<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1998 COMMISSION FILE NO. 0-17700
SIGMA-7 PRODUCTS, INC.
(Exact Name of Registrant as specified in its charter)
COLORADO 84-1095500
(State of Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7362 UNIVERSITY AVE. NE #310
FRIDLEY, MN 55432
(Address of Principal Executive Offices) (Zip code)
(612) 586-0206
(Registrant's Telephone Number including Area Code)
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 such period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for at least
the past 90 days.
Yes X No
----- -----
The number of shares outstanding of each of the Registrant's classes of common
equity, as of August 12, 1998 are as follows:
Class of Securities Shares Outstanding
Common Stock, no par value 10,076,500
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INDEX
Part I FINANCIAL INFORMATION
Item 1 Financial Statements
Balance Sheets
As of June 30, 1998 and September 30, 1997
Statement of Operations
For the three and nine month periods ended June 30,
1998 and from October 1, 1988 to June 30, 1998
Statement of Cash Flows
For the three and nine month periods ended June 30,
1998 and from October 1, 1988 to June 30, 1998
Notes to Financial Statements
Item 2 Management's Discussion and Analysis of Financial Condition and Plan
of Operation
Part II OTHER INFORMATION
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Default Upon Senior Securities
Item 4 Submissions of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
SIGNATURES
2
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PART I FINANCIAL INFORMATION
Item 1 Financial Statements
SIGMA-7 PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
(UNAUDITED) (NOTE)
<S> <C> <C>
Current Assets
Cash $ 1,243 $ 5,812
Prepaid Expenses 20,000 0
---------------- ----------------
TOTAL ASSETS $ 21,243 $ 581
================ ================
</TABLE>
LIABILITIES AND SHAREHOLDERS EQUITY
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 12,015 $ 8,657
Loans Payable Shareholders 53,784 9,750
Accrued Expenses 15,000 0
---------------- ---------------
TOTAL CURRENT LIABILITIES $ 80,799 $ 18,407
SHAREHOLDERS EQUITY: Preferred Stock, No Par Value;
25,000,000 and 10,000,000 authorized, at
June 30, 1998 and September 30, 1997; none outstanding.
Common Stock, No Par Value; 100,000,000 and
1,000,000,000 authorized at June 30, 1998 and
September 30, 1997; 10,076,500 and 758,287,496 shares
outstanding at June 30, 1998 and September 30, 1997. $ 439,715 $ 430,715
Contributed Capital 12,750 12,750
Deficit Accumulated during the
Development Stage (512,021) (461,291)
---------------- ---------------
TOTAL SHAREHOLDERS DEFICIT $ (59,556) $ (17,826)
---------------- ---------------
$ 21,243 $ 581
================ ===============
</TABLE>
NOTE: Taken from audited Balance Sheet at that date.
(See Notes to Financial Statements)
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SIGMA-7 PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Nine Months October 1, 1988
ended ended (Inception)
June 30, 1998 June 30, 1998 to June 30, 1998
------------- --------------- ----------------
<S> <C> <C> <C>
Revenue $ 0 $ 0 $ 20,966
Operating Expenses:
General and Administration 39,307 50,730 554,098
Interest expense 35,927
Amortization 250
------------- -------------- ---------------
Operating Expenses (39,307) (50,730) (590,275)
------------- -------------- ---------------
Other Income $ 0 $ 0 $ 51,160
Loss before Extraordinary Item $ $ $ (518,149)
Extraordinary Gain on Conversion
of Debt to Equity 6,118
Net Loss $ (39,307) $ (50,730) $ (512,031)
Net Loss per share $ (.01) $ (.02) $ (.71)
Weighted Average Common
Shares Outstanding 4,920,000 2,320,000 718,775
</TABLE>
(See Notes to Financial Statements)
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SIGMA-7 PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Nine Months October 1, 1988
ended ended (Inception)
June 30, 1998 June 30, 1998 to June 30, 1998
------------- ------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
NET LOSS $ (39,307) $ (50,730) $ (512,021)
ADJUSTMENTS TO RECONCILE
NET LOSS TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Amortization: 250
CASH PROVIDED (USED) BY CHANGES
IN ASSETS AND LIABILITIES:
Issuance of Stock for Services 42,700
Other Income (51,160)
Prepaid Expenses (20,000) (20,000) (20,000)
Accounts Payable 5,635 3,358 48,483
Accrued interest and expense 15,000 15,000 27,281
------------ -------------- --------------
Net Cash used by operating activities (38,672) (52,372) (464,467)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Issuance of common stock (net)
For cash 9,000 9,000 204,405
For conversion of debt 211,132
Increase in Notes Payable 30,000 30,000 54,997
Deferred Offering Costs (17,324)
Contributed capital 12,750
Increase in Organizational Costs (250)
Net cash provided by
Financing Activities 39,000 39,000 454,710
Net increase (decrease) in cash 328 662 1,243
Cash, beginning of period 915 581 -
Cash, end of period 1,243 1,243 1,243
</TABLE>
(See Notes to Financial Statements)
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SIGMA-7 PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 CONDENSED FINANCIAL STATEMENTS
The financial statements included herein have been prepared by
Sigma-7 Products, Inc. (the "Company") without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted as allowed by such rules and
regulations, and the Company believes that the disclosures are
adequate to make the information presented not misleading. It
is suggested that these financial statements be read in
conjunction with the September 30, 1997 audited financial
statements and the accompanying notes thereto. While
management believes that procedures followed in preparing
these financial statements are reasonable, the accuracy of
these amounts are in some respects dependent upon the facts
that will exist, and procedures that will be accomplished by
the Company later in the year.
The management of the Company believes that the accompanying
unaudited condensed financial statements contain all
adjustments, including normal recurring adjustment) necessary
to present fairly the operations and cash flows for the
periods presented.
NOTE 2 STOCK SPLIT ACTIVITY
Pursuant to an action approved by shareholders of the Company
at a special meeting held during the quarter ended June 30,
1998. The common stock of the Company was affected by two
stock splits. Initially, a reverse stock split in the ratio of
1 new share for 75,000 was effected with all fractional shares
rounded up to the nearest whole share. This was followed
immediately by a 100 for 1 share stock split. The resulting
new shares of the Company substantially reduced the shares
outstanding from the prior level of 758,287,496. The final
number of shares resulting from the recapitalization has not
been determined due to the need to reconcile the impact of the
splits on beneficial shareholders. It is estimated, however,
that a total of 1,076,500 recapitalized shares will be
outstanding as a result of the stock splits.
All weighted average and per share calculations included
herein have been recomputed to reflect shares on the post
split basis.
NOTE 3 RECLASSIFICATION
Certain amounts in prior years presentations have been
reclassified to conform to current period presentations.
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Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS
BACKGROUND: SIGMA-7 PRODUCTS, INC.(the "Company") was incorporated in
the state of Colorado under the name Seek-2 Ventures,Inc. on October 3, 1988 as
a "blind pool corporation" for the purpose of obtaining capital to take
advantage of domestic and foreign business opportunities. On April 13, 1989, the
Company completed its initial public offering of 11,460,000 shares of stock
raising approximately the net sum of $93,467.
On April 9, 1989, the Company amended its Articles of Incorporation,
changing the Company's name to Sigma-7 Products, Inc. On January 25,1992 the
Company again changed its name to Global Development Group, Inc.
and on May 25, 1995 back to Sigma-7 Products, Inc.
During the period between April 19,1989 and March 1, 1991, the Company
engaged in the manufacture of electronic self-protection devices, commonly
referred to as "stun guns". During 1991, the Company determined that pursuing
the stun gun manufacturing business would require substantially more funds than
it could reasonably expect to raise in the near future. Further, various
economic, governmental and regulatory agencies brought focus on the industry to
such a manner that it did not appear to be in the Company's best interests to
pursue this endeavor. By early March, 1991, the Company had ceased to operate
that business due to a lack of working capital and extended debt.
Subsequent to January 1991, the Company engaged in a financial
restructuring to eliminate as much debt as possible and to make the Company
attractive for acquisition with existing operations. Substantial quantities of
common stock had been issued in connection with this manufacturing and in
connection with the Company's ongoing administrative expenses.
On April 14,1998, a special meeting of shareholders was held in Casper,
Wyoming pursuant to notice sent to shareholders of record as of March 18,1998.
This special meeting was called for the purposes of obtaining shareholder
approval of (1) a reincorporation of the Company in Nevada which would effect a
change in the name of the Company and a recapitalization of the Company in the
form of a reverse stock split followed by a forward split of the Company's
common stock, (2) a stock option plan for up to 1,000,000 post split common
shares could be issued, and (3) an employee stock compensation plan wherein up
to 1,500,000 post split common shares could be issued. The notice of this
special meeting also contemplated the election of directors and transacting of
other business as might come before the meeting.
Prior to the meeting, the Company received notice that several
shareholders holding approximately 4.4% of the outstanding common shares
intended to dissent with respect to the proposal to reincorporate in Nevada and
receive a cash payment for their shares. After consultation with legal counsel,
it was determined that the object of the original proposal, namely a
recapitalization of the Company, could be accomplished without changing the
domicile of the Company and subjecting the Company to the obligation to
repurchase the shares of the shareholders that had indicated an intention to
dissent.
At the special meeting, management presented shareholders with an
alternative proposal which involved the shareholders approving:
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a. 1 for 75,000 share reverse split with all fractional shames
mounded up to the next full share, followed by an immediate 100 to
1 forward split.
b. The adoption of a compensatory stock option plan by the Company.
c. The adoption of an employee stock compensation plan by the
Company.
d. An amendment to the Company's Articles of Incorporation to
authorize the Company to issue up to 100,000,000 no par common
stock and up to 25,000,000 no par value preferred stock and to
change the name of the Company to either Sigma acquisition
Corporation to AMAC Technologies, Inc.
The shareholders approved the foregoing proposal, subject to a grant to
the Board of Directors of the authority to elect to proceed with the
reincorporation. In addition, the shareholders reelected Donald Smith, Timothy
Gibson and Donald Cartwright as members of the Board of Directors of the
Company.
Subsequent to the Special meeting, the Board of Directors elected not
to pursue the reincorporation of the Company in Nevada. The Board approved the
recapitalization of the Company, effective May 22,1998. As a result, the
758,287,496 common shares of the Company became approximately 1,076,500 common
shares.
On June 4, 1998, The Company acquired AMAC Technologies,Inc. a
Minnesota Corporation. The AMAC shareholders, received 9,000,000 of the
recapitalized common shares of the Company. AMAC is a recently formed
corporation with minimal capitalization and no operations. It is however, in
various stages of negotiation with a variety of operating businesses which have
expressed a desire to be acquired by a publicly held corporation. After this
merger, the former AMAC shareholders became the holders of approximately 89.8%
of the Company's common stock.
Mr. Donald Cartwright, an officer and director of AMAC Technologies,
Inc. was appointed chairman and CEO of the Company on June 16,1998. In July
16, 1998, Donald Smith resigned as a member of the Board of Directors, and
John T. Paprocki of Wausau, Wisconsin, was appointed to serve in Mr. Smith's
place.
BUSINESS OF THE COMPANY: The sole business of the Company at this time
is to seek out and acquire operating businesses. The Company plans to acquire
assets of or a majority ownership interest in an operating business in exchange
for shares of the Company's capital stock, cash or a combination of shares and
cash.
The Company has announced its intention to acquire Karns Machinery,
Inc. in exchange for 113,000 common shares of the Company. In connection with
its acquisition, the Company will be required to make $500,000 available to fund
operations of Karns Machine, Inc. Karns Machine, Inc. is a 24 year old metal
fabrication Company completing development of a unique welding technology, and
is based in Lead, South Dakota.
The Company has not identified any industry, segment within an
industry, nor geographic region in which it intends to concentrate its assets or
efforts. It however is giving preference to companies which can add
significantly to its profits and asset base. Management, ( all of whom are
devoting part time efforts to the Company's business) plan to search for
operating
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companies which the Company can acquire and become an operating Company. Theme
is no assurance that the Company will he successful in this endeavor. The
Company presently has no other source of revenue nor operations. Unless the
Company is successful in acquiring a Company or properties that provide cash
flow, the survival of the Company is in doubt.
RESULTS OF OPERATIONS: During the fiscal quarter ended June 30, 1998,
(the Company's third fiscal quarter) the Company incurred a net loss of $39,307.
Year to date losses amounted to $50,730. The loss is primarily attributed to
ongoing professional fees and other costs associated with being a publicly held
corporation, such as expenses of filings, with the Securities and Exchange
Commission as well as acquisition search expenses( primarily travel in nature)
incurred by the Company in its efforts to acquire an operating Company.
LIQUIDITY AND CAPITAL RESOURCES: At June 30,1998, the Company has
$1,243 in cash and has accumulated a deficit of $512,021. The Company has no
other cash nor liquid assets. during the three month period ended June 30, 1998,
shareholders advanced to the Company a total of $30,000 which was used to pay
operating expenses. The advances are repayable upon the request of the
shareholders and do not require the payment of interest.
Subsequent to the date of the financial statements included in this
report, the Company was able to secure $750,000 in cash to complete its
acquisition of Karns Machinery, Inc. and other working capital needs via the
sale of 100,000 shares of common stock to private investors. Management is
currently negotiating with several other groups to secure added working capital
in the form of direct investment in the Company or borrowing in order to further
its effort to acquire an operating Company. Whether the Company ultimately is
successful in its effort to acquire operating companies is dependent upon this
financing effort.
The Company has no plans not commitments for Capital expenditures at
this time, The Company will incur expenses related to its efforts to acquire
additional businesses, professional and Securities and Exchange Commission
filings,
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES
On May 22, 1998 the 758,287,496 then outstanding shares of common stock
of the Company were subjected to a recapitalization involving a reverse stock
split and an immediate forward split of the shares. In the reverse stock split
shareholders were to receive one share for each 75,000 outstanding shares with
all fractional shares being rounded into the next whole share. The resulting
shares were then subject to a forward split in which each resulting share from
the 75,000 to 1 reverse split would become 100 shares. Due to the treatment of
shares beneficially held, the Company has yet to determine the final number of
shares outstanding as a result of the recapitalization. The Company estimates,
however, that the number will be approximately 1,076,500 shares. Common stock is
the only outstanding class of shares of the Company.
9
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On May 13, 1998, the Board of Directors of the Company authorized the
issuance of up to 9,000,000 post recapitalization shares in exchange for up to
all of the shares of AMAC Technologies, Inc. ("AMAC"). The 9,000,000 shares were
issued on June 8, 1998. AMAC has nominal capitalization and no operations. AMAC
does have several pending negotiations to acquire operating businesses,
including the acquisition of Karns Machine Inc. a supplier of welding products
and services based in Lead, South Dakota, in connection with which acquisition
it is contemplated that the Company would issue 113,000 shares of its common
stock to the shareholders of Karns Machine Inc.
ITEM 3 DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 14, 1998, a special meeting of the Company's shareholders as
of March 18, 1998 was held. At the meeting 599,000,000 of the 758,287,496 shares
of common stock then outstanding were represented in person or by proxy.
The shareholders approved the reincorporation of the Company to effect
a recapitalization and the adoption of stock option and compensation plans. At
the meeting, the directors were granted the authority to elect not to pursue the
reincorporation, but to instead effect the recapitalization via stock splits. At
the meeting, shareholders also elected three directors.
ITEM 5 OTHER INFORMATION
The Company expects to sell 100,000 shares of common stock to a
private investor in exchange for $735,000 cash. The proceeds from such sale of
shares will be used to complete the Karns Machine, Inc. acquisition, and to
provide working capital for the Company as it continues its search for
additional operating companies.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 - Financial Data Schedule (filed electronically only)
(b) Reports on Form 8-K
None
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SIGNATURES
In Accordance with the requirements of the Exchange Act, the registrant
caused this Form 10-QSB to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated: August 14, 1998 SIGMA-7 PRODUCTS, INC.
By: /s/ Donald W. Cartwright
------------------------
Chairman, Chief Executive Officer
and Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,243
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,243
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,243
<CURRENT-LIABILITIES> 80,799
<BONDS> 0
0
0
<COMMON> 439,715
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (59,556)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 39,307
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (39,307)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39,307)
<EPS-PRIMARY> 0
<EPS-DILUTED> (.01)
</TABLE>
