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 March 31, 2001
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
(State of Incorporation)
93-0734888
(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
BANKRUPTCYPROCEEDINGS
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 11,199,355 shares of the Issuer's common stock
outstanding as of March 31, 2001.
PART I
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Balance Sheet
March 31, 2001, and 2000
ASSETS
March 31, 2001 March 31, 2000
(Unaudited) (Unaudited)
Current Assets:
Cash and cash
equivalents $107,848 $441,437
Trade accounts
receivable, net of
$6,000 estimated
allowance for
doubtful accounts 336,922 200,476
Inventory 110,457 124,163
Prepaid expenses 5,535 0
Total Current Assets 560,762 766,076
Fixed Assets
Office fixtures and
Equipment 72,049 17,983
Leasehold Improvements 12,894
Sub-Total 72,049 30,877
Less: Accumulated
Depreciation
and Amortization 27,385 27,927
Net Fixed Assets 44,664 2,950
Other Assets:
Prepaid service
contract 76,085 123,085
Due from related parties 2,952
Security deposits 3,113 3,113
Total Other Assets 79,198 129,150
TOTAL ASSETS $684,624 $898,176
LIABILITIES
Mar. 31, 2001 Mar. 31, 2000
(Unaudited) (Unaudited)
Current Liabilities:
Trade accounts payable $171,217 $81,861
Service contract
payable in stock 20,800
Notes Payable 50,000
other liabilities 1,364 65,295
Advance from Customers (22,201)
Other accrued liabilities 9,724 6,604
Total Current Liabilities232,306 152,359
Other Liabilities:
Accrued salaries, related
Payroll taxes, reimbursable
Expenses payable to
officers 285,241 285,241
Less: Current portion 0 0
Total Other Liabilities 285,241 285,241
TOTAL LIABILITIES 517,547 437,600
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;
11,199,000 shares
issued and
outstanding at
3/31/01, &
10,907,000 at 03/31/00 11,199 10,907
Common Stock options
outstanding
Additional paid-in-capital 2,061,850 1,999,744
Deficit (1,925,972) (1,570,074)
Sub-Total 147,077 440,577
Total Stockholders'
Equity 147,077 440,577
TOTAL LIAB. &
STOCKHOLDERS' EQUITY $684,624 $898,176
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Earnings
For the Six Month Periods Ended,
March 31, 2001, and 2000
March 31, 2001 March 31,2000
(Unaudited) (Unaudited)
REVENUES
Net product sales $833,668 $1,264,786
Total Revenues 833,668 1,264,786
COST OF SALES
Products 330,428 472,788
Total Cost of Sales 330,428 472,788
Gross Profit 503,240 791,997
Operating Expenses 602,567 577,741
Research & Development 84,333
Income before Interest (183,660) 214,257
Interest expense,
net of interest income 0 0
Income before taxes (183,660) 214,257
Provision for income taxes 0 0
NET EARNINGS ($183,660) $214,257
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Six Month Periods Ended
March 31, 2001, and 2000
March 31, 2001 March 31,2000
(Unaudited) (Unaudited)
Operating Activities:
Net Income ($183,660) $214,257
Changes in Operating
Assets and Liabilities:
Decrease (Increase) in
accounts receivable (169,444) 68,370
Decrease (Increase)
in inventory 69,623 107,347
Decrease (Increase) in
other assets 6,850 17,058
(Decrease) Increase in
accounts payable 33,420 (80,344)
Decrease in advances
from customers (15,255) (129,989)
Increase in Notes
Payable 50,000
(Decrease) Increase in
other payables (24,134) (39,999)
Decrease in deferred
service contract 23,381 23,619
Net cash provided by
operating activities (209,219) 180,319
Investing Activities:
Proceeds of miscellaneous
assets 1,048 (2,950)
Financing Activities:
(Decrease) in due from
related parties 4,735 287,057
(Decrease) Increase in due
to related parties
and related expenses 0 (283,176)
(Decrease) Increase in
common stock
options outstanding 0 (11,250)
Decrease in entity for
sale of common stock 0 48,773
Proceeds of issuance
of common stock 54,298 72,500
Net cash provided by
financing activities 59,033 113,904
Net increase in cash (149,138) 291,273
Cash at beginning of
period 256,986 150,165
Cash at end of period $107,848 $441,437
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Six Month Periods
Ended March 31 ,2001, and 2000
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital
Balance at September
30, 2000 $10,917 $0 $2,007,834
Net Earnings for the
period
ended March 31, 2001
Issuance of common stock
Stock issued for outside
services 50 54,016
Stock issued to cancel
debt to officer 191
Stock issued as pd of
wage contract
With subsidiary
President 41
Sub-Total 11,199 0 2,061,850
Receivable from related entity
for sale of common stock
Balance at
March 31, 2001 $11,199 $0 $2,061,850
Deficit Total of Rows
continued From
above
Balance at September 30,
2000 ($1,742,312) $276,439
Net Earnings for the period
ended March 31, 2001 (183,660) (183,660)
Stock issued to cancel
debt to officer 54,298
Sub-Total ($1,925,972) $147,077
Receivable from related
Entity for sale of
common stock 0
Balance at March 31,
2001 ($1,925,972) $147,077
Common Additional
Common Stock Options Paid-In
Stock Outstanding Capital
Balance at September
30, 1999 $10,182 $11,250 $1,926,969
Net Earnings for the
period
ended March 31, 1999 (11,250)
Stock issued to cancel
debt
to officer 725 71,775
Sub-Total 10,907 0 1,999,744
Receivable from related entity
for sale of common stock
Balance at March 31,
2000 10,907 $ 0 $1,999,744
Deficit Total of
Rows
continued From
above
Balance at September
30, 1999 ($1,784,331) $165,070
Net Earnings for
the period
ended March 31, 2000 214,257 214,257
Issuance of common stock (11,250)
Stock issued to cancel debt
to officer 72,500
Subtotal (1,570,074) 440,577
Receivable from related
Entity for sale of
common stock
Balance at March 31,
2000 ($1,570,074) $450,577
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 consolidated 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 changes auditors for reasons
specified in the 8K filed on February 21, 2001 and
amended on April 12, 2001. In essence the auditor
was not in compliance with certain SEC requirements.
On review the situation could not be rectified in
the near term to provide a timely opinion. The
audit process has been progressing and the new audit
firm should complete their work in the near term.
Company Background Information
The following background information is deemed
important in conjunctionwith the data provided
in the financial statements for the period
ending March 31, 2001.
Revenues for the first half-year ended March
31, were down approximately $431,000 compared
to the same period one year ago. Management
believes there are several issues associated with
the decline. Those factors are discussed in detail
under results of operations. It is understood that
to move the company to the next level investments
in new markets and new technology must be made. To
accomplish that goal there has been a focus on new
technology, which will allow the company to become
a force in the waste management market. Also the
company has made substantial investments in time
and money in the pursuit of an autostatus product.
The company has been working with several investment
bankers and has been considering different business
combinations in pursuit of is growth objective.
Management's Discussion and Analysis or Plan of Operation
Liquidity and Capital Resources
The Company's current assets totaled approximately
$560,000 compared to $760,000 one year ago. The
primary difference was the large cash position held
in March of 2000. That cash influx was the result of
a contract with Varitek, which was subsequently
canceled. That was a one time event which netted
the company $200,000. Accounts receivable is
approximately $135,000 higher than one year ago.
The difference is largely do to some software problems
the company has been experiencing. Certain customers
have elected to withhold payment until those problems
are resolved. The company is nearing completion of a
new version of software, which will include a number
of new features, which will resolve the software
issues.
The cash and cash equivalents component was down
approximately 330,000 for the same period one year
ago. That major change in the components of current
assets required the company to obtain a loan to
bolster its cash reserves. The loan was arranged
through one of its major shareholders.
Management has been in contact with investment
bankers, and has and is considering many options
with regard providing an adequate cash base for
stability and growth.
Management believes that current cash and receivable
balances and additional loans, should they be
necessary, will adequately fund operations and
expenses in the near term.
Results of Operations
Revenues for the first half totaled approximately
$834,000 compared to $1,265,000 for the same period
one-year ago. There are several factors associated
with the revenue decline. Last year a one-time
revenue item of $200,000 was recognized in the
first six months. The source was the Varitek
agreement. The general economy, which experienced
a significant slow down, is also seen as a
substantial factor. Management also believes that
it needs to have a broader product offering in its
current market segment to stimulate sales,
particularly to its existing customer base.
The company has spent considerable resources
in pursuit of new product offerings.
The company incurred a loss of $183,000 compared
to a profit of $214,000 in the same period in
fiscal 2000. The revenue recognized from the Varitek
agreement contributed $200,000 of fiscal 2000 profit.
Legal fees of approximately $100,000 in fiscal 2001
contributed significantly to the difference. The
legal fees were incurred as a result of the lawsuit,
discussed under legal proceedings, and the due
diligence associated with the proposed purchase of
the autostatus technology. The company also
incurred costs of approximately $84,000 for
research and development.
Travel was up significantly as a result of taking
a more aggressive posture in looking at and evaluation
new opportunities. Also the company incurred travel
costs associated with additional trade shows.
Expenditures for fixed assets were up approximately
$55,000 compared to the same period one-year ago.
Most of expenditures were for computer and related
equipment used in research and development.
The trade payables were up as a result of the legal
fees, which were discussed previously. The payable in
stock was reduced by $20,800 as Mr. Blankenburg was
issued the shares due him under and arrangement in
connection with his employment as President of Dinet.
The 190,000 shares issued under the arrangement shall
bear a restrictive legend.
Financial Condition
Cash holdings for the corresponding period one year
ago decreased approximately $335,000. Increased
expenditures for research and development, legal
expenses and travel were the major factors. Also
the increase in accounts receivable contributed
significantly.
Subsequent Events
There are no subsequent events to report.
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.
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. At the time there seem
to be no clear indications as to what Dinet's
liability may or may not be, there are strong
indications that if there is a liability Dinet
would not be the only vendor sharing the
responsibility. There are two other vendors,
which include the radio manufacturers and the
systems integrator. The plaintiff is seeking a
settlement prior to incurring the costs of expert
witness etc that would come with an actual trial.
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.
May 30, 2001 WIRELESS DATA SOLUTIONS, INC.
/s/ Patrick Makovec
Patrick Makovec
Chairman of the Board