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 March 31, 1998
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 number 000-23051
WIRELESS DATA SOLUTIONS, INC.
(Name of small business issuer as specified in its charter)
Utah 93-0734888
(State of Incorporation) (I.R.S. Employer Identification No.)
1016 Shores Acres Drive
Leesburg, Florida 34784
(Address of principal executive offices)
(352) 323-1295
(Issuer's telephone number)
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 __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Not applicable
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
There were 9,518,720 shares of the Issuer's common stock outstanding as of
March 31, 1998.
PART I
FINANCIAL INFORMATION
WIRELESS DATA SOLUTIONS, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1998 March 31, 1997
-------------- --------------
Assets
Current Assets
Cash and cash equivalents $ 160,472 $ 43,338
Trade accounts receivable, net of $6,000
estimated allowance for doubtful accounts 844,375 609,257
Inventory 162,537 385,049
------------- --------------
Total Current Assets 1,167,384 1,037,694
------------- --------------
Fixed Assets:
Office fixtures and equipment 15,033 15,033
Leasehold Improvements 12,894 12,894
------------- --------------
Sub-Total 27,927 27,927
------------- --------------
Less: Accumulated Depreciation and
Amortization 27,927 27,927
------------- --------------
Net Fixed Assets 0 0
------------- --------------
Other Assets:
Deferred service contract 111,936
Due from related parties 252,625 217,509
Security deposits 3,113 3,113
------------- --------------
Total Other Assets 367,674 220,622
------------- --------------
------------- --------------
TOTAL ASSETS 1,535,058 1,286,243
------------- --------------
Liabilities and Stockholders' (Deficit)
Current Liabilities
Trade accounts payable 260,896 315,958
Current portion of other liabilities 79,852 23,293
Advance from Customers 0 22,954
Other accrued liabilities 7,247 24,823
Service contract payable in stock 7,800
------------- -------------
Total Current Liabilities 355,795 387,027
------------- -------------
Other Liabilities
Accrued salaries, related payroll taxes,
reimbursable expenses payable to officers 657,633 692,132
------------- -------------
Total Other Liabilities 657,633 692,132
------------- --------------
------------- --------------
TOTAL LIABILITIES 1,013,428 1,079,159
------------- --------------
Minority interests in consolidated
subsidiaries 20,000 20,000
STOCKHOLDERS' DEFICIENCY
Preferred Stock, $.002 par value; 3,000,000
shares authorized; no shares issued or
outstanding 0 0
Common Stock, $.001 par value; 25,000,000
shares authorized; 8,039,720 shares issued
and outstanding at 3/31/97 & 9,518,720 at
3/31/98 9,519 8,040
Common Stock options outstanding 11,250 11,250
Additional paid-in-capital 1,735,381 1,328,610
Deficit (1,205,746) (1,139,970)
------------- -------------
Sub-Total 550,404 207,930
------------- -------------
Receivable from related entity for
sale of common stock (48,773) (48,773)
------------- -------------
Total Stockholders' equity 501,631 159,157
------------- -------------
Total Liabilities And Stockholders' Deficit 1,535,058 1,258,316
============= =============
See notes to financial statements.
WIRELESS DATA SOLUTIONS, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
For the Six Month Periods
Ended March 31, 1998 and March 31, 1997
Six Months Ended Six Months Ended
Mar. 31, 1998 Mar. 31, 1997
(unaudited) (unaudited)
--------------- ----------------
REVENUES
Net product sales $ 1,010,681 $ 1,220,120
Other Income 27,279 24,000
--------------- ----------------
Total Revenues 1,037,960 1,244,120
---------------- ----------------
COST OF SALES
Products 477,861 543,052
---------------- ----------------
Total Cost of Sales 477,861 543,052
---------------- ----------------
Gross Profit 560,099 701,068
Operating Expenses 509,050 568,385
Income before Interest 51,049 132,683
Interest expense, net of interest income 14,993 12,735
---------------- ----------------
Income before taxes 36,056 119,948
Provision for income taxes 8,414 9,153
NET EARNINGS $ 27,642 $ 110,794
================ ================
See notes to financial statements.
WIRELESS DATA SOLUTIONS, INC.
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Six Month Periods
Ended March 31, 1998 and March 31, 1997
Six Months Ended Six Months Ended
Mar. 31, 1998 Mar. 31, 1997
----------------- ----------------
Operating Activities:
Net Income $ 27,642 $ 110,794
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization
Prior period adjustment (5,140)
Changes in Operating Assets and Liabilities:
Increase in accounts receivable (82,789) (276,617)
Decrease in inventory 78,198 (35,608)
Decrease in other assets - -
Decrease in accounts payable (150,904) 133,133
Decrease in advances from customers (17,969) 13,154
Decrease in deferred service contract 84,164
Decrease in other payables (176,768) (21,998)
----------------- ----------------
Net cash provided by operating
activities (238,426) (82,282)
----------------- ----------------
Financing Activities:
Increase in due from related parties (8,183) (24,009)
Increase in security deposits - -
Decrease in due to related parties and
related expenses (34,499) 50,000
Increase in common stock options
outstanding - -
Increase in related entity for sale
of common stock - -
------------------ ----------------
Decrease in minority interest in
subsidiary - -
------------------ ----------------
Proceeds of issuance of common stock 358,250 6,800
------------------ ----------------
Net cash provided by financing
activities 315,568 32,791
------------------ ----------------
Net increase in cash 77,142 (49,491)
Cash at beginning of period 83,330 92,879
------------------ ----------------
Cash at end of period 180,472 43,388
================== ================
See notes to financial statements
WIRELESS DATA SOLUTIONS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED MARCH 31, 1998
Common
Stock Additional
Common Options Paid-in
Stock Outstanding Capital Deficit Total
-------- ------------ ---------- ------------ ----------
Balance at
September 30, 1997 $ 8,165 $ 11,250 $1,378,485 ($1,233,388) $ 164,512
------------
Net Earnings for the
period ended
March 31, 1998 27,642 27,642
------------
Issuance of common stock
Exercise of common
stock options
Stock issued for
service contracts 480 112,387 112,867
Private placement 724 210,159 210,883
Stock issued to cancel
debt to officer 150 34,350 34,500
--------- ---------- ----------
Prior period adjustment
Sub-Total 9,519 11,250 1,735,381 (1,205,746) 550,404
--------- ----------- ----------- ------------ ----------
Receivable from
related entity for
sale of common stock (48,773)
----------
Balance at
March 31, 1998 $ 9,519 $ 11,250 $ 1,735,381 ($1,205,746) $ 501,631
========= ========== =========== ============ ==========
See notes to Financial Statement
Notes to Financial Statements
Note 1 - Summary of Accounting Policies
---------------------------------------
The summary of Wireless Data Solution's, Inc. (the "Company")
significant accounting policies are incorporated by reference to the Company's
Registration Statement filed on Form 10-SB, as amended, dated February 12,
1998.
The accompanying unaudited condensed financial statements reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the results of operations, financial position and cash flows.
The results of the interim period are not necessarily indicative of the
results for the full year.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Liquidity and Capital Resources
- -------------------------------
The Company's current assets totaled approximately $1,167,000 as of
March 31, 1998, a slight increase from the March 31, 1997 level of
approximately 1,037,000. Accounts receivable increased from approximately
$609,000 at March 31, 1997 to approximately $844,000 at March 31, 1998. Over
the same period, inventory levels fell from $385,000 to $162,000. These
changes were due to an infusion of capital from the issuance of shares, and
the temporary implementation of new product marketing programs, as summarized
below under "Results of Operations."
Management believes that cash flow from operations and current cash
balances will be sufficient to fund operations and expenses for the near
future. The Company also may use its "credit line" from Brian Watts, an
affiliate of the Company, on which the Company owed, as of the end of the
quarter ending March 31, 1998, approximately $107,000, for additional
liquidity needs as required.
Results of Operations
- ---------------------
Revenues for the second quarter were up slightly while overall they
were down approximately $220,000 for the first half of fiscal 1998.
Management believes this is a reflection of the fact that the Company's
heaviest market penetration has been in the ready-mix industry, which was
favorably impacted by an unusually mild winter. Construction during warm
weather continues to be very active and ready-mix operators are not inclined
to put their vehicles in the shop for improvements. The Company is in the
process of finishing the work on the new Data Mate which will operate over the
cellular system and provide nationwide seamless coverage. Combined with one
of three versions of the Company's vehicle location mapping program, the
Company feels it has a product to offer which could reduce the Company's
dependence on the concrete segment of its business. Deliveries of the new
product are currently expected to commence in the fourth quarter of fiscal
1998.
Profits were up for the quarter by $27,000. This was a result of the
Company's constant efforts at cost containment, while maintaining its new
product development program in an effort to provide for future growth.
The Company's cash position improved significantly as a result of the
sale of 724,008 shares of common stock for $250,000. The transaction netted
$210,526, which is being used for working capital purposes.
Accounts receivable increased $235,000 as a result of offering time
concessions as an inducement for customers to purchase products.
Subsequently, accounts receivable returned to normal levels. Accounts
receivable are presently around $600,000.
Amounts due from related parties increased $35,000 as a result of
consulting services performed for Heartland Diversified, a major shareholder
of the Company. It has been agreed that Heartland Diversified will begin
paying interest on the debt beginning June of 1998 at an annual rate of 7%.
The deferred service contract is with ICS Communications, which has
agreed to perform public relations services for the Company. This
relationship is expected to continue for a period of five years.
Consequently, the compensation related thereto will be amortized over a period
of 60 months.
The service contract payable in stock is owed to Brian Blankenburg
who is to provide certain marketing services to the Company.
The accrued salaries and related expenses were reduced by $34,500 as
a result of Mike McLaughlin, President and CEO of the Company, taking stock to
satisfy a portion of the obligation owed to him. The stock issued in this
transaction bears a restricted legend. Mr. McLaughlin agreed to purchase
150,000 shares at a price of $0.23 per share. The market value of the
Company's freely tradable shares was $0.21 to $0.25 at the time of the
transaction.
The shares outstanding increased by 1,354,008 and the shareholders'
equity increased by 358,250. The sale of stock for cash yielded $210,883.
The stock issued for personal service contracts amounted to $112,867. The
stock sold to the President of the Company was valued at $34,500.
Financial Condition
- -------------------
Cash holdings for the quarter ended March 31, 1998 increased from
approximately $43,000 to approximately $160,000 over the corresponding quarter
in 1997. This increase resulted primarily from the issuance of shares of the
Company's Common Stock as referenced above under "Results of Operations."
Forward-Looking Statements
- --------------------------
The foregoing and subsequent discussion contains certain forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934, which are
intended to be covered by the safe harbors created thereby. These forward-
looking statements include the plans and objectives of management for future
and possible further capitalization of the Company. The forward-looking
statements contained herein are based on current expectations that involve
numerous risks and uncertainties. Assumptions relating to such current
expectations involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which
are beyond and control of the Company. Although the Company believes that the
assumptions could be inaccurate and therefore there can be no assurance that
the forward-looking statements included in this Form 10-QSB will prove to be
accurate. In light of the significant uncertainties inherent in the forward-
looking statements included herein, the inclusion of such information should
not be regarded as a representation of the Company or any other person that
the objectives and plans of the Company will be achieved.
PART II
Item 1. Legal Proceedings.
- ---------------------------
Not applicable.
Item 2. Changes in Securities and Use of Proceeds.
- --------------------------------------------------
None; not applicable.
Item 3. Defaults Upon Senior Securities.
- -----------------------------------------
There has been no material default in the payment of principal, interest,
a sinking or purchase fund installment, or any other material default not
cured within 30 days with respect to any indebtedness of the Company exceeding
five percent (5%) of the total assets of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
No matters were submitted to a vote of the Company's security holders
during the fiscal quarter covered by this report.
Item 5. Other Information.
- --------------------------
The Company has no other information to report.
Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(a) Exhibits
Exhibit
Number Description
- ---------- ------------
2.1* Agreement dated March 1, 1984, between Heartland Oil & Mineral
Corporation and Gold Genie Worldwide, an Oregon partnership
2.2* Buy/Sell Agreement dated March 1, 1984, between the Company and
Heartland Oil & Mineral Corporation
3.1* Articles of Incorporation of Gold Genie Worldwide, Inc., filed on
March 7, 1984
2* Certificate of Amendment to the Articles of Incorporation of
Products, Services and Technology Corporation, filed on June 13, 1988
3.3* Articles of Domestication of Products, Services and Technology
Corporation, filed on June 2, 1997
3.4* Articles of Amendment to the Articles of Incorporation of Products,
Services and Technology Corporation, filed on June 13, 1997
3.5* Bylaws of Products, Services and Technology Corporation dated as of
June 2, 1997
10.1* Settlement Agreement and Release dated December 17, 1987, between
Heartland Diversified Industries, Inc., the Company, and certain
individuals
10.2* Agreement, dated April 19, 1988, by and between the Company,
Heartland Diversified Industries, Inc., Distributed Networks, Inc.,
and certain shareholders of Distributed Networks, Inc.
10.3* Buy/Sell Agreement, dated March 27, 1996, by and between the Company
and Heartland Diversified Industries, Inc.
10.4* Consulting Agreement dated April 15, 1997, among Products, Services &
Technology Corporation, David Wood and Henry Hanson
11* Statement regarding computation of per share earnings
24 Power of Attorney
27 Financial Data Schedule
99* Gold Genie Worldwide, Inc. Offering Prospectus, dated July 24, 1985
1 Summaries of all exhibits contained in this Registration Statement
are modified in their entirety by reference to such exhibits.
* Incorporated by reference herein to the Company's Form 10-SB, as
amended, dated as of February 12, 1998.
(b) Forms 8-K filed during the last quarter. None.
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.
May 15, 1998 WIRELESS DATA SOLUTIONS, INC.
/s/ Michael B. McLaughlin
---------------------------
Michael B. McLaughlin
President & Chief Executive Officer
Exhibit 24
POWER OF ATTORNEY
KNOW ALL PERSONS by these presents that each person whose signature
to this Quarterly Report appears below hereby constitutes and appoints Paul B.
Ingram and John L. Naylor, and each of them as his true and lawful attorney-
in-fact and agent, with full power of substitution, to sign on his behalf
individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post-effective
amendments to this Quarterly Report, and any and all instruments or documents
filed as part of or in connection with this Quarterly Report or the amendments
thereto and each of the undersigned does hereby ratify and confirm all that
said attorney-in-fact and agent, or his substitutes, shall do or cause to be
done by virtue hereof.
In accordance with the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused this
report to be signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
May 15, 1998 /s/ Michael B. McLaughlin
--------------------------
Michael B. McLaughlin, President and
Chief Executive Officer (Principal
Executive Officer) and Director.
May 15, 1998 /s/ Patrick Makovec
-----------------------------
Patrick Makovec, Chief Financial
Officer, (Principal Accounting and
Financial Officer)
May 15, 1998 /s/ Brian Blankenburg
---------------------------------
Brian Blankenburg, Director
Exhibit 27
Financial Data Schedule