United States
Securities and Exchange Commission
Washington, D. C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-27520
SDC International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-2583767
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
251 Royal Palm Way Suite 301
Palm Beach, Florida 33480
(Address of principal (Zip code)
executive offices)
Issuer's telephone number (561) 882-9300
Securities registered under Section 12(b) of the Act:
None
Securities registered under Section 12(g) of the Act:
Common Stock, Par value $0.001
(Title of class)
<PAGE>
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 5(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that registration was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Common stock, par value $.001 per share: 9,557,391 shares outstanding as of
June 30, 2000.
<PAGE>
SDC INTERNATIONAL, INC. and SUBSIDIARY INDEX
PART 1 - FINANCIAL INFORMATION:
ITEM 1 - CONDOLIDATED BALANCE SHEETS
Condensed Consolidated Balance Sheet (Unaudited)
June 30, 2000 F-1
Condensed Consolidated Statements of Operations
(Unaudited) for the three months ended June 30, 2000
and June 30, 1999 F-2
Condensed Consolidated Statements of Operations
(Unaudited) for the six months ended June 30, 2000
and June 30, 1999 F-3
Condensed Consolidated Statements of Stockholders'
(Deficiency) (Unaudited) for the six months ended
June 30, 2000 F-4
Consolidated Statements of Cash Flows (Unaudited)
for the six months ended June 30, 2000 and June 30, 1999 F-5
Notes to Consolidated Financial Statements F-6 - F-7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II - OTHER INFORMATION 12
SIGNATURES 14
<PAGE>
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheet
June 30,
2000
-------------
ASSETS
Current assets:
Cash $ 25,136
Inventory 22,906
-------------
Total current assets 48,042
Machinery and equipment, net 4,353
Cash - restricted 81,243
Note receivable 150,000
-------------
$ 283,638
=============
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 150,394
Due to related parties, including accrued
interest of $74,466 699,466
-------------
Total current liabilities 849,860
-------------
Commitments
STOCKHOLDERS' DEFICIENCY
Common stock $.001 par value, 10,000,000 shares
authorized, 9,557,391 shares issued and
outstanding 9,557
Additional paid-in capital 16,556,345
Common shares issuable (106,036 shares) 175,724
Accumulated deficit (17,307,848)
-------------
(566,222)
-------------
$ 283,638
=============
See notes to condensed consolidated financial statements
<PAGE> F-1
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, June 30,
2000 1999
------------ ------------
<S> <C> <C>
Sales $ 116,986
Cost of sales 124,399
------------
Gross loss (7,413)
------------
Expenses:
Selling, general and administrative,
including $0 and $863,531 paid by
issuance of stock $ 327,292 1,136,877
Depreciation and amortization 400 12,358
------------ ------------
Total expenses 327,692 1,149,235
------------ ------------
Loss from operations before interest
expense (327,692) (1,156,648)
Interest expense including amortization
of debt discount (129,821) (288,761)
------------ ------------
Loss from continuing operations (457,513) (1,445,409)
Gain on sale of discontinued subsidiary 98,278 0
(Loss) income from operations of
discontinued subsidiary (22,866) (36,986)
------------ ------------
Net loss $ (382,101) $ (1,482,395)
============ ============
Net loss per share - Basic and diluted:
Loss from continuing operations $ (0.05) $ (0.21)
Loss from operations of discontinued
subsidiary 0.01 (0.01)
------- -------
Net loss $ (0.04) $ (0.22)
======= =======
Weighted average shares outstanding 9,086,000 6,753,000
========= =========
See notes to condensed consolidated financial statements
<PAGE> F-2
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
</TABLE>
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
2000 1999
------------ ------------
<S> <C> <C>
Sales $ 70,240 $ 116,986
Cost of sales 67,078 124,399
------------ ------------
Gross profit (loss) 3,162 (7,413)
------------ ------------
Expenses:
Selling, general and administrative,
including $0 and $1,360,671 paid by
issuance of stock 599,300 1,928,797
Depreciation and amortization 800 24,716
------------ ------------
Total expenses 600,100 1,953,513
------------ ------------
Loss from operations before interest
expense (596,938) (1,960,926)
Interest expense including amortization
of debt discount (453,674) (426,295)
------------ ------------
Loss from continuing operations (1,050,612) (2,387,221)
Gain on sale of discontinued subsidiary 98,278 0
(Loss) income from operations of
discontinued subsidiary (24,416) (76,687)
------------ ------------
Net loss $ (976,750) $ (2,463,908)
============ ============
Net loss per share - Basic and diluted:
Loss from continuing operations $ (0.12) $ (0.40)
Loss from operations of discontinued
subsidiary 0.01 (0.01)
------- -------
Net loss $ (0.11) $ (0.41)
======= =======
Weighted average shares outstanding 8,644,000 5,920,000
========= =========
</TABLE>
See notes to condensed consolidated financial statements
<PAGE> F-3
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Stockholders' Deficiency
<TABLE>
<CAPTION>
Accumulated
Common Stock Foreign
-------------------- Additional Common Currency
Par Paid-in Shares Accumulated Translation
Shares Value Capital Payable Deficit Adjustment Totals
--------- -------- ----------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1999 7,745,004 $ 7,745 $14,504,770 $ 918,224 $ (16,331,098) $ 24,224 $ (876,135)
Issuance of common stock in
connection with loan
agreements 190,000 190 289,310 289,500
Issuance of common stock in
repayment of short-term loan 771,387 771 770,616 771,387
Issuance of common stock 351,000 351 742,149 (742,500) 0
Sale of common stock 500,000 500 249,500 250,000
Comprehensive loss:
Foreign currency translation
adjustment (24,224) (24,224)
Net loss for the period (976,750) (976,750)
Total comprehensive loss (1,000,974)
--------- -------- ----------- ----------- ------------- ------------ -----------
Balance - June 30, 2000 9,557,391 $ 9,557 $16,556,385 $ 175,724 $ (17,307,848) $ 0 $ (566,222)
========= ======== =========== =========== ============= ============ ===========
</TABLE>
See notes to condensed consolidated financial statements
<PAGE> F-4
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (976,750) $ (2,463,909)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 800 24,716
Amortization of debt discount 102,683 154,396
Expenses paid by issuance of stock 289,500 1,645,042
Beneficial conversion feature of
convertible notes 0 68,380
Gain on sale of subsidiary (98,278)
Loans in excess of loss from operations
of discontinued subsidiary 24,416 76,687
Changes in:
Inventory 51,500 104,174
Security deposits 0 20,000
Prepaid expenses 15,000 0
Accounts payable and accrued
expenses (53,280) (10,358)
Accrued interest 62,355 72,064
------------ ------------
Net cash used in operating activities (582,054) (308,807)
Cash flows from financing activities:
Proceeds from sale of common stock 200,000 50,000
Proceeds of loans from related parties 203,000 315,000
Repayment of loans from related parties (16,703) (7,422)
------------ ------------
Net cash provided by financing activities 436,297 357,578
------------ ------------
Net (decrease) increase in cash (145,757) 48,771
Cash, beginning of period 170,893 41,651
------------ ------------
Cash, end of period $ 25,136 $ 90,422
============ ============
Supplemental cash disclosures:
Cash paid for interest $ 19,581
Supplemental disclosure of noncash
investing and financing activities:
Issuance of common stock issuable $ 742,500
Issuance of common stock in payment of
loan payable to stockholder $ 771,387 $ 813,601
</TABLE>
<PAGE> F-5
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
June 30, 2000
NOTE A - THE COMPANY AND BASIS OF PREPARATION
The accompanying financial statements include the accounts of SDC
International, Inc., (the "Company") and its wholly-owned
subsidiaries SDC Prague, s.r.o. and Skobol, s.a. ("Skobol") after
elimination of all significant intercompany transactions and
balances. The Company was incorporated in the State of Delaware in
1994, and acquired an exclusive agency agreement from Diesel
International, a.s. (formerly known as Skoda Diesel, a.s.)
("Diesel") which permitted the Company to sell a broad range of
Diesel's products, including diesel engines and power generating
sets. Diesel, which was formed in what is now the Czech Republic,
was one of the founding stockholders of the Company.
During the year ended August 31, 1997, as a result of financial
difficulties encountered by Diesel, the Company discontinued
selling Diesel's products. During November 1997, the Company
acquired the outstanding common stock of Skobol, a Bolivian
Corporation, which is a distributor within the country of Bolivia
of products manufactured in the Czech Republic. In December 1999,
the Company's Board of Directors adopted a plan to dispose of the
subsidiary and, accordingly, the subsidiary has been accounted for
as a discontinued operation in the accompanying financial
statements. During the period ended June 30, 2000, the Company has
been attempting to acquire entities in the Czech Republic and has
been incurring expenses in connection therewith.
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
instructions to Form 10-QSB. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management the interim condensed consolidated financial
statements include all adjustments necessary in order to make the
condensed consolidated financial statements not misleading. The
results of operations for the six months ended are not necessarily
indicative of the results to be expected for the full year. For
further information, refer to the Company's audited financial
statements and footnotes thereto at December 31, 1999, included in
the Company's Form 10-KSB, filed with the Securities and Exchange
Commission.
NOTE B - DUE TO RELATED PARTIES
[1] Line-of-credit:
During June 1998, the Company obtained an unsecured $500,000
line of credit from a stockholder with an interest rate of 14%
per annum. Principal and interest were payable on December 8,
1998. The agreement provided that the principal balance of the
line-of-credit and any outstanding accrued interest may be
converted into common stock at $1.00 per share. By agreement
with the stockholder, the due date was extended to December 31,
1999. During the three months ended March 31, 2000, the line-
of-credit totaling $500,000 and accrued interest amounting to
$114,110 were repaid by the issuance of 614,110 shares of
common stock. Interest expense on the line-of-credit amounted
to $15,173 during the three months ended March 31, 2000. In
addition, 216,000 shares of common stock issuable in connection
with an extension agreement (previously valued at $465,750)
were issued during the three months ended March 31, 2000.
<PAGE> F-6
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
June 30, 2000
NOTE B - DUE TO RELATED PARTIES (CONTINUED)
[2] Loans from stockholders:
During the three months ended March 31, 2000, the Company
borrowed an additional $203,000 from stockholders under notes
which are repayable in 180 days, at a stated interest rate of
14% per annum. Interest accrued on these and previous notes at
June 30, 2000 amounted to $74,466. Interest expense on the
notes during the six months ended June 30, 2000 and 1999,
amounted to $47,182 and $30,064, respectively. During the
period ended June 30, 2000, notes payable totaling $125,000
and accrued interest of $32,277 were repaid by the issuance of
157,277 shares of common stock. In connection with borrowings
during the three months ended March 31, 2000 and extension
agreements of loans previously outstanding, during the six
months ended June 30, 2000 190,000 shares of common stock
valued at $289,500 were issued. Also during the three months
ended March 31, 2000, 145,000 shares of common stock issuable
in connection with an extension agreement (previously valued at
$276,750) were issued. During the period subsequent to June 30,
2000, holders of notes with outstanding principal balances of
$75,000 converted their notes, together with accrued interest,
into shares of common stock and holders of notes with
outstanding principal balances of $550,000 extended the
repayment of their loans to January 20, 2001. During the six
months ended June 30, 2000, amortization of debt discount
amounted to $102,683.
NOTE C - STOCKHOLDERS' EQUITY
[1] As of June 30, 2000, the Company has outstanding warrants to
purchase a total of 180,000 shares of common stock at exercise
prices of $2.00 and $2.50 per share, of which 130,000 expire
in 2000 and 50,000 expire in 2003. These warrants had been
issued to consultants during 1998.
[2] During June 2000, the Company sold 500,000 shares of its
common stock at $.50 per share for total proceeds of $250,000.
NOTE D - COMMITMENTS AND OTHER COMMENTS
[1] Lease agreement:
Effective January 1, 1997, the Company rents its executive
office on a month to month basis from its Chief Executive
Officer ("CEO".) Rent expense under the arrangement amounted
to $12,000 and $3,000 during the six months ended June 30, 2000
and 1999, respectively.
Included in general and administrative expenses is rent expense
for the above and other rentals which totaled $20,443 and
$6,953 for the six months ended June 30, 2000 and 1999,
respectively.
[2] Finder's fee agreement:
On May 20, 1996, the Company entered into a finder's fee
agreement with Prime Charter, Ltd ("Prime") for a period of ten
years, renewable for additional five-year periods. Pursuant to
such agreement, any sales to entities introduced to the Company
by Prime results in a finder's fee to Prime of two percent of
the gross sales price or ten percent of the adjusted gross
profit resulting from the sales. Such payments are due 45 days
after each quarter-annual calendar period. As of June 30,
2000, no amounts were due under this agreement.
[3] Executive compensation:
For the six months ended June 30, 2000 and 1999, respectively,
the Company incurred management fees of $78,000 and $78,000,
payable to its Chief Executive Officer. For the six months
ended June 30, 2000 and 1999, respectively, the Company
incurred management fees of $78,000 and $78,000 to its
President.
<PAGE> F-7
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SDC International, Inc., (hereinafter referred to as the
"Company") is a Delaware corporation formed in June, 1994 to
market, sell, and finance Eastern and Central European industrial
products such as diesel generators, co-generation equipment,
electric metering systems, on/off-road trucks, tractors, and
transport equipment such as buses, trolleys, trams, and
airfreight containers. Because of a lack of working capital
condition within the manufacturers of such equipment, the
products could not be delivered in an acceptable time period to
the customers of the Company. Therefore, in 1998, the Company
redirected its efforts toward acquiring certain manufacturers of
the products, provided that the quality and global market
potential was deemed significant by the Company. Presently, the
Company works to establish relationships of joint venture or as
an acquirer of such manufacturing companies.
The Company has acted as an exclusive distributor of Skoda Diesel
engines in North, South and Central America, under an exclusive
license from Skoda Diesel, now known as Diesel International,
a.s., ("Diesel"). Diesel products are principally piston
combustion diesel, gas, and bio-gas engines whose applications
include locomotive and stationary engines for the generation and
co-generation of electric power and complete energy for a variety
of purposes. In April 1997, the Company acquired by merger the
Panamanian company representing Tatra, a Czech truck manufacturer
with ISO certification, to market and sell Tatra products in
South and Central America. In August 1997, the Company became
the exclusive North and South American distributor of Metal
Kraft, a.s., a Czech manufacturer of metal pallets and containers
whose customers include Mercedes Benz, BMW, and Volkswagen, and
which offers a line of airfreight cargo containers. In early
1998, the Company executed letters of intent and agreements to
purchase Tatra, a.s. However, due to changes within the
organization of the seller of Tatra, which were beyond the
control of the Company, the transaction has not been consummated,
and the Company continues its efforts toward the Tatra
acquisition. Tatra is a Czech manufacturer of on/off-road heavy
duty trucks. The factory was founded in 1850 and in 1898 the
first truck was manufactured. The factory continued development
and innovations of its vehicle and today produces a truck with
the an air cooled diesel engine and a solid central backbone tube
with swing half axles, both features being unique features of the
Tatra truck. Tatra has ISO 9001 certification and Tatra trucks
meet all Euro II regulations.
Through its direct involvement in Central and Eastern Europe, the
Company has learned that most manufacturing companies within this
geographic/political area with whom the Company wishes to
transact its business have a shortage of marketing skills and
financial capability. Therefore, the Company has determined that
it should take an internal position within its targeted
manufacturing companies to assure better financial capability and
marketing skills. This planned activity may be as a joint
venture with or an acquisition of such manufacturing companies.
<PAGE> 8
During the quarter ending June 30, 2000, the Company disposed of
its Bolivian subsidiary, Skobol, a.s., for $150,000, payable by
promissory note over a three year period. During the final
quarter of fiscal 1997, the Company had executed an acquisition
agreement with Czech trading company Motokov International which
provided for the Company's acquisition of the Motokov subsidiary
in Bolivia, Skobol, s.a. Skobol is a thirty-eight year old
distributor of Czech products within Bolivia, and the Company
plans to use this subsidiary as its base to expand throughout
that region of South America with the other Czech products
offered by the Company. The acquisition closed effective
September 30, 1997. During 1999, management reevaluated its
Bolivian subsidiary, which has not progressed as well as planned.
The basic reason the Company acquired the Bolivian operation was
to establish an entity for the sale of used Tatra trucks, a
procedure which would be necessary in order to arrange a leasing
program for new Tatra trucks, assuming the acquisition of Tatra
by the Company would be completed. At the time of the
acquisition, the economy of neighboring country Brazil, was very
positive. However, shortly after the acquisition, the economy of
Brazil deteriorated and, therefore, caused economic hardship for
Bolivia, as Bolivia had always been very dependent upon the
economic benefits of a positive Brazilian economy. Because the
Tatra acquisition has not been concluded, because of the Brazil
economic deterioration, and because the performance of the
subsidiary without the Tatra program was still in a loss
situation, management determined that plans to dispose of the
subsidiary would be necessary and, in early year 2000, the
Company executed an agreement to sell the subsidiary. The sale
closed on June 30, 2000.
Just before the end of the Quarter ending June 30, 2000, the
Czech government took control of Investicni A Postovni Banka
(IPB) and shortly afterwards transferred ownership of its assets
to Ceskoslovenska Obchodni Banka (CSOB), which is the primary
depository bank for the Company. Management expects discussions
and negiotiations to begin during the third quarter of 2000, and
believes there is a good likelihood that a favorbale conclusion
can be attained for the acquisition of the increased shares and
the bank debt of Moravan now believed to be held by CSOB. During
the quarter ending March 31, 2000, the Company had executed a
Confidentiality Agreement with Investicni A Postovni Banka, which
is the creditor bank to Moravan and which was the party in the
Czech Commercial Court which objected to the Moravan share
increase attempted by the Company during 1999. The Agreement
provided for the negotiation of the Company's possible
acquisition of the Moravan debt held by the bank. During 1999,
the Company had executed an agreement providing for the Company's
acquisition of a majority of shares of Czech aircraft
manufacturer, Moravan, a.s. The agreement, providing for the
issuance of additional shares of Moravan equal to fifty-five
percent of the subsequent outstanding shares, had been approved
by the Company's board and by the shareholders of Moravan, a.s.
Under Czech law, such an increase of shares must be registered by
the Commercial Court to be effective, a process which can take an
extended period of time and towards which any third parties may
object. There were objections and there has been no registration
in the Commercial Court. The Company had begun negotiations with
IPB, the largest creditor of Moravan to purchase the bank debt of
Moravan on discounted terms. Until such time that the objections
are settled and the Commercial Court registers the new shares,
there is no closing of the acquisition. The Company has no
substantive funds or capital at risk until and unless such a
closing occurs.
<PAGE> 9
During the last quarter of 1999, the Czech government-owned
Konsolidacni Bank took over ownership of and the process of
disposing of Tatra. During the quarter ending March 31, 2000,
Konsolidacni Banka engaged the Czech Revitalization Agency, a
subsidiary if the Konsolidacni Banka, to perform the process of
selling Tatra. A Confidential Memorandum was sent to the Company
regarding the proposed sale, a Confidentiality Agreement was
signed, and discussions have subsequently begun with various
parties in the Czech Republic which are connected with Tatra and
its sale process. In accordance to the requirements of the
Memorandum, on June 12, 2000, the Company submitted its letter
requesting negotiations with the Revitalization Agency to begin
for the Company's proposed acquisition of Tatra. Management
believes that the process is being conducted transparently and
professionally, and that the Company has a reasonable chance of
acquiring ownership of Tatra.
During the quarter ending June 30, 2000, and in preparation for
the planned acquisition of Tatra, the Company hired Mr. Henry
Keifer to become its General Manager and Vice Chairman of the
Board of Tatra, a.s., subject to the closing of such an
acquisition. Mr. Kiefer, a 32 year veteran with PACCAR, has
operated heavy-truck manufacturing facilities in the U.S.,
England, Russia, and Australia. Upon the acquisition, Kiefer
will reside in the Czech Republic. A graduate of the University
of Washington and the Stanford University Executive Program,
Kiefer began his career with the Kenworth division of PACCAR.
His career later included positions as Managing Director of
PACCAR Australia, President and Managing Director of PACCAR U.K.,
and General Manager of Kenworth Truck. His foreign experience
includes six years in England, three years in Russia, and two
years in Australia.
There can be no assurances that any of the matters discussed
above will come to fruition or will result in positive results
for the Company.
The Company has devoted substantial of its time and effort to
negotiating the acquisition of Tatra,a. s., and arranging
strategic alliances related for Tatra rather than devoting its
time to beginning its marketing and sales development.
Therefore, the Company's revenues to date are primarily the
result of orders received by the Company rather than the result
of marketing efforts by the Company. The Company records revenue
when products are shipped. During the quarter ended March 31,
2000, the Company shipped $70,240 and none during the quarter
ended June 30, 2000.
Operating expenses for the six months ended June 30, 2000,
were $1,353,413 less than in the six months ended June 30, 1999.
Non-cash operating expenses such as depreciation, amortization
and payment for consulting services by issuance of stock were
insignificant during the six months ended June 30, 2000. The
Company's net loss of $976,750 for the six months ended June 30,
2000, includes certain non-cash charges as follows:
Depreciation and Amortization $ 400
Issuance of common stock and
amortization of debt discount
in connection with loans 392,183
---------
TOTAL NON-CASH CHARGES $ 392,583
<PAGE> 10
Accordingly, the Company's cash loss before the above charges
amounted to approximately $584,167, which includes almost
$100,000 of expenses due to interest and discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
At the end of June 2000, the Company had a working capital
deficit of $801,818. However, when considering shareholder loans
to be long term debt, the working capital deficit is $102,352.
Net cash used for the Company's operating activities for the six
months ended June 30, 2000 amounted to $582,054, whereas the net
cash used for operating activities for the six months ended June
30, 1999 amounted to $308,807. Net cash provided by financing
activities in the six months ended June 30, 2000 was $436,297
compared to $357,578 for the six months ended June 30, 1999.
Therefore, total cash at the end of the six months ended June 30,
2000 was $25,136 compared to $90,422 at the end of the six months
ended June 30, 1999.
Management is evaluating its current and projected cash needs to
determine if its current financial situation will be sufficient
to meet such needs. If the Company continues according to its
present plans and without modification, the Company will be
required to obtain additional financing or equity capital.
Management is actively exploring possible sources of additional
capital and is reviewing possible methods to obtain such
additional capital, as needed. There is no assurance that such
financing or capital will be available at the time when such
capital may be needed.
Negative cash flows from the Company's pursuit of a joint venture
or acquisition are anticipated to continue until the Company has
reached agreement, if any can be reached, providing for a joint
venture or acquisition and then only if suitable financing of any
such joint venture or acquisition is received by the Company. The
Company acknowledges that there is no assurance that it will be
able to obtain suitable capital or financing at the time of any
such joint venture or acquisition. In the event the Company does
not receive additional capital, there could be a severe adverse
impact on the Company's future operations.
The Company's products are sold in US dollars and the Company
does not believe currency exchange rates or current inflation
rates will have a significant effect on sales or profitability.
Although the Company maintains a bank account in Czech currency
within the Czech Republic for paying local expenses, the amount
on deposit in such account is usually small and, therefore,
fluctuation in the currency exchange rates should not have a
significant effect on the Company.
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings:
None
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 and Reports on Form 8-K:
None
<PAGE> 12
SIGNATURES
In accordance with section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SDC INTERNATIONAL, INC.
BY:/s/Ronald A. Adams
Ronald A. Adams, Chairman
August 15, 2000
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
/s/Ronald A. Adams August 15, 2000
Ronald A. Adams, Director and Chairman
(Principal Executive Officer and Principal
Financial Officer)
<PAGE> 13
