UNITES STATES
SECUTITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
10KSB/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September, 30, 2000
[ ] 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. 333-47395
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
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
Indicates the number of shares outstanding of each of the Registrant's
classes of common stock, as of the practicable date:
There was 10,917,124 shares of the Issuer's common stock outstanding
as of September 30, 2000.
<PAGE>
WIRELESS DATA SOLUTIONS, INC.
Changes to FORM 10-KSB
This amendment to Form 10KSB was filed to correct the following items:
PART I
ITEM 3. Brian Blankenburg's commonstock ownership in the company is 3%
rather than 4%
ITEM 3. Compensation Table was added with accompanying footnotes.
ITEM 3. Stock ownership table was added to clarify the security ownership
in the company along with an accompanying footnote.
ITEM 5. The company's stock trades under the symbol WDSO rather than SOLU.
ITEM 8. The Auditors letter was changed to reflect the fact that he had
audited years 1998, 1999, and 2000 along with an address change
that identifies his New York Office.
WIRELESS DATA SOLUTIONS, INC.
FORM 10-KSB
INDEX
PART 1
ITEM 1. Business Overview
ITEM 2. Business Issues
ITEM 3. Directors and Executive Officers of the Company, compensation and
stock ownership tables
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>
PART I
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).
An enhancement to the Mobile Data terminals messaging capacity is its AVL
feature. Automatic vehicle location is used to track vehicles (it can also
be used to track other assets such as cargo containers). The unit to be tracked
is fitted with a terminal that has a (GPS) Global positioning system reciever.
The receiver gathers positioning information from the satellite system which
in turn sends the information to the base station. At the base station the
location is then super imposed on a map of the country. Wireless Data's mapping
system has a zoom feature which enables the people at the base station to look
at the precise location of the asset be it a few miles or one thousand miles
distant. Vehicle location or asset tracking is an emerging technology with
almost unlimited applications.
Its principal office is located at 2233
Roosevelt Road Suite # 5 St. Cloud, MN 56301. Its wholly owned subsidiary,
Dinet, is located in Oceanside, California, where it maintains a production
and sales facility. It also has a sales office in Severna Park, Maryland.
ITEM 2. BUSINESS ISSUES
In fiscal 2000 the company maintained its focus on the ready-mix market and
enhancing its product offerings to that segment. To that end Dinet spent in
excess of $250,000 in research and development; the R & D expenditures were
necessary because that aspect of the business had not recieved the appropriate
emphasis in the last two years.
Fiscal 2000 was a dramatic improvement over fiscal years 1998 and 1999. In
those prior two years WDS lost $277,331 and $273,611 respectively. In fiscal
2000 WDS posted a profit of $42,019. Management feels that its commitment to
service was a significant factor in this turnaround. As was its more focused
sales effort.
Although the company has shown dramatic improvement it still faces the reality
that it has limited resources and that it needs to actively pursue alternative
ways to move the company forward. The company is particularly interested in
strategic alliances and business combinations. The company has explored a
number of avenues and will continue to pursue additional oppurtunities. In
keeping with this stratedgy WDS made an agreement in November, 1999 with
Varitek Industries under which they would license them to manufacture and
market WDS technology to the retail, government and law enforcement agencies
world wide. However, the agreement contained certain on going requirements that
had not been met, and thus served as a basis for canceling the agreement.
WDS did recieve reasonable compensation for its efforts in connection with
the contemplated alliance.
WDSO has been able to maintain certain competitive advantages which management
feels will enable them to maintain a strong position in the ready-mix market.
Also its core technology has numerous applications in other industries.
ITEM 3. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The management team presently consists of three members. It is anticipated that
there will be an addition of at least one more director before the new year
closes.
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. In March of 1999 he became President
and Chief Executive Officer of Wireless Data Solutions. Mr. Blankenburg provides
expertise in the areas of strategic planning, sales and marketing, mergers
and acquisitions, funding and market research. Prior to joining WDS 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 doubled the 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 3 percent shareholder.
Robert Chase
Robert Chase succeeded Brian Blankenburg as President of Dinet, Wireless Data
Solutions wholly owned subsidiary. Mr. Chase has 25 years of experience in
operations and start-up marketing and sales programs with wireless-related
companies. For the past seven years he has consulted to Fortune 1000 ranked
companies within the wireless industry as a partner with Severin Chase. Prior
to his consulting role, he held various executive management positions with
Digital Mobile Communications, Pacific Telesis, General Electric, and Motorola.
Patrick L. Makovec
Secretary and 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 the Board Chairman and Secretary/Treasurer
of Dinet. 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 an 8% shareholder of WDS.
SUMMARY OF COMPENSATION TABLE
ANNUAL COMPENSATION
YEAR SALARY BONUS OTHER ANNUAL COMPENSATION
Brian Blankenburg 2000 $60,000
CEO
Brian Blankenburg 1999 $35,000
CEO
Mike McLaughlin 1999 $35,000
CEO
Mike McLaughlin 1998 $84,000
CEO NOTE A
LONG TERM COMPENSATION
AWARDS PAYOUT
YEAR Restricted Securities LTIP All
Stock Underlying Payouts Other
Awards Options/SRS Compensation
Brian
Blankenburg 2000 $30,800
CEO NOTE B
Brian
Blankenburg 1999
CEO
Mike
McLaughlin 1999
CEO
Mike
McLaughlin 1998 Note C
CEO
Note A No officer, director, or member of management received compensation
in excess of $100,000.
Note B The stock which was awarded to Brian Blankenburg was given in lieu of
cash compensation.
Note C In 1998 Mr. McLaughlin was awarded 10,000 warrants exercisable through
2008 at $0.20 per share. They were issued in consideration for his
agreement to cancel certain indebtedness to the corporation. The
exercise price was the fair market value of the stock at the date of
issuance of the warrants.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
TITLE OF NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
Common Pat Makovec Direct 8.6%
11735 77th St SE 936,111
Clear Lake, MN 55319
Common John Doubek Direct 6.4%
640 S Harris 700,000
Helena, MT 59601
Common Brian Blankenburg Direct 3.0%
501 Harlequin Lane 325,981
Severna Park, MD 21146
Common Heartland Diversified Ind Direct 5.0%
1016 Shore Acres Drive 550,009
Leesburg, FL 34748
Common Robert Chase Direct .2%
172 Jupiter St 27,255
Encinitas, CA 92024
Note D
Note D Mr. Chase is the President of the company's subsidiary Dinet. His
employment contract grants him a maximum of 265,000 shares of
Wireless Data's Common Stock. In the first year of his employment he
will receive 41,250 shares of stock at the end of each quarter for a
total of 165,000 shares. Additionally he will receive a one time
bonus of 100,000 shares at the end of one year. At September 30, 2000
the company was obligated to issue Bob Chase the number of shares
reflected in the table.
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 approximately $617,000 compared to $668,000
in Fiscal 1999. The decrease reflects a decline in inventory of approximately
$51,000. There was also an increase in the cash component of the current assets
of nearly $100,000. Trade receivables declined by a similiar amount these
changes are viewed as a positive in inventory and cash management. Revenues
for the period increased by approximately 30% compared to fiscal 1999. The
increase in revenues was the primary reason Wireless Data posted a $42,000
profit as opposed to a $273,000 loss in 1999.
Management believes that cash flow from operations and current cash balance
will be sufficient to fund operations and expenses for the near term.
Results of Operations
Revenues for the fiscal year 2000 were up approximately $449,000, a 30%
increase over the prior year. Product sales were up almost $280,000 while
other income, mostly special engineering, was up approximately $150,000.
The increase in revenue allowed Wireless Data to show a profit of over $42,000
in spite of the fact that the company spent in excess of $250,000 in research
and development. Management firmly believes the key to continued growth and
profitability lies in defining new opportunities and pursuing those with
high growth prospects. Management has been actively pursuing a number of
prospects.
The company's cash position increased in excess of $100,000 partially because
of the profitability but also because of the reduction of inventory and
accounts receivable. It is predicted that accounts receivable and inventory
will increase as the company enters its peak production quarters. However,
it is anticipated both will remain more in proportion to sales as more
emphasis has been placed on the management of those two areas.
Fixed assets increased by an amount in excess of $50,000. Some of the expense
can be attributed to building infastructure which had been ignored for some
time. The majority of the $50,000 was spent on equipment that was employed
in research and development.
The deferred service contract decreased by approximately $47,000 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.
$20,000 of 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, 1999 Mr. Blankenburg became a salaried employee.
The reduction in the payable in stock account was due to distribution of
common stock which was made to John Doubek and Brian Blankenburg in connection
with work performed by the two individuals. $8745 of the payable in stock is
owned to Sheryl Chase in connection with creative production and public
relations work. The company has contracted with her for additional work to be
performed in fiscal 2001. The total of the contract for both years will equal
50,000 shares. Sheryl Chase is the wife of Bob Chase, the President of Dinet.
Accrued Salaries and related payroll taxes were down by approximately $283,000.
Due from related parties is down approximately $285,000. This decline 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 market
commands. It is important for the company to have Mr. Blankenburg maintain
a substantial equity interest in WDS.
The company issued 735,000 shares of common stock during fiscal 2000. 75,000
shares were issued each to Mike McLaughlin, Henry Hanson, and Pat Makovec in
connection with options that they exercised. In November of 1999 the options
were issued in 1989. 400,000 shares were issued to Mr. John Doubek in payment
for legal service related to the 1998 management change and related issues
extending into 1999. 100,000 shares were granted to Brian Blankenburg as an
incentive to accept the position of President and Chief executive officer
of WDS. The salary was far below what his experience and ability would command.
10,000 shares were issued to Mirage Web Design in exchange for designing our
web page.
Other Disclosures
None
Financial Condition
The cash holdings of the company increased approximately $106,000, the major
reason for the increase was the company earned a profit of $42,000 as opposed
to a loss of $273,000 last fiscal year.
Subsequent Events
None
ITEM 5. MARKET PRICE OF COMMON EQUITY
The company's common stock trades on the OTC Bulletin Board under the
symbol: WDSO. The price of the company's common stock at the end of each
quarter, for the past two fiscal years, is as follows:
Quarter Ending High Bid Low Bid
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
12/31/98 7/64 1/10
3/31/99 9/64 9/64
6/30/99 9/64 7/60
9/30/99 7/64 7/64
12/31/99 3/8 11/32
3/31/00 1 3/8 1 3/16
6/30/00 13/32 3/8
9/30/00 7/16 13/32
ITEM 6. YEAR 2000 COMPLIANCE
The company did not have any difficulty complying with year 2000 issues.
ITEM 7. CHANGES IN ACCOUNTING
There were no changes in accounting for fiscal year 2000.
ITEM 8. Auditors Report
James J. Harned
Certified Public Accountant
15 Davenport Avenue-5D
New Rochelle, New York 10801
914-235-8879
December 27, 2000
INDEPENDENT AUDITOR'S REPORT
I have audited the consolidated balance sheet of Wireless Data Solutions, Inc.
and subsidiaries at September 30, 2000, September 30, 1999, and September 30,
1998 and the related consolidated statement 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 stockholder's
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, 2000, Septerber 30, 1999, and September 30, 1998 in conformity
with generally accepted accounting principles, applied consistently.
James J. Harned, C.P.A.
New Rochelle, N.Y 10801
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Earnings
For the Years Ended, September 30, 2000, 1999, 1998
09/30/00 09/30/99 09/30/98
(Audited) (Audited) (Audited)
REVENUES
Net product sales $1,745,530 $1,496,040 $1,466,337
Other Income 210,940 11,355 47,771
-------------------------------------------
Total Revenues 1,956,470 1,507,395 1,514,108
COST OF SALES
Products 719,522 632,233 685,669
------------------------------------------
Total Cost of Sales 719,522 632,233 685,669
--------------------------------------------
Gross Profit 1,236,948 875,162 828,439
Operating Expenses 944,078 1,148,773 1,080,701
Research and Development
expense 250,851
____________________________________________
Income before Interest 42,019 (273,611) (252,262)
Interest expense, net
of interest income 0 0 25,069
--------------------------------------------
Income before taxes 42,019 (273,611) (277,331)
Provision for income taxes 0 0 0
-------------------------------------------
NET EARNINGS $42,019 (273,611) ($277,331)
Basic Profit (loss)
per share $0.004 ($.027) ($.029)
Weighted average shares
outstanding for the year 10,794,610 10,178,780 9,422,602
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Balance Sheet
September 30, 2000, 1999, 1998
ASSETS
09/30/00 09/30/99 09/30/98
(Audited) (Audited) (Audited)
Current Assets:
Cash and cash equivalents $256,986 $150,165 $100,752
Trade accounts receivable,
net of $6,000 estimated allowance
for doubtful accounts 167,478 268,846 465,390
Inventory 180,080 231,510 268,258
Prepaid Expenses 12,372 17,058 0
--------------------------------------------
Total Current Assets 616,916 667,579 834,400
Fixed Assets:
Office fixtures and equipment 65,515 15,033 15,033
Leasehold Improvements 0 12,894 12,894
--------------------------------------------
Sub-Total 65,515 27,927 27,927
--------------------------------------------
Less: Accumulated Depreciation
and Amortization 19,803 27,927 27,927
---------------------------------------------
Net Fixed Assets 45,712 0 0
Other Assets:
Deferred service contract 99,466 146,704 182,133
Loan to RD220 0 0 28,649
Due from Angellcom 0 0 35,000
Due from related parties 4,735 290,009 285,007
Security deposits 3,113 3,113 3,113
-------------------------------------------
Total Other Assets 107,314 439,826 533,902
-------------------------------------------
TOTAL ASSETS $769,942 $1,107,405 $1,368,302
LIABILITIES
Current Liabilities:
Trade accounts payable $137,797 $162,205 $306,676
Service contract payable
in stock 29,545 70,800 2,900
Current portion of
other liabilities 5,077 59,932 71,549
Advance from Customers 15,255 107,788 8,750
Other accrued liabilities 600 1,966 102
Total Current Liabilities 188,274 402,691 389,977
Other Liabilities:
Accrued salaries, related payroll
taxes, reimbursable expenses
payable to officers 285,241 568,417 569,417
---------------------------------------------
Total Other Liabilities 285,241 568,417 569,417
TOTAL LIABILITIES 473,515 971,108 959,394
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;
10,162,124 shares issued and
outstanding at 9/30/98, 10,182,124
at 9/30/99 &
10,917,124 at 9/30/00. 10,917 10,182 10,162
Common Stock options outstanding 0 11,250 11,250
Additional paid-in-capital 2,007,834 1,927,969 1,926,989
Deficit (1,742,323) (1,784,331) (1,510,720)
Sub-Total 276,428 165,070 437,681
Receivable from related entity
for sale of common stock 0 (48,773) (48,773)
-----------------------------------------------
Total Stockholders' Equity 276,428 116,297 388,908
----------------------------------------------
TOTAL LIAB. &
STOCKHOLDERS' EQUITY $769,942 $1,107,405 $1,368,302
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Years Ended September 30, 2000, 1999, 1998
09/30/00 9/30/99 9/30/98
Operating Activities:
Net Income $42,019 ($273,611) ($277,331)
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Changes in Operating Assets and Liabilities:
Decrease (Increase) in
accounts receivable 101,368 196,544 296,196
Decrease (Increase) in inventory 51,430 36,748 (27,523)
(Increase) in other assets 4,686 (17,058) (196,100)
(Decrease) Increase in
accounts payable (24,408) (144,471) (105,124)
Decrease) Increase in advances
from customers (92,533) 99,038 (9,219)
(Decrease) Increase in other
payables (97,476) 58,147 (197,116)
Decrease in deferred service
contract 47,238 35,429 13,967
------------------------------------------
Net cash provided by
operating activities 32,324 (9,234) (306,150)
Investing Activities:
Proceeds of miscellaneous assets (45,712) 0 0
Financing Activities:
(Increase) in due from
related parties 285,274 (5,002) (40,565)
Decrease (Increase) in due
from Angellcom 0 35,000 (35,000)
Decrease (Increase) in loan
to RD220 0 28,649 (28,649)
Decrease) Increase in due
to related parties and related
expenses (283,176) (1,000) (122,715)
Increase (Decrease) in
common stock options o/s (11,250) 0 0
Increase (Decrease) in
related entity for sale of cm stk 48,773
Proceeds of issuance of
common stock 80,600 1,000 550,501
Net cash provided by
financing activities 120,221 58,647 323,572
---------------------------------------------
Net increase in cash 106,833 49,413 17,422
Cash at beginning of period 150,165 100,752 83,330
---------------------------------------------
Cash at end of period 256,986 $150,165 $100,752
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Years Ended September 30, 2000, 1999, 1998
<TABLE>
Common Additional
Common Stock Paid-In
Stock Options Capital
Outstanding
<S> <C> <C> <C>
Balance at September 30, 1999 $10,162 $11,250 $1,926,989
Net Earnings for the period
ended September 30, 2000
Issuance of common stock 10 (11,250) 8,090
Stock issued to cancel debt 725 71,775
Prior period adjustment
------------------------------------------
Sub-Total 10,917 0 $2,007,834
-------------------------------------------
Balance at September 30, 2000 $10,917 0 $2,007,834
Deficit Total
Balance at September 30, 1999 ($1,784,331) $165,070
Net Earnings for the period
ended September 30, 2000 42,019 42,019
Issuance of common stock (3,150)
Stock issued to cancel debt 72,500
Sub-Total (1,742,323) 276,428
Balance at September 30,2000 ($1,742,323) $276,428
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 September 30, 1999
Issuance of common stock
Stock issued to cancel debt to officer 20 980
Prior period adjustment
-------------------------------------------
Sub-Total 10,182 11,250 1,927,969
Receivable from related
entity for sale of common stock
--------------------------------------------
Balance at September 30, 1999 $10,182 $11,250 $1,927,969
Deficit Total
Balance at September 30, 1998 ($1,510,720) $437,681
Net Earnings for the period
ended September 30, 1999 (273,611) (273,611)
Stock issued to cancel debt
to officer 1,000
Sub-Total (1,784,331) 165,070
Receivable from related entity
for sale of common stock (48,773)
Balance at September 30, 1999 ($1,784,331) $116,296
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital
Balance at September 30, 1997 $8,165 $11,250 $1,378,485
Net Earnings for the period
ended September 30, 1998
Issuance of common stock
Exercise of common stock options
Stock issued for service contracts 855 235,146
Private Placement 724 210,526
Stock issued to cancel debt to officer 418 102,832
Prior period adjustment
-----------------------------------------
Sub-Total 10,162 11,250 $1,926,989
Receivable from related
entity for sale of common stock
------------------------------------------
Balance at September 30, 1998 $10,162 $11,250 $1,926,989
Deficit Total
Balance at September 30, 1997 ($1,233,388) $164,512
Net Earnings for the period
ended September 30, 1998 (277,331) (277,331)
Stock issued for service contracts 236,001
Private Placement 211,250
Stock Issued to cancel debt 103,250
Sub-Total (1,510,719) 437,682
Receivable from related entity
for sale of common stock (48,773)
Balance at September 30, 1998 ($1,510,719) $388,908
</TABLE>
<PAGE>
Wireless Data Solutions, Inc. And Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1999
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 subsidiary:
Subsidiary % of Common Stock Owned
Distributed Networks, Inc. (Dinet) 100
WDS, and Dinet are hereinafter referred to as the Company.
All significant intercompany accounts have been eliminated in
consolidation.
Organization
WDS, which is headquartered in Minnesota, has approximately 3000
shareholders of record as of September 30, 2000. 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 began selling in the international market
with clients in Mexico, Canada, South America, and Malaysia.
Trade Accounts Receivable
Bad debts are reported using the allowance method.
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
Furniture and Fixtures are depreciated under the straight line method
having a useful life of three years. Depreciation expense for the fiscal
year ended September 30, 2000 was $4,770.
Office Space
The Company maintains offices and warehouse space in Oceanside,
California; offices in St. Cloud, Minnesota; and Severna Park, Maryland.
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 Severna Park office consists of 500 square feet and is part of a
residence of an employee and no rent is charged.
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
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
FYE 9-30-99 Loss 273,611
FYE 9-30-00 Profit (42,019)
Total NOL Carryforward $1,109,463
2. Related Party Transactions and Relationships
A. The names and relationships of the related parties referred to in
these notes are set forth below:
Pat Makovec, Dinet secretary/treasurer, Board Chairman and secretary/
treasurer of WDS and a 8% stockholder of WDS.
Brian Blankenburg, President, Director and CEO of WDS and CEO of Dinet
and a 4% shareholder of WDS.
Robert Chase, President of Dinet.
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
34,500 .23 03/08
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 8,000
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
Dave Bottge 7-27-99 7-26-04 .11 1,000
Zbigniew Szuksztu 7-27-99 7-26-04 .11 1,000
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. Four 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 500,000 and the minimum that could be issued if the goal is reached in
the last year of the plan is 500,000. The life of the warrants if issued
is five years. Management does not expect any warrants will be issued under
this plan.
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.
7. Geographic Areas
All sales are managed as a single enterprise. However, in compliance with SFAS
14, "Financial Reporting for Segments of a Business Entities"
Area 2000 1999
United States Revenues $1,719,833 $1,353,887
Americas Revenues 236,637 153,508
Asia Pacific Revenues 0 0
Totals $1,956,470 $1,507,395
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 730,000 at a total value of $212,000.
9. Subsequent Events
There are no material subsequent events to be disclosed.
10. Employment Contract
On August 2, 2000, the company entered into an employment agreement with Robert
Chase, who succeeds Mr. Blankenburg as President of Dinet. (Mr. Blankenburg
will continue to serve as President and CEO of WDS). 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 encourage 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.
11. Pending Litigation
A customer filed an action against the company alleging certain problems with
equipment on or about December, 1995. The complaint includes claims agaisnt
Dinet for breach of express warranty, and for punitive damages and attorney's
fees, all in an amount in excess of $150,000. The action was filed on
September 7th, 1999 and discovery has commenced. Dinet has filed an answer
denying all claims. As of September 30, 2000, no significant changes in
status has occurred.
PART II
Item 9. Legal Proceedings
Not applicable (See auditors note #11 in the preceding paragraph).
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 year 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 Heatland 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* Artlicles 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, filed June 13, 1988.
3.3* Articles of Domestication of Products, Services, and
Technology Corporation, filed June 2, 1997.
3.4* Articles of Amendment to the Articles of Incorporation of
Products, Services, & Technology Corporation, filed on
June 13, 1997.
3.5* Bylaws of Products, Services, & 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 the Registration Statement are
modified in their entirety by reference to such exhibits.
* Incorporated by reference herein to the Company's Form 10SB, as amended,
dated as of February 12, 1998.
(b) Forms 8-K filed during the last quarter. One.
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.
December 29, 2000 Wireless Data Solutions,Inc.
/s/ Patrick L. Makovec
-----------------------
Patrick L. Makovec
Chairman of the Board
_
