SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
Amendment #1
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended
December 31, 2005
SMI PRODUCTS INC
______________________________________________
(Name of small business issuer in its charter)
SEC FILE NO. 333-55166
________
NEVADA 88-0363465
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3503 CEDAR LOCUST
SUGARLAND, TX 77479
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (713) 265-8660
Securities registered under Section 12(b) of
the Exchange Act: None Securities registered
under Section 12(g) of the Exchange Act:
COMMON STOCK, PAR VALUE $.001
_____________________________
Title of class
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ X ]
State issuer's revenues for the most recent fiscal year. Nil
On March 27, 2006, there was an aggregate market value of $5,210,190 of the
voting stock held by non-affiliates of the Registrant because there is no public
market for the stock.
There were 7,551,000 shares of common stock $.001 par value outstanding as of
March 15, 2006.
Documents incorporated by reference: None.
Transitional Small Business Format (check one): Yes [ ] No [X]
ITEM 1. DESCRIPTION OF BUSINESS
FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements by the registrant based
on its current expectations about its business and its industry. You can
identify these forward-looking statements when you see words such as "EXPECT,"
"ANTICIPATE," "ESTIMATE" and other similar expressions. These forward-looking
statements involve risks and uncertainties and actual results could differ
materially from those anticipated in these forward-looking statements as a
result of such risk factors as discussed in Business Description, Risk Factors
and elsewhere in this Registration Statement. The REGISTRANT undertakes no
obligation to publicly update any forward-looking statements for any reason,
even in the event new information becomes available or other events occur in the
future.
Unless otherwise indicated, all references to "DOLLARS", "$" or "US$" refer to
U.S. dollars and all references to "CDN$" refer to Canadian dollars.
THE COMPANY
SMI Products, Inc., the "Company" has been 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. We were inactive from inception until
January 2000, when we commenced our current operations.
BUSINESS DEVELOPMENT
The Company's website www.mortgagecommunicator.com is currently under review and
reconstruction. To date, the Company has been unsuccessful in its business
operation.
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. The Company plans to charge this fee to the subscriber's credit or
debit card.
The Company plans to process all orders by on line credit card or cyber cash
systems. The Company currently has developed a relationship to process online
orders. In addition, The Company 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, the Company 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, The Company intends 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. The Company plans to demystify the
mortgage loan process by providing more expansive information to familiarize
persons interested in mortgages.
The Company plans to establish our market through e-mail advertising. The
Company has 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. The Company
also plans to sell advertising on our website to banks, mortgage brokers,
builders, land appraisers, surveyors, inspectors, title companies and real
estate brokers. The Company has not developed criteria for pricing of the
advertising space; however, The Company anticipates pricing will be based upon
advertisement size, web page placement, content requirements, contract duration
and other factors. The Company currently has no advertisers.
The Company plans to classify lenders' advertisements by loan products they each
offer.
The Company plans 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. The Company also plans 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.
The Company believes it can take the mystique out of the process by
familiarizing the borrower with required steps to obtain a mortgage.
DISTRIBUTION
The Company plans to deliver services through our website. As of this date, the
Company has 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
The Company currently has 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. The Company believes that conventional methods
will continue to be a prime source of competition, along with the many other
Internet based mortgage information and service sites.
COMPETITORS
Our main, existing and potential competitors for real estate professionals and
service providers, homebuyers, homeowners, sellers and renters and related
content include:
- Websites offering real estate listings together with other related
services, such as Apartments.com, Microsoft's HomeAdvisor,
NewHomeNetwork.com, Move.com and RentNet; CyberHomes, HomeSeekers,
Homes.com, Homestore.com.
- Websites offering real estate and mortgage related content and services
such as mortgage calculators and information on the home buying, selling
and renting processes, such as IndyMac, Bank Home Lending, LoansDirect,
Mortgagebot.com, PHH Mortgage Services, Countrywide Home Loans,
Infoloan.com, Quicken Loans, East West Mortgage, Washington Mutual
Mortgage, E-Loan, Alliance Mortgage, FiNet.com, MortgageIT.com, First
Union, GMAC Mortgage, ditech.com, SFNB, Nexstar, Regions Mortgage.
- General-purpose consumer websites, such as AltaVista and Yahoo! that also
offer real estate-related content; and o Traditional print media such as
newspapers and magazines.
OUR COMPETITIVE POSITION
We believe competition takes place on many levels, including pricing,
convenience in obtaining mortgage information and loans, specialization, breadth
of product offerings and lending sources. Our intent is to brand ourselves as
one of the leading online interactive mortgage/financing magazine offering an
all in one "ONE STOP MORTGAGE SHOP" for consumers interested in information on
financing or refinancing their home regionally and nationally. We intend to
serve as a content aggregator for related information on the Internet, an
unbiased comprehensive information source, as well as marketplace and
facilitator for mortgage financings, loans and other services related to the
home real estate industry. Our objective is to provide a service that helps the
consumer cut through the often perceived clutter, confusion and noise of the
marketplace and help them confidently and quickly find a loan or information
that meets their goals and fits their lifestyle. We will attempt to brand
mortgagecommunicator.com as the consumer's partner in his or her search for
mortgages and related information. We will attempt to provide consumers with a
one stop shopping destination where they can access information and decision
support tools, such as mortgage calculators and finance worksheets, information
concerning the home buying and selling process and features that aid users in
evaluating the home mortgage decision to assist them in deciding to buy or
finance a home. By attempting to provide specialized information services and
tools for consumers, we will seek to differentiate ourselves from other
competing service offerings. However, we have no assurance we will be successful
in differentiating ourselves from our competitors, or that we will be successful
in competing in the marketplace for our services. By offering a specialized
mortgage information service we will be targeting those consumers that are
looking for such. We believe that consumers will pay for a service that is
specialized, unbiased, and comprehensive and a service that helps them cut
through the perceived clutter, confusion and noise of the marketplace and help
them confidently and quickly find a loan or information that meets their goals
and fits their lifestyle.
SOURCES AND AVAILABILITY OF RAW MATERIALS
As of this date, the Company no need for raw materials or suppliers.
CUSTOMER BASE
As of this date, the Company has no customers. It is not clear whether the
Company will be able to establish a customer base in the future
GOVERNMENTAL REGULATION ISSUES
The Company is not now affected by direct government regulation. However, the
Company is 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. The Company 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 The Company is 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, the Company has not undergone any research and development, except that
required to put up our website.
ENVIRONMENTAL LAW COMPLIANCE
To the extent which environmental compliance may be necessary, the Company does
not anticipate any significant compliance expense.
EMPLOYEES
The Company currently has one employee, James Charuk, our president and a
director, who works for our corporation part-time. The Company has no employment
contracts and our employee is not a union member or affected by labor contracts.
RISK FACTORS
The Company's business and any investment in its securities is subject to a
number of risks which, in addition to ordinary business risks include the
following:
COMPANY HAS LITTLE MANAGERIAL EXPERTISE IN THE DEVELOPMENT OR DISSEMINATION OF
MORTGAGE INFORMATION OR IN THE INTERNET.
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.
NO MATERIAL CONTRACTS OR FUTURE PROSPECTS FOR MATERIAL CONTRACTS; COMPANY HAS
NOT DEVELOPED AN OPERATIONAL PLAN TO OBTAIN CONTRACTS.
The Company has no contracts or prospective contracts that will assist us in
promoting or further developing our website or operations. The Company has no
contracts with Internet, computer, mortgage, technical or marketing
professionals which would assist us in the development, selection,
presentational or technical aspects of our website information. The Company has
no contracts or prospective contracts with other websites that would provide
visitation links to our website. The Company has not developed a plan to obtain
any of these contracts. If the Company fails to develop contracts with other
websites or other professionals, our revenues will be negatively impacted.
INFORMATION ON OUR WEBSITE MAY BE AVAILABLE ON OTHER WEBSITES OR IN OTHER
INFORMATIONAL FORMATS AND MAY BE PURCHASED AT LITTLE OR NO COST.
The Company 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. The Company
has not yet determined all of the specific mortgage information the Company will
make available on our website. Because our website information may be more
easily accessible at other websites or informational formats, and/or at little
or no cost, website visitors may find our website of little or no utility.
POOR FINANCIAL CONDITION AND MAY BE UNABLE TO ADEQUATELY DEVELOP OUR BUSINESS.
Because the Company has no operating history, assets, or revenue sources, an
investor cannot determine if the Company will ever be profitable. The Company
will experience financial difficulties during our operational development and
beyond. The Company may be unable to operate profitably, even if the Company
develops operations and generate revenues. The Company plans to generate
revenues from advertising sales through our website, but there can 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 attract
website users or distribute mortgage information in a useful, efficient and
timely fashion, or generate revenues.
THE COMPANY HAS NO PROFITS AND HAS LOSSES.
The Company no revenues or revenue sources, yet the Company has significant
costs and losses. Our website has not been fully developed. The Company cannot
assure that it will obtain the necessary working capital to fully develop our
website. Further, even if our website is fully developed, The Company cannot
assure that its website will receive enough Internet traffic or purchases to
generate revenues or achieve profitability. The Company believes that it will
incur net losses for at least the next two years. The Company expects to
increase operating expenses substantially as we:
- Further develop our website;
- Initiate our marketing activities and advertising efforts;
- Provide our customers with promotional benefits;
- Increase our general and administrative functions to support our
developing operations; and develop enhanced technologies and features
to improve our web site.
The Company will pay increased operating expenses from our revenues, assuming
they are sufficient; otherwise, the Company plans to borrow funds from our
management to pay expenses, assuming management has sufficient resources to loan
monies, as and when required. Otherwise, the Company 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, The Company may find that development
efforts are more expensive than currently anticipated.
IF THE COMPANY IS UNABLE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL, OUR BUSINESS
COULD 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. The Company may be
unable to successfully attract, assimilate or retain sufficiently qualified
personnel. If the Company fails to attract and retain the necessary technical
professionals, the efficiency of our website will suffer in its presentation,
search abilities and information accessibility. If the Company fails to retain
and attract the necessary managerial, sales and marketing and customer service
personnel, The Company may not develop a sufficient customer base to adequately
fund our operations.
IF CONSUMERS AND MORTGAGE BROKER BUSINESSES DO NOT EMBRACE ON-LINE MORTGAGE
FINANCING AND SALES, OUR BUSINESS WILL BE MATERIALLY ADVERSELY AFFECTED.
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. The Company 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.
The Company believes that acceptance of our services will depend on the
following factors, among others:
- the growth of the Internet as a medium for commerce generally, and as a
market for financial products and services in particular:
- development of the necessary Internet network infrastructure to support
new technologies and handle the demands placed upon the Internet;
- government regulation of the Internet;
- our ability to successfully and efficiently develop on-line information
that is attractive to a sufficiently large number of consumers and
mortgage brokers; and
- 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. The Company may
be 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
visitors falls below expectations of financial analysts or the public, The
Company may be unable to obtain quality advertising contracts. The occurrence of
any of these factors could have a material adverse effect upon the very nature
of our business and the continuation of our website.
IF MORTGAGE LOAN INTEREST RATES INCREASE AND/OR THERE IS A DECREASE IN THE
DEMAND FOR MORTGAGES, OUR BUSINESS COULD SUFFER.
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
enrolled members, if any. The Company may be unable to develop our business if
higher interest rates and decreased home sales occur.
THE COMPANY PLANS TO OPERATE IN AN UNCERTAIN AND DEVELOPING MARKET.
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
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.
THE COMPANY WILL RELY ON AND HAVE MINIMAL CONTROL OVER THIRD PARTIES.
The Company expects that our operations will depend on a number of third parties
over which the Company will have limited control. The Company does not plan to
own an Internet gateway, but instead the Company will rely on an Internet
Service Provider to host our website. The Company may experience interruptions
in our website connection and our telecommunications access due to our reliance
upon third parties. The Company anticipates that the Company will use software
that is dependent on operating system, database and server software developed
and produced by and licensed by third parties. The Company 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 telecommunications
access would have an adverse effect upon consumer perception of our ability to
provide information in a timely and efficient manner.
THE COMPANY WILL BE AT RISK OF SYSTEM FAILURE, SINGLE SITE FAILURE, AND FAILURE
OF DELIVERY.
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. The Company has no insurance coverage on our
property or business interruption insurance coverage and The Company does not
intend to obtain this coverage in the near future. The Company 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.
THE COMPANY WILL BE AT RISK FOR INTERNET COMMERCE SECURITY BREACHES THAT COULD
IMPAIR OUR BUSINESS.
A significant barrier to entry in the area of electronic commerce and
communications is the secure transmission of confidential information over
public networks. The Company 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 The Company may use
to protect customer transaction data. If any such compromise of our security
were to occur, The Company 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. The Company 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 the Company 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 the Company will be able to implement security measures that will
prevent security breaches.
THE COMPANY HAS SUBSTANTIAL NEAR-TERM CAPITAL NEEDS; THE COMPANY MAY BE UNABLE
TO OBTAIN NEEDED ADDITIONAL FUNDING.
The Company will require funding over the next twenty-four months to develop our
business. In fact, the Company has minimal capital for operations and the
Company has needs for immediate funding. The Company currently has 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 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, the Company 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.
THE COMPANY SUBSTANTIAL LONG-TERM CAPITAL NEEDS; THE COMPANY MAY BE UNABLE TO
OBTAIN NEEDED 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 The Company develops 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:
- market acceptance of our services;
- the extent and progress of our research and development programs;
- competing technological and market developments; and
- 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.
In addition, the Company has no credit facility or other committed sources of
capital. The Company may be unable to establish credit arrangements on
satisfactory terms, if at all. If capital resources are insufficient to meet our
future capital requirements, The Company may have to raise additional funds to
continue development of our website. There can be no assurance that such funds
will be available on 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, the
Company may be unable to develop our operations to a sufficient level to
generate revenues or become profitable.
IF THE COMPANY ISSUES FUTURE SHARES, PRESENT INVESTORS' PER SHARE VALUE WILL BE
DILUTED.
The Company is authorized to issue maximum stock of 100,000,000 common shares.
As of December 31, 2005, there were 7,551,000 common shares issued and
outstanding. The Board of Directors has authority to issue the balance of
92,449,000 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 CEO and director James Charuk, 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, James Charuk 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, James Charuk may affect most
corporate matters requiring stockholder approval by written consent, without a
duly-noticed and duly-held meeting of stockholders.
IF THE COMPANY LOSE ANY OF ITS KEY PERSONNEL, OUR BUSINESS WOULD BE IMPAIRED.
Our success is heavily dependent upon the continued active participation of our
chief executive officer, James Charuk. Loss of his services could have a
material adverse effect upon our business development. The Company does not
maintain "key person" life insurance on James Charuk's life. The Company does
not have a written employment agreement with James Charuk. There can be no
assurance that the Company will be able to recruit or retain other qualified
personnel, should it be necessary to do so.
THE COMPANY FACES COMPETITION FROM OTHER ENTITIES PROVIDING SERVICES SIMILAR TO
OURS.
The Company 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.
In addition, these companies may have better marketing and distribution
channels. There can be no assurance that The Company 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 The
Company wish to disseminate.
THE COMPANY HAS NEVER PAID DIVIDENDS.
The Company has never paid dividends. The Company does 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
The Company 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.
The discussion of our future business is management's best estimate and analysis
of the potential market, opportunities and difficulties that the Company 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 2. DESCRIPTION OF PROPERTY.
Our executive offices are located at 3503 Cedar Locust, Sugarland, TX 77479,
telephone (713) 265-8660, where The Company shares 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. The Company feels that this
space is adequate for our needs at this time, and The Company feels that the
Company will be able to locate adequate space in the future, if needed, on
commercially reasonable terms.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not aware of any pending or threatened legal proceedings which
involves SMI Products, Inc.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Our annual report contains 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.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information. In June 2002 our common stock commence trading on the OTC
Bulletin Board, N.A.S.D., under the symbol SMIP. As of December 31, 2005, there
were approximately 14 holders on record of our common stock.
ITEM 6. 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 these 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 advanced $66,840 in the form
of short term loans bearing interest at 2% per annum 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.
We generated no revenue for the year ended December 31, 2005 and 2004. 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. 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
make a loan to the Company when we require funds. In this 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.
Total operating expenses for the fiscal year ended December 31, 2005 were
$18,861. This represents a decrease of $116 in total operating expenses from the
comparable year ended December 31, 2004, when we recorded total operating
expenses of $18,977. The principal operating expenses for the twelve months
ended December 31, 2005 were related to audit and accounting fees $11,915 (2004:
$7,884), filing fees and legal fees $2,552 (2004: $6,245) and office and
miscellaneous fees $3,037 (2004: $3,430) and transfer agent fees $1,367 (2004:
$1,418).
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 this 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.
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.
Our future capital requirements will also depend on one or more of the following
factors:
- market acceptance of our services;
- the extent and progress of our research and development programs;
- competing technological and market developments; and
- 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 or be successful in our
business operations.
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 the funds will be available on
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 the securities will likely
result in dilution to our shareholders.
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. Therefore, if we are not
successful in this regard, we will be unable to achieve revenues under our
current business plan.
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 7. FINANCIAL STATEMENTS
SMI PRODUCTS, INC.
(A Development Stage Company)
REPORT AND FINANCIAL STATEMENTS
December 31, 2005 and 2004
(STATED IN US DOLLARS)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders,
SMI Products, Inc.
We have audited the accompanying balance sheets of SMI Products, Inc. (A
Development Stage Company) as of December 31, 2005 and 2004 and the statements
of operations, stockholders' deficiency and cash flows for each of the years
then ended and for the period June 17, 1996 (Date of Inception) to December 31,
2005. 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 the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform an audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, these financial statements referred to above present fairly, in
all material respects, the financial position of SMI Products, Inc. as of
December 31, 2005 and 2004 and the results of its operations and its cash flows
for each of the years then ended and for the period from June 17, 1996 (Date of
Inception) to December 31, 2005, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying 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"
March 22, 2006 Chartered Accountants
750 WEST PENDER STREET, SUITE 604 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, 2005 and 2004
(STATED IN US DOLLARS)
ASSETS 2005 2004
---- ----
Current
Cash $ 281 $ 635
------------------ ------------------
LIABILITIES
Current
Accounts payable $ 8,471 $ 7,400
Loans payable - Note 4 69,434 51,998
------------------ ------------------
77,905 59,398
================== ==================
STOCKHOLDERS' DEFICIENCY
Common stock, $0.001 par value
100,000,000 shares authorized
7,551,000 shares issued (2004: 7,551,000) 7,551 7,551
Additional paid-in capital 43,049 43,049
Deficit accumulated during the development stage (128,224) (109,363)
------------------ ------------------
(77,624) (58,763)
------------------ ------------------
$ 281 $ 635
================== ==================
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, 2005 and 2004
and from June 17, 1996 (Date of Inception) to December 31, 2005
(STATED IN US DOLLARS)
June 17, 1996
(Date of
Inception) to
December 31,
2005 2004 2005
---- ---- ------------
Revenue $ - $ - $ 13,668
----------------- ----------------- ----------------
Expenses
Audit and accounting fees 11,915 7,884 46,494
Business plan - - 10,114
Consulting fees - Note 3 - - 23,348
Filing and legal fees 2,552 6,245 20,261
Marketing - - 10,905
Office and miscellaneous 3,027 3,430 11,210
Organizational costs - Note 3 - - 1,000
Promotion and entertainment - - 3,500
Transfer agent fees 1,367 1,418 8,424
Travel - - 648
Website costs - - 9,080
----------------- ----------------- ----------------
18,861 18,977 144,984
----------------- ----------------- ----------------
Loss before the following: (18,861) (18,977) (131,316)
Write-off of accounts payable - - 2,192
Write-off of loans payable - 900 900
----------------- ----------------- ----------------
Net loss $ (18,861) $ (18,077) $ (128,224)
================= ================= ================
Basic loss per share $ 0.00 $ 0.00
================= =================
Weighted average shares outstanding 7,551,000 7,551,000
================= =================
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 2005 and 2004
and from June 17, 1996 (Date of Inception) to December 31, 2005
(STATED IN US DOLLARS)
June 17, 1996
(Date of
Inception) to
December 31,
2005 2004 2005
---- ---- ------------
Cash Flows used in Operating Activities
Net loss $ (18,861) $ (18,077) $ (128,224)
Adjustment to reconcile net loss
to net cash used in operations
Advance receivable - - -
Accounts payable 1,071 2,598 8,471
----------------- ----------------- ----------------
Net cash used in operating activities (17,790) (15,479) (119,753)
----------------- ----------------- ----------------
Cash Flows provided by Financing Activities
Common stock issued for cash - - 50,600
Loans payable 17,436 15,035 69,434
----------------- ----------------- ----------------
Net cash provided by financing activities 17,436 15,035 120,034
----------------- ----------------- ----------------
Net increase (decrease) in cash (354) (444) 281
Cash, beginning of period 635 1,079 -
----------------- ----------------- ----------------
Cash, end of period $ 281 $ 635 $ 281
================= ================= ================
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S
DEFICIENCY from the period June 17, 1996 (Date
of Inception) to December 31, 2005
(STATED IN US DOLLARS)
Deficit
Accumulated
Additional During the
Number Paid-in Development
of Shares Amount Capital Stage Total
--------- ------ ---------- ------------ -----
Issued for services
- at $0.00002 5,000,000 $ 1 $ 99 $ - $ 100
Net loss for the period - - - (117) (117)
---------- --------------- --------------- ---------------- ----------------
Balance, December 31, 1996 5,000,000 1 99 (117) (17)
Net loss for the year - - - (200) (200)
---------- --------------- --------------- ---------------- ----------------
Balance, December 31, 1997 5,000,000 1 99 (317) (217)
Net loss for the year - - - (200) (200)
---------- --------------- --------------- ---------------- ----------------
Balance, December 31, 1998 5,000,000 1 99 (517) (417)
Net loss for the year - - - (200) (200)
---------- --------------- --------------- ---------------- ----------------
Balance, December 31, 1999 5,000,000 1 99 (717) (617)
Stock split - 4,999 (4,999) - -
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 7,551 43,049 (37,239) 13,361
Net loss for the year - - - (22,303) (22,303)
---------- --------------- --------------- ---------------- ----------------
Balance, December 31, 2001 7,551,000 7,551 43,049 (59,542) (8,942)
Net loss for the year - - - (15,587) (15,587)
---------- --------------- --------------- ---------------- ----------------
Balance, December 31, 2002 7,551,000 7,551 43,049 (75,129) (24,529)
Net loss for the year - - - (16,157) (16,157)
---------- --------------- --------------- ---------------- ----------------
Balance, December 31, 2003 7,551,000 7,551 43,049 (91,286) (40,686)
Net loss for the year - - - (18,077) (18,077)
---------- --------------- --------------- ---------------- ----------------
Balance, December 31, 2004 7,551,000 $ 7,551 $ 43,049 $ (109,363) $ (58,763)
Net loss for the year - - - (18,861) (18,861)
---------- --------------- --------------- ---------------- ----------------
Balance, December 31, 2005 7,551,000 $ 7,551 $ 43,049 $ (128,224) $ (77,624)
========= =============== =============== ================ ================
The number of shares issued and outstanding has been restated to give
retroactive effect for a forward stock split on a five thousand for one basis
approved by the shareholders on January 15, 2000. The par value and contributed
surplus were adjusted during the year ended December 31, 2000 to adjust the par
value amount in conformity with the number of shares then issued.
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005 and 2004
(STATED IN US DOLLARS)
Note 1 NATURE AND CONTINUANCE OF OPERATIONS
The Company is in the development stage and is in the business of
internet real estate mortgage services. The Company has developed
a website and is in the pre-operating stage. The Company has
earned revenue from website advertising and is continuing to
develop its revenue model.
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going
concern, which assumes that the Company will be able to meet its
obligations and continue its operations for its next fiscal year.
Realization values may be substantially different from carrying
values as shown and these financial statements do not give effect
to adjustments that would be necessary to the carrying values and
classification of assets and liabilities should the Company be
unable to continue as a going concern. At December 31, 2005, the
Company had not yet achieved profitable operations, has
accumulated losses of $128,224 since its inception, has a working
capital deficiency of $77,624 and expects to incur further losses
in the development of its business, all of which casts substantial
doubt about the Company's ability to continue as a going concern.
The Company's ability to continue as a going concern is dependent
upon its ability to generate future profitable operations and/or
to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when
they come due. Management has no formal plan in place to address
this concern but considers that the Company will be able to obtain
additional funds by equity financing and/or related party
advances, however there is no assurance of additional funding
being available.
The Company was incorporated in the State of Nevada on June 17,
1996.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
The financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the
United States of America. 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 the framework of the significant
accounting policies summarized below:
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined in Statement
of Financial Accounting Standards ("FAS") No. 7.
SMI Products, Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005 and 2004
(STATED IN US DOLLARS) - Page 2
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES - (cont'd)
INCOME TAXES
The Company uses the asset and liability method of accounting for
income taxes pursuant to FAS No. 109 "Accounting for Income
Taxes". FAS No. 109 requires the use of the asset and liability
method of accounting for 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.
BASIC LOSS PER SHARE
The Company reports basic loss per share in accordance with FAS
No. 128, "Earnings Per Share". Basic loss per share is computed
using the weighted average number of shares outstanding during the
years.
FINANCIAL INSTRUMENTS
The carrying values of cash and accounts payable approximates fair
value because of the short maturity of those instruments. Loans
payable also approximates fair value. Unless otherwise noted it is
management's opinion that the Company is not exposed to
significant interest, currency or credit risks arising from these
financial instruments.
NEW ACCOUNTING STANDARDS
Management does not believe that any recently issued, but not yet
effective, accounting standards if currently adopted could have a
material effect on the accompanying financial statements.
REVENUE RECOGNITION
Revenue from advertising is recognized when earned, upon receipt
of a non-cancellable contract and collection is reasonably
assured.
WEBSITE COSTS
The Company recognizes the costs incurred in the development of
the Company's website in accordance with EITF 00-2 "Accounting for
Website Development Costs" and, with the provisions of AICPA
Statement of Position No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use".
Accordingly, direct costs incurred during the application stage of
development are capitalized and amortized over the estimated
useful life. Fees incurred for web site hosting are expensed over
the period of the benefit. Costs of operating a web site are
expensed as incurred.
SMI Products, Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005 and 2004
(STATED IN US DOLLARS) - Page 3
Note 3 RELATED PARTY TRANSACTIONS
The Company was charged the following amount by directors and
officers of the Company:
June 17, 1996
(Date of
Inception) to
December 31,
2005 2004 2005
---- ---- ----
Organizational costs $ - $ - $ 1,000
Consulting fees - - 3,740
---------------- ---------------- ----------------
$ - $ - $ 4,740
================ ================ ================
These charges were measured by the exchange amount, which is the
amount agreed upon by the transacting parties.
Note 4 LOANS PAYABLE
2005 2004
---- ----
Unsecured, bears interest at 2% per
annum, due within one year. $ 69,434 $ 51,998
============ ===========
Note 5 DEFERRED TAX ASSETS
The following table summarizes the significant components of the
Company's deferred tax assets:
2005 2004
---- ----
Deferred Tax Assets
Net operating loss carryforward $ 128,224 $ 109,363
============== ==============
Gross deferred tax assets $ 33,257 $ 25,512
Valuation allowance for deferred tax asset (33,257) (25,512)
-------------- --------------
$ - $ -
============== ==============
The amount taken into income as deferred tax assets must reflect
that portion of the income tax loss carryforwards which is more
likely than not 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.
SMI Products, Inc.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 2005 and 2004
(STATED IN US DOLLARS) - Page 4
Note 6 INCOME TAXES
No provision for income taxes has been provided in these financial
statements due to the net loss. At December 31, 2005, the Company
has net operating loss carryforwards, which expire commencing in
2016 totalling approximately $128,224. The potential tax benefit
of these losses, if any, has not been recorded in the financial
statements.
Note 7 COMPARATIVE FIGURES
Certain of the December 31, 2004 comparative figures have been
reclassified in order to conform to the current year's
presentation.
ITEM 8. 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.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.
(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 AGE POSITIONS HELD
James M. Charuk 49 President and Director
This person will serve as director until our next annual shareholder meeting or
until a successor is elected who accepts the position. Directors are elected for
one-year terms.
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.
eRealty.com is a team of real estate professionals who combine local real estate
expertise with the power of the Internet to better serve home buyers and
sellers. By utilizing technology, eRealty.com `s goal is to save their customers
time and money. eRealty.com is involved in the real estate buying and selling
process: expediting, informing and executing these transactions in the most
effective and cost effective manner. eRealty.com does not compete with SMI
Products, Inc.'s mortgagecommunicator.com, nor at this time, does it have any
plans to do so in the future. From January 2000 to present, Mr. Charuk has been
the Chief Technology Officer and V.P. of Technology for E-Realty. He was also
involved as an officer, director and shareholder in Institute for Learing, Inc.,
a public shell company which subsequently merged with a private company and
changed its name to China Broadband Corp.
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.
(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 these
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 10. EXECUTIVE COMPENSATION.
No executive compensation has been paid since our inception.
The officers and directors of Registrant do not currently receive cash
remuneration or salaries for their efforts. Upon successful completion of
Registrant's proposed business projects, or receipt of revenues from operations
of Registrant, of which there can be no assurance, salaries and other
remuneration will be established by the Board of Directors as appropriate.
There are no employment contracts between Registrant and any of its officers or
directors.
Registrant does not have any plan or arrangement with respect to compensation to
its executive officers which would result from the resignation, retirement or
any other termination of employment with Registrant or from a change in control
of Registrant, or a change in the executive officers' responsibilities following
any change in control, where in respect of an executive officer, the value of
such compensation exceeds $120,000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Registrant has granted no options.
There are no other bonus, pension, deferred compensation, long-term incentive
plans or awards, or any other similar plans for executive officers and/or
directors of Registrant.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of December 31, 2005, 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 the shares, except as otherwise noted.
Security Ownership of Officers and Directors.
NO. OF NATURE OF CURRENT
CLASS NAME & ADDRESS SHARES OWNERSHIP %OWNED
Common JAMES CHARUK 5,025,000 Direct 66%
3503 Cedar Locust
Sugarland, TX 77479
All Officers and Directors as a 5,025,000 Direct 66%
Group (Approx.) (1 Individual)
(c) Changes in Control.
THERE ARE CURRENTLY NO ARRANGEMENTS, WHICH WOULD RESULT IN A CHANGE IN CONTROL
OF SMI PRODUCTS, INC.
ITEM 12. 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 these
positions, beneficial owners of 5% or more of our common stock, or family
members of these persons. We are not a subsidiary of any other company
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
a) All required exhibits, including the Company's Articles of Incorporation, and
Bylaws, are attached to the Company's Form SB-2, filed on February 7, 2001. All
previously filed exhibits are incorporated herein by reference.
b) Reports on Form 8-K: No reports were on filed on Form 8K during the year
ended December 31, 2005.
EXHIBIT NO. DOCUMENT DESCRIPTION
___________ ____________________
3.1 Articles of Incorporation and any Amendments-
Incorporated by reference to the Form 10-KSB, filed
February 7, 2001.
3.2 Bylaws- Incorporated by reference to the Form 10-KSB,
filed February 7, 2001.
31.1 Certifications by James Charuk, Chief Executive Officer required
by Rule 13a-14(a)
31.2 Certification by James Charuk, Chief Financial Officer required
by Rule 13a-14(a)
32.1 Certification by James Charuk pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
32.1 Certification by James Charuk pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with the requirements of the Securities Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATE: APRIL 3, 2006 SMI PRODUCTS, INC.
By: /s/ JAMES CHARUK
________________________________
James Charuk,
President, Chairman and Director