UNITES STATES
SECUTITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
[X] Quarterly REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December, 31, 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
January 31, 1999.
<PAGE>
Part I
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1998
ASSETS
Dec. 31, 1998 Dec. 31 1997
Current Assets:
Cash and cash equivalents $54,386 $42,376
Trade accounts receivable, net of
$6,000 estimated allowance for
doubtful accounts 269,494 649,496
Inventory 265,682 189,208
Prepaid expenses 3,992 0
--------- ---------
Total Current Assets 593,554 881,080
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 170,323 185,800
Due from Angellcom 35,000
Loan to RD 220 28,649
Due from related parties 287,140 256,442
Security deposits 3,113 3,113
-------- --------
Total Other Assets 524,225 445,355
-------- --------
TOTAL ASSETS $1,117,779 $1,326,435
LIABILITIES
Current Liabilities:
Trade accounts payable $175,467 $245,386
Current portion of other liabilities 70,190 19,010
Advance from Customers 50,877 17,969
Other accrued liabilities 306 56,943
Service Contract payable in stock 13,100 196,400
------- -------
Total Current Liabilities 309,940 535,708
Other Liabilities:
Accrued salaries, related payroll
taxes, reimbursable expenses
payable to officers 568,417 692,132
Less: Current portion 0 0
------- --------
Total Other Liabilities 568,417 692,132
------- --------
TOTAL LIABILITIES 878,357 1,227,840
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;
8,164,720 shares issued and
outstanding at 12/31/97 &
10,182,124 at 12/31/98. 10,182 8,165
Common Stock options outstanding 11,250 11,250
Additional paid-in-capital 1,927,969 1,378,485
Deficit (1,681,206) (1,270,532)
---------- ---------
Sub-Total 268,195 127,368
Receivable from related entity for
sale of common stock (48,773) (48,773)
---------- ---------
Total Stockholders' Equity 219,422 78,595
---------- --------
TOTAL LIAB. & STOCKHOLDERS' EQUITY $1,117,779 $1,326,435
<PAGE>
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Statement of Earnings
For the Period Ended, December, 31 1998
Dec. 31, 1998 Dec. 31, 1997
REVENUES
Net product sales $205,979 $411,633
Other Income 6,828 12,000
-------- --------
Total Revenues 212,807 423,633
COST OF SALES
Product 113,686 246,638
-------- -------
Total Cost of Sales 113,686 246,638
-------- -------
Gross Profit 99,121 176,995
Operating Expenses 259,442 217,444
------- -------
Income before Interest (160,321) (40,449)
Interest expense, net of
interest income 10,165 360
------- ------
Income before taxes (170,486) (40,809)
Provision for income taxes 0 (3,666)
-------- --------
NET EARNINGS ($170,486) ($37,143)
Basic loss per share (.02) (.001)
Weighted average shares
outstanding for the period 10,168,831 8,164,720
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Period Ended December 31, 1998
12/31/98 12/31/97
Operating Activities:
Net Income ($170,486) ($37,143)
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization
Prior period adjustments
Changes in Operating Assets and Liabilities:
(Decrease)in accounts receivable 195,896 112,090
( Decrease) in inventor 2,576 51,527
(Increase) in other assets (3,992)
(Decrease) in accounts payable (131,209) (166,414)
Increase in advances from customers 42,127
Increase in other payables 9,045 686
Decrease in deferred service contract 11,810 10,300
--------- --------
Net cash provided by operating activities (44,233) (28,954)
Investing Activities:
Proceeds of miscellaneous assets 0 0
Financing Activities:
Increase (Decrease) in due
from related parties (2,132) (12,000)
Decrease in due to related parties and
related expenses (1,000)
Increase in common stock options outstanding
Increase in related entity for sale of common stock
Decrease in minority interest in subsidiaries
Proceeds of issuance of common stock 1,000
-------- --------
Net cash provided by financing activities (2,132) (12,000)
------- --------
Net increase in cash (46,365) (40,954)
Cash at beginning of period 100,752 83,330
-------- -------
Cash at end of period $54,387 $42,376
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Period Ended December 31, 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, 1998 $10,162 $11,250 $1,926,989 $1,510,720) $437,681
Net Earnings for the period
ended December 31, 1998 (170,486) (170,486)
Stock issued to cancel debt to office 20 980 1,000
---- ------- --------- -------- -------
Sub-Total 10,182 11,250 1,927,969 (1,681,206) 268,195
-------- ------ ---------- --------- -------
Receivable from related entity
for sale of common stock (48,773)
---------
Balance at December 31, 1998 $10,182 $11,250 $1,927,969 ($1,681,206) $219,422
</TABLE>
<PAGE>
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 filled on Form 10-SB, as amended, dated February 12.
The accompanying unaudited condensed 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.
Management's Discussion and Analysis or Plan of Operation
Liquidity and Capital Resources
The company's current assets total $593,554 at December 31, 1998, a decrease
of approximately $287,000 from December 31, 1997. Accounts receivable
decreased approximately $380,000 reflecting a lower level of sales and
collection of receivables which were from sales with extended payment terms.
Inventory increased approximately $80,000 due to the fact that anticipated
sales did not materialize. Those issues are summarized below under Results of
Operations.
Management believes that cash flow from operations, current cash balances,
and the "credit line" available from Brian Watts, a major shareholder of the
company will be sufficient to fund operations in the near future. The credit
line available from Brian Watts is a factoring arrangement where by the
company is advanced money against receivables. On December 31, 1998 Brian
Watts was owed $24,500 by the company. The company's growth will remain
constricted without new capital which is essential to investing in research
and development, marketing and sales.
Results of Operations
Revenues for the 1st quarter of fiscal year ending September 1999 were down
$205,000. There were several factors responsible for the decline and the
decline of prior months.
Dinet introduced and sold a mapping product in the market place in 1998
which was subsequently discovered to have significant problems with the soft-
ware's performance. The product was pulled from the market in September and
totally redesigned. It will be ready for Beta testing in late February. The
tesing will be completed by the end of the second quarter. The new product
introduction is planned for the third quarter. There are numerous customers
that have expressed significant interest in purchasing the redesigned product.
Dinet tested the sale of dispatching software in 1998 with minimal success.
It also created anxiety with the software providers that have historically
provided Dinet with sales leads and referrals. They were concerned that Dinet
would become a direct competitor and the number of referrals from them dropped
significantly. Dinet has eliminated those software products from its
product line. The President of Dinet has had meetings with the CEO's of each
major software company reestablishing those vital strategic alliances.
The sales pipeline for the company's products is 6 to 18 months. The loss
of sales focus in 1998 significantly reduced the number of viable potential
customers that the company had in its pipeline. Significant progress was made
in both the first and second quarters in refilling the company's potential
customer pipeline.
A number of other areas have been addressed as well. Operating expenses
have been reduced by eliminating some technical positions and replacing them
with "outsourced" use of contract consultants with greater expertise at a
lower cost. The company has refocused their research and development projects
toward their core business segments. They have significantly improved the
delivery of their service quality which had been severely impacted by the
problems with the mapping software. They have also implemented a new sales
management system.
A loss of approximately $170,000 was recorded due to the decrease in
revenues. However as mentioned above, significant progress has been made in
refilling the sales pipeline.
The company's cash position is up about $10,000 from December 31, 1997 due
to the sale of stock in the second quarter of 1998 and the collection of
receivables. Liquidity is discussed under liquidity and capital resources.
The decrease in accounts receivable of approximately $380,000 is a
reflection of lower sales and the collection of receivables.
Inventory was up approximately $76,000 due to anticipated sales which did
not materialize. The inventory will be used in the second quarter of fiscal
1999.
Deferred service contracts were down approximately $15,000 which reflects
that which was expensed in the period. The contract with Brian Blankenburg,
for marketing services, is being amortized over three years. The contract
with Dave Wood for public relations services is being amortized over five
years. In both cases, the expense is spread over the anticipated useful life
of the services rendered.
The loans to Angellcom and RD220, which were for money's advanced to secure
the license in Mexico to provide 220 MHz services, as of yet, have not been
paid. $35,000 of the loan is secured by 10 220 MHz licenses located in the
U.S. The anticipated payment date has been pushed back to March, which is when
the final payment must be made on the licenses to the Mexican government.
Due from related parties increased by approximately $31,000 which is
primarily due from Heartland Diversified Industries, Wireless Data Solutions
largest shareholder. The increase in the receivable is a combination of
accrued interest on the sale of Bernard, Lee & Edwards Securities and
management services provided by Wireless Data Solutions. Mike McLaughlin, CEO
and President of Wireless Data Solutions, and Pat Makovec, its Treasurer, are
also officers of Bernard, Lee & Edwards, and Mr. McLaughlin is a director of
the firm which is the reason Bernard, Lee & Edwards has been charged management
fees. Bernard, Lee & Edwards Securities is a NASD member firm formerly owned by
Wireless Data Solutions, which was sold to Heartland Diversified Industries
for $164,000. The loan carries a 7 percent interest rate.
The $70,000 reduction in trade payables reflects the lower level of sales
activity. Advances from customers have increased approximately $33,000
because of orders waiting to be filled at the end of the 1st quarter.
The service contract payable in stock decreased because the stock had been
issued to Mr. Blankenburg and Mr. Wood for consulting services described under
Deferred Consulting Service above. The $13,100 represents an additional
amount which is due Brian Blankenburg in stock for services rendered as
president of Dinet.
Accrued salaries, related payroll taxes, and reimbursable expenses payable
to officers was reduced by approximately $124,000. Mr. McLaughlin, CEO and
president of Wireless Data Solutions and Brian Watts former general manager of
Dinet took stock in place of money to satisfy some or all of funds due them.
Financial Condition
Cash holdings for the quarter ended December 31, 1998 increased
approximately $12,000 over the corresponding quarter in 1997. This increase
was due to the reduction of accounts receivable and funds which had been
provided by the sale of common stock in January of 1999.
Related Party Transactions
In November 1998 Pat Makovec exercised 20,000 options at $0.05. The options
when issued were at or "above" fair market value.
Subsequent Events
There are 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 numerous risks and
uncertainties. Assumptions relating to such current expectations 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 assumptions
could be inaccurate and therefore there can be no assurance that the forward-
looking statements included in this Form 10-QSB 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, 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 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.
February 12,1999 WIRELESS DATA SOLUTIONS, INC.
/s/ Michael B. McLaughlin
Michael B. McLaughlin
President & Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Unaudited Consolidated Balance Sheets and Consolidated Statements of Operations
for the three month period ended December 31, 1998 and December 31, 1997 and is
qualified in its entirety be reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 54,386
<SECURITIES> 0
<RECEIVABLES> 275,494
<ALLOWANCES> 6,000
<INVENTORY> 265,682
<CURRENT-ASSETS> 593,554
<PP&E> 15,033
<DEPRECIATION> 27,927
<TOTAL-ASSETS> 1,117,779
<CURRENT-LIABILITIES> 309,940
<BONDS> 0
0
0
<COMMON> 10,182
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,117,779
<SALES> 205,979
<TOTAL-REVENUES> 212,807
<CGS> 113,686
<TOTAL-COSTS> 113,686
<OTHER-EXPENSES> 259,442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,165
<INCOME-PRETAX> (170,486)
<INCOME-TAX> 0
<INCOME-CONTINUING> (170,486)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (170,486)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
