UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13OR 15(d) OF THE
SECURITIES EXCHNAGE ACT OF 1934.
For the Quarterly Period Ended December 31, 2000
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 333-47395
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 were 11,199,355 shares of the Issuer's common stock
outstanding as of December 31, 2000.
PART I
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Balance Sheet
December 31, 2000, 1999
ASSETS
12/31/00 12/31/99
(Unaudited) (Unaudited)
Current Assets:
Cash and cash equivalents $79,631 $208,795
Trade accounts receivable, net of
$6,000 estimated allowance for
doubtful accounts 309,910 158,160
Inventory 127,844 208,098
Prepaid expenses 7,549 10,346
Other current assets 0
315
Total Current Assets 524,934 585,714
Fixed Assets:
Office fixtures and equipment 69,739 17,983
Leasehold Improvements 0
12,894
Sub-Total 69,739 30,877
Less: Accumulated Depreciation
and Amortization 23,395 27,927
Net Fixed Assets 46,344 2,950
Other Assets:
Deferred service contract 87,656 134,894
Loan to RD220 0 0
Due from Angellcom 0 0
Due from related parties 6,534 290,009
Security deposits 3,113 3,113
Total Other Assets 97,303 428,016
TOTAL ASSETS $668,581 $1,016,680
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Balance Sheet
December 31, 2000, 1999
LIABILITIES
12/31/00 12/31/99
(Unaudited) (Unaudited)
Current Liabilities:
Trade accounts payable $109,461 $109,186
Service contract payable in stock 20,800
Current portion of
other liabilities 5,077 58,132
Advance from Customers 15,866
Other accrued liabilities 3,293 3,356
Total Current Liabilities 117,831 207,340
Other Liabilities:
Accrued salaries, related payroll
taxes, reimbursable expenses
payable to officers 285,241 564,667
Less: Current portion 0 0
Total Other Liabilities 285,241 564,667
TOTAL LIABILITIES 403,072 772,007
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;
10,917,124 shares issued and
outstanding at 12/31/1999, &
11,199,355 at 12/31/2000. 11,199 10,907
Common Stock options outstanding 0 0
Additional paid-in-capital 2,061,849 1,999,744
Deficit (1,827,539) (1,737,205)
Sub-Total 245,509 273,446
Receivable from related entity for
sale of common stock 0 (48,773)
Total Stockholders' Equity 245,509 224,673
TOTAL LIAB. & STOCKHOLDERS' EQUITY $668,581 $1,016,680
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Earnings
For the Quarters Ended December 31, 2000, 1999
12/31/00 12/31/99
(Unaudited) (Unaudited)
REVENUES
Net product sales $440,995 $487,773
Other Income 51
Total Revenues 440,995 487,824
COST OF SALES
Products 181,634 215,069
Total Cost of Sales 181,634 215,069
Gross Profit 259,361 272,755
Operating Expenses 289,467 225,618
Research & Development 52,665 0
Income before Interest (82,771) 47,137
Interest expense,
net of interest income 2,449 0
Income before taxes (85,220) 47,137
Provision for income taxes 0 0
NET EARNINGS ($85,220) $47,137
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Quarters Ended December 31, 2000, 1999
12/31/00 12/31/99
Operating Activities:
Net Income ($85,220) $47,137
Changes in Operating
Assets and Liabilities:
Decrease (Increase)
in accounts receivable (142,432) 110,686
Decrease (Increase)
in inventory 52,236 23,412
Decrease (Increase)
in other assets (4,823) 6,386
(Decrease) Increase
in accounts payable (28,336) (53,019)
(Decrease) Increase
in advances from customers (15,255) (91,922)
(Decrease) Increase
in other payables (26,852) (50,410)
Decrease in deferred
service contract 11,810 11,810
Net cash provided by
operating activities (144,006) 4,080
Investing Activities:
Proceeds of miscellaneous
assets (4,224) (2,950)
Financing Activities:
(Increase) in due from
related parties 1,799 0
Decrease (Increase)
in due from Angellcom 0 0
(Decrease) Increase in due
to related parties
and related expenses 0 (3,750)
(Decrease) Increase in common
stock options outstanding 0 (11,250)
Proceeds of issuance
of common stock 54,297 72,500
Net cash provided by
financing activities 56,096 57,500
Net increase in cash (178,584) 58,630
Cash at beginning of period 256,986 150,165
Cash at end of period $79,631 208,795
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Periods Ended December 31, 2000, 1999
Additional
Common Paid-In
Stock Capital
Balance at September $10,917 $2,007,834
30, 2000
Net Loss for the
period ended December 31,
2000
Stock issued to
cancel debt for consulting
services 50 18,186
Cancel Debt to Officer 191 20,609
Issue stock per
Employment agreement
With Dinet President 41 15,220
Balance at December 31, 2000 11,199 2,061,849
Deficit Total
Balance at September
30, 2000 ($1,742,312) $276,439
Net Loss for the period
ended December 31, 2000 (85,220) (85,220)
Issue Stock cancel debt
For consulting services 18,236
Issue stock cancel
Debt to officer 20,800
Issue stock per
Employment agreement
With Dinet President 15,261
Balance December 31, 2000 1,827,532 245,516
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital
Balance at
December 31, 1999 $10,182 $11,250 $1,927,969
Net Earnings for
the period ended December
31, 1999
Common Stock Options
Outstanding (11,250)
Stock issued per option
Agreement 725 71,775
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
Deficit Total
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
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.
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.
This report does not include the customary auditor's review as the
company is in the process of changing auditors. The change was
necessitated by the fact the current auditor was not in compliance with
certain SEC requirements. On review, the situation could not be
rectified in time to permit a timely opinion.
Management's Discussion and Analysis or Plan of Operation
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, 2000.
Revenues for the first fiscal quarter ended December 31, 2000 were down
by approximately $47,000 compared to the same period ended December 31,
1999. Management realizes there are concerns about an economic slowdown,
which typically influences prospective purchaser's decisions with regard
to purchases of Capital Equipment, which may have influenced the
decline. Management understands that to achieve the type of growth that
is desired they will need to shift their focus beyond the current market
segment. In that regard the company has been in contact with several
investment bankers and has looked at various business combinations as a
means of expanding its markets. Management will continue to examine
options which will permit the company to realize it's growth objective.
Liquidity and Capital Resources
The company's current assets totaled approximately $525,000 compared to
$585,000 at the end of the first quarter of 1999. However, the company
continues to enjoy a very positive current ratio of 4.5 to 1. The ration
defines liquidity by comparing current assets to current liabilities.
Accounts Receivable for the first quarter ended December 31, 2000 was
approximately $310,000 compared to $164,000 one year ago. The reason the
accounts receivable doubled lies with the fact that the sales for the
first quarter appeared to start somewhat slower. With most of the sales
coming at the end of the quarter; cash and cash equivalents were down
from approximately $205,000 at December 31, 1999 to approximately
$80,000 at December 31, of 2000. As indicated above there was a major
shift in the components of the current assets. Because so much of the
liquid cash reserve was tied up in accounts receivable the company was
required to obtain a loan to maintain cash reserves. The loan was in the
amount of $50,000, which was arranged with one of the company's major
shareholders, subsequent to this report date.
Management believes that the current cash and receivables balances and
additional loans, should they be necessary will adequately fund
operations and expenses for the near term. The company is currently
entering a period, quarters 2 and 3, which have historically been the
strongest on an annual basis.
Results of Operations
Revenues for the first quarter totaled approximately $440,000 compared
to $487,000 in 1999. Correspondingly profits were also down: for the
quarter ended December 31, 1999 the profits were $47,000 compared to a
loss of $85,000 for the same time period in December 31,2000. Operation
expenses compared to the corresponding period one year ago increased
significantly. They rose from $226,000 to $341,000; $52,000 of the total
of the $341,000 was expended for research and development. The time
frame to complete a major software project has taken longer than
anticipated, raising costs significantly.
Travel and legal fees increased dramatically. Management has taken a
more aggressive posture in looking at and evaluating new opportunities.
Also there were significant noncash expenditures that involved
exchanging stock for creative artwork to be used in sales, and the
payment to Mr. Robert Chase, the President of Dinet of a stock bonus to
which he is entitled under the terms of his employment contract. These
shares are part of a one-time bonus to Mr. Chase and they are restricted
under rule 144. Mr. Chase had earned 41,250 shares during the quarter
ending December 21, 2000. A maximum of 223,750 additional shares can be
earned under the employment agreement, contingent on continued
employment. All shares are issued at fair market value at the time they
become due and payable.
As previously addressed under liquidity and capital resources and
analysis, cash holdings decreased by approximately $125,000 compared to
the same period one year ago. Correspondingly Accounts Receivable was
approximately $150,000 for the same period one year ago.
The prepaid service contracts have been reduced by approximately $47,000
compared to December 31, 1999. Mr. Brian Blankenburg, President of
Wireless Data Solutions, had performed certain marketing services prior
to his becoming an employee. The value of those services is being
amortized over three years. A contract with Mr. David Wood for public
relations services is being amortized over five years. In both cases the
expense is being amortized over the anticipated useful life of the
services provided.
Accrued Salaries and related payroll taxes are down by approximately
$279,000 and due from related parties is down approximately $280,000.
This relates to a settlement that was reached between Michael
McLaughlin, (former President and CEO of WDS) Heartland Industries and
Carl Hatch (a shareholder) in a derivative action by Carl Hatch
undertaken for the benefit of Wireless Data Solutions and its
shareholders. As a result WDS was relieved of any obligations to Mr.
McLaughlin and agreed to forego any action against Heartland and dismiss
all funds owed to it by Heartland. In addition to the forgiveness of all
obligations between all parties Heartland also contributed 145,000
shares of WDS common stock. Those shares of stock are to be included as
part of a compensation package to Mr. Blankenburg; President and CEO of
WDS and Dinet. Mr. Blankenburg has been working for a modest salary far
below what the market commands. It is important for the company to
have Mr. Blankenburg maintain a substantial equity interest in WDS.
Accounts Payable at December 31, 2000 compared to the corresponding
period one year ago did not change significantly. The payable in stock
in the amount of $20,800 was reduced to zero as Mr. Blankenburg was
issued the shares due to him. 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.
After February 26 Mr. Blankenburg became a salaried employee.
Financial Condition
Cash holdings for the corresponding period one year ago decreased
approximately $125,000. While increased expenses were a major factor,
there also was a $160,000 increase in accounts receivable which ties up
cash.
Subsequent Events
On January 1, 2001 Brian Blankenburg, President and CEO of Wireless Data
Solutions, and Pat Makovec, secretary/treasurer and Board Chairman of
Wireless Data Solutions were voted a stock bonus in lieu of cash for
their efforts related to progress of the last calendar year compared to
the two prior years. Under the bonus arrangement Mr.Blankenburg will
receive 200,000 shares of WDS common stock and Mr. Makovec will receive
100,000 shares of WDS common stock. The fair market value at the time of
the award was $33,000. Also subsequent to the date of the report the
company borrowed $50,000 from a major shareholder to increase its cash
holdings and liquidity.
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 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.
A customer filed an action against the company alleging certain problems
with equipment on or about December, 1995. The complaint includes claims
against Dinet for breach of express warranty, and for punitive damages
and attorney's fees, all in an amount in excess of $150,000. The action
was filed on September 7th, 1999 and discovery has commenced. Dinet has
filed and answer denying all claims. As of December 31, 2000, no
significant changes in status have occurred.
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,
or 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 20, 2001 WIRELESS DATA SOLUTIONS, INC.
/s/ Patrick Makovec
Patrick Makovec
Chairman of the Board