-----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, AshlzEAHxy71kdvs5P+7D4sFIiFzZ7P83piogrqHnrG2S0w+XefDtceAUPewQD2k G4eDKQfhysphBoIAbbwgWA== 0000950147-00-000277.txt : 20000223 0000950147-00-000277.hdr.sgml : 20000223 ACCESSION NUMBER: 0000950147-00-000277 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000222 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: 549970 BUSINESS ADDRESS: STREET 1: 2010 E UNIVERSITY DR STREET 2: SUITE 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 12/31/99 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 December 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) 216 South Alma School Rd, Suite 10, Mesa, Az 85210 -------------------------------------------------- (Address of Principal Executive Offices) (602) 462-5900 ---------------------------------------------------- (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 February 14, 2000, Diamond Equities, Inc. Registrant had 7,880,099 shares of its $0.001 par value common stock outstanding. DIAMOND EQUITIES, INC. FORM 10-Q SECOND QUARTER 2000 INDEX PART I. FINANCIAL INFORMATION PAGE ---- Balance Sheets - December 31, 1999 and June 30, 1999 ............ 3-4 Statements of Operations for the Three and Six Months Ended December 31, 1999 and 1998 ................................ 5 Statement of Cash Flows - for the Three and Six Months Ended December 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 December 31, June 30, 1999 1999 ---------- ---------- (Unaudited) (Audited) CURRENT ASSETS Cash $ 313,893 $ 210,035 Receivables Trade accounts, net of allowance for doubtful accounts of $13,606 at December 31, 1999 and June 30, 1999 61,283 199,338 Interest Receivable 15,939 15,939 Inventory 97,088 184,143 Other Receivable -- 205,000 Note Receivable-current portion -- 274,535 Prepaid expenses 4,929 37,744 ---------- ---------- Total Current Assets 493,132 1,126,734 ---------- ---------- PROPERTY AND EQUIPMENT 709,038 1,535,717 ---------- ---------- OTHER ASSETS Notes Receivable-noncurrent portion 364,898 224,388 Other Assets 146,300 147,963 ---------- ---------- Total Other Assets 511,198 372,351 ---------- ---------- $1,713,368 $3,034,802 ========== ========== See accompanying notes to financial statements. 3 DIAMOND EQUITIES, INC. Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY December 31, June 30, 1999 1999 ----------- ----------- CURRENT LIABILITIES Accounts payable $ 158,605 $ 330,329 Accrued expenses 16,932 62,409 Customer deposits 8,809 8,809 Accrued preferred dividends 195,897 196,774 Capital lease obligation-current portion 13,154 33,435 Current portion Long term debt -- 165,007 ----------- ----------- Total Current Liabilities 393,397 796,763 ----------- ----------- LONG-TERM LIABILITIES Capital lease obligations 3,181 4,378 Notes payable -- 114,787 ----------- ----------- Total Long-term liabilities 3,181 119,165 ----------- ----------- Total Liabilities 396,578 915,928 ----------- ----------- MINORITY INTEREST 44,814 241,203 ----------- ----------- STOCKHOLDERS' EQUITY Convertible preferred stock, $.001 par, 6% cumulative, non-voting, series A; 18,000 shares authorized; 350 shares issued and outstanding, liquidation preference of $350,000 1 1 Convertible preferred stock, non-voting, non-cumulative series B; 20,000 shares authorized; 15,900 shares issued and outstanding 1,605,540 1,605,540 Common stock, $.001 par value; 50,000,000 shares authorized; 7,880,099 shares issued and outstanding 7,880 7,366 Additional paid-in capital 3,851,913 4,130,066 Accumulated deficit (4,193,358) (3,865,302) ----------- ----------- Total Stockholders' Equity 1,271,976 1,877,671 ----------- ----------- $ 1,713,368 $ 3,034,802 =========== =========== See accompanying notes to financial statements. 4 DIAMOND EQUITIES, INC. Statements of Operations (Unaudited)
For the Three Months Ended For the Six Months Ended December 31, December 31, --------------------------- --------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Net sales $ 113,911 $ 305,683 $ 344,473 $ 703,304 Less cost of sales 64,671 171,075 211,291 320,652 ----------- ----------- ----------- ----------- Gross profit 49,240 134,607 133,182 382,651 Selling, general and administrative expenses 186,193 290,812 432,902 683,393 ----------- ----------- ----------- ----------- Operating income or (loss) (136,953) (156,205) -- (300,742) ----------- ----------- ----------- ----------- Other income and (expenses), net 32,506 (6,372) 11,717 (7,076) Loss on investment in GoProfit (45,500) -- 158,900 28,686 Minority Interest 8,659 20,702 21,487 -- ----------- ----------- ----------- ----------- Net income (loss) before income taxes (141,288) (141,875) (425,417) (279,132) Provision for income taxes -- -- -- -- ----------- ----------- ----------- ----------- Net loss $ (141,288) $ (141,875) (425,417) (279,132) =========== =========== =========== =========== Net income or (loss) per share $ (.02) $ (.03) (06) (06) =========== =========== =========== =========== Weighted Average Shares Outstanding 7,366,099 4,666,099 7,366,099 4,666,099 =========== =========== =========== ===========
See accompanying notes to financial statements. 5 DIAMOND EQUITIES, INC. Statements of Cash Flows (Unaudited) For the Three Months Ended December 31, ----------------------- 1999 1998 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(425,417) $(279,132) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 106,514 113,681 Minority interest (21,487) (36,670) Unrealized loss on Investment 158,900 -- Changes in operating assets and liabilities (net of acquisition) (Increase) decrease in Receivables - trade and other 150,185 25,207 Inventory 87,055 30,027 Prepaid expenses and other 1,699 3,328 Increase (decrease) in Accounts payable (53,669) 25,102 Accrued liabilities (2,938) (1,270) --------- --------- Net Cash Used in Operating Activities (842,000) (119,727) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (45) (12,867) Cash paid for notes receivable -- 49,236 Cash received for notes receivable 216,875 -- Cash paid for acquisition of Accurate -- (375,000) --------- --------- Net Cash Provided by Investing Activities $ 216,830 $(338,631) --------- --------- See accompanying notes to financial statements. 6 DIAMOND EQUITIES, INC. Statements of Cash Flows (Continued) (Unaudited) For the Six Months Ended December 31, ------------------------- 1999 1998 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes payable $(186,478) $ 40,000 Cash received for issuance of preferred stock 180,000 85,685 Cash adjustment for equity method of recording-GoProfit (107,336) -- --------- --------- Net Cash Provided (Used) by Financing Activities (113,814) (45,685) --------- --------- INCREASE (DECREASE) IN CASH 103,858 (504,043) CASH, BEGINNING OF PERIOD 210,035 600,231 --------- --------- CASH, END OF PERIOD $ 313,893 $ 96,188 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for income taxes $ -- $ 9,973 ========= ========= Cash paid for interest $ 574 $ -- ========= ========= See accompanying notes to financial statements. 7 Diamond Equities, Inc. December 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 three months ended December 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, 1999. 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. CHANGE IN ACCOUNTING POLICY During the quarter ended September 30, 1999, the GoProfit.com board of directors authorized the issuance of common stock to employees and officers of GoProfit pursuant to a stock option plan, thus removing Diamond Equities as a major shareholder. Diamond currently owns 37% of the outstanding stock of GoProfit.com and records its investment in Goprofit using the equity method. In November 1999 other shareholders of GoProfit gave Diamond their proxy vote, thus giving Diamond voting control over GoProfit. 8 Diamond Equities, Inc. December 31, 1999 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 $313,893 at December 31, 1999 compared to $210,035 at June 30, 1999. The increase in cash was due primarily to the receipt of cash from Note Receivables of $221,000 and the issuance of Precision Plastics preferred stock for $180,000. The Company also used approximately $165,000 to settle the debt to the sellers of Accurate Thermoplastics and with the change of reporting the Company's investment with GoProfit.com using the equity method instead of consolidating the entities, $107,000 in cash was removed from the books. The Companies current cash requirements are for the operations of the Company, the purchase of inventory and payments on commitments and debt. During the two quarters ended December 31, 1999, the Company has received $23,000 from the Tru-Tel Note receivable, per the payment agreement, however, the Company has been notified that Tru-Tel is going through a reorganization bankruptcy and therefore collection on this note becomes questionable. 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 2000. The Company's principal commitments at December 31, 1999 consists of obligations under capital leases and operating leases for facilities. RESULTS OF OPERATIONS The Company generated revenues from operations of $113,911 with cost of sales of $64,671, and a gross profit of $49,240, for the quarter ended December 31, 1999 as compared to revenues of $305,683 with cost of sales of $171,075 and gross profit of $134,607 for the same period last year. The decrease in sales is due to the decrease in operations in the plastic company, with the loss of some major customers. Selling, general and administrative expenses were $186,193 for the second quarter 2000 a decrease of $104,619 over the same period last year. The decrease is primarily due to the decrease in operations for the plastics company and for Diamond Equities. Management anticipates that general selling and administrative expenses will continue to remain constant. The Company incurred a loss of $(141,288) for the second quarter 2000 compared to a loss of $(141,875) for the same timely period a year ago. The Company recorded a 45,500 loss in connection with our investment in GoProfit.com, which is an unrecognized non-cash loss from recording our interest in their losses. Therefore the net loss for the current quarter is improved from that of a year ago. 9 Diamond Equities, Inc. December 31, 1999 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, however, the second quarter is typically the slowest quarter for Precision Plastics. PLAN OF OPERATIONS The Company's plan for 2000 is to acquire additional plastic operations and consolidate the operations for maximum efficiency and profit and/or increase revenues generated from our existing plastic company. The Company is also continuing to search for other viable business operations in the internet industry to enhance our current investment in GoProfit.com. The current management of the Company has become the new management of GoProfit.com, and therefore will be more involved in assisting GoProfit in obtaining it goals to become publically traded, and enhancing its website features. PART II OTHER INFORMATION ITEM 3(b) DEFAULTS UPON SENIOR SECURITIES The Company is 48 months in arrears ($194,023) as of February 14, 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 Diamond Equities, Inc. December 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: February 14, 2000 Diamond Equities, Inc. By: /s/ David Westfere --------------------------- David Westfere, CEO and Principal Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 U.S. DOLLARS 6-MOS JUN-30-2000 JUL-01-1999 DEC-31-1999 1 313,893 0 61,283 0 97,088 493,132 719,038 0 1,713,368 393,897 0 0 1,605,540 7,616 (341,180) 1,713,368 113,911 113,911 64,671 186,193 (45,500) 0 0 (141,288) 0 (141,288) 0 0 0 (141,288) (.02) 0
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