WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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 EXCHNAGE ACT OF 1934.
For the Quarterly Period Ended December 31, 1999
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transaction 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.)
2233 Roosevelt Road
Suite #5
St. Cloud, MN 56301
(Address of principal executive offices)
(320)203-7477
(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 practicable date:
There was 10,907,124 shares of the Issuer's common stock
outstanding as of December 31, 1999.
PART I
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Balance Sheet
December 31, 1999, 1998
ASSETS
12/31/199 12/31/98
(Unaudited) (Unaudited)
Current Assets:
Cash and cash equivalents $208,795 $54,386
Trade accounts receivable, net of
$6,000 estimated allowance for
doubtful accounts 158,160 269,494
Inventory 208,098 265,682
Prepaid expenses 10,346 3,992
Other current assets 315 0
Total Current Assets 585,714 593,554
Fixed Assets:
Office fixtures and equipment 17,983 15,033
Leasehold Improvements 12,894 12,894
Sub-Total 30,877 27,927
Less: Accumulated Depreciation
and Amortization 27,927 27,927
Net Fixed Assets 2,950 0
Other Assets:
Deferred service contract 134,894 170,323
Loan to RD220 0 28,649
Due from Angellcom 0 35,000
Due from related parties 290,009 287,140
Security deposits 3,113 3,113
Total Other Assets 428,016 524,225
TOTAL ASSETS $1,016,680 $1,117,779
LIABILITIES
12/31/99 12/31/98
(Unaudited) (Unaudited)
Current Liabilities:
Trade accounts payable $109,186 $175,467
Service contract payable in stock 20,800 13,100
Current portion of other liabilities 58,132 70,190
Advance from Customers 15,866 50,877
Other accrued liabilities 3,356 306
Total Current Liabilities 207,340 309,940
Other Liabilities:
Accrued salaries, related payroll
taxes, reimbursable expenses
payable to officers 564,667 568,417
Less: Current portion 0 0
Total Other Liabilities 564,667 568,417
TOTAL LIABILITIES 772,007 878,357
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;
8,164,720 shares issued and
outstanding at 9/30/97, 10,162,124
at 9/30/98 & 10,182,110 at 9/30/99. 10,907 10,182
Common Stock options outstanding 0 11,250
Additional paid-in-capital 1,999,744 1,927,969
Deficit (1,737,205) (1,681,206)
Sub-Total 273,446 268,195
Receivable from related entity for
sale of common stock (48,773) (48,773)
Total Stockholders' Equity 224,673 219,422
TOTAL LIAB. & STOCKHOLDERS' EQUITY $1,016,680 $1,117,779
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Earnings
For the Years Ended, December 31, 1999, 1998
12/31/99 12/31/9
(Unaudited) (Unaudited)
REVENUES
Net product sales $487,773 $205,979
Other Income 51 6,828
Total Revenues 487,824 212,807
COST OF SALES
Products 215,069 113,686
Total Cost of Sales 215,069 113,686
Gross Profi 272,755 99,121
Operating Expenses 225,618 259,442
Income before Interest 47,137 (160,321)
Interest expense, net of interest income 0 10,165
Income before taxes 47,137 (170,486)
Provision for income taxes 0 0
NET EARNINGS $47,137 ($170,486)
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Years Ended December 31, 1999, 1998
12/31/99 12/31/98
Operating Activities:
Net Income $47,137 ($170,486)
Changes in Operating Assets and Liabilities:
Decrease (Increase) in accounts receivable 110,686 195,896
Decrease (Increase) in inventory 23,412 2,576
Decrease (Increase) in other assets 6,386 (3,992)
(Decrease) Increase in accounts payable (53,019) (131,209)
(Decrease) Increase in advances from customers (91,922) 42,127
(Decrease) Increase in other payables (50,410) 9,045
Decrease in deferred service contract 11,810 11,810
Net cash provided by operating activities 4,080 (44,233)
Investing Activities:
Proceeds of miscellaneous assets (2,950) 0
Financing Activities:
(Increase) in due from related parties 0 (2,132)
Decrease (Increase) in due from Angellcom 0 (1,000)
(Decrease) Increase in due to related parties
and related expenses (3,750) 0
(Decrease) Increase in common stock
options outstanding (11,250) 0
Proceeds of issuance of common stock 72,500 1,000
Net cash provided by financing activities 57,500 (2,132)
Net increase in cash 58,630 (46,365)
Cash at beginning of period 150,165 100,752
Cash at end of period 208,795 $54,387
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Periods Ended December 31, 1999, 1998
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital
Balance at September 30, 1999 $10,182 $11,250 $1,927,969
Net Earnings for the period
ended December 31, 1999
Issuance of common stock (11,250)
Stock issued to cancel debt to officer 725 71,775
Prior period adjustment
Sub-Total 10,907 0 1,999,744
Receivable from related entity
for sale of common stock
Balance at December 31, 1999 $10,907 $0 $1,999,744
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital
Balance at September 30, 1998 $10,162 $11,250 $1,926,989
Net Earnings for the period
ended December 31, 1998
Stock issued to cancel debt to officer 20 980
Sub-Total 10,182 11,250 1,927,969
Receivable from related entity
for sale of common stock
Balance at December 31, 1998 $10,182 $11,250 $1,927,969
Deficit Total of Rows
continued From above
Balance at September 30,1999 ($1,784,331) $165,070
Net Earnings for the period
ended December 31,1999 47,137 47,137
Issuance of common stock (11,250)
Stock issued to cancel debt to officer 72,500
Subtotal (1,737,205) 273,446
Receivable from related entity
for sale of common stock (48,773)
Balance at December 31, 1999 ($1,737,205) $224,673
Deficit Total of Rows
continued From above
Balance at September 30, 1998 ($1,510,720) $437,681
Net Earnings for the period
ended December 31, 1998 (170,486) (170,486)
Net Earnings for the period
ended December 31, 1998 1,000
Sub-Total (1,681,206) 268,195
Receivable from related entity
for sale of common stock (48,773)
Balance at December 31, 1998 ($1,681,206) $219,422
Part 1
Notes to Financial Statements
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.
Company Background Information
The following background information is deemed important in conjunction
with the data provided in the financial statements for the period ending
December 31, 1999.
Revenues for the 1st quarter of fiscal 2000 compared to the same period in
1999 were up approximately $280,000 with a corresponding profit of $47,000
compared to a loss of $170,0000 in fiscal 1999.
Management will continue to focus on our core business and at the same time
move forward on defining new opportunities which can contribute to the
revenue stream.
Management's Discussion and Analysis or Plan of Operation.
Liquidity and Capital Resources
The Company's current assets totaled approximately $586,000 on December
31, 1999, a slight decrease from December 31, 1998, at which time current
assets were approximately $594,000.
While the dollar value of the current assets remained essentially the same,
the composition of those assets changed significantly. Cash and cash
equivalents increased from $54,000 in December, 1998 to $208,000 in December,
1999. Trade receivables declined by approximately $110,000 while inventory
was reduced slightly more than $55,000. The increase in cash along with a
decrease in accounts receivable and inventory can be attributed to a couple
of issues. First, as previously mentioned, there was a $47,000 profit at
December 31 of 1999 compared to a $170,000 loss at December 31, 1998.
Secondly there has been a substantial reduction in the number of problems
customers have been experiencing, thus withholding payment is no longer a
convenient excuse. Improved quality control has been the object of much
attention. There also has been more emphasis on communicating with the
accounts before they get stale. Since the objective with inventory is to
bring in the expensive parts just prior to shipment, it will vary depending
upon the timing of the shipping date.
Management believes the current trend of increased sales and revenue
along with current cash balances will be sufficient to fund operations and
expenses for the near term.
Management continues to believe that to achieve the desired growth some form
of equity financing will be required. Financing will become more of an issue
as new opportunities are defined and investigated.
Results of Operations
Revenues for the first quarter of fiscal 2000 ending December 31, 1999 were
up approximately $282,000 compared to the first quarter of 1999. The 138%
increase in revenue compared to the first quarter of 1999 combeined with
a $35,000 reduction in operationg expenses for the period, allowed the company
to post a $47,000 profit for the first quarter. Management does, however,
anticipate increasing the spending for R & D in the up coming quarters. The
near term focus will be product upgrades and improvements.
As previously addresses under management's discussion and analysis cash
holdings increased by approximately $155,000.
The deferred service contract has been reduced by approximately $35,000
compared to December 31, 1998. Mr. Brian Blankenburg, President of Wireless
Data Solutions, had performed certain marketing services prior to his
becoming an employee. The value of those services are being amortized over
three years. A contract with Mr. David Wood for public relations services is
being amortized over the anticipated useful life of the services provided.
The loans to Angelcom and Radio Digital 220 were written off as uncollectable.
In early 1998 Wireless Data Solutions formed an informal alliance with
Angellcom Communications, Inc., with the intent of working with Angellcom
and Radio Digital 220 to obtain 220 MHz licenses in Mexico. Angellcom, a
Santa Monica based company owned 49 percent of Radio Digital 220, a Mexican
Company. Radio Digital was to be the operating company in Mexico. As the
relationship progresses Wireless Data Solutions advanced money for working
capital and made a deposit, which was needed to bid on the licenses. Later
Angellcom Communications and its partner alleged they had relied on certain
statements made by Mike McLaughlin (then CEO of Wireless Data Solutions)
regarding funding for Angellcom Communications, which was not provided.
They insisted they had been damaged and were entitled to compensation. Rather
than progress to a law suit (which would have been expensive and damaging to
the company's efforts to move forward, paricularly if seeking capital)
management felt it was far better to settle and move forward. A settlement was
reached whereby they would keep the maoney advanced to them and each party would
be released form any further legal action. The write off of the loans to
Angellcom Communications and Radio Digital 220 was $63,649.
Trade accounts payable were down approximately $65,000 which is a reflection
of increased cash flow and lower inventory.
The payable in stock is owed to Brian Blankenburg. Mr. Blankenburg earned
approximately 191,000 shares under an arrangement in connection with his
employment as president of Dinet. During the period in September 14, 1998 to
February 26, 1999, Mr. Blankenburg earned $1500 per week, $500 was paid in
cash and $1000 was paid in stock, based on the average stock price during
that week. The common stock will bear a restrictive legend when issued.
During the period 725,000 shares of common stock were issued. John Doubek
was issued 400,000 shares in payment for legal services which have been
performeed in conjunction with the management change and attending issues.
Those shares were issued with a restrictive legend. Brian Blankenburg was
issued 100,000 shares of common stock as an incentive to assume
the postion as president and CEO of Dinet and Wireless Data Solutions.
The incentive was a part of the package because he joined the company
at a salary far below what a person of his experience and ability would
command. In both cases the liability for the stock payment had been accrued
in March of 1999. The share issued to Mr. Blankenburg will bear a restrcitve
legend.
Pat Makovec, Henry Hanson and Mike McLaughlin each exercised 75,000 warrants.
The exercise price was $0.05 HTe warrants had been issued 10 years previous
when the stock was unpriced. The common stock will bear a restrictive legend.
RELATED PARTY TRANSACTIONS
Brian Blankenburg, Pat Makovec, and John Doubek all received stock. The
details of those transactions were discussed previously under Results of
Operations.
FINANCIAL CONDITION
Cash holdings for the period incresed approximately $155,000. The increases
was a direct result of increased revenues and lower expenses.
Subsequent Events
In August of 1999 Dinet, the wholly owned subsidiary of Wireless Data
Ssolutions signed an agreement with Varitek Industries of Houston Texas. The
nature of the agreement was for Dinet to license certain technology to
Varitek. The terms of the agreement called for cash payments and stock in
Varitek Industries. The stock and the last cash payment was due on January 19,
2000. All payments and the stock obligation were presented prior to the final
due date.
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. These 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 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, interact, a
sinking or purchase fund installment, of 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.
3.2* Certificates of Amendment to the Articles
of Incorporation of Products, Services, &
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 and 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.
February 17, 2000 WIRELESS DATA SOLUTIONS, INC.
/s/ Patrick Makovec
Patrick Makovec
Chairman of the Board