SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended June 30, 1999
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File No. 0-
World Services, Inc.
--------------------------
(Exact name of Company as specified in its charter)
A South Dakota corporation
I.R.S. Employer Identification No.46-0355586
PO Box 786 Aberdeen, SD 57402
------------------------------
(Address of Principal Executive Offices)
(605) 225-4131
-----------------------
(Registrant's telephone number, including area code)
Not Applicable
-----------------------
(former address, if changed from last report)
Indicate by checkmark 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.
___X___Yes _______No
Indicate the number of shares outstanding of the registrant's common stock as of
the latest practicable date: As of June 30, 1999, there were 2,639,679 shares of
common stock outstanding.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Balance Sheet as of June 30, 1999 ............. 1
Statements of Operations for Quarters Ended
June 30, 1999 and 1998 ........................ 2
Statements of Operations for the Six Months
Ended June 30, 1999 and 1998 .................. 3
Statements of Cash Flows for the Six Months
Ended June 30, 1999 and 1998 .................. 4
Notes to Financial Statements ................. 5
Item 2. Management's discussion and Analysis of
Financial Condition and Results of
Operations:
Liquidity and Capital Resources ............... 7
Results of Operations ......................... 8
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings ............................. 10
Item 2. Changes in Securities ......................... 10
Item 3. Default Upon Senior Securities ................ 10
Item 4. Submission of matters to a Vote of Security
Holders ....................................... 10
Item 5. Other Information ............................. 10
Item 6. Exhibits and Reports on Form 10-Q ............. 10
<PAGE>
WORLD SERVICES, INC.
BALANCE SHEET
June 30, 1999
ASSETS
CURRENT ASSETS
Cash $ 43,435.89
Money Market Fund 49.49
Certificates of Deposit 1,093,000.00
Interest Receivable 23,550.64
----------------
TOTAL CURRENT ASSETS 1,160,036.02
INVESTMENTS AND OTHER ASSETS
Investment-Super 8 Developers 568,000.00
----------------
TOTAL OTHER ASSETS 568,000.00
----------------
TOTAL ASSETS $ 1,728,036.02
================
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Stock Redemption payable $ 41,321.25
Accounts Payable 11,000.00
----------------
TOTAL CURRENT LIABILITIES 52,321.25
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 (4,691,354.98)
----------------
TOTAL STOCKHOLDERS' EQUITY 1,675,714.77
----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,728,036.02
================
1
<PAGE>
WORLD SERVICES, INC.
STATEMENTS OF OPERATIONS
For the Quarters Ended June 30, 1999 and 1998
1999 1998
---- ----
REVENUE
Dividend Income $ 79,695.20 $ 159,390.40
Interest Income 14,313.51 13,296.28
------------- -------------
TOTAL REVENUE 94,008.71 172,686.68
------------- -------------
EXPENSES
Accounting Fees 3,177.50 5,486.38
Contract Wages & Consulting 12,260.00 22,584.10
Faxes 231.75 51.00
Legal Fees 1,536.67 10,179.22
Director Fees 1,950.00 750.00
Office Supplies 15.96 264.80
Printing 809.00 545.00
Postage 2,363.29 1,501.08
Supplies 87.70 18.32
Telephone 38.05 47.51
Rent 750.00 500.00
Annual Meeting 2,913.26 0.00
Loss on Uncollect. Note 0.00 4,000.00
------------- -------------
TOTAL EXPENSES 26,133.18 45,927.41
------------- -------------
INCOME(LOSS)BEFORE INCOME TAXES 67,875.53 126,759.27
INCOME TAXES 0.00 0.00
------------- -------------
NET INCOME (LOSS) $ 67,875.53 $ 126,759.27
============= =============
INCOME PER SHARE (Basic & Diluted) .03 .05
============= =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,640,000 2,640,000
============= =============
2
<PAGE>
WORLD SERVICES, INC.
STATEMENTS OF OPERATIONS
For the Six Months ended June 30, 1999 and 1998
1999 1998
---- ----
REVENUE
Dividend Income $ 79,695.20 $ 159,390.40
Interest Income 28,610.43 16,459.04
------------- -------------
TOTAL REVENUE 108,305.63 175,849.44
------------- -------------
EXPENSES
Accounting Fees 8,919.50 9,149.94
Contract Wages & Consulting 13,645.00 25,803.10
Faxes 250.50 123.00
Legal Fees 2,037.80 11,596.97
Director Fees 2,400.00 2,100.00
Office Supplies 15.96 401.28
Miscellaneous 0.00 308.00
Printing 809.00 545.00
Postage 2,468.89 1,760.45
Supplies 135.80 238.32
Telephone 49.03 156.47
Rent 1,500.00 1,250.00
Annual Meeting 2,913.26 0.00
Loss on Uncollect. Note 0.00 4,000.00
------------- -------------
TOTAL EXPENSES 35,144.74 57,432.53
------------- -------------
INCOME BEFORE INCOME TAXES 73,160.89 118,416.91
INCOME TAXES 0.00 0.00
------------- -------------
NET INCOME $ 73,160.89 $ 118,416.91
============= =============
INCOME PER SHARE (Basic & Diluted) .03 .05
============= =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,640,000 2,640,000
============= =============
3
<PAGE>
<TABLE>
<CAPTION>
WORLD SERVICES, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1999 and 1998
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 73,160.89 $ 118,416.91
Adjustment to reconcile net income to
net cash provided by operating
activities:
(Increase) Decrease in:
Interest Receivable (4,971.64) 8,658.46
Other Assets 0.00 (10,357.85)
Increase (Decrease) in:
Accounts Payable 0.00 22,376.28
Stock Redemption Payable (3,067.00) (5,589.50)
------------- --------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 65,122.25 133,504.30
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Certificates of Deposit (70,000.00) (90,000.00)
------------- --------------
NET CASH USED BY INVESTING
ACTIVITIES (70,000.00) (90,000.00)
------------- --------------
NET INCREASE(DECREASE)IN CASH (4,877.75) 43,504.30
CASH AT BEGINNING OF PERIOD 48,313.64 65,451.44
------------- --------------
CASH AT END OF PERIOD $ 43,435.89 $ 108,955.74
============= ==============
SUPPLEMENTAL DISCLOSURES Cash payments for:
Income taxes $ 0.00 $ 0.00
============= ==============
Interest paid $ 0.00 $ 0.00
============= =============
4
</TABLE>
<PAGE>
WORLD SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 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 June 30, 1999, and the results of operations and
cash flows for the six months ended June 30, 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
- --------------------------------------------------------------------------------
A summary of significant accounting policies is currently on file with the
Securities and Exchange Commission on Form 10-KSB.
NOTE 2 - INCOME TAXES
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
The Failure of Systems and Equipment on which we depend to be 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
5
<PAGE>
WORLD SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
FOR THE PERIOD ENDED JUNE 30, 1999
banks where we have deposits or the company (S8MD) 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 completed the process or
verification of whether banks and S8MD with which we have material relationships
are Year 2000 compliant. The process of verification included 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.
6
<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 - JUNE 30, 1999, COMPARED TO
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
During the six months ended June 30, 1999, cash decreased approximately $4,900,
as a result of purchasing certificates of deposits which are now held by the
Company.
Interest receivable increased from $18,579 at December 31, 1998, to $23,551 at
June 30, 1999.
Primarily as a result of the increase in certificates of deposit and interest
receivable, current assets increased by $70,094, from $1,089,942 at December 31,
1998, to $1,160,036 at June 30, 1999.
Current liabilities decreased $3,067 from $55,388 at December 31, 1998, to
$52,321 at June 30, 1999. The decrease is the result of payments made on stock
redemption payable.
As a result of the Company's net income for the six months of $73,161, the
accumulated deficit decreased from $4,764,516 at December 31, 1998, to
$4,691,355 at June 30, 1999. As a result, total stockholders equity increased
from 1,602,554 at December 31, 1998, to $1,675,715 at June 30, 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 June 30, 1999. As a result, the
'current liabilities' portion of the balance sheet reflects a "stock redemption
payable." During the six months ended June 30, 1999, the Company redeemed
outstanding fractional shares with a value of approximately $3,067. The total
number of outstanding shares of common stock reflected on the balance sheet does
not give any effect to the fractional shares outstanding.
The company has sufficient funds available to meet its capital obligations in
the foreseeable future. As noted, the future conduct of World Services' business
7
<PAGE>
WORLD SERVICES, INC.
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
is dependent upon a number of factors, and there can be no assurance that World
Services will be able to conduct its operations as contemplated herein. Certain
statements contained in this report, such as the possibility that World Services
may acquire an operating business or, if any such business is acquired that it
can be successfully operated, are forward-looking statements. The accuracy of
these statements cannot be guaranteed as they are subject to a variety of risks
including, but not limited to: the possibility that World Services will not be
able to complete any such acquisition on economic terms, if at all; and if such
an acquisition does occur, the possibility that World Services will not be able
to operate the business successfully. Furthermore, if any acquisition does
occur, it will likely be accompanied by a change of control, and there can be no
assurance that such change of control will be beneficial to World Services or
its existing shareholders.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1999 COMPARED
TO THE SIX MONTHS ENDED JUNE 30, 1998
- --------------------------------------------------------------------------------
Total revenue for the six months ended June 30, 1999, was $108,306 as compared
to $175,849 for the comparable period ended June 30, 1998, a decrease of
$67,543. This decrease was due to a significantly smaller dividend from Super 8
Developers. The dividends were smaller due to Super 8 Developers'need to
withhold funds for accelerated motel development and rapid growth.
Operating expenses were $35,145 for the six months ended June 30, 1999, compared
to $57,433 for the comparable period ended June 30 1998, a decrease of $22,288.
This decrease was in legal, consulting fees, and loss on uncollectible note. The
large decrease in legal fees was because the 1997 OTS matter has been resolved.
Based on the foregoing, the net income available to stockholders for the six
months ended June 30, 1999, was $73,161, which translates to a net income per
share of $0.03 based on 2,640,000 weighted average shares outstanding. This
compares to the net income after taxes for the six months ended June 30, 1998,
of $118,416, which translates to a net income per share of $0.05 based on
2,640,000 weighted average shares outstanding at that time.
8
<PAGE>
WORLD SERVICES, INC.
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
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 in August of 1997.
No major changes in income or expenses are anticipated for the rest of the year.
9
<PAGE>
WORLD SERVICES, INC.
PART II. OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
None.
ITEM 2. - CHANGES IN SECURITIES
- --------------------------------------------------------------------------------
None.
ITEM 3. - DEFAULT UPON SENIOR SECURITIES
- --------------------------------------------------------------------------------
None.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------
On June 24, 1999, the Company held a special meeting of its shareholders in lieu
of an annual meeting. At that meeting, the following nominees were reelected to
the Board of Directors: Ronne Tarrell, Delores Bower, David Jorgenson, Delbert
Harty, and Terry Heinz. No other matters were considered at the special
meeting.
ITEM 5. - OTHER INFORMATION
- --------------------------------------------------------------------------------
None.
ITEM 6. - EXHIBITS
- --------------------------------------------------------------------------------
Exhibit 27 - Financial Data Schedule.
10
<PAGE>
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.
August 4, 1999
WORLD SERVICES, INC.
By: /s/ Ronne Tarrell
-------------------------------------
Ronne Tarrell, President, Chief
Executive Officer and Principal
Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the June 30,
1999 financial statements of World Services, Inc. and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,136,485
<SECURITIES> 0
<RECEIVABLES> 23,551
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,160,036
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,728,036
<CURRENT-LIABILITIES> 52,321
<BONDS> 0
0
0
<COMMON> 2,715
<OTHER-SE> 1,673,000
<TOTAL-LIABILITY-AND-EQUITY> 1,728,036
<SALES> 0
<TOTAL-REVENUES> 94,009
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 26,133
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 67,876
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,876
<EPS-BASIC> .026
<EPS-DILUTED> .026
</TABLE>
