Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Sep. 30, 2016 | Nov. 17, 2016 | |
Document and Entity Information: | ||
Entity Registrant Name | SECTOR 10 INC | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Trading Symbol | seci | |
Amendment Flag | false | |
Entity Central Index Key | 925,661 | |
Current Fiscal Year End Date | --03-31 | |
Entity Common Stock, Shares Outstanding | 305,778 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2016 | Mar. 31, 2016 |
Current assets: | ||
Cash | ||
Inventory, net | ||
Total current assets | ||
Fixed assets -cost | 22,250 | 22,250 |
Less: accumulated depreciation | (22,250) | (22,250) |
Net fixed assets | ||
Total assets | ||
Current liabilities: | ||
Accounts payable and accrued liabilities | 7,119,832 | 6,568,430 |
Note payable - short term | 753,615 | 723,615 |
Total current liabilities | 7,873,447 | 7,292,045 |
Long term liabilities: | ||
Note payable | ||
Total long term liabilities | ||
Total liabilities | 7,873,447 | 7,292,045 |
Shareholders' equity (deficit) | ||
Preferred shares - $0.001 par value; 1,000,000 authorized, no shares issued or outstanding | ||
Common shares - $0.001 par value; 199,000,000 authorized; 305,778 and 305,778 shares issued and outstanding, respectively | 306 | 306 |
Additional paid-in-capital | 6,148,229 | 6,148,229 |
Deficit accumulated during development stage | (14,021,982) | (13,440,580) |
Total shareholders' equity (deficit) | (7,873,447) | (7,292,045) |
Total liabilities and shareholders' equity (deficit) |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | 169 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
Sales | $ 18,500 | ||||
Cost of Sales | (18,032) | ||||
Gross Profit | 468 | ||||
Expenses: | |||||
General and administrative | $ 218,396 | $ 208,395 | $ 406,897 | $ 414,161 | 11,497,656 |
Depreciation | 24,106 | ||||
Research and development | 226,108 | ||||
Total expenses | 218,396 | 208,395 | 406,897 | 414,161 | 11,747,870 |
Income (loss) from operations | (218,396) | (208,395) | (406,897) | (414,161) | (11,747,402) |
Interest expense | (89,053) | (75,372) | (174,505) | (147,723) | (1,643,785) |
Other income (expense) | (630,795) | ||||
Net income (loss) before income taxes | (307,449) | (283,767) | (581,402) | (561,884) | (14,021,982) |
Provision for income taxes | |||||
Net income (loss) after income taxes | $ (307,449) | $ (283,767) | $ (581,402) | $ (561,884) | $ (14,021,982) |
Weighted Average Shares Outstanding - basic and diluted* | 305,778 | 305,778 | 305,778 | 305,778 | |
Basic and diluted income (loss) per share | |||||
Continuing Operations | $ (1.01) | $ (0.93) | $ (1.90) | $ (1.84) | |
Net Income (Loss) | $ (1.01) | $ (0.93) | $ (1.90) | $ (1.84) |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | 169 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | |
Cash Flows from Operating Activities: | |||
Net income (loss) after income taxes | $ (581,402) | $ (561,884) | $ (14,021,982) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Stock for services | 5,114,493 | ||
Depreciation | 24,106 | ||
Net discount on convertible debt | 206,324 | ||
Loss due to Impairment / Gain on restructuring | 630,795 | ||
Changes in inventory and other current assets | (4,869) | ||
Changes in accounts payable and accrued liabilities | 551,402 | 561,884 | 7,633,535 |
Net cash used in operating activities | (30,000) | (417,598) | |
Cash Flows from Investing Activities: | |||
Fixed asset / Other asset purchases | (189,541) | ||
Net cash used in investing activities | (189,541) | ||
Cash Flows from Financing Activities: | |||
Net Proceeds from general financing | 30,000 | 687,500 | |
Net Proceeds (payments) from shareholder / officers | (113,947) | ||
Proceeds from issuance of common stock | 33,586 | ||
Net cash provided by financing activities | 30,000 | 607,139 | |
Net increase (decrease) in cash | |||
Beginning of period - continuing operations | |||
End of period - continuing operations | |||
Cash paid for interest | 2,000 | 24,295 | |
Cash paid for income taxes |
Note 1 - Basis of Presentation
Note 1 - Basis of Presentation | 3 Months Ended |
Jun. 30, 2016 | |
Notes | |
Note 1 - Basis of Presentation | Note 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated condensed financial statements of Sector 10, Inc. (Sector 10 or the Company), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and required by Rule 10-01 of Regulation S-X. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited consolidated financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. |
Note 2 - Inventory
Note 2 - Inventory | 3 Months Ended |
Jun. 30, 2016 | |
Notes | |
Note 2 - Inventory | Note 2 INVENTORY There were no sales in the three months ended September 30, 2016. The inventory reflected on the books was $0 for the six months ended September 30, 2016. |
Note 3 - Notes Payable
Note 3 - Notes Payable | 3 Months Ended |
Jun. 30, 2016 | |
Notes | |
Note 3 - Notes Payable | Note 3 NOTES PAYABLE Johnson Financing The interest accrued for the six month period ended September 30, 2016 was $5,197. Dutro Financing: The contingent reserve - interest includes all interest accrued on the Dutro Company note and all interest accrued after July 1, 2010 for the Vicki Davis and William Dutro note. Interest accrued during the six month period ended September 30, 2016 was $ 18,113 comprised of Dutro Company - $9,375, Vick Davis - $6,300 and William Dutro - $2,438. Total contingent reserve - interest for the period ended September 30, 2016 is $234,235 comprised of Dutro Company - $134,073, Vick Davis - $78,750 and William Dutro - $30,469. Employee Agreement: The financial statements reflect an accrual of interest on unpaid wages and other compensation in the amount of 975,426 of which $144,484 is accrued during the six month period ended September 30, 2016 Other Notes Individuals short term An additional individual short term note of $30,000 was issued in July 2016 to pay for legal fees. The note accrues interest at an annual rate of 8%. Total interest accrued as of September 30, 2016 was $47,267 of which $4,111was accrued during the six month period ended September 30, 2016. Asher Enterprises, Inc. Total interest accrued as of September 30, 2016 was $34,302 of which $2,600 was accrued during the six month period ended September 30, 2016. The current period interest is included as part of other notes interest. Summary of Interest and Notes Payable Interest expense September 30, 2016 March 31, 2016 Interest Johnson 5,197 10,394 Interest Dutro Group 18,113 36,225 Interest - Employee Group 144,484 249,838 Interest Other Notes 6,711 12,320 Total interest expense $ 174,505 $ 308,777 Note Payable Balance September 30, 2016 March 31, 2016 Edward Johnson Johnson Financing $ 86,615 $ 86,615 Various Individuals Other Notes 119,000 89,000 Asher Enterprises, Inc. Other Notes 65,000 65,000 Vicki Davis - Dutro Group 168,000 168,000 William Dutro Dutro Group 65,000 65,000 Dutro Company Dutro Group 250,000 250,000 Total Note Payable short term $ 753,615 $ 723,615 Total Note Payable long term - $ - Total Notes Payable $ 753,615 $ 723,615 Debt Maturity Schedule As of September 30, 2016, the annual maturities for notes payable are scheduled as follows: Fiscal Year Amount March 31, 2017 $ 723,615 March 31, 2018 $ 30,000 Total $ 753,615 All interest is due under the terms of the various agreements. However future interest payments will not be made until all pending litigation is resolved and a satisfactory revised payment arrangement is completed by all parties. |
Note 4 - Equity
Note 4 - Equity | 3 Months Ended |
Jun. 30, 2016 | |
Notes | |
Note 4 - Equity | Note 4 EQUITY During the Quarter ended: June 30, 2016: No equity transactions occurred in the period ended June 30, 2016. |
Note 5 - Going Concern
Note 5 - Going Concern | 3 Months Ended |
Jun. 30, 2016 | |
Notes | |
Note 5 - Going Concern | Note 5 GOING CONCERN The Company generated minimal revenues prior to the current fiscal year. No revenues were generated for the six month period ended September 30, 2016. This level of revenues is not sufficient for the Company to meet its future obligations. This factor raises substantial doubt about the Companys ability to continue as a going concern. The Company is in the midst of the Dutro litigation and other litigation. The litigation has hindered the operation of the Company and have set back the ability to raise capital and develop ongoing business in order to continue forward as a going concern. It is expected that litigation will continue to hinder the ability to continue as a going concern through the end of the fiscal year ended March 31, 2017 and beyond. |
Note 6 - Income Tax
Note 6 - Income Tax | 3 Months Ended |
Jun. 30, 2016 | |
Notes | |
Note 6 - Income Tax | Note 6 - INCOME TAX Income taxes are accounted for using the asset and liability method. Deferred 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. The Companys financial statements for the six month period ended September 30, 2016 and 2015 do not include any provision for income taxes. No income tax accrual has been recorded based on the expectation that the Company will be in a net loss position for the overall applicable fiscal year. Accordingly, deferred tax assets have been entirely offset by valuation allowances. The difference between the amounts of income tax benefit that would result from applying domestic federal statutory income tax rates to the net loss and the net deferred tax assets is related to certain nondeductible expenses, state income taxes, and the change in the valuation allowance. The Financial Accounting Standards Board ("FASB") has issued ASC 740 for Accounting for Income Taxes that clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of ASC 740, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740. The Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of September 30, 2016 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and in the states of Delaware, Utah and any other jurisdiction where required. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2013. |
Note 7 - Subsequent Events
Note 7 - Subsequent Events | 3 Months Ended |
Jun. 30, 2016 | |
Notes | |
Note 7 - Subsequent Events | Note 7 SUBSEQUENT EVENTS The Company has evaluated subsequent events per the requirements of ASC Topic 855 and has determined that the following events should be disclosed. 1) Litigation involving Dutro Company, Reality Engineering, William Dutro, Vicki Davis, Lee Allen, Valley Inception, LLC, Incisive Software Corporation and Promixex Corporation continues and is expected to continue for the foreseeable future. Recently the defendants filed for a dismissal with prejudice. The dismissal request was denied. The case was moved for continuance in the Utah State Court. A Court Management Order (CMO) is expected to be filed soon. 2) The Company is in discussion with multiple legal representatives to take over the management of the litigation on a contingency basis and to pursue litigation with respect to patent infringement by ADT Corp (ADT) and Tyco International Ltd (TYC) and for all other patent infringement against the defendants, their affiliates and related parties currently pursued in the Utah State Court in Salt Lake City. In anticipation of the new counsel coming in on a contingency basis, the current attorney has withdrawn from the case. Sector 10 intends to pursue in Federal Courts all other known and unknown licensees of Sector 10s technology that have been distributed by the defendant, their affiliates and other related parties. Sector 10 believes that it has collected sufficient evidence and related party interests and has sent out nearly 50 subpoenas to parties that are believed to have colluded and/or helped to defraud a publically traded company (Sector 10: SECI) and sell its technology assets to another publically traded company. In addition, Sector 10 has learned of new facts with respect to the Bank of America (BAC) case and their subsidiary Merrill Lynch which may have prevented the dismissal of the case. Also new facts have come to light regarding how former contingency attorneys inappropriately allowed two key parties to the case to be dismissed with prejudice immediately before abandoning the case. These parties, John Gargett (former Board member of Sector 10) and Trusys, Inc. are believed to have been cooperative with the Dutro Group. These new facts may also enhance the current litigation. Sector 10 will be seek the assistance of the Securities & Exchange Commission (SEC) to open an investigation into these matters Sector 10 has also requested assistance from the Federal Bureau of Investigation (FBI) to assist in obtaining a stay for the Salt Lake City case while matters are pursued in Federal Courts. 3) The impact of the issues surrounding the litigation impact the Companys ability to obtain funding needed to operate the Company according to their strategic plans. 4) Federal and State authorities have and will continue to be updated on the litigation issues and proceedings |
Note 6 - Income Tax_ Income Tax
Note 6 - Income Tax: Income Tax, Policy (Policies) | 3 Months Ended |
Jun. 30, 2016 | |
Policies | |
Income Tax, Policy | Income taxes are accounted for using the asset and liability method. Deferred 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. The Companys financial statements for the six month period ended September 30, 2016 and 2015 do not include any provision for income taxes. No income tax accrual has been recorded based on the expectation that the Company will be in a net loss position for the overall applicable fiscal year. Accordingly, deferred tax assets have been entirely offset by valuation allowances. The difference between the amounts of income tax benefit that would result from applying domestic federal statutory income tax rates to the net loss and the net deferred tax assets is related to certain nondeductible expenses, state income taxes, and the change in the valuation allowance. The Financial Accounting Standards Board ("FASB") has issued ASC 740 for Accounting for Income Taxes that clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of ASC 740, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740. The Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of September 30, 2016 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and in the states of Delaware, Utah and any other jurisdiction where required. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2013. |
Note 3 - Notes Payable_ Interes
Note 3 - Notes Payable: Interest Expense Disclosure (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Tables/Schedules | |
Interest Expense Disclosure | Summary of Interest and Notes Payable Interest expense September 30, 2016 March 31, 2016 Interest Johnson 5,197 10,394 Interest Dutro Group 18,113 36,225 Interest - Employee Group 144,484 249,838 Interest Other Notes 6,711 12,320 Total interest expense $ 174,505 $ 308,777 |
Note 3 - Notes Payable_ Schedul
Note 3 - Notes Payable: Schedule Of Debt Table TextBlock (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Tables/Schedules | |
Schedule Of Debt Table TextBlock | Note Payable Balance September 30, 2016 March 31, 2016 Edward Johnson Johnson Financing $ 86,615 $ 86,615 Various Individuals Other Notes 119,000 89,000 Asher Enterprises, Inc. Other Notes 65,000 65,000 Vicki Davis - Dutro Group 168,000 168,000 William Dutro Dutro Group 65,000 65,000 Dutro Company Dutro Group 250,000 250,000 Total Note Payable short term $ 753,615 $ 723,615 Total Note Payable long term - $ - Total Notes Payable $ 753,615 $ 723,615 |
Note 3 - Notes Payable_ Sched15
Note 3 - Notes Payable: Schedule of maturities of notes payable (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Tables/Schedules | |
Schedule of maturities of notes payable | Fiscal Year Amount March 31, 2017 $ 723,615 March 31, 2018 $ 30,000 Total $ 753,615 |
Note 3 - Notes Payable_ Employe
Note 3 - Notes Payable: Employee Agreement (Details) | 6 Months Ended |
Sep. 30, 2016USD ($) | |
Details | |
Accrual of interest on unpaid wages and other compensation | $ 144,484 |
Note 3 - Notes Payable (Details
Note 3 - Notes Payable (Details) | 6 Months Ended |
Sep. 30, 2016USD ($) | |
AsherEnterprisesIncOtherNotesMember | |
Accrued Interest | $ 34,302 |
Interest Accrued | 2,600 |
Other Notes | |
Accrued Interest | $ 47,267 |
Note 3 - Notes Payable_ Inter18
Note 3 - Notes Payable: Interest Expense Disclosure (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | 169 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Mar. 31, 2016 | Sep. 30, 2016 | |
Interest expense | $ 89,053 | $ 75,372 | $ 174,505 | $ 147,723 | $ 308,777 | $ 1,643,785 |
Johnson | ||||||
Interest expense | 5,197 | 10,394 | ||||
Dutro Group | ||||||
Interest expense | 18,113 | 36,225 | ||||
Employee Group | ||||||
Interest expense | 144,484 | 249,838 | ||||
Other Notes | ||||||
Interest expense | $ 6,711 | $ 12,320 |
Note 3 - Notes Payable_ Sched19
Note 3 - Notes Payable: Schedule Of Debt Table TextBlock (Details) - USD ($) | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 |
Note payable - short term | $ 753,615 | $ 723,615 | |
Note payable | |||
Notes Payable | 753,615 | $ 753,615 | 723,615 |
Other Notes | |||
Note payable - short term | 119,000 | 89,000 | |
EdwardJohnsonJohnsonFinancingMember | |||
Note payable - short term | 86,615 | 86,615 | |
AsherEnterprisesIncOtherNotesMember | |||
Note payable - short term | 65,000 | 65,000 | |
VickiDavisDutroGroupMember | |||
Note payable | 168,000 | 168,000 | |
WilliamDutroDutroGroupMember | |||
Note payable | 65,000 | 65,000 | |
DutroCompanyDutroGroupMember | |||
Note payable | $ 250,000 | $ 250,000 |
Note 3 - Notes Payable_ Sched20
Note 3 - Notes Payable: Schedule of maturities of notes payable (Details) - USD ($) | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 |
Details | |||
Long-term Debt, Maturities, Repayments of Principal in Year Two | $ 723,615 | ||
Long Term Debt Maturities Repayments Of Principal In Year Three | 30,000 | ||
Notes Payable | $ 753,615 | $ 753,615 | $ 723,615 |