<PAGE>
U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE
ACT
For the transition period from _____________ to _________
Commission file number 33-90344
Sigma Alpha Group, Ltd.
(Exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
23-2498715
(IRS Employer Identification No.)
1341 North Delaware Avenue, Philadelphia, PA 19125
(Address of principal executive offices)
(X) (215) 425-8682
(Issuer's telephone number)
______________________________________________________________
(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
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 ( )
Outstanding shares issued or to be issued of each of the registrant's
class of common stock $.001 par value per share as of December 9, 1996 were
16,931,604.
<PAGE>
SIGMA ALPHA GROUP, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Consolidated Balance Sheets at
October 31, 1996 (unaudited) and
July 31, 1996 (audited) 3-4
Consolidated Statements of Operations
for the three months ended October 31,
1996 and 1995 (unaudited) 5-6
Consolidated Statement of Stockholders'
Equity for the three months ended
October 31, 1996 (unaudited) 7-8
Consolidated Statements of Cash Flows
for the three months ended October 31,
1996 and 1995 (unaudited) 9-10
Notes to Consolidated Financial
Statements (unaudited) 11-13
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 14-16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of
Security Holders 17
Item 5. Other Events 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Rounded to Nearest Thousand)
<CAPTION>
October 31, July 31,
1996 1996
___________ _________
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 896,000 $1,173,000
Accounts receivable 219,000 -
Inventory 201,000 119,000
Prepaid expenses and other current assets 26,000 20,000
_________ _________
1,342,000 1,312,000
PROPERTY AND EQUIPMENT 86,000 80,000
OTHER ASSETS
Goodwill 54,000 58,000
Patent and trademark 11,000 9,000
_________ _________
65,000 67,000
_________ _________
TOTAL ASSETS $1,493,000 $1,459,000
========= =========
<FN>
See accompanying notes
3
</TABLE>
<PAGE>
<TABLE>
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Rounded to Nearest Thousand)
<CAPTION>
October 31, July 31,
1996 1996
___________ _________
(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES
Loan payable $ - $ 16,000
Accounts payable - trade 351,000 231,000
Taxes, other than income taxes 7,000 7,000
Accrued wages - officers 16,000 40,000
Accrued expenses and other current
liabilities 113,000 94,000
_________ _________
TOTAL LIABILITIES 487,000 388,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
PREFERRED STOCK
SERIES A, $5.00 CONVERTIBLE, $.001 par value;
authorized, 750,000 shares; issued and
outstanding, 0 shares at October 31,
1996 and 178,000 shares at July 31, 1996. - -
SERIES B, $5.00 CONVERTIBLE, $.001 par value;
authorized, 800,000 shares; issued and
outstanding, 664,000 shares at October 31,
1996 and July 31, 1996. 1,000 1,000
SERIES C, $5.00 CONVERTIBLE, $.001 par value;
authorized, 100,000 shares; issued and
outstanding, 75,000 shares at October 31,
1996 and 97,000 shares at July 31, 1996. - -
ADDITIONAL PAID-IN CAPITAL 3,687,000 4,690,000
COMMON STOCK, $.001 par value; authorized
50,000,000 shares; issued and outstanding,
16,582,000 shares at October 31, 1996 and
14,809,000 at July 31, 1996. 17,000 15,000
ADDITIONAL PAID-IN CAPITAL 18,116,000 16,471,000
WARRANTS OUTSTANDING 2,000 2,000
ACCUMULATED DEFICIT (20,817,000) (20,108,000)
__________ __________
TOTAL STOCKHOLDERS' EQUITY 1,006,000 1,071,000
__________ __________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,493,000 $ 1,459,000
========== ==========
<FN>
See accompanying notes
4
</TABLE>
<PAGE>
<TABLE>
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Rounded to Nearest Thousand)
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
______________________
1996 1995
__________ _________
<S> <C> <C>
SALES $ 219,000 $ -
COST OF SALES 212,000 -
__________ _________
GROSS PROFIT 7,000 -
__________ _________
OPERATING EXPENSES:
Officers' compensation 339,000 128,000
Other salaries and
payroll costs 19,000 3,000
Consulting fees 74,000 86,000
Professional fees 56,000 56,000
Research and
development 28,000 231,000
Selling expenses 22,000 -
Travel 102,000 66,000
Other 94,000 87,000
_________ _________
TOTAL OPERATING EXPENSES 734,000 657,000
_________ _________
LOSS FROM CONTINUING
OPERATIONS BEFORE OTHER
INCOME AND EXTRAORDINARY
GAIN (727,000) (657,000)
_________ _________
OTHER INCOME (EXPENSE)
Interest income 10,000 14,000
Interest expense - (20,000)
_________ _________
10,000 (6,000)
_________ _________
LOSS BEFORE
EXTRAORDINARY GAIN (717,000) (663,000)
EXTRAORDINARY GAIN ON
EXTINGUISHMENT OF DEBT 8,000 13,000
_________ _________
NET LOSS $ (709,000) $ (650,000)
========= =========
<FN>
See accompanying notes
5
</TABLE>
<PAGE>
<TABLE>
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Rounded to Nearest Thousand)
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
_______________________
1996 1995
__________ __________
<S> <C> <C>
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 16,242,000 13,323,000
NET LOSS PER COMMON SHARE
Net loss before
extraordinary gain $ (0.04) $ (0.05)
Extraordinary gain on
extinguishment of debt 0.00 0.00
_________ ________
NET LOSS PER SHARE $ (0.04) $ (0.05)
========= ========
<FN>
See accompanying notes
6
</TABLE>
<PAGE>
<TABLE>
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED OCTOBER 31, 1996
(Rounded to Nearest Thousand)
PREFERRED STOCK "SERIES A"
_______________________________
<CAPTION>
ADDITIONAL
NUMBER OF PAID-IN
SHARES AMOUNT CAPITAL
_________ ______ __________
<S> <C> <C> <C>
BALANCES, AUGUST 1, 1996 178,000 $ - $ 882,000
Three months ended October 31,
1996 (Unaudited):
Converted to common stock (178,000) - (882,000)
_________ ______ __________
BALANCES, OCTOBER 31, 1996 - $ - $ -
========= ====== ==========
</TABLE>
<TABLE>
PREFERRED STOCK "SERIES B"
_______________________________
<CAPTION>
ADDITIONAL
NUMBER OF PAID-IN
SHARES AMOUNT CAPITAL
_________ ______ __________
<S> <C> <C> <C>
BALANCES, JULY 31, 1996 664,000 $ 1,000 $ -
_________ ______ __________
BALANCES, OCTOBER 31, 1996 664,000 $ 1,000 $ -
========= ====== ==========
</TABLE>
<TABLE>
PREFERRED STOCK "SERIES C"
_______________________________
<CAPTION> ADDITIONAL
NUMBER OF PAID-IN
SHARES AMOUNT CAPITAL
_________ ______ __________
<S> <C> <C> <C>
BALANCES, JULY 31, 1996 97,000 $ - $ 487,000
Three months ended October 31,
1996 (Unaudited):
Repurchase of shares for
retirement (22,000) - (120,000)
_________ ______ __________
BALANCES, OCTOBER 31, 1996 75,000 $ - $ 367,000
========= ====== ==========
</TABLE>
[FN]
See accompanying notes
7
<PAGE>
<TABLE>
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED OCTOBER 31, 1996
(Rounded to Nearest Thousand)
COMMON STOCK
______________________________________________________________
<CAPTION>
ADDITIONAL
NUMBER OF PAID-IN WARRANTS ACCUMULATED
SHARES AMOUNT CAPITAL OUTSTANDING DEFICIT
__________ _______ ___________ ___________ ____________
<S> <C> <C> <C> <C> <C>
BALANCES,
JULY 31, 1996 14,809,000 $15,000 $16,471,000 $ 2,000 $(20,108,000)
Three months
ended October
31, 1996
(Unaudited):
Issuances of
common stock 345,000 1,000 600,000 - -
Officer's
Compensation 1,250,000 1,000 187,000 - -
Preferred Series
A conversion 178,000 - 882,000 - -
Commissions - - (24,000) - -
Net loss - - - - (709,000)
__________ ______ ___________ __________ ____________
BALANCES,
OCTOBER 31,
1996 16,582,000 $17,000 $18,116,000 $ 2,000 $(20,817,000)
========== ====== =========== ========== ==========
<FN>
See accompanying notes
8
</TABLE>
<PAGE>
<TABLE>
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Rounded to Nearest Thousand)
THREE MONTHS ENDED
OCTOBER 31,
__________________________
<CAPTION>
1996 1995
___________ ________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (709,000) $ (650,000)
Adjustments to reconcile net loss
to net cash flows from operating
activities:
Extraordinary gain on extinguishment
of debt (8,000) ( 13,000)
Depreciation of property and
equipment and amortization of
goodwill 9,000 7,000
Amortization of unearned compensation - 3,000
Issuance of common stock for
Officers' compensation 188,000 -
(Increase) decrease in:
Accounts receivable (219,000) (12,000)
Receivable from underwriting - 198,000
Inventory (82,000) -
Prepaid expenses and other current
assets (6,000) (12,000)
Increase (decrease) in:
Accounts payable 127,000 30,000
Taxes, other than income taxes - 7,000
Accrued wages - officers (24,000) -
Accrued expenses and other current
liabilities 19,000 (19,000)
_________ ________
Net cash used in operating activities ( 705,000) (461,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in trademark (2,000) -
Purchase of equipment (11,000) (42,000)
_________ _______
Net cash used in investing activities (13,000) (42,000)
_________ _______
<FN>
See accompanying notes
9
</TABLE>
<PAGE>
<TABLE>
SIGMA ALPHA GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Rounded to Nearest Thousand)
THREE MONTHS ENDED
OCTOBER 31,
_______________________
<CAPTION>
1996 1995
_________ ________
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of loans payable $ (16,000) $ -
Proceeds from issuance of common stock 601,000 -
Commission on common stock issuance (24,000) -
Repurchase of Preferred Series C stock (120,000) (44,000)
_________ _________
Net cash provided by financing activities 441,000 (418,000)
_________ _________
NET CHANGE IN CASH AND EQUIVALENTS (277,000) (921,000)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 1,173,000 1,423,000
_________ _________
CASH AND EQUIVALENTS, END OF PERIOD $ 896,000 $ 502,000
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the six months:
Interest $ - $ -
SUPPLEMENTAL SCHEDULE OF NONCASH
FINANCING ACTIVITIES
Preferred Stock Series B issued for
conversion of debt $ - $ 75,000
Common stock issued for conversion
of debt $ - $ 1,000
Common stock issued retirement of
Preferred Series A stock $ 882,000 $ -
<FN>
See accompanying notes
10
</TABLE>
<PAGE>
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996 AND 1995
NOTE 1 - INTERIM PERIODS
The unaudited information has been prepared on the same basis as the annual
financial statements and, in the opinion of the Company's management reflects
normal recurring adjustments necessary for a fair presentation of the
information for the periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-KSB for the year ended July 31, 1996. All references to the
Company's product include products produced and/or marketed by the Company's
80% owned subsidiary, Global Telecommunications of Delaware, Inc.
The results of operations for the three month periods ended October 31, 1996
and 1995 are not necessarily indicative of operating results for the full year.
NOTE 2 - MANAGEMENT'S PLANS
At October 31, 1996, the Company had working capital of $855,000. During the
three months ended October 31, 1996, the Company conducted activities directed
toward the production of the Company's Stock Information Receiver ("SIR") and
the research and development of a Voice Information Pager ("VIP"), also
sometimes referred to as the Digital Voice Pager ("DVP"). Management believes
that during the twelve month period following October 31, 1996, in the event
that the Company issues the remaining 2,200,000 shares of common stock,
pursuant to the Company's Prospectus dated September 6, 1996, on a timely
basis, and the approximate $4,400,000 in proceeds are generated therefrom, that
the Company will be able to complete the funding of the VIP project.
Management is aware, however, that there can be no assurance that the VIP field
tests will be successful, or that the VIP will be developed, or even if
developed, that the VIP and SIR would be profitable upon commercialization.
Subsequent to October 31, 1996, the Company has issued 350,000 shares of common
stock pursuant to a Prospectus dated September 6, 1996, which has generated
$700,000 for the Company leaving a balance of 1,805,000 shares, which could
generate an additional $3,610,000. Additionally, the Company or its agents
have collected approximately $101,000 of the accounts receivable outstanding at
October 31, 1996. The Company has total orders, including those already sold,
for 41,000 SIR's from three radio stations in China, through December 10, 1996,
which should generate a total of $1,335,000 of sales revenue, once they have
all been shipped.
NOTE 3 - METHOD OF ACCOUNTING
The Company prepares its financial statements on the accrual method of
accounting, recognizing income when earned and expenses when incurred.
11
<PAGE>
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996 AND 1995
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Development Agreement
GTD has extended the date of delivery, under a development agreement, of the
VIP prototype until January 15, 1997. This is a result of the priority of the
SIR project in order to meet the needs of GTD's proposed customers in China and
the Company's limited financial resources which restrict a parallel development
path.
Employment Agreement
On November 14, 1995, the Board of Directors authorized a bonus to the Chairman
of 1,250,000 shares of common stock. These shares were issued in August, 1996.
Legal Proceedings
As of October 31, 1996, the Company had approximately 10 judgments related to
accounts payable totalling approximately $71,000 outstanding against it. The
City of Philadelphia maintains a judgment in the amount of approximately
$16,000 against the Company. Management has been actively negotiating and
working out settlements with respect to judgments and tax assessments and
believes that the Company will be able to satisfy such obligations over a
period of time provided adequate funding is received from financing activities.
In August, 1996, the Company was served with a Summons and Complaint. The
Complaint seeks specific performance of a contract and entitles the plaintiff
to receive 15,000 shares of the Company's common stock or alternatively
$66,000. The Company has prepared an answer to the complaint denying the
plaintiff's right to receive such shares or any monetary compensation.
NOTE 5 - PREFERRED STOCK
The Company redeemed approximately 22,000 shares of Preferred Series C Stock
which are held by the Company's Chairman, for approximately $120,000 during the
three months ended October 31, 1996. Subsequent to October 31, 1996 the
Company has redeemed approximately an additional 13,000 shares of Preferred
Series C Stock for approximately $69,000.
NOTE 6 - EXTRAORDINARY GAIN ON EXTINGUISHMENT OF DEBT
The Company recognized an extraordinary gain on the extinguishment of debt of
$8,000 during the three months ended October 31, 1996, relating to accounts
payable in the aggregate amount of $8,000.
12
<PAGE>
SIGMA ALPHA GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996 AND 1995
NOTE 7 - INCOME TAXES
There is no income tax benefit for operating losses for the three months ended
October 31, 1996 and 1995 due to the following:
Current tax benefit - the operating losses cannot be carried back to
earlier years.
Deferred tax benefit - the deferred tax assets were offset by a valuation
allowance. Management believes that a valuation
allowance is considered necessary since it is more
likely than not that the deferred asset will not be
realized through future taxable income.
NOTE 8 - NET LOSS PER SHARE
Net loss per share is based upon the weighted average number of shares
outstanding, without assumed conversion of the warrants and stock options,
which are considered to be common stock equivalents, since the effect on net
loss per share would be anti-dilutive.
13
<PAGE>
PART I. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Company's consolidated financial statements appearing elsewhere in this
report.
General Operations
During the three months ended October 31, 1996, the Company and its 80%
owned subsidiary, Global Telecommunications of Delaware, Inc., conducted
activities directed toward the production of the Company's Stock Information
Receiver ("SIR") and the research and development of a Voice Information Pager
("VIP"), also sometimes referred to as the Digital Voice Pager ("DVP").
Management believes that during the twelve month period following October 31,
1996, in the event that the Company issues the remaining 2,200,000 shares of
common stock, pursuant to the Company's Prospectus dated September 6, 1996, on
a timely basis, and the approximate $4,400,000 in proceeds are generated
therefrom, that the Company will be able to complete the funding of the VIP
project. Management is aware, however, that there can be no assurance that the
VIP field tests will be successful, or that the VIP will be developed, or even
if developed, that the VIP and SIR would be profitable upon commercialization.
Subsequent to October 31, 1996, the Company has issued 350,000 shares of
common stock pursuant to a Prospectus dated September 6, 1996, which has
generated $700,000 for the Company, leaving a balance of 1,805,000 shares which
could generate an additional $3,610,000. Additionally, the Company or its
agents have collected approximately $101,000 of the accounts receivable
outstanding at October 31, 1996. The Company also has total orders, including
those already sold, for 41,000 SIR's from three radio stations in China,
through December 10, 1996, which should generate a total of $1,335,000 of sales
revenue, once they have all been shipped.
Three Months Ended October 31, 1996
v. Three Months Ended October 31, 1995
Results of Operations
For the three months ended October 31, 1996, the Company incurred a net
loss of $709,000 on sales of $219,000. This compares to a net loss of $650,000
on no sales for the three months ended October 31, 1995. The $59,000 increase
in the net loss for the three month period is attributed to an increase in
operating expenses of $77,000, which was offset by gross profit of $7,000 and a
decrease in interest expense of $20,000.
The gross profit for the three months ended October 31, 1996 was $7,000 and
may increase for future sales, since the Company gave the first radio station
an introduction price of $28 per unit for the first 10,000 SIR units. Future
orders to this radio station and subsequent radio stations will be sold at a
price of $35 for each SIR unit. Additionally, the Company is attempting to
negotiate better pricing arrangements with its vendors, subsequent to October
31, 1996.
14
<PAGE>
Operating expenses for the three months ended October 31, 1996 were
$734,000 compared to $657,000 for the three months ended October 31, 1995, a
$77,000 increase. The difference can be attributed to an increase in officers'
compensation of $211,000; a decrease in research and development costs of
$203,000; an increase in selling expenses of $22,000; and an increase in travel
of $36,000.
The increase in officers' compensation for the three months ended October
31, 1996 resulted from the issuance of 1,250,000 shares of common stock to the
Chairman valued at $188,000, a 15% increase in the Chairman's salary effective
July 22, 1996, and other normal officer salary increases. Research and
development costs decreased to $28,000 for the three months ended October
31, 1996 from $231,000 for the three months ended October 31, 1995, because the
Company focused on the production of the SIR in lieu of further research and
development of the VIP. Selling expenses for the three months ended October
31, 1996 were $22,000 compared to $0 for the three months ended October 31,
1995. The increase is a result of the first sales of the Company being
generated in October, 1996. The increase in travel expenses for the three
months ended October 31, 1996 resulted from travel related to field tests of
the SIR, marketing efforts at radio stations in China, and financing efforts in
Europe.
Interest expense was $0 for the three months ended October 31, 1996,
compared to $20,000 for the three months ended October 31, 1995. This was a
result of having to pay interest in order to settle debt, during the three
months ended October 31, 1995.
Liquidity and Capital Resources
At October 31, 1996, the Company had working capital of $855,000. During
the quarter, the Company conducted activities directed toward production of the
SIR and the research and development of the VIP.
As of October 31, 1996, the Company has sold approximately 8,000 SIR's.
The Company has orders through December 10, 1996 for an additional 33,000 SIR
units for a grand total of 41,000 units ordered. The first 10,000 units are
being sold at an introduction price of $28, however, future SIR's will be sold
at a minimum of $35 per unit. The Company has collected approximately $101,000
from the sales of the SIR's through December 10, 1996, thus generating
additional cash flow for the Company.
To fully consummate its plans with respect to the VIP, the Company is
relying on the issuance of a total of 2,500,000 shares of common stock at $2.00
per share in accordance with the Company's latest registration statement. As
of October 31, 1996, the Company has sold 300,000 of these shares of common
stock, which generated $600,000 for the Company. Subsequent to October 31,
1996, the Company has sold an additional 350,000 shares of common stock, which
has generated another $700,000 for the Company.
With a portion of the remaining $3,700,000, the Company intends to
finalize the development of the VIP and bring it to market. In the event that
the remaining shares of common stock cannot be sold, the Company will need to
pursue other financing opportunities to bring the VIP to market on schedule.
Alternatively, if these other financing opportunites cannot be obtained, the
Company would have to rely on sales of the SIR's to provide capital to bring
the VIP to market at a slower rate, however, additional funding may be needed
to culminate the plan using this strategy. There can be no assurance that the
15
<PAGE>
SIR will be profitable or able to support the development and marketing of the
VIP.
There can be no assurance that additional funding will be made available,
or if available on terms acceptable to the Company.
16
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the Registrant's Annual Report on
Form 10-KSB for the year ended July 31, 1996.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Events
None
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K: The Company filed a Form 8-K on
November 4, 1996. The report disclosed in Item 5,
agreements entered with radio stations in China pursuant to
which the radio stations agreed to purchase 16,000 SCA
Radios.
Exhibit - 27. Financial Data Schedule
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 13, 1996
SIGMA ALPHA GROUP, LTD.
(REGISTRANT)
By: s/Scott A. McPherson
Scott A. McPherson
________________
Duly Authorized Officer
and Chief Accounting Officer
(Principal Financial and
Accounting Officer)
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-START> Aug-01-1995
<PERIOD-END> Oct-31-1996
<CASH> 896,000
<SECURITIES> 0
<RECEIVABLES> 219,000
<ALLOWANCES> 0
<INVENTORY> 201,000
<CURRENT-ASSETS> 1,342,000
<PP&E> 224,000
<DEPRECIATION> 138,000
<TOTAL-ASSETS> 1,493,000
<CURRENT-LIABILITIES> 487,000
<BONDS> 0
0
1,000
<COMMON> 17,000
<OTHER-SE> 988,000
<TOTAL-LIABILITY-AND-EQUITY> 1,493,000
<SALES> 219,000
<TOTAL-REVENUES> 219,000
<CGS> 212,000
<TOTAL-COSTS> 734,000
<OTHER-EXPENSES> (10,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (717,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (717,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 8,000
<CHANGES> 0
<NET-INCOME> (709,000)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
