UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 002-71136
DETONICS SMALL ARMS LIMITED
(Exact name of registrant as specified in its charter)
Washington | 91-1150122 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
14508 SE 51st, Bellevue, WA 98006
(Address and zip code of principal executive offices)
(425) 746-6761
(Registrant's telephone number, including area code)
_____________________________
(Former name, former address and former fiscal year, if changed since last report)
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 [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
DETONICS SMALL ARMS LIMITED
BALANCE SHEET
September 30, 2016
(UNAUDITED)
September 30, 2016 | September 30, 2015 | |||||
ASSETS | ||||||
Cash | $ | 0 | $ | 0 | ||
Royalties Receivable | 0 | 0 | ||||
TOTAL CURRENT ASSETS | 0 | 0 | ||||
Intangible Assets Less Amortization | $ | 0 | $ | 0 | ||
Receivable from Affiliates Less Allowance | 0 | 0 | ||||
TOTAL ASSETS | 0 | 0 | ||||
LIABILITIES AND PARTNERS' EQUITY | ||||||
Accounts Payable | $ | 0 | $ | 0 | ||
Taxes Payable | 0 | 0 | ||||
TOTAL CURRENT LIABILITIES | 0 | 0 | ||||
Payable to Affiliates | $ | 672,769 | $ | 672,769 | ||
TOTAL LIABILITIES | $ | 672,769 | $ | 672,769 | ||
Partners' Capital | $ | (672,769 | ) | $ | (672,769 | ) |
TOTAL LIABILITIES AND PARTNER'S EQUITY | 0 | 0 |
DETONICS SMALL ARMS LIMITED
STATEMENT OF INCOME
FOR THE QUARTER ENDING
September 30, 2016
(UNAUDITED)
September 30, 2016 | September 30, 2015 | |||||
Royalty Revenue | $ | 0 | 0 | |||
Expenses | 0 | 0 | ||||
Net Income (Loss) | $ | 0 | 0 |
NOTE: The products owned by the Partnership are subject to an intellectual property use agreement was signed with Double Nickel LLC/Detonics in late 2007. No royalties have yet been paid by Double Nickel.
DETONICS SMALL ARMS LIMITED
STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDING
September 30, 2016
(UNAUDITED)
September 30, 2016 | September 30, 2015 | |||||
Net Cash Provided By Operating Activities | $ | 0 | $ | 0 | ||
Net Cash Used By Investing Activities | 0 | 0 | ||||
Net Cash Provided By Financing Activities | 0 | 0 | ||||
Net Increase In Cash | $ | 0 | $ | 0 | ||
Cash At Beginning Of Period | $ | 0 | $ | 0 | ||
Cash At End Of Period | $ | 0 | $ | 0 |
Item 2: | Management's Discussion and Analysis of Financial Condition and Results of Operations |
The partnership does not conduct any operations. Income is booked when royalties or fees only at such time are paid to the partnership.
No royalties or other income were booked in the third quarter of 2016.
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 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 partnership and the rights to produce products owned by the partnership. 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, Mr.Jerry Ahern. Royalty amounts of 5% of gross sales had 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 signed a three year agreement with Mr. Ahern giving him the exclusive right to seek funding or a partner to reestablish production.
Mr. Ahern was successful in finding a backer and a new company named Detonics USA LLC was formed (not owned by the partnership) The partnership 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 35% to Elgot and Moore combined and 65% to the partnership(s) whose products have been sold.
Detonics USA was subsequently purchased by Double Nickel LLC in late 2007 and operates as a division of that company and has been renamed Detonics Defence Technologies. The partnership payments have been changed to a flat $25.00 per Detonics/1911 style gun sold and $5.00 per non-Detonics gun sold. The split between the partnership and Mark Elgot and Richard Moore remains the same 65%/35%. There can be no assurance that Double Nickel will succeed and that royalties/fees will be paid.
Parts are being manufactured by Detonics Defense Technologies.
Sid Woodcock, the co-General Partner of the partnership, who was involved solely in early stage technical design and production matters, passed away in June 2011 at age 87. Michel Maes is now sole General Partner of the partnership. He is a co-owner of an electronics company and is not a stock holder and does not play any role in the Double Nickel, dba Detonics Defense Technologies.
Item 3: | Market Risk |
The partnership's units are not tradeable and no market exists for them.
The units can be transfered to or from family trusts or by inheritence.
PART II - OTHER INFORMATION
Item 1: | Legal Proceedings: None |
Item 2: | Unregisterd Sales of Equity securities and Use of Proceeds: None |
Item 3: | Defaults Upon Senior Securities: None |
Item 4: | Controls and Procedures: |
The Partnership's disclosure controls and procedures are designed 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, summarized 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 proceedures 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 General Partner has reviewed the effectiveness of the Partnership's disclosure controls and procedures as of the end of September 30, 2016 for this Form 10-Q report and have concluded that the disclosure controls and procedures are effective. |
There were no changes in our internal control over financial reporting during the three months ended September 30, 2016 , that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. |
Item 5: | Other Information: None |
Item 6: | Exhibits: |
a) | Documents filed as part of this Report: Unaudited financial statement. |
b) | Reports on Form 8-K: None. |
DSAL has no independent auditor at present, in accordance with Rule 3-11 of Regulation S-X.
Exhibits
31 | Rule 13a-14(a) Certification |
32 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) |
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) |
|
11-4-2016 | /s/ Michel E. Maes, General Partner |
(Date) | (Signature) |
EXHIBIT 31
RULE 13A-14(A) CERTIFICATION
I, Michel Maes, certify that:
1. | I have reviewed this 10-Q of Detonics Small Arms Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | As the registrant's certifying officer I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Michel Maes
General Partner
Date: 11-4-2016
EXHIBIT 32
CERTIFICATION
PERSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
OF
2002 (18 U.S.C. 1350)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) the undersigned Managing General Partner of Detonics Small Arms Limited, a Washington limited partnership (the "Company"), do hereby certify, to the best of such General Partner's knowledge and belief, that:
1. | The Quarterly Report on Form 10-Q for the period ended September 30, 2016 (the "Form 10-Q) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ MICHEL E. MAES
Michel E. Maes
General Partner
Date: 11-4-2016
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 04, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | DETONICS SMALL ARMS LTD | |
Entity Central Index Key | 0000351397 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 0 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2016 |
Balance Sheets (Unaudited) - USD ($) |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
ASSETS | ||
Cash | $ 0 | $ 0 |
Royalties Receivable | 0 | 0 |
TOTAL CURRENT ASSETS | 0 | 0 |
Intangible Assets Less Amortization | 0 | 0 |
Receivable from Affiliates Less Allowance | 0 | 0 |
TOTAL ASSETS | 0 | 0 |
LIABILITIES AND PARTNERS' EQUITY | ||
Accounts Payable | 0 | 0 |
Taxes Payable | 0 | 0 |
TOTAL CURRENT LIABILITIES | 0 | 0 |
Payable to Affiliates | 672,769 | 672,769 |
TOTAL LIABILITIES | 672,769 | 672,769 |
Partners' Capital | (672,769) | (672,769) |
TOTAL LIABILITIES AND PARTNER'S EQUITY | $ 0 | $ 0 |
Statement of Income (Unaudited) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||
Royalty Revenue | $ 0 | $ 0 |
Expenses | 0 | 0 |
Net Income (Loss) | $ 0 | $ 0 |
Statements of Cash Flows (Unaudited) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Statement of Cash Flows [Abstract] | ||
Net Cash Provided By Operating Activities | $ 0 | $ 0 |
Net Cash Used By Investing Activities | 0 | 0 |
Net Cash Provided By Financing Activities | 0 | 0 |
Net Increase In Cash | 0 | 0 |
Cash At Beginning Of Period | 0 | 0 |
Cash At End Of Period | $ 0 | $ 0 |
3
M*8C79R[,[V"1&SI9,#NC)>&NN8.'8::>\6"9&Z51KWZ-XB?=L\(^A35S$ZU-
MN>,GM]J=T9)P71QUM<6M1R:Y8<;$DQ AI (D(_<"(?1C*AWB?0