<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(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
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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
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(Address of Principal Executive Offices)
(561) 624-7299
--------------------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
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(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
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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' 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
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SEPTIMA ENTERPRISES, INC.
FORM 10-QSB/A
AMENDMENT NO. 1
INDEX
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<TABLE>
<CAPTION>
PAGE
PART I: FINANCIAL INFORMATION NUMBER
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<S> <C> <C>
Item l. Financial Information:
Financial Statements of Septima Enterprises, Inc.:
Balance Sheet as of December 31, 1996................................ 1
Statement of Income for the Three Months and the
Six Months Ended December 31, 1996.......................... 2
Statement of Cash Flows for the period ended
December 31, 1996........................................... 3
Notes to Financial Statements........................................ 4
Item 2. Management's Discussion and Analysis.......................................... 7
Signature .............................................................................. 9
</TABLE>
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SEPTIMA ENTERPRISES, INC.
BALANCE SHEET
DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 3l,
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
Contributed capital 172,008
Accumulated deficit (1,715,212)
----------------
Total stockholders' equity (423,913)
----------------
Total liabilities and stockholders' equity $ 323,065
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
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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 products sold 93,649 -- 93,649 1,618
General & administrative 283,834 2,400 328,435 150,092
Research & development -- -- -- --
Depreciation & amortization 4,122 4,207 8,287 8,414
------------ ------------ ------------ ------------
Total expenses 381,605 6,607 430,371 160,124
------------ ------------ ------------ ------------
(Loss) before income taxes
and other expenses (230,805) (6,607) (279,571) (139,642)
Income tax -- -- -- --
------------ ------------ ------------ ------------
Net (loss) $ (230,805) $ (6,607) $ (279,571) $ (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) $ * $ (0.03) $ (0.02)
============ ============ ============ ============
</TABLE>
*Less than $.01 per share
The accompanying notes are an integral part of these financial statements.
2
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SEPTIMA ENTERPRISES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
December 31, November 30,
1996 1995
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<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 --
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Cash used in operating activities (135,207) (210,504)
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Cash flows from investing activities
Purchase of equipment (14,953) --
Loan proceeds from related parties 122,217 217,638
Loan proceeds from 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) $ (279,571) (139,642)
Non-cash charges to net income/(loss) -
depreciation and amortization 8,287 8,414
(Increase) in accounts receivable (50,000) --
(Increase) in prepaid expenses and other assets (103,074) (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.
3
<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.
4
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Septima Enterprises, Inc.
Notes to Financial Statements
December 31, 1996
(Unaudited)
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 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.
5
<PAGE>
Septima Enterprises, Inc.
Notes to Financial Statements
December 31, 1996
(Unaudited)
NOTE E -- RELATED PARTY TRANSACTIONS -- (CONTINUED)
- ---------------------------------------------------
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 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.
6
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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 $279,571 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 $328,435 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
7
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acceptance of Septima products.
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.
8
<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: May 19, 1997 SEPTIMA ENTERPRISES, INC.
/s/ R. Edwin Morgan
----------------------------------------
R. Edwin Morgan
President, Chief Executive Officer and
Principal Financial Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<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 41,176
<DEPRECIATION> 4,122 8,287
<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> 381,605 430,371
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<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> (230,805) (279,571)
<EPS-PRIMARY> (0.03) (0.03)
<EPS-DILUTED> 0 0
</TABLE>
