UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1998
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from_____to_____
Commission file number 0-2749
DISTINCTIVE DEVICES, INC.
(Name of small business issuer in its charter)
New York
(State of incorporation or organization)
13-1999951
(I.R.S. Identification No.)
Suite 134, 1324 Motor Parkway, Hauppauge, New York 11788
(Address of principal executive offices)
Issuer's telephone number: (516)751-1375
Former name, former address and former fiscal year,
if changed since last report: N/A
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( )
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes(X) No( )
4,119,902 shares of issuer's common stock, $.05 par value, were outstanding at
August 31, 1998. Issuer has no other class of common equity.
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheeets--
August 31, 1998 and February 28, 1998 3
Consolidated statements of income--
Three months and six months ended
August 31, 1998 and 1997 4
Consolidated statements of cash flows--
Six months ended August 31, 1998 and 1997 5
Notes to financial statements--
August 31, 1998 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 7
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS 7
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 7
SIGNATURES 8
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
August 31, February 28,
1998 1998
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $ 329,543 $ 339,539
Investments available-for-sale 99,906 99,500
Receivable, covenant not to
compete, current portion 7,932 7,574
------- -------
Total Current Assets 437,381 446,613
Receivable, covenant not to
compete, long term portion 7,197 11,255
Property and Equipment, net 450 630
------- -------
$ 445,028 $ 458,498
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
expenses $ 3,930 $ 5,920
-------- --------
Total Current Liabilities 3,930 5,920
Commitments and contingencies--
See accompanying notes
Shareholders' Equity
Preferred stock, $1.00 par value
Shares authorized - 1,000,000
Issued and outstanding - None
Common stock, $.05 par value
Shares authorized - 20,000,000
Issued and outstanding - 4,119,902 205,995 205,995
Additional paid-in capital 630,178 630,178
Accumulated deficit (395,691) (383,805)
Unrealized gain on investments 616 210
-------- --------
Total Shareholders' Equity 441,098 452,578
-------- --------
$ 445,028 $ 459,498
======== ========
The accompanying notes are part of the financial statements.
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended Six months ended
August 31, August 31,
1998 1997 1998 1997
---- ---- ---- ----
Revenues:
Covenant not to compete $ 6,750 $ 3,285 $13,500 $ 4,500
Interest income 5,626 6,739 11,959 13,742
------ ------ ------ ------
12,376 10,024 25,459 18,242
Administrative expenses (17,898) (17,434) (37,345) (34,642)
------ ------ ------ ------
Net (loss) $(5,522) $(7,410) $(11,886)$(16,400)
====== ====== ====== ======
Net (loss)per
share of common stock
(basic and diluted) $(0.001) $(0.002) $(0.003) $(0.004)
====== ====== ====== ======
Average number of
common shares
outstanding 4,119,902 4,119,902 4,119,902 4,119,902
The accompanying notes are part of the financial statements.
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months ended August 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(11,886) $(16,400)
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 180 180
Decrease in operating assets:
Accrued interest receivable 0 (1,335)
Decrease in operating
liabilities:
Accounts payable and
accrued expenses (1,990) (4,598)
------
(13,696) (22,153)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in non-trade receivable 3,700 16,269
----- ------
3,700 16,269
----- ------
CASH AND CASH EQUIVALENTS
Decrease during period (9,996) (5,884)
At beginning of period 339,539 361,269
------- -------
At end of period 329,543 $355,385
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ -- $ --
Franchise taxes paid $ 380 $ 775
The accompanying notes are part of the financial statements.
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
August 31, 1998
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management all adjustments considered necessary
for a fair presentation have been included. Operating results for the
six-month period ended August 31, 1998 are not necessarily indicative of
results that may be expected for the year ending February 28, 1999. For
further information refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for
the year ended February 28, 1998.
NOTE B - CURRENT AND LONG-TERM RECEIVABLES FROM COVENANT NOT
TO COMPETE
As discussed in its Annual Report on Form 10-KSB for the year ended February
28, 1997, the Company's operating assets and businesses were sold on July 12,
1996. Upon closing, the Company received cash equal to the approximate book
value of receivables, inventories and equipment. Added consideration is
payable monthly, over a four-year term following the sale date, in exchange for
the Company's commitment not to compete with the buyer. Such payment amounts
are subject to reduction if control of the Company changes during the four-year
term.
The date of such control change cannot be predicted. In the interim, financial
statements reflect amounts received under non-compete provisions of the
business sale agreement and the discounted value of probable future payments,
based upon management's best estimate.
NOTE C - NON-CASH INVESTING ACTIVITY
Investments available-for-sale are 4-3/4% U.S. Treasury Notes par value
$100,000 due October 31, 1998, valued at market. Market value rose $406 during
the six-month period ended August 31, 1998.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS: Since the sale of its businesses on July 12, 1996, the
Company has had no operating income. As a consequence, losses resulted from
continuing operations for the three- and six-month periods ended August 31,
1998 and 1997. For information regarding the business sale agreement reference
is made to the Company's Annual Report on Form 10-KSB for the year ended
February 28, 1997.
Revenues include noncompete consideration and interest earned on cash
equivalents and investments. Noncompete consideration earned during the latest
three- and six-month periods does not include payments received which were
previously classified (on a discounted basis)as receivable from the covenant
not to compete.
FINANCIAL CONDITION: Except for estimated amounts to be received from the
buyer of the Company's businesses, assets consist of cash and marketable
investments. Liabilities represent routine administrative expenses, either
payable or accrued at the balance sheet date. The Company has no debt and no
financial commitments outstanding.
CURRENT ACTIVITIES: The Company is actively continuing efforts to identify a
suitable merger partner, preferably a profitable, privately-held business
seeking public ownership.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
No Report on Form 8-K was filed during the period for which this Quarterly
Report is filed.
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:
DISTINCTIVE DEVICES, INC.
September 26, 1998 /s/ EARL M. ANDERSON, JR.
Earl M. Anderson, Jr.
President and Principal
Executive Officer
September 26, 1998 /s/ JAMES R. HAWK
James R. Hawk
Treasurer and Principal
Accounting Officer
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