UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter ended June 30, 2006
Commission File Number: 333-55166
SMI PRODUCTS, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Nevada 88-0363465
_______________________ ____________________________________
(State of organization) (I.R.S. Employer Identification No.)
3503 Cedar Locust
Sugarland, TX 77479
________________________________________
(Address of principal executive offices)
(713) 265-8660
_________________________________________________
Registrants telephone number, including area code
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months and (2) has been
subject to such filing requirements for the past 90 days. Yes [x]
Securities registered under Section 12(g) of the Exchange Act:
There are 7,551,000 shares of common stock outstanding as of June 30, 2006.
TABLE OF CONTENTS
_________________
PART I FINANCIAL INFORMATION
ITEM 1 INTERIM FINANCIAL STATEMENTS
ITEM 2 MANAGEMENT'S DISCUSSION OF OPERATIONS AND
FINANCIAL CONDITION
ITEM 3 CONTROLS AND PROCEDURES
PART II OTHER INFORMATION
ITEM 7 SIGNATURES
ITEM 1 INTERIM FINANCIAL STATEMENTS
SMI PRODUCTS, INC.
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
June 30, 2006
(Stated in US Dollars)
(Unaudited)
SMI PRODUCTS, INC.
(A Development Stage Company)
INTERIM BALANCE SHEETS
June 30, 2006 and December 31, 2005
(Stated in US Dollars)
(Unaudited)
June 30, December 31,
2006 2005
__________ ____________
ASSETS
Current
Cash $ 510 $ 281
========= =========
LIABILITIES
Current
Accounts payable and accrued liabilities $ 13,061 $ 8,471
Loans payable 77,136 69,434
_________ _________
90,197 77,905
_________ _________
STOCKHOLDERS' DEFICIENCY
Common stock, $0.001 par value
100,000,000 shares authorized,
7,551,000 shares issued (December 31, 2005: 7,551,000) 7,551 7,551
Additional paid-in capital - Note 5 47,249 43,049
Deficit accumulated during the development stage (144,487) (128,224)
_________ _________
(89,687) (77,624)
_________ _________
$ 510 $ 281
========= =========
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three and six months ended June 30, 2006 and 2005
and from June 17, 1996 (Date of Inception) to June 30, 2006
(Stated in US Dollars)
(Unaudited)
June 17, 1996
(Date of
Three months ended Six months ended Inception) to
June 30, June 30, June 30,
2006 2005 2006 2005 2006
__________ __________ __________ __________ _____________
Revenue $ - $ - $ - $ - $ 13,668
Expenses
Audit and accounting fees 5,222 1,778 8,515 3,566 55,009
Business plan - - - - 10,114
Consulting - - - - 23,348
Filing and legal 902 343 1,785 1,308 22,046
Management fees - Notes 4 and 5 1,500 - 3,000 - 3,000
Marketing - - - - 10,905
Office and miscellaneous 382 448 968 2,708 12,178
Organization costs - - - - 1,000
Promotion and entertainment - - - - 3,500
Rent - Notes 4 and 5 600 - 1,200 - 1,200
Transfer agent fees 419 378 795 759 9,219
Travel - - - - 648
Website costs - - - - 9,080
__________ __________ __________ __________ _________
9,025 2,947 16,263 8,341 161,247
__________ __________ __________ __________ _________
Loss before the following: (9,025) (2,947) (16,263) (8,341) (147,579)
Write-off of accounts payable - - - - 2,192
Write-off of loans payable - - - - 900
__________ __________ __________ __________ _________
Net loss for the period $ (9,025) $ (2,947) $ (16,263) $ (8,341) $(144,487)
========== ========== ========== ========== =========
Basic loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
========== ========== ========== ==========
Weighted average shares outstanding 7,551,000 7,551,000 7,551,000 7,551,000
========== ========== ========== ==========
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the six months ended June 30, 2006 and 2005 and
from June 17, 1996 (Date of Inception) to June 30, 2006
(Stated in US Dollars)
(Unaudited)
June 17, 1996
(Date of
Inception) to
Six months ended June 30, June 30,
2006 2005 2006
________ ________ _____________
Cash flows used in operating activities
Net loss $(16,263) $ (8,341) $(144,487)
Add items not affecting cash
Non-cash administrative expenses 4,200 - 4,200
Adjustment to reconcile net loss to net cash
used in operations
Accounts payable and accrued liabilities 4,590 (3,009) 13,061
________ ________ _________
Net cash used in operating activities (7,473) (11,350) (127,226)
________ ________ _________
Cash flows provided by financing activities
Common stock issued for cash - - 50,600
Loans payable 7,702 10,775 77,136
________ ________ _________
Net cash provided by financing activities 7,702 10,775 127,736
________ ________ _________
Net increase (decrease) in cash 229 (575) 510
Cash, beginning of period 281 635 -
________ ________ _________
Cash, end of period $ 510 $ 60 $ 510
======== ======== =========
Non-cash transactions - Note 5
SEE ACCOMPANYING NOTES
SMI PRODUCTS, INC.
(A Development Stage Company)
INTERIM STATEMENTS OF STOCKHOLDERS' DEFICIENCY
from the period June 17, 1996 (Date of Inception) to June 30, 2006
(Stated in US Dollars)
(Unaudited)
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)
Capital contribution - - 4,200 - 4,200
Net loss for the period - - (16,263) (16,263)
_________ ______ _______ _________ ________
Balance, June 30, 2006 7,551,000 $7,551 $47,249 $(144,487) $(89,687)
========= ====== ======= ========= ========
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 INTERIM FINANCIAL STATEMENTS
June 30, 2006
(Stated in US Dollars)
(Unaudited)
NOTE 1 NATURE AND CONTINUANCE OF OPERATIONS
The Company was incorporated in the State of Nevada on June 17,
1996.
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 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 operations for its next twelve months.
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 June 30, 2006, the
Company had not yet to achieve profitable operations, has
accumulated losses of $144,487 since its inception, has a working
capital deficiency of $89,687 and expects to incur further losses
in the development of its business, all of which cast 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.
NOTE 2 BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been
prepared by SMI Products, Inc. (the "Company") pursuant to the
rules and regulations of the United States Securities and Exchange
Commission. Certain information and disclosures normally included
in annual financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments and
disclosures necessary for a fair presentation of these financial
statements have been included. Such adjustments consist of normal
recurring adjustments. These interim financial statements should
be read in conjunction with the annual audited financial
statements for the Company for the fiscal year ended December 31,
2005, as filed with the United States Securities and Exchange
Commission.
The results of operations for the period ended June 30, 2006 are
not indicative of the results that may be expected for the full
year.
SMI Products, Inc.
(A Development Stage Company)
Notes to the Interim Financial Statements
June 30, 2006
(Stated in US Dollars)
(Unaudited) - Page 2
NOTE 3 REVENUE RECOGNITION
Revenue from advertising is recognized when earned, upon receipt
of a non-cancellable contract and collection is reasonably
assured.
NOTE 4 RELATED PARTY TRANSACTIONS - Note 5
The Company was charged the following by an entity controlled by
directors and officers of the Company:
June 17,
1996
(Date of
Three months ended Six months ended Inception) to
June 30, June 30, June 30,
2006 2005 2006 2005 2006
______ ____ ______ ____ _____________
Consulting fees $ - $ - $ - $ - $3,740
Management fees 1,500 - 3,000 - 3,000
Organizational costs - - - - 1,000
Rent 600 - 1,200 - 1,200
______ ____ ______ ____ ______
$2,100 $ - $4,200 $ - $8,940
====== ==== ====== ==== ======
NOTE 5 NON-CASH TRANSACTIONS
Investing and financing activities that do not have a direct
impact on current cash flows are excluded from the statements of
cash flow. During the six months ended June 30, 2006, the
president of the Company has provided certain administrative
services at no charge to the Company. The fair value for these
services has been recorded as additional paid-in capital as
follows:
June 17, 1996
(Date of
Six months ended Inception) to
June 30, June 30,
2006 2005 2006
______ _____ _____________
Management fees $3,000 $ - $3,000
Rent 1,200 - 1,200
______ _____ ______
$4,200 $ - $4,200
These transactions have been excluded from the statements of cash
flow.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
DESCRIPTION OF BUSINESS
SMI Products Inc., the "Company" has commenced mortgage information service
operations on the Internet. The Company filed and registered a domain name and
has developed a website with information services related to the mortgage
industry. There can be no assurance that the Company will be successful in
developing its operations in this area to the point of generating revenues or
profits.
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 estimated and analysis accurately reflect our
opportunities and potential for success. Competitive and economic forces make
forecasting of revenue and costs difficult and unpredictable.
BUSINESS DEVELOPMENT
The Company was 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.
PRINCIPAL PRODUCTS AND SERVICES
The Company's website 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:
- WEB SITES 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.
- WEB SITES 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, E-Loan, Alliance Mortgage, FiNet.com, MortgageIT.com, First
Union, GMAC Mortgage, ditech.com, SFNB, Nexstar, Regions Mortgage,
LoanSurfer.com
- General-purpose consumer WEB SITES, 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
INTELLECTUAL PROPERTY
The Company does not have any trademarks, patents, licenses, royalty agreements,
or other proprietary interest, except for the web domain name
mortgagecommunicator.com
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:
REPORTS TO SECURITY HOLDERS.
We are a reporting company under the requirements of the Exchange Act and file
quarterly, annual and other reports with the Securities and Exchange Commission.
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.
Copies of the 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.
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. We are unable to satisfy cash requirements
without management's financial support or other funding.
We generated no revenue for the six months ended June 30, 2006, as compared to
$Nil for the six months ended June 30, 2005. 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 and shareholders. 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 six months ended June 30, 2006 were $16,263.
This represents an increase of $7,922 in total operating expenses from the
comparable six months period ended June 30, 2005, when we recorded total
operating expenses of $8,341. The principal operating expenses for the period
ended June 30, 2006 were related to audit fees and accounting fees of $8,515,
filing and legal fees $1,785, donated management fees $3,000, office and
miscellaneous $968, donated rent $1,200 and transfer agent fees $795. Effective
January 1, 2006, the president is providing certain administrative services at
no charge to the Company. Accordingly, the fair value for these services has
been recorded as contributed surplus.
At June 30, 2006, we had cash on hand of $510. Our liabilities at the same date
totaled $90,197 and consisted of accounts payable and accrued liabilities of
$13,061 and loans payable of $77,136.
Over the next twelve months, --we plan to further develop our web site to
provide mortgage related information. Specifically, during the next 12 months,
we anticipate focusing our efforts on the following specific areas of
operations:
1. Internet marketing
2. Maintaining and enhancing content of website
3. Subscriber payment credit card processing
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.
ITEM 3. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was conducted by the sole director of the
Company, who also acts as the Company's President, the Chief Executive Officer,
and the Chief Financial Officer.
Based upon that evaluation, the Company concluded that the disclosure controls
and procedures are effective. There have been no significant changes in the
Company's internal controls or in other factors, which could significantly
affect internal controls subsequent to the date the Company carried out its
evaluation.
PART II OTHER INFORMATION
ITEM 7. SIGNATURES
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SMI PRODUCTS, INC.
Date: July 28, 2006 By:/s/ JAMES CHARUK
______________________________
James Charuk,
President, Chairman and Director