UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECRUITIES
EXCHANGE ACT OF 1934. MARCH 31,2003
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 March 31,2003.
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 six months periods ended
March 31, 2002 and March 31, 2003
Part I
Item I
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Balance Sheet
March 31, 2003
Assets
2003 2002
Current Assets
(Not Reviewed) (Reviewed)
Cash and Cash Equivalents $59,329 $35,899
Trade Accounts receivable, net of estimated
Allowance for doubtful accounts of $64,688 105,366 177,937
Inventory 98,723 107,820
Prepaid Expenses - 7,020
Total Current Assets 263,418 328,676
Property and Equipment
Office Fixtures and equipment 59,155 59,155
Leasehold Improvements 12,894 12,894
72,049 72,049
Less:
Accumulated Depreciation 60,906 44,660
Net Property and Equipment 11,143 27,389
Other Assets
Security Deposits 5,636 5,636
Total $ 280,197 $361,701
Liabilities and Stockholder's Equity (Deficiency)
2003 2002
Current Liabilities
(Not Reviewed) (Reviewed)
Note Payable-stockholder $50,000 $50,000
Accounts Payable and Accrued Expenses
180,302 359,866
Advance from customers 18,415 40,142
Other Current Liabilities 12,550 6,247
Total Current Liabilities 261,267 456,253
Other Liablilities
Due to Officers 32,206 16,696
Total Liabilities 293,473 472,951
Minority Interest in consolidated subsidiaries
20,000 20,000
Commitment and contingencies
Stockholder's Equity (Deficiciency)
Preferred Stock, $.002 par value; 3,000,000 shares
Authorized; no shares issued or outstanding - -
Common Stock, $.001 par value; 25,000,000 shares
Authorized; 15,142,434 issued 15,142 11,599
Common Stock to be issued 410,126 551,229
Additional Paid in Capital 2,373,963 2,118,902
Accumulated Deficit (2,832,507) (2,812,980)
Total Stockholder's Deficienc(13,276) (131,250)
Total Liabilities and Stockholder's Deficiency$ 280,197 $361,701
WIRELESS DATA SOLUTIONS , INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Six Months Ended March 31, 2003 and 2002
2003 2002
Revenue (Not Reviewed) (Reviewed)
Net Product Sales $467,784 $492,864
Repairs and Maintenance 18,514 20,470
Engineering Services 14,250 -
Total Revenue 500,548 513,334
Cost of Sales 171,669 178,407
Gross Profit 328,879 334,927
Operating Expenses 311,421 420,074
Operating gain (loss) before
interest expense and other income17, 458 (85,147)
Other Income - 40
Interest Expense 2, 620 -
Net Gain (loss) $14,838 $(85,107)
Basic and diluted loss
per common share $.001 $(.007)
Weighted Average Common
Shares Outstanding 15,142,434 11,419,037
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Six Months Ended March 31, 2003 and 2002
2003 2002
(Not Reviewed) (Reviewed)
Cash Provided by (used in)
Operating Activities:
Net Income (loss) $ 14,838 $ (85,107)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation 8,100 8,144
Issuance of common stock for services 18,000
Common Stock to be issued for services
(Increase) Decrease in Assets:
Accounts Receivable (9,253) (43,782)
Inventory (19,106) 16,721
Prepaid Expenses and Other Assets - (2,170)
Increase (decrease) in Liabilities:
Accounts payable and Accrued Expenses
(28,025) 49,177
Advances to Customers 18,415 34,314
Due to Officers (4,643) -
Other Liabilities 3,882 -
Net Cash used in Operating Activities:
(15,792) (4,703)
Cash Flow from Investing Activities:
Purchase of Property and Equipment - -
Cash Flows from Financing Activities:
Proceeds form issuance of notes Receiveable - -
Proceeds from stock to be issued - 32,500
Repayment to officers - (3,899)
Net Cash provided by financing activities - 28,601
Net Increase (Decrease) in Cash and Cash Equivalents (15,792) 23,898
Cash and cash equivalents, beginning of period 75, 121 12,001
Cash and cash equivalents, end of period $59,329 $35,899
WIRELESS DATA SOLUTIONS
Consolidated Statement of Changes in Stockholders Equity
For the Six Months ended March 31,2003 and 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 $.41 per share 182,296 182 74,818 -
Advance on common stock
To be issued at$.05 per share- - - -
Net Loss for Six Months ended
March 31,2002 - - - (85,107)
Balance, March 31,2002 11,599,420 11,599 2,118,902 (2812,980)
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 14,838
Balance 03/31/03
(Unaudited) 15,142,434 $15,142 $2,373,962 ($2,832,507)
WIRELESS DATA SOLUTIONS
Consolidated Statement of Changes in Stockholders Equity
For the Six Months ended March 31, 2003 and 2002
Common Stock Total
To be Issued
Balance Sept 30,2001 593,729 (96,643)
(Audited)
Issuance common stock
For services at
$.04 per share - 18,000
Issuance of common stock
For debt reduction
At $.41 per share (75,000) -
Advance on common stock to
Be issued at $.05 per share 32,500 32,500
Net Loss for Six Months
Ended March 31,2002 - (85,107)
Balance March, 31,2002 $551,229 $(131,250)
Issuance for common stock
For debt reduction
At $.20 per share (108,603) -
Issuance of common stock
For working capital
At $.05 per share - 117,500
Balance Sept 30, 2002
(Unaudited)
$410,126 $(48,115)
Net Profit 14,838
Balance March 31,2003
(Unaudited) $410,126 ($33,287)
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.
Also significantly impacting the cash flow essential to implementing
the acquisition strategy.
In Fiscal 2000, a customer filed a complaint against Dinet alleging
certainproblems 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 purchase
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 Half of Fiscal 2003 were $500,548,
compared to the 1st Half of 2002 when sales totaled
$513,334.
The resulting operating income for the first half of 2003 was a
profit of $14,838 versus a loss of ($85,107) in the first half of
2002.Basically the primary reason for the return to profitability was
that The expenses were reduced by approximately 26% compared to the
same period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The company's 1st Qtr cash position increased by approximately
$24,000, $59,329 vs. $35,899, 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 enabled it to
preserve capital.
Current liabilities at 03/31/03 were $261,267 compared to 456,253 at
03/31/02. 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.
May 13th, 2003 WIRELESS DATA SOLUTIONS, INC.
/s/ Patrick Makovec
Patrick Makovec
Chairman of the Board
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