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 May 31, 1999
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES 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( )
4,119,902 shares of issuer's common stock, $.05 par value, were outstanding at
May 31, 1999. Issuer has no other class of common equity.
DISTINCTIVE DEVICES, INC.
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance sheets--
May 31, 1999 and February 28, 1999 3
Statements of income--
Three months ended May 31, 1999 and 1998 4
Statements of cash flows--
Three months ended May 31, 1999 and 1998 5
Notes to financial statements--
May 31, 1999 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PENDING
ACQUISITION 7
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS 8
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 8
SIGNATURES 8
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DISTINCTIVE DEVICES, INC.
BALANCE SHEETS
May 31, February 28,
1999 1999
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $ 409,906 $ 418,630
Receivable, covenant not to
compete, current portion 8,255 8,355
-------- ---------
Total Current Assets 418,161 426,985
Receivable, covenant not to
compete, long term portion 750 2,900
Property and equipment, net 180 270
-------- --------
$ 419,091 $ 430,155
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
and accrued expenses $ 6,240 $ 6,091
-------- --------
Total Current Liabilities 6,240 6,091
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 (423,322) (412,109)
-------- --------
Total Shareholders' Equity 412,851 424,064
-------- --------
$419,091 $430,155
======== ========
The accompanying notes are part of the financial statements.
DISTINCTIVE DEVICES, INC.
STATEMENTS OF INCOME
(UNAUDITED)
Three months ended May 31,
1999 1998
---- -----
Revenues:
Covenant not to compete $ 6,750 $ 6,750
Interest income 4,568 6,333
------- -------
11,318 13,083
Administrative expenses (22,531) (19,447)
------- -------
Net (loss) (11,213) (6,364)
======== =======
Net (loss) per common
share(basic and diluted) $ (0.003) $ (0.002)
======== ========
Weighted average number of common
shares outstanding 4,119,902 4,119,902
The accompanying notes are part of the financial statements.
DISTINCTIVE DEVICES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended May 31,
1999 1998
---- ----
CASH FLOWS FROM ADMINISTRATIVE ACTIVITIES
Net (loss) $(11,213) $ (6,364)
Adjustments to reconcile net (loss)
to net cash provided by (used in)
administrative activities:
Depreciation and amortization 90 90
Increase(Decrease) in operating liabilities:
Accounts payable and accrued
expenses 149 (2,365)
------- -------
(10,974) (8,639)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in non-trade receivable 2,250 1,829
------- ------
2,250 1,829
CASH AND CASH EQUIVALENTS
(Decrease) for the period (8,724) (6,810)
At beginning of period 418,630 339,539
------- -------
At end of period 409,906 $332,729
======= =======
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid $ -- $ --
Franchise taxes paid $ 877 $ 380
The accompanying notes are part of the financial statements.
DISTINCTIVE DEVICES, INC.
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited 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 three-month period
ended May 31, 1999 are not necessarily indicative of results that may be
expected for the year ended February 29, 2000. For further information refer
to the financial statements and footnotes thereto included in the Company's
annual report on Form 10-KSB for the year ended February 28, 1999.
NOTE B - CURRENT AND LONG-TERM RECEIVABLES FROM COVENANT NOT TO
COMPETE
The Company's operating assets and businesses were sold on July 12, 1996.
Pursuant to terms of the sale agreement the Company currently receives, from
the buyer, noncompete consideration of $3,000 per month of which $2,250 is
recorded as income and $750 as a reduction in the related receivable. Payments
would be reduced to $750 per month upon a change in control of the Company.
The final noncompete payment is due June 16, 2000.
NOTE C - SUBSEQUENT EVENT
On June 18, 1999, the Company entered into a definitive agreement to acquire
approximately 80% of the equity of EagleView Industries, Inc. (EVI). The
transaction is scheduled to close August 4, 1999. Following the closing
control of the Company will pass to EVI's largest shareholder, EagleView
Technologies, Inc. Remaining EVI shares would be acquired at a later date.
The Company would issue a total of approximately 10,000,000 shares of its
unissued common stock if all EVI shares are acquired.
6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PENDING
ACQUISITION
RESULTS OF OPERATIONS: Since the sale of our businesses on July 12, 1996, we
have had no operating revenues. As a consequence, losses resulted for the
three-month periods ended May 31, 1999 and 1998. For information regarding the
business sale agreement, reference is made to our 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
three-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 cash equivalents.
Liabilities represent routine administrative expenses, either payable or
accrued at the balance sheet date. The Company has no debt.
PENDING ACQUISITION: On June 18,1999 we entered into a definitive agreement to
acquire approximately 80% of the outstanding equity of EagleView Industries,
Inc. ("Industries") in exchange for approximately 8,000,000 shares of our
unissued Common Stock. The parties expect to close this transaction August 4,
1999. Upon closing, control of the Company would pass to EagleView
Technologies, Inc., the largest shareholder of Industries. At a later date (or
dates) the remainder of Industries' equity would be acquired by issuance of an
additional 2,000,000 shares, approximately, of the Company's Common Stock.
Industries intends to provide high quality, low cost broad bandwidth wireless
connectivity for Internet, data and video- telecommunication services. To
date, Industries has had no operating revenues.
Statements in this Report concerning future activities, events, expectations,
performance or intentions are "forward looking statements". Actual activities
or developments may differ materially from those expressed or implied by such
statements as the result of known or unknown risks, uncertainties and other
factors.
7
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.
June 26, 1999 /s/ EARL M. ANDERSON, JR.
Earl M. Anderson, Jr.
President and Principal
Executive Officer
June 26, 1999 /s/ JAMES R. HAWK
James R. Hawk
Treasurer and Principal
Accounting Officer
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