SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended: March 31, 2000
Commission file number 0-28665
DIVEDEPOT.COM, INC.
-------------------
(Exact name of small business issuer as specified in its charter)
Florida 65-0817033
-------- ----------
(State or other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification No.)
2101 West SR 434, Suite 221, Longwood, FL 32779
---------------------------------------------------
Address of principal executive offices)
(407) 949-9300
---------------
(Issuer's telephone number)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
As of March 31, 2000, 2,031,297 shares of common stock were outstanding.
Transitional Small Business Disclosure Format: Yes No X
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
DIVEDEPOT.COM, INC. AND SUBSIDIARY
BALANCE SHEET
AS OF MARCH 31, 2000 AND DECEMBER 31, 1999
ASSETS
MARCH 31 DEC 31
CURRENT ASSETS 2000 1999
--------------
Cash $138,287 $15,410
Accounts Receivable (Note 3) 65,037 84,701
Inventory (Note 4) 42,869 42,819
------------------------
Total Current Assets 246,193 142,930
FIXED ASSETS (Note 5 1,806,513 1,423,197
GOODWILL (Note6) 653,401 662,604
------------------------
TOTAL ASSETS $2,706,107 $2,228,731
========================
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Bank Overdraft (Note 7) $ 62,023 68,748
Accounts Payable 480,880 464,196
Customer Deposits 1,000 1,000
Bank Loan (Note 8) 1,847 3,732
Related Party Loans(Note 9) 211,714 107,867
------------------------
Total Current Liabilities 757,464 645,543
------------------------
LONG TERM LIABILITIES
Bank Loan - -
Related Party Loans 259,122 275,316
Bonds Payable 246,000 -
------------------------
Total Long Term Liabilities 505,122 275,316
------------------------
TOTAL LIABILITIES 1,262,586 920,859
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.001 par value, 50,000,000 authorized, 2,031 1,831
2,031,297 shares issued and outstanding as of
March 31, 2000 and 1,831,297 as of December 1999
Additional paid in capital 2,332,396 1,932,597
Retained earnings (840,906) (626,556)
Less: Treasury stock (12,500 shares) (50,000) -
------------------------
Total Stockholders' Equity 1,443,521 1,307,872
------------------------
TOTAL LIABILITIES AND EQUITY (DEFICIT) $2,706,107 $2,228,731
========================
See Accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
DIVEDEPOT.COM, INC. AND
SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDING MARCH 31, 2000 AND 1999,
THE TWELVE MONTHS ENDING DECEMBER 31, 1999 AND
FROM INCEPTION (DECEMBER 1, 1997) TO March
March 31 March 31 December 31 FROM
2000 1999 1999 INCEPTION
--------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $299,901 $ 481,947 $1,187,538 $2,892,327
-----
COST OF SALES $156,405 $ 128,524 $ 841,699 $1,587,893
-------------
--------------------------------------------------------------
GROSS PROFIT $ 143,496 $ 353,423 $ 345,839 $1,304,434
------------
OPERATING EXPENSES $ 348,643 $ 425,462 $ 671,971 $2,062,515
------------------
AMORTIZATION OF GOODWILL $ 9,203 $ 12,884 $ 36,811 $ 82,825
------------------------ -------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES ($214,350) $ (84,923) $ (362,943) $ -
--------------------------------- -------------------------------------------------------------
INCOME TAXES $ - $ - $ - $ (840,906)
------------
$(214,350) $ (84,923) $ (362,943) $ 840,906
NET INCOME (LOSS)
----------------- ============================================================
Weighted Average 1,893,797 1,587,500 1,403,889
Number of shares
Basic EPS $ (0.113) $ (.0535) $ (0.259)
</TABLE>
<PAGE>
DIVEDEPOT.COM, INC.
STATEMENT OF CASH FLOWS
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDING MARCH 31, 2000, AND 1999
THE TWELVE MONTHS ENDING DECEMBER 31, 1999, AND
FROM INCEPTION (DECEMBER 31, 1997) TO MARCH 31, 2000
MARCH 31 MARCH 31 DECEMBER 31 FROM
2000 1999 1999 INCEPTION
---------------------------------------------------
CASH FLOWS FROM (FOR)
OPERATING ACTIVITIES
Net income (Loss) (214,350) (84,923) (362,943) (840,906)
Adjustments for items
not involving the
movement of cash:
Receivables -
related parties
Accounts receivable $19,664 $18,496 (818) ($65,037)
Depreciation $26,650 $27,591 $108,572 $225,383
Inventory ($50) ($19,506) $8,350 ($42,869)
Accounts $16,684 $10,484 $242,266 $528,691
Customer $700 $500 ($29,354)
Amortization of
Goodwill $9,203 $9,203 $36,811 $82,825
Income Taxes $0
Loss On Sale of
Fixed Assets $4,291
Other $1,999
---------------------------------------------------
Total adjustments to
net income $72,151 $46,968 $395,681 $ 703,930
Net cash provided by
(used in) operating
activities ($142,199) ($37,955) $32,738 ($136,976)
CASH FLOWS FROM (FOR)
INVESTING ACTIVITIES
Purchase of Subsidiary
(net of cash acquired ($1,041,013)
Purchase of Fixed ($9,966)($729,757) ($1,268,320) ($1,331,400)
Assets
---------------------------------------------------
Net cash provided by ($9,966) ($729,757) ($1,268,320) ($2,372,413)
(used in) investing
activities
<PAGE>
CASH FLOWS FROM (FOR)
FINANCING ACTIVITIES
Purchase of treasury
stock ($50,000) ($50,000)
Proceeds from bank loan 17,109
Repayment on bank loan ($13,366)
Proceeds from loan
Repayment on loan ($1,885) ($1,502) ($7,075) ($1,885)
Proceeds from sale
of shares $794,500 $831 $340,595
Contributed Surplus $1,595,869
Share split ($2,036) ($2,036)
Related party loans $87,653 $12,239 ($376,706) $423,014
Proceeds from $246,000 - - $246,000
issuance of bonds pay
Deferred Costs ($7,539) $35,701 $30,354
Add'l paid in capital $1,573,396
---------------------------------------------------
Net cash provided by
(used in)financing $281,768 $797,698 $1,224,111 $2,585,654
activities
CASH
RECONCILIATION
Net increase
(decrease) in cash $129,602 $29,986 ($11,471) $76,265
Beginning cash
balance ($53,338) ($41,867) ($41,867) ($49,670)
---------------------------------------------------
CASH BALANCE AT END OF
-----------------------
PERIOD $78,264 ($11,881) ($53,338) $26,595
------
===================================================
See accompanying notes to the financial statements
<PAGE>
<TABLE>
<CAPTION>
DIVEDEPOT.COM
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE PERIOD OF INCEPTION (DECEMBER 1, 1997 TO MARCH 31, 2000)
Additional
Common Stock Paid-In Income
Shares Amount Capital (Loss) Total
------ ------ ------- ------ -----
<S> <C> <C> <C> <C> <C>
Issuance of shares of
common stock on Nov. 1,
1997 $.001 per share 1,022,987 1,023 - - 1,023
Net (loss) from
inception on Dec. 1,
1997 through Dec. 31,
1997. - - - (25,974) (25,974)
--------- --------- ------------ -------- --------
Balance Dec. 31, 1997 1,022,987 1,023 - (25,974) (24,941)
Issuance of shares of
common stock on June 4,
1998 ro $.001 per share 2,964 3 - - 3
Issuance of shares of
common stock on July 2,
1998 for $1.43 per
share 3,622 4 5,176 - 5,180
Net (loss) through
Dec. 31, 1998 - - - (237,639) (237,639)
--------- --------- ------------ -------- --------
Balance Dec. 31, 1998 1,029,573 1,030 5,176 (263,631) (257,407)
Issuance of shares of
common stock on Feb.
15, 1999 for $.001
per share 27,724 28 - - 28
Issuance of shares of
common stock Mar. 7,
1999 for $2.00 per
share 50,000 50 99,950 - 100,000
Issuance of shares of
coommon stock on Mar.
24, 1999 for $2.00 per 10,000 10 19,990 - 20,000
share
Issuance of shares of
common stock on Mar.
29, 1999 for $2.00
per share 50,000 50 99,950 - 50,000
Issuance of share of
coommon stock on Mar.
30, 1999 for $2.00
per share 10,000 10 19,990 - 20,000
Issuance of share of
common stock on Mar.
31, 1999 for $7.934
per share 20,000 20 158,680 - 40,000
Issuance of shares of
common stock on Apr.
1, 1999 for $.001
per share 73,500 73 - - 73
Issuance of shares of
common stock on Apr.
6, 1999 for $2.00
per share 122,500 122 244,878 - 245,000
<PAGE>
Issuance of shares of
common stock on June
9, 1999 for $.001 per
share 10,000 10 - - 10
Issuance of shares of
common stock on Aug.
4, 1999 for $.001
per share 23,000 23 - - 23
Issuance of share of
common stock on Aug.
31, 1999 for $2.00
per share 325,000 325 649,675 - 650,000
Issuance of shares of
common stock on Aug.
31, 1999 for $2.00
per share 80,000 80 - 634,408
Net (loss) through
Dec. 31, 1999 - - - (362,943) (362,943)
---------- -------- ---------- --------- --------
Balance Dec. 31, 1999 1,831,297 1,831 1,932,596 (626,556) 1,307,874
Issuance of shares of
common stock on Feb.1,
2000 for $2.00 per
share 100,000 100 199,900 - 200,000
Issuance of shares of
common stock Mar. 1,
2000 for $2.00 100,000 100 199,900 - 200,000
Treasury stock
purchased (12,500) - - - -
Net income(loss) for
period through Mar.
31, 2000 - - - (214,350) (214,350)
Cumulative Balance
March 31, 2000 2,018,797 2,031 2,332,396 (840,906) 1,493,524
</TABLE>
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000 and December 31, 1999
(Expressed in United States dollars)
1. INCORPORATION AND ACTIVITY
DIVEDEPOT.COM, Inc. (the "Company") was incorporated on December 1,
1997 in the State of Florida (USA) under the Florida Business
Corporation Act. During 1999 DIVEDEPOT.COM, Inc. changed its name from
Baskin in the Sun, International, Inc. The principal activity of the
Company is that of a holding company. The company has one operating
subsidiary, Baskin in the Sun LTD., of the British Virgin Islands.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
--------------------
The financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America and the
significant accounting policies are as follows:
Basis of consolidation
----------------------
The consolidated financial statements incorporate the results of the
Company and its subsidiary.
Inventory
---------
Inventory is valued at the lower of cost and net realizable value on a
first in, first out basis. Cost includes any expenditure incurred in
bringing the inventory to its present condition. Net realizable value
is the expected selling price less any associated selling costs.
Fixed assets
------------
Fixed assets are recorded at cost. Depreciation, which is based on the
cost of the asset, is computed using the straight-line method at the
following annual rates:
Compressor equipment 15%
Computer equipment 33 1/3%
Furniture & Fixtures 15%
Machinery and other equipment 15%
Motor vehicles 25%
Motor vessels 15%
Rental equipment 10%
The cost of the website will be amortized at 33 1/3% when it will be
completed and satisfactorily brought on-line.
Goodwill
--------
The goodwill originated on purchase of the subsidiary and is amortized
over 20 years commencing of January 1, 1998.
<PAGE>
Income taxes
------------
The Company is liable for income taxes at 22% of its operating income
and accounts for this using the liability method:The subsidiary is
liable for income taxes at 15% of its operating income and accounts
for this using the liability method.
Revenue recognition
-------------------
Diving and certification income is recognized on the completion of the
activity. Merchandise income is recognized when items are sold and
title has passed.
3. ACCOUNTS RECEIVABLE
March 31, 2000 December 31, 1999
------------- --------------
Trade 47,557 69,609
Utility 3,533 3,533
Prepaid expenses 13,946 11,559
------------- --------------
$ 65,036 $ 84,701
============= ==============
4. INVENTORY
3-31-00 12-31-99
------------- --------------
Merchandise 39,748 39,748
Spares 0 0
Teaching materials 3,121 3,071
Fuel - -
------------- --------------
$ 42,869 $ 42,819
============= ============
<PAGE>
5. FIXED ASSETS
<TABLE>
<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
FIXED ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Compressor Computer Website Furniture Machinery & Motor Motor Rental
Equipment Equipment & Fixtures Equipment Vehicles Vessels Equipment
January 1, 2000 64,849 21,229 1,060,000 29,922 69,652 35,300 480,549 92,086
Additions 4,966 0 400,000 0 0 0 0 5,000
Disposals 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
March 31, 2000 69,815 21,229 1,460,000 29,992 69,652 35,300 480,549 97,086
Accumulated
Depreciation
January 1, 2000 51,222 12,798 0 21,123 37,984 35,300 213,523 58,482
Charge for the
Quarter 1,850 1,770 0 949 1,623 0 18,021 2,428
Disposals 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
March 31, 2000 53,072 14,566 0 22,072 39,598 35,300 231,544 60,890
-------- -------- -------- -------- -------- -------- -------- --------
Net Book
Value
March 31, 2000 16,743 6,663 1,460,000 7,850 30,058 0 249,005 36,196
-------- -------- -------- -------- -------- -------- -------- --------
Dec. 31, 2000 13,627 8,433 1,060,000 8,799 31,688 0 267,026 33,624
</TABLE>
<PAGE>
6. GOODWILL
2000 1999
---- ----
Goodwill 736,226 736,226
Amortization of goodwill (92,028) (73,622)
--------- --------
$ 644,198 $ 662,604
================ =============
7. BANK OVERDRAFT
The bank overdraft is secured by a charge on the assets of the subsidiary
company and bears interest at 11% annum.
8. BANK LOAN
The bank loan bears interest at 2.5% above Barclays Bank Prime Rate, and is
repayable over a maximum of three years. The loan is secured by a debenture
registered over the subsidiary company's assets.
2000 1999
---------- ----------
Bank loan is secured by a charge over
the assets of the subsidiary company.
The loan bears interest at 2.5% above
Barclays prime rate and is repayable 1,848 3,732
by June 2000, in monthly installments
of $655 including interest.
Less: current portion (1,848) (3,732)
------------ ------------
$ - $ -
=============== ==============
9. RELATED PARTY LOANS
March 31, 2000 Dec. 31, 1999
----------------------------------
Related party loan which bears
interest at 3% over New York
prime rate. It is repayable in 259,122 275,316
monthly installments of $4,583.00.
Related party loan which is
unsecured bears no interest
and has no fixed terms of
repayment. It is not expected
to be repaid within the next
year. 183,714 79,867
Unsecured loan which bears
interest at 8% per annum.
It is repayable in quarterly
installments of $560. 28,000 28,000
--------- ----------
470,836.00 383,183.00
Less: Current portion 211,714 (107,867)
---------- ----------
$259,122 $275,316
<PAGE>
10. SHARE CAPITAL
March 31, 2000 December 31, 1999
-----------------------------------
Authorized
50,000,000 Ordinary shares of $50,000 $50,000
$0.001 par value each
Issued and fully paid
2,031,297 (12/31/99 - 1,831,297) 2,031 $1,831
Ordinary shares
March 31, 2000 December 31, 1999
-----------------------------------
Stock options to the website suppliers
Options exercisable at $2.00 per
share 250,000 250,000
11. STOCK PLAN
The Group has established an informal Stock Plan (the "Plan") whereby
it grants ordinary shares of the Company to employees who have at least
one year's service and have benefited the Group. The Plan provides that
employees are chosen by the Group's Chairman and approved by the Board
of Directors based on performance and dedication.
12. STOCK OPTIONS
During 1999, the Group granted stock options on 250,000 shares of the
Company to software developers as part of the compensation to design
and develop a corporate website on behalf of the Group. The stock
options are exercisable at $2.00 per share within a five year period
from the date of grant. None of the options were exercised during 1999,
or the first three months of 2000.
13. INCOME TAXES
The Company has $753,732 of estimated tax losses which it can carry
forward and be set off against future income.
14. LEASE COMMITMENTS
The Group has various lease commitments in respect of its premises.
Future lease payment will total $138,906, including the following
amounts over the next three years.
<PAGE>
December 31, 1999 Commitment
------------------------------------------------------
2000 $ 68,027
2001 48,844
2002 22,035
In addition to the above there is also a lease agreement with Peter Island
Resort. In accordance with this lease the Company must pay 15% of the total
of all goods and services billed to guests of Peter Island. During the 1st
quarter 2000, the Company paid -0- (Total 1999 - $10,332) to Peter Island
Resort. The lease was issued in April 1999 and will expire in 2 years.
15. INFORMATION ON SUBSIDIARY
PLACE OF DATE OF PORTION OF
NAME INCORPORATION INCORPORATION VOTING SHARES HELD
---- ------------- ------------- ------------------
Baskin in the British Virgin May 2, 1972 100%
Sun Limited Islands
16. CONTINGENCIES
Divedepot.com, Inc. is defendant in a legal action. The Plaintiffs are
seeking relief for an alleged breach of contract, fraud, and have also
requested constructive trust to be imposed by the Court. The Company has
vigorously defended the action and believes the action is without
foundation. Due to a lack of record activity and of prosecution on the part
of the Plaintiffs for approximately one year, the Company will be seeking
to dismiss the action. In the event that the Plaintiffs were ultimately
successful, the Company could potentially sustain a judgment, exceeding
$217,000 plus interest.
17. COMPARATIVES
Certain comparative figures have been reclassified to conform with the
current year's presentation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000.
IMPORTANT NOTE ABOUT FORWARD LOOKING STATEMENTS
This Report contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Predictions of future events are inherently uncertain.
Actual events could differ materially from those predicted in the forward
looking statements due to a number of factors including but not limited to the
risks set forth in the following discussion.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE UNAUDITED
INTERIM CONDENSED FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED IN
PART 1- ITEM 1 OF THIS REPORT AND DIVEDEPOT.COM'S AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2000 COMPARED TO THE
SAME PERIOD IN 1999
The Company had revenues for the three month period of $299,901 in 2000 and
$481,947 in 1999. The cost of sales in the period in 2000 was $156,405 compared
to $128,524 in 1999. The gross profit was $143,496 in the period in 2000
compared to $353,423 in the period in 1999. The operating expenses in the period
in 2000 decreased to $348,643 compared to $425,462 in the period in 1999. The
net loss in the period in 2000 was ($214,350) compared to ($84,923)in 1999.
DiveDepot.Com has incurred net losses and experienced negative cash flow
from operations since inception through the end of the period ending March 31,
2000. There can be no assurance that the company will be able to achieve or
sustain revenue growth, profitability or positive cash flow on either a
quarterly or an annual basis.
REVENUE. Revenue totaled $299,901 for the three months ended March 31,
2000 compared to $481,947 in the period in 1999.
COST OF REVENUE. Cost of Sales totaled $156,405 (or 52% of sales) for the
three months ended March 31, 2000 compared to $128,524 in the period in 1999.
Cost of sales consists primarily of costs to provide travel related services to
<PAGE>
clients; the costs of merchandise sold in the retail stores and to a minor
extent the costs of fuel and training materials sold to third parties.
Management believes that there is significant room for reducing the relative
cost of travel services and retail merchandise as volumes increase and buying
power is more firmly established. Management has reduced substantially the
inventory carried over the last three years and streamlined the purchasing
operations.
OPERATING EXPENSES (Including Marketing, Sales and Administration).
Operating expenses totaled $348,643 for the three months ended March 31, 2000
compared to $425,462 in the period in 1999. Operating expenses include all costs
of salaries, rent, utilities, repairs, fuel and all costs associated with the
ongoing dive operations in the British Virgin Islands. Dive operations expenses
are high as a percentage of sales and significant economies of scale can be
achieved as diving activities increase. At present, infrastructure and equipment
is in place within the companies operations in the BVI to accommodate
substantial additional business with only minor capital expenditures, marketing,
sales and administration expense consists primarily of personnel expenses,
accounting, legal expenses and marketing development, promotion and sales
activities, including salary and commissions, costs of marketing programs and
the cost of attending various dive shows and travel trade shows. These costs are
mostly born by the parent company located in Miami. This expenditure reflects a
substantial investment in the Internet systems, customer support, marketing and
sales organizations necessary to support the company's expanded customer base.
Management expects marketing, sales and administration expenditures to continue
to increase in dollar amount, but to decline as a percentage of revenue.
Specifically, the administrative infrastructure of DiveDepot.Com is designed to
anticipate future travel, and merchandise sales that have not yet occurred. As
these sales occur, administrative expenses will not increase substantially and
will decline as a percentage of revenue. The company has also incurred
significant administrative costs in fulfilling its regulatory obligations in
preparation for and as a potential public entity. Management expects these
expenses to remain constant and therefore decline as a percentage of revenue.
Together, therefore, management anticipates that marketing, sales and
administrative expenses will increase somewhat more modestly than in the
previous quarter of the last fiscal year, but decline sharply as a percentage of
revenue as sales of travel and merchandise increase.
NET LOSS. DiveDepot.Com had a loss of approximately ($214,350) for the
three months ended March 31, 2000 as compared to a loss of ($84,923) for the
three months ended March 31, 1999. NET LOSS per share was ($.11) in the quarter
in 2000 and ($.053) in 1999.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
To date, the company has satisfied its cash requirements primarily through
debt, the sale of capital stock and through operating revenues. The company's
principal uses of cash are to fund working capital requirements and capital
expenditures and to service its vendor, payroll and professional expenses. Net
cash used in operating activities for the period ended March 31, 1999 was
$10,999. The amount of cash used in operating activities in this period was
primarily impacted by the increased costs of Miami operations. Additional cash
expenditures were caused by increased costs in anticipation of the Internet
development program and the expansion of management, sales, marketing and
organizational infrastructure.
For the period ended March 31, 2000, $281,768 cash was generated from
financing activities. At March 31, 2000, the company had cash and cash
equivalents of $138,287.
Net cash used in operating activities for the three months ended March 31,
2000 was approximately $142,200. Net cash used in operating activities in the
fiscal year ending December 31, 1999 was $395,681. The amount of cash used in
operating activities in both periods was primarily impacted by the increased
costs of consolidating operations and expenses associated with opening new dive
operations at Peter Island in the British Virgin Islands. Additional cash
expenditures were caused by increased costs in supporting the DiveDepot.Com
Internet development program and the expansion of DiveDepot.Com's management,
sales, marketing and organizational infrastructure.
NEED FOR ADDITIONAL FINANCING
The Company may not have capital sufficient to meet the Company's cash
needs, when compared to its historical operating losses. The Company will have
to seek loans or equity placements to cover such cash needs.
No commitments to provide additional funds have been made by management
or other stockholders. Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses as they may be incurred.
Irrespective of whether the Company's cash assets prove to be
inadequate to meet the Company's operational needs, the Company might seek to
compensate providers of services by issuances of stock in lieu of cash.
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a party to only one legal action. That action is in the
Circuit Court for Miami - Dade County, Florida, Plaintiff, the firm of Marc M.
Harris, on behalf of others has alleged breach of contract, fraud, conversion,
and constructive trust. The total amount of the claim by the firm of Marc M.
Harris is recorded as long-term debt on the company books and audited statement.
This debt was acquired in the acquisition of all liabilities and assets of
Baskin In The Sun International, S.A. The Company is vigorously defending the
action and believes the action is without foundation because the Plaintiff
offset accounts containing funds of Defendant in similar amounts to those
claimed. In the event Plaintiff were fully successful, Defendant could sustain a
judgment exceeding $217,000, plus interest, which could have a material impact
on the Company. The Company will be filing a counter claim that in settlement
can only reduce the liabilities of the company as they currently stand and not
further worsen or negatively impact the corporation.
Item 2. Changes in Securities and Use of Proceeds.
The company issued 200,000 shares of common stock in a private placement exempt
under Section 4 (2) and 4 (6) of the Securities Act of 1933 in this quarter. The
proceeds to the company were $200,000 which was used to fund continuing
operations.
Item 3. Default upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of secutity holders during the quarter.
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits.
27 Financial Data Schedule
B. Form 8-K.
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the undersigned have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DIVEDEPOT.COM, INC.
Dated: October 2, 2000 By: /s/ Norbert D. Weller
-----------------------------
Norbert D. Weller,
Chief Executive Officer
