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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 March 31, 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 was 10,907,124 shares of the Issuer's common stock
outstanding as of March 31, 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
March 31, 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
May 16, 2000
PART I
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Balance Sheet
March 31, 2000, and 1999
ASSETS
March 31, 2000 March 31, 1999
(Unaudited) (Unaudited)
Current Assets:
Cash and cash equivalents $441,437 $49,342
Trade accounts receivable, net of
$6,000 estimated allowance for
doubtful accounts 200,476 317,230
Inventory 124,163 178,925
Prepaid expenses 0 39,167
Total Current Assets 766,076 584,664
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 123,085 158,513
Due from RD220 0 28,649
Allowance for loan losses 0 63,649
Due from Angellcom 0 35,000
Due from related parties 2,952 290,009
Security deposits 3,113 3,113
Total Other Assets 129,150 451,635
TOTAL ASSETS $898,176 $1,036,300
LIABILITIES
Mar. 31, 2000 Mar. 31, 1999
(Unaudited) (Unaudited)
Current Liabilities:
Trade accounts payable $81,861 $222,450
Service contract payable in stock 20,800 70,800
Current portion of other liabilities 65,295 71,948
Advance from Customers (22,201) 22,478
Other accrued liabilities 6,604 1,640
Total Current Liabilities 152,359 389,316
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 437,600 957,733
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 9/30/97, 10,162,124
at 9/30/98 & 10,182,110 at 9/30/99. 10,907 10,182
Common Stock options outstanding 0 11,250
Additional paid-in-capital 1,999,744 1,927,969
Deficit (1,570,074) (1,842,061)
Sub-Total 440,577 107,340
Receivable from related entity for
sale of common stock 0 (48,773)
Total Stockholders' Equity 440,577 58,567
TOTAL LIAB. & STOCKHOLDERS' EQUITY $898,176 $1,036,300
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Earnings
For the Six Month Periods Ended, March 31, 2000, and 1999
March 31,2000 March 31,1999
(Unaudited) (Unaudited)
REVENUES
Net product sales $1,064,735 $643,137
Other Income 200,051 11,147
Total Revenues 1,264,786 654,284
COST OF SALES
Products 472,788 316,034
Total Cost of Sales 472,788 316,034
Gross Profit 791,997 338,250
Operating Expenses 577,741 653,903
Income before Interest 214,257 (315,653)
Interest expense, net of interest income 0 15,588
Income before taxes 214,257 (331,241)
Provision for income taxes 0 0
NET EARNINGS $214,257 (331,241)
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Six Month Periods Ended March 31, 2000, and 1999
03/31/00 03/31/99
Operating Activities:
Net Income $214,257 ($331,241)
Changes in Operating Assets and Liabilities:
Decrease (Increase) in accounts receivable 68,370 148,160
Decrease (Increase) in inventory 107,347 89,332
Decrease (Increase) in other assets 17,058 (39,167)
(Decrease) Increase in accounts payable (80,344) (84,326)
Decrease in advances from customers (129,989) 13,728
(Decrease) Increase in other payables (39,999) 69,837
Decrease in deferred service contract 23,619 23,620
Net cash provided by operating activities 180,319 (110,057)
Investing Activities:
Proceeds of miscellaneous assets (2,950) 0
Financing Activities:
(Decrease) in due from related parties 287,057 (5,002)
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
Proceeds of issuance of common stock 72,500 1,000
Net cash provided by financing activities 113,904 58,647
Net increase in cash 291,273 (51,410)
Cash at beginning of period 150,165 100,752
Cash at end of period $441,437 $49,342
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Six Month Periods Ended March 31 ,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 March 31, 2000
Issuance of common stock (11,250)
Stock issued to cancel debt to officer 725 71,775
Sub-Total 10,907 0 1,999,744
Receivable from related entity
for sale of common stock
Balance at March 31, 2000 $10,907 $0 $1,999,744
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 March 31, 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 March 31, 2000 214,257 214,257
Issuance of common stock (11,250)
Stock issued to cancel debt to officer 72,500
Subtotal (1,570,074) 440,577
Receivable from related entity
for sale of common stock
Balance at March 31, 2000 ($1,570,074) $450,577
Deficit Total of Rows
continued From above
Balance at September 30, 1998 ($1,510,720) $437,681
Net Earnings for the period
ended March 31, 1999 (331,241) (331,241)
Stock issued to cancel debt to officer 1,000
Sub-Total (1,841,961) 107,340
Receivable from related entity
for sale of common stock (48,773)
Balance at March 31, 1999 ($1,841,961) $58,567
Part 1
Notes to 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
with the data provided in the financial statements for the period ending
March 31, 2000.
Revenues for the 2nd quarter of fiscal 2000 compared to the same period in
1999 were up approximately $600,000 with a corresponding profit of $214,000
compared to a loss of $313,000 as of March 31, 1999. A significant contribution
in the amount of $200,000 was realized from the contract with Varitek under
which they were to license the company's technology. The contract was
subsequently canceled.
The cancellation was announced on May 9, 2000. Management feels that it is
in the best interest of our shareholders that we pursue a course of action
other than with Varitek Industries. Other licensing agreements as well as
marketing through our own organization are being considered.
Management's Discussion and Analysis or Plan of Operation
Liquidity and Capital Resources
The Company's current assets totaled approximately $766,000 on March
31, 2000, a significant increase from March 31, 1999 at which time the current
assets were approximately $585,000. The most critical component of the current
assets, cash, and cash equivalents increased almost $400,000. During that same
period accounts receivable was reduced by approximately $117,000. Better
management of the accounts and an emphasis on customer service were the two
major factors in the reduction. The cash position increase came about because
of the company's return to profitability. The two most recent quarters generated
a surplus of cash. In addition the one time revenue injection from Varitek
Industries contributed substantially to the over all cash position.
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 with a synergetic effect.
They have had contact with an international consulting firm, which specializes
in wireless communication, to help in this regard. Management further believes
that the right opportunity would permit them to go to equity markets and raise
the capital which would move them to the next level.
Results of Operations
Revenues for the 1st one half of fiscal 2000 ending March 31, 2000 were up
approximately $610,000 compared to the same period one year ago. If the other
income from the licensing agreement with Varitek were to be factored out the
increase would be $410,000. That increase coupled with approximately $75,000
in expense reduction compared to the same period one year ago which allowed
the company to post a profit of $214,257 compared to a loss of $331,241 the
previous year. In keeping with management's plan, the company will be
investing heavily in R&D in the up coming quarters. The company will be
upgrading it's present product line and adding new products.
As previously addressed under Liquidity & Capital Resources and analysis,
cash holdings increased by approximately $392,000 compared to the same period
one year ago.
Trade receivables as discussed earlier, were down approximately $117,000
compared to the same period one year ago. The reasons for the decline were
twofold. First an emphasis on customer service has resolved most disputes which
can be a factor in delayed payment. Secondly the overall receivables and
collection program has improved substantially.
Prepaid expenses were fully amortized at March 31, 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 March 31, 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 is down by approximately $287,000.
This relates to a settlement that was reached between Micheal 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 dismiss all funds 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.
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. Later
Angelcom Communications and its partner alleged they had relied on certain
statements made by Micheal McLaughlin (then CEO of Wireless Data Solutions)
regarding funding for Angellcom Communications, which was not provided.
They insisted they had been damaged and were entitled to compensation. Rather
than progress to a law suit (which would have been expensive and damaging to
the company's efforts to move forward, particularly if seeking capital)
management felt it was far better to settle and move forward. A settlement was
reached whereby they would keep the money advanced to them and each party would
be released form any further legal action. The write off of the loans to
Angellcom Communications and Radio Digital 220 was $63,649.
Trade payables were down approximately $140,000 reflecting an increase in cash
flows and better inventory management.
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.
The reduction in the payable in stock account was due to stock which was paid
to John Doubek and Brian Blankenburg as was previously discussed above under
results of operations.
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 $390,000. Increased
revenues and lower expenses were the major factors.
Subsequent Events
Subsequent to the March 31, 2000 end of second quarter WDS contracted with
Mirage Web Design to build a web site. The current WDS web site does not convey
an appropriate corporate image and lacks those qualities that would make it
a useful conduit to convey news to our shareholders and other interested
parties. WDS will pay Mirage Web Design 10,000 shares of the company's common
stock. Those shares will be issued pursuant to a S-8 registration previously
done and will be free trading.
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.
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 19, 2000 WIRELESS DATA SOLUTIONS, INC.
/s/ Patrick Makovec
Patrick Makovec
Chairman of the Board
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