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 September 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)279-9632
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
October 31, 2000. Issuer has no other class of common equity.
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INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet--
September 30, 2000 3
Condensed Consolidated Statements Of Operations--
Three and nine months ended September 30, 2000
and 1999
February 5, 1998 (Inception) to September 30, 2000 4
Condensed Consolidated Statements Of Changes In
Stockholders' Equity--
Inception to September 30, 2000 5
Condensed Consolidated Statements Of Cash Flows--
Nine months ended September 30, 2000 and 1999
February 5, 1998 (Inception)
to September 30, 2000 6
Notes To The Consolidated Financial Statements 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION 8
PART II - OTHER INFORMATION
Item 5. OTHER INFORMATION 10
Item 6. EXHIBITS AND REPORTS ON FROM 8-K 11
SIGNATURES 11
[2]
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PART I - FINANCIAL INFORMATION
Item 1. - FINANCIAL STATEMENTS
DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
CONSOLIDATED BALANCE SHEET
(unaudited)
September 30, 2000
ASSETS
CURRENT ASSETS
Cash $ 1,334,827
Other Receivables 11,190
---------
Total Current Assets 1,346,017
PROPERTY AND EQUIPMENT, Net 870,168
OTHER ASSETS 65,839
--------
$ 2,282,024
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 106,538
-------
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 (2,079,401)
---------
2,175,486
---------
$ 2,282,024
=========
The Accompanying Notes are an
Integral Part of These Financial Statements
[3]
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DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Nine Months Period From
Ended Ended February 5, 1998
September 30, September 30, (Inception) to
2000 1999 2000 1999 Sept. 30, 2000
Revenue $ $ $ $ $
General and
Administrative
Expenses 483,566 159,883 1,590,109 443,294 2,327,913
------- ------- --------- ------- ---------
Operating Loss (483,566) (159,883) (1,590,109) (443,294) (2,327,913)
Interest and Other
Income 12,302 3,877 44,846 3,877 56,646
------- ------- --------- ------- ---------
(471,264) (156,006) (1,545,263) (439,417) (2,271,267)
Minority Interest - 43,131 51,628 78,104 170,673
------- ------- --------- ------- ---------
Net Loss $ (471,264) $ (112,875) $(1,493,635) $ (361,313) $(2,100,594)
======= ======= ========= ======= =========
Weighted Average
Shares of
Common Stock
Outstanding 17,163,404 12,292,954 16,282,235 12,292,954 9,851,903
========== ========== ========== ========== =========
Loss Per Share--
Basic and
Diluted $ (0.03) $ (0.01) $ (0.09) $ (0.03) $ (0.21)
======== ======= ======== ======= =======
The Accompanying Notes are an
Integral Part of These Financial Statements
[4]
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DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
Deficit
Additional Accumulated
Common Stock Paid-in During the
Shares Amount Capital Development
Stage
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 (1,493,635)
------- ------- --------- ---------
Balance at
September 30, 2000
(unaudited) 17,163,404 $858,170 $3,396,717 $(2,079,401)
========== ======= ========= =========
The Accompanying Notes are an
Integral Part of These Financial Statements
[5]
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DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Period From
February 5, 1998
Nine Months Ended September 30, (Inception) to
2000 1999 September 30, 2000
CASH FLOWS FROM
OPERATING ACTIVITIES $ (1,510,027) $ (317,029) $ (2,224,489)
CASH FLOWS FROM
INVESTING ACTIVITIES (741,215) (65,789) (591,824)
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from Issuance
of Common Stock 3,156,810 1,189,823 4,151,140
-------- --------- ---------
Increase in Cash 905,568 807,005 1,334,827
Cash:
Beginning 429,259 5 _
------- -------
Ending $ 1,334,827 $ 807,010 $ 1,334,827
========= ======= =========
The Accompanying Notes are an
Integral Part of These Financial Statements
[6]
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DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
NOTES TO THE 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 September 30, 2000 and the results of their
operations for the three months and nine months ended September 30, 2000 and
1999 and cash flows for the nine months ended September 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.
[7]
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DISTINCTIVE DEVICES, INC. AND SUBSIDIARY
(Development Stage Companies)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: PRIVATE PLACEMENT
During the nine months ended September 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 nine months ended September 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 September 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
In April 2000, the Company 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.
NOTE 7: RECLASSIFICATION OF PRIOR PERIOD
Certain amounts in the prior period's financial statements have been
reclassified to conform to the current period presentation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Plan of Operation
As described in Part II, Item 5, of this Report, a change occurred in the
management of the Company and its subsidiary on July 14, 2000. New
management's attention turned immediately to curtailing cash expenditures.
During the three months ended March 31, 2000, negative cash flow from operating
activities amounted to $578,860. During the three months ended June 30, 2000,
negative cash flow rose to $642,567. These amounts were in addition to
$661,350 invested in equipment during the six-month period.
[8]
As a consequence of staff reductions, and other economies, negative cash flow
from operating activities for the three months ended September 30, 2000, was
reduced to $288,600.
In a further plan to reduce expenses, we elected to seek out established
providers of Internet and related services, in the New York City metropolitan
area, to market our wireless Internet connection services, rather than
undertaking the costly process of establishing our own sales organization in
that locale. In that regard, we are currently negotiating agreements with two
firms - one in New York City and the other in northern New Jersey - to act as
marketers or resellers of our service.
The New York City firm is a successful provider of data storage and retrieval,
and other business solution, services to banks, insurance companies and
brokerages. The New Jersey firm has been similarly successful in providing
Internet provider and access services to small businesses in its marketing
area.
During the September quarter, beta testing of our antenna array tower in Union
City, New Jersey, was carried out to a number of locations in New York City and
northern New Jersey. Results were satisfactory and users at several sites may
begin paying for the service before year end. Service charges and billing
dates await the outcome of the marketing or reseller agreements referred to
above.
Subsequent Events
Our array tower structure in Union City includes a satellite antenna system.
From there, we can re-transmit incoming Internet traffic to customer locations
worldwide, either directly or via another earth station. Several users of our
prospective New York City marketer's services have a need for such
international connectivity. Satellite operations require licensing by the
Federal Communications Commission (FCC) and, this month, we retained the
services of FCC counsel to prepare and submit our license application.
Meanwhile, we have reached an understanding with Cidera, Inc., of Laurel,
Maryland, a privately-held corporation organized in 1997, whereby Cidera will
provide a licensed satellite antenna on our Union City rooftop location as part
of its Internet services. Cidera serves customers from four
satellites-in-orbit.
Cidera offers direct wireless Internet connectivity between content and access
providers, thereby bypassing the congestion, delays and omissions now becoming
common in the high speed transmission of data via the Internet landlines, or
"backbone". Further, Cidera's satellites can broadcast data, streaming video,
Usenet news and large data bases to any number of access providers
simultaneously, in North America and elsewhere. Such simultaneous service is
beyond the capability of Internet landlines.
Recently, we've become involved in a U.S. government sponsored program to bring
Internet services to remote communities. It would appear that wireless is the
most economical way to accomplish this objective. While in an early stage of
development, this program could provide another outlet for the Company's
services.
The Company has had no operating revenue to the date of this Report.
[9]
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Future Funding
At September 30, 2000, the Company's cash and equivalent balances approximated
$1.3 million. This amount will not be sufficient to fund operations for the
next twelve months, absent meaningful revenue. Accordingly, discussions have
begun with a prospective new investor, although no assurance can be given that
funding will be available from this, or another, source, to enable operations
to continue if funds now on hand are exhausted.
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
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.
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.
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.
[10]
<PAGE>
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
September 30, 2000.
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: November 13, 2000 By: /s/ JAMES W. WOLFF
James W. Wolff
President and Treasurer
Chief Executive Officer
Chief Financial Officer
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