U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: March 31, 2000
Commission file no. 26021
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SD Products Corp.
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(Name of Small Business Issuer in its Charter)
Florida 65-0790763
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(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
2958 Braithwood Court
Atlanta, GA 30345
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (770) 414-9596
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
None None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
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(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696 - Fax: (561) 659-5371
Indicate by Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
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As of March 31, 2000, there are 2,800,000 shares of voting stock of
the registrant issued and outstanding.
PART I
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Independent Accountants' Review Report..................................F-2
Balance Sheets..........................................................F-3
Statements of Operations................................................F-4
Statements of Stockholders' Equity......................................F-5
Statements of Cash Flows................................................F-6
Notes to Financial Statements...........................................F-7
F-1
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors and Stockholders
SD Products Corp.
(A Development Stage Enterprise)
Atlanta, Georgia
We have reviewed the accompanying balance sheet of SD Products Corp. as of March
31, 2000, and the related statements of income, retained earnings, and cash
flows for the six months then ended, in accordance with Statements on Standards
for Accounting and Review Services issued by the American Institute of Certified
Public Accountants. All information included in these financial statements is
the representation of the management of SD Products Corp.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based upon our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to be
in conformity with generally accepted accounting principles.
Durland & Company, CPAs, P.A.
Palm Beach, Florida
April 25, 2000
F-2
SD Products Corp.
(A Development Stage Enterprise)
Balance Sheets
March 31, September 30,
2000 1999
------------------------ -------------------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 1,688 $ 13,200
Loan and accrued interest receivable - related party 6,205
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Total current assets 7,893 13,200
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Total Assets $ 7,893 $ 13,200
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 0 $ 452
Accrued expenses - related party 0 500
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Total current liabilities 0 952
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Total Liabilities 0 952
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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 (15,317) (10,962)
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Total Stockholders' Equity 7,893 12,248
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Total Liabilities and Stockholders' Equity $ 7,893 $ 13,200
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F-3
The accompanying notes are an integral part of the financial statements
SD Products Corp.
(A Development Stage Enterprise)
Statements of Operations
(Unaudited)
For the Six For the Six Period from
Months Ended Months Ended October 20, 1997
March 31, March 31, (Inception) through
2000 1999 March 31, 2000
---------------------- -------------------- ------------------------
Revenues $ 0 $ 0 $ 0
---------------------- -------------------- ------------------------
Expenses
7,927
General and administrative expenses 210 690 8,102
Legal fees - related party 0 0 510
Professional fees 4,350 2,375 7,607
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Total expenses 4,560 3,065 16,219
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Loss from operations (4,560) (3,065) (16,219)
Other income (expense)
Interest income - related party 205 503 902
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Net loss $ (4,355)$ (2,562)$ (15,317)
====================== ==================== ========================
Basic net loss per weighted average share $ (.00)$ (.00)$ (.01)
====================== ==================== ========================
Weighted average number of shares 2,800,000 2,800,000 2,800,000
====================== ==================== ========================
F-4
The accompanying notes are an integral part of the financial statements
SD Products Corp.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
Deficit
Accumulated
Additional During the Total
Number of Common Paid-in Development Stockholders'
Shares Stock Capital Stage Equity
------------- ------------ ------------- -------------- ---------------
BEGINNING BALANCE, September 30,1998 2,800,000 $ 280 $ 22,930 $ (6,543)$ 16,667
Net loss - 1999 0 0 0 (4,419) (4,419)
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BALANCE, September 30, 1999 2,800,000 280 22,930 (10,962) 12,248
Net loss 0 0 0 (4,355) (4,355)
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ENDING BALANCE, March 31, 2000 (unaudited) 2,800,000 $ 280 $ 22,930 $ (15,317)$ 7,893
============= ============ ============= ============== ===============
F-5
The accompanying notes are an integral part of the financial statements
SD Products Corp.
(A Development Stage Enterprise)
Statement of Cash Flows
(Unaudited)
For the Six For the Six Period from
Months Ended Months Ended October 20, 1997
March 31, March 31, (Inception) through
2000 1999 March 31, 2000
------------------ --------------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,355)$ (2,562)$ (15,317)
Adjustments to reconcile net loss to net cash used for operating
activities:
Stock issued for services 0 0 10
Stock issued for services - related party 0 0 200
Changes in operating assets and liabilities:
(Increase) decrease accrued interest receivable - related party (205) 73 (205)
Increase (decrease) accrued expenses (952) 0 0
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Net cash used by operating activities (5,512) (2,489) (15,312)
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CASH FLOW FROM INVESTING ACTIVITIES:
(Advance to) repayment from related party (6,000) 3,000 (6,000)
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Net cash (used) provided by investing activities (6,000) 3,000 (6,000)
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CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 0 23,000
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Net cash provided by financing activities 0 0 23,000
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Net increase (decrease) in cash (11,512) 511 1,688
CASH, beginning of period 13,200 1,898 0
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CASH, end of period $ 1,688 $ 2,409 $ 1,688
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F-6
The accompanying notes are an integral part of the financial statements
SD Products Corp.
(A Development Stage Enterprise)
Notes to Financial Statements
(Unaudited)
(1) Summary of Significant Accounting Principles
The Company SD Products Corp. 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 is computed by dividing the net loss by the
weighted average number of common shares outstanding during the
period.
c) Use of estimates The financial statements for the six months
ended March 31, 2000 and 1999 and for the period since October 20,
1997, (Inception), through March 31, 2000, include all adjustments
which in the opinion of management are necessary for fair
presentation, and such adjustments are of a normal and recurring
nature. 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.
(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 $205 was accrued at March 31, 2000.
(3) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par
value preferred stock. Rights and privileges of the preferred stock
are to be determined by the Board of Directors prior to issuance.
The Company had 2,800,000 shares of common stock and 0 shares of
preferred stock issued and outstanding at December 31, 1999. The
Company, on October 20, 1997, issued 2,000,000 shares to its sole
Officer and Director for the value of services rendered in
connection with the organization of the Company. On the same date,
the Company issued 100,000 shares for the value of consulting
services rendered in connection with the organization of the
Company. In April 1998, the Company issued 300,000 shares of common
stock at $0.01 per share for $3,000 in cash. In June 1998, the
Company issued 400,000 shares of common stock at $0.05 per share for
$20,000 in cash.
(4) Income Taxes Deferred income taxes (benefits) are provided for
certain income and expenses which are recognized in different
periods for tax and financial reporting purposes. The Company has
net operating loss carry- forwards for income tax purposes of
approximately $4,300, $4,400 and $6,500 expiring at September 30,
2020, 2019 and 2018, respectively.
The amount recorded as deferred tax assets as of March 31, 2000 is
approximately $3,000, 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.
F-7
SD Products Corp.
(A Development Stage Enterprise)
Notes to Financial Statements
(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:
March 31, 2000
(unaudited) September 30, 1999
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Loan and accrued interest receivable - related party $ 6,205 $ 0
=========================== ================================
Accrued expenses - related party $ 0 $ 500
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Interest earned - related party $ 205 $ 604
=========================== ================================
(6) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $15,317 for the period from October
20, 1997 (Inception) through March 31, 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
Item 2. Management's Discussion and Analysis or Plan of Operation
General
Since its inception, the Company has conducted minimal business
operations except for organizational and capital raising activities. The Company
has not realized significant revenues since its inception due to the fact that
its key executive, Mr. Mark A. Mintmire, until his graduation in August 1998,
has been enrolled as a full-time college student in the Masters of Business
Administration program at Georgia State University, in Atlanta, Georgia. As a
result, from inception (October 20, 1997) through March 31, 2000, the Company
had interest income of $902.00 from a loan to a related party. Cumulative
operating expenses as of March 31, 2000 were $16,219.00. The Company proposes to
engage in the business of automobile lease financing/funding.
Mr. Charles Adams, consultant to SDP, agreed to develop the
automobile lease financing/funding business for the Company for the following,
among other, reasons: (i) because of his belief that a public company could
exploit its talents, services and business reputation to commercial advantage
and (ii) to observe directly whether the perceived advantages of a public
company, including, among others, greater ease in raising capital, liquidity of
securities holdings and availability of current public information, would
translate into greater profitability for a public, as compared to a
locally-owned lease finance/funding company.
Plan of Operation
If the Company is unable to generate sufficient revenue from
operations to implement its expansion plans, management intends to explore all
available alternatives for debt and/or equity financing, including but not
limited to private and public securities offerings. Depending upon the amount of
revenue, if any, generated by the Company, management anticipates that it will
be able to satisfy its cash requirements for the next approximately six (6) to
nine (9) months without raising funds via debt and/or equity financing or from
third party funding sources. Accordingly, management expects that it will be
necessary for SDP to raise additional funds in the next six(6) months, if only a
minimal level of revenue is generated in accordance with management's
expectations.
Mr. Adams, at least initially, will be solely responsible for
developing SDP's automobile lease finance/funding business. However, at such
time, if ever, as sufficient operating capital becomes available, management
expects to employ additional staffing and marketing personnel. In addition, the
Company expects to continuously engage in market research in order to monitor
new market trends, seasonality factors and other critical information deemed
relevant to SDP's business.
In addition, at least initially, the Company intends to operate out
of the home of Mr. Mintmire. Thus, it is not anticipated that SDP will lease or
purchase office space or computer equipment in the foreseeable future. SDP may
in the future establish its own facilities and/or acquire computer equipment if
the necessary capital becomes available; however, the Company's financial
condition does not permit management to consider the acquisition of office space
or equipment at this time.
For the period from October 20, 1997 through March 31, 2000, the
Company had a cumulative loss from operations aggregating $15,317.00.
Financial Condition, Capital Resources and Liquidity
At March 31, 2000, the Company had assets totaling $7,893.00 and
liabilities of $ 0.00 attributable to accrued expenses.
The Company has no potential capital resources from any outside
sources at the current time. It is anticipated that the Company will require
only nominal capital to maintain the corporate viability of the Company. Any
additional capital needed will most likely be provided by the Company's existing
shareholders or its officers and directors.
The ability of the Company to continue as a going concern is
dependent upon the availability of obtaining additional capital and financing
from such shareholders and directors.
Net Operating Losses
The Company has net operating loss carryforwards of $4,300.00,
$4,400.00 and $6,500.00 which expire September 30, in the years 2020, 2019 and
2018, respectively. Until the Company's current operations begin to produce
earnings, it is unclear whether the Company can utilize such carryforwards.
Year 2000 Compliance
The Company did not experience any material impact to its operations
as a result of the Year 2000 calendar change. The Company does not anticipate
any material disruption in its operations as a result of any failure by the
Company to be in compliance.
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-QSB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
finding suitable merger or acquisition candidates, expansion and growth of the
Company's business and operations, and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses made
by the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances. However, whether
actual results or developments will conform with the Company's expectations and
predictions is subject to a number of risks and uncertainties, general economic
market and business conditions; the business opportunities (or lack thereof)
that may be presented to and pursued by the Company; changes in laws or
regulation; and other factors, most of which are beyond the control of the
Company. Consequently, all of the forward-looking statements made in this Form
10-QSB are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequence to or effects on the Company or its business or operations.
The Company assumes no obligations to update any such forward-looking
statements.
PART II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or
to which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending March 31, 2000,
covered by this report to a vote of the Company's shareholders, through the
solicitation of proxies or otherwise.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are
incorporated herein by reference, as follows:
Exhibit No. Description
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3.(i).1 Articles of Incorporation of SD Products Corp. filed October
20, 1997(1)
3.(i).2 Articles of Amendment to the Articles of Incorporation of SD
Products Corp. filed April 30, 1999(1)
3(ii).1 By-laws (1)
27 * Financial Data Schedule
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(1) Incorporated herein by reference to the Company's Registration Statement on
Form 10-SB.
* Filed herewith
(b) No Reports on Form 8-K were filed during the quarter ended March 31,
2000.
SIGNATURES
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In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SD Products Corp.
Date: April 26, 2000 BY: /s/ Mark A. Mintmire
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Mark A. Mintmire
President, Secretary,
Chief Executive Officer & Director