<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 March 31, 1998 Commission File No. 0-17700
SIGMA-7 PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)
COLORADO 84-1095500
(State or other jurisdiction of (I.R.S. Empl. Ident. No.)
incorporation or organization)
2501 East Third Street
Casper, Wyoming 82609
(Address of Principal Executive Offices) (Zip Code)
(307) 235-0012
(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 to such filing
requirements for at least the past 90 days.
YES ____ NO X
The number of shares outstanding of each of the Registrant's classes of
common equity, as of March 31, 1998 are as follows:
Class of Securities Shares Outstanding
-------------------------- ------------------
Common Stock, no par value 758,287,496
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INDEX
<TABLE>
<CAPTION>
PAGE OF
REPORT
<S> <C> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS:
As of March 31, 1998 (Unaudited) ............................................................ 3
STATEMENT OF OPERATIONS (UNAUDITED):
For the three months ended March 31, 1998
and Cumulative from inception (October 3, 1988) through March 31, 1998 ....................... 4
STATEMENTS OF CASH FLOWS (UNAUDITED):
For the three months ended March 31, 1998
and Cumulative from inception (October 3, 1988) through March 31, 1998 ....................... 5
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)..................................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION..................... 7
PART II. OTHER INFORMATION
Item 5. Other Information .................................................................................... 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................................................... 10
Signatures.................................................................................... 10
</TABLE>
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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>
March 31, September 30,
1998 1997
------------ -------------
<S> <C> <C>
(Unaudited) (Note)
CURRENT ASSETS:
Cash $ 915 $ 581
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,380 $ 8,657
Loan payable-shareholders 23,784 9,750
------------ -------------
TOTAL CURRENT LIABILITIES 30,164 18,407
------------ -------------
STOCKHOLDERS' EQUITY:
Preferred stock, no par value,
10,000,000 shares authorized;
none issued and outstanding
Common stock, no par value; 1,000,000,000 shares authorized;
758,287,496 shares issued and outstanding at March 31,
1998 and September 30, 1997. 430,715 430,715
Contributed capital 12,750 12,750
Deficit accumulated during the
development stage (472,714) (461,291)
------------ -------------
TOTAL STOCKHOLDERS' (DEFICIT) (29,249) (17,826)
------------ -------------
$ 915 $ 581
============ =============
</TABLE>
Note: Taken from the audited balance sheet at that date.
3
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SIGMA-7 PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
October 3, 1988
Three months Six months (Inception)
ended ended to
March 31, 1998 March 31, 1998 March 31, 1998
-------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUE $ - $ - $ 20,966
-------------- ------------- -------------
OPERATING EXPENSES:
General and
administration 7,860 11,423 514,791
Interest expense - - 35,917
Amortization - - 250
-------------- ------------- -------------
7,860 11,423 550,958
-------------- ------------- -------------
OTHER INCOME - - 51,160
-------------- ------------- -------------
Income (loss) before
extraordinary item: (7,860) (11,423) (478,832)
EXTRAORDINARY ITEMS:
Gain on conversion of
debt to equity - - 6,118
-------------- ------------- ------- -----
NET INCOME (LOSS) $ (7,860) $ (11,423) $ (472,714)
============== ============= =============
NET LOSS PER SHARE * * *
============== ============= =============
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 758,287,496 758,287,496 370,331,161
============== ============= =============
</TABLE>
* less than $.01 per share
4
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SIGMA-7 PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
October 3, 1988
Three Months Six Months (Inception)
ended ended to
March 31, 1998 March 31, 1998 March 31, 1998
-------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) income $ (7,860) $ (11,423) $ (472,714)
ADJUSTMENTS TO RECONCILE NET
INCOME(LOSS) TO NET CASH
PROVIDED BY OPERATING
ACTIVITIES:
Amortization - - 250
CASH PROVIDED (USED) DUE TO
CHANGES IN ASSETS AND
LIABILITIES:
Issuance of common stock
for services - - 42,700
Other income - - (51,160)
Accounts payable (1,045) (2,277) 42,848
Accrued interest and expense - - 12,281
------------- ------------ ------------
Net cash used by operating
activities (8,905) (13,700) (425,795)
------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common
stock:
For cash - - 195,405
For conversion of debt - - 211,132
Increase in notes payable 8,534 14,034 24,997
Deferred offering costs - - (17,324)
Contributed capital - - 12,750
Increase in organization costs - - (250)
------------- ------------ ------------
Net cash provided by financing
activities 8,534 14,034 426,710
------------- ------------ ------------
Net increase (decrease) in cash
and cash equivalent (371) 334 915
Cash and cash equivalents,
beginning of period 1,286 581 -
------------- ------------ ------------
Cash and cash equivalents,
end of period $ 915 $ 915 $ 915
============= ============ ============
</TABLE>
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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 the procedures followed in preparing these financial
statements are reasonable, the accuracy of the 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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN
OF OPERATION.
BACKGROUND. Sigma-7 Products, Inc. (the "Company") was incorporated in the
state of Colorado under the name of 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 the
approximately net sum of $93,467.
On April 19, 1989, the Company amended its Articles of Incorporation
changing the Company's name to Sigma-7 Products, Inc. Subsequently, on January
25, 1992, the Company changed its name to Global Development Group, Inc. and
back again to Sigma-7 Products, Inc. on May 25, 1995.
During the period between April 19, 1989 and approximately 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 that 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
interest to pursue this endeavor. During late February and early March 1991, the
Company ceased to operate that business due to a lack of working capital and
extended debt.
Subsequent to January 1, 1991, the Company engaged in a financial
restructuring to eliminate as much debt as possible and to make the Company
attractive for acquisition and/or merger with qualified individuals and
companies with existing operations. Substantial quantities of the Company's
common stock have been issued in connection with such restructuring and in
connection with the Company's ongoing administrative expenses.
FORWARD LOOKING STATEMENTS. This report contains certain forward-looking
statements and information relating to the Company that are based on the beliefs
of its management as well as assumptions made by and information currently
available to its management. When used in this report, the words "anticipate,"
"believe," "estimate," "expect," "intend," "plan," and similar expressions, as
they relate to the Company or its management, are intended to identify
forward-looking statements. These statements reflect management's current view
of the Company with respect to future events and are subject to certain risks,
uncertainties and assumptions. Should any of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in this report as anticipated,
estimated or expected. The Company's realization of its business aims will
depend in the near future principally on the successful completion of its
acquisition of operations as discussed below.
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BUSINESS OF THE COMPANY. The Company's sole business at this point is to
seek to acquire assets of, or an interest in, a small to medium-sized company or
venture actively engaged in a business generating revenues or having immediate
prospects of generating revenues. The Company plans to acquire such assets or
shares by exchanging therefor the Company's securities. In order to avoid
becoming subject to regulation under the Investment Company Act of 1940, as
amended, the Company does not intend to enter into any transaction involving the
purchase of another corporation's stock unless the Company can acquire at least
a majority interest in that corporation. The Company has not identified any
industry, segment within an industry or type of business, nor geographic area,
in which it will concentrate its efforts, and any assets or interest acquired
may be in any industry or location, anywhere in the world. The Company will give
preference to profitable companies or ventures with a significant asset base
sufficient to support a listing on a national securities exchange or quotation
on the NASDAQ system. Members of management (all of whom are devoting part time
to the Company's affairs) plan to search for an operating business or venture
which the Company can acquire, thereby becoming an operating company. There is
no assurance that the Company will be successful in this endeavor. The Company
has no operation or source of revenues. Unless the Company succeeds in acquiring
a company or properties which provide cash flow, the Company's ability to
survive is in doubt.
RESULTS OF OPERATIONS. During the fiscal quarter ended March 31, 1998 (the
second quarter of the current fiscal year), the Company incurred a net loss of
$7,860 for an accumulated net loss for the first two quarters of its current
fiscal year of $11,423. The expenses resulting in the loss related primarily to
accounting fees, legal fees and other costs incurred in regard to the Company's
Securities and Exchange Commission filings.
LIQUIDITY AND CAPITAL RESOURCES. The Company had $915 cash on hand at the
end of the current quarter. The Company has, since inception, accumulated a
deficit (net loss) of $472,714. The Company had no other cash or other liquid
assets, nor any current plans to raise capital. The Company's cash has been
provided by advances made to the Company by certain of its principal
shareholders. Whether the Company ultimately becomes a going concern depends
upon its success in finding and acquiring a suitable private business and the
success of that acquired business. At this time, the Company has no commitment
for any capital expenditure and foresees none. Offices are provided without
charge to the Company. However, the Company will incur routine fees and expenses
incident to filing of periodic reports with the Securities and Exchange
Commission, and it will incur fees and expenses in the event it makes or
attempts to make an acquisition. As a practical matter, the Company expects no
significant operating costs other than professional fees payable to attorneys
and accountants.
In regard to a proposed acquisition, the Company anticipates requiring the
target company to deposit with the Company a retainer which the Company can use
to defray such professional fees and costs. In this way, the Company could avoid
the need to raise funds for such expenses or becoming indebted to such
professionals. Moreover, investigation of business ventures for potential
acquisition will involve some costs, at the least postage and long-distance
telephone charges. Management hopes, once a candidate business venture is deemed
to be
8
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appealing, to likewise secure a deposit from the business venture to defray
expenses of further investigation, such as air travel and lodging expenses.
An otherwise desirable business venture may, however, decline to post such
a deposit.
The Company has no credit available to it and is unable to borrow money.
Management does not anticipate raising funds through the sale of securities or
otherwise, and it is unlikely that significant funds could be raised in a
securities offering in any event. This inability to raise funds could negatively
affect the Company's realization of its business purpose.
PART II OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
On April 14, 1998, a special meeting of the shareholders of the Company was
held in Casper, Wyoming pursuant to notice sent to shareholders of record as of
March 18, 1998 (the "Special Meeting"). The Special Meeting was called for the
purposes of obtaining shareholder approval of (i) a reincorporation of the
Company in Nevada which would effect a change in the name of the Company and a
recapitalization of the Company involving a reverse split followed by a forward
split of the Company's common stock; (ii) a stock option plan pursuant to which
options for the purchase of up to 1,000,000 (post-split) shares of common stock
of the Company could be issued; and (iii) an employee stock compensation plan
pursuant to which up to 1,500,000 (post-split) shares of common stock of the
Company could be issued. The notice of the meeting also contemplated that at the
meeting the shareholders would elect directors and transact such other business
as may come before the meeting.
Prior to the Special Meeting, the Company received notice from several
shareholders holding approximately 4.4% of the outstanding shares that such
shareholders intended to dissent with respect to the reincorporation proposal
and receive a cash payment with respect to their shares. After consultation with
legal counsel, it was determined that the primary purposes of the
reincorporation; that is, the recapitalization of the Company could be
accomplished without changing the domicile of the Company and without 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 of the Company presented to the
shareholders an alternative to the reincorporation proposal which involved the
shareholders approving:
a. a 1 for 75,000 share reverse split with all fractional
shares rounded up to the next full share followed by an immediate 100
for 1 forward split.
b. the direct adoption of the compensatory stock option plan
by the Company rather than by the Company after it reincorporated in
Nevada.
c. the direct adoption of the employee stock compensation plan
by the Company rather than by the Company after its reincorporation in
Nevada.
9
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d. an amendment of the Company's Articles of Incorporation to
authorize the Company to issue up to 100,000,000 no par value 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 or
AMAC Technologies, Inc.
The shareholders approved the foregoing alternative proposal, subject to a
grant to the Board of Directors of the authority to elect to proceed with the
reincorporation. In addition, the shareholders re-elected Donald Smith, Timothy
Gibson and Donald Cartwright as the members of the Board of Directors of the
Company. Mr. Cartwright had been appointed as a director in March 1998 to fill a
vacancy caused by the resignation of Richard Rouse.
Subsequent to the Special Meeting, the Board of Directors of the Company
elected to not pursue the reincorporation of the Company as a Nevada
corporation. The Board of Directors approved the recapitalization of the Company
to be effective on May 22, 1998. As a result of the recapitalization, it is
expected that the Company's 758,287,496 currently outstanding shares of common
stock will become approximately 1,020,000 shares of common stock.
The Board of Directors also authorized the Company to offer to Donald
Cartwright and the other nine shareholders of AMAC Technologies, Inc. ("AMAC of
Minnesota"), to exchange their shares of AMAC of Minnesota for a total of
9,000,000 of the recapitalized shares of the Company's common stock. If the
offers are accepted, Mr. Cartwright and the other AMAC of Minnesota shareholders
will become holders of approximately 89.8% of the Company's then outstanding
common stock. AMAC of Minnesota is a recently established Minnesota corporation
with nominal capitalization and no operations. Mr. Cartwright, who is a director
of the Company, is a principal shareholder, officer and director of AMAC of
Minnesota.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS. Exhibit 27 - Financial Data Schedule.
(b) REPORTS ON FORM 8-K. NONE.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report on Form 10-QSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: May 13, 1998 SIGMA-7 PRODUCTS, INC.
By: /s/ Donald J. Smith
-----------------------------------------
Donald J. Smith, Chief Executive Officer,
President and Chief Financial Officer
10
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 915
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 915
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 915
<CURRENT-LIABILITIES> 30,164
<BONDS> 0
0
0
<COMMON> 430,715
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (29,249)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,860
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,860)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,860)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
