As filed with the Securities and Exchange Commission on September 25, 2000
Registration No. 333-36966
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 4 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
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(State or Other (Primary Standard (North American (IRS Employer
Jurisdiction of Industrial Industry Classification Identification
Incorporation Classification Number System ("EIN") Number)
or Organization) ("SIC") Number) ("NAICS")Number)
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2958 Braithwood Court
Atlanta, Georgia 30345
(770) 414-9596
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive office)
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Copy To:
Carl N. Duncan, Esq.
Duncan, Blum & Associates
5718 Tanglewood Drive
Bethesda, Maryland 20817
(301) 263-0200
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the
Registration Statement
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, check the following box: [x].
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
an amendment which specifically states that the Registration Statement shall
thereafter become effective in accordance with Section 8 (a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
Disclosure of Alternative Used: Alternative 1 |X| Alternative 2 |_|
<PAGE>
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Prospectus
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SD Products Corp.
(A Developmental Stage Company)
2958 Braithwood Court, Atlanta, Georgia 30345
(770) 414-9596
Offering 100,000 to 1,000,000 Shares of Common Stock $1.00 per Share,
Representing $100,000 Minimum to $1,000,000 Maximum Gross Proceeds.
Selling Shareholders May Also Be Selling up to 800,000 Additional Shares
Company Information
o We provide a lending source for financing and funding of lease purchase
agreements relating to 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 from 2 to 9 months from the date listed in
this prospectus unless it is terminated earlier.
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 us.
o This offering is being made on a self-underwritten basis by us through our
only principal, Mark A. Mintmire, without the use of securities brokers.
All proceeds from the sale of shares will be held in an attorney escrow
account maintained by 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 without interest.
Additional Shares Being Offered
o We will not receive any proceeds from the additional 800,000 shares which
may be offered by our selling shareholders.
o You 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.
Disclaimers
o 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.
o 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.
o You should note there is substantial doubt about our ability to continue as
a going concern. Carefully consider the risk factors beginning on page 5 of
this prospectus.
September _____, 2000
<PAGE>
Table of Contents
Descriptive Title Page
PROSPECTUS SUMMARY.............................................................3
SUMMARY FINANCIAL DATA.........................................................4
RISK FACTORS...................................................................4
RELATED PARTY TRANSACTIONS.....................................................9
FIDUCIARY RESPONSIBILITY OF THE COMPANY'S MANAGEMENT..........................10
SELLING SHAREHOLDERS..........................................................10
APPLICATION OF PROCEEDS.......................................................13
CAPITALIZATION................................................................13
DILUTION......................................................................14
THE COMPANY...................................................................15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.............................................24
ABSENCE OF CURRENT PUBLIC MARKET AND DIVIDEND POLICY..........................26
DESCRIPTION OF CAPITAL STOCK..................................................26
SUBSCRIPTION PROCEDURE........................................................27
ERISA CONSIDERATIONS..........................................................28
LEGAL MATTERS.................................................................28
EXPERTS.......................................................................28
AVAILABLE INFORMATION.........................................................28
APPENDIX I (FINANCIAL STATEMENTS)............................................F-1
EXHIBIT A - SUBSCRIPTION AGREEMENT...........................................A-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 but has had no revenues to date -- a $19,289 net loss
from continuing operations through June 30, 2000 and aggregate
$7,892 in assets at June 30, 2000. We are currently a
developmental stage company. Our objective is to become a
significant 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 The maximum amount of shares offered is $1,000,000 (1,000,000
Offered by shares at $1.00 per share).
the Company
` The minimum amount of shares offered is $100,000 (100,000 shares
at $1.00 per share.
Offering Initial: We will begin to sell shares on the date listed on the
Period(s) cover of this prospectus. During this initial offering period, we
may continue to offer shares from 2 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 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.
There is no assurance that interest will be earned on the funds
in the escrow account. Even if interest is earned, it will not be
returned to investors.
Minimum The minimum purchase is $500.
Subscription
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Risks and This investment involves substantial risks due in part to the
Conflicts of costs which we will incur and the highly speculative nature of
Interest the automobile leasing business. Risks inherent in investing
in the companyare discussed under "Risk Factors," including the
substantive doubt about our ability to continue as a going
concern.
Plan of The shares are being offered directly by Mark A. Mintmire, our
Distribution sole principal.
Application of The proceeds of the offering are expected to be used to continue
Proceeds business operations and expand the scope of the business with
particular emphasis on enhancing our credit lines. In the event
we receive more than the $100,000 minimum, we intend to be more
aggressive in implementing our business plan.
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 June 30, 2000.
o Current assets $7,982
o Noncurrent assets 0
o Current liabilities 0
o Gross Revenues 0
o Gross Profit 0
o Loss from continuing operations ($19,289)
o Net loss ($19,289)
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 commence business operations.
You should, therefore, be aware of the difficulties normally encountered by a
new, developing company. The likelihood that we will succeed must be considered
in light of the problems, expenses and delays frequently encountered as listed
below.
1. Additional Funding Essential to Business Success but Unlikely Because of
Lack of Net Worth; Proceeds of Sale of Shares May Be Inadequate to
Continue Business Operations. 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 9 months from the date of this
prospectus. As of June 30, 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, our working capital is presently minimal and there
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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
necessary lines of credit or equity financing from any source. (See
"Related Party Transactions" and "Fiduciary Responsibility of
Management.")
2. Working Capital May Be Insufficient to Promote 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. 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.
There can be no assurance that we will be able to create or maintain a
market presence.
3. Pursuit of Revenue Sources Will Require Up-Front Money; Financing Future
Activities Could Lead to Long-Term Debt. One of our sources of revenue
will be derived from our ability to purchase discounted automobile lease
contracts and receivables. The pursuit of our anticipated revenue
sources will require a significant amount of up-front money. To secure
such revenues, a significant amount of capital must be invested or
borrowed and any inability or failure on our part to raise this capital
will impair our ability to generate revenues. It may be necessary, for
example, to borrow funds to achieve our growth objectives. While we
currently have no long-term debt, we cannot guarantee that in pursuing
the course of setting up and increasing our business (i.e., acquiring
office space, purchasing equipment, etc.) we will not accumulate
sufficient debt to decrease our profit margin. If the accumulated debt
is substantially more than the revenues we are capable of generating, we
will not be able to produce a profit and continue doing business.
4. Monetary Reserve for Non-payables May Reduce the Working Capital. We
expect to receive payments on the automobile lease financing receivables
on a timely basis. A monetary reserve will be maintained in case
payments are not received on a timely basis. In the event it is
necessary to use reserves to repay our loans (this in addition to the
cessation or deferral of lease payments) will deprive us of income for
operations. This loss of income will have a detrimental impact on
operations and result in unexpected losses for us.
5. Self-underwritten Offering Made by Principal Who Has No Relevant Prior
Experience . 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).
6. Complete Reliance on Two Key Personnel with Little or No Experience in
the Automobile Leasing Business. Our business is dependent upon two
individuals: Mark A. Mintmire, our sole director and executive officer,
and Charles Adams, our key consultant. Since Mr.
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Mintmire has no experience in the automobile leasing business, our
success is greatly dependent upon the expertise of Mr. Adams who, in
turn, has only 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.
7. Conflicts of Interest from Principals Being Involved in Competing
Business Activities. While subject to fiduciary obligations, our
executive officer and director as well as our key consultant may have
conflicts of interest in the future to the extent that these individuals
are involved in the management of any company which transacts business
or competes directly with us. For example, Mr. Adams is the president
and manager of his own lease finance company. As a result, business
which might have gone to us may go to Mr. Adams. Mr. Adams will divide
his time and effort between our company, his existing leasing business
and his other business obligations. Any time and effort he spends
developing his own business endeavors will result in less business for
us. Under these circumstances, we would earn less revenue and our
ability to compete would be diminished.
8. Arbitrary Offering Price Is in Excess of the Net Tangible Book Value.
The common stock's price per share in this offering has been arbitrarily
determined by Mr. Mark A. Mintmire, currently acting as a one-man 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 our
net tangible book value as a "start-up" company.
9. Absence of Public Market for Shares Will Adversely Affect the Market
Price and Liquidity of the Shares. There is no public market for our
shares of common stock 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.
10. Shares Will be Listed as "Penny Stock" if a Primary and Secondary Market
Develops for the Shares. In the event a market develops 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." It will,
therefore, be less likely that brokers will sell the shares due to the
difficulty imposed by the penny stock regulations in selling the stock.
As long as our common stock is considered penny stock, the regulations
can be expected to have an adverse effect on the liquidity of any common
stock which may develop in the secondary market.
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11. No Present Client Base and Limited Funds to Attract Clients. 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 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.
12. Competition May Be Too Strong for Business to Obtain Enough Clients. 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.
13. Broad Discretion of Management with Regard to Application of Proceeds
Could Have an Adverse Effect on Company Growth. 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 effect
on the profitability of the company.
14. Need to Re-Sell Acquired Receivables in Order to Increase Profits. 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 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.
15. Governmental Regulations Could Hinder the Ability to Produce a Profit.
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. High Interest Rates Will Hinder Our Ability to Make a Profit from the
Purchase of Leases . The revenues we generate will result 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 will service would bear interest at fixed rates, our
indebtedness would generally bear 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. Extended Declines in Automobile Sales, Seasonal Variations and Business
Cycle Exposure Will Hinder the Number of Clients Available. 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
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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. Offering will be Rescinded if the Minimum Amount of Funds is Not
Achieved. We are endeavoring to sell at least $100,000 worth of shares.
There is no assurance that we will be able to achieve this minimum
amount within the 2-9 months alloted for this initial offering. If we
cannot sell at least the $100,000 in shares, we will terminate the
entire offering and return all proceeds from sales at that point.
Investors purchasing shares will not have access to the money paid for
the shares until the initial 9-month offering has ended. Without this
minimum infusion of capital, we cannot continue doing business beyond 9
months from the date of prospectus.
19. Operational Costs May Have Been Incorrectly Estimated; There May be
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. We may expend significantly more funds than anticipated
without expanding the business. In such an event, we would not be able
to continue operations, as projected, and would have to close the
business.
20. Shares Are Entitled to Dividends but There are 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
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
discretion of our management, currently only Mr. Mark A. Mintmire. 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.
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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>
Owner Date Issued No. of Shares Notes
----- ----------- ------------- -----
<S> <C> <C> <C>
Mark A. Mintmire, 10/20/97 2,000,000 Issued for services (valued at $200) performed in setting
President and Treasurer up the company.
Donald F. Mintmire, 6/24/98 17,500 Issued for cash of $875; Mr. Mintmire also owns
Legal Counsel approximately .63% of outstanding common stock.
Charles Adams, 10/20/97 100,000 Issued for services (valued at $10) performed in setting
Key Consultant up the company.
</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.
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.
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.
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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 any current or future
member of management.)
The SEC has 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 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, our key consultant, and Donald F. Mintmire, our legal counsel.
Each selling shareholder may offer all , some or none of the common stock they
own.
<TABLE> Amount of
Name of Owner Address of Owner Shares Being Sold Percent of Class
-------------- ----------------- ------------------ ----------------
<S> <C> <C> <C>
Charles Adams 219 Almeria 100,000 .03571
West Palm Beach, Fl 33405
Brannon C. Amtower 594 Wilbledon Road NE - Apt 6722 20,000 .00714
Atlanta, GA 30324
Angela Bartolota 4309 W. Atlantic Boulevard - #908 17,500 .00625
Coconut Creek, Fl. 33066
</TABLE>
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<TABLE>
Amount of
Name of Owner Address of Owner Shares Being Sold Percent of Class
-------------- ----------------- ------------------ ----------------
<S> <C> <C> <C>
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 l277,Royal Poinciana Way - #195 17,500 .00625
Technology, Inc. Palm Beach, FL 33480
</TABLE>
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<TABLE>
Amount of
Name of Owner Address of Owner Shares Being Sold Percent of Class
-------------- ----------------- ------------------ ----------------
<S> <C> <C> <C>
Kerry Matheiu 740 NW 103 Terrace 17,500 .00625
Pembroke Pines, Fl 33325
Mary C. McGowan 2057 Jordan Terrace N.E. 20,000 .00714
Atlanta, GA 30345-231
Meka McNeal 7202 Trolley Aquare Crossing 17,500 .00625
Atlanta, GA 30305
Samuel Melice II 600 Davis Road North -#87 17,500 .00625
Palm Springs, FL 33461
Donald F. Mintmire 205 Sunrise Avenue - #204 17,500 .00625
Palm, Beach, FL 33480
Amy Moss 1406A Druid Valley Drive 17,500 .00625
Atlanta, GA 30379
Lionel Obriot 980 Taft Avenue -- #11 17,500 .00625
Atlanta, GA 30309
Ocean Group 205 Sunrise Avenue - #204 17,500 .00625
Holdings, Inc. Palm Beach, Fl 33480
Douglas Paxton 258 8th Street N.E. 17,500 .00625
Atlanta, GA 30309
Cindy Pelierin 1570 Dekalb - #P 20,000 .00714
Atlanta, GA 30307
Sammy Peroulas 1825 Charline Avenue 20,000 .00714
Atlanta, GA 30306
Forrest Pitt 752 Glenwood Avenue S.E. - # 615 17,500 .00625
Atlanta, GA 30316
William Ragsdale 1515 N. Highland - #3 20,000 .00714
Atlanta, GA 30305
Shannon Russel 500 Means Street - Studio H 17,500 .00625
Atlanta, GA 30318
John Stagl 106 Barefoot Coove 17,500 .00625
Hypoluxo, FL
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>
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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 ($1,000,000) maximum number of shares is sold and
$65,050 if only the $100,000 ($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 leased automobile and limousine financing. In the
event that more than the minimum is sold, we intend to also develop additional
operations, personnel and projects. None of the estimates 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>
Gross Proceeds (1)(2)
--------------
$100,000 $550,000 $1,000,000
--------- -------- ----------
Dollar Dollar Dollar
Amount Percentage Amount Percentage Amount Percentage
------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Offering Expenses $34,950 34.95% $34,950 6.35% $34,950 3.49%
Financing and
Funding 55,050 55.05% 490,050 89.10% 920,050 92.01%
Salaries 50,000 50.00% 66,000 12.00% 75,000 5.00%
Working Capital 10,000 10.00% 25,000 4.50% 45,000 4.50%
------ ------ ------ ------- ------ -----
Net Proceeds $65,050 $515,050 $965,050
======= ======== ========
</TABLE>
--------------------
(1) In order to begin our operations, we incurred costs for equipment, printing
and related expenditures which have been paid by Mark A. Mintmire. We do
not intend to reimburse Mr. Mintmire for these costs.
(2) 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 June 30, 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.
-13-
<PAGE>
<TABLE>
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 stag (19,289) (19,289) (19,289)
-------- -------- --------
Total Shareholders' equity and total capitalization $3,921 $69,151 $969,151
====== ======= ========
</TABLE>
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 our present shareholders.
Dilution for $100,000 Minimum Offering
<TABLE>
<S> <C> <C> <C> <C>
Initial public offering price per share $1.00 (100.0%)
Net tangible book value per share before offering 0.003 (0.3%)
Increase per share attributable to new shareholders 0.027 (2.7%)
Pro forma net tangible book value per share after offering $0.03 (3%)
------
Total dilution per share to new shareholders $0.97 (97%)
=====
</TABLE>
<TABLE>
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 3.40 100,000 81.16 1.00
------- ----- ------- ----- ----
Total 2,900,000 100.00% $123,210 100.00% $0.04
========= ====== ======== ====== =====
</TABLE>
-14-
<PAGE>
Dilution for $1,000,000 Maximum Offering
<TABLE>
<S> <C> <C> <C> <C>
Initial public offering price per Share $1.00 (100.0%)
Net tangible book value per Share before offering $0.003 (0.3%)
Increase per Share attributable to new Shareholders $0.257 (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>
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 26.4 000,000 97.7 1.00
--------- ---- -------- ---- ----
Total 3,800,000 100.00% 1,023,210 100.00% $0.269
========= ------- ========= ======= ======
</TABLE>
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, including limousines. Currently a developmental stage company, we
plan to conduct business initially in Florida and Georgia later opening up to
selected areas nationwide. Eventually, we intend to be able to provide a full
spectrum of lease financing services such as direct leasing, providing insurance
and maintenance and repair work for our clients.
Business Objective
Our objective is to become a significant 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 such as General Motors Credit Corporation or Ford Motor Credit
Corporation.
Our services will be initially be offered in Palm Beach and Broward
Counties, Florida; expanding to Atlanta, Georgia; 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.
-15-
<PAGE>
The Initial Phase of Operations
This phase will consist of development of clientele for the purchase of
leased automobile and limousines in Palm Beach and Broward Counties, Florida.
Once funded, this phase is expected to take about six months. We believe this
offering will include enough funding to generate cash flow to fund those
operations.
If we are able to generate enough proceeds 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/or
the private placement of corporate debt.
Intermediary Stage of Operations
The intermediary stage of operations will require additional funding to
open new locations. We will finance this phase from funds raised in excess of
the minimum in this offering and any income from operations. This phase is
expected to begin immediately after the initial phase.
We intend to open the first office outside of Florida in Atlanta, Georgia.
Mr. Mintmire already has business activities in that area and is familiar with
the business environment there. Mr. Mintmire will supervise the Atlanta
operation 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 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 believe 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.
Our primary revenues during this stage will come from our ability to
purchase discounted automobile lease contracts and receivables from car dealers,
bundle these contracts and receivables and sell these pools of securities in the
secondary market. Pursuing these revenue sources require a significant amount of
up-front money. It is likely that it we will expend a great deal of time, money
and resources before we can purchase and bundle a pool of securities. We will
expend additional, perhaps even greater time and resources in finding a suitable
buyer for such a bundle.
Our secondary revenue source will come from the interest charged to
purchasers we finance directly. However, we will need to establish a significant
client base in order for this endeavor to prove lucrative. 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
-16-
<PAGE>
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.
Plans for Acquiring Existing Businesses
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.
When we expand our automobile lease finance market outside of Florida, we will
be required to comply with applicable usury and related consumer fraud
regulations in each additional state.
o Acquisitions
We expect to increase market penetration through internal expansion and
thereafter through selected acquisitions. These acquisitions could
include both new and used car dealerships as well as finance companies.
We believe that, in the current market, expansion into markets beyond
the state of Florida could be especially attractive if 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, even if we are successful in establishing a presence in
our targeted markets, we will be able to profitably penetrate these
markets.
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.If acquisition
candidates are subject to public reporting requirements, the pool of
potential acquisitions or merger candidates is reduced 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 intermediary 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, we would
consider such a merger.
o Franchises
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
-17-
<PAGE>
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 our brand name becomes in the marketplace by consumers.
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, we believe
this expansion would, in due course, place us in a position to be a major force
in Florida and Georgia in funding higher risk automobile and limousine leases.
If this expansion is implemented, Mr. Adams and Mr. Mintmire believe they will
be able to oversee the operation with the addition of the contemplated regional
manager.
Marketing Plans
We intend to employ a multi-pronged marketing approach. This approach
consists of direct sales and forging strategic alliances. This dual-channeled
approach should allow us to 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.
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.
-18-
<PAGE>
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.
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.
Facilities
We currently own no property. We maintain our present office, rent free, at
facilities provided by Mr. Mark Mintmire, our sole principal. 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.
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 or those deemed material in character.
-19-
<PAGE>
Industry Regulation
We are not subject to industry specific regulation. However, we are subject
to usury and other standards relating to permitted maximum rates of interest and
related consumer fraud regulations.
Current Employees and Proposed Staffing
o Currently 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 we were incorporated. 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 has been compensated, in the
form of company common stock, for specialized services, including the
preparation of our business plan and the performance of consulting
services. Mr. Mintmire was compensated, in the form of restricted common
stock, for management services relating to our formation and for
financial consulting services.
o 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.
-20-
<PAGE>
o Sole Officer and Director
Mark A. Mintmire. Mr. 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. 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.
o Key Consultant
Mr. Charles Adams. Mr. Adams has served as our key consultant since its
inception. Mr. Adams specializes in financing equipment which is placed
with end users. 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 also
arranges the operating leases for rolling stock (cars, buses, trucks and
construction equipment) and large commercial marine end users (boats for
ferries, cruise lines and commercial fisheries). He has independently
engaged in commercial leasing of limousines and limousine fleets.
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
-21-
<PAGE>
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.
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.
o Proposed 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 achieving adequate funding. We recognize
that their expertise and experience is essential to the success of our
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 to these employees
for their services.
o 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.
-22-
<PAGE>
o 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.
o 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 could 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 a retirement plan, such as a 401(k) retirement
plan, and 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 Mr. Mark A. Mintmire, Mr.
Adams or 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 August 15, 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.
-23-
<PAGE>
<TABLE>
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> <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 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 August 31, 2000.
(2) Assumes issuance and sale of 100,000 shares during this offering period
(the "minimum" offering) in addition to the 2,800,000 shares outstanding
as of August 31, 2000, an aggregate 2,900,000 shares.
(3) Assumes issuance and sale of 1,000,000 shares of our during this
offering period (the "maximum" offering) in addition to the 2,800,000
shares outstanding as of August 31, 2000, an aggregate 3,800,000 shares.
(4) Our sole executive and director.
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 $1,036, all of which came from a loan to a related
party. Total company operations and operating expenses as of June 30, 2000 were
$20,325.
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 revenue generated, we believe we will be
able to satisfy our cash requirements for the next 6-9 months without raising
additional funds via debt, equity financing or third party funding sources.
Nonetheless, we expect we will need to raise additional funds within the next 6
months, if only a minimal amount of revenue is generated through operations.
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 our
own facilities and acquire computer equipment if the necessary capital becomes
available.
-24-
<PAGE>
Financial Condition, Capital Resources and Liquidity
o General
1.At June 30, 2000, we had $7,982 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, we issued 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 relied upon an 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 relied upon
an exemption from registration provided under the 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.
Net Operating Losses
We have net operating losses carry-forwards of $19,289 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.
-25-
<PAGE>
Historical Fact Versus Projection and Expectation
Statements contained in this document which are not historical fact are
forward-looking statements based upon management's current expectations. These
subjective assessments 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 June 30, 2000.
Absence of Current Public Market
There is no current public trading market for the shares. While we intend
to take needed action 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
-26-
<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; or
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." 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
Funds from the sale of this offering will be retained in an IOLTA attorney
escrow account maintained with our securities counsel. Under pertinent Maryland
regulation, interest will be paid to the Maryland Bar Association for funding
-27-
<PAGE>
attorney representation for those who cannot otherwise afford counsel.
Accordingly, any interest will not be paid to us or shareholders.
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.
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:
<TABLE>
Main Office: Regional Offices:
------------ -----------------
<S> <C> <C>
450 Fifth Street, N.W., Seven World Trade Center-13th Floor 500FWest Madison -- Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60601
</TABLE>
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.
-28-
<PAGE>
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).
-29-
<PAGE>
APPENDIX I
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report.................................................F-2
Balance Sheets...............................................................F-3
Statements of Operations.....................................................F-4
Statements of Changes in Stockholders' Equity................................F-5
Statements of Cash Flows.....................................................F-6
Notes to Financial Statements................................................F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
SD Products Corporation
Atlanta, Georgia
We have audited the accompanying balance sheets of SD Products Corporation, a
development stage enterprise, as of September 30, 1999 and 1998 and the related
statements of operations, changes in stockholders' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SD Products Corporation as of
September 30, 1999 and 1998 and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has experienced a loss since inception. The
Company's financial position and operating results raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/Durland & Company, CPAs, P.A.
Palm Beach, Florida
December 19, 1999
F-2
<PAGE>
<TABLE>
SD Products Corporation
(A Development Stage Enterprise)
Balance Sheets
September 30, 1999 June 30,
2000
------------------- ---------------
(unaudited)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $13,200 $1,643
Loan and accrued interest receivable - related party 0 6,339
------------------- ---------------
Total current assets 13,200 7,982
------------------- ---------------
Total Assets $13,200 $7,982
=================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $452 $4,061
Accrued expenses - related party 500 0
------------------- ---------------
Total current liabilities 952 4,061
------------------- ---------------
Total Liabilities 952 4,061
------------------- ---------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, authorized
10,000,000 shares: none issued 0 0
Common stock, $0.0001 par value, authorized
50,000,000 shares: 2,800,000 issued and outstanding 280 280
Additional paid-in capital 22,930 22,930
Deficit accumulated during the development stage (10,962) (19,289)
------------------- ---------------
Total Stockholders' Equity 12,248 3,921
------------------- ---------------
Total Liabilities and Stockholders' Equity $13,200 $7,982
=================== ===============
The accompanying notes are an integral part of the financial statements
F-3
</TABLE>
<PAGE>
<TABLE>
SD Products Corporation
(A Development Stage Enterprise)
Statements of Operations
Period from
October 20, 1997
(Inception)
Year Ended September 30, Nine Months Ended June 30, through
----------------------------- -----------------------------
1999 1998 2000 1999 June 30, 2000
---------------- ----------- ------------- --------------- ------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Revenues $0 $0 $0 $0 $0
Expenses
General and administrative expenses 1,466 6,426 270 891 8,162
Legal fees - related party 500 10 0 0 510
Professional fees 3,057 200 8,396 6,090 11,653
---------------- ----------- ------------- --------------- ------------------
Total expenses 5,023 6,636 8,666 6,981 20,325
---------------- ----------- ------------- --------------- ------------------
Loss from operations (5,023) (6,636) (8,666) (6,981) (20,325)
Other income (expense)
Interest income - related party 604 93 339 624 1,036
---------------- ----------- ------------- --------------- ------------------
Net loss $(4,419) $(6,543) (8,327) (6,357) (19,289)
================ =========== ============= =============== ==================
Basic net loss per weighted average share $ (.00) $ (.00) $ (0.01) $ (0.01)
================ =========== ============= ===============
Weighted average number of shares 2,800,000 2,424,986 2,800,000 2,800,000
============================ ============== ===============
The accompanying notes are an integral part of the financial statements
F-4
</TABLE>
<PAGE>
<TABLE>
SD Products Corporation
(A Development Stage Enterprise)
Statements of Stockholders' Equity
Period From October 20, 1997 (Inception) through June 30, 2000
Deficit
Accumulated
Additional During the Total
Number of Preferred Common Paid-in Development Stockholders'
Shares Stock Stock Capital Stage Equity
------------ ----------- --------- ------------ ------------ ---------------
BEGINNING BALANCE,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
Nine Months ended June 30, 2000: (unaudited)
--------------------------------------------
Net loss 0 0 0 0 (8,327) (8,327)
------------ --------- ---------- ------------ ------------ ---------------
BALANCE, June 30, 2000 (unaudited) 2,800,000 $0 $280 $22,930 $(19,289) $3,921
============ ========= ========== ============ ============ ===============
The accompanying notes are an integral part of the financial statements
F-5
</TABLE>
<PAGE>
<TABLE>
SD Products Corporation
(A Development Stage Enterprise)
Statements of Cash Flows
Period from
October 20, 1997
(Inception)
Year Ended September 30, Nine Months Ended June 30, through
--------------------------- -----------------------------
1999 1998 2000 1999 June 30, 2000
------------- ------------ ------------- -------------- -----------------
(unaudited) (unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Net loss $(4,419) $(6,543) $(8,327) $(6,357) $(19,289)
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) (339) 73 (339)
Increase (decrease) accrued expenses (2,548) 3,000 3,609 0 4,061
Increase (decrease) accrued expenses -
related party 0 500 (500) 0 0
------------- ------------ ------------- -------------- -----------------
Net cash used by operating activities (6,874) (2,926) (5,557) (6,284) (15,357)
------------- ------------ ------------- -------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Advance to) repayment from related party 18,000 (18,000) (6,000) 18,000 (6,000)
------------- ------------ ------------- -------------- -----------------
Net cash (used) provided by investing activities 18,000 (18,000) (6,000) 18,000 (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 (11,557) 11,716 1,643
CASH, beginning of period 2,074 0 13,200 2,074 0
------------- ------------ ------------- -------------- -----------------
CASH, end of period $13,200 $2,074 $1,643 $13,790 $1,643
============= ============ ============= ============== =================
The accompanying notes are an integral part of the financial statements
F-6
</TABLE>
<PAGE>
SD Products Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to the nine months ended June 30, 2000
and 1999 is unaudited)
(1) Summary of Significant Accounting Principles
The Company SD Products Corporation is a Florida chartered development
stage corporation which conducts business from its headquarters in
Atlanta, Georgia. The Company was incorporated on October 20, 1997.
The Company has not yet engaged in its expected operations. The
Company's future operations will be to provide automobile leasing for
various consumer groups. Current activities include raising additional
equity and negotiating with potential key personnel and facilities.
There is no assurance that any benefit will result from such
activities. The Company will not receive any operating revenues until
the commencement of operations, but will nevertheless continue to
incur expenses until then.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Start-up costs Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of
Position (SOP) 98-5.
b) Net loss per share Basic is computed by dividing the net loss by
the weighted average number of common shares outstanding during the
period.
c) Use of estimates In preparing the financial statements, management
is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the date of the statements of
financial condition and revenues and expenses for the period then
ended. Actual results may differ significantly from those estimates.
d) Interim financial information The financial statements for the nine
months ended June 30, 2000 and 1999 and for the period since October
20, 1997, (Inception), through June 30, 2000, include all adjustments
which in the opinion of management are necessary for fair
presentation, and such adjustments are of a normal and recurring
nature.
(2) Loan Receivable The Company authorized a loan in the amount of $6,000 to a
related party at the rate of 9% per year, payable on demand. Interest of
$339 was accrued at June 30, 2000.
(3) Stockholders Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par value
preferred stock. Rights and privileges of the preferred stock are to be
determined by the Board of Directors prior to issuance. The Company had
2,800,000 shares of common stock and 0 shares of preferred stock issued and
outstanding at December 31, 1999. The Company, on October 20, 1997, issued
2,000,000 shares to its sole Officer and Director for the value of services
rendered in connection with the organization of the Company. On the same
date, the Company issued 100,000 shares for the value of consulting
services rendered in connection with the organization of the Company. In
April 1998, the Company issued 300,000 shares of common stock at $0.01 per
share for $3,000 in cash. In June 1998, the Company issued 400,000 shares
of common stock at $0.05 per share for $20,000 in cash.
F-7
<PAGE>
SD Products Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
(4) Income Taxes Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax and
financial reporting purposes. The Company has net operating loss
carry-forwards for income tax purposes of approximately $8,300, $6,500 and
$4,400 expiring at September 30, 2020, 2019 and 2018, respectively.
The amount recorded as deferred tax assets as of June 30, 2000 is
approximately $2,900, which represents the amount of tax benefit of the
loss carryforward. The Company has established a 100% valuation allowance
against this deferred tax asset, as the Company has no history of
profitable operations.
(5) Related parties Counsel to the Company directly owns 100,000 shares of the
Company, and indirectly owns 100,000 shares in the Company through the 100%
sole ownership of the common stock of another company that has invested in
the Company. Also, counsel's adult son, sole Officer and Director of the
Company, directly owns 2,020,000 shares in the Company.
As discussed in Note 2, the Company extended a loan to a company under
common control.
Related party balances and amounts for the period ended are as follows:
<TABLE>
June 30, 2000
(unaudited) September 30, 1999
---------------- -------------------
<S> <C> <C>
Loan and accrued interest receivable - related party $ 6,339 $ 0
================ ===================
Accrued expenses - related party $ 0 $ 500
================ ===================
Interest earned - related party $ 339 $ 604
================ ===================
</TABLE>
(6) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $19,300 for the period from October 20, 1997
(Inception) through June 30, 2000. The ability of the Company to continue
as a going concern is dependent upon commencing operations and obtaining
additional capital and financing. The financial statements do not include
any adjustments that might be necessary if the Company is unable to
continue as a going concern. The Company is currently seeking financing to
allow it to begin its planned operations.
F-8
<PAGE>
EXHIBIT A
SUBSCRIPTION AGREEMENT
SD Products Corp.
Attn: Mark A. Mintmire, President
2958 Braithwood Court
Atlanta, Georgia 30345
By executing this Subscription Agreement (the "Subscription Agreement") of
SD Products Corp. (hereafter, the "Company"), the undersigned purchaser
(hereafter, the "Purchaser") hereby irrevocably subscribes for shares of common
stock ("Shares") in the Company. Purchaser herewith encloses the sum of
$___________ ($500 minimum in $500 increments), representing the purchase of
_____ Shares at $1.00 per Share. Subscriptions, whether checks or wire
transfers, should be made payable to SD Products Corp. -- Attorney Escrow
Account and forwarded to the Escrow Agent, Duncan, Blum & Associates (Attn: Carl
N. Duncan, Esq.), 5718 Tanglewood Drive, Bethesda, Maryland 20817. If this
Subscription Agreement is accepted, the Purchaser agrees to contribute the
amount enclosed to the Company.
Purchaser represents that he, she or it has (i) a net worth of at least
$100,000 (exclusive of home, furnishings and automobiles) or (ii) a net worth
(similarly calculated) of at least $50,000 and an annual adjusted gross income
of at least $25,000. Purchaser represents that he meets these financial
requirements and that he is of legal age. Purchaser is urged to review carefully
the responses, representations and warranties he is making herein. Purchaser
agrees that this subscription may be accepted or rejected in whole or in part by
the Company in its sole and absolute discretion.
READ THIS PROSPECTUS CAREFULLY BEFORE YOU SUBSCRIBE. CONTAINED HEREIN ARE
DISCLOSURES CONCERNING VARIOUS RISKS, CONFLICTS, FEES AND EXPENSES RELATING TO
OR TO BE PAID BY THE COMPANY.
The undersigned is reminded that:
(1) The Shares are speculative investments, the purchase of which involves a
high degree of risk of loss of the entire investment of the undersigned in
the Company.
(2) S/he is encouraged to discuss the proposed purchase with her/his attorney,
accountant or a Purchaser Representative (as defined under the Securities
Act of 1933, as amended) or take the opportunity to do so, and is satisfied
that s/he has had an adequate opportunity to ask questions concerning the
Company, the Shares and the Offering described in the Prospectus.
(3) No federal or state agency has passed upon the adequacy or accuracy of the
information set forth in the Prospectus or made any finding or
determination as to the fairness of the investment, or any recommendation
or endorsement of the Shares as an investment.
(4) S/he must not be dependent upon a current cash return with respect to
her/his investment in the Shares. S/he understands that distributions are
not required (and are not expected) to be made.
(5) The Company is not a "tax shelter" and the specific tax consequences to
her/him relative to as an investment in the Company will depend on her/his
individual circumstances.
A-1
<PAGE>
Representations
Purchaser makes the following representations in order to permit the
Company to determine his suitability as a purchaser of Shares:
(1) The undersigned has received the Company's Prospectus and the exhibits
thereto.
(2) The undersigned understands that the Company has made all documents
pertaining to the transactions described in the Company's Prospectus
available to the undersigned in making the decision to purchase the Shares
subscribed for herein.
(3) If the Shares are being subscribed for by a pension or profit-sharing plan,
the undersigned independent trustee represents that s/he has reviewed the
plan's portfolio and finds (considering such factors as diversification,
liquidity and current return and projected return of the portfolio) this
purchase to be a prudent investment under applicable rules and regulations,
and acknowledges that no representation is made on behalf of the Company
that an investment in the Company by such plan is suitable for any
particular plan or constitutes a prudent investment thereby. Moreover, the
undersigned independent trustee represents that s/he understands that
income generated by the Company may be subject to tax, that s/he is
authorized to execute such subscription on behalf of the plan or trust and
that such investment is not prohibited by law or the plan's or trust's
governing documents.
The undersigned understands and agrees that this subscription may be
accepted or rejected by the Company in whole or in part, in its sole and
absolute discretion. The undersigned hereby acknowledges and agrees that this
Subscription Agreement shall survive (i) non-material changes in the
transactions, documents and instruments described in the Prospectus, (ii) death
or disability of the undersigned and (iii) the acceptance of this subscription
by the Company. By executing this Subscription Agreement below, the undersigned
(i) acknowledge the accuracy of all statements and (ii) appoints the management
of the Company to act as his true and lawful attorney to file any documents or
take any action required by the Company to carry out its business activities.
The foregoing information which the undersigned has provided to the
Company is true and accurate as of the date hereof and shall be true and
accurate as of the date of the undersigned's admission as a Shareholder. If in
any respect such representations, warranties or information shall not be true
and accurate at any time prior to the undersigned's admission as a Shareholder,
s/he will give written notice of such fact to the Company, specifying which
representation, warranty or information is not true and accurate and the reason
therefor.
By executing this Subscription Agreement, the undersigned certifies, under
penalty of perjury:
(1) That the Social Security Number or Taxpayer Identification Number provided
below is correct; and
(2) That the IRS has never notified him that s/he is subject to 20% backup
withholding, or has notified her/him that s/he is no longer subject to such
backup withholding. (Note: If this part (2) is not true in your case,
please strike out this part before signing.)
(3) The undersigned is a U.S. citizen or resident, or is a domestic
corporation, partnership or trust, as defined in the Internal Revenue Code
of 1986, as amended. (Note: If this part (3) is not true in your case,
please strike out this part before signing.)
(4) That the undersigned acknowledges and agrees that this information may be
disclosed to the Internal Revenue Service by the Company and that any false
statement contained herein is punishable by fine, imprisonment or both. The
undersigned will notify the Company within sixty (60) days of the date upon
which any of the information contained herein becomes false or otherwise
changes in a material manner, or the undersigned becomes a foreign person.
The undersigned agrees to update this information whenever requested by the
Company. Under penalties of perjury, the undersigned declares that the
undersigned has examined the information contained herein and to the best
of the undersigned's knowledge and belief, it is true, correct and
A-2
<PAGE>
complete, and that the undersigned has the authority to execute this
Subscription Agreement.
This Subscription Agreement and the representations and warranties contained
herein shall be binding upon the heirs, executors, administrators and other
successors of the undersigned. If there is more than one signatory hereto, the
obligations, representations, warranties and agreements of the undersigned are
made jointly and severally. By executing this agreement, you are not waiving any
rights under federal law.
The undersigned is the following kind of entity (please check):
|_| Individual |_| IRA
|_| Joint Account - JTWROS |_| Pension Plan
|_| Joint Account - TENCOM |_| Trust
|_| UGMA (Gift to Minor) |_|Non-Profit Organization
|_| Partnership |_| Employee of NASD member firm
|_| Corporation |_| Other (Specify)
Dated this ___ day of ________ of 1999
Mr./Ms._____________________________ _________________________________
Purchaser's Name Social Security or Tax ID#
Mr./Ms._____________________________ _________________________________
Name of Second Purchaser Date of Birth of First Purchaser
____________________________________ (______)_________________________
Street Address of First Purchaser Business Phone (Day)
____________________________________ (______)________________________
City State and Zip Code Home Phone
____________________________________
Signature of First Purchaser (Individual,
Custodian or Email address (if applicable)
Officer or Partner of Entity)
____________________________________________
Signature of Second Purchaser (if applicable)
NOTE: If a joint subscription, please indicate whether joint tenants with right
of survivorship (JTWROS) or tenants in common (TENCOM). Each joint tenant or
tenant in common must sign in the space provided. If purchaser is a trust,
partnership, corporation or other business association, the signing trustee,
partner or officer represents and warrants that he/she/it has full power and
authority to execute this Subscription Agreement on its behalf. If Purchaser is
a trust or partnership, please attach a copy of the trust instrument or
partnership agreement. If Purchaser is a corporation, please attach certified
corporate resolution authorizing signature.
A-3
<PAGE>
<TABLE>
No dealer, salesperson or other individual has been $100,000 - $1,000,000 of Shares of
authorized to give any information or to make any Common Stock at $1.00 per Share
representations not contained in this Prospectus in
connection with the Offering covered by this Prospectus. If Selling Shareholders May Also Be Selling
given or made, such information or representation must not 800,000 Additional Shares
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 SD PRODUCTS CORP.
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.
TABLE OF CONTENTS
Descriptive Title Page PROSPECTUS
<S> <C>
Prospectus Summary 3
Summary Financial Data 3
Risk Factors 4
Related Party Transactions 6
Fiduciary Responsibility
of the Company's Management 7
Selling Shareholders 7 September____, 2000
Application of Proceeds 9
Capitalization 10
Dilution 10
The Company 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations 18
Absence of Public Market and
Dividend Policy 20
Description of Capital Stock 20
Subscription Procdure 21 Until October ___, 2000 (25 days after the date hereof), all
ERISA Considerations 21 dealers effecting transactions in the registered securities,
Legal Matters 21 whether or not participating in this distribution, may be
Experts 21 required to deliver a current copy of this Prospectus. This
Available Information 22 delivery requirement is in addition to the obligation of dealers
Appendix I (Financial Statements F-1 to deliver a Prospectus when acting as underwriters and with)
Exhibit A -- Subscription Agreement A-1 respect to their unsold allotments or subscriptions.
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 5. Index to Exhibits
(a)(1) Financial Statements -- Included in Prospectus:
Independent Certified Public Accountants' Report.
Balance Sheet as of June 30, 2000
Statement of Changes in Shareholder's Equity for the Period October 20,
1997 (Date of Formation) through June 30, 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 exhibits were filed in the May 12, 2000 Registration Statement
and/or Pre-Effective Amendments filed subsequently. Since there have been no
changes, these exhibits are not filed in this Pre-Effective Amendment No. 4.
SB-1-5
<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 Pre-Effective
Amendment No. 4 to the Registration Statement to be signed on its behalf by the
Undersigned, thereunto duly authorized, in the City of Atlanta, State of
Georgia, on the 22th day of September, 2000.
SD Products Corp.
By: /s/ Mark A. Mintmire
----------------------------------------
Mark A. Mintmire, President
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. to the 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 September 25, 2000
-------------------- President, CEO
Mark A. Mintmire and Director
/s/ Mark A. Mintmire
-------------------- Treasurer, Chief Financial Officer September 25, 2000
Mark A. Mintmire and Secretary
SB-1-6
