U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: June 30, 2000
Commission file no. 26021
SD Products Corp.
-----------------------------------
(Name of Small Business Issuer in its Charter)
Florida 65-0790763
------------------------------------ -----------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
2958 Braithwood Court
Atlanta, GA 30345
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (770) 414-9596
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
None None
------------------------ ----------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
--------------------------------------------------------
(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696 - Fax: (561) 659-5371
<PAGE>
Indicate by Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
---- ----
As of June 30, 2000, there are 2,800,000 shares of voting stock of the
registrant issued and outstanding.
PART I
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Balance Sheets............................................................F-2
Statements of Operations..................................................F-3
Statements of Stockholders' Equity........................................F-4
Statements of Cash Flows..................................................F-5
Notes to Financial Statements.............................................F-6
F-1
<PAGE>
<TABLE>
<CAPTION>
SD Products Corporation
(A Development Stage Enterprise)
Balance Sheets
September 30, June 30,
1999 2000
-------------------- ----------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 13,200 $ 1,643
Loan and accrued interest receivable - related party 0 6,339
-------------------- ----------------------
Total current assets 13,200 7,982
-------------------- ----------------------
Total Assets $ 13,200 $ 7,982
==================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $452 $ 4,061
Accrued expenses - related party 500 0
-------------------- ----------------------
Total current liabilities 952 4,061
-------------------- ----------------------
Total Liabilities 952 4,061
-------------------- ----------------------
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) (19,289)
-------------------- ----------------------
Total Stockholders' Equity 12,248 3,921
-------------------- ----------------------
Total Liabilities and Stockholders' Equity $ 13,200 $ 7,982
==================== ======================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
SD Products Corporation
(A Development Stage Enterprise)
Statements of Operations
(Unaudited)
Period from
Three Months Ended Nine Months Ended October 20, 1997
June 30, June 30, (Inception)
------------------------------ ------------------------------ through
2000 1999 2000 1999 June 30, 2000
--------------- ------------ ------------- -------------- -------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 0 $ 0 $ 0 $ 0 $ 0
--------------- ------------ ------------- -------------- -----------------
Expenses
General and administrative expenses 60 201 270 891 8,162
Legal fees - related party 0 0 0 0 510
Professional fees 4,046 3,715 8,396 6,090 11,653
--------------- ------------ ------------- -------------- -----------------
Total expenses 4,106 3,916 8,666 6,981 20,325
--------------- ------------ ------------- -------------- -----------------
Loss from operations (4,106) (3,916) (8,666) (6,981) (20,325)
Other income (expense)
Interest income - related party 134 121 339 624 1,036
--------------- ------------ ------------- -------------- -----------------
Net loss $ (3,972) (3,795) $ (8,327) $ (6,357) $ (19,289)
=============== ============ ============= ============== =================
Basic net loss per weighted average share $ (0.00) $ (0.00) $ (0.01) $ (0.01)
=============== ============ ============= ==============
Weighted average number of shares 2,800,000 2,800,000 2,800,000 2,800,000
=============== ============ ============= ==============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
SD Products Corporation
(A Development Stage Enterprise)
Statement of Stockholders'
Equity Period from October 20, 1997
(Inception) through June 30, 2000
Deficit
Accumulated
Additional During the Total
Number of Common Paid-in Development Stockholders'
Shares Stock Capital Stage Equity
------------- ------------ --------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
BEGINNING BALANCE, September 30,1998 2,800,000 $ 280 $ 22,930 $ (6,543)$ 16,667
Year Ended September 30, 1999:
-----------------------------
Net loss - 1999 0 0 0 (4,419) (4,419)
------------- ------------ --------------- ----------------- ---------------
BALANCE, September 30, 1999 2,800,000 280 22,930 (10,962) 12,248
Nine Months Ended June 30, 2000: (unaudited)
-------------------------------
Net loss 0 0 0 (8,327) (8,327)
------------- ------------ --------------- ----------------- ---------------
ENDING BALANCE, June 30, 2000 (unaudited) 2,800,000 $ 280 $ 22,930 $ (19,289)$ 3,921
============= ============ =============== ================= ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
SD Products Corporation
(A Development Stage Enterprise)
Statement of Cash Flows
(Unaudited)
Period from
Three Months Ended Nine Months Ended October 20, 1997
June 30, June 30, (Inception)
------------------------- ----------------------- through
2000 1999 2000 1999 June 30, 2000
------------- ----------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,972)$ (3,795) $ (8,327) $ (6,357) $ (19,289)
Adjustments to reconcile net loss to net cash used for
operating activities:
Stock issued for services 0 0 0 0 10
Stock issued for services - related party 0 0 0 0 200
Changes in operating assets and liabilities:
(Increase) decrease accrued interest receivable - 176
related party (134) (339) 73 (339)
Increase (decrease) accrued expenses 4,061 0 3,609 0 4,061
Increase (decrease) accrued expenses - related party 0 0 (500) 0 0
------------- ----------- ---------- ----------- ---------------
Net cash used by operating activities (45) (3,619) (5,557) (6,284) (15,357)
------------- ----------- ---------- ----------- ---------------
CASH FLOW FROM INVESTING ACTIVITIES:
Advance on loan receivable 0 0 0 (15,000) (15,000)
Repayment of loan receivable 0 0 0 15,000 15,000
Advance on loan receivable - related party 0 0 (6,000) 0 (24,000)
Repayment from related party 15,000 0 18,000 18,000
------------- ----------- ---------- ----------- ---------------
Net cash (used) provided by investing activities 0 15,000 (6,000) 18,000 (6,000)
------------- ----------- ---------- ----------- ---------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 0 0 0 23,000
------------- ----------- ---------- ----------- ---------------
Net cash provided by financing activities 0 0 0 0 23,000
------------- ----------- ---------- ----------- ---------------
Net increase (decrease) in cash (45) 11,381 (11,557) 11,716 1,643
CASH, beginning of period 1,688 2,409 13,200 2,074 0
------------- ----------- ---------- ----------- ---------------
CASH, end of period $ 1,643 $ 13,790 $ 1,643 $ 13,790 $ 1,643
============= =========== ========== =========== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
SD Products Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to the nine months
ended June 30, 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 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) Interim financial information The financial statements for the
nine months ended June 30, 2000 and 1999 and for the period since
October 20, 1997, (Inception), through June 30, 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.
(2) Loan Receivable 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 $339 was accrued at June 30, 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 December 31, 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 $8,300, $6,500 and $4,400 expiring at September 30,
2020, 2019 and 2018, respectively.
F-6
<PAGE>
SD Products Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
(4) Income Taxes (Continued) The amount recorded as deferred tax assets
as of June 30, 2000 is approximately $2,900, 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) 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 ended are as
follows:
<TABLE>
<S> <C> <C>
June 30, 2000
(unaudited) September 30, 1999
----------------- --------------------
Loan and accrued interest receivable - related party $ 6,339 $ 0
================= ====================
Accrued expenses - related party $ 0 $ 500
================= ====================
Interest earned - related party $ 339 $ 604
================= ====================
</TABLE>
(6) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $19,300 for the period from October
20, 1997 (Inception) through June 30, 2000. 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.
F-7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
General
Since its inception, the Company has conducted minimal business
operations except for organizational and capital raising activities. The Company
has not realized significant revenues since its inception due to the fact that
its key executive, Mr. Mark A. Mintmire, until his graduation in August 1998,
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 June 30, 2000, the Company had
interest income of $1036.00 from a loan to a related party. Cumulative operating
expenses as of June 30, 2000 were $20,325. 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.
Plan of Operation
If the Company is unable to generate sufficient revenue from operations
to implement its expansion plans, it 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
generated by the Company, it anticipates that it will be able to satisfy its
cash requirements for the next six (6) to nine (9) months without raising funds
via debt or equity financing or from third party funding sources. Accordingly,
the Company expects it will need to raise additional finds in the next months if
only a minimal amount of revenue is generated.
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.
For the period from October 20, 1997 through June 30, 2000, the Company
had a cumulative loss from operations aggregating $20,325.
<PAGE>
Financial Condition, Capital Resources and Liquidity
At June 30, 2000, the Company had assets totaling $7,982 and
liabilities of $4,061 attributable to accrued expenses. On October 20, 1997, at
inception, the Company issued 2,000,000 shares of restricted Common Stock to Mr.
Mark A. Mintmire, the President and Treasurer of the Company and record and
beneficial owner of approximately 72.14% of the Company's outstanding Common
Stock. At the same time, the Company also issued Charles Adams 100,000 shares of
common stock valued at $10 for services rendered in setting up the Company. In
April and June 1998, the Company received a total of $3,000 and $ 20,000
respectively in cash contributed as consideration for the issuance of shares of
Common Stock pursuant respectively to Section 3(b) of the Act and Rule 504 of
Regulation D promulgated thereunder, Section 10-5-9(13) of the Georgia Code and
Section 517.061(11) of the Florida Code.
The Company has no potential capital resources from any outside sources
at the current time. It is anticipated that the Company will require only
nominal capital to maintain the corporate viability of the Company.
The ability of the Company to continue as a going concern is dependent
upon the availability of obtaining additional capital and financing from such
shareholders and directors.
Net Operating Losses
The Company has net operating loss carryforwards of approximately
$8,300, $6,500 and $4,400 expiring at September 30, 2020, 2019 and 2018,
respectively. Until the Company's current operations begin to produce earnings,
it is unclear whether the Company can utilize such carryforwards.
Year 2000 Compliance
The Company did not experience any material disruption in its
operations as a result of year 2000 date change-over.
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-QSB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
finding suitable merger or acquisition candidates, expansion and growth of the
Company's business and operations, and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses made
by the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances. However, whether
actual results or developments will conform with the Company's expectations and
predictions is subject to a number of risks and uncertainties, general economic
market and business conditions; the business opportunities (or lack thereof)
that may be presented to and pursued by the Company; changes in laws or
regulation; and other factors, most of which are beyond the control of the
Company. Consequently, all of the forward-looking statements made in this Form
10-QSB are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequence to or effects on the
<PAGE>
Company or its business or operations. The Company assumes no obligations to
update any such forward-looking statements.
PART II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending June 30, 1999,
covered by this report to a vote of the Company's shareholders, through the
solicitation of proxies or otherwise.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated
herein by reference, as follows:
Exhibit No. Description
--------------- -------------------------------------------------------
3.(i).1 Articles of Incorporation of SD Products Corp.
filed October 20, 1997(1)
3.(i).2 Articles of Amendment to the Articles of Incorporation of SD
Products Corp. filed April 30, 1999(1)
3(ii).1 By-laws (1)
27 * Financial Data Schedule
----------------------------------------
(1) Incorporated herein by reference to the Company's Registration Statement on
Form 10-SB.
* Filed herewith
(b) No Reports on Form 8-K were filed during the quarter ended June 30,
2000.
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SD Products Corp.
Date: August 15, 2000 BY: /s/Mark A. Mintmire
--------------------------
Mark A. Mintmire, President, Secretary
Chief Executive Officer & Director
