UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From to
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Commission File Number: 0-24138
DIAMOND EQUITIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Nevada 88-0232816
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
216 South Alma School Rd, Suite 10, Mesa, Az 85210
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(Address of Principal Executive Offices)
(602) 462-5900
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and formal fiscal year,
if changed since last report)
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 and, (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
As of October 31, 2000, Diamond Equities, Inc. Registrant had 8,280,099 shares
of its $0.001 par value common stock outstanding.
<PAGE>
FORM 10-Q
FIRST QUARTER 2001
DIAMOND EQUITIES, INC.
INDEX
PAGE
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PART I. FINANCIAL INFORMATION
Balance Sheets - September 30, 2000 and June 30, 2000........... 3-4
Statements of Operations for the Three Months
Ended September 30, 2000 and 1999............................... 5
Statement of Cash Flows - for the Three Months
Ended September 30, 2000 and 1999............................... 6-7
Notes to Financial Statements................................... 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................... 9
PART II. OTHER INFORMATION
Item 3(b) Defaults Upon Senior Securities....................... 10
2
<PAGE>
DIAMOND EQUITIES, INC.
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
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(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash $139,532 $125,049
Receivables
Trade accounts, net of allowance for doubtful accounts of
$9,960 at September 30, 2000 and June 30, 2000 160,273 83,607
Interest Receivable 3,281 3,281
Inventory 96,061 98,581
Note Receivable-current portion 15,750 15,750
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Total Current Assets 414,897 326,268
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PROPERTY AND EQUIPMENT 564,483 617,956
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OTHER ASSETS
Other Assets 6,750 6,750
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Total Other Assets 6,750 6,750
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$986,130 $950,974
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</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
DIAMOND EQUITIES, INC.
Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
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<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 189,052 $ 143,549
Accrued expenses 47,458 56,443
Accrued preferred dividends 20,624 17,784
Capital lease obligation-current portion 2,091 2,091
Current portion Long term debt -- --
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Total Current Liabilities 259,225 219,867
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LONG-TERM LIABILITIES
Capital lease obligations 1,782 2,287
Notes payable 15,000 --
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Total Long-term liabilities 16,782 2,287
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Total Liabilities 276,007 222,154
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MINORITY INTEREST 262,116 231,258
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STOCKHOLDERS' EQUITY
Convertible preferred stock, $.001 par, 6% cumulative,
non-voting, series A; 18,000 shares authorized;
250 shares issued and outstanding, liquidation
preference of $250,000 1 1
Convertible preferred stock, non-voting, non-cumulative
series B; 18,000 shares authorized; 15,194 shares
issued and outstanding 1,708,684 1,708,684
Common stock, $.001 par value; 50,000,000 shares
authorized; 7,366,099 shares issued and outstanding 8,280 8,280
Additional paid-in capital 3,606,391 3,606,391
Accumulated deficit (4,875,349) (4,825,794)
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Total Stockholders' Equity 448,007 497,562
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$ 986,130 $ 950,974
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</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
DIAMOND EQUITIES, INC.
Statements of Operations
(Unaudited)
For the Three Months Ended
September 30,
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2000 1999
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Net sales $ 298,642 $ 230,562
Less cost of sales 156,131 146,620
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Gross profit 142,511 83,942
Selling, general and administrative expenses 179,836 246,709
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Operating income or (loss) (37,325) (162,767)
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Other income and (expenses), net 5,545 (9,072)
Loss on investment in GoProfit (10,000) (113,400)
Minority Interest (7,775) 12,828
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Net income (loss) before income taxes (49,555) (272,411)
Provision for income taxes -- --
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Net loss $ (49,555) $ (272,411)
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Net income or (loss) per share $ (.01) $ (.04)
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Weighted Average Shares Outstanding 8,280,099 7,366,099
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See accompanying notes to financial statements.
5
<PAGE>
DIAMOND EQUITIES, INC.
Statements of Cash Flows
(Unaudited)
For the Three Months Ended
September 30,
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(49,555) $(272,411)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 53,473 53,250
Minority interest 7,775 (12,828)
Unrealized loss on Investment -- 113,400
Changes in operating assets and liabilities
(net of acquisition)
(Increase) decrease in
Receivables - trade and other (76,666) (44,257)
Inventory (2,520) 73,111
Prepaid expenses and other -- 1,699
Increase (decrease) in
Accounts payable 48,626 (11,304)
Accrued liabilities (6,145) (3,209)
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Net Cash Used in Operating Activities (25,012) (102,549)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment -- (45)
Cash received from sale of investment in sub 25,000 --
Cash received for notes receivable -- (7,000)
Cash paid for acquisition of Accurate -- 221,875
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Net Cash Provided by Investing Activities $ 25,000 $ 214,830
======== =========
See accompanying notes to financial statements.
6
<PAGE>
DIAMOND EQUITIES, INC.
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,
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2000 1999
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes payable $ (505) $ (13,399)
Cash received from debt financing 15,000 --
Cash received for issuance of preferred stock -- 180,000
Cash adjustment for equity method of recording-GoProfit -- (107,336)
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Net Cash Provided (Used) by Financing Activities 14,495 59,265
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INCREASE (DECREASE) IN CASH 14,483 171,546
CASH, BEGINNING OF PERIOD 125,049 210,035
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CASH, END OF PERIOD $ 139,532 $ 381,581
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes $ -- $ --
========= =========
Cash paid for interest $ 18 $ 574
========= =========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
Diamond Equities, Inc.
September 30, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
GENERAL
Diamond Equities, Inc. (the "Company") has elected to omit substantially all
footnotes to the financial statements for the three months ended September 30,
2000, since there have been no material changes (other than indicated in other
footnotes) to the information previously reported by the Company in their Annual
Report filed on Form 10-KSB for the Fiscal year ended June 30, 2000.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and records of the
Company without audit. However, such information reflects all normal and
recurring adjustments which are, in the opinion of management, necessary to
properly reflect the results of the interim period presented. The information
presented is not necessarily indicative of the results from operations expected
for the full fiscal year.
CHANGE IN MINORITY INTEREST
During the quarter ended September 30, 2000, the Company received 1,800,000
shares of Precision Plastics common stock in satisfaction of inter-company debt.
Diamond Equities also sold 100,000 shares of Precision common stock to a
shareholder of Diamond and Precision for $25,000. With these two changes,
Diamond equities owns 62% of Precision Plastics, and a 38% minority interest
exists.
NOTE PAYABLE-RELATED PARTY
During the 1st quarter 2001, the Company received 15,000 as a loan from
Go-Profit.com. The terms require the company to repay the debt by March 25,
2002, and bears interest at 10%.
8
<PAGE>
Diamond Equities, Inc.
September 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY
Cash and cash equivalents totaled $139,532 at September 30, 2000 compared to
$125,049 at June 30, 2000. The increase in cash was due primarily to the receipt
of cash from a Note Payable of $15,000. The Company also used approximately
$25,000 in operations and received $25,000 from the sale of Diamond held
Precision stock to investors of Diamond. The Companies current cash requirements
are for the operations of the Company, the purchase of inventory and payments on
commitments and debt.
Long term cash requirements, other than normal operating expenses, are
anticipated for the acquisition of additional ventures, however, funds will need
to be raised to support such new ventures. In October 2000, the Company signed
an agreement to acquire 80% of the common stock of RealMotorcycle.com, Inc., a
company that holds the marketing and distribution rights to the "Pagsta" custom
motorcycle which is being marketed through Harley Davidson dealers as a custom
Harley. The company also has a website from which it will distribute apparel and
other motorcycle parts and accessories. RealMotorcycle will raise funds from a
line of credit and a private placement to fund its operations. No cash was
required in the acquisition of RealMotorcycle.com. The Company will need to
raise additional funds from investors in order to complete additional
acquisitions if identified. The Company believes that its existing cash and
anticipated cash generated from operations will be sufficient to satisfy its
currently anticipated cash requirements for fiscal year 2001.
The Company's principal commitments at September 30, 2000 consists of
obligations under capital leases and operating leases for facilities.
RESULTS OF OPERATIONS
The Company generated revenues from operations of $298,642 with cost of sales of
$156,131, and a gross profit of $142,511, for the quarter ended September 30,
2000 as compared to revenues of $230,562 with cost of sales of $146,620 and
gross profit of $83,942 for the same period last year. The increase in sales is
due to the increase in operations in the plastic company.
Selling, general and administrative expenses were $179,836 for the first quarter
2001 a decrease of $66,873 over the same period last year. The decrease is
primarily due to the fine tuning of the plastics company and Diamond Equities.
Management anticipates that general selling and administrative expenses will
continue to remain constant.
The Company incurred a loss of $(49,555) for the first quarter 2001 compared to
a loss of $(272,411) for the same time period a year ago. The $222,856 increase
in net income is due to the increase of gross margin of $58,569 , the decrease
of general and administrative expenses and the lack of recorded losses in
connection with our investment in GoProfit.com in fiscal 2000.
9
<PAGE>
Diamond Equities, Inc.
September 30, 2000
There are no seasonal aspects of the Company's business which had, or are
expected to have, a material effect on the financial conditions or results of
operations.
PLAN OF OPERATIONS
The Company's plan for 2001 is to increase sales in the plastic operations and
explore the development of the operations of RealMotorcycle.com in order to
generate significant revenues from that entity. The Company will also continue
to search for other viable business operations.
PART II OTHER INFORMATION
ITEM 3(b) DEFAULTS UPON SENIOR SECURITIES
The Company converted the original Class A Preferred dividends in the amount of
$194,023 to Preferred Series B. The Company is currently 16 months in arrears
($20,624) as of November 15, 2000, in the payment of dividends to the
shareholders of the Class A 6% Preferred Stock. No demand has yet been made on
the Company by the Preferred shareholders.
10
<PAGE>
Diamond Equities, Inc.
September 30, 2000
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 by the
undersigned thereunto duly authorized.
Date: November 20, 2000
Diamond Equities, Inc.
By: /s/ David Westfere
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David Westfere, CEO
By: /s/ Todd D. Chisholm
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Todd D. Chisholm, CFO
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