SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
For Quarter Ended September 30, 2000
Commission file number: 0-28665
CIK:0001101715
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
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
YES X NO
----- -----
As of September 30, 2000, there were 2,031,797 shares of $0.001 par value common
stock outstanding.
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIVEDEPOT.COM, INC. AND SUBSIDIARY
BALANCE SHEET
SEPTEMBER 30, 2000
DECEMBER 31, 1999
(Unaudited)
<S> <C> <C>
9/30/00 12/31/99
-----------------------------------
ASSETS
CURRENT ASSETS
CASH ($84,424) $15,410
ACCOUNTS RECEIVABLE $7,212 $84,701
INVENTORY $42,869 $42,819
PREPAID EXPENSES $19,014
EMPLOYEE ADVANCES $35
-----------------------------------
TOTAL CURRENT ASSETS ($15,294) $142,930
-----------------------------------
FIXED ASSETS $1,763,523 $1,423,197
-----------------------------------
GOODWILL $634,995 $662,604
-----------------------------------
TOTAL ASSETS $2,383,224 $2,228,731
===================================
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE-TRADE $449,997 $464,196
CUSTOMER DEPOSITS PAYABLE ($863) $1,000
PAYROLL & PAYROLL TAXES PAYABLE $27,802
ACCRUED EXPENSES $4,000
OUTSIDE PARTY LOANS $291,150
RELATED PARTY LOANS $20,200 $107,867
TREASURY STOCK PURCHASE PAYABLE $25,000
BANK OVERDRAFT $68,748
BANK LOAN $3,732
-----------------------------------
TOTAL CURRENT LIABILITIES $817,286 $645,543
-----------------------------------
LONG TERM LIABILITIES
RELATED PARTY LOANS $254,000 $275,316
NOTES PAYABLE $192,939
-----------------------------------
TOTAL LONG TERM LIABILITIES $446,939 $275,316
-----------------------------------
STOCKHOLDERS EQUITY
COMMON STOCK $2,032 $1,831
ADDITIONAL PAID IN CAPITAL $2,332,396 $1,932,597
RETAINED EARNINGS ($1,165,429) ($626,556)
TREASURY STOCK ($50,000)
-----------------------------------
TOTAL STOCKHOLDERS EQUITY $1,118,999 $1,307,872
-----------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $2,383,224 $2,228,731
===================================
See Accompanying Notes
</TABLE>
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<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
INCOME STATEMENT
SEPTEMBER 30, 2000
(Unaudited)
<S> <C> <C> <C> <C> <C>
3 MONTHS 9/30/00 3 MONTHS 9/30/99 9 MONTHS 9/30/00 9 MONTHS 9/30/99 FROM
CONSOLIDATED CONSOLIDATED CONSOLIDATED CONSOLIDATED INCEPTION
TOTAL TOTAL TOTAL TOTAL TO 9/30/2000
---------------------------------------------------------------------------------------------------
SALES $208,146 $258,443 $779,163 $922,459 $3,185,765
COST OF SALES $26,957 $83,100 $295,388 $236,647 $1,699,919
---------------------------------------------------------------------------------------------------
GROSS PROFIT $181,189 $175,343 $483,775 $685,812 $1,485,846
OPERATING EXPENSES $253,894 $264,155 $1,009,101 $914,429 $2,552,319
AMORTIZATION OF GOODWILL $9,203 $9,202 $27,609 $27,609 $101,231
---------------------------------------------------------------------------------------------------
INCOME(LOSS) BEFORE INCOME TAXES ($81,908) ($98,014) ($552,935) $256,226) ($1,167,704)
EXTRAORDINARY ITEM: GAIN ON SALE
OF FIXED ASSETS $0 $0 $0 $0 $44,945
INCOME TAXES $0 $0 $0 $0 $0
---------------------------------------------------------------------------------------------------
NET INCOME(LOSS) ($81,908) ($98,014) ($552,935) ($256,226) ($1,122,759)
===================================================================================================
WEIGHTED AVERAGE NUMBER OF SHARES 1,956,297 1,587,500 1,956,297 1,587,500
BASIC EPS ($0.04) ($0.06) ($0.28) ($0.16)
See Accompanying Notes
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<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 2000
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1999
FOR THE PERIOD FROM INCEPTION TO SEPTEMBER 30, 2000
(Unaudited)
<S> <C> <C> <C>
9 MONTHS 9/30/00 9 MONTHS 9/30/99 FROM
CONSOLIDATED CONSOLIDATED INCEPTION
TOTAL TOTAL
--------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) ($507,989) ($219,333) ($922,814)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH PROVIDED BY (USED IN) OPERATIONS:
ADJUSTMENT TO RETAINED EARNINGS ($30,642) ($30,642)
DEPRECIATION AND AMORTIZATION EXP $106,823 $109,933 $343,498
DECR/(INCR) IN ACCOUNTS RECEIVABLE $4,429 ($4,316) ($96,267)
DECR/(INCR) IN OTHER ASSETS ($45,000) ($43,125)
GAIN ON SALE OF FIXED ASSETS $4,291
DECR/(INCR) IN INVENTORIES ($50.00) ($27,865) ($42,869)
INCR/(DECR) IN ACCOUNTS PAYABLE $128,784 $97,371 $529,592
INCR/(DECR) IN CUSTOMER DEPOSITS PAYABLE ($1,863) $500 ($31,576)
INCR/(DECR) IN PAYROLL TAXES PAYABLE $5,072 $5,072
INCR/(DECR) IN OTHER CURRENT LIABILITIES $46,222 $46,222
--------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES ($294,214) ($43,710) ($238,618)
--------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
PURCHASE OF SUBSIDIARY ($1,041,013)
PROCEEDS FROM SALE OF FIXED ASSETS $60,000 $60,000
INVESTMENT IN FIXED ASSETS ($53,507) (1,042,510) ($1,334,774)
--------------------------------------------------------
NET CASH PROVIDED BY INVESTMENT ACTIVITIES $6,493 ($1,042,510) ($2,315,787)
--------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
PURCHASE OF TREASURY STOCK ($50,000) ($50,000)
PROCEEDS FROM BANK LOAN $17,109
REPAYMENT ON BANK LOAN ($9,167) ($5,238) ($22,533)
REPAYMENT ON LOANS ($3,732) ($1,885)
RELATED PARTY LOANS $65,534 ($50,833) $423,014
PROCEEDS FROM SALE OF SHARES $1,135,000 $340,595
CONTRIBUTED SURPLUS $1,595,869
SHARE SPLIT ($2,036)
PROCEEDS FROM ISSUANCE OF BONDS $254,000 $246,000
DEFERRED COSTS ($10,770) $30,354
--------------------------------------------------------
NET CASH PROVIDED BY FINANCE ACTIVITIES $256,635 $1,068,159 $2,576,487
--------------------------------------------------------
NET INCREASE (DECREASE) IN CASH ($31,086) ($18,061) $22,082
--------------------------------------------------------
CASH AT BEGINNING OF PERIOD ($53,338) ($41,867) ($49,669)
--------------------------------------------------------
CASH AT END OF PERIOD ($84,424) ($59,928) ($27,587)
========================================================
See Accompanying Notes
</TABLE>
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<TABLE>
<CAPTION>
DIVEDEPOT.COM
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE PERIOD OF INCEPTION (DECEMBER 1, 1997) TO SEPTEMBER 30, 2000
(Unaudited)
<S> <C> <C> <C> <C> <C>
ADDITIONAL
COMMON STOCK PAID-IN INCOME
SHARES AMOUNT CAPITAL (LOSS) TOTAL
------ ------ ------- ------ -----
Issuance of shares of
common stock on Nov 1, 1997
$.001 per share 1,022,987 1,023 -- -- 1,023
Net (loss) from inception
on Dec 1, 1997 through
Dec 31, 1997 (25,974) (25,974)
Balance December 31,1997 1,022,987 1,023 (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 -- 5,180
Net (loss) through
December 31, 1998 (237,639) (237,639)
---------- ---------- ---------- ---------- ----------
Balance December 31, 1998 1,029,573 1,030 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
See accompanying notes
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<CAPTION>
DIVEDEPOT.COM
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE PERIOD OF INCEPTION (DECEMBER 1, 1997) TO SEPTEMBER 30, 2000
(Unaudited)
<S> <C> <C> <C> <C> <C>
ADDITIONAL
COMMON STOCK PAID-IN INCOME
SHARES AMOUNT CAPITAL (LOSS) TOTAL
------ ------ ------- ------ -----
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, 2000 (211,731) (214,350)
Cumulative Balance,
March 31, 2000 2,018,797 2,031 2,332,396 (840,906) (1,493,524)
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
Net income (loss) for period
through September 30, 2000 (81,908) (81,908)
Cumulative Balance
September 30, 2000 2,018,797 2,031 2,332,396 (1,134,545) 1,199,885
See Accompanying Notes
</TABLE>
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DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(EXPRESSED IN UNITED STATES DOLLARS)
(Unaudited)
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.
INVENTORY
Inventory is valued at the lower of cost and net realizable value on a
first in, first out basis. Cost includes any expenditure incurred in
bringing the inventory to its present condition. Net realizable value is
the expected selling price less any associated selling costs.
FIXED ASSETS
Fixed assets are recorded at cost. Depreciation, which is based on the cost
of the asset, is computed using the straight-line method at the following
annual rates:
COMPRESSOR EQUIPMENT 15%
COMPUTER EQUIPMENT 33 1/3%
FURNITURE & FIXTURES 15%
MACHINERY AND OTHER EQUIPMENT 15%
MOTOR VEHICLES 25%
MOTOR VESSELS 15%
Rental equipment 10% the cost of the website will be amortized at 33 1/3%
when it will be completed and satisfactorily brought on-line.
GOODWILL
The goodwill originated on purchase of the subsidiary and is amortized over
20 years commencing of January 1, 1998.
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(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
SEPTEMBER 30, 2000
-------------
TRADE 7,212
UTILITY 3,533
PREPAID EXPENSES 19,014
-------------
$29,759
=============
4. INVENTORY
SEPTEMBER 30, 2000
-------------
MERCHANDISE 39,748
SPARES 0
TEACHING MATERIALS 3,121
FUEL -
-------------
$ 42,869
=============
5. FIXED ASSETS
WHAT SHOULD BE INSERTED HERE SINCE WE AREN'T PUTTING IN THE LARGE TABLE???
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(EXPRESSED IN UNITED STATES DOLLARS)
6. GOODWILL
September 30, 2000
--------------
GOODWILL 736,226
AMORTIZATION OF GOODWILL (101,230)
---------
$ 634,996
===============
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.
SEPTEMBER 30, 2000 JUNE 30, 2000
---------- ----------
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 0
by June 2000, in monthly installments
of $655 including interest.
Less: current portion 0 0
--------- -------
$ 0 $ 0
========= ========
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<CAPTION>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(EXPRESSED IN UNITED STATES DOLLARS)
9. RELATED PARTY LOANS
<S> <C> <C>
SEPTEMBER 30, 2000 JUNE 30, 2000
------------- --------------
Related party loan which bears interest at 3%
over New York prime rate. It is repayable in 197,084 242,927
monthly installments of $4,583.00 plus interest.
Related party loan which is unsecured bears no
interest and has no fixed terms of repayment. It 177,791 177,791
is not expected to be repaid within the next year.
Unsecured loan which bears interest at 8% per
annum. It is repayable in quarterly installments 28,000 28,000
of $560. ---------- ---------
402,875 448,718
LESS: CURRENT PORTION 205,791 205,791
---------- ---------
$197,084 $242,927
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<CAPTION>
10. SHARE CAPITAL
<S> <C> <C>
SEPTEMBER 30, 2000 JUNE 30, 2000
----------------- ----------------
AUTHORIZED
50,000,000 ordinary shares of $0.001 par $50,000 $50,000
value each
ISSUED AND FULLY PAID
2,031,297 (03/31/00 - 2,031,297) ordinary shares 2,031 $2,031
SEPTEMBER 30, 2000 MARCH 30, 2000
----------------- -----------------
STOCK OPTIONS TO THE WEBSITE SUPPLIERS
Options exercisable at $2.00 Per share 250,000 250,000
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DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(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.
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.
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 2nd quarter 2000, the Company paid -0- (Total 1st
quarter 2000 - $0) to Peter Island Resort. The lease was issued in
April 1999 and will expire in 2 years.
<PAGE>
DIVEDEPOT.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(EXPRESSED IN UNITED STATES DOLLARS)
15. INFORMATION ON SUBSIDIARY
NAME PLACE OF INCORPORATION DATE OF PORTION OF
INCORPORATION VOTING
SHARES
HELD
--------------------------------------------------------------------------------
Baskin in the Sun Limited British Virgin Islands May 2, 1972 100%
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. COMPARITIVES
Certain comparative figures have been reclassified to conform with the
current year's presentation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000.
SALES & MARKETING
The Miami sales and marketing operation has been relocated to Longwood
(Orlando) area. This will help to reduce costs and improve the efficiency of the
sales and reservations process. Office hours have been expanded to include
evenings and weekends. An outbound caller program has been initiated.
Consumer dive show participation has resumed with our attendance at the
Denver Dive Show. Plans are in place to aggressively market at major dive shows
on an ongoing basis.
Dive travel wholesalers, to include PADI, participated in a familiarization
trip to Baskin In The Sun in the British Virgin Islands conducted in September.
A number of bookings have resulted from this trip.
Strategic sales and marketing alliances are being formed. The Company
already formed a strategic alliance with Continental Airlines. Greater dive and
hotel package options and alternatives have been created. Although these bundled
packages reflect price increases, they will offer divers better values for
longer stays. Off-season programs are in development. These may include student
summer camp, educational and fitness concepts.
Programs to increase incremental on site spending have been created. Logo
and branded merchandise is being displayed in a more attractive and appealing
way with suggestive selling techniques and incentives.
New contacts with cruise ships have been initiated. Cruise ship passengers
will be taken on weekly and bi-weekly snorkel and diving excursions, as
"off-boat" adventures.
<PAGE>
EQUIPMENT
A fourth boat is being added to our fleet. This boat is a custom-built
aluminum catamaran, which has been converted specifically for our Baskin In The
Sun dive operation. It can hold 50 snorkelers or 30 divers. This boat replaces
Narcosis, which was retired from our fleet earlier this quarter. The "ALAN B"
has been selected as the name, in honor of the founder of Baskin In The Sun;
Alan Baskin.
WEB SITES
The Baskin In The Sun web sites have been merged into one site and edited
to reflect the more relevant and current information. This web site is an
important sales communication tool and is linked to our overall goal to improve
the sales process and ultimately sales results.
Work continues on the final stages of the Divedepot.com web site. This dive
oriented portal and search engine will be the leading source for virtually all
dive-related information. Divers, dive shops, dive resorts, equipment
manufactures and certifying agencies will be presented at the same site. This
site for dive commerce is designed to facilitate the integration of buyers and
sellers.
RESULTS OF OPERATIONS
The Company had revenues for the three month period of $208,145 in 2000,
and the cost of sales in the period in 2000 was $26,957. The gross profit was
$181,189 and the operating expenses in the period in 2000 were $253,894. The net
loss in the period in 2000 was ($81,908).
Divedepot.com has incurred net losses and experienced negative cash flow
from operations since inception through the end of the period ending September
30, 2000. During the first nine months of the fiscal year beginning January 1,
2000 to September 30, 2000, the Company realized a net loss of ($552,935)
compared to a net loss of ($256,226) in the same period in 1999. There can be no
assurance that the company will be able to achieve or sustain revenue growth,
profitability or positive cash flow on either a quarterly or an annual basis.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2000 COMPARED TO THE
SAME PERIOD IN 1999
REVENUE FROM SALES. Revenue totaled $208,146 for the three months ended
September 30, 2000, compared to $258,443 in the quarter in 1999.
COST OF REVENUE. Cost of sales totaled $26,957 for the three months ended
September, 2000 compared to $83,100 in the quarter 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. Management believes that
there is significant room for reducing the relative cost of travel services and
retail merchandise as volumes increase and buying power is more firmly
established. Management has reduced substantially the inventory carried over the
last three years and streamlined the purchasing operations.
<PAGE>
OPERATING EXPENSES (Including Marketing, Sales and Administration).
Operating expenses totaled $253,894 for the three months ended September 30,
2000 compared to $264,155 in the quarter 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 consists primarily of personnel expenses,
accounting, legal expenses and marketing development, promotion and sales
activities, including salary and commissions, costs of marketing programs and
the cost of attending various dive shows and travel trade shows. These costs are
mostly born by the parent company located in Longwood. 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. Management expects
these expenses to remain constant and therefore decline as a percentage of
revenue. Together, therefore, management anticipates that marketing, sales and
administrative expenses will increase somewhat more modestly than in the
previous quarter of the last fiscal year, but decline sharply as a percentage of
revenue as sales of travel and merchandise increase. Operating loss for the
quarter in 2000 was ($81,908) and ($98,014) in 1999.
NET LOSS. Divedepot.com had a loss of approximately ($81,908) for the
quarter ended September 30, 2000 compared to ($98,014) in 1999. Loss per share
was ($.04) in 2000 and ($.06) in 1999.
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 it's internet marketing
programs and mix of products and services and changes in, and the timing of,
expenses relating to development and sales and marketing. Other factors that may
contribute to variability of operating results include the timely deployment and
implementation of expansion of the Divedepot.com outside sales network or
internal direct marketing capability, changes in demand for sport diving travel
and related products and services, the cyclical nature of marine expenditures
and the overall health of the regional and international economy.
<PAGE>
RESULTS OF OPERATIONS FOR NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000 COMPARED TO
SAME PERIOD IN 1999.
The Company had revenues of $779,163 in the nine month period in 2000 and
revenues of $922,459 in the period in 1999.
Cost of sales totaled $295,388 for the nine month period ended September
30, 2000 and $236,647 in the period in 1999. Cost of sales consists primarily of
costs to provide travel related services to clients, the costs of merchandise
sold in the retail stores and to a minor extent the costs of fuel and training
materials sold to third parties.
Operating expenses totaled $1,009,101 for the nine month period ended
September 30, 2000 compared to $914,429 in the period in 1999. Operating
expenses include all costs of salaries, rent, utilities, repairs, fuel and all
costs associated with the ongoing dive operations in the British Virgin Islands.
Dive operations expenses are high as a percentage of sales and significant
economies of scale may be achieved as diving activities increase. At present,
infrastructure and equipment is in place within the company's operations in the
BVI to accommodate substantial additional business with only minor capital
expenditures. Marketing, sales and administration expense consists primarily of
personnel expenses, accounting, legal expenses and marketing development,
promotion and sales activities, including salary and commissions, costs of
marketing programs and the cost of attending various dive shows and travel trade
shows. 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 the Company is
designed to anticipate future travel, and merchandise sales that have not yet
occurred. Management expects expenses to remain relatively constant and
therefore decline as a percentage of revenue, if revenues increase. Together,
therefore, management anticipates that marketing, sales and administrative
expenses will increase somewhat more modestly than in the current fiscal year,
but decline as a percentage of revenue if sales of travel and merchandise
increase.
NET LOSS. Divedepot had a loss of $(552,935) for the nine month ended
September 30, 2000, and a loss of ($256,226) for the same period in 1999.
The loss per share for the period was ($.28) in 2000 and ($.16) in 1999.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
To date, the company has satisfied its cash requirements primarily through
debt, the sale of capital stock and through operating revenues. The company's
principal uses of cash are to fund working capital requirements and capital
expenditures and to service its vendor, payroll and professional expenses. The
Company had a cash deficit of ($84,424) at September 30, 2000. The Company's
current liabilities at September 30, 2000 exceeded current assets by $822,580.
The Company needs to achieve further capital in order to continue and expand
operations and pay current liabilities.
NEED FOR ADDITIONAL FINANCING
The Company does not have capital sufficient to meet the Company's cash
needs for continued operation. The Company will have to seek loans or equity
placements to cover such cash needs.
No commitments to provide additional funds have been made by management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to the Company to allow it to cover its expenses as they
may be incurred.
Irrespective of whether the Company's cash assets prove to be inadequate to
meet the Company's operational needs, the Company might seek to compensate
providers of services by issuances of stock in lieu of cash.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to only one legal action. That action is in the
Circuit Court for Miami - Dade County, Florida, Plaintiff, the firm of Marc M.
Harris, on behalf of others has alleged breach of contract, fraud, conversion,
and constructive trust. The total amount of the claim by the firm of Marc M.
Harris is recorded as long-term debt on the company books and audited statement.
This debt was acquired in the acquisition of all liabilities and assets of
Baskin In The Sun International, S.A. The Company is vigorously defending the
action and believes the action is without foundation because the Plaintiff
offset accounts containing funds of Defendant in similar amounts to those
claimed. In the event Plaintiff were fully successful, Defendant could sustain a
judgment exceeding $217,000, plus interest, which could have a material impact
on the Company. The Company filed a counter claim that in settlement can only
reduce the liabilities of the company as they currently stand and not further
worsen or negatively impact the corporation.
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 2. Changes in securities - None.
Item 3. Defaults upon senior securities - None.
Item 4. Submission of matters to a vote of security holders - None.
Item 5. Other information - None.
Item 6. Exhibits and reports on Form 8-K
(a) The following are filed as Exhibits to this
Quarterly Report. The numbers refer to the Exhibit Table of
Item 601 of Regulation S-K:
None.
(b) Reports on Form 8-K filed during the nine months
ended September 30, 2000. (incorporated by reference)
None.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
Dated: January 9, 2001
DIVEDEPOT.COM, INC.
by:/s/Norbert Weller
Norbert Weller, President
