SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended December 31, 2000.
or
[ ] 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 0-22851
DIT VENTURES, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN
(State or jurisdiction of incorporation or organization)
38-2351253
(I.R.S. Employer Identification No.)
9420 Telstar Ave., Ste 211
El Monte, CA 91731
(626) 279-2689
(Registrant's telephone number, including area code)
(Former Address, 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 (or for such that the registrant was required to file such reports), and (2) has shorter period been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY.
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
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 practicable date.
As of December 31, 2000, approximately11,940,714 shares of the Registrant's Common Stock, $.01 par value, were outstanding.
As of December 31, 2000, no shares of the Registrant's Preferred Stock were outstanding.
Part I - Financial Information.
Item 1. Financial Statements.
DIT VENTURES, INC.
Financial Statements and Supplementary Information
December 31, 2000
DIT VENTUERS, INC.
Financial Statements and Supplementary Information
December 31, 2000
Table of Contents
Independent Auditor's Review Report
Financial Statements
Balance Sheet
Statement of Income
Statement of Stockholders' Equity
Statement of Cash Flows
Note to Financial Statements
Supplementary Information
Supplementary Schedule- Operating Expenses
EDWARD C. LEE, CPA
A Professional Corp.
9420 Telstar Avenue, Suite 101
El Monte, California 91731
Phone: (626) 453-8781Fax: (626) 453-8785
Stockholders and Board of Directors
DIT Ventures, Inc.
El Monte, CA 91731
We have reviewed the accompanying balance sheet of DIT Ventures, Inc.as of December 31, 2000 and the related statement of income, stockholders' equity, and cash flows for the quarter then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of DIT Ventures, Inc.
A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.
Our review was made primarily for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles. The supplementary data appearing as "Supplementary Schedule - Operating Expenses" is presented only for supplementary analysis purposes. This supplementary information has been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements, and we are not aware of any material modifications that should be made to these data.
____________________________
Edward C. Lee, CPA
El Monte, California, U.S.A.
February 21, 2000
1
DIT VENTURES, INC.
Balance Sheet
December 31, 2000
<table>
<tr>
| Dec. 31, 2000 | |
| ASSETS | |
| CURRENT ASSETS | |
| Cash & cash equivalent (Note 2) | $ 92,095 |
| Accounts receivable-net | 6,420 |
| Prepaid expenses and other (Note-3) | 2,767 |
| TOTAL CURRENT ASSETS | $ 101,282 |
| PROPERTY AND EQUIPMENT-NET (Note-4) | 84,631 |
| OTHER ASSETS | |
| Security deposit | 9,500 |
| TOTAL ASSETS | $ 195,413 |
</table>
The accompanying notes are an integral part of the financial statements.
2
DIT VENTURES, INC.
Balance Sheet
December 31, 2000
<table>
<tc>
| Dec. 31, 2000 | |
| LIABILITIES & EQUITY | |
| CURRENT LIABILITIES | |
| Notes payable - Current (Note-5) | $ 180,000 |
| Credit card-American Express | 1,700 |
| P/R tax & withholding payable | 9,273 |
| Accrued expenses (Note-6) | 39,290 |
| TOTAL CURRENT LIABILITIES | $ 230,263 |
| NONCURRENT LIABILITIES | - |
| STOCKHOLDERS' EQUITY (Note 7) | |
| Stock authorized: 70,000,000 Common | - |
| 30,000,000 Preferred | - |
| Stock issued: 11,940,714 common @ $0.001 par value | 11,941 |
| Additional paid-in capital | 270,762 |
| Accumulated deficit | (317,553) |
| Stockholders' equity - Net | (34,850) |
| TOTAL LIABILITIES & EQUITY | $ 195,413 |
</table>
The accompanying notes are an integral part of the financial statements.
3
DIT VENTURES, INC.
Statement of Income
For the Quarter Ended December 31, 2000
<table>
<tc>
| 3 mo. ended |
Dec. 31, 2000
Dec. 31, 2000
</table>
The accompanying notes are an integral part of the financial statements.
4
DIT VENTURES, INC.
Statement of Stockholders' Equity
December 31, 2000
<table>
<tc>
| Common Stock | Accumulated | |||
| Share | Value | Deficit | Total | |
| Balance, Oct. 1, 2000 | 4,300,000 | $ 4,300 | ||
| Additional stocks issued | 7,640,714 | 7,641 | 11,941 | |
| Additional paid in capital | 270,762 | 270,762 | ||
| Net loss for the year | ___ - | - | $ (317,553) | $ (317,553) |
| Balance | ||||
| Dec. 31, 2000 | 11,940,714 | $ 282,703 | ($317,553) | ($ 34,850) |
</table>
The accompanying notes are an integral part of the financial statements.
5
DIT VENTURES, INC.
Statement of Cash Flows
For the Quarter Ended December 31, 2000
<table>
<tc>
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| Net income for the period | $ (184,173) |
| Adjustments to reconcile net income to net cash | |
| Depreciation | 642 |
| Cash provided by (used for) changes in assets and liabilities | |
| Accounts receivable | (4,170) |
| Prepaid advertising | 10,833 |
| Prepaid rent | 2,815 |
| Prepaid legal service | 506 |
| Prepaid purchase-Domain names | 250 |
| Prepaid - other | (81) |
| Misc. deposits | (936) |
| Credit card- American Express | (2,942) |
| P/R tax &withholding payable | (3,439) |
| Accrued expenses & interest | 37,239 |
| NET CASH USED FOR OPERATING ACTIVITIES | (143,456) |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| Purchases of fixed assets | (11,812) |
| Security deposits | (2,000) |
| NET CASH USED FOR INVESTING ACTIVITIES | (13,812) |
| CASH FLOWS FROM FINANCING ACTIVITIES Proceeds of | |
| Proceeds of Issuance of common stock | 130,000 |
| Reduction of paid-in capital due to merger | (26,397) |
| Notes payable - Current | 20,000 |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 123,603 |
| NET INCREASE (DECREASE) IN CASH | (33,665) |
| Cash and cash equivalents, beginning of period | $ 125,760 |
| Cash and cash equivalents, end of period | $ 92,095 |
| Supplementary disclosure of cash flow information: | |
| Cash paid: Interest expense | $ - |
| Income taxes | $ - |
</table>
The accompanying notes are an integral part of the financial statements.
6
DIT VENTURES, INC.
Notes to Financial Statements
December 31, 2000
Note-1 Organization and Summary Significant Accounting Policies
Organization and Purpose
MEDLA888.COM was incorporated on June 1, 2000 in the state of Nevada and authorized to do intrastate business in the state of California on June 13, 2000. On August 14, 2000, the name of the corporation was changed to DIT Ventures, Inc. DIT Ventures, Inc. is mainly engaged in the business of website design & hosting, financial information translating, and the network link of business to business and business to consumers. On September 28, 2000, the company entered into a merger agreement with Paramount Casino Corporation, a corporation incorporated in the state of Michigan. This agreement and plan of merger was effective on October 15, 2000. Paramount Casino Corporation is the surviving company and the post-merger Board of Directors has resolved to change the company's name from Paramount Casino Corporation to DIT Ventures, Inc.
Significant Accounting Policies
The company uses the accrual method of accounting for financial reporting and income tax purpose by which assets and liabilities are recorded and revenues and expenses are recognized in the period in which they are earned and incurred.
A. Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
B. Income Taxes
In February 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for Income Taxes. SFAS 109 requires a change from the deferred method of accounting for income taxes of APB Opinion No. 11 to the asset and liability method of accounting for income taxes. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. 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 accompanying notes are an integral part of the financial statements.
7
C. Revenue Recognition and SAB 101 Impact
Revenue generating agreements are on a fee for service basis. The services provided are approved once payment has been received. Completion of services on our active site Mybiz888 takes less than 7 days to complete. So, revenue is immediately recognized.
Revenue Recognition
Quote888
Online transaction revenues will be derived primarily from subscription fees, banner ads, licencing fees, and news dissemination fees. All of these revenue streams will be recognized when paid as the services for which payment has been received have either been performed or will be performed shortly (monthly subscription dues are paid one month in advance).
Barter Revenue
To date, advertising revenue, which includes barter advertising, has accounted for less than 1% of the company's revenue. The company will record barter revenue only to the extent that specific objective evidence existed demonstrating the fair value of benefits given and received. As a result, most barter transactions will be judged to have no value or associated revenue.
Provisions for doubtful accounts and authorized credits to sellers are provided at the time of revenue recognition based upon the company's historical experience.
The company has reviewed Securities and Exchange Commission Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," and its effect on the recognition of listing and featured item fee revenue. The company believes the effect of SAB 101 on historical fee revenue is insignificant, DIT Ventures, Inc. has adopted the provision for licencing fee revenue. As such, future licences fee revenue, if any, in Quote888 will be recognized ratably over the period of the licencing agreement.
Note-2 Cash and Cash Equivalents
<table>
| Cash on hand | $ 524 |
| United National Bank #3026469 (Business Checking) | 91,571 |
| Total | $ 92,095 |
</table>
The accompanying notes are an integral part of the financial statements.
8
Note-3 Prepaid Expenses and Other
<table>
| Prepaid purchase - Domain names | $ 1,750 |
| Prepaid legal fee | 936 |
| Prepaid - other | 81 |
| $ 2,767 |
</table>
Note-4 Property and Equipment
Property and equipment additions are recorded at cost. Maintenance, repairs, and renewals are expensed, and additions and improvements are capitalized. Depreciation is computed using straight-line methods over the estimated useful lives of asset ranging from 5-7 years.
<table>
| Furniture & fixture | $ 11,954 |
| Computer - PC's | 27,443 |
| Computer - Servers | 37,320 |
| Office equipment | 1,052 |
| Computer software | 9,433 |
| Less accumulated depreciation and amortization | (2,572) |
| Total fixed asset - Net | $ 84,631 |
</table>
Note-5 Notes Payable and Related Party Transaction
<table>
| Loan from Richard Manley-A | $ 20,000 |
| Loan from WGN Enterprises, Ltd.-B | 140,000 |
| Loan from Greg Amor - C | 20,000 |
| $ 180,000 |
</table>
A. This loan was executed on July 12, 2000 with maturity date June 30, 2001. Interest rate is stated at 8% per annum, compounded monthly.
B. This loan was executed on August 30, 2000 with maturity date June 30, 2001. Interest rate is stated at 8% per annum, compounded monthly.
Upon maturity, the above two creditors have the right, at their options, to require the company to convert all of the unpaid principal balance and accrued interest into shares of the common stock of the company at a deemed price per share of $0.875. In the event of prepayment, the conversion amount is up to $20,000 for creditor A and $40,000 for creditor B.
The accompanying notes are an integral part of the financial statements.
9
C. There is no formal loan agreement signed by both parties and no interest is accrued. Greg Amor holds 375,000 or 3.14% of total outstanding shares of the company.
Note-6 Accrued Expenses
<table>
| Accounting fee | $ 7,133 |
| Advertising | 6,500 |
| Outside service | 2,200 |
| Consulting fee | 7,000 |
| Legal fee | 11,611 |
| Interest expenses | 4,702 |
| Office expenses | 144 |
| $ 39,290 |
</table>
Note-7 Ownership
The company has only one class of common stock and authorized to issue 100,000,000 shares. As of December 31, 2000, total outstanding shares are 11,940,714.
<table>
Name of stockholder | # of shares | % of ownership |
| Amitesh Damudar | 869,800 | 7.29% |
| Barrington Simon | 285,714 | 2.39% |
| Bob Greagh | 25,000 | 0.21% |
| Capital General Corp | 388,800 | 3.25% |
| Eric Lo | 205,000 | 1.72% |
| Frank Callaghan | 375,000 | 3.14% |
| Glen Watson | 850,000 | 7.12% |
| Greg Amor | 375,000 | 3.14% |
| J. Puglia | 750,000 | 6.29% |
| Kenneth Yeh | 5,864,700 | 49.12% |
| Kylie Chan | 275,000 | 2.32% |
| Qingkuang Yang | 205,000 | 1.72% |
| Richard Manley | 900,000 | 7.53% |
| Robert Creagh | 150,000 | 1.25% |
| Tony Blake | 180,000 | 1.50% |
| Ultrapedic Bed | 213,500 | 1.78% |
| 282 Charities | 28,200 | 0.23% |
| 11,940,714 | 100.00% |
</table>
The accompanying notes are an integral part of the financial statements.
10
Note-8 Cost of Revenue and Website Development Cost
<table>
| Website development cost | |
| Internet fees-T1 | $ 13,321 |
| Salaries & wages | 94,745 |
| Payroll taxes | 9,474 |
| Depreciation | 2,572 |
| Website development cost-Total | 120,112 |
| Marketing costs | 46,867 |
| Domain name fee | 250 |
| $ 167,229 |
</table>Website Development Costs
Computer software costs that are incurred in the preliminary project stage have been expensed as incurred. In future years once an application reaches the development stage, internal and external costs will be capitalized. Such costs include but are not limited to external direct costs and services, payroll and payroll related costs, and interest costs incurred while developing internal use software. All capitalized costs will be amortized on a straight-line basis.
Note-9 Provision for Income Tax
No income tax provision is recorded for the period end. According to California's R&TC Secs. 23153 & 23221 and AB10(CH.99-64), new C corporations formed or qualified to do business in California on or after January 1, 2000, are exempt from the minimum franchise tax during the first two years of business. These corporations are exempt from the minimum franchise tax prepayment to the Secretary of State (SOS) and from the second year's minimum franchise tax, which is paid as the first estimated tax payment.
There are no material disclosures required under SFAS 109 (see Note-1).
Note-10 Lease Commitment
The company lease its office space under one noncancelable operating lease. The commencement date is June 1, 2000 and will expire on May 31, 2002. future minimum lease payments are as follows:
<table>
| 31-Dec-01 | $ 33,777 |
| 31-May-02 | 14,074 |
| Total minimum lease payments | $ 47,851 |
</table>
The accompanying notes are an integral part of the financial statements.
11
Note-11 Merger and Basis of Presentation
On September 28, 2000, a company, Paramount Casino Corporation, entered into an agreement and plan of merger to acquire all of the issued and outstanding shares of DIT Ventures, Inc. ("DIT") in exchange for 4,300,000 common shares of Paramount (the "Agreement"). Certain of Paramount's significant shareholders also entered into an agreement with the shareholders of DIT to sell a total of 6,119,500 common shares of Paramount held by them to the shareholders of DIT.
Completion of these transactions occurred on October 15, 2000 and Paramount changed its name to DIT Ventures, Inc. As the shareholders of DIT obtained control of Paramount on completion of these transactions, the Agreement will be accounted for as a capital transaction, effectively as if DIT had issued shares to acquire Paramount, followed by a recapitalization. Under recapitalization accounting, the historical assets, liabilities, revenues and expenses will be those of DIT, with Paramount's assets, liabilities, revenues and expenses consolidated effective October 15, 2000. These financial statements gives effect to completion of the Agreement and the assumptions described below.
The balance sheet as of September 30, 2000 has been prepared based on the balance sheet of each of Paramount and DIT as at October 15, 2000 and gives effect to the Agreement as at October 15, 2000. As the shareholders of DIT obtained control of Paramount on completion of the Agreement, the Agreement has been accounted for in this balance sheet as a capital transaction by DIT, followed by a recapitalization. DIT's additional paid-in capital has been reduced by Paramount's deficiency in assets at October 15, 2000 (detail below). In addition, as Paramount's common shares have a par value of $0.001 per share, DIT's additional paid-in capital has also been reduced by the $7,500 par value of Paramount's previously issued share capital.
The accompanying notes are an integral part of the financial statements.
12
<table>
| Share capital and additional paid-in capital | ||||
Sharecapital
Additional
paid-incapital
additional
capital and
paid-in capital
paid-in capital to reflect
the par value of Paramount'soutstanding shares as a
result of DIT's reverse
takeover of Paramount
(note 12)
paid-in capital to reflect
the shareholders' deficiency
of Paramount as a result of DIT's reverse takeover ofParamount (note 12)
proposed to be issued to Acquire shares of DIT
(note 12)
balance, 10/15/2000
</table>
Note-14 Loss Per Share
The calculations of loss per share in the information for the period ended December 31, 2000 is based on the weighted average number of common shares of post-merger DIT that would have been outstanding for the period from July 1, 2000 to December 31, 2000.
The accompanying notes are an integral part of the financial statements.
13
DIT VENTURES, INC.
Supplementary Schedule-Operating Expenses
December 31, 2000
<table>
| 3 mo. ended Dec. 31, 2000 | Dec. 31, 2000 | |
| A. Marketing expenses | ||
| Printing | $ 0 | $669 |
| Total marketing expenses | 669 | |
| B. General & Administrative expenses | ||
| Accounting | 3,875 | 3,875 |
| Advertising | 10,833 | 10,833 |
| Bank charge | 35 | 245 |
| Credit card fees | 180 | 180 |
| Dues and subscriptions | 2,593 | 2,975 |
| Entertainment | 110 | 110 |
| Equipment rental | 80 | 80 |
| Site information delivery | 1,120 | 1,120 |
| Delivery expenses | 140 | 140 |
| Health and dental insurance | 634 | 2,086 |
| Liability insurance | 0 | 850 |
| Insurance-other | 0 | 771 |
| Legal & professional | 25,627 | |
| Consulting fee | 7,000 | 20,586 |
| Licenses and fees | 1,500 | 2,000 |
| Office expense & supplies | 418 | 3,401 |
| Postage | 560 | 933 |
| Rent | 8,444 | 19,703 |
| Repairs and maintenance | 775 | 965 |
| Salaries and wages | 31,369 | 48,192 |
| Outside service | 7,200 | 7,520 |
| Alarm & security | 0 | 175 |
| Taxes-payroll | 2,205 | 3,906 |
| Telephone | 696 | 2,400 |
| Travel | 1,181 | 1,181 |
| Total general & administrative expenses | 106,575 | 166,898 |
| Total operation expenses | $ 106,575 | $ 167,567 |
</table>
The accompanying notes are an integral part of the financial statements.
14
Edward C. Lee, CPA
February 21, 2001
Mr. Kenneth Kang Yeh, CEO/President
DIT Ventures, Inc.
9420 Telstar Avenue, Suite 211
El Monte, CA 91731
Re: Filing of Form 10-SQ
Dear Mr. Yeh:
We have reviewed the financial statements of DIT Ventures, Inc. (DITV) for the quarter ended December 31, 2000. We hereby grant our consent for DITV to include our review report (dated February 21, 2001) in DITV's filing of Form 10-SQ.
Very truly yours,
______________________
Edward C. Lee, CPA
El Monte, California
Item 2. Management's Discussion and Analysis or Plan of Operation.
The information required by this Item is incorporated as part of the Company's financial statements.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DIT VENTURES, INC.
Date: February 22, 2001
_____________________________
Kenneth Yeh
