This excerpt taken from the SECT 10-K filed Nov 12, 2008.
NOTE 3 REVERSE MERGER
On September 12, 2007, Sector 10, Inc., Jeffrey Martin (Sector 10 Shareholder), Sector 10 Services-USA, Inc. (Sector 10 Services), Sector 10 Holdings, Inc. (Sector 10 Holdings) and the Pericles DeAvila Institute for Humanitarian Studies (the DeAvila Institute) entered into a Stock Exchange Agreement (the Exchange Agreement) setting forth the terms and conditions upon the above named parties thereto proposed to consummate a stock exchange transaction pursuant to which Sector 10 Holdings and the DeAvila Institute would transfer to the Company approximately 75% of the issued and outstanding shares of common stock of Sector 10 Services in exchange for (i) the Companys issuance and delivery to Sector 10 Holdings and the DeAvila Institute of 47,058,824 and 2,941,176 newly-issued shares of the Companys common stock (the Common Stock), respectively, and (ii) Mr. Martins transfer and delivery to Sector 10 Holdings and the DeAvila Institute of 14,117,674 and 882,353 outstanding shares of Common Stock, respectively (collectively, the Sector 10 Transaction). A summary of the terms of the Exchange Agreement and related details were originally disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission on October 11, 2007 (the October Form 8-K).
As disclosed in the October Form 8-K, the consummation of the transactions contemplated by the Exchange Agreement was conditioned upon the Companys amendment of its Certificate of Incorporation to authorize the issuance of sufficient shares of the Companys common stock to consummate the transactions contemplated by the Exchange Agreement. On or about September 13, 2007 the Company obtained the written consent of the holders of sufficient shares of the issued and outstanding shares of the Companys common stock to amend the Companys Certificate of Incorporation for the purpose of increasing the authorized capital of the Company to 200,000,000 shares of capital stock, consisting of 199,000,000 shares of common stock and 1,000,000 shares of preferred stock. Based on the approval of the Companys shareholders, on September 15, 2007, the Company filed a Certificate of Amendment to the Companys Certificate of Incorporation for the purpose of affecting the increase in the number of authorized shares of the Companys capital stock.
In November 2007, based upon the approval by the Sector 10s shareholders of the Certificate of Amendment, and the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, the Company completed the transactions contemplated by the Exchange Agreement, including the issuance and delivery to Sector 10 Holdings and the DeAvila Institute of 47,058,824 and 2,941,176 newly-issued shares of the Companys common stock, respectively. The Company believes the issuance of such shares to Sector 10 Holdings and the DeAvila Institute was exempt from registration under the Securities Act of 1933, as amended (the Securities Act), pursuant to the provisions of Section 4(2) thereof.
The shareholders of Sector 10 Services owned 85% of Sector 10 immediately after the exchange was completed in November 20, 2007. The exchange transaction is treated as a reverse merger with Sector 10 Services treated as the
surviving entity. The financial statements have been adjusted to eliminate all prior Sector 10 information and include prior Sector 10 Services financial information.
The merger occurred in the 3rd quarter and various adjustments were required. A summary of significant adjustments to the Balance Sheet of the Company resulting from the merger of Sector 10 Services Inc. and SKRM Interactive is as follows:
In the 4th quarter, additional liabilities were identified that were assumed in the merger. These additional liabilities were general accounts payable totaling $60,088. An adjustment was made to include in accounts payable and to adjust additional paid in capital. The adjustment is reflected in the Statement of Shareholders Deficit.
The reporting period for the new entity will continue with a March 31 fiscal year end. The name of the company was formerly changed to Sector 10, Inc. on April 15, 2008.