-----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, MnZ1Ke2medPiEwUbl6j4hkXegpW7Na0ycNIgfE35nfFZflNo1wPYgB1Du5K69VrK B/D79a8LA47mkrjBtApg2w== 0001179350-03-000070.txt : 20030519 0001179350-03-000070.hdr.sgml : 20030519 20030519152859 ACCESSION NUMBER: 0001179350-03-000070 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIATECT INTERNATIONAL CORP CENTRAL INDEX KEY: 0000319124 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 820513109 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-10147 FILM NUMBER: 03710457 BUSINESS ADDRESS: STREET 1: 875 SOUTH INDUSTRIAL PARKWAY CITY: HEBER STATE: UT ZIP: 84032 BUSINESS PHONE: 435-654-4370 MAIL ADDRESS: STREET 1: 875 SOUTH INDUSTRIAL PARKWAY CITY: HEBER STATE: UT ZIP: 84032 FORMER COMPANY: FORMER CONFORMED NAME: SAN DIEGO BANCORP DATE OF NAME CHANGE: 19931124 10QSB 1 f03m10q.txt DIATECT 03 MARCH 10QSB SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-QSB [X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended: March 31, 2003 [ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from _____________ to ____________ Commission File Number 0-10147 ------- DIATECT INTERNATIONAL CORPORATION ---------------------------------------------- (Name of Small Business Issuer in its charter) California 82-0513109 - ------------------------------- -------------------------- (State or other jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 875 S Industrial Parkway, Heber City, Utah 84032 ----------------------------------------------------- (Address of principal executive offices and Zip Code) (435) 654-4370 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 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. (1) Yes X No (2) Yes X No --- --- --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, No Par Value 46,736,667 - --------------------------- ---------------------------- Title of Class Number of Shares Outstanding as of March 31, 2003 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DIATECT INTERNATIONAL CORP. FINANCIAL STATEMENTS (UNAUDITED) The accompanying financial statements have been prepared by the Company, without audit, in accordance with the instructions to Form 10-QSB pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore may not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made. These financial statements should be read in conjunction with the accompanying notes, and with the historical financial information of the Company. 3 Diatect International Corp. Consolidated Balance Sheets March 31, 2003 December 31, (Unaudited) 2002 ------------ ------------ ASSETS CURRENT ASSETS Cash $ 3,442 $ 4,509 Cash in escrow 400,000 Accounts receivable 356,954 352,643 Employee receivable 3,016 1,270 Prepaid interest 22,781 108,048 Prepaid royalties 2,486 Prepaid expenses 48,488 56,399 Inventories 1,189,313 1,259,149 ------------ ------------ Total Current Assets 1,626,479 2,182,018 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT Mining property 940 940 Land 150,000 Building 725,500 Equipment 435,043 420,839 Less accumulated depreciation (121,247) (97,142) ------------ ------------ Total Property, Plant and Equipment 1,190,236 324,637 ------------ ------------ OTHER ASSETS Deposits 28,500 Investment in EPA labels 1,736,322 1,736,322 ------------ ------------ Total Other Assets 1,736,322 1,764,822 ------------ ------------ TOTAL ASSETS $ 4,553,038 $ 4,271,477 ============ ============ See condensed notes to interim consolidated financial statements. 4 Diatect International Corp. Consolidated Balance Sheets March 31, 2003 December 31, (Unaudited) 2002 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 1,331,824 $ 1,400,610 Accounts payable - related party 11,877 37,710 Line of credit 100,410 351,048 Lease payable 16,792 18,067 Interest payable 339,277 310,434 Settlements payable 181,357 181,357 Other accrued liabilities 166,067 190,951 Royalty payable 113,623 113,623 Notes payable 2,228,415 2,132,181 ------------ ------------ Total Current Liabilities 4,489,643 4,735,981 ------------ ------------ LONG-TERM DEBT Mortgage note payable 847,000 Lease payable-net of current portion 3,392 ------------ ------------ 847,000 3,392 ------------ ------------ COMMITMENTS AND CONTINGENCIES 134,739 134,739 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) Common stock, no par value; 100,000,000 shares authorized; 46,736,667 and 45,013,414 shares issued and outstanding 15,391,958 14,971,327 Common stock subscribed (20,000) (20,000) Stock options 36,070 36,070 Accumulated deficit (16,326,373) (15,590,032) ------------ ------------ Total Stockholders' Equity (Deficit) (918,345) (602,635) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 4,553,038 $ 4,271,477 ============ ============ See condensed notes to interim consolidated financial statements. 5 Diatect International Corp. Consolidated Statements of Operations Three Months Ended March 31, 2003 2002 (Unaudited) (Audited) ----------- ----------- REVENUES $ 130,453 $ 46,260 COST OF SALES 67,639 20,817 ----------- ----------- GROSS PROFIT 62,814 25,443 ----------- ----------- OPERATING EXPENSES Salaries, wages and benefits 211,551 99,968 Executive compensation 53,503 48,462 Registration fees 9,964 11,025 Depreciation and amortization 24,105 10,970 Legal and professional fees 41,771 24,821 Contract labor 36,870 34,867 Advertising and promotion 68,610 19,636 Travel and promotion 43,190 12,836 Bad debts 45,000 17,450 Other operating expense 69,065 95,122 ----------- ----------- Total Operating Expenses 603,629 386,002 ----------- ----------- OPERATING LOSS (540,815) (360,559) ----------- ----------- OTHER INCOME (EXPENSES) Interest expense (195,682) (63,684) Miscellaneous 156 75 ----------- ----------- Total Other Income (Expenses) (195,526) (63,609) ----------- ----------- LOSS BEFORE INCOME TAXES (736,341) (424,168) INCOME TAXES - - ----------- ----------- NET LOSS $ (736,341) $ (424,168) =========== =========== BASIC AND DILUTED NET LOSS PER SHARE $ (0.02) $ (0.01) =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED 46,187,058 37,916,550 =========== =========== See condensed notes to interim consolidated financial statements. 6 Diatect International Corp. Consolidated Cash Flow Statements
For the Three Months Ended March 31, 2003 2003 2002 (unaudited) (audited) ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (736,341) $ (424,168) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 24,105 10,970 Issuance of stock for services 5,040 Changes in assets and liabilities: Cash in escrow 400,000 - Accounts receivable (4,311) 12,236 Employee receivable (1,746) - Prepaid interest 85,267 10,276 Prepaid royalties (2,486) 245 Prepaid expenses 7,911 - Inventories 69,836 (723,835) Deposits 28,500 - Accounts payable (68,786) 559,908 Accounts payable - related parties (25,833) 5,652 Bank overdraft - 5,448 Interest payable 69,186 32,843 Other accrued liabilities (24,884) 34,667 ------------ ------------ NET CASH FLOWS USED BY OPERATING ACTIVITIES (174,542) (475,758) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (889,704) (28,486) ------------ ------------ NET CASH FLOWS USED BY INVESTING ACTIVITIES (889,704) (28,486) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock for cash 3,000 413,565 Proceeds from stock subscriptions - 50,000 Payment of settlements - (2,000) Proceeds from lines of credit _ 5,030 Net payment of lease payable (4,667) - Payments of line of credit (250,638) - Net payments of notes payable (400,516) (22,500) Net proceeds from mortgage payable 847,000 - Net proceeds from notes payable 869,000 60,000 ------------ ------------ NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 1,063,179 504,095 ------------ ------------ NET INCREASE IN CASH (1,067) (149) CASH AT BEGINNING OF PERIOD 4,509 888 ------------ ------------ CASH AT END OF PERIOD $ 3,442 $ 739 ============ ============
See condensed notes to interim consolidated financial statements. 7 Diatect International Corp. Consolidated Cash Flow Statements
Three Months Ended March 31, 2003 2003 2002 (Unaudited) (audited) ------------ ------------ SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest expense paid $ 6,884 $ - Income taxes paid $ - $ - NON-CASH FINANCING ACTIVITIES: Issuance of common stock for debt and interest $ 412,591 $ 256,695 Issuance of stock for services $ 5,040 $ -
See condensed notes to interim consolidated financial statements. 8 Diatect International Corp. Notes to the Interim Consolidated Financial Statements March 31, 2003 NOTE 1 BASIS AND PRESENTATION The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements for the period ended March 31, 2003. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company's financial position and results of operations. Operating results for the three-month period ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. GOING CONCERN UNCERTAINTY These financial statements have been prepared on a going concern basis, which contemplated the realization of assets and the satisfaction of liabilities in the normal course of business. For the three months ended March 31, 2003, the Company sustained a net loss of $736,341. As of March 31, 2003 the Company's accumulated deficit was $16,326,373. These factors, among others indicate that the Company may be unable to continue as a going concern for a reasonable period of time. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is contingent upon its ability to obtain additional financing, and to generate revenue and cash flow to meet its obligations on a timely basis. 9 Diatect International Corp. Notes to the Interim Consolidated Financial Statements March 31, 2003 NOTE 2 - ORGANIZATION AND DESCRIPTION OF BUSINESS Diatect International Corp's principal business activities primarily consist of developing and marketing pesticide products. Diatect International has its principal business located in Heber, Utah with Manufacturing, Marketing, Sales, and Corporate offices located there. At the beginning of 2003 Diatect International has abandoned all dormant shells to include Enviro-Guard Corporation, Diatect International, Inc. and D.S.D. NOTE 3 INVENTORIES Inventories at March 31, 2003 and December 31, 2002 consist of the following: March 31, December 31, 2003 2002 ----------- ----------- Raw Materials $ 72,696 $ 78,169 Packaging Materials 11,720 12,874 Finished Goods 1,104,897 1,168,106 ----------- ----------- Total $ 1,189,313 $ 1,259,149 =========== =========== Finished goods consist of different forms of application of pesticide products. 10 Diatect International Corp. Notes to the Interim Consolidated Financial Statements March 31, 2003 NOTE 4 NOTES PAYABLE All of the Company's notes payable are considered short-term. At March 31, 2003 notes payable consisted of the following: Creditor and Conditions March 31, 2003 - ----------------------- -------------- Balance, December 31, 2002 $ 2,132,181 RCK, LLC, (a shareholder of the Company) unsecured, interest at 12%, dated September 28, 2001, due on demand, paid by return of funds and issuance of stock. (600,000) Kyle Baird, (a shareholder of the Company), unsecured, interest at 10%, dated July 5, 2002, due on September 30, 2002, paid by issuance of stock. (74,000) Ronald Davis, (a shareholder of the Company), unsecured, interest at 10%, dated July 10, 2002, due on December 31, 2002, paid by issuance of stock. (79,250) Hyrum L. & Helen Mae Andrus, (shareholders of the Company), interest at 8%, dated April 24, 2002, due on June 24, 2002, delinquent, partial payment by issuance of stock. (516) George Ann Pope Charitable Trust, (a shareholder of the Company), secured by inventory security agreement whereby $0.25 of each dollar of gross proceeds from the sale of inventory is allocated and set aside until the note is paid, interest at 10%, dated January 15, 2003, due on July 15, 2003. 750,000 Stonefield, Inc., secured by deed of trust, interest at 13% with monthly payments of interest only commencing February 17, 2003, dated January 15, 2003, due on January 17, 2005. 847,000 LaJolla Cove Investors, Inc., (a shareholder of the Company), unsecured, interest at 8%, interest only payments monthly, convertible to common stock, dated March 19, 2003, due on demand. 100,000 -------------- Total $ 3,075,415 -------------- Less current portion 2,228,415 -------------- Total long term notes payable $ 847,000 ============== 11 Diatect International Corp. Notes to the Interim Consolidated Financial Statements March 31, 2003 NOTE 5 LINES OF CREDIT At July 19, 2002, the Company secured a $250,000 line of credit with Zion Bank. As of December 31, 2002, the Company has borrowed $250,000. This line of credit was secured by Company assets and carries a stated interest rate of 6.75%, and paid in full during January 2003. NOTE 6 LITIGATION From time to time the Company is subject to various legal proceedings that arise in the ordinary course of business. Although the Company cannot predict the outcome of these proceedings with certainty, the Company does not believe that the disposition of these matters will have a material adverse affect on its financial position, results of operations or cash flows. The status of pending legal proceedings against the Company is detailed in Part II, Item 1. Legal Proceedings, later in this report. NOTE 7 COMMON STOCK During the three months ended March 31, 2003, the Company issued 1,680,253 shares of its common stock for debt and interest valued at $412,591 and 28,000 shares of its common stock to directors for services valued at $5,040. The stock was valued at it fair market value on the date of issuance. The Company also sold 15,000 shares of its common stock for $3,000 during the same fiscal period. NOTE 8 STOCK OPTIONS There were no options exercised or issued during the quarter ended March 31, 2003. NOTE 9 COMMITMENTS AND CONTINGENCIES Purchase of Facilities During October 2001, the Company relocated both its office and operating facilities to Heber City, Utah. During January 2003, the Company completed negotiations for the purchase of its new facilities at a total cost of $875,500. Terms of the financing agreement call for approximately $9,200 in interest only payments at 13% annual interest rate. (See Note 4.) Under terms of the original agreement, the Company occupied the facilities with no charge until closing. Other terms of the agreement called for a down payment of $28,500, escrow deposit in the amount of $384,000 and a letter of credit in the amount of $412,500. The Company paid the down payment of $28,500 during the fourth quarter of the year ended December 31, 2001 and this amount is reflected in the attached financial statements as deposits at December 31, 2002. During the same period, the Company also secured cash in the amount of $400,000, which was considered restricted for an escrow deposit. These funds were returned to the lender in January 2003. The Company has occupied the facilities since October 10, 2001. NOTE 10 SUBSEQUENT EVENTS Subsequent to the date of these financial statements, the Company sold 15,000 shares of its common stock for $3,000 cash. Other subsequent stock issuances included 105,105 shares of common stock for debt and interest, 23,000 shares for services, and 35,000 shares as loan incentives. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary Statement Regarding Forward-looking Statements - --------------------------------------------------------- This report may contain "forward-looking" statements. Examples of forward- looking statements include, but are not limited to: (a) projections of revenues, capital expenditures, growth, prospects, dividends, capital structure and other financial matters; (b) statements of the plans and objectives of our management or Board of Directors; (c) statements of future economic performance; (d) statements of assumptions underlying other statements and statements about us and our business relating to the future; and (e) any statements using the words "anticipate," "expect," "may," "project," "intend" or similar expressions. Three Months ended March 31, 2003 compared to March 31, 2002 - ----------------------------------------------------------------------------- During the three months ended March 31, 2003 and 2002, our revenues were $130,453 and $46,260, respectively, with costs of sales of $67,639 and $20,817 with gross profits of $62,814 and $25,443. The increase in our revenues in the three months ended March 31, 2003 compared to 2002 is attributable to a number of factors. First, new business has been created with the addition of various key employees. Second, our base business has been broadened with the inclusion of several new distribution networks that are aggressively placing product in their customer base. Third, we have agreements with two new independent distributors, which service the commercial sector in strategic areas. We feel the 282 percent increase in revenues for the three months period ended March 31 2003 compared to the same periods in the preceeding year is indicative of our future prospects for the balance of the fiscal year. Operating Expenses. For the three months ended March 31, 2003 and 2002, total operating expenses were $603,629 and $386,002, respectively, for total operating losses of $540,815 and $360,559. The operating expenses for the three months ended March 31, 2003 were considerably higher than the prior year period for a number of reasons. We had large increases in salaries, wages and benefits of $111,583, which is attributed to increased sales and administrative staffing needed to meet current demands. The majority of this increase is related to the increased frequency of shipping, promotions and advertising (especially due to increased marketing efforts), as well as additional consulting and travel expenses related to those marketing efforts. The company has also taken a conservative stance to account for related bad debts. Other Income and Expenses. Other income/expenses showed a loss of $195,526 and $63,609, respectively, for the three months ended March 31, 2003 and 2002. Interest expense was the primary component of other expenses for the respective periods and was higher in 2003 due to increased borrowing and debt service. For the three months ended March 31, 2003 and 2002, we had net losses of $736,341 and $424,168 and loss per share was $0.02 and $0.01, respectively. 13 Liquidity and Capital Resources - ------------------------------- In the three months ended March 31, 2003, our liquidity was substantially derived from the issuance of notes payable and the issuance of common stock for cash. Cash used in operations far exceeded revenues. We hope that the remainder of the fiscal year will demonstrate the effectiveness of our marketing and distribution efforts and we continue to anticipate increases in market development and sales, which will bring us closer to profitability. At March 31, 2003, we had current assets of $4,553,038, consisting primarily of accounts receivable of $356,954, prepaid interest of $22,781, and $1,189,313 in inventory. We had current liabilities of $4,489,643, consisting primarily of accounts payable of $1,331,824, a line of credit of $100,410, interest payable of $339,277, and current notes payable of $2,228,415, plus other accrued liabilities of $166,067, and other long term debt of $847,000, consisting of the mortgage note payable for the purchase of our facilities. Accordingly, we have a working capital deficit of $2,863,164. At March 31, 2003, we had property, plant and equipment totaling $1,190,236, net of depreciation, and other assets of $1,736,322, consisting primarily of our investment in EPA labels. Cash used in operations for the quarter ended March 31, 2003 was $174,542. In 2003, our operations have been funded primarily by proceeds from notes payable. Cash used by investing activities for the quarter ended March 31, 2003 totaled $889,704 for the purchase of property plant, and equipment. Cash flows from financing activities for the quarter ended March 31, 2003 totaled $1,063,179, consisting of cash received from the sale of common stock, proceeds from newly issued notes payable, offset by payments on previously issued notes payable and line of credit. Non-cash financing activities included the issuance of common stock for notes payable and interest totaling $412,591, and issuance of common stock for services totaling $5,040. On December 27, 2002 Diatect International entered into a 8% convertible debenture to raise operating capital for the ongoing operations of the company. The principal sum of the debenture is $150,000 of which $100,000 was advanced to the company, $50,000 was placed into escrow for the legal and registration fees associated with the potential registration. This registration will include convertible debenture, exercisable warrants. On April 22, 2003, Diatect International received a draft of the registration statement. In reviewing the statement it was determined that revisions needed to be made. It is Diatect International's intent to reduce the number of shares registered and to maintain the exercise option. At the time of this filing Diatect International Board of Directors has not ratified the registration statement. As a result of our past production increase and delays in scheduled shipments, we currently have over 700,376 finished product units with a potential wholesale value of over $4.1 million. We are continuing to market our products into the wholesale; retail and commercial outlets which is expected to continue to absorb the excess inventory. During the balance of fiscal year 2003, we may seek working capital from several sources, including the equity markets and private investors. 14 We believe that in the remainder of fiscal 2003, we will increase revenues from operations as we continue to move from the development stage of our products to a full marketing and sales program. We have initiated an aggressive marketing campaign to the thousands of small retail stores within Southern region. With our current inventory and our ability to manufacture 60,000 + units per day, we believe we can rapidly meet the potential demand for large quantities of our products. We believe two of the largest and most important markets for our products are the agricultural and home and garden markets. When we obtain sufficient working capital, we plan to conduct affordable advertising and maintain a sales force that can effectively reach these markets. Accordingly, although we anticipate more revenue from the sale of our products than we have received in the past, we will not be as profitable without additional cash to fund our advertising and marketing campaign. Impact of Inflation - ------------------- We do not anticipate that inflation will have a material impact on our current or proposed operations. Seasonality - ----------- We have not experienced significant variations in sales of products attributable to seasonal factors. ITEM 3. CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures. We believe our disclosure controls and procedures (as defined in Sections 13a-14(c) and 15d- 14(c) of the Securities Exchange Act of 1934, as amended) are adequate, based on our evaluation of such disclosure controls and procedures on May 14,2003. (b) Changes in internal controls. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not aware of any other threatened litigation against it or its subsidiaries. ITEM 2. CHANGES IN SECURITIES During the three months ended March 31, 2003, we issued 1,680,253 shares of our common stock valued at $412,591 in payment of notes payable and accrued interest. We have sold 15,000 shares of our common stock for cash proceeds of $3,000. We issued 28,000 shares of our common stock to directors and others for services valued at $5,040. The above securities have been issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. (See Consolidated Statements of Stockholders' Equity in the interim financial statements and the notes thereto.) ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. 15 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8_K (a) Exhibits. Exhibit 99 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (b) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: DIATECT INTERNATIONAL CORPORATION Date: May 19, 2003 /s/ Jay W. Downs, Chief Executive Officer, Principal Accounting Officer /s/ Margie Humpries, Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Date: May 19, 2003 /s/ Jay W. Downs, Director /s/ David Andrus, Director /s/ Michael McQuade, Director /s/ M. Stewart Hyndman, Director /s/ Frank S. Priestley, Director /s/ Robert E. Crouch, Director 16 CERTIFICATIONS I, Jay W. Downs, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Diatect International Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function); a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control. 6. The registrant's other certifying officers and I have indicated in this quarterly report whether of not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 19, 2003 /S/Jay W. Downs Principal Executive Officer Principal Financial Officer EX-99 3 f03mex99.txt 03 MARCH CERTIFICATION Exhibit 99 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Diatect International Corporation (the "Company") on Form 10-QSB for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on this date (the "Report"), I, Jay W. Downs, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /S/ Jay W. Downs Jay W. Downs Chief Executive Officer and Chief Financial Officer May 19, 2003 -----END PRIVACY-ENHANCED MESSAGE-----