As filed with the Securities and Exchange Commission on July 20, 2000
Registration No. 333- 36966
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO THE
FORM SB-1 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
SD PRODUCTS CORP.
-----------------------------------
(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)
---------------------------------------
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
<TABLE>
<S> <C> <C> <C> <C>
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to be Amount to be Offering Price Aggregate Registration
Registered Registered per Share Offering Price Fee
-------------------- ----------- --------------- ---------------- ------------
Shares of Common 1,800,000
Stock Shares $1.00 $1,800,000 $475
===================== ========== ================== ================ =============
</TABLE>
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>
PRELIMINARY PROSPECTUS DATED JULY _____, 2000
PROSPECTUS
SD PRODUCTS CORP.
2958 Braithwood Court, Atlanta, Georgia 30345
(770) 414-9596
Offering 100,000 - 1,000,000 shares of common stock at $1.00 per share
Company Information
o We provide a lending source for the purchase of leased automobiles and
limousines. We intend to qualify our shares for quotation on the NASDAQ
Bulletin Board concurrently with the date of this prospectus.
Terms of the Initial Offering Period
o The initial offering period will be up to 2 months from the date listed in
this prospectus unless it is terminated earlier or, our by sole discretion,
it is extended up to seven additional months.
o During the initial offering period, we will sell shares at $1.00 per share
with the minimum purchase being $500 (500 shares). Since there is no
selling commission, all proceeds from the sales will go to the company.
o This offering is being made by the company through our only principal
director, Mark A. Mintmire without the use of securities brokers. All
proceeds from the sale of shares will be held in an attorney escrow account
with Duncan, Blum & Associates, Bethesda, Maryland.
o If we do not sell a minimum of $100,000 of shares during the initial
offering period, we will return all money from shares sold with interest.
Additional Shares Being Offered
o Some of our stockholders are offering an additional 800,000 shares. We will
not, however, receive any proceeds from the sale of shares by the members
of the company.
IMPORTANT INFORMATION
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
No one is authorized to give any information not contained in this prospectus in
connection with this offering and, if given, you should not rely on this
information. This prospectus should not be considered an offer to any person to
whom such an offer would be unlawful.
Carefully consider the risk factors beginning on page 7 of this prospectus.
Do not assume all information in this prospectus is correct
or will continue to be correct in the future on the basis
of its delivery or any sale made from it.
Until September ___, 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.
August_______, 2000
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<PAGE>
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.
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<PAGE>
Investment Requirements
The purchase of a subscription for shares is subject to the following
conditions:
1. The minimum initial purchase is $500. There is no limit to the number of
shares you may purchase, except as limited by regulations for the state in
which you live.
2. You meet must meet certain requirements in order to purchase the shares
offered in this prospectus. You must indicate in the Subscription Agreement
and Power of Attorney that you have either a net worth of at least $100,000
(exclusive of home, furnishings and automobiles) or a net worth of at least
$50,000 (also exclusive of home, furnishings and automobiles) and an annual
adjusted gross income of not less than $25,000.
3. If you are representing a pension, profit-sharing plan, trust, tax-deferred
or tax-exempt entity (including retirement plans) you must indicate that
you are authorized to make purchases on behalf of the plan and that such an
investment is not prohibited by law or the plan's governing documents.
4. We have the right to reject any subscription. All subscriptions received
are irrevocable.
5. We must have reasonable grounds to believe, on the basis of information you
have provided us concerning your financial situation, that you are able to
benefit the company with your investment. You must, in addition, be able to
sustain a possible loss of your entire investment.
[Balance of Page Intentionally Left Blank.]
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<PAGE>
Table of Contents
Descriptive Title Page
INVESTMENT REQUIREMENTS..................................................4
PROSPECTUS SUMMARY.......................................................6
SUMMARY FINANCIAL DATA...................................................7
RISK FACTORS.............................................................7
RELATED PARTY TRANSACTIONS...............................................10
FIDUCIARY RESPONSIBILITY OF THE COMPANY'S MANAGEMENT.....................11
SELLING SHAREHOLDERS.....................................................11
APPLICATION OF PROCEEDS..................................................13
CAPITALIZATION...........................................................14
DILUTION.................................................................15
THE COMPANY..............................................................16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS....................................22
ABSENCE OF CURRENT PUBLIC MARKET AND DIVIDEND POLICY.....................24
DESCRIPTION OF CAPITAL STOCK.............................................24
ERISA CONSIDERATIONS.....................................................25
LEGAL MATTERS............................................................26
EXPERTS..................................................................26
AVAILABLE INFORMATION....................................................26
APPENDIX I (FINANCIAL STATEMENTS)........................................I-1
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<PAGE>
Prospectus Summary
The following is a summary of the information contained in this
prospectus. Before making any investment, you should carefully consider the
information under the heading "Risk Factors."
The Company SD Products Corp. was incorporated in Florida on October 20,
1997. Our objective is to become a dominant provider of
automobile lease financing for credit-impaired car buyers.
We plan to conduct business initially in Florida and Georgia
and later opening up to selected areas nationwide. We intend
to, eventually, be able to provide a full spectrum of lease
financing services for our clients.
Securities Offered Maximum amount of shares offered ($1,000,000):
by the Company 1,000,000 shares at $1.00 per share
Minimum amount of shares offering ($100,000): 100,000 Shares
at $1.00 per Share.
Offering Initial: We will begin to sell shares on the date listed on
Period(s) the cover of this prospectus. During this initial offering
period, we may continue to offer shares for up to 9 months.
This initial offering period will close once the minimum
$100,000 in shares is sold and we close the escrow account.
If the minimum $100,000 in shares is not sold, we will
return all proceeds to the investors without interest.
Continuous: If we do not sell the maximum $1,000,000 in
shares during the initial offering period, we will update
this prospectus and continue the offering for up to 24
months from the date this prospectus is issued. During this
continuous offering period, we will sell subscriptions for
shares at $1.00 per share until a market develops for the
shares. We will then sell the shares at the prevailing
market rate.
Proceeds Held There is no assurance that interest will be earned on the
funds in the escrow account. If interest is earned, it will
be returned to investors only if the $100,000 minimum in
shares is not sold.
Proceeds from these sales will not be paid to the company
until the $100,000 minimum in sales is achieved. Investors
are reminded that, given the 9-month duration of the initial
offering period, investments may be held in escrow until the
end of the initial offering period.
Minimum The minimum purchase is $500.
Subscription
Risks and This investment involves substantial risks due in part to
Conflicts of the costs which we will incur and the highly speculative
Interest nature of the automobile leasing business. Risks inherent
in investing in the company are discussed under "Risk
Factors."
Plan of The shares are being offered directly by Mark A. Mintmire,
Distribution the sole principal of the company.
Application of The proceeds of the offering are expected to be used to
Proceeds continue business operations and expand the scope of the
lines. In the event we receivemore than the $100,000
minimum, we intend business with particular emphasis on
enhancing our credit to be more aggressive in implementing
our business plan.
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<PAGE>
Summary Financial Data
The following is a summary of the financial data contained in this
prospectus. This information reflects the our operations for the period from
inception to March 31, 2000.
o Current assets $7,893
o Noncurrent assets 0
o Current liabilities 0
o Gross Revenues 0
o Gross Profit 0
o Loss from continuing operations ($15,387)
o Net loss ($15,387)
Risk Factors
Before making an investment, you should consider carefully the following
risk factors.
We are a new company in its development stage. Our main efforts thus
far have been geared toward raising funds in order to continue to grow and do
business. You should, therefore, be aware of the difficulties normally
encountered by a new, developing company. At present, most of these conditions
presented below are beyond our control or at least cannot be predicted at this
time. The likelihood that we will succeed must be considered in light of the
problems, expenses and delays frequently encountered in connection with the
competitive environment in which we will operate.
1. Lack of Net Worth. As of March 31, 2000, our total assets consisted of a
loan of $6,000 plus $205 in accrued interest for a total net worth of
$7,893. In addition, the Company's working capital is presently minimal and
there can be no assurance that our financial condition will improve. Our
success is dependent upon our obtaining additional financing in order to
arrange a large volume of direct automobile lease financing directly to
consumers. There is no assurance that we will be able to obtain additional
liens or equity financing from any source.
2. No Client Base. While we intend to engage in the automobile lease finance
industry, we currently have no clients and there can be no assurance that
we will be successful in obtaining clients by marketing in the Palm Beach
and Broward Counties (Florida) as planned. Further, the very limited
funding currently available to us will only permit us to conduct business
on a very limited scale.
3. Proceeds from Sale of Shares May be Inadequate. If we receive significantly
less than the $1,000,000 maximum, we may not have the funds to continue
with our operations. Without an infusion of capital or profits, we do not
expect to continue doing business after 6 to nine 9 months from the date of
this prospectus.
4. Self-underwritten Offering. Because there is no firm commitment for the
purchase of shares, there can be no assurance that we will sell the
intended $1,000,000. No underwriter, placement agent or other person has
contracted with us to purchase or sell any of the shares offered.
Accordingly no commitment exists by anyone to purchase any shares and,
consequently, we can give no assurance that any of the shares will be sold.
In fact, the risk is greater in this case since Mr. Mintmire has not
previously conducted a self-underwritten offering (meaning without the use
of broker-dealers).
5. Offering Subject to the Minimum. While we are offering a maximum of
$1,000,000 worth of shares, this offering is subject to a $100,000 minimum.
If we do not achieve this minimum within 9 months, we will terminate the
offering and return all proceeds from sales at that point (with pro rata
interest).
6. Unforeseen Costs . There can be no assurance that we have correctly
estimated the costs for establishing a client base or for obtaining a
substantial volume of direct automobile lease financing directly with
consumers. Therefore, we may expend significantly more funds than
anticipated without expanding the business.
7. No Current Plans to Pay Dividends. Each share is entitled to dividends if
and when the Board of Directors decides to distribute dividends. It is not,
however, currently within our plans to pay dividends, either now or for the
foreseeable
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<PAGE>
future. We may be restricted from paying dividends to our shareholders
under future credit or other financing agreements. The amount and frequency
of dividends distributed to shareholders is solely within the management's
discretion. At present, we will retain any earnings for the operation and
expansion of the business. Moreover, no assurance can be given that our
services and products will be accepted in the marketplace or that there
will be sufficient revenue generated for us to be profitable.
8. Competition. The market for financing "credit-impaired" and "sub-prime" car
buyers is highly competitive. Our 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 we do. 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, have not
competed for financing for credit-impaired used car buyers.
9. Growth. We expect to expand through internal growth, by granting franchises
and through acquisitions. We also plan to expand our business from its
current location and by entry into other markets. There can be no assurance
that we will be able to create or maintain a market presence. Our ability
to grow will depend on the availability of working capital to support such
growth existing and emerging competition and our ability to maintain
sufficient profit margins in the face of an increasingly competitive
industry. We must also successfully manage costs, adapt our systems to
accommodate growth and recruit and train qualified personnel. In order to
protect ourselves and our shareholders, we must attempt to successfully
indemnify ourselves against any claims made by our independent franchises.
Despite any efforts to minimize the risk of liability, there can be no
assurance that a claim will not be made against the us, nor that our
indemnification requirements and insurance coverage will be sufficient to
cover any judgments, settlements or costs relating to any claim..
10. Reliance on Personnel. Our business is dependent upon two individuals: Mark
A. Mintmire, our sole director and executive officer and Charles Adams our
key consultant. Since Mr. Mintmire has no experience in the automobile
leasing business, our success is greatly dependent upon the expertise of
Mr. Adams, who has approximately three years of relevant experience. At
present, it is estimated that the time devoted by each individual to manage
the day-to-day affairs of the business will be approximately five to ten
hours per week. This time commitment is expected to increase at such time
as we obtain sufficient funding with which to begin the search for leases
to finance. Similarly, future members of management may have professional
responsibilities to other entities. The departure or disabling of either of
these individuals could have a material adverse effect on our performance.
Our success also depends on our ability to attract, retain and motivate
qualified personnel.
11. Conflicts of Interest. Conflicts of interest may arise in the future if our
executive officers and directors are involved in the management of any
company which transacts business or competes directly with us. Mr. Adams,
who is the president and manager of his own lease finance company will
divide his time and effort between this company, his existing employment
agency and his other business obligations.
12. Broad Discretion of Management with Regard to Application of Proceeds. The
amounts discussed in the "Application of Proceeds" section indicates the
proposed use of proceeds from this offering. However, management may choose
to use these funds in ways that vary from the usage stated in this
prospectus without consent from the investors. These decisions could have
an adverse affect on the profitability of the company.
13. Financing Future Activities. Our future accumulation of debt could have a
positive or an adverse impact on the shareholders. While we currently have
no long-term debt, we anticipate using the proceeds of this offering to
finance our future activities. We may issue debt securities from time to
time, subject to compliance with applicable securities law and possible
future credit or other financing agreements.
14. Need to Re-Sell Acquired Receivable in the Secondary Markets. We intend to
bundle together a number of automobile lease financing receivables for the
purpose of re-selling them in public and private offerings by an
institutional investors and individuals. This reselling will provide us
with additional working capital. There is no assurance, however, that we
will be successful in trying to re-sell these "bundled" securities in the
secondary market.
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<PAGE>
15. Governmental Regulations. Federal, state and local regulation and
supervision requires us to limit interest rates, fees and other charges
related to finance contracts. The interest rates and fees we charge may in
the future may be lower than those we currently charge. If this instance
occurs, our financial condition, results of operations or cash flows may be
adversely affected.
16. Sensitivity to Interest Rates. The revenues we generate will be derived
from a profit made from paying a low interest rate on the money we borrow
to buy contracts while charging a higher interest rate on the contract
itself. While the finance contracts that we service bear interest at fixed
rates, our indebtedness generally bears interest at floating rates. In the
event our interest expense increases, we would seek to compensate for these
increases by raising the interest rates on new finance contracts. To the
extent we are unable to do so because of legal limitations or otherwise,
the net margins on our finance contracts would decrease, thereby adversely
affecting our financial condition.
17. Seasonal Variations and Business Cycle Exposure. We expect to experience
higher revenues in our 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, we
expect to experience lower revenues in the third and fourth quarters due to
lower overall economic activity. The automobile industry historically
experiences cyclical growth which follows general economic cycles. 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 our financial condition and results of
operations.
18. Monetary Reserve for non-payables. We expect to receive payments on the
automobile lease financing receivables on a timely basis. However, the
nature of the sub-prime lending market will require that the we plan for a
monetary reserve to be held in case payments are not received on a timely
basis. In the event that this reserve increases substantially, our working
capital will be negatively impacted directly impairing operations.
19. Absence of Public Market for Shares. Our shares of common stock are not
registered with the U.S. Securities and Exchange Commission. There is no
public market for the shares and no assurance that one will develop. No
assurance can be given that if a market for these shares develops, it 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, if you choose to purchase shares as a result of this
offering, you may not be able to re-sell your shares in the event of an
emergency or for any other reason. Also, the shares may not be readily
accepted as collateral for a loan. Accordingly, you should consider the
purchase of Shares only as a long-term investment.
20. Arbitrary Offering Price; Dilution. The common stock's price per share in
this offering has been arbitrarily determined by our Board of Directors and
bears no relationship to our assets, book value or net worth. Our offering
price per share is substantially in excess of the net tangible book value
as a "start-up" company. This offering will result in immediate and
substantial dilution of the net tangible book value per common share. If
you purchase shares offered by this offering, you will experience immediate
dilution based on the difference between the subscription price and the net
tangible book value per common share. During at least the initial offering
period, you will pay $1.00 per share which, upon completion of this
offering, will have a net tangible book value of approximately $0.07 if the
$100,000 minimum offering is achieved and $0.49 if the $1,000,000 maximum
offering is achieved.
21. No Secondary Trading Exemption. In the event a market develops for our
shares, secondary trading in the common stock will not be possible in each
state until the shares of common stock are qualified for sale under the
applicable securities laws of that state or we verify that an exemption,
such as listing in certain recognized securities manuals, is available for
secondary trading in the state. There can be no assurance that the stock
will qualify for secondary trading or that we will qualify for an exemption
for secondary trading in any state. If the we fail to obtain an exemption
for the secondary trading of the common stock in any particular state, the
shares of common stock could not be offered, sold to or purchased by, a
resident of that state. In the event that a significant number of states
refuse to permit secondary trading of our common stock, a public market for
the common stock will fail to develop and the shares could be deprived of
any value.
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22. Possible Adverse Effect of Penny Stock Regulations. In the event a market
develops in for our shares and a secondary trading market also develops,
the common stock is expected to come within the meaning of the term "penny
stock" because the shares are issued by a small company, are priced under
five dollars and are not traded on NASDAQ or on a national stock exchange.
The SEC has established risk disclosure requirements for any sellers
participating in penny stock transactions as part of a system. The SEC obligates
a seller to satisfy special sales practice requirements:
1. The seller must make an individual, written suitability determination
of each purchaser.
2. The seller must receive the purchaser's written consent prior to the
transaction.
3. Prior to a transaction in a penny stock, the seller must deliver a
standardized risk disclosure instrument that provides information
about penny stocks and the risks in the penny stock market.
4. The seller must provide the purchaser with:
a. a current bid and offer quotations for the penny stock;
b. any compensation the seller received for the transaction; and
d. 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.
Related -Party Transactions
The following inherent or potential conflicts of interests should be
considered by prospective investors before subscribing for shares:
Existing Ownership of Shares by Principals
<TABLE>
<S> <C> <C> <C>
Owner Date Issued No. of Shares Notes
-------------- ---------- ------------- ------------------
Mark A. Mintmire, 10/20/97 2,000,000 Issued for services performed in setting up the company.
President and Treasurer
Owns approx. 71.43% of outstanding common stock
Donald F. Mintmire, 6/24/98 17,500 Issued for cash of $875.
Legal Counsel
Also owns approx. .63% of outstanding common stock.
Charles Adams, 10/20/97 100,000 Issued for services performed in setting up the company.
Key Consultant (valued at $10)
Also owns approx. 3.57% of outstanding common stock.
</TABLE>
We have no plans to issue any additional securities to management,
promoters, affiliates or associates at the present time. If the Board of
Directors adopts an employee stock option or pension plan, we may issue
additional shares according to the terms of this plan.
Although we have a very large amount of authorized but unissued
common and preferred stock, we intend to reserve this stock to implement
continued expansion of the business.
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Business with Affiliates of the Company
We have only done business with affiliates at the prices and on
terms comparable to those of non-affiliates. The Board of Directors must approve
any related party contract or transaction. Mr. Adams, who is not presently a
director, has agreed, in the event that he is elected to serve as a director in
the future, he would abstain from voting on any related party contract or
transaction involving his existing business. Nevertheless, it would still be
possible for the Board of Directors, to authorize such a contract or transaction
with Mr. Adams' existing business agency or any other affiliate even if the
terms were unfair to the company.
We do not intend to use the proceeds from this offering to make
payments to any promoters, management (except as salaries, benefits and out of
pocket expenses) or any of their affiliates. We have no present intention of
acquiring any assets by any promoter, management or their affiliates or
associates. In addition, we have no current plans to acquire or merge with any
business which our promoters, management or their respective affiliates have an
ownership interest. Existing conflict of interest provisions are set forth in
the Amended Articles of Incorporation for the Company. 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 this information will be
disclosed to the shareholders.
There are no arrangements or agreements between non-management
shareholders and management under which non- management shareholders may
directly or indirectly participate in or influence company affairs.
Fiduciary Responsibility of the Company's Management
Our counsel has advised us that we have a fiduciary responsibility
for the safekeeping and use of all company assets. Management is accountable to
each shareholder and required to exercise good faith and integrity with respect
to its affairs. (For example, management cannot commingle the company's property
with the property of any other person, including that of management.)
The SEC stated that, to the extent any exculpatory or
indemnification provision includes indemnification for liabilities arising under
the Securities Act of 1933, it is the opinion of the SEC that this
indemnification is contrary to public policy and, therefore, unenforceable.
Shareholders who believe that our 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 that time.
According to federal and state statutes, including the Florida
General Corporation Law, shareholders in a corporation have the right to bring
class action suites in federal court to enforce their rights under federal
securities laws. Shareholders who have suffered losses in connection with the
purchase or sale of their shares may be able to recover any such losses from a
corporation's management where the losses result from a violation of SEC rules.
It should be noted, however, that it would be difficult to establish a basis for
liability that we have not met these SEC standards. This is due to the broad
discretion given the directors and officers of a corporation to act in its own
best interest.
Selling Shareholders
The shareholders listed below are offering a total of 800,000 shares
in addition to the 1,000,000 shares being sold by the company. The shareholders
(not the company) will receive the proceeds from the sale of their individual
shares.
The only selling shareholders who have held a position, office, or
had any other material relationship with the company during the previous three
years are Charles Adams, as our key consultant, and Donald F. Mintmire as our
legal counsel. Each selling shareholder is offering all of the common stock that
they own.
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<TABLE>
<S> <C> <C> <C>
Amount of
Name of Owner Address of Owner Shares Being Sold Percent of Class )
-------------- ----------------- ------------------ ----------------
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 Bartolota 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
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
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
Amount of
Name of Owner Address of Owner Shares Being Sold Percent of Class (1)
-------------- ----------------- ------------------ ----------------
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
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>
Application of Proceeds
Net proceeds from the sale of the shares of common stock are
estimated to be $965,050 if the $1,000,000 maximum number of shares is sold and
$65,050 if only the $100,000 minimum number of shares is sold. We, will not
receive any money from the sales of shares by the selling shareholders.
These proceeds will be used to finance the expansion of our
activities as well as for general business purposes. In the event only the
minimum sales are made, we will concentrate our efforts primarily on expanding
our lines of credit and providing collateral for fleet financing. In the event
that more than the minimum is sold, we intend to also develop company
operations,
-13-
<PAGE>
personnel and projects. None of the estimates or include income from revenue. We
anticipate receiving income from our day-to- day operations, but there can be no
assurance that this income will be enough to generate a positive cash flow
before the sales from this offering are expended.
<TABLE>
<CAPTION>
Gross Proceeds (1) (2)
$100,000 $550,000 $1,000,000
-------- -------- ----------
Dollar Percentage Dollar Percentage Dollar Percentage
Amount Amount Amount
------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Offering Expenses $34,950 34.95% $34,950 6.35% $34,950 3.49%
Financing and 55,050 55.05% 490,050 89.10% 920,050 92.01%
Funding
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 34,950 34.95 34,950
------ ----- ------
Expenses
Net Proceeds $65,050 $515,050 $965,050
======= ======== ========
</TABLE>
------------------------------
(1) We project that we will pay $50,000-$75,000 of capital received from this
offering for employee salaries (and thus from 50 % at the minimum offering to 5%
at the maximum).
(2) In order to begin our operations, we incurred costs for equipment, printing,
etc.,which have been paid by Mark A. Mintmire. We do not intend to reimburse Mr.
Mintmire for these costs.
We reserve the right to change the application of proceeds depending on
unforeseen circumstances at the time of this offering. The intent is to
implement our business plan to the fullest extent possible with funds raised in
this offering.
Capitalization
The following table shows the our capitalization as of March 31,
2000 and the pro forma capitalization on the same date. This information
reflects the sale of the 100,000 shares offered for estimated net proceeds of
$0.65 per share. This information also indicates the sale of 1,000,000 shares
offered for estimated net proceeds of $0.97 per share.
<TABLE>
<CAPTION>
As Adjusted
-----------
Actual Minimum Maximum
------- ------- --------
<S> <C> <C> <C>
Shareholders' equity
Common stock, $.0001 par value; 50,000,000
Shares authorized; 2,800,000 Shares 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>
-14-
<PAGE>
Dilution
The following table shows 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.
Dilution for $100,000 Offering
<TABLE>
<S> <C> <C> <C> <C>
Initial public offering price per Share (1) $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>
Dilution for $1,000,000 Offering
<TABLE>
<S> <C> <C> <C> <C>
Initial public offering price per Share (2) $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>
-15-
<PAGE>
The Company
Introduction
SD Products Corp. was organized under the laws of Florida on October
20, 1997 by Mr. Mark A. Mintmire, our executive officer and director. The
purpose of the business is to provide a lending source for the purchase of
leased automobiles and including limousines, We plan to conduct business
initially in Florida and Georgia later opening up to selected areas nationwide.
We intend to, eventually, be able to provide a full spectrum of lease financing
services for its clients.
Business Objective
Our objective is to become a dominant provider of automobile lease
financing for the sub-prime and credit- impaired car buyer. This market is
comprised of those car buyers with credit risks that would not be acceptable to
major lenders including officials of car manufacturers like GMC or Ford Motor
Credit.
Our services will be initially be offered in Palm Beach and Broward
Counties, Florida; expanding to Atlanta, Georgia and then to adjacent counties
in south Florida and eventually throughout Florida, Georgia and selected areas
nationwide. To achieve this objective, we intend to provide a comprehensive
package of automobile lease financing programs to both dealerships and
individuals, focusing on Palm Beach and Broward Counties which have high growth
opportunities.
o The Initial Phase of Operations
This phase will consist of development of business opportunities in Palm
Beach and Broward Counties, Florida. After funding, this phase is expected
to take about six months. We believe it will include enough funding to
generate cash flow to fund those operations.
o Medium Term Operations
This medium term operation will consist of additional funding and open
additional operations in new locations. This phase is expected to begin
immediately after the initial phase.
Our primary revenues will be based upon our ability to purchase
discounted automobile lease contracts and receivables from car dealers. Our
secondary revenue source will come from the interest charged to purchasers we
finance directly.
We intend to bundle the automobile lease financing receivables we
acquire 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 an institution or individual buyer. This re-selling of receivables will
enable us to reuse the cash which we will re-commit to the purchase additional
automobile leases and contracts or to use to finance sub-prime and
credit-impaired clients on an individual basis.
Expenditures
Our primary direct costs will be as follows:
o Salaries to Mr. Adams and Mr. Mintmire (payroll cost, actual or
deferred)
o Marketing and sales related costs
o Employment related taxes
o Health benefits.
-16-
<PAGE>
Business Activity to Date
We have conducted no business operations except organizational and
fund-raising activities since inception. We have had no employees. We received
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. These offerings were made in the State
of Georgia and the State of Florida respectively in April and June 1998.
Facilities
We currently own no property. We maintain our present office, rent
free, at facilities provided by Mr. Mark. Mintmire. We anticipate continued use
of this office on a rent-free basis for the foreseeable future. This arrangement
will meet our needs while we are in the development stage. Assuming we obtain
the necessary additional financing, we believe we would be able to locate
adequate commercial facilities at reasonable rental rates in Palm Beach County
suitable for our future needs.
Expansion
In the event we are successful in securing the additional financing
for long term expansion, we plan to seek out acquisitions of businesses which we
believe will complement our overall strategy inside and outside of Florida. We
eventually intend to expand operations to encompass the entire United States. At
such time as we enter the automobile lease finance market outside of Florida, we
will be required to comply with applicable regulations on a state-by-state
basis.
o Within Florida
If we are able to generate enough revenue during this offering, we
plan to open one additional office in Florida each quarter until we have
four operating offices. The third office will be located in Martin County
since that is immediately adjacent to Palm Beach and Broward County. We
will open the fourth office in Dade County. Mr. Adams will manage these
operations. Management plans to closely monitor company operations for
approximately one year. If each of the operations is capable of sustaining
itself, we intend to seek additional financing through the offering of
additional equity securities, conventional bank financing, small business
administration financing, venture capital and the private placement of
corporate debt.
o Outside of Florida
We intend to open the first office outside of Florida in Atlanta,
Georgia. Mr. Mintmire already has an operation in that area and is familiar
with the business environment there. Mr. Mintmire will oversee the Atlanta
and generally oversee the Florida operation.
We believe that the additional funding from this offering should be
sufficient to cover these increased costs for up to nine months. These
funds will be used to open a third and fourth Atlanta office during the
next two quarters, then into expand into Martin County and Indian River
County. It is also our intention, to increase advertising and promotional
costs and add a regional manager to oversee these additional operations. In
addition, to be competitive with other automobile lease finance companies,
we must implement an employee benefit program. We believe that this
expansion could achieve similar economies on the same scale as those
anticipated by the Palm Beach, Broward and Dade Counties expansion.
o Acquisitions
Management expects to increase our market penetration through internal
expansion and thereafter through selected acquisitions. These acquisitions
could include both new and used car dealerships as well as financing
companies. We believe 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.
-17-
<PAGE>
We 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. Being subject to
such reporting requirements reduces the pool of potential acquisitions or
merger candidates since these transactions require that certified
financials be provided for the acquiring, acquired or merging candidate
within a specified period of time. That is why we intend to expand through
internal operations through the short and medium term. When we do seek
acquisitions or mergers, we will limit the search 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.
o Reverse Merger as a Means of Expansion
In order to aid our ability to expand, we may seek a reverse merger
with a larger, public company. While we have no present intention to seek
such a merger, if an appropriate vehicle were to become known, the Board of
Directors would consider such a merger.
o Risks Associated with Expansion
The potential investor should be aware that we may incur large
liabilities which would increase as our geographic coverage expands.
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.
Sales and Marketing
We intend to employ a three-pronged marketing approach. This
approach consists of direct sales, opening franchises and forging strategic
alliances. This multi-channel approach should allow us to more quickly access
large pools of automobile lease finance receivables, develop regional awareness
and ultimately become a market leader.
o Direct Sales
Our initial marketing efforts will be in the area of direct sales to
automobile purchasers. We believe Mr. Adams will be able to secure our
client base. However, we expect to employ qualified sales personnel to
establish new customer accounts. We will present quality presentations and
follow-up with the clients to ensure a higher retention rate. By employing
our own sales personnel, we will be able to penetrate additional markets at
a minimal cost since sales associates receive compensation in the form of
commissions based on the client's contracting our programs. Management is
currently unable to forecast the acceptance of our lease finance programs
or the expenses of doing business in this manner; however, we intend to
market our programs competitively in our identified target markets.
o Strategic Alliances
We intend to form strategic alliances with automobile and limousine
sales companies, to provide us with an easy, cost-effective, "in-house"
alternative to seeking buyers directly. In this system of marketing, we
would make our programs available to selected automobile and limousine
dealerships. The dealership then behaves much like a franchise in that, for
little cost, the dealer's agents sell our programs for us in order to
provide financing for their sub-prime credit automobile purchasers.
o Franchising
If sufficient capital is acquired, we intend to begin seeking
acquisitions of independently owned and operated automobile lease finance
businesses within two years. These franchises will decrease our day-to-day
operating costs by assuming the responsibility for their own operations
while paying us royalties. In addition, the more franchises offices we
acquire, the more readily recognizable the our brand-name becomes in the
marketplace by consumers.
-18-
<PAGE>
Assuming the availability of adequate funding, we intend to stay
abreast of changes in the marketplace by ensuring that we remain in the field
where clients and competitors can be observed firsthand. We believe that the
loyalty of these clients can be maintained through a continuous presence,
relationship building and professional service.
We will attempt to maintain diversity within our client base in
order to decrease our exposure to downturns or volatility in any particular
industry. As part of this client selection strategy, we will offer services to
clients which have a reputation for reputable dealings and a reliable and broad
inventory base. We will eliminate clients that we believe present a higher risk
of product mechanical failure and very poor sub-prime and "impaired credit"
purchaser profiles. Where feasible, we will evaluate each client's portfolio of
automobile lease finance receivables for creditworthiness, product grade and
loan failure history.
Debt Financing
We have not yet sought any debt financing since we do not believe we
would qualify for such a loan until we have completed at least two years of
profitable operations. Once we have met this criteria, we intend to seek out
funds from licensed venture capital firms. Since we will not seek financing
until we have several locations operating successfully, we believe we will be in
a better position to negotiate appropriate placement and repayment terms for
these loans. However, in the event we do receive financing but default in
payments, the financing would result in foreclosure upon our assets to the
detriment of the shareholders.
Reporting
As a reporting company, we are required to file quarterly unaudited
financial reports on Form 10-QSB and annual audited financial reports on Form
10-KSB. In addition, we would be required to file on Form 8-K under certain
specified conditions.
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.
Current and Proposed Staffing
o Charles Adams. Because of his expertise, we have retained the services of
Mr. Charles Adams to act as a key consultant. At present, we believe Mr.
Adams' expertise is sufficient to meet our needs. It is anticipated,
however that we will need to employ a manager, additional clerical support
and an accountant. Mr. Adams will begin by finding clients and advising Mr.
Mintmire in the operation of the lease financing. Mr. Adams will visit
clients and prospective clients on a regular schedule to foster strong
business relationships.
Through his company, Adams, Inc., Mr. Adams is currently providing us
with consulting services and commercial equipment leasing. From October
1997 until the present he has been employed by Carcorp., Inc. Carcorp is a
lender who provides commercial paper for operating leases for Lear Jets and
other major aviation equipment as well as high line automobiles Mr. Adams
also arranges the operating lease for rolling stock, large commercial
marine end users. He has independently engaged in commercial leasing of
limousines and limousine fleets.
o Mark A. Mintmire. Mr. Mintmire also will become familiar with the our
automobile lease finance clients by teaming up with Mr. Adams on client
visits to establish a sound business relationship.
-19-
<PAGE>
o Minimal Employees; No Monetary Compensation
As of April 30, 2000, Mr. Mintmire was our only part-time employee. We
have had no other employees since our organization. In addition, Mr.
Mintmire (sole executive officer and director) and Mr. Charles Adams ( key
consultant) have served in those positions without compensation from
inception to the present. If we sell the maximum shares offered, it is
anticipated that these individuals will receive reasonable salaries for
services as executive officers. 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.
o Additional Personnel
It is expected that additional personnel will be employed to assist in
operations and financial management. We have also identified several people
that are candidates for key positions within the organization. We have
discussed opportunities with some of these individuals and intend to
actively recruit them upon funding. Management recognizes that their
expertise and experience is essential to the success of the business. In
addition, we intend to also continue to expand our business and finance
advisors.
It is generally anticipated that any future employees will devote
full time to the company. The Board of Directors may then, in its discretion,
approve the payment of cash or non-cash compensation these employees for their
services.
Management
The following table reflects the name, address, age and position of
the executive officer and director. For additional information, see the
biographical information which follows:
Name Address Position
-------------- ----------------- ------------
Mark A. Mintmire (1) 2958 Braithwood Court, President, Secretary,
Atlanta, Georgia, 30345 Chief Executive Officer
and Director
Charles Adams (2) 219 Almeria Road, Consultant(1) (2)
West Palm Beach, Florida, 33405
--------------------
(1) Mr. Mintmire may be deemed to be our sole "promoter" and "parent" of as
those terms are defined by the Securities Act.
(2) Mr. Adams acts as our key consultant but should not be deemed a "promoter"
or "parent" of the company.
All directors hold office until the next annual meeting of our
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the Board of Directors. Aside from employing Mr.
Mintmire as officer/director and Mr. Adams as key consultant, there are no other
individuals whose activities will be material to our operations at this time.
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.
-20-
<PAGE>
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. 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 Ogner Motors, a Porsche, Audi and
Ferrari authorized dealer 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.
Director
(See "Officer" above.)
Remuneration and Employment Contracts
2,000,000 and 100,000 shares of common stock were issued to both Mr.
Mark Mintmire and Mr. Charles Adams.
Except for this described compensation, it is not anticipated that any
executive officer will receive any cash or non-cash compensation for his or her
services. When we begin operations, it is expected that the Board of Directors
will approve the payment of salaries in a reasonable amount to each of our
officers for their services.
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 amount of shares is sold and no other funds are available, both Mr.
Mintmire's salary and Mr. Adams' consulting services compensation will be
$30,000. The balance will be deferred for each individual until cash flow is
available to adequately pay the larger amount.
Compensation of Directors
Until we have $1,000,000 in lease receivables, no members of the Board
of Directors will be paid separately for their services. Directors'
out-of-pocket expenses will be reimbursed upon presentation of appropriate
documents.
Employee Benefits
We do not provide officers with pension, stock appreciation rights,
long-term incentive or other plans but have the intention of implementing such
plans in the future.
We intend to implement a restricted employee stock option plan. Under
this plan, the Board of Directors may grant employees, directors and certain
advisors options to purchase shares at exercise prices of at least 85% of the
then current market price. Income from any such options is 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.
We intend to adopt an employee bonus program to provide incentive to our
employees. This plan would pay bonuses in cash or stock to employees based upon
our pre-tax or after-tax profit for a particular period. We also intend to adopt
-21-
<PAGE>
a retirement plan such as a 401(k) retirement plan and that we 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.
Litigation
There has never been any material civil, administrative or criminal
proceedings concluded, pending or on appeal against us.
Securities Ownership of Certain Owners and the Principal Shareholder
The following table summarizes certain information with respect to the
beneficial ownership of company shares, immediately prior to and after this
offering. The following table sets forth information as of March 31, 2000,
regarding the ownership of common stock by each shareholder known to be the
owner of more than 10% of the 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)
----------------- ------- -------
Name of Beneficial Owner: Number % Number % Number %
------------------------- -------- --- -------- --- -------- --
<S> <C> <C> <C> <C> <C> <C>
Mark A. Mintmire (4) 2,000,000 71.42% 2,000,000 68.96% 2,000,000 52.63%
--------- ---------
All Directors, Officers and 10%
Shareholders as a Group 2,000,000 71.42% 2,000,000 68.96% 2,000,000 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.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Since inception, we have conducted minimal business operations
except for organizational and capital raising activities. We have only
negligible revenues due to the fact that our key executive, Mr. Mintmire, had
been enrolled as a full-time college student until his graduation in August
1998. As a result, we had only interest income of $832, 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.
If we are unable to generate sufficient revenue from operations to
implement our expansion plans, we intend to explore all available alternatives
for debt and equity financing, including private and public securities
offerings. Depending upon the amount of any revenue generated by, we believe we
will be able to satisfy our cash requirements for the next 6-9 months without
raising funds via debt or equity financing or from third party funding sources.
Accordingly, we expect to need to raise additional funds in the next 6 months,
if only a minimal amount of revenue is generated .
-22-
<PAGE>
At least initially, we intend to operate out of the home of Mr.
Mintmire. It is, therefore, not anticipated that we will lease or purchase
office space or computer equipment in the foreseeable future. We may in the
future establish its own facilities and acquire computer equipment if the
necessary capital becomes available.
Financial Condition, Capital Resources and Liquidity
o General
1. At December 31, 2000, we maintained $7,893 of assets with no
liabilities.
2. Since inception, we have received $23,000 in cash as payment for the
issuance of shares.
3. Our working capital is presently minimal and there can be no assurance
that our financial condition will improve.
4. Management expects to continue to have minimal working capital or a
working capital deficit as a result of current liabilities.
o Issuance of Stock
1. At inception, we issued 2,000,000 shares of common stock (valued at
$200) to Mr. Mark A. Mintmire for services rendered in setting up the
company.
2. At the same time, Mr. Charles Adams 100,000 shares of common stock
(valued at $10) for services rendered in setting up the company .
3. During April 1998, we sold a total of 300,000 shares of common stock
to Georgia and Florida residents for cash totaling $3,000. No
underwriter was employed in connection with the offering and sale of
the shares. We claimed the exemption from registration provided under
the Georgia Code.
4. During June 1998, we sold a total of 400,000 Shares to Florida
residents for cash totaling $20,000. No underwriter was employed in
connection with the offering and sale of the shares. We claimed the
exemption from registration provided under Florida Code.
Even though we believe we will obtain sufficient capital with which
to implement our business plan on a limited scale, we do not expect to continue
operations 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 any revenues.
Our ability to continue as a going concern is dependent upon our
ability to attract an adequate number of direct clients who will qualify for a
lease financing program. We believe that in order to be able to expand our
initial operations, we will eventually need to 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. We
believe there is adequate and affordable rental space, equipment, and trained
personnel are available in Palm Beach County.
-23-
<PAGE>
Net Operating Losses
We have net operating losses carry-forwards of $15,387 expiring at
September 30, 2020. We also carry a $3,000 deferred tax asset resulting from the
loss carry-forwards. We have established a 100% valuation allowance for this
asset. Until our current operations begin to produce earnings, our the ability
to utilize these carry-forwards is unclear.
Safe Harbor
Statements contained in this document which are not historical fact
are forward-looking statements based upon management's current expectations that
are subject to risks and uncertainties that could cause actual results to differ
materially from those stated or implied by the forward-looking statements.
Recent Accounting Pronouncements
We are aware of all recently issued accounting statements which
impact on our financial statements as of March 31, 2000.
Absence of Current Public Market
There is no current public trading market for the shares. While we
intend to qualify the shares for quotation on the NASDAQ Bulletin Board under
the symbol "SDPR" on the same date we file this prospectus, there is no
assurance that we can satisfy the current pertinent listing standards or, if
successful in getting listed, avoid later de-listing.
Description of Stock
We are authorized to issue 50,000,000 shares of common stock,
$0.0001 par value. The issued and outstanding shares of common stock being
registered are validly issued, fully paid and non-assessable. The holders of
outstanding shares are entitled to receive dividends out of the assets legally
available whenever and in whatever amounts the Board of Directors may determine.
All shares have equal voting rights of one vote per share.
Shareholders may vote in all matters to be voted upon by the shareholders. 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 elect all the directors as they choose to do
so and, in such an event, the holders of the remaining shares will not be able
to elect any directors. The shares have no preemptive, subscription, conversion
or redemption rights and can only be issued as fully-paid and non-assessable
shares.
Preferred Stock
We are authorized to issue 10,000,000 shares of preferred stock,
$0.0001 par value. Currently, we have no issued and outstanding preferred shares
and none are contemplated.
Transfer Agent
Interwest Transfer Co., Inc.
1981 E. Murray Holiday Road --Suite 100
Salt Lake City, Utah 84117
-24-
<PAGE>
Certain Provision of Florida Law
Section 607.0902 of the Florida Business Corporation Act prohibits
voting by shareholders in a publicly-held Florida corporation who acquired their
shares in a "control share acquisition" unless the acquisition of incorporation
or bylaws specifically state that this section does not apply. A control share
acquisition is an acquisition of shares that immediately entitles the
shareholder to vote in the election of directors within each of the following
ranges of voting power:
1. one-fifth or more, but less than one-third of such voting power
2. one-third or more, but less than a majority of such voting power
3. more than a majority of such voting power
Our Amended Articles of Incorporation specify that Section 607.0902
does not apply to control-share acquisitions of shares we offer.
Shareholders are entitled to one vote per share on all matters to be
voted upon by shareholders. Once payment- in-full is made for the shares, this
right is non-assessable. In the event we go out of business, the shareholders
are entitled to share in all remaining assets after liabilities are paid. There
are no redemption or "sinking fund" provisions or preemptive rights with respect
to the shares. Shareholders have no right to require us to redeem or purchase
shares.
Subscription Procedure
In order to purchase shares:
1. An investor must complete and sign copy of the subscription agreement
and power of attorney.
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
You must indicate in the subscription agreement your classification of net
worth as defined in "Prospectus Summary." Under the securities laws of certain
states, residents of those states may be subject to higher standards. In
addition, you must indicate that you have received this prospectus and that you
are a citizen or permanent resident of the United States.
Escrow Account
To the extent practicable, the funds held in the escrow account
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 the account will be retained. All interest from funds held in escrow
during the continuous offering period will be retained by the company.
ERISA Considerations
Those who consider purchasing shares on behalf of qualified plans
are urged to consult with tax and ERISA counsel to determine that such a
purchase will not result in a violation of prohibited transaction under ERISA,
the Internal Revenue Code or other applicable law. We will rely on the
determination made by such experts, although no shares will be sold to any plans
if we believe that the sale will result in a prohibited transaction under ERISA
or the Code.
-25-
<PAGE>
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.
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. Their report contains information
regarding our ability to continue doing business.
Available Information
We have filed a Registration Statement on Form SB-1 with the
Securities and Exchange Commission with respect to the securities offered in
this prospectus. This prospectus does not contain all of the information in the
registration statement, certain portions have been omitted pursuant to the rules
and regulations of the SEC. You may inspect and copy the registration statement
at the public reference facilities of the SEC as well as at the SEC's regional
offices:
Main Office: Regional Offices:
450 Fifth Street, N.W., Seven World Trade Center, 13th Floor,
Washington, D.C. 20549 New York, New York 10048
500 West Madison, Suite 1400,
Chicago, Illinois 60601
Copies of the registration statement can be obtained from the Public Reference
Section of the SEC's main office. 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
the entire document filed as an exhibit to the registration statement.
For further information about us and the shares of common stock we
are offering, you may inspect a copy of our registration statement and the
associated filing documents at the public reference facilities of the SEC. The
registration statement and related materials have also been filed electronically
with the SEC. Accordingly, these 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).
-26-
<PAGE>
APPENDIX I
INDEX TO FINANCIAL STATEMENTS
Description Page
Independent Auditors' Report..............................................F-1
Balance Sheets............................................................F-2
Statements of Operations..................................................F-3
Statements of Changes in Stockholders' Equity.............................F-4
Statements of Cash Flows..................................................F-5
Notes to Financial Statements.............................................F-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
SD Products Corporation
Atlanta, Georgia
We have audited the accompanying balance sheet of S D Products Corporation, a
development stage enterprise, as of September 30,1999 and the related statements
of operations, changes in stockholders' equity and cash flows for the two years
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 S. D. Products Corp. as of
September 30,1999 and results of its operations and its cash flows for the two
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 five 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
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>
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 of shares of
common stock
SD PRODUCTS CORP.
------------------------------------------
PROSPECTUS
------------------------------------------
July____, 2000
<PAGE>
TABLE OF CONTENTS
Descriptive Title Page
----------------- ----
INVESTMENT REQUIREMENTS..................................................4
PROSPECTUS SUMMARY.......................................................6
SUMMARY FINANCIAL DATA...................................................7
RISK FACTORS.............................................................7
RELATED PARTY TRANSACTIONS...............................................10
FIDUCIARY RESPONSIBILITY OF THE COMPANY'S MANAGEMENT.....................11
SELLING SHAREHOLDERS.....................................................11
APPLICATION OF PROCEEDS..................................................13
CAPITALIZATION...........................................................14
DILUTION.................................................................15
THE COMPANY..............................................................16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS....................................22
ABSENCE OF CURRENT PUBLIC MARKET AND DIVIDEND POLICY.....................24
DESCRIPTION OF CAPITAL STOCK.............................................24
ERISA CONSIDERATIONS.....................................................25
LEGAL MATTERS............................................................26
EXPERTS..................................................................26
AVAILABLE INFORMATION....................................................26
APPENDIX I (FINANCIAL STATEMENTS)........................................I-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 $ 475.00 $ 475.00
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 $35,221.00 $35,221.00
========== ==========
</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.
SB-1-30
<PAGE>
(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.
(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 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 of services valued at $10 in connection with the
organization of Registrant.
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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.
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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.).
*These exhiubits filled in the May 12, 2000 Registration Statement. Since
any changes are not material, they are not filed in this Amendment.
SB-1-33
<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 19th day of
July 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 July 19, 2000
-------------------------- President, CEO
Mark A. Mintmire and Director
/s/ Mark A. Mintmire
---------------------------
Mark A. Mintmire Treasurer, Chief Financial July 19, 2000
Officer and Secretary
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