As filed with the Securities and Exchange Commission on May 12, 2000
Registration No. 333- ________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-1 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
SD PRODUCTS CORP.
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(Exact name of registrant as specified in its charter)
Florida 6159 522298 65-0790763
- ----------------- ----------------- ------------------ ---------------
(State or Other (Primary Standard (North American (IRS Employer
Jurisdiction of Industrial Industry Identification
Incorporation or Classification Classification ("EIN") Number)
Organization) ("SIC") Number) Number System
("NAICS") Number)
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2958 Braithwood Court
Atlanta, Georgia 30345
(770) 414-9596
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive office)
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Copy To:
Carl N. Duncan, Esq.
Duncan, Blum & Associates
5718 Tanglewood Drive
Bethesda, Maryland 20817
(301) 263-0200
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the
Registration Statement
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [x].
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
Each Class of Amount Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered* per Share* Offering Price Fee
================= ============ ============== ============== ============
Shares of Common 1,000,000
Stock Shares $1.00 $1,000,000 $200
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
an amendment which specifically states that the Registration Statement shall
thereafter become effective in accordance with Section 8 (a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
Disclosure of Alternative Used: Alternative 1 |X| Alternative 2 |_|
<PAGE>
SD Products Corp.
CROSS REFERENCE SHEET
(Showing Location in the Prospectus of Information
Required by Items of Form SB-1)
An asterisk (*) under "Caption in Prospectus" indicates that the answer to the
item of Form SB-1 Part I is negative or inapplicable.
<TABLE>
<CAPTION>
Items in Form SB-1 (Model B) Caption in Prospectus
<S> <C> <C>
I. Form 1-A Items
1. Cover Page Information............................................Front Cover Page
2. Distribution Spread...............................................Front Cover Page
3. Summary Information, Risk Factors and Dilution...................Summary; Risk Factors; Dilution
4. Plan of Distribution..............................................Plan of Distribution
5. Use of Proceeds to Issuer.........................................Application of Proceeds
6. Description of Business...........................................The Company
7. Description of Property...........................................The Company
8. Directors, Executive Officers and Significant Employees...........The Company
9. Remuneration of Directors and Officers............................The Company
10. Security Ownership of Management and Securityholders..............The Company
11. Interest of Management and Others in Certain Transactions ........Conflicts of Interest
12. Securities to be Offered..........................................Cover Page; Description of Capital Stock
II. Alternative 1 Items
1. Inside Front and Outside Back Cover Pages
of the Prospectus Front...........................................Cover Page
2. Significant Parties...............................................The Company
3. Relationship with Issuer of Experts
Named in the Registration Statement...............................Experts
4. Selling Shareholders..............................................Selling Shareholders
5. Changes in and Disagreements with Accountants.....................N/A
6. Disclosure of Commission Position on Indemnification..............Fiduciary Responsibility of Registrant's Management
</TABLE>
<PAGE>
SUBJECT TO COMPLETION -- PRELIMINARY PROSPECTUS DATED MAY ___, 2000
................................................................................
PROSPECTUS $1,000,000
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Preliminary Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sales of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
Maximum 1,000,000 Shares of Common Stock @$1.00 ($1,000,000)
Minimum 100,000 Shares of Common Stock @ 1.00 ($100,000)
SD PRODUCTS CORP.
SD Products Corp., a Florida corporation (the "Company), is making this
offering of 1,000,000 shares of common stock (the "Shares") on a best-efforts,
self-underwritten, minimum-maximum basis (the "Offering"). The Company is
engaged in the business of providing a lending (funding) source for the purchase
of leased automobiles, including limousines. (See "The Company.")
Unless earlier terminated, the Initial Offering Period will be up to two
(2) months from the date hereof unless, in the sole discretion of the Company,
it is extended for periods up to a total of seven (7) additional months. The
selling stockholders that the Company identifies in this Prospectus are offering
an additional 1,500,000 Shares. The Company will not receive any proceeds from
the sale of Shares by the Selling Shareholders. (See "Plan of Distribution,"
"Risk Factors" and "Selling Shareholders.")
During the Initial Offering Period (see "Prospectus Summary -- The Offering
- -- Offering Period(s) " and "Plan of Distribution", Shares will be offered at
$1.00 per Share (the "Selling Price"). Because Shares are being sold by its sole
principal, Mark A. Mintmire, on a self-underwritten basis (without the use of
broker-dealers), there is no selling commission. (See "Notes to the Cover
Page.") During the Continuous Offering Period, the period subsequent to the
Initial Offering Period, Shares will continue to be sold at $1.00 per Share
until a market develops for the Shares. (The Company intends to qualify its
Shares for quotation on the NASDAQ Bulletin Board concurrently with the date of
this Prospectus. ) At such time as a market develops, Shares will be sold by the
Company at the average of the then prevailing bid and asked prices on the date
the subscription is received. If a minimum of $100,000 of Shares is not sold
during the Initial Offering Period (as it may be extended), investor funds as to
shares sold by the Company will be promptly returned with all pro rata interest
earned thereon. The minimum purchase is $500 for both the Initial and Continuous
Offering Periods.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION NOT CONTAINED IN THE PROSPECTUS
IN CONNECTION WITH THIS OFFERING AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY ANY PERSON WITHIN ANY JURISDICTION TO
ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL.................................
THESE ARE SPECULATIVE SECURITIES. See "Risk Factors" for certain factors that
should be considered by prospective investors.
<TABLE>
<CAPTION>
Price to Public During Initial Offering Selling Proceeds to
Period (1)(2)(3) Commission (2)(3) Company (3)
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<S> <C> <C> <C>
Per Share $1.00 $0.00 $1.00
Total Minimum $100,000 $0.00 $100,000
Total Maximum $1,000,000 $0.00 $1,000,000
</TABLE>
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<PAGE>
( See notes following.)
(1) During this Offering Period, there is a $500 minimum.
(2) The Shares are being self-underwritten by the Company's sole principal.
There is no selling commission.
(3) These amounts are before deducting offering expenses (estimated at $34,950,
whether for the Minimum or Maximum Offering).
Potential investors are advised that an investment in its Shares of the Company
is subject to the following considerations, among others:
* Leasing companies can be speculative and volatile and involve significant
risks, including those discussed in "Risk Factors." Moreover, prospective
investors are advised that the Company's auditors have issued a report (as
is often true for developmental stage entities) which raises questions
about the Company's ability to continue as a "going concern". (See
Financial Statement, Appendix I, and "Risk Factors - Need for Additional
Capital; Proceeds from Sale of Shares May Be Inadequate; Going Concern
Qualification Expressed by Auditor" and "Related Party Transactions.")
* The Company has not had significant prior operations and market acceptance
may be beyond the control of management. (See "The Company" and "Risk
Factors.")
* Certain conflicts of interest exist in the management of the Company. (See
"Conflicts of Interest.")
* The success of the Company is dependent on its management. (See "The
Company -- Management" and "Risk Factors -- Reliance on Management.")
Until June ___, 2000 (25 days after the date hereof), all dealers effecting
transactions in the registered securities, whether or not participating in this
distribution, may be required to deliver a current copy of this Prospectus. This
delivery requirement is in addition to the obligation of dealers to deliver a
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
Neither the delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that the information herein is
correct as of any time subsequent to the date hereof or that there has been no
change in the affairs of the Company since such date or, in the case of
information incorporated herein or therein by reference, the date of filing with
the Securities and Exchange Commission.
INVESTMENT REQUIREMENTS
Subscriptions for the purchase of the Shares offered hereby are subject to
the following conditions:
(1) The minimum initial purchase is $500. (See "Plan of Distribution.") There
is generally no limit on the maximum number of Shares that may be purchased
by any one investor, except as limited by applicable regulatory
considerations. (See, for example, "ERISA Considerations.")
(2) To ensure enforcement of the investment requirements associated with this
Offering, each purchaser must represent in the Subscription Agreement and
Power of Attorney that he has (a) a net worth of at least $100,000
(exclusive of home, furnishings and automobiles) or (b) a net worth of at
least $50,000 (similarly calculated) and an annual adjusted gross income of
not less than $25,000.
(3) In the case of a pension, profit sharing plan or trust or any tax-deferred
or tax-exempt entity, including retirement plans, the trustee or custodian
must represent that he, she or it is authorized to execute such
subscription on behalf of the plan and that such investment is not
prohibited by law or the plan's governing documents.
(4) The Company may reject any subscription. All subscriptions received are
irrevocable.
The date of this Propsectus is June___, 2000
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<PAGE>
(5) The Company must have reasonable grounds to believe, on the basis of
information obtained from the purchaser concerning his financial situation
and needs and any other information known by the Company , that (a) the
purchaser is or will be in a financial position appropriate to enable him
to realize to a significant extent the benefits described in the
Prospectus; (b) the purchaser has a net worth sufficient to sustain the
risks inherent in an investment in the Company, including possible losses
on their investment and lack of liquidity; and (c) the Company is otherwise
a suitable investment for the purchaser.
Following the conclusion of each fiscal year, Shareholders will receive an
annual report, including a balance sheet, statements of operations, cash flows
and changes in shareholders' equity and related footnotes. The financial
statements contained in the annual report will be audited by the Company's
independent certified public accountants. Unaudited quarterly reports on
operations also will be distributed to Shareholders or made available through
e-mail and/or the Internet.
[Balance of Page Left Intentionally Blank.]
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<PAGE>
TABLE OF CONTENTS
Descriptive Title Page
INVESTMENT REQUIREMENTS.......................................................2
PROSPECTUS SUMMARY............................................................5
SUMMARY FINANCIAL DATA........................................................6
PRO FORMA FINANCIAL INFORMATION...............................................6
INTRODUCTORY STATEMENT: WHO SHOULD INVEST.....................................6
RISK FACTORS..................................................................7
RELATED PARTY TRANSACTIONS...................................................15
FIDUCIARY RESPONSIBILITY OF THE COMPANY'S MANAGEMENT.........................16
SELLING SHAREHOLDERS.........................................................17
APPLICATION OF PROCEEDS......................................................19
CAPITALIZATION...............................................................19
DILUTION.....................................................................20
THE COMPANY..................................................................21
SELECTED FINANCIAL DATA......................................................32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS........................................32
ABSENCE OF PUBLIC MARKET AND DIVIDEND POLICY.................................34
DESCRIPTION OF CAPITAL STOCK.................................................34
PLAN OF DISTRIBUTION.........................................................35
ERISA CONSIDERATIONS.........................................................37
LEGAL MATTERS................................................................37
EXPERTS......................................................................37
AVAILABLE INFORMATION........................................................37
APPENDIX I (FINANCIAL STATEMENTS)............................................I-1
EXHIBIT A -- SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY....................A-1
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere or incorporated by
reference in this Prospectus. All references in this Prospectus to Shares are as
of March 31, 2000 , unless otherwise specified. Prospective investors should
carefully consider the information set forth under the heading "Risk Factors."
The Company
SD Products Corp., incorporated on October 20, 1997 in Florida, will be
engaged in the business of providing a lending (funding) source for the purchase
of leased automobiles, including limousines. (See "The Company.")
The Offering
Securities Offered 1,000,000 Shares having an aggregate offering price of
by the Company $1,000,000 (the "Maximum Offering") are being offered at
$1.00 per Share (the "Selling Price") during this Offering
Period. The Minimum Offering ($100,000) is 100,000 Shares at
$1.00 per Share. (See "Plan of Distribution" and Cover
Page.)
Offering This Offering Period begins on the date of this Prospectus
Period(s) and may continue for up to nine (9) months thereafter,
unless earlier terminated or extended. (The date that (1)
subscriptions for a minimum of $100,000 of Shares have been
received and (2) the Company has closed the initial escrow
will mark the end of the Initial Offering Period.) Subject
to pertinent securities requirements, the Company expects to
update this Prospectus after its Initial Offering Period and
continue the Offering (the "Continuous Offering Period") for
up to 24 months from the date of this Prospectus if, as
expected, the $1,000,000 maximum is not achieved during the
Initial Offering Period.
Proceeds Held All subscriptions during the Initial Offering Period will be
held in an attorney escrow account with Duncan, Blum &
Associates, Bethesda, Maryland. Such proceeds will not be
paid to the Company until receipt of the minimum offering
amount of $100,000; thereafter, if such minimum is achieved,
the Offering will continue during the Continuous Offering
Period at the Company's $1.00 per Share Selling Price until
a market develops for the Shares. (At such time as a market
develops, Shares will be sold by the Company at the average
of the then prevailing bid and asked prices on the date a
subscription is received.) If the minimum offering amount of
$100,000 is not achieved, the related proceeds and all
interest earned thereon will be returned to the investors.
Even after the Initial Offering Period (so long as at least
the $100,000 minimum is achieved), subscriptions will
continue to be escrowed with Duncan, Blum & Associates
pending month-end acceptance. Investors are reminded that,
given the duration of the Initial Offering Period,
subscriptions may be held in escrow for up to nine (9)
months from the date of this Prospectus. In addition, while
it is expected that interest will be earned on escrowed
funds, there is no assurance that interest will be earned
and, in any event, interest earned will be returned pro rata
to subscribers only if the $100,000 minimum offering is not
achieved.
Minimum The minimum purchase is $500. All interest earned on
Subscription escrowed subscriptions will be retained by the Company
unless the minimum is not achieved. (See "Investment
Requirements" and "Plan of Distribution-Subscriptions.")
Risks and An investment in the Company involves substantial risks due
Conflicts of in part to the costs which the Company will incur and the
Interest highly speculative nature of the automobile leasing funding
business. (See "Related Party Transactions.") Risks inherent
in investing in the Company are discussed under "Risk
Factors."
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<PAGE>
Plan of The Shares are being offered on a best-efforts,
Distribution self-underwritten, minimum-maximum basis by Mark A.
Mintmire, the sole principal of the Company. (See "Plan of
Distribution.")
Application of The proceeds of the Offering are expected to be employed as
Proceeds outlined in "Application of Proceeds," with particular
emphasis on enhancing the Company's credit lines. In the
event more than the minimum is subscribed, the Company
intends to be more aggressive in implementing its business
plan. (See "Application of Proceeds" and "The Company.")
SUMMARY FINANCIAL DATA
The Summary Financial Information, all of which has been derived from
audited financial statements included elsewhere in this Prospectus, reflects the
operations of the Company for its limited operating history as of and for the
period from inception to March 31, 2000. This information should be read in
conjunction with the financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operation."
Current assets $ 7,893
Noncurrent assets 0
Current liabilities 0
Gross Revenues 0
Gross Profit 0
Loss from continuing operations $ 15,317
Net loss $(15,317)
PRO FORMA FINANCIAL INFORMATION
Pro forma financial information has not been presented since no
significant business combination has occurred or is probable and, even where
possible or remote, there have been no significant historical operations.
Furthermore, there has been minimal historical activity (approximately 29
months). Consequently, pro forma information would serve no useful purpose. (See
Appendix I.) In addition, summary financial data is provided in "Selected
Financial Data."
INTRODUCTORY STATEMENT:
WHO SHOULD INVEST
PURCHASE OF THE SHARES OFFERED HEREBY SHOULD BE MADE ONLY BY THOSE PERSONS
WHO CAN AFFORD TO BEAR THE RISK OF A TOTAL LOSS OF THEIR INVESTMENT. THE COMPANY
RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART.
Each subscriber will be required to make certain representations as to his
net worth and income. (See "Investment Requirements" and the Subscription
Agreement and Power of Attorney attached as Exhibit A.) The Company believes
that prospective investors should consider the Shares as a long-term investment.
While the Company is a reporting company and intends to seek listing on the
NASDAQ OTC Bulletin Board ("OTCBB"), there is currently no public market for the
Company's Shares (and none is likely to develop for approximately 2 to 4 months
after the date of this Prospectus). (See "Publicly Reporting Company; No Current
Public Market for the Company's Shares.")
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<PAGE>
In addition, offerees should not purchase Shares with the expectation of
sheltering income.
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following factors before
purchasing the Shares offered hereby.
1. Development Stage Company, Minimal Assets, Working Capital and Net Worth.
The Company was only recently organized on October 20, 1997 and, accordingly, is
in an early form of development stage and must be considered promotional.
Management's efforts, since inception, have been allocated primarily to
organizational and fund raising activities and the ability of the Company to
establish itself as a going concern is dependent upon the receipt of additional
funds from operations or other sources to continue those activities. Potential
investors should be aware of the difficulties normally encountered by a new
enterprise in its development stage, including under-capitalization, cash
shortages, limitations with respect to personnel, technological, financial and
other resources and lack of a client base and market recognition, most of which
are beyond the Company's control. The likelihood that the Company will succeed
must be considered in light of the problems, expenses and delays frequently
encountered in connection with the competitive environment in which the Company
will operate. There is no guarantee that the Company's proposed activities will
attain the level of recognition and acceptance necessary for it to find a niche
in the automobile lease financing/funding industry. There are numerous
competitors in Palm Beach and Broward Counties, and the remaining State of
Florida as well as in Atlanta, Georgia and nationwide, several of which are
large public companies, which are already positioned in the business and which
are better financed than the Company. There can be no assurance that the
Company, with its very limited capitalization, will be able to compete with
these companies and achieve profitability. (See "Description of Business.")
As of March 31, 2000, the Company's total assets in the amount of $7,893
consisted of a loan receivable of $6,000 plus accrued interest $205. As a result
of its minimal assets, as of March 31, 2000, the Company has very minimal net
worth presently. Further, the Company's working capital is presently minimal and
there can be no assurance that the Company's financial condition will improve.
The Company is expected to continue to have minimal working capital or a working
capital deficit as a result of current liabilities. The Company, at inception,
issued 2,000,000 shares of the Company's Common Stock to Mr. Mark A. Mintmire,
executive officer and director of the Company, in consideration and exchange for
services performed for the Company in connection with the organization of the
Company. On October 20, 1997, the Company issued 100,000 shares of unrestricted
common stock to Mr. Charles Adams, the key consultant of the Company, in
consideration and exchange for services performed for the Company in connection
with the organization of the Company. During April 1998, the Company issued and
sold an aggregate of 300,000 shares of Common Stock for cash consideration
totaling $3000. During June 1998, the Company issued and sold an aggregate of
400,000 shares of Common Stock for cash consideration totaling $20,000 at $.05
per share. Even though management believes, without assurance, that it will
obtain sufficient capital with which to implement its business plan on a limited
scale, the Company is not expected to continue in operation without an infusion
of capital. In order to obtain additional equity financing, management may be
required to dilute the interest of existing Shareholders or forego a substantial
interest of its revenues, if any.
2. Limited History of Operation; Net Losses to Date; Company is a "Start-Up"
with No Revenues to Date. The Company is in the early stage of development and
has only a limited history of operations which, through March 31, 2000, have
generated aggregate losses of $15,387. (See "The Company -- Introduction" and
"Conflicts of Interest.") To the extent that the Company implements its business
plan, the Company's business will be subject to all of the problems, expenses,
delays and risks inherent in a new business enterprise (including limited
capital, delays in program development, possible cost overruns, uncertain market
acceptance and a limited operating history). (See also below "Reliance on
Management.") In addition, the Company's future success will depend upon many
factors, including those which may be beyond its control or which cannot be
predicted at this time, such as increased levels of competition (including the
emergence of additional competitors, changes in economic conditions, emergence
of new technologies and changes in governmental regulations). The Company may
never generate revenues or profits in the foreseeable future.
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<PAGE>
Since its inception, most of the time and resources of the Company have
been spent in organizing the Company, obtaining interim financing and developing
a business plan. The Company's success is dependent upon its obtaining
additional financing from intended operations, from placement of its equity or
debt or from third party funding sources. The Company's success in the business
of automobile lease finance/funding is dependent upon the purchasing of receipt
automobile lease financing/funding receivables and the arranging of a large
volume of direct automobile lease financing/funding directly to consumers, which
are not expected for the foreseeable future, and/or additional financing to
enable the Company to continue in operation. There is no assurance that the
Company will be able to obtain additional debt or equity financing from any
source. The Company, during the development stage of its operations, can be
expected to sustain substantial operating expenses without generating any
operating revenues or the operating revenues generated can be expected to be
insufficient to cover expenses. Thus, for the foreseeable future, unless the
Company attains profitable operations, which is not anticipated, the Company's
financial statements will show an increasing net operating loss.
3. Need for Additional Capital; Proceeds from Sale of Shares May be
Inadequate; Going Concern Qualification Expressed by Auditor. Especially if
significantly less than the maximum offering is achieved, the Company's capital
resources may not be adequate to fully implement its business plan.
Specifically, the Company is currently beginning its operations and a
substantial portion of the proceeds from this Offering will be used to fund the
Company's expansion, operations and other capital needs. There can be no
assurance, however, that such proceeds will be sufficient for these purposes,
especially in light of the fact that the Company is a "start-up" company with
essentially no operating history and no revenues. While $100,000 may be
sufficient to pursue the specific opportunities already targeted and described
in this Prospectus, such amount would not be sufficient to pursue the Company's
larger business plan. Specifically, without an infusion of capital or profits
from operations, the Company is not expected to continue in operation after the
expiration of the period of six (6) to nine (9) months from the date hereof.
Accordingly, the Company is not expected to become a viable business entity
unless additional equity and/or debt financing is obtained. There can be no
assurance that any such additional financing that may be required will be
available to the Company if and when required, or on terms acceptable to the
Company, or that such additional financing, if available, would not result in
substantial dilution of the equity interests of existing Shareholders. The
Company does not anticipate the receipt of operating revenues until management
successfully implements its business plan, which is not assured. Further, the
Company may incur significant unanticipated expenditures which deplete its
capital at a more rapid rate because of among other things, the development
stage of its business, its limited personnel and other resources and its lack of
a clients and market recognition. Because of these and other factors, management
is presently unable to predict what additional costs might be incurred by the
Company beyond those currently contemplated to obtain additional financing and
achieve market penetration on a commercial scale in its proposed line of
business, i.e. automobile lease financing/funding.
The factors described above raise substantial doubt about the Company's
ability to continue as a going concern. In this regard, see the Report of
Independent Certified Public Accountants accompanying the Company's audited
financial statements (Appendix I). There can be no assurance that the Company
will achieve profitability or generate positive cash flow in the future. As a
result of these and other factors, there can be no assurance that the Company's
proposed activities and/or acquisitions will be successful or that the Company
will be able to achieve or maintain profitable operations. If the Company fails
to achieve profitability, its growth strategies could be materially and
adversely affected. (See "Management's Discussion and Analysis of Financial
Condition and Prospective Results of Operations.")
4. Minimum/Maximum Offering. While $1,000,000 is the maximum offering
contemplated pursuant to this Registration Statement, it is subject to a
$100,000 minimum. If such minimum is not achieved during the up to nine (9)
month Initial Offering Period, subscription proceeds will be returned (with pro
rata interest based on amount and timing of the subscription) to subscribers and
the Offering will be terminated. (See "Plan of Distribution.") If the minimum is
achieved, the Company believes it will have sufficient funds for 6-9 months of
operation but at a reduced level than would be the case for the maximum
offering. (See "Application of Proceeds.")
5. Need to Re-Sell Acquired Receivables in the Secondary Markets. Since the
Company has minimal working capital, it will be critical that all cash resources
utilized by the Company be maximized. The Company will bundle together in pools
of securities, the size of which will be determined by the quality of
receivables purchased and the
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number and dollar amount of automobile lease financing/funding receivables, for
the purpose of re-selling them in a public and/or private offering for purchase
by an institutional investor and/or an individual. This reselling will restore
working capital to the Company with which it can put back to work to purchase
additional automobile lease financing receivables and/or by directly financing
an individual's automobile lease purchase. There is no assurance, however, that
the Company will be successful in its efforts to re-sell these "bundled"
securities in the secondary market and may, if unsuccessful, be limited in its
attempt to become a viable company.
6. Reliance on Management: Lack of Experience in Automobile Lease
Financing/Funding. The possible success of the Company is expected to be largely
dependent on the continued services of Mr. Charles Adams, because Mr. Mintmire,
the Company's sole director and executive officer, does not currently have any
experience or expertise in the automobile lease finance/funding industry.
Virtually all decisions concerning the clients to contact, the type of lease
financing/funding programs to design and direct marketing material to
disseminate and the establishment of a client profile database by the Company
will be made or significantly influenced by Mr. Adams. He is presently serving
as manager of his own lease finance/funding company and is required to devote a
significant amount of time to the conduct of that company's business. This
potential risk is even more important in this Offering since the Company's
business is dependent, to a significant degree, upon the performance of one key
individual, Mark A. Mintmire, the departure or disabling of whom could have a
material adverse effect on the Company's performance. (See "The Company.") Mr.
Mintmire and Mr. Adams are expected to devote only such time and effort to the
business and affairs of the Company as may be necessary to perform their
responsibilities on behalf of the Company. The loss of the services of Mr. Adams
would adversely affect the conduct of the Company's business and its prospects
for the future. The Company presently holds no key-man life insurance on the
lives of, and has no employment contract or other agreement with, Mr. Mintmire
or Mr. Adams.
7. No Client Base. The Company was only recently organized. While the Company
intends to engage in the automobile lease finance/funding industry, the Company
currently has no clients. Further, the very limited funding currently available
to the Company will not permit it to commence business operations in the
automobile lease finance/funding industry except on a very limited scale. There
can be no assurance that the debt and/or equity financing, which is expected to
be required by the Company in order for the Company to continue in business
after the expiration of the next six (6) to nine (9) months, will be available.
The Company has no clients presently and there can be no assurance that it will
be successful in obtaining clients in its initial prospective marketing area
encompassing Palm Beach and Broward Counties (Florida). The Company does not
expect to have long-term contracts with any clients; thus, management believes
that the Company must, in order to survive, ultimately obtain the loyalty of a
large volume of clients. The Company could be expected to experience substantial
difficulty in attracting the high volume of clients in the prospective target
market which would enable the Company to achieve commercial viability. Moreover,
the Company will be dependent upon Mr. Charles Adams, who has approximately two
and one-half (2 1/2) years of experience in the automobile lease
financing/funding industry.
8. High Risks and Unforeseen Costs Associated with the Company's Entry into
the Automobile Lease Finance/Funding Industry. There can be no assurance that
the costs for the establishment of a client base or for the obtaining of a
substantial volume of direct automobile lease financing directly with consumers
by the Company will not be significantly greater than those estimated by Company
management. Therefore, the Company may expend significant unanticipated funds or
significant funds may be expended by the Company without development of a
commercially viable automobile lease financing/funding business. There can be no
assurance that cost overruns will not occur or that such cost overruns will not
adversely affect the Company. Further, unfavorable general economic conditions
and/or a downturn in client confidence has in the past had, and could be
expected in the future to have, an adverse affect on client ability to sell
automobiles which could, in turn, adversely affect the Company's business.
Additionally, competitive pressures and changes in client mix, among other
things, which management expects the Company to experience in the uncertain
event that it achieves commercial viability, could reduce the Company's gross
profit margin from time to time. Accordingly, there can be no assurance that the
Company will be capable of establishing itself in a commercially viable position
in local, state and nationwide automobile lease financing/funding industry. (See
"The Business.")
9. Conflict s of Interest. There are existing and potential conflicts of
interest, including time, effort and corporate opportunity, involved in the
participation by the Company's executive officers and director in other business
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entities and transactions. (See "Related Party Transactions" with regard to
policies to mitigate such potential conflicts. Nonetheless, Mr. Adams is the
President and manager of his own lease finance/funding company (which, by virtue
of his relation to the Company, is an affiliate of the Company) will divide his
time and effort between the Company, his existing employment agency and his
other business obligations. Accordingly, Mr. Adams and Mr. Mintmire may become
subject to direct conflicts of interest and the corporate opportunities doctrine
with respect to business which come to their attention.
Because of the existing and/or potential future associations of the
Company's executive officers and directors in various capacities with other
firms involved in a range of business activities and because of the limited or
minimal amount of time and effort which is expected to be devoted to the Company
by such persons, there are existing and potential conflicts of interest in their
acting as executive officers and directors of the Company. At least initially,
none of the executive officers or directors of (and the key consultant to) the
Company will be able to devote a significant amount of time or effort to the
business and affairs of the Company because of their simultaneous participation
in, employment by and/or commitments to other firms involved in a range of
business activities. In addition, all of such persons are or may become, in
their individual capacities, officers, directors, controlling shareholders
and/or partners of other entities (in addition to Mr. Adams' existing business)
involved in a variety of businesses which are engaged, or may in the future
engage, in various transactions, or compete directly, with the Company.
Conflicts of interest and transactions which are not at arm's-length may arise
in the future if the Company's executive officers and/or directors are involved
in the management of any company which transacts business, or competes directly
with, the Company.
10. No Assurance of Profitability; Dividends at Discretion of Management; No
Current Plans to Pay Dividends. Dividends, if any, to Shareholders are in the
discretion of management. No assurance can be given that the Company's services
and products will be accepted in the marketplace or that there will be
sufficient revenues generated for the Company to be profitable. Not only has the
Company not paid any dividends to date, it anticipates that, for the foreseeable
future, it will retain any earnings for use in the operation and future
expansion of its business. Moreover, the Company may be restricted from paying
dividends to its Shareholders under future credit or other financing
agreement(s). (See "Related Party Transactions - Dividends Would Reduce Funds
Available"and "Absence of Current Public Market and Dividend Policy.")
11. Governmental Regulation and Legal Uncertainties. The Company's business is
subject to extensive federal, state and local regulation and supervision. Such
regulation, among other things, requires the Company to limit interest rates,
fees and other charges related to finance contracts. Such regulations exist
primarily for the benefit of consumers, rather than for the protection of
dealers or finance companies and could limit the Company's discretion in
operating its business. Noncompliance with any applicable statutes or
regulations could result in the suspension or revocation of any license at
issue, as well as the imposition of civil fines and criminal penalties.
Specifically, the Company's automobile lease financing/funding activities in
Florida are subject to existing Florida statutes which limit the interest rate
which a lender may charge on consumer finance contracts. Before expanding the
companies operations to Atlanta, Georgia, the Company must consider the impact
of usury laws in Georgia. To the extent that the interest rates and fees charged
by the Company are limited by the application of maximum allowable interest
rates and charges that in the future may be lower than those it currently
charges, the Company's financial condition, results of operations or cash flows
may be adversely affected.
12. Ability to Grow. The Company expects to grow through internal growth, by
granting franchises and through acquisitions. The Company plans to expand its
business from its current location and by entry into other markets. There can be
no assurance that the Company will be able to create a market presence, or if
such market presence is created, to profitably expand its market presence or
successfully enter other markets. The ability of the Company to grow will depend
on a number of factors, including the availability of working capital to support
such growth, existing and emerging competition and the Company's ability to
maintain sufficient profit margins in the face of an increasingly competitive
industry. The Company must also manage costs in a changing regulatory
environment, adapt its infrastructure and systems to accommodate growth and
recruit and train qualified personnel.
The Company also plans to expand its business, in part, through
acquisitions primarily of independently owned and operated automobile lease
finance businesses. Although the Company will continuously review potential
acquisition candidates, it has not entered into any agreement, understanding or
commitment with respect to any acquisitions at thistime. There can be no
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assurance that the Company will be able to successfully identify suitable
acquisition candidates, complete acquisitions on favorable terms, or at all, or
integrate acquired businesses into its operations. Moreover, there can be no
assurance that acquisitions will not have a material adverse effect on the
Company's operating results, particularly in the fiscal quarters immediately
following the consummation of such transactions, while the operations of the
acquired business are being integrated into the Company's operations. Once
integrated, acquisitions may not achieve comparable levels of revenues,
profitability or productivity as at then existing Company-owned locations or
otherwise perform as expected. The Company is unable to predict whether or when
any prospective acquisition candidate will become available or the likelihood
that any acquisitions will be completed. The Company will be competing for
acquisition and expansion opportunities with entities that have substantially
greater resources than the Company. In addition, acquisitions involve a number
of special risks, such as diversion of management's attention, difficulties in
the integration of acquired operations and retention of personnel, unanticipated
problems or legal liabilities, and tax and accounting issues, some or all of
which could have a material adverse effect on the Company's results of
operations and financial condition.
Franchise growth poses the additional risk of the inability of the Company
to control the quality of services provided by its franchise associates.
Moreover, the failure of any franchise associate to pay royalties due to the
Company could have a material adverse effect on the Company's financial
condition and results of operations. At such time as the Company enters into
franchise agreements, the Company may be subject to claims asserting that it is
vicariously liable for the damages allegedly caused by the franchisees.
Generally, franchiser liability for the acts or inactions of its franchisees are
based on agency concepts. The Company intends for its franchise agreements to
state that the parties are not agents and that the franchisees control the
day-to-day operations of their businesses. Furthermore, it is intended that the
franchise agreements will require the franchisees to undertake certain efforts
to inform the public that they are not agents of the Company and that they are
independently owned and operated. Moreover, the Company will take certain
additional steps to insulate its potential liability based on claims from the
franchisee's conduct including requiring the franchisees to indemnify the
franchiser for such claims and mandating that the franchisees carry certain
insurance coverage naming the Company as an additional insured. Despite these
efforts to minimize the risk of vicarious liability, there can be no assurance
that a claim will not be made against the Company, nor that the indemnification
requirements and insurance coverage will be sufficient to cover any judgments,
settlements or costs relating to such a claim.
For the Company to expand its business operations, it must continue to
improve and expand the expertise of its personnel and must attract, train and
manage qualified managers and employees to oversee and manage its contemplated
expanded operations. It is the intention of the Company to significantly expand
its existing business operations and management anticipates that significant
expansion of its operations will continue to be required in order to address
potential market opportunities. Such expansion will subject the Company to a
variety of risks associated with rapidly growing companies. In particular, the
Company's growth may place a significant strain on its accounting systems,
internal controls and oversight of its day-to-day operations. To manage its
growth, the Company must implement, improve and effectively utilize its
operational, management, marketing and financial systems and train and manage
its future employees. These individuals will not have previously worked together
and would be required to integrate as a management team. There can be no
assurance that the Company will be able to manage effectively the expansion of
its operations or that the Company's current personnel, systems, procedures and
controls will be adequate to support the Company's operations. Any failure of
management to manage effectively the Company's growth could have a material
adverse effect on the Company's business, results of operations and financial
conditions. (See "-Dependence on Key Personnel." Although management intends to
ensure that its internal controls remain adequate to meet the demands of further
growth, there can be no assurance that its systems, controls or personnel will
be sufficient to meet these demands. Inadequacies in these areas could have a
material adverse effect on the Company's business, financial condition and
results of operations.
13. Competition. The market for financing "credit-impaired" and/or "sub-prime"
car buyers is highly competitive. The Company's competitors include local,
regional and national automobile dealers, used car finance companies and other
sources of financing for automobile purchases, many of which are larger and have
greater financial and marketing resources than the Company. Historically,
commercial banks, savings and loan associations, credit unions, captive finance
subsidiaries of automobile manufacturers and other consumer lenders, many of
which have significantly greater resources than the Company, have not competed
for financing for credit-impaired used car buyers. To the extent that
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such lenders expand their activities in the credit-impaired market, the
Company's financial condition, results of operations or cash flows could be
materially and adversely affected. Moreover, many of the Company's competitors
have significantly greater name recognition and have greater marketing,
financial and other resources than the Company. The Company expects that there
will be significant consolidation in automobile lease financing/funding of
credit- impaired and/or sub-prime borrowers, resulting in increased competition
from larger national and regional companies. There can be no assurance that the
Company will be able to compete effectively against such competitors in the
future.
14. Seasonal Variations in Results and Business Cycle Exposure. The Company
expects to experience higher revenues in its first and second quarters because
of an observed correlation between federal income tax refunds and their use as
down-payments on the purchase of new and used automobiles. In addition, the
Company expects to experience lower revenues in the third and fourth quarters
due to lower overall economic activity. (See "The Company.") Moreover, the
automobile industry historically experiences cyclical growth which follows
general economic cycles. In times of economic downturns, the automobile industry
tends to experience similar periods of decline and recession as those
experienced by the general economy. The automobile industry is greatly
influenced by consumer confidence, employment rates, general economic
conditions, interest rates, levels of personal discretionary spending and credit
availability. There can be no assurance that the automobile industry will not
experience protracted periods of decline in sales in the future. Any protracted
declines will have an adverse negative impact on the Company's financial
condition, results of operations and/or cash flows.
The Company's quarterly operating results may in the future vary
significantly depending upon such factors as the timing of new announcements and
customer subscriptions. The sales cycle could be lengthy and subject to a number
of significant risks over which the Company has little or no control, including
customers' budgetary constraints and general economic conditions. Due to the
foregoing factors, quarterly revenue is difficult to forecast. Additionally, if
quarterly revenue levels are below expectations, operating results are likely to
be materially adversely affected. In particular, net income, if any, may be
disproportionately affected by a reduction in revenue because only a small
portion of the Company's expenses vary with revenue.
15. Sensitivity to Interest Rates. The Company's revenues will be derived from
automobile lease finance/funding income which results from the difference
between the rate of interest it pays on the funds it borrows and the rate of
interest it earns pursuant to the finance contracts in its portfolio. While the
finance contracts that the Company services is expected to bear interest at
fixed rates, the Company's indebtedness generally bears interest at floating
rates. In the event the Company's interest expense increases, the Company would
seek to compensate for such increases by raising the interest rates on its new
finance contracts. To the extent the Company is unable to do so because of legal
limitations or otherwise, the net margins on the Company's finance contracts
would decrease, thereby adversely affecting the Company's financial condition,
results of operations or cash flows.
16. Lack of Working Capital Funding Source. The Company expects to receive
payments on the automobile lease financing/funding receivables on a timely
basis. However, the nature of the sub-prime lending market will require that the
Company plan for a reserve to be held for non-performing receivables. In the
event that such reserve for non- performing receivables increases substantially,
the Company's working capital will be negatively impacted directly impairing
operations. In addition, as new offices are established or acquired, or as the
existing office is expanded, there will be increasing requirements for cash to
fund the Company's plans for expansion. The Company has no current source of
working capital funds and, should the Company be unable to secure additional
financing on acceptable terms, its business, financial condition, results of
operations and liquidity would be materially adversely affected.
17. Publicly Reporting Company; No Current Public Market for Shares. Because
the Company's Shares are registered with the U.S. Securities and Exchange
Commission (the "SEC") under the Securities Exchange Act of 1934 (the "Exchange
Act"), it is a reporting company. As a reporting company, it is required to file
quarterly reports on Form 10-QSB and annually on Form 10-KSB and, in each case,
is required to provide the financial and other information specified in such
forms. In addition, the Company would be required to file on Form 8-K in the
event there was a change of control, if the Company acquires or disposes of
assets, if there is a bankruptcy or receivership, if the Company changes its
certified accountants after certain resignations of directors and upon the
occurrence of other events which may be material to Shareholders. Once these
Shares are registered under the Securities Act of 1933 (the "Securities Act"),
the Company intends to seek listing on the NASDAQ Bulletin Board ("OTCBB")
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concurrent with the date of this Prospectus. Nonetheless, except for thin
trading in the OTC "Pink Sheets," there is no public market for the shares of
common stock at this time. Sales of Shares in this Offering by the Company and
Selling Shareholders, respectively, may have a depressive effect on the market
price of the Company's common stock, should a public market develop for such.
Such sales also might impede future financing by the Company. (See "Security
Ownership of Certain Beneficial Owners and the Principal Shareholder" and
"Selling Shareholders.") However, until such time, a purchaser of Shares may not
be able to liquidate his or her investment and Shares may not be readily
acceptable as collateral for loans. No assurance can be given as to the
liquidity of the trading market for the Shares or that an active public market
will develop or, if developed, will continue. If an active public market does
not develop or is not maintained, the market price and liquidity of the Shares
may be adversely affected. Consequently, holders of Shares acquired pursuant to
this Offering may not be able to liquidate their investment in the event of an
emergency or for any other reason, and the Shares may not be readily accepted as
collateral for a loan. Accordingly, prospective investors should consider the
purchase of Shares only as a long-term investment.
18. Current Lack of Secondary Trading Exemption. In the event a market develops
in the Shares, which there can be no assurance, secondary trading in the
Company's common stock will not be possible in each state until the Shares of
are qualified for sale under the applicable securities laws of the state or the
Company verifies that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. While
normally available once OTCBB status is achieved, there can be no assurance that
the Company will be successful in registering or qualifying the common stock for
secondary trading, or availing itself of an exemption for secondary trading in
the common stock, in any state. If the Company fails to register or qualify, or
obtain or verify an exemption for the secondary trading of, the common stock in
any particular state, the Shares could not be offered or sold to, or purchased
by, a resident of that state. In the unlikely event that a significant number of
states refuse to permit secondary trading in the Company's common stock, a
public market for the common stock will fail to develop and the Shares could be
deprived of all or portion of its value.
19. Control by the Principal Shareholder; No Cumulative Voting; and Possible
Anti-Takeover Effects. The present shareholders of the Company's common stock
will, by virtue of their percentage share ownership and the lack of cumulative
voting, be able to elect the entire Board of Directors, establish the Company's
policies and generally direct its affairs. The election of directors and other
questions will be decided by a majority vote. Since cumulative voting is not
permitted and one-third of the Company's outstanding common stock constitutes a
quorum, investors who purchase shares of the Company's common stock may not have
the power to elect even a single director and, as a practical matter, the
current management will continue to effectively control the Company.
Accordingly, persons investing in the Company's common stock will have no
significant voice in Company management, and cannot be assured of ever having
representation on the Board of Directors. (See "The Company -- Security
Ownership of Certain Beneficial Owners and the Principal Shareholder.")
Specifically, upon consummation of the Offering, at least 68.9% of the Company's
outstanding Shares will be beneficially owned by the Company's sole principal,
Mark A. Mintmire (the "Principal Shareholder.") As a result of this ownership,
management (and more specifically, Mr. Mintmire) will have significant influence
over the management policies and corporate affairs of the Company. Concentration
of large amounts of the Company's Shares in the hands of management may also
make more difficult any takeover, buy-out or change of control of the Company
not approved by Mr. Mintmire. Consequently, the Principal Shareholder may be
able to effectively control the outcome on all matters submitted for a vote to
the Company's Shareholders (particularly if significantly less than the
$1,000,000 maximum is raised). Accordingly, at least initially, the Principal
Shareholder will be able to elect all of the Company's directors. Such control
by the Principal Shareholder may have the effect of discouraging certain types
of transactions involving an actual or potential change of control of the
Company, including transactions in which holders of Shares might otherwise
receive a premium for their Shares over then current market prices.
20. Possible Adverse Effect of Penny Stock Regulations on Liquidity of Common
Stock in any Secondary Market. In the event a market develops in the Company's
shares, of which there can be no assurance, then if a secondary trading market
develops in the shares of common stock of the Company, of which there can be no
assurance, the common stock is expected to come within the meaning of the term
"penny stock" under 17 CAR 240.3a51-1 because such Shares are issued by a small
company; are low-priced (under five dollars); and are not traded on a national
stock exchange or the NASDAQ National Market System or SmallCap Market. The SEC
has established risk disclosure requirements for broker-dealers participating in
penny stock transactions as part of a system of disclosure and regulatory
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oversight for the operation of the penny stock market. Specifically, Rule 15g-9
under the Exchange Act obligates a broker-dealer to satisfy special sales
practice requirements, including a requirement that it make an individualized
written suitability determination of the purchaser and receive the purchaser's
written consent prior to the transaction. Further, the Securities Enforcement
Remedies and Penny Stock Reform Act of 1990 require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure
instrument that provides information about penny stocks and the risks in the
penny stock market. Additionally, the customer must be provided by the
broker-dealer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and the salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. For so long as the Company's common stock is considered
penny stock, the penny stock regulations can be expected to have an adverse
effect on the liquidity of the common stock in the secondary market, if any,
which develops.
21. Self-underwritten Offering; No Commitment to Purchase Shares; No Market
Maker. Because there is no firm commitment for the purchase of Shares, there can
be no assurance that the Company will sell the intended $1,000,000 aggregate
offering. No underwriter, placement agent or other person has contracted with
the Company to purchase or sell all, or a portion of, the Shares offered hereby
or in the future. Accordingly no commitment exists by anyone to purchase all or
any part of the Shares being offered hereby and, consequently, the Company can
give no assurance that any of the Shares will be sold. In fact, such risk factor
is greater in this Offering since Shares will be exclusively self-underwritten
- -- meaning without the use of securities brokers -- by the Company through Mark
A. Mintmire, its sole principal who has not previously conducted a
self-underwritten offering. (See 'Plan of Distribution" and "The Company --
Biographical Information.") Subscribers' funds may thus be retained in the
escrow account for up to approximately nine (9) months following the date of
this Prospectus. To the extent that significantly less money is raised than the
$1,000,000 maximum, the Company's operating costs will be allocated among
relatively fewer Shares.
22. Broad Discretion of Management with Regard to Application of Proceeds. The
amounts set forth in the "Application of Proceeds" section indicates the
proposed use of proceeds from this Offering. However, the actual expenditures
may vary substantially from these estimates depending upon the economic
conditions and the success, if any, of the Company's business. A significant
portion of the net proceeds of this Offering has been allocated, among other
uses, to developing its lines of credit for the purchase of leased vehicles as
well as for working capital purposes. While the Company expects to use proceeds
of this Offering as outlined in "Application of Proceeds," the Company retains
broad discretion as to the specific use of such funds. For example, as described
in such discussion $55,050 (55.05%) of funds raised are expected to be used for
financing and funding lease receivables if the $100,000 minimum is achieved but
increases to $490,050 (89.10%) at $550,000 and $920,050 (92.01%) at the
$1,000,000 maximum.
23. Dependence on Key Personnel. The Company's success depends to a significant
extent upon, among other factors, the continued service of its key senior
executive, Mark A. Mintmire, and its key consultant, Charles Adams, and on the
Company's ability to attract, retain and motivate qualified personnel, including
Mr. Mintmire. The inability to replace or attract new qualified personnel could
have a material adverse effect on the Company. (See "The Company - Management.")
24. Arbitrary Offering Price; Dilution. There has been no prior secondary
market for the Shares. The common stock's price per Share in this Offering has
been arbitrarily determined by the Company's board of directors and bears no
relationship to the Company's assets, book value or net worth. The Company's
offering price per Share is substantially in excess of the net tangible book
value as a "start-up". Accordingly, this Offering will result in immediate and
substantial dilution of the net tangible book value per common share. Thus,
investors who purchase Shares offered hereby will experience immediate dilution
based on the difference between the subscription price and the net tangible book
value per common share. Purchasers of Shares during at least the Initial
Offering Period will pay $1.00 per share which, upon completion of this
Offering, will have a net tangible book value (based on the Company's balance
sheet as of December 31, 1999, after giving effect to this Offering) of
approximately $0.03 if the $100,000 minimum offering is achieved and $0.26 if
the $1,000,000 maximum offering is achieved. That represents dilution of $0.97
per share (or approximately 97%) at the $100,000 level and $0.74 per share (or
approximately 74%) at the $1,000,000 level. (See "Capitalization," "Dilution"
and "Description of Capital Stock -- Generally.")
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27. Financing Future Activities. While the Company has no long-term debt
currently, the Company anticipates that the proceeds of this Offering will be
used to finance its future activities (See "Application of Proceeds" and "Need
for Additional Capital; Proceeds form Sale of Shares May be Inadequate; Going
Concern Qualification Expressed by Auditor.") The Company may issue debt
securities from time to time subject, among other things, to compliance with
applicable securities law considerations and possible future credit or other
financing agreements. Accordingly, the future issuance of debt by the Company
could have a positive or an adverse impact on the Shareholders.
In addition to the above risks, businesses are often subject to risks not
foreseen by management. In reviewing the Prospectus, potential investors should
keep in mind other potential risks that could be important.
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RELATED PARTY TRANSACTIONS
Because of certain statutory and case law relating to broad discretion
granted management of a company, typically directors and officers of a
corporation are indemnified by and have limited monetary liability to its
Shareholders. Failure of management to satisfy its fiduciary responsibility to
Shareholders could subject management to certain claims. (See "Fiduciary
Responsibility of the Company's Management" and "Description of Capital Stock --
Directors' Liability.") The following inherent or potential conflicts of
interests should be considered by prospective investors before subscribing for
Shares. (See disclaimer at the end of the following discussion regarding certain
specific transactions.)
On October 20, 1997, the Company's inception, it 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 as of the date of this Prospectus of
approximately 71.43% of the Company's outstanding common stock, in consideration
and exchange for services performed for the Company in connection with the
organization of the Company.
On October 20, 1997, the Company issued 100,000 shares of unrestricted
common stock to Mr. Donald F. Mintmire, the legal counsel of the Company and
record and beneficial owner of approximately 3.57% of the Company's outstanding
common stock, in exchange for services performed for the Company in connection
with the organization of the Company valued at $500.
On October 20, 1997, the Company issued 100,000 shares of unrestricted
common stock to Mr. Charles Adams, the key consultant of the Company and record
and beneficial owner of approximately 3.57% of the Company's outstanding common
stock, in consideration and exchange for services performed for the Company in
connection with the organization of the Company.
On April 14, 1998, the Company sold a total of 20,000 shares of
unrestricted common stock to Mark A. Mintmire, the sole executive and director
of the Company and the record and beneficial owner of approximately 71.43% of
the Company's outstanding common stock, for certain business consulting services
performed for the Company valued at $200.
At the current time, the Company has no provision to issue any additional
securities to management, promoters or their respective affiliates or
associates. At such time as the Board of Directors adopts an employee stock
option or pension plan, any issuance would be in accordance with the terms
thereof and proper approval. Although the Company has a very large amount of
authorized but unissued common and preferred stock which may be issued without
further shareholder approval or notice, the Company intends to reserve such
stock for certain offerings contemplated to implement continued expansion, for
acquisitions and for properly approved employee compensation at such time as
such plan is adopted.
1. Members of Management May Not Be Required to Devote Full-time to the
Business Activities of the Company. Mark A. Mintmire will not devote full time
to the activities of the Company. Similarly, future members of management may
have professional responsibilities to entities other than the Company. Those
external activities may be pursued within the discretion of each individual
member of management. However, as described in "Fiduciary Responsibility of the
Company's Management" below, those activities are subject to fiduciary standards
even if full- time is not devoted to the Company.
2. Dividends Would Reduce Funds Available for Expanding Operations. The amount
and frequency of dividends declared and/or distributed to Shareholders is solely
within the discretion of the Company. Since certain fees to management and/or
related parties are, directly or indirectly, related to assets of the Company
and the Company seeks to invest those funds to the maximum extent feasible,
management would suffer an economic disadvantage if the Company reduced its
assets through such distributions to Shareholders. Consequently, the Company
does not expect to declare dividends for the foreseeable future.
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3. No Independent Review. Investors should note that the Company and its
management are represented by the same counsel. Therefore, to the extent the
Company and this Offering would benefit by an independent review, such benefit
will not be available in this case.
4. Possible Related Party Transactions. The Company may in the future enter
into transactions with affiliates. (See disclaimer following.)
The Company believes that any past transactions with its affiliates have
been at prices and on terms no less favorable to the Company than transactions
with independent third parties. The Company may enter into transactions with its
affiliates in the future. However, the Company intends to continue to enter into
such transactions only at prices and on terms no less favorable to the Company
than transactions with independent third parties. In that context, the Company
will require any director or officer who has a pecuniary interest in a matter
being considered to recuse themselves from any negotiations. The Company's
Amended Articles of Incorporation provide that any related party contract or
transaction must be authorized, approved or ratified at a meeting of the Board
of Directors by sufficient vote thereon by directors not interested therein or
the transaction must be fair and reasonable to the Company. Mr. Adams, who is
not presently a director of the Company, has agreed, in the event that he is
elected to serve as a director of the Company in the future, that he would
abstain from voting on any related party contract or transaction involving his
existing business. Nevertheless, assuming Mr. Adams' future election to the
Company's Board of Directors and his abstention from voting on any related party
contract or transaction in accordance with his agreement, it would still be
possible for the Board of Directors of the Company, by a vote of a sufficient
number of disinterested directors, to authorize, approve or ratify such a
contract or transaction with Mr. Adams' existing business agency or any other
affiliate even if the terms were unfair to the Company and unreasonable. In any
event, any debt instruments of the Company in the future are expected generally
to prohibit the Company from entering into any such affiliate transaction on
other than arm's-length terms. In addition, a majority of the Board is (and must
continue to be) neither an officer nor have a pecuniary interest (other than as
a Shareholder or Director) in any transactions with the Company, in turn,
commencing immediately, a majority of the independent Board of Directors members
(defined as having no pecuniary interest in the transaction under consideration)
will be required to approve all matters involving interested parties.
FIDUCIARY RESPONSIBILITY OF THE COMPANY'S MANAGEMENT
Counsel has advised the Company's management it has a fiduciary
responsibility for the safekeeping and use of all assets of the Company. (See
"Related Party Transactions" and "Risk Factors -- Conflicts of Interest.")
Management is accountable to each Shareholder and required to exercise good
faith and integrity with respect to its affairs. (For example, whether under SEC
and/or general fiduciary principles, management cannot commingle property of the
Company with the property of any other person, including that of management.)
Cases have been decided under the common or statutory law of corporations
in certain jurisdictions to the effect that a Shareholder may institute legal
action on behalf of himself and all other similarly situated Shareholders (a
class action) to recover damages from management for violations of fiduciary
duties, or on behalf of a corporation (a corporation derivative action), to
recover damages from a third party where management has failed or refused to
institute proceedings to recover such damages. On the basis of federal and/or
state statutes, including most critically the Florida General Corporation Law,
and rules and decisions by pertinent federal and/or state courts, accordingly,
(a) Shareholders in a corporation have the right, subject to the provisions of
the Federal Rules of Civil Procedure and jurisdictional requirements, to bring
class actions in federal court to enforce their rights under federal securities
laws; and (b) Shareholders who have suffered losses in connection with the
purchase or sale of their shares may be able to recover such losses from a
corporation's management where the losses result from a violation by the
management of SEC Rule 10b-5, promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). It should be noted, however, that in
endeavoring to recover damages in such actions, it would be generally difficult
to establish as a basis for liability that the Company's management has not met
such standard. This is due to the broad discretion given the directors and
officers of a corporation to act in its best interest.
-19-
<PAGE>
The SEC has stated that, to the extent any exculpatory or indemnification
provision purports to include indemnification for liabilities arising under the
Securities Act of 1933, as amended ( the "Securities Act"), it is the opinion of
the SEC that such indemnification is contrary to public policy and, therefore,
unenforceable. Shareholders who believe that the Company's management may have
violated applicable law regarding fiduciary duties should consult with their own
counsel as to their evaluation of the status of the law at such time.
SELLING SHAREHOLDERS
The Selling Shareholders listed below are offering an aggregate 800,000
Shares in addition to the up to 1,000,000 Shares being sold by the Company
pursuant to this Prospectus. (See "Risk Factors.") Such Shares must be sold by
the Selling Shareholders in "brokers' transactions" as defined under pertinent
securities laws. Such Selling Shareholders (not the Company) will receive the
proceeds from the sale of their individual Shares.
<TABLE>
<CAPTION>
Amount Beneficially Owned
Name of Beneficial Owner Address of Beneficial Owner Prior to Offering Percent of Class (1)
- ------------------------ ---------------------------- ----------------- ----------------
<S> <C> <C> <C>
Charles Adams 219 Almeria 100,000 .03571
West Palm Beach, Fl 33405
Brannon C. Amtower 594 Wilbledon Road NE - Apt 6722 20,000 .00714
Atlanta, GA 30324
Angela Bartolosta 4309 W. Atlantic Boulevard - # 908 17,500 .00625
Coconut Creek, Fl. 33066
James Brock 1933 Radar Road N.E. 20,000 .00714
Atlanta, GA 30345
Kevin Bell 299 Northside #605 20,000 .00714
Atlanta, GA 30309
Kimberley Brown 4371 Winters Chapel Road - # 2826 17,500 .00625
Doraville, GA 30380
Michael Bunn 848 Myrtle Street N.E. 17,500 .00625
Atlanta, GA 30303
A. Rene Dervaes, Jr. 170 South Country Road 17,500 .00625
Palm Beach, Fl 33480
Marie Evans 2583 McCurdy Way 17,500 .00625
Decatur, GA 30033
Rodney Ford 2281 Clifton Springs Road 20,000 .00714
Decatur, GA 30334
Jennifer Froehlich 928 Rosenal Road 20,000 .00714
Atlanta, GA 30306
Mark Gallagher 1238 Kendrick Road N.E. 17,500 .00625
Atlanta GA 30319
Marco Gollarza 333 Edgewood Avenue 17,500 .00625
Atlanta, GA 30312
Melinda Gore 2409 Chastain Drive 17,500 .00625
Atlanta, GA 30342
Mathew Hann 370 Alberta Terrace - #6-1 17,500 .00625
Atlanta, GA 30305
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
Amount Beneficially Owned
Name of Beneficial Owner Address of Beneficial Owner Prior to Offering Percent of Class (1)
- ------------------------ ---------------------------- ----------------- ----------------
<S> <C> <C> <C>
Roxanne Hemmerlein 1342 Eddy Road 20,000 .00714
Jacksonville, Fl 32211
Erin Hess 10005 Greenwood Avenue -- #3 17,500 .00625
Atlanta,GA 30306
Scott Jackson 366 Barnett Street NE 20,000 .00714
Atlanta, GA 30306
Brian S. Jansma 1825 Charline NE 20,000 .00714
Atlanta, GA 30306
Christina Kelly 676 Myrtle Street 17,500 .00625
Atlanta, GA
Legal Computer Technology, 277 Royal Poinciana Way -- #195 17,500 .00625
Inc. Palm Beach, FL 33480
Kerry Matheiu 740 NW 103 Terrace 17,500 .00625
Pembroke Pines, Fl 33325
Mary C. McGowan 2057 Jordan Terrace N.E. 20,000 .00714
Atlanta, GA 30345-231
Meka McNeal 7202 Trolley Aquare Crossing 17,500 .00625
Atlanta, GA 30305
Samuel Melice II 600 Davis Road North -- #87 17,500 .00625
Palm Springs, FL 33461
Donald F. Mintmire 205 Sunrise Avenue - #204 17,500 .00625
Palm, Beach, FL 33480
Amy Moss 1406A Druid Valley Drive 17,500 .00625
Atlanta, GA 30379
Lionel Obriot 980 Taft Avenue -- #11 17,500 .00625
Atlanta, GA 30309
Ocean Group 205 Sunrise Avenue - #204 17,500 .00625
Holdings, Inc. Palm Beach, Fl 33480
Douglas Paxton 258 8th Street N.E. 17,500 .00625
Atlanta, GA 30309
Cindy Pelierin 1570 Dekalb - #P 20,000 .00714
Atlanta, GA 30307
Sammy Peroulas 1825 Charline Avenue 20,000 .00714
Atlanta, GA 30306
Forrest Pitt 752 Glenwood Avenue S.E. - # 615 17,500 .00625
Atlanta, GA 30316
William Ragsdale 1515 N. Highland -- #3 20,000 .00714
Atlanta, GA 30305
Shannon Russel 500 Means Street -- Studio H 17,500 .00625
Atlanta, GA 30318
John Stagl 106 Barefoot Coove 17,500 .00625
Hypoluxo, FL
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
Amount Beneficially Owned
Name of Beneficial Owner Address of Beneficial Owner Prior to Offering Percent of Class (1)
- ------------------------ ---------------------------- ----------------- ----------------
<S> <C> <C> <C>
Julia Taylor 5022 Roderick Trave 20,000 .00714
Marietta, GA 30056
Geoffrey Watson 5022 Rodrick Trace 20,000 .00714J
Marietta, GA 30058
Jerry Weldon 685 W/ Wesley Road 17,500 .00625
Atlanta, GA 30305 ------ ------
Total 800,000 28.5712%
======= ========
</TABLE>
-22-
<PAGE>
APPLICATION OF PROCEEDS
The net proceeds to the Company from the sale of the shares of common stock
(the "Shares") offered hereby (after associated organization and offering
expenses approximating $34,950) are estimated to be $965,050 if the $1,000,000
maximum offering is achieved and $65,050 if the $100,000 minimum offering is
achieved. (See "Capitalization" below with regard to the Company's
capitalization currently and that which will exist if the minimum or maximum
offering is achieved.) The Company will not receive any of the proceeds from the
sales of Shares by the Selling Shareholders. (See "Selling Shareholders" above.)
The Company expects that such net proceeds will be used to finance
expansion of its contemplated activities as well as for general corporate
purposes. Specifically, in the event only the minimum amount of funding is
subscribed, the Company will concentrate its efforts primarily on expanding its
lines of credit and/or providing collateral for fleet financing. In the event
that more than the minimum is subscribed, the Company intends to be more
aggressive in implementing its business plan and further develop operations,
personnel and projects. Anticipated application of proceeds below does not,
however, include cash flow from revenue. The Company anticipates receiving
revenues from operations, but there can be no assurance that such revenues will
be sufficient to generate positive cash flow before proceeds from this Offering
are expended. At anticipated levels of capital expenditures (so-called "burn
rates"), proceeds from the Minimum Offering are expected to fund the Company's
operations for 6-9 months. (See "Risk Factors.")
Gross Proceeds (1) (2)
<TABLE>
<CAPTION>
$100,000 $550,000 $1,000,000
-------- -------- ----------
Dollar Amount Percentage Dollar Amount Percentage Dollar Amount Percentage
------------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Offering Expenses $34,950 34.95% $34,950 6.35% $34,950 3.49%
Financing and Funding 55,050 55.05% 490,050 89.10% 920,050 92.01%
Working Capital 10,000 10.00% 25,000 4.50% 45,000 4.50%
------ ------ ------ ----- ------ -----
Gross Proceeds 100,000 100% 550,000 100% 1,000,000 100%
======= ==== ======= ==== ========= ====
Less Offering Expenses 34,950 34.95 34,950
------ ----- ------
Net Proceeds $65,050 $515,050 $965,050
======== ========
</TABLE>
- ------------------------------
(1) The salaries of the Company's sole executive officer and key consultant are
estimated to aggregate $60,000 ($30,000 each) in 2000. The balance of their
respective $20,000 salaries and consulting fees will be deferred for each until
the Company generates at least $1,000,000 in lease receivables. It is assumed
that revenues generated from Company operations will be sufficient to pay the
aggregate $60,000 non-deferred compensation described above and thus no portion
of the net proceeds from this Offering are expected to be used for such purpose.
(2) In order to commence operations, the Company incurred costs, such as office
rent, equipment and printing, which have been paid by Mark A. Mintmire, the
Company's sole executive officer and controlling Shareholder. The Company will
not reimburse Mr. Mintmire for these de minimus costs.
The Company reserves the right to change the application of proceeds
depending on unforeseen circumstances at the time of this Offering. The intent
is to implement the Company's business plan to the extent possible with funds
raised in this Offering. Unforeseen events, timing, the general state of the
economy and the Company's ability or inability to generate revenue could greatly
alter the application of proceeds from that shown above.
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company
as of March 31, 2000 and (ii) the pro forma capitalization of the Company on the
same date, reflecting (a) the sale of the 100,000 Shares offered by the Company
hereby for estimated net proceeds of 0.65 per Share (the "Minimum Offering");
and (b) the sale of 1,000,000 Shares (maximum) offered by the Company for
estimated net proceeds of 0.97 per Share (the "Maximum Offering").
(See "Application of Proceeds" and "Description of Capital Stock.")
-23-
<PAGE>
<TABLE>
<CAPTION>
As Adjusted
Actual Minimum Maximum
------ -------------------
<S> <C> <C> <C>
Shareholders' equity
Common stock, $.0001 par value; 50,000,000 Shares authorized;
2,800,000Shares issued and outstanding; 2,900,000 (Minimum) and
3,800,000 (Maximum)
Shares to be issued and outstanding, as adjusted $280 $290 $380
Additional Paid-in capital 22,930 88,150 988,060
Deficit accumulated during the development stage (15,387) (15,387) (15,387)
-------- -------- --------
Total Shareholders' equity and total capitalization $7,893 $72,963 $973,053
====== ======= ========
</TABLE>
DILUTION
The following table sets forth the percentage of equity the investors in
this Offering will own compared to the percentage of equity owned by the present
shareholders, and the comparative amounts paid for the Shares by the investors
as compared to the total consideration paid by the present shareholders of the
Company. (See "Description of Capital Stock," "Risk Factors" and
"Capitalization" for a more complete discussion of total number of Shares and
associated rights and consequences.)
Dilution for $100,000 Offering (1)
<TABLE>
<S> <C> <C> <C> <C>
Initial public offering price per Share $1.00 (100.0%)
Net tangible book value per Share before offering 0.003 (0.3%)
Increase per Share attributable to new Shareholders 0.027 (2.7%)
Pro forma net tangible book value per Share after offering $0.03 (3%)
------
Total dilution per Share to new Shareholders $0.97 (97%)
=====
</TABLE>
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
---------------- -------------------
Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shares 2,800,000 96.60 23,210 18.84 0.008
New Shares 100,000 0.40 100,000 81.16 1.00
------- ---- ------- ----- ----
2,900,000 100.00 123,210 100.00 0.04
========= ====== ======= ====== ====
</TABLE>
-24-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Dilution for $1,000,000 Offering (2)
Initial public offering price per Share $1.00 (100.0%)
Net tangible book value per Share before offering $0.003 (0.3%)
Increase per Share attributable to new Shareholders $0.257 (2.57%)
Pro forma net tangible book value per Share after offering $0.26 (2.6%)
-----
Total dilution per Share to new Shareholders $0.74 (74%)
=====
</TABLE>
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
---------------- -------------------
Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shares 2,800,000 73.6 $23,210 2.3 $0.008
New Shares 1,000,000 26.4 1,000,000 97.7 1.00
--------- ---- --------- ---- ----
3,800,000 100.00 $1,023,210 100.00 $0.269
========= ------ ========== ====== ======
</TABLE>
- ------
(1) Assumes issuance and sale of 100,000 of the Company's Shares during this
Offering Period in addition to the 2,800,000 Shares currently outstanding.
(2) Assumes issuance and sale of 1,000,000 of the Company's Shares during this
Offering Period in addition to the 2,800,000 Shares currently outstanding.
THE COMPANY
Introduction
SD Products Corp. (hereinafter referred to as the "Company") was organized
under the laws of Florida on October 20, 1997. The Company was organized by Mr.
Mark A. Mintmire, the executive officer and director of the Company, for the
purpose of engaging in the business of providing a lending (funding) source for
the purchase of leased automobiles, including limousines. (See "Management".) In
this regard, the Company has retained the services of Mr. Charles Adams to act
as a key consultant to the Company. (See "Employees and Consultants.") It is
anticipated that the Company will benefit from the synergy expected to result
from the combination of the specialized working experience and expertise of Mr.
Mintmire with Mr. Adams' experience in the industry. The Company's executive
offices are presently located at 2958 Braithwood Court, Atlanta, Georgia 30345
and its telephone number is (770) 414- 9596.
The Company generally has been inactive, having conducted no business
operations except organizational and fund raising activities since its
inception. The Company received gross proceeds in the amount of $23,000 from the
sale of a total of 800,000 shares of common stock, $.0001 per value per share
(the "Shares"), in two (2) offerings conducted pursuant to Section 3(b) of the
Securities Act of 1933, as amended (the "Act"), and Rule 504 of Regulation D
promulgated thereunder ("Rule 504"). These offerings were made in the State of
Georgia and the State of Florida. The Company undertook its first offering of
its Shares pursuant to Rule 504 on April 7, 1998 and its second offering of
shares of common stock pursuant to Rule 504 on June 24,1998. While no offering
memorandum was used in connection with these offerings, the business plan of the
Company was provided to each prospective investor. Neither Georgia nor Florida
required a disclosure document under the terms of the exemption under which
these offerings were made.
-25-
<PAGE>
The Company has had no employees since its organization. It is anticipated
that the Company's sole executive officer and director, along with the
consultant as described below, will receive reasonable paid and/or accrued
salaries for services as executive officers at such time as the Company
commences business operations. These individuals will devote such time and
effort as may be necessary to participate in the day-to-day management of the
Company. The Company proposes to engage in business as the provider of
financing/funding for automobile leases.
Business of Issuer
The following discussion of the financing market, as it relates to the
Company's medium and long term business objectives, is pertinent only if the
Company is successful in obtaining sufficient debt and/or equity financing to
commence operations as a lender and, in addition thereto, is able to generate
significant profits from operations (which are not expected in the foreseeable
future) and/or additional financing to continue in business and/or fund the
anticipated growth, assuming the Company's proposed business is successful.
There can be no assurance such financing can be obtained or that the Company's
proposed business will be successful. (See "Risk Factors.")
Mr. Mintmire decided to pursue the leasing/financing business via the
Company because of the belief that his formal education, when combined with Mr.
Adams' leasing business experience, will enable them to develop a successful
financing/funding company which will have the advantages of, among other things,
greater availability of capital and potential for growth through the vehicle of
a public company as compared to a privately-held company. The time required to
be devoted by each individual, including Mr. Mintmire and Mr. Adams, to manage
the day-to-day affairs of the Company is presently estimated to be approximately
five to ten hours per week. This time commitment on the part of these
individuals is expected to increase at such time, if ever, as the Company
obtains sufficient funding with which to commence the search for leases to
finance/fund.
The Company will be dependent upon its consultant, Mr. Adams, to develop
the client base with whom to arrange lease financing/funding. Mr. Adams has
extensive experience in the leasing business and has managed his own employment
leasing business for approximately the last two and one-half (2 1/2) years
(initially as a sole proprietor and the last six (6) months as a corporation).
The Company plans to use to its advantage Mr. Adams' reputation in the leasing
industry. Nevertheless, while Mr. Adams has been successful in the past, there
can be no assurance that he will be successful in building the client base
necessary for the successful operation of the Company.
The Company intends to lend funds for automobile lease financing/funding,
initially in the Palm Beach and Broward County, Florida area and thereafter in
selected areas nationwide. The Company plans to be able to provide a full
spectrum of lease financing/funding services for its clients.
In its initial phase, the Company will operate out of the facility provided
by Mr. Mintmire. Mr. Adams will begin by finding clients for the Company and
advising Mr. Mintmire in the operation of the lease financing/funding market. In
the event the Company requires additional capital during this phase, Mr.
Mintmire has committed to fund the operation until such time as additional
capital is available.
Due to the limited capital available to the Company as described in "Risk
Factors", the principal risks during this phase are that the Company is
dependent upon Mr. Adams' efforts, that Mr. Mintmire lacks experience and that
the Company will not be able to establish a sufficiently profitable client base
to establish the lease financing/funding business.
To implement the initial plan, the Company intends to initiate this public
offering in order to raise an additional $100,000 to $1,000,000. In the event
such placement is successful, the Company believes that it will have sufficient
operating capital to meet the initial expansion goals and operating costs for
approximately six (6) months. In the event the Company is not successful in
raising such funds, the Company believes that it will not be able to continue
operations past a period of six (6) to nine (9) months.
Even if the Company is successful at raising this additional money, there
can be no assurance that the implementation of the expansion of the initial plan
will increase the number of potential clients. By expanding, the Company may
face unforeseen costs associated with entry into the lease financing/funding
market. The Company still
-26-
<PAGE>
will be largely dependent upon Mr. Adams and to a limited extent upon Mr.
Mintmire to find suitable clients on a profitable and timely basis.
Additionally, Mr. Adams may have a conflict between the time demands of an
expanding business and the time requirements of his existing business. Although
the Company believes $100,000 is sufficient to cover operations for the
projected period, there can be no assurance that such funding can cover the
additional risks associated with expansion.
If the Company is able to generate enough revenue during the initial phase
to support the business in Palm Beach and Broward Counties, in the medium term,
the Company plans to open one (1) additional office each quarter until such time
as it has four (4) offices operating. The Company intends to open the first
expansion office outside of Palm Beach and Broward Counties in Atlanta, Georgia
since Mr. Mintmire already has an operation in that area and is familiar with
the business environment there. The Company anticipates that it will require an
additional $100,000 to fund one (1) year of operations at the Atlanta area
location for acquisition of office space, equipment and wages for clerical
staff. The Company also believes that Mr. Adams will be capable of managing the
Palm Beach and Broward Counties operation at this time, while Mr. Mintmire will
oversee Atlanta, Georgia and generally oversee the Palm Beach and Broward
Counties operation. To fund the expansion into Palm Beach and Broward Counties,
the Company intends to initiate this self-underwritten offering to raise
$100,000 to $1,000,000. If the Company is not successful in raising such
additional funds, the Company believes that it will not be able to operate a
Georgia location without creating a financial drain on the first location. Even
if it is successful, there can be no assurance that the Company will achieve any
acceptance in the Palm Beach and Broward Counties marketplace and may not
establish a sufficient client base to make the venture viable.
During the first quarter in which the Atlanta, Georgia office is operating,
the Company intends to seek funding through an additional offering, seeking an
additional $300,000. Such funds will be utilized to open the third and fourth
office during the next two quarters. While office space, clerical help,
equipment costs and operations for a one (1) year period are not anticipated to
exceed $100,000, the Company believes that both Mr. Adams and Mr. Mintmire
should be placed on an annual salary and that advertising and promotional costs
must be increased in order to increase the accessability to a broader range of
potential clients. Also, in order to be competitive with other automobile lease
finance /funding companies, the Company must implement an employee benefit
program. The Company believes that the additional $100,000 in this offering
should be sufficient to cover these increased costs for up to nine (9) months.
The Company plans to open its third office in Martin County since that is
immediately contiguous to Palm Beach and Broward County and its fourth office in
Dade County. The Company believes that by covering these contiguous counties in
South Florida and having coverage in Atlanta, Georgia, that it will have access
to a broader range of potential clients and a larger pool of potential client
lease financing/funding. Further, it believes that operations in the contiguous
Florida counties and in Atlanta, Georgia, will lead to economies of scale which
will increase the potential profitability of the Company. Areas in which the
Company believes it will have the benefit of the greatest economies of scale are
advertising, expenses and the availability of a larger automobile lease
finance/funding market.
The principal risks of these expanded operations would be unforeseen costs
associated with entry into the expanded market, increased costs associated with
a larger geographic area of coverage, additional clerical employee related
claims associated with a larger support staff, inability to establish a presence
in the expanded market place, increased competition and increased risk
associated with the lapse between purchasing the lease finance/funding contracts
and the receipt of the stream of cash flows related to each individual
automobile receivable. (See "Risk Factors.") Should the Company incur any large
liabilities because of its operations, which risk increases as the Company's
geographic coverage expands, such liabilities could have a substantially
detrimental affect upon the Company's financial condition. Further, should the
Company be unable to secure the financing required for the additional expansion,
the anticipated revenues from a reduced operation, while potentially able to
meet the operating needs of the Company, would impede the likelihood of
incremental revenue increases necessary for the long term financial success of
the Company.
The Company plans to monitor closely its medium term operations for
approximately one (1) year. If it has been successful in securing the necessary
financing and if each of the operations is capable of sustaining itself, the
Company intends to seek additional financing through the offering of additional
equity securities, conventional bank financing, small business administration
financing, venture capital and/or the private placement of corporate debt for a
total of approximately $1,000,000. There can be no assurance that any of these
financing sources will be available
-27-
<PAGE>
to the Company. If the Company plan to seek additional financing is successful,
the Company intends to open additional offices which compliment the Southern
Florida and Atlanta, Georgia operations, beginning in Atlanta, then expanding
into Martin County and Indian River County and to add a regional manager to
oversee these additional operations. The Company believes that such expansion
will achieve similar economies of scale as those which are anticipated by the
Palm Beach, Broward and Dade Counties expansion. Further, the Company believes
that such expansion will place the Company in a position to be a major force in
the lease purchase financing/funding industry in Florida and Georgia. If such
expansion is implemented, Mr. Adams and Mr. Mintmire believe that they will be
able to oversee the operation with the addition of the contemplated regional
manager.
The Company has not sought as of yet any debt financing since it believes
that any qualified venture capital firm will not loan any funds to the Company
until such time as it has completed at least two years of profitable operations.
Once it has met such criteria, the Company intends to seek out funds from
licensed venture capital firms and to negotiate terms which will fit the
financial capabilities of the Company. Since the Company does not intend to seek
debt financing until such time as it has several locations operating
successfully, it believes that it can negotiate appropriate placement and
repayment terms for such borrowings. However, there can be no assurance that
such funds will be available to it or that suitable terms which are most
advantageous to the Company can be negotiated. In addition, the Company does
not, at this time, anticipate that it will require substantial leverage to fund
the expanded operations. However, in the event the Company did receive debt
financing and in the event the Company is not successful in sustaining
operations or meeting such debt and defaulted in its payments on the debt, then
such debt financing would result in foreclosure upon the Company's assets to the
detriment of its Shareholders.
Although the Company is authorized to borrow funds, as discussed, it does
not intend to do so until such time as it has been operating for a given period
of time. At such time as the Company seeks borrowed funds, it does not intend to
use the proceeds to make payments to the Company's promoters(if any), management
(except as reasonable salaries, benefits and out of pocket expenses) or their
respective affiliates or associates, if any. The Company has no present
intention of acquiring any assets or other property owned by any promoter,
management or their respective affiliates or associates or acquiring or merging
with a business or company in which the Company's promoters, management or their
respective affiliates or associates directly or indirectly have an ownership
interest. Existing conflict of interest provisions are set forth in the Amended
Articles of Incorporation for the Company. Management is not aware of any
circumstances under which this policy, through their own initiative, may be
changed. Although there is no present potential for a related party transaction,
in the event that any payments are to be made to promoters and management such
will be disclosed to the security holders and no such payments will be made in
breach of the fiduciary duty such related persons have to the Company. (See
"Related Party Transactions.")
There are no arrangements, agreements or understandings between
non-management shareholders and management under which non-management
shareholders may directly or indirectly participate in or influence the
management of the Company's affairs. There are no arrangements, agreements or
understandings under which non- management shareholders will exercise their
voting rights to continue to elect the current directors to the Company's Board
of Directors.
In the event the Company is successful in securing the additional financing
for its long term expansion, it plans to seek acquisitions of qualified
companies which the Company believes will compliment its overall strategy inside
and outside of Florida. The Company will seek acquisitions of related companies
and expand its operations to eventually encompass the entire United States. At
such time as the Company enters the automobile lease finance/funding market
outside of Florida, the Company will be required to comply with applicable
regulations on a state-by-state basis regarding such entities.
Such increased expansion may increase greatly the risks associated with the
Company's operations. The Company will continue to be dependent upon obtaining a
sufficient client base which possesses an appropriate number of consumer lease
contracts. Increased operations and expansion into other geographic areas expose
the Company to the potential of unfavorable interpretation of government
regulations. In addition, the larger the geographic market, the greater the
chance of increased support staff costs. Furthermore, expansion will expose the
Company to competition from larger and more established automobile lease
finance/funding firms, many of whom have greater resources than the Company. The
Company anticipates that revenues from such expanded operations may result in
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greater revenue fluctuations as a result of seasonal variations in the
automobile sales market and the Company's support staffing needs. Also, the
Company will be required to pay wages to a larger support staff while still
experiencing 30 to 45 day delays in direct payments received from the new lease
financing/funding receivables. In addition, with expansion and implementation of
an employee benefit plan which is necessary in order to be competitive for
qualified employees, in the event such plan were to be disallowed, loss of
qualified status could have an adverse effect upon the Company. Finally, as a
larger Company, it could face possible adverse affects from fluctuations in the
general economy and business of its clients.
Another avenue available to the Company to aid its ability to expand is to
seek a reverse merger with a larger, public company. While the Company has no
present intention to seek such a merger, in the event that an appropriate
vehicle were to become known to the Company, the Board of the Company would
evaluate the relative risks and merits of such a merger to the overall plans for
the Company. The Company may also seek to expand by acquisitions of unrelated
companies which engage in related services such as industrial equipment
financing, aircraft lease financing and aircraft equipment financing.
As a reporting company the Company is required to file quarterly reports on
Form 10-QSB and annually on Form 10-KSB and, in each case, is required to
provide the financial and other information specified in such forms. In
addition, the Company would be required to file on Form 8-K in the event there
was a change of control, if the Company acquires or disposes of assets, if there
is a bankruptcy or receivership, if the Company changes its certified
accountants after certain resignations of directors and upon the occurrence of
other events which may be material to Shareholders. Being subject to such
reporting requirements reduces the pool of potential acquisitions or merger
candidates for the Company since such transactions require that certified
financials must be provided for the acquiring, acquired or merging candidate
within a specified period of time. That is why the Company intends to expand
through internal operations through the short and medium term. At such time as
the Company will seek acquisitions or mergers, it will limit itself to companies
which either already have certified financial statements or companies whose
operations lend themselves to review for a certified audit within the required
time.
The Company believes that, because these potential "credit impaired"
purchasers represent a substantial market, there is a demand by automobile
dealers with respect to financing for non-prime borrowers that has not been
effectively served by traditional automobile financing sources.
Business Strategy
The Company's business strategy, which is dependent upon its obtaining
sufficient financing with which to implement its business plan (of which there
is no assurance), is to provide automobile lease financing/funding to both
automobile dealers and automobile purchasers. The Company's primary revenues
will be based upon ability of the Company to purchase at a discount automobile
lease financing/funding contracts and/or receivables from car dealers. The
Company's secondary revenue source will be based upon the income earned from the
interest charged to purchasers who are directly financed by the Company. (Any
profit realized in a final sale price will be booked by the car dealership.) The
Company's revenues are dependent on the number of clients and the
leases/contracts available for purchase at a discount, the percentage of
non-performing receivables and the number of purchasers the Company directly
finances.
The Company will bundle the automobile lease financing/funding receivables
it acquires into pools of securities for the purpose of offering such pools for
sale in the secondary market via a public and/or private offering or through the
sale to a public and/or private institution or individual buyer. This reselling
of receivables will enable the Company to re-use its cash with which it will
re-commit to purchase additional automobile lease financing/funding receivables
or to use to finance sub prime and/or credit impaired clients on an individual
basis.
The Company's primary direct costs will be (i) salaries to Mr. Adams and
Mr. Mintmire (payroll cost, actual or deferred), (ii) marketing and sales
related costs, (iii) employment related taxes and (iii) health benefits.
Employment related taxes consist of the employer's portion of payroll taxes
required under the Federal Income Contribution Act ("FICA"), which includes
Social Security and Medicare, and federal and state unemployment taxes. The
federal tax rates are defined by the appropriate federal regulations. State of
Florida unemployment tax rates are affected by claims
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experience, of which the Company has none at this time. Health benefits are
comprised primarily of medical insurance costs, but also include costs of other
employee benefits such as prescription coverage, vision care, disability
insurance and employee assistance plans.
The Company's gross profit margin will be determined in part by its ability
to minimize and control operating costs; to maximize the discounts applicable to
the automobile lease financing/funding contracts; to finance reliably performing
impaired credit receivables, thereby obtaining the highest cash flows available
per contract pool; being able to provide direct financing of high quality credit
impaired automobile purchasers; and, how successful the Company will be in
re-selling the pooled receivable bundles in the secondary market. The Company
will attempt to maximize the discounts to the automobile lease financing/funding
contracts it purchases and to carefully select which impaired credit borrowers
to finance because it will not have many direct costs over which it can minimize
much further with the exception of marketing and sales related costs.
The Company's objective is to become a dominant provider of automobile
lease financing/funding for the sub prime and/or credit impaired car buyer at
first in a select geographic area, beginning in Palm Beach and Broward Counties,
Florida, expanding to Atlanta, Georgia, then to contiguous counties in South
Florida and, eventually throughout Florida, Georgia and selected areas
nationwide. To achieve this objective, and assuming that sufficient operating
capital becomes available, the Company intends to: (i) provide a comprehensive
package of automobile lease financing/funding programs to both dealerships and
individuals; and (ii) focus on Palm Beach and Broward Counties which have high
growth opportunities.
Management expects, in the event the Company achieves commercial success,
initially to increase the Company's market penetration through internal
expansion and thereafter through selected acquisitions. Such acquisitions could
include both new and used car dealerships and financing companies related
thereto. Management believes that in the current market, expansion into markets
beyond the state of Florida could be especially attractive because it is
believed that the internal structuring of a successful operation in Florida can
be replicated in other selected geographic areas with high growth opportunities.
However, such expansion presents certain challenges and risks. There is no
assurance that the Company, even if it is successful in establishing a presence
in its targeted markets, will be able to profitably penetrate these markets.
Proposed Company Staffing and Services
Mr. Adams has been managing his own company in the automobile lease
finance/funding industry for approximately the past two and one-half (2 1/2)
years. Under Mr. Adams' direction, the Company plans to offer clients a full
array of automobile lease financing programs. It is anticipated, and subject to
the availability of additional funding, that the Company will employ a manager,
additional clerical support and an accountant.
The Company believes that its initial success will be due in part to the
familiarity of Mr. Adams with the automobile lease finance/funding businesses of
its potential clients. He will visit clients and prospective clients on a
regular schedule to allow for the necessary lead time to permit strong business
relationships to develop. To insure client satisfaction, Mr. Adams will pursue a
pro-active approach with prospective and existing clients. This pro-active
approach will include the providing of customized marketing information
illustrating financing program alternative which dealerships may use in closing
a sale with a customer. Mr. Mintmire also will become familiar with the
Company's automobile lease finance/funding industry clients by teaming up with
Mr. Adams on client visits to establish as sound a business relationship with
such clients as Mr. Adams.
Management is unable at this time to forecast with any degree of certainty
the acceptance of the Company's lease finance/funding programs or the expenses
of doing business; however, the Company intends to market its programs
competitively in the Company's target markets.
Sales and Marketing
The Company plans to market its automobile lease finance/funding programs
through a combination of marketing channels including direct sales, franchises
and strategic alliances. The Company believes that this multi- channel approach
will allow the Company to quickly access a pool of automobile lease finance
receivables, develop regional awareness and ultimately become a market leader.
Of the three marketing channels intended to be employed by the Company, direct
sales is widely recognized as the most common in the industry due to the
relationship building that is necessary to be established with clients;
furthermore, strategic alliances have often been used to provide an appearance
of a proprietary "in-house" financing alternative. Franchising is an often used
means whereby an automobile lease finance/funding company can further expand its
revenue stream not only in obtaining additional lease finance receivables but
also by the receipt of franchise revenues. In addition, another benefit to
franchising has been the further recognition of a company's brand-name in the
marketplace by consumers. There can be no assurance that any of these techniques
will be used or will be successful. The Company intends to compete, assuming
that it is successful in obtaining sufficient financing, with other companies in
its target markets who are currently providing automobile lease finance/funding
programs.
The Company anticipates that its initial marketing efforts will be in the
area of direct sales. Good quality presentations and professional follow-up with
the clients will be essential to the Company's success. Initially, Mr. Adams
will secure the Company's client base. However, the Company anticipates that it
will employ qualified sales personnel to establish new customer accounts. The
Company believes that by employing its own sales personnel it will be able to
penetrate additional markets at a minimal cost since sales associates receive
compensation in the form of commissions based upon a client's use of the
Company's programs. This commission based compensation program will reduce the
overhead costs for the Company.
The Company's ability to develop markets through the efforts of Mr. Adams
and, eventually, a sales force is dependent upon management's ability to obtain
necessary financing, of which there can be no assurance. Assuming the
availability of adequate funding, the Company intends to stay abreast of changes
in the marketplace by ensuring that it remain in the field where clients and
competitors can be observed firsthand. The Company does not anticipate obtaining
long-term written contracts with clients since such contracts are not common in
the automobile lease finance/funding industry; however, management believes that
the loyalty of such clients can be maintained through a continuous presence,
relationship building and, more importantly, through effective and professional
servicing of client accounts.
The Company will attempt to maintain diversity within its client base in
order to decrease its exposure to downturns or volatility in any particular
industry. As part of this client selection strategy, the Company intends to
offer its services to those clients which have a reputation for reputable
dealings and a reliable and broad inventory base and eliminating clients that it
believes present a higher risk of product mechanical failure and very poor
sub-prime and/or very poor "impaired credit" purchaser profiles. Where feasible,
the Company will evaluate each client's portfolio of automobile lease
finance/funding receivables for creditworthiness, product grade and loan failure
history.
Competition
The non-prime consumer credit market consists of many national, regional
and local competitors with various strategies to approach industry risks.
Although fragmented, the market is becoming increasingly competitive due to its
profitability and relative ease of entry. Existing and potential competitors
include well-established financial institutions, such as banks, savings and
loans, small loan companies, leasing companies and captive finance companies
owned by automobile manufacturers and others. Many of these financial
organizations do not consistently solicit business in the non-prime consumer
credit market. The Company believes that captive finance companies generally
focus on new car financing, and direct their marketing efforts to the non-prime
consumer market only when inventory control and/or production scheduling
requirements of their parent organizations dictate a need to enhance sales
volumes and then exit the market once such sales volumes are satisfied.
Increased regulatory oversight and capital requirements imposed by market
conditions and governmental agencies have limited the activities of many banks
and savings and loans in the non-prime consumer credit market.
Industry Regulation
As an employer, the Company is subject to all federal, state and local
statutes and regulations governing its relationship with its employees and
affecting businesses generally.
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Seasonality
The Company believes that its results of operations will reflect the
seasonality of higher client demand which is associated with federal income tax
refunds. It has been observed, as has been the case with other "big ticket"
items, that car buying appears to be higher in the first two quarters of the
calendar year than in the later half of the year. Many car purchasers receive
income tax refunds during the first half of the year which becomes a principal
source of down payments on new and used car purchases.
Employees and Consultants
The Company has had no employees since its organization. In addition, Mr.
Mintmire, (the Company's sole executive officer and director)and Mr. Charles
Adams (the Company's key consultant) have served in those positions without
compensation through the date hereof. Mr. Adams was compensated, in the form of
company common stock, for specialized services, including the preparation of a
business plan and the performance of consulting services. Mr. Mintmire was
compensated, in the form of restricted common stock, for management services
relating to the formation of the Company and for financial consulting services.
The Company has had negligible revenues since its inception due to the fact
that its key executive, Mr. 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. Upon
finishing his education, Mr. Mintmire decided to pursue the lease financing
business because of the belief that his prior formal business training, when
combined with Mr. Adams' years of experience in the industry, will enable them
to develop a successful lease financing company which will have the advantages
of among other things, greater availability of capital and potential for growth
through the vehicle of a public company as compared to a privately-held company.
The Company will be dependent upon Mr. Adams to develop the client base
with whom to place automobile lease financing/funding programs. Mr. Adams has
many years of experience in the lease financing business and has managed his own
business for several years. The Company plans to use to its advantage Mr. Adams'
reputation in the industry. Nevertheless, while Mr. Adams has been successful in
the past, there can be no assurance that he will be successful in building the
client base and client solicitation program necessary for the successful
operation of the Company.
Facilities
The Company maintains its office rent free at facilities provided by Mr.
Mark A. Mintmire, the sole officer and director of the Company, at 2958
Braithwood Court, Atlanta, Georgia 30345. Its telephone number is (770) 414-
9596. The Company anticipates that it will have continued use of this office on
a rent-free basis for the foreseeable future and that this arrangement will be
adequate for the Company's needs while it is in the development stage. Assuming
that the Company obtains the necessary additional financing and is successful in
implementing its business plan, no assurance of which can be made, the Company
will require its own commercial facility in Palm Beach County. In such event,
management believes that the Company would be able to locate adequate facilities
at reasonable rental rates in Palm Beach County, suitable for its future needs.
Management
(1) Introduction
By way of summary, the following table reflects the name, age and position
of the Company's executive officer and director. See the biographical
information which follows:
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Name Age Position
- -------------------- ---- ---------------------------
Mark A. Mintmire (1) 29 President, Secretary, Chief Executive Officer
and Director
Charles Adams (2) 33 Consultant(1) (2)
(1) Mr. Mintmire may be deemed to be the sole "promoter" and "parent" of the
Company as those terms are defined under the Rules and Regulations
promulgated under the Securities Act.
(2) Mr. Adams acts as a key consultant to the Company but should not be deemed
a "promoter" or "parent" of the Company.
All directors hold office until the next annual meeting of the Company's
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the Board of Director. Mr. Mintmire and Mr. Adams will
devote such time and effort to the business and affairs of the Company as may be
necessary to perform their responsibilities as executive officers and/or
directors of the Company. Aside from the above receptive officer/director and
key consultant, there are no other persons whose activities will be material to
the operations of the Company at this time.
(2) Officer
Mark A. Mintmire has served as the sole executive President, Treasurer and
Director of the Company since its inception(October 20, 1997). As such, he acts
as the CEO, CFO and principal accounting officer. Mr. Mintmire was a full time
Masters of Business Administration student at Georgia State University, Atlanta,
Georgia, until graduating in August 1998, concentrating in Finance. Mr. Mintmire
is an active consultant to a number of companies including: Global Equity Funds,
Ltd., a small private investment banking group located in Calgary, Canada;
Paradigm Sales and Marketing Corporation, located in Hattiesburg, Mississippi;
and Bio-Solutions International, Inc., located in Denver, Colorado. From 1993
through September 1997 Mr. Mintmire formed, financed and operated a bar and
restaurant in Atlanta, Georgia, with an investor and operational group. Mr.
Mintmire sold his interest in the bar and restaurant in September 1997 to attend
graduate school. Mr. Mintmire has extensive experience in computer based capital
budgeting and financial forecasting.
(3) Key Consultant
Mr. Charles Adams has served as the Company's key consultant since its
inception and since October 1997 he has engaged in private business ventures,
mostly in the area of finance. Through his company, Adams Inc., which was formed
in October 1997, he is currently providing consulting services and commercial
equipment leasing. Mr. Adams specializes in financing equipment which is placed
with end users. From October 1997 until the present, Mr. Adams has been employed
by Carcorp, Inc. which is one of only two lenders who provide commercial paper
for Bombardier, Inc., under operating leases for Lear jets and other major
aviation equipment. Mr. Adams is the Director of Finance of Carcorp, Inc. and
supervises a staff of eight (8). In this capacity, Mr. Adams arranges the
operating leases for rolling stock, large commercial equipment, aviation and
commercial marine end users. From 1995 through October 1997, Mr. Adams was
independently engaged in commercial leasing of limousines and limousine fleets.
From 1996 through October 1997, he also was employed by Ed Morse Cadillac as the
Fleet Manager for its Jeep operations. From 1993 through 1995, Mr. Adams was
employed by Palm Beach Lincoln Mercury in sales. Prior to relocating to Florida,
from 1991 through 1993 Mr. Adams was employed by Alpha Zeta Trust in California,
where he was responsible for the acquisition of commercial real estate,
including negotiations of sale and arrangement of bridge financing. During Mr.
Adams' employment, Alpha Zeta Trust acquired two large loan pools from
Resolution Trust Corporation, a land trust located in Gibraltar. The profitable
part of these pools were sold at a substantial profit, while the non-performing
loans were foreclosed. From 1988 through 1991, Mr. Adams independently engaged
in the acquisition of real estate. During the same period, he was employed by
Porsche, Audi, Ferrari in Woodland Hills, California as a salesman. In this
capacity, Mr. Adams was responsible for all aspects of automobile acquisition,
including arranging the purchase financing. Mr. Adams attended Los Angeles
Valley College for two (2) years and took marketing and sales extension courses
at the University of California at Los Angeles.
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It is expected that additional personnel will be employed to assist in
operations and financial management. The Company has also identified several
people that are candidates for key positions within the organization. The
Company has discussed opportunities with some of these people and intends to
actively recruit them upon funding. Management recognizes that their expertise
and experience is essential to success of its business plan. The Company intends
to also continue to expand its advisory group in the areas of business and
finance.
(4) Director
(See "Officer" above.)
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<PAGE>
Remuneration and Employment Contracts
The Company was formed on October 20, 1997 and therefore paid no
compensation prior to that time. The Company, in consideration for various
services performed for the Company, issued to Mr. Mark A. Mintmire, the
Company's sole executive officer and/or director 2,000,000 shares of restricted
common stock. The Company issued 100,000 shares of unrestricted common stock to
Mr. Adams for consulting services performed and costs incurred by Mr. Adams on
behalf of the Company. Except for the above-described compensation, it is not
anticipated that any executive officer of the Company will receive any cash or
non-cash compensation for his or her services in all capacities to the Company
until such time as the Company commences business operations. At such time as
the Company commences operations, it is expected that the Board of Directors
will approve the payment of salaries in a reasonable amount to each of its
officers for their services to the Company. (See description in succeeding
paragraph.)
Although there are no employment agreements in place, Mark A. Mintmire will
be paid compensation at the annual rate of $50,000 in 2000. If only the minimum
funding is subscribed for in this Offering and no other funds are available, it
is intended that the amount of Mr. Mintmire's salary and Mr. Adams' consulting
services compensation will be respectively $30,000 and the balance deferred for
each until cash flow is available to adequately pay such larger amounts.
As the Company's operations develop, it is anticipated that additional
personnel may be hired. It is generally anticipated that any such future
individuals will devote full time to the Company. At such time, the Board of
Directors may, in its discretion, approve the payment of additional cash or
non-cash compensation to the foregoing for their services to the Company.
The Company does not provide officers with pension, stock appreciation
rights, long-term incentive or other plans but has the intention of implementing
such plans in the future. (See "Employee Benefits.")
Compensation of Directors
At least until the Company has $1,000,000 in lease receivables, any members
of the Board of Directors will be paid separately for such services. Directors
out of pocket expenses will be reimbursed upon presentation of appropriate
documents.
Employee Benefits
It is anticipated that the Company will implement, in the near future, a
Restricted Employee Stock Option plan under which its Board of Directors may
grant employees, directors and certain advisors of the Company options to
purchase its Shares at exercise prices of not less than 85% of the then current
market price on the date of their grant. Income from any such options are not
expected to be tax deferrable. As of the date of this Prospectus, the plan has
not been defined and no options have been granted but it is anticipated that
500,000 Shares will be reserved.
The Company anticipates that it will adopt, in the future, an employee
bonus program to provide incentive to the Company's employees. It is anticipated
that such a plan would pay bonuses in cash or stock to employees based upon the
Company's pre-tax or after-tax profit for a particular period. It is anticipated
that the Company will adopt a retirement plan such as a 401(k) retirement plan
and that it will implement an employee health plan comparable to the industry
standard. Establishment of such plans and their implementation will be at the
discretion of the Board of Directors; any such bonus plan will be based on
annual objective, goal-based criteria developed by the Board of Directors for
eligible participants and will be exercisable only at prices greater than or
equal to the market value of the underlying Shares on the date of their grant.
Employees
As of April 30, 2000, the Company had one part-time employee (Mr.
Mintmire). It is not expected that future employees will be represented by
employee union(s).
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Property
The Company's executive offices are located at 2958 Braithwood Court,
Atlanta, Georgia 30345. Its telephone number is (770) 414-9596. The Company pays
no rent for this space. The Company owns no real or personal property.
Litigation
There has not been any material civil, administrative or criminal
proceedings concluded, pending or on appeal against the Company or its
affiliates and principals.
Securities Ownership Of Certain Beneficial Owners and the Principal Shareholder
The following table summarizes certain information with respect to the
beneficial ownership of the Company's Shares, immediately prior to and after
this Offering. The following table sets forth information as of March 31, 2000,
regarding the ownership of the Company's common stock by each shareholder known
by the Company to be the beneficial owner of more than ten per cent (10%) of its
outstanding Shares, each director and all executive officers and directors as a
group. Except as otherwise indicated, each of the shareholders has sole voting
and investment power with respect to the shares of Common Stock beneficially
owned.
<TABLE>
<CAPTION>
After the Offering
Prior to Offering (1) Minimum(2) Maximum(3)
----------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Name of Beneficial Owner: Number % Number % Number %
- ------------------------- -------- --- -------- --- -------- --
Mark A. Mintmire (4) 2,020,000 72.14% 2,020,000 68.96% 2,020,000 52.63%
All Directors, Officers and 10%
Shareholders as a Group 2,020,000 72.14% 2,020,000 68.96% 2,020,000 52.63%
--------- ------ --------- ------ --------- ------
All Beneficial Owners as a Group 2,800,000 100.0% 2,900,000 100.0% 3,800,000 100.0%
========= ====== ========= ====== ========= ======
</TABLE>
(1) Reflects total outstanding Shares of 2,800,000 as of March 31, 2000.
(2) Assumes issuance and sale of 100,000 Shares of the Company during this
Offering Period (the "minimum" offering) in addition to the 2,800,000
Shares outstanding as of March 31, 2000, an aggregate 2,900,000 Shares.
(3) Assumes issuance and sale of 1,000,000 Shares of the Company's during this
Offering Period (the "maximum" offering) in addition to the 2,800,000
Shares outstanding as of March 31, 2000, an aggregate 3,800,000 Shares.
(4) Sole executive and Director of the Company.
Family Relationships
There are no family relationships between relating to the Company
and any principal or named consultant.
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<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth certain financial data for the Company. The
selected financial data should be read in conjunction with the Company's
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements of the Company and Notes thereto. The
selected financial data as of and for the period from inception to March 31,
2000 have been derived from the Company's financial statements and are included
as Appendix I to this Prospectus.
Current assets $7,893
Noncurrent assets 0
Current liabilities 0
Gross Revenues 0
Gross Profit 0
Loss from continuing operations 15,317
Net loss (15,317)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Since its inception, the Company has conducted minimal business operations
except for organizational and capital raising activities. The Company has had
only negligible revenues since its inception due to the fact that its key
executive, Mr. Mintmire, until his graduation in August 1998, had 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 March 31, 2000, the Company had only interest income
of $902, all of which came from a loan to a related party. Total company
operations and operating expenses as of March 31, 2000 were $16,219. The Company
proposes to engage in the business of automobile lease financing/funding.
Mr. Charles Adams, consultant to the Company, 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.
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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 the Company 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
the Company'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
the Company'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 the Company will lease or
purchase office space or computer equipment in the foreseeable future. the
Company may in the future establish its own facilities and/or 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.
Financial Condition, Capital Resources and Liquidity
At March 31, 2000, the Company had assets totaling $7,893 and no
liabilities. Since the Company's inception, it has received $23,000 in cash
contributed as consideration for the issuance of its Shares.
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The Company's working capital is presently minimal and there can be no
assurance that the Company's financial condition will improve. The Company is
expected to continue to have minimal working capital or a working capital
deficit as a result of current liabilities. The Company, at inception, issued
2,000,000 shares of the Company's common stock to Mr. Mark A. Mintmire,
executive officer and director of the Company, for the fair value of services
rendered (valued at $200). At the same time, Mr. Donald F. Mintmire, Esq., the
Company's legal counsel, received 100,000 shares of the Company's common stock
for services (value $500). During April 1998, the Company issued and sold an
aggregate of 300,000 shares of common stock to Georgia and Florida residents for
cash consideration totaling $3,000. No underwriter was employed in connection
with the offering and sale of the shares. The Company claimed the exemption from
registration in connection with each of the offerings provided under Section
3(b) of the Act and Rule 504 of Regulation D promulgated thereunder, Section
10-5-9(13) of the Georgia Code.
During June 1998, the Company issued and sold an aggregate of 400,000
Shares to Florida residents for cash consideration totaling $20,000. No
underwriter was employed in connection with the offering and sale of the Shares.
The Company claimed the exemption from registration in connection with each of
the offerings provided under Section 3(b) of the Act and Rule 504 of Regulation
D promulgated thereunder and Section 517.061(11) of the Florida Code. Even
though management believes, without assurance, that it will obtain sufficient
capital with which to implement its business plan on a limited scale, the
Company is not expected to continue in operation without an infusion of capital.
In order to obtain additional equity financing, management may be required to
dilute the interest of existing shareholders or forego a substantial interest of
its revenues, if any.
The Company has no potential capital resources from any outside sources at
the current time. In its initial phase, the Company will operate out of the
facility provided by Mr. Mintmire. Mr. Adams will begin by finding clients for
the Company and instructing Mr. Mintmire in the operation of an automobile lease
financing/funding business. To attract clients, Mr. Adams and Mr. Mintmire will
visit potential clients in order to determine their lease financing needs. The
Company will place advertising in local area newspapers in Palm Beach County to
directly solicit prospective sub- prime and/or credit impaired auto buyers. In
the event the Company requires additional capital during this phase, Mr.
Mintmire has committed to fund the operation until such time as additional
capital is available. The Company believes that it will require six (6) to nine
(9) months in order to determine the market demand potential.
The ability of the Company to continue as a going concern is dependent upon
its ability to obtain clients who will utilize the Company's automobile lease
financing/funding programs and whether the Company can attract an adequate
number of direct clients who will qualify for a lease financing program. The
Company believes that in order to be able to expand its initial operations, it
must rent offices in Palm Beach County, hire clerical staff and acquire through
purchase or lease computer and office equipment to maintain accurate financial
accounting and client data. The Company believes that there is adequate and
affordable rental space available in Palm Beach County and sufficiently trained
personnel to provide such clerical services at affordable rates. Further, the
Company believes that the type of equipment necessary for the operation is
readily accessible at competitive rates.
To implement such plan, also during this initial phase, the Company has
initiated this self-underwritten public offering in order to raise from $100,000
to $1,000,000. In the event such placement is successful, the Company believes
that it will have sufficient operating capital to meet the initial expansion
goals and operating costs for a period of one (1) year. In the event the Company
is not successful in raising such funds, the Company believes that it will not
be able to continue operations past a period of two (2) to three (3) months.
-38-
<PAGE>
Net Operating Losses
The Company has net operating loss carry-forwards of $15,317 expiring at
September 30, 2020. The Company has a $3,000 deferred tax asset resulting from
the loss carry-forwards, for which it has established a 100% valuation
allowance. Until the Company's current operations begin to produce earnings, it
is unclear as to the ability of the Company to utilize such carry-forwards.
Forward-Looking Statements
This Prospectus 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 of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Prospectus 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), business
strategy, 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 Prospectus is 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.
Recent Accounting Pronouncements
There are no recently issued accounting standards for which the impact on
the Company's financial statements at March 31, 2000 is not known.
ABSENCE OF CURRENT PUBLIC MARKET AND DIVIDEND POLICY
There is no current public trading market for the Shares. While the Company
intends to qualify its Shares for quotation on the NASDAQ Bulletin Board under
the symbol "SDPR", that is not expected to occur, if at all, for at least 2-4
months from the date of this Prospectus. There is no assurance that the Company
can satisfy then-current pertinent listing standards or, if successful in
getting listed, avoid later delisting. (See "Risk Factors.")
The Company intends to retain future earnings for use in its business and
does not anticipate paying any dividends on Shares in the foreseeable future.
While not currently so restricted, the Company may be prohibited from paying
dividends on the Shares in the future under credit or other financing
agreement(s) unless certain amounts are available and certain other conditions
are satisfied. (See "Description of Capital Stock-- Dividend Rights.")
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 50,000,000 shares of common stock,
$0.0001 par value. The issued and outstanding shares of common stock (the
"Shares") being registered hereby are validly issued, fully paid and non-
assessable. The holders of outstanding Shares are entitled to receive dividends
out of assets legally available therefor at such times and in such amounts as
the Board of Directors may from time to time determine.
All Shares have equal voting rights and, when validly issued and
outstanding, have one vote per share in all matters to be voted upon by the
stockholders. A majority vote is required on all corporate action. Cumulative
voting in the election of directors is not allowed, which means that the holders
of more than 50% of the outstanding shares can
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<PAGE>
elect all the directors as they choose to do so and, in such event, the holders
of the remaining shares will not be able to elect any directors. (See "Risk
Factors - Control by the Principal Shareholder; No Cumulative Voting; and
Possible Anti-Takeover Effects.") The Shares have no preemptive, subscription,
conversion or redemption rights and can only be issued as fully paid and
non-assessable shares. Upon liquidation, dissolution or winding-up of the
Company, the holders of Shares are entitled to receive a pro rata of the assets
of the Company which are legally available for distribution to stockholders.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred Stock,
$0.0001 par value. Currently there are no issued and outstanding preferred
shares of the Company and none are contemplated.
Transfer Agent
Interwest Transfer Co., Inc.
1981 E. Murray Holiday Road --Suite 100
Salt Lake City, Utah 84117
Certain Provision of Florida Law.
Section 607.0902 of the Florida Business Corporation Act prohibits the
voting of shares in a publicly-held Florida corporation that are acquired in a
"control share acquisition" unless the holders of a majority of the
corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition or
unless the acquisition of incorporation or bylaws specifically state that this
section does not apply. A "control share acquisition" is defined as an
acquisition that immediately thereafter entitles the acquiring party to vote in
the election of directors within each of the following ranges of voting power:
(i) one-fifth or more, but less than one-third of such voting power; (ii)
one-third or more, but less than a majority of such voting power; and (iii) more
than a majority of such voting power. The Amended Articles of Incorporation of
the Company specifically state that Section 607.0902 does not apply to control-
share acquisitions of shares of the Company.
The only class of stock outstanding at this time (the "Shares").
Shareholders are entitled to one vote per Share on all matters to be voted upon
by Shareholders and, upon issuance in consideration of full payment, are
non-assessable. In the event of liquidation, dissolution or winding up of the
Company, the Shareholders are entitled to share ratably in all assets remaining
after payment of liabilities. Shares do not have cumulative voting rights with
respect to the election of directors and, accordingly, the holders of more than
50% of the Shares could elect all the directors of the Company. (See "Risk
Factors - Control by the Principal Shareholder; No Cumulative Voting; and
Possible Anti-Takeover Effects.") There are no redemption or sinking fund
provisions or preemptive rights with respect to the Shares, and Shareholders
have no right to require the Company to redeem or purchase Shares.
Dividend Rights
Each Share is entitled to dividends if, as and when dividends are declared
by the Company's Board of Directors. It is not the current expectation of the
Company to pay dividends.
PLAN OF DISTRIBUTION
The Shares are offered on a best efforts, self-underwritten basis by Mark
A. Mintmire, the sole principal of the Company. The Initial Offering Period will
be up to nine (9) months from the date of this Prospectus unless earlier
terminated. Shares having an aggregate selling price of $1,000,000 are being
offered pursuant to this Registration Statement. Unless earlier terminated, the
Initial Offering Period will be up to two (2) months from the date hereof unless
extended for periods up to a total of seven (7) additional months. The Company
is offering a minimum of $100,000 and up to a maximum of $1,000,000 of Shares.
The date that (1) subscriptions for a minimum of $100,000
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<PAGE>
in Shares have been received and (2) the Company has closed the initial escrow
on the Offering will mark the end of the Initial Offering Period. If a minimum
of $100,000 in Shares is not sold during the Initial Offering Period (as it may
be extended), investor funds will be promptly returned with all pro rata
interest earned thereon. Unless the minimum offering is not achieved, all
interest earned on subscriptions pending their month-end acceptance will be paid
to the Company, not the individual subscribers. Similarly, if the subscription
is rejected, in whole or in part (which is in the sole discretion of the
Company), the subscription funds or the rejected portion thereof will be
returned within 30 days to the subscriber without interest. The up to $1,000,000
offering being made pursuant to this Registration Statement may be extended for
additional periods, once the Initial Offering Period is concluded, which in the
aggregate will not exceed 24 months from the date of this Prospectus (defined
herein as the "Continuous Offering Period").
The minimum purchase during the Initial and Continuous Offering Periods is
$500. Subscriptions for Shares sold during the Continuous Offering Period will
continue to be escrowed (see "Escrow Account" below) until accepted at the
respective month-end. Subject to pertinent securities requirements, the Company
expects to update periodically the Prospectus after its initial nine (9) month
Offering Period and continue the Offering if, as expected, the $1,000,000
maximum offering is not achieved during that period; in no case will this
Offering extend for more than two years from the date of this Prospectus nor
will more than $1,000,000 be raised by the Company under this current
Registration Statement. If the $100,000 minimum offering is achieved, the
Offering will continue during the Continuous Offering Period at the Company's
$1.00 per Share Selling Price until a market develops for the Shares. (At such
time as a market develops, Shares will be sold by the Company at the average of
the then prevailing bid and asked prices on the date a subscription is
received.)
Subscription Procedure
In order to purchase Shares:
1. An investor must complete and execute a copy of the Subscription
Agreement and Power of Attorney (hereafter the "Subscription Agreement")
(Exhibit A).
2. Checks (which should be at least $500) should be made payable as
follows: SD Products Corp. -- Attorney Escrow Account.
3. The check and the Subscription Agreement should be mailed or delivered
to the Escrow Agent, Duncan, Blum & Associates (Attn: Carl N. Duncan, Esq.),
5718 Tanglewood Drive, Bethesda, Maryland 20817.
Each individual subscriber must represent and warrant in the Subscription
Agreement that he has either a net worth (exclusive of home, furnishings and
automobile) of at least $100,000 or a net worth (similarly calculated) of at
least $50,000 and an annual adjusted gross income of at least $25,000. (See
"Investment Requirements.") Under the securities laws of certain states,
residents of those states may be subject to higher standards as stated in the
Annex to the Subscription Agreement. In addition, the subscriber must represent,
among other things, that: (a) the subscriber has received this Prospectus; and
(b) the subscriber is (or is not) a citizen or permanent resident of the United
States.
The Company must have reasonable grounds to believe on the basis of
information obtained from the Shareholder concerning his investments, financial
situation and needs, and any other information known by the undersigned, that:
(i) the purchaser is or will be in a financial position appropriate to enable
him to realize to a significant extent the benefits described in the Prospectus;
(ii) the purchaser has a net worth sufficient to sustain the risks inherent to
the Company, including losses of investment and lack of liquidity; and (iii) the
Company is otherwise a suitable investment for the purchaser.
Escrow Account
All monies remitted by subscribers during the Initial Offering Period will
be deposited in an attorney escrow account maintained by the Company with
Duncan, Blum & Associates, 5718 Tanglewood Drive, Bethesda, Maryland 20817
attorney until the $100,000 minimum offering is achieved. The Escrow Agent is
not guaranteeing that any interest will accrue on the subscription funds
deposited with it. To the extent practicable, the funds held in the account
-41-
<PAGE>
during the Initial Offering Period will be invested at the direction of
management in short-term U.S. Treasury securities and other high quality
interest-earning obligations. Unless the minimum is not achieved, all interest
earned during the Initial Offering Period on the proceeds of the subscriptions
held in such account maintained by the Company with the Escrow Agent will be
retained by the Company. (See "Application of Proceeds" and "The
Company--Management.") Subscriptions for Shares sold during the Continuous
Offering Period will continue to be escrowed (with all interest earned thereon
retained by the Company).
ERISA CONSIDERATIONS
Persons who contemplate purchasing Shares on behalf of Qualified Plans are
urged to consult with tax and ERISA counsel regarding the effect of such
purchase and, further, to determine that such a purchase will not result in a
prohibited transaction under ERISA, the Code or a violation of some other
provision of ERISA, the Code or other applicable law. The management and the
Company necessarily will rely on such determination made by such persons,
although no Shares will be sold to any Qualified Plans if management believes
that such sale will result in a prohibited transaction under ERISA or the Code.
LEGAL MATTERS
The validity of Shares being offered by this Prospectus will be passed upon
for the Company by Duncan, Blum & Associates, Bethesda, Maryland and Washington,
D.C.
The Company may from time to time be a party to various legal actions
arising in the ordinary course of its business. The Company is not currently
involved in any such actions.
EXPERTS
The financial statements included in this Prospectus and in the
Registration Statement have been audited by Durland & Company, CPAs, P.A.,
independent certified public accountants, to the extent and for the period set
forth in their report, which contains an emphasis paragraph regarding the
Company's ability to continue as a going concern, appearing elsewhere herein and
in the Registration Statement, and are included in reliance upon such report
given upon the authority of said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form SB-1 with respect to the securities
offered hereby. This Prospectus does not contain all the information set forth
in such Registration Statement, certain portions of which have been omitted
pursuant to the rules and regulations of the SEC. Reference is made to such
Registration Statement, including the amendment(s) and exhibits thereto, for
further information with respect to the Company and such securities. The
Registration Statement can be inspected and copied at the public reference
facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, as well
as at the SEC's following regional offices: at Seven World Trade Center, 13th
Floor, New York, New York 10048; and 500 West Madison, Suite 1400, Chicago,
Illinois 60601. Copies of the Registration Statement can be obtained from the
Public Reference Section of the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Statements made in this Prospectus
concerning the contents of any documents referred to herein are not necessarily
complete, and in each instance are qualified in all respects by reference to the
copy of such document filed as an exhibit to the Registration Statement.
For further information with respect to the Company and the shares of
common stock offered hereby, reference is made to the Registration Statement and
the exhibits and the financial statements, notes and schedules filed as a part
thereof or incorporated by reference therein, which may be inspected at the
public reference facilities of the SEC, at the addresses set forth above.
Moreover, the Company has filed such materials electronically with the SEC;
accordingly,
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<PAGE>
such materials can be accessed through the SEC's web site that contains reports,
proxy and information statements and other information regarding registrants
(http// www.sec.gov).
Moreover, the Company is subject to the informational and periodic
reporting requirements of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"). Accordingly, Company annual (Form 10-KSB), quarterly (Form
10-QSB) and periodic material reports (Form 8-KSB) are available (and
accessible) as outlined above.
-43-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report...............................................F-2
Balance Sheets.............................................................F-3
Statements of Operations...................................................F-4
Statements of Changes in Stockholders' Equity..............................F-5
Statements of Cash Flows...................................................F-6
Notes to Financial Statements..............................................F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
SD Products Corporation
Atlanta, Georgia
We have audited the accompanying balance sheets of SD Products Corporation, a
development stage enterprise, as of September 30, 1999 and 1998 and the related
statements of operations, changes in stockholders' equity 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 audits 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 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 SD Products Corporation as of
September 30, 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 5 to the
financial statements, the Company has experienced a loss since inception. The
Company's financial position and operating results raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Durland & Company, CPAs, P.A.
Durland & Company, CPAs, P.A.
Palm Beach, Florida
December 13, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
SD Products Corporation
(A Development Stage Enterprise)
Balance Sheets
September 30, March 31,
1999 2000
-------------------------- -----------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 13,200 $ 1,688
Loan and accrued interest receivable - related party 0 6,205
-------------------------- -----------------------
Total current assets 13,200 7,893
-------------------------- -----------------------
Total Assets $ 13,200 $ 7,893
========================== =======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 452 $ 0
Accrued expenses - related party 500 0
-------------------------- -----------------------
Total current liabilities 952 0
-------------------------- -----------------------
Total Liabilities 952 0
-------------------------- -----------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, authorized 10,000,000
shares: none issued 0 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 (10,962) (15,317)
-------------------------- -----------------------
Total Stockholders' Equity 12,248 7,893
-------------------------- -----------------------
Total Liabilities and Stockholders' Equity $ 13,200 $ 7,893
========================== =======================
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
SD Products Corporation
(A Development Stage Enterprise)
Statements of Operations
Period from
October 20, 1997
Year Ended September 30, Six Months Ended March 31, (Inception)
-------------------------------- ------------------------------------- through
1999 1998 2000 1999 March 31, 2000
--------------- -------------- ------------------ ----------------- ------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Revenues $ 0 $ 0 $ 0 $ 0 $ 0
Expenses
General and administrative expenses 1,466 6,426 210 690 8,102
Legal fees - related party 500 10 0 0 510
Professional fees 3,057 200 4,350 2,375 7,607
-------------- -------------- ------------------ ----------------- -----------
Total expenses 5,023 6,636 4,560 3,065 16,219
-------------- -------------- ------------------ ----------------- -----------
Loss from operations (5,023) (6,636) (4,560) (3,065) (16,219)
Other income (expense)
Interest income - related party 604 93 205 503 902
-------------- -------------- ------------------ ----------------- -----------
Net loss $ (4,419) $ (6,543) (4,355) (2,562) (15,317)
============== ============== ================== ================= ===========
Basic net loss per weighted average share $ (.00) $ (.00) $ (.00) $ (.00) $ (.01)
============== ============== ================== ================= ===========
Weighted average number of shares 2,800,000 2,424,986 2,800,000 2,800,000 2,800,000
============== ============== ================== ================= ===========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
SD Products Corporation
(A Development Stage Enterprise)
Statements of Stockholders' Equity
Period From October 20, 1997 (Inception) through March 31, 2000
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
Year ended September 30, 1998:
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
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
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) (6,543)
Year ended September 30, 1999:
Net loss 0 0 0 0 (4,419) (4,419)
-------------- ------------ --------- ----------- ------------- --------------
BALANCE, September 30, 1999 2,800,000 $ 0 $ 280 $ 22,930 $ (10,962)$ 12,248
Six Months ended March 31, 2000: (unaudited)
- -------------------------------
Net loss 0 $ 0 $ 0 $ 0 $ (4,355)$ (4,355)
-------------- ------------ --------- ----------- ------------- --------------
BALANCE, March 31, 2000 (unaudited) 2,800,000 $ 0 $ 280 $ 22,930 $ (15,317)$ 7,893
============== ============ ========= =========== ============= ==============
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
SD Products Corporation
(A Development Stage Enterprise)
Statements of Cash Flows
Period from
October 20, 1997
Year Ended September 30, Six Months Ended March 31, (Inception)
------------------------ ------------------------- through
1999 1998 2000 1999 March 31, 2000
----------- ----------- -------------- -------------- ----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,419) $ (6,543) $ (4,355) $ (2,562) $ (15,317)
Adjustments to reconcile net loss to net cash used for
operating activities:
Stock issued for services 0 10 0 0 10
Stock issued for services - related party 0 200 0 0 200
Changes in operating assets and liabilities:
(Increase) decrease accrued interest receivable -
related party 93 (93) (205) 73 (205)
Increase (decrease) accrued expenses (2,548) 3,000 (952) 0 0
Increase (decrease) accrued expenses -
related party 0 500 0 0 0
--------- ----------- ------------ -------------- --------------
Net cash used by operating activities (6,874) (2,926) (5,512) (2,489) (15,312)
--------- ----------- ------------ -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Advance to) repayment from related party 18,000 (18,000) (6,000) 3,000 (6,000)
--------- ----------- ------------ -------------- --------------
Net cash (used) provided by investing activities 18,000 (18,000) (6,000) 3,000 (6,000)
--------- ----------- ------------ -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 23,000 0 0 23,000
--------- ----------- ------------ -------------- --------------
Net cash provided by financing activities 0 23,000 0 0 23,000
--------- ----------- ------------ -------------- --------------
Net increase in cash 11,126 2,074 (11,512) 511 1,688
CASH, beginning of period 2,074 0 13,200 1,898 0
--------- ----------- ------------ -------------- --------------
CASH, end of period $ 13,200 $ 2,074 $ 1,688 $ 2,409 $ 1,688
========= =========== ============ ============== ==============
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-6
<PAGE>
SD Products Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to the six months ended
March 31, 2000 and 1999 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
Atlanta, Georgia. 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 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.
c) Use of estimates 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.
d) Unaudited information The financial statements for the six months
ended March 31, 2000 and 1999 and for the period since October 20,
1997, (Inception), through March 31, 2000 include all adjustments
which in the opinion of management are necessary for fair
presentation, and such adjustments are of a normal and recurring
nature. Results for interim periods are not necessarily indicative
of a full year's operations.
(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. Interest of $93 was accrued at September 30, 1998. The loan
principal and accrued interest were paid in full in fiscal 1999. The
Company authorized a loan in the amount of $6,000 to a related party
at the rate of 9% per year, payable on demand. Interest of $205 was
accrued at March 31, 2000.
(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. Rights and privileges of the preferred stock
are to be determined by the Board of Directors prior to issuance.
The Company had 2,800,000 shares of common stock and 0 shares of
preferred stock issued and outstanding at September 30, 1999. 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.
(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 carry- forwards for income tax purposes of
approximately $6,500, $4,400 and $4,400 expiring at September 30,
2018, 2019 and 2020, respectively.
F-7
<PAGE>
SD Products Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
(4) Income Taxes (Continued) The amount recorded as deferred tax assets
is approximately $1,300 and $1,800 as of September 30, 1999 and
March 31, 2000, respectively, which represents the amount of tax
benefit of the loss carryforward. The Company has established a 100%
valuation allowance against this deferred tax asset, as the Company
has no history of profitable operations.
(5) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $11,000 for the period from October
20, 1997 (Inception) through September 30, 1999, and has continued
to incur net losses subsequent thereto. 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 a company
under common control.
Related party balances and amounts for the period since inception,
(October 20, 1997), ended September 30, 1999 are as follows:
Professional fees payable - related party $ 510
==========
Organizational costs - related party $ 245
==========
Accrued expenses - related party $ 500
==========
Interest earned - related party $ 604
==========
F-8
<PAGE>
EXHIBIT A
SUBSCRIPTION AGREEMENT
SD Products Corp.
Attn: Mark A. Mintmire, President
2958 Braithwood Court
Atlanta, Georgia 30345
By executing this Subscription Agreement (the "Subscription
Agreement") of SD Products Corp. (hereafter, the "Company"), the undersigned
purchaser (hereafter, the "Purchaser") hereby irrevocably subscribes for shares
of common stock ("Shares") in the Company. Purchaser herewith encloses the sum
of $___________ ($500 minimum in $500 increments) representing the purchase of
_____ Shares at $1.00 per Share. Subscriptions, whether checks or wire
transfers, should be made payable to SD Products Corp. -- Attorney Escrow
Account and forwarded to the Escrow Agent, Duncan, Blum & Associates (Attn: Carl
N. Duncan, Esq.), 5718 Tanglewood Drive, Bethesda, Maryland 20817. If this
Subscription Agreement is accepted, the Purchaser agrees to contribute the
amount enclosed to the Company.
Purchaser represents that he, she or it has (i) a net worth of at
least $100,000 (exclusive of home, furnishings and automobiles) or (ii) a net
worth (similarly calculated) of at least $50,000 and an annual adjusted gross
income of at least $25,000. Purchaser represents that he meets these financial
requirements and that he is of legal age. Purchaser is urged to review carefully
the responses, representations and warranties he is making herein. Purchaser
agrees that this subscription may be accepted or rejected in whole or in part by
the Company in its sole and absolute discretion.
READ THIS PROSPECTUS CAREFULLY BEFORE YOU SUBSCRIBE. CONTAINED HEREIN ARE
DISCLOSURES CONCERNING VARIOUS RISKS, CONFLICTS, FEES AND EXPENSES RELATING TO
OR TO BE PAID BY THE COMPANY. YOU SHOULD BE AWARE THAT THE DISCLOSURES MADE MAY
BE USED AS A DEFENSE IF PROCEEDINGS ARE BROUGHT BY SHAREHOLDERS RELATING TO THE
COMPANY.
Representations and Warranties
Purchaser makes the following representations and warranties in
order to permit the Company to determine his suitability as a purchaser of
Shares:
(1) The undersigned has received the Company's Prospectus and the exhibits
thereto.
(2) The undersigned understands that the Company has made all documents
pertaining to the transactions described in the Company's Prospectus available
to the undersigned in making the decision to purchase the Shares subscribed for
herein.
(3) The undersigned is reminded that:
(a) The Shares are speculative investments, the purchase of which
involves a high degree of risk of loss of the entire investment of the
undersigned in the Company.
(b) S/he is encouraged to discuss the proposed purchase with her/his
attorney, accountant or a Purchaser Representative (as defined under the
Securities Act of 1933, as amended) or take the opportunity to do so, and
is satisfied that s/he has had an adequate opportunity to ask questions
concerning the Company, the Shares and the Offering described in the
Prospectus.
A-1
<PAGE>
(c) No federal or state agency has passed upon the adequacy or accuracy
of the information set forth in the Prospectus or made any finding or
determination as to the fairness of the investment, or any recommendation
or endorsement of the Shares as an investment.
(d) S/he must not be dependent upon a current cash return with respect to
her/his investment in the Shares. S/he understands that distributions are
not required (and are not expected) to be made.
(e) The Company is not a "tax shelter" and the specific tax consequences
to her/him relative to as an investment in the Company will depend on
her/his individual circumstances.
(4) If the Shares are being subscribed for by a pension or profit-sharing plan,
the undersigned independent trustee represents that s/he has reviewed the plan's
portfolio and finds (considering such factors as diversification, liquidity and
current return and projected return of the portfolio) this purchase to be a
prudent investment under applicable rules and regulations, and acknowledges that
no representation is made on behalf of the Company that an investment in the
Company by such plan is suitable for any particular plan or constitutes a
prudent investment thereby. Moreover, the undersigned independent trustee
represents that s/he understands that income generated by the Company may be
subject to tax, that s/he is authorized to execute such subscription on behalf
of the plan or trust and that such investment is not prohibited by law or the
plan's or trust's governing documents.
The undersigned understands and agrees that this subscription may be
accepted or rejected by the Company in whole or in part, in its sole and
absolute discretion. The undersigned hereby acknowledges and agrees that this
Subscription Agreement shall survive (i) non-material changes in the
transactions, documents and instruments described in the Prospectus, (ii) death
or disability of the undersigned and (iii) the acceptance of this subscription
by the Company. By executing this Subscription Agreement below, the undersigned
(i) acknowledge the accuracy of all statements and (ii) appoints the management
of the Company to act as his true and lawful attorney to file any documents or
take any action required by the Company to carry out its business activities.
The foregoing information which the undersigned has provided to the
Company is true and accurate as of the date hereof and shall be true and
accurate as of the date of the undersigned's admission as a Shareholder. If in
any respect such representations, warranties or information shall not be true
and accurate at any time prior to the undersigned's admission as a Shareholder,
s/he will give written notice of such fact to the Company, specifying which
representation, warranty or information is not true and accurate and the reason
therefor.
By executing this Subscription Agreement, the undersigned certifies, under
penalty of perjury:
(1) That the Social Security Number or Taxpayer Identification Number
provided below is correct; and
(2) That the IRS has never notified him that s/he is subject to 20% backup
withholding, or has notified her/him that s/he is no longer subject to such
backup withholding. (Note: If this part (2) is not true in your case, please
strike out this part before signing.)
(3) The undersigned is a U.S. citizen or resident, or is a domestic corporation,
partnership or trust, as defined in the Internal Revenue Code of 1986, as
amended. (Note: If this part (3) is not true in your case, please strike out
this part before signing.)
(4) That the undersigned acknowledges and agrees that this information may be
disclosed to the Internal Revenue Service by the Company and that any false
statement contained herein is punishable by fine, imprisonment or both. The
undersigned will notify the Company within sixty (60) days of the date upon
which any of the information contained herein becomes false or otherwise changes
in a material manner, or the undersigned becomes a foreign person. The
undersigned agrees to update this information whenever requested by the Company.
Under penalties of perjury, the undersigned declares that the undersigned has
examined the information contained herein and to the best of the undersigned's
knowledge and belief, it is true, correct and complete, and that the undersigned
has the authority to execute this Subscription Agreement.
A-2
<PAGE>
This Subscription Agreement and the representations and warranties
contained herein shall be binding upon the heirs, executors, administrators and
other successors of the undersigned. If there is more than one signatory hereto,
the obligations, representations, warranties and agreements of the undersigned
are made jointly and severally. The undersigned is the following kind of entity
(please check):
|_| Individual |_| IRA
|_| Joint Account - JTWROS |_| Pension Plan
|_| Joint Account - TENCOM |_| Trust
|_| UGMA (Gift to Minor) |_| Non-Profit Organization
|_| Partnership |_| Employee of NASD member firm
|_| Corporation |_| Other (Specify)
Dated this ____ day of ______ of 1999
Mr./Ms. ____________________________ ____________________________________
Purchaser's Name Social Security or Tax ID#
Mr./Ms. ____________________________ ____________________________________
Name of Second Purchaser Date of Birth of First Purchaser
____________________________________ ( )_______________________________
Street Address of First Purchaser Business Phone (Day)
____________________________________ ( )_______________________________
City State and Zip Code Home Phone
____________________________________ ( )_______________________________
Signature of First Purchaser Email address (if applicable)
(Individual, Custodian or Officer
or Partner of Entity)
_____________________________________________
Signature of Second Purchaser (if applicable)
NOTE: If a joint subscription, please indicate whether joint tenants with right
of survivorship (JTWROS) or tenants in common (TENCOM). Each joint tenant or
tenant in common must sign in the space provided. If purchaser is a trust,
partnership, corporation or other business association, the signing trustee,
partner or officer represents and warrants that he/she/it has full power and
authority to execute this Subscription Agreement on its behalf. If Purchaser is
a trust or partnership, please attach a copy of the trust instrument or
partnership agreement. If Purchaser is a corporation, please attach certified
corporate resolution authorizing signature.
A-3
<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the Offering covered by this Prospectus. If given or made, such
information or representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute as an offer to sell, or a
solicitation of an offer to buy, the common stock in any jurisdiction where, or
to any person to whom, it is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that there has not been any change in
the facts set forth in this Prospectus or in the affairs of the Company since
the date hereof.
1,000,000 shares of
common stock
SD PRODUCTS CORP.
------------------------------------------
PROSPECTUS
------------------------------------------
June _____, 2000
TABLE OF CONTENTS
Descriptive Title Page
- ----------------- ----
Investment Requirements 2
Prospectus Summary 5
Summary Financial Data 6
Pro Forma Financial Information 7
Introductory Statement: Who Should Invest 7
Risk Factors 7
Selling Shareholders 16
Fiduciary Responsibility
of the Company's Management 17
Related Party Transactions
Application of Proceeds 18
Capitalization 20
Dilution 20
The Company 22
Selected Financial Data 28
Management's Discussion and Analysis
of Financial Condition and Results
of Operations 29
Absence of Public Market and
Dividend Policy 31
Description of Capital Stock 31
Plan of Distribution 32
ERISA Considerations 34
Legal Matters 34
Experts 34
Available Information 34
Appendix I (Financial Statements) I-1
Exhibit A-Subscription Agreement A-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 1. Indemnification of Directors and Officers
Reference is made to "Fiduciary Responsibility of Registrant's
Management" and "Description of Capital Stock" contained in the Prospectus
relating to the indemnification of Registrant's officers, directors,
stockholders, employees and affiliates. The Registrant is prohibited from
indemnifying its affiliates for liabilities resulting from violations or alleged
violations of the Securities Act of 1933 or any state securities laws in
connection with the issuance or sale of the shares of common stock, except in
the case of successful defense of an action in which such violations are
alleged, and then only if a court approves such indemnification after being
appraised of relevant regulatory positions on indemnification.
Item 2. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the approximate amount of the
fees and expenses paid by the Registrant and affiliates as described in the
Prospectus.
<TABLE>
<CAPTION>
Approximate Amount*
Minimum Maximum
-------------- -------------
<S> <C> <C>
Securities and Exchange Commission registration fee.......$ 200.00 $ 200.00
Printing expenses......................................... 5,000.00 5,000.00
Accounting fees and expense 2,000.00 2,000.00
Blue Sky filing fees...................................... 1,250.00 1,250.00
Legal (including Blue Sky) fees........................... 25,000.00 25,000.00
Escrow expenses........................................... 500.00 500.00
Miscellaneous expenses .................................... 1,000.00 1,000.00
-------- --------
TOTAL.............................$34,950.00 $34,950.00
========== ==========
</TABLE>
* The offering expenses are expected to be the same irrespective of whether the
$100,000 minimum or $1,000,000 maximum is raised.
Item 3. Undertakings
A. Certificates: Inapplicable
B. Rule 415 Offering
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to: (i)
include any prospectus required by Section 10(a) (3) of the Securities
Act of 1933 (the "1933 Act"); (ii) reflect in the Prospectus any facts
or events which, together, represent a fundamental change in the
information in the Registration Statement; and (iii) include any
additional or changed material information on the plan of
distribution.
(2) For determining liability under the 1933 Act, treat each
post-effective amendment as a new Registration Statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
<PAGE>
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
C. Request for Acceleration of Effective Date
The Registrant may elect to request acceleration of the effective
date of the Registration Statement under Rule 461 of the 1933 Act.
D. Indemnification
Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
E. Rule 430A
The undersigned Registrant will:
(1) For determining any liability under the Act, treat the
information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained
in the form of a Prospectus filed by the Registrant under Rule
424(b) (1) or (4) or 497(h) under the Act as part of this
Registration Statement as of the time the Commission declared it
effective.
(2) For any liability under the 1933 Act, treat each post-effective
amendment that contains a form of Prospectus as a new Registration
Statement for the securities offered in the Registration Statement,
and that the offering of the securities at that time as the initial
bona fide offering of those securities.
Item 4. Recent Sales of Unregistered Securities
There has been no established public trading market for the
Registrant's common stock since its inception on October 20,1997. As of March
31, 2000, Registrant had 20 shareholders of record owning its 2,800,000
outstanding shares of common stock.
On October 20, 1997, Registrant issued 2,000,000 shares of
restricted common stock to Mr. Mark A. Mintmire, the President and Treasurer of
Registrant and record and beneficial owner of approximately 72.14% of
Registrant's outstanding Shares, in consideration and exchange for his services
in connection with the organization of Registrant.
On October 20, 1997, Registrant issued and sold 100,000 shares of
unrestricted common stock to Mr. Donald F. Mintmire, the legal counsel of
Registrant and record and beneficial owner of approximately 3.57% of
Registrant's outstanding common stock, in consideration and exchange for his
legal services (valued at $500) in connection with the organization of
Registrant.
On October 20, 1997, Registrant issued 100,000 shares of
unrestricted common stock to Mr. Charles Adams, Registrant's key consultant and
record and beneficial owner of approximately 3.57% of Registrant's outstanding
common stock, in consideration and exchange for his services in connection with
the organization of Registrant.
<PAGE>
During April 1998, Registrant issued and sold (at $.01 per share) an
aggregate of 300,000 shares of common stock to fifteen(15) Georgia residents for
cash consideration totaling $3,000. No underwriter was employed in connection
with the offering and sale of the shares. The Company claimed the exemption from
registration in connection with each of the offerings provided under Section
3(b) of the Act and Rule 504 of Regulation D promulgated thereunder as well as
Section 10-5-9(13) of the Georgia Code.
During June 1998, Registrant issued and sold an aggregate of 400,000
shares of common stock to Florida residents for cash consideration totaling
$20,000 (200,000 shares to two (2) Florida residents at $.05 per share and
200,000 shares to two (2) Florida corporations, all at $.05 per share). No
underwriter was employed in connection with the offering and sale of the shares.
The Company claimed the exemption from registration in connection with each of
the offerings provided under Section 3(b) of the Act and Rule 504 of Regulation
D promulgated thereunder as well as Section 517.061(11) of the Florida Code.
The facts relied upon the by Registrant to make the federal
exemption available include the following: (i) the aggregate offering price for
the offering of the shares of common stock did not exceed $1,000,000, less the
aggregate offering price for all securities sold within the twelve months before
the start of and during the offering of the shares in reliance on an exemption
under Section 3(b) of, or in violation of Section 5(a) of, the Act; (ii) no
general solicitation or advertising was conducted by Registrant in connection
with the offering of any of the shares; (iii) the Registrant has not been since
its inception (a) subject to the reporting requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended; (b) an "investment company"
within the meaning of the Investment Company Act of 1940, as amended; or (c) a
development stage Company that either has no specific business plan or purpose
or has indicated that its business plan is to engage in a merger or acquisition
with an unidentified company or companies, or other entity or person; and (iv)
the required number of manually executed originals and true copies of Form D
were duly and timely filed with the U.S. Securities and Exchange Commission.
The facts relied upon to make the Georgia exemption available
include the following: (i) the aggregate number of persons purchasing
Registrant's stock during the 12 month period ending on the date of issuance did
not exceed fifteen (15) persons; (ii) neither the offer nor the sale of any of
the shares was accomplished by a public solicitation or advertisement; (iii)
each certificate contains a legend stating "These securities have been issued or
sold in reliance of paragraph (13) of Code Section 10-5-9 of the Georgia
Securities Act of 1973 and may not be sold or transferred except in a
transaction which is exempt under such act or pursuant to an effective
registration under such act"; and (iv) each purchaser executed a statement to
the effect that the securities purchased have been purchased for investment
purposes. Offerings made pursuant to this section of the Georgia Securities Act
have no requirement for an offering memorandum or disclosure document. An issuer
is deemed to have satisfied such requirement if such purchaser or his
representative has been given access to all material books and records of the
issuer; all material contacts and documents relating to the proposed transaction
and an opportunity to question the appropriate executive officer. In this
regard, the Company supplied such information and Mr. Adams was made available
for such questioning.
The facts relied upon to make the Florida exemption available
include the following: (i) sales of the shares of common stock were not made to
more than 35 persons; (ii) neither the offer nor the sale of any of the shares
was accomplished by the publication of any advertisement; (iii) all purchasers
either had a preexisting personal or business relationship with one or more of
the executive officers of Registrant or, by reason of their business or
financial experience, could be reasonably assumed to have the capacity to
protect their own interests in connection with the transaction; (iv) each
purchaser represented that he was purchasing for his own account and not with a
view to or for sale in connection with any distribution of the shares; and (v)
prior to sale, each purchaser had reasonable access to or was furnished all
material books and records of Registrant, all material contracts and documents
relating to the proposed transaction, and had an opportunity to question the
executive officers of Registrant. Pursuant to Florida Statutes Rule 3E-500.005,
in offerings made under Section 517.061(11), an offering memorandum is not
required; however each purchaser (or his representative) must be provided with
or given reasonable access to full and fair disclosure of material information.
An issuer is deemed to have satisfied such requirement if such purchaser or his
representative has been given access to all material books and records of the
issuer; all material contacts and documents relating to the proposed transaction
and an opportunity to question the appropriate executive officer. In this
regard, the Company supplied such information and Mr. Adams was made available
for such questioning.
<PAGE>
Item 5. Index to Exhibits
(a)(1) Financial Statements -- Included in Prospectus:
Independent Certified Public Accountants' Report.
Balance Sheet as of March 31, 2000
Statement of Changes in Shareholder's Equity for the Period October
20, 1997 (Date of Formation) through March 31, 2000.
Notes to Financial Statements.
(a)(2) Included Separately from Prospectus:
Consent of Independent Public Accountants.
Schedules are omitted for the reason that all required information
is contained in the financial statements included in the Prospectus.
(b) Exhibits:
3.1.1 Certificate of Incorporation of Registrant.
3.1.2 Certificate of Amendment to the Certificate of Incorporation.
3.2 Bylaws of Registrant
3.3 Form of Stock Certificate
3.4 Subscription Agreement and Power of Attorney (attached to the
Prospectus as Exhibit A).
5.1 Opinion of Counsel as to the legality of the Shares.
24.1 Consent of Counsel (Duncan, Blum & Associates).
24.2 Consent of Auditors (Durland & Company, CPAs, P.A.).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-1 and has duly caused this
Registration Statement to be signed on its behalf by the Undersigned, thereunto
duly authorized, in the City of Atlanta, State of Georgia, on the 12th day of
May, 2000.
SD Products Corp.
By: /s/ Mark A. Mintmire
-------------------------------
Mark A. Mintmire, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person in his
respective capacity as officer and/or director of the Registrant on the date
indicated.
Signatures Title Date
- --------------------- --------------- ------------
/s/Mark A. Mintmire May 12, 2000
- ----------------------- President, CEO
Mark A. Mintmire and Director
/s/ Mark A. Mintmire
- -----------------------
Mark A. Mintmire Treasurer, May 12, 2000
Chief Financial Officer and Secretary
EXHIBIT 3.(i).1
ARTICLES OF INCORPORATION
OF
SD PRODUCTS CORP.
The undersigned subscriber to these Articles of Incorporation, a natural
person competent to contract, hereby forms a corporation under the laws of the
State of Florida.
ARTICLE I. NAME
The name of the corporation shall be: SD PRODUCTS CORP. The principal place
of business of this corporation shall be 265 Sunrise Avenue, Suite 204, Palm
Beach, FL 33480.
ARTICLE II. NATURE OF BUSINESS
This corporation may engage or transact in any or all lawful activities or
business permitted under the laws of the United States, the State of Florida or
any other state, country, territory or nation.
ARTICLE III. CAPITAL STOCK
The maximum number of shares of stock that this corporation is authorized
to have outstanding at any one time is 50,000,000 shares of common stock having
$.0001 par value per share and 10,000,000 shares of preferred stock having
$.0001 par value per share.
ARTICLE IV. ADDRESS
The street address of the initial registered office of the corporation
shall be 265 Sunrise Avenue, Suite 204, Palm Beach, FL 33480, and the name of
the registered agent of the corporation at that address is Donald F. Mintmire.
ARTICLE V. TERM OF EXISTENCE
This corporation is to exist perpetually.
ARTICLE VI. DIRECTORS
This corporation shall have no Directors, initially. The affairs of the
Corporation will be managed by the shareholders until such time Directors are
designated as provided by the Bylaws.
<PAGE>
ARTICLE VII. INCORPORATOR
The name and street address of the incorporator to these Articles of
Incorporation is:
Donald F. Mintmire, Esq.
Mintmire & Associates
265 Sunrise Avenue
Suite 204
Palm Beach, Florida 33480.
ARTICLE VIII. EFFECTIVE DATE
The corporation shall commence its existence on October 20, 1997.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal on
this 20th day of October, 1997.
/s/ DONALD F. MINTMIRE
------------------------------
Donald F. Mintmire
STATE OF FLORIDA )
) SS:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this20th day of October,
by Donald F. Mintmire, who is personally known to me and who did not take an
oath
/s/ LISA R. COPPA
-----------------
Notary Public
My commission expires: December 19, 1999
Donald F. Mintmire, having been designated to act as Registared Agent,
hereby agrees to act in this capacity.
/s/ Donald F. Mintmire
- ----------------------
Donald F. Mintmire
EXHIBIT 3.(i).2
ARTICLES OF AMENDMENT
of
SD Products, Inc
Article I. Name
The name of this Florida corporation is SD Products, Inc.
Article II. Amendments
The Articles of Incorporation of the Corporation are amended so that the
following provisions are added:
1. Article IX. Conflict of Interest.
Any related party contract or transaction must be authorized, approved or
ratified at a meeting of the Board of Directors by sufficient vote thereon
by directors not interested therein or the transaction must be fair and
reasonable to the Corporation.
2. Article X. Indemnification.
The Corporation shall indemnify its Officers, Directors, Employees and
Agents in accordance with the following:.
(a) The Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, of any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is otherwise serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, actually and reasonably incurred by him in connection
with such action, suit or proceeding, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, has no reasonable cause to believe his conduct as unlawful. The
termination of any action, suit or proceeding, by judgment, order,
settlement, conviction upon a plea of nolo contendere or its equivalent,
shall not of itself create a presumption that the person did not act in
good faith in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Corporation and, with respect to any criminal
action or proceeding, had reasonable cause to believe the action was
unlawful.
(b) The Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or
completed action or suit by or in the right of the Corporation, to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee or
<PAGE>
agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit, if
he acted in good faith and in a manner he reasonably believed to be in, or
not, opposed to, the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable for negligence
or misconduct in the performance of his duty to the Corporation, unless,
and only to the extent that, the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability, but in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such expenses which
such court deems proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections (a) and (b) of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under Section (a) or (b) of this Article
(unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification
of the officer, director and employee or agent is proper in the
circumstances, because he has met the applicable standard of conduct set
forth in Section (a) or (b) of this Article. Such determination shall be
made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the affirmative vote of the
holders of a majority of the shares of stock entitled to vote and
represented at a meeting called for purpose.
(e) Expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit or proceeding may be paid by the Corporation in
advance of the final disposition or such action, suit or proceeding, as
authorized in Section (d) of this Article, upon receipt of an understanding
by or on behalf of the director, officer, employee or agent to repay such
amount, unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article.
(f) The Board of Directors may exercise the Corporation's power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not
the Corporation would have the power to indemnify him against such
liability under this Article.
(g) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under these Amended Articles of Incorporation, the Bylaws,
agreements, vote of the shareholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office and shall
<PAGE>
continue as to person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs and personal
representative of such a person.
3. Article XI. Law Applicable to Control-Share Voting Rights.
The provisions set forth in Fl. Stat. 607.0902 do not apply to
control-share acquisitions of shares of the Corporation.
Article III. Date Amendment Adopted
The amendments set forth in these Articles of Amendment were adopted on
April 23, 1999.
Article IV. Shareholder Approval of Amendment
The amendments set forth in these Articles of Amendment were proposed by
the Corporations's Board of Directors and approved by the shareholders by a
vote sufficient for approval of the amendments.
The undersigned executed this document on the date shown below.
SD Products, Inc.
By: /s/MARK A. MINTMIRE
-------------------
Name: Mark A. Mintmire
Title: President
Date: April 30, 1999
EXHIBIT 3.(ii)
BY-LAWS
OF
SD PRODUCTS CORP.
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Florida shall be
located in the City of Palm Beach. The Corporation may have such other offices,
either within or without the State of Florida, as the business of the
Corporation may require from time to time.
The Registered Office of the Corporation may be, but need not be, identical
with its principal office in the State of Florida and the address of the
Registered Office may be changed from time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of shareholders shall be held
in the month of July of each year, beginning with the year 1998 on such date, at
such time and place as the Board of Directors shall determine for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. If the election of directors shall not be held on the day
designated for any annual meeting, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders to be held as soon thereafter as may be convenient.
SECTION 2. SPECIAL MEETING. Special meetings of the shareholders may be
called by the President, by the Board of Directors or any member thereof, or by
the holders of not less than one-fifth (1/5) of the voting power of all
shareholders of the Corporation.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any place
within or without the State of Florida as the place of meeting for any annual
meeting, or any place either within or without the State of Florida as the place
of meeting for any special meeting called by the Board of Directors.
A waiver of notice signed before or after the meeting by all shareholders
may designate any place, either within or without the State of Florida as the
place for the holding of such meeting. If no such designation is made, or if a
special meeting is called by any person other than the Board of Directors, the
place of meeting shall be the principal office of the Corporation in the State
of Florida, except as otherwise provided in Section 5 of this Article.
SECTION 4. NOTICE OF MEETINGS AND WAIVER. Written or printed notice stating
the place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
<PAGE>
than ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the Chairman of the
Board, the President, or the Secretary, or the officer or persons calling the
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail in a sealed envelope addressed to the shareholder at
his address as it appears on the records of the Corporation, with postage
thereon prepaid. Notice of any shareholders' meeting may be waived in writing by
any shareholder at any time before or after the meeting.
SECTION 5. MEETING OF ALL SHAREHOLDERS. If all of the shareholders shall
meet at any time and place, either within or without the State of Florida, and
consent to the holding of a meeting, such meeting shall be valid without call or
notice, and at such meeting any corporate action may be taken.
SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board of
Directors of the Corporation may close its stock transfer books for a period not
exceeding sixty (60) (but, if closed, for not less than ten (10)) days prior to
the date of any meeting of shareholders, or the date for the payment of any
dividend or for the allotment of rights, or the date when any exchange or
reclassification of shares shall be effective; or in lieu thereof, may fix in
advance a date, not exceeding sixty (60) and not less than ten (10) days prior
to the date of any meeting of shareholders, or to the date for the payment of
any dividend or for the allotment of rights, or to the date when any exchange or
reclassification of shares shall be effective, as the record date for the
determination of shareholders entitled to receive payment of any such dividend
or to receive any such allotment of rights, or to exercise rights in respect of
any exchange or reclassification of shares; and the shareholders of record on
such date shall be the shareholders entitled to notice of and to vote at, such
meeting, or to receive payment of such dividend or to receive such allotment of
rights, or to exercise such rights, in the event of an exchange or
reclassification of shares, as the case may be. If the transfer books are not
closed and no record date is fixed by the Board of Directors, the date on which
notice of the meeting is mailed shall be deemed to be the record date for the
determination of shareholders entitled to vote at such meeting. Transferees of
shares which are transferred after the record date shall not be entitled to
notice of or to vote at such meeting.
SECTION 7. VOTING LISTS. The officer or agent having charge of the transfer
book for shares of the Corporation shall make, at least ten (10) days before
each meeting of shareholders, a complete list of the shareholders entitled to
vote at such meeting, arranged in alphabetical order, with the address and the
number of shares held by each shareholder, which list, for a period of ten (10)
days prior to such meeting, shall be kept on file at the office of the
Corporation and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger or
stock transfer book, or a duplicate thereof kept in this State, shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
share ledger or stock transfer book or to vote at any meeting of shareholders.
SECTION 8. QUORUM. A majority of the outstanding shares of the Corporation,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders; provided, that if less than a majority of the outstanding shares
<PAGE>
are represented at said meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder may vote
by proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
eleven (11) months from the date of its execution, unless otherwise provided in
the proxy, and such proxy may be withdrawn at any time.
SECTION 10. VOTING OF SHARES. Each outstanding share of Common Stock shall
be entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the ByLaws of such corporation may prescribe, or, in the
absence of such provision, as the Board of Directors of such corporation may
determine.
Shares standing in the name of a deceased person may be voted by his
administrator or executor, either in person or by proxy. Shares standing in the
name of a guardian, conservator, or trustee may be voted by such fiduciary,
either in person or by proxy.
Shares standing in the name of a trustee may be voted by him, either in
person or by proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name.
Shares standing in the joint names of four (4) or more fiduciaries shall be
voted in the manner determined by the majority of such fiduciaries, unless the
instrument or order appointing such fiduciaries otherwise directs.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority to do so is
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares (except that if the right to vote be expressly given in writing to the
pledgee and notice thereof delivered to the Corporation in writing by the
pledgee, the shareholder shall not have the right to vote the shares so pledged)
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee or his nominee shall be entitled to vote the shares so
transferred.
SECTION 12. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted.
<PAGE>
SECTION 13. ADJOURNMENTS. If a meeting is adjourned to another time or
place, notice of the adjourned meeting need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken. The
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty (30) days or a new
record is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each shareholder of record entitled to vote at the meeting.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS AND EXECUTIVE COMMITTEE. The business and affairs
of the Corporation shall be managed by its Board of Directors. The Board of
Directors may, by resolution passed by a majority of the whole Board, designate
two (2) or more of its number to constitute an Executive Committee, who, to the
extent provided in the resolution, shall have and exercise the authority of the
Board of Directors in the management of the Corporation.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors which
shall constitute the whole Board of Directors shall be fixed from time to time
by resolution passed by the Board or by the shareholders (any such resolution of
either the Board of Directors or shareholders being subject to any later
resolution by either of them) but in no event shall such number be less than
one. No resolution shall have the effect of shortening the term of any incumbent
director. Directors shall be elected at the annual meeting of shareholders and
shall continue in office until their successors shall have been elected and
qualified. Directors need not be residents of Florida nor need they be the
holder of any shares of the capital stock of the Corporation.
SECTION 3. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held without other notice than this By-Law, immediately after, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide, by resolution, the time and place, either within or without the
State of Florida, for holding of additional regular meetings without other
notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by or at the request of the Chairman of the Board, the President or
any two (2) directors. The person or persons authorized to call special meetings
of the Board of Directors may fix any place, either within or without the State
of Florida, as the place for holding any special meeting of the Board of
Directors called by them.
SECTION 5. NOTICE. Written notice of any special meeting shall be given to
each director at least two (2) days before the meeting, either by personal
delivery or by mail, telegram or cablegram. Any director may waive notice of any
meeting. The attendance of a director at any meeting shall constitute a waiver
of notice of such meeting, and a waiver of any and all objections to the place
of meeting, the time of meeting, or the manner in which it was called or
convened, except where a director attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
<PAGE>
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver or notice of such a meeting.
SECTION 6. QUORUM. A majority of the number of directors fixed by or in the
manner prescribed in the By-Laws of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
provided, that if less than a majority of the directors are present at that
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice.
SECTION 7. MANNER OF ACTING. The act of majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors.
SECTION 8. INFORMAL ACTION BY DIRECTORS. Any action required to be taken at
a meeting of the Directors of a corporation or any action which may be taken at
such meeting may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all directors and such consent
shall have the same effect as a unanimous vote.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors or in
a directorship to be filled by reason of an increase in the number of directors,
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office
or until the next succeeding annual meeting of shareholders. Any directorship to
be filled by reason of an increase in the number of directors may be filled by
election by the Board of Directors for a term of office continuing only until
the next election of the directors by the shareholders.
SECTION 10. COMPENSATION. Directors, as such, shall not receive any stated
salaries for their services, but by resolution of the Board of Directors, a
fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the Board of Directors; provided, that
nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 11. REMOVAL. At a meeting or shareholders called expressly for that
purpose, directors may be removed, with or without cause, by a vote of the
majority of the shares then entitled to vote at an election of directors.
ARTICLE IV
OFFICERS
SECTION 1. CLASSES. The officers of the Corporation shall be a President, a
Treasurer, and a Secretary, and such other officers and assistant officers as
from time to time may be deemed necessary by the Board of Directors and elected
in accordance with the provisions of this Article. Any two (2) or more offices
may be held by the same person. The failure to elect a President, Secretary or
Treasurer shall not affect the existence of this Corporation.
<PAGE>
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the Corporation
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as convenient. Vacancies may be filled or new offices
created and filled at any meeting of the Board of Directors. Each officer shall
hold office until his successor shall have been duly elected and shall have
qualified or until his death, his resignation or his removal from office in the
manner hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever, in its judgment,
the best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. PRESIDENT. The President shall be the principal executive
officer of the Corporation and shall in general supervise and control all of the
business and affairs of the Corporation. He shall preside at all meetings of the
shareholders and of the Board of Directors. He may sign, with the Secretary or
any other proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors have
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
ByLaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. VICE PRESIDENT. In the absence of the President or in the event
of his inability or refusal to act, the Vice President shall perform the duties
of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. The Vice President shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
SECTION 7. TREASURER. If required by the Board of Directors, the Treasurer
shall give a bond for the faithful discharge of his duties in such sum and with
such surety or sureties as the Board of Directors shall determine. He shall: (a)
have charge and custody of and be responsible for all funds and securities of
the Corporation; (b) receive and give receipts for monies due and payable to the
Corporation from any source whatsoever, and deposit all such monies in the name
of the Corporation in such banks, trust companies, or other depositories as
shall be selected in accordance with the provisions of Article V of these
By-Laws; and (c) in general perform all the duties as from time to time may be
assigned to him by the President or the Board of Directors.
<PAGE>
SECTION 8. SECRETARY. The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these By-Laws or as required by law; (c) be custodian of
the corporate records and of the seal of the Corporation and see that the seal
of the Corporation is affixed to all certificates for shares prior to the issue
thereof and to all documents, the execution of which on behalf of the
Corporation under this seal is duly authorized in accordance with the provisions
of these By-Laws; (d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the President, or Vice President, certificates for shares of the
Corporation, the issue of which shall have been authorized by resolution of the
Board of Directors; (f) sign with the President, or Vice President, certificates
for shares for the Corporation, the issue of which shall have been authorized by
resolution of the Board of Directors; (g) have personal charge of the stock
transfer books of the Corporation; and (h) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Assistant
Treasurers shall respectively, if required by the Board of Directors, give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the Board of Directors shall determine. The Assistant Secretaries, as and if
authorized by the Board of Directors, may sign with the President or Vice
President certificates for shares of the Corporation, the issue of which shall
have been authorized by a resolution of the Board of Directors. The Assistant
Treasurers and Assistant Secretaries in general shall perform such duties as
shall be assigned to them by the Treasurer or Secretary, respectively, or by the
President or the Board of Directors.
SECTION 10. SALARIES. The salaries of the officers shall be fixed from time
to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECK AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instruments in the name of and on behalf of the Corporation and such authority
may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the Corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, agent or agents, of
the Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
<PAGE>
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of the
Corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the President and shall be
sealed with the seal of the Corporation. All certificates for shares shall be
consecutively numbered. The name of the persons owning the shares represented
thereby with the number of shares and date of issue shall be entered on the
books of the Corporation. All certificates surrendered to the Corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the Corporation as the Board of Directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the Corporation shall
be made only by the registered holder thereof or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, and on surrender for cancellation of the certificate for such
share. The person in whose name shares stand on the books of the Corporation
shall be deemed the owner thereof for all purposes as regards the Corporation.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the resolution of
the Board of Directors.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE IX
SEAL
The Board of Directors shall provide a corporate seal which shall be in the
form of a circle and shall have inscribed thereon appropriate wording.
<PAGE>
ARTICLE X
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the provisions
of these By-Laws, or under the provisions of the Articles of Incorporation, or
under the provisions of the corporation laws of the State of Florida, waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify each of its directors and officers who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and with respect to any criminal action or
proceeding had no reasonable cause to believe his conduct was unlawful.
Except as provided hereinbelow, any such indemnification shall be made by
the Corporation only as authorized in the specific case upon determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth above. Such
determination shall be made: (a) by the Board of Directors by a majority vote of
a quorum of directors; or (b) by the shareholders.
Expenses (including attorneys' fees) incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action or proceeding if authorized by the Board of
Directors and upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation.
To the extent that a director or officer has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to above, or
in defense of any claim issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith without any further determination that he has met the
applicable standard of conduct set forth above.
ARTICLE XII
AMENDMENTS
The Board of Directors shall have the power and authority to alter, amend
or rescind the By-Laws of the Corporation at any regular or special meeting at
which a quorum is present by a vote of a majority or the whole Board of
Directors, subject to the power of the shareholders to change or repeal such
ByLaws at any annual or special meeting of shareholders at which a quorum is
present, by a vote of a majority of the stock represented at such meeting,
<PAGE>
provided, that the notice of such meeting shall have included notice of any
proposed alteration, amendment or rescission.
I certify that these are the By-Laws adopted by the Board of Directors of
the Corporation.
/s/ DONALD F. MINTMIRE
-----------------------------------
Secretary
Date Signed: OCTOBER 30, 1997
EXHIBIT 3.3
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
NUMBER: SHARES:
S D PRODUCTS CORP.
Authorized Common Stock: 50,000,000 Shares * Par Value: $.0001
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
--Shares of S D PRODUCTS CORP. Common Stock--
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
/s/ /s/
- ------------------------- S D PRODUCTS CORP ------------------------
Secretary Corporate President
Seal
Florida
Interwest Transfer Co., Inc. P.O. Box 17136/Salt Lake City, Utah 84117
Countersigned & Registered
-------------------------------------------------
Countersigned Transfer Agent-Authorized Signature
<PAGE>
NOTICE: Signature must be gruaranteed by a firm which is a
member of a registered national stock exchange, or by a
bank (other than a saving bank) or a trust company. The
following abbreviations when used in the inscription of
the face of this certificate, shall be construed as
though they were written out in full according to
applicable laws or regulations.
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian Under Uniform Gifts to Minors Act ____________
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of Survivorship and not as tenants
Additional abbreviations may also be used though not in the above list.
For Value Receieved, ___________ hereby sell, assign and transfer unto
Please insert social security or other
identifing number of assignee
- --------------------------
- -------------------------------------------------------------------------
(Please Print or typewrite name and address, including zip code of assignee)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
____________________________________________________Shares of the capital stock
represented by the within certificate, and do hereby irrevocably constitute and
appoint
________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated______________
----------------------------------------------------------
NOTICE: The signature to this assignment must correspond
with the name as written upon the face of the Certificate in
every particular without alteratio or enlargement or any
change whatever.
EXHIBIT 5.1
DUNCAN, BLUM & ASSOCIATES
ATTORNEYS AT LAW
[email protected]
Carl N. Duncan David E. Blum
5718 Tanglewood Drive 1863 Kalorama Road, N.W.
Bethesda, Maryland 20817 Washington, D.C. 20009
(301) 263-0200 (202) 232-6220
(301) 263-0300 (Fax) (202) 232-7891 (Fax)
May 1, 2000
SD Products, Inc.
2958 Braithwood Court
Atlanta, Georgia 30345
Re: SD Products Corp. Registration Statement on Form SB-1 Relating to the
Offer and Sale of 1,000,000 Shares of Common Stock
Gentlemen:
Since March 1, 2000, this firm has acted as securities counsel for
SD Products Corp. (the "Company"), a Florida corporation organized under the
Florida General Corporate Law, in connection with the registration under the
Securities Act of 1933, as amended, of 1,000,000 shares of common stock as
defined below (the "Shares") in the Company, having a maximum aggregate offering
price of $1,000,000, pursuant to the referenced Registration Statement.
You have requested our opinion regarding the legality of the Shares
registered pursuant to the Registration Statement on Form SB-1 (the
"Registration Statement"). We have examined originals or copies, certified to
our satisfaction, of such records, agreements and other instruments of the
Company, certificates or public officials, certificates of the officers or other
representatives of the Company, and other documents, as we have deemed necessary
as a basis for the opinions hereinafter set forth. As to various questions of
fact material to such opinions, we have, when relevant facts were not
independently established, relied upon written certifications of officers and
references, including (but not limited to) statements contained in the
Registration Statement.
Our opinions, insofar as they address issues of Florida law, are
based solely upon our review of (i) the records of the Company; (ii) the Florida
General Corporate Law; and (iii) a certified copy of the Company's October 20,
1997 Articles of Incorporation and April 30, 1999 Certificate of Amendment
thereto. Subject to the foregoing, we do not express our opinion herein
concerning any law other than the federal laws of the United States.
We have assumed the genuineness of all signatures on documents
reviewed by or presented to us, the legal capacity of natural persons, the
authenticity of all items submitted to us as originals and the conformity with
originals of all items submitted to us as copies.
Based upon the foregoing, we are of the opinion that:
1. The Company is a duly organized, validly existing corporation under the
laws of the State of Florida.
<PAGE>
2. The Shares of the Company to be offered pursuant to the Prospectus forming
a part of the Registration Statement are validly authorized and when (a)
the pertinent provisions of the Securities Act of 1933, as amended, and
such state securities laws and regulations as may be applicable have been
complied with and (b) such Shares have been duly delivered against payment
therefor as contemplated by the offer contained in the Prospectus, such
Shares will be validly issued, fully paid and non-assessable under the law
of Florida.
Our opinion is expressed as of the date hereof, and we do not assume
any obligations to update or supplement our opinion to reflect any fact or
circumstances which hereafter comes to our attention or any change in the law
that hereafter occurs.
We hereby consent to the reference to our firm in the "Legal
Matters" section of the Prospectus and to the inclusion of this opinion as an
Exhibit to the Registration Statement.
DUNCAN, BLUM & ASSOCIATES
By: /s/ Carl N. Duncan
-------------------
Carl N. Duncan, Managing Partner
EXHIBIT 24.1
CONSENT OF COUNSEL
We herby consent to the reference to us in the Prospectus
constituting part of this Form SB-1 Registration Statement for SD Products,
Inc., under the caption "Legal Matters."
/s/ Duncan Blum & Associates
DUNCAN, BLUM & ASSOCIATES
Bethesda, Maryland
May 1, 2000
EXHIBIT 24.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
SD Products, Inc.
We hereby consent to the use in this Registraion Statement of SD Products Corp.
on Form SB-1 of our report dated December 13, 1999 on the financial statements
of the company, appearing in the Prospectus, which is part of this Registration
Statement.
We also consent to the reference to our firm under the heardings "Selected
Finanical Data" and "Experts" in such Prospectus.
/s/Durland & Company, CPAs, BA
DURLAND & COMPANY, CPAs, P.A.
Palm Beach, Florida
May 8, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001085720
<NAME> SD PRODUCTS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. Currency
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Sep-30-1999
<PERIOD-START> Oct-01-1999
<PERIOD-END> Mar-31-2000
<EXCHANGE-RATE> 1
<CASH> 1,688
<SECURITIES> 0
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<INVENTORY> 0
<CURRENT-ASSETS> 7,893
<PP&E> 0
<DEPRECIATION> 7,893
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 280
<OTHER-SE> 7,893
<TOTAL-LIABILITY-AND-EQUITY> 7,893
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,219
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (16,219)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,219)
<EPS-BASIC> 0
<EPS-DILUTED> (.01)
</TABLE>
