Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Dec. 31, 2018 | Feb. 11, 2019 | |
Details | ||
Registrant Name | SECTOR 10 INC | |
Registrant CIK | 925,661 | |
SEC Form | 10-Q | |
Period End date | Dec. 31, 2018 | |
Fiscal Year End | --03-31 | |
Trading Symbol | seci | |
Tax Identification Number (TIN) | 330,565,710 | |
Number of common stock shares outstanding | 305,778 | |
Filer Category | Non-accelerated Filer | |
Current with reporting | Yes | |
Small Business | true | |
Emerging Growth Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q3 | |
Entity Incorporation, State Country Name | Delaware | |
Entity Address, Address Line One | 222 South Main Street | |
Entity Address, Address Line Two | 5th Floor | |
Entity Address, City or Town | Salt Lake City | |
Entity Address, State or Province | UT | |
Entity Address, Postal Zip Code | 84,101 | |
City Area Code | 206 | |
Local Phone Number | 853-4866 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 |
Current Assets | ||
Cash | $ 0 | $ 0 |
Inventory, net | 0 | 0 |
Total current assets | 0 | 0 |
Fixed assets - cost | 22,250 | 22,250 |
Less: accumulated depreciation | (22,250) | (22,250) |
Net fixed assets | 0 | 0 |
Total assets | 0 | 0 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 9,902,057 | 8,928,642 |
Note payable - short term | 803,615 | 803,615 |
Total current liabilities | 10,705,672 | 9,732,257 |
Long term liabilities: | ||
Note payable - long term | 0 | 0 |
Total long term liabilities | 0 | 0 |
Total liabilities | 10,705,672 | 9,732,257 |
Shareholders' equity (deficit) | ||
Preferred shares | 0 | 0 |
Common shares | 306 | 306 |
Additional paid-in capital | 6,148,229 | 6,148,229 |
Deficit accumulated during development stage | (16,854,207) | (15,880,792) |
Total shareholders' equity (deficit) | (10,705,672) | (9,732,257) |
Total liabilities and shareholders' equity (deficit) | $ 0 | $ 0 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets - Parenthetical - $ / shares | Dec. 31, 2018 | Mar. 31, 2018 |
Details | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 1,000,000 | 1,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 199,000,000 | 199,000,000 |
Common Stock, Shares, Issued | 305,778 | 305,778 |
Common Stock, Shares, Outstanding | 305,778 | 305,778 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | 193 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Details | |||||
Sales | $ 0 | $ 0 | $ 0 | $ 0 | $ 18,500 |
Cost of Sales | 0 | 0 | 0 | 0 | (18,032) |
Gross Profit | 0 | 0 | 0 | 0 | 468 |
Expenses | |||||
General and administrative | 208,007 | 197,820 | 623,409 | 594,855 | 13,369,532 |
Depreciation | 0 | 0 | 24,106 | ||
Research and development | 0 | 226,108 | |||
Total expenses | 208,007 | 197,820 | 623,409 | 594,855 | 13,619,746 |
Income (loss) from operations | (208,007) | (197,820) | (623,409) | (594,855) | (13,619,278) |
Interest expense | (120,052) | (106,852) | (350,006) | (310,405) | (2,604,134) |
Other income (expense) | 0 | 0 | 0 | 0 | (630,795) |
Net income (loss) before income taxes | (328,059) | (304,672) | (973,415) | (905,260) | (16,854,207) |
Provision for income taxes | 0 | 0 | 0 | 0 | 0 |
Net income (loss) after income taxes | $ (328,059) | $ (304,672) | $ (973,415) | $ (905,260) | $ (16,854,207) |
Weighted Average Number of Shares Outstanding, Basic and Diluted | 305,778 | 305,778 | 305,778 | 305,778 | |
Basic and diluted income (loss) per share | |||||
Income (Loss) from Continuing Operations, Per Basic and Diluted Share | $ (1.07) | $ (1) | $ (3.18) | $ (2.96) | |
Earnings Per Share, Basic and Diluted | $ (1.08) | $ (1) | $ (3.19) | $ (2.96) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | 193 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
Cash Flows from Operating Activities: | |||
Net income (loss) after income taxes | $ (973,415) | $ (905,260) | $ (16,854,207) |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities | |||
Share-based Compensation | 0 | 0 | 5,114,493 |
Depreciation | 0 | 0 | 24,106 |
Net discount on convertible debt | 0 | 0 | 206,324 |
Loss due to Impairment / Gain on restructuring | 0 | 0 | 630,795 |
Changes in: | |||
Changes in Inventory and other current aseets | 0 | 0 | (4,869) |
Changes in accounts payable and accrued liabilities | 973,415 | 905,260 | 10,415,760 |
Net Cash Provided by (Used in) Operating Activities, Continuing Operations | 0 | 0 | (467,598) |
Cash Flows from Investing Activities: | |||
Fixed asset / Other asset purchases | 0 | 0 | (189,541) |
Net cash used in investing activities | 0 | 0 | (189,541) |
Cash Flows from Financing Activities: | |||
Net Proceeds from general financing | 0 | 0 | 737,500 |
Net Proceeds (payments) from shareholder / officers | 0 | 0 | (113,947) |
Proceeds from issuance of common stock | 0 | 0 | 33,586 |
Net cash provided by financing activities | 0 | 0 | 657,139 |
Cash and Cash Equivalents, Period Increase (Decrease) | 0 | 0 | 0 |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 0 | 0 | 0 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 0 | 0 | 0 |
Interest Paid, Including Capitalized Interest, Operating and Investing Activities | 0 | 0 | 24,295 |
Income Taxes Paid, Net | $ 0 | $ 0 | $ 0 |
Note 1 - Basis of Presentation
Note 1 - Basis of Presentation | 9 Months Ended |
Dec. 31, 2018 | |
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, 2018 | |
Notes | |
Note 2 - Inventory | Note 2 INVENTORY There were no sales in the nine months ended December 31, 2018. The inventory reflected on the books was $0 for the nine months ended December 31, 2018. |
Note 3 - Notes Payable
Note 3 - Notes Payable | 9 Months Ended |
Dec. 31, 2018 | |
Notes | |
Note 3 - Notes Payable | Note 3 NOTES PAYABLE Johnson Financing Total interest accrued as of December 31, 2018 was $57,481 of which $7,795 was accrued during the nine month period ended December 31, 2018. 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, 2018 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, 2018 is $324,798 comprised of Dutro Company - $176,260 , Vick Davis - $107,100 and William Dutro - $41,438 . Employee Agreement: The financial statements reflect an accrual of interest on unpaid wages and other compensation in the amount of 1,789,579 of which $301,001 is accrued during the nine month period ended December 31, 2018. Other Notes Individuals short term Total interest accrued as of December 31, 2018 was $76,870 of which $10,140 was accrued during the nine month period ended December 31, 2018. Asher Enterprises, Inc. Total interest accrued as of December 31, 2018 was $46,002 of which $3,900 was accrued during the nine month period ended December 31, 2018. The current period interest is included as part of other notes interest. Summary of Interest and Notes Payable Interest expense December 31, 2018 March 31, 2018 Interest Johnson 7,796 10,394 Interest Dutro Group 27,169 36,225 Interest - Employee Group 301,001 355,218 Interest Other Notes 14,040 18,720 Total interest expense $ 350,006 $ 420,557 Note Payable Balance December 31, 2018 March 31, 2018 Edward Johnson Johnson Financing $ 86,615 $ 86,615 Various Individuals Other Notes 169,000 169,000 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 $ 803,615 Total Note Payable long term - $ - Total Notes Payable $ 803,615 $ 803,615 Debt Maturity Schedule As of September 30, 2018, the annual maturities for notes payable are scheduled as follows: Fiscal Year Amount March 31, 2019 $ 803,615 March 31, 2020 $ - 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, 2018 | |
Notes | |
Note 4 - Equity | Note 4 EQUITY During the Quarter ended: June 30, 2018: No equity transactions occurred in the period ended June 30, 2018. During the Quarter ended: September 30, 2018: No equity transactions occurred in the period ended September 30, 2018. During the Quarter ended: December 31, 2018: No equity transactions occurred in the period ended December 31, 2018. |
Note 5 - Going Concern
Note 5 - Going Concern | 9 Months Ended |
Dec. 31, 2018 | |
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, 2018. 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, 2019 and beyond. |
Note 6 - Income Tax
Note 6 - Income Tax | 9 Months Ended |
Dec. 31, 2018 | |
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 nine month period ended December 31, 2018 and 2017 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, 2018 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 2014. |
Note 7 - Subsequent Events
Note 7 - Subsequent Events | 9 Months Ended |
Dec. 31, 2018 | |
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 Proximex Corporation continues and is expected to continue for the foreseeable future. 2) In October, 2018, the Court in Sector 10s litigation against a number of defendants, titled Sector 10, Inc. Plaintiffs . v. Lee Allen et al., Case No. 119907606 in the Third District Court Salt Lake County, Utah, issued its oral ruling on defendants motions for summary judgment to dismiss all of Sector 10s claims against them. In its ruling, the Court denied defendants request to dismiss Sector 10s claims for breach of contract and tortious interference against certain defendants. The Court, however, did grant defendants requests to dismiss Sector 10s claims for misappropriation of trade secrets. With this ruling, Sector 10 can now pursue its tortious interference and breach of contract claims in a second phase of fact discovery that Sector 10 believes will result in additional evidence further supporting its claims. In early 2019, the Court entered the order on the summary judgment motion and ruled that the Company may proceed with Phase II discovery. Company counsel is in process of preparing for discovery and the defendants depositions. 3) A trial date is expected to be set before the end of the fiscal year ended March 31, 2019. Any delays could extend the trial date into the next fiscal year. 4) 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. 5) Federal and State authorities have and will continue to be updated on the litigation issues and proceedings. Additional information concerning the litigations is available at www.whitecollarfacades.com 6) On September 25, 2018, the SEC notified the Company of the temporary suspension of trading of the securities of Sector 10 from September 26, 2018 through October 9, 2018. Suspension occurred due to concerns of certain manipulative market activity. Trading resumed but the Company is no longer trading on the major markets. The Company is working to file appropriate filings to engage a broker with the efforts of reestablishing the market for the Companys stock. This process is not complete as of this filing. |
Note 6 - Income Tax_ Income Tax
Note 6 - Income Tax: Income Tax, Policy (Policies) | 9 Months Ended |
Dec. 31, 2018 | |
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 nine month period ended December 31, 2018 and 2017 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, 2018 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 2014. |
Note 3 - Notes Payable_ Interes
Note 3 - Notes Payable: Interest Expense Disclosure (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Interest Expense Disclosure | Interest expense December 31, 2018 March 31, 2018 Interest Johnson 7,796 10,394 Interest Dutro Group 27,169 36,225 Interest - Employee Group 301,001 355,218 Interest Other Notes 14,040 18,720 Total interest expense $ 350,006 $ 420,557 |
Note 3 - Notes Payable_ Schedul
Note 3 - Notes Payable: Schedule Of Debt Table TextBlock (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule Of Debt Table TextBlock | Note Payable Balance December 31, 2018 March 31, 2018 Edward Johnson Johnson Financing $ 86,615 $ 86,615 Various Individuals Other Notes 169,000 169,000 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 $ 803,615 Total Note Payable long term - $ - Total Notes Payable $ 803,615 $ 803,615 |
Note 3 - Notes Payable_ Sched_2
Note 3 - Notes Payable: Schedule of maturities of notes payable (Tables) | 9 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of maturities of notes payable | Fiscal Year Amount March 31, 2019 $ 803,615 March 31, 2020 $ - Total $ 803,615 |
Note 2 - Inventory (Details)
Note 2 - Inventory (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 |
Details | ||
Inventory, net | $ 0 | $ 0 |
Note 3 - Notes Payable_ Johnson
Note 3 - Notes Payable: Johnson Financing (Details) | 9 Months Ended |
Dec. 31, 2018USD ($) | |
Edward Johnson - Johnson Financing | |
Interest Accrued | $ 7,795 |
Note 3 - Notes Payable_ Dutro F
Note 3 - Notes Payable: Dutro Financing (Details) | 9 Months Ended |
Dec. 31, 2018USD ($) | |
Contingent Reserve Interest Accrued | $ 27,169 |
Total Contingent Reserve -Interest | 324,798 |
Dutro Company - Dutro Group | |
Contingent Reserve Interest Accrued | 14,063 |
Total Contingent Reserve -Interest | 176,260 |
Vicki Davis - Dutro Group | |
Contingent Reserve Interest Accrued | 9,450 |
Total Contingent Reserve -Interest | 107,100 |
William Dutro - Dutro Group | |
Contingent Reserve Interest Accrued | 3,656 |
Total Contingent Reserve -Interest | $ 41,438 |
Note 3 - Notes Payable_ Employe
Note 3 - Notes Payable: Employee Agreement (Details) | 9 Months Ended |
Dec. 31, 2018USD ($) | |
Details | |
Accrual of interest on unpaid wages and other compensation | $ 301,001 |
Note 3 - Notes Payable_ Other N
Note 3 - Notes Payable: Other Notes (Details) | 9 Months Ended |
Dec. 31, 2018USD ($) | |
Individuals - Short Term | |
Interest Accrued | $ 10,140 |
Asher Enterprises Inc - Other Notes | |
Interest Accrued | $ 3,900 |
Note 3 - Notes Payable_ Inter_2
Note 3 - Notes Payable: Interest Expense Disclosure (Details) - USD ($) | 9 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Interest Expense | $ 350,006 | $ 420,557 |
Edward Johnson - Johnson Financing | ||
Interest Expense | 7,796 | 10,394 |
Dutro Company - Dutro Group | ||
Interest Expense | 27,169 | 36,225 |
Employee Group | ||
Interest Expense | 301,001 | 355,218 |
Other Notes | ||
Interest Expense | $ 14,040 | $ 18,720 |
Note 3 - Notes Payable_ Sched_3
Note 3 - Notes Payable: Schedule Of Debt Table TextBlock (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 |
Note payable - short term | $ 803,615 | $ 803,615 |
Note payable - long term | 0 | 0 |
Notes Payable | 803,615 | 803,615 |
Edward Johnson - Johnson Financing | ||
Note payable - short term | 86,615 | 86,615 |
Other | ||
Note payable - short term | 169,000 | 169,000 |
Asher Enterprises Inc - Other Notes | ||
Note payable - short term | 65,000 | 65,000 |
Vicki Davis - Dutro Group | ||
Note payable - long term | 168,000 | 168,000 |
William Dutro - Dutro Group | ||
Note payable - long term | 65,000 | 65,000 |
Dutro Company - Dutro Group | ||
Note payable - long term | $ 250,000 | $ 250,000 |
Note 3 - Notes Payable_ Sched_4
Note 3 - Notes Payable: Schedule of maturities of notes payable (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 |
Details | ||
Long-term Debt, Maturities, Repayments of Principal in Year Two | $ 803,615 | |
Long Term Debt Maturities Repayments Of Principal In Year Three | 0 | |
Notes Payable | $ 803,615 | $ 803,615 |