SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTER REPORT UNDER SECTION 13 0R 15(d)
Quarter Ended: 3-31-98 Commission File Number:
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World Services, Inc.
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(Exact name of registrant as specified in its charter)
South Dakota 46-0355586
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
PO Box 786 Aberdeen, South Dakota 57402
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(Address if principal executive offices) (Zip Code)
Registrant's telephone number, including area code (605) 225-4131
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Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the close of the period covered by this report.
As of March 31, 1998, Registrant had 2,639,679 shares of its $.001 par value
common stock outstanding.
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INDEX
PART I. FINANCIAL INFORMATION:
Item 1. ACCOUNTANTS' REPORT ........................................ 1
Balance Sheets as of March 31, 1998 ................... 2
Statements of Operations for the Three Months
Ended March 31, 1998 and 1997 ......................... 3
Statements of Cash Flows for the Three Months
Ended March 31, 1998 and 1997 ......................... 4
Notes to Financial Statements ......................... 5
Item 2. Managements's discussion and Analysis of
Financial Condition and Results of Operations:
Liquidity and Capital Resources ....................... 6
Results of Operations ................................. 6
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings .......................................... 8
Item 2. Changes in Securities ...................................... 8
Item 3. Default Upon Senior Securities ............................. 8
Item 4. Submission of maters to a Vote of Security
Holders .................................................... 8
Item 5. Other Information .......................................... 8
Item 6. Exhibits and Reports on Form 10-Q .......................... 8
<PAGE>
MEIDINGER & ASSOCIATES
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Certified Public Accountants 311 South 2nd Street
Aberdeen, SD 57401
(605) 229-4404
May 7, 1998
The Board of Directors
World Services, Inc.
Aberdeen, South Dakota 57401
We have compiled the accompanying Balance Sheets of World Services, Inc. as of
March 31, 1998, and the related Statements of Income and Cash Flows for the
period ended March 31, 1998, and March 31, 1997, in accordance with Statements
on Standards for Accounting and Review Services issued by the American Institute
of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements,
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit the statements of changes in retained earnings
required by generally accepted accounting principles. If the omitted statements
were included in the financial statements, they might influence the user's
conclusions about the company's financial position and results of operations.
Accordingly, these financial statements are not designed for those who are not
informed about such matters.
/s/ Meidinger & Associates
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Meidinger & Associates
Certified Public Accountants
1
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WORLD SERVICES, INC.
BALANCE SHEETS
March 31, 1998
March 31,
1998
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ASSETS
CURRENT ASSETS
Cash $ 51,013.22
Certificate of Deposit 340,000.00
Interest Receivable 14,669.00
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TOTAL CURRENT ASSETS 405,682.22
INVESTMENTS AND OTHER ASSETS
United States Treasury Note 407,666.25
Investment-Super 8 Developers 568,000.00
Other 4,000.00
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TOTAL OTHER ASSETS 979,666.25
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TOTAL ASSETS $ 1,385,348.47
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LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Stock Redemption $ 70,102.50
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STOCKHOLDERS EQUITY
Common stock, par value $.001 per
share; (50,000,000 shares
authorized)with
2,640,000 shares issued 2,715.00
Additional paid in capital 6,364,354.75
Accumulated Deficit (5,051,823.78)
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TOTAL STOCKHOLDERS' EQUITY 1,315,245.97
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,385,348.47
================
2
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WORLD SERVICES, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1998 and 1997
1998 1997
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REVENUE
Interest Income $ 3,162.76 $ 0.00
Stock Transfer Fees 0.00 20.25
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TOTAL REVENUE 3,162.76 20.25
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EXPENSES
Accounting Fees 3,663.56 0.00
Contract Wages & Consulting 3,219.00 920.00
Faxes 72.00 0.00
Legal Fees 1,417.75 11,286.60
Director Fees 1,350.00 1,200.00
Office Supplies 136.48 119.35
Postage 259.37 78.05
Supplies 220.00 19.07
Telephone 108.96 4.37
Rent 750.00 0.00
Miscellaneous Expense 308.00 0.00
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TOTAL EXPENSES 11,505.12 13,627.44
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LOSS BEFORE INCOME TAXES (8,342.36) (13,607.19)
INCOME TAXES 0.00 0.00
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NET (LOSS) (8,342.36) (13,607.19)
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(LOSS) PER SHARE (Basic & Diluted) * *
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WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,640,000 5,229,907
================ ================
* Less than $0.01 per share.
3
<PAGE>
WORLD SERVICES, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1998 and 1997
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ (8,342.36) $ (13,607.19)
Adjustment to reconcile net income to
net cash used in operating
activities:
(Increase) Decrease in:
Interest Receivable 5,375.46
Other Assets (8,177.82)
Increase (Decrease) in:
Accounts Payable (3,293.50)
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NET CASH USED IN OPERATING
ACTIVITIES (14,438.22) (13,607.19)
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NET DECREASE IN CASH (14,438.22) (13,607.19)
CASH AT BEGINNING OF PERIOD 65,451.44 27,652.56
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CASH AT END OF PERIOD $ 51,013.22 $ 14,045.37
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SUPPLEMENTAL DISCLOSURES
Cash payments for:
Income taxes $ 0.00 $ 0.00
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Interest paid $ 0.00 $ 0.00
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4
<PAGE>
WORLD SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND 1996
In the opinion of management of World Services, Inc., (the Company), the
accompanying unaudited financial statements reflect all adjustments (consisting
of only normal recurring accruals) necessary to present fairly the financial
position of the company as of March 31, 1998, and the results of operations and
cash flows for the three months ended March 31, 1998 and 1997.
These unaudited financial statements should be read in conjunction with the
Company's annual report on Form 10-KSB for the year ended December 31, 1997.
NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
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A summary of significant accounting policies is currently on file with the
Securities and Exchange Commission on Form 10-KSB.
NOTE 2 - INCOME TAXES
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As of December 31, 1997, the Company had net operating loss carry forwards for
income tax purposes totaling approximately $3,100,000 which expire in the years
1998 to 2011. The net operating loss carry forwards may be limited with respect
to their availability due to prior ownership changes and the consolidated return
regulations. In addition, there are investment tax credit carry forwards of
$28,000.
5
<PAGE>
WORLD SERVICES, INC.
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Financial Statements and Notes thereto appearing elsewhere in this report.
LIQUIDITY AND CAPITAL RESOURCES - MARCH 31, 1998, COMPARED TO
DECEMBER 31, 1997
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During the three months ended March 31, 1998, cash decreased by $14,438.22, from
$65,451.44 at December 31, 1997, to $51,013.22 at March 31, 1998.
Interest receivable decreased $5,375.46, from $20,044.46 at December 31, 1997,
to $14,669.00 at March 31, 1998.
As a result of the foregoing, current assets decreased by $19,813.68, from
$425,495.90 at December 31, 1997, to $405,682.22 at March 31, 1998.
Current liabilities decreased $3,293.50, from $73,396.00 at December 31, 1997,
to $70,102.50 at March 31, 1998. The decrease is the result of payments made on
stock redemption payable induced by a prior year stockholder approved stock
split.
As a result of the Company's net loss for the three months of $8,342.36, the
accumulated deficit increased from $5,043,481.42 at December 31, 1997, to
$5,051,823.78 at March 31, 1998. As a result, total stockholders equity
decreased from 1,323,588.33 at December 31, 1997, to $1,315,245.97 at March 31,
1998.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1998 COMPARED
TO THE THREE MONTHS ENDED MARCH 31, 1997
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Total revenue for the three months ended March 31, 1998, were $3,162.76 as
compared to $20.25 for the comparable period ended March 31, 1997, an increase
of $3,142.51. The increase is due to interest accruing.
Operating expenses were $11,505.12 for the three months ended March 31, 1998,
compared to $13,627.44 for the comparable period ended March 31, 1997, a
decrease of $2,122.32. The majority of this decrease was in legal fees.
6
<PAGE>
WORLD SERVICES, INC.
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Based on the foregoing, the net loss available to stockholders for the three
months ended March 31, 1998, was $8,342.36, which translates to a net loss per
share of less than $0.01 based on 2,640,000 weighted average shares outstanding.
This compares to the net loss available to stockholders for the three months
ended March 31, 1997, of $13,607.19, which translates to a net loss per share of
less than $0.01 based on 5,229,907 weighted average shares outstanding at that
time.
7
<PAGE>
WORLD SERVICES, INC.
PART II. OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
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The Company is not a party to any legal proceedings except as follows, and no
such proceedings are known to be contemplated.
The Company is plaintiff in a civil action in the Circuit Court of the Fifth
Judicial Circuit of the State of South Dakota (Civ97-187, entitled "World
Services, Inc. vs. Murray Woulfe") against Murray Woulfe, a former president of
World Services, on a promissory note. The actions seeks recovery of $19,000 plus
interest and costs. Mr. Woulfe has denied liability and claims that he owes
World Services no obligation under the promissory note. The matter is scheduled
or trial in May of 1998 and it will be head before one of the Circuit Judges of
the Fifth Judicial Circuit in and for the County of Brown, State of South
Dakota. As to the ultimate result, Plaintiff expects to prevail; however, the
defendant would have the right of appeal to the appellate court of the State of
South Dakota and, thus, giving it an indefinite date and time when this matter
can be satisfactorily concluded. Mr. Woulfe has made no material counterclaims
against World Services.
ITEM 2. - CHANGES IN SECURITIES
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None.
ITEM 3. - DEFAULT UPON SENIOR SECURITIES
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None.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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There were no shareholder meetings and no matters were submitted to a vote of
shareholders during the first quarter of the fiscal year.
ITEM 5. - OTHER INFORMATION
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None.
ITEM 6. - EXHIBITS
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Exhibit 27 - Financial Data Schedule.
8
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
MAY 7, 1998
WORLD SERVICES, INC.
By /s/ Ronne Tarrell
--------------------------------
Ronne Tarrell, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
MAY 7, 1998 /s/ Ronne Tarrell
---------------------------------
Ronne Tarrell, President,
Principal Executive
Officer, and Director
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
March 31, 1998 financial statements of World Services, Inc. and is qualified
in its entirety by referenct to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 391,013
<SECURITIES> 0
<RECEIVABLES> 14,669
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 405,682
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,385,348
<CURRENT-LIABILITIES> 70,103
<BONDS> 0
0
0
<COMMON> 2,775
<OTHER-SE> 1,312,531
<TOTAL-LIABILITY-AND-EQUITY> 1,385,348
<SALES> 0
<TOTAL-REVENUES> 3,163
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,505
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8,342)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,342)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
