Sector 10 (SECI) 10-Q 13 Feb 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Dec. 31, 2016	Feb. 10, 2017
Document and Entity Information:
Entity Registrant Name	SECTOR 10 INC
Document Type	10-Q
Document Period End Date	Dec. 31, 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	Q3

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 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	7,402,667	6,568,430
Note payable - short term	803,615	723,615
Total current liabilities	8,206,282	7,292,045
Long term liabilities:
Note payable
Total long term liabilities
Total liabilities	8,206,282	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	(14,354,817)	(13,440,580)
Total shareholders' equity (deficit)	(8,206,282)	(7,292,045)
Total liabilities and shareholders' equity (deficit)

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICAL - $ / shares	Dec. 31, 2016	Mar. 31, 2016
CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICAL
Preferred shares par value	$ 0.001	$ 0.001
Preferred shares authorized	1,000,000	1,000,000
Preferred shares issued
Preferred shares outstanding
Common shares par value	$ 0.001	$ 0.001
Common shares authorized	199,000,000	199,000,000
Common shares issued	305,778	305,778
Common shares outstanding	305,778	305,778

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended		172 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Sales					$ 18,500
Cost of Sales					(18,032)
Gross Profit					468
Expenses:
General and administrative	$ 240,001	$ 205,547	$ 646,898	$ 619,708	11,737,657
Depreciation					24,106
Research and development					226,108
Total expenses	240,001	205,547	646,898	619,708	11,987,871
Income (loss) from operations	(240,001)	(205,547)	(646,898)	(619,708)	(11,987,403)
Interest expense	(92,834)	(78,892)	(267,339)	(226,615)	(1,736,619)
Other income (expense)					(630,795)
Net income (loss) before income taxes	(332,835)	(284,439)	(914,237)	(846,323)	(14,354,817)
Provision for income taxes
Net income (loss) after income taxes	$ (332,835)	$ (284,439)	$ (914,237)	$ (846,323)	$ (14,354,817)
Weighted Average Shares Outstanding - basic and diluted*	305,778	305,778	305,778	305,778
Basic and diluted income (loss) per share
Continuing Operations	$ (1.09)	$ (0.93)	$ (2.99)	$ (2.77)
Net Income (Loss)	$ (1.09)	$ (0.93)	$ (914,237)	$ (846,323)	$ (14,354,817)

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended		172 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016
Cash Flows from Operating Activities:
Net Income (Loss)	$ (914,237)	$ (846,323)	$ (14,354,817)
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	$ 834,237	$ 846,323	7,916,370
Net cash used in operating activities	(80,000)		(467,598)
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	80,000		737,500
Net Proceeds (payments) from shareholder / officers			(113,947)
Proceeds from issuance of common stock			33,586
Net cash provided by financing activities	80,000		657,139
Net increase (decrease) in cash
Beginning of period - continuing operations
End of period - continuing operations
Cash paid for interest			24,295
Cash paid for income taxes

Note 1 - Basis of Presentation

Note 1 - Basis of Presentation	9 Months Ended
	Dec. 31, 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	9 Months Ended
	Dec. 31, 2016
Notes
Note 2 - Inventory	Note 2 – INVENTORY There were no sales in the nine months ended December 31, 2016. The inventory reflected on the books was $0 for the nine months ended December 31, 2016.

Note 3 - Notes Payable

Note 3 - Notes Payable	9 Months Ended
	Dec. 31, 2016
Notes
Note 3 - Notes Payable	Note 3 – NOTES PAYABLE Johnson Financing The interest accrued for the nine month period ended December 31, 2016 was $7,795. 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 nine month period ended December 31, 2016 was $ 27,169 comprised of Dutro Company - $14,063 , Vick Davis - $9,450 and William Dutro - $3,656 . Total contingent reserve - interest for the period ended December 31, 2016 is $252,348 comprised of Dutro Company - $138,760 , Vick Davis - $81,900 and William Dutro - $31,688 . Employee Agreement: The financial statements reflect an accrual of interest on unpaid wages and other compensation in the amount of 1,052,743 of which $221,801 is accrued during the nine month period ended December 31, 2016 Other Notes Individuals – short term An additional individual short term notes of $30,000 was issued in July 2016 to pay for legal fees. Another individual short term note of $50,000 was issued in December 2016 to pay for legal fees. Both new notes accrue interest at an annual rate of 8%. For all individual notes, total interest accrued as of December 31, 2016 was $48,646 of which $6,674was accrued during the nine month period ended December 31, 2016. Asher Enterprises, Inc. Total interest accrued as of December 31, 2016 was $35,602 of which $3,900 was accrued during the nine month period ended December 31, 2016. The current period interest is included as part of other notes interest. Summary of Interest and Notes Payable Interest expense December 31, 2016 March 31, 2016 Interest – Johnson 7,795 10,394 Interest – Dutro Group 27,169 36,225 Interest - Employee Group 221,801 249,838 Interest – Other Notes 10,574 12,320 Total interest expense $ 267,339 $ 308,777 Note Payable Balance December 31, 2016 March 31, 2016 Edward Johnson – Johnson Financing $ 86,615 $ 86,615 Various Individuals – Other Notes 169,000 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 $ 803,615 $ 723,615 Total Note Payable – long term - $ - Total Notes Payable $ 803,615 $ 723,615 Debt Maturity Schedule As of December 31, 2016, the annual maturities for notes payable are scheduled as follows: Fiscal Year Amount March 31, 2017 $ 723,615 March 31, 2018 $ 80,000 Total $ 803,615 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	9 Months Ended
	Dec. 31, 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. During the Quarter ended: September 30, 2016: No equity transactions occurred in the period ended September 30, 2016. During the Quarter ended: December 31, 2016: No equity transactions occurred in the period ended December 31, 2016.

Note 5 - Going Concern

Note 5 - Going Concern	9 Months Ended
	Dec. 31, 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 nine month period ended December 31, 2016. This level of revenues is not sufficient for the Company to meet its future obligations. This factor raises substantial doubt about the Company’s 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 has 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	9 Months Ended
	Dec. 31, 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 Company’s financial statements for the nine month period ended December 31, 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 December 31, 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	9 Months Ended
	Dec. 31, 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 another request for a dismissal with prejudice. The Company attorneys engaged in December 2016 have filed a request that the dismissal request be denied and that discovery proceedings be reopened to continue the case. The Court is expected to rule on the motion in March. 2) The impact of the issues surrounding the litigation impact the Company’s ability to obtain funding needed to operate the Company according to their strategic plans. 3) 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)	9 Months Ended
	Dec. 31, 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 Company’s financial statements for the nine month period ended December 31, 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 December 31, 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)	9 Months Ended
	Dec. 31, 2016
Tables/Schedules
Interest Expense Disclosure	Summary of Interest and Notes Payable Interest expense December 31, 2016 March 31, 2016 Interest – Johnson 7,795 10,394 Interest – Dutro Group 27,169 36,225 Interest - Employee Group 221,801 249,838 Interest – Other Notes 10,574 12,320 Total interest expense $ 267,339 $ 308,777

Note 3 - Notes Payable_ Schedul

Note 3 - Notes Payable: Schedule Of Debt Table TextBlock (Tables)	9 Months Ended
	Dec. 31, 2016
Tables/Schedules
Schedule Of Debt Table TextBlock	Note Payable Balance December 31, 2016 March 31, 2016 Edward Johnson – Johnson Financing $ 86,615 $ 86,615 Various Individuals – Other Notes 169,000 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 $ 803,615 $ 723,615 Total Note Payable – long term - $ - Total Notes Payable $ 803,615 $ 723,615

Note 3 - Notes Payable_ Sched16

Note 3 - Notes Payable: Schedule of maturities of notes payable (Tables)	9 Months Ended
	Dec. 31, 2016
Tables/Schedules
Schedule of maturities of notes payable	Fiscal Year Amount March 31, 2017 $ 723,615 March 31, 2018 $ 80,000 Total $ 803,615 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 3 - Notes Payable (Details

Note 3 - Notes Payable (Details)	9 Months Ended
	Dec. 31, 2016USD ($)
Contingent Reserve Interest Accrued	$ 27,169
Total Contingent Reserve -Interest	252,348
EdwardJohnsonJohnsonFinancingMember
Interest Accrued	7,795
DutroCompanyDutroGroupMember
Contingent Reserve Interest Accrued	14,063
Total Contingent Reserve -Interest	138,760
VickiDavisDutroGroupMember
Contingent Reserve Interest Accrued	9,450
Total Contingent Reserve -Interest	81,900
WilliamDutroDutroGroupMember
Contingent Reserve Interest Accrued	3,656
Total Contingent Reserve -Interest	$ 31,688

Note 3 - Notes Payable_ Employe

Note 3 - Notes Payable: Employee Agreement (Details)	9 Months Ended
	Dec. 31, 2016USD ($)
Details
Accrual of interest on unpaid wages and other compensation	$ 221,801

Note 3 - Notes Payable_ Inter19

Note 3 - Notes Payable: Interest Expense Disclosure (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended	172 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Mar. 31, 2016	Dec. 31, 2016
Interest expense	$ 92,834	$ 78,892	$ 267,339	$ 226,615	$ 308,777	$ 1,736,619
Johnson
Interest expense			7,795		10,394
Dutro Group
Interest expense			27,169		36,225
Employee Group
Interest expense			221,801		249,838
Other Notes
Interest expense			$ 10,574		$ 12,320

Note 3 - Notes Payable_ Sched20

Note 3 - Notes Payable: Schedule Of Debt Table TextBlock (Details) - USD ($)	Dec. 31, 2016	Mar. 31, 2016
Note payable - short term	$ 803,615	$ 723,615
Note payable
Notes Payable	803,615	723,615
EdwardJohnsonJohnsonFinancingMember
Note payable - short term	86,615	86,615
PatrickMadisonOtherNotesMember
Note payable - short term	169,000	89,000
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_ Sched21

Note 3 - Notes Payable: Schedule of maturities of notes payable (Details) - USD ($)	Dec. 31, 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	80,000
Notes Payable	$ 803,615	$ 723,615