FORM 10 KSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31,
1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[NO FEE REQUIRED] for the transition period from
____________ to ____________
Commission file number: 000-27487
SAN DIEGO SOCCER DEVELOPMENT CORPORATION
(Name of small business issuer in its charter)
CALIFORNIA 33-0770631
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2123 Garnet Ave., Suite B
San Diego, California 92109
--------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code:
(858) 581-2120
Securities registered pursuant to Section 12(b) of the Securities Exchange Act:
Title of each class Name of each exchange on which
registered
NONE
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Securities registered pursuant to section 12(g) of the Securities Exchange Act:
Title of each class Name of each exchange on which
registered
COMMON STOCK,
No Par Value NONE
Check whether the issuer (1) 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10 KSB or any
amendment to this Form 10 KSB [ ]
As of December 31, 1999, 5,284,369 shares of the issuer's Common Stock were
outstanding to approximately 530 shareholders of record.
DOCUMENTS INCORPORATED BY REFERENCE:
See Part III, Item 13, Exhibits and Reports on Form 8-K
PART I
Item 1: DESCRIPTION OF BUSINESS
Forward-looking Statements
Certain matters discussed in this Registration Statement on Form 10SB are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as the Company "believes,"
"anticipates," "expects," "estimates" or words of similar meaning. Similarly,
statements that describe the Company's future plans, objectives or goals are
also forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties which are described in close proximity to such
statements and which could cause actual results to differ materially from those
anticipated as of the date of this report. Shareholders, potential investors and
other readers are urged to consider these factors in evaluating the
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forward-looking statements and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included herein are
only made as of the date of this report and the Company undertakes no obligation
to publicly update such forward-looking statements to reflect subsequent events
or circumstances.
Business Development
San Diego Soccer Development Corporation, a California corporation, was founded
in 1997 to develop, own, and run a professional soccer team in San Diego, with
the ultimate goal of becoming a Major League Soccer franchise. The Company is
headquartered at 2123 Garnet Avenue, Suite B, San Diego, CA 92109.
The Company operates as The San Diego Flash soccer club. The Company stages
professional soccer games and competes in the A-League, America's Division II
professional league. The sanctioning body for the league is USL, or United
Soccer Leagues, formerly known as USISL. In its inaugural season in San Diego,
the team won the championship of the Pacific Division, and nearly captured the
A-League title. In its second season, the Flash team captured its second
straight Pacific Division crown, the first of the A-League's 30 teams nationwide
to win back-to-back division championships in its first two years of
competition. The team is currently beginning its 2000 season.
In the fourth quarter of 1999, the Company paid a $20,000 franchise fee for the
Riverside County Elite Division III Soccer franchise. This fee was paid in
anticipation of an agreement pursuant to which the Company will purchase a 75%
interest in Riverside County Soccer Development Corporation, which operates the
Elite. The Company expects such transaction to be finalized in the first or
second quarter of the 2000 fiscal year.
Business of Issuer
Marketing and Distribution
The Company, as part of its regular business and promotion of its San Diego
Flash brand name, currently sells branded merchandise at its home games. Through
the 1998 season and the 1999 season, the Company's merchandise was produced and
sold through a local vendor. This contract has recently been terminated, and the
merchandise operation has been brought in-house. The Company believes that this
change will allow it to make a greater margin on the sales of its merchandise,
as well as allowing greater control of price points, quality, and product mix.
The Company plans to expand its merchandise operation to include sales at
kiosk-based locations in selected malls in San Diego County. The plan is for
these kiosk outlets to sell Flash branded merchandise, as well as general soccer
merchandise and equipment. The Company plans to place kiosks in 3 major malls in
the greater San Diego area.
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The Company has increased its ticket sales distribution effort by hiring a
ticket sales contractor, Sportix.net. The contract calls for Sportix.net to
provide telemarketing and sales services to the Company in return for a
commission on each ticket sold. The Company believes that this contract will
increase overall ticket sales.
Proprietary Rights
The team currently claims trademark protection for the brand name "San Diego
Flash". It holds a franchise with the USL as an A-League team, the top division
of the USL. The A-League is currently regarded as the `second division' of
American soccer, behind the MLS (Major League Soccer). The Company has sublease
agreements with concessionaires at its games for sales of food and non-alcoholic
beverages.
Competition
The Company's A-League soccer franchise competes for sports entertainment
dollars not only with other major league sports, but also with college
athletics, high-school athletics and other sports-related (and non-sports
related) entertainment in the San Diego area.
Seasonality
Seasonal aspects of the sport of Soccer have a material effect on the company's
operations. These effects are largely self-evident in the attached financials
and audit of the Company.
Employees
The Company presently employs its officers and directors, and certain clerical
staff on an "as needed" basis. This includes 10 full-time and 1 part-time
management personnel, and 26 part-time players and coaching personnel.
ITEM 2: DESCRIPTION OF PROPERTY
The Company presently utilizes approximately 1,350 square feet of office space
and related equipment and resources, including computers, printers, typewriters,
desk, conference table and cabinets.
The Company, through Yan K Skwara and Marta Glodkoska, Yan Skwara's mother, who
are lessees, leases 1,350 sq ft from Mark Spitzer under a three-year lease
agreement. The lease will run out in January 1, 2002. Currently, the lease
payment is $1,350 a month. The terms of lease agreement does not call for any
increase in the payments. Mr. Skwara and Mrs. Glokoska pass the lease cost
direct to the Company with out any compensation.
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The Company has signed a Use of Facilities Agreement with San Diego Mesa
College. The agreement provides a "pre game rental charge" of $1450 per game and
seasonal cost of $3,000 per year to be paid on or before December 15 of each
year. The terms of contract are for one year and renewable by mutual consent of
the parties.
It is the management's belief that all facilities are adequately insured against
damage and loss.
ITEM 3: LEGAL PROCEEDINGS
The Company is not currently subject to any legal proceeding. Further, the
Company is not aware of any contemplated action or proceeding by any
governmental authority to which Company is a participant.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
PART II
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Currently, the shares of the Company are not listed on any national exchange
including the "Pink Sheets" or on the over-the-counter Bulletin Board.
Recent Sales of Unregistered Securities
From October 13, 1997 to January 31, 1999 the Company offered and privately sold
458,300 shares of Common Stock at $1.00 per share for a total of $458,300. The
offering was underwritten by Lloyd Wade Securities, 5005 LBJ Freeway, Suite 360,
Dallas, TX. Attached to this offering were warrants, 183,320 of which were
issued. The warrants are convertible into common stock at an exercise price of
$1.25/share. 72,400 of the warrants were exercised in 1998 and 13,000 were
exercised in 1999. 97,920 remain outstanding. These warrants will expire between
October 2001 and June 2003. Commissions of 15% were paid on 43,000 shares sold
by brokers at Lloyd Wade Securities. No general forms of advertising were used
in connection with the issuance of the shares. This issuance was exempt from the
registration provisions of the Act by virtue of Section 4(2) and Regulation D as
promulgated thereunder.
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From February 3, 1999 to December 31, 1999, the Company offered and privately
sold 183,320 shares of Common Stock at $1.00 per share for a total of $183,320.
The Company may sell up to a total of 1,000,000 shares under this offering
before it is closed. No underwriters were used in connection with the issuance
of these shares. No general forms of advertising were used in connection with
the issuance of the shares. This issuance is exempt from the registration
provisions of the Act by virtue of Section 4(2) and Regulation D as promulgated
thereunder.
The Company sold convertible debt securities in 1999, pursuant to two series of
promissory notes. A total of $733,950 was sold under the Series 99-1 Promissory
Note. As of December 31, 1999, $404,850 has been converted into common stock at
1 share per dollar held in the notes. $329,100 of said notes remain outstanding.
The Series 99-1 Promissory Notes matured on December 31, 1999. These issuances
are exempt from the registration provision of the Act by virtue of Section 4(2)
and Regulation D as promulgated thereunder.
The Company issued 1,319,700 shares of restricted common stock in 1998 and 1,500
shares of restricted common stock in 1999 as compensation to employees. The
shares were issued in reliance upon the exemption contained in Section 4(2)
under the Securities Act.
The Company issued 260,000 shares of restricted common stock in 1997, 150,000
shares of restricted common stock in 1998 and 268,935 shares of restricted
common stock in 1999 in exchange for consulting services provided to the
Company. The shares were issued in reliance upon the exemption contained in
Section 4(2) under the Securities Act.
The Company issued 1,078,300 options to purchase shares of common stock in 1999
as additional compensation and bonus to employees and consultants, including
some officers and directors of the Company (See "Item 10: Executive
Compensation" below). These options are exercisable at $0.05/share and will
expire in April of 2004. The shares were issued in reliance upon the exemption
contained in Section 4(2) under the Securities Act.
The Company sold 150,000 shares of restricted common stock in September, 1997 in
exchange for an existing A-league soccer franchise. This is the franchise under
which the team currently operations. (See "Item I: Description of Business") The
shares were issued in reliance upon the exemption contained in Section 4(2)
under the Securities Act.
The Company sold 650,000 shares of restricted common stock in 1998 and 295,000
shares of restricted common stock in 1999 in exchange for securities of other
companies. These securities were immediately sold to produce a cash flow to the
Company. The shares were issued in reliance upon the exemption contained in
Section 4(2) under the Securities Act.
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ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company operates a top-ranked team in Soccer's A-League (Division II). The
Company's gate receipts for 1999 decreased by 28.7 % from 1998. Operating costs
of the Company increased by 69% from 1998 to 1999. It is important to mention
that the revenues in the 1998 season were not enough to cover expenses and the
Company experienced significant losses. This was also true for 1999.
The Company is working to build brand recognition of the San Diego Flash in the
community. The Company's efforts to build its fan base include direct marketing
to the youth soccer market, general advertising, and media relations with all
local sports media outlets. Another effort to improve visibility and recognition
of the team involves awarding complementary tickets to potential fans that have
yet to attend a game. The team plans to reduce the number of complimentary
tickets in the coming year, as the visibility and recognition of the brand has
increased.
The Company sold convertible debt securities in 1999, pursuant to two series of
promissory notes. A total of $719,950 was sold under the Series 99-1 Promissory
Note. As of December 31, 1999, $390,850 has been converted into common stock at
1 share per dollar held in the notes. $329,000 is said notes remain outstanding.
The Series 99-1 Promissory Notes matured on December 31, 1999. A total of
$37,900 was sold under the Series 99-2 Promissory Note. These notes are
convertible into common stock at 1 share per dollar held in the notes. As of
December 31, 1999, none of the Series 99-2 Promissory Notes had been converted.
The Company, as part of its regular business and promotion of its San Diego
Flash brand name, currently sells branded merchandise at its home games. Through
the 1998 season and the 1999 season, the Company's merchandise was produced and
sold through a local vendor. This contract has recently been terminated, and the
merchandise operation has been brought in-house. The Company believes that this
change will allow it to make a greater margin on the sales of its merchandise,
as well as allowing greater control of price points, quality, and product mix.
The Company plans to expand its merchandise operation to include sales at
kiosk-based locations in selected malls in San Diego County. The plan is for
these kiosk outlets to sell Flash branded merchandise, as well as general soccer
merchandise and equipment. The Company plans to place kiosks in 3 major malls in
the greater San Diego area. The Company believes that these kiosks will prove to
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be revenue-producers, and also feels that they will serve an important marketing
function in increasing community awareness of the San Diego Flash. Uncertainties
in being able to accomplish this merchandising plan include possible
non-availability of space at local malls, potential lack of public acceptance of
the products sold, and potential competition from other outlets.
The Company's contract with a local food and beverage concessionaire has also
been terminated. The Company plans to contract with a professional caterer to
service the food and beverage needs of its fans, and believes that its revenue
from food and beverage will increase from this change.
The Company has increased its ticket sales distribution effort by hiring a
ticket sales contractor, Sportix.net. The contract calls for Sportix.net to
provide telemarketing and sales services to the Company in return for a
commission on each ticket sold. The Company believes that this contract will
increase overall ticket sales.
Seasonality
Since the Company's team plays from April to September each year, the business
operations are highly seasonal. With the major sources of revenue for the
Company coming from team operations, this seasonality is material.
ITEM 7: FINANCIAL STATEMENTS
(Begins on Page 16 Below)
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINACIAL MATTERS
Not Applicable
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A).
The following persons represent the Board of Directors and Officers of the
Company as of December 31, 1999:
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Name Age Title
---- --- -----
Yan K. Skwara 34 Director, President, CEO
Sam Kaloustian 30 Chariman, VP, General
Trisha Bollman 29 Director, Secretary
Chris Payne 32 Director, COO
Steven R. Peacock 52 Director
Directors are elected on an annual basis. The terms for each director will
expire at the next annual meeting of shareholders or at such time as a successor
is duly elected.
Yan K. Skwara. Mr. Skwara is founder, and has been President and a
Director of the Company since its inception; he was elected CEO of the Company
in September, 1998. For the past 10 years, Mr. Skwara has been employed as an
investment banker, holding various securities licenses through several
investment banking firms. Mr. Skwara is currently employed full-time with the
Company and brings his prior experience in the investment banking world to the
Company. Mr. Skwara has significant experience in management, product support
and overall knowledge in the investor relations arena. Mr. Skwara also maintains
a significant background in the soccer industry. He is a student of the game and
has been actively playing the game for 17 years and began his professional
career in soccer at age nineteen where he signed his first professional contract
with a club in Germany. Prior to playing overseas, Mr. Skwara studied and played
at California State University of Los Angeles. He played in Germany for two
years before coming back to the states to finish his career in Los Angeles.
After a professional career, Mr. Skwara acquired his North Texas Soccer `D'
Coaching License and also was founder and partner of a semi-pro franchise in
Dallas, Texas in 1994.
Sarkis Kaloustian. Mr. Kaloustian has previously served as Chairman of the
Board of Directors, and was elected Vice President and General Manager in
September. Prior to that date, Mr. Kaloustian served as CEO of the Company. Mr.
Kaloustian is an attorney licensed to practice law in the State of California
and has been a legal practitioner in a civil law firm predominantly engaged in
business and corporate transaction and litigation matters for the past four
years. Mr. Kaloustian, aside from his duties as Vice President and General
Manager, is also the Company's in house corporate counsel. Prior to practicing
law as a civil trial attorney and joining Company's management team, Mr.
Kaloustian interned for the United States Attorneys' Office, the District
Attorney's Office as well as the San Diego Attorney's Office. He is currently a
volunteer and vice-president for the San Diego County Soccer League; a San Diego
based Premier amateur adult league. Mr. Kaloustian has also served as a
volunteer member for the City of San Diego Recreation Department Sports Council
for Mira Mesa from 1995 until present. Mr. Kaloustian has extensive experience
in corporate legal and management matters, as well as over twelve years of
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experience in coordinating and operating soccer clubs and leagues. Mr.
Kaloustian has played soccer for over 21 years and has played semi-professional
soccer for club teams in both Los Angeles and Glendale, California. He has also
been coaching collegiate level players in San Diego for the past seven years.
Trisha Bollman. Ms. Bollman has been Corporate Secretary and Director of
Investor Relations since the Company's inception. Prior to joining the Company,
she was employed from 1989 to 1992 as an Insurance Underwriter and from 1992 to
present has worked in several Investment Banking Firms in the corporate finance
division as well as head of operations. She is a licensed Series 11 Assistant
Representative registered with the National Association of Securities Dealers.
Utilizing her skills in investment banking, Ms. Bollman assists in the Company's
investor relations and marketing division.
Christopher M Payne. Since April 1999, Mr. Payne has been a Director and
Chief Operating Officer of the Company. Between May 1998 and April 1999, Mr.
Payne was the Chief Operating Officer of a startup sportswear Company where he
developed relationships with third-party vendors and manufacturers. From
December 1994 until April 1998, Mr. Payne was Vice President of a gaming
development Company which financed and built hotels and casinos in the
Philippines and Costa Rica. He is experienced in both the creation and
evaluation of business plans and private placement memoranda. He also has
extensive construction and project management experience and is a valuable asset
in the scheduling of tight deadlines and complex projects. Mr. Payne holds a
Bachelor of Arts in Psychology from the University of California, San Diego that
he received in 1992. Mr. Payne is a native of England but is currently a
resident of San Diego.
Mr. Steven R. Peacock, is President and founder of Peacock Financial
Corporation which he has worked for for 22 years. He has extensive experience in
real estate development, property management and construction. His vision,
creative mind, persistence and direction have positioned Peacock Financial
Corporation to take advantage of the upturn in the real estate marketplace, but
also to increase shareholder value through the creation or acquisition of
subsidiaries strategically positioned within their own industries.
Except as noted above, during the past five years, none of the Company's
executive officers or directors have been convicted in a criminal proceeding
(other than traffic violations and other minor offenses) or been parties to any
bankruptcy, insolvency or similar proceedings, individually, or as an executive
officer of general partner of a business in bankruptcy, insolvency or similar
proceedings.
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Option/SAR Grants in Last Fiscal Year
The following table sets forth certain information concerning individual grants
of stock options to executive officers of the Company, during the fiscal year
ending December 31, 1999:
Name Number of Securities Percent of Exercise
---- -------------------- ---------- --------
Yan K. Skwara 150,000 13.9 $.05
Sarkis Kaloustian 50,000 4.6 $.05
Trisha Bollman 50,000 4.6 $.05
Chris Payne 130,000 12.1 $.05
Section 16(A) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, the Company's directors, its
executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Commission and the Company. Specific due dates for these reports have been
established and the Company is required to disclose any failure to file, or late
filing, of such reports. Based solely on the Company's review of Forms 3, 4 and
5 and amendments thereto furnished to the Company and written representations
with respect to filing of such Forms, the Company is aware that no Forms have
been filed timely to date. Initial Form 3's are being filed concurrently
herewith by mailing. The Company knows of no Form 4 filings required by any
officer, director or 10% shareholder at this time.
ITEM 10: EXECUTIVE COMPENSATION
The following table sets forth information concerning cash and non-cash
compensation paid or accrued on behalf of the Company's Chief Executive Officer,
Yan K. Skwara, for the fiscal years ended December 31, 1998 and December 31,
1999. No other person had a total salary and bonus in excess of $100,000 for the
fiscal years ended December 31, 1998 and 1999.
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<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term Compensation
- -----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -----------------------------------------------------------------------------------------------------------------
Restricted
Name and Other Stock LTIP All
Principal Annual Awards(s) Payouts Other
Position Year Salary($) Bonus Compensation ($) Options ($) Compensation
- -------- ---- --------- ----- ------------ --- ------- --- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Yan K. 1998 $60,000* N/a N/a N/a 150,000 N/a N/a
Swara, CEO
1999 $60,000* N/a N/a N/a 150,000 N/a N/a
</TABLE>
* Indicated salary is an amount currently being accrued by Company.
Compensation of Directors
The Directors of the Company are not paid any fee for their services in
such capacity.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Set forth below is the direct ownership of the Registrants Common voting stock
by Directors, Officers or any owner of 5% or more of the Common Stock of
Registrant as of December 31, 1999:
<TABLE>
<CAPTION>
Title of Name and Address Amount of and Nature
Class of Beneficial Owner of the Beneficial Ownership Percent of Class
----- ------------------- --------------------------- ----------------
<S> <C> <C> <C>
Common Trisha Bollman 571,428 12.8 %
Stock 1560 Chalcedony #H
San Diego, Ca 92109
Common Sarkis Kaloustian 571,428 12.8 %
Stock 1246 Roslyn Lane
La Jolla, Ca 92037
Common Yan Skwara 571,428 12.8 %
Stock 1680 Chalcedony #H
San Diego, Ca. 92109
Common Altomare Trust 237,000 5.3 %
Stock 3883 Ruffin Road
San Diego, Ca 92123
Common Lloyd Wade Securities 116,000 2.6 %
Stock 5005 LBJ Freeway
Dallas, TX 75246
Common Peacock Financial Corporation 200,000 4.5 %
Stock 2531 San Jacinto Ave
San Jacinto, Ca 92583
</TABLE>
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ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
All of the Company's officers and directors have been in the past and may
continue to be active in business with other companies and on their own behalf.
All officers and directors have retained the right to conduct their own
independent business interests; these activities may give rise to conflicts of
interest with the Company. The officers and directors have agreed that if a
business opportunity relating to the Company's business comes to the attention
of its officers or directors, such opportunity will be made available to the
Company and the Company shall have the right of first refusal with regard to
such opportunity, after full disclosure of the opportunity to the Company. If an
officer or director owes a fiduciary duty to another entity similar to the duty
owed to the Company, it is possible that the conflict may be impossible to
resolve in a manner that is equitable to both entities.
A majority of disinterested directors may reject a corporate opportunity for
various reasons. If the Company rejects such opportunity, then any director or
officer may avail themselves of such opportunity. In addition, if an opportunity
is presented to the Company, and one or more of the Company's officers or
directors has an outside interest in the opportunity, the opportunity will be
reviewed at a meeting of the Board of Directors and the interested director(s)
will not vote on issues relating to such opportunity. To the best ability and in
the best judgment of the officers and directors of the Company, any conflicts of
interest between the Company and the personal interest of the officers and
directors of the Company will be resolved in a fair manner which will protect
the interests of the Company.
ITEM 13: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Articles of Incorporation (1)
3.2 By-laws (1)
4.1 Series 99-1 Promissory Note (1)
4.2 Form of Option Agreement
10.1 Lease agreement by and between Yan K. Skwara & Marta
Glodkoska & Donn Lowrey and Russell Thurman, dated
January 11, 1999 (1)
10.2 Stadium agreement by and between San Diego Soccer
Development Corporation and San Diego Mesa College, dated
November 2, 1998 (1)
27 Financial Data Schedule
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- ---------------------------------
(1) The Company hereby incorporates the footnoted Exhibit by reference in
accordance with Rule 12b-32, as such Exhibit was originally filed as an
Exhibit to the Company's Form 10SB registration statement filed October
29, 1999.
(b) Reports on Form 8-K
NONE.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SAN DIEGO SOCCER DEVELOPMENT CORPORATION
By: /s/ Yan K. Skwara
- ----------------------
Yan K. Skwara, Chief Executive Officer
Date: March 31, 2000
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Yan K. Skwara Chief Executive Officer March 31, 2000
President
/s/ Steve Peacock Chairman of the Board March 31, 2000
/s/ John Upton Director March 31, 2000
/s/ Sarkis Kaloustian Director March 31, 2000
/s/ Chris Payne Director March 31, 2000
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San Diego Soccer Development Corporation
Financial Statements
December 31, 1998
And
December 31, 1999
Index to Financial Statements.
Page
Report of independent auditor................................................ 17
Balance Sheet as of December 31, 1999........................................ 18
Statements of Operations..................................................... 19
Statements of Shareholders' (Deficit)........................................ 20
Statements of Cash Flows..................................................... 20
Notes to Financial Statements................................................ 22
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Independent Auditors' Report
To the Board of Directors and Stockholders
San Diego Soccer Development Corporation
San Diego, California
We have audited the accompanying balance sheets of San Diego Soccer Development
Corporation as of December 31, 1999 and 1998, and the related statements of
operations, stockholders' deficit and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits of the financial statements provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of San Diego Soccer Development
Corporation as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
financial statements, the Company has sustained recurring losses and negative
cash flows since its inception in 1997 and it had a working capital deficiency
and was in default under the terms of its convertible promissory notes at
January 1, 2000. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 12 to the financial statements. The financial
statements do not include any adjustments relating to the recoverability and
classification of reported asset amounts and classification of liabilities that
might result from the outcome of this uncertainty.
/s/ Logan Throop & Co., LLP
- ---------------------------
San Diego, California
February 28, 2000
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SAN DIEGO SOCCER DEVELOPMENT CORPORATION
DBA SAN DIEGO FLASH
BALANCE SHEETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------------
<S> <C> <C>
Assets
Current assets
Cash $ 50,253 $ 298
Shareholder advances - 100
Trading securities - 22,725
Total current assets 50,253 23,123
Other assets
Deposit 1,350 -
Property and equipment, net 18,119 9,695
Soccer franchise, net 166,800 143,000
------- -------
Total other assets 186,269 152,695
------- -------
Total assets $ 236,522 $ 175,818
========= =========
- ----------------------------------------------------------------------------------------
Liabilities and stockholders' equity
Current liabilities
Bank overdraft $ 1,065 $ 7,871
Accounts payable 102,005 40,138
Accrued liabilities 42,483 177,912
Accrued payroll and payroll taxes 212,764 154,236
Loans from affiliated company 2,273 -
Shareholder loans - 45,090
Note payable 15,646 16,979
Convertible promissory Notes 329,100 -
Deferred revenue 32,490 18,066
-------- -------
Total current liabilities 737,826 460,292
------- -------
Stockholders' equity
Common stock, no par value,
20,000,000 shares authorized, 5,284,369 and 3,801,484 shares issued
and outstanding at December 31, 1999
and 1998, respectively. 2,000,298 852,703
Common stock subscribed, 12,000 shares 12,000 -
Stock subscriptions receivable (48,000) (172,500)
Additional paid in capital 941,363 88,460
Accumulated deficit (3,406,965) (1,053,137)
Total stockholders' equity (501,304) (284,474)
------- --------
Total liabilities and stockholders'
Equity $ 236,522 $175,818
=========== =========
</TABLE>
18
<PAGE>
SAN DIEGO SOCCER DEVELOPMENT CORPORATION
DBA SAN DIEGO FLASH
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1999 1998
----------- -----------------
<S> <C> <C>
Revenue:
Ticket sales $ 58,789 $ 82,534
Corporate sponsorships 183,829 199,489
Other revenue 10,224 10,361
----- ------
Total revenue 252,842 292,384
------- -------
Operating expenses
General and administrative 1,346,795 504,738
Game and player expenses 641,575 458,418
Advertising and promotion 630,097 311,124
------- -------
Total operating expenses 2,365,625 1,274,280
--------- ---------
Loss from operations (2,365,625) (981,896)
Other income (loss)
Gain (loss) on trading securities 36,067 (25,136)
Loss on abandoned equipment (6,400) -
Interest expense (17,870) (4,832)
Total other income (loss) 11,797 (29,968)
------
Net loss $(2,353,828) $ (1,011,864)
========== ============
Loss per share $ (0.50) $ (0.35)
Average number of shares
outstanding 4,692,432 2,906,987
</TABLE>
19
<PAGE>
SAN DIEGO SOCCER DEVELOPMENT CORPORATION
DBA SAN DIEGO FLASH
STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common Stock Stock Total
-------------------- subscriptions Accumulated Stockholders'
Shares Amount receivable Deficit equity (deficit)
------ ------ ---------- ------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 2,352,284 $ 187,893 $ -- $ (41,273) $ 146,620
Issuance of stock and warrants for cash 354,300 354,300 -- -- 354,300
Issuance of stock for services 100,000 80,000 -- -- 80,000
Issuance of stock for trading securities 650,000 118,770 -- -- 118,770
Warrants exercised 72,400 36,200 -- -- 36,200
Stock subscriptions receivable 172,500 172,500 (172,500) -- --
Issuance of stock for syndication cost 100,000 -- -- -- --
Syndication costs paid -- (8,500) -- -- (8,500)
Net loss -- -- -- (1,011,864) (1,011,864)
------- --------- --------- ------- -------
Balance at December 31, 1998 3,801,484 941,162 (172,500) (1,053,137) (284,474)
========= ======= ======== ========== ========
- -----------------------------------------------------------------------------------------------------------------------
Issuance of stock and warrants for cash 16,000 16,000 -- -- 16,000
Issuance of stock for cash 148,300 148,300 -- -- 148,300
Warrants exercised 13,000 6,500 -- -- 6,500
Stock subscriptions payable -- -- 12,000 -- 12,000
Issuance of stock for services 273,600 273,600 -- -- 273,600
Stock subscription receivable satisfied
by receipt of services -- -- 110,500 -- 110,500
Issuance of stock to satisfy accrued
liabilities 194,000 155,200 -- -- 155,200
Issuance of stock for trading securities 295,000 78,345 -- -- 78,345
Payment stock subscription receivable -- -- 62,000 -- 62,000
Stock subscriptions receivable 48,000 48,000 (48,000) -- --
Issuance of stock for syndication cost 70,135 -- -- -- --
Issuance of stock for equipment 20,000 20,000 -- -- 20,000
Issuance of stock for converted notes 404,850 404,850 -- -- 404,850
Stock options issued -- 849,703 -- -- 849,703
Net loss -- -- -- (2,353,828) (2,353,828)
--------- --------- -------- ---------- ----------
Balance at December 31, 1999 5,284,369 2,941,661 (36,000) (3,406,965) (501,304)
========= ========= ======== ========== ========
</TABLE>
20
<PAGE>
SAN DIEGO SOCCER DEVELOPMENT CORPORATION
DBA SAN DIEGO FLASH
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1999 1998
----------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,353,828) $(1,011,864)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 11,376 8,020
(Gain) loss on trading securities (36,067) 25,136
Loss on abandoned fixed assets 6,400 --
Stock issued for services 384,100 80,000
Stock options issued for services 671,718 --
Corporate sponsorship for trading securities -- 35,537
(Increase) decrease in deposits (1,350) --
Proceeds from sale of trading securities 137,137 106,558
Increase (decrease) accounts payable 61,867 42,504
Increase (decrease) bank overdraft (6,806) 7,871
Increase (decrease) accrued liabilities 246,284 302,036
Increase (decrease) deferred revenue 14,424 18,066
Net cash (used) by operating activities (864,745) (457,210)
-------- --------
Cash flows from investing activities:
Purchase of soccer franchise (20,000) --
Purchase of property and equipment -- (5,716)
------- ------
Net cash provided (used) by investing activities (20,000) (5,716)
------- -------
Cash flows from financing activities:
Proceeds from sale of stock, net issuance costs 182,800 382,000
Proceeds from stock subscription receivable 62,000 --
Proceeds from promissory notes 733,950 --
Payment of notes payable (1,333) --
Payment of obligation for soccer franchise -- (30,000)
Proceeds from note payable -- 10,920
Proceeds from rlated party loans, net 2,273 --
Proceeds from shareholder loans, net (44,990) 32,541
Net cash provided by financing activities 934,700 395,461
------- -------
Net increase(decrease) in cash 49,955 (67,465)
Cash at beginning of period 298 67,763
------- ------
Cash at end of period $ 50,253 $ 298
=========== ===========
Supplemental disclosures:
Interest paid $ 6,277 $ --
Noncash financing and investing activities:
Stock issued in exchange for equipment $ 20,000 $ --
Stock issued in exchange for trading securities $ 78,345 $ 118,770
Stock subscription receivable $ 48,000 $ --
Stock issued for settlement of accrued liabilities $ 155,200 $ 172,500
Stock issued for syndication costs $ 70,135 $ 80,000
Stock issued for convertible promissory notes $ 404,850 $ --
Stock options for accrued liabilities $ 177,985 $ --
Soccer franchise financed $ 10,000 $ --
</TABLE>
21
<PAGE>
SAN DIEGO SOCCER DEVELOPMENT CORPORATION
DBS SAN DIEGO FLASH
NOTES TO FINANCIAL STATEMENTS
1. Organization and Operations
Organization
San Diego Soccer Development Corporation, (the "Company"), was
incorporated on August 22, 1997 in the state of California. The Company is
engaged in the management and marketing of a professional soccer team. The
majority of the Company's revenues are currently generated from corporate
sponsorships and ticket sales. The Company exited the development stage
and held its first game during 1998.
2. Summary of Significant Accounting Policies
Trading Securities
Equity securities are classified as Trading Securities and are
available-for-sale to support current operations. These securities are
stated at estimated fair value based upon market quotes. Unrealized gains
and losses are recognized as income or loss during the current period.
Realized gains and losses are recognized using the weighted average cost
method.
Property and Equipment
Property and equipment are stated at cost and depreciated over the
estimated useful lives of the assets (one to five years) using the
straight-line method.
Soccer Franchise
The membership in the United Systems of Independent Soccer Leagues (USISL)
represents the original purchase price of the franchise recorded at cost
and is amortized using the straight line method over a 25 year period.
Each franchise is continuously evaluated by management to determine if its
carrying value will be realized based upon the estimated discounted cash
flow expected from the franchise. Additional amortization will be
recognized in a period a decline in value is identified.
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Revenue and Expense Recognition
Revenue from ticket sales is recognized at the time the home game, to
which such proceeds relate, is played. Accordingly, advance ticket sales
for the next season are recorded as deferred revenues and recognized
ratably during the applicable season. Revenue from advertising and
promotions is recognized ratably during the season the promotion relates
to is played. Professional league team expenses, principally player
compensation, are recorded as expense over the entire Professional Soccer
League regular season. Administrative, general, advertising and
promotional expenses are charged to operations as incurred.
Income Taxes
Deferred income taxes are provided for the estimated tax effects of timing
differences between income for tax and financial reporting. A valuation
allowance is provided against deferred tax assets, where realization is
uncertain. The income tax provision or credit is the tax payable or
refundable for the period plus or minus the change during the period in
deferred tax assets and liabilities.
Temporary differences are differences between the tax basis of assets and
liabilities and their reported amounts in the financial statements that
will result in taxable or deductible amounts in future years. The
Company's temporary differences consist primarily of net operating losses
and depreciation.
Net Earnings Per Common Share
Net earnings (loss) per common share are based on the weighted average
number of common shares outstanding during each period. The calculation of
diluted earnings (loss) per common share is similar to that of basic
earnings (loss) per common share, except that the numerator and
denominator are adjusted to reflect the decrease in earnings per share or
the increase in loss per share that could occur if securities or other
contracts to issue common stock, such as stock options and convertible
notes, were exercised or converted into common stock that then shared in
the Company's earnings or loss.
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Net Earnings Per Common Share (Continued)
The Company was required to compute primary and diluted loss per share
amounts for 1999 and 1998 pursuant to SFAS 128. Since the Company had
losses applicable to common stock in 1999 and 1998, the assumed effects of
the exercise of outstanding stock options and conversion of notes were
anti-dilutive and, accordingly, dilutive per share amounts have not been
presented in the accompanying statements of operations.
Stock Options
The Company has granted options to purchase common stock to various
individuals and officers of the Company in return for various services
rendered to the Company. Under the Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("SFAS 123"),
the Company is recognizing the compensation cost using the estimated fair
value method. Under the fair value method, total compensation cost is the
estimated fair value of the stock options at the grant date, less any
amount paid by the employee for the stock options.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. Trading Securities
Following is a summary of trading securities:
December 31, 1999 1998
-----------------------------------------------------------
Aggregate cost $ 0 $ 37,819
Gross unrealized holding loss (0) (15.094)
-- -------
Aggregate fair value $ 0 $ 22,725
===== ========
4. Property and equipment
Depreciation expense for the years ended December 31, 1999 and 1998 were
$5,176 and $2,050, respectively. Property and equipment consist of the
following:
December 31, 1999 1998
----------------------------------------------------------------------
Soccer equipment $ 6,000 $ 6,000
Computers and software 17,716 5,715
------ -----
23,716 11,715
Less accumulated depreciation (5,597) (2,020)
------ ------
$18,119 $ 9,695
======= =======
5. Soccer Franchises
During 1997, the Company purchased a soccer franchise to operate the San
Diego Flash in San Diego, California. The Company paid cash and common
stock for the franchise and the value of the stock portion was determined
based on the cash price of a 1998 A-League franchise, which was the first
season the Company could participate in the league.
During 1999, the Company purchased a D-3 Pro League franchise for $30,000.
The new franchise is playing in Riverside and will serve as a farm team
for the San Diego Flash. The franchises have been amortized as follows:
December 31, 1999 1998
------------------------------------------------------------
Soccer Franchises $ 180,000 $ 150,000
Accumulated amoritization (13,200) (7,000)
------- ------
$ 166,800 $ 143,000
========= =========
<PAGE>
6. Related Party Transactions
Stockholder Loans
Certain stockholders of the Company paid game and player expenses on
behalf of the Company. As of December 31, 1998 the amount owed was
included in the ending balance payable to stockholders. The balances
payable to stockholders were due on demand and accrued interest at 8%.
Accrued interest was included in the ending balance. The balance was
completely paid off during 1999.
Loans from Affiliated Company
During 1999, certain officers of the Company formed another company to
acquire and operate a Las Vegas soccer franchise. The Company received
loans from that company and have accrued interest at 10%. The loan is due
on demand.
Stock for Trading Securities
The Company traded shares of its stock for stock of a publicly trading
company's stock at a highly discounted rate in order to get cash for
operations. The President of the publicly traded company is also a major
shareholder of the Company. During 1999 this shareholder also became a
director of the Company. (See note 10)
7. Note Payable
The Company has a note payable to an individual bearing interest at 10%.
The note is due on demand.
<PAGE>
8. Convertible Promissory Notes
In order to obtain "bridge" funds while a public offering is being
prepared, the Company issued convertible notes with a face amount totaling
$733,950 during 1999. The notes bear interest at 8% per annum and are
convertible into common stock at $1.00 per share at the option of the
holder. The notes matured on December 31, 1999. During 1999, the
noteholders converted $404,850 of convertible notes into 404,850 shares of
common stock. The remaining balance of $329,100 is in default as of
January 1, 2000.
9. Leasing Activities
The Company leases its office facilities under an operating lease that
expires on January 16, 2002. The base rent under the lease is $1,350 per
month. The Company also leased a soccer field from a local community
college on an annual lease that expired at the end of 1999. The base rent
was $1,450 per home game. The Company has one other operating lease for
equipment. Operating lease expense for 1999 and 1998 was $59,247 and
$40,103 respectively.
The future annual minimum lease payments under operating leases at
December 31, 1999 are as follows:
Year Ending December 31,
------------------------------------------------------------------------
2000 $ 17,628
2001 16,914
------
Total Minimum Lease Payments $ 34,542
========
<PAGE>
10. Stockholders' Deficit
Common Stock
During 1997, the Company prepared a private placement memorandum offering
1,000,000 Common Shares (the Offering). The 1,000,000 common shares were
offered at a price of $5.00 per unit. Each unit included 5 common shares
and entitled the investor to 2 warrants to purchase additional shares of
common stock for $.50 per share. The price per unit was allocated $4.00 to
the shares and $1.00 to the warrants. Under the Offering the Company sold
458,300 common shares and raised $425,050 net of syndication costs.
A second private placement memorandum dated February 3, 1999 (Second
Offering) offered 1,000,000 common shares at a price of $1.00 per share.
Under the Second Offering, the Company raised $148,300.
During the last quarter of 1998 the Company traded 650,000 shares of its
stock for stock of a publicly trading company's stock at a highly
discounted rate in order to get cash for operations. Most of the stock
received in the trade was liquidated, however, stock valued at $22,725 was
still held in trading securities at December 31, 1998. The President of
the publicly traded company is also a major shareholder of the Company.
During 1999 this shareholder also became a director of the Company.
During 1999 the Company traded an additional 200,000 shares with the same
publicly traded company, again at a highly discounted rate, in order to
get cash for operations. The Company further traded 95,000 shares with
another publicly traded company for shares valued at $38,792 on the date
of trade. All of the trading securities were liquidated by the end of
1999.
Warrants
Warrants for 183,320 shares were issued along with the first private
placement. Warrants for 85,400 were exercised in total during 1999 and
1998, leaving 97,920 outstanding at December 31, 1999. The warrants expire
in 2001.
<PAGE>
10. Stockholders' Deficit (Continued)
Convertible promissory notes
At December 31, 1999 the Company had convertible promissory notes
outstanding which were convertible into 329,100 shares of common stock.
(See note 8)
Stock Options
The Company had the following common stock option transactions during the
year ended December 31, 1999:
Weighted Contractual life
Shares or price Average of Options
per share Exercise Price Outstanding
-------------------------------------------
Options outstanding at
January 1, 1999 0 0 0
Options granted 985,300 $ .05 3.67 years
Options granted 100,000 $1.25 3.67 years
Options exercised 0 0 0
Options forfeited or
expired 0 0 0
---------------------------------------------------------------------
Options outstanding at
December 31, 1999 1,085,300 $ .16 3.67 years
---------------------------------------------------------------------
Options price range at
end of year $.05 through $1.25
---------------------------------------------------------------------
Exercisable at end of
year 1,085,300
---------------------------------------------------------------------
10. Stockholders' Deficit (Continued)
Stock Options (Continued)
The fair value of the stock options are estimated on the date of grant
using the Black-Scholes option-pricing model. The estimated fair value has
been calculated ignoring the volatility factor which is allowed for a
non-public company. The following assumptions were used to estimate the
fair values of options:
Risk free interest rate 5.5%
Expected life 4 years
Expected dividend yield 0%
The weighted average fair value at the grant date of the options awarded
during the year was $0.78.
11. Income Taxes
At December 31, 1999, the Company had federal and state tax net operating
loss carryforwards of approximately $3,156,000. The federal and state tax
loss carryforwards will expire at various dates through year 2019 unless
previously utilized and may be significantly limited in use as a result of
changes in ownership of the Company.
Significant components of the Company's deferred tax assets are shown
below. A valuation allowance of $1,041,000 has been recognized to offset
the deferred tax assets as realization of such assets is uncertain. The
valuation allowance increased during 1999 and 1998 by $728,000 and
$299,000, respectively.
December 31, 1999 1998
-----------------------------------------------------------------
Deferred tax assets computed at 34%
Net operating loss $1,041,000 $ 274,000
Accrued bonus compensation 0 39,000
- ------
Net deferred tax assets 1,041,000 313,000
--------- -------
Valuation allowance for deferred (1,041,000) (313,000)
---------- --------
Total deferred tax assets $ 0 $ 0
--------------------------------------------------------------
12. Contingencies - Going Concern
As reported in the financial statements, the Company has an accumulated
deficit of approximately $3,407,000 at December 31, 1999 and has incurred
a loss from operations for the year then ended. In addition, the Company
was not able to pay their promissory notes when the notes matured on
December 31, 1999. The Company's shareholders' deficit was $501,304 and
its current liabilities exceeded its current assets by $687,573.
These factors create uncertainty about the Company's ability to continue as
a going concern. The ability of the Company to continue as a going concern
is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable. If the Company is unable to obtain
adequate capital it could be forced to cease operations.
In order to continue as a going concern, develop and grow its game
attendance, revenues and achieve a profitable level of operations, the
Company will need, among other things, additional capital resources.
Management's plans to obtain such resources for the Company include (1)
raising additional capital through sales of common stock, the proceeds of
which would be used to build soccer stadiums in both San Diego and
Riverside County, hiring of administrative, sales and marketing personnel;
(2) continuing to use stock options to pay for employee compensation and
marketing services; (3) converting promissory notes into common stock; (4)
expanding the revenue sources from corporate sponsors, television and radio
advertising, concessions, merchandise sales, soccer camps, concerts and
other stadium events. In addition, management is continually seeking to
improve the operations and grow the business through a variety of venues.
However, Management cannot provide any assurances that the Company will be
successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon
its ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain
profitable operations. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to
continue as a going concern.
13.Subsequent Events
Common Stock (unaudited)
As of March 1, 2000 the Company has issued 12,000 common shares for
marketing services and 2,000 shares for bonus compensation pertaining to
the year 2000.
Convertible Promissory Notes (unaudited)
In order to obtain bridge funds while in the process of completing a
formal registration with the Security Exchange Commission, the Company has
issued convertible notes with a face amount totaling $54,900 as of March
1, 2000. The notes bear interest at 8% per annum and are convertible into
common stock at $1.00 per share at the option of the holder. The notes
mature on July 1, 2000.
Merger (unaudited)
During December 1999 the Company entered into negotiations to merge with
Roller Coaster, Inc. (a Nevada Corporation). Roller Coaster, Inc. is a
public shell with no activity other than inception in December 1995 and
a 1:10 stock split in October 1999. The merger was consummated in the
month of March 2000.
According to the merger agreement the surviving corporation will be named
San Diego Soccer Development Corporation and will be a Nevada Corporation.
Shares will be exchanged 1:1 for the public shell's shares. The merger
will result in approximately 7,784,000 shares outstanding (2,500,000
shares pertaining to the former Roller Coaster, Inc.) Shares authorized
will be 100,000,000 common stock at $.001 par value and 50,000,000
preferred shares at $.001 par value. In connection with the merger, the
Company incurred $200,000 in consulting fees on the merger. The merger is
expected to be accounted for as a pooling-of-interests.
Form of Stock Option to Purchase Common Stock
of
San Diego Soccer Development Corporation,
A California Corporation
No. SO - _______________ Stock Option to Purchase ___________
Shares of Common Stock (subject to
adjustment)
THIS STOCK OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE STOCK OPTION UNDER SUCH ACT AND APPLICABLE LAWS OR
SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
This certifies that, for value received, ______________________, or
registered assigns ("Holder") is entitled, subject to the terms set forth below,
to purchase San Diego Soccer Development Corporation, a California corporation
(the "COMPANY"), ________________ shares of the Common Stock of the COMPANY, as
constituted on the date hereof (the "Stock Option Issue Date"), upon surrender
hereof, at the principal office of the COMPANY referred to below, with the
subscription form attached hereto duly executed, and simultaneous payment
therefor in lawful money of the United States or otherwise as hereinafter
provided, at the Exercise Price as set forth in Section 2 below. The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as provided below. The term "Stock Option" as used herein shall
include this Option, which is one of a series of stock options issued to
employees and consultants of the COMPANY for the Common Stock of COMPANY, and
any stock options delivered in substitution or exchange therefor as provided
herein.
1. Term of Stock Option.
(a) Subject to the terms and conditions set forth herein, this Stock
Option shall be exercisable, in whole or in part, during the term commencing on
the Stock Option Issue Date and ending on or before 5:00 P.M. Pacific time on
the later of (i) August 25, 2004, or (ii) within two (2) years after the initial
registration of the Company's Common Shares under the Securities Act of 1933
("Securities Act") and applicable state securities laws, whichever shall last
occur.
(b) Notwithstanding anything herein to the contrary, if the expiration
date of this Stock Option as determined pursuant to Section 1(a) is after August
25, 2004, COMPANY shall, once said expiration date has been calculated, give
Holder at least ninety (90) days prior written notice of such expiration date,
and this Stock Option may be exercised on or before the ninety-first day
following the effective date of such notice, or such later date as otherwise
provided in Section 1(a).
(c) Notwithstanding anything herein to the contrary, if this Stock Option
would otherwise expire on a Saturday, Sunday or legal bank holiday, this Stock
Option may nevertheless be exercised on the second business day next following
such Saturday, Sunday or legal bank holiday.
2. Exercise Price. The Exercise Price at which this Stock Option may be
exercised shall be $0.05 per share of Common Stock, as adjusted from time to
time pursuant to Section 11 hereof.
3. Exercise of Stock Option.
(a) The purchase rights represented by this Stock Option are exercisable
by the Holder in whole or in part, at any time, or from time to time, during the
term hereof as described in Section 1 above, by the surrender of this Stock
Option and the Notice of Exercise annexed hereto duly completed and executed on
behalf of the Holder, at the office of the COMPANY (or such other office or
agency of the COMPANY as it may designate by notice in writing to the Holder at
the address of the Holder appearing on the books of the COMPANY), upon payment
(i) in cash or by check acceptable to the COMPANY, (ii) by cancellation by the
Holder of indebtedness or other obligations of the COMPANY to the Holder, (iii)
shares of the COMPANY's common stock duly endorsed over to the COMPANY (which
shares shall be valued at the Fair Market Value (as defined below), (iv) written
direction to an authorized broker to sell the shares purchased pursuant to such
exercise immediately for the account of the Holder and to pay to the COMPANY an
amount equal to the aggregate Exercise Price with respect to the shares so
purchased, or (v) by a combination of the foregoing methods of payment which
together amount to payment of the full Exercise Price of the shares so
purchased.
(b) This Stock Option shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the shares of Common Stock
issuable upon such exercise shall be treated for all purposes as the holder of
record of such shares as of the close of business on such date. As promptly as
practicable on or after such date and in any event within ten (10) days
thereafter, the COMPANY at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates for the
number of shares issuable upon such exercise. In the event that this Stock
Option is exercised in part, the COMPANY at its expense will execute and deliver
a new Stock Option of like tenor exercisable for the number of shares for which
this Stock Option may then be exercised.
(c) Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the Fair Market Value of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Stock Option for cash, the Holder may elect to receive shares
equal to the value (as determined below) of this Stock Option (or the portion
thereof being canceled) by surrender of this Stock Option at the principal
office of the COMPANY together with the properly endorsed Notice of Exercise and
notice of such election in which event the COMPANY shall issue to the Holder a
number of shares of Common Stock computed using the following formula:
X = Y(A-B); where
A
X= the number of shares of Common Stock to be issued
to the Holder
Y= the number of shares of Common Stock purchasable under
the Stock Option or, if only a portion of the Stock
Option is being exercised, the portion of the Stock
Option being canceled (at the date of such calculation)
A= the Fair Market Value of one share of the
COMPANY's Common Stock (at the date of such
calculation)
B= Exercise Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, Fair Market Value of one share of Common
Stock shall be determined by the COMPANY's Board of Directors in good faith,
which COMPANY agrees to have done forthwith on not less than ten (10) business
days prior notice; provided, however, that where there exists a public market
for the COMPANY's Common Stock at the time of such exercise, the fair market
value per share shall be the (i) the average of the closing bid and asked prices
of the Common Stock quoted in the Over-The-Counter Market Summary or (ii) the
last reported sale price of the Common Stock or the closing price quoted on the
NASDAQ National Market or on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western Edition of The Wall Street
Journal for the five (5) trading days prior to the date of determination of fair
market value. Notwithstanding the foregoing, in the event the Stock Option is
exercised in connection with the COMPANY's initial public offering of Common
Stock, the Fair Market Value per share shall be the per share offering price to
the public of the COMPANY's initial public offering.
4. Restriction on Resale of Converted Shares. Shares of Common Stock
acquired by the exercise of this Stock Option pursuant to Section 3, for which
there is a public market and which are otherwise saleable under Rule 144, shall
nevertheless be restricted as to any resale for a period of 5 1/2 years as
follows:
(i) During the 1st 6 months following the date that such shares of
Common Stock first become saleable, none of such shares may be
sold;
(ii) During the 2nd 6 months following the date that such shares of
Common Stock first become saleable, and every 6 month period
thereafter, no more than fifteen percent (15%) of such shares
may be sold.
5. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Stock Option. In
lieu of any fractional share to which the Holder would otherwise be entitled,
the COMPANY shall make a cash payment equal to the Exercise Price multiplied by
such fraction.
6. Replacement of Stock Option. On receipt of evidence reasonably
satisfactory to the COMPANY of the loss, theft, destruction or mutilation of
this Stock Option and, in the case of loss, theft or destruction, on delivery of
an indemnity agreement reasonably satisfactory in form and substance to the
COMPANY or, in the case of mutilation, on surrender and cancellation of this
Stock Option, the COMPANY at its expense shall execute and deliver, in lieu of
this Stock Option, a new stock option of like tenor and amount.
7. Rights of Stockholders. Subject to Sections 9 and 11 of this Stock
Option, the Holder shall not be entitled to vote or receive dividends or be
deemed the holder of Common Stock or any other securities of the COMPANY that
may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such, any
of the rights of a stockholder of the COMPANY or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Stock Option shall have
been exercised as provided herein.
8. Transfer of Stock Option.
(a) Stock Option Register. The COMPANY will maintain a register (the
"Stock Option Register") containing the names and addresses of the Holder or
Holders. Any Holder of this Stock Option or any portion thereof may change his
or her address as shown on the Stock Option Register by written notice to the
COMPANY requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be delivered or given by mail to such
Holder as shown on the Stock Option Register and at the address shown on the
Stock Option Register. Until this Stock Option is transferred on the Stock
Option Register of the COMPANY, the COMPANY may treat the Holder as shown on the
Stock Option Register as the absolute owner of this Stock Option for all
purposes, notwithstanding any notice to the contrary.
(b) Stock Option Agent. The COMPANY may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Stock Option Register
referred to in Section 7(a) above, issuing the Common Stock or other securities
then issuable upon the exercise of this Stock Option, exchanging this Stock
Option, replacing this Stock Option, or any or all of the foregoing. Thereafter,
any such registration, issuance, exchange, or replacement, as the case may be,
shall be made at the office of such agent.
(c) Transferability and Nonnegotiability of Stock Option. This Stock
Option may not be transferred or assigned in whole or in part without compliance
with all applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the COMPANY, if such are requested by
the COMPANY). Subject to the provisions of this Stock Option with respect to
compliance with the Securities Act of 1933, as amended (the "Act"), title to
this Stock Option may be transferred by endorsement (by the Holder executing the
Assignment Form annexed hereto) and delivery in the same manner as a negotiable
instrument transferable by endorsement and delivery.
(d) Exchange of Stock Option Upon a Transfer. On surrender of this Stock
Option for exchange, properly endorsed on the Assignment Form and subject to the
provisions of this Stock Option with respect to compliance with the Act and with
the limitations on assignments and transfers contained in this Section 7, the
COMPANY at its expense shall issue to or on the order of the Holder a new stock
option of like tenor, in the name of the Holder or as the Holder (on payment by
the Holder of any applicable transfer taxes) may direct, for the number of
shares issuable upon exercise hereof.
(e) Compliance with Securities Laws.
(i) The Holder of this Stock Option, by acceptance hereof,
acknowledges that this Stock Option and the shares of Common Stock to be
issued upon exercise hereof are being acquired solely for the Holder's own
account and not as a nominee for any other party, and for investment, and
that the Holder will not offer, sell or otherwise dispose of this Stock
Option or any shares of Common Stock to be issued upon exercise hereof
except under circumstances that will not result in a violation of the Act
or any state securities laws. Upon exercise of this Stock Option, the
Holder shall, if requested by the COMPANY, confirm in writing, in a form
satisfactory to the COMPANY, that the shares of Common Stock so purchased
are being acquired solely for the Holder's own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale.
(ii) This Stock Option and all shares of Common Stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by
state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES AND ANY SECURITIES
ISSUED HEREUNDER OR THEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND
APPLICABLE LAWS. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE
SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMPANY.
9. Reservation of Stock. The COMPANY covenants that during the term this
Stock Option is exercisable, the COMPANY will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of this Stock Option and, from time to time,
will take all steps necessary to amend its Certificate of Incorporation (the
"Certificate") to provide sufficient reserves of shares of Common Stock issuable
upon exercise of this Stock Option. The COMPANY further covenants that all
shares that may be issued upon the exercise of rights represented by this Stock
Option and payment of the Exercise Price, all as set forth herein, will be free
from all taxes, liens and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously or otherwise
specified herein). The COMPANY agrees that its issuance of this Stock Option
shall constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the exercise of this Stock Option.
10. Notices.
(a) Whenever the Exercise Price or number of shares purchasable hereunder
shall be adjusted pursuant to Section 11 hereof, the COMPANY shall issue a
certificate signed by its Chief Financial Officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Exercise Price and
number of shares purchasable hereunder after giving effect to such adjustment,
and shall cause a copy of such certificate to be mailed or personally delivered
to the Holder of this Stock Option. (b) In case:
(i) the COMPANY shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the
exercise of this Stock Option) for the purpose of entitling them to
receive any dividend or other distribution, or any right to subscribe for
or purchase any shares of stock of any class or any other securities, or
to receive any other right, or
(ii) of any capital reorganization of the COMPANY, any
reclassification of the capital stock of the COMPANY, any consolidation or
merger of the COMPANY with or into another corporation, or any conveyance
of all or substantially all of the assets of the COMPANY to another
corporation, or
(iii)of any voluntary dissolution, liquidation or winding-up
of the COMPANY,
then, and in each such case, the COMPANY will mail or personally deliver to the
Holder or Holders a notice specifying, as the case may be, (A) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(B) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place, and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such stock or securities at the time receivable upon the exercise of
this Stock Option) shall be entitled to exchange their shares of Common Stock
(or such other stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed or
personally delivered at least 15 days prior to the date therein specified.
(c) All notices and other communications required or permitted hereunder
shall be in writing and, unless otherwise expressly provided herein, shall be
(i) mailed by United States first-class certified mail, return receipt
requested, postage prepaid, or (ii) delivered personally by hand or nationally
recognized courier addressed (A) if to a Holder, as set forth on the signature
page hereof, or at such other address as such Holder or permitted assignee shall
have furnished to the COMPANY in writing, or (B) if to the COMPANY, at such
address as the COMPANY shall have furnished to each Holder in writing. All such
notices and other written communications shall be deemed to have been received,
in the case of mailing, on the third business day following the date of such
mailing, and in the case of personal delivery, on the date of such delivery.
11. Amendments. This Stock Option and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
12. Adjustments. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as
follows:
(a) Merger, Sale of Assets, etc. If at any time while this Stock Option,
or any portion thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the COMPANY with or into another corporation in which the
COMPANY is not the surviving entity, or a reverse triangular merger in which the
COMPANY is the surviving entity but the shares of the COMPANY's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the COMPANY's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Stock Option shall thereafter be
entitled to receive upon exercise of this Stock Option, during the period
specified herein and upon payment of the Exercise Price then in effect, the
number of shares of stock or other securities or property of the successor
corporation resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Stock
Option would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Stock Option had been exercised
immediately before such reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this Section 11. The foregoing
provisions of this Section 11(a) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Stock Option. If the per-share consideration payable to the
holder hereof for shares in connection with any such transaction is in a form
other than cash or marketable securities, then the value of such consideration
shall be determined in good faith by the COMPANY's Board of Directors. In all
events, appropriate adjustment (as determined in good faith by the COMPANY's
Board of Directors) shall be made in the application of the provisions of this
Stock Option with respect to the rights and interests of the Holder after the
transaction, to the end that the provisions of this Stock Option shall be
applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event upon exercise of this
Stock Option.
(b) Reclassification, etc. If the COMPANY, at any time while this Stock
Option, or any portion hereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Stock Option exist into the same or a
different number of securities of any other class or classes, this Stock Option
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Stock
Option immediately prior to such reclassification or other change and the
Exercise Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 11.
(c) Split, Subdivision or Combination of Shares. If the COMPANY at any
time while this Stock Option, or any portion hereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Stock Option exist, into a different number of securities of
the same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities or Property. If
while this Stock Option, or any portion hereof, remains outstanding and
unexpired, the holders of the securities as to which purchase rights under this
Stock Option exist at the time shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or additional stock or
other securities or property (other than cash) of the COMPANY by way of
dividend, then and in each case, this Stock Option shall represent the right to
acquire, in addition to the number of shares of the security receivable upon
exercise of this Stock Option, and without payment of any additional
consideration therefor, the amount of such other or additional stock or other
securities or property (other than cash) of the COMPANY that such holder would
hold on the date of such exercise had it been the holder of record of the
security receivable upon exercise of this Stock Option on the date hereof and
had thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving effect to all
adjustments called for during such period by the provisions of this Section 11.
(e) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment pursuant to this Section 11, the COMPANY at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each Holder of this Stock Option a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The COMPANY shall, upon the written
request, at any time, of any such Holder, furnish or cause to be furnished to
such Holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property that at the time
would be received upon the exercise of the Stock Option.
(f) No Impairment. The COMPANY will not, by any voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the COMPANY, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 11 and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of this Stock Option against impairment.
13. Miscellaneous.
(a) Governing Law. This Stock Option shall be governed in all respects by
the laws of the State of California, as applied to agreements among California
residents entered into and to be performed entirely in California.
(b) Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
(c) Entire Agreement; Amendment; Waiver. This Stock Option constitutes the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof. Neither the Stock Option nor any term hereof
may be amended, waived, discharged or terminated, except as provided in Section
10 hereof.
(d) Titles and Subtitles. The titles of the paragraphs and subparagraphs
of this Stock Option are for convenience of reference only and are not to be
considered in construing or interpreting this Stock Option.
(e) Necessary Acts; Further Assurances. The parties shall at their own
cost and expense execute and deliver such further documents and instruments and
shall take such other actions as may be reasonably required or appropriate to
evidence or carry out the intent and purposes of this Stock Option.
IN WITNESS WHEREOF, San Diego Soccer Development Corporation has caused
this Stock Option to be executed by its officers thereunto duly authorized as of
the date set forth below.
San Diego Soccer Development Corporation Dated: __________, 1999
By: ______________________
By: ______________________
ACKNOWLEDGED AND AGREED:
HOLDER
- --------------------------- ----------------------------
(Name of Holder) (Name of Holder)
- --------------------------- ----------------------------
(Signature of Holder) (Signature of Holder)
- --------------------------------- -----------------------------------
(SSAN of EIN of Holder) (SSAN of EIN of Holder)
- --------------------------------- ------------------------------------
(Address of Holder) (Telephone)
- --------------------------------- ------------------------------------
(Address of Holder) (Facsimile)
<PAGE>
Annex A - Notice of Exercise
To: San Diego Soccer Development Corporation
(1) The undersigned hereby (A) elects to purchase _______ shares of Common
Stock of San Diego Soccer Development Corporation pursuant to the provisions of
Section 3(a) of the attached Stock Option, and tenders herewith payment of the
purchase price for such shares in full, or (B) elects to exercise this Stock
Option for the purchase of_______ shares of Common Stock, pursuant to the
provisions of Section 3(c) of the attached Stock Option.
(2) In exercising this Stock Option, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, and for
investment, and that the undersigned will not offer, sell or otherwise dispose
of any such shares Common Stock except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any applicable
state securities laws.
(3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name or names as is
specified below:
- ------------------------------
(Name)
- ------------------------------
(Name)
(4) Please issue a new Stock Option for the unexercised portion of the
attached Stock Option in the name of the undersigned or in such other name as is
specified below:
- ------------------------------
(Name)
- ------------------------------
(Name)
- -------------------------- -----------------------------
(Name of Holder) (Name of Holder)
- -------------------------- -----------------------------
(Signature of Holder) (Signature of Holder)
Date: ________________
<PAGE>
Annex B - Assignment Form
FOR VALUE RECEIVED, the undersigned registered owner of this Stock Option
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Stock Option, with respect to the
number of shares of Common Stock set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint ____________ Attorney to make
such transfer on the books of San Diego Soccer Development Corporation
maintained for the purpose, with full power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Stock Option and the shares of stock to be issued upon
exercise hereof or conversion thereof are being acquired for investment and that
the Assignee will not offer, sell or otherwise dispose of this Stock Option or
any shares of stock to be issued upon exercise hereof or conversion thereof
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended, or any state securities laws. Further, the
Assignee has acknowledged that upon exercise of this Stock Option, the Assignee
shall, if requested by the COMPANY, confirm in writing, in a form satisfactory
to the COMPANY, that the shares of stock so purchased are being acquired for
investment and not with a view toward distribution or resale.
- -------------------------- -----------------------------
(Name of Holder) (Name of Holder)
- -------------------------- -----------------------------
(Signature of Holder) (Signature of Holder)
Date: ________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of San Diego Soccer Development Corporation for the year
ended December 31, 1999 and is qualified in its entirety by reference to such
financial statement.
</LEGEND>
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 50,253
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 50,253
<PP&E> 236,522
<DEPRECIATION> 11,376
<TOTAL-ASSETS> 236,522
<CURRENT-LIABILITIES> 737,826
<BONDS> 0
0
0
<COMMON> 5,284,369
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 236,522
<SALES> 58,789
<TOTAL-REVENUES> 252,842
<CGS> 0
<TOTAL-COSTS> 2,365,625
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,870
<INCOME-PRETAX> (2,353,828)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,353,828)
<EPS-BASIC> (.50)
<EPS-DILUTED> (.50)
</TABLE>
