UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SMI Products, Inc.
(Name of small business issuer in our charter)
Nevada
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(State or other jurisdiction of incorporation or organization)
7299 88-0363465
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(Primary standard industrial (I.R.S. Employer
classification code number) Identification No.)
3503 Cedar Locust
Sugarland, TX 77479
713-265-8660
(Address and telephone number of principal executive offices)
Michael J. Morrison, Esq.
1495 Ridgeview Drive, Suite 220
Reno, NV 89509
775-827-6300
(Name, address and telephone of agent for service)
Approximate date of commencement of proposed
sale to the public: As soon as practicable after the
effective date of this 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, as amended (the "SECURITIES ACT"), check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE (1)
Title of class of Proposed maximum Amount of
securities to be registered aggregate offering price Registration Fee
and number of shares
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Common Stock, par value $.001 $25,160 $6.64
2,516,000 shares
Total Registration Fee $6.64
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 (c).
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 A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS
SHALL NOT CONSTITUTE AN OFFER TO SELL NOR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
1
SMI PRODUCTS, INC.
2,516,000 shares of Common Stock
The registration statement of which this prospectus is a part relates to the
offer and sale of 2,516,000 shares of our common stock by the holders of these
securities, referred to as selling security holders throughout this document.
See "DESCRIPTION OF SECURITIES".
Our common stock is not listed on any national securities exchange or the NASDAQ
stock market. We are currently a private company.
The selling security holders may offer their shares at any price. We will pay
all expenses of registering the securities.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY
PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS".
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this preliminary prospectus is February 1, 2001.
TABLE OF CONTENTS
Part I
Item No.
1. Front Cover Page of Prospectus 1
2. Inside Front and Outside Back Cover Pages of Prospectus 2
3. Summary Information & Risk Factors 4
4. Use of Proceeds 10
5. Determination of Offering Price 10
6. Dilution 10
7. Selling Security Holders 10
8. Plan of Distribution 11
9. Legal Proceedings 11
10. Directors, Executive Officers, Promoters and Control Management 12
11. Security Ownership of Certain Beneficial Owners and Management 12
12. Description of Securities 13
13. Interest of Named Experts and Counsel 14
14. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities 14
15. Organization Within Last Five Years N/A
16. Description of Business 14
17. Management's Discussion and Analysis or Plan of Operation 18
18. Description of Property 18
19. Certain Relationships and Related Transactions 18
20. Market for Common Equity and Related Stockholder Matters 19
21. Executive Compensation 19
22. Financial Statements 19
23. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 19
Part II - Information Not Required in Prospectus
24. Indemnification 20
25. Other Expenses of Issuance and Distribution 20
26. Recent Sales of Unregistered Securities 20
27. Exhibits 21
28. Undertakings 21
ITEM 3. SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
This prospectus contains statements about our future operations, which involve
risks and uncertainties. Our actual results could differ in important ways from
our anticipated future operations, due to many factors, including "RISK FACTORS"
and other factors. Because this is a summary and the information is selective,
it does not contain all information that may be important to you. You should
read carefully all information in the prospectus including its detailed
information and the financial statements and their explanatory notes before
making an investment decision.
Our Company.
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We were incorporated in the State of Nevada on June 17, 1996. Our principal
executive offices are located at 3503 Cedar Locust, Sugarland, TX 77479,
Telephone - (713) 265-8660. Our total authorized stock consists of 25,000,000
common shares, par value $.001.
OUR BUSINESS.
We have developed a website, located on the internet at
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www.mortgagecommunicator.com , where individuals can obtain information
regarding mortgages. Currently, we do not have any operations or revenue
sources. Further development of our website during our first year of operations
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will cost an estimated $10,000.00.
THE OFFERING.
As of December 31, 2000, we had 7,551,000 shares of our common stock
outstanding. This offering is comprised of securities offered by selling
security holders only. Although we have agreed to pay all offering expenses, we
will not receive any proceeds from the sale of the securities. We anticipate
offering expenses of approximately $10,000.
FINANCIAL SUMMARY INFORMATION.
Because this is a only a financial summary, it does not contain all the
financial information that may be important to you. You should also read
carefully all the information in this prospectus, including the financial
statements included in this prospectus and their explanatory notes.
Balance Sheet Data: 12/31/00 12/31/99 12/31/98 12/31/97 12/31/96
- - ------------------- -------- -------- -------- -------- --------
CASH $13,178 $0 $0 $0 $0
TOTAL ASSETS $14,261 $283 $483 $683 $883
TOTAL LIABILITIES $ 900 $900 $900 $900 $900
STOCKHOLDERS'EQUITY $13,361 ($617) ($417) ($217) ($ 17)
RISK FACTORS.
An Investment in the Shares of Common Stock Offered by This Prospectus Involves
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a High Degree of Risk.
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We cannot assure that we will ever generate revenues, develop operations, or
make a profit.
We Have Little Managerial Expertise in the Development or Dissemination of
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Mortgage Information or in the Internet.
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Because our management has little experience in developing and disseminating
mortgage information, our abilities in this area may be limited. Even if our
management develops a sufficient quantity of mortgage information, it may be
unable to particularize or adapt it to the needs of website visitors. Moreover,
our management has no Internet experience. Unless management has the financial
resources to hire qualified Internet consultants, as and when needed, the
presentation and technical aspects of our website may suffer.
We Now Have No Material Contracts or Future Prospects for Material Contracts; We
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Have Not Developed An Operational Plan to Obtain Contracts.
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We have no contracts or prospective contracts that will assist us in promoting
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or further developing our website or operations. We have no contracts with
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Internet, computer, mortgage, technical or marketing professionals which would
assist us in the development, selection, presentational or technical aspects of
our website information. We have no contracts or prospective contracts with
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other websites that would provide visitation links to our website. We have
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not developed a plan to obtain any of these contracts. If we fail to develop
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contracts with other websites or other professionals, our revenues will be
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negatively impacted.
The Information on Our Website May Be Available on Other Websites or in Other
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Informational Formats and May be Purchased at Little or No Cost.
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We have conducted no research to determine what mortgage information is
available over the Internet or in other informational formats and whether that
information may be purchased at nominal fees or free to the public. We have not
yet determined all of the specific mortgage information we will make available
on our website. Because our website information may be more easily accessible at
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other websites or informational formats, and/or at little or no cost, website
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visitors may find our website of little or no utility.
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We Lack a Well-Developed Business Plan.
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Because we currently do not have a well-developed business plan, we may spend an
excessive amount of our financial and operational resources in development of
our business plan. Our website may not be developed with the computer, technical
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and marketing skills necessary to provide a superior website or one which would
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attract customers.
We Have a Poor Financial Condition and May be Unable to Adequately Develop our
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Business.
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Because we have no operating history, assets, or revenue sources, an investor
cannot determine if we will ever be profitable. We will experience financial
difficulties during our operational development and beyond. We may be unable to
operate profitably, even if we develop operations and generate revenues. We plan
to generate revenues from advertising sales through our website, but there can
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be no assurance that our revenues will exceed our costs. Our poor financial
condition could adversely affect our ability to provide a website that will
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attract website users or distribute mortgage information in a useful, efficient
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and timely fashion, or generate revenues.
We Are a Development Stage Company With No Operating History for Investors to
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Evaluate.
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We have just recently developed a website, but we have no operating history for
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investors to evaluate our business strategy. We have limited insight into trends
that may emerge and affect our business. You must consider the risks and
difficulties frequently encountered by development stage companies. Furthermore,
we face risks due to our anticipated participation in the new and
rapidly-evolving Internet market. These challenges include our:
o Need to further develop, maintain, and increase awareness of our web site;
o Need to attract and retain customers;
o Dependence on web site and transaction processing performance and reliability;
o Need to compete effectively;
o Need to establish ourselves as a participant in the evolving market for
mortgage information;
o Need to establish and develop relationships with entities related to and
involved in the mortgage industry in order to obtain advertising revenues
for our site.
Because significant up-front advertising, sales, and other expenses are required
to develop our web site, we anticipate that we may incur losses until revenues
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are sufficient to cover our operating costs. We expect that our total additional
website development costs will be approximately $10,000, based on the following
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estimated costs: (1) $125 for domain name registration and listing; (2) $7,500
for technical, presentational and other developmental costs; (3) $1,000 for
annual hosting service fees; (4) $1,000 for annual site maintenance; and (5)
$375 for miscellaneous administrative expenses. We will allocate advertising and
promotional expenses as we develop operations and research market demand for our
services. Future losses are likely before our operations will become profitable.
We Have No Profits and We Have Losses.
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We have no revenues or revenue sources, yet we have significant costs and
losses. Our website has not been fully developed. We cannot assure that we will
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obtain the necessary working capital to fully develop our website. Further, even
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if our website is fully developed, we cannot assure that our website will
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receive enough Internet traffic or purchases to generate revenues or achieve
profitability. We believe that we will incur net losses for at least the next
two years. We expect to increase our operating expenses substantially as we:
o Further develop our website;
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o Initiate our marketing activities and advertising efforts;
o Provide our customers with promotional benefits;
o Increase our general and administrative functions to support our developing
operations; and o Develop enhanced technologies and features to improve our
web site.
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We will pay our increased operating expenses from our revenues, assuming they
are sufficient; otherwise, we plan to borrow funds from our management to pay
expenses, assuming management has sufficient resources to loan us monies, as and
when required. Otherwise, we will have to seek additional debt and/or equity
financing from third parties. Depending upon the extent that our development
costs outpace our revenues, our losses will accumulate more rapidly. In
addition, we may find that our development efforts are more expensive than we
currently anticipate.
There is No Public Market for Our Common Stock.
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There is no established public trading market or market maker for our
securities. There can be no assurance that a market for our common stock will be
established or that, if established, a market will be sustained. Therefore, if
you purchase our securities you may be unable to sell them. Accordingly, you
should be able to bear the financial risk of losing your entire investment.
A market maker sponsoring a company's securities is required to obtain a listing
of the securities on any of the public trading markets, including the
Over-the-Counter Bulletin Board ("OTCBB"). If we are unable to obtain a market
maker for our securities, we will be unable to develop a trading market for our
common stock. We may be unable to locate a market maker that will agree to
sponsor our securities. Even if we do locate a market maker, there is no
assurance that our securities will be able to meet the requirements for a
quotation or that the securities will be accepted for listing on the OTCBB.
We intend to apply for listing of the securities on the OTCBB, but there can be
no assurance that we will be able to obtain this listing. The OTCBB securities
are not listed and traded on the floor of an organized national or regional
stock exchanges. Instead, OTCBB securities transactions are conducted through a
telephone and computer network connecting dealers in stocks. Over-the-counter
stocks are traditionally smaller companies that do not meet the financial and
other listing requirements of a regional or national stock exchange.
If We Are Unable To Attract and Retain Qualified Personnel, Our Business Could
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Suffer.
- - ------
Our current and future success depends on our ability to identify, attract,
hire, train, retain and motivate highly skilled technical, managerial, sales and
marketing, customer service and professional personnel. Competition for such
employees is intense, especially in the e-commerce sector. We may be unable to
successfully attract, assimilate or retain sufficiently qualified personnel. If
we fail to attract and retain the necessary technical professionals, the
efficiency of our website will suffer in its presentation, search abilities and
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information accessibility. If we fail to retain and attract the necessary
managerial, sales and marketing and customer service personnel, we may not
develop a sufficient customer base to adequately fund our operations.
If Consumers And Mortgage Broker Businesses Do Not Embrace On-Line Mortgage
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Financing And Sales, Our Business Will Be Materially Adversely Affected.
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Our success depends upon the general acceptance of on-line mortgage information
and services by consumers, mortgage brokers and other third parties. If these
groups do not embrace online mortgage information, our operations will be
adversely affected. The market for electronic mortgage information and services,
particularly over the Internet, is in its early stages of development, but is
evolving rapidly. We cannot assure that a sufficiently broad base of consumers
and businesses will adopt, and continue to use, the Internet to obtain mortgage
services, traditionally provided in person-to-person and paper transactions. Our
business prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in the new and rapidly evolving
market for Internet services. Several on-line mortgage service companies have
already failed and are no longer in business. The industry is extremely volatile
and competitive.
We believe that acceptance of our services will depend on the following factors,
among others:
o the growth of the Internet as a medium for commerce generally, and as a market
for financial products and services in particular;
o development of the necessary Internet network infrastructure to support new
technologies and handle the demands placed upon the Internet;
o government regulation of the Internet;
o our ability to successfully and efficiently develop on-line information that
is attractive to a sufficiently large number of consumers and mortgage
brokers; and
o a change in the perception among many consumers and real estate service
providers that obtaining mortgage information on-line is less dependable
than obtaining mortgage information through more traditional methods.
Slower response times could adversely affect use of our website. We may be
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unable to develop and introduce new services or service enhancements in a timely
manner. In addition, because the market for on-line mortgage information is in
the early stages of development, data pertaining to the volume of visitors to
other mortgage websites is difficult to predict. If the volume of website
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visitors falls below expectations of financial analysts or the public, we may be
unable to obtain quality advertising contracts. The occurrence of any of these
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factors could have a material adverse effect upon the very nature of our
business and the continuation of our website.
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If Mortgage Loan Interest Rates Increase and/or There is a Decrease In The
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Demand For Mortgages, Our Business Could Suffer.
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Mortgage business depends upon the overall level of sales and refinancing of
residential real estate, as well as mortgage loan interest rates. The
residential real estate industry is highly cyclical. Shifts in the economy and
residential real estate values generally affect the number of home sales and new
housing starts. The demand for mortgage loan information increases as the number
of home sales increases. Declining interest rates generally increase mortgage
loan financing activity, because homeowners refinance existing mortgage loans to
obtain favorable interest rates. Rising interest rates, in contrast, discourage
refinancing activities and generally reduce the number of home sales that occur.
Any fluctuation in interest rates or an adverse change in residential real
estate or general economic conditions could cause a serious decline in
visitation to our website, memberships, and the retention rate of our previously
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enrolled members, if any. We may be unable to develop our business if higher
interest rates and decreased home sales occur.
We Plan to Operate in an Uncertain and Developing Market.
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The market for Internet services is recent and rapidly changing. Market demand
and acceptance for recently introduced Internet services is uncertain and
difficult to predict. The success of our website will depend upon the adoption
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of the Internet by a broad base of consumers and vendors. There can be no
assurance of widespread acceptance of Internet commerce in general, including
Internet mortgage information and services. Companies now offering services
similar to ours have relied on consumers and vendors who use traditional means
of commerce. Consumers and vendors must accept and utilize novel ways of
conducting business and exchanging information if our business is to be
successful.
We Will Rely on and Have Minimal Control Over Third Parties.
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We expect that our operations will depend on a number of third parties over
which we will have limited control. We do not plan to own an Internet gateway,
but instead we will rely on an Internet Service Provider to host our website. We
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may experience interruptions in our website connection and our
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telecommunications access due to our reliance upon third parties. We anticipate
that we will use software that is dependent on operating system, database and
server software developed and produced by and licensed by third parties. We may
discover errors and defects in this third party software and rely on the third
parties to correct these errors and defects in a timely manner. Accordingly,
continuous or prolonged interruptions in our website connection or in our
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telecommunications access would have an adverse effect upon consumer perception
of our ability to provide information in a timely and efficient manner.
We Will Be at Risk of System Failure, Single Site Failure, and Failure of
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Delivery.
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Our success will also be dependent upon our communications software and
hardware. Our systems will be vulnerable to damage from earthquake, fire,
floods, power loss, telecommunications failures, break-ins and similar events.
Failure of information delivery can occur due to e-mail system, hosting site
and/or local system failures. We have no insurance coverage on our property or
business interruption insurance coverage and we do not intend to obtain this
coverage in the near future. We may be vulnerable to computer viruses, physical
or electronic break-ins, deliberate attempts by third parties to exceed the
capacity of our systems leading to interruptions, delays, loss of data or
cessation of service. The occurrence of any of these events could cause our
current and prospective users to question our ability to keep their information
confidential.
We Will Be at Risk for Internet Commerce Security Breaches That Could Impair Our
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Business.
- - --------
A significant barrier to entry in the area of electronic commerce and
communications is the secure transmission of confidential information over
public networks. We will rely on encryption and authentication technology
licensed from third parties to provide the security and authentication necessary
to effect secure transmission of confidential information. There can be no
assurance that advances in computer capabilities, new discoveries in the field
of cryptography or other events or developments will not result in a compromise
or breach of the algorithms we may use to protect customer transaction data. If
any such compromise of our security were to occur, we may be subject to
damage claims from our users or others.
A party who is able to circumvent our security measures could misappropriate
proprietary information. We may be required to expend significant capital and
other resources to protect against security breaches or to alleviate problems
caused by breaches. Concerns over the security of Internet transactions and the
privacy of users may also inhibit the growth of the Internet generally, and the
World Wide Web in particular, especially as a means of conducting commercial
transactions. To the extent that our future activities or those of third party
contractors whom we may use involve the storage and transmission of proprietary
information, such as credit card numbers, security breaches could expose us to a
risk of loss or litigation. There can be no assurance that we will be able to
implement security measures that will prevent security breaches.
We Have Substantial Near-Term Capital Needs; We May be Unable to Obtain Needed
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Additional Funding.
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We will require funding over the next twenty-four months to develop our
business. In fact, after paying the expenses of this offering, we will have
minimal capital for operations and we will have immediate funding. We currently
have no source of funds. Our capital requirements will depend on many factors
including, but not limited to, the timing of further development of our web site
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and the growth of the Internet. If additional funds are raised through the
issuance of equity securities, the percentage ownership of our current
shareholders will be reduced. Moreover, those equity securities may have rights,
preferences, and privileges senior to those of the holders of our common stock.
There can be no assurance that additional capital will be available on terms
favorable to us or our shareholders.
Our cash requirements may vary substantially depending on our rate of
development, research results, competitive and technological advances and other
factors. If adequate funds are not available, we may be required to curtail
operations or to obtain funds by entering into collaboration agreements on
unattractive terms. Our inability to raise capital would impair the technical
and presentational aspects of our website and our marketing abilities.
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We Have Substantial Long-Term Capital Needs; We May Be Unable to Obtain Needed
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Additional Funding.
- - ------------------
Substantial expenditures will be required to further develop our web site and to
market our services. The level of expenditures required for these activities
will depend in part on whether we develop and market our services independently
or with other companies through collaborative arrangements. Our future capital
requirements will also depend on one or more of the following factors:
o market acceptance of our services;
o the extent and progress of our research and development programs;
o competing technological and market developments; and
o the costs of commercializing our services.
There can be no assurance that funding will be available on favorable terms to
permit successful commercialization of our website, if at all.
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In addition, we have no credit facility or other committed sources of capital.
We may be unable to establish credit arrangements on satisfactory terms, if at
all. If capital resources are insufficient to meet our future capital
requirements, we may have to raise additional funds to continue development of
our website. There can be no assurance that such funds will be available on
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favorable terms, if at all.
To the extent that additional capital is raised through the sale of equity
and/or convertible debt securities, the issuance of such securities will likely
result in dilution to our shareholders. If adequate funds are not available, we
may be unable to develop our operations to a sufficient level to generage
revenues or become profitable.
If the Securities Do Not Meet Blue Sky Resale Requirements, You May Be Unable to
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Resell Your Securities.
- - ----------------------
The securities offered by this prospectus must meet the blue sky resale
requirements in the states in which the proposed purchasers reside. If we fail
to meet these qualifications, the securities may be deprived of any value.
If We Issue Future Shares, Present Investors' per Share Value Will be Diluted.
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We are authorized to issue maximum stock of 25,000,000 common shares. As of
December 31, 2000, there were 7,551,000 common shares issued and outstanding.
The Board of Directors has authority to issue the balance of 17,449,000 shares
of our authorized stock without shareholder consent, on terms and conditions set
in the discretion of the Board, which may dilute the value of your stock.
Our Principal Stockholder Controls our Company.
- - ----------------------------------------------
Our company founder, principal stockholder and Director, Philip Herr, currently,
owns approximately 66% of our common stock. Therefore, he will have significant
influence over all matters requiring approval by our stockholders, but not
requiring the approval of the minority stockholders. In addition, Philip Herr
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will be able to elect all of the members of our Board of Directors, allowing him
to exercise significant control of our affairs and management. In addition,
Philip Herr may affect most corporate matters requiring stockholder approval by
written consent, without a duly-noticed and duly-held meeting of stockholders.
If We Lose Any of Our Key Personnel, Our Business Would Be Impaired.
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Our success is heavily dependent upon the continued active participation of our
chief executive officer, James Charuk. Loss of his services could have a
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material adverse effect upon our business development. We do not maintain "KEY
PERSON" life insurance on James Charuk's life. We do not have a written
employment agreement with James Charuk. There can be no assurance that we will
------------
be able to recruit or retain other qualified personnel, should it be necessary
to do so.
We Face Competition From Other Entities Providing Services Similar to Ours.
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We will face intense competition in all aspects of the mortgage business. We
will compete with financial intermediaries, commercial banks, savings
associations, credit unions, loan brokers and insurance companies that also
provide mortgage information and services to the public. These companies may
offer convenience and customer service superior to that offered by our company.
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In addition, these companies may have better marketing and distribution
channels. There can be no assurance that we will be able to compete effectively
in this highly competitive industry, which could have a material adverse impact
upon market acceptance of our website and the information we wish to
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disseminate.
We Have Never Paid Dividends.
- - ----------------------------
We have never paid dividends. We do not anticipate declaring or paying dividends
in the foreseeable future. Our retained earnings, if any, will finance the
development and expansion of our business. Our dividends will be at our Board of
Directors' discretion and contingent upon our financial condition, earnings,
capital requirements and other factors. Future dividends may also be affected by
covenants contained in loan or other financing documents we may execute.
Therefore, there can be no assurance that cash dividends of any kind will ever
be paid.
Our Business Plan Incorporates Estimates Rather than Actual Figures.
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The discussion of our future business is management's best estimate and analysis
of the potential market, opportunities and difficulties that we face. There can
be no assurances that our estimates and analysis accurately reflect our
opportunities and potential for success. Competitive and economic forces make
forecasting of revenues and costs difficult and unpredictable.
ITEM 4. USE OF PROCEEDS
Not applicable. We will not receive any proceeds from the sale of the securities
by the selling security holders.
ITEM 5. DETERMINATION OF OFFERING PRICE
Not applicable. The selling security holders will be able to determine the price
at which they sell their securities.
ITEM 6. DILUTION
Not applicable. We are not registering any unissued shares in this registration
statement.
ITEM 7. SELLING SECURITY HOLDERS
The securities are being sold by the selling security holders named below. The
table indicates that all the securities will be available for resale after the
offering. However, any or all of the securities listed below may be retained by
any of the selling security holders, and therefore, no accurate forecast can be
made as to the number of securities that will be held by the selling security
holders upon termination of this offering. We believe that the selling security
holders listed in the table have sole voting and investment powers with respect
to the securities indicated. We will not receive any proceeds from the sale of
the securities.
Beneficial Maximum Beneficial
Ownership Number of Ownership
Before Offering Shares Being After Offering(2)
NAME(1) Shares Percent Offered Shares Percent
- - ---------------------------------------------------------------------------------------
477633 B.C. Ltd. 1000 Less than 1% 1000 0 0
Abey, Michael in Trust
For Bo Edison Abey 500 Less than 1% 500 0 0
Abey, Michael in Trust
For Michaela Abey 500 Less than 1% 500 0 0
Anderson, Elizabeth 1000 Less than 1% 1000 0 0
Armor Capital Partners 150,000 2% 150,000 0 0
Associated Product Services 310,000 4% 310,000 0 0
Bank Sol Oppenheim 200,000 3% 200,000 0 0
Biedka, Lucia 2000 Less than 1% 2000 0 0
Charuk, Al 1000 Less than 1% 1000 0 0
Charuk, Barbara 1000 Less than 1% 1000 0 0
Charuk, Jill 1000 Less than 1% 1000 0 0
Coutts, Steve 1000 Less than 1% 1000 0 0
Destin Pacific 320,000 4% 320,000 0 0
Dick, Brian 1000 Less than 1% 1000 0 0
Dispasquale, Anna 1000 Less than 1% 1000 0 0
Dispasquale, Paul 1000 Less than 1% 1000 0 0
Eckert, Dale 1000 Less than 1% 1000 0 0
E-Ternity Trading Corp. 1000 Less than 1% 1000 0 0
Extreme Investment Corp. 1000 Less than 1% 1000 0 0
Harris, Graham in Trust
For Bryton Harris 1000 Less than 1% 1000 0 0
Harris, Graham in Trust
For Graydon Harris 1000 Less than 1% 1000 0 0
Havanna Consultants Inc. 1000 Less than 1% 1000 0 0
Holden, Mark 1000 Less than 1% 1000 0 0
Holt, Chanel in Trust 1000 Less than 1% 1000 0 0
Holt, Julie 1000 Less than 1% 1000 0 0
Holt, Oliver in Trust 1000 Less than 1% 1000 0 0
Holt, Paul 1000 Less than 1% 1000 0 0
Holt, Spencer in Trust 1000 Less than 1% 1000 0 0
Gajdics, Tibor in Trust
For Merrick Gajdics 1000 Less than 1% 1000 0 0
Gajdics, Tibor in Trust
For Michael Gajdics 1000 Less than 1% 1000 0 0
Iucolino, Marco 1000 Less than 1% 1000 0 0
Kiss, Ilona 1000 Less than 1% 1000 0 0
Kurtyka, Anna 1000 Less than 1% 1000 0 0
Legg, David 1000 Less than 1% 1000 0 0
Matrix Holdings Foundation 320,000 4% 320,000 0 0
McCleod, Bruce 1000 Less than 1% 1000 0 0
McDermid, Elaine 1000 Less than 1% 1000 0 0
McLeod, Don 1000 Less than 1% 1000 0 0
M.D.I. Small Cap Fund 280,000 4% 280,000 0 0
Miller, David 1000 Less than 1% 1000 0 0
Miller, Ron W. 1000 Less than 1% 1000 0 0
Mitchell, David 1000 Less than 1% 1000 0 0
Nelson, Candice 1000 Less than 1% 1000 0 0
Noel, C.M. 1000 Less than 1% 1000 0 0
Noel, D.R. 1000 Less than 1% 1000 0 0
Robertson, Jayde 1000 Less than 1% 1000 0 0
Robertson, John 1000 Less than 1% 1000 0 0
Roman, Roman 17 Ltd. 320,000 4% 320,000 0 0
Shaw, Brent 276,000 276,000 0 0
Shaw, Grant 1000 Less than 1% 1000 0 0
Shaw, Wade 2000 2000 0 0
Stead, Martin 1000 Less than 1% 1000 0 0
Symes, Sharon 1000 Less than 1% 1000 0 0
Symes, Sharon in Trust
For Zachary Symes 1000 Less than 1% 1000 0 0
Venture Consultants 290,000 4% 290,000 0 0
Vanger, Tony 1000 Less than 1% 1000 0 0
Whitmore, Kay Brian 1000 Less than 1% 1000 0 0
Wills, Les 1000 Less than 1% 1000 0 0
--------- ---------
Total 2,516,000 2,516,000
(1) None of the selling security holders have, or ever had, any material rela-
tionship with our corporation or any of its predecessors and/or
affiliates.
(2) Assumes the sale of all shares offered by Selling Security Holder.
We intend to seek qualification for sale of the securities in those states where
the securities will be offered. That qualification is necessary to resell the
securities in the public market and only if the securities are qualified for
sale or are exempt from qualification in the states in which the selling
shareholders or proposed purchasers reside. There is no assurance that the
states in which we seek qualification will approve of resales of our securities
resales.
ITEM 8. PLAN OF DISTRIBUTION
The securities offered by this prospectus may be sold by the selling security
holders or by those to whom such shares are transfered. We are not aware of any
underwriting arrangements that have been entered into by the selling security
holders. The distribution of the securities by the selling security holders may
be effected in one or more transactions that may take place in the
over-the-counter market, assuming a market for our securities exists, including
broker's transactions, privately negotiated transactions or through sales to one
or more dealers acting as principals in the resale of these securities.
Any of the selling security holders, acting alone or in concert with one
another, may be considered statutory underwriters under the Securities Act of
1933, if they are directly or indirectly conducting an illegal distribution of
the securities on behalf of our corporation. For instance, an illegal
distribution may occur if any of the selling securities holders provide us with
cash proceeds from their sales of the securities. If any of the selling
shareholders are determined to be underwriters, they may be liable for
securities violations in connection with any material misrepresentations or
omissions made in this prospectus.
In addition, the selling security holders and any brokers and dealers through
whom sales of the securities are made may be deemed to be "UNDERWRITERS" within
the meaning of the Securities Act, and the commissions or discounts and other
compensation paid to such persons may be regarded as underwriters' compensation.
The selling security holders may pledge all or a portion of the securities owned
as collateral for margin accounts or in loan transactions, and the securities
may be resold pursuant to the terms of such pledges, accounts or loan
transactions. Upon default by such selling security holders, the pledgee in such
loan transaction would have the same rights of sale as the selling security
holders under this prospectus. The selling security holders also may enter into
exchange traded listed option transactions which require the delivery of the
securities listed under this prospectus. The selling security holders may also
transfer securities owned in other ways not involving market makers or
established trading markets, including directly by gift, distribution, or other
transfer without consideration, and upon any such transfer the transferee would
have the same rights of sale as such selling security holders under this
prospectus.
In addition to, and without limiting, the foregoing, each of the selling
security holders and any other person participating in a distribution will be
affected by the applicable provisions of the Securities Exchange Act of 1934,
including, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the securities by the selling security holders or
any such other person.
There can be no assurances that the selling security holders will sell any or
all of the securities. In order to comply with state securities laws, if
applicable, the securities will be sold in jurisdictions only through registered
or licensed brokers or dealers. In various states, the securities may not be
sold unless these securities have been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with. Under applicable rules and regulations of the Exchange Act, as
amended, any person engaged in a distribution of the securities may not
simultaneously engage in market-making activities in these securities for a
period of one or five business days prior to the commencement of such
distribution.
All of the foregoing may affect the marketability of the securities. Pursuant to
the various agreements we have with the selling securities holders, we will pay
all the fees and expenses incident to the registration of the securities, other
than the selling security holders' pro rata share of underwriting discounts and
commissions, if any, which is to be paid by the selling security holders.
ITEM 9. LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings which involve
SMI Products, Inc.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
(a) Directors and Officers.
----------------------
Our Bylaws provide that we shall have a minimum of one director and a
------
maximum of nine directors on the board at any one time. Our current
directors and executive officers are as follows:
NAME AND ADDRESS AGE POSITIONS HELD
---------------- --- --------------
James Charuk 44 President and Director
Cynthia Carter 42 Secretary, Treasurer and Director
Philip Herr 59 Director
These persons will serve as directors until our next annual
shareholder meeting or until a successor is elected who accepts the position.
Directors are elected for one-year terms.
Philip Herr
- - -----------
Mr. Herr has been a Director of the company since inception from
1991 to present. Mr. Herr has worked as an independent consultant specializing
in small business development. He retired as a Captain in the U.S. Navy in
1988. He received a B.S. Degree in Accounting and Taxation from the University
of Roosevelt, Chicago, IL, in 1963. Mr. Herr will devote approximately 5% of
his time to the business of the company.
James Charuk
- - ------------
Mr.Charuk was born in Canada and immigrated to the United States
in May 1990. During 1990-1991, Mr. Charuk was a database analyst for Digitech
Information, a private company specializing in oil reservoir analyses.
From 1991 to December 1997, Mr. Charuk served as a principal of Western Atlas
International, a Houston, Texas- based company specializing in geosciences and
interpretation services for forestry and mining companies. Mr. Charuk's
responsibilities included overseeing an annual budget in excess of $14 Million
for Western Atlas in the areas of Geosciences and Interpretation Software
Systems and Data Analysis.
In December 1997, Mr. Charuk became a Director of CCR Internet Realty, now known
as E-Realty, and served as a Director until January 2000. E-Realty is a pioneer
in the E-Broker residential real estate industry in the United States. From
January 2000 to present, Mr. Charuk has been the Chief Technology Officer and
V.P. of Technology for E-Realty.
He earned a Bachelor of Science degree from Mount Allison University in Moncton,
New Brunswick in 1981.
Mr. Charuk will devote approximately 20% of his time to the business of the
company.
Cynthia Carter
- - --------------
From 1992 to present, Ms. Carter has been sole officer, director
and shareholder of White Pine Productions, Inc., a Nevada corporation engaged in
direct and integrated marketing strategy and development, website development
and internet branding in Chicago, IL. Her clients include The Quaker Oats
Company, and major international advertising agencies, such as DDB Needham, Leo
Burnett and J. Walter Thompson. Ms. Carter has also been involved in the
broadcasting and related F.C.C. industry since 1984. Ms Carter received a
B.S. in English from Southwest Missouri State University in 1979. Ms. Carter
will devote approximately 5% of her time to the business of the company.
(b) Significant Employees.
---------------------
Other than James Charuk, there are no employees who are expected to
-------------
make a significant contribution to our corporation.
(c) Family Relationships.
--------------------
There are no family relationships among our officers, directors, or
persons nominated for such positions.
(d) Legal Proceedings.
-----------------
No officer, director, or persons nominated for such positions, and no
promoter or significant employee of our corporation has been involved in legal
proceedings that would be material to an evaluation of our management.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of December 31, 2000, of our
common stock (a) by each person known by us to be the beneficial owner of more
than 5% of our outstanding common stock, and (b) by each of our directors, by
all executive officers and by our directors as a group. To the best of our
knowledge, all persons named have sole voting and investment power with respect
to such shares, except as otherwise noted.
(a) Security Ownership of Certain Beneficial Owners.
TITLE OF NO. OF NATURE OF CURRENT
CLASS NAME & ADDRESS SHARES OWNERSHIP %OWNED
- - ----- -------------- ------ --------- ------
Common Philip Herr 5,000,000 Direct 66%
(b) Security Ownership of Officers and Directors.
TITLE OF NO. OF NATURE OF CURRENT
CLASS NAME & ADDRESS SHARES OWNERSHIP %OWNED
- - ----- -------------- ------ --------- ------
Common Philip Herr 5,000,000 Direct 66%
Common James Charuk 25,000 Direct Less
than 1%
Common Cynthia Carter 10,000 Direct Less
than 1%
All Officers and Directors as a Group 5,035,000 Direct 66%
(Approx.) (3 Individuals)
(c) Changes in Control.
There are currently no arrangements, which would result in a change in
control of SMI Products, Inc.
ITEM 12. DESCRIPTION OF SECURITIES
The following description is a summary and is qualified in its entirety by the
provisions of our Articles of Incorporation and Bylaws, copies of which have
------------------------- ------
been filed as exhibits to the registration statement of which this prospectus is
a part.
COMMON STOCK.
General.
- - -------
We are authorized to issue 25,000,000 shares of common stock, $001 par value. As
of December 31, 2000, there were 7,551,000 common shares issued and outstanding.
All shares of common stock outstanding are validly issued, fully paid for and
non-assessable.
Voting Rights.
- - -------------
Each share of common stock entitles the holder to one vote, either in person or
by proxy, at meetings of shareholders. The holders are not permitted to vote
their shares cumulatively. Accordingly, the holders of common stock holding, in
the aggregate, more than fifty percent of the total voting rights can elect all
of our directors and, in such event, the holders of the remaining minority
shares will not be able to elect any of such directors. The vote of the holders
of a majority of the issued and outstanding shares of common stock entitled to
vote thereon is sufficient to authorize, affirm, ratify or consent to such act
or action, except as otherwise provided by law.
Dividend Policy.
- - ---------------
All shares of common stock are entitled to participate proportionally in
dividends if our Board of Directors declares them out of the funds legally
available and subordinate to the rights, if any, of the holders of loan or other
financing documents. These dividends may be paid in cash, property or additional
shares of common stock. We have not paid any dividends since our inception and
presently anticipate that all earnings, if any, will be retained for development
of our business. Any future dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings,
operating and financial condition, capital requirements, and other factors.
Therefore, there can be no assurance that any dividends on the common stock will
be paid in the future.
Miscellaneous Rights and Provisions.
- - -----------------------------------
Holders of common stock have no cumulative voting rights, and no preemptive or
other subscription rights, conversion rights, redemption or sinking fund
provisions. In the event of our dissolution, whether voluntary or involuntary,
each share of common stock is entitled to share proportionally in any assets
available for distribution to holders of our equity after satisfaction of all
liabilities and payment of the applicable liquidation preference of any
outstanding loan or financing documents.
Stock Transfer Agent
- - --------------------
Upon completion of this offering, we intend to engage an independent stock
transfer agency firm to serve as our registrar and stock transfer agent.
SHARES ELIGIBLE FOR FUTURE SALE.
The 2,516,000 shares of common stock registered in this offering will be freely
tradable without restrictions under the Securities Act. No shares held by our
"affiliates" (officers, directors or 10% shareholders) are being registered
hereunder. The remaining 5,035,000 of our outstanding shares are held by
affiliates: Mr. Herr owns 5,000,000 shares, all of which have been held for over
one year; Mr. Charuk owns 25,000 shares, all of which have been held for less
than one year; and Ms. Carter owns 10,000 shares, all of which have been held
for less than one year.
In general, under Rule 144, as currently in effect, any of our affiliates and
any person or persons whose sales are aggregated who has beneficially owned his
or her restricted shares for at least one year, may be entitled to sell in the
open market within any three-month period a number of shares of common stock
that does not exceed the greater of (i) 1% of the then outstanding shares of our
common stock, or (ii) the average weekly trading volume in the common stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also affected by limitations on manner of sale, notice requirements, and
availability of current public information about us. Non-affiliates who have
held their restricted shares for two years may be entitled to sell their shares
under Rule 144 without regard to any of the above limitations, provided they
have not been affiliates for the three months preceding such sale.
Further, Rule 144A as currently in effect, in general, permits unlimited resales
of restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our existing stockholders to sell their shares
of common stock to such institutions and registered broker-dealers without
regard to any volume or other restrictions. Unlike under Rule 144, restricted
securities sold under Rule 144A to non-affiliates do not lose their status as
restricted securities.
As a result of the provisions of Rule 144, and subject to the volume limitations
of Rule 144 applicable, 5,000,000 of the outstanding restricted securities, held
by Mr. Herr, a director of the company, could be available immediately for sale
in a public market, if developed. The availability for sale of substantial
amounts of common stock under Rule 144 could adversely affect prevailing market
prices, if any, for our securities.
ITEM 13. EXPERTS
ACCOUNTANTS
- - -----------
Our Audited Financial Statements for the period from June 17, 1996 (inception)
----
to December 31, 2000, have been included in this prospectus in reliance upon of
--------
Amisano Hanson, Chartered Accountants, 750 West Pender Street, Suite 604,
- - -------
Vancouver, B.C. Canada, V6C 2T7, telephone 604-689-0188, as experts in
accounting and auditing.
LEGAL MATTERS
- - -------------
The law office of Michael J. Morrison, Chtd., 1495 Ridgeview Drive, Suite 220,
Reno, Nevada 89509, telephone 775-827-6300, has passed upon the validity of the
shares offered and certain other legal matters in connection with this
registration statement.
ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons, we have been
advised that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities, other than
the payment by us of expenses incurred or paid by our directors, officers or
controlling persons in the successful defense of any action, suit or
proceedings, is asserted by such director, officer, or controlling person in
connection with any securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to
court of appropriate jurisdiction the question whether such indemnification by
us is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issues.
ITEM 16. DESCRIPTION OF BUSINESS
We have commenced operations on the internet. We have filed and registered a
domain name and have developed a website with information services related to
-------
the mortgage industry. There can be no assurance that we will be able to develop
operations in this area, or any other area.
BUSINESS DEVELOPMENT.
We were incorporated in the State of Nevada on June 17, 1996, for the purpose of
providing consulting services to businesses, and engaging in any other lawful
activity.
PRINCIPAL PRODUCTS AND SERVICES.
We currently have a web site at the URL mortgagecommunicator.com. We have
registered a domain name, and have a hosting service for
mortgagecommunicator.com.
- - ------------------------
Our web site provides information to visitors about different mortgages. The
--------
site offers both free information services, as well as "subscribed for" member
services. The free information services include: a daily mortgage commentary; a
listing of the top online mortgage companies; and the daily top news headlines
and stories for the mortgage and real estate industry.
The subscribed for services include: A glossary of terms and frequently asked
questions for the mortgage and real estate industry; mortgage calculators; an
interest rate survey empowering individuals to make a more informed mortgage
decision; and rate alert, a feature which allows the subscriber to set the rate
and points they want, then be notified when the rate and points reach the level
desired.
Visitors who wish to subscribe for the member services will pay an annual
subscription fee of $49.95 per year, which allows them to use the member
services on our site for one year from the subscription date. Each subscriber
will be granted a password for entry into the member services section of our
website. We plan to charge this fee to the subscriber's credit or debit card.
- - -------
We plan to process all orders by on line credit card or cyber cash systems. We
currently have developed a relationship to process online orders. In addition,
we have researched the needs of our planned website functions and the fees
-------
associated with the services needed to fulfill those needs.
Our site content will consist of information relating to the mortgage industry.
In the future, we may plan to provide interest rate information by geographic
area. A portion of the information available on our website may be available
free of charge at other locations; however, we intend to develop more expansive
information than that available free of charge.
Applying for a mortgage can be a confusing, tedious and intrusive experience for
homebuyers, especially first-time homebuyers. We plan to demystify the mortgage
loan process by providing more expansive information to familiarize
persons interested in mortgages.
We plan to establish our market through e-mail advertising. We have not
conducted any market testing to determine prospective advertisers on our
website. Visitors will be able to obtain information twenty-four hours per day,
seven days per week through the website. We also plan to sell advertising on our
website to banks, mortgage brokers, builders, land appraisers, surveyors,
inspectors, title companies and real estate brokers. We have not developed
criteria for pricing of the advertising space; however, we anticipate pricing
will be based upon advertisement size, web page placement, content requirements,
contract duration and other factors. We currently have no advertisers.
We plan to classify lenders' advertisements by loan products they each offer.
We plan to seek lender advertisers that have a variety of products including
full disclosure loans that require verification of income, assets, credit,
source of funds, employment and residence history, based solely on the
borrower's credit history and the loan to value ratios without any further
documentation. We also plan to attract advertisers who offer programs for
borrowers with previous credit blemishes and those offering sub-prime loans.
The process of applying for a mortgage may be an invasive and foreign process.
We believe we can take the mystique out of the process by familiarizing the
borrower with required steps to obtain a mortgage.
DISTRIBUTION.
We plan to deliver our services through our website. As of the date of this
prospectus, we have an Internet service provider, web site developer and a basic
web site, all of which will be necessary to execute our plan of business.
NEW PRODUCTS OR SERVICES.
We currently have no new products or services announced or planned to be
announced to the public.
COMPETITIVE BUSINESS CONDITIONS.
The conventional method of obtaining mortgage information, for at least the past
fifty years, has been through personal contact with mortgage brokers or lenders,
commercial banks, savings and loan associations, credit unions and insurance
companies. The public has been reticent to try new vehicles or formats through
which they would receive mortgage information. Despite the convenience of
information offered over the Internet, including at our website, many consumers
will view conventional methods of obtaining this information more convenient and
offering better customer service. We believe conventional methods will continue
to be a prime source of competition, along with the many other internet based
mortgage information and service sites.
SOURCES AND AVAILABILITY OF RAW MATERIALS.
As of the date of this prospectus, we have no need for raw materials or
suppliers.
CUSTOMER BASE.
As of the date of this prospectus, we have no customers. If we are able to
establish a customer base in the future, we do not anticipate we will depend on
one or a few major customers. There can be no assurance that this assumption is
correct.
INTELLECTUAL PROPERTY.
We do not have any trademarks, patents, licenses, royalty agreements, or other
proprietary interests, except for the web domain name mortgagecommunicator.com.
------------------------
GOVERNMENTAL REGULATION ISSUES.
We are not now affected by direct government regulation. However, we are
affected by laws, rules and regulations directly applicable to access to or
commerce on the Internet generally. However, due to increasing usage of the
Internet, a number of laws and regulations may be adopted relating to the
Internet, covering user privacy, pricing, and characteristics and quality of
products and services. Furthermore, the growth and development for Internet
commerce may prompt more stringent consumer protection laws imposing additional
burdens on those companies conducting business over the Internet. The adoption
of any additional laws or regulations may decrease the growth of the Internet,
which, in turn, could decrease the demand for Internet services and increase the
cost of doing business on the Internet. These factors may have an adverse effect
on our business, results of operations and financial condition.
Moreover, the interpretation of sales tax, libel and personal privacy laws
applied to Internet commerce is uncertain and unresolved. We may be required to
qualify to do business as a foreign corporation in each such state or foreign
country. Our failure to qualify as a foreign corporation in a jurisdiction where
we are required to do so could subject us to taxes and penalties. Any such
existing or new legislation or regulation, including state sales tax, or the
application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse effect on our
business, results of operations and financial condition.
RESEARCH AND DEVELOPMENT.
To date, we have not undergone any research and development, except fthat
required to put up our website.
ENVIRONMENTAL LAW COMPLIANCE.
To the extent which environmental compliance may be necessary, we do not
anticipate any significant compliance expense.
EMPLOYEES.
We currently have one employee, James Charuk, our president and a director, who
works for our corporation part-time. We have no employment contracts and our
employee is not a union member or affected by labor contracts.
REPORTS TO SECURITY HOLDERS.
After the effective date of this registration statement, we will be a reporting
company under the requirements of the Exchange Act and will file quarterly,
annual and other reports with the Securities and Exchange Commission. Our annual
report will contain the required audited financial statements. We are not
required to deliver an annual report to security holders and will not
voluntarily deliver a copy of the annual report to the security holders. The
reports and other information filed by us will be available for inspection and
copying at the public reference facilities of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549.
Copies of such material may be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Information on the operation of the Public Reference Room may
be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission
maintains a World Wide Website on the Internet at http://www.sec.gov that
------- ------------------
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
YEAR 2000 COMPLIANCE.
We have no computer systems at this time. As a result, we have not encountered
any compliance costs. The Y2K compliance issue is the result of computer
programs being written using two digits rather than four to define the
applicable year. Computer programs that have time sensitive software may
recognize a date using "00" as the year 1900 rather than 2000. This could result
in a systems failure or miscalculation causing disruption of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities. Although the
Year 2000 event has already occurred, there may be some chance that the effects
of that event on computer systems have not yet become apparent, we do not
anticipate Y2K issues will have a significant effect on our corporation or
operations.
ITEM 17. PLAN OF OPERATIONS
The discussion contained in this prospectus contains "FORWARD-LOOKING
STATEMENTS" that involve risk and uncertainties. These statements may be
identified by the use of terminology such as "BELIEVES," "EXPECTS," "MAY,"
"WILL," "SHOULD" or "ANTICIPATES" or expressing this terminology negatively or
similar expressions or by discussions of strategy. The cautionary statements
made in this prospectus are applicable to all related forward-looking statements
wherever they appear in this prospectus. Our actual results could differ
materially from those discussed in this prospectus. Important factors that could
cause or contribute to such differences include those discussed under the
caption entitled "RISK FACTORS," as well as those discussed elsewhere in this
registration statement.
We are a development stage company without operations or revenues. We are unable
to satisfy cash requirements without management's financial support or other
funding. Our management and certain investors have made $50,100 of capital
contributions to our business. We anticipate, but have no assurance, that we
will meet our cash requirements for the foreseeable future through the financial
support of our management. Management's capital contributions will be
accomplished through interest bearing promissory notes between our company and
-----------
management. No promissory notes are currently in effect. We have not determined
the amount of funds that will be necessary for management to contribute at this
time. Nor is there any assurance our management will have funds available to
loan us as and when we require funds. In such event, we will be required to seek
loans and/or equity funding from third parties, and there is no assurance we
will be able to do so.
Over the next twelve months, we plan to further develop our web site to
--------
provide mortgage related information. We will require additional
funds to further develop our website. Although we plan to raise additional
-------
funds, we have not yet determined how, where or when we will obtain these funds.
There is no assurance that we will be able to obtain financing for our business
development. If adequate funds are not available to us, we believe that our
business development will be adversely affected.
Until such time as our website is fully developed, we do not expect to have any
significant revenues from our operations. We anticipate that if our website
-------
becomes fully operational, we will generate revenues from the sale of
subscriptions to the website and though the sale of advertisements. There is no
-------
assurance that we will be successful in selling subscriptions or advertising for
our website. We have no other sources of revenue. As such, if we are not
-------
successful in this regard, we will be unable to achieve revenues under our
current business plan.
If our company or its management receives proceeds from the sales of the
------------
securities by the selling security shareholders, which neither the company nor
its management has any intent to do, those persons may have conducted an illegal
distribution of our securities and may be deemed underwriters. Accordingly, they
will have liability for any material misrepresentations or omissions in this
document and otherwise in the offer and sale of securities.
We do not anticipate significant research and development expenses over the next
twelve months. We do not expect to purchase or sell any plant and significant
equipment or make any significant changes in the number of employees over the
next twelve months.
ITEM 18. DESCRIPTION OF PROPERTY
Our executive offices are located at 3503 Cedar Locust, Sugarland, TX 77479,
telephone (713) 265-8660, where we share space in the offices our President,
James Charuk. The space is approximately 400 square feet total, of which we
- - -------------
occupy a small portion without charge. We feel that this space is adequate for
our needs at this time, and we feel that we will be able to locate adequate
space in the future, if needed, on commercially reasonable terms.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the sale of shares to our officers and directors, we have not entered
--------
into any transactions with our officers, directors, persons nominated for such
positions, beneficial owners of 5% or more of our common stock, or family
members of such persons. We are not a subsidiary of any other company. Our
President, James Charuk, and our founder and Director, Philip Herr, were was our
only promoters.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information.
Our common stock is not traded on any exchange. We plan to eventually seek
listing on the OTC Bulletin Board, once our registration statement has cleared
comments of the Securities and Exchange Commission, and the N.A.S.D. We cannot
guarantee that we will obtain a listing. There is no trading activity in our
securities, and there can be no assurance that a regular trading market for our
common stock will ever be developed.
As of of December 31, 2000, there were approximately 60 holders of record of our
common stock.
ITEM 21. EXECUTIVE COMPENSATION
No executive compensation has been paid since our inception.
ITEM 22. FINANCIAL STATEMENTS
SMI PRODUCTS, INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
December 31, 2000, 1999, 1998, 1997 and 1996
(Stated in US Dollars)
--------------------
TERRY AMISANO LTD. AMISANO HANSON
KEVIN HANSON, C.A. Chartered Accountants
INDEPENDENT AUDITORS' REPORT
To the Stockholders,
SMI Products, Inc.
We have audited the accompanying balance sheets of SMI Products, Inc. (A
Development Stage Enterprise) as at December 31, 2000, 1999, 1998, 1997 and 1996
and the statements of operations, stockholders' equity and cash flows for each
of the years in the four year period ended December 31, 2000, the seven months
ended December 31, 1996 and for the period from inception, June 17, 1996 to
December 31, 2000. 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 United States generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance 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 audit provides a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of SMI Products, Inc. as at December 31, 2000,
1999, 1998, 1997 and 1996 and the results of its operations and cash flows for
each of the years in the four year period ended December 31, 2000, the seven
months ended December 31, 1996 and for the period from inception, June 17, 1996
to December 31, 2000, in accordance with generally accepted accounting
principles in the United States.
The accompanying consolidated financial statements referred to above have been
prepared assuming that the company will continue as a going concern. As
discussed in Note 1 to the financial statements, the company is in the
development stage, and has no established source of revenue and is dependent on
its ability to raise capital from shareholders or other sources to sustain
operations. These factors, along with other matters as set forth in Note 1,
raise substantial doubt that the company will be able to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Vancouver, Canada "AMISANO HANSON"
January 2, 2001 Chartered Accountants
Suite 604 - 750 West Pender Street Telephone: (604) 689-0188
Vancouver, Canada Facsimile: (604) 689-9773
V6C 2T7 E-MAIL: amishan@telus.net
SMI PRODUCTS, INC.
(A Development Stage Company)
BALANCE SHEETS
December 31, 2000, 1999, 1998, 1997 and 1996
(Stated in US Dollars)
--------------------
ASSETS
------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Current
Cash $ 13,178 $ - $ - $ - $ -
Advance receivable - Note 3 1,000 - - - -
Organization costs - Note 4 83 283 483 683 883
-------- ----- ----- ----- -----
$ 14,261 $ 283 $ 483 $ 683 $ 883
======== ===== ===== ===== =====
LIABILITIES
-----------
Current
Due to related party - Note 5 $ 900 $ 900 $ 900 $ 900 $ 900
-------- ----- ----- ----- -----
STOCKHOLDER'S EQUITY
--------------------
Common stock - Note 6 2,552 1 1 1 1
Additional paid-in capital 48,048 99 99 99 99
Deficit accumulated during the
development stage (37,239) (717) (517) (317) (117)
-------- ----- ----- ----- -----
13,361 (617) (417) (217) ( 17)
-------- ----- ----- ----- -----
$ 14,261 $ 283 $ 483 $ 683 $ 883
======== ===== ===== ===== =====
Nature and Continuance of Operations - Note 1
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
for the years ended December 31, 2000, 1999, 1998, 1997
and the seven months ended December 31, 1996
and June 17, 1996 (Date of Inception) to December 31, 2000
(Stated in US Dollars)
--------------------
June 17, 1996
7 months (Date of
Years ended December 31, ended Inception) to
------------------------------------------- December 31, December 31,
2000 1999 1998 1997 1996 2000
---- ---- ---- ---- ---- ----
Expenses
Amortization $ 200 $ 200 $ 200 $ 200 $ 117 $ 917
Audit fees 2,000 - - - - 2,000
Business plan 10,114 - - - - 10,114
Consulting fees 11,776 - - - - 11,776
Promotion and entertainment 12,432 - - - - 12,432
---------- ------ ------ ------ ------ -------
Net loss $ 36,522 $ 200 $ 200 $ 200 $ 117 $37,239
========== ====== ====== ====== ====== =======
Net loss per share $ 0.01 $ 0.20 $ 0.20 $ 0.20 $ 0.12
========== ====== ====== ====== ======
Weighted average shares outstanding 6,879,334 1,000 1,000 1,000 1,000
========== ====== ====== ====== ======
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY from
the period June 17, 1996 (Date of Inception) to December
31, 2000
(Stated in US Dollars)
--------------------
Deficit
Accumulated
During the
Number Contributed Development
of Shares Amount Surplus Stage Total
--------- ------ ------- ----- -----
Issued for services - at $0.10 1,000 $ 1 $ 99 $ - $ 100
Net loss for the period - - - (117) (117)
--------- ------ ------- -------- -------
Balance, December 31, 1996 1,000 1 99 (117) ( 17)
Net loss for the year (200) (200)
--------- ------ ------- -------- -------
Balance, December 31, 1997 1,000 1 99 (317) (217)
Net loss for the year (200) (200)
--------- ------ ------- -------- -------
Balance, December 31, 1998 1,000 1 99 (517) (417)
Net loss for the year (200) (200)
--------- ------ ------- -------- -------
Balance, December 31, 1999 1,000 1 99 (717) (617)
Forward split, 5,000 for 1 4,999,000 - - - -
--------- ------ ------- -------- -------
5,000,000 1 99 (717) (617)
Issued for cash - at $0.01 2,500,000 2,500 22,500 - 25,000
- at $0.50 51,000 51 25,449 - 25,500
Net loss for the year - - - (36,522) (36,522)
--------- ------ ------- -------- -------
Balance, December 31, 2000 7,551,000 $2,552 $48,048 $(37,239) $13,361
========= ====== ======= ======== =======
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
STATEMENTS CASH FLOWS
for the years ended December 31, 2000, 1999, 1998, 1997
and the seven months ended December 31, 1996
and June 17, 1996 (Date of Inception) to December
31, 2000
(Stated in US Dollars)
--------------------
June 17, 1996
7 months (Date of
Years ended December 31, ended Inception) to
------------------------------------------- December 31, December 31,
2000 1999 1998 1997 1996 2000
---- ---- ---- ---- ---- ----
Cash flows used in operating activities
Net loss $(36,552) $(200) $(200) $(200) $ (117) $(37,239)
Adjustment to reconcile net loss to
net cash used in operations
Amortization 200 200 200 200 117 917
Advance receivable (1,000) - - - - (1,000)
Net cash used in operating activities (37,322) - - - - (37,322)
Cash flow used in investing activity
Organization costs - - - - (1,000) (1,000)
Net cash used in investing activity - - - - (1,000) (1,000)
Cash flows provided by financing
activity
Common shares issued for cash 50,500 - - - 100 50,600
Due to related party - - - - 900 900
Net cash provided by financing activity 50,500 - - - 1,000 51,500
Net increase in cash 13,178 - - - - 13,178
Cash, beginning of period - - - - - -
Cash, end of period $ 13,178 $ - $ - $ - $ - $13,178
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2000, 1999, 1998, 1997 and 1996
(Stated in US Dollars)
--------------------
Note 1 Nature and Continuance of Operations
------------------------------------
The company is in the development stage and is engaged in the
business of internet real estate mortgage services.
These financial statements have been prepared on a going concern
basis. The company has accumulated losses of $37,239 since
inception. Its ability to continue as a going concern is dependent
upon the ability of the company to generate profitable operations
in the future and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business
operations when they come due.
Note 2 Summary of Significant Accounting Principles
--------------------------------------------
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in the
United States. Because a precise determination of many assets and
liabilities is dependent upon future events, the preparation of
financial statements for a period necessarily involved the use of
estimates which have been made using careful judgement. Actual
results may differ from these estimates.
The financial statements, in management's opinion, have been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
Organization
------------
The company was incorporated in the State of Nevada on June 17,
1996.
Development Stage Company
-------------------------
The company is a development stage company as defined in
Statement of Financial Accounting Standards No. 7.
Organization Costs
------------------
Organization costs are recorded at cost. The company provides for
amortization using the straight-line method over five years.
Income Taxes
------------
The company uses the liability method of accounting for income
taxes pursuant to Statement of Financial Accounting Standards No.
109 "Accounting for Income Taxes".
Basic Loss per Share
--------------------
The company reports basic loss per share in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share". Basic loss per share is computed using the weighted
average number of shares outstanding during the years. Diluted
loss per share has not been provided as it would be antidilutive.
Note 2 Summary of Significant Accounting Principles - (cont'd)
--------------------------------------------
Fair Market Value of Financial Instruments
------------------------------------------
The carrying values of cash and advance receivable approximate
fair value because of the short maturity of those instruments.
Note 3 Advance Receivable
------------------
The advance receivable is unsecured, non-interest bearing with no
specific terms for repayment.
Note 4 Organization Costs
------------------
Accumulated Net Carrying Amounts
Cost Amortization 2000 1999 1998 1997 1996
---- ------------ ---- ---- ---- ---- ----
Incorporation $1,000 $917 $83 $283 $483 $683 $883
fees ====== ==== === ==== ==== ==== ====
Note 5 Due to Related Party
--------------------
The amount due to related party is due to a director of the
company and is unsecured, non-interest bearing and has no specific
terms for repayment.
Note 6 Capital Stock
-------------
Authorized:
25,000,000 common shares with a par value of $0.001.
Note 7 Deferred Tax Assets
-------------------
The Financial Accounting Standards Board issued Statement Number
109 in Accounting for Income Taxes ("FAS 109") which is effective
for fiscal years beginning after December 15, 1992. FAS 109
requires the use of the asset and liability method of accounting
of income taxes. Under the assets and liability method of FAS 109,
deferred tax assets and liabilities are recognized for the future
tax consequences attributable to temporary differences between the
financial statements carrying amounts of existing assets and
liabilities and loss carryforwards and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled.
Note 7 Deferred Tax Assets - (cont'd)
-------------------
The following table summarizes the significant components of the
company's deferred tax assets:
Total
-----
Deferred Tax Assets
Net operating loss carryforward $ 37,239
========
Gross deferred tax assets $ 37,239
Valuation allowance for deferred tax asset (18,620)
-------
$ 18,619
========
The amount taken into income as deferred tax assets must reflect
that portion of the income tax loss carryforwards which is likely
to be realized from future operations. The company has chosen to
provide an allowance of 100% against all available income tax loss
carryforwards, regardless of their time of expiry.
Note 8 Income Taxes
------------
No provision for income taxes has been provided in these financial
statements due to the net loss. At December 31, 1999, the company
has net operating loss carryforwards, which expire commencing in
2016 totalling approximately $37,239. The potential tax benefit of
these losses, if any, has not been recorded in the financial
statements.
Note 9 New Accounting Standard
-----------------------
In March 1995, Statement of Financial Accounting Standards No. 12
("SFAS-12") "Accounting for Impairment of long-lived assets and
for long-lived assets to be disposed of" was issued. Certain
long-lived assets held by the company must be reviewed for
impairment whenever events or changes in circumstances indicate
the carrying amount of an asset may not be recoverable.
Accordingly, the impairment loss is recognized in the period it is
determined. The company has adopted these standards and there was
no material effect on its financial position or results of
operations of the company from its adoption.
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The accounting firm of Amisano Hanson, Chartered Accountants audited our
financial statements. Since inception, we have had no changes in or
disagreements with our accountants.
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation and By laws provide that, to the fullest extent
permitted by law, none of our directors or officers shall be personally liable
to us or our shareholders for damages for breach of any duty owed to our
shareholders or us. Nevada law provides that a director shall have no personal
liability for any statement, vote, decision or failure to act, regarding
corporate management or policy by a director, unless the director breached or
failed to perform the duties of a director. A company may also protect its
officers and directors from expenses associated with litigation arising from or
related to their duties, except for violations of criminal law, transactions
involving improper benefit or willful misconduct. Our By-laws contain provisions
-------
to indemnify the officers and directors of ours against any contingency or peril
as may be determined to be in our best interest and in conjunction therewith, to
procure, at our expense, policies of insurance.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemization of all expenses, without consideration to
future contingencies, incurred or expected to be incurred by our corporation in
connection with the issuance and distribution of the securities being offered by
this prospectus. Items marked with an asterisk (*) represent estimated expenses.
We have agreed to pay all the costs and expenses of this offering. Selling
Security Holders will pay no offering expenses.
ITEM EXPENSE
---- -------
SEC Registration Fee $ 6.64
Legal Fees and Expenses $ 7,500.00
Accounting Fees and Expenses $ 1,500.00
Miscellaneous* $ 993.36
===========
Total $ 10,000.00
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
From June 1996 through December 2000, we issued 7,551,000 shares of our common
stock under an exemptions from registration provided in Regulation S promulgated
under the Securities Act and/or Section 4(2) of the Securities Act of 1933, as
amended.
In June 1996, we issued 1,000 shares of our common stock to our founder, Philip
Herr, for $100.00 cash and his duties as the founder of the company. This trans-
-----------
action did not involve a public offering and was exempt from registration pur-
suant to Section 4(2) of the Securities Act of 1933, as amended. Subsequently,
the company approved a forward split of the total 1,000 outstanding shares on a
5,000 for 1 basis, resulting in a total of 5,000,000 shares outstanding.
In February 2000, we issued 2,500,000 shares of our common stock at a price of
$.01 per share, or aggregate cash proceeds of $25,000.00. This transaction
involved 9 foreign purchasers and was exempt from registration pursuant to Regu-
lation S of the Securities Act of 1933, as amended, based on offshore trans-
actions involving all non-U.S. persons in sales that took place entirely outside
the U.S. This transaction also involved 2 persons in the U.S., but did not
involve a public offering and was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended.
In October 2000, we issued 51,000 shares of our common stock for $.50 per share,
or aggregate cash proceeds of $25,500. This transaction involved 50 purchasers
and was exempt from registration pursuant to Regulation S of the Securities
Act of 1933, as amended, based on offshore transactions involving all non-U.S.
persons in sales that took place entirely outside the U.S.
ITEM 27. EXHIBITS
Exhibit Number Exhibit Description
- - -------------- -------------------
3.1 Articles of Incorporation
3.2 Bylaws
4 Instrument Defining the Right of Holders - Share
Certificate
5 Legal Opinion
24 Consents of Experts
ITEM 28. UNDERTAKINGS
The undersigned Registrant undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
a. Include any prospectus required by Section 10(a)(3)of the Securities Act
of 1933;
b. Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement;
c. Include any additional or changed material information on the
plan of distribution.
2. That, for determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bonafide offering.
3. To file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
------------
4. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
5. In the event that a claim for indemnification against such liabilities, other
than the payment by the Registrant of expenses incurred and paid by a direc-
tor, officer or controlling person of the Registrant in the successfuldefense
of any action, suit or proceeding, is asserted by such director, officer or
controlling person in connection with the securities being registered by this
registration statement, will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appro-
priate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements of filing of Form SB-2 and authorized this registration
statement to be singed on its behalf by the undersigned, in the City of Houston,
State of Texas, on this ____ day of February, 2001.
SMI Products, Inc.
By: /s/ JAMES CHARUK
----------------------------------
James Charuk, President
Date: February 1, 2001
In accordance with the requirements of the Securities act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
/s/ JAMES CHARUK /s/ CYNTHIA CARTER
- - --------------------------- ---------------------------------
James Charuk Cynthia Carter
Title: President & Director Title: Secretary, Treasurer, Chief
Financial Officer & Director
Date: February 1, 2001 Date: February 1, 2001