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: December 31, 2000
Commission file no. 26021
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 December 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
Balance Sheets........................................................F-2
Statements of Operations..............................................F-3
Statements of Changes in Stockholders' Equity.........................F-4
Statements of Cash Flows..............................................F-5
Notes to Financial Statements.........................................F-6
F-2
SD Products Corporation
(A Development Stage Enterprise)
Balance Sheets
December 31, September 30,
2000 2000
------------------- -----------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 291 $ 336
Loan and accrued interest receivable - related party 6,610 6,475
------------------- -----------------
Total current assets 6,901 6,811
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Total Assets $ 6,901 $ 6,811
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 0 $ 0
Accrued expenses - related party 4,500 500
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Total current liabilities 4,500 500
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Total Liabilities 4,500 500
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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 (20,809) (16,899)
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Total Stockholders' Equity 2,401 6,311
------------------- -----------------
Total Liabilities and Stockholders' Equity $ 6,901 $ 6,811
=================== =================
F-3
SD Products Corporation
(A Development Stage Enterprise)
Statements of Operations
Three Months Ended December 31,
(Unaudited)
Period from
October 20, 1997
(Inception) through
2000 1999 December 31, 2000
----------------- ------------------ ----------------------
Revenues $ 0 $ 0 $ 0
----------------- ------------------ ----------------------
Expenses
General and administrative expenses 45 35 8,847
Legal fees - related party 0 0 510
Professional fees 4,000 4,350 12,759
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Total expenses 4,045 4,385 22,116
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Loss from operations (4,045) (4,385) (22,116)
Other income (expense)
Interest income - related party 135 70 1,307
----------------- ------------------ ----------------------
Net loss $ (3,910)$ (4,315)$ (20,809)
================= ================== ======================
Net loss per weighted average share, basic $ (0.01)$ (0.01)
================= ==================
Weighted average number of shares 2,800,000 2,800,000
================= ==================
F-4
SD Products Corporation
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Equity
Period From October 20, 1997 (Inception) through December 31, 2000
Deficit
Accumulated
Additional During the Total
Number of Preferred Common Paid-in Development Stockholders
Shares Stock Stock Capital Stage '
Equity
------------ ------------ ------------ ------------ --------------- --------------
BEGINNING BALANCE,
October 20, 1997 (Inception) 0 $ 0 $ 0 $ 0 $ 0 $ 0
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) 16,667
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
Net loss 0 0 0 0 (5,937) (5,937)
------------ ------------ ------------ ------------ --------------- --------------
BALANCE, September 30, 2000 2,800,000 0 280 22,930 (16,899) 6,311
Net loss 0 0 0 0 (3,910) (3,910)
------------ ------------ ------------ ------------ --------------- --------------
ENDING BALANCE, December 31, 2000
(unaudited) 2,800,000 $ 0 $ 280 $ 22,930 $ (20,809)$ 2,401
============ ============ ============ ============ =============== ==============
F-5
SD Products Corporation
(A Development Stage Enterprise)
Statements of Cash Flows
Three Months Ended December 31,
(Unaudited)
Period from
October 20, 1997
(Inception) through
2000 1999 December 31, 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,910)$ (4,315)$ (20,809)
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 (135) (70) (610)
Increase (decrease) accrued expenses 0 3,898 0
Increase (decrease) accrued expenses - related party 4,000 0 4,500
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Net cash used by operating activities (45) (487) (16,709)
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CASH FLOW FROM INVESTING ACTIVITIES:
(Advance to) repayment from related party 0 (6,000) (6,000)
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Net cash (used) provided by investing activities 0 (6,000) (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 (45) (6,487) 291
CASH, beginning of period 336 13,200 0
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CASH, end of period $ 291 $ 6,713 $ 291
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F-6
SD Products Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
(1) Summary of Significant Accounting Principles
TheCompany SD Products Corporation is a Florida chartered development
stage corporation which conducts business from its headquarters in
Atlanta, Georgia. The Company was incorporated on October 20, 1997.
The Company has not yet engaged in its expected operations. The
Company's future operations will be to provide automobile leasing for
various consumer groups. Current activities include raising additional
equity and negotiating with potential key personnel and facilities.
There is no assurance that any benefit will result from such
activities. The Company will not receive any operating revenues until
the commencement of operations, but will nevertheless continue to incur
expenses until then.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Start-up costs Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of
Position (SOP) 98-5.
b) Net loss per share Basic is computed by dividing the net loss by the
weighted average number of common shares outstanding during the period.
c) Use of estimates The financial statements have been prepared in
conformity with generally accepted accounting principles. In preparing
the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the date of the statements of financial condition and revenues
and expenses for the period then ended. Actual results may differ
significantly from those estimates.
d) Interim financial information The financial statements for the three
months ended December 31, 2000 and 1999 and for the period since
October 20, 1997, (Inception), through December 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.
(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 $610 was accrued at December 31, 2000.
(3) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par
value preferred stock. Rights and privileges of the preferred stock are
to be determined by the Board of Directors prior to issuance. The
Company had 2,800,000 shares of common stock and 0 shares of preferred
stock issued and outstanding at September 30, 2000. 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
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 $6,500,
expiring at September 30, 2018, $4,400 expiring at September 30, 2019,
$5,900 expiring at September 30, 2020 and $3,900 expiring at September
30, 2021.
The amount recorded as deferred tax assets is approximately $3,100 and
$1,600 as of December 31, 2000 and December 31, 1999, respectively,
which represents the amount of tax benefit of the loss carryforward.
The Company has established a 100% valuation allowance against this
deferred tax asset, as the Company has no history of profitable
operations.
(5) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $20,900 for the period from October 20,
1997 (Inception) through December 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.
(6) Related parties Counsel to the Company directly owns 100,000 shares of
the Company, and indirectly owns 100,000 shares in the Company through
the 100% sole ownership of the common stock of another company that has
invested in the Company. Also, counsel's adult son, sole Officer and
Director of the Company, directly owns 2,020,000 shares in the Company.
Related party balances and amounts for the period since inception,
(October 20, 1997), ended December 31, 2000 are as follows:
Professional fees paid by related party $ 4,000
=====================
Professional fees payable - related party $ 510
=====================
Organizational costs - related party $ 245
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Interest earned - related party $ 1,172
=====================
F-8
Item 6. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations
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. 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 December 31, 2000, the Company had only interest
income of $1,307 from a loan to a related party. Total Company operations and
operating expenses as of December 31, 2000 were $22,116. 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.
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.
Financial Condition, Capital Resources and Liquidity
For the Three Months ending December 31, 2000 and December 31, 1999
At December 31, 2000 and December 31, 1999, the Company had assets
totaling $6,901 and $6,811 respectively, and liabilities of $4,500 and $500
respectively. The Company's total assets are primarily attributable to interest
income from a loan to a related party. The Company's total liabilities are
attributable primarily to accrued legal expenses, organization expenses and
professional fees. Since the Company's inception, it has received $23,000 in
cash contributed as consideration for the issuance of shares of Common Stock.
SDP's working capital is presently minimal and there can be no assurance that
the Company's financial condition will improve. The Company is expected to
continue to have minimal working capital or a working capital deficit as a
result of current liabilities. Even though management believes, without
assurance, that it will obtain sufficient capital with which to implement its
business plan on a limited scale, the Company is not expected to continue in
operation without an infusion of capital. In order to obtain additional equity
financing, management may be required to dilute the interest of existing
shareholders or forego a substantial interest of its revenues, if any.
The Company has no potential capital resources from any outside sources
at the current time. In its initial phase, the Company will operate out of the
facility provided by Mr. Mintmire. Mr. Adams will begin by finding clients for
the Company and instructing Mr. Mintmire in the operation of an automobile lease
financing/funding business. To attract clients, Mr. Adams and Mr. Mintmire will
visit potential clients in order to determine their lease financing needs. The
Company will place advertising in local area newspapers in Palm Beach County to
directly solicit prospective sub-prime and/or credit impaired auto buyers. In
the event the Company requires additional capital during this phase, Mr.
Mintmire has committed to fund the operation until such time as additional
capital is available. The Company believes that it will require six (6) to nine
(9) months in order to determine the market demand potential.
The ability of the Company to continue as a going concern is dependent
upon its ability to obtain clients who will utilize the Company's automobile
lease financing/funding programs and whether the Company can attract an adequate
number of direct clients who will qualify for a lease financing program. The
Company believes that in order to be able to expand its initial operations, it
must rent offices in Palm Beach County, hire clerical staff and acquire through
purchase or lease computer and office equipment to maintain accurate financial
accounting and client data. The Company believes that there is adequate and
affordable rental space available in Palm Beach County and sufficiently trained
personnel to provide such clerical services at affordable rates. Further, the
Company believes that the type of equipment necessary for the operation is
readily accessible at competitive rates.
To implement such plan the Company has initiated a Form SB-1 public
offering pursuant to Rule 415 under the Securities Act of 1933. It intends to
initiate a self-underwritten sale of a minimum of 100,000 shares at an offering
price of $1.00 and a maximum sale of 1,000,000 shares at an offering price of
$1.00. The 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.
Net Operating Losses
The Company has net operating loss carry-forwards of $6,500 expiring at
September 30, 2018, $4,400 expiring at September 30, 2019, $5,900 expiring at
September 30, 2020 and expiring at September 30, 2021. The company has a $3,100
and $1,600 deferred tax asset as of December 31, 2000 and December 31, 1999,
respectively, resulting from the loss carry-forwards, for which it has
established a 100% valuation allowance. Until the Company's current operations
begin to produce earnings, it is unclear as to the ability of the Company to
utilize such carry-forwards.
Year 2000 Compliance
The Company did not experience a negative impact to its technology
infrastructure as a result of the Year 2000. The Company does not anticipate
that it will experience any material disruption in its operations as a result of
the Year 2000 changeover in the future.
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 Form10-KSB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
business strategy, expansion and growth of the Company's business and
operations, and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it believes
are appropriate in the circumstances. However, whether actual results or
developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this 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 December 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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2.1 SB-1 Registration Statement(1)
3.(i).1 Articles of Incorporation of SD Products Corp. filed October 20, 1997(2)
3.(i).2 Articles of Amendment to the Articles of Incorporation of SD Products Corp. filed
April 30, 1999(2)
3.(ii) Bylaws of SD Products Corp.(2)
23.2 Independent Auditors Consent to the incorporation by reference of financial
statements of the company as of September 30, 2000 in Form SB-1.(1)
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(1) Incorporated herein by reference to the Registration Statement on Form SB-1
and Amendments thereto of SD Products Corp.(Registration No. 333-36966),
filed with the U.S. Securities and Exchange Commission.
(2) Incorporated herein by reference to the Registration Statement on Form
10-SB of SD Products Corp.(File No. 0-26021), filed with the U.S.
Securities and Exchange Commission.
(b) No Reports on Form 8-K were filed during the fiscal year ended December
31, 2000, covered by this Report on Form 10-QSB.
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.
(Registrant)
Date: February 12, 2001 BY: /s/ Mark A. Mintmire
------------------- -----------------------
Mark A. Mintmire
President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Date Signature Title
February 12, 2001 BY: /s/ Mark A. Mintmire
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Mark A. Mintmire President, Secretary,
Treasurer, Director