U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/A
Amendment No. 2
File No.:0-28665
CIK:0001101715
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
DIVEDEPOT.COM, INC.
(Name of Small Business Issuer)
FLORIDA 65-0817033
(State of Incorporation) (I.R.S. Employer Identification No.)
2101 West SR 434, Suite 221, Longwood, FL 32779
(Address of principal executive offices) (Zip Code)
Registrants Telephone Number, including area code: 407-949-9300
Securities to be registered under Section 12(b) of the Act: NONE
Securities to be registered under Section 12(g) of
the Act:
Title of Class: Common Stock
<PAGE>
TABLE OF CONTENTS
PART I
Page
Item 1. Business 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Item 3. Properties 21
Item 4. Security Ownership of Certain Beneficial Owners and Management 21
Item 5. Directors and Executive Officers of the Registrant 23
Item 6. Executive Compensation 25
Item 7. Certain Relationships and Related Transactions 26
Item 8. Description of Securities 27
PART II
Item 1. Market for Registrant's Common Stock and Security Holder Matters 28
Item 2. Legal Proceedings 28
Item 3. Changes in and Disagreements with Accountants on Accounting 28
and Financial Disclosure
Item 4. Recent Sales of Unregistered Securities 29
Item 5. Indemnification of Directors and Officers 33
PART F/S
Signature Page 35
Index to Financial Statements 36
Index to Exhibits 37
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Registrant was incorporated in 1997 as Baskin In The Sun International,
Inc. in Florida to act as a U. S. holding company for the British Virgin Islands
subsidiary, Baskin In The Sun, Ltd. Hereafter, Baskin In the Sun International,
Inc. will be referred to as "the Company".
CORPORATE NAME CHANGE
At an extraordinary meeting of shareholders held June 10, 1999, the motion
for the corporate name was changed to Divedepot.com, Inc. From this time forward
the Company will operate under the name Divedepot.com, Inc. with the BVI
subsidiary maintaining it's current identity of Baskin In The Sun, Ltd. Travel
and non-diving specific operations will operate on a DBA basis under the Baskin
In The Sun name.
PREDECESSOR HISTORY
The Original Baskin In The Sun ("BITS") was founded in February of 1969 on
the little known island of Grenada by Alan M. Baskin. In 1973, an unstable
political environment prompted Alan Baskin to sell the existing business
together with the dive boats and SCUBA equipment. The "Baskin In The Sun" name,
however, was retained.
DOMINICAN REPUBLIC: The second Baskin In The Sun operation opened in Santo
Domingo, Dominican Republic, in September of 1974. The business at the time
consisted of a SCUBA store, a classroom for teaching courses and a single dive
boat. This company was the first professional operation of its kind in the
Dominican Republic. In 1975 Mr. Baskin sold his interest in the company, but
again retained the corporate name. He formed a partnership with one of the
original investors, Eva Cope, and opened his third dive operation, this time at
the Punta Cana Hotel, a resort on the eastern shore of the Dominican Republic.
The hotel and dive operation was sold to Club Med in the spring of 1977.
HAITI: In November of 1977 Baskin In The Sun opened for business in Haiti.
This move came about for several reasons. First, there were no professional
SCUBA diving operations in the country. Second, the Duvalier government exerted
political stability and was interested in promoting tourism. Finally, it
represented a challenge to be successful in Haiti. The problems associated with
establishing a viable business in Haiti were daunting. Haiti had a serious
public relations problem and was therefore a difficult vacation spot to sell.
Baskin In The Sun operated for nine years in Haiti, while more than fourteen
similar dive businesses met with failure. Unfortunately on February 7, 1985 the
Haitian Revolution began. The airlines stopped flying; the tourists stopped
coming. After nine years in Haiti it was necessary to close and relocate Baskin
In The Sun to a new location where it might be an attractive destination.
3
<PAGE>
BRITISH VIRGIN ISLANDS: As a British colony, the BVI offered unquestioned
political stability and, furthermore, it was already recognized as an
outstanding diving location. Alan Baskin and Eva Cope purchased an existing
business called Marler Industries, Ltd. (DBA Aquatic Centres) from George and
Luana Marler in Road Town, Tortola, in April of 1986. This business had been
operating in the BVI since 1971. However, it was clear that the company had been
neglected and was in financial trouble. Management was ineffective and many of
the company's assets had been depleted.
To capitalize on the "Baskin In The Sun" name, "Aquatic Centres": was
dropped and a new corporation was formed under the name - Baskin In The Sun,
Ltd. Most of the first year of business was spent restructuring the company and
the operation. Donald Mitchell and his daughter Lisa Mitchell ( an experienced
diving instructor), together with a small group of Investors, acquired Baskin In
The Sun, Ltd. from Alan Baskin and Eva Cope in 1993.
A predecessor to Divedepot.com, Inc. was formed in 1996, under the laws of
the Republic of Panama as BASKIN IN THE SUN INTERNATIONAL, S.A. The purpose of
the predecessor was to own and operate dive facilities and provide ancillary
travel, retail and rental activities related to the diving industry in the
British Virgin Islands and other locations.
The predecessor, Baskin In The Sun International, S.A., was formed in 1996
to consolidate the subsidiaries Baskin In The Sun, Ltd., Baskin In Panama, S.A.,
the investment in Discovery Diving & Fishing, Inc.
The predecessor, Baskin In The Sun International, S.A. was unsuccessful in
its efforts to raise additional capital as a foreign corporation, and had an
unsuccessful investment in Discovery Dive & Fishing, Inc. in Key Largo, Florida.
In December 1997, management formed the company, which then purchased all of the
assets and liabilities of the predecessor. No markup or goodwill was recorded in
the accounting for the transaction. The subsidiary in BVI, Baskin In The Sun,
Ltd. became a subsidiary of the new company.
The Company, Baskin In The Sun International, Inc. (name changed to
DiveDepot.Com, Inc. in June 1999) was originally founded in 1997 and in December
of 1997 acquired in exchange for stock and assumption of debt the British Virgin
Island company, Baskin In The Sun, Ltd. as a subsidiary. The Company commenced
operations in the United States on December 1st, 1997, its purpose to engage in
dive travel, promotions and marketing activities in support of the subsidiary
located in the British Virgin Islands.
The Company has funded its activities primarily through a combination of
operating revenues, debt and through the private placement of equity. The
Company's Revenue through June 30, 2000 has been primarily generated from the
sale of travel packages. The Company's current focus is on developing an
improved capacity to efficiently market and sell dive trip packages including
airline and hotel accommodations located in the Caribbean. Management believes
that the ability to market dive travel and other specialty adventure travel
products via
4
<PAGE>
the internet provides an opportunity to expand the current operation
substantially, and accordingly has developed an additional business direction of
internet marketing of travel/dive ventures through its internet dive portal
(divedepot.com).
MARKETING
The Corporate Strategy for the Company is to be an recreational diving
resource. While the nature of the business is recreational diving the company's
marketing focus will be on the consumer. The primary objective of the Company is
to market dive resort packages to consumers over the next three to five years.
By carefully choosing new destinations, the number and variety of dive travel
packages will be significantly increased and customized in line with guest's
needs and desires. The Company has developed a centralized reservation service
located in Longwood, Florida to assist in its marketing efforts.
The continued development of the Company's U.S. based centralized
reservation, marketing, sales and travel service will enable Baskin customers
from around the world to arrange for vacation packages to vacation locations
with one telephone call, e-mail or fax. This direct reservations service will
provide cost savings for the company as a whole in addition to substantially
increased sales opportunities.
The Company has established an educational program that focuses on
continuing diver training to promote loyal repeat customers. With the Company's
focus on growth and diversification, this customer base will be the primary
business source for the expanded sites, travel services and investment
opportunities.
The Company has been developing specialty courses and seasonal events to
give guests additional creative diving opportunities. Each dive trip is
different, even if it is to the same dive site. This diversification of programs
and events will give both repeat customers and first time guests more variety,
as well as the opportunity to gain additional certifications and a broadening of
underwater knowledge.
A key element within the long term objectives of the Company to remain
firmly rooted in the developing and growing Recreation and Leisure Industry. The
Company intends to become involved in every related aspect of the diving
business to include equipment rental and travel/reservations coordination.
5
<PAGE>
CURRENT OPERATIONS OF SUBSIDIARY BASKIN IN THE SUN, LTD. IN BVI
The current revenue producing areas of the Company operations primarily
focus on Training, Diving, Rentals and Merchandising in its BVI dive resort
operations and 80% of the its business falls into these four revenue categories.
The British Virgin Islands are known by purists within the diving
profession as offering the widest variety of diving opportunities in the
Caribbean. There are several shipwrecks throughout the BVI located at varying
depths, accommodating all levels of divers, including snorkelers. The wreck of
the famous British packet, "The Rhone", for example, lends itself to both
snorkeling and SCUBA activities. Wreck diving is of consummate interest to
snorkelers and SCUBA divers since wrecks attract hordes of tropical and reef
fish. Wrecks also sponsor a serious interest in the history of the period and in
those passengers associated with the wreck..
Currently, there are three Baskin In The Sun locations in the British
Virgin Islands: Soper's Hole, Prospect Reef, and Peter Island. The first dive
center is in Soper's Hole, on Frenchman's Cay. Locally known as the "West End",
Soper's Hole is a protected harbor nestled among steep hills and dotted with
glistening yachts.
The second operation, Prospect Reef, is located on the property of The
Prospect Reef Hotel. This hotel is among the largest within the British Virgin
Islands with approximately 131 rooms, six lighted tennis courts, a deep water
diving pool, Olympic designed swimming pool, several different room
configurations, and charming restaurants.
The Prospect Reef location is a short distance from the new government
building where cruise ship passengers disembark. This is very significant for
the business growth of Baskin In The Sun because the British Virgin Islands has
a duty-free status. This places the island of Tortola on a more competitive
footing with St. Thomas, St. John and St. Croix in the US Virgin Islands.
The exclusive Peter Island Resort is the location of the third dive
operation. Baskin In The Sun has chosen this charming setting from which to
operate and promote the diving experience.
The Company has three dive boats, a basic requirement for the diving and
marine recreational business. These boats have configurations that permit client
comfort in a variety of seas. All the BITS boats have good maintenance and
performance records. The Company is committed to fleet modernization and will
seek new dive boats that will improve customer service and safety.
6
<PAGE>
Insurance requirements for the Company are currently handled by Lloyds of
London.
Baskin In The Sun is a PADI 5-Star Instructor Development Center (IDC), and
authorized to certify all levels up to Dive Instructor. The Company is also
affiliated with NAUI, SSI and other major scuba certification.
INTERNET DIVE PORTAL (DIVEDEPOT.COM)
In conjunction with its dive resort and travel business, the Company has
identified a significant opportunity for utilizing the internet to web enable
many of its marketing programs and create an internet presence in the sport
diving industry. The domain and operating name Divedepot.com, Inc. has been
researched and trademarked and the domain registered, and a website is under
development.
The "Master Dive Portal - Divedepot.com, Inc." will be automatically
updated to contain virtually all existing web content relative to diving where
all pages are posted automatically to all search engines and directories. By
incorporating several traffic generation techniques and services, the site will
attempt to become the most active scuba diving category-specific portal on the
web. This searchable site is intended to also allow many other diver-related web
services that will further enhance the traffic:
1. FREE E-MAIL ACCOUNTS TO ALL DIVERS by using this e-mail the diver would be
automatically entered in drawings, get dive related news, be updated on
specials etc. The model for this is the hotmail.com e-mail system offered
by Microsoft. Every e-mail sent is a marketing piece, as it has a tag line
that is automatically attached containing a hyperlink to the divedepot.com
portal. This system will be completely automated and runs on the web mail
server. It also allows a user to check/send e-mail with only a browser.
2. To enhance this further the Company will give individuals 1-3 personal
pages for their own use. As people go to these pages they will pass through
the divedepot.com portal site and generate other impressions and marketing
opportunities.
7
<PAGE>
3. The divedepot postcard system. As part of e-mail registration and the mail
system the user will be able to send an e-postcard using a variety of
formats and include proprietary photos by copying in digital photos and
.gif or .jpeg images.
4. Dive shop websites. The Company will create at least an e-commerce page for
virtually every recognized dive shop in the world. Shops will then be able
to go up to several pages by providing us the content, logos, prices for
courses etc.. If they currently have a site it will be initially copied it
to registrant's the appropriate heading. The system will allow all to have
an e-commerce site under the divedepot.com domain and all transactions and
travel will result in a commission being paid to the shop. This system will
promote the loyalty of the dive shops who are major players in the training
of new divers and sponsoring dive travel.
THE COMPANY INTENDS TO GENERATE WEB DIRECT REVENUE SOURCES
1. The BVI subsidiary - Baskin In The Sun, Ltd. will be a featured advertiser
on the divedepot site driving traffic to the Baskin site for Dive Travel
services, providing a low cost way of creating substantial traffic through
the Baskin site.
2. Web advertising space will be sold to dive equipment, dive shops, resorts
and services providers.
3. Partnering with book resellers at each content area to sell books on the
subject and other related items.
By registering all dive shops and their clients, the Company will be able
to charge a commission to the dive retailer every time a direct internet
purchase is effected for either travel services or merchandise. This unique
partnering arrangement with the retail shops promotes ongoing loyalty and a
maximization of all potential sales outlets.
COMPETITION
The Company expects to encounter substantial competition in its efforts to
build its businesses. Many of these entities will have significantly greater
experience, financial and other resources and managerial capabilities than the
Company and will therefore be in a better position than the Company to market
services.
8
<PAGE>
ADMINISTRATIVE OFFICES
The Company currently maintains a mailing address at 2101 West SR 434,
Suite 221, Longwood, Florida, 32779. The Company's telephone number is (407)
949-9300. The wholly owned subsidiary (Baskin In The Sun, Ltd.) maintains
offices at Prospect Reef Hotel, Slaney Point, Tortola, British Virgin Islands,
Tel 284-494-2858. The Company does not currently maintain any other office
facilities.
EMPLOYEES
The Company currently employs a staff of five (5). Management of the
Company expects to use consultants, attorneys and accountants as necessary and
will require a further staff of eight (8) to carry on the intended business
plan. Although there is no current plan with respect to its nature or amount,
remuneration may be paid to or accrued for the benefit of, the Company's
officers and directors in addition to Mr. Weller's current salary as President
and CEO and Ms. Mitchell's current salary as Executive Vice President. See
"Executive Compensation" and under "Certain Relationships and Related
Transactions."
RISK FACTORS
1. CONFLICTS OF INTEREST. Certain conflicts of interest may exist between
the Company and its officers and directors. They have other business interests
to which they devote their attention, and may be expected to continue to do so
although management time should be devoted to the business of the Company. As a
result, conflicts of interest may arise that can be resolved only through
exercise of such judgment as is consistent with fiduciary duties to the Company.
See "Management," and "Conflicts of Interest."
2. NEED FOR ADDITIONAL FINANCING. The Company has very limited funds, and
such funds may not be adequate to take advantage of any available business
opportunities. Even if the Company's funds prove to be sufficient to acquire an
interest in, or complete a transaction with, a business opportunity, the Company
may not have enough capital to exploit the opportunity. The ultimate success of
the Company may depend upon its ability to raise additional capital. The Company
has not investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its modest
capital.
3. REGULATION OF PENNY STOCKS. The Company's securities, when available for
trading, will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
9
<PAGE>
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act
of 1934, as amended. Because the securities of the Company may constitute "penny
stocks" within the meaning of the rules, the rules would apply to the Company
and to its securities. The rules may further affect the ability of owners of
Shares to sell the securities of the Company in any market that might develop
for them.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
4. LIMITED OPERATING HISTORY. The parent company was formed in December
1997 in Florida (the subsidiary was incorporated as Marler Industries in BVI in
1971) for the purpose of engaging in any lawful business. The Company is not and
has never been profitable. The Company has a limited operating history and has
not yet reached a profitable operating stage.
5. NO ASSURANCE OF SUCCESS OR PROFITABILITY. There is no assurance that the
Company will acquire a favorable business opportunity. There is no assurance
that the company will generate profits, or that the market price of the
Company's common stock will be increased thereby.
6. LACK OF DIVERSIFICATION. Because of the limited financial resources that
the Company has, it is unlikely that the Company will be able to diversify its
acquisitions or operations. The Company's probable inability to diversify its
activities into more than one area will subject the Company to economic
fluctuations within the scuba diving and travel industry and therefore increase
the risks associated with the Company's operations.
10
<PAGE>
7. OTHER REGULATION. An acquisition made by the Company may be of a
business that is subject to regulation or licensing by federal, state, or local
authorities. Compliance with such regulations and licensing can be expected to
be a time-consuming, expensive process and may limit other investment
opportunities of the Company.
8. DEPENDENCE UPON MANAGEMENT. Limited Participation of Management. The
Company currently has only five individuals who are serving as its officers and
directors. The Company will be heavily dependent upon their skills, talents, and
abilities to implement its business plan, and may, from time to time, find that
the inability of the officers and directors to devote their full time attention
to the business of the Company results in a delay in progress toward
implementing its business plan. See "Management." Because investors will not be
able to evaluate the merits of possible business acquisitions by the Company,
they should critically assess the information concerning the Company's officers
and directors.
9. LACK OF CONTINUITY IN MANAGEMENT. The Company does not have an
employment agreement with its officers and directors, and as a result, there is
no assurance they will continue to manage the Company in the future.
10. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Florida Revised Statutes
provide for the indemnification of its directors, officers, employees, and
agents, under certain circumstances, against attorney's fees and other expenses
incurred by them in any litigation to which they become a party arising from
their association with or activities on behalf of the Company. The Company will
also bear the expenses of such litigation for any of its directors, officers,
employees, or agents, upon such person's promise to repay the Company therefore
if it is ultimately determined that any such person shall not have been entitled
to indemnification. This indemnification policy could result in substantial
expenditures by the Company, which it will be unable to recoup.
11. DIRECTOR'S LIABILITY LIMITED. Florida Revised Statutes exclude personal
liability of its directors to the Company and its stockholders for monetary
damages for breach of fiduciary duty except in certain specified circumstances.
Accordingly, the Company will have a much more limited right of action against
its directors than otherwise would be the case. This provision does not affect
the liability of any director under federal or applicable state securities laws.
12. DEPENDENCE UPON OUTSIDE ADVISORS. To supplement the business experience
of its officers and directors, the Company may be required to employ
accountants, technical experts, appraisers, attorneys, or other consultants or
advisors. The selection of any such advisors will be made by the Company's
President without any input from stockholders. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the President of the
Company considers it necessary to hire outside advisors, he may elect to hire
persons who are affiliates, if they are able to provide the required services.
11
<PAGE>
13. COMPETITION. The travel marketing and dive business is intensely
competitive. The Company expects to be at a disadvantage when competing with
many firms that have substantially greater financial and management resources
and capabilities than the Company.
14. NO FORESEEABLE DIVIDENDS. The Company has not paid dividends on its
common stock and does not anticipate paying such dividends in the foreseeable
future.
15. NO PUBLIC MARKET EXISTS. There is no public market for the Company's
common stock, and no assurance can be given that a market will develop or that a
shareholder ever will be able to liquidate his investment without considerable
delay, if at all. If a market should develop, the price may be highly volatile.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of the securities offered hereby. Owing
to the low price of the securities, many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in these securities, the combination of
brokerage commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.
16. RULE 144 SALES. All of the outstanding shares of common stock held by
present officers, directors, and stockholders are "restricted securities" within
the meaning of Rule 144 under the Securities Act of 1933, as amended. As
restricted shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other applicable
exemptions from registration under the Act and as required under applicable
state securities laws. Rule 144 provides in essence that a person who has held
restricted securities for one year may, under certain conditions, sell every
three months, in brokerage transactions, a number of shares that does not exceed
the greater of 1.0% of a company's outstanding common stock or the average
weekly trading volume during the four calendar weeks prior to the sale. There is
no limit on the amount of restricted securities that may be sold by a
nonaffiliated shareholder after the restricted securities have been held by the
owner for a period of two years. Nonaffiliated shareholders of the Company who
have held their shares for two years under Rule 144(K) are eligible to have
freely tradable shares. A sale under Rule 144 or under any other exemption from
the Act, if available, or pursuant to subsequent registration of shares of
common stock of present stockholders, may have a depressive effect upon the
price of the common stock in any market that may develop.
17. BLUE SKY CONSIDERATIONS. Because the securities registered hereunder
have not been registered for resale under the blue sky laws of any state, the
holders of such shares and persons who desire to purchase them in any trading
market that might develop in the future, should be aware that there may be
significant state blue-sky law restrictions upon the ability of investors to
sell the securities and of purchasers to purchase the securities. Accordingly,
investors should consider the secondary market for the Company's securities to
be a very limited one.
12
<PAGE>
18. CONTROL BY PRINCIPAL STOCKHOLDERS. The directors and executive officers
of the company own a majority of the outstanding common stock in DiveDepot.Com.
In particular, Donald Mitchell and entities under his beneficial ownership or
control constitute the largest shareholder of the company's common stock. Donald
Mitchell is, an officer and director. As a result, Mr. Mitchell may be able to
control the election of members of the company's Board of Directors and
generally exercise control over the company's corporate actions. Such
concentration of ownership may also have the effect of delaying or preventing a
change in control of the company.
INDUSTRY RISK FACTORS THAT COULD AFFECT OPERATING RESULTS
The following factors, together with other risk factors discussed in the
"Overview" section of Management's Discussion and Analysis of Financial
Condition and Results of Operations and other information contained elsewhere
herein, should be considered carefully in evaluating the company and its
business.
1. NARROW GROSS MARGINS FOR AIR TRAVEL RELATED SALES. Approximately 5% of
the company's revenues in fiscal 1998 were generated through air travel related
sales. As a result of price competition and the entry of airlines into direct
competition with the travel industry and, the elimination or reduction of
commissions paid by airlines, the company's gross margins on air travel sales
will continue to be fairly low, projected to be approximately 12% in fiscal
1999. As a result of the company's narrow gross margins in this product
category, fluctuations in net revenues and operating costs may have an impact on
the company's operating results. Further declines in the company's air travel
gross margins may have an adverse effect on the company's business, financial
condition and operating results.
2. DEPENDENCE ON BRITISH VIRGIN ISLAND OPERATIONS. Disruption of operations
at the Baskin In The Sun Island locations for any reason, including power or
telecommunications failures, natural disasters such as hurricanes, fires,
tornadoes or floods, or work stoppages, would have a material adverse effect on
the company's business, operating results and financial condition.
3.INCREASED EMPHASIS ON INTERNET GENERATED SALES. DiveDepot.Com's adventure
travel sales are characterized by higher gross margins than those attainable in
general vacation and domestic sales. As a result, the company's goal is to
increase the proportion of revenues derived from the provision of adventure
travel packages (dive, yacht charter and condo/villa) relative to air only or
domestic travel sales. DiveDepot.Com's success in increasing its travel revenues
will depend to a certain extent on the use of the internet as a proactive
marketing and sales tool backed by the history of the Baskin In The Sun brand,
identity, service and reputation. To the extent that DiveDepot.Com does not
successfully increase the revenues attributable to its adventure travel
business, the company's operating margins may be adversely affected. The company
has also implemented a marketing program for selling its travel services, known
as the "Partners in Paradise". If travel revenues do not increase sufficiently
or the company fails to accurately price its services, the company's business,
operating results and financial
13
<PAGE>
condition would be materially and adversely affected. In addition, customer
acceptance and strong sales of DiveDepot.Com travel services and merchandise and
the ability to establish a significant participating group of dive shops or
network will have a substantial impact on revenues.
4. NEED TO RECRUIT AND RETAIN MANAGEMENT, TECHNICAL AND SALES PERSONNEL.
The company believes that its future success depends, to a large extent, upon
the efforts and abilities of its executive officers, managers, technical and
sales personnel. Failure by the company to attract and train skilled managers,
technical and sales personnel on a timely basis, or the inability of the company
to retain such personnel, could materially and adversely affect the company's
business, operating results or financial condition.
5. MANAGEMENT OF GROWTH. The company has experienced business growth since
its entry into the dive and travel industry. This growth has placed, and is
expected to continue to place, a significant strain on the company's management,
financial, sales, technical and support systems and personnel. The ability to
manage its growth effectively will require it to continue to develop and improve
its operational, financial and other internal systems and train, manage and
motivate its employees. The company has in the past and will continue in the
future to evaluate the acquisition of businesses that complement or expand the
company's presence and profitability in the sport diving and related travel and
merchandising industry. Integrating newly acquired businesses may divert
significant management resources and attention from day to day operations.
6. COMPETITION. The sport diving, adventure travel and dive related
merchandising industry is very competitive. DiveDepot.Com expects competition to
intensify in the future. As an integrated product and service provider,
DiveDepot.Com competes with sellers of travel, and other equipment and diving
services providers. Management is not aware of any company, which would compete
directly in every phase of the company's operations. Instead, DiveDepot.Com
faces competition from a number of different sources and on different levels.
Caradonna, Maduro, Island destinations, PADI Travel and others compete with
DiveDepot.Com in adventure travel products. In addition to these large and
established travel wholesalers, DiveDepot.Com also competes against numerous
regional and local companies in the sport diving resort and dive instructional
areas and many of these competitors have longstanding customer relationships.
For the dive travel markets, there is intense competition from destinations that
have much cheaper air fare from the United States and less expensive hotel
accommodations.
Many of the company's competitors have greater financial, technical and
marketing resources. As a result, such companies may be able to respond more
quickly to new or emerging changes in customer needs or devote more resources to
the development, promotion and sales of their services than DiveDepot.Com. In
addition, competition could result in price decreases and depress gross margins
in the industry. Declines in the company's gross margins may exacerbate the
impact of fluctuating net revenues and operating costs on the company's
operating results and have a material adverse affect on the company's business,
operating results and financial condition.
14
<PAGE>
The principal competitive factors in the company's industry include the
breadth and quality of destinations, and services offerings, availability,
pricing, and expertise of the sales and operational workforce. Management
believes that it competes favorably with respect to each of these factors.
However, there can be no assurance that DiveDepot.Com will, in the future, be
able to compete successfully against existing or future competitors or that such
competition will not adversely affect DiveDepot.Com's business, operating
results and financial condition.
7. HIGH DEGREE OF LEVERAGE; FUTURE CAPITAL NEEDS. The Company requires
substantial capital to fund its business and, in particular, to finance internet
and sales and marketing organizational development, accounts receivable, capital
expenditures, salaries and lease payments on its Orlando and British Virgin
Island facilities. To date, the company has relied on an influx of equity and
debt to finance its business and its expansion. As a result, the company is
highly leveraged.
Substantially all of the company's outstanding indebtedness is tied to the
prime rate. The company is not currently a party to any financial instruments,
which would mitigate the company's exposure to increases in the prime interest
rate. Accordingly, increases in the prime rate could adversely impact the
company's pretax income or otherwise materially and adversely affect the
company's business, operating results or financial condition. Also, there can be
no assurance that the company will be able to generate sufficient cash from
operations to satisfy future interest and principal payments. In the event that
the company is unable to meet its payment obligations or needs additional
capital to fund its business, the company would be required to seek alternative
sources of financing or attempt to refinance its existing credit facilities.
There can be no assurance that such alternative equity or debt funding would be
available on terms acceptable to the company, if at all. Under such
circumstances, the company's inability to procure additional funding or
refinance existing indebtedness would have a material adverse effect on the
company's business, operating results and financial condition.
8. LIABILITY AND RISKS FROM PERSONAL INJURY. The sport diving industry is
not highly regulated, and relies on the small group of training agencies to set
safety standards. The company operates under a number of local safety
regulations and all vessels and dive equipment are inspected annually. All dive
instructors must be certified and insured. The company's diving operations are
constantly exposed to the possibility of accidents or fatalities related to the
sport. A serious accident or fatality could have a serious and material effect
on the company's diving operations and could result in civil penalties on behalf
of the company, its employees, officers and directors. While the company has all
regulatory permits and insurance for its business as presently conducted, and
operates to the highest safety standards there can be no assurance that such
insurance would cover every contingency.
15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
IMPORTANT NOTE ABOUT FORWARD LOOKING STATEMENTS
This Registration Statement 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
In late 1998 DiveDepot.Com began negotiating to operate the diving
concession at the Peter Island Resort in the British Virgin Islands. A
concession operating contract was signed with Amway Hotel Corp. and operations
commenced at that location on April 1st, 1999. It is managements expectation
that this operating unit under the control of the subsidiary Baskin In The Sun,
Ltd. will increase to gross sales for the company. Management has worked to
reduce overhead and streamline management and operations in the subsidiary
Baskin In The Sun, Ltd.
In early 1999 management determined that there was a need for a dive
related internet portal. This portal would be a search engine containing
virtually all available information for the industry and also be a transactional
based system allowing dive shops, dive resorts and manufacturers the ability to
conduct e-commerce between the users and the diving enthusiasts who would avail
themselves of the services provided to the diving public. DiveDepot.Com
management entered into internet development contracts with Virtacon Corp,
Webulate, LLC, Q Sound Corp, and Prismawebs to design support and host the
internet portal to be known as DiveDepot.Com. At an extraordinary meeting of
shareholders held June 10, 1999 the motion to change the name of the parent
corporation to DiveDepot.Com, Inc. was unanimously approved.
In anticipation of the development of the DiveDepot.Com project, the added
vessels and equipment to support the Peter Island operations and for general
working capital the company made a private placement offering which raised
$435,000.
16
<PAGE>
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.
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 MONTHS 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.
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.
17
<PAGE>
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.
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.
In regard to the possibility that the shares of the Company would qualify
for listing on NASDAQ, the current NASDAQ standards include the requirements
that the issuer of the securities that are sought to be listed have net tangible
assets of at least $4,000,000. The Company does not satisfy the NASDAQ listing
criteria, at this time.
18
<PAGE>
RESULTS OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 1999 COMPARED TO SAME PERIOD
IN 1998.
The Company had revenues of $1,187,538 in 1999 compared to $1,326,414 in
1998. Cost of sales in 1999 was $841,699, compared to a cost of sales in 1998 of
$940,038. In 1999 the gross profit was $345,839, and in 1998 gross profit was
$386,376.
The Company incurred operating expenses of $671,971 in 1999 compared to
$587,204 in 1998. After amortization of goodwill of $36,811 for each year, the
Company sustained a loss on operations totalling ($362,943) in 1999 and
($237,639) in 1998. The net loss was $362,943 in 1999 and ($237,639) in 1998.
The diving income for the Company rose to $548,502 in 1999 from $415,999 in
1998. Certification income from divers was $76,274 in 1999 compared to $78,090
in 1998. Merchandise sales were $286,666 in 1999 and $290,914 in 1998. Travel
package income decreased to $156,333 in 1999 from $372,613 in 1998, as a result
of the Company changing its marketing of this area due to unprofitability.
The Company incurred yacht charter expenses in 1999 of $27,534 for a new
travel program not offered in 1998. Repair income was off in 1999 to $26,907
from $40,052 in 1998.
The Company's largest operational expense items were merchandise costs of
$173,634 in 1999 compared to $147,209 in 1998, and salaries of $433,152 in 1999
as compared to $370,108 in 1998. Hotel costs were $95,033 in 1999 as compared to
$180,292 in 1998. Diving costs were reduced to $38,097 in 1999 from $132,104 in
1998.
19
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company had $15,410 in cash at year end 1999, down from $27,482 at 1998
year end. Current assets were $142,930 and $162,534 at year end 1999 and 1998,
respectively. The current liabilities of the Company were $645,543 and $353,854
at year end 1999 and 1998, respectively.
The Company had inadequate capital and needed to borrow funds or make
private placements of stock in order to fund operations and pay liabilities at
year end.
CASH FLOWS
The Company, at year end, had inadequate cash flow to pay accounts payable
and current operations costs. The operations deficits of ($362,943) for 1999 and
($237,639) show continued unprofitability in the start up share of the Company's
business efforts.
NEED FOR ADDITIONAL FINANCING
The Company does not have capital sufficient to meet the Company's cash
needs. 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.
20
<PAGE>
YEAR 2000 ISSUES
Year 2000 problems result primarily from the inability of some computer
software to properly store, recall, or use data after December 31, 1999. These
problems may affect many computers and other devices that contain embedded
computer chips. Based on a review of its existing information systems, the
Company does not anticipate that it will incur significant costs in connection
with bring its information systems into compliance with Year 2000 requirements.
Most of DiveDepot.Com's software is non-customized third-party software.
However, there is no guarantee that the company will not experience disruptions
in its operations due to a failure of its vendors, key suppliers, lenders,
utility providers or dealers in addressing their individual Year 2000 compliance
issues effectively.
The Company relies on non-IT systems that may suffer from Year 2000
problems, including telephone systems and facsimile and other, office machines.
Moreover, the Company relies on third-parties that may suffer from Year 2000
problems that could affect the Company's operations, including banks,
reservation systems, and utilities. The Company does not believe that such
non-IT systems or third-party Year 2000 problems will affect the Company in a
manner that is different or more substantial than such problems affect other
similarly situated companies or industry generally. Consequently, the Company
does not currently intend to conduct any further readiness assessment of Year
2000 problems or to develop a detailed contingency plan with respect to Year
2000 problems that may affect the Company.
ITEM 3. DESCRIPTION OF PROPERTY
None. The Company leases facilities from a non-affiliate for its offices at
2101 West SR 434, Suite 221, Longwood, Florida 32779.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth as of the date of this Registration
Statement, the number of shares of common stock owned of record and beneficially
by executive officers, directors and persons who hold 5.0% or more of the
outstanding common stock of the Company. Also included are the shares held by
all executive officers and directors as a group.
5% SHAREHOLDERS/ NUMBER OF SHARES OWNERSHIP
BENEFICIAL OWNERS PERCENTAGE
--------------------------------------------------------------------------------
Norbert D. Weller 100,000 4.9%
President, CEO & Director
490 N. Pin Oak Pl. #200
Longwood, FL 32779
Donald Mitchell 545,027(1) 27.0%
Chairman & Director
525 Melrose Ave.
Winter Park, FL 32789
21
<PAGE>
Frank Horwich, 110,000(2) 5.4%
Secretary & Director
300 S. Jackson St., Suite 100
Denver, CO 80209
Lisa Mitchell, 75,871 3.7%
Vice President & Director
525 Melrose Ave.
Winter Park, FL 32789
Carl Dilley, 80,871 4.0%
Director
(resigned as President April 2000)
8890 Coral Way, Suite 220
Miami, FL 33176
Baskin in the Sun International, S.A. 200,419 10.0%
8890 Coral Way, Suite 220
Miami, FL 33165
Dr. Martin Preskin 125,000 6.0%
8324 N.W. 40TH Ct.
Coral Springs, FL 33065
Virtacon Corp 100,000 4.9%
4910 Blue Lake Drive
Suite 200
Boca Raton, FL 33431
Q Sound Labs, Inc. 225,000 11.0%
400-3115 12TH St., NE
Calgary, Alberta, Canada
All directors and executive
Officers as a group (5 persons) 911,769 45.0%
Each principal shareholder has sole investment power and sole voting power over
the shares.
(1) Through Exodus Asset Corp.
(2) Includes shares owned by Webulate, LLC which Mr. Horwich controls.
22
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The directors and executive officers currently serving the Company are as
follows:
NAME AGE POSITION HELD TENURE
--------- --- ------------------ ------
Norbert D. Weller 55 President, CEO & Director Since 2000
Lisa Mitchell 41 Executive Vice President & Dir. Since 1997
Frank Horwich 39 Secretary & Director Since 1997
Don Mitchell 66 Chairman & Director Since 1999
Carl Dilley 44 Director Since 1997
The directors named above will serve until the net annual meeting of the
Company's stockholders. Thereafter, directors will be elected for one-year terms
at the annual stockholders' meeting. Officers will hold their positions at the
pleasure of the board of directors, absent any employment agreement, of which
none currently exists or is contemplated. There is no arrangement or
understanding between the directors and officers of the Company and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
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.
FRANK HORWICH, is a Secretary and Director of the Company since 1997. He
studied Administration and Psychology at Southern Illinois University from
1978-1979. From 1998 to present he has been President of Webulate, LLC, an
information technology consulting company. From 1987 to 1998 he was President,
CEO and Director of Secutron Corp. of Denver, Colorado which developed a
software system for broker-dealers.
LISA MITCHELL, Executive Vice President and Director, was the acting
General Manager of Baskin In The Sun, Ltd. (the BVI subsidiary) 1995 -1998 and
2000 to present and is one of the founding shareholders. She was employed by
Universal Studios Florida in Orlando from 1998 - 2000. Her experience includes
over 18 years as Diving Instructor and dive shop management activity. Lisa
Mitchell was Retail Manager for the DIVI Operation at the Flamingo Beach Hotel
in Bonaire from 1990 to 1993, which is a large dive operation. Lisa served as
Training Director at Lady Cyana Divers in Islamorada, Florida from 1985 to 1990,
Assistant Manager at Sea Dwellers Sports Center in Key Largo, from 1982 to 1985,
and Assistant SCUBA Director at SeaCamp Association from 1980 to 1982. She
obtained a BA in 1988 in Resort/Management from George Mason University. She was
a Vice President and a Director of Baskin in the Sun International, S.A.
1996-1997, and has been Vice President and Director of the Company since
inception in 1997.
23
<PAGE>
DON MITCHELL, Chairman of the Board and Director, studied at Bridgewater,
Virginia and at New York University in New York. Prior to becoming a partner in
Asian Strategic Partners in 1998, Mr. Mitchell served as president of an
international investment firm in Central America, The Firm of Marc Harris, in
1996. He has been an officer and director of Baskin In The Sun International,
Inc. (1997-1999) and Baskin In The Sun International, S.A. (1996-1997). He was a
director of IPAC from 1993 to 1996. He was an officer of Revenge Marine, Inc.
(1997-1998) and has been an officer of Grant Douglas Publishing since July 1999.
CARL DILLEY, Director, studied at the College of New Caledonia, in British
Colombia where he attended from 1973 to 1974 and, later during 1979 to 1982
completed advanced accounting and financial analysis programs at The University
of British Columbia and the University of West Virginia. He is a fellow of the
Canadian Securities Institute and holds a designation of F.C.S.I. for completing
advanced studies in Canadian Investment Finance. He served for many years in
various capacities at the firm of Pemberton Securities that was eventually
purchased by Dominion Securities. From 1990 to 1996 Carl served as project
manager and director of finance for Industrial Bosque Puerto Carrillo S.A., of
Costa Rica (a flooring manufacturer). He has also acted in executive capacity as
a CFO for the Firm of Marc M. Harris in Panama in 1996. He became President and
Director of Baskin In The Sun International, S.A. in 1996. Mr. Dilley resigned
as President of the Company in April 2000, however he remains a Director.
The directors and officers of the Company will devote such time to the
Company's affairs on an "as needed" basis, except Carl Dilley is full-time.
None of the Company's officers, except Norbert D. Weller, Lisa A. Mitchell
and Carl Dilley and/or directors receives any compensation for their respective
services rendered to the Company, nor have they received such compensation in
the past. The all have agreed to act without compensation until authorized by
the Board of Directors, which is not expected to occur until the Company has
generated revenues from operations after consummation of a merger or
acquisition. As of the date of filing this report, the Company has no funds
available to pay officers or directors. Further, none of the officers or
directors is accruing any compensation pursuant to any agreement with the
Company. No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for the
benefit of its employees.
As permitted by Florida Revised Statutes, the Company may indemnify its
directors and officers against expenses and liabilities they incur to defend,
settle or satisfy any civil or criminal action brought against them on account
of their being or having been Company directors or officers unless, in any such
action, they are adjudged to have acted with gross negligence or willful
misconduct. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
CONFLICTS OF INTEREST
The officers and directors of the Company will not devote more than a
portion of their time to the affairs of the Company. There will be occasions
when the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such conflicts may require
that the Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
24
<PAGE>
Conflict of Interest - General. Certain of the officers and directors of
the Company may be directors and/or principal shareholders of other companies
and, therefore, could face conflicts of interest with respect to time.
Additional conflicts of interest and non-arms length transactions may also arise
in the future in the event the Company's officers or directors are involved in
the management of any firm with which the Company transact business. The
Company's Board of Directors has adopted a policy that the Company will not seek
a merger with, or acquisition of, any entity in which management serve as
officers or directors, or in which they or their family members own or hold a
controlling ownership interest. Although the Board of Directors could elect to
change this policy, the Board of Directors has no present intention to do so.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ITEM 6. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
Name & Principal Year Salary Bonus Other Annual Restricted Securities
Position ($) ($) Comp- Stock Underlying
ensation ($) Award(s) Options
($) /SARS (#)
------------------------------------------------------------------------------------------------------------------
Norbert D. Weller 1999 $96,000 0 0 0 0
President as of April 2000
Carl Dilley, 1997 $65,000 0 0 $80,871 0
President (resigned) 1998 $11,000 0 0 0 0
1999 $27,141 0 0 0 0
Frank Horwich, 1997 0 0 0 0 0
Secretary 1998 0 0 0 0 0
1999 0 (1) 0 0 0 (1) 0
Lisa Mitchell, 1997 0 0 0 0 0
Executive Vice President 1998 $48,000 0 0 0 0
1999 0 0 0 0 0
Don Mitchell, 1997 0 0 0 0 0
Chairman 1998 0 0 0 0 0
1999 0 0 0 0 0
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS' COMPENSATION
Name Year Annual Meet- Consulting Number Number of
Retainer ing Fees/Other of Securities
Fee($) Fees Fees ($) Shares Underlying
($) (#) Options
SARS (#)
A. Director, Norbert D. Weller 1999 0 0 0 0 0
(appointed April 2000)
B. Director, Carl Dilley 1998 0 0 0 0 0
1999 0 0 0 0 0
C. Director, Frank Horwich 1998 0 0 0 10,000 0
1999 (1) 0 0 (1) 0
D. Director, Lisa Mitchell 1998 0 0 0 0 0
1999 0 0 0 0 0
E. Director, Don Mitchell 1998 0 0 0 0 0
1999 0 0 0 0 0
(1) Mr. Horwich's company, Webulate, LLC, received 100,000 shares of common
stock for software development services in 1999.
</TABLE>
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End
Option/SAR value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Prior to the date of this filing, the Company issued shares to its
founders, officers, directors and to the shareholders. Certificates evidencing
the common stock issued by the Company to these persons have all been stamped
with a restrictive legend, and are subject to stop transfer orders by the
Company.
a. In 1996 the Company acquired all of the assets and liabilities of
Baskin in the Sun International, S.A., a Panamanian corporation,
in exchange for 220,418 shares (post split) of common stock of
the Company and the assumption of debt of the Panamanian
corporation. Messrs. Carl Dilley and Donald Mitchell, Frank
Horwich and Lisa Mitchell were officers and directors of Baskin
in the Sun International, S.A. at the time of the acquisition.
The additional consideration for the acquisition of assets were
as follows:
* Assumption by BITS INT, Inc. of the note and account payable to Donald
Mitchell and Exodus Assets Corp., in the amount of $216,471.22.
* The return to Baskin In The Sun International,S.A. of all of shares of
Baskin In The Sun International, S.A.(1,083,939 shares) currently held
by 15 S.A. and Exodus Assets Corp.
* A promissory note from Baskin In The Sun International, Inc. to Baskin
In The Sun International, S.A. for $365,247.53.
* Assumption of long-term debt in the amount of $352,917.00.
26
<PAGE>
Norbert D. Weller became President, CEO and Director in April 2000 and was
issued 100,000 shares of Registrant's common stock. Mr. Weller replaced Carl
Dilley who was President and Director of the Registrant from December 1997 until
April 2000. Mr. Dilley received 80,871 shares of common stock of Registrant in
December 1997 for services in organizing companies. Lisa Mitchell became Vice
President and Director of Registrant and received 75,871 shares of common stock
of Registrant for services in organizing the company. Donald Mitchell, through
Exodus Assets Corp., received 545,027 shares of common stock of the Registrant
in consideration of the conversion of $216,471 in debt owed Mr. Mitchell for
cash advances.
b. Frank Horwich, a Director and Secretary received 10,000 shares of
common stock of Registrant in 1998 for agreeing to serve as
Director and Secretary. His company Webulate, LLC received
100,000 shares of common stock of Registrant in 1999 for its
services in building the software for the database reservations
system of Registrant.
c. Q Sound Labs received 225,000 shares of common stock of
Registrant in 1999 for its services in building the Website -
DiveDepot.com.
d. Virtacon Corp. received 100,000 shares of common stock of
Registrant in 1999 for its services in designing parts of the
website DiveDepot.com.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of
50,000,000 shares of common stock $.001 par value. Each record holder of common
stock is entitled to one vote for each share held on all matters properly
submitted to the stockholders for their vote. Cumulative voting for the election
of directors is not permitted by the Articles of Incorporation. As of December
31, 1999, there were 1,831,297 shares issued and outstanding.
Holders of outstanding shares of common stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of common stock
have no preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of common stock are, and all unissued shares when offered and
sold will be, duly authorized, validly issued, fully paid, and nonassessable. To
the extent that additional shares of the Company's common stock are issued, the
relative interests of then existing stockholders may be diluted.
TRANSFER AGENT
The Company has engaged Mountain Share Transfer, Inc., 1625 Abilene Drive,
Broomfield, Colorado 80020 as its transfer agent.
27
<PAGE>
REPORTS TO STOCKHOLDERS
The Company plans to furnish its stockholders with an annual report for
each fiscal year containing financial statements audited by its independent
certified public accountants. In the event the Company enters into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to stockholders. The Company intends to
comply with the periodic reporting requirements of the Securities Exchange Act
of 1934 for so long as it is subject to those requirements, and to file
unaudited quarterly reports and annual reports with audited financial statements
as required by the Securities Exchange Act of 1934.
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
No public trading market exists for the Company's securities and all of its
outstanding securities are restricted securities as defined in Rule 144. There
were 33 holders of record of the Company's common stock on December 31, 1999. No
dividends have been paid to date and the Company's Board of Directors does not
anticipate paying dividends in the foreseeable future.
ITEM 2. 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 financial
statements. 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 Baskin In The Sun, S.A. 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 filed an answer and a
counter claim.
No director, officer or affiliate of the Company, and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
any litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not applicable.
28
<PAGE>
<TABLE>
<CAPTION>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Since December 1997 (the date of the Company's formation), the Company has
sold its common stock to the persons listed in the table below in transactions
summarized as follows:
<S> <C> <C> <C>
Name and Address Purchase Date # of Shares Consideration
Issued
-------------------------------------------------------------------------------------------------------------
Exodus Asset Corp. 11/01/97 545,027 Services/Founder (1)
6829 Kenfig Dr
Falls Church, VA 22042
Carl Dilley 11/01/97 80,871 Services/Founder (1)
8890 Coral Way, Suite 220
Miami, FL 33176
Lisa Mitchell 11/01/97 5,871 Services/Founder (1)
324 Palmetto St.
Oviedo, FL 32765
Claire Abrehart 06/04/98 2,964 Employee Bonus
P.O. Box 3012
RoadTown,
British Virgin Islands
Kevin Dobb 02/15/99 3,976 Employee Bonus
2191 Parkway Blvd.
Coquitlam, BC Canada
M.A. Littman 02/15/99 9,880 Services (1)
10200 W. 44th Ave.
Suite 400
Wheat Ridge, CO 80033
Chris Winter 02/15/99 9,880 Services (1)
7101 Lexington Farm Dr.
Alpharetta, GA 30004
John Hluska 02/15/99 1,988 Employee Bonus
Prospect Reef Resort
RoadTown,
British Virgin Islands
29
<PAGE>
Baskin In The Sun 11/01/97 200,419 Founder/Services (1)
International, S.A.
8890 Coral Way, Suite 220
Miami, FL 33165
Frank Horwich 06/09/99 10,000 Director/Stock Bonus
300 S. Jackson St., Suite 100
Denver, CO 80209
Sue Thompson 02/15/99 1,000 Employee Stock Bonus
Prospect Reef Resort
RoadTown,
British Virgin Islands
Jane Barnes 02/15/99 1,000 Employee Bonus
10241 SW 128TH St.
Miami, FL 33176
Barry Potter 07/01/98 329 Services (1)
3087 N.E. 183 Lane
Aventure, FL 33160
Hylton Wright 07/01/98 3,293 $ 4,700 *
900 Greenhill Rd. @$1.43 per share
Mt. Airy, NC 27030
Abraham Garfinkel 04/06/99 5,000 $ 10,000 *
879 E. 27TH Street @$2.00 per share
Brooklyn, NY 11210
Isaac Tietelbaum 04/06/99 5,000 $ 10,000 *
C/O Moses Gluck @$2.00 per share
14 Quickway Rd. Unit 101
Monroe, NY 10950
Irwin B. Finch 03/29/99 50,000 $100,000 *
134 Wood Dale Dr. @$2.00 per share
Ballston Lake, NY 10219
Paul Sachter 03/24/99 10,000 $ 29,000 *
1785 Whispering Oaks @$2.00 per share
Ogden, UT
30
<PAGE>
Dr. Martin Preskin 04/06/99 50,000 $100,000 *
8324 N.W. 40TH Ct. @$2.00 per share
Coral Springs, FL 33065
Sheldon L. Miller 03/17/99 50,000 $100,000 *
3000 Town Center, @$2.00 per share
Suite 1700
Southfield, MI 48074-1188
Earth Care Corp. 04/06/99 10,000 $ 20,000 *
12535 W. Lisbin Rd. @$2.00 per share
Brookfield, WI 53005
Rex Schuette 03/30/99 10,000 $ 20,000 *
25 Cider Hill Lane @$2.00 per share
Sherborn, MA 01770
Dr. Ira Kalfus 04/06/99 10,000 $ 20,000 *
135 W. 70TH St. @$2.00 per share
New York, NY 10023-4458
Wayne Home 04/06/99 12,500 $ 25,000 *
Pine Haven Cir. @$2.00 per share
Boca Raton, FL
Ruth Schuler 04/06/99 2,500 $ 5,000 *
4188 NW 83 Lane @$2.00 per share
Coral Springs, FL 33065-1316
Dr. Luis Cruz 4/06/99 15,000 $ 30,000 *
2260 SW 8TH St. @$2.00 per share
Miami, FL 33135
Nico R. Pronk 4/06/99 12,500 $ 25,000 *
1140 SW 21 Ave. @$2.00 per share
Boca Raton, FL 33486
Kyle Kennedy 04/01/99 48,500 Services (1)
710 Oakfield Dr.
Suite 206
Brandon, FL 33511
31
<PAGE>
Kyle Kennedy 04/01/99 25,000 Services (1)
710 Oakfield Dr.
Suite 206
Brandon, FL 33511
Magnus Opus Capital, Inc. 08/04/99 23,000 Services (1)
4910 Blue Lake Drive,
Suite 200
Webulate, LLC 08/31/99 100,000 Services (1)
300 S. Jackson St.
Suite 300
Denver, CO
Virtacon, Corp., Inc. 08/31/99 100,000 Services (1)
4910 Blue Lake Drive
Suite 200
Boca Raton, FL 33431
Q Sound Labs, Inc. 08/31/99 225,000 Services (1)
400-3115 12TH St., NE
Calgary, Alberta, Canada
</TABLE>
(1) The sales listed above was made for services as listed. All of the listed
sales were made in reliance upon the exemption from registration offered by
Section 4 (2) of the Securities Act of 1933, as amended. Based upon
Subscription Agreements completed by each of the subscribers, the Company
had reasonable grounds to believe immediately prior to making an offer to
the private investors, and did in fact believe, when such subscriptions
were accepted, that such purchasers (1) were purchasing for investment and
not with a view to distribution, and (2) had such knowledge and experience
in financial and business matters that they were capable of evaluating the
merits and risks of their investment and were able to bear those risks. The
purchasers had access to pertinent information enabling them to ask
informed questions. The shares were issued without the benefit of
registration. An appropriate restrictive legend is imprinted upon each of
the certificates representing such shares, and stop-transfer instructions
have been entered in the Company's transfer records. All such sales were
effected without the aid of underwriters, and no sales commissions were
paid.
* Each of these sales was made in reliance upon Regulation D, Rule 504 as an
exemption to Registration under the Securities Act of 1933.
All of the investors were sophisticated and were known by principals in the
company to have business investment experience. The company provided a personal
interview with a principal in the company for each investor who explained the
business plan, and provided a copies of any documents requested by an investor.
Each subscriber executed a subscription agreement in which the subscriber
acknowledged a) an understanding of the investment risks, b) an understanding of
the nature of the securities as being unregistered, and restricted from transfer
c) an ability to hear economic risk of loss and illiquidity, and d) an
investment intent and not a purchase for redistribution.
32
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Florida Revised Statutes provide that the Company may indemnify its
officers and directors for costs and expenses incurred in connection with the
defense of actions, suits, or proceedings where the officer or director acted in
good faith and in a manner he reasonably believed to be in the Company's best
interest and is a party by reason of his status as an officer or director,
absent a finding of negligence or misconduct in the performance of duty.
EXCLUSION OF LIABILITY
The Florida Corporation Act excludes personal liability for its directors
for monetary damages based upon any violation of their fiduciary duties as
directors, except as to liability for any breach of the duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, acts in violation of the Florida Corporation Act, or any
transaction from which a director receives an improper personal benefit. This
exclusion of liability does not limit any right which a director may have to be
indemnified and does not affect any director's liability under federal or
applicable state securities laws.
33
<PAGE>
PART F/S
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is included as a separate Exhibit to this report.
Please see pages F-1 through F-29.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements and Schedules. The following financial statements
and schedules for the Registrant as of June 30, 2000 and for the fiscal year of
1999 are filed as part of this report.
(1) Financial statements of DiveDepot.com, Inc. (formerly Baskin In The Sun
International, Inc.) and subsidiaries.
PAGE
Cover Page F-1
Index to Financial Statements F-2
Independent Auditor's Report for years ended
December 31, 1999 and December 31, 1998 F-3
Consolidated Balance Sheet at end of December 31, 1999 F-4
Consolidated Statements of Loss and Retained Deficit
at end of December 31, 1999 F-5
Consolidated Statement of Stockholders' Equity at end of December 31, 1999 F-6
Consolidated Statement of Cash Flows at end of December 31, 1999 F-7
Notes to the Consolidated Financial Statements F-8 - F-14
Interim Financial Statements for period ended June 30, 2000 (unaudited)
Cover Sheet F-16
Consolidated Balance Sheet F-17-F-18
Statement of Operations F-19
Consolidated Statement of Cash Flows F-20-F-21
Stockholders' Equity F-22-F-23
Notes to Financial Statements F-24-F-29
34
<PAGE>
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED: October 31, 2000
DIVEDEPOT.COM, INC.
BY: /S/NORBERT D. WELLER
Norbert D. Weller, President
BY: /S/FRANK HORWICH
Frank Horwich, Secretary
BY: /S/LISA MITCHELL
Lisa Mitchell, Vice President
DIRECTORS:
BY: /S/NORBERT D. WELLER
Norbert D. Weller, Director
BY: /S/FRANK HORWICH
Frank Horwich, Director
BY: /S/LISA MITCHELL
Lisa Mitchell, Director
BY: /S/DON MITCHELL
Don Mitchell, Director
BY: /S/CARL DILLEY
Carl Dilley, Director
35
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
Cover Page F-1
Index to Financial Statements F-2
Independent Auditor's Report for years ended
December 31, 1999 and December 31, 1998 F-3
Consolidated Balance Sheet at end of December 31, 1999 F-4
Consolidated Statements of Loss and Retained Deficit
at end of December 31, 1999 F-5
Consolidated Statement of Stockholders' Equity at end of December 31, 1999 F-6
Consolidated Statement of Cash Flows at end of December 31, 1999 F-7
Notes to the Consolidated Financial Statements F-8 - F-14
Interim Financial Statements for period ended June 30, 2000 (unaudited)
Cover Sheet F-16
Consolidated Balance Sheet F-17-F-18
Statement of Operations F-19
Consolidated Statement of Cash Flows F-20-F-21
Stockholders' Equity F-22-F-23
Notes to Financial Statements F-24-F-29
36
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
Consolidated Financial Statements for the Years ended December 31, 1999
and 1998 and Independent Auditors' Report
F-1
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
TABLE OF CONTENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
PAGE
INDEPENDENT AUDITORS' REPORT F-3
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
Consolidated balance sheets F-4
Consolidated statements of loss F-5
Consolidated statements of changes in shareholders' equity F-6
Consolidated statements of cash flows F-7
Notes to consolidated financial statements F-8-F-14
F-2
<PAGE>
DELOITTE & TOUCHE Omar Hodge Building Telephone: (284)494-2868
Wickhams Cay 1 Facsimile: (284) 494-7889
P.O. BOX 3083 E-MAIL: [email protected]
Road Town, Tortola WWW.DELOITTE.COM
British Virgin Islands
INDEPENDENT AUDITORS' REPORT
To the Shareholders' of
DIVEDEPOT.COM, INC. AND SUBSIDIARY
We have audited the accompanying balance sheets of DiveDepot.com, Inc. and its
subsidiary (the "Group") as of December 31, 1999 and 1998 and the related
consolidated statements of loss, of changes in shareholders' equity and of cash
flows for the years ended December 31, 1999 and 1998 (all expressed in United
States dollars). These financial statements are the responsibility of the
Group's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of 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 present fairly, in all material
respects, the financial position of the Group as of December 31, 1999 and 1998,
and the results of its operations, changes in shareholders' equity and cash
flows for the years ended December 31, 1999 and 1998 in accordance with
accounting principles generally accepted in the United States of America.
June 20, 2000
British Virgin Islands
F-3
<PAGE>
<TABLE>
<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C> <C>
1999 1998
------------------ ------------------
ASSETS
CURRENT ASSETS
Cash 15,410 27,482
Accounts receivable (Note 3) 84,701 83,883
Inventory (Note 4) 42,819 51,169
------------------ ------------------
142,930 162,534
FIXED ASSETS (Note 5) 1,423,197 263,449
GOODWILL (Note 6) 662,604 699,415
DEFERRED COSTS - 35,701
------------------ ------------------
$ 2,228,731 $ 1,161,099
================== ==================
LIABILITIES
CURRENT LIABILITIES
Bank overdraft (Note 7) 68,748 69,349
Accounts payable 464,196 221,930
Customer deposits 1,000 500
Bank loan (Note 8) 3,732 7,075
Related party loans (Note 9) 107,867 55,000
------------------ ------------------
645,543 353,854
------------------ ------------------
LONG TERM LIABILITIES
Bank loan (Note ) - 3,732
Related party loans (Note 9) 275,316 704,889
------------------ ------------------
275,316 708,621
------------------ ------------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 10) 1,831 3,036
CONTRIBUTED SURPLUS 1,932,597 359,201
RETAINED DEFICIT (626,556) (263,613)
------------------ ------------------
1,307,872 98,624
------------------ ------------------
$ 2,228,731 $ 1,161,099
================== ==================
APPROVED BY THE BOARD OF DIRECTORS:
/s/CARL DILLEY
-----------------------
Director
See notes to consolidated financial statements
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF LOSS
YEARS ENDED AT DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C> <C>
1999 1998
------------------ -----------------
SALES 1,187,538 1,326,414
COST OF SALES 841,699 940,038
------------------ -----------------
GROSS PROFIT 345,839 386,376
OPERATING EXPENSES 671,971 587,204
AMORTIZATION OF GOODWILL 36,811 36,811
------------------ -----------------
OPERATING LOSS BEFORE INCOME TAXES (362,943) (237,639)
INCOME TAXES - -
------------------ -----------------
NET LOSS $ (362,943) $ (237,639)
================== =================
See notes to consolidated financial statements
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C> <C> <C> <C> <C>
Total
Shares Share Contributed Retained deficit shareholders'
outstanding capital surplus equity
$ $ $ $
----------------- ----------------- ------------------ ------------------- -----------------
SHAREHOLDERS' EQUITY
AT JANUARY 1, 1998 1,561,571 1,562 335,564 (25,974) 311,152
Issue of shares 565,975 566 23,637 - 24,203
Share split 908,773 908 - - 908
Net loss - - - (237,639) (237,639)
----------------- ----------------- ------------------ ------------------- -----------------
SHAREHOLDERS' EQUITY
AT DECEMBER 31, 1998 3,036,319 3,036 359,201 (263,613) 98,624
Issue of shares 831,297 831 1,571,360 - 1,572,191
Reverse share split (2,036,319) (2,036) 2,036 - -
Net loss - - - (362,943) (362,943)
----------------- ----------------- ------------------ ------------------- -----------------
SHAREHOLDERS' EQUITY
AT DECEMBER 31, 1999 1,831,297 $ 1,831 $ 1,932,597 $ (626,556) $ 1,307,872
================= ================= ================== =================== =================
Share split (1.5 shares for each share at March 31, 1998) Reverse share split (1
share for each 3.036 shares at January 01, 1999)
See notes to financial statements
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C> <C>
1999 1998
------------------ -----------------
CASH FLOW PROVIDED BY/(USED IN):
OPERATING ACTIVITIES
Net loss (362,943) (237,639)
ADJUSTMENTS FOR ITEMS NOT INVOLVING THE MOVEMENT OF CASH:
Depreciation 108,572 86,925
Amortization of goodwill 36,811 36,811
Loss on sale of fixed assets - 4,291
CHANGES IN NON-CASH WORKING CAPITAL
Accounts receivable (818) 2,918
Inventory 8,350 26,637
Accounts payable 242,266 92,033
Customer deposits 500 (29,854)
Income taxes - (6,687)
------------------ -----------------
32,738 (24,565)
------------------ -----------------
INVESTING ACTIVITIES
Purchase of fixed assets (1,268,320) (17,588)
------------------ -----------------
(1,268,320) (17,588)
------------------ -----------------
FINANCING ACTIVITIES
Proceeds from sale of shares 831 566
Share split (2,036) 908
Contributed surplus 1,573,396 23,637
Deferred costs 35,701 (35,701)
Repayment of bank loans (7,075) (6,291)
Related party loans (376,706) (28,369)
------------------ -----------------
1,224,111 (45,250)
------------------ -----------------
DECREASE IN CASH (11,471) (87,403)
CASH, BEGINNING OF YEAR (41,867) 45,536
------------------ -----------------
CASH, END OF YEAR $ (53,338) $ (41,867)
================== =================
REPRESENTED BY:
Cash 15,410 27,482
Bank overdraft (68,748) (69,349)
------------------ -----------------
$ (53,338) $ (41,867)
================== =================
See notes to consolidated financial statements
</TABLE>
F-7
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(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.
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 Baskin in the Sun Limited.
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 331/3%
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 331/3% 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 January 1, 1998.
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.
F-8
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
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
1999 1998
---------------------------------
Trade 69,609 71,162
Utility 3,533 6,352
Prepaid expenses 11,559 6,369
---------------------------------
$ 84,701 $ 83,883
=================================
Included in trade receivables are amounts owed by related parties
amounting to $23,800 (1998- $23,700), which are on normal commercial
terms.
4. INVENTORY
1999 1998
--------------------------------
Merchandise 39,748 34,397
Spares - 13,514
Teaching materials 3,071 1,987
Fuel - 1,271
--------------------------------
$ 42,819 $ 51,169
================================
F-9
<PAGE>
<TABLE>
<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
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
January 1, 1999 54,468 16,121 - 21,752 64,898 35,300 328,664 75,204 596,407
Additions 10,381 10,950 1,060,000 8,170 4,754 - 151,885 22,180 1,268,320
Disposals - (5,842) - - - - - (5,298) (11,140)
------------ ------------ ----------- -------- ----------- ---------- ----------- ---------- ----------
December 31, 1998 64,849 21,229 1,060,000 29,922 69,652 35,300 480,549 92,086 1,853,587
------------ ------------ ------------ -------- ----------- ----------- ----------- ---------- -----------
ACCUMULATED DEPRECIATION
January 1, 1998 44,565 13,159 - 17,329 31,437 35,080 141,441 49,947 332,958
Charge for the year 6,657 5,479 - 3,794 6,527 220 72,082 13,813 108,572
Disposals - (5,842) - - - - - (5,298) (11,140)
------------ ------------ ------------ --------- ----------- ---------- ----------- ---------- -----------
December 31, 1998 51,222 12,796 - 21,123 37,964 35,300 213,523 58,462 430,390
------------ ------------ ------------ --------- ----------- ---------- ----------- ---------- -----------
NET BOOK VALUE
December 31, 1999 $ 13,627 $ 8,433 $1,060,000 $ 8,799 $ 31,688 $ - $ 267,026 $ 33,624 $1,423,197
=========== =========== ============ ========= =========== ========== =========== ========== ==========
December 31, 1998 $ 9,903 $ 2,962 $ - $ 4,423 $ 33,461 $ 220 $ 187,223 $ 25,257 $ 263,449
=========== =========== ============ ========= =========== ========== =========== ========== ==========
</TABLE>
F-10
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
6. GOODWILL
1999 1998
---------------------------------
Goodwill 736,226 736,226
Amortization of goodwill (73,622) (36,811)
---------------------------------
$ 662,604 $699,415
=================================
7. BANK OVERDRAFT
The bank overdraft is secured by a charge on the assets of the subsidiary
company and bears interest at 11% per 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.
1999 1998
----------------------------------
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 by June 2000, in
monthly instalments of $655
including interest. 3,732 10,807
Less: current portion (3,732) (7,075)
----------------------------------
$ - $ 3,732
==================================
F-11
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
9. RELATED PARTY LOANS
1999 1998
-----------------------------------
Related party promissory note bears
interest at 10% per annum - 369,392
Related party loan which bears interest
at 3% over New York prime rate. It is
repayable in monthly instalments of
$4,583 plus interest. 275,316 336,572
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. 79,867 25,925
Unsecured loan which bears interest
at 8% per annum. It is repayable in
quarterly instalments of $560. 28,000 28,000
------------------------------------
383,183 759,889
Less: current portion (107,867) (55,000)
------------------------------------
$ 275,316 $ 704,889
====================================
10. SHARE CAPITAL
1999 1998
------------------------------------
Authorized
50,000,000 Ordinary shares
of $0.001 par value each $ 50,000 $ 50,000
====================================
Issued and fully paid
1,831,297 (1998-3,036,319)
Ordinary shares $ 1,831 $ 3,036
====================================
1999 1998
------------------------------------
Stock options to the website suppliers no no
Options exercisable at $2.00 per 250,000 -
share ====================================
F-12
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
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. During the year, the
number of shares distributed under the Plan were 20,000 (1998 - 555,975).
12. STOCK OPTIONS
During the year, 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 the year.
13. INCOME TAXES
The Company has $539,382 of estimated tax losses which it can carry
forward and 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.
December 31 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 1999 the Company paid $10,332 (1998 - Nil) to Peter Island
Resort. The lease was issued in April 1999 and will expire in 2 years.
<TABLE>
<CAPTION>
15. INFORMATION ON SUBSIDIARY
<S> <C> <C> <C> <C>
PORTION
PLACE OF DATE OF OF VOTING
NAME INCORPORATION INCORPORATION SHARES HELD
---- ------------- ------------- -----------
Baskin in the Sun Limited British Virgin Islands May 2, 1972 100%
</TABLE>
F-13
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(EXPRESSED IN UNITED STATES DOLLARS)
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 a 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.
F-14
<PAGE>
DIVEDEPOT.COM, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2000
(Unaudited)
F-15
<PAGE>
TABLE OF CONTENTS
Interim Financial Statements for period ended June 30, 2000 (unaudited)
PAGE
Cover Sheet F-16
Consolidated Balance Sheet F-17-F-18
Statement of Operations F-19
Consolidated Statement of Cash Flows F-20-F-21
Stockholders' Equity F-22-F-23
Notes to Financial Statements F-24-F-29
F-16
<PAGE>
<TABLE>
<CAPTION>
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
</TABLE>
F-17
<PAGE>
<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
F-18
<PAGE>
<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
F-19
<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) ($2,372,413)
</TABLE>
See accompanying notes to the financial statements
F-20
<PAGE>
<TABLE>
<CAPTION>
CASH FLOWS FROM (FOR)
INVESTING ACTIVITIES
<S> <C> <C> <C> <C> <C>
Purchase of treasury stock ($ 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
F-21
<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
F-22
<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>
F-23
<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.
F-24
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and December 31, 1999
(Expressed in United States dollars)
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
============= ============
F-25
<PAGE>
<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>
F-26
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and December 31, 1999
(Expressed in United States dollars)
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
F-27
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and December 31, 1999
(Expressed in United States dollars)
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.
F-28
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and December 31, 1999
(Expressed in United States dollars)
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.
F-29
<PAGE>
INDEX TO EXHIBITS
EXHIBIT #
3.1 Articles of Incorporation of Baskin in the Sun International, Inc.*
3.2 Articles of Amendment to the Articles of Incorporation of Baskin in
the Sun International, Inc.*
3.3 Bylaws*
27.1 Financial Data Schedules
* Previously filed with Form 10SB
37
