<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934
For the transition period from to
----------------- -----------------
Commission file number 33-25126-D
----------
SEPTIMA ENTERPRISES, INC.
-------------------------
(Exact name of small business issuer as specified in its charter)
Colorado 85-0368333
- ------------------------------- ---------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
600 Sandtree Drive
Lake Park FL 33403
-------------------------------------------
(Address of Principal Executive Offices)
(561) 624-7299
-----------------------------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer: (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Exchange Act during the past 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
---- ----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuers's classes
of common equity, as of the latest practicable date: 8,235,629 as of February
10, 1997.
Transitional Small Business Disclosure Format (Check one):
Yes No X
---- ----
<PAGE>
SEPTIMA ENTERPRISES, INC.
FORM 10-QSB
INDEX
-----
PAGE
PART I: FINANCIAL INFORMATION NUMBER
- ------- --------------------- ------
Item l. Financial Information:
Financial Statements of Septima Enterprises, Inc.:
Balance Sheet as of December 31, 1996..............................2
Statement of Income for the Three Months and the
Six Months Ended December 31, 1996........................3
Statement of Cash Flows for the period ended
December 31, 1996.........................................4
Notes to Financial Statements......................................5
Item 2. Management's Discussion and Analysis.................................8
PART II: OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings..........................................9
Item 2. Changes in Securities......................................9
Item 3. Defaults Upon Senior Securities............................9
Item 4. Submission of Matters to the Vote of Security Holders.. 9
Item 5. Other Information..........................................9
Item 6. Exhibits and Reports on Form 8-K...........................10
Signature.....................................................................11
Exhibits:
l. Consulting Agreement dated September 10, 1996....................12
<PAGE>
SEPTIMA ENTERPRISES, INC.
BALANCE SHEET
DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1996
----------------
<S> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 14,242
Accounts receivable-trade 50,000
Prepaid expenses and other current assets 129,897
---------------
Total current assets 194,139
---------------
Equipment (net of accumulated depreciation
of $57,922) 41,176
Other assets
Technology license 87,750
---------------
Total assets $ 323,065
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable-trade 170,768
Note payable-SMC 332,209
Insurance loan payable 36,788
Deposit from customers 75,000
Accrued expenses 114,213
Stockholder loan 18,000
---------------
Total current liabilities $ 746,978
---------------
Stockholders' equity
Preferred stock, no par value, 10,000,000 shares
authorized, no shares issued $ --
Common stock, no par value, 25,000,000 shares
authorized; 8,235,629 shares issued and
outstanding 1,119,291
Accumulated deficit (1,543,204)
---------------
Total stockholders' equity (423,913)
---------------
Total liabilities and stockholders' equity $ 323,065
===============
</TABLE>
The accompnaying notes are an integral part of these financial statements.
2
<PAGE>
SEPTIMA ENTERPRISES, INC.
STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, November 30, December 31, November 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 150,800 $ - $ 150,800 $ -
Other income - - - 20,482
------------ ------------ ------------ ------------
Total income 150,800 - 150,800 20,482
------------ ------------ ------------ ------------
Costs and expenses
Cost of product sold 93,649 - 93,649 1,618
General and administrative 303,622 2,400 338,763 68,534
Research and development 8,326 - 11,519 81,558
Depreciation and amortization 4,122 4,207 8,287 8,414
------------ ------------ ------------ ------------
Total expenses 409,719 6,607 452,218 160,124
------------ ------------ ------------ ------------
(Loss) before income taxes
and other expenses (258,919) (6,607) (301,418) (139,642)
Income tax - - - -
------------ ------------ ------------ ------------
Net (loss) $ (258,919) $ (6,607) $ (301,418) $ (139,642)
============ ============ ============ ============
Average number of common
shares outstanding 8,235,629 7,785,629 8,010,629 7,785,629
------------ ------------ ------------ ------------
Net income/(loss) per share $ (0.03) $ * $ (0.04) $ (0.02)
============ ============ ============ ============
*Less than $.01 per share
</TABLE>
3
The accompanying notes are an integral part of these financial statements
<PAGE>
SEPTIMA ENTERPRISES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
December 31, November 30,
1996 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from sales $ 100,800 $ --
Cash paid to suppliers and operating expense (311,007) (210,504)
Customer deposits 75,000 --
-------------- --------------
Cash used in operating activities (135,207) (210,504)
-------------- --------------
Cash flows from investing activities:
Purchase of equipment (14,953) --
Loan proceeds from related parties 122,217 217,638
Loan proceeds for insurance 36,788 --
-------------- --------------
Cash provided by investing activities 144,052 217,638
-------------- --------------
Net increase in cash and cash equivalents 8,845 7,134
Cash and cash equivalents at beginning of period 5,397 1,996
-------------- --------------
Cash and cash equivalents at end of period 14,242 9,130
============== ==============
Reconciliation of net loss to cash used
in operating activities
Net income/(loss) $ (301,418) (139,642)
Non-cash charges to net income/(loss)-
depreciation and amortization 8,287 8,414
Increase in accounts receivable (50,000) --
(Decrease) in prepaid expenses and other assets (81,227) (27,758)
Increase in accounts payable 117,078 (66,202)
Increase in deposits from customers 75,000 --
Increase in accrued expenses 97,073 14,684
-------------- --------------
Cash used in operating activities $ (135,207) $ (210,504)
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Septima Enterprises, Inc.
Notes to Financial Statements
December 31, 1996
(Unaudited)
NOTE A -- ORGANIZATION AND DEVELOPMENT OF THE COMPANY
- ------------------------------------------------------
The Company was formed on September 12, 1988, and was engaged in the prior years
in the development of its products and, more recently, in the organization of
its corporate facilities. The Company began making sales on October 16, 1996,
and became operational during the six month period ended December 31, 1996.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------
Basis of Presentation
- ---------------------
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for financial statements. For further
information, refer to the audited financial statements and notes thereto for the
year ended May 31, 1996, included in the Company's Form 10-KSB filed with the
Securities and Exchange Commission on August 28, 1996.
The results of operations for the three month and six month periods ended
December 31, 1996, are not necessarily indicative of the results to be expected
for the entire fiscal year 1997.
Employees
- ---------
All persons working for Septima are paid through Septima. The Company had two
compensated employees during the six month period ended December 31, 1996.
Change of Fiscal Year
- ---------------------
The Company changed its fiscal year from June through May 31 of each calendar
year to July 1 through June 30 of each calendar year commencing with the fiscal
year ended June 30, 1996.
Revenue Recognition
- -------------------
The Company recognizes revenue when the product is manufactured and shipped to
the customer. For the six months ended December 31, 1996, the Company had sales
of $150,800 which were from one customer.
NOTE C -- COMMON STOCK
- ----------------------
Private Offering
- ----------------
On December 5, 1996, the Company prepared a Private Placement Memorandum
pursuant to Regulation D in which it offered to accredited investors 1,100,000
shares at a price of $2.00 per
5
<PAGE>
Septima Enterprises, Inc.
Notes to Financial Statements
December 31, 1996
(Unaudited)
share. The life of the Memorandum is up to one year from the date of offering.
Costs associated with this private offering amount to $35,000 at December 31,
1996, and have been recorded as a prepaid expense.
The previous private offering dated July 24, 1994, which expired September 1,
1994, without any shares being sold was withdrawn by management.
NOTE D -- STOCK OPTIONS
- -----------------------
In written action in lieu of a special meeting of the Board of Directors, a
former director of the Company was granted an option to purchase 200,000 shares
of stock at an exercise price of $1.00 per share exercisable at any time prior
to October 1, 2001.
In a written action in lieu of a special meeting, the Board of Directors on
September 9, 1996, granted to two Board members options to purchase 312,500
shares of the Company's stock at an exercise price of $.20 per share exercisable
at any time prior to September 9, 2006.
Additionally, the Board authorized the issuance to the members of the Company's
Board of Directors options to purchase 20,000 shares of common stock at the
exercise price of $1.00 per share. These options vest one year after date of
issuance.
NOTE E -- RELATED PARTY TRANSACTIONS
- ------------------------------------
The Company has negotiated a Manufacturing and Distribution Agreement for Mexico
sales with a company operated by a former director and current shareholder.
Spark Management Corporation ("Spark") entered into a Master Licensing Agreement
dated September 10, 1996, with the Company which culminated an understanding
between the parties reached in September 1995. Spark is owned by two directors
of the Company. The Company acquired developments, information, proprietary
rights and trade secrets collectively referred to as Ignition Systems and
Processes. The Agreement will terminate ten years following the last expired
patent acquired by Spark. Also, this Agreement is subject to termination or
cancellation by both parties based upon various circumstances explained in the
Agreement. In consideration of the Agreement, Spark has received 450,000 shares
of common stock. The Company has recorded the License Agreement as an asset
based upon the estimated fair market value of the common stock at the time the
understanding was reached. Also, the Company will pay Spark $1 for each
Product/Insert sold up to 1,000,000 units; $.50 for each Product/Insert on the
next million aggregate units sold, and $.25 for each Product/Insert sold
thereafter.
The Company entered into a Consulting Agreement with Spark Management
Corporation. Spark Management will provide services to the Company as a
consultant for a five year period commencing September 10, 1996. Spark
Management will be compensated on a cost plus 10 percent basis for the first
year. During the final four years, the compensation will be $250,000
6
<PAGE>
Septima Enterprises, Inc.
Notes to Financial Statements
December 31, 1996
(Unaudited)
annually, paid quarterly.
NOTE F -- COMMITMENTS
- ---------------------
An agreement dated March 22, 1994, between Septima Enterprises, Inc. and a
company whereby the company will pursue capital and licensing endeavors was
canceled.
The Company entered into a Manufacturing and Distribution Agreement dated August
23, 1996, with a company. The company is required to order a minimum number of
Products/Inserts per year from Septima Enterprises.
The Company entered into a Manufacturing Agreement dated September 4, 1996. The
Company engaged the manufacturer as its exclusive producer for the entire
requirements for the product produced in the United States. The initial term is
for four (4) years automatically renewable for one (1) year periods.
The Company has moved its Corporate Offices and has assumed a lease for office
space in Lake Park, Florida. The lease agreement expires September 30, 1997, but
has a provision to extend the agreement for an additional year. Monthly rental
payments are $2,062.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Except for the historical information contained herein, the matters discussed in
the Form 10- QSB include forward-looking statements that involve risks and
uncertainties, including, but not limited to, quarterly fluctuations in results,
the management of growth, and other risks detailed from time to time in the
Company's Securities and Exchange Commission filings. Actual results may differ
materially from management expectations.
Results of Operations
Sales for the first six months of fiscal year 1997 were $150,800. All
of these sales occurred in the second quarter and were to one customer for
resale in Mexico. There were no sales in the corresponding six- and three-month
periods of fiscal 1996.
Net loss of $258,919 in the first six months was due to nonrecurring
expenses and no sales until the last two months..
The second quarter sales performance reflects the efforts of the
Company's focus on significant domestic and international market opportunities.
The Company no longer is a development stage company, and sales should improve
throughout calendar 1997.
Marketing and Distribution
General & Administrative Expenses of $303,622 in the first six months
included nonrecurring costs of legal fees and settlement of the Worldwide
Associates, Inc. dispute, cost of a Regulation D private placement memorandum,
and relocation of the corporate headquarters to Lake Park, Florida.
Corporate Non-Operating
Liquidity and Capital Resources. The Company's operations for the three
months ended December 31, 1996, were financed by loans from Spark Management to
the Company. The cash requirements for operations for the three months ended
December 31, 1996, were met by the loans from Spark to the Company. Should loans
from Spark not be available to the Company in the future, there is no assurance
that the Company will be able to raise sufficient capital from other sources to
adequately fund the continuing operations of the Company.
As of December 31, 1996, the balance due to Spark was $332,209
principal and $32,088 in accrued interest.
Outlook
New business opportunities are being actively pursued on a broad front both
domestically and internationally. Management expects it will take several months
to one year to fully implement a marketing program, and management is actively
seeking diligently to accomplish broad acceptance of Septima products.
8
<PAGE>
Recent Events
Capital Resources. The Board of Directors authorized a private offering
of 1,100,000 shares of Septima common stock at a price of $2.00 per share, the
proceeds of which are to be used for product manufacture, advertising and
marketing for a product launch in the United States market. A Private Placement
Memorandum offering dated December 5, 1996, is being made by the Company in
reliance upon Rule 506 of Regulation D promulgated by the United States
Securities and Exchange Commission under the Securities Act of 1933.
Part II
OTHER INFORMATION
Item 1. Legal Proceedings.
On June 17, 1996, a demand for arbitration was filed with
American Arbitration Association in Phoenix, Arizona, relating
to an Agreement dated May 27, 1994, with Worldwide Associates,
Inc. A Settlement Agreement was reached on December 2, 1996,
whereby Septima paid Worldwide the sum of $15,000.00 and
Septima and Worldwide declared the Distribution Agreement
appointing Worldwide as the exclusive authorized distributor
of Septima products for the entire world null, void and of no
effect since its inception.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to the Vote of Security Holders
None
Item 5. Other Information
In calendar 1995 and 1996, all domestic and foreign patent
delinquencies and fees that were owing were paid by the
Company and brought up to date with the financial assistance
of Spark.
Officers and Directors. At the Board of Directors meeting held
on September 9, 1996, the Board of Directors accepted the
resignation of R. Keith Casler as a Director and as
Secretary/Treasurer of the Board of Directors. There was no
disagreement between Mr. Casler and the Company.
9
<PAGE>
On September 9, 1996, Darryl J. Dillenback was appointed to
the Board of Directors. Mr. Dillenback is currently the
President and Chief Executive Officer of Explosive
Technologies International, Inc. ("E.T.I.") which is a
subsidiary of Canadian Investment Capital, Ltd. Of Toronto,
Canada. E.T.I. is a commercial explosives manufacturer and
distributor located in Wilmington, Delaware.
A special meeting of the Board of Directors was held on
December 13, 1996. Roy H. Davidson and Ronald J. Costello were
appointed to the Board of Directors.
Mr. Davidson is currently President of BallenIsles Development
Company and has broad experience in executive management. Mr.
Davidson is a former auditor and CPA with one of the Big 6
public auditing firms and was elected as Chairman of Septima's
Audit Committee.
Mr. Costello is co-owner and President of Versachem, an
international manufacturing and marketing company for
automotive products.
Each director will be granted an option for 20,000 shares of
Septima at an option price of $1.00 per share upon completion
of one year of service.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
(10) Consulting Agreement dated September 10, 1996 -
signed between the Company and Spark Management
whereby Septima would compensate Spark for services
during the next five years.
b. Reports on Form 8-K:
Accounting Matters. On September 9, 1996, the Board
of Directors authorized the Company to change its
fiscal year end from May 31 to June 30. The Company
filed a timely transition report covering the
resulting transition period between the closing date
of its 1996 fiscal year (May 31) and the opening date
of its new fiscal year (July 1).
On January 14, 1997, the Company filed a current
report on Form 8-K regarding change of auditors. On
January 7, 1997, the Company notified Delisi,
Henninger and Associates, the Company's auditors
until that time, of Greensburg, Pennsylvania, that
McGladrey & Pullen, LLP, of West Palm Beach, Florida,
had been elected and had accepted the responsibility
as auditor for the Company.
There was no disagreement between Delisi, Henninger
and Associates and the Company.
10
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: February 14, 1997 SEPTIMA ENTERPRISES, INC.
/s/ R. Edwin Morgan
----------------------------------------
R. Edwin Morgan
President, Chief Executive Officer and
Principal Financial Officer
11
<PAGE>
CONSULTING AGREEMENT
--------------------
THIS AGREEMENT is made and entered into this 10th day of September 1996
by and between SPARK MANAGEMENT CORPORATION (hereinafter referred to as "SPARK")
and SEPTIMA ENTERPRISES, INC. (hereinafter referred to as "SEPTIMA"), a Colorado
corporation.
WHEREAS, SEPTIMA wishes to secure the continued services of SPARK as a
consultant of SEPTIMA; and
WHEREAS, SPARK wishes to act as a consultant to SEPTIMA on the terms
and conditions set forth below; and
WHEREAS, by this Agreement, the parties hereto desire to set forth
their complete agreement and understanding regarding the terms and conditions of
SPARK'S relationship with SEPTIMA;
NOW, THEREFORE, for good and sufficient consideration set forth
hereinbelow, SPARK and SEPTIMA agree as follows:
1. Duties. SPARK shall be employed to perform technical services for
------
SEPTIMA during the term of this Agreement as defined herein. In that capacity,
SPARK shall perform the duties and responsibilities of providing the resources
necessary to managing the technical and scientific affairs of SEPTIMA, as well
as other duties SPARK may be called upon to perform from time to time.
2. Term of Agreement. The term of SPARK's contract under this Agreement
-----------------
shall commence on September 10, 1996, and continue for five (5) years therefrom.
3. Compensation. During the term of this Agreement, SEPTIMA shall
------------
compensate SPARK on a cost plus ten (10%) percent basis for the first year. The
costs shall be submitted to SEPTIMA on an annual basis detailing services
performed and costs thereto. For the final four (4) years of the term, SEPTIMA
shall pay a Two Hundred Fifty Thousand ($250,000.00) Dollar annual fee, paid
quarterly. This fee shall be subject to annual adjustments consistent with cost
of living adjustments based upon annual increases in the consumer price index.
The compensation set forth herein shall be adjusted as mutually agreed by the
parties for additional duties assigned to SPARK.
4. Termination of Agreement. Notwithstanding any other provision
------------------------
herein, this Agreement may be terminated as follows:
c. By SEPTIMA for Cause. SEPTIMA shall have the right to terminate
--------------------
SPARK's contract hereunder for "cause" upon thirty (30) days prior written
notice. For purposes of this Agreement only, "cause" shall be defined to include
material willful misconduct by SPARK in the performance of its duties and
responsibilities hereunder.
In the event of a termination of SPARK's contract for cause pursuant
to this
12
<PAGE>
section, SEPTIMA shall not be obligated and SPARK shall not be entitled to any
further compensation under this Agreement including, without limitation, such
other benefits to which SPARK might otherwise be entitled by law.
d. By Spark. SPARK shall have the right to terminate SPARK's contract
---------
hereunder upon thirty (30) days prior to written notice to SEPTIMA.
5. Non-disclosure of Confidential Information. SPARK acknowledges that
-------------------------------------------
SEPTIMA owns certain patents attached hereto as Schedule A, and which are and
will continue to be of great and unique value to SEPTIMA and its subsidiaries
and affiliates in their respective business ("Confidential Information").
SPARK agrees that all such Confidential Information heretofore
received by it will be kept and maintained by it as confidential and in complete
secrecy, and SPARK will not disclose such information at any time, either orally
or in writing or otherwise, except with the prior express written permission of
SEPTIMA.
SEPTIMA acknowledges that SPARK has developed intellectual property
beyond the scope of the patents currently held by SEPTIMA. SEPTIMA further
acknowledges that SPARK has developed significant and material improvements to
those patents listed on Schedule A belonging to SEPTIMA. SEPTIMA agrees that
such intellectual property developed by SPARK shall remain the property of SPARK
and said property is listed and attached hereto as Schedule B. SEPTIMA agrees
that all such information will be kept and maintained as confidential and in
complete secrecy, and SEPTIMA will not disclose such information at any time,
either orally or in writing or otherwise, except with the prior express written
permission of SPARK.
6. Severability. In the event that any one or more of the provisions of
-------------
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired.
7. Assignment. This Agreement, and the rights and obligations of SPARK
-----------
and SEPTIMA hereunder, shall inure to the benefit of and shall be binding upon
SPARK and its successors, and upon SEPTIMA, its successors and assigns. This
Agreement may not be assigned by SPARK.
8. Entire Agreement; Modification. This Agreement sets forth the entire
-------------------------------
agreement between the parties hereto and supersedes any and all prior
agreements and understandings, oral or written. This Agreement may be modified
only in writing signed by all parties to the Agreement.
9. Choice of Law. This Agreement, and all disputes arising under or
--------------
related to it, shall be governed by the laws of the State of Florida.
10. No Representations. Other than the covenants, representations, and
-------------------
warranties set forth in the Assignment Agreement, SPARK agrees and acknowledges
that SEPTIMA made no statements, promises or representations to SPARK
concerning the
13
<PAGE>
terms, enforceability or implications of this Agreement except for the terms
contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
SPARK MANAGEMENT CORPORATION SEPTIMA ENTERPRISES, INC.
By: /s/ Louis S. Camilli By: /s/ R. Edwin Morgan
------------------------- ------------------------
Louis S. Camilli, President R. Edwin Morgan, President
STATE OF NEW MEXICO )
) ss.
COUNTY OF BERNALILLO )
On this the 10th day of September 1996, before me the undersigned,
personally appeared Louis S. Camilli and R. Edwin Morgan, known to me to be the
persons whose name is subscribed to in this instrument and acknowledged to me
that they executed the foregoing instrument for the purposes therein contained.
/s/ Lillian G. Werntz
---------------------------
Notary Public
My commission expires: July 23, 1997
14
<PAGE>
SCHEDULE A
----------
SEPTIMA ENTERPRISES, INC. (SEPTIMA) PATENTS
1. U. S. PATENT Re. 32,505 reissued September 15, 1987, (Application No.
06/616,509 filed June 1, 1984) titled "COMBUSTION INITIATION SYSTEM",
REISSUE of Patent 4,333,135, issued June 1, 1982, (Application No.
06/119,869 filed February 8, 1980);
2. U. S. PATENT 4,333,126, issued June 1, 1982, (Application No.
06/154,949 filed May 30, 1980) titled "COMBUSTION INITIATION DEVICE");
3. U. S. PATENT 4,402,036, issued August 30, 1983, (Application No.
06/325,806 filed November 30, 1981) titled "METHOD OF PRODUCING A HIGH
ENERGY PLASMA FOR INITIATING FUEL";
4. U. S. PATENT 4,589,398, issued May 20, 1986, (Application No.
06/583,694 filed February 27, 1984) titled "COMBUSTION INITIATION
SYSTEM EMPLOYING HARD DISCHARGE")
5. U. S. PATENT 5,272,415 issued December 21, 1993, (Application No.
07/414,054 filed September 28, 1989) titled "COMBUSTION IGNITOR";
6. U. S. PATENT 5,371,436, issued December 6, 1994, (Application No.
07/459,904 filed January 2, 1990) titled "COMBUSTION IGNITOR"; and
7. U. S. PATENT application No. 08/170,464 filed December 20, 1993 titled
"COMBUSTION IGNITOR".
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1997
<PERIOD-START> OCT-01-1996 JUL-01-1996
<PERIOD-END> DEC-31-1996 DEC-31-1996
<CASH> 0 14,242
<SECURITIES> 0 0
<RECEIVABLES> 0 50,000
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 194,139
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 323,065
<CURRENT-LIABILITIES> 0 746,978
<BONDS> 0 0
0 0
0 0
<COMMON> 0 1,119,291
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 0 323,065
<SALES> 150,800 150,800
<TOTAL-REVENUES> 150,800 150,800
<CGS> 93,649 93,649
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 316,070 358,569
<LOSS-PROVISION> (258,919) (301,418)
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 258,919 301,418
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
