UNITES STATES
SECUTITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September, 30, 1998
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSACTION PERIOD
FROM _______ TO ______
Commission File No. 000-23051
Wireless Data Solutions, Inc.
(Exact Name of registrant as specified in its charter)
Utah 93-0734888
(State of Incorporation) (I.R.S. Employer Identification No.)
1016 Shore Acres Drive
Leesburg, FL 34748
(Address of principal executive offices)
(352) 323-1295
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
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. Yes X No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Not Applicable
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicates the number of shares outstanding of each of the
Registrant's classes of common stock, as of the practicable date:
There was 10,182,124 shares of the Issuer's common stock
outstanding as of December 31, 1998.
<PAGE>
WIRELESS DATA SOLUTIONS, INC.
FORM 10-K
INDEX
PART I
ITEM 1. Business Overview
ITEM 2. Business Issues
ITEM 3. Directors and Executive Officers of the Company
ITEM 4. Management's Discussion and Analysis of Financial
Condition and Result of Operations
Liquidity and Capital Resources
Results of Operation
Other Disclosures
Financial Condition
Subsequent Events
ITEM 5. Market Price on Common Equity
ITEM 6. Year 2000 Compliance
ITEM 7. Changes in Accounting
ITEM 8. Independent Auditors Report
PART II
ITEM 9. Legal Proceedings
ITEM 10. Changes in Securities and Use of Proceeds
ITEM 11. Defaults Upon Senior Securities
ITEM 12. Submission of Matters to a Vote of Security Holders
ITEM 13. Other Information
ITEM 14. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
ITEM 1. BUSINESS OVERVIEW
Wireless Data Solutions, Inc. develops and markets digital
wireless communications equipment for mobile fleet management in
the U.S. and foreign countries. The equipment is designed,
assembled, and sold by Dinet, a wholly owned subsidiary of the
company. It has sold units to a number of industry segments,
including ready-mix concrete suppliers, taxi-cab companies,
parcel delivery, vehicle towing, and public transportation. The
large majority of its sales have been to the ready-mix segment.
It transmits data using two-way radio, cellular, and CDPD
(cellular digital packet data).
Its principal office is located at 1016 Shore Acres Drive,
Leesburg, Florida. Its wholly owned subsidiary, Dinet, is
located in Oceanside, California, where it maintains a production
and sales facility. It also has a sales and accounting office in
St. Cloud, Minnesota.
ITEM 2. BUSINESS ISSUES
In fiscal 1998, approximately 75 percent of the company's
sales came from the ready-mix segment with a large portion of the
balance coming from the taxi-cab segment. 95.5 percent of its
business was done in the United States. The remaining 3.5
percent was done in Canada. The company maintains relationships
with four suppliers of software, who provide leads in the ready-
mix market. In some instances they will sell mobile data units
directly to the customers, along with their software. In other
instances, they will provide leads where they have existing
software systems. The company also sells through dealers or
direct from Dinet to the end user.
In late fiscal 1998, the company started a project whereby it
will completely modify its mapping product in an effort to make
it more user friendly and more fully featured. Existing systems
will be upgraded and the new product will have sales potential to
existing customers. The new version will be completed in January
of 1999.
Market research done in late 1998 suggests there are a
number of other industry segments which could be a target for
mobile data terminal sales. The company is proceeding with plans
to identify the most logical candidates and contact them.
The technology market place is characterized by rapid change
and is very competitive. To respond to these changes it may be
necessary for the company to develop or purchase new technologies
and or form strategic alliances to remain competitive. There can
be no assurances that the company will be able to develop or
purchase the new technologies and or form the necessary strategic
alliances.
ITEM 3. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The management team is presently operating out of three different
areas of the country, which has been the case since inception.
Mike McLaughlin is at the WDS offices in Leesburg, Florida, Pat
Makovec is at the first satellite sales and accounting office in
St. Cloud, Minnesota, and Brian Blankenburg is President of Dinet
in Oceanside, California. This structure has worked well over
the years, and there have been some benefits from the exposure in
the different locations. It is anticipated that the second
satellite sales office will be opened in central Florida
Michael B. McLaughlin
As an officer and board member of WDS since December 1987,
he was mainly responsible for negotiating and funding the
acquisition of Dinet in 1988. Mr. McLaughlin is presently
Chairman, CEO, and President of the Company, as well as Secretary
and Chairman of the Board of Dinet. He is available to talk to members
of the investment community and shareholders. Mr. McLaughlin believes in
delegation of authority, while maintaining continual involvement
in the Company's direction and important decisions. His
background is mainly in the securities business. He is the second
largest WDS shareholder.
Brian B. Blankenburg
Mr. Blankenburg was elected as a Director of the Company in
June, 1997 and was named President of Dinet in September 1998.
Mr. Blankenburg is a partner in the Business Development Group
(BDG), which provides consulting services in the areas of
strategic planning, sales, and marketing, management,
acquisitions, funding, market research, due diligence and
computer analysis. BDG has offices in Seattle, Milwaukee,
Minneapolis, and Baltimore, the latter of which is managed by Mr.
Blankenburg. Prior to joining BDG, from January, 1993 to
October, 1996, Mr. Blankenburg served as Executive Vice
President, and later President, of Hudson Industries, Mr.
Blankenburg led the strategic repositioning of that company's
business and the doubling of sales in four years. Prior to that
time, Mr. Blankenburg held various management positions with
International Multifoods, Beatrice, Green Giant and Hormel
Company. He is a 1971 graduate of the University of Minnesota,
where he received a B.A. in advertising. His continuing
education has included the Beatrice Executive Marketing School at
the J.L. Kellogg Graduate School of Business, Northwestern
University, as well as studies at the University of Pennsylvania
Wharton School of Business. He is a 1.5 percent shareholder.
Patrick L. Makovec
Presently a Director and the Treasurer of WDS, Mr. Makovec
has been an officer and board member of the Company since
December 1987. He was instrumental in discovering Dinet, and
evaluating the Company prior to its acquisition by WDS. He was
also involved in the restructuring of Dinet to strengthen the
base from which to move the Company forward. He is a Director
and Treasurer of Dinet. Mr. Makovec is in daily communication
with the WDS and Dinet offices as he is in charge of all
accounting functions and records including preparation of work
papers for audits and quarterly financial statements, and is
involved in all important decisions. He was formerly the
President of Tel Corp. Leasing in St. Cloud, MN, and holds an
M.S. Degree in Accounting from the University of Wisconsin. He is
the third largest shareholder of WDS.
ITEM 4. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS
Except for the historical information contained herein, the
following discussion contains forward looking statements that
involve risks and uncertainties. The Company's actual results
could differ materially from those discussed here. Factors that
could cause or contribute to such differences include, but are
not limited to, those discussed in this section.
Liquidity and Capital Resources
The company's current assets totaled $834,400, a $251,000
decrease from September 30, 1997. The decreases is principally
attributable to the $277,331 loss incurred in fiscal 1998. The
revenues for the same period, compared to 1997, were $889,000
lower. That is reflected in the accounts receivable decline of
$296,000, the largest change in the components of working
capital. Those issues are summarized below, under result of
operations.
Management believes that cash flow from operations and
current cash balances will be sufficient to fund operations and
expenses for the near term. The company also has a "credit line"
to factor receivables available from Brian Watts. Mr. Watts is a
director of Dinet. At year end, approximately $122,000 was owed
to Brian Watts.
Management believes that to achieve the desired growth, they
will have to pursue equity financing, which will allow them to
pursue new product and new markets.
Results of Operations
Revenues for the year were down approximately $889,000. To
management's best knowledge, no significant orders were lost to
competition. It is believed that 1998 results were principally
due to the heavy concentration and dependence on the ready-mix
industry. The Data-Mate is sold to work with an existing
software system or as part of a new software system. The company
has historically worked closely with four major software
suppliers. Those companies have been conducting Beta tests of
their new dispatching software in 1998 with limited introduction
of new products. In September of 1998 the Board of Directors of
Dinet elected Brian Blankenburg as President in place of Pat
Makovec. Mr. Blankenburg's area of expertise is strategic
planning. His emphasis is on defining opportunities and pursuing
those with high growth.
A loss of $277,000 was recorded for the year due to the
decrease in revenues.
The company's cash position remained stable in spite of the
loss. The company sold 724,000 shares of common stock for
$250,000. The transaction netted $210,526, which added to the
cash position.
Accounts receivable decreased by $296,000, which reflects
the decreased sales volume.
The account,"due from related parties," increased by $41,000
due to charges for performing consulting services for Heartland
Diversified Industries and interest on its debt. Heartland
agreed to begin paying interest on $164,000 which is owed for the
sale of Bernard, Lee & Edwards, a brokerage firm which was owned
by Wireless Data Solutions. Interest was charged at a rate of 7
percent annum. Interest started on June 1, 1998 and $3,827 was
accrued on the books of WDS.
The prepaid service contract decreased by $14,000, which
reflects the amortization. A total of $212,000 was the value of
service contracts to be performed by ICS Communications and Brian
Blankenburg. The amount of $176,500 was paid to ICS, for which
they agreed to perform certain public relations services for
Wireless Data Solutions. The benefits are expected to last for a
period of five years. The amount of $35,500, which was the value
of the stock issued, was paid to Brian Blankenburg to perform
certain marketing services, the benefits of which are expected to
last over three years. The contract is being amortized over
three years. The total shares issued pursuant the service
contracts were 780,000. All shares were issued at fair market
value at the date of the grant.
In early 1998 Wireless Data Solutions formed an informal
alliance with Angellcom Communications, Inc., with the intent of
working with Angellcom and Radio Digital 220 to obtain 220 MHz
licenses in Mexico. Angellcom, a Santa Monica based company
owned 49 percent of Radio Digital 220, a Mexican company. Radio
Digital was to be the operating company in Mexico.
An employee of Angellcom had been issued stock to perform
research for the project related to providing 220 MHz for the
country of Mexico. The work was incomplete, as such no lasting
value could be determined. Therefore, the $12,000, which was
classified as a deferred service contract, was expensed.
A loan in the amount of $35,000 was provided to Angellcom
for working capital to pursue the agreement with RD220 and secure
the licenses necessary to do business in Mexico. The loan was
secured by ten 220 MHz licenses owned by Angellcom. The loan
bears an interest rate of 8 percent. The loan is expected to be
repaid in January of 1999.
A loan in the amount of $28,649 was provided to RD220.
RD220 is a Mexican corporation which had been formed for the
express purpose of obtaining and becoming the operating entity in
Mexico, which was to provide 220 MHz services. It was owned by
two Mexican nationals and Angellcom. Angellcom owns 49% of
RD220. The money was used for one-half of the deposit that was
required, by the Mexican equivalent of the U.S. FCC, to bid on
the 220 MHz licenses. Angellcom provided the other half of the
money for the deposit. The money is expected to be repaid in
January of 1999.
The accrued salaries and related expenses were reduced by
$123,000. Mike McLaughlin, president and CEO, took stock, with a
value of $34,500, to satisfy a portion of the obligation due him.
Mr. McLaughlin purchased 150,000 shares at a price of $0.23 per
share. The common stock, as quoted on the OTC bulletin board,
was $0.21 to $0.25 at the time of the transaction and the shares
were issued with a restrictive legend. Brian Watts, then
general manager of the wholly owned subsidiary, Dinet, agreed to
purchase stock for his entire share of accrued salaries and
related expenses, totaling $52,750. The stock issued bears a
restricted legend. Brian Watts purchased 188,396 shares at a
price of $0.28 per share. The market value of the Company's
freely trading shares was $0.27 to $0.29 at the time of the
transaction. In addition to the transaction described above Mr.
McLaughlin purchased 50,000 shares of common stock at $0.20 per
share, which was in exchange for $10,000 accrued salaries and
expenses. The price of the stock on that date was $0.19 to
$0.21, with a fair market value of $0.20. The issued shares are
restricted. The related taxes were also reduced by $25,000
because of previous over-accrual and this amount is included
in the $123,000.
Mr. Makovec, treasurer of WDS converted $6,000 of expenses
into 30,000 restricted shares of stock. The price of the stock
at the time of the transaction was $0.19 to $0.21 and was issued
at $0.20 per share.
Shares outstanding increased by 1,997,444. Stock issued for
service contracts was 855,000 shares. Stock issued as a result
of a private placement was 724,000 shares. Stock issued to
cancel debt to officers amounted to 418,000 shares.
In addition, 34,500 stock options were issued to Mike
McLaughlin, President and CEO of Wireless Data Solutions, as an
incentive to convert accrued salaries and expenses to common
stock. The options have an exercise price of $0.23. They were
issued on 3/31/98 and expire on 3/12/08. Shares issued under the
options would bear a restrictive legend. Mike McLaughlin was
also issued 10,000 warrants to purchase common stock at $0.20 per
share. They expire on 6/23/08. The warrants were issued as an
incentive to purchase stock in exchange for $10,000 in debt due
Mr. McLaughlin by the company.
Brian Watts, then general manager of Dinet, the Company's
wholly owned subsidiary, was issued 52,571 warrants as an
incentive to convert accrued salaries and expenses to common
stock. The warrants have an exercise price of $0.28. They were
issued on 4/16/98 and expire on 4/15/03.
Brian Blankenburg was issued 100,000 warrants as an incentive
to perform certain marketing services. The warrants have an
exercise price of $0.28. They were issued on 4/16/98 and expire
4/15/03.
Tim Stevenson, an employee of Wireless Data Solutions'
subsidiary Dinet, was issued 20,000 warrants as a key person.
4,000 warrants per year can be exercised over a period of 5
years. Should he leave the company prior to the time any
warrants become eligible to be exercised, those warrants will be
terminated. The warrants have an exercise price of $0.31 and
they were issued on 4/18/98 and expire 4/22/03.
Jack Augsback and Associates were issued 100,000 warrants for
their role in completing the funding in January 1998. The
warrants have an exercise price of $1.00. They were issued on
4/28/98 and expire on 4/27/03. All warrants were issued at fair
market value or above.
Pat Makovec, Treasurer or Wireless Data Solutions, was
issued 6,000 warrants, to purchase common stock, as an incentive
to convert money due him, for expenses, to stock. The warrants
are exercisable at $0.20 per share until June 22, 2008.
Other Disclosures
In late September of 1998, the last day prior to the
deadline for depositing money for eligibility to bid on the
Mexican 220 MHz licenses, (see discussion of loan to Angellcom
and RD220 in Management's Discussion and Analysis of Financial
Condition above,) more money was needed to be placed on deposit
with the Mexican government. The money was required because of a
change in bidding strategy. The change would have allowed RD220
to bid on all the regional licenses or a nationwide license,
depending upon the direction taken by the competition. The money
previously deposited by Angellcom and Wireless Data Solutions
would have only permitted bidding on a nation wide license or
some of the regional licenses. The money was not available
through Angellcom or Wireless Data Solutions. Pat Makovec,
Treasurer of Wireless Data Solutions, provided the money,
$11,000, from his personal funds after consulting with the Board
of Directors or Wireless Data Solutions. He was not given any
consideration for his contribution. He was to have his money
refunded, plus interest. A personal check was forwarded to
Angellcom because Angellcom was in charge of dealing with
RD220. In late December of 1998, Mr. Makovec received a check
from Angellcom for $11,000. The interest on the funds remains
unpaid.
Financial Condition
The cash holdings for the year increased approximately
$17,000 in spite of losses incurred for the year. The increase
resulted primarily from the issuance of shares of the company's
common stock for cash as referenced above under "Results of
Operations."
Subsequent Events
Since fiscal year end 190,000 warrants have been issued.
20,000 stock options have been exercised by Mr. Makovec and the
obligation to pay 71,700 shares of the company's common stock has
been incurred. The details have been set forth in the Auditor's
Report.
As referenced above under "Results of Operations," the
company along with Angellcom participated in an auction with
Radio Digital 220, a Mexican company, for the purpose of
acquiring a license or licenses for 220 MHz frequencies being
offered by the country of Mexico.
To participate, the Mexican government required a deposit,
and the company's contribution was a loan to RD220 for this
purpose for $28,649. Because of competitive elements, the bids
for licenses surpassed the company's financial ability to
continue, and therefore it was not successful in this endeavor.
The company's contribution is expected to be repaid in January.
ITEM 5. MARKET PRICE OF COMMON EQUITY
The company's common stock trades on the OTC Bulletin Board
under the symbol: SOLU. The price of the company's common stock at
the end of each quarter, for the past two fiscal years are as follows:
Quarter Ending High Bid Low Bid
12/31/96 1 1/8 3/4
3/31/97 3/4 5/8
6/30/97 1 1/2 7/16
9/30/97 15/16 7/8
12/31/97 15/16 25/32
3/31/98 21/32 3/16
6/30/98 3/8 3/16
9/30/98 1/4 5/32
ITEM 6. YEAR 2000 COMPLIANCE
With the exception of some mapping programs sold in the
past, all the company's products are year 2000 compliant. Those
mapping programs will be replaced with more recent versions which
are compliant. The new version is scheduled for completion in
mid-January of 1999.
The company will have to change some of its internal use
programs, such as its accounting software. The cost involved is
not considered to be a major issue.
ITEM 7. CHANGES IN ACCOUNTING
There were no changes in accounting for fiscal year 1998.
ITEM 8. Auditors Report
<PAGE>
James J. Harned
Certified Public Accountant
1316 Christopher Court
Bel Air, Maryland 21014
December 17, 1998
Independent Auditor's Report
I have audited the consolidated balance sheet of Wireless Data
Solutions, Inc. and subsidiaries as at September 30, 1998 and the
related consolidated statements of earnings, stockholders'
equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. These standards require that I plan and
conduct the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatements. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for that opinion.
In my opinion, the consolidated balance sheet and statements of
stockholders' equity (deficiency) referred to above present
fairly, in all material respects, the financial position of
Wireless Data Solutions, Inc. and Subsidiaries as at September
30, 1998 in conformity with generally accepted accounting
principles, applied consistently.
James J. Harned, C.P.A.
Bel Air, MD 2101
<PAGE>
FINANCIAL INFORMATION
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Balance Sheets
September 31, 1998, 1997, and 1996
ASSETS
9/30/98 9/30/97 9/30/96
Current Assets:
Cash and cash equivalents $100,752 $83,330 $92,879
Trade accounts receivable, net of
$6,000 estimated allowance for
doubtful accounts 465,390 761,586 332,640
Inventory 268,258 240,735 349,442
Total Current Assets 834,400 1,085,651 774,961
Fixed Assets:
Office fixtures and equipment 15,033 15,033 15,033
Leasehold Improvements 12,894 12,894 12,894
Sub-Total 27,927 27,927 27,927
Less: Accumulated Depreciation
and Amortization 27,927 27,927 27,927
Net Fixed Assets 0 0 0
Other Assets:
Deferred service contract 182,133 196,100 0
Loan to RD220 28,649 0 0
Due from Angellcom 35,000 0 0
Due from related parties 285,007 244,442 193,500
Security deposits 3,113 3,113 3,113
Total Other Assets 533,902 443,655 196,613
TOTAL ASSETS $1,368,302 $1,529,306 $971,574
LIABILITIES & STOCKHOLDERS' (Deficit)
Current Liabilities:
Trade accounts payable $306,676 $411,800 $182,825
Service contract payable in stock 2,900 196,400 0
Current portion of
other liabilities 71,549 12,924 56,719
Advance from Customers 8,750 17,969 9,800
Other accrued liabilities 102 62,343 13,395
Total Current Liabilities 389,977 701,436 262,739
Other Liabilities:
Accrued salaries, related payroll
taxes, reimbursable expenses
payable to officers 569,417 692,132 692,132
Less: Current portion 0 0 50,000
Total Other Liabilities 569,417 692,132 692,132
TOTAL LIABILITIES 959,394 1,393,568 904,871
Minority interests in
consolidated subsidiaries 20,000 20,000 20,000
STOCKHOLDERS' DEFICIENCY:
Preferred Stock, $.002 par value;
3,000,000 shares authorized;
no shares issued or outstanding 0 0 0
Common Stock, $.001 par value;
25,000,000 shares authorized;
8,164,720 shares issued and
outstanding at 9/30/97 &
10,162,124 at 9/30/98. 10,162 8,165 8,020
Common Stock options outstanding 11,250 11,250 11,250
Additional paid-in-capital 1,926,989 1,378,485 1,321,830
Deficit (1,510,720)(1,233,389)(1,245,624)
Sub-Total 437,681 164,511 95,476
Receivable from related entity for
sale of common stock (48,773) (48,773) (48,773)
Total Stockholders' Equity 388,908 115,738 46,703
TOTAL LIAB. & STOCKHOLDERS' EQUITY $1,368,302 $1,529,306 $971,574
See notes to financial statements.
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Earnings
For the Fiscal Years Ended, September 30, 1998, 1997, and 1996
9/30/98 9/30/97 9/30/96
REVENUES
Net product sales $1,466,337 $2,358,902 $2,049,580
Other Income 47,771 48,000 41,975
Total Revenues 1,514,108 2,406,902 2,091,555
COST OF SALES
Products 685,669 1,138,907 836,607
Total Cost of Sales 685,669 1,138,907 836,607
Gross Profit 828,439 1,267,995 1,254,948
Operating Expenses 1,080,701 1,148,042 879,021
Income before Interest (252,262) 119,953 375,927
Interest expense, net of
interest income 25,069 29,252 9,500
Income before taxes (277,331) 90,701 366,427
Provision for income taxes 0 9,114 3,838
Income from continuing
operations (277,331) 81,587 362,589
Discontinued Operations:
Loss from operations of
former subsidiary 0 0 11,069
Gain on sale of subsidiary 0 0 135,893
NET EARNINGS ($277,331) $81,587 $487,413
Basic loss per share ($.03) $.01 $.06
Weighted average shares
outstanding for the year 9,422,602 7,398,285
See notes to financial statements.
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Years Ended September 30, 1998, 1997 & 1996
9/30/98 9/30/97 9/30/96
Operating Activities:
Net Income ($277,331) $81,587 $487,413
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization (1,429)
Prior period adjustment (69,352) 5,535
Changes in Operating Assets and Liabilities:
(Decrease) Increase in accounts receivable 296,196 (346,946) (231,842)
(Decrease) Increase in inventory (27,523) 108,707 (159,566)
Decrease in other assets (196,100) 923 0
(Decrease) Increase in accounts payable (105,124) 228,974 89,770
(Decrease) Increase in advances
from customers (9,219) 8,169 4,800
(Decrease) Increase in other payables (197,116) 201,553 (11,876)
Decrease in deferred service contract 13,967 0 0
Net cash provided by operating activities (306,150) 16,592 183,728
Investing Activities:
Proceeds of miscellaneous assets 0 0 3,570
Financing Activities:
Increase in due from related parties (40,565) (132,942) (105,970)
Increase in due from Angellcom (35,000) 0 0
Increase in loan to RD220 (28,649) 0 0
Increase in security deposits 0 0 (195)
(Decrease) Increase in due to related
parties and related expenses (122,715) 50,000 (4,606)
Decrease in minority interest in subsidiaries (64,519)
Proceeds of issuance of common stock 550,501 56,800 1,114
Net cash provided by financing activities 323,572 (26,142) (174,176)
Net increase in cash 17,422 (9,550) 13,122
Cash at beginning of period 83,330 92,880 79,758
Cash at end of period $100,752 $83,330 $92,880
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Period Ended September 30, 1998
<TABLE>
<CAPTION>
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1997 $8,165 $11,250 $1,378,485 ($1,233,388) $164,512
Net Earnings for the period
ended September 30, 1998 (277,331) (277,331)
Issuance of common stock
Exercise of common stock options
Stock issued for service contracts 855 235,146 236,001
Private placement 724 210,526 211,250
Stock issued to cancel debt to officer 418 102,832 103,250
Sub-Total 10,162 11,250 1,926,989 (1,510,719) 437,682
Receivable from related entity
for sale of common stock (48,773)
Balance at September 30, 1998 $10,162 $11,250 $1,926,989 ($1,510,719) $388,908
</TABLE>
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Statement of Stockholders' Equity
For The Period Ended September 30, 1997
<TABLE>
<CAPTION>
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1996 $8,020 $11,250 $1,321,830 ($1,245,624 $95,476
Net Earnings for the period
ended September 30, 1997 81,587 81,587
Issuance of common stock 145 56,655 56,800
Prior period adjustment re: overaccrual (69,352) (69,352)
Sub-Total 8,165 11,250 1,378,485 (1,233,389) 164,511
Receivable from related entity
for sale of common stock (48,773)
Balance at September 30, 1997 $8,165 $11,250 $1,378,485 ($1,233,389) $115,738
</TABLE>
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1998
1. Organization and Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying financial statements include the accounts
of Wireless Data Solutions, Inc. (WDS) and the following
majority-owned subsidiaries:
Subsidiary % of Common Stock Owned
Distributed Networks, Inc. (Dinet) 100
Angellcom International, Inc. (ACI) 100
WDS, Dinet and ACI are hereinafter referred to as the
Company.
All significant intercompany accounts have been eliminated
in consolidation.
Organization
WDS, which is headquartered in Florida, has approximately
317 shareholders of record as of September 30, 1998. WDS's common
stock is traded on the OTC Bulletin Board. WDS files an annual
Form 10K with the Securities and Exchange Commission.
Dinet designs and markets fleet management and control
systems for the two-way mobile radio and cellular (CDPD) markets.
It's customers include ready-mix concrete suppliers, taxi-cab
companies, parcel delivery services, public transportation, etc.
From its offices in Oceanside, California, Dinet sells to
customers on a nationwide basis; since September 30, 1994, Dinet
has begun selling in the international market with clients in
Mexico, Canada, South America, and Malaysia.
ACI has been a dormant entry for several years and does not
have any significant operations.
Trade Accounts Receivable
Bad debts are reported using the allowance method.
Notes to Consolidated Financial Statements
September 30, 1998
Page 2
Inventories
Raw materials and the related component of work-in-progress
inventory are recorded at lower of cost or market using the
first-in, first-out method of accounting for inventory.
Property and Equipment
All equipment, fixtures and leasehold improvements have
been fully depreciated and amortized, and have no value on the
books of the Company.
Office Space
The Company maintains office and warehouse space in three
locations- Oceanside, California; St. Cloud, Minnesota; and
Leesburg, Florida. The Oceanside location houses the offices of
Dinet. The Company leases 5,200 square feet of office space for a
rent of $2,621 per month for yearly renewable lease periods. The
St. Cloud office is leased on a month to month basis at $250 per
month, and consists of 850 square feet. The Leesburg office,
which constitutes the Company headquarters, consists of 300
square feet, leased monthly for $100.
Income Taxes
Dinet files consolidated federal and separate California
income tax returns based on a February 28/29 fiscal years. There
are no significant differences in reporting revenue or expenses
for financial statement purposes vs. income tax purposes.
WDS has not filed tax returns as a result of incurring
substantial prior losses. The tax losses can be carried forward
for 15 years. The Company's net operating loss carryforwards
(NOL) are listed as follows:
Year
FYE 9-30-85 Loss $ 156,640
FYE 9-30-86 Loss 350,448
FYE 9-30-87 Loss 63,220
FYE 9-30-88 Loss 77,463
FYE 9-30-89 Loss 28,235
FYE 9-30-90 Loss 155,830
FYE 9-30-91 Loss 73,336
Notes to Consolidated Financial Statements
September 30, 1998
Page 3
FYE 9-30-92 Loss 60,078
FYE 9-30-93 Loss 162,125
FYE 9-30-94 Loss 90,040
FYE 9-30-95 Profit (208,147)
FYE 9-30-96 Profit (327,141)
FYE 9-30-97 Profit (81,587)
FYE 9-30-98 Loss 277,331
Total NOL Carryforward $877,871
2. Related Party Transactions and Relationships
A. The names and relationships of the related parties referred to
in these notes are set forth below:
Mike McLaughlin, CEO-President of WDS, Chairman and
Secretary of Dinet, President of ACI and approximately 11.3%
stockholder of WDS.
Pat Makovec, Dinet Treasurer, and WDS and ACI Treasurer and
Secretary and 8.6% stockholder of WDS.
Heartland Diversified Industries, Inc., a non-operating
entity which is 35% owned by Mr. McLaughlin and 15% by Mr.
Makovec. Heartland is a 17.8% stockholder of WDS. WDS holds a
note receivable from Heartland in the amount of $164,000. This
note is classified in the "Other Assets" section of the
balance sheet. The nature of this note arose from the sale of
Bernard, Lee & Edwards Securities, Inc. (BLE), a former
subsidiary of WDS. Interest is accrued at 7% per annum, beginning
June 1, 1998.
Brian Watts, Dinet vice-president and general manager and a
4.9% stockholder of WDS. Mr. Watts also factors the Company's
accounts receivable and has received approximately $24,000 in
fees for his factoring services.
Brian Blankenburg, director of WDS and Dinet, and president
of Dinet is a 1.3% shareholder of WDS.
Notes to Consolidated Financial Statements
September 30, 1998
Page 4
3. Preferred Stock
In a 1991/1992 private offering, Dinet sold 20 shares of
$1,000 face value preferred stock, each of which is convertible
into 800 shares of Dinet common stock. The 12% annual non-
cumulative dividend increased to 25% in January of 1995. This
preferred stock is callable upon payment of (1) an 18% premium
(which decreased to 15% in January, 1995) for each year the stock
is outstanding and (2) all accrued dividends; the call premium is
cumulative.
4. Stock Options and Warrants
Incentive Stock Options
Under an incentive stock option plan (ISOP) approved by
WDS's stockholders, 500,000 shares of common stock have been
authorized/reserved for issuance to officers and other key
employees. Exercise prices for options granted under the ISOP
shall generally not be less than the estimated fair market value
of the stock at the date of grant; option periods may not exceed
ten years. At September 30, 1998 options for 484,500 shares have
been granted. Options outstanding at that date are summarized as
follows:
Options Outstanding Exercise Price Expiration Date
20,000 .05 11/98
225,000 .05 12/99
34,500 .23 03/08
279,500
Warrants Issued
The company issued warrants as follows:
Name Date Issued Exp. Date Exercise Price # Warrants
Brian Watts 4-16-98 4-15-03 .28 52,751
B. Blankenburg 4-16-98 4-15-03 .28 100,000
Tim Stevenson 4-28-98 4-17-03 .31 20,000
Augsback & Assoc. 4-28-98 4-27-03 1.00 100,000
Pat Makovec 6-23-98 6-22-08 .20 6,000
M. McLaughlin 6-23-98 6-22-08 .20 10,000
Notes To Consolidated Financial Statements
September 30, 1998
Page 5
Management Incentive Earnings Plan
Under a management incentive earnings plan (MIEP), officers and
employees could receive warrants based on a minimum after tax
profit per share of common stock on a fully diluted basis which
would include any warrants to be issued. The MIEP will be in
existence for five years beginning on April 1, 1996 and ending on
March 31, 2001. The warrant exercise price is $.50 per share of
common stock. These officers and employees will receive warrants
in accordance with a schedule of after tax profits of $.06 per
share by March 31, 1997 graduated annually by $.06 per share
increments. Therefore, at the end of the fifth year- March 31,
2001, an after tax profit of $.30 per share must be achieved. At
the start of the plan no participant could receive more than
500,000 warrants, and the maximum number of warrants that could
be issued was 1,500,000. Two years of the plan have expired and
participants were not eligible for any warrants. At the end of
each year if the targeted earnings are not achieved, the number
of warrants available are reduced by 20%. The maximum number of
warrants that could be issued under the plan is now 900,000, and
the minimum that could be issued if the goal is reached in the
last year of the plan is 614,000. The life of the warrants if
issued is five years.
5. Commitments and Contingencies
The Company has entered into a golden parachute agreement under
which it is obligated to certain WDS officers- in the event of a
hostile or friendly takeover, or if any such officer is
terminated for any reason other than allegations of fraud- for
severance pay equal to one year's salary. Voluntary resignation
reduces the amount by 25%. All liabilities for bonuses, back
salaries and reimbursable expenses will be paid, and the cost of
benefits will be paid for one year.
6. Accrued Salaries and Expenses Payable
Over the course of five years, certain officers and key
employees elected to leave the major portion of their salaries
and expenses as a way of infusing additional cash in WDS thereby
enabling WDS to continue its growth pattern. Such salaries and
expenses will be disbursed as management determines, assuming
cash flow is adequate. All related salaries and tax items have
been expensed so that there will be no effect on future earnings.
Notes To Consolidated Financial Statements
September 30, 1998
Page 6
7. Geographic Areas
All sales are managed as a single enterprise. However, in
compliance with SFAS 14, "Financial Reporting for Segments of a
Business Enterprise", the United States is reported as a separate
geographic area.
Area 1998 1997
United States Revenues $ 1,461,831 $ 2,104,194
Americas Revenues 52,277 302,708
Asia Pacific Revenues 0 0
Totals $ 1,514,108 $ 2,406,902
8. Deferred Service Contract
In April of 1997, WDS entered into a consulting agreement whereby
the Consultants would function as public relations, provide
services relating to establishing WDS as a reporting company, and
other services not related to capital formation, and the company
would compensate the Consultants with cash and common stock. The
agreed upon compensation was $10,000 in cash and 300,000 shares
of common stock. The total value of the services to be provided
was $ 206,400. In October of 1997, the Company extended the
Consulting agreement to include an additional 150,000 shares of
common stock. And in the current year an additional 280,000
shares were issued. Total shares issued as at September 30, 1998
was 780,000 at a total value of $212,000.
9. Other Loans
RD220 is a Mexican corporation which has entered into an
agreement with WDS in an effort to obtain 220 MHz frequency
licensing in Mexico. The $28,649 represents part of a bid deposit
which was paid by WDS.
Angellcom owns 49% of RD220's stock. WDS loaned Angellcom $35,000
which was used for working capital. This loan is secured by 10 US
220 MHz licenses.
Notes to Consolidated Financial Statements
September 30, 1998
Page 7
10. Subsequent Events
Additional warrants were issued as follows:
Name Issue Date Exp. Date Exercise Price # Warrants
Nick Watts 10/30/98 10/29/03 .12 100,000
Tim Stevenson 10/30/98 10/29/03 .12 50,000
Name Date Issued Date Expired Exercise Price # Warrants
Jerry Kyckelhann 10/30/98 10/29/03 .12 40,000
In November of 1998, Mr. Makovec exercised 20,000 options at .05.
On September 14, 1998, Brian Blankenburg assumed the position of
President of Dinet. His compensation was set at $300 per day,
which was paid $100 in cash and $200 in common stock. The amount
of stock issued was determined by the fair market value of the
stock at the end of each week. Mr. Blankenburg is to receive
86,993 shares of stock- 15,293 shares for the period ended
September 30, 1998, and 71,700 shares for the first quarter of
fiscal year ended September 30, 1999. The stock will bear a
restrictive legend. The stock has been accrued but not issued.
<PAGE>
PART II
Item 9. Legal Proceedings.
Not applicable.
Item 10. Changes in Securities and Use of Proceeds.
None; not applicable.
Item 11. Defaults Upon Senior Securities.
There has been no material default in the payment of principal,
interact, a sinking or purchase fund installment, of any other
material default not cured within 30 days with respect to any
indebtedness of the Company exceeding five percent (5%) of the
total assets of the Company.
Item 12. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Company's
security holders during the fiscal quarter covered by this
report.
Item 13. Other information.
The Company has no other information to report.
Item 14. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
2.1* Agreement dated March 1, 1984, between
Heartland Oil & Mineral Corporation and
Gold Genie Worldwide, an Oregon partnership
2.2* Buy/Sell Agreement dated March 1, 1984,
between the Company and Heartland Oil &
Mineral Corporation
3.1* Articles of Incorporation of Gold Genie
Worldwide, Inc., filed on March 7, 1984.
3.2* Certificates of Amendment to the Articles
of Incorporation of Products, Services, &
Technology Corporation, filed on June 13, 1988
3.3* Articles of Domestication of Products, Services
and Technology Corporation, filed on June 2,
1997.
3.4* Articles of Amendment to the Articles of
Incorporation of Products, Services and
Technology Corporation, filed on June 13, 1997
3.5* Bylaws of Products, Services and Technology
Corporation dated as of June 2, 1997
10.1* Settlement Agreement and Release dated December
17, 1987, between Heartland Diversified
Industries, Inc., the Company, and certain
individuals
10.2* Agreement, dated April 19, 1988, by and between
the Company, Heartland Diversified Industries,
Inc., Distributed Networks, Inc., and certain
shareholders of Distributed Networks, Inc.
10.3* Buy/Sell Agreement, dated March 27, 1996, by
and between the Company and Heartland
Diversified Industries, Inc.
10.4* Consulting Agreement dated April 15, 1997,
among Products, Services and Technology
Corporation, David Wood and Henry Hanson
11 Statement regarding computation of per share
earnings
24 Power of Attorney
27 Financial Data Schedule
99* Gold Genie Worldwide, Inc. Offering Prospectus,
dated July 24, 1985
1 Summaries of all exhibits contained in this Registration
Statement are modified in their entirety by reference to
such exhibits.
* Incorporated by reference herein to the Company's Form 10
SB, as amended, dated as of February 12, 1998
(b) Forms 8-K filed during the last quarter. None.
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.
January 8, 1998 WIRELESS DATA SOLUTIONS, INC.
/s/ Michael B. McLaughlin
Michael B. McLaughlin
President & Chief Executive Officer
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<LEGEND>
This schedule contains summary financial information extracted from the
Audited Consolidated Balance Sheets and Consolidated Statements of
Operations for the fiscal year ended September 30, 1998 and is qualified
in its entirety to be referenced to such finanacial statements.
</LEGEND>
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<PERIOD-END> SEP-30-1998
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<CURRENT-ASSETS> 834,400
<PP&E> 27,927
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<TOTAL-ASSETS> 1,368,302
<CURRENT-LIABILITIES> 389,977
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0
0
<COMMON> 10,162
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<TOTAL-LIABILITY-AND-EQUITY> 1,368,302
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<CGS> 685,669
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