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UNITES STATES
SECUTITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September, 30, 1999
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSACTION PERIOD
FROM _______ TO ______
Commission File No. 000-23051
Wireless Data Solutions, Inc.
(Exact Name of registrant 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 X No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Not Applicable
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicates the number of shares outstanding of each of the Registrant's
classes of common stock, as of the practicable date:
There was 10,182,124 shares of the Issuer's common stock outstanding
as of September 30, 1999.
WIRELESS DATA SOLUTIONS, INC.
FORM 10-K
INDEX
PART I
ITEM 1. Business Overview
ITEM 2. Business Issues
ITEM 3. Directors and Executive Officers of the Company
ITEM 4. Management's Discussion and Analysis of Financial
Condition and Result of Operations
Liquidity and Capital Resources
Results of Operation
Other Disclosures
Financial Condition
Subsequent Events
ITEM 5. Market Price on Common Equity
ITEM 6. Year 2000 Compliance
ITEM 7. Changes in Accounting
ITEM 8. Independent Auditors Report
PART II
ITEM 9. Legal Proceedings
ITEM 10. Changes in Securities and Use of Proceeds
ITEM 11. Defaults Upon Senior Securities
ITEM 12. Submission of Matters to a Vote of Security Holders
ITEM 13. Other Information
ITEM 14. Exhibits and Reports on Form 8-K
Signatures
PART I
ITEM 1. BUSINESS OVERVIEW
Wireless Data Solutions, Inc. develops and markets digital wireless
communications equipment for mobile fleet management in the U.S. and
foreign countries. The equipment is designed, assembled, and sold by
Dinet, a wholly owned subsidiary of the company. It has sold units to
a number of industry segments, including ready-mix concrete suppliers,
taxi-cab companies, parcel delivery, vehicle towing, and public
transportation. The large majority of its sales have been to the ready-mix
segment. It transmits data using two-way radio, cellular, and CDPD
(cellular digital packet data).
Its principal office is located at 2233 Roosevelt Road Suite # 5
St. Cloud, MN 56301. Its wholly owned subsidiary, Dinet, is located
in Oceanside, California, where it maintains a production and sales
facility. It also has a sales office in Severna Park, Maryland.
ITEM 2. BUSINESS ISSUES
In fiscal 1999 the company redirected the majority of its efforts
almost exclusively toward the ready-mix market. Management felt this
action was necessary because of the company's less than desirable
performance in fiscal 1998, and its very poor start in the first
quarter of 1999. By directing its effects toward its core business,
the company was able to use its limited resources, both human and
financial, most efficiently. Management is of the opinion that its
course of action was appropriate, as the last three quarters of the
year, taken as a whole, were much improved over the preceding three
quarters. During the three preceding quarters, its cash flow improved
dramatically and the company was able to reduce its short term debt to
zero.
Due to the company's limited resources it was decided to actively pursue
alternative ways of moving the company forward. Management was
particularly interested in strategic alliances and various business
combinations. In August of 1999 Wireless Data Solutions (WDS) signed a
licensing agreement with Varitek Industries of Houston, Texas, which
would permit Varitek to market the company's vehicle location and recovery
device. The application was developed by the company employing cellular
and GPS technology and also our proprietary map program. The scope of the
license is limited to consumer and government applications of vehicle
location, tracking and or recovery. The same technology would be
applicable to keeping track of various cargoes and hazardous wastes.
Any commercial applications of the same technology would remain the
property of Wireless Data. Subsequent to this reporting period, November
1999, Wireless Data Solutions signed a letter of intent with Varitek
Industries. The purpose of the letter is for Varitek Industries to acquire
Wireless Data Solutions and its wholly owned subsidiary Dinet. The
proposed acquisition would be accomplished through an exchange of common
stock. There can be no assurances that the purchase will be complete.
ITEM 3. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The management team has been reduced to two members, formerly it had
been three. Mike McLaughlin was removed as an officer in March and
resigned as a Director in May of 1999. There were irreconcilable
differences of opinion as to the direction the company should take
and philosophy, as to how the company should be managed.
Brian B. Blankenburg
Mr. Blankenburg was elected as a Director of the Company in June, 1997
and was named President of Dinet in September 1998. Mr. Blankenburg is a
partner in the Business Development Group (BDG), which provides consulting
services in the areas of strategic planning, sales, and marketing,
management, acquisitions, funding, market research, due diligence and
computer analysis. BDG has offices in Seattle, Milwaukee, Minneapolis, and
Baltimore, the latter of which is managed by Mr. Blankenburg. Prior to
joining BDG, from January, 1993 to October, 1996, Mr. Blankenburg served
as Executive Vice President, and later President, of Hudson Industries,
Mr. Blankenburg led the strategic repositioning of that company's
business and the doubling of sales in four years. Prior to that time, Mr.
Blankenburg held various management positions with International
Multifoods, Beatrice, Green Giant and Hormel Company. He is a 1971
graduate of the University of Minnesota, where he received a B.A. in
advertising. His continuing education has included the Beatrice Executive
Marketing School at the J.L. Kellogg Graduate School of Business,
Northwestern University, as well as studies at the University of
Pennsylvania Wharton School of Business. He is a 4 percent shareholder.
Patrick L. Makovec
Presently a Director and the Treasurer of WDS, Mr. Makovec has been
an officer and board member of the Company since December 1987. He was
instrumental in discovering Dinet, and evaluating the Company prior to
its acquisition by WDS. He was also involved in the restructuring of Dinet
to strengthen the base from which to move the Company forward. He is a
Director and Treasurer of Dinet. Mr. Makovec is in daily communication
with the WDS and Dinet offices as he is in charge of all accounting
functions and records including preparation of work papers for audits
and quarterly financial statements, and is involved in all important
decisions. He was formerly the President of Tel Corp. Leasing in St. Cloud,
MN, and holds an M.S. Degree in Accounting from the University of
Wisconsin. He is the third largest shareholder of WDS.
ITEM 4. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS
Except for the historical information contained herein, the following
discussion contains forward looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from
those discussed here. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this
section.
Liquidity and Capital Resources
The company's current assets totaled $667,579, an approximate decrease
of $167,000 from September 30, 1998. The decrease is primarily do to the
loss of $273,611 sustained in fiscal 1999. The revenues for fiscal 1999
compared to 1998 were essentially the same, $7000 down from 1998. The cash
component of working capital is up by $50,000 compared to 1998. This is do
to the enforcement of company policy calling for customers to place a
deposit with their order. Also the last three quarters of the year, from
an operation stand point, the company was operating around break even.
There were items such as bad loans, amortization of service contracts,
and legal fees associated with the management change, that contributed
heavily to the loss. Those issues are summarized below, under result of
operations.
Management believes that cash flow from operations and current cash
balances will be sufficient to fund operations and expenses for the near
term. Particularly since the first quarter of year 2000 appears to be
profitable. Also subsequent to the reporting period there has been a
significant influx of cash from the advance payments required under the
licensing agreement. In addition the company has a "credit line" to factor
receivables available from Brian Watts. Mr. Watts was a former director
of Dinet. At year end no money was owed to Brian Watts.
Results of Operations
Revenues for the year were down approximately $7000 from the prior
year. 1999 was a year of significant change for Wireless Data Solutions
and the industry as a whole. The market has matured characterized by the
consolidation taking place among our customers and competitors. Management
believes the key to profitability is the formation of strategic alliances
and identifying new opportunities. As mentioned previously, management has
executed a licensing agreement calling for up front payments, a stock
position in Varitek, and royalty payments. In addition they executed a
letter of intent with purpose of beginning merger talks. Regardless of
the outcome management will continue focusing on defining opportunities
and pursuing those with high growth prospects.
A loss of $273,611 was recorded for the year. The major contributing
factors were a loss of approximately $170,000 in the first quarter of
fiscal 1999 and a loan write off of $63,0000.
The company's cash position increased by $50,000 in spite of the loss.
As mentioned previously, the company took a hard line in regard to
enforcing the role that requires advance payment with each order because
of the degree of customization involved.
Accounts Receivable declined approximately $197,000 while sales remained
stable. At the end of fiscal 1998 several large customers were withholding
payment because of problems with their mapping programs, which were sold
by the company. Consequently, the company undertook the task of totally
redoing the programs which resulted in a much enhanced program. These were
provided free to those customers who then paid without further incident.
Management also believes that the receivables are being managed better and
that a much more aggressive posture has been assumed resulting in
collection before the receivable gets old.
Prepaid expenses increased by approximately $17,000 because of legal
fees anticipated to be associated with the management change and attending
issues. Also Brian Blankenburg was given a stock incentive to assume the
roles of President and CEO.
The deferred service contract decreased by $36,000, which reflects the
amortization. A total of $212,000 was the value of service contracts to
be performed by ICS Communications and Brian Blankenburg. The amount of
$176,500 was paid to ICS, for which they agreed to perform certain public
relations services for Wireless Data Solutions. The benefits are expected
to last for a period of five years. The amount of $35,500, which was the
value of the stock issued, was paid to Brian Blankenburg to perform
certain marketing services, the benefits of which are expected to last
over three years. The contract is being amortized over three years. The
total shares issued pursuant the service contracts were 780,000. All
shares were issued at fair market value at the date of the grant.
In early 1998 Wireless Data Solutions formed an informal alliance with
Angellcom Communications, Inc., with the intent of working with Angellcom
and Radio Digital 220 to obtain 220 MHz licenses in Mexico. Angellcom, a
Santa Monica based company owned 49 percent of Radio Digital 220, a
Mexican company. Radio Digital was to be the operating company in Mexico.
As the relationship progressed Wireless Data Solutions advanced money for
working capital and made a deposit, which was needed to bid on the
licenses. Later Angellcom Communications and its partner alleged they
had relied on certain statements made by Mike McLaughlin (then CEO of
Wireless Data Solutions) regarding funding for Angellcom Communications,
which was not provided. They insisted they had been damaged and were
entitled to compensation. Rather than progress to a law suit (which
would have been expensive and damaging to the company's efforts to move
forward, particularly if seeking capital) management felt it was far
better to settle and move forward. A settlement was reached whereby they
would keep the money advanced to them and each party would be released
from any further legal action. The write off of the loans to Angellcom
Communications and Radio Digital 220 was $63,649.
Due from related parties increased by approximately $5000 due to
services performed for Heartland Diversified early in the year.
Reduction in trade payables of approximately $144,000 reflects an
improved cash flow.
The payable in stock is owed to Brian Blankenburg and John Doubek.
Mr. Doubek is owned $40,000 for legal services relating to the
management change and related issues. Mr. Blankenburg earned
approximately 30,800 shares under an arrangement in connection with
his employment as president of Dinet. During the period in September 14,
1998 to February 26, 1999, Mr. Blankenburg earned $1500 per week,
$500 was paid by check and $1000 was paid in stock, based on the
average stock price during that week.
Approximately 599,000 shares of common stock will be issued to
satisfy the obligations detailed in the discussion of the "Payable
in Stock" account above.
Advances from customers has increased by almost $100,000. A deposit
is required with each order before it is scheduled for manufacture.
Previously, the company had not enforced the rule.
The common stock accounts did not change significantly. 20,000 shares
of common stock were issued to Pat Makovec when he exercised an option
in November of 1998.
In fiscal 1999 warrants were issued as follows:
Name Issue Date Exp date Exercise Price #warrants
Nick Watts 10/30/98 10/29/03 .12 100,000
Tim Stevenson 10/30/98 10/29/03 .12 50,000
Jerry Kyckelhann 10/30/98 10/29/03 .12 40,000
Dave Bettge 07/27/99 10/26/04 .11 1,000
Zbigniew Szuksztul 07/27/99 10/26/04 .11 1,000
Other Disclosures
None
Financial Condition
The cash holdings for the year increased approximately $50,000 in
spite of losses incurred for the year. The increase resulted primarily
from advances from customers as referenced above under "Results of
Operations."
Subsequent Events
Since fiscal year end 100,000 warrants have been issued, 50,000 each
to Tim Stevenson and Nick Watts as performance bonuses. Both have been
instrumental in moving Dinet, Wireless Data Solutions wholly owned
subsidiary, forward under extremely difficult conditions.
In November of 1999, Wireless Data Solutions signed a letter of
intent with Varitek Industries of Houston, Texas. The purpose of
the letter is for the two parties to negotiate a purchase of
Wireless Data Solutions by Varitek Industries. Other than agreeing
that a stock exchange is the most likely vehicle for the proposed
acquisition little progress has been made. The majority of the time
has been devoted to the details associated with the licensing agreement
between Wireless Data Solutions and Varitek. Those issues were
summarized above under business issues. It is anticipated the full
scale negotiations will begin after January 1, 2000.
ITEM 5. MARKET PRICE OF COMMON EQUITY
The company's common stock trades on the OTC Bulletin Board under the
symbol: SOLU. The price of the company's common stock at the end of each
quarter, for the past two fiscal years, is as follows:
Quarter Ending High Bid Low Bid
3/31/97 3/4 5/8
6/30/97 1 1/2 7/16
9/30/97 15/16 7/8
12/31/97 15/16 25/32
3/31/98 21/32 3/16
6/30/98 3/8 3/16
9/30/98 1/4 5/32
12/31/98 7/64 1/10
3/31/99 9/64 9/64
6/30/99 9/64 7/60
9/30/99 7/64 7/64
ITEM 6. YEAR 2000 COMPLIANCE
The company did not have any difficulty complying with year 2000 issues.
ITEM 7. CHANGES IN ACCOUNTING
There were no changes in accounting for fiscal year 1999.
ITEM 8. Auditors Report
James J. Harned
Certified Public Accountant
1316 Christopher Court
Bel Air, Maryland 21014
410-838-5948
December 28, 1999
INDEPENDENT AUDITOR'S REPORT
I have audited the consolidated balance sheet of Wireless Data Solutions, Inc.
and subsidiaries as at September 30, 1999 and the related consolidated statement
of earnings, stockholders equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
These standards require that I plan and conduct the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for that opinion.
In my opinion, the consolidated balance sheet and statements of stockholder's
equity (deficiency) referred to above present fairly, in all material respects,
the financial position of Wireless Data Solutions, Inc. and Subsidiaries as at
September 30, 1999 in conformity with generally accepted accounting principles,
applied consistently.
James J. Harned, C.P.A.
Bel Air, MD 21014
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Earnings
For the Years Ended, September 30, 1999, 1998, 1997
09/30/99 09/30/98 09/30/97
(Audited) (Audited) (Audited)
REVENUES
Net product sales $1,496,040 $1,466,337 $2,358,902
Other Income 11,355 47,771 48,000
-------------------------------------------
Total Revenues 1,507,395 1,514,108 2,406,902
COST OF SALES
Products 632,233 685,669 1,138,907
------------------------------------------
Total Cost of Sales 632,233 685,669 1,138,907
--------------------------------------------
Gross Profit 875,162 828,439 1,267,995
Operating Expenses 1,148,773 1,080,701 1,148,042
--------------------------------------------
Income before Interest (273,611) (252,262) 119,953
Interest expense, net
of interest income 0 25,069 29,252
--------------------------------------------
Income before taxes (273,611) (277,331) 90,701
Provision for income taxes 0 0 9,114
-------------------------------------------
NET EARNINGS ($273,611) ($277,331) $81,587
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Balance Sheet
September 30, 1999, 1998, 1997
ASSETS
09/30/99 09/30/98 09/30/97
(Audited) (Audited) (Audited)
Current Assets:
Cash and cash equivalents $150,165 $100,752 $83,330
Trade accounts receivable, net of
$6,000 estimated allowance for
doubtful accounts 268,846 465,390 761,586
Inventory 231,510 268,258 240,735
Prepaid Expenses 17,058 0 0
--------------------------------------------
Total Current Assets 667,579 834,400 1,085,651
Fixed Assets:
Office fixtures and equipment 15,033 15,033 15,033
Leasehold Improvements 12,894 12,894 12,894
--------------------------------------------
Sub-Total 27,927 27,927 27,927
--------------------------------------------
Less: Accumulated Depreciation
and Amortization 27,927 27,927 27,927
---------------------------------------------
Net Fixed Assets 0 0 0
Other Assets:
Deferred service contract 146,704 182,133 196,100
Loan to RD220 0 28,649 0
Due from Angellcom 0 35,000 0
Due from related parties 290,009 285,007 244,442
Security deposits 3,113 3,113 3,113
-------------------------------------------
Total Other Assets 439,826 533,902 443,655
-------------------------------------------
TOTAL ASSETS $1,107,405 $1,368,302 $1,529,306
LIABILITIES
Current Liabilities:
Trade accounts payable $162,205 $306,676 $411,800
Service contract payable
in stock 70,800 2,900 196,400
Current portion of
other liabilities 59,932 71,549 12,924
Advance from Customers 107,788 8,750 17,969
Other accrued liabilities 1,966 102 62,343
--------------------------------------------
Total Current Liabilities 402,691 389,977 701,436
Other Liabilities:
Accrued salaries, related payroll
taxes, reimbursable expenses
payable to officers 568,417 569,417 692,132
Less: Current portion 0 0 0
---------------------------------------------
Total Other Liabilities 568,417 569,417 692,132
TOTAL LIABILITIES 971,108 959,394 1,393,568
Minority interests in
consolidated subsidiaries 20,000 20,000 20,000
STOCKHOLDERS' DEFICIENCY:
Preferred Stock, $.002 par value;
3,000,000 shares authorized;
no shares issued or outstanding 0 0 0
Common Stock, $.001 par value;
25,000,000 shares authorized;
8,164,720 shares issued and
outstanding at 9/30/97, 10,162,124
at 9/30/98 &
10,182,124 at 9/30/99. 10,182 10,162 8,165
Common Stock options outstanding 11,250 11,250 11,250
Additional paid-in-capital 1,927,969 1,926,989 1,378,485
Deficit (1,784,331) (1,510,720) (1,233,389)
Sub-Total 165,070 437,681 164,511
Receivable from related entity for
sale of common stock (48,773) (48,773) (48,773)
-----------------------------------------------
Total Stockholders' Equity 116,297 388,908 115,738
----------------------------------------------
TOTAL LIAB. &
STOCKHOLDERS' EQUITY $1,107,405 $1,368,302 $1,529,306
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Cash Flows
For The Years Ended September 30, 1999, 1998, 1997
9/30/99 9/30/98 9/30/97
Operating Activities:
Net Income ($273,611) ($277,331) $81,587
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Prior period adjustment 0 0 (69,352)
Changes in Operating Assets and Liabilities:
Decrease (Increase) in
accounts receivable 196,544 296,196 (346,946)
Decrease (Increase) in inventory 36,748 (27,523) 108,707
(Increase) in other assets (17,058) (196,100) 923
(Decrease) Increase in
accounts payable (144,471) (105,124) 228,974
(Decrease) Increase in advances
from customers 99,038 (9,219) 8,169
(Decrease) Increase in other payables 58,147 (197,116) 201,553
Decrease in deferred service contract 35,429 13,967 0
------------------------------------------
Net cash provided by
operating activities (9,234) (306,150) 16,592
Investing Activities:
Proceeds of miscellaneous assets 0 0 0
Financing Activities:
(Increase) in due from
related parties (5,002) (40,565) (132,942)
Decrease (Increase) in due
from Angellcom 35,000 (35,000) 0
Decrease (Increase) in loan
to RD220 28,649 (28,649) 0
(Decrease) Increase in due to related parties
and related expenses (1,000) (122,715) 50,000
Proceeds of issuance of
common stock 1,000 550,501 56,800
---------------------------------------------
Net cash provided by
financing activities 58,647 323,572 (26,142)
---------------------------------------------
Net increase in cash 49,413 17,422 (9,550)
Cash at beginning of period 100,752 83,330 92,880
---------------------------------------------
Cash at end of period $150,165 $100,752 $83,330
Wireless Data Solutions, Inc. And Subsidiaries
Consolidated Statement of Stockholders' Equity
For The Years Ended September 30, 1999, 1998, 1997
Common Additional
Common Stock Paid-In
Stock Options Capital
Outstanding Deficit Total
Balance at September 30, 1998 $10,162 $11,250 $1,926,989 ($1,510,720) $437,681
Net Earnings for the period
ended September 30, 1999 (273,611) (273,611)
Issuance of common stock
Stock issued to cancel debt to officer 20 980 1,000
Prior period adjustment
------------------------------------------------------------
Sub-Total 10,182 11,250 1,927,969 (1,784,331) 165,070
Receivable from related
entity for sale of common stock (48,773)
---------------------------------------------------------------
Balance at September 30, 1999 $10,182 $11,250 $1,927,969 ($1,784,331) $116,296
Balance at September 30, 1997 $8,165 $11,250 $1,378,485 ($1,233,388) $164,512
Net Earnings for the period
ended September 30, 1998 (277,331) (277,331)
Issuance of common stock
Exercise of common stock options
Stock issued for service contracts 855 235,146 236,001
Private placement 724 210,526 211,250
Stock issued to cancel debt to officer 418 102,832 103,250
Prior period adjustment
----------------------------------------------------------------
Sub-Total 10,162 11,250 1,926,989 (1,510,719) 437,682
Receivable from related
entity for sale of common stock (48,773)
------------------------------------------------------------------
Balance at September 30, 1998 $10,162 $11,250 $1,926,989 ($1,510,719) $388,908
Balance at September 30, 1996 $8,020 $11,250 $1,321,830 ($1,245,624) $95,476
Net Earnings for the period
ended September 30, 1997 81,587 81,587
Issuance of common stock 145 56,655 56,800
Exercise of common stock options
Stock issued to non-related parties for service
Prior period adjustment re: overaccrual (69,352) (69,352)
-----------------------------------------------------------------
Sub-Total 8,165 11,250 1,378,485 (1,233,389) 164,511
Receivable from related
entity for sale of common stock (48,773)
------------------------------------------------------------------
Balance at September 30, 1997 $8,165 $11,250 $1,378,485 ($1,233,389) $115,738
Wireless Data Solutions, Inc. And Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1999
1. Organization and Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying financial statements include the accounts of Wireless Data
Solutions, Inc. (WDS) and the following majority-owned subsidiaries:
Subsidiary % of Common Stock Owned
Distributed Networks, Inc. (Dinet) 100
Angellcom International, Inc. (ACI) 100
WDS, Dinet and ACI are hereinafter referred to as the Company.
All significant intercompany accounts have been eliminated in consolidation.
Organization
WDS, which is headquartered in Minnesota, has approximately 317
shareholders of record as of September 30, 1999. WDS's common stock is
traded on the OTC Bulletin Board. WDS files an annual Form 10K with the
Securities and Exchange Commission.
Dinet designs and markets fleet management and control systems for
the two-way mobile radio and cellular (CDPD) markets. It's customers
include ready-mix concrete suppliers, taxi-cab companies, parcel delivery
services, public transportation, etc. From its offices in Oceanside,
California, Dinet sells to customers on a nationwide basis; since
September 30, 1994, Dinet has begun selling in the international market
with clients in Mexico, Canada, South America, and Malaysia.
ACI has been a dormant entry for several years and does not have
any significant operations.
Trade Accounts Receivable
Bad debts are reported using the allowance method.
Inventories
Raw materials and the related component of work-in-progress inventory
are recorded at lower of cost or market using the first-in, first-out
method of accounting for inventory.
Property and Equipment
All equipment, fixtures and leasehold improvements have been fully
depreciated and amortized, and have no value on the books of the Company.
Office Space
The Company maintains offices and warehouse space in Oceanside,
California; offices in St. Cloud, Minnesota; and Severna Park, Maryland.
The Oceanside location houses the offices of Dinet. The Company leases
5,200 square feet of office space for a rent of $2,621 per month for
yearly renewable lease periods. The St. Cloud office is leased on a
month to month basis at $250 per month, and consists of 850 square feet.
The Severna Park office consists of 500 square feet and is part of a
residence of an employee and no rent is charged.
Income Taxes
Dinet files consolidated federal and separate California income
tax returns based on a February 28/29 fiscal years. There are no
significant differences in reporting revenue or expenses for financial
statement purposes vs. income tax purposes.
WDS has not filed tax returns as a result of incurring substantial
prior losses. The tax losses can be carried forward for 15 years.
The Company's net operating loss carryforwards (NOL) are listed as
follows:
Year
FYE 9-30-85 Loss $ 156,640
FYE 9-30-86 Loss 350,448
FYE 9-30-87 Loss 63,220
FYE 9-30-88 Loss 77,463
FYE 9-30-89 Loss 28,235
FYE 9-30-90 Loss 155,830
FYE 9-30-91 Loss 73,336
FYE 9-30-92 Loss 60,078
FYE 9-30-93 Loss 162,125
FYE 9-30-94 Loss 90,040
FYE 9-30-95 Profit (208,147)
FYE 9-30-96 Profit (327,141)
FYE 9-30-97 Profit (81,587)
FYE 9-30-98 Loss 277,331
FYE 9-30-99 Loss 273,611
Total NOL Carryforward $1,151,482
2. Related Party Transactions and Relationships
A. The names and relationships of the related parties referred to in
these notes are set forth below:
Pat Makovec, Dinet Treasurer, and WDS and ACI Treasurer and
Secretary and 8.6% stockholder of WDS, and Chairman of the Board.
Heartland Diversified Industries, Inc., a non-operating entity which is
35% owned by Mr. McLaughlin and 15% by Mr. Makovec. Heartland is a 17.8%
stockholder of WDS. WDS holds a note receivable from Heartland in the amount
of $164,000. This note is classified in the "Other Assets" section of the
balance sheet. The nature of this note arose from the sale of Bernard, Lee &
Edwards Securities, Inc. (BLE), a former subsidiary of WDS. Interest is
accrued at 7% per annum, beginning June 1, 1998.
Brian Blankenburg, president, director and CEO of WDS and Dinet is a 4%
shareholder of WDS.
3. Preferred Stock
In a 1991/1992 private offering, Dinet sold 20 shares of
$1,000 face value preferred stock, each of which is convertible into
800 shares of Dinet common stock. The 12% annual non-cumulative dividend
increased to 25% in January of 1995. This preferred stock is callable
upon payment of (1) an 18% premium (which decreased to 15% in January,
1995) for each year the stock is outstanding and (2) all accrued
dividends; the call premium is cumulative.
4. Stock Options and Warrants
Incentive Stock Options
Under an incentive stock option plan (ISOP) approved by WDS's
stockholders, 500,000 shares of common stock have been authorized/reserved
for issuance to officers and other key employees. Exercise prices for
options granted under the ISOP shall generally not be less than the
estimated fair market value of the stock at the date of grant; option
periods may not exceed ten years. At September 30, 1999 options for
484,500 shares have been granted. Options outstanding at that date
are summarized as follows:
Options Outstanding Exercise Price Expiration Date
34,500 .23 03/08
Warrants Issued
The company issued warrants as follows:
Name Date Issued Exp.Date Exercise Price # Warrants
Brian Watts 4-16-98 4-15-03 .28 52,751
B. Blankenburg 4-16-98 4-15-03 .28 100,000
Tim Stevenson 4-28-98 4-17-03 .31 20,000
Augsback & Assoc. 4-28-98 4-27-03 1.00 100,000
Pat Makovec 6-23-98 6-22-08 .20 6,000
M. McLaughlin 6-23-98 6-22-08 .20 10,000
N. Watts 10-30-98 10-29-03 .12 100,000
Tim Stevenson 10-30-98 10-29-03 .12 50,000
Dave Bottge 7-27-99 7-26-04 .11 1,000
Zbigniew Szuksztul7-27-99 7-26-04 .11 1,000
Management Incentive Earnings Plan
Under a management incentive earnings plan (MIEP), officers and
employees could receive warrants based on a minimum after tax profit
per share of common stock on a fully diluted basis which would include
any warrants to be issued. The MIEP will be in existence for five years
beginning on April 1, 1996 and ending on March 31, 2001. The warrant
exercise price is $.50 per share of common stock. These officers and
employees will receive warrants in accordance with a schedule of after
tax profits of $.06 per share by March 31, 1997 graduated annually by
$.06 per share increments. Therefore, at the end of the fifth year-
March 31, 2001, an after tax profit of $.30 per share must be achieved.
At the start of the plan no participant could receive more than 500,000
warrants, and the maximum number of warrants that could be issued was
1,500,000. Three years of the plan have expired and participants were
not eligible for any warrants. At the end of each year if the targeted
earnings are not achieved, the number of warrants available are reduced by
20%. The maximum number of warrants that could be issued under the plan is
now 500,000 and the minimum that could be issued if the goal is reached in
the last year of the plan is 500,000. The life of the warrants if issued
is five years.
5. Commitments and Contingencies
The Company has entered into a golden parachute agreement under which it is
obligated to certain WDS officers- in the event of a hostile or friendly
takeover, or if any such officer is terminated for any reason other than
allegations of fraud- for severance pay equal to one year's salary. Voluntary
resignation reduces the amount by 25%. All liabilities for bonuses, back
salaries and reimbursable expenses will be paid, and the cost of benefits
will be paid for one year.
6. Accrued Salaries and Expenses Payable
Over the course of five years, certain officers and key employees to leave
the major portion of their salaries and expenses as a way of infusing additional
cash in WDS thereby enabling WDS to continue its growth pattern. Such salaries
and expenses will be disbursed as management determines, assuming cash flow is
adequate. All related salaries and tax items have been expensed so that there
will be no effect on future earnings.
7. Geographic Areas
All sales are managed as a single enterprise. However, in compliance with SFAS
14, "Financial Reporting for Segments of a Business En
Area 1999 1998
United States Revenues $1,353,887 $1,461,831
Americas Revenues 153,508 52,277
Asia Pacific Revenues 0 0
Totals $1,507,395 $1,514,108
8. Deferred Service Contract
In April of 1997, WDS entered into a consulting agreement whereby the
Consultants would function as public relations, provide services relating to
establishing WDS as a reporting company, and other services not related to
capital formation, and the company would compensate the Consultants with cash
and common stock. The agreed upon compensation was $10,000 in cash and 300,000
shares of common stock. The total value of the services to be provided was
$206,400. In October of 1997, the Company extended the Consulting agreement
to include an additional 150,000 shares of common stock. And in the current
year an additional 280,000 shares were issued. Total shares issued as at
September 30, 1998 was 730,000 at a total value of $212,000.
9. Subsequent Events
Additional warrants were issued as follows:
Name Issue Date Exp Date Exercise Price # Warrants
Nick Watts 12/20/99 12/19/04 .27 50,000
Tim Stevenson 12/20/99 12/19/04 .27 50,000
In November, 1999, the company signed a letter of intent with Varitek Industries
of Houston, Texas (Varitek). The purpose of the letter is for Varitek to acquire
the company through an exchange of common stock. No assurances have been made
that the acquisition will take place.
PART II
Item 9. Legal Proceedings
Not applicable
Item 10. Changes in Securities and Use of Proceeds.
None; not applicable
Item 11. 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 12. 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 year covered by this report.
Item 13. Other Information.
The company has no other information to report.
Item 14. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
- ------ ------------
2.1* Agreement dated March 1, 1984, between Heatland 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* Artlicles 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, filed June 13, 1988.
3.3* Articles of Domestication of Products, Services, and
Technology Corporation, filed June 2, 1997.
3.4* Articles of Amendment to the Articles of Incorporation of
Products, Services, & Technology Corporation, filed on
June 13, 1997.
3.5* Bylaws of Products, Services, & 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 the Registration Statement are
modified in their entirety by reference to such exhibits.
* Incorporated by reference herein to the Company's Form 10SB, as amended,
dated as of February 12, 1998.
(b) Forms 8-K filed during the last quarter. One.
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.
January 11, 2000 Wireless Data Solutions,Inc.
/s/ Patrick L. Makovec
-----------------------
Patrick L. Makovec
Chairman of the Board
_