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 June 30, 1998
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 000-23051
WIRELESS DATA SOLUTIONS, INC.
(Name of small business issuer as specfied in its charter)
Utah 93-0734888
(State of Incorporation) (I.R.S. Employer Indendification No.)
1016 Shore Acres Drive
Leesburg, FL 34748
(Address of principal executive offices)
(352) 323-1295
(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 was 10,162,124 shares of the Issuer's common stock
outstanding as of August 1, 1998.
PART I
FINANCIAL INFORMATION
WIRELESS DATA SOLUTIONS, INC.
AND SUBSIDIARIES
Consolidated Balance Sheet
June 30, 1998 and 1997
ASSETS
June 30, 1998 June 30, 1997
Current Assets:
Cash and cash equivalents $148,315 $34,871
Trade accounts receivable, net of
$6,000 estimated allowance for
doubtful accounts 761,639 836,555
Inventory 113,764 232,020
Total Current Assets 1,023,718 1,103,446
Fixed Assets:
Office fixtures and equipment 15,033 15,033
Leasehold Improvements 12,894 12,894
Sub-Total 27,927 27,927
Less: Accumulated Depreciation
and Amortization 27,927 27,927
Net Fixed Assets 0 0
Other Assets:
Prepaid service contract 202,700 10,000
Due from related parties 280,442 231,172
Due from Angellcom 37,500
Security deposits 3,113 3,113
Total Other Assets 523,755 244,285
TOTAL ASSETS $1,547,473 $1,347,731
LIABILITIES & Stockholders' (Deficit)
Current Liabilities:
Trade accounts payable $227,680 $338,073
Current portion of other liabilities 83,853 8,390
Advance from Customers 8,176 25,656
Other accrued liabilities 2,146 50,405
Total Current Liabilities 321,855 422,524
Other Liabilities:
Accrued salaries, related payroll
taxes, reimbursable expenses
payable to officers 604,882 692,133
Less: Current portion 0 0
Total Other Liabilities 604,882 692,133
TOTAL LIABILITIES 926,737 1,114,657
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;
8,127,220 shares issued and
outstanding at 6/30/97 &
10,057,124 at 6/30/98. 10,057 8,127
Common Stock options outstanding 11,250 11,250
Additional paid-in-capital 1,900,094 1,363,523
Deficit 1,271,892 (1,121,053)
Sub-Total 649,509 261,847
Receivable from related entity for
sale of common stock (48,773) (48,773)
Total Stockholders' Equity 600,736 213,074
TOTAL LIAB. & STOCKHOLDERS' DEFICIT $1,547,473 $1,347,731
See notes to financial statements.
WIRELESS DATA SOLUTIONS, INC.
AND SUBSIDIARIES
Consolidated Statement of Earnings
For Nine Months Ended, June 30, 1998 & 1997
June 30, 1998 June 30, 1997
(Unaudited) (Unaudited)
REVENUES
Net product sales $1,408,672 $1,928,658
Other Income 43,221 36,000
Total Revenues 1,451,893 1,964,658
COST OF SALES
Products 673,371 895,230
Total Cost of Sales 673,371 895,230
Gross Profit 778,522 1,069,428
Operating Expenses 793,895 847,824
Income before Interest (15,373) 221,604
Interest expense, net of
interest income 23,130 22,251
Income before taxes (38,503) 199,353
Provision for income taxes 0 19,846
Income from continueing operations (38,503) 179,507
NET EARNINGS ($38,503) $179,507
Basic loss per share ($.-) $.02
Weighted average shares
outstanding 9,176,050 8,058,330
Diluted loss per share ($.-) $.02
Fully diluted shares
outstanding 10,162,124 8,372,220
See notes to financial statements.
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Period Ended June 30, 1998 & 1997
June 30, 1998 June 30, 1997
Operating Activities:
Net Income ($38,503) $179,507
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization
Prior period adjustment (54,936)
Changes in Operating Assets and Liabilities:
Increase in accounts receivable (53) (421,915)
Decrease in inventory 126,971 117,422
Increase in prepaid assets (10,000)
Decrease in accounts payable (184,120) 155,248
Decrease in advances from customers (9,793) 15,856
Decrease in other payables (185,668) (11,319)
Decrease in deferred service contract (6,600) 0
Net cash provided by
operating activities (297,766) (30,137)
Financing Activities:
Increase in due from related parties (36,000) (119,672)
Increase in due from other unrelated par (37,500)
Increase in due to related parties and
related expenses (87,250) 50,001
Proceeds of issuance of common stock 523,501 41,800
Net cash provided by
financing activities 362,751 (27,871)
Net increase in cash 64,985 (58,008)
Cash at beginning of period 83,330 92,879
Cash at end of period $148,315 $34,871
See notes to financial statements
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Period Ended June 30, 1998
Common
Stock Additional
Common Options Paid - in
Stock Outstanding Capital Deficit Total
Balance at September 30, 1997 $8,165 $11,250 $1,378,485 ($1,233,388) $164,512
Net Earnings for the period
ended June 30, 1998 (38,503) (38,503)
Issuance of common stock
Exercise of common stock options
Stock issued for service contracts 830 224,170 225,000
Private placement 724 210,526 211,250
Stock issued to cancel debt to officer 338 86,912 87,250
Prior period adustment
Sub-Total 10,057 11,250 1,900,093 (1,271,891) 649,509
Receivable from related entity
for sale of common stock (48,773)
Balance at June 30, 1998 $10,057 $11,250 $1,900,093 ($1,271,891) $600,736
See notes to Financial Statements
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.
Management's Discussion and Analysis or Plan of Operation.
Liquidity and Capital Resources
The Company's current assets totaled approximately
$1,023,718, a slight decrease from the June 30, 1997 level of
$1,103,446. Accounts receivable decreased from the June 30, 1997
level of $836,555 to $761,639 at June 30, 1998. Inventory
declined during the same period from $232,020 at June 30, 1997
to $113,764 at June 30, 1998. These changes reflect the lower
level of sales revenue over the same time period, and the unexpected
delay in bringing the new cellular product to market. Those issues
are summarized below under results of operations.
Management believes that cash flow from operations and
current cash balances will be sufficient to fund operations and
expenses for the near future. The company may also use its
"credit line" available from Brian Watts, an affiliate of the
Company, on which the company owed, as of the end of the quarter
ending June 30, 1998 approximately $83,000 for additional liquidity
needs as required.
Results of Operations
Revenues for the third quarter ending, June 30, 1998, were
down approximately $306,000 compared to the third quarter of 1997.
Overall they were down approximately $512,000 for the year. To
management's best knowledge no significant orders were lost to
competition. It believes that the sales decline was temporarily
influenced by a couple of factors. A shortage of concrete and
reinforcing bars was a great concern to the ready-mix industry,
which in turn led to a "wait and see" attitude, consequently
purchases have been delayed. Another factor, but one difficult
to measure, is that somewhere around 40% of the major ready-mix
operations are Australian owned. These companies have been enduring
economic setbacks with their Asian operations, which has impacted their
liquidity and consequently their willingness to add equipment.
The Company has completed work on its new Data Mates which
have been designed to work on the cellular system and therefore
will be able to virtually provide seamless coverage across the
country and around the world. Many of the major cellular
providers have indicated a willingness to bill data transmissions
in as little as six second increments which makes the cellular option
extremely attractive. The cellular option coupled with the Global
Positioning System and the company's vehicle location products open
a number of new market segments. A reorganization of the sales
department is also being planned.
A loss of approximately $62,000 was recorded for the quarter
ending June 30, due to the decrease in revenues.
The Company's cash position improved significantly as a result
of the sale of 724,000 shares of common stock for $250,000. The
transaction netted $210,526, which is being used for working capital
purposes.
Accounts receivable decreased by $75,000 but remains
relatively high because of previous concessions on payment terms.
Due to related parties, increased by approximately $49,000 which
was largely due to $48,000 in consulting fees performed by the company's
largest shareholder, Heartland Diversified Industries. Heartland agreed
to begin paying interest on its debt due the Company at the end of June
1998. Heartland has agreed to begin paying on its debt by January 1, 1999
or it will offer sufficient stock, in Wireless Data Solutions, to
collaterize its obligation.
The prepaid service contract increased by approximately
$192,700. The prepaid service contract is with ICS Communications in the
amount of $172,500, Brian Blankenburg in the amount of $36,500, and
Angellcom in the amount of $12,000, less the amounts amortized. ICS
Communications has agreed to perform public relations services for the firm.
The benefits, of which, are expected to last over a period of five years
and therefore the costs are being amortized over five years. Brian
Blankenburg has agreed to perform marketing services for the company, the
benefits of which are expected to last for a period of three years and
therefore the costs are being amortized over three years. Angellcom is
performing certain services with regard to putting together an agreement
whereby Angellcom International, formerly PST Financial, a wholly owned
subsidiary of Wireless Data Solutions, would be involved in providing paging
and 220 MHz specialized mobile radio services to Mexico. At such time as
the agreement might be completed, Angellcom International, would partner
with a Mexican Company, RD220. Angellcom International will be owned by
Angellcom and Wireless Data Solutions. The exact terms are being negotiated.
The accrued salaries and related expenses were reduced by $87,250.
Mike McLaughlin, president and CEO, took stock, with a value of $34,500, to
satisfy a portion of the obligation due him. Mr. McLaughlin purchased
150,000 shares at a price of $0.23 per share. The market value of the freely
tradable shares was $0.21 to $0.25 at the time of the transaction. Brian
Watts, general manager of the wholly owned subsidiary, Dinet, agreed to
purchase stock for his entire share of accrued salaries and related expenses,
totaling $52,750. The stock issued bears a restricted legend. shares at a
price of $0.28 per share. The market value of the Company's freely trading
shares was $0.27 to $0.29 at the time of the transaction.
A loan in the amount of $37,500 was provided to Angellcom for working
capital to pursue the agreement with RD220 and secure the licenses necessary
to do business in Mexico.
Shares outstanding increased by 1,929,904. In addition 34,500 options
were issued to Mike McLaughlin, President and CEO of Wireless Data Solutions,
as an incentive to convert accrued salaries and expenses to common stock.
The options have an exercise price of $0.23. They were issued on 3/13/98
and expire on 3/12/08. Shares issued under the options would bear a
restrictive legend.
Brian Watts, general manager of Dinet, the Company's wholly owned
subsidiary, was issued 52,571 warrants as an incentive to convert accrued
salaries and expenses to common stock. The warrants have an exercise price
of $0.28. They were issued on 4/16/98 and expire on 4/15/03.
Brian Blankenburg was issued 100,000 warrants as an incentive to perform
certain marketing services. The warrants have an exercise price of $0.28.
They were issued on 4/16/98 and expire 4/15/03.
Tim Stevenson, an employee of Wireless Data Solutions' subsidiary Dinet,
was issued 20,000 warrants as a key person. 4,000 warrants per year can be
exercised over a period of 5 years. Should he leave the company prior to
the time any warrants become eligible to be exercised, those warrants will
be terminated. The warrants have an exercise price of $0.31 and they were
issued on 4/18/98 and expire 4/22/03.
Jack Augsback and Associates were issued 100,000 warrants for their role
in completing the funding in January 1998. The warrants have an exercise price
of $1.00. They were issued on 4/28/98 and expire on 4/27/03. All warrants
were issued at fair market value or above.
Financial Condition
Cash holdings for the quarter ended June 30, 1998 increased approximately
$114,000 over the corresponding quarter in 1997. This increase resulted
primarily from the issuance of shares of the Company's common stock for cash
as referenced above under "Results of Operations."
Subsequent Events
Subsequent to the June 30 date of the financial statements Wireless Data
has agreed to issue 50,000 shares to Mike McLaughlin, who is CEO and President
in exchange for expenses in the amount of $10,000 which had been previously
accrued. The Company also agreed to issue to Pat Makovec its treasurer, 30,000
exchange for $6,000 of expenses incurred on behalf of the company. In both
instances the stock will bear a restrictive legend. The fair market value of
the company's freely tradable shares was $0.19 to $0.21 at issuance. Tana
Renze was issued 25,000 shares of free trading stock to provide certain
research in connection with Angellcom International's Mexican project.
The fair market value of the transaction was $10,000.
Pat Makovec, treasurer of the Company, received 6,000 warrants as an
inducement to convert $6,000 of expenses due him to stock. The warrants
have an exercise price of $0.20. They were issued on 6/23/98 and expire on
6/22/08.
Mike McLaughlin, president and CEO of the Company, was issued 10,000
warrants as an inducement to convert 10,000 due him for expenses to stock.
The warrants have an exercise price $0.20. The warrants were issued on
6/23/98 and expire on 6/22/08. All warrants were issued at fair market value.
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.
Not applicable.
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.
August 12, 1998 WIRELESS DATA SOLUTIONS, INC.
/s/ Michael B. McLaughlin
Michael B. McLaughlin
President & Chief Executive Officer