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 September 30, 1999
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 executive offices) (Zip code)
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)
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: 7,481,879 shares outstanding as of
September 30, 1999.
<PAGE>
SDC INTERNATIONAL, INC. and SUBSIDIARY INDEX
PART 1 - FINANCIAL INFORMATION:
ITEM 1 - CONDOLIDATED BALANCE SHEETS
Consolidated Balance Sheets (Unaudited) September 30, 1999
and December 31, 1998 F-1
Consolidated Statements of Operations (Unaudited) for
the nine months ended September 30, 1999 and
September 30, 1998 F-2
Consolidated Statement of Operations (Unaudited) for
The three months ended September 30, 1999 and
September 30, 1998 F-3
Consolidated Statements of Stockholders' (Deficiency)
Equity (Unaudited) for the nine months ended
September 30, 1999 F-4
Consolidated Statements of Cash Flows (Unaudited) for the
nine months ended September 30, 1999 and
September 30, 1998 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 8-10
PART II - OTHER INFORMATION
<PAGE> 1
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 119,175 $ 41,651
Inventory $ 141,443 303,223
Prepaid expenses 15,000 15,000
------------ ------------
Total current assets 275,618 359,874
Machinery and equipment, net 6,842 15,251
Cash - restricted 80,532 80,532
Agency rights at cost, net of accumulated
amortization of $92,367 and $63,702 60,536 89,201
Net assets of discontinued subsidiary 32,386 94,518
Other assets 28,894 48,894
------------ ------------
$ 484,808 $ 688,270
============ ============
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 67,542 $ 87,900
Due to related parties,
including accrued interest of
$103,222 and $88,928, net of
unamortized discount of $0 and $154,396 1,101,530 1,470,262
------------ ------------
Total current liabilities 1,169,072 1,558,162
------------ ------------
Commitments
STOCKHOLDERS' DEFICIENCY
Common stock $.001 par value, 10,000,000
shares authorized, 7,481,879 and 4,671,917
shares issued and outstanding, respectively 7,482 4,672
Additional paid-in capital 13,703,341 10,570,673
Common shares payable 421,508 70,875
Accumulated deficit (14,868,598) (11,549,518)
Accumulated foreign currency
translation adjustment 52,003 33,406
------------ ------------
(684,264) (869,892)
------------ ------------
$ 484,808 $ 688,270
============ ============
</TABLE>
See Notes to Financial Statements
<PAGE> F-1
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Nine months Nine months
Ended Ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Sales $ 169,472
Cost of sales 182,004
-----------
Gross profit (12,532)
-----------
Expenses:
Selling, general and administrative,
including $1,773,171 and $1,080,521
paid by issuance of stock $ 2,570,032 $ 2,253,470
Depreciation and amortization 37,074 436,167
----------- -----------
Total expenses 2,607,106 2,689,637
----------- -----------
Loss from operations before interest
expense (2,619,638) (2,689,637)
Interest expense including amortization
of debt discount, net (578,714) (153,417)
----------- -----------
Loss from continuing operations (3,198,352) (2,843,054)
(Loss) income from operations of
discontinued subsidiary (120,729) (13,027)
----------- -----------
Net loss $(3,319,081) $(2,856,081)
=========== ===========
Net loss per share - Basic and diluted:
Loss from continuing operations $(0.50) $(0.80)
Loss from operations of discontinued
subsidiary (0.02) Nil
------ ------
Net loss $(0.52) $(0.80)
====== ======
Weighted average shares outstanding 6,316,893 3,565,517
========= =========
</TABLE>
See Notes to Financial Statements
<PAGE> F-2
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three months Three months
Ended Ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Sales $ 52,486
Cost of sales 57,605
-------------
Gross profit (5,119)
-------------
Expenses:
Selling, general and administrative,
including $412,500 and $381,657
paid by issuance of stoc $ 641,235 $ 985,152
Depreciation and amortization 12,358 175,725
------------ -------------
Total expenses 653,593 1,160,877
------------ -------------
Loss from operations before interest expense (658,712) (1,160,877)
Interest expense including amortization
of debt discount (152,419) (132,664)
------------ -------------
Loss from continuing operations (811,131) (1,293,541)
(Loss) income from operations of
discontinued subsidiary (44,042 (57,832)
------------ -------------
Net loss $ (855,173) $ (1,351,373)
============ ============
Net loss per share - Basic and diluted:
Loss from continuing operations $(0.11) $(0.32)
Loss from operations of discontinued
subsidiary (0.01) (0.01)
------ ------
Net loss $(0.12) $(0.33)
====== ======
Weighted average shares outstanding 7,201,497 4,047,286
========= =========
</TABLE>
See Notes to Financial Statements
<PAGE> F-3
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' (Deficiency) Equity
<TABLE>
<CAPTION>
Foreign
Common Stock 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, 1998 4,671,917 $ 4,672 $10,570,673 70,875 $(11,549,518) $ 33,406 $ (869,892)
Issuance of common stock in
connection with private
placement memorandum 25,000 25 49,975 50,000
Issuance of common stock in
connection with loan
agreements 49,000 49 106,576 106,625
Issuance of common stock to
consultants and employees
for services 1,052,660 1,053 1,798,993 1,800,046
Issuance of common stock in
repayment of short-term loan 1,683,302 1,683 1,177,124 1,178,807
Shares to be issued for loan
extension (162,000) 350,633 350,633
Comprehensive loss:
Foreign currency translation
Adjustment 18,597 18,597
Net loss for the period (3,319,081) (3,319,081)
Total comprehensive loss (3,300,484)
--------- --------- ----------- ---------- ------------ ----------- ------------
Balance - September 30, 1999 7,481,879 $ 7,482 $13,703,341 $ 421,508 $(14,868,598) $ 52,003 $ (684,264)
========= ========= =========== ========== ============ =========== ============
</TABLE>
See Notes to Financial Statements
<PAGE> F-4
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine months Nine months
Ended Ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,319,081) $ (2,856,081)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 37,074 436,167
Amortization of debt discount 261,021 8,750
Amortization of excess of value
of net assets acquired over cost
of Acquisition (18,945) (42,000)
Expenses paid by issuance of stock 2,150,679 1,208,563
Loss from operations of discontinued
subsidiary 139,674 55,027
Changes in:
Inventory 161,780
Security deposits 20,000
Prepaid expenses
Other current assets, net 205,326
Accounts payable and accrued
expenses (20,358) 67,596
Accrued interest 93,101
---------- -----------
Net cash used in operating
activities (495,055) (1,583,388)
----------- -----------
Cash flows from investing activities:
Purchase of machinery and equipment (14,151)
Investment in, and advances to,
discontinued subsidiary (40,000)
----------- -----------
Net cash (used in) provided by
investing activities (40,000) (14,151)
----------- -----------
Cash flows from financing activities:
Advances (repayment of advances)
from officer, net 21,543 5,604
Loans from related parties, net 541,036 1,409,996
Proceeds from sale of stock 50,000 253,500
Costs associated with sale of
stock (32,955)
----------- -----------
Net cash provided by financing
activities 612,579 1,636,145
----------- -----------
Net (decrease) increase in cash 77,524 38,606
Cash, beginning of period 41,651 104,997
----------- -----------
Cash, end of period $ 119,175 $ 143,603
=========== ===========
Supplemental cash flow disclosure:
Cash paid for:
Interest $ 19,581
Supplemental disclosure of noncash
investing and financing activities:
Issuance of common stock for in
connection with stockholder loans $ 29,925
Issuance of common stock in
payment of loan from stockholder $ 1,178,807 $ 35,000
</TABLE>
See Notes to Financial Statements
<PAGE> F-5
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Notes to Financial Statements
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 September 30,
1999, the Company has been attempting to acquire entities in the Czech
Republic and has been incurring expenses in connection therewith.
The accompanying unaudited 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
consolidated financial statements include all adjustments necessary in
order to make the consolidated financial statements not misleading. The
results of operations for the nine 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, 1998, 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. As of
September 30, 1999, outstanding borrowings under the line of credit
amounted to $500,000 and accrued interest amounted to $46,441. As
consideration for the extension of the line of credit, the Company
agreed to issue 54,000 shares of common stock quarterly, until
paid. The value of the shares to be issued at September 30, 1999
(216,000) amounted to $421,508 and has been recorded as common
shares payable on the accompanying balance sheet.
[2] Loans from stockholders:
During October 1997, from June 1998 through September 1998, and
during the nine months ended September 30,1 999, the Company
borrowed $100,000, $1,186,500 and $600,000, respectively, from
stockholders under notes which are repayable in periods ranging
from 90 to 180 days, at a stated interest rate of 14% per annum.
Interest accrued on these notes at September 30, 1999 amounted to
$70,023. During the period subsequent to September 30, 1999,
holders of notes with outstanding principal balances of $500,000
converted their notes, together with accrued interest, into 700,110
shares of common stock.
<PAGE> F-6
SDC INTERNATIONAL, INC. AND SUBSIDIARY
Notes to Financial Statements
NOTE B - DUE TO RELATED PARTIES (CONTINUED)
In connection with these borrowings, during the year ended
December 31, 1998 and the four months ended December 31, 1997, the
Company issued to the stockholders 228,033 and 15,000 shares of
common stock valued at $474,140 and $26,250, respectively. In
addition, several notes had a beneficial conversion feature whereby
the principal and accrued interest could be converted to common
stock at less than the prevailing market price. Such amounts have
been accounted for as debt discounts. The Company's effective rate
for these borrowings, including debt discount, ranged from 14% to
134%. During the nine months ended September 30,
1999, amortization of discount amounted to $134,756.
During the nine months ended September 30, 1999, the Company repaid
notes of $1,100,000, and accrued interest of $78,807 by issuance of
1,683,302 common shares.
NOTE C - STOCKHOLDERS' EQUITY
[1] As of December 31, 1998, 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 the nine months ended September 30, 1999, the Company
issued 1,052,660 shares of common stock, both under the Company's
stock option plan in the form of options which vested immediately
with no exercise price, and unregistered shares restricted under
Section 144. Such shares have been valued at the closing bid price
at date of grant.
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 $3,000 and $7,000
during the nine months ended September 30, 1999 and September 30,
1998, respectively.
Included in general and administrative expenses is rent expense for
the above and other rentals which totaled $16,793 and $7,807 for
the nine months ended September 30, 1999 and September 30, 1998,
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 September 30, 1999, no amounts were
due under this agreement.
[3] Executive compensation:
For the nine months ended September 30, 1999 and September 30,
1998, respectively, the Company incurred management fees of $39,000
and $64,000, payable to its Chief Executive Officer.
For the nine months ended September 30, 1999 and September 30,
1998, respectively, the Company incurred management fees of 39,000
and $64,000 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.
<PAGE> 8
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.
During the quarter ending September 30, 1999, the mandate issued to
Komercni Banka by Tatra owner Skoda Plzen was canceled after Komercni
Banka failed to conclude the sale of Tatra shares and debt to a
strategic partner for Tatra. The Company was informed that the
government of the Czech Republic, through its state-owned Konsolidacni
Banka, would assume the responsibility for selling of Tatra's shares and
bank debts. The Company was informed that Konsolidacni Banka would
offer for sale approximately 60% of the outstanding shares of Tatra
along with all outstanding bank debt of Tatra, which amounted to
approximately US$120,000,000. The Company, represented by Chairman
Ronald Adams, President Milota Srkal, and strategic Board Advisor
General Haig, met in Prague, Czech Republic, with Prime Minister Milos
Zeman, Deputy Minster of Finance Mladek, Deputy Minister of Foreign
Affairs Hynek Kmonicek, Minister of Defense Jan Vetchy, and Chairman of
Konsolidacni Banka Ziegler. During the meetings, the Company discussed
its plans for Tatra and expressed its determination to acquire the
shares and debts of Tatra as were to be offered by Konsolidacni Banka.
During the quarter ending September 30, 1999, the Company 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, was 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 has begun negotiations with 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 funds or capital at risk until and unless such a closing
occurs.
Subsequent to the close of the third quarter ending September 30, 1999,
the Czech government-owned Konsolidacni Bank has taken over ownership of
and the process of disposing of Tatra. They are offering approximately
60% of Tatra's outstanding shares along with all of its bank debt, i.e.,
about USD120million of debt. Management believes that the process will
<PAGE> 9
be transparent and professionally handled, and that the Company has a
reasonable chance of acquiring the Tatra shares and selected debts.
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 ending
September 30, 1999, the Company shipped $52,486.
Operating expenses for the quarter ending September 30, 1999, were
$507,284 less than in the quarter ending September 30, 1998. Total
expenses for the quarter ending September 30 were $653,593 in 1999 and
$1,160,877 in 1998. Non-cash expenses as depreciation and amortization
and payment for consulting services accounted for more than sixty-four
percent (64%) of the expenses during the quarter ending September 30,
1999. The Company's net loss of $855,173 for the quarter ending
September 30, 1999, includes certain non-cash charges as follows:
Depreciation and Amortization $ 12,358
Issuance of common stock as
consideration of services 412,500
---------
TOTAL NON-CASH CHARGES $ 424,858
Accordingly, the Company's cash loss before the above charges amounted
to approximately $430,315, which includes almost $200,000 of expenses
due to interest and amortization of debt discount (non-cash) and
discontinued operations.
During the three months ending September 30, 1999, as compared to the
three months ending September 30, 1998, operating expenses were
approximately $507,284 lower. Management expects operating expenses
(non-depreciation and non-amortization), to remain at this approximate
level for the near future due to the level of negotiations and expansion
discussions taking place presently. Operating expense categories which
exceeded $5,000, for the three month period ending September 30, 1999,
were; amortization & depreciation $12,358; rents $10,459; management
compensation & salary $78,779; travel & lodging $36,932; consulting
$460,000; legal and accounting $24,647; telephone $11,375; interest
$21,037; automobile $8,318; and financial consulting $45,000.
LIQUIDITY AND CAPITAL RESOURCES
At the end of September, 1999, the Company's net working capital is
($899,454). However, when considering shareholder loans to be long term
debt, the actual net working capital is positive $208,076. Net cash
<PAGE> 10
used for the Company's operating activities for the nine months ending
September 30, 1999 amounted to $495,055, whereas the net cash used for
operating activities for the nine months ending September 30, 1998
amounted to $1,583,388. Net cash provided (+) by financing activities
in the nine months ending September 30, 1999 was $612,579 compared to
$1,636,145 for the quarter ending September 30, 1998. Therefore, total
cash at the end of the quarter ending September 30, 1999 was $119,175
compared to $143,603 at the end of the quarter ending September 30,
1998.
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:
See attached
<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
March 27, 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 March 27, 2000
Ronald A. Adams, Director and Chairman
(Principal Executive Officer and Principal
Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from Balance Sheet,
Statement of Operations, Statement of Cash Flows and Notes thereto incorporated
in Part I, Item 1. of this Form 10-QSB and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 119,175
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 141,443
<CURRENT-ASSETS> 275,618
<PP&E> 6,842
<DEPRECIATION> 0
<TOTAL-ASSETS> 484,808
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0
0
<COMMON> 7,482
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<CGS> 182,004
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<INCOME-PRETAX> (3,198,352)
<INCOME-TAX> 0
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<DISCONTINUED> (120,729)
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<NET-INCOME> (3,319,081)
<EPS-BASIC> (0.52)
<EPS-DILUTED> (0.52)
</TABLE>
