WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHNAGE ACT OF 1934.
For the Quarterly Period Ended June 30, 2000
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transaction period from _________ to _________
Commission file number 000-23051
WIRELESS DATA SOLUTIONS, INC.
(Name of small business issuer as specified in its charter)
Utah 93-0734888
(State of Incorporation) (I.R.S. Employer Identification No.)
2233 Roosevelt Road
Suite #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
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the practicable date:
There were 10,917,124 shares of the Issuer's common stock
outstanding as of June 30, 2000.
James J. Harned
Certified Public Accountant
1316 Christopher Court
Bel Air, Maryland 21014
410-838-5948
Board of Directors and Shareholders
Wireless Data Solutions, Inc.
I have reviewed the balance sheet of Wireless Data Solutions, Inc. as of
June 30, 2000 and the related statement of income for the three months ended.
A review consists principally of inquiries of company personnel and
management, and analytical tests of the financial statements. In addition,
some inquiries were made of corporate officers.
A review is not an audit of the financial statements of Wireless Data
Solutions, Inc. An audit is an examination of the books and records of the
financial statements in order to express an opinion on them. No such opinion
is rendered on the statements contained herein.
Although in my review I was not required to test the financial statements for
conformity to generally accepted accounting principles, nothing came to my
attention that would require the statements to be changed as a result of
non-conformity to them.
James J. Harned
Certified Public Accountant
Bel Air, Maryland
July 31, 2000
PART I
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Balance Sheet
June 30, 2000, and 1999
ASSETS
June 30, 2000 June 30, 1999
(Unaudited) (Unaudited)
Current Assets:
Cash and cash equivalents $389,131 $62,491
Trade accounts receivable, net of
$6,000 estimated allowance for
doubtful accounts 339,049 328,807
Inventory 134,942 159,729
Prepaid expenses 0 32,765
Total Current Assets 863,122 583,792
Fixed Assets
Office fixtures and equipment 17,983 15,033
Leasehold Improvements 12,894 12,894
Sub-Total 30,877 27,927
Less: Accumulated Depreciation
and Amortization 27,927 27,927
Net Fixed Assets 2,950 0
Other Assets:
Prepaid service contract 111,275 146,704
Due from RD220 0 28,649
Allowance for loan losses 0 63,649
Due from Angellcom 0 35,000
Due from related parties 2,942 290,413
Security deposits 3,113 3,113
Total Other Assets 117,341 440,230
TOTAL ASSETS $983,413 $1,024,022
LIABILITIES
June 30, 2000 June 30, 1999
(Unaudited) (Unaudited)
Current Liabilities:
Trade accounts payable $134,166 $143,752
Service contract payable in stock 20,800 70,800
Current portion of other liabilities 55,457 58,091
Advance from Customers 17,285 52,620
Other accrued liabilities 2,393 1,713
Total Current Liabilities 230,101 326,976
Other Liabilities:
Accrued salaries, related payroll
taxes, reimbursable expenses
payable to officers 285,241 568,417
Less: Current portion 0 0
Total Other Liabilities 285,241 568,417
TOTAL LIABILITIES 515,342 895,393
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;
10,182,310 shares issued and
outstanding at 06/30/1999
& 10,917,124 at 06/30/2000. 10,917 10,182
Common Stock options outstanding 0 11,250
Additional paid-in-capital 2,007,834 1,927,969
Deficit (1,570,680) (1,792,000)
Sub-Total 448,071 157,401
Receivable from related entity for
sale of common stock 0 (48,773)
Total Stockholders' Equity 448,071 108,628
TOTAL LIAB. & STOCKHOLDERS' EQUITY $983,413 $1,024,022
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Earnings
For the Three Month Periods Ended, June 30, 2000, and 1999
June 30, 2000 June 30, 1999
(Unaudited) (Unaudited)
REVENUES
Net product sales $1,525,391 $1,145,667
Other Income 200,403 11,317
Total Revenues 1,725,793 1,156,984
COST OF SALES
Products 657,527 538,372
Total Cost of Sales 657,527 538,372
Gross Profit 1,068,266 618,612
Operating Expenses 854,615 883,078
Income before Interest 213,651 (264,466)
Interest expense, net of interest income 0 16,713
Income before taxes 213,651 (281,179)
Provision for income taxes 0 0
NET EARNINGS $213,651 ($281,180)
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Three Month Periods Ended June 30, 2000, and 1999
June 30, 2000 June 30, 1999
Operating Activities:
Net Income $213,651 ($281,180)
Changes in Operating Assets and Liabilities:
Decrease (Increase) in accounts receivable (70,203) 136,583
Decrease (Increase) in inventory 96,568 108,529
Decrease (Increase) in other assets 17,058 (32,765)
(Decrease) Increase in accounts payable (28,039) (163,023)
Increase in advances from customers (90,503) 43,870
(Decrease) Increase in other payables (54,048) 56,053
Decrease in deferred service contract 35,429 35,429
Net cash provided by operating activities 119,913 (96,504)
Investing Activities:
Proceeds of miscellaneous assets (2,950) 0
Financing Activities:
(Decrease) in due from related parties 287,057 (5,406)
Increase in loan allowance 0 63,649
(Decrease) Increase in due to related parties
and related expenses (283,176) (1,000)
(Decrease) Increase in common stock
options outstanding (11,250) 0
Increase in related entity for
Sale of Common Stock 48,773
Proceeds of issuance of common stock 80,600 1,000
Net cash provided by financing activities 122,004 58,243
Net increase in cash 238,967 (38,261)
Cash at beginning of period 150,165 100,752
Cash at end of period $389,131 $62,491
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Three Month Periods Ended June 30, 2000, and 1999
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital
Balance at September 30, 1999 $10,182 $11,250 $1,927,969
Net Earnings for the period
ended June 30, 2000
Issuance of common stock 10 (11,250) 8,090
Stock issued to cancel debt to officer 725 71,775
Sub-Total 10,917 0 2,007,834
Receivable from related entity
for sale of common stock
Balance at June 30, 2000 $10,917 $0 $2,007,834
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital
Balance at September 30, 1998 $10,162 $11,250 $1,926,989
Net Earnings for the period
ended June 30, 1999
Stock issued to cancel debt to officer 20 980
Sub-Total 10,182 11,250 1,927,969
Receivable from related entity
for sale of common stock
Balance at March 31, 1999 $10,182 $11,250 $1,927,969
Deficit Total of Rows
continued From above
Balance at September 30,1999 ($1,784,331) $165,070
Net Earnings for the period
ended June 30, 2000 213,651 213,651
Issuance of common stock (3,150)
Stock issued to cancel debt to officer 72,500
Subtotal (1,570,680) 448,071
Receivable from related entity
for sale of common stock
Balance at March 31, 2000 ($1,570,680) $448,071
Deficit Total of Rows
continued From above
Balance at September 30, 1998 ($1,510,720) $437,681
Net Earnings for the period
ended June 30, 1999 (281,180) (281,180)
Stock issued to cancel debt to officer 1,000
Sub-Total (1,791,900) 157,401
Receivable from related entity
for sale of common stock (48,773)
Balance at June 30, 1999 ($1,791,900) $108,628
Part 1
Notes to Financial Statements
Summary of Accounting Policies
The summary of Wireless Data Solution's, Inc.(the "Company") significant
accounting policies is incorporated by reference from 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
with the data provided in the financial statements for the period ending
June 30, 2000.
Revenues for the nine month period ended June 30, 2000 were up approximately
$369,000 compared to the same period ended June 30, 1999. Management
believes that focusing on the company's core business has been the key factor
driving the sales increase. The company will continue to emphasize quality
and service in their core business area; however, management also realizes
that attainment of the company's growth objectives will require that it find
new market applications for its core technology.
Management's Discussion and Analysis or Plan of Operation
Liquidity and Capital Resources
The Company's current assets totaled approximately $863,000 at June
30, 2000, an increase of approximately $280,000 compared to the third quarter
of 1999.
Accounts Receivable for the nine months ended June 30, 2000 did not
change significantly compared to the prior year's period. While the accounts
receivable balance for the quarter ended June 30, 2000 is up compared to the
preceding quarter (March 31, 2000), 30 days subsequent to the close of the
June 30 quarter they were down to approximately $190,000, a quite reasonable
level. Cash and cash equivalents were up substantially, approximately
$327,000, due to a solid first three quarters of fiscal 2000.
Management believes the current trend of increased sales and revenue along
with current cash balances will be sufficient to fund operations and expenses
for the near term.
Management continues the search for opportunities which can provide a
synergetic effect. Efforts in this area will be intensified in the upcoming
quarters. Wireless Data Solutions subsidiary, Dinet has hired a new President,
Robert Chase, to allow Brian Blankenburg more time in this endeavor. Mr.
Blankenburg will continue to serve as President and CEO of Wireless Data
Solutions.
Results of Operations
Revenues for the first three quarters of the year totaled in excess of
1,725,000, an increase of approximately $569,000 compared to the same period
one year ago. Profits were approximately $214,000 compared to a loss of
$281,000 for the same time period in fiscal 1999. Other income was up
substantially because of the $200,000 which was realized from the
cancellation of a licensing agreement with Varitek. Under the agreement Varitek
was licensed to use our technology, on a royalty basis, in certain consumer
markets. In May of 2000 the company elected to cancel the agreement.
Operating expenses in total compared to the corresponding period one year ago
did not change appreciably. However, there has been a substantial redirection
in spending. R & D expenditures for the first three quarters of the year have
exceeded $100,000. The company expects to make a substantial commitment to
R & D in the upcoming quarters. Since research is an ongoing endeavor in a
technology company, Wireless Data Solutions has elected not to capitalize
its R & D costs. However, should those costs become disportionate to the
company's structure as a whole, the company may elect to capitalize R & D
costs in keeping with generally accepted accounting principals.
As previously addressed under Liquidity & Capital Resources and analysis,
cash holdings increased by approximately $327,000 compared to the same period
one year ago.
Prepaid expenses were fully amortized at June 30, 2000. They related to legal
services performed by John Doubek and salary incentives paid to Brian
Blankenburg.
Inventory was down somewhat due to normal fluctions in shipment and the receipts
of materials. The company tries to maintain just-in-time inventory control.
The prepaid service contract has been reduced by approximately $35,000
compared to June 30, 1999. 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 five years. In both cases the expense is being amortized
over the anticipated useful life of the services provided.
Accrued Salaries and related payroll taxes are down by approximately $283,000.
Due from related parties is down approximately $287,000. This relates to
a settlement that was reached between Michael McLaughlin (former President
and CEO of WDS), Heartland Industries and Carl Hatch (a shareholder) in a
derivative action by Carl Hatch undertaken for the benefit of Wireless Data
Solutions and its shareholders. As a result WDS was relieved of any
obligations to Mr. McLaughlin and agreed to forego any action against
Heartland and cancel any obligations owed to it by Heartland. In addition
to the forgiveness of all obligations between all parties Heartland also
contributed 145,000 shares of WDS common stock. Those shares of stock are to
be included as part of a compensation package to Mr. Blankenburg, President
and CEO of WDS and Dinet. Mr. Blankenburg has been working for a modest
salary far below what the market commands. It is important for the company to
have Mr. Blankenburg maintain a substantial equity interest in WDS.
The loans to Angelcom and Radio Digital 220 were written off as uncollectable.
The background of these loans is as follows. 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. As the relationship progressed Wireless Data
Solutions advanced money for working capital and made a deposit, which was
needed to bid on the licenses. A dispute arose between the parties, which was
settled by the exchange of mutual releases from further obligations and
liabilities. The write off of the loans to Angellcom Communications and
Radio Digital 220 in connection with this settlement was $63,649.
The payable in stock is owed to Brian Blankenburg. Mr. Blankenburg earned
approximately 191,000 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 $1500 per week, $500 was paid in
cash and $1000 was paid in stock, based on the average stock price during
that week. The common stock will bear a restrictive legend when issued.
After February 26 Mr. Blankenburg became a salaried employee.
The reduction in the payable in stock account was due to a distribution of
common stock which was made to John Doubek and Brian Blankenburg.
The accrued salaries and related payroll taxes were down substantially as a
part of the settlement on the derivative on behalf of the shareholders of WDS
by Carl Hatch. The settlement has been previously discussed above under
results of Operations.
Financial Condition
Cash holdings for the period increased approximately $327,000. Increased
revenues and lower expenses were the major factors.
Subsequent Events
On August 2, 2000 Robert Chase was hired as President of Dinet. Mr. Chase
brings 25 years of industry specific knowledge to the company. He has held
management positions with General Electric and Motorola and other notable
companies. In addition he has consulted to Fortune 1000 ranked companies for
the last seven years. Mr. Chase succeeds Brian Blankenburg, who will continue
to serve as President and CEO of Wireless Data Solutions. The change will
afford Mr. Blankenburg to vigorously pursue new areas of opportunity for
the company. Under the terms his employment agreement, Mr. Chase receives
certain stock incentives and a severance package, in addition to the normal
salary and bonuses. At the end of one year Mr. Chase could accumulate up to
265,000 shares of common stock all of which would be restricted. This is a
one time benefit to Mr. Chase to incentivize him to join the company.
The severance package contains a sliding payment schedule based on longevity.
After three years his severance would be approximately $85,000. Management
feels it is appropriate to use stock and other incentives to enable it to
compete effectively for quality personnel.
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 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.
Dinet Distributed Networks, Inc. ("Dinet"), a subsidiary of the Company, has
been named as a defendant in an action titled Sanact, Inc. vs. Imcom
Communications Company Sales, Inc., Dinet Distributed Networks, Inc., a
California Corporation, and Does 1 through 20, inclusive. It is filed in the
California Superior Court of Alameda County. The action was filed on
September 7, 1999.
The complaint in the action alleges the following facts: Plaintiff purchased
a Dinet Data Mate Mobile data system to communicate with Roto Rooter trucks.
The system was intended to incorporate global satellite positioning to allow
Plaintiff to track and monitor the location of its vehicles. Delivery of the
system commenced on or about December 1995, but the system did not work
properly.
The complaint includes claims against Dinet for breach of contract, for
intentional misrepresentation, for negligent misrepresentation, for breach
of express warranty, and for punitive damages and attorney's fees, all in an
amount unnamed except that they exceed the jurisdictional limit of the Court,
which is $25,000.
The action is in an early stage and discovery has just begun. Dinet has filed
an answer denying all claims. As of 06/30/00 no significant changes in status
have occurred.
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,
sinking or purchase fund installment, or 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.
August 18, 2000 WIRELESS DATA SOLUTIONS, INC.
/s/ Patrick Makovec
Patrick Makovec
Chairman of the Board
</TABLE>
