, 2005/s/ J. Patrick Michaels, Jr.J. Patrick Michaels, Jr.Chairman of the Board and Chief Executive Officer/s/ Brad Gordon

Brad GordonChief Financial Officer
 16