U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DIAMOND POWERSPORTS, INC.
---------------------------------------------
(Name of small business issuer in its charter)
Florida 3751 65-0419601
--------- ------- ---------------
(State of jurisdiction of (Primary StandardIndustrial(I.R.S. Employer Ident
corporation or organization)(Classification Code Number) No.)
10145 N.W. 46th Street - Sunrise, Florida 33351 (954) 749-8606
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(Address and telephone number of principal executive offices)
10145 N.W. 46th Street - Sunrise, Florida 33351 (954) 749-8606
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(Address and telephone number of principal place of business)
Pierre Elliott Copies to:
10145 N.W. 46th Street John Hanzel, Esquire
Sunrise, Florida 33351 19425-G Liverpool Parkway
(954) 749-8606 Cornelius, North Carolina 28031
(Name, address, and telephone
number of agent for service)
Approximate date of proposed sale to the public: As soon as
possible after effectiveness of this Registration Statement.
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant
to Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant
to Rule 462(d) under the Securities Act, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [ ]
Title of each class of securities to be registered
Common Stock, $.001 par value
Amount to be Registered
4,000,000 Shares
Proposed maximum Offering price per Unit
$.25
Proposed maximum Aggregate offering Price
$1,000,000
Amount of Registration fee
$264
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Diamond Powersports, Inc. (the "Company") is offering its common
stock for the purpose of raising money to engage in retail and
wholesale manufacturing and distribution of motorcycle
accessories and apparel. As exhibited herein, the Company has
initiated a private offering under Regulation 3(b) of the
Securities Act of 1933 and Rule 504 promulgated thereunder, a
transaction which is believed to be exempt from registration
with the Securities and Exchange Commission. As outlined in this
registration statement, the Company has already sold securities
pursuant to this offering. This statement is intended to
register such securities that may be sold during the period of
this private offering. In addition, this statement is intended
to register sales of securities to the public that may be made
pursuant to this registration after the effective date of this
statement as outlined herein.
- --The rest of this page is intentionally left blank--
Confidential Private Placement Offering Memorandum (the "Memorandum")
DIAMOND POWERSPORTS, INC.
A Florida Corporation
4,000,000 Shares of Common Stock
US$1,000,000
Diamond Powersports, Inc. (the "Company"), is offering 4,000,000
Shares of its Common Stock, $.001 par value per Share (the
"Shares"), at the offering price of $.25 per Share, for a period
of six months from the date of this Offering Memorandum (the
"Offering Period"), which period may be extended for an
additional 90 days at the sole discretion of the Company (See
"Plan of Distribution"). There is no minimum offering amount,
and no escrow of funds received from this offering (the
"Offering"). Any funds received will be immediately available
for utilization by the Company for its own benefit. Initial
investors should be aware of the high degree of risk involved
with the Offering. Prior to this Offering, there has been no
public market for the Shares of Common Stock, and there can be
no assurance that a market will develop upon completion of this
Offering or, if a market should develop, that it would continue.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK AND SHOULD NOT BE
PURCHASED BY PERSONS WHO CANNOT AFFORD TO RISK LOSS OF THEIR
ENTIRE INVESTMENT. THE INITIAL OFFERING PRICE HAS BEEN
ARBITRARILY ESTABLISHED BY THE COMPANY AND BEARS NO RELATIONSHIP
TO THE ASSETS OF THE COMPANY, SHAREHOLDER EQUITY, OR ANY
ESTABLISHED CRITERIA OF VALUE.
(SEE "RISK FACTORS", "INVESTOR SUITABILITY", AND "PLAN OF
DISTRIBUTION").
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION BECAUSE THEY ARE BELIEVED TO
BE EXEMPT FROM REGISTRATION UNDER SECTION 3(b) OF THE SECURITIES
ACT OF 1933 AND RULE 504 PROMULGATED THEREUNDER.
The Company was incorporated in the state of Florida in May 1992
to manufacture and distribute motorcycle apparel and
accessories. The Company has been operating during this period
in Sunrise, Florida - the location of their corporate offices.
During 1998, the company introduced its own line of custom
wheels and accessories. The Company intends to increase these
manufacturing and distribution operations, and has plans to
expand its management and staff in order to capitalize on the
growth of the motorcycle accessory and apparel industry, which
the Company believes will cause a substantial increase in both
its gross revenues and earnings. See "Use of Proceeds" and
"Business".
The Shares are being offered by the Company through its officers
and directors on a 4,000,000 Share "Best Efforts" basis,
pursuant to a non-public offering exemption from the
registration requirements imposed by the Securities Act of 1933,
as amended ("1933 Act"). The Shares may also be offered and
sold through broker-dealers ("Participating Broker-Dealers") who
are members of the National Association of Securities Dealers,
Inc. ("NASD").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER SECURITIES
REGULATORY AUTHORITY. NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY OTHER AUTHORITY HAS PASSED UPON OR ENDORSED
THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS
MEMORANDUM, AND IT IS NOT INTENDED THAT ANY OF THEM WILL. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. INVESTORS
MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE RISKS,
MERITS AND TERMS OF THIS OFFERING IN MAKING AN INVESTMENT
DECISION.
THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE 1933 ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD ONLY BE PURCHASED BY
THOSE WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT (SEE "RlSK
FACTORS" AND "DILUTION").
THESE SECURITIES ARE OFFERED TO QUALIFIED INVESTORS PURSUANT TO
THE NON-PUBLIC OFFERING EXEMPTION FROM REGISTRATION WITH THE
SECURITIES AND EXCHANGE COMMISSION PROVIDED BY REGULATION D,
RULE 504, AND/OR SECTION 4(2) OF THE 1933 ACT ("SEE SUITABILITY
INFORMATION").
<TABLE>
<S> <C> <C>
Price to Investors<F1> Proceeds to Company <F2>
Per Share: $0.25 $0.25
Maximum Offering Amount: $1,000,000 $1,000,000 <F3>
The Date of this Offering Memorandum is July 1, 1999
<FN>
<F1>
The purchase price per share is payable by check at the time an investor
executes a subscription agreement and confidential purchaser questionairre. The
offering will be managed by the Company and the shares offered will be sold by
company without any discounts or commissions. In the event of over-subscription,
the Company may, in its sole discretion, elect to retain all funds received
and increase the total offering amount to include the over-subscribed
amount (See "Plan of Distribution").
<F2>
All funds received will be made immediately available to the Company for use as
working capital (See "Use of Proceeds"). The Offering will continue until the
earlier of the receipt of US $1,000,000 or December 31, 1999, unless extended
at the sole discretion of the Company. Any extension may be accompanied by a
supplement to this Offering Memorandum if the same is deemed material by the
Company.
<F3>
The total proceeds hereunder will go to the Company with respect to shares sold
but before deducting for legal, accounting, printing, and other expenses of the
Offering estimated at approximately $10,000 (See "Use of Proceeds" and "Other
Expenses of Issuance and Distribution").
</FN>
</TABLE>
TABLE OF CONTENTS
Summary.................................................. 5
Risk Factors.............................................. 6-10
Use Of Proceeds........................................... 10
Pro Forma Capitalization and Dilution.................... 11
Plan of Distribution....................................... 11
Legal Matters.............................................. 12
Directors, Executive Officers, Promoters, and Control
Persons.................................................... 13
Security Ownership of Beneficial Owners and
Management................................................. 14
Description Of Securities................................. 14
Description of Business.................................... 15
Management Discussion and Analysis or Plan of Operation of
Diamond Powersports........................................ 18-24
Certain Relationships And Related
Transactions............................................... 24
Executive
Compensation.............................................. 24-25
Index To Financial
Statements................................................ 26
Accounting Matters........................................ 53
APPENDIX A -- Subscription Agreement
----------------------------------------------------------
Prospective investors may rely only on the information
contained in this Memorandum. Diamond Powersports, Inc. has not
authorized anyone to provide prospective investors with
information different from that contained in this Memorandum.
This Memorandum is not an offer to sell nor is it seeking an
offer to buy these securities in any jurisdiction where the
offer or sale is not permitted. The information contained in
this Memorandum is correct only as of the date of this
Memorandum, regardless of the time of the delivery of this
Memorandum or any sale of these securities.
This Memorandum contains forward-looking statements which
involve risks and uncertainties. You can identify these forward-
looking statements through our use of words such as "may,"
"will," "expect," "anticipate," "believe," "plan," "estimate,"
"continue," or other similar words. Our actual results may
differ significantly from the results we mention in these
forward-looking statements. Factors that might cause such a
difference include, but are not limited to: limited operating
history, uncertainty of future profits, limited capital and the
need for additional capital, rapid technological changes, need
for additional hardware purchases, no dividends, intense
competition, untrained/ unskilled labor pool, arbitrary
determination of offering price, no assurance of public market
for securities, no market for shares or restrictions on
transferability, volatility of stock prices, applicability of
low priced stock risk disclosure requirements, limited liability
of management, best efforts/ no firm commitment offering,
uncertainty of funds sufficiency, benefits to present
stockholders and disproportionate risks, and broad discretion in
application of proceeds. These factors are discussed in "RISK
FACTORS" beginning on page 3 of this Memorandum.
SUMMARY
This is a brief summary of some information in this
Memorandum. It is not a complete statement of all material facts
about the matters in this Summary. Please read the entire
Memorandum carefully before you invest.
Diamond Powersports
As used herein, the term "Company" refers to Diamond
Powersports, Inc., a Florida Corporation, and any predecessors,
unless the context indicates otherwise. Originally incorporated
in May 1992 in Florida as Diamond Racing, Inc., the name was
changed in August of 1999 to Diamond Powersports, Inc. to
reflect management's' plans to enter additional segments of the
powersports apparel and accessory market. The "powersports"
market consists primarily of street and off-road motorcycles,
all-terrain vehicles (ATV's), and small watercrafts such as jet
skis and powered kayaks. The Company's principal executive
offices are located at 10145 N.W. 46th Street - Sunrise, Florida
33351. The primary telephone number is (954) 749-8606.
Since 1992, the Company has concentrated operations primarily on
the motorcycle accessory and apparel industry. Specifically, the
Company has focused on the street motorcycle and cruiser
segments of the accessory and apparel industry. In August 1999,
the Company developed a new division of operations related to
the preparation, development, and marketing of a motorcycle
accessories and apparel e-commerce Internet site. This operating
division is known as startumup.com. The Company has to date made
significant expenditures toward the development of startumup.com
and has yet to commence operations of this division. The Company
anticipates that the launch date for the web site will be spring
of the year 2000.
The Company's operations primarily involve motorcycle accessory
and apparel manufacturing and distributing, specializing in
affordable brand name and after-market products. Through its
emphasis on budget pricing and high quality products, the
Company has developed a market in the motorcycle accessories and
apparel industry. The Company currently operates one office and
is maintained by a management team of five individuals. The
present geographic area the Company operates includes primarily
the Dade County, Broward County, and South Palm Beach County
areas of South Florida. Additional markets have also developed
in the Caribbean islands.
The Directors and Officers
The Directors and Officers of Diamond Powersports are:
Pierre Elliott Lisa Elliott
Alan D. Lichtman Margaret Hurley
David A. Lewis, PhD
Mr. Elliott, who has over 25 years experience in the motorcycle
accessory and apparel industry, is President and Chief Executive
Officer of the Company. Mrs. Elliott is the Company's secretary.
Mr. & Mrs. Elliott plan to serve in the same capacities as
officers of the Company. The Company plans additions to these
two officers as operations proceed. However, as of the date of
this filing, no agreements for such additions have been made.
All of the five aforementioned individuals currently serve as
directors of the Company. See "Directors, Officers, Promoters
and Control Persons".
The Offering
Shares of Common Stock.................. 4,000,000
Offering Price per Share ............... $.25
Minimum Individual Purchase............. 10,000
Maximum Individual Purchase............. No Maximum Purchase Has
Been Set
Use of Proceeds ........................ To capitalize Diamond
Powersports (see "Use of Proceeds")
We reserve the right to alter the minimum and maximum purchase
amounts in our sole discretion. See "Offering and Method of
Subscription".
RISK FACTORS
The Shares being offered hereby involve a high degree of risk.
Prospective investors should carefully consider, among others,
the following risk factors present in this Offering:
Prospective purchasers of the Shares should carefully consider
the following risk factors and the other information contained
in this Offering before making an investment in the Shares.
Information contained in the Memorandum contains "forward-
looking statements" which can be identified by the use of
forward-looking terminology such as "believes", "expects",
"may", "should" or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by
discussion of strategy (See "Results of Operations" and
"Business"). No assurance can be given that the future results
covered by the forward-looking statements will be achieved. The
following matters constitute cautionary statements identifying
important factors with respect to such forward-looking
statements, including certain risks and uncertainties that could
cause actual results to vary materially from the future results
covered in such forward-looking statements.
1. Limited Operating History; Uncertainty of Future Profits.
The Company's expansion program is a new venture which, though
the Company was profitable in the past, had relatively small
profits, and as such, there is no guarantee that profits will
continue at the previous pace if at all. In addition, the
Company has incurred losses for 1997 and 1998 (See F-1:
Financial Statements). The Company was incorporated in 1992, and
began full operations in May 1992. The Company's continued
success will depend in part on its ability to deal with the
problems, expenses, and delays frequently associated with
establishing a relatively new business venture. Inasmuch as the
Company will be required to make significant expenditures in
connection with expanding its market, including advertising,
sales, salaries and promotional expenses. The Company
anticipates that losses will continue to occur until such time
as revenues are sufficient to offset the Company's operating
costs. There can be no assurance that the Company will generate
significant revenues or ever achieve profitability. Future
losses are likely to occur before the Company's operations will
become profitable, and there is no assurance that the Company's
operations will ever attain profitability.
2. Limited Capital; Need for Additional Capital. The Company
presently has limited operating capital. Current revenue from
its wholesale and distribution accounts is only sufficient to
maintain its presence in the market, and is dependent upon
receipt of proceeds from this Offering or elsewhere to expand
its business as intended. Upon completion of the Offering, even
if the entire Offering amount is raised, the amount of capital
available to the Company will be limited, and may not be
sufficient to enable the Company to fully develop its business
without additional fund raising. Any inability to obtain
additional financing when needed would have a material adverse
effect on the Company, requiring it to curtail its expansion
efforts.
3. Rapid Technological Change. The industry in which the
Company operates and the market for the Company's services is
characterized by rapid technological developments, evolving
industry standards, and frequent new product and service
introductions and enhancements. The development and
introduction of new products and services could render the
Company's existing services unmarketable. The Company's
business depends in significant part on its ability to
continually improve the performance, features, and reliability
of its motorcycle accessories and apparel products and services,
and to modify its manufacturing operations to work with new
technological standards in response to both evolving demand in
the marketplace and competitive products and services. The
Company's pursuit of improved performance, new features, and
necessary technological advances will require substantial time
and expense, and there can be no assurance that the Company will
succeed in adapting its products to changing technology
standards and customer requirements.
Although the Company intends to support emerging industry
standards, there can be no assurance that industry standards
will emerge, or if they become established, that the Company
will be able to conform to these new standards in a timely and
economic fashion and maintain a competitive position in the
market. There can be no assurance that the announcement or
introductions of new products or services by the Company or its
competitors, or any change in industry standards will not cause
customers to defer or cancel purchases of existing products or
services, which could have a material adverse effect on the
Company's business, financial condition, and results of
operations. See "Business".
4. Hardware Purchases. The Company must continue to purchase
the most advanced hardware and software in the market in order
to stay competitive. There is the distinct possibility that the
price of certain hardware and software items may increase
drastically such that the Company will not be able to purchase
these items in a timely fashion, and may have to spend undue
amounts of time shopping for more cost-effective approaches.
Any of these occurrences could materially effect the Company in
an adverse way. There is also the danger that the costs of
production or distribution will accelerate. A drastic increase
in production or distribution expenses could cause the Company
material expenses, and force the Company to completely
restructure its business model, thereby likely causing
substantial expenses and losses. The Company, in anticipation of
this possibility, has begun to contact major manufacturers and
wholesalers so as to form strategic alliances. Alliances have
been formed in the form of favorable distribution agreements
with CGS Machine & Tool and Race Engine Valve. The Company will
continue to pursue such beneficial alliances to remain
competitive within their industry.
5. No Dividends. The Company does not currently pay cash
dividends on its Common Stock and does not anticipate paying
such dividends at any time in the immediate future. At present,
the Company will follow a policy of retaining all of its
earnings, if any, to finance development and expansion of its
business (See "Dividend Policy").
6. Intense Competition. The motorcycle accessories and apparel
market is competitive and there are no substantial barriers to
entry. The Company expects that competition will intensify in
the future. The Company believes that its ability to compete
successfully depends on a number of factors, including brand
awareness and market presence; the quality of its advertising
services; the accuracy of directing Internet traffic to its
website, ease of use and timing of introductions of new products
by the Company and its competitors; the ability of the Company
to establish co-marketing relationships; and industry and
general economic trends.
7. Untrained/Unskilled Labor Pool. The Company intends to
expand its operations in technical areas which demand skilled,
technical labor. If such labor is difficult to identify and
subsequently hire, the Company may be affected in materially
adverse ways, including, among others, serious delays and
expenses in training this non-technical labor.
8. Arbitrary Determination of Offering Price. The Offering
price of the Shares offered hereby was arbitrarily determined by
management of the Company, and was set at a level substantially
in excess of the price recently paid by such management for
Shares of the same class. The price bears no relationship to
the Company's assets, book value, net worth or other economic or
recognized criteria of value. In no event should the public
offering price be regarded as an indicator of any future market
price of the Company's securities.
9. No Assurance of a Public Market for Securities. There is
presently no public market for the securities of the Company and
no assurance any market will develop for the securities upon
completion of this offering or, if a market does develop, that
it will continue. There is also no assurance as to the depth or
liquidity of any such market or the prices at which holders may
be able to sell the securities. An investment in the Shares may
be totally illiquid and investors may not be able to liquidate
their investment readily or at all when they need or desire to
sell. The company does intend on submitting its shares for
trading on the over-the-counter bulletin board (OTCBB).
10. No Market for Shares; Restrictions on Transferability There
has been no public market for the Shares offered in this Private
Offering Memorandum. The Shares, if sold to investors in the
United States may be considered "restricted securities", in
which case the Securities may need to be sold in compliance with
Rule 144, adopted under the Securities Act of 1933. Rule 144
provides, in essence, that holders of restricted securities,
after holding restricted securities for one (1) year, may sell
in broker/market maker transactions an amount equal to the
greater of 1% of the Company's outstanding Common Stock or the
weekly average trading volume over the preceding four weeks,
every three (3) months. There can be no assurance that a public
market for the Common Stock will be present, or that Rule 144
will be available at the time an investor may wish to sell any
Shares purchased in this Offering. Investors must be prepared
to accept the fact that their investment is of a long-term
nature and may not be readily liquidated.
There can be no assurance that that the conditions necessary to
permit sales under Rule 144 will ever be satisfied. Moreover,
there can be no assurance that any market for the Shares will
develop, or that, if a market develops, it will be sustained.
Investors in this Offering may be required to execute a lock-up
agreement if so requested by the Underwriters in any IPO,
pursuant to which they will agree not to offer, sell or pledge,
or otherwise dispose of their Shares for a prescribed period
without the prior written consent of the managing underwriter.
The Shares are being offered and sold pursuant to applicable
private placement exemptions under the Federal securities laws
and in compliance with applicable state securities laws. The
Shares may not be transferred except in compliance with all
applicable Federal and state securities laws.
11. Volatility of Stock Prices. In the event a public market
does develop for the Shares, market prices will be influenced by
many factors, and will be subject to significant fluctuation in
response to variations in operating results of the Company and
other factors such as investor perceptions of the Company,
supply and demand, interest rates, general economic conditions
and those specific to the industry, developments with regard to
the Company's activities, future financial condition and
management.
12. Applicability of Low Priced Stock Risk Disclosure
Requirements. The Shares of the Company will be considered low-
priced securities under rules promulgated under the Exchange
Act. Under these rules, Broker-Dealers participating in
transactions in low-priced securities must first deliver a risk
disclosure document which describes the risks associated with
such stocks, the Broker-Dealer's duties, the customer's rights
and remedies, and certain market and other information, and make
a suitability determination approving the customer for low-
priced stock transactions based on the customer's financial
situation, investment experience and objectives. Broker-Dealers
must also disclose these restrictions in writing to the customer
and obtain specific written consent of the customer, and provide
monthly account statements to the customer. The likely effect
of these restrictions will be a decrease in the willingness of
Broker-Dealers to make a market in the stock, decreased
liquidity of the stock, and increased transaction costs for
sales and purchases of the stock as compared to other
securities.
13. Limited Liability of Management. The Company has adopted
provisions to its Articles of Incorporation and Bylaws which
limit the liability of its Officers and Directors, and provide
for indemnification by the Company of its Officers and Directors
to the full extent permitted by Florida corporate law, which
generally provides that its officers and directors shall have no
personal liability to the Company or its stockholders for
monetary damages for breaches of their fiduciary duties as
directors, except for breaches of their duties of loyalty, acts
or omissions not in good faith or which involve intentional
misconduct or knowing violation of law, acts involving unlawful
payment of dividends or unlawful stock purchases or redemptions,
or any transaction from which a director derives an improper
personal benefit. Such provisions substantially limit the
shareholder's ability to hold officers and directors liable for
breaches of fiduciary duty, and may require the Company to
indemnify its officers and directors (See "Certain Transactions
- - Conflicts of Interest").
14. Best Efforts Offering/No Firm Commitment. The Shares are
offered by the Company on a "best efforts, no minimum basis";
there is no underwriter and no firm commitment from anyone to
purchase all or any of the Shares offered. No assurance can be
given that all or any of the Shares will be sold. Furthermore,
there is no escrow of funds or other provisions for returning
any investors' funds if less than all Shares offered hereby are
sold. This creates an increased risk to initial investors, in
the event the Company is unable to raise the entire Offering
amount, because there is no minimum Offering amount and funds
will be utilized as received by the Company.
15. Uncertain Sufficiency of Funds. The Company believes that
the net proceeds to the Company from the sale of the Shares
offered hereby (assuming that all Shares offered hereby are
sold) will provide the Company with sufficient capital to expand
operation of the Company's proposed business until it can begin
generating profits from operations. Many factors may, however,
affect the Company's cash needs, including the Company's
possible failure to generate sufficient revenues from operations
(See "Use of Proceeds"). In addition, if less than all Shares
are sold, the Company may not have sufficient capital to fund
operations until sufficient revenues are being generated and may
be unable to find suitable financing on terms acceptable to the
Company. This event would significantly increase the risk to
those persons who invest in this offering (See "Use of
Proceeds").
16. Benefits to Present Stockholders/Disproportionate Risks.
Collectively, the existing shareholders own 8,120,000 shares of
the Company's Common Stock. If all Shares offered hereby are
sold, upon completion of the Offering present stockholders will
own 66.7% of the then outstanding Common Stock, and investors in
this Offering will own the other 33.3%, for which they will have
paid $1,000,000 cash. Thus, investors in this Offering will
provide a disproportionately greater percentage of the cash
contributed to capital of the Company than the ownership
percentage they receive. Present stockholders will benefit from
a greater share of the Company if successful, while investors in
this Offering risk a greater loss of cash invested if the
Company is not successful.
17. Broad Discretion in Application of Proceeds. Of the
estimated net proceeds from this Offering, approximately
$990,000 after estimated expenses, has been allocated for
working capital and other development uses for its marketing and
advertising products and services (See "Use of Proceeds"). None
of the funds allocated to the foregoing purposes is subject to
binding agreements requiring such use and no specific
acquisition now being negotiated is likely to occur.
Accordingly, the Company will have broad discretion in the
application of such proceeds.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of
4,000,000 Shares offered by the Company hereby are estimated to
be approximately $990,000, after deducting Offering expenses
payable by the Company. The Company believes the net proceeds
of this Offering will be sufficient to fund its plan of
operations for at least the next twelve months, however, it may
be necessary for the Company to raise additional funds to meet
the expenditures required for operating its business.
Amount Type Percentage
- ------- -------------------------- -----------
$580,000 Inventory Purchasing & Manufacturing Operations 58%
$55,000 Working Capital and Operating Expenses 5.5%
$60,000 Management, Staffing, and New Hires 6.0%
$180,000 Sales, Marketing, Advertising 18%
$125,000 Filing for Active Trading Status On the OTCBB 12.5%
- -------- --------------------------- ------------
$1,000,000 TOTAL 100%
From time to time in the ordinary course of business, the
company evaluates the acquisition of products, businesses, and
technologies that complement the Company's business, for which a
portion of the net proceeds may be used. Pending use of the net
proceeds for the above purposes, the Company intends to invest
such funds in short-term interest-bearing securities or other
instruments, as the Company deems appropriate.
CAPITALIZATION AND DILUTION
Dilution is the difference between the Offering price of $0.25
per share for the Common Stock offered herein, and the net
tangible book value per share of the Common Stock immediately
after its purchase, before deducting the estimated Offering
expenses. The Company's net tangible book value per share is
calculated by subtracting the Company's total liabilities from
its total tangible assets (total assets less any intangible
assets), and then dividing by the number of shares then
outstanding. Prior to the sale of any Shares in the Offering,
the Company has 8,120,000 shares of Common Stock outstanding.
The Company was incorporated in Florida in May 1992, has short-
and long-term liabilities, and has limited assets. Without
taking into consideration any operating results or other changes
after December 31, 1998, the estimated pro forma tangible book
value of the Company prior to the Offering is approximately a
negative $11,424, or ($.001) per Share, based on 8,120,000
Shares of Common stock outstanding (adjusted for stock split).
Assuming no further changes in net tangible book value other
than those resulting from the sale of all the Shares offered
hereby and receipt of the net proceeds therefrom, after payment
of Offering expenses of approximately $10,000, the estimated
post-Offering pro forma net tangible book value of the Company
would be approximately $978,576 or approximately $.081 per
Share, with 12,120,000 Shares then outstanding. This represents
an immediate increase in net tangible book value of about $.082
per Share to existing stockholders, and an immediate dilution of
$.168 per Share (or 67.2%) to new investors. The following
table illustrates the foregoing information with respect to
dilution to new investors on a per share basis.
Offering price per Share: $.25
Net tangible book value per Share prior to Offering: $(.001)
Increase attributable to purchase of Shares by new investors: $.082
Post offering pro forma net tangible book value per Share: $.081
Dilution to investors in this Offering: $.168
If less than the entire offering amount is sold, dilution to
participating investors will be higher. The fewer the number of
Shares sold, the greater the dilution will be.
PLAN OF DISTRIBUTION
1. General
The Company is offering the Shares on a best-efforts, no minimum
basis. The Offering will be managed by the Company without the
utilization of any underwriter, investment banker, or broker-
dealer.
The Company may enter into agreements with securities broker-
dealers who are members of the National Association of
Securities Dealers, Inc. ("NASD"), whereby these broker-dealers
will be involved in the sale of the Shares and will be paid a
commission by the Company of up to ten percent (10%) of the
offering price of the Shares sold by them, plus an additional
unaccountable expense of three percent (3%) of the offering
price of the Shares sold by them, as agreed to between the
Company and the broker. However, the Company has not currently
entered into any agreements with any broker-dealers, and there
can be no assurance that the Company will do so.
The Shares will be offered and sold by officers, directors, and
employees of the Company, who will receive no sales commissions
or other compensation in connection with the Offering, except
for reimbursement of expenses actually incurred on behalf of the
Company in connection with such activities. However, these
persons will receive compensation as per their normal
relationship with the Company. The Shares will be sold only to
persons who meet the suitability standards set forth herein, at
a price of $.25 per Share (See "Suitability Standards"). In the
event of over-subscription, the Company may, in its sole
discretion, elect to retain all funds received and increase the
total offering amount to include the over-subscribed amount.
2. Method of Subscribing
Investors may subscribe for the Shares by filling in and signing
the Subscription Agreement and the Confidential Purchaser
Questionnaire included herewith and delivering them to the
Company prior to the Expiration Date as defined below.
Certificates of Common Stock subscribed will be issued to each
investor as soon as practical after the subscription is accepted
by the Company, which will occur after review of the
subscription materials and all other factors relevant to the
transaction.
3. Expiration Date
The Offering will expire (the "Expiration Date") on December 31,
1999 or when the entire Offering is fully subscribed, unless the
Company, at its option, extends the offering period and updates
the disclosures contained herein.
4. Right to Reject
The Company reserves the right to withdraw this offer at any
time, or to reject any subscription in its sole discretion for
any reason whatsoever prior to acceptance. Upon acceptance,
funds for such subscription will be promptly deposited by the
Company in its regular corporate checking account.
5. Immediate Use of Funds
There is no escrow of proceeds, and all proceeds will be
immediately used by the Company in its operations as received.
See "Use of Proceeds".
LEGAL PROCEEDINGS
There have been no legal proceedings against the Company since
inception, nor is the Company aware of any disputes which may
result in legal proceedings.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Name Age Position
- ------------------------- --------- ---------------------
Pierre Elliott 38 President and CEO for the
Company; Director
Lisa Elliott 36 Controller; Director
Alan Lichtman 25 Operations Manager; Director
Margaret Hurley 41 Marketing Director; Director
David A. Lewis, PH.D 45 Director
Pierre Elliott has been President & CEO and Chairman of the
Company since its inception in 1992. Mr. Elliott has been
involved in various aspects of the industry for the past 25
years including manufacturing, wholesaling, inventory
management, quality control, and retail sales. During the
Company's history, Mr. Elliott developed and implemented all
operations and developments creating a company that started with
less than 50 customers, and today retails and wholesales
products over 1,500 customers in South Florida and the
Caribbean. Prior to this, Mr. Elliott owned several local
ventures during a time span of five years including a
restaurant, a grocery store, and home cleaning service. Mr.
Elliott is a member of the Diamond Racing team and the National
Hot Rod Association. Pierre Elliott is married to Lisa Elliott.
Lisa Elliott has served as Secretary and Director of the Company
since its inception in 1992. During her tenure she has been in
charge of staffing, customer relations, and assists the
accounting department. Mrs. Elliott served previously as a
financial accountant for Colorfilm Video and Mobo Enterprises.
During her tenure there, Mrs. Elliott was responsible for the
Company's daily accounting transactions including accounts
receivable and accounts payable. Lisa Elliott is married to
Pierre Elliott.
Alan Lichtman serves as the Company's Operations Manager and
Director since August 1999. Prior to joining Diamond
Powersports, Mr. Lichtman was a licensed Financial Service
Professional with First Union National Bank for five years. Mr.
Lichtman has been directing retail and marketing operations for
the last 8 years. Mr. Lichtman's background also includes three
years of retail operations work with Atlantic Records where he
assisted in the marketing and distribution of new audio
products. Mr. Lichtman will co-assist Mr. Elliott in the
Company's national operations.
Margaret Hurley serves in the capacity as a Marketing Director
and Director of the Company since September of 1999. Prior to
joining Diamond Powersports, Mrs. Hurley was a team manager for
State Farm Insurance Co. for over 19 years. Mrs. Hurley's
background experience consists of defining a market and managing
the marketing process. Mrs. Hurley's responsibilities include
managing market penetration and product quality control. Mrs.
Hurley holds a bachelor's degree in Criminal Justice from the
University of Central Florida.
Dr. David A. Lewis serves in the capacity as Director of the
Company since September of 1999. Dr. Lewis is currently the
Director of Pastoral care at Covenant Life Christian Church in
Ft. Lauderdale, Florida. Prior to this, Dr. Lewis owned Tropical
Clima-Coat, Inc., which provided construction services to
commercial and residential buildings. As the Owner/ President,
Dr. Lewis managed all aspects of the business including
construction operations, marketing, and accounting. Dr. Lewis
has traveled to several countries outside the U.S., including
Mexico, Kenya, Ecuador, Belize, and Haiti, to give seminars on
organizational and corporate structure and provide corporate
assistance to charitable organizations. Dr. Lewis holds his PH.D
from So. Fla. Bible College and is licensed in the State of
Florida as a counselor.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning
the ownership of the Company's Common Stock as of September 30,
1999, with respect to: (i) each person known to the company to
be the beneficial owner of more than five percent of the
Company's Common Stock, (ii) all directors; and (iii) directors
and executive officers of the Company as a group. The notes
accompanying the information in the table below are necessary
for a complete understanding of the figures provided below. As
of September 30, 1999 there were 8,320,000 shares of common
stock outstanding. As of September 30, 1999, there were no
preferred shares outstanding.
<TABLE>
<S> <C> <C> <C>
(1)Title of Class (2)Name and Address of (3)Amount and Nature of(4)Percent of
Beneficial Owner(s) Beneficial Ownership class
Common Stock Pierre & Lisa Elliott 8,100,000 <F4> 97.4%
($.001 par 10145 NW 46th Street
value) Sunrise, FL 33351
Common Stock Alan Lichtman 20,000 .2%
($.001 par 10145 NW 46th Street
value) Sunrise, FL 33351
Common Stock All Directors 8,120,000 97.6%
($.001 par
value)
<FN>
<F4>
Pierre and Lisa Elliott are the beneficial owners of the above securities and
hold them as Joint Tenancy With Rights of Survivorship.
</FN>
</TABLE>
DESCRIPTION OF SECURITIES
Qualification. The following statements constitute summaries of
the material provisions of the Company's Certificate of
Incorporation and Bylaws, as amended. Such summaries do not
purport to be complete and are qualified in their entirety by
reference to the full text of the Certificate of Incorporation
and Bylaws which are contained in the Exhibits to this
registration statement.
The Company's Articles of Incorporation authorize it to issue up
to 100,000,000 Common Shares, $.001 par value per Common Share.
On August 1, 1999 the Company Amended its Articles of
Incorporation to authorize 5,000,000 shares of Preferred Stock,
no par value per share. Such Preferred Stock may or may not be:
issued in series, convertible into shares of common stock,
redeemable by the Company, and entitled to cumulative dividends.
Other terms and conditions may be imposed at the time of
issuance. However, since the writing of this report, no
Preferred Shares were issued and outstanding.
Common Stock. All outstanding Common Shares are legally issued,
fully paid and non-assessable.
Liquidation Rights. Upon liquidation or dissolution, and after
payment of the Preferred Shareholders, each outstanding Common
Share will be entitled to share equally in the remaining assets
of the Company legally available for distribution to
shareholders after the payment of all debts and other
liabilities.
Dividend Rights. There are no limitations or restrictions upon
the rights of the Board of Directors to declare dividends out of
any funds legally available thereof. The Company has not paid
dividends to date and it is not anticipated that any dividends
will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to
finance the future growth of the Company. Accordingly, future
dividends, if any, will depend upon, among other considerations,
the Company's need for working capital and its financial
conditions at the time.
Voting Rights. Holders of Common Shares of the Company are
entitled to cast one vote for each share held at all
shareholders meetings for all purposes.
Other Rights. Common Shares are not redeemable, have no
conversion rights and carry no preemptive or other rights to
subscribe to or purchase additional Common Shares in the event
of a subsequent offering.
Preferred Stock. The Corporation is authorized to issue Five
Million (5,000,000) Preferred Shares, no par value per share.
The rights, preferences, privileges and restrictions granted to
and imposed on the Common Shares and the Preferred Shares are
identical in all respects, except that the holders of the
Preferred Shares may have certain conversion rights and a
liquidation preference upon such issuance. Terms of the
Preferred Stock would be outlined by the Company's Board of
Directors in the event of such issuance.
INTEREST OF NAMED EXPERTS AND COUNSEL
The Company does not have any "experts" or "counsel", as defined
by Item 509 in Regulation S-B, that were hired on a contingent
basis or that will receive a direct or indirect interest in the
Company. In addition, the Company has not engaged a promoter,
underwriter, voting trustee, director, officer, or employee on a
contingent basis related to the filing of this registration
statement.
DESCRIPTION OF BUSINESS
Corporate Organization
As used herein, the term "Company" refers to Diamond
Powersports, Inc., a Florida Corporation, and any predecessors,
unless the context indicates otherwise. Originally incorporated
in May 1992 in Florida as Diamond Racing, Inc., the name was
changed in August of 1999 to Diamond Powersports, Inc. to
reflect management's' plans to enter additional segments of the
powersports apparel and accessory market. The "powersports"
market consists primarily of street and off-road motorcycles,
all-terrain vehicles (ATV's), and small watercrafts such as jet
skis and powered kayaks.
Since 1992, the Company has concentrated operations primarily on
the motorcycle accessory and apparel industry. Specifically, the
Company has focused on the street motorcycle and cruiser
segments of the accessory and apparel industry. In August 1999,
the Company developed a new division of operations related to
the preparation, development, and marketing of a motorcycle
accessories and apparel e-commerce Internet site. This operating
division is known as startumup.com. The Company has to date made
significant expenditures toward the development of startumup.com
and has yet to commence operations of this division. The Company
anticipates that the launch date for the web site will be spring
of the year 2000.
Description of Business
Diamond Powersports. The Company's operations primarily involve
motorcycle accessory and apparel manufacturing and distributing,
specializing in affordable brand name and after-market products.
Through its emphasis on budget pricing and high quality
products, the Company has developed a market in the motorcycle
accessory and apparel industry. The Company currently operates
one office and is maintained by a management team of five
individuals. The present geographic area the Company operates
includes primarily the Dade County, Broward County, and South
Palm Beach County areas of South Florida. Additional markets
have also developed in the Caribbean islands.
Marketing for the Company's products is accomplished through
print ads in newspapers and magazines as well as wholesale
referral. Additionally, the Company utilizes a network of
industry wholesale buyers to sell large product quantities.
The motorcycle accessory and apparel industry is highly
competitive with respect to price, service, quality, and
location. There are numerous competitors in the motorcycle
accessory and apparel industry possessing substantially greater
financial, marketing, personnel and other resources than the
Company. There can be no assurance that the Company will be able
to respond to various competitive factors affecting the
business. The Company plans to gain a competitive advantage over
its competitors in the motorcycle accessories and apparel
industry by offering quality service at a low price. The Company
believes the e-commerce operations will allow its overhead to be
further reduced, giving it a further competitive advantage in
the future. The Company has been successful in achieving this
goal since 1992 and plans to further expand in South Florida by
continuing its current marketing strategy.
The main markets for Diamond Powersports are individual retail
customers and wholesale buyers and no single customer makes up
more than ten percent of the total revenues of Diamond
Powersports, Inc. The Company does not expect that this will
change in the future.
The Company has three full-time employees, and two part-time
employees. The Company also has two management consultants that
are each independently contracted with the Company to service
and provide financial consulting and services relating to the
Company's initial registration with the Securities and Exchange
Commission.
Startumup.com. The Company is developing a separate division
which includes a motorcycle accessory & apparel e-commerce
Internet site. Startumup.com is being developed by the Company's
management team under the guidance of Todd Shuler of
Perspectives Business Support Systems. Mr. Shuler and his team
have extensive experience with several facets of e-commerce
development and marketing including providing developmental
services to such web sites as Bank of America? and Xerox?. The
site will be designed to create a marketing and distribution
area for motorcycle accessories and apparel, which primarily
include: tires, wheels, batteries, custom chrome, lubricants,
valves, steering components, sprockets, seats, exhausts, and
motorcycle related apparel. Initially, the Company will begin
targeting the street bike and motorcycle cruiser market
segments, which account for approximately thirty-four percent
(34%) of the total two-wheel motorcycle market, according to the
Motorcycle Industry Council?. As developments progress, the
Company plans to offer product lines to fulfill the demand of
the remaining part of the two-wheel motorcycle market, which
includes dirt bikes and all-terrain-vehicles (ATV's).
Manufacturing operations are also expected to expand and offer
new, uniquely designed retail products to customers.
The Company will attempt to develop the startumup.com concept of
a "one-stop, motorcycle superstore," and will strive to provide
the best prices available. Initially, the Company anticipates a
catalogue web format with 1000-2000 products, with new lines
being added as traffic increases. The Company intends to
maintain a floating inventory of products, as current available
product sourcing eliminates the need for an extended inventory.
All customer orders will be implemented by online credit card or
cyber cash systems with a virtual shopping cart. Visitors to the
online store will be able to shop 24 hours a day, 7 days a week,
regardless of location, and will be able to shop and order in
English, Spanish, or French. Startumup.com has a projected
launch date of February 2000. The Company plans to launch a
preview site for the general public by January of 2000.
Motorcycle accessories and apparel will be marketed over the
World Wide Web via the Internet. The Company has orally entered
into a marketing alliance with RST Designs, Inc. to assist with
initial marketing plans and provide marketing support for the e-
commerce operations. The Company has also engaged the Motorcycle
Industry Council? to provide motorcycle demographic and
statistical information relating to various aspects of the
industry. The Company is also negotiating online marketing
contracts with search engines and major Internet Portals such as
Yahoo! and Earthlink. Advertising is expected to commence in
Spring of 2000. To date, no formal contracts or agreements have
been reached with search engines, Internet portals, or other
potential online advertising or marketing outlets.
The online motorcycle accessory and apparel supply industry is
highly competitive with respect to price, service, quality, and
Internet marketing. In addition, the barriers to entry for e-
commerce activities are low and it is expected that larger,
well-established competitors will begin e-commerce marketing of
their own products in the future. As a result, the potential for
failure in this industry is significant. There can be no
assurance that the Company will be able to respond to various
competitive factors affecting the business. The Company plans to
attempt to gain a competitive advantage over its competitors in
motorcycle accessories and apparel by offering a variety of
quality products at a low price, directly to the consumer. This
will be achieved by working directly with wholesalers, enabling
the Company to get and pass on to the customer the best prices
in the online market. The Company also plans to gain a
competitive advantage by providing access to the web site in
English, Spanish, and French. The Company hopes that this will
successfully increase its market appeal and presence with a wide
variety of cultures and communities.
The principal suppliers to startumup.com will be wholesale
distributors and manufacturers, who do not sell retail, but do
supply other retail stores and export companies. The Company's
current distribution agreements with distributors and
manufacturers for its traditional retail outlets will remain in
effect with its e-commerce operations. Although the terms vary
among wholesalers, such distribution agreements have been made
with Good Year, Dunlop Distributors, Inc., Vance & Hines, Inc.,
CGS Machine & Tool, Inc., and Race Engine Valve, to name a few.
The Company believes that its current distribution agreements
account for the majority of its planned product line. However,
material changes to these agreements or price inflation could
hinder Company's ability to purchase their products in a
competitive manner. In such an event, the Company would seek to
establish other wholesale relationships. A delay in locating new
wholesale suppliers could have an adverse affect on the revenues
and cash flows of the Company.
The Company does not expect that any single customer will
account for more than ten percent of its business. At the
present time there is no need for governmental approval, though
this may change in the future.
The Diamond Powersports, Inc. staff is projected at 4-5 new
employees for the first twelve months. The five managers that
are presently on staff will supervise these new employees.
Reports to Security Holders
The Company's annual report will contain audited financial
statements. The Company is 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 Company
intends , from this date forward, to file all of its required
information with the Securities and Exchange Commission ("SEC").
Prior to this form being filed there were not other forms filed.
The Company plans to file its 10KSB, 10QSB, and all other forms
that may be or become applicable to the Company with the SEC.
The public may read and copy any materials that are filed by the
Company with the SEC at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. The Public may
obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The statements and forms
filed by the Company with the SEC have also been filed
electronically and are available for viewing or copy on the SEC
maintained Internet site that contains reports, proxy and
information statements, and other information regarding issuers
that file electronically with the SEC. The Internet address for
this site can be found at {http://www.sec.gov.} Additional
information can be requested directly from the Company at 10145
NW 46th Street - Sunrise, Florida 33351 (954) 749-8606.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward Looking Statements
The information contained herein contains certain forward
looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended
to be covered by the safe harbors created thereby. Investors are
cautioned that all forward looking statements involve risks and
uncertainties, including, without limitation, the ability of the
Company to continue its expansion strategy, changes in costs of
raw materials, labor and employee benefits, as well as general
market conditions, competition and pricing. Although the Company
believes that the assumptions underlying the forward looking
statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no
assurance that the forward looking statements included in the
Form SB-2 will prove to be accurate. In view of the significant
uncertainties inherent in the forward looking statements
included herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
General
The Company plans to continue the operations of its retail
distribution business in the South Florida area. Emphasis will
be placed on continuing to strengthen its position in that
market. The Company also plans to greatly expand its e-commerce
operations through its startumup.com division. A significant
amount of its resources and finances will be spent on further
developing and expanding this aspect of its operations.
The Company projects that the revenues from the sales of its
products along with the proceeds of the sale of its securities
in September of 1999 will be sufficient to pay its operating
costs for the next twelve months. The Company is weighing the
advantages of creating a large scale marketing and advertising
campaign for its startumup.com operations. This campaign will
require substantial capital which the Company does not currently
have. If the Company should choose to create such a campaign
the funds required to perform it would be raised through a
future follow-on stock offering. In the event the Company is
unable to raise additional monies through its future follow-on
stock offering it may have to substantially modify its future
plans.
Startumup.com
The Company currently has no plans to conduct any product
research. The Company will continue to develop and expand the
startumup.com Internet site. This development will not require
the purchase of additional equipment or supplies but funds will
be used to pay developers of the web site and other related
online and software needs. As the Company expands, significant
personnel changes will be made. Initially, the Company projects
the need for 4-5 additional full-time employees to administrate
over and operate the startumup.com division. If revenues should
increase from the startumup.com Internet site the need for
personnel will greatly increase with it.
Security of Online Transactions
The Company will address the risks associated with security
breaches for online credit cards and cyber cash systems for
startumup.com by utilizing the services of a leading provider of
custom processing solutions. This provider is believed to offer
the highest levels of secured customer transactions including
high-level encryption standards to ensure a safe and secure
funding. These transactions will include checkless checks and
all major credit cards using state of the art electronic
processing. At the present time, the Company is reviewing
various proposals from companies that guarantee secure
transactions.
A significant barrier to online commerce and communications is
the secure transmission of confidential information over public
networks. The Company relies on encryption and authentication
technology licensed from third parties to provide the security
and authentication necessary to effect secure transmission of
confidential information, such as customer credit card numbers.
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 used by the Company to protect customer
transaction data. If any such compromise of the Company's
security were to occur, it could have a material adverse effect
on the Company's reputation, business, prospects, financial
condition and results of operations.
A party who is able to circumvent the Company's security
measures could misappropriate proprietary information or cause
interruptions in the Company's operations. The Company may be
required to expend significant capital and other resources to
protect against such security breaches or to alleviate problems
caused by such breaches. Concerns over the security of the
Internet and other online transactions and the privacy of users
may also inhibit the growth of the Internet and other online
services generally, and the Web in particular, especially as a
means of conducting commercial transactions. To the extent that
activities of the Company or third-party contractors involve the
storage and transmission of proprietary information, such as
credit card numbers, security breaches could damage the
Company's reputation and expose the Company to a risk of loss or
litigation and possible liability. There can be no assurance
that the Company's security measures will prevent security
breaches or that failure to prevent such security breaches will
not have a material adverse effect on the Company's business.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three months ended September 30, 1999 and September 30, 1998;
Nine months ended September 30, 1999 and September 30, 1998 &
years ended December 31, 1998 and December 31, 1997
Sales
Sales for the three months ended September 30, 1999 increased to
$70,621 from $69,032 for the comparable period in 1998, an
increase of 2.3%. Sales for the nine months ended September 30,
1999 decreased to $234,823 from $251,026 for the comparable
period in 1998. The decrease in revenues was primarily
attributable to the Company's shift in product mix to lower
priced motorcycle components. Gross margins, however, increased
to 34% during the nine months ended September 30, 1999 from 26%
for the comparable period in 1998, an increase of 8%.
Sales for the year ended December 31, 1998 decreased to $313,782
from $326,410 for the year ended December 31, 1997, a decrease
of 3.9%. The decrease in revenues was primarily attributable to
a decrease in the revenues from the Company's wholesale
operations.
Retail and wholesale sales of the Company's motorcycle
accessories and apparel have accounted for 100% of total net
sales in 1997, 1998, and 1999 to date. The Company expects an
accelerated growth of sales in 2000 due to increased
expenditures on marketing and a growing public awareness of its
products.
Income/ Losses
Net losses for the three months ended September 30, 1999,
increased to $9,240 from $481 for the comparable period in 1998,
an increase of $8,759. Net losses for the nine months ended
September 30, 1999 increased to $7,424 form $1,750 in the
comparable period in 1998. The increase in net losses were
primarily attributable to expenditures relating to the Company's
preparation in gaining active trading status on the OTC Bulletin
Board and the hiring of additional personnel.
Net losses for the year ended December 31, 1998 decreased to
$2,187 from $9,537 for the year ended December 31, 1997, a
decrease of $7,350. The decrease in losses was primarily
related to the Company's better management of certain expenses,
particularly with company salaries.
The Company expects to continue to incur losses at least through
the third quarter of the year 2000. In addition, there can be no
assurance that the Company will achieve or maintain
profitability or that its revenue growth can be sustained in the
future.
Expenses
Selling, general and administrative expenses for the three
months ended September 30, 1999, increased to $29,328 from
$17,196 in the comparable period in 1998, an increase of 41%.
Selling, general, and administrative expenses for the nine
months ended September 30, 1999 increased to $79,358 from
$62,528 in the comparable period in 1998, an increase of 27%.The
increase in selling general and administrative expenses for the
third quarter was primarily the result of an $8,143 increase in
labor costs from the same period in 1998.
Selling, general and administrative expenses for the year ended
December 31, 1998, decreased to $78,161 from $90,445 for the
year ended December 31, 1997, a decrease of 14%. The decrease
in selling, general and administrative expenses was the result
of the Company's better management of certain expenses,
particularly with company salaries.
Depreciation and amortization expenses for the three months
ended September 30, 1999 and September 30, 1998 were $3,474 and
$2,904, respectively. Depreciation and amortization expenses for
the nine months ended September 30, 1999 and September 30, 1998
were $10,422 and $10,558, respectively. The increase was
primarily due to the Company's additional purchases of property
and equipment early in 1999.
Depreciation and amortization expenses for the years ended
December 31, 1998 and December 31, 1997 were $16,258 and
$13,198, respectively. The increase was primarily due to the
additional purchases of property and equipment during 1998.
The Company expects increases in expenses through 1999 and the
year 2000 as the Company moves toward increasing development and
marketing of its startumup.com operations.
Cost of Labor
A large factor in the variation from year to year in the cost of
labor as a percentage of net sales is the economic cost of
labor.
The cost of labor for the three months ended September 30, 1999
was $11,060 compared to $2,917 for the comparable period in
1998. The cost of labor for the nine months ended September 30,
1999 was $21,860 compared with $10,612 for the comparable period
in 1998. The increase in the cost of labor was primarily
attributable to the hiring of additional staff personnel. Cost
of labor as a percentage of sales for three months ended
September 30, 1999 and 1998 respectively, were 16% and 4%.
The cost of labor for the year ended December 31, 1998 was
$13,258 compared to $27,675 for the year ended December 31,
1997. The decrease in the cost of labor was primarily
attributable to a reduction in office staffing hours. Cost of
labor as a percentage of sales for December 31, 1998 and 1997
respectively, were 4% and 8%.
Cost of Sales
The largest factor in the variation from year to year in the
cost of goods sold as a percentage of net sales is the cost of
sales.
The cost of goods sold for the three months ended September 30,
1999 was $43,429 compared to $51,072 for the comparable period
in 1998. The cost of goods sold for the nine months ended
September 30, 1999 was $155,564 compared with $185,718 for the
comparable period in 1998. The decrease in the cost of goods
sold was primarily attributable to the Company's shift in
product lines to lower cost, higher margin products. Cost of
goods sold as a percentage of sales for three months ended
September 30, 1999 and 1998 respectively, were 61% and 74%.
The cost of goods sold for the year ended December 31, 1998 was
$232,147 compared to $241,784 for the year ended December 31,
1997. The decrease in the cost of goods sold, as in current
year, was primarily the result of the Company's shift to higher
margin motorcycle products. The Company expects cost of goods
sold as a percentage of sales to decrease as the Company pursues
additional beneficial vendor trade relationships and as more
products are manufactured directly by the Company. Cost of goods
sold as a percentage of sales for December 31, 1998 and 1997
respectively, were 74% and 75%.
Impact of Inflation
The Company believes that inflation has had a negligible effect
on operations over the past three years. The Company believes
that it can offset inflationary increases in the cost of labor
by increasing sales and improving operating efficiencies.
Liquidity and Capital Resources
Three and nine months ended September 30, 1999 and September 30,
1998 & years ended December 31, 1998 and December 31, 1997
Cash flows generated by operations were a negative $59,400 for
the nine months ended September 30, 1999 and $2,851 for the
comparable period in 1998. Negative cash flows from operating
activities for the nine months ended September 30, 1999 are
primarily attributable to an increase in inventory and prepaid
expenses related to this registration statement.
Cash flows generated by operations were a negative $3,025 for
the year ended December 31, 1998, and a positive $85 for the
year ended December 31, 1997. Negative cash flows from
operating activities for the year ended December 31, 1998 is
primarily attributable to additional inventory purchased for
daily operations.
Cash flows generated from financing activities was $67,771 for
the nine months ended September 30, 1999 and a positive $5,286
for the comparable period in 1998. The Company conducted a
private placement offering in an effort to improve its cash flow
in 1999.
Cash flows generated from financing activities was $93,999 for
the year ended December 31, 1998 and a positive $22,299 for the
year ended December 31, 1997. The positive cash flow generated
was primarily the result of borrowing under a bank line of
credit.
The Company has funded its cash needs from inception through
September 30, 1999 with a series of debt and equity
transactions, including private placements.
The shareholder loan payable of $3,792 on December 31, 1998 is
payable to Pierre Elliott, President and majority shareholder.
The loan is not evidenced by a written promissory note, rather
it is an oral agreement. There is no interest on this loan and
the effects of imputed interest are immaterial to the financial
statements taken as a whole. The shareholder loan was repaid in
full subsequent to year end.
In the third quarter of 1999, the Company raised $50,000 through
a limited private placement under Rule 504 of Regulation D. The
Company expects to finance operations through additional equity
placements in the future as outlined in this registration
statement.
The Company made no significant capital expenditures on property
or equipment for the nine months ended September 30, 1999 or
1998. Capital expenditures on property or equipment for the
years ended December 31, 1998 or 1997 were $86,905 and $21,334,
respectively, primarily as a result of the Company's purchases
of product packing equipment and transportation equipment.
Expenses for development, marketing and advertisement are
projected at One Hundred and Eighty Thousand dollars ($180,000)
during the year 2000. The company also expects to create an
initial inventory valued at approximately Three Hundred Thousand
Dollars ($300,000). The value and amount of the inventory will
increase as business develops. The Company is currently
applying for 30-60 day lines of credit with its distributors.
This will allow the Company to purchase the needed initial
inventory. If the Company fails to get the lines of credit
from the distributors, the Company may have to reduce the
initial amount of inventory and purchase needed amounts with
cash. Additional initial development, marketing, advertising,
and inventory costs are being paid for with funds from the
proceeds of a limited private offering executed during the
remainder of 1999. The Company expects to generate immediate
revenues upon opening the web site and will use those revenues
to pay for its operating costs. However, the Company does not
guarantee that such revenues will be adequate to fund the
Company's plans.
The Company will substantially rely on the existence of revenue
from the retail and wholesale business and from the projected
revenues of startumup.com. The Company projects that current
and projected revenues and capital reserves will sustain it for
12 months. If the projected revenues of startumup.com fall
short of needed capital the Company will not be able to sustain
its capital needs for more than six months. The Company will
then need to obtain additional capital through equity or debt
financing to sustain operations for an additional year. A lack
of significant revenues beginning in the first quarter of 2000
will significantly affect the cash position of the Company and
move the Company toward a position where the raising of
additional funds through equity or debt financing will be
necessary.
On a long-term basis, liquidity is dependent on continuation and
expansion of operations, receipt of revenues, additional
infusions of capital and debt financing. The Company is
considering launching a wide scale marketing and advertising
campaign. The current Company's capital and revenues are not
sufficient to fund such a campaign. If the Company chooses to
launch such a campaign it will require substantially more
capital. If necessary, the Company plans to raise this capital
through an additional stock offering. The funds raised from
this offering will be used to develop and execute the marketing
and advertising strategy which may include the use of
television, radio, print and Internet advertising. However ,
there can be no assurance that the Company will be able to
obtain additional equity or debt financing in the future, if at
all. If the Company is unable to raise additional capital, the
growth potential will be adversely effected. Additionally, the
Company will have to significantly modify its plans.
Trends, Events, and Uncertainties
Demand for the Company's products will be dependent on, among
other things, market acceptance of the Company's concept, the
quality of its Web site and general economic conditions, which
are cyclical in nature. Inasmuch as a major portion of the
Company's activities is the receipt of revenues from the sales
of its products, the Company's business operations may be
adversely affected by the Company's competitors and prolonged
recessionary periods.
Year 2000 Implications
Many current installed computer systems and software may be
coded to accept only two-digit entries in the date code field
and cannot distinguish 21st century dates from 20th century
dates. As a result, many software and computer systems may need
to be upgraded or replaced. Because of the nature of the
business of the Company's startumup.com division, being an
internet based company, there is uncertainty about the overall
effect of the Year 2000 on the internet and therefore the
Company's Internet operations. If other third parties that the
Company uses or the overall Internet should experience
significant problems from Year 2000 related issues, it could
significantly affect the operation and ability of startumup.com
to perform business over the Internet and therefore could
adversely affect revenues. The Company has taken steps to
insure that all of the internal computer systems are compliant.
The Company has to date replaced its computers with new Year
2000 compliant machines. The Company has not incurred material
costs to date in the process, and does not believe that the cost
of additional actions will have a material effect on its
operating results or financial condition. The Company's current
systems and products may contain undetected errors or defects
with Year 2000 date functions that may result in material costs.
In addition, the Company utilizes third-party equipment,
software and content, including non-information technology
systems, such as security systems, building equipment and
systems with embedded micro-controllers that may not be Year
2000 compliant.
The Company has taken steps to analyze its technical
relationships and ensure that its third party suppliers,
distributors, advisors, and other entities that the Company
depends on for operations are also compliant. These include but
are not limited to its relationship with Yahoo!, Earthlink,
Nexlook, and Perspectives Business Support Systems of North
Carolina . The Company has received verification that these
Companies are compliant. Not all of the Company's third party
distributors have given adequate assurances that they are or are
not compliant and therefore may or may not experience problems
relating to the Year 2000 issues and potentially create delays
in distributing needed inventory or create other unforeseen
problems.
Failure of third-party equipment, software or content to operate
properly with regard to the Year 2000 issue could require the
Company to incur unanticipated expenses to remedy problems,
which could have a material adverse effect on its business,
operating results and financial condition. If any problems arise
from third parties or from the Internet in general related to
the Year 2000 issues, the ability of the Company to respond is
limited, due to its nature as an Internet Company.
Additionally, the computer systems necessary to maintain the
viability of the Internet or any of the Web sites that direct
consumers to the Company's online stores may not be Year 2000
compliant. Computers used by customers to access the Company's
online stores may not be Year 2000 compliant, delaying
customers' product purchases. The Company cannot guarantee that
its systems will be Year 2000 compliant or that the Year 2000
problem will not adversely affect its business, which includes
limiting or precluding customer purchases.
Year 2000 Contingency Plan
If such a situation should occur the Company will process the
existing orders using no Internet and computer based methods,
such as telephone conformation, standard ground shipping done
through local offices, and manual processing of credit cards.
This will continue until all third parties or the Internet solve
the problems and normal business operations can continue.
DESCRIPTION OF PROPERTY
The Company's executive offices are located at 10145 Northwest
46th Street - Sunrise, Florida 33351. These offices consist of
2,500 square feet, which are leased through April 2001 for
$1,202.00 per month. The Company projects that its current
offices will need to be expanded during the next six months to
handle anticipated capacity resulting form the Company's growth
in early 2000. The Company currently has the option to lease
neighboring warehouse bays, which will be an additional 2,500
square feet, for an additional $1,850 per month.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions, or proposed transactions during
the past two years to which the Company or any Officers or
Directors were a party.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to this Offering, there has been no public market for the
Shares of Common Stock, and there can be no assurance that a
market will develop upon completion of this Offering or, if a
market should develop, that it will continue.
The Company has never paid any cash dividends nor does it
intend, at this time, to make any cash distributions to its
shareholders as dividends in the near future.
As of September 30, 1999, the number of holders of the Company's
common stock is 7.
EXECUTIVE COMPENSATION
Executive Compensation
No compensation in excess of $100,000 was awarded to, earned by,
or paid to any executive officer of the Company during the years
1997 to 1999. The following table and the accompanying notes
provide summary information for each of the last three fiscal
years concerning cash and non-cash compensation paid or accrued
by Pierre Elliott and Lisa Elliott, the Company's chief
executive officer and secretary for the past three years.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation in ($)
Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name and
Principal
Position Year Salary Bonus Other Stock Options LTIP All Other
Pierre Elliot 1999 6,050 - - - - - -
ChiefExecutive 1998 3,000 - - - - - -
Officer 1997 12,080 - - - - - -
Lisa Elliott 1999 6,050 - - - - - -
Secretary 1998 3,000 - - - - - -
1997 12,080 - - - - - -
</TABLE>
The Company has entered into an employment agreement with Pierre
Elliott for a term of one year. Pursuant to the agreement, Mr.
Elliott serves as President, Director and General Manager. Mr.
Elliott shall receive an annualized base salary of $65,000 and
is entitled to an incentive bonus of .5% of the gross profits.
Mr. Elliott's salary has not started to accrue.
The Company has also entered into an employment agreement with
Lisa Elliott for a term of one year. Pursuant to the agreement,
Mrs. Elliott serves as Secretary, Controller and Director. Mrs.
Elliott shall receive an annualized salary of $30,000, payable
in installments according to the Employer's regular payroll
schedule. Mrs. Elliott's salary has not started to accrue.
All executive salaries and agreements will not begin until fall
of 1999.
Compensation of Directors
In 1999, the Company committed itself to compensate each of its
Board of Directors with shares of its common stock and common
stock purchase options. As of the date of this report, the terms
have yet to be finalized and no option agreement has been
officially adopted. Comments in the auditor's report reflect
that term have been defined regarding compensation. Since the
writing of the report, terms remain undefined and no agreement
or terms have been reached.
PART F/S
The Company's unaudited interim financial statements for period
ended September 30, 1999 and annual audited financial statements
for the fiscal year ended December 31, 1998 are attached hereto
as pages F-1 through F-11.
- -- The rest of this page is left intentionally blank--
INDEX TO FINANCIAL STATEMENTS
Unaudited Interim Financial Reports for Three and Nine Months
Ended September 30,1999
Balance Sheets 27, 28
Statements of Operations 29
Statements of Cash Flows 30,31
Notes to Financial Statements 32
Audited Financial Reports for Year ending December 31, 1998
Letter From Auditor 33
Balance Sheet 34,35
Statements of Operations 36,37
Statements of Cash Flows 38,39
Statement of Stockholder's Equity(Deficit)40
Notes to Financial Statements 41-45
BALANCE SHEETS
----------------------------
DIAMOND POWERSPORTS, INC.
As of September 30, 1999 & December 31, 1998
ASSETS (Unaudited)
------ September 30, 1999 December 31,1998
CURRENT ASSETS ------------------ ----------------
- ---------------
Cash $ 8,029 $ 4,519
Accounts receivable 20,632 19,532
Prepaid expenses 42,000 ---
Inventory 45,614 28,415
------------------ ---------------
TOTAL CURRENT ASSETS 116,275 52,466
PROPERTY AND EQUIPMENT
Furniture 3,490 1,900
Transportation equipment 95,905 95,905
Equipment 44,999 41,728
Accumulated depreciation (62,302) (51,880)
------------------ ----------------
NET PROPERTY AND EQUIPMENT 82,092 87,653
OTHER ASSETS
Deposits 300 300
------------------ ----------------
TOTAL OTHER ASSETS 300 300
------------------ ----------------
TOTAL ASSETS $ 198,667 $ 140,419
================ ===============
See Accompanying Notes to Financial Statements
BALANCE SHEETS (CONTINUED)
-----------------------------------
DIAMOND POWERSPORTS, INC.
LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
(Unaudited)
September 30, 1999 December 31,1998
------------------ -----------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 6,896 $ 8,996
Current portion of bank note 2,553 2,553
Bank line of credit 75,566 52,150
Shareholder Loans Payable --- 3,792
----------- -----------
TOTAL CURRENT LIABILITIES 85,015 67,491
LONG-TERM DEBT
Long-term portion of bank note 82,499 84,352
STOCKHOLDERS' EQUITY(DEFICIT)
Common stock 8,320 300
($.001, par value,100,000,000
authorized- 8,320,000 issued
and outstanding)
Preferred stock (5 million
authorized- zero issued and
outstanding) --- ---
Additional Paid-in-Capital 41,980 ---
Retained deficit (19,148) (11,724)
------------ ----------
TOTAL STOCKHOLDERS'EQUITY(DEFICIT) 31,152 (11,424)
------------ ----------
$ 198,667 $ 140,419
============ ===========
See Accompanying Notes to Financial Statements
STATEMENTS OF OPERATIONS (Unaudited)
--------------------------------------------
DIAMOND POWERSPORTS, INC.
For the Three and Nine Months Ended September 30, 1999 & 1998
Three Three Nine Nine
Months Ended Months Ended Months Ended Months Ended
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
------------- ------------- ------------- ------------
REVENUE:
Sales $ 70,621 $ 69,032 $ 234,823 $ 251,026
Cost of Goods Sold (43,429) (51,072) (155,564) (185,718)
------------- ------------- ------------- ------------
GROSS PROFIT 27,192 17,960 79,259 65,308
EXPENSES:
Advertising $ 600 $ 1,091 $ 1,788 3,967
Auto Expenses 323 1,288 2,974 4,683
Contract Labor --- 1,597 2,255 5,806
Depreciation 3,474 2,904 10,422 10,558
Dues & Fees 867 90 1,167 326
Insurance 938 626 3,512 2,277
Miscellaneous Expense --- 367 446 1,336
Office Expenses 607 1,025 2,261 3,727
Postage & Freight 1,460 1,228 6,115 4,465
Professional Fees 400 44 920 160
Rent 4,492 3,064 13,552 11,143
Salaries 11,060 1,320 21,860 4,800
Taxes & Licenses 639 648 2,056 2,357
Telephone 2,879 1,354 7,665 4,922
Travel 818 337 818 1,227
Utilities 771 213 1,547 774
------------ ----------- ------------- ---------
TOTAL EXPENSES 29,328 17,196 79,358 62,528
------------ ----------- ------------- ------------- ---------
INC/LOSS FROM
OPERATIONS (2,136) 764 (99) 2,780
OTHER INCOME/EXPENSE:
Interest Expense 7,104 1,245 7,325 4,529
------------ ----------- ------------- ------------ ----------
NET LOSS $ (9,240) $ (481) $ (7,424) $ (1,750)
============ =========== ============= ============
Net Loss Per Share-
Basic and fully diluted
$ ** N/A $ ** N/A
============= =========== ============= ============
Weighted Average Shares
8,240,000 N/A 8,185,000 N/A
============= =========== ============ ============
** Less than $ 0.01
See Accompanying Notes to Financial Statements
STATEMENTS OF CASH FLOWS (Unaudited)
-------------------------------------------
DIAMOND POWERSPORTS, INC.
For the Nine Months Ended September 30, 1999 & 1998
September 30, September 30,
1999 1998
-------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (7,424) $ (1,750)
Adjustments to reconcile net loss
to net cash provided by(used in)operating
activities:
Depreciation 10,422 10,558
(Increase) decrease in operating assets:
Accounts receivable (1,100) 6,201
Inventory (17,198) (8,610)
Prepaid expenses (42,000) --
Increase (decrease) in operating
liabilities:
Accounts payable & accrued expenses ( 2,100) (9,250)
----------- -----------
NET CASH USED IN
OPERATING ACTIVITIES (59,400) (2,851)
------------ ----------
CASH FLOWS FROM INVESTING ACIVITIES:
Equipment Purchases (3,271) --
Furniture Purchases (1,590) --
------------ ----------
NET CASH USED IN
INVESTING ACTIVITIES (4,861) --
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issuances 50,000 --
Proceeds from bank line of credit 23,416 8,214
Repayments of bank line of credit (1,853) (6,720)
Shareholder loans receipts(repayments) (3,792) 3,792
------------ ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 67,771 5,286
------------ ----------
See Accompanying Notes to Financial Statements
STATEMENTS OF CASH FLOWS (Unaudited)
--------------------------------------
DIAMOND POWERSPORTS, INC.
For the Nine Months Ended September 30, 1999 & 1998
September 30, September 30,
1999 1998
----------- -----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 3,510 $ 2,435
Cash and cash equivalents,
beginning of period $ 4,519 $ 1,050
------------ ----------
CASH AND CASH EQUIVALENTS
END OF PERIOD $ 8,029 $ 3,485
============ ==========
Supplementary cash flow disclosure:
Cash paid for interest $ 7,325 $ 4,529
============ ==========
--The rest of this page is left intentionally blank--
See Accompanying Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------
DIAMOND POWERSPORTS, INC.
September 30, 1999 (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, the unaudited condensed
consolidated financial statements contain all adjustments
consisting only of normal recurring accruals considered
necessary to present fairly the Company's financial position at
September 30, 1999, the results of operations for the three and
nine month periods ended September 30,1999 and 1998, and cash
flows for the nine months ended September 30, 1999 and 1998. The
results for the period ended September 30, 1999, are not
necessarily indicative of the results to be expected for the
entire fiscal year ending December 31, 1999.
NOTE B - EARNINGS (LOSS) PER SHARE
The following represents the calculation of loss per share:
BASIC & FULLY DILUTED*
Three Three Nine Nine
Months Ended Months Ended Months Ended Months Ended
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30,1998
------------------------------------------------------
Net Loss $ (9,240) $ (481) $ (7,424) $ (1,750)
Less- preferred stock dividends
-- -- -- --
------------- ------------- ------------- ------------
Net Loss $ (9,240) $ (481) $ (7,424) $ (1,750)
Weighted average number
Of common shares 8,240,000 N/A 8,185,000 N/A
------------- ------------ ------------- ------------
Basic & Fully Diluted
loss per share $ ** N/A $ ** N/A
============= ============ ============= ============
* The Company had no common stock equivalents during the
periods presented
** Less than $0.01
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Diamond Racing, Inc.
10145 N.W. 46th Street
Sunrise, Florida 33351
We have audited the accompanying balance sheet of Diamond
Racing, Inc. as of December 31, 1998 and the related statements
of operations, stockholder's deficit, and cash flows for the
years ended December 31, 1998 and December 31, 1997. 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 generally
accepted auditing standards. Those standards require that we
plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free from 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, the financial statements referred to above
present fairly, in all material respects, the financial position
of Diamond Racing, Inc. as of December 31, 1998 and the results
of its operations and its cash flows for the years ended
December 31, 1998 and December 31, 1997 in conformity with
generally accepted accounting principles.
Michael J. Bongiovanni, C.P.A.'s
Charlotte, North Carolina
July 31, 1999
BALANCE SHEET
---------------------------
Diamond Racing, Inc.
December 31, 1998
ASSETS
-----------
CURRENT ASSETS
- --------------------------
Cash and Cash Equivalents $ 4,519
Accounts Receivable 19,532
Inventory 28,415
--------
TOTAL CURRENT ASSETS 52,466
PROPERTY AND EQUIPMENT
- ----------------------------
Machinery & Equipment 41,728
Furniture & Fixtures 1,900
Transportation Equipment 95,905
Accumulated Depreciation (51,880)
---------
NET PROPERTY AND EQUIPMENT
87,653
OTHER ASSETS
- ---------------------
Deposits 300
---------
300
TOTAL ASSETS $ 140,419
==============
See notes to audited financial statements and auditor's report.
BALANCE SHEET (CONT.)
--------------------------------------
Diamond Racing, Inc.
December 31, 1998
LIABILITIES AND STOCKHOLDER'S EQUITY
- -------------------------------------
CURRENT LIABILITIES
- --------------------------------
Accounts Payable $ 8,996
Current Portion of Installment
Note Payable to Bank (Note B) 2,553
Bank Line of Credit 52,150
Shareholder Loans Payable 3,792
---------
TOTAL CURRENT LIABILITIES
67,491
LONG-TERM DEBT
- --------------------------
Installment Note Payable to Bank,
less current portion (Note B) 84,352
STOCKHOLDER'S DEFICIT
- ---------------------------
Common Stock ($1.00 par value, 300 shares
authorized; 300 shares issued and outstanding
at December 31, 1998)
300
Retained Deficit (11,724)
----------
TOTAL STOCKHOLDER'S DEFICIT (11,424)
-----------
$ 140,419
=============
See notes to audited financial statements and auditor's report.
STATEMENTS OF OPERATIONS
-----------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
1997 1998
REVENUE ----------- ---------
Net Sales $ 326,410 $ 313,782
Cost of Goods Sold (241,784) (232,147)
----------- ----------
GROSS PROFIT 84,626 81,635
OPERATING EXPENSES
- ---------------------------------
Advertising $ 3,272 $ 4,959
Automobile 4,414 5,854
Bank Charges 84 75
Computer Processing 270 -0-
Contract Labor 3,515 7,258
Depreciation 16,258 13,198
Dues & Fees 280 408
Insurance 3,176 2,846
Maintenance 106 1,991
Miscellaneous 482 1,670
Office Supplies & Expense 1,076 2,592
Postage & Freight 3,500 5,581
Professional Fees 545 200
Rent 17,045 13,929
Salaries & Wages 24,160 6,000
Taxes & Licenses 3,449 2,946
Telephone 6,034 6,153
Travel 2,120 1,534
Utilities 659 967
----------- ----------
TOTAL EXPENSES 90,445 78,161
----------- -----------
OPERATING INCOME (LOSS) (5,819) 3,474
See notes to audited financial statements and auditor's report.
STATEMENTS OF OPERATIONS (CONT.)
---------------------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
1997 1998
------------ ---------
OTHER EXPENSE
- -------------------------
Interest Expense $ 3,718 $ 5,661
------------ ---------
TOTAL OTHER EXPENSE 3,718 5,661
------------ ---------
NET LOSS $ (9,537) $ (2,187)
========= ========
See notes to audited financial statements and auditor's report.
STATEMENT OF STOCKHOLDER'S DEFICIT
-----------------------------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
Common Additional
Common Stock Paid-in Retained
Shares $ Capital Deficit
----------- -------- --------- ------------
Balances, January 1, 1997 300 $ 300 $ -0- $ -0-
Net loss for 1997 - - - $ (9,537)
----------- -------- ---------- ------------
Balances, December 31, 1997 300 $ 300 $ -0- $ (9,537)
Net loss for 1998 - - - $ (2,187)
------------ -------- ---------- -----------
Balances, December 31, 1998 300 $ 300 $ -0- $ (11,724)
=========== ======= ========== ==========
See notes to audited financial statements and auditor's report.
STATEMENTS OF CASH FLOWS
--------------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
1997 1998
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net Loss $ (9,537) $ (2,187)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation expense 16,258 13,198
(Increase) decrease in operating assets:
Accounts receivable (15,001) 8,310
Inventory 13,733 (10,670)
Increase (decrease) in operating liabilities:
Excess of outstanding checks over bank balance(1,166) -0-
Accounts payable (4,202) (11,676)
--------------- ---------------
NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES 85 (3,025)
CASH FLOWS FROM INVESTING ACTIVITIES:
- ---------------------------------------
Expenditures for property and equipment (21,334) (86,905)
------------- -------------
NET CASH USED IN
INVESTING ACTIVITIES (21,334) (86,905)
See notes to audited financial statements and auditor's report.
STATEMENTS OF CASH FLOWS (CONT.)
-----------------------------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
1997 1998
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Increase (decrease) in shareholder
loans payable $ (5,927) $ 3,792
Proceeds from installment
note payable - bank (Note B) -0- 86,905
Borrowings under bank line of
credit (Note F) 37,845 49,446
Repayments on bank line of
credit (Note F) (9,619) (46,744)
----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 22,299 93,399
----------- -----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 1,050 $ 3,469
---------- -----------
Cash and cash equivalents,
beginning of period $ -0- $ 1,050
---------- ----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 1,050 $ 4,519
========= ========
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest during the period $ 3,718 $ 5,661
========= ========
See notes to audited financial statements and auditor's report.
NOTES TO AUDITED FINANCIAL STATEMENTS
---------------------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Business Activity - Diamond Racing, Inc. was organized under the
laws of the State of Florida on May 13, 1992 and commenced
operations as of that date.
Diamond Racing, Inc., provides a comprehensive distribution of
motorcycle parts and accessories mainly to retail consumers in
South Florida.
Basis of Presentation - The financial statements included herein
include the accounts of the Diamond Racing, Inc presented on an
accrual basis of accounting.
Accounts Receivable - Accounts receivable are charged to bad
debt expense as they are deemed uncollectible based upon a
periodic review of the accounts. No bad debt expense for the
years
ended December 31, 1998 and 1997 was recorded. At December 31,
1998, no allowance for doubtful accounts was deemed necessary.
Credit is extended to customers based on an evaluation of their
financial condition, and collateral is not required. The Company
performs ongoing credit evaluations of its customers.
Property and Equipment - Property and equipment are recorded at
cost and include expenditures which substantially increase the
productive lives of the existing assets. Maintenance and repair
costs are expensed as incurred. Depreciation is provided using
the straight-line method. Depreciation of property and equipment
is calculated over the management prescribed recovery periods
which range from 5 to 10 years.
When a fixed asset is disposed of, its cost and related
accumulated depreciation are removed from the accounts. The
difference between undepreciated cost and proceeds from
disposition is recorded as a gain or loss.
Long-Lived Assets - In accordance with Financial Accounting
Standards Board Statement of Financial Accounting Standard
No.121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of", the carrying value of
intangible assets and other long-lived assets is reviewed by
management on a regular basis for the existence of facts or
circumstances, both internally and externally, that may suggest
impairment. To date, no such impairment has been indicated.
Should there be an impairment in the future, the Company will
recognize the amount of the impairment based on discounted
expected future cash flows from the impaired assets.
NOTES TO AUDITED FINANCIAL STATEMENTS
--------------------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
- -----------------------------------------------------------
Cash and Cash Equivalents - For purposes of the Statements of
Cash Flows, the Company considers liquid investments with an
original maturity of three months or less to be cash
equivalents.
Management's Use of Estimates - The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that effect the reported amounts of assets and liabilities,
disclosures of contingent assets and liabilities at the date of
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.
Revenue Recognition - Revenue is recognized when goods are
shipped and earned or when services are performed, provided
collection of the resulting receivable is probable. If any
material contingencies are present, revenue recognition is
delayed until all material contingencies are eliminated.
Further, no revenue is recognized unless collection of the
applicable consideration is probable.
Income Taxes - The company, with the consent of its
shareholder, has elected to be taxed under the sections of the
federal and state income tax laws which provide that, in lieu of
corporation income taxes, the shareholder separately accounts
for his pro rata share of the company's items of income,
deductions, losses and credits. Therefore, these financial
statements do not include any provision for corporate federal or
state income taxes.
Advertising Costs - Advertising costs are expensed as incurred.
The Company does not incur any direct-response advertising
costs. Advertising expense totaled $4,959 and $3,272 for the
years ended December 31, 1998 and 1997, respectively.
Comprehensive Income (Loss) - As of January 1, 1998, the Company
adopted Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income", which establishes standards for the reporting and
display of comprehensive income and its components in the
financial statements. There were no items of comprehensive
income (loss) applicable to the Company during the period
covered in the financial statements.
Inventory - Inventory, consisting of motorcycle parts and
accessories located in Sunrise, Florida, is valued at the lower
of cost or market using the first-in, first-out (FIFO) method.
NOTES TO AUDITED FINANCIAL STATEMENTS
--------------------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
NOTE B - INSTALLMENT NOTE PAYABLE TO BANK
- ------------------------------------------
The Note Payable to Bank in the accompanying Balance Sheet
represents a promissory note to a bank collateralized by certain
of the Company's transportation equipment with a net book value
of $78,214 at December 31, 1998. The loan is payable in monthly
installments of approximately $961, which includes interest at
10.50% and loan matures on December 11, 2013. At December 31,
1998, the principal balance outstanding was $86,905 and is due
in annual principal installments as follows:
Year Ending
December 31,
---------------
1999 $ 2,553
2000 2,799
2001 3,108
2002 3,451
2003 3,831
Thereafter 71,163
-------
Total $86,905
NOTE C - LEASE COMMITMENT
- -------------------------------------
The Company leases its corporate office and warehouse facilities
in Sunrise, Florida under a noncancelable industrial operating
lease through April 30, 2001. At December 31, 1998, the
operating lease had a remaining lease term of twenty-eight
months. At the end of the lease term, the lease may be extended
for an additional four years under the same terms as the
original lease. The future minimum annual commitment is as
follows:
Year Ending
December 31,
---------------
1999 $ 14,414
2000 14,414
2001 4,804
----------
Total $ 33,632
NOTES TO AUDITED FINANCIAL STATEMENTS
--------------------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
Rental payments and related expense for the years ending
December 31, 1998 and 1997 were $13,929 and $17,045,
respectively.
NOTE D - RECENT ACCOUNTING PRONOUNCEMENTS
- ------------------------------------------
In June of 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities, which the
Company has not been required to adopt. The Statement, which is
effective for fiscal years beginning after June 15, 1999,
establishes standards for accounting and reporting for
derivative instruments and hedging activities. The Company does
not expect that the adoption of Statement of Financial
Accounting Standards No.133 will have a material impact on its
financial statements because the Company does not currently hold
any derivative instruments.
In March, 1998, the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position (SOP) No. 98-1
"Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use", which establishes guidelines for the
accounting for the costs of all computer software developed or
obtained for internal use. The Company adopted this SOP
effective for the year ended December 31, 1998. The adoption of
the SOP does not make a material impact on the Company's
financial statements.
In April, 1998, the AICPA issued SOP 98-5, "Reporting on the
Costs of Start-Up Activities". The SOP is effective for fiscal
years beginning after December 15, 1998. The SOP requires costs
of start-up activities and organization costs to be expensed as
incurred. The Company is required to adopt SOP 98-5 for the year
ended December 31, 1999, The adoption of SOP 98-5 is not
expected to have a material impact on the Company's financial
statements.
NOTE E - YEAR 2000 ISSUE
- --------------------------------------
Due to the nature of the Company's planned computerized Internet
operations, the Company would be substantially reliant on
computers for the processing of critical data. The disruption of
the processing of that data could have a material adverse impact
on the Company. It is management's opinion that the estimated
cost of remediation would be immaterial to the financial
statements taken as a whole.
NOTES TO AUDITED FINANCIAL STATEMENTS
- -----------------------------------------
Diamond Racing, Inc.
For the Years Ended December 31, 1998 and December 31, 1997
NOTE F - BANK LINE OF CREDIT
- ------------------------------------------------------
The Company has an unsecured bank line of credit bearing
interest at 9.75% at December 31, 1998. Due to the nature of the
bank's line of credit provisions, the loan is classified as
currently payable on the accompanying Balance Sheets. The
principal balance outstanding at December 31, 1998 was $52,150.
NOTE G - SUBSEQUENT EVENTS
- ----------------------------------------------
Subsequent to year end, the Company changed its corporate name
from Diamond Racing, Inc. to Diamond Powersports, Inc.,
increased the authorized common shares to 100,000,000, changed
the par value of the common shares to $.001, authorized the
issuance of 5,000,000 shares of preferred stock, and enacted a
27,000 to 1 stock split of the outstanding common stock.
APPENDIX A
Common Shares
Number of Shares Subscribed For: _________
DIAMOND POWERSPORTS, INC.
SUBSCRIPTION AGREEMENT
4,000,000 Shares of Common Stock
US$1,000,000
Diamond Powersports, Inc. (the "Company"), is offering 4,000,000
Shares of its Common stock, $.001 par value per Share (the
"Shares"), at the offering price of $0.25 per Share, as
described in the Company's Confidential Private Placement Offering Memorandum
dated July 1, 1999, and indicated by checking the box above.
A. The undersigned hereby subscribes for and agrees to purchase
____________ number of Shares issuable by Diamond Powersports,
Inc. a corporation organized and existing under the laws of the
State of Florida (the "Company"). The Shares being offered are
described in the Confidential Private Placement Memorandum of
the Company dated July 1, 1999 (the "Private Placement
Memorandum"). Unless otherwise indicated, capitalized terms
shall have the same meaning ascribed to them in the Private
Placement Memorandum. The undersigned agrees to pay a purchase
price of $0.25 for each Share purchased. The undersigned
herewith tenders to the Company the entire amount of such
purchase price by check made payable to the order of the
Company.
B. The undersigned acknowledges that the Shares (the
"Securities") have not been registered under the Securities Act
of 1933, as amended (the "1933 Act"), or the securities laws of
any state (i) that absent an exemption or registration under the
Act, the Securities cannot be resold, and (ii) the Securities
are being offered for sale in reliance upon exemptions from
registration contained in the 1933 Act and applicable state
laws, and that the Company's reliance upon such exemptions is
based in part upon the undersigned's representations, warranties
and agreements contained in this Subscription Agreement.
The offering of the Shares shall terminate on December 31, 1999,
or such later date not more than 90 days thereof as may be
determined by the Company in its discretion, unless sooner
terminated by reason of the sale of all the Shares prior to such
time. The Company has the right, in it sole discretion, to
accept or reject any subscription.
In order to induce the Company to accept this Subscription
Agreement, the undersigned represents and warrants to the
Company as follows:
(1) The undersigned understands that (i) this Subscription
Agreement may be accepted or rejected in whole or in part in the
discretion of the Company, and (ii) this Subscription Agreement,
unless properly revoked before acceptance, shall survive the
undersigned's death, disability or insolvency, except that the
undersigned shall have no obligations in the event that this
Subscription Agreement is rejected by the Company. In the event
that the Company does not accept the undersigned's subscription,
or if the Offering is terminated for any reason, the
undersigned's payment will be returned without interest or
deduction.
(2) The undersigned has read carefully this Subscription
Agreement and the Private Placement Memorandum dated July 1,
1999 (including the Exhibits annexed thereto) and, to the extent
necessary, has discussed the representations, warranties and
agreements which the undersigned makes by signing it, and the
applicable limitations upon the undersigned's resale of the
Shares with counsel.
(3) The undersigned understands that no federal or state
agency has made any finding or determination regarding the
fairness of the offering of the Securities, or any
recommendation or endorsement of the offering of the Securities.
Any representation to the contrary is a criminal offense.
(4) The undersigned is purchasing the Securities for the
undersigned's own account, with the intention of holding the
Securities for investment purposes, with no present intention of
dividing, or allowing others to participate in this investment
or of reselling or otherwise participating, directly or
indirectly, in a distribution of the Securities; and shall not
make any sale, transfer or other disposition of the Securities
without registration under the 1933 Act and applicable state
securities laws unless an exemption from registration is
available under those laws.
(5) The undersigned's overall commitment to investments
which are not readily marketable is not disproportionate to the
undersigned's net worth, and the undersigned's investment in the
Securities will not cause such overall commitment to become
excessive.
(6) The undersigned, if an individual, has adequate means
of providing for his current needs and personal and family
contingencies and has no need for liquidity in his investments
in the Securities.
(7) The undersigned is an "accredited investor" as that
term is defined in Section 501(a) under Regulation D promulgated
by the Securities and Exchange Commission under the 1933 Act
which definition is attached hereto. The undersigned is
financially able to bear the economic risk of this investment,
including the ability to afford holding the Securities for an
indefinite period or to afford a complete loss of this
investment.
(8) The address shown under the undersigned's signature at
the end of this Subscription Agreement is the undersigned's
principal residence if he is an individual, or its principal
business address if a corporation or other entity.
(9) The undersigned, together with any purchaser
representatives of the undersigned (as identified herein) has
such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an
investment in the Securities.
(10) The undersigned has been given the opportunity to ask
questions of and receive answers from the Company concerning the
terms and conditions of the Offering and to obtain additional
information necessary to verify the accuracy of the information
contained in the Private Placement Memorandum or such other
information as the undersigned desired in order to evaluate the
investment, and the undersigned availed itself of such
opportunity to the extent considered appropriate in order to
evaluate the merits and risks of the proposed investment.
(11) The undersigned has made an independent evaluation of
the merits of the investment and acknowledges the high risk
nature of the investment.
(12) The undersigned has accurately completed the Qualified
Purchaser Questionnaire provided herewith (Appendix B) and has
executed such Qualified Purchaser Questionnaire and any
applicable exhibits thereto.
(13) The undersigned understands that even if the Company
is or becomes a "reporting company" under the Securities
Exchange Act of 1934, as amended, the provisions of Rule 144
promulgated under the 1933 Act to permit resales of the
Securities are not available for at least one (1) year from the
date the Securities are paid for and accepted, there can be no
assurance that the conditions necessary to permit routine sales
of the Securities under Rule 144 will be satisfied in that such
sales require that the Company be current in filing periodic
reports under the Securities Exchange Act of 1934, and, if Rule
144 should become available, sales made in reliance on its
provisions could be made only in limited amounts and in
accordance with the terms and conditions of the Rule. The
undersigned further understands that in connection with the sale
of securities for which Rule 144 is not available, compliance
with some other registration exemption will be required. The
undersigned understands that except as specifically set forth
herein, the Company is under no obligation to the undersigned to
register the Securities or to comply with the conditions of Rule
144 or take any other action necessary in order to make any
exemption for the resale of the Securities without registration.
(14) The undersigned understands that none of the
Securities has been registered under the 1933 Act, or any state
securities laws in reliance on exemptions for private offerings;
the Securities cannot be resold or otherwise disposed of unless
they are subsequently registered under the 1933 Act and
applicable state securities laws or an exemption from
registration is available. The certificate(s) representing the
Securities will bear the following legend until (i) such
securities shall have been registered under the 1993 Act and
effectively disposed of in accordance with the registration
statement; or (ii) in the opinion of counsel reasonable
satisfactory to the Company such Securities may be sold without
registration under the 1933 Act:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE "BLUE
SKY" OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED, AND ANY
TRANSFER OR PURPORTED TRANSFER SHALL NOT BE RIGHTFUL UNDER THE
UNIFORM COMMERCIAL CODE AND THE COMPANY SHALL HAVE NO DUTY TO
REGISTER A TRANSFER OF THESE SECURITIES EXCEPT (i) PURSUANT TO A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME
EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR
(ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER
THE ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE
WRITTEN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL
APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY
APPLICABLE "BLUE SKY" OR SIMILAR SECURITIES LAW. THE
RESTRICTIONS CONTAINED HEREIN ARE BINDING ON THE HOLDER HEREOF
AND HIS SUCCESSORS AND ASSIGNS.
(15) The undersigned, if an individual, is at least 21
years of age.
(16) If at any time prior to acceptance of the subscription
for the Securities of the undersigned, any representation or
warranty of the undersigned shall no longer be true, the
undersigned promptly shall give written notice to the Company
specifying which representations and warranties are not true and
the reason therefore, whereupon the undersigned's subscription
may be rejected.
(17) Notwithstanding the place where this Subscription
Agreement may be executed by any of the parties hereto, all the
terms and provisions hereof shall be construed in accordance
with and governed by the laws of the State of Florida, without
giving effect to its conflict of law principles. Any dispute
which may arise out of or in connection with this Subscription
Agreement shall be adjudicated before a court located in the
State of Florida and the parties hereby submit to the exclusive
jurisdiction of the courts of the State of Florida and of the
federal courts in the District of Florida with respect to any
action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have
respecting the venue of any action or proceeding brought in such
a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this
Subscription Agreement or any acts or omissions relating to the
sale of the Securities, and the undersigned consents to the
service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested,
in care of the address set forth below or such other address as
the undersigned shall furnish in writing to the Company.
(18) The undersigned hereby waives trial by jury in any
action or proceeding involving, directly or indirectly, any
matter (whether sounding in tort, contract, fraud or otherwise)
in any way arising out of or in connection with this
Subscription Agreement or the undersigned's purchase of the
Securities.
(19) The undersigned acknowledges that he understands the
meaning and legal consequences of the representations,
warranties and acknowledgements contained in this Subscription
Agreement and in the Qualified Purchaser Questionnaire, and
hereby agrees to indemnify and hold harmless the Company and the
Representative, and their respective shareholders, officers,
directors, affiliates, "controlling persons", agents and
representatives, from and against any and all loss, damage,
expense, claim, action, suit or proceeding (including the
reasonable fees and expenses of legal counsel) as incurred
arising out of or in any manner whatsoever connected with a
breach of any representation or warranty of the undersigned
contained in this Subscription Agreement or in the Qualified
Purchaser Questionnaire. The undersigned acknowledges that such
damage could be substantial since (a) the Shares are being
offered without registration under the 1993 Act in reliance upon
the exemption pursuant to Section 4(2) of the 1933 Act for
transactions by an issuer not involving a public offering and,
in various states, pursuant to exemptions from registration, (b)
the availability of such exemptions is, in part, dependent upon
the truthfulness and accuracy of the representations made by the
undersigned herein and in its Qualified Purchaser Questionnaire,
and (c) the Company will rely on such representations in
accepting the undersigned's Subscription Agreement.
(20) Except as expressly provided herein, this Subscription
Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and may be
amended only by a writing executed by all of the parties hereto.
This Subscription Agreement supersedes all prior arrangements or
understandings with respect thereto, whether verbal or written.
The terms and conditions of this Subscription Agreement shall
inure to the benefit of and be binding upon the parties and
their respective successors, heirs and assigns.
(21) The undersigned agrees that if the Company has an
initial public offering prior to July 1, 2001, and the
Underwriter in such offering requires the existing shareholders
of the Company to agree to a lock-up period during which such
shareholders will not dispose of or pledge their Securities, the
undersigned will agree to the lock-up period prescribed by the
Underwriter.
- --The rest of this page is intentionally left blank--
ALL SUBSCRIBERS MUST COMPLETE THIS PAGE
IN WITNESS WHEREOF, the undersigned has executed this
Subscription
Agreement on this _______ day of ___________________, 1999.
Subscribed for Quantity and Type of Shares:
Quantity of Shares: ______
Manner in which Title is to be held (Please Check One):
1. / / Individual 7. / / Trust/Estate/Pension or Profit
Sharing Plan
Date Opened:
2. / / Joint Tenants With
Right of Survivorship 8. / / As a Custodian
for
3. / / Community Property ____________________
Under the Uniform Gift
to Minors
Act of the State of
______________________
4. / / Tenants in Common
5. / / Corporate/Partnership 9. / / Married with Separate Property
6. / / IRA 10. / / Keogh
INDIVIDUAL SUBSCRIBERS MUST COMPLETE PAGE 6;
SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 7.
Name of Purchaser
Registered Representative
Please indicate whether or not you or any member of your
immediate family is affiliated with any member of the National
Association of Securities Dealers, Inc. A member of your
immediate family includes parents, mother-in-law, father-in-law,
husband or wife, brother or sister, brother-in-law or sister-in-
law, son-in-law, daughter-in-law and children and any other
person who is supported, directly or indirectly to a material
extend by the subscriber.
Check One: / / No Affiliates / / Affiliated with
(explain)
EXECUTION BY SUBSCRIBER WHO IS A NATURAL PERSON
Exact Name in Which Title is to be Held
_______________________
Signature
(If joint Tenant or Tenants in Common, both persons must sign and
this page must contain all information for both persons.)
Name (Please Print)
Residence: Number and Street
City State Zip Code
Telephone Number
Social Security Number
ACCEPTED this day of , 1999 on behalf of the
Company.
FOR DIAMOND POWERSPORTS, INC.
BY: ______________________________
Mr. Pierre Elliott, President & CEO
EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY
(Corporation, Partnership, Trust, Etc.)
Name of Entity (Please Print)
Address of Principal Office of Entity
BY:
TITLE:
(seal)
Attest:
(If Entity is a Corporation)
Address
Telephone Number
Taxpayer ID Number
ACCEPTED this day of , 1999 on behalf of the
Company.
FOR DIAMOND POWERSPORTS, INC.
BY:
Mr. Pierre Elliott, President & CEO
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE
PART II-INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification. The Company shall indemnify to the fullest
extent permitted by, and in the manner permissible under the
laws of the State of Florida, any person made, or threatened to
be made, a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Company, or
served any other enterprise as director, officer or employee at
the request of the Company. The Board of Directors, in its
discretion, shall have the power on behalf of the Company to
indemnify any person, other than a director or officer, made a
party to any action, suit or proceeding by reason of the fact
that he/she is or was an employee of the Company.
Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons
of the Company, the Company has been advised that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful
defense of any action, suit or proceedings) is asserted by such
director, officer, or controlling person in connection with any
securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issues.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration fee.......... $ 264
Accounting & legal fees ...... 5,200*
Blue sky registration......... 2,500*
Printing and Mailing........... 1,000*
Miscellaneous.................. 1,036*
------------
Total $ 10,000
*Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In August 1999, the Company offered 200,000 Common Shares under
Rule 504 of Regulation D of the Securities Act of 1933 at .25
per Common Share to the following:
Name # of Common Shares
- ---------------------------- ---------------------------
Freddie Studz 80,000
Daryl James 40,000
James Ryant 40,000
Ft. Lauderdale Investments 40,000
ITEM 27. EXHIBITS
See Exhibit Index
ITEM 28. UNDERTAKINGS
(a) The Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement; and notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any
deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to 17
C.F.R. ss. 230.424(b) if, in the aggregate, the
changes in the volume and price represent no more than
a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, to
treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of
the securities at that time to be the initial bona fide
offering.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at
the end of the offering.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to
directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer
of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the small
business issuer will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
- --------------------
In accordance with the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements of filing on Form
SB-2 and authorized this amendment to registration statement to
be signed on its behalf by the undersigned, in the City of
Sunrise , State of Florida, on December 17, 1999.
DIAMOND POWERSPORTS, INC.
S/ Pierre Elliott
BY:------------------------
Pierre Elliott, President and
Chief Executive Officer
In accordance with the requirements of the Securities Act of
1933, this amendment to Registration Statement was signed by the
following persons in the capacities and on the dates stated.
Signature Title Date
- --------------------------- --------------------------- --------------
S/ Pierre Elliott Chief Executive Officer December 17, 1999
Director
S/ Lisa Elliott Secretary, Director December 17, 1999
(Acting Chief Financial
Officer)
S/ Alan Lichtman Director December 17, 1999
S/ David A. Lewis, Ph.D. Director December 17, 1999
S/ Margaret Hurley Director December 17, 1999
EXHIBIT INDEX
Exhibit No. in
Item 601 of
Regulation S-B Description
- ------------------- ------------------------------
3.1(A) Articles of Incorporation
3.1(B) Articles of Amendment
3.2 Bylaws of Diamond Powersports, Inc.
4 Form of Stock Certificate
5 Opinion of John Hanzel, P.A.
10.2(A) Employment Contract Between the Company and Pierre Elliott
10.2(A) Employment Contract Between the Company and Lisa Elliott
23.1 Consent of John Hanzel, P.A. (Included in Exhibit 5)
23.2 Consent of Michael J. Bongiovanni, P.A.,
Certified Public Accountants
27 Financial Data Schedule
EXHIBIT 3.1(A)
ARTICLES OF INCORPORATION
OF
DIAMOND POWERSPORTS, INC.
----------------------------------------------
I, the undersigned natural person of the age of twenty-one
years or more, acting as incorporator of a corporation under the
Florida General Corporation Act, do hereby adopt the following
Articles of Incorporation for such corporation:
ARTICLE I. NAME
The name of this Corporation is: DIAMOND RACING, INC.
ARTICLE II. GOVERNING LAW
This corporation is organized pursuant to the
provision of the Florida General Corporation Act.
ARTICLE III. DURATION
The period of its duration is perpetual, commencing on
the date of execution and acknowledgement of these articles on
May 13, 1992.
ARTICLE IV. PURPOSE
This corporation is organized for the purpose of
transacting any or all lawful business.
ARTICLE V. CAPITAL STOCK
This corporation is authorized to issue three hundred (300)
shares of one dollar ($1.00) par value stock.
ARTICLE VI. INITIAL REGISTERED AGENT AND OFFICE
The street address of the initial registered office of the
Registered Office of this corporation is:
Lewis S. Kilmer, Esquire
6950 Cypress Road, Suite 209
Plantation, Florida 33317
ARTICLE VII. INITIAL BOARD OF DIRECTORS
This corporation shall have (1) director initially. The
number of directors may be increased or diminished from time to
time by the by-laws adopted by the stockholders, but shall never
be less than one (1). The name and address of the initial
director of this corporation is:
NAME ADDRESS
--------- --------------
PIERRE ELLIOTT 10145 NW 46TH STREET
SUNRISE, FLORIDA 33351
ARTICLE VIII. INCORPORATOR
The name and address of the person signing these articles
is:
NAME ADDRESS
--------- --------------
PIERRE ELLIOTT 10145 NW 46TH STREET
SUNRISE, FLORIDA 33351
ARTICLE IX. INDEMNIFICATION
This corporation shall have the power to indemnify any
officer or director, or any former officer or director, to the
full extent permitted by law.
ARTICLE X. RESTRICTION ON THE TRANSFER OF STOCK
The shares of capital stock of this corporation held by any
shareholder may not be resold, pledged, hypothecated, mortgaged,
or otherwise transferred to other persons or entities unless
first offered to the remaining shareholders or to this
corporation. The price and terms at which, and the time within
which, those shares may be offered and sold shall be further
specified by written agreement among all of the shareholders and
this corporation.
ARTICLE XI. AMENDMENT
This corporation reserves the right to amend or repeal any
provisions contained in these articles of incorporation, or any
amendments to them, and any right conferred upon the
shareholders is subject to this reservation.
IN WITNESS WHEROF the undersigned subscribed has executed
these articles of incorporation on this 13th day of May, 1992.
/s/ Pierre Elliott
-------------------
Pierre Elliott, Subscriber
CONSENT TO APPOINTMENT OF REGISTERED AGENT
TO: Department of State
Division of Corporations
P.O. Box 6327
Tallahassee, Florida 32314
I, LEWIS S. KILMER, do hereby consent to serve as
registered agent for the corporation:
This 15th day of May, 1992.
/s/ Lewis S. Kilmer
---------------------
Lewis S. Kilmer
Address of registered agent:
6950 Cypress Road, Suite 209
Plantation, Florida 33317
EXHIBIT 3.1(B)
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DIAMOND RACING, INC.
Pursuant to the provisions of section 607.1006, Florida
Statutes, this Florida profit corporation adopts the following
articles of amendment to its articles of incorporation:
Article I. The name under which the Corporation was formed
is:
DIAMOND RACING, INC.
Article II. The Articles of Incorporation of the Corporation
were filed on May 13, 1992 by the Secretary of the State of
Florida. (Document number: V36694; FAX Audit number:
H92000002716).
Article III. Article 10 - RESTRICTION ON THE TRANSFER OF
STOCK is hereby deleted in its entirety. Articles 1 and 5 are
hereby deleted in their entirety, and respectively replaced with
the following:
Article 1. The name of this corporation is:
DIAMOND POWERSPORTS, INC.
Article 5. The corporation is authorized to issue One-
Hundred and Five Million (105,000,000) shares of Capital Stock
as follows:
5.1 Preferred Stock. Five Million (5,000,000) shares of
no par value Preferred Stock upon such terms and conditions as
the Board of Directors may determine at the time of issuance,
without further action of the shareholders being required. Such
preferred shares may or may not be: issued in series,
convertible into shares of common stock, redeemable by the
Company, and entitled to cumulative dividends. Other terms and
conditions may be imposed at the time of issuance.
5.2 Common Stock. One-Hundred Million (100,000,000)
shares of Common Stock having the par value of $0.001 per share.
The holders of Common Stock are entitled to one vote for each
share held on all matters submitted to a vote of shareholders.
Holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors
out of funds legally available therefor, subject to any
preferential dividend rights of outstanding Preferred Stock. The
holders of Common Stock have no preemptive, subscription,
redemption, or conversion rights.
Article IV. The first Amendment to the Articles of
Incorporation shall take effect immediately on its adoption by
the undersigned, being the sole stockholder and director of the
corporation.
IN WITNESS WHEREOF, the undersigned under the penalties of
perjury has executed this Amendment to the Articles of
Incorporation this 1stday of August, 1999.
____________________________________
Pierre Elliott, President, Sole
Stockholder, and Director
EXHIBIT 3.2
BYLAWS
FOR THE REGULATION, EXCEPT AS OTHERWISE
PROVIDED BY STATUTE OR ITS ARTICLES OF INCORPORATION
OF
DIAMOND RACING, INC.
ARTICLE 1
OFFICES
The registered office of the Corporation in the State of Florida
shall be located in the City and State designated in the
Articles of Incorporation. The Corporation may also maintain
offices at such other places within or without the State of
Florida as the Board of Directors may, from time to time,
determine.
ARTICLE 2
MEETINGS OF SHAREHOLDERS
Section 1- Annual Meetings (Chapter 78.310)
The annual meeting of the shareholders of the Corporation shall
be held at the time fixed, from time to time, by the Directors.
Section 2- Special Meetings (Chapter 78.310)
Special meetings of the shareholders may be called by the Board
of Directors or such person or persons authorized by the Board
of Directors and shall be held within or without the State of
Florida.
Section 3- Place of Meetings (Chapter 78.310)
Meetings of shareholders shall be held at the registered office
of the Corporation, or at such other places, within or without
the State of Florida as the Directors may from time to time fix.
If no designation is made, the meeting shall be held at the
Corporation's registered office in the state of Florida.
Section 4- Notice of Meetings (Section 78.370)
(a) Written or printed notice of each meeting of shareholders,
whether annual or special, signed by the president, vice
president of secretary, stating the time when and place where it
is to be held, as well as the purpose or purposes for which the
meeting is called, shall be served either personally or by mail,
by or at the direction of the direction of the president, the
secretary, or the officer or the person calling the meeting, not
less than ten or more than sixty days before the date of the
meeting, unless the lapse of the prescribed time shall have been
waived before or after the taking of such action, upon each
shareholder of record entitled to vote at such meeting, and to
any other shareholder to whom the giving of notice may be
required by law. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, addressed to the
shareholder as it appears on the share transfer records of the
Corporation or to the current address, which a shareholder has
delivered to the Corporation in a written notice.
(b) Further notice to a shareholder is not required when notice
of two consecutive annual meetings, and all notices of meetings
or of the taking of action by written consent without a meeting
to him or her during the period between those two consecutive
annual meetings; or all, and at least two payments sent by
first-class mail of dividends or interest of securities during a
12-month period have been mailed addressed to him or her at his
or her address as shown on the records of the Corporation and
have been returned undeliverable.
Section 5- Quorum (Section 78.320)
(a) Except as other wise provided herein, or by law, or in the
Articles of Incorporation (such Articles and any amendments
thereof being hereinafter collectively referred to as the
"Articles of Incorporation"), a quorum shall be present at all
meetings of shareholders of the Corporation, if the holders of a
majority of the shares entitled to vote of that matter are
represented at the meeting in person or by proxy.
(b) The subsequent withdrawal of any shareholder form the
meeting, after the commencement of a meeting, or the refusal of
any shareholder represented in person or by proxy to vote, shall
have no effect of the existence of a quorum, after a quorum has
been established at such meeting.
(c) Despite the absence of a quorum at any meeting of
shareholders, the shareholders present may adjourn the meeting.
Section 6- Voting and Acting (Section 78.320 & 78.350)
(a) Except as otherwise provided by law, the Articles of
Incorporation, or these Bylaws, any corporate action, the
affirmative vote of the majority of shares entitled to vote on
that matter and represented either in person or by proxy at a
meeting of shareholders at which a quorum is present, shall be
the act of the shareholders of the Corporation.
(b) Except as otherwise provided by statute, the Certificate of
Incorporation, or these bylaws, at each meeting of shareholders,
each shareholder of the Corporation entitled to vote thereat,
shall be entitled to one vote for each share registered in his
name on the books of the Corporation.
(c) Where appropriate communication facilities are reasonably
available, any or all shareholders shall have the right to
participate in any shareholders' meeting, by means of conference
telephone or any means of communications by which all persons
participating in the meeting are able to hear each other.
Section 7- Proxies (Section 78.355)
Each shareholder entitled to vote or to express consent or
dissent without a meeting, may do so either in person or by
proxy, so long as such proxy is executed in writing by the
shareholder himself, his authorized officer, director, employee
or agent or by causing the signature of the stockholder to be
affixed to the writing by any reasonable means, including, but
not limited to, a facsimile signature, or by his attorney-in-
fact there unto duly authorized in writing. Every proxy shall
be revocable at will unless the proxy conspicuously states that
it is irrevocable and the proxy is coupled with an interest. A
telegram, telex, cablegram, or similar transmission by the
shareholder, or a photographic, photostatic, facsimile, shall be
treated as a valid proxy, and treated as a substitution of the
original proxy, so long as such transmission is a complete
reproduction executed by the shareholder. If it is determined
that the telegram, cablegram or other electronic transmission is
valid, the persons appointed by the Corporation to count the
votes of shareholders and determine the validity of proxies and
ballots or other persons making those determinations must
specify the information upon which they relied. No proxy shall
be valid after the expiration of six months from the date of its
execution, unless otherwise provided in the proxy. Such
instrument shall be exhibited to the Secretary at the meeting
and shall be filed with the records of the Corporation. If any
shareholder designates two or more persons to act as proxies, a
majority of those persons present at the meeting, or, if one is
present, then that one has and may exercise all of the powers
conferred by the shareholder upon all of the persons so
designated unless the shareholder provides otherwise.
Section 8- Action Without a Meeting (section 78.320)
Unless otherwise provided for in the Articles of Incorporation
of the Corporation, any action to be taken at any annual or
special shareholders' meeting, may be taken without a meeting,
without prior notice and without a vote if written consents are
signed by a majority of the shareholders of the Corporation,
except however if a different proportion of voting power is
required by law, the Articles of Incorporation or these Bylaws,
than that proportion of written consents is required. Such
written consents must be filed with the minutes of the
proceedings of the shareholders of the Corporation.
ARTICLE 3
Board of Directors
Section 1- Number, Term, Election and Qualifications
(Section 78.115, 78.330)
(a) The first Board of Directors and all subsequent Boards of
the Corporation shall consist of ( Pierre Elliott and Lisa
Elliott), unless and until otherwise determined by vote of a
majority of the entire Board of Directors. The Board of
Directors or shareholders all have the power, in the interim
between annual and special meetings of the shareholders, to
increase or decrease the number of Directors of the Corporation.
A Director need not be a shareholder of the Corporation unless
the Certificate of Incorporation of the Corporation or these
Bylaws so require.
(b) Except as may otherwise be provided herein or in the
Articles of Incorporation, the members of the Board of Directors
of the Corporation shall be elected at the first annual
shareholders' meeting and at each annual meeting thereafter,
unless their terms are staggered in the Articles of
Incorporation of the Corporation or these Bylaws, by a plurality
of the votes cast at a meeting of shareholders, by the holders
of shares entitled to vote in the election.
(c) The first Board of Directors shall hold office until the
first annual meeting of shareholders and until their successors
have been duly elected and qualified or until there is a
decrease in the number of Directors. Thereinafter, Directors
will be elected at the annual meeting of shareholders and shall
hold office until the annual meeting of the shareholders next
succeeding his election, unless their terms are staggered in the
Articles of incorporation of the Corporation (so long as at
least one-fourth in number of the Directors of the Corporation
are elected at each annual shareholders' meeting) or these
Bylaws, or until his prior death, resignation or removal. Any
Director may resign at any time upon written notice of such
resignation to the Corporation.
(d) All Directors of the Corporation shall have equal voting
power unless the Articles of Incorporation of the Corporation
provide that the voting power of individual Directors or classes
of directors are greater than or less than that of any other
individual Directors or classes of Directors, and the different
voting powers may be stated in the Articles of Incorporation or
may be dependent upon any fact or event that may be ascertained
outside the Articles of Incorporation is the manner in which the
fact or event may operate of those voting powers is stated in
the Articles of Incorporation. If the Articles of Incorporation
provide that any Directors have voting power greater than or
less than other Directors of the Corporation, every reference in
these Bylaws to a majority or other proportion of Directors
shall be deemed to refer to majority or other proportion of the
voting power of all the Directors or classes of Directors, as
may be required by the Articles of Incorporation.
Section 2- Duties and Powers (Section 78.120)
The Board of Directors shall be responsible for the control and
management of the business and affairs, property and interests
of the Corporation, and may exercise all powers of the
Corporation, except such as those stated under Florida state
law, are in the Articles of Incorporation or these Bylaws,
expressly conferred upon or reserved the shareholders or any
other person or persons named therein.
Section 3- Regular Meetings; Notice (Section 78.310)
(a) A regular meeting of the Board of Directors shall be held
either within or without the State of Florida at such time and
at such place as the Board shall fix.
(b) No notice shall be required of any regular meeting of the
Board of Directors and, if given, need not specify the purpose
of the meeting' provided, however that in case the Board of
Directors shall fix or change the time or place of any regular
meeting when such time and place was fixed before such change,
notice of such action shall be given to each director who shall
not have been present at the meeting at which such action was
taken within the time limited, and in the manner set forth in
these Bylaws with respect to special meetings, unless such
notice shall be waived in the manner set forth in these Bylaws.
Section 4- Special Meetings, Notice (Section 78.310)
(a) Special meetings of the Board of Directors shall be held at
such time and place as may be specified in the respective
notices or waivers of notice thereof.
(b) Except as otherwise required statute, written notice of
special meetings shall be mailed directly to each Director,
addressed to him at his residence or usual place of business, or
delivered orally.
With sufficient time for the convenient assembly of Directors
thereat, or shall be sent to him at such place by telegram,
radio or cable, or shall be delivered to him personally or given
to him orally, not later than the day before the day on which
the meeting is to be held. If mailed, the notice of any special
meeting shall be deemed to be delivered on the second day after
it is deposited in the United States mails, so addressed, with
postage prepaid. If notice is given by telegram, it shall be
deemed to be delivered when the telegram is delivered to the
telegraph company. A notice, or waiver of notice, except as
required by these Bylaws, need not specify the business to be
Transacted at or the purpose or purposes of the meeting.
(c) Notice of any special meeting shall not be required to be
given to any director who shall attend such meeting without
protesting prior thereto or at its commencement, the lack of
notice to him, or who submits a signed waiver of notice, whether
before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5- Chairperson
The Chairperson of the Board, if any and if present, shall
preside at all meetings of the Board of Directors. If there
shall be no Chairperson, or he or she shall be absent, then the
President shall preside, and in his absence, any other director
chosen by the Board of Directors shall preside.
Section 6- Quorum and Adjournments (Section 78.315)
(a) At all meetings of the Board of Directors, or any committee
thereof, the presence of a majority of the entire Board, or such
committee thereof, shall constitute a quorum for the transaction
of business, except as otherwise provided by law, by the
Certificate of Incorporation, or these Bylaws.
(b) A majority of the directors present at the time and place of
any regular or special meeting, although less than a quorum, may
adjourn the same from time to time without notice, whether or
not a quorum exists. Notice of such adjourned meeting shall be
given to Directors not present at time of the adjournment and,
unless the time and place of the adjourned meeting are announced
at the time of the adjournment, to the other Directors who were
present at the adjourned meeting.
Section 7- Manner of Acting (Section 78.315)
(a) At all meetings of the Board of Directors, each director
present shall have one vote, irrespective of the number of
shares of stock, if any, which he may hold.
(b) Except as otherwise provided by law, by the Articles of
Incorporation, or these bylaws, action approved by a majority of
the votes of the Directors present at any meeting of the Board
or any committee thereof, at which a quorum is present shall be
the act of the Board of Directors or any committee thereof.
(c) Any action authorized in writing made prior or subsequent to
such action, by all of the Directors entitled to vote thereon
and filed with the minutes of the Corporation shall be the act
of the Board of Directors, or any committee thereof, and have
the same force and effect as if the same had been passed by
unanimous vote at a duly called meeting of the Board or
committee for all purposes.
(d) Where appropriate communications facilities are reasonably
available, any or all directors shall have the right to
participate in any Board of Directors meeting, or a committee of
the Board of Directors meeting, by means of conference telephone
or any means of communications by which all persons
participating in the meeting are able to hear each other.
Section 8- Vacancies (Section 78.335)
(a) Unless otherwise provided for by the Articles of
Incorporation of the Corporation, any vacancy in the Board of
Directors occurring by reason of an increase in the number of
directors, or by reason of the death, resignation,
disqualification, removal or inability to act of any director,
or other cause, shall be filled by an affirmative vote of a
majority of the remaining directors, though less than a quorum
of the Board or by a sole remaining Director, at any regular
meeting or special meeting of the Board of Directors called for
that purpose except whenever the shareholders of any class or
classes or series thereof are entitled to elect one or more
Directors by the Certificate of Incorporation of the
Corporation, vacancies and newly created directorships of such
class or classes or series may be filled by a majority of the
Directors elected by such class or classes or series thereof
then in office, or by a sole remaining Director so elected.
Section 9- Resignation (Section 78.335)
A Director may resign at any time by giving written notice of
such resignation to the Corporation.
Section 10- Removal (Section 78.335)
Unless otherwise provided for by the Articles of Incorporation,
one or more or all the Directors of the Corporation may be
removed with or without cause at any time by a vote of two-
thirds of the shareholders entitled to vote thereon, at a
special meeting of the shareholders called for that purpose,
unless the Articles of Incorporation provide that Directors may
only be removed for cause, provided however, such Director shall
not be removed if the Corporation states in its Articles of
Incorporation that its Directors shall be elected by cumulative
voting and there are a sufficient number of shares cast against
his or her removal, which if cumulatively voted at an election
of Directors would be sufficient to elect him or her. If a
Director was elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to
remove that Director.
Section 11- Compensation (Section 78.140)
The Board of Directors may authorize and establish reasonable
compensation of the Directors for services to the Corporation as
Directors, including, but not limited to attendance at any
annual or special meeting of the Board.
Section 12- Committees (Section 78.125)
Unless otherwise provided for by the Articles of Incorporation
of the Corporation, the Board of Directors, may from time to
time designate from among its members one or more committees,
and alternate members thereof, as they deem desirable, each
consisting of one or more members, with such powers and
authority (to the extent permitted by law and these Bylaws ) as
may be provided in such resolution. Unless the Articles of
Incorporation or Bylaws state otherwise, the Board of Directors
may appoint natural persons who are not Directors to serve on
such committees authorized herein. Each such committee shall
serve at the pleasure of the Board and, unless otherwise stated
by law, the Certificate of Incorporation of the Corporation or
these Bylaws, shall be governed by the rules and regulations
stated herein regarding the Board of Directors.
ARTICLE 4
OFFICERS
Section 1- Number, Qualifications, Election and Term of
Office (Section 78.130)
(a) The Corporation's officers shall have such titles and duties
as shall be stated in these Bylaws or in a resolution of the
Board of Directors which is not inconsistent with these Bylaws.
The officers of the Corporation shall consist of a president,
secretary and treasurer, and also may have one or more vice
presidents, assistant secretaries and assistant treasurers and
such other officers as the Board of Directors may from time to
time deem advisable. Any officer may hold two or more offices
in the Corporation.
(b) The officers of the Corporation shall be elected by the
Board of Directors at the regular annual meeting of the Board
following the annual meeting of shareholders.
(c) Each officer shall hold office until the annual meeting of
the Board of Directors next succeeding his election, and until
his successor shall have been duly elected and qualified,
subject to earlier termination by his or her death, resignation
or removal.
Section 2- Resignation
Any officer may resign at any time by giving written notice of
such resignation to the Corporation.
Section 3- Removal
Any officer elected by the Board of Directors may be removed,
either with or without cause, and a successor elected by the
Board at any time, and any officer or assistant officer, if
appointed by another officer, may likewise by removed by such
officer.
Section 4- Vacancies
A vacancy, however caused, occurring in the Board and any newly
created Directorships resulting from an increase in the
authorized number of Directors may be filled by the Board of
Directors.
Section 5- Bonds
The Corporation may require any or all of its officers or Agents
to post a bond, or otherwise, to the Corporation for the
faithful performance of their positions or duties.
Section 6- Compensation
The compensation of the officers of the Corporation shall be
fixed from time to time by the Board of Directors.
ARTICLE 5
SHARES OF STOCK
Section 1- Certificate of Stock (Section 78.235)
(a) The shares of the Corporation shall be represented by
certificates or shall be uncertified shares.
(b) Certificated shares of the Corporation shall be signed ,
(either manually or by facsimile), by officers or agents
designated by the Corporation for such purposes, and shall
certify the number of shares owned by him in the Corporation.
Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a
registrar, then a facsimile of the signatures of the officers or
agents, the transfer agent or transfer clerk or the registrar of
the Corporation may be printed or lithographed upon the
certificate in lieu of the actual signatures. If the corporation
uses facsimile signatures of its officers and agents on its
stock certificates, it cannot act as registrar of its own stock,
but its transfer agent and registrar may be identical if the
institution action in those dual capacities countersigns or
otherwise authenticates any stock certificates in both
capacities. If any officer who has signed or whose facsimile
signature has been placed upon such certificate, shall have
ceased to be such officer before such certificate is issued, it
may be issued by the Corporation with the same effect as if he
were such officer at the date of its issue.
(c) If the Corporation issues uncertified shares as provided for
in these Bylaws, within a reasonable time after the issuance or
transfer of such uncertified shares, and at least annually
thereafter, the Corporation shall send the shareholder a written
statement certifying the number of shares owned by such
shareholder in the Corporation.
(d) Except as otherwise provided by law, the rights and
obligation of the holders of uncertified shares and the rights
and obligations of the holders of certificates representing
shares of the same class and series shall be identical.
Section 2- Lost or Destroyed Certificates (Section
104.8405)
The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or
certificates therefore issued by the Corporation alleged to have
been lost, stolen or destroyed if the owner:
(a) so requests before the Corporation has notice that the
shares have bee acquired by a bona fide purchaser,
(b) files with the Corporation a sufficient indemnity bond; and
(c) satisfies such other requirements, including evidence of
such loss, theft or destruction, as may be imposed by the
Corporation.
Section 3- Transfers of shares (Section 104.8401,104.8406.
& 104.8416)
(a) Transfers or registration of transfers of shares of the
Corporation shall be made of the stock transfer books of the
Corporation by the registered holder thereof, or by his attorney
duly authorized by a written power of attorney; and in the case
of shares represented by certificates, only after the surrender
to the Corporation of the certificates representing such shares
with such shares properly endorsed, with such evidence of the
authenticity of such endorsement, transfer, authorization and
other matters as the Corporation may reasonably require, and the
payment of all stock transfer taxes due thereon.
(b) The Corporation shall be entitled to treat the holder of
record of any share or shares as the absolute owner thereof for
all purposes and accordingly, shall not be bound to recognize
any legal, equitable or other claim to, or interest in, such
share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as
otherwise expressly provided by law.
Section 4- Record Date (Section 78.215 & 78.350)
(a) The Board of Directors may fix, in advance, which shall not
be more than sixty days before the meeting or action requiring a
determination of shareholders, as the record date for the
determination of shareholders entitled to receive notice of, or
to vote at, any meeting of shareholders, or to consent to any
proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividends, or
allotment of any rights, or for the purpose of any other action.
If no record date is fixed, the record date for shareholders
entitled to notice of meeting shall be at the close of business
on the day preceding the day on which notice is given, or, if no
notice is given, the day on which the meeting is held, or if
notice is waived, at the close of business on the day before the
day on which the meeting is held.
(b) the Board of Directors may fix a record date, which shall
not precede the date upon which the resolution fixing the record
date is adopted for shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights of
shareholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of
any other lawful action.
(c) A determination of shareholders entitled to notice of or to
vote at a shareholders' meeting is effective for any adjournment
of the meeting unless the Board of Directors fixes a new record
date for the adjourned meeting.
Section 5- Fractions of Shares/Scrip (Section 78.205)
The Board of Directors may authorize the issuance of
certificates or payment of money for fractions of a share,
either represented by a certificate or uncertificated, which
shall entitle the holder to exercise voting rights, receive
dividends and participate in any assets of the Corporation in
the event of liquidation, in proportion to the fractional
holdings; or it may authorize the payment in case of the fair
value of fractions of a share as of the time when those entitled
to receive such fractions are determined; or it may authorize
the issuance, subject to such conditions as may be permitted by
law, of scrip in registered or bearer form over the manual or
facsimile signature of and officer or agent of the Corporation
or its agent for that purpose, exchangeable as therein provided
for full shares, but such scrip shall not entitle the holder to
any rights of shareholder, except as therein provided. The scrip
may contain any provisions or conditions that the Corporation
deems advisable. If a scrip ceases to be exchangeable for full
share certificates, the shares that would otherwise have been
issuable as provided on the scrip are deemed to be treasury
shares unless the scrip contains other provisions for their
disposition.
ARTICLE 6
DIVIDENDS
(a) Dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time
or times as the Board of Directors may determine and shares may
be issued pro rata and without consideration to the
Corporation's shareholders or to the shareholders of one or more
classes or series.
(b) Shares of one class or series may not be issued as a share
dividend to shareholders of another class or series unless:
(i) so authorized by the Articles of Incorporation;
(ii) a majority of the shareholders of the class or series to be
issued approve the issue; or
(iii) there are no outstanding shares of the class or series of
shares that are authorized to be issued.
ARTICLE 7
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be
subject to change by the Board of Directors from time to time,
subject to applicable law.
ARTICLE 8 (Section 78.065)
CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be
prescribed and altered, from time to time, by the Board of
Directors. The use of a seal or stamp by the Corporation on
corporate documents is not necessary and the lack thereof shall
not in any way affect the legality of a corporate document.
ARTICLE 9
AMENDMENTS
Section 1- By Shareholders
All Bylaws of the Corporation shall be subject to alteration or
repeal, and new Bylaws may be made, by a majority vote of the
shareholders at the time entitled to vote in the election of
Directors even though these Bylaws may also be altered, amended
or repealed by the Board of Directors.
Section 2- By Directors (Section 78.120)
The Board of Directors shall have power to make, adopt, alter,
amend and repeal, from time to time, Bylaws of the Corporation.
ARTICLE 10 (Section 78.375)
WAIVER OF NOTICE
Whenever any notice is required to given by law, the Articles of
Incorporation or these Bylaws, a written waiver signed by the
person or persons entitled to such notice, whether before or
after the meeting by any person, shall constitute a waiver of
notice of such meeting.
ARTICLE 11 (Section 78.140)
No contract or transaction shall be void or voidable if such
contract or transaction is between the corporation and one or
more of its Directors or Officers, or between the Corporation
and any other corporation, partnership, association, or other
organization in which one or more of its Directors or Officers,
are directors or officers, or have a financial interest, when
such Director or Officer is present at or participates in the
meeting of the Board, or the committee of the shareholders which
authorizes the contract or transaction or his, her or their
votes are counted for such purpose, if:
(a) the material facts as to his, her or their relationship or
interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee and are
noted in the minutes of such meeting, and the Board or committee
in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested Directors,
even though the disinterested Directors be less than a quorum,
or
(b) the material facts as to his, her or their relationship or
relationships or interest or interests and as to the contract or
transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the shareholders;
or
(c) the contract or transaction is fair as to the Corporation as
of the time it is authorized, approved or ratified, by the Board
of Directors, a committee of the shareholder; or
(d) the fact of the common directorship, office or financial
interest is not disclosed or known to the Director or Officer at
the time the transaction is brought before the Board of
Directors of the Corporation for such action.
Such interested Directors may be counted when determining the
presence of a quorum at the Board of Directors or committee
meeting authorizing the contract or transaction.
ARTICLE 12 (Section 78.150 & 78.165)
ANNUAL LIST OF OFFICERS, DIRECTORS, AND REGISTERED AGENTS
The Corporation shall, within sixty days after the filing of its
Articles of Incorporation with the Secretary of State, and
annually thereafter on or before the last day of the month in
which the anniversary date of incorporation occurs each year,
file with the Secretary of State a list of its president,
secretary and treasurer and all of its Directors, along with the
post office box or street address, either residence or business,
and a designation of its resident agent in the state of Florida.
Such list shall be certified by an officer of the Corporation.
EXHIBIT 4
PAR VALUE $.001
CERTIFICATE NUMBER NUMBER OF SHARES
DIAMOND POWERSPORTS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
CLASS A CUSIP NUMBER
COMMON STOCK
This certifies that ________________________ is the owner
of ________________________ Fully Paid and Non-Assessable Shares
of Common Stock Par Value $.001 Per Share, of Diamond
Powersports, Inc., transferable only on the books of the
Corporation by the holder hereof in person or by duly authorized
attorney upon surrender of this certificate properly endorsed.
This Certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the corporation and the facsimile
signatures of its duly authorized officers.
Date
[CORPORATE SEAL]
- ------------------- ------------------
President Secretary
COUNTERSIGNED:
---------------------------
Transfer Agent and Registrar
Attest:_______________________
Authorized
Signature
[REVERSE SIDE OF CERTIFICATE]
DIAMOND POWERSPORTS, INC.
The Corporation will furnish to any shareholder upon request and
without charge, a full statement of the designations,
preferences, limitations, and relative rights of the shares of
each class authorized to be issued and, if the Corporation is
authorized to issue any preferred or special class in series,
the variations in the relative rights and preferences between
the shares or each such series so far as the same have been
fixed and determined, and the authority of the board of
directors to fix and determine the relative rights and
preferences of other series.
[STANDARD TRANSFER FORM]
EXHIBIT 5
December 15, 1999
Diamond Powersports, Inc.
10145 NW 46th Street
Sunrise, Florida 33351
Gentlemen:
In connection with the registration under the Securities Act of
1933 (the "Act") of 4,000,000 shares of the common stock, $.001
par value (the "Common Stock"), of Diamond Powersports, a
Florida corporation (the "Company"), we have examined such
corporate records, certificates and other documents, and such
questions of law, as we have considered necessary or appropriate
for the purposes of this opinion.
Upon the basis of such examination, it is our opinion that the
Common Stock, when issued upon the terms and conditions set
forth in the Registration Statement filed by the Company in
connection with the registration of the Common Stock, and upon
receipt of the consideration therefor, will be legally issued,
fully paid and nonassessable.
We consent to be named in the Registration Statement as
attorneys who will pass upon certain legal matters in connection
with the offering described in the Registration Statement, and
to the filing of a copy of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
John Hanzel, P.A.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into this 1 day of November, 1999, by and between PIERRE ELLIOTT
of 4320 NW 107 avenue, Coral Springs, FL. (hereinafter
"Employee"), and DIAMOND POWERSPORTS, Inc. having it's principal
offices at 10145 NW 46 St., Sunrise, FL. (hereinafter
"Employer") W I T N E S S E T H This Agreement is made and entered
into under the following circumstances:
(1) Whereas, Employer is engaged in the business of the sale of
motorcycle parts and accessories; and (2) Whereas, Employer
desires, on the terms and conditions stated herein, to employ
the Employee as a President; and (3) Whereas, the Employee
desires, on the terms and conditions stated herein, to be
employed by the Employer. NOW THEREFORE, in consideration of the
foregoing recitals, and of the promises, covenants, terms and
conditions contained herein, which is hereby acknowledged by the
parties hereto, it is agreed as follows:
1.Employment and Term. a) Subject to earlier termination as
provided for in this Section 1 and in Section 2 hereof, the
Employer hereby employs Employee, and Employee hereby accepts
employment with the employer, as President for a period of one
(1) year (hereinafter the "Term of Employment") commencing the1
day of November, 1999 ("hereinafter the "Effective Date")
through the 1day of November 2000. The Term of Employment shall
be renewed or renegotiated upon the mutual agreement of Employee
and Employer. This agreement and Employee's employment may be
terminated at the Employer's discretion during the Term of
Employment, provided that Employer shall pay to Employee an
amount of Employee's base salary for the remaining period of the
Term of Employment. b) Employee may terminate this Agreement at
Employee's discretion by providing at least thirty (30) days
prior written notice to Employer. In the event of termination by
Employee pursuant to this subsection, Employer may immediately
relieve Employee of all duties and immediately terminate this
Agreement, provided that Employer shall pay Employee at the then
applicable base salary rate to the termination date included in
Employee's original termination notice.
2. Employment Termination. Subject to earlier termination
as provided for in this Section, the Employer hereby employs
Employee, and Employee hereby accepts employment with the
employer pursuant to the terms of this agreement, which empowers
Employer to terminate employee at any time with cause. Cause
shall be defined as: i) failure of Employee to perform the
duties in a manner satisfactory to Employer, in its sole
discretion; provided, however, that the Employment shall not be
terminated pursuant to this subparagraph (i) unless Employer
first gives Employee a written notice ("Notice of Deficiency").
The Notice of Deficiency shall specify the deficiencies in
Employee's performance of his duties. Employee shall have a
period of thirty (30) days, commencing on receipt of the Notice
of Deficiency, in which to cure the deficiencies contained in
the Notice of Deficiency. In the event, Employee does not cure
the deficiencies to the satisfaction of Employer, in its sole
discretion, within such thirty- (30) day period; the Employer
shall have the right to immediately terminate the Employee's
Employment. The provisions of this subparagraph (i) may be
invoked by Employer any number of times and cure of deficiencies
contained in any Notice of Deficiency shall not be construed as
a waiver of this subparagraph (i) nor prevent the Employer from
issuing any subsequent Notices of Deficiency; ii) any dishonesty
by Employee in dealings with the Employer, the commission of
fraud by Employee, or negligence or willful neglect in the
performance of the duties of Employee; iii) the arrest or
conviction (or plea of guilty or no lo contendere) of Employee
of any felony or other crime involving dishonesty or moral
turpitude; iv) any violation of any provision contained in this
agreement; v) unlawful use of narcotics or other controlled
substances, or use of alcohol or other drugs in a manner the
Employer reasonably determines to be adverse to the best
interest of the Employer; vi) Failure of Employee to attend
training programs required for competency in his duties (job
description) as an Employee; vii) if, due to any act or omission
of Employee, liability insurance cannot be reasonably obtained
or maintained, or if, due to any act or omission of Employee,
liability insurance is canceled, terminated or revoked; or, For
all purposes of this Agreement, termination for "cause" shall be
deemed to have occurred in the event of Employee's resignation
when, because of existing facts and circumstances, subsequent
termination for "cause" can be reasonably foreseen. In the event
of termination pursuant to this subsection, Employee shall be
paid only at the then applicable base salary rate up to and
including the date of termination. Employee shall not be paid
any incentive salary payments or other compensation, prorated or
otherwise.
3. Duties and Responsibilities. Employee shall: (a) engage
full-time services, on behalf of Employer, at locations directed
by Employer, as Employer may designate; (b) perform all
managerial duties necessary; (c) perform such other duties as
may from time to time be reasonably assigned to the Employee by
Employer; (d) cooperate with Employer, to the fullest ethical
extent, to promote Employer's business and to continue and
expand the products provided by Employer, and to further the
best interests of the Employer; and (e) perform all services in
a professional manner using the full knowledge and skill of
Employee which services shall be performed in accordance with
standards and procedures established by Employer. Employee shall
(i) devote Employee's entire business time, attention and
energies exclusively to the Employer; and (ii) faithfully and
competently perform the duties hereunder using Employee's full
professional skill and knowledge; and (iii) not engage in any
other professional or business activity.
4. Compensation. Employee shall be paid compensation during
this Agreement as follows: a) A base salary of $ 65,000.00 per
year, payable in installments according to the Employer's
regular payroll schedule. b) An incentive salary equal to one
half of one (1/2%) percent of the adjusted net profits
(hereinafter defined) of the Employer beginning with the
Employer's year end 2000 and each fiscal year thereafter during
the term of this Agreement. "Adjusted net profit" shall be the
net profit of the Employer before federal and state income
taxes, determined in accordance with generally accepted
accounting practices by the Employer's independent accounting
firm and adjusted to exclude: (i) any incentive salary payments
paid pursuant to this Agreement; (ii) any contributions to
pension and/or profit sharing plans; (iii) any extraordinary
gains or losses (including, but not limited to, gains or losses
on disposition of assets); (iv) any refund or deficiency of
federal and state income taxes paid in a prior year; and (v) any
provision for federal or state income taxes made in prior years
which is subsequently determined to be unnecessary. The
determination of the adjusted net profits made by the
independent accounting firm employed by the Employer shall be
final and binding upon the Employee and Employer. The incentive
salary payment shall be made within thirty (30) days after the
Employer's independent accounting firm has concluded its audit.
If the final audit is not prepared within ninety (90) days after
the end of the fiscal year, then Employer shall make preliminary
payment equal to fifty percent (50%) of the amount due based
upon the adjusted net profits preliminarily determined by the
independent accounting firm, subject to payment of the balance,
if any, promptly following completion of the audit by the
Employer's independent accounting firm.
5. Benefits. a) Vacation/Personal Time. Employer shall be
entitled to an aggregate of seven (7) working days paid vacation
during each full year during the Term of Employment. In
addition, personal time will be provided, this will be
reevaluated during the Term of Employment and recalculated after
one year. b) Holidays. Employee shall be entitled to paid
holidays each calendar year. Employer shall notify Employee on
or about the beginning of each calendar year with respect to the
holiday schedule for the coming year. Personal holidays, if any,
will be scheduled in advance subject to requirements of
Employer. Such holidays must be taken during the calendar year
and cannot be carried forward into the next year. c) Sick Leave.
Employee shall be entitled to sick leave and emergency leave,
which shall be liberally granted upon reasonable notice. d)
Medical Insurance. Employer agrees to include Employee and
family in the group medical and hospital plan of Employer. e)
Pension and Profit Sharing Plans. Employee shall be entitled to
participate in any pension or profit sharing plan or other type
adopted by the Employer for the benefit of its officers and/or
regular employees. g) Expense Reimbursement. Employee shall be
entitled to reimbursement for all reasonable expenses, including
travel and entertainment, incurred by Employee in the
performance of Employee's duties. Employee shall maintain
records and written receipts as required by the Employer and
reasonably requested by the board of directors to substantiate
such expenses.
6. Non-Competition. During the Term of Employment and for a
continuous period of two (2) years commencing upon termination
of employment, Employee shall not, individually or jointly with
others, own or hold any ownership or voting interest in any
person or entity engaged in a business the same as or similar to
any business of the employer or which competes in any manner
whatsoever with the business of Employer, and which is located
or intended to be located in the United States; and Employee
shall not act as an officer, director, employee, partner,
independent contractor, consultant, principal, agent,
proprietor, or in any other capacity for, not lend any
assistance (financial, managerial, professional or otherwise) or
cooperation to, nor perform any services for, any such person or
entity; and during the Term of Employment Employee shall be
prohibited from the foregoing activities and relationships with
any person or entity which competes with Employer, regardless of
the geographic location of such person or entity.
7. Non-Disclosure; Non-Solicitation. Except in the
performance of servicing customers of Employer, at no time
during the Term of Employment or at anytime thereafter shall
Employee, individually or jointly with others, for the benefit
of Employee or any third party, publish, disclose, use or
authorize anyone else to publish, disclose or use, any secret or
confidential material or information regarding the business
methods, business policies, procedures, techniques or trade
secrets, or other knowledge or processes of or developed by
Employer (and/or any other Employee or agent of Employer), any
affiliate of the employer, any entity in which the Employer has
an interest, including, without limitation, any secret or
confidential information relating to the business, customers,
financial position, trade or industrial practices, trade
secrets, technology or know-how of the Employer. Furthermore,
for a period of two (2) years commencing upon termination of
Employee's employment, Employee shall not solicit or contact, or
cause any other person or entity to solicit or contact, any
current customer of Employer at the time of termination.
8. Reasonableness of Restrictions: Reformation:
Enforcement. The parties hereto recognize and acknowledge that
the geographical and time limitations contained in Section 6 and
7 hereof (hereinafter "Restrictive Covenants") are reasonably
necessary to protect the Employer's legitimate business
interests and properly required for the adequate protection of
such business interests of Employer. Employee acknowledges that
the Employer will provide to Employee confidential information
concerning the Employer's business methods and operating
practices in reliance on the covenants contained in the
Restricted Covenants. It is agreed by the parties hereto that if
any portion of the restrictions contained in the Restrictive
Covenants. It is agreed by the parties hereto that if any
portion of the restrictions contained in the Restrictive
Covenants are held to be unreasonable, arbitrary, or against
public policy, then the restrictions shall be considered
divisible, both as to the time and to the geographical area,
with each month of the specified period being deemed a separate
period of time and each radius mile of the restricted territory
being deemed a separate geographic area, so that the lesser
period of time or geographical area shall remain effective so
long as the same is not unreasonable, arbitrary, or against
public policy. The parties hereto agree that in the event any
court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory
to be unreasonable, arbitrary, or against public policy, a
lesser time period or geographical area which is determined to
be reasonable, non arbitrary, and not against public policy may
be enforced against Employee. If Employee shall violate any of
the covenants contained herein and if any court action is
instituted by the Employer to prevent or enjoin such violation,
then the period of time during which the Employer's business
activities shall be restricted, as provided in this Agreement,
shall be lengthened by a period of time equal to the period
between the date of the Employee's breach of the terms or
covenants contained in this Agreement and the date on which the
decree of the court disposing of the issued upon the merits
shall become final and not subject to further appeal.
9. No Remedy At Law. Employee agrees that the remedy at law
for any breach by Employee of the covenants contained in
Sections 6 and 7 will be inadequate and would be difficult to
ascertain and therefore, in the event of the breach or
threatened breach of any such covenants, the Employer, in
addition to any and all other remedies, shall have the right to
enjoin Employee from any threatened or actual activities in
violation thereof; and Employee hereby consents and agrees that
temporary and permanent injunctive relief may be granted in any
proceedings which might be brought to enforce any such covenants
without the necessity of proof of actual damages.
10. Representations of Employee. Employee hereby makes the
following representations to Employer, each of which is material
and is being relied on by Employer and shall be true as of the
date hereof and throughout the Term of Employment: a) Employment
Qualifications. Employee shall (i) use Employee's best efforts
to maintain qualifications as a president, (ii) is experienced
in administrative procedure, (iii) agrees to participate and
shall participate in a continuing education and/or training
programs, (iv) use Employee's best efforts as a president. b)
Factual Information. Any and all factual information furnished
by Employee to Employer is true and accurate in every material
respect as of the date on which such information was furnished.
c) Professional Conduct. Employee has and will continue to
conduct all activities in accordance and compliance with any and
all laws, regulations and ethical standards. d) Authority.
Employee has full power and authority to enter into this
Agreement and perform all obligations hereunder. The execution
and performance of this Agreement by Employee will not
constitute a breach or violation of any covenant, agreement or
contract to which Employee is a party or by which Employee is
bound.
11. Books, Office Equipment, Etc. a) Employee's Ownership.
All books, office equipment and other property furnished by
Employee shall remain Employee's property. b) Employer's
Ownership. All instruments, equipment, furniture, furnishings,
supplies, products, samples, forms, charts, logs, brochures,
client records, procedures, contracts and any other property,
materials or information furnished by Employer are and shall
remain the sole property of Employer. Upon termination of this
Agreement, Employee shall return all such property to Employer.
12. Assignability. This Agreement and the rights and duties
created hereunder shall not be assignable or delegable by
Employee. Employer may, at Employer's option and without consent
of Employee, assign its rights and duties hereunder to any
success or entity or transferee of Employer's assets.
13. Notices. All notices or other communications provided
for herein to be given or sent to a party by the other party
shall be deemed validly given or sent if in writing and mailed,
postage prepaid, by registered or certified United States mail,
addressed to the parties at their addresses herein above set
forth. Any party may give notice to the other parties at any
time, by the method specified above, of a change in the address
at which, or the person to whom, notice is to be addressed.
14. Severability. Each section, subsection and lesser
section of this Agreement constitutes a separate and distinct
undertaking, covenant or provision hereof. In the event that any
provision of this Agreement shall be determined to be invalid or
unenforceable, such provision shall be deemed limited by
construction in scope and effect to the minimum extent necessary
to render the same valid and enforceable provision shall be
deemed severed from this Agreement, but every other provision of
this Agreement shall remain in full force and effect.
15. Effect of Termination. The termination of this
Agreement, for whatever reason, shall not extinguish those
obligations of Employee specified in the Restrictive Covenants,
nor shall the same extinguish the right of either party to bring
an action, either in law or in equity, for breach of this
Agreement by the other party.
16. Waiver. The failure of a party to enforce any term,
provision or condition of this Agreement at any time or times
shall not be deemed a waiver of that term, provision or
condition for the future, nor shall any specific waiver of a
term, provision or condition at one time be deemed a waiver of
such term, provision or condition for any future time or times.
17. Parties. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their
heirs, personal representative, legal representative and proper
successors and assigns, as the case may be.
18. Governing Law. The laws of the State of Florida,
without giving effect to the principles of comity or conflicts
of laws thereof shall govern the validity, interpretation and
performance of this Agreement.
19. Captions. The captions of this Agreement have been
assigned thereto for convenience only, and shall not be
construed to the limit, define or modify the substantive terms
hereof.
20. Entire Agreement; Counterparts. This Agreement
constitutes the entire agreement between the parties hereto
concerning the subject matter hereof, and supersedes all prior
agreements, memoranda, correspondence, conversations and
negotiations. This Agreement may be executed in several
counterparts that together shall constitute but one and the same
Agreement.
21. Costs of Enforcement. In the event it is necessary for
any party to retain the services of an attorney or to initiate
legal proceedings to enforce the terms of this Agreement, the
prevailing party shall be entitled to recover from the non-
prevailing party, in addition to all other remedies, all costs
of such enforcement, including reasonable attorneys' fees and
including trial and appellate proceedings.
22. Gender, Etc. Words used herein, regardless of the
number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and
any other gender, masculine, feminine or neuter, as the context
indicates is appropriate. IN WITNESS WHEREOF, the undersigned
have hereunto set their hands on the date first above written.
Signed in the presence of: Employee:
- -------------------------- ------------------------
As to Employer Pierre Elliott
- ------------------------------------
As to Employee
Signed in the presence of:
ATTEST: Employer:
- ------------- -------------------
- --------------------------------
Secretary By: Director for Diamond
Powersports, Inc.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into this 1 day of November, 1999, by and between LISA ELLIOTT
of 4320 NW 107 avenue, Coral Springs, FL. (hereinafter
"Employee"), and DIAMOND POWERSPORTS, Inc. having it's principal
offices at 10145 NW 46 St., Sunrise, FL. (hereinafter
"Employer")
W I T N E S S E T H This Agreement is made and entered into
under the following circumstances:
(1) Whereas, Employer is engaged in the business of the sale of
motorcycle parts and accessories; and (2) Whereas, Employer
desires, on the terms and conditions stated herein, to employ
the Employee as Secretary; and (3) Whereas, the Employee
desires, on the terms and conditions stated herein, to be
employed by the Employer. NOW THEREFORE, in consideration of the
foregoing recitals, and of the promises, covenants, terms and
conditions contained herein, which is hereby acknowledged by the
parties hereto, it is agreed as follows:
1.Employment and Term. a) Subject to earlier termination as
provided for in this Section 1 and in Section 2 hereof, the
Employer hereby employs Employee, and Employee hereby accepts
employment with the employer, as Secretary for a period of one
(1) year (hereinafter the "Term of Employment") commencing the1
day of November, 1999 ("hereinafter the "Effective Date")
through the 1day of November 2000. The Term of Employment shall
be renewed or renegotiated upon the mutual agreement of Employee
and Employer. This agreement and Employee's employment may be
terminated at the Employer's discretion during the Term of
Employment, provided that Employer shall pay to Employee an
amount of Employee's base salary for the remaining period of the
Term of Employment. b) Employee may terminate this Agreement at
Employee's discretion by providing at least thirty (30) days
prior written notice to Employer. In the event of termination by
Employee pursuant to this subsection, Employer may immediately
relieve Employee of all duties and immediately terminate this
Agreement, provided that Employer shall pay Employee at the then
applicable base salary rate to the termination date included in
Employee's original termination notice.
2. Employment Termination. Subject to earlier termination
as provided for in this Section, the Employer hereby employs
Employee, and Employee hereby accepts employment with the
employer pursuant to the terms of this agreement, which empowers
Employer to terminate employee at any time with cause. Cause
shall be defined as: i) failure of Employee to perform the
duties in a manner satisfactory to Employer, in its sole
discretion; provided, however, that the Employment shall not be
terminated pursuant to this subparagraph (i) unless Employer
first gives Employee a written notice ("Notice of Deficiency").
The Notice of Deficiency shall specify the deficiencies in
Employee's performance of his duties. Employee shall have a
period of thirty (30) days, commencing on receipt of the Notice
of Deficiency, in which to cure the deficiencies contained in
the Notice of Deficiency. In the event, Employee does not cure
the deficiencies to the satisfaction of Employer, in its sole
discretion, within such thirty- (30) day period; the Employer
shall have the right to immediately terminate the Employee's
Employment. The provisions of this subparagraph (i) may be
invoked by Employer any number of times and cure of deficiencies
contained in any Notice of Deficiency shall not be construed as
a waiver of this subparagraph (i) nor prevent the Employer from
issuing any subsequent Notices of Deficiency; ii) any dishonesty
by Employee in dealings with the Employer, the commission of
fraud by Employee, or negligence or willful neglect in the
performance of the duties of Employee; iii) the arrest or
conviction (or plea of guilty or no lo contendere) of Employee
of any felony or other crime involving dishonesty or moral
turpitude; iv) any violation of any provision contained in this
agreement; v) unlawful use of narcotics or other controlled
substances, or use of alcohol or other drugs in a manner the
Employer reasonably determines to be adverse to the best
interest of the Employer; vi) Failure of Employee to attend
training programs required for competency in his duties (job
description) as an Employee; vii) if, due to any act or omission
of Employee, liability insurance cannot be reasonably obtained
or maintained, or if, due to any act or omission of Employee,
liability insurance is canceled, terminated or revoked; or, For
all purposes of this Agreement, termination for "cause" shall be
deemed to have occurred in the event of Employee's resignation
when, because of existing facts and circumstances, subsequent
termination for "cause" can be reasonably foreseen. In the event
of termination pursuant to this subsection, Employee shall be
paid only at the then applicable base salary rate up to and
including the date of termination. Employee shall not be paid
any incentive salary payments or other compensation, prorated or
otherwise.
3. Duties and Responsibilities. Employee shall: (a) engage
full-time services, on behalf of Employer, at locations directed
by Employer, as Employer may designate; (b) perform all
managerial duties necessary; (c) perform such other duties as
may from time to time be reasonably assigned to the Employee by
Employer; (d) cooperate with Employer, to the fullest ethical
extent, to promote Employer's business and to continue and
expand the products provided by Employer, and to further the
best interests of the Employer; and (e) perform all services in
a professional manner using the full knowledge and skill of
Employee which services shall be performed in accordance with
standards and procedures established by Employer. Employee shall
(i) devote Employee's entire business time, attention and
energies exclusively to the Employer; and (ii) faithfully and
competently perform the duties hereunder using Employee's full
professional skill and knowledge; and (iii) not engage in any
other professional or business activity.
4. Compensation. Employee shall be paid compensation during
this Agreement as follows: a) A base salary of $ 35,000.00 per
year, payable in installments according to the Employer's
regular payroll schedule. b) An incentive salary equal to one
half of one (1/2%) percent of the adjusted net profits
(hereinafter defined) of the Employer beginning with the
Employer's year end 2000 and each fiscal year thereafter during
the term of this Agreement. "Adjusted net profit" shall be the
net profit of the Employer before federal and state income
taxes, determined in accordance with generally accepted
accounting practices by the Employer's independent accounting
firm and adjusted to exclude: (i) any incentive salary payments
paid pursuant to this Agreement; (ii) any contributions to
pension and/or profit sharing plans; (iii) any extraordinary
gains or losses (including, but not limited to, gains or losses
on disposition of assets); (iv) any refund or deficiency of
federal and state income taxes paid in a prior year; and (v) any
provision for federal or state income taxes made in prior years
which is subsequently determined to be unnecessary. The
determination of the adjusted net profits made by the
independent accounting firm employed by the Employer shall be
final and binding upon the Employee and Employer. The incentive
salary payment shall be made within thirty (30) days after the
Employer's independent accounting firm has concluded its audit.
If the final audit is not prepared within ninety (90) days after
the end of the fiscal year, then Employer shall make preliminary
payment equal to fifty percent (50%) of the amount due based
upon the adjusted net profits preliminarily determined by the
independent accounting firm, subject to payment of the balance,
if any, promptly following completion of the audit by the
Employer's independent accounting firm.
5. Benefits. a) Vacation/Personal Time. Employer shall be
entitled to an aggregate of seven (7) working days paid vacation
during each full year during the Term of Employment. In
addition, personal time will be provided, this will be
reevaluated during the Term of Employment and recalculated after
one year. b) Holidays. Employee shall be entitled to paid
holidays each calendar year. Employer shall notify Employee on
or about the beginning of each calendar year with respect to the
holiday schedule for the coming year. Personal holidays, if any,
will be scheduled in advance subject to requirements of
Employer. Such holidays must be taken during the calendar year
and cannot be carried forward into the next year. c) Sick Leave.
Employee shall be entitled to sick leave and emergency leave,
which shall be liberally granted upon reasonable notice. d)
Medical Insurance. Employer agrees to include Employee and
family in the group medical and hospital plan of Employer. e)
Pension and Profit Sharing Plans. Employee shall be entitled to
participate in any pension or profit sharing plan or other type
adopted by the Employer for the benefit of its officers and/or
regular employees. f) Expense Reimbursement. Employee shall be
entitled to reimbursement for all reasonable expenses, including
travel and entertainment, incurred by Employee in the
performance of Employee's duties. Employee shall maintain
records and written receipts as required by the Employer and
reasonably requested by the board of directors to substantiate
such expenses.
6. Non-Competition. During the Term of Employment and for a
continuous period of two (2) years commencing upon termination
of employment, Employee shall not, individually or jointly with
others, own or hold any ownership or voting interest in any
person or entity engaged in a business the same as or similar to
any business of the employer or which competes in any manner
whatsoever with the business of Employer, and which is located
or intended to be located in the United States; and Employee
shall not act as an officer, director, employee, partner,
independent contractor, consultant, principal, agent,
proprietor, or in any other capacity for, not lend any
assistance (financial, managerial, professional or otherwise) or
cooperation to, nor perform any services for, any such person or
entity; and during the Term of Employment Employee shall be
prohibited from the foregoing activities and relationships with
any person or entity which competes with Employer, regardless of
the geographic location of such person or entity.
7. Non-Disclosure; Non-Solicitation. Except in the
performance of servicing customers of Employer, at no time
during the Term of Employment or at anytime thereafter shall
Employee, individually or jointly with others, for the benefit
of Employee or any third party, publish, disclose, use or
authorize anyone else to publish, disclose or use, any secret or
confidential material or information regarding the business
methods, business policies, procedures, techniques or trade
secrets, or other knowledge or processes of or developed by
Employer (and/or any other Employee or agent of Employer), any
affiliate of the employer, any entity in which the Employer has
an interest, including, without limitation, any secret or
confidential information relating to the business, customers,
financial position, trade or industrial practices, trade
secrets, technology or know-how of the Employer. Furthermore,
for a period of two (2) years commencing upon termination of
Employee's employment, Employee shall not solicit or contact, or
cause any other person or entity to solicit or contact, any
current customer of Employer at the time of termination.
8. Reasonableness of Restrictions: Reformation:
Enforcement. The parties hereto recognize and acknowledge that
the geographical and time limitations contained in Section 6 and
7 hereof (hereinafter "Restrictive Covenants") are reasonably
necessary to protect the Employer's legitimate business
interests and properly required for the adequate protection of
such business interests of Employer. Employee acknowledges that
the Employer will provide to Employee confidential information
concerning the Employer's business methods and operating
practices in reliance on the covenants contained in the
Restricted Covenants. It is agreed by the parties hereto that if
any portion of the restrictions contained in the Restrictive
Covenants. It is agreed by the parties hereto that if any
portion of the restrictions contained in the Restrictive
Covenants are held to be unreasonable, arbitrary, or against
public policy, then the restrictions shall be considered
divisible, both as to the time and to the geographical area,
with each month of the specified period being deemed a separate
period of time and each radius mile of the restricted territory
being deemed a separate geographic area, so that the lesser
period of time or geographical area shall remain effective so
long as the same is not unreasonable, arbitrary, or against
public policy. The parties hereto agree that in the event any
court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory
to be unreasonable, arbitrary, or against public policy, a
lesser time period or geographical area which is determined to
be reasonable, non arbitrary, and not against public policy may
be enforced against Employee. If Employee shall violate any of
the covenants contained herein and if any court action is
instituted by the Employer to prevent or enjoin such violation,
then the period of time during which the Employer's business
activities shall be restricted, as provided in this Agreement,
shall be lengthened by a period of time equal to the period
between the date of the Employee's breach of the terms or
covenants contained in this Agreement and the date on which the
decree of the court disposing of the issued upon the merits
shall become final and not subject to further appeal.
9. No Remedy At Law. Employee agrees that the remedy at law
for any breach by Employee of the covenants contained in
Sections 6 and 7 will be inadequate and would be difficult to
ascertain and therefore, in the event of the breach or
threatened breach of any such covenants, the Employer, in
addition to any and all other remedies, shall have the right to
enjoin Employee from any threatened or actual activities in
violation thereof; and Employee hereby consents and agrees that
temporary and permanent injunctive relief may be granted in any
proceedings which might be brought to enforce any such covenants
without the necessity of proof of actual damages.
10. Representations of Employee. Employee hereby makes the
following representations to Employer, each of which is material
and is being relied on by Employer and shall be true as of the
date hereof and throughout the Term of Employment: a) Employment
Qualifications. Employee shall (i) use Employee's best efforts
to maintain qualifications as a secretary, (ii) is experienced
in administrative procedure, (iii) agrees to participate and
shall participate in a continuing education and/or training
programs, (iv) use Employee's best efforts as a secretary. b)
Factual Information. Any and all factual information furnished
by Employee to Employer is true and accurate in every material
respect as of the date on which such information was furnished.
c) Professional Conduct. Employee has and will continue to
conduct all activities in accordance and compliance with any and
all laws, regulations and ethical standards. d) Authority.
Employee has full power and authority to enter into this
Agreement and perform all obligations hereunder. The execution
and performance of this Agreement by Employee will not
constitute a breach or violation of any covenant, agreement or
contract to which Employee is a party or by which Employee is
bound.
11. Books, Office Equipment, Etc. a) Employee's Ownership.
All books, office equipment and other property furnished by
Employee shall remain Employee's property. b) Employer's
Ownership. All instruments, equipment, furniture, furnishings,
supplies, products, samples, forms, charts, logs, brochures,
client records, procedures, contracts and any other property,
materials or information furnished by Employer are and shall
remain the sole property of Employer. Upon termination of this
Agreement, Employee shall return all such property to Employer.
12. Assignability. This Agreement and the rights and duties
created hereunder shall not be assignable or delegable by
Employee. Employer may, at Employer's option and without consent
of Employee, assign its rights and duties hereunder to any
success or entity or transferee of Employer's assets.
13. Notices. All notices or other communications provided
for herein to be given or sent to a party by the other party
shall be deemed validly given or sent if in writing and mailed,
postage prepaid, by registered or certified United States mail,
addressed to the parties at their addresses herein above set
forth. Any party may give notice to the other parties at any
time, by the method specified above, of a change in the address
at which, or the person to whom, notice is to be addressed.
14. Severability. Each section, subsection and lesser
section of this Agreement constitutes a separate and distinct
undertaking, covenant or provision hereof. In the event that any
provision of this Agreement shall be determined to be invalid or
unenforceable, such provision shall be deemed limited by
construction in scope and effect to the minimum extent necessary
to render the same valid and enforceable provision shall be
deemed severed from this Agreement, but every other provision of
this Agreement shall remain in full force and effect.
15. Effect of Termination. The termination of this
Agreement, for whatever reason, shall not extinguish those
obligations of Employee specified in the Restrictive Covenants,
nor shall the same extinguish the right of either party to bring
an action, either in law or in equity, for breach of this
Agreement by the other party.
16. Waiver. The failure of a party to enforce any term,
provision or condition of this Agreement at any time or times
shall not be deemed a waiver of that term, provision or
condition for the future, nor shall any specific waiver of a
term, provision or condition at one time be deemed a waiver of
such term, provision or condition for any future time or times.
17. Parties. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their
heirs, personal representative, legal representative and proper
successors and assigns, as the case may be.
18. Governing Law. The laws of the State of Florida,
without giving effect to the principles of comity or conflicts
of laws thereof shall govern the validity, interpretation and
performance of this Agreement.
19. Captions. The captions of this Agreement have been
assigned thereto for convenience only, and shall not be
construed to the limit, define or modify the substantive terms
hereof.
20. Entire Agreement; Counterparts. This Agreement
constitutes the entire agreement between the parties hereto
concerning the subject matter hereof, and supersedes all prior
agreements, memoranda, correspondence, conversations and
negotiations. This Agreement may be executed in several
counterparts that together shall constitute but one and the same
Agreement.
21. Costs of Enforcement. In the event it is necessary for
any party to retain the services of an attorney or to initiate
legal proceedings to enforce the terms of this Agreement, the
prevailing party shall be entitled to recover from the non-
prevailing party, in addition to all other remedies, all costs
of such enforcement, including reasonable attorneys' fees and
including trial and appellate proceedings.
22. Gender, Etc. Words used herein, regardless of the
number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and
any other gender, masculine, feminine or neuter, as the context
indicates is appropriate. IN WITNESS WHEREOF, the undersigned
have hereunto set their hands on the date first above written.
Signed in the presence of: Employee:
- ------------------ ------------------------------
As to Employer Lisa Elliott
- ------------------------------------
As to Employee
Signed in the presence of:
ATTEST: Employer:
- -------- ------------------------
Secretary By: Director for Diamond
Powersports, Inc.
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation of our report dated July
31, 1999, relating to the financial statements of Diamond
Powersports, Inc. in the Registration Statement on Form SB-2,
and Prospectus, and to the reference to our firm therein under
the caption "ACCOUNTING MATTERS."
Michael J. Bongiovanni, C.P.A.'s
Charlotte, North Carolina
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the Balance Sheet as of September 30, 1999, and the
Statement of Operations for the Period Ended September 30, 1999
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1999
<CASH> 8,029
<SECURITIES> 0
<RECEIVABLES> 20,632
<ALLOWANCES> 0
<INVENTORY> 45,614
<CURRENT-ASSETS> 116,275
<PP&E> 144,394
<DEPRECIATION> 62,302
<TOTAL-ASSETS> 198,667
<CURRENT-LIABILITIES> 85,015
<BONDS> 0
0
0
<COMMON> 8,320
<OTHER-SE> 41,980
<TOTAL-LIABILITY-AND-EQUITY> 31,152
<SALES> 70,621
<TOTAL-REVENUES> 70,621
<CGS> 43,429
<TOTAL-COSTS> 43,429
<OTHER-EXPENSES> 29,328
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,104
<INCOME-PRETAX> (9,240)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,240)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,240)
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
