UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECRUITEIS EXCHANGE
ACT OF 1934. December 31,2002
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__ No__X__
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANRUPTCY 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 the practicable date:
There were 15,142,434 shares of the Issuer's common stock outstanding as of
December 31,2002.
Table of Contents
Part I
Item I Financial Statements
Item II Management's Discussion and Analysis or plan of Operation.
Part II
Item I Legal Proceedings
Item II Changes in Securities
Item III Defaults upon Senior Sercurities
Item IV Submission of Matters to a vote of security holders
Item V Other Information
Item VI Exhibits on Reports on Form 8K
Item VII Subsequent Events
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Financial Statements
For the Quarter Ended December 31,2002
( Not Reviewed)
Part I
Item I
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 2002
Assets
Current Assets 12/31/02 12/31/01
(Not Reveiwed) (Reviewed)
Cash and Cash Equivalents $54,147 $7,672
Trade Accounts receivable, net off
Estimated Allowance for doubtful
Accounts of $64,688 87,022 94,037
Inventory 81,703 116,916
Prepaid Expenses - 8,691__
Total Current Assets $222,872 $227,316
Property and Equipment
Office Fixtures and Equipment 59,155 59,155
Leasehold Improvements 12,894 12,894
72,049 72,049
Less: Accumulated Depreciation 56,857 40,604
Net Property and Equipment 15,192 31,445
Other Assets
Security Deposits 5,635 5,636
Total Assets $243,699 $275,118
Liabilities and Stockholder's Equity (Deficiency)
Current Liabilities:
Note Payable to Stockholder $50,000 $50,000
Accounts Payable and Accrued Expenses 173,220 315,526
Advance from Customers - 26,870
Other Current Liabilities 11,564 8,542
Total Current Liabilities 234,784 400,938
Other Liabilities:
Due to officers 21,486 21,746
Total Liabilities 256,270 422,684
Minority Interests in consolidated subsidiaries 20,000 20,000
Commitment and Contingencies
Stockholders Equity
Preferred Stock, $.002 par value;3,000,000 shares
Authorized; no shares issued or outstanding -- --
Common Stock, $.001 par value; 25,000,000 shares
Authorized; 15,142,434 issued 15,142 11,599
Common Stock to be issued 410,126 518,729
Additional Paid in Capital 2,373,962 2,118,902
Accumulated Deficit (2,831,801) (2,827,517)
Total Stockholder's Deficiency (32,571) (178,287)
Total Liabilities and Stockholder Deficiency $243,699 $264,397
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Quarter Ended December 31, 2002
12/31/2002 12/31/2001
(Not Reviewed) (Reviewed)
Revenue
Net Product Sales $224,494 $155,779
Repairs and Maintenance 12,124 10,435
Engineering Services 2,650 -____
Total Revenue $239,268 $166,214
Cost of Sales $72,101 $64,325
Gross Profit 167,167 101,889
Operating Expenses 150,317 201,573
Operating Income (loss) 16,850 (99,684)
Other Income(Expense):
Interest Expense 1,306 -
Interest Income - 40____
Total Other Income (Expense) 1,306 40
Provision For Income Tax 0 0____
Net Gain or Loss $ 15,544 $(99,644)
Basic and diluted earnings(loss)
per common share $.001 $(.009)
Weighted Average Common Shares Outstanding 15,142,434 10,917,124
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the three months Ended December 31, 2002 and 2001
2002 2001
(Not Reviewed) (Reviewed)
Cash Provided by (used in)
Operating Activities:
Net Income(loss) 15,544 (99,644)
Adjustments to reconcile net loss to net cash
Provided by (used in) operating activities:
Depreciation 4,050 4,089
Issuance of common stock for services - 18,000
(Increase)Decrease in Assets:
Accounts Receivable 9,091 40,118
Inventory (2,086) 7,625
Prepaid expenses and other assets - (3,843)
Increase (decrease) in liabilities:
Accounts Payable and Accrued Expenses (50,620) 7,134
Due to Officers 150 -
Advances from Customers - 21,042
Other Current liabilities 2,897 -__
Net Cash provided by (used in)
operating activities: (20,974) (5,479)
Cash Flows from Financing Activities:
Advance to Officers 0 1,150
Net Cash provided by financing activities 0 1,150
Net increase (decrease) in
Cash and Cash Equivalents (20,974) (4,329)
Cash and Cash equivalents, beginning of period 75,121 12,001
Cash and Cash equivalents, end of period $54,147 $7,672
WIRELESS DATA SOLUTIONS
Consolidated Statement of Changes in Stockholders Equity
For the Quarter Ended December 31,2002
Common Stock
Number Additional
Of Paid-In Accumulated
Shares Amount Capital Deficit
Balance Sept 30,2001 10,967,124 10,967 2,026,534 (2,727,873)
(Audited)
Issuance of common stock
For services at
$.04 per share 450,000 450 17,550 -
Issuance of common stock
For debt reduction
At $.41 per share 182,296 182 74,818 -
Issuance for common stock
For debt reduction
At $.20 per share 543,014 543 108,060 -
Issuance of common stock
For working capital
At $.05 per share 3,000,000 3,000 147,000 -
Net Loss - - - (119,472)
Balance Sept. 30,2002 15,142,434 $15,142 $2,373,962 ($2,847,345)
(Unaudited)
Net Profit 15,545
Balance 12/31/03
(Unaudited) 15,142,434 $15,142 $2,373,962 ($2,831,800)
WIRELESS DATA SOLUTIONS
Consolidated Statement of Changes in Stockholders Equity
For the Quarter Ended December 31,2002
Common Stock Total
To be Issued
Balance Sept 30,2001 593,729 (96,643)
(Audited)
Issuance of common stock
For services at
$.04 per share - 18,000
Issuance of common stock
For debt reduction
At $.41 per share (75,000) -
Issuance for common stock
For debt reduction
At $.20 per share (108,603) -
Issuance of common stock
For working capital
At $.05 per share - 150,000
Net loss for fiscal year end - (119,472)
Balance Sept 30, 2002
(Unaudited)
$410,126 $48,115
Net Profit 15,545
Balance 12/31/03
(Unaudited) $410,126 ($32,570)
Item II Management's Discussion and Analysis of Financial Conditions and
Results of Operations
This discussion may include certain "forward looking" statements
that reflect our current views with respect to future events and
financial performance. Investors should be aware that actual
results may differ materially from our expressed expectations
because of risks and uncertainties inherent in future events;
particularly those risks identified and set forth below, and should
not unduly rely on these forward looking statements. We undertake
no duty to update the information in this discussion if any forward
looking statement later turns out to be inaccurate.
Business Issues
The need to significantly up-grade mobile data terminal hardware
technology was recognized in a 2000 fiscal year WDS management
business review that included discussions with existing and
potential customers, projected wireless fleet tracking growth trends
that included primary and secondary research sources, a competitive
analysis and an internal capabilities assessment of DINET. The
analysis also determined that the core assets of WDS were identified
as DINET'S substantial customer base in the concrete construction
segment, the broad awareness that DINET produced high quality mobile
data computers, and the publicly traded stock of WDS that could be
utilized to secure capital.
The result of this business review was a strategic business decision
to acquire advanced hardware technologies that would enhance our
competitive position in the concrete construction market as well as
other vertical markets rather than to develop them internally. The
rationale for this decision was based upon the projected high R&D
costs and the long-time frame associated with internal development.
Additionally the review determined that there were a broad variety
of advanced wireless hardware and software products with significant
market potential that had been designed in small private companies
that were under exploited due to a lack of unavailable capital to
market and manufacture the new technology.
WDS management believed that an "acquisition strategy" would enable
the company to continue to be a leading provider of wireless fleet
tracking technology to the Ready Mixed market, and, at the same
time, enable WDS to exploit other new vertical market opportunities
due to the significant wireless growth opportunities in vehicle
fleet management.
Implementation of the technology acquisition strategy has been
impeded for several reasons:
? In one instance, the proposed acquisition by the company of very
advanced and implemented technology was stymied by questions about
applicable patent rights discovered during the course of the
company's due diligence. While WDS received two patent attorney
opinions that the firm could probably win a patent challenge the
firm did not have the financial resources to support the extended
challenge.
? The FY 2001 the SEC notified WDS management that the auditing
firm that had completed the firms FY2000 audit had not maintained
their continuing education requirements and the SEC made
determination that WDS had to re-submit their FY2000 audit. However
a marked decrease in revenues during fiscal 2001, continuing in
fiscal 2002, had deprived the company of the cash resources needed to
pay the new independent auditors fees selected to resubmit the FY2000
audit as well as pay for the FY2001 audit. As a consequence,
completion of the company's Annual Report on Form 10-KSB for the year
ended September 30, 2001, and of subsequent quarterly reports, was
substantially delayed, thereby, in turn, inhibiting the company's
ability to pursue acquisitions involving use of the company's common
stock as a medium of payment.
? Sales declined in 2001 and again in 2002. Significantly impacting
the cash flow essential to implementing the acquisition strategy.
? A customer filed a complaint against Dinet alleging certain
problems with equipment purchased in December 1995 (three years prior
to the employment of the current presidents of both WDS and Dinet).
The complaint included claims against Dinet for breach of express
warranty. This action by the customer also included the manufactures
of the two-way radio system the customer had purchased as well as the
spectrum network provider. WDS settled its portion of the action out
of court for $175,000. The payment terms for the settlement include
$75,000 worth of WDS Common Stock to be issued at $0.41 per share and
$100,000 worth of WDS common stock to be issued at $0.20 per share.
The settlement was reached in July 2001 (the fourth quarter of
FY2002) and the stock has issued. Additionally the legal costs for
WDS in defending the company against this complaint exceeded
$100,000.
These business setbacks made it essential for WDS to secure
additional capital to re-submit the fiscal year 2000 audit and
complete the 2001 audit that would bring its filings current.
Subsequently WDS was able to sell common stock in a private placement
and raise $150,000. Management also decided that it was important to
reduce the debt on the WDS balance sheet so that WDS would be able to
resume acquisition and/or merger discussions with a clean balance
sheet. Consequently in the first quarter of FY2002 the WDS
management implemented a cost and debt reduction strategy enabling
the company to eliminate over $400,000 in debt in exchange for common
stock, or a significantly reduced, but immediate, payment in cash.
The stock issued or to be issued will be restricted.
RESULTS OF OPERATIONS (1ST qtr. FY2003)
Total revenues for the First Quarter of Fiscal 2003 were $239,268,
increased 44% compared to the 1st Quarter of 2002 when sales totaled
$166,214. While this increase can not necessarily be attributed to
any trend, however it is in line with our long term averages.
The operating income for the first fiscal quarter of 2003 was a
profit of $15,544 a loss of $99,644 in the first quarter of 2002.
Basically there were two reasons for the return to profitability.
Revenue went up in 2003 significantly compared to same period in
2002, as discussed in the previous paragraph. Also the expenses were
reduced by approximately 25% compared to the same period in the prior
year.
LIQUIDITY AND CAPITAL RESOURCES
The company's 1st Qtr cash position increased by approximately
$47,000, $54,147 vs. $7,672, compared to the same period of the prior
year. The cash increase was primarily due to the $150,000, which was
realized from the private placement done in the 3rd Qtr of 2002. Also
the company's return to profitability was a significant contributing
factor.
Current liabilities at 12/31/01 were $400,938 compared to 234,738 at
12/31/02. Accrued taxes and legal cost were the two major factors
accounting for the change. The taxes we subsequently paid and
compromise settlement was made for the legal fees. The agreed to
settle all their fees for $10,000. Those two factors also accounted
for the change in total liabilities also.
Part II
Item I LEGAL PROCEEDINGS
(none)
Item II CHANGES IN SECURITIES
On October 31,2001, 1st Qtr of Fiscal 2002, Dinet reached a settlement
with Sanact, prior to litigation under which they would accept,
182,296 shares of Wireless Data Solutions common stock in exchange
for $75,000 of the $175,000, which was the total amount of the
settlement. A settlement on the remaining $100,000 was reached in
April of 2002 and is discussed in the 3rd quarter 10Q. On November
7,2001 John Doubek was issued 450,000 shares of WDS common stock in
payment of legal services which had been performed over a period of
time. The value of the services was $62,700.
In both instances the stock was issued in accordance with rule 144.
Item III DEFAULTS UPON SENIOR SERCURITIES
(none)
Item IV SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(none)
Item V OTHER INFORMATION
(none)
Item VI EXHIBITS ON REPORTS ON FORM 8-K
For budgetary reasons the company was unable to provide audited
financials at 9/30/02. Consequently the company filed an 8K at
3/13/03 to provide investors with unaudited financial information.
On 3/09/03 the company excepted Brian Blankenburg's resignation as
a means of further cutting costs. Mr. Blankenburg continues to
work on a consulting basis as needed. Mr. Blankenburg's
resignation was discussed in Form 8K filed 3/11/03.
Item VII SUBSEQUENT EVENTS
On 3/09/03 Brian Blankenburg resigned, however he will continue to
provide his services as needed on a consulting basis. His
resignation is discussed in an 8K filed on 3/11/03.
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.
April 9th, 2002 WIRELESS DATA SOLUTIONS, INC.
/s/ Patrick Makovec
Patrick Makovec
Chairman of the Board