Commission File Number: 2-71136
DETONICS SMALL ARMS LIMITED
(Exact name of registrant as specified in it's charter)
Washington 91-1150122
(State or other Jurisdiction of (IRS Employer ID No.)
incorporation or organization)
14508 SE 51st, Bellevue, WA 98006
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (425) 746-6761
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 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:
DOCUMENTS INCORPORATED BY REFERENCE
Form S-1, Detonics Small Arms Limited, Commission File No. 2- 71136, but
excluding the balance sheet of Detonics Small Arms Limited together with the
report of independent certified public accountants, is incorporated by
reference.
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
See Appendix A
Item 2: Management's Discussion and Analysis of the Financial Condition and
Results of Operations
No royalties or other income were booked in the first quarter of 2007.
The partnership originally had licensed the manufacturing and sale of its
products to Detonics Manufacturing Corporation (DMC) a subsidiary of Energy
Sciences Corporation, (ESC). DMC, ESC and the Partnership entered Chapter 11
bankruptcy proceedings on April
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29, 1986. In late 1987, the Bankruptcy Court approved a sale of all of DMC's
assets to a new entity, formed by outside third parties, called New Detonics
Manufacturing Corporation, (NDMC). By subsequent majority vote of the limited
partners of the Partnership, a new license was entered into between the
Partnership and NDMC, which called for royalties to begin in late 1991 at the
rate of 4% of gross sales. No partnership income was expected before that time.
On May 13, 1988, ESC's bankruptcy was dismissed and all remaining assets were
repossessed by the sole secured creditor of ESC, the firm of Murphy & Elgot.
These assets are primarily amounts owed to ESC by the partnerships and the
rights to produce products owned by the partnerships. The general partners had
discussions with Mr. Murphy, (who was also counsel for ESC and the
partnerships), on the elimination of most or all the debt owed by the
Partnership to ESC, (and, therefor to Murphy & Elgot).
As previously reported, the general partners learned in late 1991 that
production of firearms at NDMC was suspended in 1991. The general partners have
subsequently been advised that Murphy & Elgot, the sole secured creditors of the
original DMC, have moved to have the "soft" assets (the name "Detonics" and the
right to manufacture the Detonics designs) which were assigned to NDMC by the
Bankruptcy Court be returned to Murphy & Elgot and Moore. This occured in
September 1992. Mr. Murphy passed away in 1997. The general partners have had
discussions with Mr. Elgot regarding future attempts to recommercialize the
products and he indicated he would approve any recommercialization plan that the
general partners would be able to obtain. The general partners had been
discussing such plans with a third party. Royalty amounts of 5% of gross sales
have been verbally agreed to, but no written agreement had been prepared or
signed as of December 31, 2002. It was learned in April 2003 that this plan
would not take place. Mr. Ahern continued to explore other financing sources and
the partnership has signed a three year agreement with Mr. Ahern giving him the
exclusive right to seek funding or a partner to reestablish production. There
can be no guarantee that it will be possible to arrange for production of any of
the Partnership's products.
Mr. Ahern has been successful. A company named Detonics USA LLC was formed (not
owned by the partnership) The new company had a booth at the Shot Show held in
Las Vegas in February 2004, 2005, 2006 and 2007. The partnership has been
informed that some financing has been obtained for Detonics USA, LLC., to be
used for marketing and an initial production run of pistols based on the
original Detonics Combat Master .45 caliber semi-automatic (not one of the
partnership's products).
The partnership has signed a license agreement with Detonics USA LLC which
involves a royalty of about 5% of gross sales of each of the partnership's
products manufactured and sold, appropriately divided among all the firearms
partnerships and shared with Mark Elgot and Richard Moore in the ratio of 355 to
Elgot and Moore combined and 65% to the partnership(s) whose products ahve been
sold. There can be no assurance that Detonics USA will succeed and that
royalties will be paid.
Mr. Ahern is a principal of the new company. He is a noted writer and authority
on firearms and is presently the owner of Ahern Enterprises, which manufactures
and sells a line of high quality holsters and firearms accessories. Sid
Woodcock, co-General
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Partner of the partnership is V.P. of Research & Development and a stockholder
of the new company. Michel Maes, also co-General and Managing Partner of the
partnership, is a principal and co-owner of an electronics company. Mr. Maes is
not and will not be a stock holder and is not expected to play an active role in
Detonics USA LLC.
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
The staff of the Securities and Exchange Commission's Division of Enforcement
recommended to the Commission that it authorize the staff to file a civil
injunction action against the Partnership and Messrs. Maes and Steffey to
require timely filing of reports with the commission. Such an injunction was
entered on June 25, 1986. All subsequent reports have been timely filed.
On October 16, 1989 the U.S. Bankruptcy Court ordered the conversion of the
partnership's Chapter 11 to a Chapter 7. On May 11, 1990, the partnership filed
an amended motion to dismiss the Chapter 7. The motion was granted on June 21,
1990 and the partnership is no longer in bankruptcy.
In March 1993, the partnership received a "Notice of Beginning of Administrative
Proceeding" from the Internal Revenue Service. The issue was a possible finding
that the partnership "burned out" and is subject to recapture. The general
partners are of the position that the products and the partnership remain
viable. In July, 1993, the general partners received notification from the IRS
that they did not intend to make any changes as a result of that Administrave
Proceeding. The IRS has the right to bring the subject up again.
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 Information: None
Item 6: Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
a) Documents filed as part of this Report: Unaudited
financial statement.
b) Reports on Form 8-K: None.
Item 9: Disagreements on Accounting and Financial Disclosure Matters
TASA has no independent accountant at present, in accordance with Rule 3-11 of
Regulation S-X
Item 9A Controls and Procedures
The Partnership's disclosure controls and procedures are designed
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to ensure that information required to be disclosed in reports that are filed or
submitted under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summerized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Act is accumulated and communicated to the
issuer's management including its principal executive and principal financial
officers, or persons performing similar functions (the Managing General
Partner), as appropriate to allow timely decisions regarding required
disclosure.
The Managing General Partner has reviewed the effectiveness of the Partnership's
disclosure controls and procedures as of the end of the period covered by this
Form 10-Q report and have concluded that the disclosure controls and proceedures
are effective.
There were no changes in our internal control over financial reporting during
the three months ended March 31, 2007 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
9B Other Information
None
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Appendix A
DETONICS SMALL ARMS LIMITED
BALANCE SHEET
March 31, 2007
(UNAUDITED)
ASSETS
Cash $ 0
Royalties Receivable 0
----------
TOTAL CURRENT ASSETS $ 0
Intangible Assets Less Amortization 0
Receivable from Affiliates Less Allowance 0
----------
TOTAL ASSETS $ 0
LIABILITIES AND PARTNERS' EQUITY
Accounts Payable $ 0
Taxes Payable 0
----------
TOTAL CURRENT LIABILITIES 0
Payable to Affiliates 672,769
----------
TOTAL LIABILITIES 672,769
Partners' Capital (672,769)
----------
TOTAL LIABILITIES
AND PARTNER'S EQUITY 0
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DETONICS SMALL ARMS LIMITED
STATEMENT OF INCOME
FOR THE QUARTER ENDING
March 31, 2007
(UNAUDITED)
Royalty Revenue $ 0
Expenses 0
----------
Net Income (Loss) $ 0
NOTE: The products owned by the Partnership were licensed to New Detonics
Manufacturing Corporation (NDMC). Under the terms of that license, royalties
were not scheduled to be paid to the Partnership until late 1991. NDMC
suspended production of all firearms and the license with NDMC has been
terminated. A new license agreement was signed with Detonics USA in August
2004.
DETONICS SMALL ARMS LIMITED
STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDING
March 31, 2007
(UNAUDITED)
Net Cash Provided By Operating Activities $ 0
Net Cash Used By Investing Activities 0
Net Cash Provided By Financing Activities 0
----------
Net Increase In Cash $ 0
Cash At Beginning Of Period $ 0
----------
Cash At End Of Period $ 0
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.
DETONICS SMALL ARMS LIMITED
(Registrant)
5/4/07 /S/ Michel E. Maes, Managing General Partner
(Date) (Signature)
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