form 10Q for Seaview Video Technology, Inc.

10-Q 1 seaviewa.htm form 10Q for Seaview Video Technology, Inc.

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15d
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2000

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15d
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: ____________ to ____________

Commission file number:
33-55254-26

SEAVIEW VIDEO TECHNOLOGY, INC.
(exact name of registrant as specified in its charter)

NEVADA 87-0438640
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

SEAVIEW VIDEO TECHNOLOGY, INC.
111 Second Avenue NE, Suite 1403
St. Petersburg, FL 33701

(727) 866-3660
(Registrant's telephone number, including area code)

SEAVIEW UNDERWATER RESEARCH, INC.
(Former name, former address and former 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 15d of the Securities and Exchange Act of 1934
during the preceding 12 months (or such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X Yes No

APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical date.

Total number of shares of Common Stock, as of July 30, 2000: 14,826,956

SEAVIEW UNDERWATER RESEARCH, INC.

INDEX

Part I. FINANCIAL INFORMATION Page No.

Item 1. Financial Statements 3 - 8

Item 2. Management's Discussion and Analysis of Financial 9 - 13
Condition and Results of Operations

Part II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K 14

Signatures 15

Exhibits 16 - 18

PART I. FINANCIAL INFORMATION

Item 1. Financial statements (restated)

SEAVIEW VIDEO TECHNOLOGY, INC.
BALANCE SHEETS

June 30, December 31,
Assets 2000 1999
(unaudited)

Current Assets:
Cash and cash equivalents.................................... $ 371,419 $ -
Accounts receivable-Trade................................... 213,500 -
Accounts receivable-Employees............................... 9,382 -
Accounts receivable-Officer................................. 418,567 -
Prepaid expenses............................................. 77,506 9,197
Income tax benefit.......................................... - 25,795
Inventory.................................................... 268,613 120,604
----------------- ---------------
Total current assets...................................... 1,358,987 155,596
Property and equipment, net...................................... 436,766 140,330
Deferred tax asset .............................................. 676,714 28,023
----------------- ----------------
Total assets.............................................. $ 2,472,467 $ 323,949
================= ================

Liabilities and Stockholders' Equity

Current Liabilities:
Due to Bank................................................ - 10,412
Accounts Payable 72,344 -
Convertible Debentures 100,000
Accrued liabilities......................................... 10,000 53,562
----------------- ----------------
Total Liabilities........................................ 182,344 63,974
Stockholders' equity:
Capital stock................................................... 15,346 9,380
Additional paid-in capital...................................... 3,371,048 335,571
Unearned Restricted Stock Compensation.......................... (57,640) (74,306)
Retained earnings............................................... (1,038,631) (10,670)
----------------- ----------------
Total stockholders' equity............................... 2,290,123 259,975
----------------- ----------------
Total liabilities and stockholders' equity.............. $ 2,472,467 $ 323,949
================= ================

The accompanying notes are an integral part of these financial statements.

SEAVIEW VIDEO TECHNOLOGY, INC.
STATEMENT OF OPERATIONS
(Unaudited)

Three months Three months Six Months Six Months
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2000 1999 2000 1999
---------------- ----------------- --------------- ----------------

Net Revenue.......................... $ 335,120 $ 364,729 $ 756,188 $ 665,598
Cost of goods sold................... 201,196 94,148 262,193 142,404
---------------- ----------------- --------------- ----------------
Gross Profit 133,924 270,581 493,995 523,194
Operating expenses:
Salaries & Wages............... 277,260 39,171 388,682 100,461
Advertising & Promotions....... 614,000 130,730 1,072,707 200,729
Depreciation.................... 7,131 4,035 17,806 7,985
Rent & Utilities................ 30,602 34,676 47,631 55,302
Other Expenses.................. 491,830 72,399 619,164 111,454
---------------- ----------------- --------------- ----------------
Total operating expenses 1,420,823 281,011 2,145,990 475,931
---------------- ----------------- --------------- ----------------
Operating Profit (loss)..... $ (1,286,899) $ (10,430) $(1,651,995) $ 47,263
Interest Income 638 1,139 -
---------------- ----------------- --------------- ----------------
Income (loss) before taxes......... $ (1,286,261) $ (10,430) $(1,650,856) $ 47,263
Income tax (benefit) expense (496,101) 10,159 (622,895) 10,159
---------------- ----------------- --------------- ----------------

Net Income........................... $ (790,160) $ (20,589) $(1,027,961) $ 37,104
================ ================= =============== ================

Basic net (loss) income per common share $ (0.071) $ (0.003) $ (.101) $ 0.007
Diluted net (loss) income per common
Share $ (0.071) $ (0.002) $ (.101) $ 0.005
Pro forma basic net income per common share
Pro forma diluted net income per common
share
Basic weighted average common shares
outstanding 11,141,790 6,304,286 10,209,278 5,063,204
Diluted weighted average common shares
outstanding 11,141,790 8,931,363 10,209,278 7,669,913

The accompanying notes are an integral part of these financial statements.

SEAVIEW UNDERWATER RESEARCH, INC
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

Six months Six months
Ended Ended
June 30, 2000 June 30, 1999
------------- -------------

Cash flows from operating activities:
Net (loss) income............................................... $ (1,027,961) $ 37,104
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation................................................ 17,806 7,985
Amortization of unearned compensation...................... 16,666 9,028
Compensation expense of stock issuance to employees 72,459 -
Compensation expense of stock issuance to consultants...... 269,890 14,300
Deferred income taxes..................................... (648,690) (2,399)
(Increase) decrease in:
Inventory..................................................... (148,009) (43,702)
Accounts receivable trade..................................... (213,500) -
Employee accounts receivable.................................. (9,382) -
Prepaid Assets................................................ (68,309) -
Increase (decrease) in:
Accounts Payable.............................................. 72,344 -
Accrued Liabilities........................................... (43,562) -
Income taxes payable........................................ 25,795 12,558
------------- -------------
Net cash provided by (used in) operating activities........... (1,684,453) 34,874
-------------- -------------
Cash flows from investing activities:
Additions to property and equipment.............................. (314,244) (56,886)
-------------- -------------
Net cash used in investing activities......................... (314,244) (56,886)
-------------- -------------
Cash flows from financing activities:
Officer Loans................................................. (418,567) -
Proceeds from issuance of convertible subordinated debentures 2,799,095 0
-------------- -------------
Net cash provided by financing activities..................... 2,380,528 0
-------------- -------------
Net (decrease) increase in cash and cash equivalents.......... 381,831 (22,012)
Cash and cash equivalents at beginning of period...................... (10,412) 14,516
-------------- -------------
Cash and cash equivalents at end of period............................ $ 371,419 $ (7,496)
============== =============

The accompanying notes are an integral part of these financial statements.

SEAVIEW VIDEO TECHNOLOGY, INC.
Notes to Interim Consolidated Financial Statements
June 30, 2000 (Unaudited)

1. OPERATIONS AND ORGANIZATION

SeaView Video Technology, Inc., (the "Company" or "we" or "our") was
originally incorporated in the State of Utah on April 16, 1986. In order to
change our domicile, we were reorganized under the laws of Nevada on December
30, 1993. On March 24, 1999, we entered into a reorganization agreement with
SeaView Underwater Research, Inc. ("SeaView Florida"), a privately held
Corporation that was incorporated in the State of Florida on April 2, 1998 ("the
reorganization"). At the time of the reorganization we were a non-operating
Company whose common stock was not publicly traded. We were however, subject to
the reporting requirements of the Securities Exchange Act of 1934. In connection
with the reorganization, we issued 5,000,000 shares of our common stock to
SeaView Florida's shareholders in exchange for 100% of Seaview Florida's
outstanding shares of common stock and $250,000 cash. For accounting purposes
the reorganization was treated as a recapitalization.

As a result of the reorganization,
o We were the surviving entity;
o SeaView Florida ceased to exist;
o SeaView Florida's shareholders gained control of our Company;
o Our Board of Directors resigned and were replaced by a Board of
Directors selected by SeaView Florida's shareholders; and
o We changed our name to Seaview Underwater Research Inc. to reflect
our continuance of SeaView Florida's business plan.

On February 2, 2000 we changed our name to SeaView Video Technology, Inc.

Our Products
We manufacture underwater video cameras, lights, and accessories through several
third party assembly companies for the marine, commercial, and consumer-retail
markets. We have also developed a video security system utilizing an exclusive
patented technology, which enables video transmission through existing
electrical wiring. SecureView, manufactured through independent contractors, is
a light bulb camera and decoder combination which can be deployed, without
additional wiring, as a security monitoring system. Our product sales and
distribution efforts concentrate on the following: (1) direct to the public and
government (2) through a network of approximately 700 independent dealers and
(3) through an expanding retailers network. We have registered trademarks for
many of our products.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation / basis of consolidation. The accompanying unaudited
financial statements have been prepared in accordance with prescribed guidance
of the Securities and Exchange Commission ("SEC"), and therefore, do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows and stockholders' equity in
conformity with generally accepted accounting principals. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the three
and six-month periods ended June 30, 2000, are not necessarily indicative of the
results that can be expected for a full fiscal year.

Inventories. Inventories consist of raw materials and finished goods held for
resale and are stated at the lower of cost or market. Inventory costs are
determined using the first-in, first-out (FIFO) method.

Property and equipment. Property and equipment are stated at cost less
accumulated depreciation. Depreciation on property and equipment is calculated
on the straight-line method over the estimated useful lives of the assets
ranging from five to seven years. Maintenance and repairs are charged to expense
as incurred.

Stock Based Compensation. In October 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standard ("SFAS") No. 123,
"Accounting for Stock-Based Compensation". SFAS 123 allows companies which have
stock based compensation arrangements with employees to adopt a fair-value basis
of accounting for equity instruments or to continue to apply the intrinsic value
based method required by with Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock issued to Employees". The Company has elected to
account for stock based compensation arrangements in accordance with APB No. 25.

Revenue recognition. Revenue is recognized at the time of product shipment. Such
revenue is recorded net of estimated product return. At June 30, 2000, estimated
amounts for returns are not considered material.

Income taxes. Prior to April 1, 1999, the company had elected S Corporation
status under Section 1362(a) of the Internal Revenue Code. Under the election,
the stockholders included their share of the Company's applicable taxable income
or loss on their federal income tax return. Accordingly, no provision for income
taxes had been made. On April 1, 1999, the Company elected to terminate its
Subchapter S status in favor of a taxable C Corporation as designated in the
Internal Revenue Code. Accordingly, pro forma income taxes, net income, and
earnings per share have been included on the face of the historical income
statement for the period presented prior to April 1, 1999. In addition, a pro
forma adjustment has been made to reclassify undistributed earnings of $180,467
through April 1, 1999 as additional paid in capital.

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in the tax rate is recognized in income in
the period that includes the enactment date of the rate change.

Use of estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

3. STOCK AWARD AGREEMENT

Under a Professional Services Agreement effective March 25, 1999, 2,700,000
shares of restricted common stock were issued to a key employee. Upon issuance
of stock under the plan, unearned compensation equivalent to the market value of
the stock at the date of grant is charged to stockholders' equity and
subsequently amortized over the period of the agreement, three years.
Amortization of $8,333 and $16,666 was recorded for the three and six month
periods ended June 30, 2000, respectively.

Because the terms of the Professional Services Agreement call for no cash
payment by the employee, the intrinsic value of the compensation to the employee
as defined by APB No. 25 equals the fair market value of the award as defined by
SFAS No. 123. Thus, pro forma disclosures of net income and earnings per share,
as if the fair value based method of accounting had been applied, have been
omitted.

4. NOTE RECEIVABLE-OFFICER

During the second quarter 2000, the Company accepted several non-interest
bearing notes from an officer for a total of $418,567 at June 30, 2000. The
notes are collateralized by 6.5 million shares of company stock. The term of
the loans are 120 days.

5. CONVERTIBLE DEBENTURES

In the first and second quarter of 2000, the Company issued 8% convertible
debentures for proceeds of $2,799,095. The debentures were non-interest bearing
for the first thirty days, after which, interest was payable quarterly. The
debentures were for a term of twelve months. The debentures were convertible by
the option of the holders into shares of the Company's restricted common stock
on the basis of $.50 - 8.00 per share. Proceeds from the issuance were used to
fund operations of the Company.

During the second quarter of 2000, the company exchanged $2,699,095 of the
convertible debentures for 4,398,599 shares of Company common stock.

6. RECAPITALIZATION

SeaView Video Technology, Inc., (the "Company" or "we" or "our") was originally
incorporated in the State of Utah on April 16, 1986. In order to change our
domicile, we were reorganized under the laws of Nevada on December 30, 1993. On
March 24, 1999, we entered into a reorganization agreement with SeaView
Underwater Research, Inc. ("SeaView Florida"), a privately held Corporation that
was incorporated in the State of Florida on April 2, 1998 ("the
reorganization"). At the time of the reorganization we were a non-operating
Company whose common stock was not publicly traded. We were however, subject to
the reporting requirements of the Securities Exchange Act of 1934. In connection
with the reorganization, we issued 5,000,000 shares of our common stock to
SeaView Florida's shareholders in exchange for 100% of Seaview Florida's
outstanding shares of common stock and $250,000 cash. For accounting purposes
the reorganization was treated as a recapitalization.

The transaction is recorded as a capital transaction as described above, and, as
such, pro forma information is not presented, since the transaction does not
result in a business combination. The historical financial statements prior to
March 24, 1999 are those of Seaview Video Technology, Inc., and reflect the
restatement of the equity accounts based on the ratio of the exchange of
5,000,000 shares of Gopher for 100 shares of Seaview Video Technology, Inc.

On February 2, 2000, the Company changed its name to SeaViewVideo Technology,
Inc.

7. COMMITMENTS AND CONTINGENCIES

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.

8. SUBSEQUENT EVENT

On July 12, 2000, the Company acquired a twenty percent (20%) ownership interest
in Golden Springs, LLC, a state of Florida limited liability company. In
consideration for its 20% equity position in Golden Springs, LLC, the Company
conveyed 150,000 shares of its common stock to Golden Springs, LLC subject to
restrictions under Rule 144 of the Securities and Exchange Act of 1933, as
amended. The resolution approved by the board of directors to issue shares
dictated that the shares be replaced by the President and C.E.O. within 120
days. Golden Springs, LLC reports total assets of $4.06 million.

Item 2. Management's discussion and analysis of financial condition and results
of operations

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

A. Overview

The Company manufactures underwater video cameras, lights, and
accessories for the marine commercial and consumer retail market. The Company
has also developed and manufactures a video security system utilizing exclusive
patented technology, which enables video transmission through existing
electrical wiring. The key product, SecureView, is a light bulb camera and
decoder system. The Company sells and distributes its product lines through the
following channels: (1) direct to the public and government (2) through a
network of approximately 700 independent dealers and (3) through an expanding
retailers network. Production is contracted through several outside assembly
companies. The Company has registered trademarks for many of its products.

B. Results of Operations

The financial statements and results of operations for the 2nd quarter
ended June 30, 2000 have been restated in accordance with Generally Accepted
Accounting Principles. Our original Form 10-Q for the quarter ended June 30,
2001, which was filed on August 14, 2000, incorrectly included as revenues and
accounts receivable approximately $1,184,006 of purchase orders that were
received by the Company for its new SecureView security camera products, but
were not shipped to the customer by June 30, 2000. After restatement, our 2nd
quarter net revenues were approximately $335,120. As set forth in the chart
below, our restatements have resulted in a reduction of our net income by
approximately $966,957 for the quarter ended June 30, 2000. We discovered these
errors for the first time, during an internal review of fiscal year 2000
operations that was undertaken by our newly hired CFO. As of the date of this
filing, our new management has successfully implemented internal accounting
control procedures that are designed to ensure that similar misstatements do not
occur.

Original Original
Filing Restated Filing Restated
Quarter Ended Quarter Ended Six Months Six Months
June 30 June 30 $ % Ended June 30 Ended June 30 $ %
2000 2000 Change Change 2000 2000 Change Change

Net Revenue $ 1,519,126 $ 335,120 $ (1,184,006) -78% $ 1,940,194 $ 756,188 $ (1,184,006) -61%

Net Income $ 176,797 $ (790,160) $ (966,957) -547% $ (61,003) $(1,027,961) $ (966,958) -1585%

Total Assets $ 3,153,615 $2,472,467 $ (681,148) -22% $ 3,153,615 $ 2,472,467 $ (681,148) -22%

The following table sets forth, as a percentage of net revenue, certain
items in the Company's statements of operations for the quarters indicated. The
performance of the Company during this quarter is not indicative of future
financial results or conditions.

Three months Three months Six Months Six Months
Ended June 30, Ended June 30, Ended Ended
2000 1999 June 30, 2000 June 30,1999
----------------- --------------- -------------- --------------

Net Revenue........................... 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.................... 60.0% 25.8% 34.7% 21.4%
----------------- --------------- -------------- --------------
Gross Profit........ 40.0% 74.2% 65.3% 78.6%
Operating expenses:
Salaries & Wages................ 82.7% 10.7% 51.4% 15.1%
Advertising & Promotions........ 183.3% 35.8% 141.8% 30.2%
Depreciation..................... 2.1% 1.1% 2.4% 1.2%
Rent & Utilities................. 9.1% 9.5% 6.3% 8.3%
Other Expenses................... 146.8% 19.9% 81.9% 16.7%
----------------- --------------- -------------- --------------
Total Operating expenses..... 424.0% 77.0% 283.8% 71.5%
----------------- --------------- -------------- --------------

Operating Profit (loss)...... (384.0)% (2.8)% (218.5)% 7.1%
Interest Income..................... 0.2% 0.0% 0.2% 0.0%
----------------- --------------- -------------- --------------
Income before taxes............... (383.8)% (2.8)% (218.3)% 7.1%

Income tax (benefit) expense.... (148.0)% 2.8% (82.4)% 1.5%
----------------- --------------- -------------- --------------
Net Income (235.8)% (5.6)% (135.9)% 5.6%
================= =============== ============== ==============

Net Revenue. Net revenue decreased 8.1% and increased 13.6% for the
quarter and six months ended June 30, 2000, from $364.7 thousand to $335.1
thousand and from $665.6 thousand to $756.2, respectively. The six-month
increase was primarily caused by increased sales resulting from the Company's
increased investment in advertising and the establishment of a Dealer Sales
Base.

Cost of Goods Sold. Cost of goods sold increased 113.8% and 84.1% for
the quarter and six months ended June 30, 2000, from $94.1 thousand to $201.2
thousand and from $142.4 thousand to $262.2 thousand, respectively. This
increase was primarily caused by an increase in the cost of outsourced
resources. Cost of goods sold relates to the parts and fees paid to outside
companies for manufacturing the product.

Salaries and Wages. Salaries and wages increased 607.4% and 286.8% for
the quarter and six months ended June 30, 2000, from $39.2 thousand to $277.3
thousand and from $100.5 thousand to $388.7 thousand, respectively. This
increase was primarily caused by increased compensation resulting from increased
staffing and compensation associated with bonus and stock award programs.
Salaries and wages comprise inside wages and outside labor.

Advertising and Promotion. Advertising and promotion expenses increased
369.8% and 448.1% for the quarter and six months ended June 30, 2000, from
$130.7 thousand to $614.0 thousand and from $200.7 thousand to $1.1 million,
respectively. This increase was primarily caused by increased national and
regional television advertising efforts on behalf of the Company. Advertising
and promotions comprises the expense to advertise at boat shows and to advertise
in industry magazines. This number also includes postage, printing and travel,
attributable to advertising and promotion.

Depreciation Expense. Depreciation expense increased 77.5% and 122.5%
for the quarter and six months ended June 30, 2000, from $4.0 thousand to $7.1
thousand and from $8.0 thousand to $17.8 thousand, respectively. This increase
in depreciation expense was caused by property and equipment acquisitions by the
Company during the period. Depreciation on equipment is calculated on the
straight-line method over the estimated useful lives of the assets ranging from
five to seven years.

Rent and Utilities. Rent and utilities decreased 11.8% and 13.9% for the
quarter and six months ended June 30, 2000, from $34.7 thousand to $30.6
thousand and from $55.3 thousand to $47.6 thousand, respectively. This decrease
was primarily caused by consolidation of office space and other expense
reduction measures. Rent and utilities includes office rent, telephone and
utilities.

Other Expenses. Other expenses increased 579.3% and 455.3% for the
quarter and six months ended June 30, 2000, from $72.4 thousand to $491.8
thousand and from $111.5 thousand to $619.2 thousand, respectively. This
increase was primarily caused by research and development costs and fees paid
for and stock issued to consultants and other professionals. Other expenses are
comprised of the cost of research and development, insurance, property taxes,
bank charges, product licensing fees and other miscellaneous expenses.

Income Taxes. Prior to April 1, 1999, the Company had elected S
Corporation status under Section 1362(a) of the Internal Revenue Code. Under the
election, the stockholders included their share of the Company's applicable
taxable income or loss on their federal income tax return. Accordingly, no
provision for income taxes was made for periods prior to April 1, 1999. On April
1, 1999, the Company elected to terminate its Subchapter S status in favor of a
taxable C Corporation as designated in the Internal Revenue Code. Income tax
provisions have been recorded for periods presented subsequent to April 1, 1999.

LIQUIDITY AND CAPITAL RESOURCES

On March 24, 1999, we entered into a reorganization agreement with
SeaView Underwater Research, Inc. ("SeaView Florida"), a privately held
Corporation that was incorporated in the State of Florida on April 2, 1998 ("the
reorganization"). At the time of the reorganization we were a non-operating
Company whose common stock was not publicly traded. We were however, subject to
the reporting requirements of the Securities Exchange Act of 1934. In connection
with the reorganization, we issued 5,000,000 shares of our common stock to
SeaView Florida's shareholders in exchange for 100% of Seaview Florida's
outstanding shares of common stock and $250,000 cash. For accounting purposes
the reorganization was treated as a recapitalization.

Since our inception we have financed our operations primarily through
internal cash flow. Since the date of the reorganization, financing has
primarily been obtained through debt and equity securities sales. Such
securities sales also occurred during the quarter ended June 30, 2000, as set
forth in Part II, Item 2, below.

Based upon the Company's anticipated capital needs for operations of its
business and general corporate purposes, management believes that the
combination of the funds expected to be available under the Company's current
cash reserves and cash flow from operations should be sufficient to meet the
Company's funding requirements to conduct its operations and for further
implementation of its growth strategy and current plans through at least 2001.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable.

Special Notice Regarding Forward Looking Statements

This Form 10-Q, the quarterly report, and certain information provided
periodically in writing or orally by the Company's Officers or its agents
contains statements which constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act, as amended and Section 21E of the
Securities Exchange Act of 1934. The terms "Seaview Underwater Research,"
"company," "we," "our" and "us" refer to Seaview Video Technology, Inc. The
words "expect," "believe," "plan," "intend," "estimate" and similar expressions
and variations thereof if used are intended to specifically identify
forward-looking statements. Those statements appear in a number of places in
this Form 10-Q and in other places, particularly, "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and include
statements regarding the intent, belief or current expectations of the Company,
its directors or its officers with respect to, among other things:

(i) the successful expansion of the Company in new and existing markets

(ii) our liquidity and capital resources

(iii) our future performance and operating results; and

Investors and prospective investors are cautioned that any such forward-
looking statements are not guarantees of future performance and involve risks
and uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors. The
factors that might cause such differences include, among others, the following:

(i) any adverse effect or limitations caused by any governmental
regulations or actions;

(ii) any increased competition in business and in acquisitions;

(iii) inability to successfully conduct our business in new markets;

(iv) the continued relationship with and success of our professional
association customers and their continued ability to grow in
conjunction with our growth;

(v) any inability to meet or exceed analysts expectations in any future
period

We undertake no obligation to publicly update or revise the forward looking
statements made in this Form 10-Q or annual report to reflect events or
circumstances after the date of this Form 10-Q and annual report or to reflect
the occurrence of unanticipated-events.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

There are no material pending legal proceedings other than routine
litigation arising in the ordinary course of business. We do not believe that
the results of such routine litigation, even if the outcome were unfavorable to
us would have a material effect on our financial position.

Item 2. Changes in Securities and Use of Proceeds.

During the six months ended June 30, 2000, the Company issued 172,500
shares of restricted common stock to employees under an employee bonus
arrangement. Bonus expense of $74,199 was recognized in connection with the
issuance.

During the six months ended June 30, 2000, the Company issued 395,500
shares of Company stock as compensation for consulting, professional, and
advertising services rendered. Expenses of $269,890 were recognized in
conjunction with the stock issuances.

In the first and second quarter of 2000, the Company issued 8%
convertible debentures for proceeds of $2,799,095. The debentures were non-
interest bearing for the first thirty days, after which, interest was payable
quarterly. The debentures were for a term of twelve months. The debentures were
convertible by the option of the holders into shares of the Company's restricted
common stock on the basis of $.50 per share. Proceeds from the issuance were
used to fund operations of the Company. During the second quarter of 2000, the
company exchanged $2,699,095 of the convertible debentures for 4,398,599 shares
of Company common stock.

We made the above mentioned issuances and sales in reliance upon Section
4(2) and Rule 506 of Regulation D of the 1933 Act. We believed that Section 4(2)
and Rule 506 of Regulation D were available because sales were made without
general solicitation or advertisement. We believe that each purchaser was
accredited or sophisticated enough to evaluate the merits of the investment. All
shares of common stock were issued with a restrictive legend.

Item 5. Other Information

Executive Compensation

Rich McBride, C.E.O. was placed on a yearly salary of $52,000 as of February 7,
2000.

James R. Cox, Treasurer/Secretary received a salary increase from $28,600 to
$37,200 as of March 21, 2000.

Lock-up Agreement

On April 17, 2000 the Company entered into a pooling lock up agreement
with the following parties holding 921,000 shares of restricted stock held for
over one year from the original reverse merger with Gopher, Inc.

Bon Temps Roule Inc. 230,000 shares
Gregory Fox 120,000 shares
Jason Fox 110,000 shares
Tuscano Investments 195,000 shares
John J. Doria 100,000 shares
Calvin Mitchel 100,000 shares
Catherine Kaier 5,000 shares
Joeseph Horshel 6,000 shares
Ronald Glickman 5,000 shares

The agreement restricts the sale of stock during the period from April
2000 through April 2001 to 1/12th of the total holdings of each individual. The
stock is held with the Company's transfer agent and an opinion letter is
required each month for release of the shares.

Item 6. Exhibits and Reports of Form 8-K.

EXHIBIT
(a) NUMBER DESCRIPTION

11.1 Computation of Earnings per Share
27 Financial Data Schedule for the quarter Ended June 30,
2000 (SEC only)

(b) Reports on Form 8-K

None.

SEAVIEW VIDEO TECHNOLOGY, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of St.
Petersburg, State of Florida on April 9, 2001.

SEAVIEW VIDEO TECHNOLOGY, INC.

By: _________________________
George S. Bernardich III
Chief Executive Officer

By: _________________________
J.R. COX
Secretary and Treasurer

EXHIBIT INDEX

EXHIBIT
NUMBER EXHIBIT DESCRIPTION

11.1 Computation of Per share Earnings.

27 Financial Data Schedule for the quarter June 30, 2000 (for SEC use
only)