-----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, E9pIZLhtMRJxpuQ/hZFzSRKAvM0TP8KDVWHYnKGzfwZH6Y8vfJC/OzKui8eVdSl1 SZkh0xXcFnRMTk4fpssXow== 0000950147-98-000374.txt : 19980514 0000950147-98-000374.hdr.sgml : 19980514 ACCESSION NUMBER: 0000950147-98-000374 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAMOND EQUITIES INC CENTRAL INDEX KEY: 0000923150 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] 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: 98618547 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 3RD QUARTERLY REPORT 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, 1998 - ----- 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 April 30, 1998, Diamond Equities, Inc. Registrant had 4,666,099 shares of its $0.001 par value common stock outstanding. Page 1 of 11 sequentially numbered pages FORM 10-Q THIRD QUARTER 1998 Diamond Equities, Inc. ---------------------- INDEX PART I. FINANCIAL INFORMATION PAGE ---- Balance Sheets - March 31, 1998 and June 30, 1997................. 3-4 Statements of Operations for the Three and Nine Months Ended March 31, 1998 and 1997 .................................... 5 Statement of Cash Flows - for the Nine Months Ended March 31, 1998 and 1997 . ................................... 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 Page 2 Diamond Equities, Inc. Balance Sheets ASSETS ------
March 31, June 30, ---------- ---------- 1998 1997 ---------- ---------- (Unaudited) (Audited) CURRENT ASSETS Cash $ 873,868 $1,586,983 Receivables Trade accounts, net of allowance for doubtful accounts of $0 at March 31, 1998 and June 30, 1997 35,588 20,292 Interest receivable -- 1,900 Note Receivable-current portion 15,750 41,123 Certificate of Deposit 250,000 -- ---------- ---------- Total Current Assets 1,175,206 1,650,298 ---------- ---------- PROPERTY AND EQUIPMENT 24,882 20,980 ---------- ---------- OTHER ASSETS Investment 5,000 -- Notes Receivable-noncurrent portion 811,250 770,127 Deposits 1,000 2,106 ---------- ---------- Total Other Assets 817,250 772, 233 ---------- ---------- $2,017,338 $2,441,405 ========== ==========
See accompanying notes to financial statements. 3 Diamond Equities, Inc. Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
March 31, June 30, ----------- ----------- 1998 1997 ----------- ----------- CURRENT LIABILITIES Accounts payable $ 112,246 $ 112,812 Accrued expenses 4,964 59,940 Sales tax payable -- 88,098 Accrued preferred dividends 194,023 194,023 ----------- ----------- Total Current Liabilities 311,233 454,873 ----------- ----------- Total Liabilities 311,233 454,873 ----------- ----------- 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 1,817,591 -- Common stock, $.001 par value; 50,000,000 shares authorized; 4,666,099 shares issued and outstanding 4,666 4,666 Additional paid-in capital 2,582,282 2,582,282 Accumulated deficit (2,698,434) (2,418,007) ----------- ----------- Total Stockholders' Equity 1,706,105 1,986,532 ----------- ----------- $ 2,017,338 $ 2,441,127 =========== ===========
See accompanying notes to financial statements. 4 Diamond Equities, Inc. Statements of Income (Unaudited)
For the Three Months For the Nine Months Ended March 31, Ended March 31, -------------------------- -------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Net sales $ -- $ -- -- -- Less cost of sales -- -- -- -- ----------- ----------- ----------- ----------- Gross profit -- -- -- -- Selling, general and administrative expenses 83,625 115,719 292,080 166,340 ----------- ----------- ----------- ----------- Operating income or (loss) (83,625) (115,719) (292,080) (166,340) ----------- ----------- ----------- ----------- Other income and (expenses), net 11,925 36,927 44,849 63,089 Income (loss) from Discontinued Operations -- -- (33,196) (1,117) Gain on sale of assets -- -- -- 1,856,985 ----------- ----------- ----------- ----------- Net income (loss) before income taxes (71,700) (78,792) (280,427) 1,752,617 Provision for income taxes -- -- -- -- ----------- ----------- ----------- ----------- Net income or (loss) before preferred dividends (71,700) (78,792) (280,427) 1,752,617 Preferred dividends -- (27,264) -- (81,792) ----------- ----------- ----------- ----------- Net loss attributed to common stock (71,700) $ (106,056) (280,427) 1,670,825 ----------- ----------- ----------- ----------- Net income or (loss) per share $ (.02) $ (.02) (.06) .32 ----------- ----------- ----------- ----------- Weighted Average Shares Outstanding 4,666,099 4,666,099 4,666,099 5,073,432 ----------- ----------- ----------- -----------
See accompanying notes to financial statements. 5 Diamond Equities, Inc. Statements of Cash Flows (Unaudited) For the Nine Months Ended -------------------------- March 31, -------------------------- 1998 1997 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss (280,427) $ 1,670,825 Adjustments to reconcile net loss to net cash used in operating activities: Gain on sale of equipment -- (1,856,985) Depreciation and amortization 4,443 81,306 Changes in operating assets and liabilities (Increase) decrease in Receivables - trade and other (13,396) (57,434) Prepaid expenses and other (1,000) 3,657 Increase (decrease) in Accounts payable (566) (95,232) Accrued liabilities (143,074) 80,152 ----------- ----------- Net Cash Used in Operating Activities (434,020) (173,711) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (8,345) (45,610) Proceeds form sale of assets -- 1,711,250 Cash paid for notes receivable (15,750) (143,291) Cash paid for investments (5,000) -- Cash paid for certificate of deposit (250,000) -- ----------- ----------- Net Cash Provided by Investing Activities $ (279,095) $ 1,522,349 ----------- ----------- See accompanying notes to financial statements. 6 Diamond Equities, Inc. Statements of Cash Flows (Continued) (Unaudited)
For the Nine Months Ended March 31, 1998 1997 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes payable $ -- $ (246) Proceeds from SB2 offering returned to shareholders -- (458,250) ----------- ----------- Net Cash Provided (Used) by Financing Activities -- (458,496) ----------- ----------- INCREASE (DECREASE) IN CASH (713,115) 890,142 CASH, BEGINNING OF PERIOD 1,586,983 694,293 ----------- ----------- CASH, END OF PERIOD $ 873,868 $ 1,584,435 =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for income taxes $ -- $ -- =========== =========== Cash paid for interest $ 915 $ 178 =========== ===========
See accompanying notes to financial statements. 7 Diamond Equities, Inc. March 31, 1998 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, 1998, 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, 1997. 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. 8 Diamond Equities, Inc. March 31, 1998 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources of the Company - ---------------------------------------------- On November 15, 1996, the Company sold its payphone base and all related equipment, contracts, automobiles and nearly all furniture & fixtures to Tru-Tel Communications, L.L.C. for $1,711,250 in cash and a note receivable of $811,250. The Company assigned the office and warehouse lease to the buyer and moved its operations to another location in Tempe, Arizona. Since November 15, 1996, the Company has been winding down operations relative to the payphone business and has been involved in searching for new business ventures and operations to acquire in different industries. Because the Company discontinued its operations in the pay telephone industry in fiscal year 1997, the results of operations will greatly differ from that of fiscal year 1998. Cash and cash equivalents totaled $873,868 at March 31, 1998 compared to $1,586,983 at June 30, 1997. The decrease in cash was due primarily to general and administrative expenses exceeding the interest income, which is the only form of revenue the Company currently has, as well as the payment of sales tax liabilities and attorneys fees related to the discontinued operations. The Company also purchased an 18 month certificate of deposit for $250,000, which is security on a line of credit with a bank of $235,000. Long term cash requirements, other than normal operating expenses, are anticipated for the acquisition or start up of new business operations. 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 1998. The Company's principal commitment at March 31, 1998 consists of an obligation under an operating leases for facilities. Results of Operations - --------------------- Revenues of $11,925 from interest income for the third quarter of 1998 decreased slightly from the same period last year due to diminishing cash. The only form of revenues currently being recorded is the interest on the cash accounts. Because the note receivable is in default, no interest income is being recorded. Selling, general and administrative expenses were $83,625 for the third quarter 1998, a decrease of $32,094 over the same period last year. The decrease is primarily due to a decrease in legal fees and other expenses related to the change of operations. Management anticipates that general selling and administrative expenses will continue to remain constant until new business operations begin. The Company incurred a loss of $(71,700) for the third quarter 1998 compared to a loss of $(106,056) for the same timely period a year ago. The Company no longer has a preferred dividend burden due to the exchange of Series A Preferred Stock for Series B non-cumulative preferred stock. This results in an additional net income of $27,264 available to common shareholders every quarter. 9 Diamond Equities, Inc. March 31, 1998 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 1998 is to acquire or begin operations in a different industry. Management is currently reviewing several potential acquisition candidates in various industries, and hopes to secure operations in the near future. PART II OTHER INFORMATION Item 3(b) Defaults Upon Senior Securities - ----------------------------------------- The Company is 24 months in arrears ($194,023) as of May 1, 1998, 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. 10 Diamond Equities, Inc. March 31, 1998 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 11, 1998 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-30-1998 JUL-01-1997 MAR-31-1998 1 873,868 5,000 35,588 0 0 1,175,206 24,882 0 2,017,338 311,233 0 0 1,817,591 4,666 (116,152) 2,017,338 0 0 0 292,080 (44,849) 0 0 (280,427) 0 (280,427) 0 0 0 (280,427) (.06) 0
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