UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
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(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
--------- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
--------- OF 1934
For the transition period from ____________ to ___________
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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 of incorporation) (IRS Employer ID Number)
15945 Quality Trail North, Scandia, MN 55073
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(Address of principal executive offices)
(651) 433-3522
--------------
(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be filed by Section
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
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: October 24, 2000: 8,995,629
---------------------------
Transitional Small Business Disclosure Format (check one): YES NO X
--- ---
<PAGE>
Septima Enterprises, Inc.
Form 10-QSB for the Quarter ended September 30, 2000
Table of Contents
Page
----
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 12
Part II - Other Information
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
Signatures 13
Exhibits
Exhibit 23.1 Consent of Independent Certified Public Accountants 14
Exhibit 27 Financial Data Schedule 15
2
<PAGE>
S. W. HATFIELD, CPA
certified public accountants
Member: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
Item 1 - Part 1 - Financial Statements
Accountant's Review Report
--------------------------
Board of Directors and Shareholders
Septima Enterprises, Inc.
We have reviewed the accompanying balance sheets of Septima Enterprises, Inc. (a
Colorado corporation) as of September 30, 2000 and 1999 and the accompanying
statements of operations and comprehensive income and statements of cash flows
for the three months then ended. These financial statements are prepared in
accordance with the instructions for Form 10-QSB, as issued by the U. S.
Securities and Exchange Commission, and are the sole responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression on an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon significant shareholders to provide sufficient working
capital to maintain the integrity of the corporate entity. These circumstances
create substantial doubt about the Company's ability to continue as a going
concern and are discussed in Note A. The financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.
S. W. HATFIELD, CPA
Dallas, Texas
October 24, 2000
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
3
<PAGE>
<TABLE>
<CAPTION>
Septima Enterprises, Inc.
Balance Sheets
September 30, 2000 and 1999
(Unaudited)
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
------
Current Assets
Cash on hand and in bank $ -- $ --
----------- -----------
Total current assets -- --
----------- -----------
Total Assets $ -- $ --
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable - trade $ 133,696 $ 125,000
----------- -----------
Total current liabilities 133,696 125,000
----------- -----------
Commitments and Contingencies
Shareholders' Equity
Common stock - No par value
100,000,000 shares authorized; 8,995,629 shares
issued and outstanding, respectively 1,551,128 1,551,128
Contributed capital 203,608 203,608
Deferred compensation -- (9,407)
Accumulated deficit (1,888,432) (1,870,329)
----------- -----------
Total shareholders' equity (133,696) (125,000)
----------- -----------
Total Liabilities and Shareholders' Equity $ -- $ --
=========== ===========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants. See Accountant's
Review Report.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Septima Enterprises, Inc.
Statements of Operations and Comprehensive Income
Three months ended September 30, 2000 and 1999
(Unaudited)
Three months Three months
ended ended
September 30, September 30,
2000 1999
----------- -----------
Revenues $ -- $ --
----------- -----------
Expenses
General and administrative expenses 9,407 --
----------- -----------
Loss from continuing operations
before income taxes (9,407) --
Provision for income taxes -- --
----------- -----------
Loss from continuing operations (9,407) --
Discontinued operations,
net of income taxes
Income (Loss) from
discontinued operations (8,696) --
----------- -----------
Net Loss (18,103) --
Other comprehensive income -- --
----------- -----------
Comprehensive Income $ (18,103) $ --
=========== ===========
Loss per weighted-average share
of common stock outstanding,
calculated on Net Loss
From continuing operations nil nil
From discontinued operations nil nil
----------- -----------
Total loss per share nil nil
=========== ===========
Weighted-average number of shares
of common stock outstanding 8,995,629 8,995,629
=========== ===========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants. See Accountant's
Review Report.
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Septima Enterprises, Inc.
Statements of Cash Flows
Three months ended September 30, 2000 and 1999
(Unaudited)
Three months Three months
ended ended
September 30, September 30,
2000 1999
------------ -------------
Cash Flows from Operating Activities
Net loss $ (18,103) $ --
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization -- --
Deferred consulting fees 9,407 --
Change in net assets and liabilities
of discontinued operations 8,696 --
------------ -------------
Net cash used in operating activities -- --
------------ -------------
Cash Flows from Investing Activities -- --
------------ -------------
Cash Flows from Financing Activities -- --
------------ -------------
Increase (Decrease) in Cash -- --
Cash at beginning of period -- --
------------ -------------
Cash at end of period $ -- $ --
============ =============
Supplemental disclosure of interest
and income taxes paid
Interest paid for the period $ -- $ --
============ =============
Income taxes for the period $ -- $ --
============ =============
The financial information presented herein has been prepared by management
without audit by independent certified public accountants. See Accountant's
Review Report.
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Septima Enterprises, Inc.
Notes to Financial Statements
Note A - Organization and Description of Business
Septima Enterprises, Inc. (Company) was incorporated on September 12, 1988 under
the laws of the State of Colorado tor the purpose of acquiring interests in
other business entities and commercial technologies. Operations to date have
consisted of acquiring capital, evaluating investment opportunities, acquiring
interests in other businesses and technologies, establishing a business concept,
conducting research and development activities, and manufacturing.
The Company, due to the unsuccessful nature of its initial operations, ceased
all operations in February 1998. In September 1998, creditors of the Company
were successful in obtaining a judgment against the Company for unpaid debts. In
October 1998, the Company was subject to a Judicial Sale whereby all assets of
the Company were sold in satisfaction of the September 1998 judgment.
Accordingly, the aggregate adjusted balance of open trade payables, as of
September 30, 2000, of approximately $134,000 is the only remaining identifiable
liability of the Company.
During the first quarter of Fiscal 2001, the Company's legal counsel began to
negotiate the settlement of the outstanding trade accounts payable. As a result
of these activities, the Company was able to negotiate settlements, using both
cash, the Company's restricted and unregistered common stock and combinations
thereof, to satisfy approximately $122,700 of open trade payables. Additionally,
unaffiliated third parties have agreed to assume the remaining approximately
$11,000 of trade payables owed to unlocated vendors. Management of the Company
anticipates completing the settlement of these balances during the second
quarter of Fiscal 2001.
The Company has had no operations, assets or liabilities since its fiscal year
ended June 30, 1998. Accordingly, the Company is dependent upon management
and/or significant shareholders to provide sufficient working capital to
preserve the integrity of the corporate entity at this time. It is the intent of
management and significant shareholders to provide sufficient working capital
necessary to support and preserve the integrity of the corporate entity.
During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB filed with the U. S. Securities and Exchange Commission.
The information presented herein may not include all disclosures required by
generally accepted accounting principles and the users of financial information
provided for interim periods should refer to the annual financial information
and footnotes contained in its Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 on Form 10-KSB when reviewing the interim
financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending June 30, 2001.
7
<PAGE>
Septima Enterprises, Inc.
Notes to Financial Statements - Continued
Note A - Organization and Description of Business - Continued
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
2. Stock-based compensation
------------------------
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, which establishes a fair value based method for financial
accounting and reporting for stock-based employee compensation plans and
for transactions in which an entity issues its equity instruments to
acquire goods and services from non-employees.
However, the new standard allows compensation to employees to continue to
be measured by using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, but requires expanded disclosures. The Company
has elected to continue to apply to the intrinsic value based method of
accounting for stock options issued to employees. Accordingly,
compensation cost for stock options is measured as the excess, if any, of
the estimated market price of the Company's stock at the date of grant
over the amount an employee must pay to acquire the stock. No compensation
expense has been recorded in the accompanying statements of operations
related to stock options issued to employees. All transactions in which
goods or services are the consideration received for the issuance of
equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable.
3. Income taxes
------------
Deferred income taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not
that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
8
<PAGE>
Septima Enterprises, Inc.
Notes to Financial Statements - Continued
Note B - Summary of Significant Accounting Policies - Continued
4. Net earnings (loss) per common share
------------------------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of September 30, 2000 and 1999, the
Company's outstanding stock options are considered to be antidilutive due
to the Company's net operating loss position.
Note C - Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments: Cash, accounts receivable and accounts
payable, The carrying amounts approximated fair value because the demand nature
of these instruments.
Note D - Going Concern Uncertainty and Discontinued Operations
The Company, due to the unsuccessful nature of its initial operations, ceased
all operations in February 1998. In September 1998, creditors of the Company
were successful in obtaining a judgment against the Company for unpaid debts. In
October 1998, the Company was subject to a Judicial Sale whereby all assets of
the Company were sold in satisfaction of the September 1998 judgment.
During the first quarter of Fiscal 2001, the Company's legal counsel began to
negotiate the settlement of the outstanding trade accounts payable. As a result
of these activities, the Company has been able to negotiate settlements, using
both cash, the Company's restricted and unregistered common stock and
combinations thereof, to pay approximately $122,700 of open trade payables and
an additional approximate $11,000 of trade payables controlled by unlocated
vendors will be assumed by controlling shareholders of the Company. Accordingly,
the aggregate adjusted balance of open trade payables of approximately $134,000
is the only remaining identifiable liability of the Company. Management of the
Company anticipates the final settlement of these balances during the second
quarter of Fiscal 2001.
The Company has had no operations, assets or liabilities since its fiscal year
ended June 30, 1998. Accordingly, the Company is dependent upon management
and/or significant shareholders to provide sufficient working capital to
preserve the integrity of the corporate entity at this time. It is the intent of
management and significant shareholders to provide sufficient working capital
necessary to support and preserve the integrity of the corporate entity.
9
<PAGE>
Septima Enterprises, Inc.
Notes to Financial Statements - Continued
Note E - Common Stock Transactions
On October 20, 1997, the Company filed with the Securities and Exchange
Commission a Form S-8 Registration Statement. The Registration Statement
registered 867,000 shares of the Company's common stock, reserved for issuance
and delivery pursuant to options granted to a marketing consultant and options
awarded to certain of the Company's current and former employees, directors,
consultants and advisors between February 22, 1994 and May 19, 1997. No shares
under this Registration Statement have been sold or otherwise issued.
Note F - Stock Options
On January 9, 1998, the Company's Board of Directors granted options to purchase
up to an aggregate of 20,000 shares of the Company's common stock at a price of
$0.20 per share to three individuals serving as officers or key employees of the
Company. These options may be exercised at any time prior to January 9, 2002.
On November 4, 1997, the Company's Board of Directors granted an option to
purchase up to 50,000 shares of the Company's common stock at an exercise price
of $1.00 per share to an individual who was appointed to be a Vice President of
the Company. This option may be exercised at any time prior to November 4, 2002.
On January 25, 1999, the Company's Board of Directors granted an option to
purchase up to 705,000 shares of the Company's common stock at $1.00 per share
to an individual who was formerly a Company officer, Spark Management
Corporation and another related entity. These options may be exercised at any
time through January 25, 2005.
The fair value of each option grant is estimated on the date of grant using the
present value of the exercise price with the following weighted-average
assumptions used for grants in 1997: risk-free interest rates of 7.5 percent;
expected lives of 5 to 10 years, no dividends and price volatility of 30%. The
weighted average remaining life of the options outstanding is 3 years as of June
30, 2000. A reconciliation of the Company's stock option activity, and related
information for the three months ended September 30, 2000 and the year ended
June 30, 2000 is as follows:
Three months ended Year ended
September 30, 2000 June 30, 2000
-------------------- --------------------
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
---------- -------- ---------- --------
Outstanding at beginning of year 1,189,500 $0.94 1,189,500 $0.94
Granted -- -- -- --
Exercised -- -- -- --
Expired/Forfeited -- -- -- --
---------- ----------
Outstanding at end of year 1,189,500 $0.94 1,189,500 $0.94
========== ==========
10
<PAGE>
Septima Enterprises, Inc.
Notes to Financial Statements - Continued
Note G - Stock Options - Continued
The following table summarizes information about the stock options at September
30, 2000:
September 30, 2000
--------------------------
Exercise Number Number
Expiration Date Price Outstanding Exercisable
--------------- -------- ----------- -----------
September 2006 $0.20 62,500 62,500
January 2003 $0.20 20,000 20,000
September 2001 $0.50 17,000 17,000
Various from November 2000
through January 2004 $1.00 1,090,000 1,090,000
--------- ---------
1,189,500 1,189,500
Note H - Income Taxes
Temporary differences between the financial statement carrying amounts and tax
bases of assets and liabilities that give rise to the deferred tax assets and
liabilities relate to the following as of September 30, 2000 and 1999,
respectively:
2000 1999
--------- ---------
Deferred tax assets
Net operating loss carryforwards $ 311,000 $ 305,000
Less valuation allowance (311,000) (305,000)
--------- ---------
Net Deferred Tax Asset $ -- $ --
========= =========
The Company has net operating loss carryforwards of approximately $1,000,000 as
of June 30, 2000. The amount and availability of the net operating loss
carryforwards may be subject to limitations set forth by the Internal Revenue
Code. Factors such as the number of shares ultimately issued within a three year
look-back period; whether there is a deemed more than 50 percent change in
control; the applicable long-term tax exempt bond rate; continuity of historical
business; and subsequent income of the Company all enter into the annual
computation of allowable annual utilization of the carryforwards.
11
<PAGE>
Part I - Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
(2) General comments
Septima Enterprises, Inc. (Company) was incorporated on September 12, 1988 under
the laws of the State of Colorado tor the purpose of acquiring interests in
other business entities and commercial technologies. Operations to date have
consisted of acquiring capital, evaluating investment opportunities, acquiring
interests in other businesses and technologies, establishing a business concept,
conducting research and development activities, and manufacturing.
During the year ended June 30, 1997, the Company began operations consisting
primarily of the sale of Ultra High Power Spark Amplifiers for automotive
ignition systems. Sales were primarily to distributors for retail sales to the
Mexican and Asian markets on credit terms that the Company established for
individual customers. The Company began an unsuccessful marketing campaign to
retail customers in the United States.
The Company, due to the unsuccessful nature of its initial operations, ceased
all operations in February 1998. In September 1998, creditors of the Company
were successful in obtaining a judgment against the Company for unpaid debts. In
October 1998, the Company was subject to a Judicial Sale whereby all assets of
the Company were sold in satisfaction of the September 1998 judgment. The
economic effect of these transactions are reported in the accompanying financial
statements as of June 30, 1998 as "discontinued operations".
The Company has had no operations, assets or liabilities since its fiscal year
ended June 30, 1998. Accordingly, the Company is dependent upon management
and/or significant shareholders to provide sufficient working capital to
preserve the integrity of the corporate entity at this time. It is the intent of
management and significant shareholders to provide sufficient working capital
necessary to support and preserve the integrity of the corporate entity.
(3) Results of Operations, Liquidity and Capital Resources
As of the date of this filing, the Company has no operations or assets.
Accordingly, the Company is dependent upon management and/or significant
shareholders to provide sufficient working capital to preserve the integrity of
the corporate entity at this time. It is the intent of management and
significant shareholders to provide sufficient working capital necessary to
support and preserve the integrity of the corporate entity.
12
<PAGE>
The aggregate adjusted balance of open trade payables, as of September 30, 2000,
of approximately $134,000 is the only remaining identifiable liability of the
Company.
During the first quarter of Fiscal 2001, the Company's legal counsel began to
negotiate the settlement of the outstanding trade accounts payable. As a result
of these activities, the Company was able to negotiate settlements, using both
cash, the Company's restricted and unregistered common stock and combinations
thereof, to satisfy approximately $122,700 of open trade payables. Additionally,
unaffiliated third parties have agreed to assume the remaining approximately
$11,000 of trade payables owed to unlocated vendors. Management of the Company
anticipates completing the settlement of these balances during the second
quarter of Fiscal 2001.
The Company continues to seek a suitable merger or acquisition candidate.
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings
of shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Reports on Form 8-K and Exhibits
Reports on Form 8-K - None
Exhibit 23.1 - Consent of Independent Certified Public Accountants
Exhibit 27 - Financial Data Schedule
--------------------------------------------------------------------------------
SIGNATURES
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.
Septima Enterprises, Inc.
August 1 , 2000 /s/ Gregory Johnson.
------- -----------------------------
Gregory Johnson
President and Director
13
