-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RUUlEM95wu+E7CCm0hHK3DBXT9lxC7obkh8gr4U6KhyiQ/o94+7SENfCOGfa3tPx f7mKe7xGnDREnhnEPKzRIg== 0000950147-99-000509.txt : 19990518 0000950147-99-000509.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950147-99-000509 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAMOND EQUITIES INC CENTRAL INDEX KEY: 0000923150 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 880232816 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24138 FILM NUMBER: 99627332 BUSINESS ADDRESS: STREET 1: 2010 E UNIVERSITY DR STREET 2: STE 3 CITY: TEMPE STATE: AZ ZIP: 85281 BUSINESS PHONE: 6028298777 FORMER COMPANY: FORMER CONFORMED NAME: UNITED PAYPHONE SERVICES INC DATE OF NAME CHANGE: 19940516 10QSB 1 QUARTERLY REPORT FOR THE QTR ENDED 3/31/99 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 March 31, 1999 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From _________ to _________ Commission File Number: 0-24138 DIAMOND EQUITIES, INC. ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) Nevada 88-0232816 - ------------------------------- ---------------- (State of Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 2010 E. University Drive, Suite 3, Tempe, Az 85281 -------------------------------------------------- (Address of Principal Executive Offices) (602) 921-2760 -------------------------------------------------- (Registrant's telephone number, including area code) N/A -------------------------------------------------- (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 March 31, 1999, Diamond Equities, Inc. Registrant had 4,966,099 shares of its $0.001 par value common stock outstanding. Page 1 of 11 sequentially numbered pages FORM 10-Q THIRD QUARTER 1999 DIAMOND EQUITIES, INC. INDEX PAGE ---- PART I. FINANCIAL INFORMATION Balance Sheets - March 31, 1999 and June 30, 1998................. 3-4 Statements of Operations for the Three and Nine Months Ended March 31, 1999 and 1998..................................... 5 Statement of Cash Flows - for the Nine Months Ended March 31, 1999 and 1998..................................... 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 DIAMOND EQUITIES, INC. Balance Sheets ASSETS March 31, June 30, 1999 1998 ---------- ---------- (Unaudited) (Audited) CURRENT ASSETS Cash $ 97,532 $ 600,231 Certificates of Deposit 262,873 505,404 Receivables Trade accounts, net of allowance for doubtful accounts of $35,588 at March 31, 1999 and June 30, 1998 319,873 10,560 Inventory 147,042 5,400 Prepaid expenses 1,783 5,111 Note Receivable-current portion 208,750 35,750 ---------- ---------- Total Current Assets 1,037,853 1,162,456 ---------- ---------- PROPERTY AND EQUIPMENT 955,781 197,162 ---------- ---------- OTHER ASSETS Notes Receivable-noncurrent portion 243,388 405,625 Deposits 1,000 -- Investments 5,000 66,000 ---------- ---------- Total Other Assets 249,388 471,625 ---------- ---------- $2,243,022 $1,831,243 ========== ========== See accompanying notes to financial statements. 3 DIAMOND EQUITIES, INC. Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY March 31, June 30, 1999 1998 ----------- ----------- CURRENT LIABILITIES Accounts payable $ 371,735 $ 111,234 Accrued expenses 13,138 8,473 Line of Credit 195,000 250,200 Current Portion Long Term Debt 264,390 21,362 Accrued preferred dividends 194,023 194,023 ----------- ----------- Total Current Liabilities 1,038,286 585,292 ----------- ----------- LONG-TERM LIABILITIES Captial Lease obligations 134,202 10,150 Notes payable 414,742 -- Current Portions Long-term Debt (264,390) -- ----------- ----------- Total Long-Term Liabilities 284,554 10,150 ----------- ----------- Total Liabilities 1,322,840 595,442 ----------- ----------- MINORITY INTEREST 52,362 66,975 ----------- ----------- STOCKHOLDERS' EQUITY Convertible preferred stock, $.001 par, 6% cumulative, non-voting, class A; 10,000 shares authorized; 0 and 727 shares issued and outstanding -- 1,817,591 Convertible preferred stock, non-voting, non-cumulative class B; 20,000 shares authorized; 18,000 shares issued and outstanding 1,787,298 -- Common stock, $.001 par value; 50,000,000 shares authorized; 4,966,099 shares issued and outstanding 4,966 4,666 Additional paid--in capital 2,612,275 2,582,282 Accumulated deficit (3,536,719) (3,235,713) ----------- ----------- Total Stockholders' Equity 867,820 1,168,826 ----------- ----------- $ 2,243,022 $ 1,831,243 =========== =========== See accompanying notes to financial statements. 4 DIAMOND EQUITIES, INC. Statements of Operations (Unaudited)
For the Three Months For the Nine Months Ended March 31, Ended March 31, -------------------------- -------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Net sales $ 396,170 $ -- $ 1,099,474 $ -- Less cost of sales 137,286 -- 457,938 -- ----------- ----------- ----------- ----------- Gross profit 258,885 -- 641,536 -- Selling, general and administrative expenses 254,945 83,625 938,338 292,080 ----------- ----------- ----------- ----------- Operating income or (loss) 3,940 (83,625) (296,802) (292,080) ----------- ----------- ----------- ----------- Other income and (expenses), net (11,795) 11,925 (18,871) 44,849 Income (loss) from Discontinued Operations -- -- (33,196) Minority Interest (14,391) 14,295 Gain on sale of assets 1,000 -- 1,000 -- ----------- ----------- ----------- ----------- Net income (loss) before income taxes (21,246) (71,700) (300,378) (280,427) Provision for income taxes -- -- -- -- ----------- ----------- ----------- ----------- Net income or (loss) before preferred dividends (21,246) (71,700) (300,378) (280,427) Preferred dividends 153 -- 153 -- ----------- ----------- ----------- ----------- Net loss attributed to common stock $ (21,399) $ (71,700) $ (300,531) $ (280,427) =========== =========== =========== =========== Net income or (loss) per share $ (.00) $ (.02) $ (.06) $ (.06) =========== =========== =========== =========== Weighted Average Shares Outstanding 4,766,099 4,666,099 4,766,099 4,666,099 =========== =========== =========== ===========
See accompanying notes to financial statements. 5 DIAMOND EQUITIES, INC. Statements of Cash Flows (Unaudited) For the Nine Months Ended March 31, ------------------------- 1999 1998 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss (300,531) $(280,427) Adjustments to reconcile net loss to net cash used in operating activities: Minority Interest 128,072 -- Depreciation and amortization 19,714 4,443 Changes in operating assets and liabilities (Increase) decrease in Receivables-- trade and other (84,400) (13,396) Inventory (58,074) -- Prepaid expenses and other 3,328 (1,000) Increase (decrease) in Accounts payable 83,642 (566) Accrued liabilities 4,665 (143,074) --------- --------- Net Cash Used in Operating Activities (203,584) (434,020) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (12,867) (8,345) Proceeds from sale of assets 50,759 -- Cash paid for investments (375,000) (5,000) Cash paid for notes receivable -- (15,750) Cash received from CDS 256,955 -- Cash paid for CDs -- (250,000) --------- --------- Net Cash Used by Investing Activities $ (80,153) $(279,095) --------- --------- See accompanying notes to financial statements. 6 DIAMOND EQUITIES, INC. Statements of Cash Flows (Continued) (Unaudited) For the Nine Months Ended March 31, ------------------------- 1999 1998 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Cash advanced from Lines of Credit $ 40,000 $ -- Principal payments on notes payable (163,609) -- Cash paid on Line of Credit (95,200) -- Dividends paid (153) -- --------- ---------- Net Cash Provided (Used) by Financing Activities (218,962) -- --------- ---------- INCREASE (DECREASE) IN CASH (502,699) (713,115) CASH, BEGINNING OF PERIOD 600,231 1,586,983 --------- ---------- CASH, END OF PERIOD $ 97,532 $ 873,868 ========= ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for income taxes $ -- $ -- ========= ========== Cash paid for interest $ 40,569 $ 915 ========= ========== See accompanying notes to financial statements. 7 Diamond Equities, Inc. March 31, 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 nine months ended March 31, 1999, 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, 1998. UNAUDITED INFORMATION The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all adjustment 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. ACQUISITION OF ACCURATE THERMOPLASTICS Effective July 21, 1998, the Company acquired the assets and assumed various debts and leases of Accurate Thermoplastics, Inc. (Accurate), a plastics injection molder in Mesa, Arizona. The Company paid $375,000 in cash, issued a note for $185,000, assumed capital leases in the amount of $185,734 and notes of $94,639. The Company also signed a consulting commitment for $5,000 per month for 48 months to the previous owner as part of the acquisition. A commitment liability was recorded for $205,679 (the present value of the payments). Accounts payable of $176,859 were also assumed. For the above payments, notes and assumptions, the Company received accounts receivable of $224,913, Inventory of $83,567 and fixed assets of $914,430. 8 Diamond Equities, Inc. March 31, 1999 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY With the two acquisitions of plastic injection molding companies, the operations of the Company have changed significantly as compared to the same period a year ago, when the Company was merely looking for business opportunities. With the increased operations however, there is also an increase in commitments and cash requirements. Cash and cash equivalents totaled $97,532 at March 31, 1999 compared to $600,231 at June 30, 1998. The decrease in cash was due primarily to the acquisition of Accurate wherein $375,000 was disbursed. The Company also used approximately $200,000 in operations and $250,000 in payments on debt. During the past nine months the Company has withdrawn $40,000 on its line of credit, and cashed a certificate of deposit of $262,000. The Company's current cash requirements are for the operations of the Company, the purchase of inventory and payments on commitments and debt. The Company also has a balloon payment of $145,000 currently due from the acquisition of Accurate. The Company has one Certificate of Deposit totaling $262,000 securing a line of credit. There is $67,000 available to borrow on the line of credit at March 31 1999. The CD has not been included in the cash balances disclosed above. In February 1999, the Company reached a settlement with Tru-Tel Communications on the delinquent note receivable held by the Company. The settlement provides for $100,000 to be paid in April 1999, and monthly installments to begin in July 1999 of approximately $7,900 for 48 months. This will assist the Company with its current and future cash requirements. Long term cash requirements, other than normal operating expenses, are anticipated for the acquisition of additional plastic operations. The Company will need to raise additional funds from investors in order to complete additional acquisitions. 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 1999. The Company's principal commitments at March 31, 1999 consist of obligations under capital leases, operating leases for facilities and commitments incurred in connection with the acquisition of Accurate. 9 Diamond Equities, Inc. March 31, 1999 RESULTS OF OPERATIONS The Company generated revenues from the new operations of $1,099,474 with cost of sales of $457,938, and a gross profit of $641,536 for the nine months ended March 31, 1999. The Company's gross margin for the nine months was 58%. Because there were no operations during fiscal 1998, there are no comparatives in this area. Selling, general and administrative expenses were $254,945 for the third quarter 1999, an increase of $171,320 over the same period last year. The increase is primarily due the change in operations. Management anticipates that general selling and administrative expenses will continue to remain constant or decrease slightly due to the fine tuning of operations. The Company incurred a loss of (21,246) for the third quarter 1999 as compared to $(71,700) for the third quarter 1998. The decrease is due to the new operations generating revenue while the 1998 fiscal year had no revenue sources other than interest income. 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 1999 is to fine tune and expand the operations of Precision Plastics to make it a profitable subsidiary. Management is currently reviewing several potential acquisition candidates in the plastics industry, and hopes to secure the third operation in the near future. The Company is also reviewing various start up proprietary products to acquire as a division of the plastics molding Company. The Company will assist in bringing the products to market as well as doing the plastic molding for the products. Effective April 1999, the Company acquired Go Profit.com, Inc., an internet company developing a worldwide financial search engine. The Company will continue to develop its internet technology in hopes of generating revenue from this source in the near future. The Company will assist Go Profit in becoming a publicly traded company in the current calendar year, wherein it will be able to raise the additional funds necessary to further develop its product. The Company issued preferred stock in exchange for all issued and outstanding stock of Go Profit in April of 1999. PART II OTHER INFORMATION ITEM 3(b) DEFAULTS UPON SENIOR SECURITIES The Company is 39 months in arrears ($194,023) as of May 14, 1999, in the payment of dividends to the shareholders of the Class A 6% Preferred Stock. The class A Preferred shares have been replaced by Class B shares, however accrued preferred dividends have not yet been paid. No demand has yet been made on the Company by the Preferred shareholders. 10 Diamond Equities, Inc. March 31, 1999 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: May 14, 1999 Diamond Equities, Inc. By: /s/ David Westfere -------------------------------- David Westfere, CEO and Principal Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 9-MOS JUN-30-1999 JUL-01-1998 MAR-31-1999 1 97,532 0 319,873 (35,588) 147,042 1,037,853 955,781 (189,531) 2,243,022 1,038,286 0 0 1,787,298 4,966 (924,444) 2,243,022 1,099,474 1,099,474 457,938 457,938 938,338 0 40,569 (300,378) 0 (300,531) 0 0 0 (300,531) (.06) 0
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