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 June 30, 2000
( ) 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 13-1999951
(State of incorporation or organization) (IRS Identification No.)
110 E. Atlantic Avenue, Suite 240, Delray Beach, Florida 33444
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (561)274-4233
N/A
(Issuer's former address)
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( )
17,163,404 shares of issuer's common stock, $.05 par value, were outstanding at
July 31, 2000. Issuer has no other class of common equity.
<PAGE>
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets--
June 30, 2000 3
Condensed Consolidated Statements Of Operations--
Three months ended June 30, 2000 and 1999
February 5, 1998 Inception to June 30, 2000 4
Condensed Consolidated Statements Of Changes In
Stockholders' Equity--
Inception to June 30, 2000 5
Condensed Consolidated Statements Of Cash Flows--
Three months ended June 30, 2000 and 1999
February 5, 1998 Inception to June 30, 2000 6
Notes To The Condensed Consolidated Financial
Statements 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION 9
PART II - OTHER INFORMATION
Item 5. OTHER INFORMATION 10
Item 6. EXHIBITS AND REPORTS ON FROM 8-K 10
SIGNATURES 11
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - FINANCIAL STATEMENTS
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
June 30,
2000
ASSETS
CURRENT ASSETS
Cash $ 1,453,292
Other Receivables 290,000
Prepaid Expenses 14,000
---------
Total Current Assets 1,757,292
PROPERTY AND EQUIPMENT, Net 838,267
OTHER ASSETS 69,954
---------
$ 2,665,513
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 18,763
------
COMMITMENTS
MINORITY INTEREST
STOCKHOLDERS' EQUITY
Preferred Stock, Par Value $1; Authorized
1,000,000 Shares, Issued 0 Shares
Common Stock, Par Value $.05; Authorized
20,000,000 Shares 858,170
Additional Paid-In Capital 3,396,717
Deficit Accumulated During
the Development Stage (1,608,137)
---------
2,646,750
---------
$ 2,665,513
=========
The Accompanying Notes are an Integral Part of These Financial Statements
<PAGE>
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Six Months Period From
Ended Ended February 5, 1998
June 30, June 30, (Inception) to
2000 1999 2000 1999 June 30, 2000
<S> <C> <C> <C> <C> <C>
Revenue $ $ $ $ $
General and
Administrative
Expenses 606,768 196,250 1,106,543 283,411 1,844,347
------- ------- --------- ------- ---------
Operating Loss (606,768) (196,250) (1,106,543) (283,411) (1,844,347)
Interest and Other
Income 26,345 32,544 44,344
------- ------- --------- ------- ---------
(580,423) (196,250) (1,073,999) (283,411) (1,800,003)
Minority Interest 32,010 51,628 34,973 170,673
------- ------- --------- -------
Net Loss $ (580,423) $ (164,240) $(1,022,371) $ (248,438) $(1,629,330)
======= ======= ========= ======= =========
Weighted Average
Shares of
Common Stock
Outstanding 17,163,404 6,000,000 15,838,826 6,000,000 9,084,045
========== ========= ========== ========= =========
Loss Per Share--
Basic and
Diluted $ (0.03) $ (0.03) $ (0.06) $ (0.04) $ (0.18)
======== ======= ======= ======= =========
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements
<PAGE>
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
Deficit
Additional Accumulated
Common Stock Paid-in During the
Shares Amount Capital Development Stage
<S> <C> <C> <C> <C>
Initial Issuance of Shares for Cash 6,000,000 $ 300,000 $ (299,700) $
Net Loss (195)
--------- ------- ------- ---
Balance at December 31, 1998 6,000,000 300,000 (299,700) (195)
Issuance of Shares for Cash 2,051,340 102,567 699,597
Acquisition of Net Assets on
Recapitalization 4,119,902 205,995 (1,666)
Issuance of Shares for Services 121,712 6,086 85,198
Net Loss (606,764)
--------- ------- -------- -------
Balance at December 31, 1999 12,292,954 614,648 483,429 (606,959)
(unaudited)
Issuance of Shares for Cash (Note 4) 3,156,810 157,841 2,998,969
Issuance of Shares for
Minority Interest 1,713,640 85,681 (85,681)
Reduction of Minority Interest 21,193
Net Loss (1,022,371)
--------- -------- --------- ---------
Balance at June 30, 2000 (unaudited) 17,163,404 $ 858,170 $ 3,396,717 $(1,608,137)
========== ======= ========= =========
The Accompanying Notes are an Integral Part of These Financial Statements
</TABLE>
<PAGE>
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Period From
Feb. 5, 1998
Six Months Ended June 30, (Inception) to
2000 1999 June 31, 2000
CASH FLOWS FROM OPERATING
ACTIVITIES $(1,471,427) $ (307,476) $(2,185,769)
--------- ------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of Property
and Equipment (661,350) (47,905) (910,983)
Cash Effect of Recapitalization 398,904
------- ------- -------
Net Cash Used in Investing
Activities (661,350) (47,905) (512,079)
------- ------ -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of
Common Stock 3,156,810 550,530 4,151,140
--------- ------- ---------
Increase in Cash 1,024,033 194,879 1,453,292
Cash:
Beginning 429,259 5
------- ------- ---------
Ending $ 1,453,292 $ 194,884 $ 1,453,292
========= ======= =========
The Accompanying Notes are an Integral Part of These Financial Statements
<PAGE>
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF CONSOLIDATION
The accompanying unaudited condensed consolidated financial statements include
the accounts of Distinctive Devices, Inc. ("DDI") and its subsidiary, EagleView
Industries, Inc. (EagleView).
NOTE 2: INTERIM FINANCIAL DATA
In the opinion of management, the accompanying unaudited financial statements
have been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission and generally accepted accounting principles
for interim financial information. These financial statements do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. The annual financial statements
of the Company as of December 31, 1999 should be read in conjunction with these
statements. The financial information included herein has not been audited.
However, management believes the accompanying unaudited interim financial
statements contain all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the consolidated financial position of
the Company as of June 30, 2000 and the results of their operations for the
three months and six months ended June 30, 2000 and 1999 and cash flows for
the six months ended June 30, 2000 and 1999. The results of operations and
cash flows for the period are not necessarily indicative of the results of
operations or cash flows for the year ending December 31, 2000.
NOTE 3: CAPITAL STRUCTURE
Preferred Stock
The Company has 1,000,000 shares of preferred stock (par value $1) authorized.
The Board has authority to issue the shares in one or more series and to fix
the designation preferences, powers and other rights as it deems appropriate.
No shares of preferred stock are outstanding.
Common Stock
The Company has 20,000,000 shares of common stock (par value $.05) authorized.
Common stock has one vote per share for the election of directors and all other
matters submitted to a vote of stockholders. Shares of common stock do not
have cumulative voting, preemptive, redemption or conversion rights.
<PAGE>
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: PRIVATE PLACEMENT
During the six months ended June 30, 2000, DDI offered in a private placement,
shares of its $.05 par value common stock, at a price of $1 per share. The
shares were offered on a best efforts basis with no minimum and DDI issued an
aggregate of 3,156,810 shares of its common stock for $3,156,810 in cash.
NOTE 5: MINORITY INTEREST
During the six months ended June 30, 2000, DDI exchanged 1,713,640 shares of
its common stock for 856,820 shares of EagleView common stock held by minority
shareholders. As a result of this transaction, at June 30, 2000, DDI owned
approximately 97.9% of the outstanding shares of EagleView. As this is a
continuation of the August 10, 1999 recapitalization, no goodwill has been
recorded and only an adjustment to additional paid-in capital has been made for
the resultant differences in par value.
As a result of the EagleView stockholders' deficit, the minority interest has
been reduced to zero with a corresponding offset to equity.
NOTE 6: COMMITMENT
The Company has entered into a noncancelable operating lease for facilities in
New York. The lease provides for an annual base rent of $90,280, subject to
semi-annual increases based on changes to the Consumer Price Index, limited to
3% semi-annually, plus tax, operating expenses and common area maintenance.
The lease expires in 2010.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
After an overlong delay, our antenna array tower, atop a building in Union
City, New Jersey, was finally connected to T-3 service provided by
MCIWorldCom's Internet backbone on June 20, 2000. For the first time, we've
since been able to conduct beta tests of the various features and services
offered by our two-way, wireless, "last mile" communication system to be used
by prospective subscribers located in Manhattan and northeast New Jersey.
As part of our system development program, high speed, broad bandwidth, voice,
data and Internet connectivity has now been successfully demonstrated between
our antenna array tower , in New Jersey, and four locations in northeast New
Jersey and Manhattan, the latter at the Empire State Building and the World
Trade Center. Further, the video-conferencing feature of our intended services
has been successfully tested by wireless connectivity between our new sales and
demonstration offices in the Empire State Building and the New Jersey antenna
array tower, and then, via Internet, to our offices in Delray Beach, Florida.
<PAGE>
By offering free Internet connectivity for a 60 day trial period, to
prospective subscribers in our New York-New Jersey service area, we intend to
broaden our beta test area to include additional user locations. As we add to
the number of users we gain needed research information with respect to the
traffic-handling capabilities of the array tower. At the same time, additional
users will provide an opportunity to test antennas made by several
manufacturers, for use at subscribers' premises.
Meanwhile, the Company's new management (see Part II, Item 5(b), below) has
initiated contacts with local realtors, and others, with a view to towards
offering our wireless "last mile" Internet connectivity to managers and owners
of office and apartment buildings in our service area.
The Company has had no operating revenues to the date of this Report.
Future Funding
Management believes that Company funds are adequate to meet cash requirements
through the end of the current year. Although operating revenues are
anticipated before year end, the amount may be insufficient to implement the
business plan beyond that time. Thus, substantial additional capital will, in
all likelihood, be needed in order to fund operations into the next calendar
year. As of the date of this Report, no assurance can be given that such
funding will be available to the Company.
IN ADDITION TO THE FOREGOING UNCERTAINTY, READERS ARE ADVISED THAT STATEMENTS
CONTAINED IN THIS REPORT CONCERNING FUTURE ACTIVITIES, PERFORMANCE OR
INTENTIONS ARE FORWARD-LOOKING STATEMENTS WHICH, BY THEIR NATURE, INVOLVE RISK
AND UNCERTAINTY BECAUSE THEY RELATE TO EVENTS, AND DEPEND ON CIRCUMSTANCES,
THAT WILL OCCUR IN THE FUTURE, MANY OF WHICH MAY NOT BE WITHIN THE COMPANY'S
CONTROL. ACTUAL RESULTS AND EVENTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED
OR IMPLIED BY SUCH STATEMENTS AS THE RESULT OF KNOWN OR UNKNOWN RISKS,
UNCERTAINTIES AND/OR OTHER FACTORS AND THERE CAN BE NO ASSURANCE THAT SUCH
EXPECTATIONS WILL PROVE CORRECT.
PART II OTHER INFORMATION
Item 5. OTHER INFORMATION
(a) Our Report on Form 10-QSB for the quarter ended March 31, 2000, advised
that a letter of intent had been executed with respect to the acquisition, by
the Company, of a satellite teleport business. Subsequently, negotiations were
terminated.
<PAGE>
(b) At a meeting of directors held on June 19, 2000, Mr. Michael J. Paolini
resigned as a director, president and CEO of the Company and its subsidiary,
EagleView Industries, Inc. ("EVI"). He remained Treasurer and CFO, of both
companies, on an interim basis. He will continue to serve the Company as an
engineering consultant.
At a similar meeting held on July 14, 2000, Mr. James W. Wolff was elected a
director, president, CEO, treasurer and CFO of the Company and its subsidiary.
Directors also re-elected Mr. Sanjay S. Mody, a director, to his former
position as Executive Vice President and COO of the Company and EVI.
Mr. Wolff, 59, has been engaged in commercial and investment banking for the
past 35 years, most recently as president of First Internet Capital, Inc., a
Boca Raton, Florida, privately-held, venture banking firm. Previously, he
served as a senior officer with the Wall Street Division of Chemical Bank, New
York City, and three South Florida banks.
He holds a Masters degree in corporate finance from New York University.
Currently, he is a consultant to the U.S. Bankruptcy Court for the Southern
District of Florida and he has testified, as an expert, in matters involving
domestic and international banking. He also serves as a director of
Casinolive.com Corp. and Entertech, Inc.
Mr. Wolff acted as the finder for the transaction pursuant to which the Company
acquired control of EVI on August 10, 1999. His fee earned from that
transaction, and the subsequent acquisition of additional EVI shares, was paid
by the issuance of 138,848 shares of the Company's common stock.
Mr. Mody, 42, a director of the Company and EVI, served briefly, as Executive
Vice President and COO of both companies during March and April 2000. Since,
he has served both companies in a consulting capacity. Prior thereto, he
served, for four years, as Vice President of Laidlaw Global Securities, Inc.,
New York City and for one year as Vice President of Dean Witter & Co., New York
City. He holds equity interests in technology companies in his native India.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27. Financial Data Schedule
No Reports on Form 8-K were filed by the Company for the quarter ended June 30,
2000.
<PAGE>
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.
(Registrant)
Dated: August 11, 2000 By: /s/ JAMES W. WOLFF
James W. Wolff
President and Treasurer
Chief Executive Officer
Chief Financial Officer
<PAGE>
