UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended 9-30-99
OR
[ ] Transition Report under Section 13 or 15(d) of the Exchange Act
For the transition period from ____________ to ________________
Commission File No. 0-
World Services, Inc.
--------------------------
(Exact name of small business issuer as specified in its charter)
A _______ 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)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
___X___Yes _______No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of September 30, 1999, there were
2,639,679 shares of common stock outstanding.
Transitional Small Business Disclosure Format (Check one):Yes[ ] No[x]
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Balance Sheet as of September 30, 1999 ........ 1
Statements of Operations for Quarters Ended
September 30, 1999 and 1998 ................... 2
Statements of Operations for the Nine Months
Ended September 30, 1999 and 1998 ............. 3
Statements of Cash Flows for the Nine Months
Ended September 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 ............... 6
Results of Operations ......................... 7
Y2K Compliance ................................ 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
September 30, 1999
ASSETS
CURRENT ASSETS
Cash $ 26,370.08
Money Market Fund 49.49
Certificates of Deposit 1,094,246.58
Interest Receivable 31,448.08
--------------
TOTAL CURRENT ASSETS 1,152,114.23
INVESTMENTS AND OTHER ASSETS
Investment-Super 8 Developers 568,000.00
--------------
TOTAL OTHER ASSETS 568,000.00
--------------
TOTAL ASSETS $ 1,720,114.23
==============
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Stock Redemption payable $ 42,329.75
Accounts Payable 5,500.00
--------------
TOTAL CURRENT LIABILITIES 47,829.75
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 (4,694,785.27)
--------------
TOTAL STOCKHOLDERS' EQUITY 1,672,284.48
--------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,720,114.23
==============
1
<PAGE>
WORLD SERVICES, INC.
STATEMENTS OF OPERATIONS
For the Quarters Ended September 30, 1999 and 1998
1999 1998
---- ----
REVENUE
Dividend Income $ 0.00 $ 159,390.40
Interest Income 11,677.87 13,502.33
------------- -------------
TOTAL REVENUE 11,677.87 172,892.73
------------- -------------
EXPENSES
Accounting Fees 2,759.51 2,399.00
Contract Wages & Consulting 6,420.00 4,249.61
Faxes 45.75 30.00
Legal Fees 3,814.03 773.87
Director Fees 750.00 1,350.00
Office Supplies 124.24 366.71
Printing 116.50 119.00
Postage 97.00 416.00
Supplies 202.84 36.20
Telephone 28.29 48.01
Rent 750.00 750.00
------------- -------------
TOTAL EXPENSES 15,108.16 10,538.40
------------- -------------
INCOME(LOSS)BEFORE INCOME TAXES (3,430.29) 162,354.33
INCOME TAXES 0.00 0.00
------------- -------------
NET INCOME (LOSS) $ (3,430.29) $ 162,354.33
============= =============
INCOME PER SHARE (Basic & Diluted) $ .00 $ .06
============= =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,640,000 2,640,000
============= =============
2
<PAGE>
WORLD SERVICES, INC.
STATEMENTS OF OPERATIONS
For the Nine Months ended September 30, 1999 and 1998
1999 1998
---- ----
REVENUE
Dividend Income $ 79,695.20 $ 318,780.80
Interest Income 40,288.30 29,961.37
------------- -------------
TOTAL REVENUE 119,983.50 348,742.17
------------- -------------
EXPENSES
Accounting Fees 11,679.01 11,548.94
Contract Wages & Consulting 20,065.00 30,052.71
Faxes 296.25 153.00
Legal Fees 5,851.83 12,370.84
Director Fees 3,150.00 3,450.00
Office Supplies 140.20 767.99
Miscellaneous 0.00 308.00
Printing 925.50 664.00
Postage 2,565.89 2,176.45
Supplies 338.64 274.52
Telephone 77.32 204.48
Rent 2,250.00 2,000.00
Annual Meeting 2,913.26 0.00
Loss on Uncollect. Note 0.00 4,000.00
------------- -------------
TOTAL EXPENSES 50,252.90 67,970.93
------------- -------------
INCOME BEFORE INCOME TAXES 69,730.60 280,771.24
INCOME TAXES 0.00 0.00
------------- -------------
NET INCOME $ 69,730.60 $ 280,771.24
============= =============
INCOME PER SHARE (Basic & Diluted) $ .03 $ .11
============= =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,640,000 2,640,000
============= =============
3
<PAGE>
WORLD SERVICES, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 69,730.60 $ 280,771.24
Adjustment to reconcile net income to
net cash provided by operating
activities:
(Increase) Decrease in:
Interest Receivable (12,869.08) 5,636.46
Other Assets 0.00 (15,899.15)
Increase (Decrease) in:
Accounts Payable (5,500.00) 0.00
Stock Redemption Payable (2,058.50) (6,739.50)
----------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 49,303.02 263,769.05
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Certificates of Deposit (71,246.58) (240,000.00)
----------- ------------
NET CASH USED BY INVESTING
ACTIVITIES (71,246.58) (240,000.00)
----------- ------------
NET INCREASE(DECREASE)IN CASH (21,943.56) 23,769.05
CASH AT BEGINNING OF PERIOD 48,313.64 65,451.44
----------- ------------
CASH AT END OF PERIOD $ 26,370.08 $ 89,220.49
=========== ============
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Income taxes $ 0.00 $ 0.00
=========== ============
Interest paid $ 0.00 $ 0.00
=========== ============
4
<PAGE>
WORLD SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 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 September 30, 1999, and the results of operations
and cash flows for the nine months ended September 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.
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 - SEPTEMBER 30, 1999, COMPARED TO
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
During the nine months ended September 30, 1999, cash decreased approximately
$21,900, 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 $31,448 at
September 30, 1999.
Primarily as a result of the increase in operating income, current assets
increased by $62,172, from $1,089,942 at December 31, 1998, to $1,152,114 at
September 30, 1999.
Current liabilities decreased $7,558 from $55,388 at December 31, 1998, to
$47,830 at September 30, 1999. The decrease is the result of payments made on
stock redemption payable and accounts payable.
As a result of the Company's net income for the nine months of $69,731, the
accumulated deficit decreased from $4,764,516 at December 31, 1998, to
$4,694,785 at September 30, 1999. As a result, total stockholders equity
increased from 1,602,554 at December 31, 1998, to $1,672,284 at September 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 September 30, 1999. As a result,
the 'current liabilities' portion of the balance sheet reflects a "stock
redemption payable." During the nine months ended September 30, 1999, the
Company redeemed outstanding fractional shares with a value of approximately
$2,059. 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)
The company has sufficient funds available to meet its capital obligations in
the foreseeable future. As noted, elsewhere in this report and in the Company's
annual report on Form 10-KSB for the year ended December 31, 1998, the future
conduct of World Services' business 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 - NINE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
Nine months ended
September 30, September 30,
1999 1998
------------- -------------
Net income $ 119,984 $ 348,742
Operating Expenses 50,253 67,971
Weighted Average
Number of Shares 2,640,000* 2,640,000*
Net income per share $ 0.03 $ 0.11
7
<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.
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
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.
8
<PAGE>
WORLD SERVICES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
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.
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.
October 18, 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 SEPTEMBER
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
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<RECEIVABLES> 31,448
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<CURRENT-ASSETS> 1,152,114
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<TOTAL-ASSETS> 1,720,114
<CURRENT-LIABILITIES> 47,830
<BONDS> 0
0
0
<COMMON> 2,715
<OTHER-SE> 1,669,569
<TOTAL-LIABILITY-AND-EQUITY> 1,720,114
<SALES> 0
<TOTAL-REVENUES> 11,678
<CGS> 0
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</TABLE>
