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. June 30,2003
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 June 30,2003.
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 nine months periods ended
June 30, 2002 and June 30, 2003
Item 1
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Balance Sheet
June 30,2003
Assets
06/30/03 06/30/02
(Not Reviewed) (Reviewed)
Current Assets
Cash and Cash Equivalents $47,760 $83,814
Trade accounts receivable, net of estimated
Allowance for doubtful accounts of $64,688 60,400 182,670
Inventory 90,804 91,812
Prepaid Expenses - 7,020
Total Current Assets 198,964 365,316
Property and Equipment
Office fixtures and equipment 59,155 59,155
Leasehold improvements 12,894 12,894
72,049 72,049
Less: accumulated depreciation 63,413 48,716
Net Property and Equipment 8,636 23,333
Other Assets
Security Deposits 5,636 5,636
Total Assets $213,236 $394,285
Liabilities and Stockholders=Equity (Deficiency)
06/30/03 06/30/02
(Not Reviewed) (Reviewed)
Current Liabilities:
Note Payable-Stockholder $50,000 $50,000
Accounts Payable and accrued expenses 146,878 201,879
Other Current Liabilities 34,838 10,236
Total Current Liabilities 231,716 262,115
Other Liabiliites:
Due to Officers 30,900 14,696
Total Liabilities 262,616 276,811
Minority Interests in consolidated subsidaries 20,000 20,000
Commitment and contingencies
Stockholders=Equity(Deficiciency)
Preferred stock,$.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 15,142
Common stock to be issued 410,126 410,126
Additional Paid in Capital 2,373,962 2,373,962
Accumulated deficit (2,868,610) (2,701,756)
Total Stockholders=Deficiency (69,380) 97,414
Total Liabilities and Stockholders=Deficiency $213,236 $394,285
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Statement of Operations
For the Nine Months Ended June 30, 2003 and 2002
2003 2002
(Not Reviewed) (Reviewed)
Revenue
Net Product Sales $612,539 $814,852
Repairs and Maintenance 31,841 35,060
Engineering Services 30,695 -__
Total Revenue 675,075 849,912
Cost of Sales 245,952 289,254
Gross Profit 429,123 560,658
Operating expenses 446,662 534,581
Operating Income (loss) (17,539) 26,077
Other Income (Expense)
Miscellaneous Income 201 -
Interest Income - 40
Interest Expense (3,927) -__
Other Income(expense) (3,726) 40__
Net Income (Loss) $(21,265) $26,117
Basic and diluted income(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 Nine Months Ended June 30, 2003 and 2002
2003 2002
(not reviewed) reviewed)
Cash Provided by(used in)
Operating Activities:
Net Income(loss) $(21,265) $ 26,117
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation 10,601 12,201
Common Stock to be issued for services - -
Issuance of Common Stock for services - 18,000
(Increase) decrease in assets:
Accounts Receivable 35,712 (48,515)
Inventory (11,187) 32,729
Prepaid Expenses and other assets - (2,171)
Increase (decrease) in liabilities:
Accounts Payable and accrued expenses (52,751) (104,820)
Advances form customers - (5,828)
Due to Officers 11,528 -____
Net cash used in Operating activities (27,362) (72,287)
Cash Flows from Financing Activities:
Proceeds from issuance of notes receivable - -
Proceeds from issuance of common stock - 150,000
Proceeds from stock to be issued - -
Repayment to officers - (5,900)
Net cash provided by financing activites: - 144,100
Net Increase (decrease) in
Cash and Cash Equivalents (27,362) 71,813
Cash and cash equivalents, beginning of period 75,121 12,001
Cash and cash equivalents, end of period $ 47,759 $83,81
WIRELESS DATA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Statement of Changes in Stockholders Equity
For the Nine Months Ended June 20, 2003 and 2002
Common Stock
Number of
Shares
Amount
Additional
Paid In
Capital
Accumulated
Deficit
CommonStock
To be Issued
Total
Balance,
September30,2001
10,967,124
$10, 967
$2,026,534
$ (2,727,873)
$593,729
$ (96,643)
Issuance of Common
Stock for services at
$.04 per share
450,000
450
17,550
- -
- -
18,000
Issuance of common
stock for services at
$.41 per share
182,296
182
74,818
- -
(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)
- -
(85,107)
Balance, March 31, 2002
11,599,420
$11,599
$2,118,902
$ (2,812,980)
$551,229
$ (131,250)
Issuance for common
stock for debt
reduction at $.20 per
share
543,014
543
108,060
- -
(108,603)
- -
Issuance for common
stock for working
capital at $.05 per
share
3,000,000
3,000
147,000
- -
- -
117,500
Balance Sept 30, 2002
(unaudited)
15,142,434
$15,142
$2,373,962
$(2,847,345)
$410,126
$(48,115)
Net Profit
(21,265)
(21,265)
Balance March 31, 2003
(Unaudited)
15,142,434
$15,142
$2,373,962
(2,832,507)
$ 410,126
$(69,380)
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 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 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' Annual Report on Form 10-KSB for the year ended
September 30,2001 and the 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 the last two years, which emphasized the
need for new technology. The sales decline also had a
negative impact on the cash flow essential to implementing the
acquisition strategy. In the fiscal 2000, 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 $.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 forth quarter of
FY2002) and the stock was 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 filing 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 WEDS 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 (3RD QUARTER FY2003)
Total revenues for the first three quarters of Fiscal 2003
were $675,275, compared to the First three quarters of 2002
when sales totaled $851,768. The resulting operating income
for the first three quarters of 2003 was a loss of $21,264
versus a profit of $26,077 in the first three quarters of
2002. Basically the primary reason for the loss was the
decline in revenue, which unscores the need for adding new
technology.
LIQUIDITY AND CAPITAL RESOURCES
The company's 3rd Qtr cash position decreased by approximately
$36,064, $47,759 vs. $83,814 compared to the same period of
the prior year. The cash decrease was primarily due to the
decline in revenue and the corresponding decline in profits.
Current liabilities at 6/30/03 were $196,878 compared to
$262,115 at 03/31/02.
Part II
Item I LEGAL PROCEEDINGS
(None)
Item II CHANGES IN SECURITIES
There were no securities issued or repurchased during the
first three quarters of fiscal 2003.
Item III DEFAULTS UPON SENIOR SECURITIES
(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.
On 6/04/03 Wireless Data Solutions was informed by its
Certifying Accountant Marshall Granger that they had
resigned. There were no outstanding issues that were
unresolved between Wireless Data Solutions and Marshall
Granger & Co. Marshall Granger's resignation was discussed
in the form 8K filed on 6/04/03.
Item VII SUBSEQUENT EVENTS
On 7/16/03 an amended form 8K was filed, at the request of
the SEC, to clarify certain issues relating to the change in
certifying accountant.
On 7/09/03 Wireless Data Solutions accepted the resignation
of Brian Blankenburg, who was serving as a Director of
Wireless Data Solutions. Mr. Blankenburg requested that he
resign so that he could devote his full attention to
restablishing his consulting business Mr. Blankenburg was
subsequently replaced as a director, by the President of
Dinet, Mr. Robert Chase. Wireless Data Solutions filed an
8K on July 9, 2003 discussing those events.
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.
August 18, 2003 WIRELESS DATA SOLUTIONS INC.
/S/ Patrick Makovec
Patrick Makovec
Chairman of the Board