SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTER REPORT UNDER SECTION 13 0R 15(d)
3-31-99
Quarter Ended______________Commission File Number____________
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)
(605) 225-4131
Registrant's telephone number, including area code_______________
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 X 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
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, 1999, Registrant had 2,639,679 shares of its $.001 par value
common stock outstanding.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Balance Sheet as of March 31, 1999 ............ 1
Statements of Operations for Quarters Ended
March 31, 1999 and 1998 ....................... 2
Statements of Cash Flows for the Three Months
Ended March 31, 1999 and 1998 ................. 3
Notes to Financial Statements ................. 4
Item 2. Management's discussion and Analysis of
Financial Condition and Results of
Operations:
Liquidity and Capital Resources ............... 6
Results of Operations ......................... 7
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 matters to a Vote of Security
Holders ....................................... 8
Item 5. Other Information ............................. 8
Item 6. Exhibits and Reports on Form 10-Q ............. 8
<PAGE>
WORLD SERVICES, INC.
BALANCE SHEET
March 31, 1999
ASSETS
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CURRENT ASSETS
Cash $ 32,199.01
Money Market Fund 49.49
Certificates of Deposit 1,031,424.26
Interest Receivable 18,483.73
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TOTAL CURRENT ASSETS 1,082,156.49
INVESTMENTS AND OTHER ASSETS
Investment-Super 8 Developers 568,000.00
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TOTAL OTHER ASSETS 568,000.00
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TOTAL ASSETS $ 1,650,156.49
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LIABILITIES AND STOCKHOLDERS EQUITY
-----------------------------------
CURRENT LIABILITIES
Stock Redemption payable $ 42,317.25
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TOTAL CURRENT LIABILITIES 42,317.25
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 (4,759,230.51)
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TOTAL STOCKHOLDERS' EQUITY 1,607,839.24
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,650,156.49
================
1
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WORLD SERVICES, INC.
STATEMENTS OF OPERATIONS
For the Quarters Ended March 31, 1999 and 1998
1999 1998
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REVENUE
Interest Income $ 14,296.92 $ 3,162.76
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TOTAL REVENUE 14,296.92 3,162.76
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EXPENSES
Accounting Fees 5,742.00 3,663.56
Contract Wages & Consulting 1,385.00 3,219.00
Faxes 18.75 72.00
Legal Fees 501.13 1,417.75
Director Fees 450.00 1,350.00
Office Supplies 0.00 136.48
Miscellaneous 0.00 308.00
Postage 105.60 259.37
Supplies 48.10 220.00
Telephone 10.98 108.96
Rent 750.00 750.00
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TOTAL EXPENSES 9,011.56 11,505.12
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INCOME(LOSS)BEFORE INCOME TAXES 5,285.36 (8,342.36)
INCOME TAXES 0.00 0.00
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NET INCOME (LOSS) $ 5,285.36 $ (8,342.36)
============= =============
INCOME PER SHARE (Basic & Diluted) * *
============= =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,640,000 2,640,000
============= =============
* Less than $0.01 per share.
2
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WORLD SERVICES, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1999 and 1998
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 5,285.36 $(8,342.36)
Adjustment to reconcile net income to
net cash used in operating
activities:
(Increase) Decrease in:
Interest Receivable 95.27 5,375.46
Other Assets 0.00 (8,177.82)
Increase (Decrease) in:
Accounts Payable (11,000.00) 0.00
Stock Redemption Payable (2,071.00) (3,293.50)
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NET CASH PROVIDED(USED)BY
OPERATING ACTIVITIES (7,690.37) (14,438.22)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Certificates of Deposit (8,424.26) 0.00
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NET CASH USED BY INVESTING
ACTIVITIES (8,424.26) 0.00
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NET INCREASE(DECREASE)IN CASH (16,114.63) (14,438.22)
CASH AT BEGINNING OF PERIOD 48,313.64 65,451.44
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CASH AT END OF PERIOD $32,199.01 $51,013.22
========== ==========
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Income taxes $ 0.00 $ 0.00
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Interest paid $ 0.00 $ 0.00
========== ==========
3
<PAGE>
WORLD SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 1999
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, 1999, and the results of operations and
Statements of Cash Flows for the three months ended March 31, 1999 and 1998.
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, 1998.
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, 1998, the Company had net operating loss carry forwards for
income tax purposes totaling approximately $2,700,000 which expire in the years
1999 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.
NOTE 3 - Y2K COMPLIANCE
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The Failure of Systems and Equipment on which we depend to by Year 2000
compliant could adversely affect our business.
Computer programs or other embedded technology that have been written using two
digits to define the applicable year and that have time-sensitive logic may
recognize a date using "00" as the Year 1900 rather than the Year 2000. This
could result in widespread miscalculations or system failures. If we and the
4
<PAGE>
WORLD SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
FOR THE PERIOD ENDED MARCH 31, 1999
banks where we have deposits or the subsidiary company in which we hold a
minority stock interest are unable to address Year 2000 issues in a timely
manner, it could result in material financial risk, including the loss of
revenue and unanticipated costs. Therefore, we plan to devote all resources
necessary to resolve significant Year 2000 issues in a timely manner.
Both information technology systems and non-IT systems using embedded technology
may be affected by the Year 2000. We have completed the assessment phase of our
Year 2000 program. We only have one computer and it's software is Y2K compliant.
Since we are currently a non-operating company, we expect little impact of Y2K
issues on our cash flow or financial condition. We have not completed the
process or verification of whether banks and subsidiary with which we have
material relationships are Year 2000 compliant. We intend to complete this
verification process with our banks and subsidiary by the quarter ending June
30, 1999. The process of verification includes contacting each vendor's IT
department to determine their state of Year 2000 readiness and requesting
written documentation outlining each vendor's Year 2000 compliance plan.
We estimate that expenditures for Year 2000 issues will be less than $1,000.00
for fiscal 1999. However, we are not able to determine the total costs for our
year 2000 program or whether the Year 2000 will have a material effect on our
financial condition, results of operations or cash flows.
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, 1999, COMPARED TO DECEMBER 31, 1998
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During the three months ended March 31, 1999, cash decreased approximately
$16,100, as a result of paying off accounts payable and purchasing certificates
of deposits which are now held by the Company.
Interest receivable decreased from $18,579 at December 31, 1998, to $18,484 at
March 31, 1999.
Primarily as a result of the decrease in cash, current assets decreased by
$7,786, from $1,089,942 at December 31, 1998, to $1,082,156 at March 31, 1999.
This decrease in cash is mainly due to paying off accounts payable.
Current liabilities decreased $13,071 from $55,388 at December 31, 1998, to
$42,317 at March 31, 1999. The decrease is the result of paying off accounts
payable and payments made on stock redemption payable.
As a result of the Company's net income for the three months of $5,285, the
accumulated deficit decreased from $4,764,516 at December 31, 1998, to
$4,759,231 at March 31, 1999. As a result, total stockholders equity increased
from 1,602,554 at December 31, 1998, to $1,607,839 at March 31, 1999.
In August of 1997, the Company completed a reverse stock split followed by a
forward stock split. Following the reverse stock split, there were a number of
fractional shares which were redeemed. Not all of the fractional shares had been
submitted for payment by December 31, 1998 or March 31, 1999. As a result, the
'current liabilities' portion of the balance sheet reflects a "stock redemption
payable." During the three months ended March 31, 1999, the Company redeemed
outstanding fractional shares with a value of approximately $2,071. The total
number of outstanding shares of common stock reflected on the balance sheet does
not give any effect to the fractional shares outstanding.
6
<PAGE>
WORLD SERVICES, INC.
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 1998
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Total revenue for the three months ended March 31, 1999, was $14,297 as compared
to $3,163 for the comparable period ended March 31, 1998, an increase of
$11,134.
Operating expenses were $9,012 for the three months ended March 31, 1999,
compared to $11,505 for the comparable period ended March 31 1998, a decrease of
$2,493. This decrease was in legal, director, and consulting fees.
Based on the foregoing, the net income available to stockholders for the three
months ended March 31, 1999, was $5,285, which translates to a net income per
share of less than $0.01 based on 2,640,000 weighted average shares outstanding.
This compares to the net loss after taxes for the three months ended March 31,
1998, of $8,342, which translates to a net loss per share of less than $0.01
based on 2,640,000 weighted average shares outstanding at that time.
The weighted average number of shares has been adjusted for the reverse and
forward stock splits completed in August of 1997 and for the repurchase of the
fractional shares resulting from the reverse stock split, all as described in
the Company's proxy statement for the shareholders' meeting August 1997.
7
<PAGE>
WORLD SERVICES, INC.
PART II. OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
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None.
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
<PAGE>
SIGNATURES
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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.
April 28, 1999
WORLD SERVICES, INC.
By: /s/ Ronne Tarrell
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Ronne Tarrell, President, Chief
Executive Officer and Principal
Financial Officer
9
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,063,672
<SECURITIES> 0
<RECEIVABLES> 18,484
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,082,156
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,650,156
<CURRENT-LIABILITIES> 42,317
<BONDS> 0
0
0
<COMMON> 2,715
<OTHER-SE> 1,605,124
<TOTAL-LIABILITY-AND-EQUITY> 1,650,156
<SALES> 0
<TOTAL-REVENUES> 14,297
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,012
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,285
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,285
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
