UNITES STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the nine-month period ended June 30, 1999
[ ] 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.)
2233 Roosevelt Road, Ste. 5
St. Cloud, MN 56301
(Address of principal executive offices)
(320) 203-7477
(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 July 27, 1999.
<PAGE>
Wireless Data Solutions, Inc. and Subsidiaries
Consolidated Statement of Earnings
For the Period Ended, June 30, 1999
June 30, 1999 June 30, 1998
(Unaudited) (Unaudited)
REVENUES
Net product sales $1,145,667 $1,408,672
Other Income 11,317 43,221
-------- ---------
Total Revenues 1,156,984 1,451,893
COST OF SALES
Products 538,372 673,371
-------- --------
Total Cost of Sales 538,373 673,371
-------- -------
Gross Profit 618,611 778,522
Operating Expenses 883,078 793,895
------- -------
Income before Interest (264,467) (15,373)
Interest expense, net of
interest income 16,713 23,130
-------- --------
Income before taxes (281,180) (38,503)
Provision for income taxes 0 0
--------- ---------
NET EARNINGS ($281,180) ($38,503)
Basic loss per share (0.03) 0.00
Weighted average shares
outstanding 10,175,457 9,176,050
<PAGE>
Wireless Data Solutions,Inc. and Subsidiaries
Consolidated Balance Sheet
June 30, 1999
ASSETS
June 30, 1999 June 30, 1998
(Unaudited) (Unaudited)
Current Assets:
Cash and cash equivalents $62,491 $148,315
Trade accounts receivable, net of
$80,292 and $6,000 respectively
estimated allowance for 328,807 761,639
doubtful accounts.
Prepaid expenses 32,765 0
Inventory 159,729 113,764
-------- ---------
Total Current Assets 583,792 1,023,718
Fixed Assets:
Office fixtures and equipment 15,033 15,033
Leasehold Improvements 12,894 12,894
Sub-Total 27,927 27,927
Less: Accumulated Depreciation
and Amortization 27,927 27,927
------- ------
Net Fixed Assets 0 0
Other Assets:
Deferred service contract 146,704 202,700
Due from related parties 290,413 280,442
Loan to RD220 28,649
Due from Angellcom 35,000 37,500
Allowance for loan losses 63,649
Security deposits 3,113 3,113
------ -------
Total Other Assets 440,230 523,755
------- -------
TOTAL ASSETS $1,024,022 $1,547,473
========== ==========
LIABILITIES
Current Liabilities:
Trade accounts payable $143,753 $227,680
Payable in stock 70,800
Current portion of other liabilities 58,091 83,853
Advance from Customers 52,620 8,176
Other accrued liabilities 1,713 2,146
------ ------
Total Current Liabilities 326,977 321,855
Other Liabilities:
Accrued salaries, related payroll
taxes, reimbursable expenses
payable to officers 568,417 604,882
Less: Current portion 0 0
--- ---
Total Other Liabilities 568,417 604,882
------- -------
TOTAL LIABILITIES 895,394 926,737
Minority interests in
consolidated subsidiaries 20,000 20,000
STOCKHOLDERS' DEFICIENCY:
Preferred Stock, $.002 par value;
3,000,000 shares authorized;
no shares issued or outstanding 0 0
Common Stock, $.001 par value;
25,000,000 shares authorized;
10,057,124 shares issued and
outstanding at 6/30/98 &
10,182,310 at 6/30/99. 10,182 10,057
Common Stock options outstanding 11,250 11,250
Additional paid-in-capital 1,927,969 1,900,094
Deficit (1,792,000) (1,271,892)
---------- ----------
Sub-Total 157,401 649,509
Receivable from related entity for
sale of common stock (48,773) (48,773)
------ ----------
Total Stockholders' Equity 108,628 600,736
------- ----------
TOTAL LIAB.& STOCKHOLDERS' EQUITY $1,024,022 $1,547,473
========== ==========
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Period Ended June 30, 1999
June 30, 1999 June 30, 1998
Operating Activities:
Net Income ($281,180) ($38,503)
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization
Prior period adjustment
Changes in Operating Assets and Liabilities:
Decrease in accounts receivable 136,583 (53)
Decrease in inventory 108,529 126,971
Increase in other assets (32,765) 0
Decrease in accounts payable (163,023) (184,120)
Increase in advances from customers 43,870 (9,793)
Increase in other payables 56,053 (185,668)
Decrease in deferred service contract 35,429 (6,600)
------- ----------
Net cash provided by
operating activities ($96,504) ($297,766)
Investing Activities:
Proceeds of miscellaneous assets
Financing Activities:
Increase in due from related parties (5,406) (36,000)
Increase in loan allowances 63,649 (37,500)
Increase in due to related parties and
related expenses (1,000) (87,250)
Proceeds of issuance of common stock 1,000 523,501
------ --------
Net cash provided by financing activities 58,243 362,751
------ -------
Net increase in cash (38,261) 64,985
Cash at beginning of period 100,752 83,330
------- ------
Cash at end of period $62,491 $148,315
======= =======
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Period Ended June 30, 1999
<TABLE>
<CAPTION>
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1998 $10,162 $11,250 $1,926,989 ($1,510,720) $437,581
Net Earnings for the period ended June 30, 1999 (281,180) (281,180)
Stock issued to cancel debt to officer 20 980 1,000
Sub-Total 10,182 11,250 1,927,969 (1,791,900) 157,401
Receivable from related entity for sale of common stock (48,773)
Balance at June 30, 1999 $10,182 $11,250 $1,927,969 ($1,791,900) $108,628
</TABLE>
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Period Ended June 30, 1998
<TABLE>
<CAPTION>
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital Deficit Total
<C> <S> <S> <S> <S> <S>
Balance at September 30, 1997 $8,165 $11,250 $1,378,485 ($1,233,388) $164,512
Net Earnings for the period ended June 30, 1998 (38,503) (38,503)
Issuance of common stock
Exercise of common stock options
Stock issued for service contracts 830 224,170 225,000
Private placement 724 210,526 211,250
Stock issued to cancel debt to officer 338 86,912 87,250
Prior period adustment
Sub-Total 10,057 11,250 1,900,093 (1,271,891) 649,509
Receivable from related entity for sale of common stock (48,773)
Balance at June 30, 1998 $10,057 $11,250 $1,900,093 ($1,271,891) $600,736
</TABLE>
<PAGE>
Part I
Notes to Consolidated Financial Statements
Summary of Accounting Policies:
The summary of Wireless Data Solution's Inc. ("the company") significant
accounting policies are incorporated by reference to the Company's
Registration Statement filed on Form 10-SB, as amended, dated February 12,
1998.
The accompanying unaudited consolidated financial statements reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the results of operations, financial position and cash flows.
The results of the interim period are not necessarily indicative of the
results for the full year.
Company Background Information:
The following background information is deemed important in conjunction
and context with the data provided in the financial statements for the
period ending June 30, 1999.
Revenues for the nine month period ended June 30, 1999 compared to the
same period in 1998 were down approximately $295,000. However there are
very strong indications that the negative trend in sales has been reversed.
The downward trend began the 2nd half of fiscal year 1998 and continued
through the first quarter of fiscal year 1999. Revenues started increasing
in the 2nd quarter of 1999.
Management feels strongly that the changes in management and strategy have
paid dividends and the company expects to maintain an upward trend in
revenues. Clearly there has been an improvement in the corporate image.
This is reflected by the increase in referrals and quality of the
testimonials when potential customers check references.
Management's discussion and Analysis or Plan of Operation
Liquidity and Capital Resources:
The company's current assets totaled $583,792 on June 30, 1999. This was
a decrease of approximately $440,000 from June 30, 1998.
The component of current assets which comprised the majority of this
reduction was accounts receivable which decreased approximately $433,000.
There were a number of reasons for the decline, not the least of which was
the resolution of disputes with customers. A number of Automatic Vehicle
Location systems had been shipped, which were not working. All those systems
were replaced and the customers subsequently paid. By changing to a service
orientated philosophy, the company expects to avoid similar problem
unts were determined to be uncollectable and were turned over for collection.
Consequently "Allowance for Bad Debts" was increased to reflect the best
estimate of recoverable costs.
The balance of the change in assets was an increase in inventory and a
decrease in cash. The inventory increase reflects the anticipation of
increased sales vs. declining sales. The cash position was down by
approximately $86,000. The decline is a direct reflection of the cash
consumption due to losses in the second half of 1998 and the first half of
1999.
Management believes the current trend of increased sales and revenue and
the resulting cash flow, along with current cash balances will be sufficient
to fund operations and expenses for the near term. The company also has a
"credit line" to factor receivable available from Brian Watts. Mr. Watts is a
major shareholder in WDS. At June 30, 1999 Mr. Watts was owed $13,000
compared to $122,000 at the beginning of the first quarter.
Management continues to believe that to achieve the desired growth, they will
have to pursue equity financing. Additional financing will allow them to
pursue new products and markets.
Results of Operations:
Revenues for the 3rd quarter ending June 30th, 1999 were up approximately
$90,000 compared to the 3rd quarter of 1998. The 21% increase in revenue
compared to the 3rd quarter of 1998 combined with a $47,000 reduction in
operating expenses for the period, allowed the company to post a $50,000
profit for the third quarter. The year to date figures show that revenues
were down by $300,000 and compared to the nine month ending June 30, 1998.
Losses for the period ending June 30, 1999 exceeded the losses for
by approximately $243,000. The numbers are a direct reflection of the
disastrous 1st quarter and the weak 2nd quarter of 1999. Those quarters
also reflect what management believes was the end of a downward trend and
the beginning of an upward trend in revenues and earnings.
As previously addressed under management's discussion and analysis cash
holdings declined $86,000, a direct reflection of earlier period losses.
Prepaid expenses reflect the unamortized portion of fees which were paid
to Mr. John Doubek and Mr. Brian Blankenburg. Mr. Doubek has and will
provide legal services relating to the management change and attending
issues. The total of those fees were estimated to be $40,000. 400,000
shares of common stock will be issued to pay for those services Mr. Brian
Blankenburg agreed to accept the positions of President of Dinet and
Wireless Data Solutions for a salary far below what a person of his
experience and be issued 100,000 shares of the company's common stock,
which was offered as an incentive. He will serve in those capacities for
a period of no less than one year.
The deferred service contract has been reduced by approximately $56,000
compared to June 30, 1998. Mr. Brian Blankenburg, President of Wireless
Data Solutions, had performed certain marketing services prior to his
becoming an employee. The value of those services are being amortized over
three years. A contract with Mr. David Wood for public relations services
is being amortized over 5 years. In both cases the expense is being
amortized over the anticipated useful life of the services provided.
Due from related parties increased approximately $10,000 over the prior
period end June 30, 1999. The increase was due to certain management
services provided for the benefit of Heartland Diversified Industries and
or interest charged on the sale of Bernard, Lee and Edwards to Heartland.
A shareholder on WDS initiated a derivative, class action suit against
Heartland Diversified Industries on behalf of himself and all the
shareholders of WDS. In that suit he is requesting $332,773 in contract
damages, any net recovery will flow directly to WDS. Heartland Diversified
Industries is controlled by Mike McLaughlin, who is Board Chairman and
President, and who has a very large stock position in Heartland.
Heartland owns in excess of 1,600,000 shares of WDS stock.
The value of the loans to Angellcom and RD 220 are thought to be minimal .
The net realizable value, considering cost of collection and or legal fees,
should WDS proceed with litigation, is believed to be insignificant.
Accounts payable was reduced by approximately 84,000 which is a direct
result of Dinet's improved financial health.
The payable in stock is owed to Brian Blankenburg and John Doubek.
Mr. Doubek is owed 400,000 shares for legal services relating to the
management change and related issues. Mr. Blankenburg earned approximately
199,000 shares under an arrangement in connection with his employment as
president of Dinet. During the period in September 14, 1998 to February 26,
1999, Mr. Blankenburg earned $1,500 per week, $500 was paid by check and
$1,000 was paid in stock, based on the average stock price during that week.
When assuming the role of CEO and president of WDS, he was granted 100,000
shares as an incentive to assume a salary at less than market for his
ability and experience.
Approximately 699,000 shares of common stock will be issued to satisfy
the obligations detailed in the discussion of the "Payable in Stock"
account above.
Financial Condition:
Cash holding for the period declined approximately $84,000 compared to
June 20, 1998. The decrease was a direct result of a serious sales
decline starting in the 3rd quarter of 1998. The decline began to reverse
in the 2nd quarter of 1999. In March cash holding should increase just as
WDS was profitable in the 3rd quarter of fiscal 1999.
Related Party Transactions:
Brian Blankenburg received 100,000 shares of common stock as and incentive
to assume the role of president and CEO of WDS at a salary of $60,000. The
salary is below standard for someone of his knowledge and experience,
particularly considering he also functions as president of Dinet.
Subsequent Events:
No subsequent events to report.
Forward Looking Statements:
The foregoing and subsequent discussion contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934, which are intended
to be covered by the safe harbors created thereby. These forward-looking
statements include the plans and objectives of management for future and
possible further capitalization of the Company. These forward-looking
statements contained herein are based on current expectations that involve
judgments with respect to, among other things, future economic, competitive
and market conditions and future business decisions, all of which are
difficult or impossible to predict accurately and many of which are beyond
and control of the Company. Although the Company believes that the
assumptions could be inaccurate and therefore there can be no assurance that
the forward looking statements included in this Form 10-Q will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation of the Company or any other person
that the objectives and plans of the Company will be achieved.
PART II
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities and Use of Proceeds.
None; not applicable.
Item 3. Defaults Upon Senior Securities
There has been no material default in the payment of principal, interest,
a sinking or purchase fund installment, of any other material default not
cured within 30 days with repect to any indebtedness of the Company exceeding
five percent (5%) of the total assets of the Company.
Item 4. 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 5. Other information.
The Company has no other information to report.
Item 6. 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.
July 27, 1999 WIRELESS DATA SOLUTIONS, INC.
/s/ Patrick Makovec
Patrick Makovec
Board Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Unaudited Consolidated Balance Sheets and Consolidated Operating Statements
for the nine month period ended June 30, 1999 and June 30, 1998 and is
qualified in its entirety be reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 62,491
<SECURITIES> 0
<RECEIVABLES> 328,807
<ALLOWANCES> 80,292
<INVENTORY> 159,729
<CURRENT-ASSETS> 583,792
<PP&E> 15,033
<DEPRECIATION> 27,894
<TOTAL-ASSETS> 1,024,022
<CURRENT-LIABILITIES> 326,977
<BONDS> 0
0
0
<COMMON> 10,182
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,024,022
<SALES> 1,145,667
<TOTAL-REVENUES> 1,156,984
<CGS> 538,373
<TOTAL-COSTS> 538,373
<OTHER-EXPENSES> 883,078
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,713
<INCOME-PRETAX> (281,180)
<INCOME-TAX> 0
<INCOME-CONTINUING> (281,180)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (281,180)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
