Commission File Number: 2-71136
DETONICS SMALL ARMS LIMITED
(Exact name of registrant as specified in it's charter)
Washington 91-1150122
(State or other Jurisdiction of (IRS Employer ID No.)
incorporation or organization)
14508 SE 51st, Bellevue, WA 98006
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (425) 746-6761
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities 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:
DOCUMENTS INCORPORATED BY REFERENCE
Form S-1, Detonics Small Arms Limited, Commission File No. 2-
71136, but excluding the balance sheet of Detonics Small Arms
Limited together with the report of independent certified public
accountants, is incorporated by reference.
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
See Appendix A
Item 2: Management's Discussion and Analysis of the Financial
Condition and Results of Operations
No royalties or other income were booked in the first quarter of
1999.
The partnership originally had licensed the manufacturing and sale
of its products to Detonics Manufacturing Corporation (DMC) a
subsidiary of Energy Sciences Corporation, (ESC). DMC, ESC and
the Partnership entered Chapter 11 bankruptcy proceedings on April
29, 1986. In late 1987, the Bankruptcy Court approved a sale of
all of DMC's assets to a new entity, formed by outside third
parties, called New Detonics Manufacturing Corporation, (NDMC).
By subsequent majority vote of the limited partners of the
Partnership, a new license was entered into between the
Partnership and NDMC, which called for royalties to begin in late
1991 at the rate of 4% of gross sales. No partnership income was
expected before that time.
On May 13, 1988, ESC's bankruptcy was dismissed and all remaining
assets were repossessed by the sole secured creditor of ESC, the
firm of Murphy & Elgot. These assets are primarily amounts owed
to ESC by the partnerships and the rights to produce products
owned by the partnerships. The general partners have begun
discussions with Mr. Murphy, (who was also counsel for ESC and the
partnerships), on the elimination of most or all the debt owed by
the Partnership to ESC, (and now, therefor to Murphy & Elgot).
As previously reported, the general partners learned in late 1991
that production of firearms at NDMC was suspended in 1991. The
general partners have subsequently been advised that Murphy &
Elgot, the sole secured creditirs of the original DMC, have moved
to have the "soft" assets (the name "Detonics" and the right to
manufacture the Detonics designs) which were assigned to NDMC by
the Bankruptcy Court be returned to Murphy & Elgot. This occured
in September 1992. Mr. Murphy passed away in 1997. The general
partners have had discussions with Mr. Elgot regarding future
attempts to recommercialize the products and he indicated he
would likely approve any recommercialization plan that the general
partners would be able to obtain. The general partners have been
discussing such plans with a third party and a draft license
agreement is being reviewed, but, no royalty amounts have been
discussed as of April 19, 1999. There can be no guarantee that
it will be possible to arrange for production of any of the
Partnership's products and no royalties are expected for 1999.
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
The staff of the Securities and Exchange Commission's Division of
Enforcement recommended to the Commission that it authorize the
staff to file a civil injunction action against the Partnership and
Messrs. Maes and Steffey to require timely filing of reports with
the commission. Such an injunction was entered on June 25, 1986.
All subsequent reports have been timely filed.
On October 16, 1989 the U.S. Bankruptcy Court ordered the conversion of
the partnership's Chapter 11 to a Chapter 7. On May 11, 1990, the
partnership filed an amended motion to dismiss the Chapter 7. The
motion was granted on June 21, 1990 and the partnership is no
longer in bankruptcy.
In March 1993, the partnership received a "Notice of Beginning of
Administrative Proceeding" from the Internal Revenue Service. The
issue was a possible finding that the partnership "burned out" and
is subject to recapture. The general partners are of the
position that the products and the partnership remain viable. In
July, 1993, the general partners received notification from the
IRS that they did not intend to make any changes as a result of
that Administrave Proceeding. The IRS has the right to bring the
subject up again.
Item 2: Changes In Securities: None
Item 3: Defaults Upon Senior Securities: None
Item 4: Submission Of Matters To A Vote Of Security Holders: None
Item 5: Other Information: None
Item 6: Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
a) Documents filed as part of this Report: Unaudited
financial statement.
b) Reports on Form 8-K: None.
Appendix A
DETONICS SMALL ARMS LIMITED
BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
ASSETS
Cash $ 0
Royalties Receivable 0
--------
TOTAL CURRENT ASSETS $ 0
Intangible Assets Less Amortization 0
Receivable from Affiliates Less Allowance 0
--------
TOTAL ASSETS $ 0
LIABILITIES AND PARTNERS' EQUITY
Accounts Payable $ 0
Taxes Payable 0
--------
TOTAL CURRENT LIABILITIES 0
Payable to Affiliates 672,769
------------
TOTAL LIABILITIES 672,769
Partners' Capital
(672,769)
------------
TOTAL LIABILITIES
AND PARTNER'S EQUITY 0
DETONICS SMALL ARMS LIMITED
STATEMENT OF INCOME
FOR THE QUARTER ENDING
MARCH 31, 1999
(UNAUDITED)
Royalty Revenue $ 0
Expenses 0
-----
Net Income (Loss) $ 0
NOTE: The products owned by the Partnership were licensed to New
Detonics Manufacturing Corporation (NDMC). Under the terms of
that license, royalties were not scheduled to be paid to the
Partnership until late 1991. NDMC suspended production of all
firearms and the license with NDMC has been terminated. As of
April 1999, there are no new license agreements in existance.
DETONICS SMALL ARMS LIMITED
STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDING
MARCH 31, 1999
(UNAUDITED)
Net Cash Provided By Operating Activities $ 0
Net Cash Used By Investing Activities 0
Net Cash Provided By Financing Activities 0
-----
Net Increase In Cash $ 0
Cash At Beginning Of Period $ 0
------
Cash At End Of Period $ 0
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.
DETONICS SMALL ARMS LIMITED
(Registrant)
4/19/99 Michel E. Maes, General Partner
Date (Signature)
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