U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1999
Commission file no.26021
SD Products Corp.
------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Florida 65-0790763
- ------------------------------------ -----------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
1506 Briarhill Lane N.E.
Atlanta, GA 30324
- -------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (404) 321-1192
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
None None
- ----------------------------------- -----------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
--------------------------------------------------------
(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696 - Fax: (561) 659-5371
<PAGE>
Indicate by Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
As of June 30, 1999, there are 2,800,000 shares of voting stock of the
registrant issued and outstanding.
<PAGE>
PART I
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Balance Sheet.........................................................F-2
Statement of Operations...............................................F-3
Statement of Changes in Stockholders' Equity..........................F-4
Statement of Cash Flows...............................................F-5
Notes to Financial Statements.........................................F-6
<PAGE>
<TABLE>
<CAPTION>
SD Products, Inc.
(A Development Stage Enterprise)
Balance Sheet
June 30, September 30,
ASSETS 1999 1998
(Unaudited)
--------------- ---------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 13,790 $ 2,074
Loan and accrued interest receivable 20 0
Loan and accrued interest receivable - related party 0 18,093
--------------- ---------------
Total current assets 13,810 20,167
--------------- ---------------
Total Assets $ 13,810 $ 20,167
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $3,000 $ 3,000
Accrued expenses - related party 500 500
--------------- ---------------
Total current liabilities 3,500 3,500
--------------- ---------------
Total Liabilities 3,500 3,500
--------------- ---------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, authorized 10,000,000
shares, 0 issued and outstanding 0
Common stock, $0.0001 par value, authorized 50,000,000
shares, 2,800,000 issued and outstanding 280 280
Additional paid-in capital 22,930 22,930
Deficit accumulated during the development stage (12,900) (6,543)
--------------- ---------------
Total Stockholders' Equity 10,310 16,667
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 13,810 $ 20,167
=============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
SD Products, Inc.
(A Development Stage Enterprise)
Statement of Operations
Cumulative
October 20, 1997
For the nine months ended Inception) through
( June 30, 1999
(Unaudited)
------------- --------------- ----------------
June 30, 1999 June 30,1998
(Unaudited) (Unaudited)
------------- --------------- ---------------
<S> <C> <C> <C>
Revenues $ 0 $ 0 $ 0
------------- --------------- ---------------
Expenses
Bank charges 45 94 139
Research costs 176 10 186
Organization expenses 150 0 150
Organization expenses - related party 0 200 200
Professional fees 6,090 2,000 11,090
Professional fees - related party 0 500 500
Transfer agent fees 520 0 1,352
------------- ---------------- --------------
Total expenses 6,981 2,804 13,617
------------- ---------------- --------------
Loss from operations (6,981) (2,804) (13,617)
Other income (expense)
Interest income 0 0 0
Interest income - related party 624 0 717
------------- ---------------- --------------
Total other income 624 0 717
------------- ---------------- --------------
Net income (loss) $(6,357) $ (2,804$ (12,900)
============= ================ ==============
Basic net income (loss)
per weighted average (0.002) $ (.001) (.005)
============= ================ ==============
Weighted average number of shares 2,800,000 2,204,646 2,556,084
============= ================ ==============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
SD Products, Inc.
(A Development Stage Enterprise)
Statement of Changes in Stockholders' Equity
Deficit
Accumulated
Additional During the Total
Number of Preferred Common Paid-in Development Stockholders'
Shares Stock Stock Capital Stage Equity
--------- --------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BEGINNING BALANCE, October 20, 1997 (Inception) 0 $ 0$ 0 $ 0 $ 0 $ 0
October 20, 1997 - services ($0.0001/sh) 2,100,000 0 210 0 0 210
April 7, 1998 - cash ($0.01/sh) 20,000 0 2 198 0 200
servicecashsssssssssssssssss ssssss (
April 8, 1998 - cash ($0.01/sh) 100,000 0 10 990 0 1,000
April 11, 1998 - cash ($0.01/sh) 40,000 0 4 396 0 400
servicecashsssssssssssssssss ssssss (
April 12, 1998 - cash ($0.01/sh) 40,000 0 4 396 0 400
April 13, 1998 - cash ($0.01/sh) 20,000 0 2 198 0 200
April 14, 1998 - cash ($0.01/sh) 40,000 0 4 396 0 400
April 15, 1998 - cash ($0.01/sh) 20,000 0 2 198 0 200
April 17, 1998 - cash ($0.01/sh) 20,000 0 2 198 0 200
June 24, 1998 - cash ($0.05/sh) 300,000 0 30 14,970 0 15,000
June 29, 1998 - cash ($0.05/sh) 100,000 0 10 4,990 0 5,000
Net loss 0 0 0 0 (6,543) (6,543)
--------- ---------- -------- --------- ------------ ------------
BALANCE, September 30, 1998 2,800,000 0 280 22,930 (6,543) 16,667
--------- ---------- -------- --------- ------------ ------------
For the nine months ended June 30, 1999 (Unaudited)
Net loss 0 0 0 0 (6,357) (6,357)
--------- ---------- -------- --------- ------------ ------------
BALANCE, June 30, 1999 (Unaudited) 2,800,000 $ 0 $280 $ 22,930 $(12,900) $10,310
========= ========== ======== ========= ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
SD Products, Inc.
(A Development Stage Enterprise)
Statement of Cash Flows
From October
20, 1997
For the nine months ended (Inception)
through
June 30, 1999
(Unaudited)
--------------------------- --------------
June 30, 1999 June 30, 1998
(Unaudited) (Unaudited)
------------- ------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $(6,357) $(2,804) $(12,900)
Adjustments to reconcile net loss to net cash used for operating
activities:
Stock issued in lieu of cash 0 10 10
Stock issued in lieu of cash - related party 0 200 200
Changes in assets and liabilities
Increase in accrued interest receivable (20) 0 (20)
Increase in accrued interest receivable - related party 93 0 0
Increase in accrued expenses 0 2,000 3,000
Increase in accrued expenses - related party 0 500 500
------------- ------------- --------------
Net cash used for operating activities (6,284) (94) (9,210)
------------- ------------- --------------
CASH FLOW FROM INVESTING ACTIVITIES :
Advance on loan receivable (15,000) 0 (15,000)
Repayments on loan receivable 15,000 0 15,000
Advance on loan receivable - related party 0 0 (18,000)
Repayments on loan receivable - related party 18,000 0 18,000
------------- ------------- --------------
Net cash used by investing activities 18,000 0 0
------------- ------------- --------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 0 23,000 23,000
------------- ------------- --------------
Net cash provided by financing activities 0 23,000 23,000
------------- ------------- --------------
Net increase in cash 11,716 22,906 13,790
CASH, beginning of period 2,074 0 0
------------- ------------- --------------
CASH, end of period $ 13,790 $ 22,906 $ 13,790
============= ============= ==============
Net cash used for operating activities (6,284) (94) (9,210)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: None
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
SD Products Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to the periods ended
June 30, 1999 and 1998 is unaudited)
(1) Summary of Significant Accounting Principles
The Company SD Products Corporation is a Florida chartered development
stage corporation which conducts business from its headquarters in Palm
Beach, Florida. The Company was incorporated on October 20, 1997.
The Company has not yet engaged in its expected operations. The
Company's future operations will be to provide automobile leasing for
various consumer groups. Current activities include raising additional
equity and negotiating with potential key personnel and facilities.
There is no assurance that any benefit will result from such activities.
The Company will not receive any operating revenues until the
commencement of operations, but will nevertheless continue to incur
expenses until then.
The financial statements have been prepared in conformity with generally
accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the
statements of financial condition and revenues and expenses for the
period then ended. Actual results may differ significantly from those
estimates.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Start-up costs Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of
Position (SOP) 98-5.
b) Net loss per share Basic is computed by dividing the net loss by the
weighted average number of common shares outstanding during the period.
(2) Loan Receivable The Company authorized a loan in the amount of $18,000
to a related party at the rate of 9% per year, payable on demand. The
loan principal and accrued interest were paid in full, subsequent to
September 30, 1998. The Company then loaned American Sports Machine,
Inc. $15,000 at the rate of 7% per year, payable on demand. This loan
was paid in full in May, 1999.
(3) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par
value preferred stock. The Company had 2,800,000 shares of common stock
issued and outstanding at September 30, 1998. The Company, on October
20, 1997, issued 2,000,000 shares to its sole Officer and Director for
the value of services rendered in connection with the organization of
the Company. On the same date, the Company issued 100,000 shares for the
value of consulting services rendered in connection with the
organization of the Company. In April 1998, the Company issued 300,000
shares of common stock at $0.01 per share for $3,000 in cash. In June
1998, the Company issued 400,000 shares of common stock at $0.05 per
share for $20,000 in cash. In December 1998, additional paid in capital
was reduced by offering costs.
The Company had no shares of preferred stock issued and outstanding at
June 30, 1999.
(4) Income Taxes Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax
and financial reporting purposes. The Company has net operating loss
carryforwards for income tax purposes of approximately $12,900, expiring
at September 30, 2019.
F-6
<PAGE>
The amount recorded as deferred tax assets as of June 30 1999 is $5,000,
which represents the amount of tax benefit of the loss carryforward. The
Company has established a valuation allowance against this deferred tax
asset, as the Company has no history of profitable operations.
SD Products Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
(5) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $12,900 for the period from October 20,
1997 (Inception) through June 30, 1999. The ability of the Company to
continue as a going concern is dependent upon commencing operations and
obtaining additional capital and financing. The financial statements do
not include any adjustments that might be necessary if the Company is
unable to continue as a going concern. The Company is currently seeking
financing to allow it to begin its planned operations.
(6) Related parties Counsel to the Company directly owns 100,000 shares of
the Company, and indirectly owns 100,000 shares in the Company through
the 100% sole ownership of the common stock of another company that has
invested in the Company. Also, counsel's adult son, sole Officer and
Director of the Company, directly owns 2,020,000 shares in the Company.
As discussed in Note 2, the Company extended a loan to M. Investments of
Nevada, Inc., a company under common control. This loan was repaid in
full.
Related party balances and amounts for the period ended are as follows:
June 30, September 30,
1999 1998
------------------------------
Loan and accrued interest receivable -related $party 0$ 18,093
==============================
Accrued expenses - related party $0 $ 500
==============================
Interest earned - related party $0 $ 93
==============================
Organization expenses - related party $0 $ 200
==============================
Professional fees - related party $0 $ 500
==============================
F-7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
General
Since its inception, the Company has conducted minimal business
operations except for organizational and capital raising activities. The Company
has not realized significant revenues since its inception due to the fact that
its key executive, Mr. Mark A. Mintmire, until his graduation in August 1998,
has been enrolled as a full-time college student in the Masters of Business
Administration program at Georgia State University, in Atlanta, Georgia. As a
result, from inception (October 20, 1997) through June 30, 1999, the Company had
interest income of $624.00 from a loan to a related party. Cumulative operating
expenses as of June 30, 1999 were $6,981. The Company proposes to engage in the
business of automobile lease financing/funding.
Mr. Charles Adams, consultant to SDP, agreed to develop the automobile
lease financing/funding business for the Company for the following, among other,
reasons: (i) because of his belief that a public company could exploit its
talents, services and business reputation to commercial advantage and (ii) to
observe directly whether the perceived advantages of a public company,
including, among others, greater ease in raising capital, liquidity of
securities holdings and availability of current public information, would
translate into greater profitability for a public, as compared to a
locally-owned lease finance/funding company.
Plan of Operation
If the Company is unable to generate sufficient revenue from operations
to implement its expansion plans, management intends to explore all available
alternatives for debt and/or equity financing, including but not limited to
private and public securities offerings. Depending upon the amount of revenue,
if any, generated by the Company, management anticipates that it will be able to
satisfy its cash requirements for the next approximately six (6) to nine (9)
months without raising funds via debt and/or equity financing or from third
party funding sources. Accordingly, management expects that it will be necessary
for SDP to raise additional funds in the next six(6) months, if only a minimal
level of revenue is generated in accordance with management's expectations.
Mr. Adams, at least initially, will be solely responsible for
developing SDP's automobile lease finance/funding business. However, at such
time, if ever, as sufficient operating capital becomes available, management
expects to employ additional staffing and marketing personnel. In addition, the
Company expects to continuously engage in market research in order to monitor
new market trends, seasonality factors and other critical information deemed
relevant to SDP's business.
In addition, at least initially, the Company intends to operate out of the
home of Mr. Mintmire. Thus, it is not anticipated that SDP will lease or
purchase office space or computer equipment in the foreseeable future. SDP may
in the future establish its own facilities and/or
<PAGE>
acquire computer equipment if the necessary capital becomes available; however,
the Company's financial condition does not permit management to consider the
acquisition of office space or equipment at this time.
For the period from October 20, 1997 through June 30, 1999, the Company
had a cumulative loss from operations aggregating $6,981.
Financial Condition, Capital Resources and Liquidity
At June 30, 1999, the Company had assets totaling $13,790 and
liabilities of $3,500 attributable to accrued expenses. On October 20, 1997, at
inception, the Company issued 2,000,000 shares of restricted Common Stock to Mr.
Mark A. Mintmire, the President and Treasurer of the Company and record and
beneficial owner of approximately 72.14% of the Company's outstanding Common
Stock. In April and June 1998, the Company received a total of $3,000 and $
20,000 respectively in cash contributed as consideration for the issuance of
shares of Common Stock pursuant to Section 3(b) of the Act and Rule 504 of
Regulation D promulgated thereunder, Section 10-5-9(13) of the Georgia Code and
Section 517.061(11) of the Florida Code.
The Company has no potential capital resources from any outside sources
at the current time. It is anticipated that the Company will require only
nominal capital to maintain the corporate viability of the Company. Any
additional capital needed will most likely be provided by the Company's existing
shareholders or its officers and directors.
The ability of the Company to continue as a going concern is dependent
upon the availability of obtaining additional capital and financing from such
shareholders and directors.
Net Operating Losses
The Company has net operating loss carryforwards of $12,900 which expire
in the year 2019. Until the Company's current operations begin to produce
earnings, it is unclear whether the Company can utilize such carryforwards.
Year 2000 Compliance
The Company is currently in the process of evaluating its information
technology for Year 2000 compliance. The Company does not expect that the cost
to modify its information technology infrastructure to be Year 2000 compliant
will be material to its financial condition or results of operations. The
Company does not anticipate any material disruption in its operations as a
result of any failure by the Company to be in compliance.
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act
<PAGE>
of 1934, as amended. All statements, other than statements of historical facts,
included or incorporated by reference in this Form 10-QSB which address
activities, events or developments which the Company expects or anticipates will
or may occur in the future, including such things as future capital expenditures
(including the amount and nature thereof), finding suitable merger or
acquisition candidates, expansion and growth of the Company's business and
operations, and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it believes
are appropriate in the circumstances. However, whether actual results or
developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-QSB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations. The Company assumes no
obligations to update any such forward-looking statements.
PART II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending June 30, 1999, covered
by this report to a vote of the Company's shareholders, through the solicitation
of proxies or otherwise.
Item 5. Other Information
None
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a)The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated
herein by reference, as follows:
Exhibit No. Description
- ----------------------------------------------------------------------
3.(i).1 Articles of Incorporation of SD Products Corp.filed October 20,1997(1)
3.(i).2 Articles of Amendment to the Articles of Incorporation of SD Products
Corp. filed April 30, 1999(1)
3(ii).1 By-laws (1)
27 * Financial Data Schedule
- ----------------
(1) Incorporated herein by reference to the Company's Registration Statement
on Form 10- SB.
* Filed herewith
(b)No Reports on Form 8-K were filed during the quarter ended June 30,
1999.
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SD Products Corp.
Date: August ___, 1999 BY:__________________________
Mark A. Mintmire, President, Secretary
Chief Executive Officer & Director
[sign page SD PRODUCTS 10Q 6.30.99]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0001085720
<NAME> SD Products, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Currency
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Sep-30-1998
<PERIOD-START> Oct-1-1998
<PERIOD-END> Jun-30-1999
<EXCHANGE-RATE> 1
<CASH> 13,790
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,810
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,810
<CURRENT-LIABILITIES> 3,500
<BONDS> 0
0
0
<COMMON> 280
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,810
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,357)
<EPS-BASIC> (0.002)
<EPS-DILUTED> 0
</TABLE>
