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: June 30, 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 June 30, 2000, 2,031,297 shares of common stock were outstanding.
Transitional Small Business Disclosure Format: Yes No X
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<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
DIVEDEPOT.COM, INC. AND SUBSIDIARY
BALANCE SHEET
AS OF JUNE 30, 2000 AND MARCH 31, 2000
ASSETS
------
<S> <C> <C>
JUNE 30 DECEMBER 31
CURRENT ASSETS 2000 1999
-------------- ---- ----
Cash $ 84,240 $ 15,410
Accounts Receivable (Note 3) 49,042 84,701
Inventory (Note 4) 42,869 42,819
---------- ----------
Total Current Assets 176,151 142,930
FIXED ASSETS (Note 5) 1,759,837 1,423,190
GOODWILL (Note 6) 644,198 662,604
---------- ---------
TOTAL ASSETS $2,580,186 $2,228,731
=========================
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Bank Overdraft (Note 7) $ 52,482 $ 68,748
Accounts Payable 592,079 464,196
Customer Deposits 1,359 1,000
Bank Loan (Note 8) 0 3,732
Related Party Loans (Note 9) 205,791 107,867
---------- --------
Total Current Liabilities 851,711 645,543
---------- --------
See accompanying notes to the financial statements
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<TABLE>
<CAPTION>
<S> <C> <C>
LONG TERM LIABILITIES
Bank Loan -- --
Related Party Loans 242,927 275,316
Bonds Payable 254,000 --
------------------------
Total Long Term Liabilities 496,927 275,316
------------------------
TOTAL LIABILITIES 1,348,638 920,859
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
June 30 , 2000 and 1,831,297 as of December 31, 1999
Additional paid in capital 2,332,396 1,932,957
Retained earnings (1,052,879) (626,556)
Less: Treasury stock (12,500 shares) (50,000) --
---------------------------
Total Stockholders' Equity 1,231,548 1,307,872
---------------------------
TOTAL LIABILITIES AND EQUITY (DEFICIT) $ 2,580,186 $ 2,228,731
===========================
</TABLE>
See accompanying note to financial statements
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<TABLE>
<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDING JUNE 30, 2000 AND 1999,
THE SIX MONTHS ENDING JUNE 30, 2000 AND 1999 AND
FROM INCEPTION (DECEMBER 1, 1997) TO JUNE 30, 2000
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDING ENDING ENDING ENDING
JUNE 30 JUNE 30 JUNE 30 JUNE 30 FROM
2000 1999 2000 1999 INCEPTION
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SALES $ 271,116 $206,549 $ 571,017 $ 688,495 $ 3,163,443
COST OF SALES $ 112,026 $ 55,082 $ 268,431 $ 183,606 $ 1,699,919
----------------------------------------------------------------------
GROSS PROFIT $ 159,090 $151,467 $ 302,586 $ 504,889 $ 1,463,524
OPERATING EXPENSES 406,564 $182,341 755,207 607,802 2,469,079
AMORTIZATION OF GOODWILL 9,203 $ 5,522 18,406 18,406 92,028
----------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY ITEMS (256,677) ($ 36,396) (471,027) (121,319) (1,097,583)
----------------------------------------------------------------------
EXTRAORDINARY ITEM: GAIN ON
SALE OF FIXED ASSETS 44,945 0 44,945 0 44,945
INCOME TAXES 0 0 0 0 0
---------------------------------------------------------------------
NET INCOME (LOSS) $ (211,731) ($ 36,396) $ (427,082) $ (121,319) $(1,052,636)
======================================================================
Weighted Average 1,956,297 1,956,297 1,956,297 1,280,315
Number of Shares
Basic EPS $ (0.108) $ (.019) $ (0.21) $ (0.095)
</TABLE>
See accompanying notes to the financial statements
<PAGE>
<TABLE>
<CAPTION>
DIVEDEPOT.COM AND SUBSIDIARY
STATEMENT OF CASH FLOWS
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDING JUNE 30, 2000 AND 1999,
THE SIX MONTHS ENDING JUNE 30, 2000 AND 1999
FROM INCEPTION (DECEMBER 1, 1997) TO JUNE 30,2000
<S> <C> <C> <C> <C> <C>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDING ENDING ENDING ENDING
JUNE 30 JUNE 30 JUNE 30 JUNE 30 FROM
2000 1999 2000 1999 INCEPTION
-------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (FOR)
OPERATING ACTIVITIES
Net Income (Loss) (211,731) (36,396) (426,081) (121,319) (840, 906)
Adjustments for items not involving the movement of cash:
Receivables - related parties
Accounts Receivable $ 15,995 $ 7,927 $ 35,659 $ 26,423 ($ 65,037)
Depreciation $ 26,477 $ 27,591 $ 53,126 $ 55,182 $ 225,383
Inventory -- ($ 8,360) ($ 50) ($ 27,865) ($ 42,869)
Accounts Payable $ 111,199 $ 4,493 $ 127,883 $ 14,977 $ 528,691
Customer Deposits $ 359 $ 300 $ 359 $1000 ($ 29,354)
Amortization of Goodwill $ 9,203 $ 9,203 $ 18,406 $ 18,406 $ 82,825
Gain On Sale of Fixed Assets ( $44,945) -- ($ 44,945) -- $ 4,291
Other ($ 16,954) -- ( 16,954) -- $ 1,999
-------------------------------------------------------------------------
Total adjustments to net income $ 101,334 $ 41,154 $ 173,484 $ 88,123 $ 705,929
Net cash provided by (used in)
operating activities ($ 110,397) $ 4,758 ($ 252,597) ($ 33,196) ($ 134,977)
CASH FLOWS FROM (FOR)
INVESTING ACTIVITIES
Proceeds from Sale of Fixed Assets $ 60,000 $ 60,000
Purchase of Subsidiary (net of cash acquired) ($1,041,013)
Purchase of Fixed Assets ( $40,167) ($ 312,753) ($ 50,133) ($1,042,510) ($1,331,400)
-------------------------------------------------------------------------
Net cash provided by (used in)
operating activities $ 19,833 ($ 312,753) $ 9,867 ($ 1,042,510) ($2,372,413)
</TABLE>
See accompanying notes to the financial statements
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<CAPTION>
CASH FLOWS FROM (FOR)
INVESTING ACTIVITES
<S> <C> <C> <C> <C> <C>
Purchase of treasury stock ($ 50,000) ($ 50,000)
Proceeds from bank loan 17,109
Repayment on bank loan ($ 2,146) ($ 13,366)
Proceeds from loan
Repayment on loan ($ 1,847) ($ 844) ($ 3,732) ($ 1,885)
Proceeds from sale of shares $ 340,500 $ 1,135,000 $ 340,595
Contributed Surplus $ 1,595,869
Share split ($ 2,036)
Related party loans ($ 22,118) $ 5,245 $ 65,535 $ 17,484 $ 423,014
Proceeds from issuance
of bonds pay $ 8,000 -- $ 254,000 $ 246,000
Deferred Costs ($ 3,231) ($ 10,770) $ 30,354
Add'l paid in capital
Net cash provided by (used in)
Investing activities ($ 15,965) $ 341,870 $ 265,803 $ 1,139,568 $ 2,585,654
CASH RECONCILIATION
Net increase (decrease)
in cash ($ 106,529) $ 33,876 $ 23,073 $ 63,862 $ 78,264
Beginning cash balance $ 138,287 ($ 11,881) $ 84,949 ($ 41,867) ($ 49,669)
------------------------------------------------------------------------
CASH BALANCE AT END
OF PERIOD $ 31,758 $ 21,995 $ 108,022 $ 21,995 $ 28,595
========================================================================
</TABLE>
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 JUNE 30, 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 1023 -- -- 1023
Net (loss) from inception
on Dec 1, 1997 through
Dec 31, 1997 (25,974) (25,974)
Balance December 31,1997 1,022,987 1023 (25,974) (24,951)
Issuance of shares of
common stock on June 4,
1998 for $.001 per share 2,964 3 -- -- 3
Issuance of shares of
common stock on July 1,
1998 for $1.43 per share 3,622 4 5,176 -- 5180
Net (loss) through
December 31, 1998 (237,639) (237,639)
---------- ---------- ---------- ---------- ----------
Balance December 31, 1998 1,029,573 1030 5,176 (263,613) (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 on March 7,
1999 for $ 2.00 per share 50,000 50 99,950 -- 100,000
Issuance of shares of
common stock on March 24,
1999 for $ 2.00 per share 10,000 10 19,990 -- 20,000
Issuance of shares of
common stock on March 29,
1999 for $ 2.00 per share 50,000 50 99,950 -- 50,000
Issuance of share of
common stock on March 30,
1999 for $ 2.00 per share 10,000 10 19,990 -- 20,000
Issuance of shares of
common stock on March 31,
1999 for $ 7.934 per share 20,000 20 158,660 -- 40,000
Issuance of shares of
common stock on April 1,
1999 for $ .001 per share 73,500 73 -- -- 73
Issuance of shares of
common stock on April 6,
1999 for $ 2.00 per share 122,500 122 244,878 -- 245,000
</TABLE>
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 JUNE 30, 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 June 9,
1999 for $ .001 per share 10,000 10 10
Issuance of shares of
common stock on August 4,
1999 for $ .001 per shares 23,000 23 23
Issuance of shares of
common stock on August 31,
1999 for $ 2.00 per share 325,000 325 649,675 650,000
Issuance of shares of
common stock on August 31,
1999 for $7.93 per share 80,000 80 634,328 634,408
Net (loss) through
December 31, 1999 (362,943) (362,943)
---------------------------------------------------------------------------------
Balance December 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 on March 1,
2000 for $ 2.00 per share 100,000 100 199,900 200,000
Treasury stock purchased (12,500)
Net income(loss) for period
through March 31, 20000 (214,350) (214,350)
Net income (loss) for period
through June 30, 2000 (211,731) (211,731)
Cumulative Balance,
June 30, 2000 2,018,797 2,031 2,332,396 (1,052,637) 1,281,793
</TABLE>
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 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. It owns a subsidiary, Baskin in
the Sun LTD.
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 to income taxes at 22% of its operating income
and accounts for this using the liability method.The subsidiary is
liable to 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
June 30, 2000 March 31, 1999
------------- --------------
Trade 26,461 47,557
Utility 3,533 3,533
Prepaid expenses 19,048 13,946
------------- --------------
$ 49,042 $ 65,036
============= ==============
4. INVENTORY
June 30, 2000 March 31, 2000
------------- --------------
Merchandise 39,748 39,748
Spares 0 0
Teaching materials 3,121 3,071
Fuel - -
------------- --------------
$ 42,869 $ 42,819
============= ============
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<TABLE>
<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
5. FIXED ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Compressor Computer Website Furniture Machinery & Motor Motor Rental Total
Equipment Equipment & Fixtures Equipment Vehicles Vessels Equipment
--------- --------- ------- ---------- --------- -------- ------- --------- --------
Cost
March 31,2000 64,815 21,229 1,460,000 29,922 69,652 35,300 480,549 92,086 2,263,553
Additions 1,357 0 25,000 1,476 1,476 0 1,550 10,550 41,400
Disposals 0 0 0 0 0 0 119,415 0 119,415
------------ ------------ ---------- --------- ---------- ------ ------- ------- ---------
June 30, 2000 71,172 21,229 1,485,000 31,389 71,128 35,300 362,684 107,636 2,185,538
Accumulated Depreciation
March 31, 2000 53,072 14,566 0 22,072 39,596 35,300 231,544 60,890 457,040
Charge for the Quarter 1,869 3,067 0 1,122 1,340 0 16,528 2,550 26,476
Disposals 0 0 0 0 0 0 87,832 0 87,832
---------- ---------- -------- -------- ---------- ------- ------- -------- ---------
June 30, 2000 54,941 17,633 0 23,194 40,936 35,300 160,240 63,440 395,684
---------- ---------- ---------- ------- ---------- ------- --------- -------- -------
Net book value
June 30, 2000 16,231 3,596 1,485,000 8,195 30,192 - 202,444 44,196 1,789,854
--------- -------- ------- ------- --------- ------ ------- ------ -------
March 31, 2000 16,743 6,663 1,460,000 7,850 30,056 249,005 36,196 1,806,514
---------- --------- --------- ------- -------- -------- -------- -------- ----------
</TABLE>
<PAGE>
6. GOODWILL
June 30, 2000 March 31, 1999
------------- --------------
Goodwill 736,226 736,226
Amortization of goodwill (92,028) (82,825)
--------- --------
$ 644,198 $ 653,401
================ =============
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.
June 30, 2000 March 31, 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 0 1,847
by June 2000, in monthly installments
of $655 including interest.
Less: current portion 0 (1,847)
------------ ------------
$ - $ -
=============== ==============
9. RELATED PARTY LOANS
June 30, 2000 March 31, 2000
----------------------------------
Related party loan which bears
interest at 3% over New York 242,927 259,122
prime rate. It is repayable
in monthly installments of
$4,583.00 plus interest.
Related party loan which is
unsecured bears no interest 177,791 183,174
and has no fixed terms of
repayment. It is not expected
to be repaid within the next
year.
Unsecured loan which bears
interest at 8% per annum. It 28,000 28,000
is repayable in quarterly
installments of $560. ---------- ----------
448,718 470,836
Less: Current portion 205,791 211,714
---------- ----------
$242,927 $259,122
<PAGE>
10. SHARE CAPITAL
June 30, 2000 March 31, 2000
-----------------------------------
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
June 30, 2000 March 31, 2000
-----------------------------------
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 six months of 2000.
13. INCOME TAXES
The Company incurred $211,731 of estimated tax losses during the three
months ended June 30, 2000 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 PERIOD ENDED JUNE 30, 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 JUNE 30, 2000 COMPARED TO THE
SAME PERIOD IN 1999
The Company had revenues for the three month period of $271,116 in 2000,
compared to $206,549 in 1999. The cost of sales in the period in 2000 was
$112,026 and in 1999 cost of sales was $55,082. The gross profit was $159,090 in
the period in 2000 compared to $151,467 in 1999. The operating expenses in the
period in 2000 increased to $406,564 from $182,341 in 1999 . The net loss in the
period in 2000 was ($256,677) compared to ($36,396) in the period in 1999.
COST OF REVENUE. Cost of Sales totaled $112,026 (or 41% of sales) for the
three months ended June 30, 2000 compared to $55,082 in 1999. Cost of sales
consists primarily of costs to provide travel related services to clients; the
costs of merchandise sold in the retail stores and to a minor extent the costs
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 increases and buying power is more firmly
established. Management has reduced substantially the inventory carried over the
last three years and streamlined the purchasing operations.
<PAGE>
OPERATING EXPENSES. (Including Marketing, Sales and Administration). Operating
expenses totaled $406,564 for the three months ended June 30, 2000, compared to
$182,341 in 1999. Operating expenses include all 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 consist 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. 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 percentage of revenue as sales of travel and
merchandise increase. Operating loss for the period in 2000 was ($256,677) as
compared to ($36,396) in 1999 for the quarter.
NET LOSS. DiveDepot.Com had a loss of approximately ($211,731) for the
quarter June 30, 2000 after an extraordinary gain on sale of fixed assets of
$44,945. Net loss for the quarter in 1999 was ($36,396).
RESULTS OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000
The company had sales revenues of $571,017 in the period in 2000 compared
to $688,495 for the period in 1999.
<PAGE>
COST OF REVENUE. Cost of Sales totaled $268,431( or 41% of sales) for the
period in 2000 compared to $183,605 in 1999. Cost of sales consists primarily of
costs to provide travel related services to 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.
OPERATING EXPENSES (Including Marketing, Sales and Administration).
Operating expenses totaled $755,207 for the six month period ended June 30,
2000, compared to $607,802 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.
The company had a loss on operations of ($471,027) in the six month period
in 2000, as compared to a loss of ($121,319) in the same period in 1999.
The company had an extraordinary gain of $44,945 in the second quarter of
2000 which reduced the net loss for the six month period to ($427,082) compared
to ($121,319) in loss for the same period in 1999.
The loss per share for the six month period in 2000 was ($.21) and in 1999,
it was ($.095). Losses can be expected to continue as the company attempts to
expand its business.
Management believes that period-to-period comparisons of its financial
results should not be relied upon as an indication of future performance.
DiveDepot.Com may experience significant period-to-period fluctuations in
operating results depending upon factors such as the success of the
DiveDepot.Com's efforts to expand sales and implement its Internet marketing
programs and mix of products and services and changes in, and the timing of,
expenses relating to development and sales and marketing. Other factors that may
contribute to variability of operating results include the timely deployment and
implementation of expansion of the DiveDepot.Com outside sales network or
internal direct marketing capability, changes in demand for sport diving travel
and related products and services, the cyclical nature of marine expenditures
and the overall health of the regional and international economy.
<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.
CASH FLOWS
Net cash used in operating activities for the three months ended June 30,
2000 was approximately $110,397. The amount of cash used in operating activities
in the period was primarily impacted by the increased costs of operations and
expenses associated with commencement opening the new dive operations at Peter
Island. 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 does not have capital sufficient to meet the Company's cash
needs, which remain critical due to continuing 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.
<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 stocks in a private placement exempt
under Section 4 (2) and 4 (6) of the Securities Act of 1933. 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 security holders during the quarter.
Item 5. Other Information.
NORBERT D.WELLER, age 55 was appointed as President, CEO and Director of the
company in April 2000. Mr. Weller has a BS in Business Administration from State
University of New York at Buffalo (1972) and MBA course work 1973-75 at State
University of New York at Buffalo. From 1992-98 he was employed by Resorts USA,
a division of the Rank Group, first as a Vice President-Administration and in
1997 promoted to Executive Vice President. Mr. Weller was employed by Marriott
In-Flite Services as Senior Vice President from 1988-1990. From 1990 to 1992 he
was an independent writer and consultant for business management.
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
