Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SAN DIEGO SOCCER DEVELOPMENT CORPORATION
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fees (Check the appropriate box)
[ ] No fee required
[X] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11. 1.
Title of each class of securities to which transaction applies:
Common Stock
2. Aggregate number of securities to which transaction applies:
5,284,369
3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined:
Number of shares (5,284,369) x the average price on 3/22/00 (1.4375)
= $7,596,280.44
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
$1519.26
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
------------------------------------------------------
2. Form, Schedule or Registration Statement No.:
------------------------------------------------------
3. Filing Party:
------------------------------------------------------
4. Date Filed:
------------------------------------------------------
<PAGE>
SAN DIEGO SOCCER DEVELOPMENT CORPORATION
2123 Garnet Avenue, Suite B
San Diego, California 92109
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
April 17, 2000
---------------------
To the Shareholders of
San Diego Soccer Development Corporation
NOTICE IS HEREBY GIVEN that a Special Meeting of shareholders of San Diego
Soccer Development Corporation (the "Company") will be held at La Jolla Sea
Lodge, 8110 Camino Del Oro, La Jolla, CA 92037, on Monday, April 17, 2000 at
2:00 p.m. for the following purposes:
1. The election of Directors.
2. Reaffirmation of the proposed merger between the Company and Roller Coaster,
Inc., a Nevada corporation.
3. To consider and act upon such other business as may properly come before the
Special Meeting. Only shareholders of record at the close of business on April
6, 2000 are entitled to receive notice of the Special Meeting and to vote at the
Special Meeting. You are cordially invited to attend the Special Meeting in
person. Whether or not you plan to attend the Special Meeting, you are urged to
date and sign the enclosed proxy and promptly return it in the enclosed reply
envelope (which requires no postage if mailed in the United States) so that your
shares may be voted for you.
By Order of the Board of Directors,
/s/ Yan K. Skwara
- -----------------
Yan K. Skwara,
President and Director
Dated: San Diego, California
April 7, 2000
<PAGE>
SAN DIEGO SOCCER DEVELOPMENT CORPORATION
2123 Garnet Avenue, Suite B
San Diego, CA 92109
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
April 17, 2000
---------------------
This Proxy Statement and accompanying proxy are being furnished to the
shareholders of San Diego Soccer Development Corporation (the "Company" or
"Registrant") in connection with the solicitation of proxies on behalf of the
Board of Directors of the Company for use in voting at the Special Meeting of
Shareholders (the "Special Meeting") to be held at La Jolla Sea Lodge, 8110
Camino Del Oro, La Jolla, CA 92037, on April 17, 2000 at 2:00 p.m. At the
Special Meeting the shareholders will consider the following proposals: (i) the
election of directors; (ii) the reaffirmation of the merger proposal with Roller
Coaster, Inc. and (iii) such other business as may properly come before the
Special Meeting.
This Proxy Statement and accompanying proxy is intended to be released to
shareholders on or about April 7, 2000.
PROXIES; VOTING SECURITIES
Only holders of shares of common stock, $.001 par value, of the Company (the
"Common Stock") of record at the close of business on April 6, 2000 (the "Record
Date") are entitled to notice of and to vote at the Special Meeting. On the
Record Date there were issued and outstanding 5,284,369 shares of Common Stock,
held by approximately 530 shareholders of record. Each share of Common Stock
entitles the holder thereof to one vote.
The presence, in person or by proxy, of a majority of the outstanding Common
Stock is required to constitute a quorum at the Special Meeting. Abstentions are
counted for purposes of determining a quorum. Approval of the proposed merger
will require the affirmative vote of a majority of the outstanding Common Stock.
Each of any other proposals brought before the Special Meeting will require the
affirmative vote of a majority of the Common Stock present at the Special
Meeting.
Proxies in the form enclosed, if properly submitted and not revoked prior to or
at the Special Meeting will be voted in accordance with the instructions
indicated in such proxies. Proxies properly submitted which do not indicate
voting instructions will be voted at the complete discretion of the proxy
holder.
CUMULATIVE VOTING RIGHTS
Directors will be elected by a majority of the shares present and voting unless
any shareholder entitled to vote requests cumulative voting. Cumulative voting
gives each share as many votes as there are directors to be elected. The
shareholder can then cumulate his or her votes by casting them all for one
director, or distributing them as he or she sees fit.
To request cumulative voting, at least one shareholder must give notice at the
meeting of his or her intention to vote his or her shares cumulatively. This
notice must be given after the candidates' names have been placed in nomination
and before the voting begins. Cumulative voting is not automatic.
REVOCATION OF PROXY
A proxy may be revoked by (i) delivery of a written statement to the Secretary
of the Company stating that such proxy is revoked, (ii) by a subsequently dated
proxy duly executed and presented at or prior to the Annual Meeting, or (iii)
voting in person at the Annual Meeting.
DISSENTERS' RIGHTS OF APPRAISAL
Any vote cast in opposition to the election of any director or of the approval
of the merger shall be considered to satisfy any notice requirements with
respect to appraisal rights. All appraisal rights must be exercised and notice
given to the Company of such within 30 days of the date of the notice of
shareholder approval of the merger should such proposal be approved.
PRINCIPLE OWNERSHIP OF COMMON STOCK
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>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The following persons will stand for re-election to the Board of Directors of
the Company by Common Stock shareholders at the special meeting of shareholders:
Name Age Title
Yan K. Skwara 34 Director, President, CEO
Sam Kaloustian 30 Director, VP, General
Chris Payne 32 Director, COO
On March 17, 2000, a special meeting of the Board of Directors was held, a which
time, the Board appointed James Upton and Steve Peacock as interim Directors to
fill vacancies until the upcoming shareholder vote. Mr. Peacock was also elected
interim Chairman of the Board. The following persons will stand for election to
fill vacant, or temporarily-held positions on the Board of Directors of the
Company by Common Stock shareholders at the special meeting of shareholders:
Name Age Title
James S. Upton 52 Interim Director, CFO
Steve Peacock 53 Interim Chairman
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.
The following is a biographical summary of the business experience of the
individuals standing for election to the Board of Directors:
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 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.
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.
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.
James S. Upton. Mr. Upton has been Executive Vice President of Peacock Financial
Corporation. He has 27 years of real estate development and business experience
Mr. Upton specializes in the management and administration of all of Peacock's
investments. He is experienced in market analysis, analyzing economic
feasibility, analyzing pro-formas and cost budgets, and directing scheduling,
marketing, and sales. From 1989 to 1996 he was President and CEO of Upton
Development Corporation, where he generated over 2 million dollars in revenues
with 10% profit in production home building; and custom home and remodeling in
Vero Beach Florida.
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.
There were 3 meetings of the Board of Directors held during the 1999 fiscal
year. No Director failed to be present in person or by telephone at more than
25% of such meetings.
Committees
The Company currently has no standing audit, nominating or compensation
committees of the Board of Directors, nor committees performing similar
functions.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning cash and non-cash
compensation paid or accrued by Company and its subsidiaries to or on behalf of
the Company's officers up to the year ended December 31, 2000.
<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 N/a 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.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
The Company has no employment contracts with any of its present executive
officers and has no plans or arrangements with respect to payments resulting
from the resignation, retirement or any other termination of a named executive
officer's employment or from a change-in-control of the Company.
PROPOSAL NO. 2
MERGER
GENERAL
The Board of Directors has been in merger negotiations with Roller Coaster,
Inc., a publicly-held, Nevada corporation. Roller Coaster, Inc. ("RLLC") was
formed specifically for the purpose of acquiring a business like the Company. To
date they have had not business operations. RLLC's executive offices are located
at: 5333 S. Arville Street, Las Vegas, NV 89118, 702-242-6337.
PROPOSED TRANSACTION
Under the proposed transaction, the Company will merge into RLLC and then cease
to exist. RLLC has already changed its name to San Diego Soccer Development
Corporation and will continue the business operations of the Company.
Shareholders of the Company should see no significant change in operations.
Pursuant to the merger, the shareholders of the Company will, in exchange for
their common stock in the Company, be issued common shares in the new
corporation equal to the number of shares they currently own. RLLC currently has
2,500,000 shares issued to 35 shareholders of record. The Company has 5,284,369
shares issued to approximately 530 shareholders of record. The new Company will
have a total of 7,784,369 shares issued to approximately 565 shareholders. Upon
the filing of the merger documents, the new company will have a total of
100,000,000 shares of common stock authorized for issuance. For accounting
purposes the assets and liabilities of the Company and RLLC will be combined in
the new corporation. As this is a straight merger by which the shareholders of
the Company will receive will receive common stock of the new corporation, the
transaction is a tax-free exchange under IRC Section 354(a)(1).
Following the merger, the Board of Directors for the new company will consist
solely of the members of the Company's Board of Directors, as constituted
following the election of directors to be held at the Special Meeting. This
means the control of the new company will remain with the current management of
the Company.
The Company proposes this transaction because RLLC has filed a 15c2-11
Information Statement and its stock is currently trading on the Pink Sheets.
This gives the Company a new and public market in which its shares may be sold.
This merger has been approved by both the Directors and the Shareholders of RLLC
in accordance with Nevada law.
INFORMATION WITH RESPECT TO THE COMPANY
Description of Business
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 filed a Form 10-SB registration statement in order to become a
reporting company under the Securities Exchange Act of 1934. That registration
statement became effective on December 29, 1999.
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-Leagues 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.
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.
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.
Properties
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.
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.
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.
MarketPrice of - and Dividends on - the Registrant's 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.
Holders of the Company's Common Stock are entitled to dividends when and if
declared by the Board of Directors out of funds legally available therefor. The
Company does not anticipate the declaration or payment of any dividends in the
foreseeable future.
The Company intends to retain earnings, if any, to finance the development and
expansion of the its business. Future dividend policy will be subject to the
discretion of the Board of Directors and will be based upon future earnings, the
financial condition of the Company and general business conditions along with
other factors. Therefore, there can be no assurance that any dividend of any
kind will ever be paid.
Management Discussion and Analysis of Financial Conditions and Results of
Operations.
As noted, 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 team is working to build recognition in the community and get the word out
about its games. It is building a fan base, and to do that it is necessary to
give away many (if not most) of the tickets to get potential fans in the seats
and acquainted with the product (the team). Once the fan base is established, a
team will typically begin to reduce the number of complimentary tickets and
begin to build the perceived value of the ticket. This process has already begun
with the Flash.
The liabilities grew from 1998 to 1999, due to sale of convertible promissory
notes issued by the Company to investors. These liabilities will be reduced by
when the notes are redeemed or converted by the Company into common stock. As of
December 31, 1999, 404,850 of the 773,950 shares evidenced by the notes had been
converted into common stock.
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 had its merchandise produced
and sold through a local vendor. This contract has recently ended because of the
vendor's non-performance, and the merchandise operation has been brought
in-house. The Company believes that this change will allow the Company to make a
much greater margin on the sales of merchandise, plus it will allow greater
control of price points, quality, and product mix.
The merchandise operation is due to be expanded to include merchandising at
kiosk-based locations in selected malls in San Diego County. These kiosks will
also be a prime outlet for selling tickets to home games. The initial plan is to
place kiosks in 5 major malls in the greater San Diego area.
The food and beverage concession contract has also been revoked for the previous
contract holder, again due to lack of performance (the vendor was the same as
for the merchandise.) This change is material to the Company as the margins
granted to the Company for the sales of food and beverages at all Flash events
will be increased from approximately 17% of gross sales to approximately 25% of
gross sales, while at the same time improving the quality of the food and of the
service.
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.
The financial statements of the Company for 1999 have been audited by the
Company's auditors. No significant changes in the financial condition of the
company are expected from 1998 to 1999, no new trends or changes in the
industry, nor material changes in the business that could significantly alter
the revenues of the Company.
Financial Statements
The financial statements of the Company are attached as Exhibit 1 and
incorporated herein by reference.
INFORMATION WITH RESPECT TO ROLLER COASTER, INC.
Financial Statements
Roller Coaster, Inc., ("RLLC") was organized for the specific purpose of
acquiring another corporation, and it has had no business operations to date
except for those needed to continue its existence as a corporate entity.
Therefore, it has no income and no liabilities. Its balance sheet and other
financial statements are attached as Exhibit 2 and incorporated herein by
reference. These financials were audited by Kurt D. Salinger, C.P.A.
INDEPENDENT PUBLIC ACCOUNTANT
Logan, Throop & Company, has audited the Company's 12/31/98 financial statements
and is currently auditing the Company's 12/31/99 financial statements. A
representative of Logan Throop & Co. will not be at the special meeting, but
will be made available to answer appropriate questions from shareholders upon
request of the shareholder.
The Company has had no changes in or disagreement with its independent
accountants on accounting and financial disclosure during the two most recent
fiscal years.
Dated: April 7, 2000
THE BOARD OF DIRECTORS
/s/ San Diego Soccer Development Corporation
----------------------
San Diego Soccer Development Corporation
2123 Garnet Ave., Suite B
San Diego, CA 92109
<PAGE>
PROXY
The undersigned, as record owner of the shares of San Diego Soccer Development
Corporation described below, hereby appoints Trisha Bollman, Corporate
Secretary, as the proxy of the undersigned, to attend and vote at the special
meeting of shareholders of San Diego Soccer Development Corporation, to be held
at La Jolla Sealodge, 8110 Camino Del Oro, La Jolla, CA 92037, on April 17,
2000, at 2:00 PM, and to vote, execute, consent, waive and otherwise act fo the
undersigned in the same manner as with the same effect as if the undersigned
were personally present at said meeting.
The shares represented by this proxy shall be voted in the following
manner:
FOR ELECTION OF DIRECTORS FOR AGAINST WITHHOLD
Yan K. Skwara [ ] [ ] [ ]
John Upton [ ] [ ] [ ]
Sarkis Kaloustian [ ] [ ] [ ]
Chris Payne [ ] [ ] [ ]
Steve Peacock [ ] [ ] [ ]
ACTIONS PROPOSED TO BE TAKEN FOR AGAINST WITHHOLD
Vote to reaffirm approval [ ] [ ] [ ]
of San Diego Soccer Development
Corporation's merger into Roller
Coaster, Inc., a publicly-held
Nevada Corporation.
IF NO INDICATION IS MADE ON HOW YOU DESIRE YOUR SHARES TO BE VOTED, THE PROXY
HOLDER WILL HAVE COMPLETE DISCRETION IN VOTING THE SHARES ON ANY MATTER VOTED ON
AT THE MEETING.
Number and Class of Shares Owned:
--------------
Dated: -------------- ----------------------------
Signature(s)
----------------------------
Name(s) (typed or printed)
<PAGE>
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
<PAGE>
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>
<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>
<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>
<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>
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.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Roller Coaster, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheets of Roller Coaster, Inc. (a
development stage company), as of May 13, 1999; December 31, 1998; December 31,
1997; and December 31, 1996 and the related statements of operations,
stockholders' equity and cash flows for the five month period ended May 31, 1999
and the years ended December 31, 1998; December 31, 1997 and December 31, 1996.
These financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Roller Coaster, Inc. at
March 31, 1999; December 31, 1998; December 31, 1997; and December 31, 1996 and
the results of their operations and their cash flows for the five month period
ended May 31, 1999; and years ended December 31, 1998; December 31, 1997 and
December 31, 1996 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has had no operations and has no established
source of revenue. This raises substantial doubt about its ability to continue
as a going concern. Management's plan in regard to these matters are also
described in Note 3. the financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Kurt D. Saliger C.P.A
- -------------------------
Kurt D. Saliger C.P.A
June 17, 1999
<PAGE>
ROLLER COASTER, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
May December December December
31, 1999 31, 1998 31, 1997 31, 1996
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash $0 $0 $0 $0
-- -- -- --
TOTAL CURRENT ASSETS $0 $0 $0 $0
-- -- -- --
TOTAL ASSETS $0 $0 $0 $0
== == == ==
LIABILITITES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $0 $0 $0 $0
-- -- -- --
TOTAL CURRENT LIABILITIES $0 $0 $0 $0
STOCKHOLDERS' EQUITY
Common Shock, $.001 par
value authorized
50,000,000 shares;
issued and outstanding
250,000 shares $250 $250 $250
2,500,000 shares $2,500
Additional Paid In Capital $0 $2,250 $2,250 $2,250
Deficit Accumulated During
Development Stage ($2,500) ($2,500) ($2,500) ($2,500)
------- ------- ------- -------
TOTAL STOCKHOLDERS' EQUITY $0 $0 $0 $0
-- -- -- --
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $0 $0 $0 $0
== == == ==
</TABLE>
ROLLER COASTER, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Dec. 12 1995
Jan. 1 to Jan. 1 to Jan. 1 to Jan. 1 to (inception) to
May 31, 1999 December 31, 1998 December 31, 1997 December 31, 1996 May 31, 1999
------------ ----------------- ----------------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
INCOME $0 $0 $0 $0 $0
-- -- -- -- --
Revenue
TOTAL INCOME $0 $0 $0 $0 $0
EXPENSES
General &
Administrative $0 $0 $0 $2,500 $2,500
-- -- -- ------ ------
TOTAL EXPENSES $0 $0 $0 $2,500 $2,500
-- -- -- ------ ------
NET PROFIT (LOSS) $0 $0 $0 ($2,500) ($2,500)
== == == ======= =======
NET PROFIT (LOSS)
PER SHARE $0.0000 $0.0000 $0.0000 $0.0100 $0.0100
======= ======= ======= ======= =======
AVERAGE NUMBER
OF SHARES OF
COMMON STOCK
OUTSTANDING 2,500,000 250,000 250,000 250,000 2,500,000
========= ======= ======= ======= =========
</TABLE>
ROLLER COASTER, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
May 31, 1999
Common Stock
<TABLE>
<CAPTION>
(Deficit) Accumulated
Number of Additional Paid During
Shares Amount in Capital Development Stage
------ ------ ---------- -----------------
<S> <C> <C> <C> <C>
January 03, 1996
issued for cash (Note 2) 250,000 $250 $2,250
Net Income, 12-15-95
(inception) to 12-31-96 ($2,500)
- ------------------------------------------------------------------------------------------------------
Balance, Dec. 31, 1996 250,000 $250 $2,250 ($2,500)
Net Income, 12-31-97 $0
- ------------------------------------------------------------------------------------------------------
Balance, Dec. 31, 1997 250,000 $250 $2,250 ($2,500)
Net Income, 12-31-98 $0
- ------------------------------------------------------------------------------------------------------
Balance, Dec. 31, 1998 250,000 $250 $2,250 ($2,500)
May 27, 1999
10:1 Forward
Stock Split 2,250,000 $2,500 ($2,500)
Net Income, 05-31-99 $0
- ------------------------------------------------------------------------------------------------------
Balance May 31, 1999 2,250,000 $2,500 $0 ($2,500)
========= ====== == =======
</TABLE>
ROLLER COASTER
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Jan. 1 to Dec. 12, 1995
Jan. 1 to December 31, Jan. 1 to (inception)
May 31, 1999 1998 & 1999 December 31, 1996 to May 31, 1999
------------ ----------- ----------------- ---------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
FROM OPERATING ACTIVITIES
Net (Loss) $0 $0 ($2,500) ($2,500)
Accounts Payable $0 $0 $0 $0
CASH FLOWS FRO
FROM OPERATING ACTIVITIES
Issue common stock $0 $2,500 $2,500
----- ----- ------ ------
Net increase
(decrease) in cash $0 $0 $0 $0
Cash, Beginning
of Period $0 $0 $0 $0
----- ----- ------ ------
Cash, End of
Period $0 $0 $0 $0
===== ===== ====== ======
</TABLE>
ROLLER COASTER, INC.
(A development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 12, 1996 (inception) to May 31, 1999
NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES
The Company was incorporated December 12, 1995 under the laws of the State
of Nevada. The Company was organized to engage in any lawful activity. The
Company currently has no operations and, in accordance with SFAS #7, is
considered a development stage company.
The Company has not determined its accounting policies and procedures,
except as follows:
1. The Company uses the accrual method of accounting.
2. Earnings per share is computed using the weighted average number of
shares of common stock outstanding.
3. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
NOTE 2 - ISSUANCE OF COMMON STOCK
The Company issued 250,000 shares of common stock for cash of $2,500 on
January 03, 1996.
The Company approved a 10:1 forward stock split of common stock shares on
May 27, 1999. The Company now has authorized 50,000,000 shares of common stock
and has issued and outstanding 2,500,000 shares.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern.
NOTE 4 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
