U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Dita, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 0-27057 33-0696051
-------------- ------------------------ -------------
(state of (Commission File Number) (IRS Employer
incorporation) I.D. Number)
2214 Beverly Boulevard
Los Angeles, CA 90057
213-368-3968
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(Address and telephone number of registrant's principal
executive offices and principal place of business)
As of May 31, 2000, there were 3,140,000 shares of the Registrant's
Common Stock, par value $0.01 per share, outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ]No [X]
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Dita Inc.
Balance Sheet
Three Months Ended, May 31, 2000
ASSETS
<TABLE>
Current Assets
<S> <C> <C>
Cash Checking $ 7,733
Checking-Marketing Account 461
Secured Savings 2,679
Accounts Receivable 210,065
Allowance for Doubtful Account (40,659)
Inventory 148,837
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TOTAL Current Assets $ 329,116
Fixed Assets
Computer Equipment 26,208
Display Cases 73,854
Furniture and fixtures 9,670
Shop and Warehouse Equipment 8,731
(Less) Accumulated Depreciation (58,131)
Leasehold Improvements 5,711
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TOTAL Fixed Assets 66,044
Other Assets
Deposits 3,335
Organizational Costs 3,790
(Less) Accumulated Amortization (3,454)
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TOTAL Other Assets 3,671
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TOTAL Assets $ 398,831
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LIABILITIES AND EQUITY
Current Liabilities
Accounts Payable $ 287,368
Purchases Clearing Account 5,500
Accrued Expenses 9,870
Officers Loan Payable 21,859
Credit Card-Wells Fargo (9227) 5,450
Business Line _0682 30,384
Capital Lease Payable 16,241
Lease -Secured Funding 1,628
Loan Payable 16,747
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TOTAL Current Liabilities $ 395,047
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TOTAL Liabilities 395,047
Equity
Common Stock 31,400
Paid In Capital 613,338
Retained Earnings (640,954)
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TOTAL Equity 3,784
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TOTAL Liabilities and Equity $ 398,831
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</TABLE>
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<PAGE>
Dita Inc.
Condensed Statement of Income
Three Months Ended May 31, 2000
<TABLE>
<CAPTION>
2000 - 2001 1999 - 2000
--------------- ---------------
<S> <C> <C>
Net Sales $371,557 $289,566
Cost of Sales 142,833 133,848
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Gross Profit 228,724 155,718
Operating Expenses 170,894 155,086
--------- ---------
Net Income $ 57,830 $ 632
========= =========
Net Income per share $.02 $ -
basic ad diluted
Weighted Average common Shares
outstanding basic ad diluted 3,140,000 3,140,000
========== ==========
</TABLE>
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<PAGE>
DITA, INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Three months ended May 2000
---------------------------
2000 1999
(Unaudited) (Unaudited)
----------- -----------
Cash flows provided by (used for)
operating activities:
<S> <C> <C>
Net Income (loss) $ 57,830 $ 631
---------- ----------
Adjustments reconcile net loss to net cash
provided by (used for) operating
activities:
Depreciation and amortization 6,000 -
Provision for doubtful accounts 13,297
Other -
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (122,419) (78,929)
Inventory 13,160 (44,244)
Deposits (275)
Prepaid expenses 1,698 19,000
Increase (decrease) in liabilities -
Accounts payable and accrued expenses 20,856 73,743
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Total adjustments (67,684) (30,430)
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Net cash used for operating
activities (9,854) (29,799)
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Cash flows used for investing activities:
Acquisition of property and equipment (2,400)
Increase in other assets (3,711)
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Net cash used for investing activities (3,711) (2,400)
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Cash flows provided by (used for)
financing activities:
(Payments on) advances from
officer-stockholders (1,615) (5,507)
(Payments on) proceeds from
note payable 5,271 (14,000)
(Payments on) proceeds from other
current liabilities 3,550
(Payments on) obligations under capital
lease (283)
Proceeds from note payable (987)
Proceeds from issuance of common stock -
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Net cash provided by financing
activities 7,205 (20,778)
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Net increase (decrease) in cash (6,359) (52,976)
Net increase in cash-reserve
Cash, beginning of year 17,234 121,516
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Cash, end of year $ 10,874 $ 68,540
========== ==========
</TABLE>
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<PAGE>
Dita Inc.
Notes to Interim Condensed Financial Statements
Three Months ended May 31, 2000
Basis of Preparation
The accompanying Interim Condensed Financial Statements are prepared in
accordance with rules set forth in Retaliation SB of the Securities and Exchange
Commission. As said, these statements do not include all disclosures required
under generally accepted principles and should be read in conjunction with the
audited financial statements for the year ended February 29, 2000. In the
opinion of management all adjustments consisting of normal reoccurring accruals
have been made to the financial statements. The results of operation for the
three months ended May 31, 2000. Are not necessarily indicative of the results
to be expected for the fiscal year ending May 31, 2000.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis should be read in conjunction with
the financial statements and the accompanying notes thereto and is qualified in
its entirety by the foregoing and by more detailed financial information
appearing elsewhere. See "Item 1. Financial Statements."
Financial condition, changes in financial condition and results of
operations - First Quarter of Fiscal Year 2001 Compared to First Quarter of
Fiscal Year 2000
Dita's sales increased from $289,566 in the three-month period ended May
31, 1999 (Q1:2000) to $371,557 in the three-month period ended May 31, 2000
(Q1:2001), a 28.3 percent increase of $81,991. The increase is due primarily to
increases of $22,739 in sales of optical sunglasses and $31,511 in sales in
boutiques, and a decrease of $24,066 in returns and allowances.
The cost of sales increased from $133,848, or 46.2 percent of sales, in
Q1:2000 to $142,833, or 38.4 percent of sales, in Q1:2001, a decrease of 7.8
percent when considered as a percentage of sales.
Operating expenses increased from $155,086 - or 53.6 percent of sales -
in Q1:2000 to $170,894 - or 46 percent of sales - in Q1:2001. The only
significant changes were -
o a decrease in advertising expense from $43,828 in Q1:2000 to
nothing in Q1:2001;
o an increase in accounting fees from $600 in Q1:2000 to $18,563
in Q1:2001;
o an increase in trade show expense from $5,528 in Q1:2000 to
$11,029 in Q1:2001;
o an increase in sales commissions from $17,667 or 6.1 percent of
sales in Q1:2000 to $24,045 or 6.5 percent of sales in Q1:2001;
and
o an increase in bad debts from none in Q1:2000 to $13,297 or 3.6
percent of sales in Q1:2001.
Dita had net income from operations of $631 in Q1:2000 but had net
income of $57,829 in Q1:2001. This $57,198 forward move is attributable to the
above-described increase in sales, decrease in cost of sales and almost level
operating expenses.
Our accounts receivable, net of allowances for doubtful accounts,
increased by $109,122 from $60,283 at the end of fiscal year 2000 to $169,405 at
the end of Q1:2001, and our accounts payable and accrued expenses increased by
$54,789 from $283,783 at the end of FY 2000 to $338,572 at the end of Q1:2001. A
cash position of $17,234 at the end of FY 2000 was reduced to $10,873 at the end
of Q1:2001. Inventory decreased from $161,998 at the end of FY 2000 to $148,838
at the end of Q1:2001.
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<PAGE>
Stockholders' equity increased from a deficit of $54,045 at the end of FY 2000
to equity of $3,783 at the end of Q1:2001.
Liquidity and Outlook.
We have been able to stay in operation only (1) from the services
provided by Glance, Inc., a manufacturer of sunglasses under the control of
Bendar Wu, the chairman of our board of directors, which company funds and
warehouses a considerable portion of our inventory, (2) from the proceeds
realized from the sale of capital stock and recently (3) from maintaining a
large accounts payable.
With respect to the sales of stock, we covered our loss from operations
in fiscal 1999 by the sale of $200,000 in capital stock. In fiscal 2000 we
borrowed $25,113 on our bank line of credit. In Q1:2001 we made our first
significant profit but have had to slow-pay our trade creditors to stay in
operation.
Glance provides liquidity as follows: standard payment terms in our
industry are to provide a secured letter of credit to the manufacturer for the
entire amount of a purchase order submitted. The letter of credit matures upon
the manufacturer's shipment of the product. Glance requires no letter of credit
or deposit of any type to secure a purchase order from us. In addition, Glance
takes shipment of the inventory ordered and warehouses it until we need it. Once
we order the inventory to be delivered from Glance's warehouse, we have 30 days
to pay for it.
We perceive our long-term solution to our continuing losses to be an
improvement in our gross margin. The essential services provided by Glance, Inc.
come at a cost to us - they increase our cost of goods sold from 20 to 30
percent above industry standard. Yet, it is impossible to dispense with these
services without the cash to pay for and warehouse all our inventory. We are
still working on obtaining lines of credit from lending institutions that cater
to small businesses. When we have exhausted these possibilities, we will attempt
to obtain capital through the sale of shares of common stock.
At this time, we have not identified the sources of additional lines of
credit or of equity capital we need to break out of our dilemma. Short term, we
need to increase our bank line of credit from $45,000 to approximately $100,000
to help pay for the implementation of new prescription glasses lines.
Long term, we need an additional line of credit of approximately
$150,000 to decrease our dependence on Glance, Inc. and thereby improve our
profit margins.
Possibility of a Reverse Acquisition and Reorganization
We have been approached by several development-stage companies that are
interested in acquiring our corporate shell. Each proposes that our present
sunglasses business either be spunoff to our shareholders or sold, leaving the
company as a trading public shell. Our management is open to the proposals but
none of the development-stage companies has secured adequate financing or
commenced meaningful operations. Until such occurs,
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<PAGE>
there is no point in negotiating a contract with a company that is not viable.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Forms 8-K
None
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.
Date: July __, 2000 Dita, Inc.
By /s/ Troy Schmidt
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Troy Schmidt, President and
Chief Financial Officer
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