-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T2Ompd7q7p0JRNI+i/SDkd91OpI3Y3QliVsEWfUGA0MRE13TLlzFHeEF2hPruQe4 82liAlErT1TuHdGS9YrvVg== 0001050502-01-500579.txt : 20020410 0001050502-01-500579.hdr.sgml : 20020410 ACCESSION NUMBER: 0001050502-01-500579 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLD SERVICES INC CENTRAL INDEX KEY: 0000767410 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 460355586 STATE OF INCORPORATION: SD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13499 FILM NUMBER: 1781166 BUSINESS ADDRESS: STREET 1: 404 S LINCOLN CITY: ABERDEEN STATE: SD ZIP: 57401 BUSINESS PHONE: 6052294404 MAIL ADDRESS: STREET 1: 404 S LINCOLN CITY: ABERDEEN STATE: SD ZIP: 57401 10QSB 1 worldservices901.txt 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended 9-30-01 OR [ ] Transition Report under Section 13 or 15(d) of the Exchange Act For the transition period from to Commission File No. 0- World Services, Inc. --------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) A corporation ---------- I.R.S. Employer Identification No. 46-0355586 ---------- PO Box 786 Aberdeen, SD 57402 -------------------------------------- (Address of Principal Executive Offices) (605) 225-4131 -------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable ------------------------------------------- (former address, if changed from last report) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. X Yes No ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of September 30, 2001, there were 2,639,679 shares of common stock outstanding. Transitional Small Business Disclosure Format (Check one):Yes[ ] No[x] INDEX PART I. FINANCIAL INFORMATION: Item 1. Balance Sheet as of September 30, 2001 ........ 1 Statements of Operations for Quarters Ended September 30, 2001 and 2000 ................... 2 Statements of Operations for the Nine Months Ended September 30, 2001 and 2000 ............. 3 Statements of Cash Flows for the Nine Months Ended September 30, 2001 and 2000 ............. 4 Notes to Financial Statements ................. 5 Item 2. Management's discussion and Analysis of Financial Condition and Results of Operations: Liquidity and Capital Resources ............... 6 Results of Operations ......................... 7 Subsequent Events ............................. 8 PART II. OTHER INFORMATION: Item 1. Legal Proceedings ............................. 12 Item 2. Changes in Securities ......................... 12 Item 3. Default Upon Senior Securities ................ 12 Item 4. Submission of matters to a Vote of Security Holders ....................................... 12 Item 5. Other Information ............................. 12 Item 6. Exhibits and Reports on Form 10-Q ............. 12 WORLD SERVICES, INC. BALANCE SHEET September 30, 2001 (Unaudited) ASSETS CURRENT ASSETS Cash $ 136,133.73 Money Market Fund 261,073.46 Certificates of Deposit 1,090,608.26 Interest Receivable 27,560.29 ------------- TOTAL CURRENT ASSETS 1,515,375.74 INVESTMENTS AND OTHER ASSETS Investment-Super 8 Developers 568,000.00 ------------- TOTAL OTHER ASSETS 568,000.00 ------------- TOTAL ASSETS $2,083,375.74 ============= LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES Stock Redemption payable $ 41,833.75 Accounts Payable 5,500.00 ------------- TOTAL CURRENT LIABILITIES 47,333.75 STOCKHOLDERS EQUITY Common stock, par value $.001 per share; (50,000,000 shares authorized)with 2,640,000 shares issued 2,715.00 Additional paid in capital 6,364,354.75 Accumulated Deficit (4,331,027.76) ------------- TOTAL STOCKHOLDERS' EQUITY 2,036,041.99 ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,083,375.74 ============= 1 WORLD SERVICES, INC. STATEMENTS OF OPERATIONS For the Quarters Ended September 30, 2001 and 2000 (Unaudited) 2001 2000 ---- ---- REVENUE Interest Income $ 21,503.24 $ 20,219.24 Dividend Income 0.00 199,238.00 ------------- ------------- TOTAL REVENUE 21,503.24 219,457.24 ------------- ------------- EXPENSES Accounting Fees 3,038.93 1,576.05 Contract Wages & Consulting 6,365.00 5,850.00 Faxes 288.00 35.25 Legal Fees 14,880.40 726.00 Director Fees 5,100.00 600.00 Printing 105.20 0.00 Postage 61.50 64.00 Supplies 148.43 4.90 Telephone 20.40 3.00 Rent 750.00 750.00 Miscellaneous 47.70 0.00 ------------- ------------- TOTAL EXPENSES 30,805.56 9,609.20 ------------- ------------- INCOME(LOSS)BEFORE INCOME TAXES (9,302.32) 209,848.04 INCOME TAXES 0.00 0.00 ------------- ------------- NET INCOME (LOSS) $ (9,302.32) $ 209,848.04 ============= ============= INCOME PER SHARE (Basic & Diluted) $ .01 $ .08 ============= ============= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,640,000 2,640,000 ============= ============= 2 WORLD SERVICES, INC. STATEMENTS OF OPERATIONS For the Nine Months Ended September 30, 2001 and 2000 (Unaudited) 2001 2000 ---- ---- REVENUE Interest Income $ 71,463.59 $ 56,944.51 Dividend Income 0.00 199,238.00 ------------- ------------- TOTAL REVENUE 71,463.59 256,182.51 ------------- ------------- EXPENSES Accounting Fees 13,011.18 10,812.31 Contract Wages & Consulting 18,385.00 18,020.00 Faxes 576.75 138.00 Legal Fees 18,713.06 2,143.40 Director Fees 7,200.00 1,950.00 Printing 3,696.20 747.40 Postage 3,127.49 136.84 Supplies 260.53 42.90 Telephone 50.23 53.29 Rent 2,250.00 2,250.00 Annual Meeting 169.65 0.00 Miscellaneous 47.70 0.00 ------------- ------------- TOTAL EXPENSES 67,487.79 36,294.14 ------------- ------------- INCOME BEFORE INCOME TAXES 3,975.80 219,888.37 INCOME TAXES 0.00 0.00 ------------- ------------- NET INCOME $ 3,975.80 $ 219,888.37 ============= ============= INCOME PER SHARE (Basic & Diluted) .01 .08 ============= ============= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,640,000 2,640,000 ============= ============= 3 WORLD SERVICES, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2001 and 2000 (Unaudited) 2001 2000 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 3,975.80 $219,888.37 Adjustment to reconcile net income to net cash used in operating activities: (Increase) Decrease in: Interest Receivable 674.51 (31,131.84) Increase (Decrease) in: Stock Redemption Payable ( 125.00) ( 246.00) Accounts Payable (5,500.00) (5,500.00) ----------- ----------- NET CASH PROVIDED(USED) BY OPERATING ACTIVITIES ( 974.69) 183,010.53 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Certificates of Deposit 0.00 (196,401.00) Redemption of Certificates of Deposit 355,956.78 0.00 ----------- ----------- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 355,956.78 (196,401.00) ----------- ----------- NET INCREASE(DECREASE)IN CASH 354,982.09 (13,390.47) CASH AT BEGINNING OF PERIOD 42,225.10 50,173.74 ----------- ----------- CASH AT END OF PERIOD $397,207.19 $ 36,783.27 =========== =========== SUPPLEMENTAL DISCLOSURES Cash payments for: Income taxes $ 0.00 $ 0.00 =========== =========== Interest paid $ 0.00 $ 0.00 =========== =========== 4 WORLD SERVICES, INC. NOTES TO FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 2001 In the opinion of management of World Services, Inc., (the Company), the accompanying unaudited financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the company as of September 30, 2001, and the results of operations and cash flows for the nine months ended September 30, 2001 and 2000. These unaudited financial statements should be read in conjunction with the Company's annual report on Form 10-KSB for the year ended December 31, 2000. NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------------------- A summary of significant accounting policies is currently on file with the Securities and Exchange Commission on Form 10-KSB. NOTE 2 - INCOME TAXES - -------------------------------------------------------------------------------- As of December 31, 2000, the Company had net operating loss carry forwards for income tax purposes totaling approximately $823,000 which expire in the years 2001 to 2011. The net operating loss carry forwards may be limited with respect to their availability due to prior ownership changes and the consolidated return regulations. 5 WORLD SERVICES, INC. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this report. LIQUIDITY AND CAPITAL RESOURCES - SEPTEMBER 30, 2001, COMPARED TO DECEMBER 31, 2000 - -------------------------------------------------------------------------------- During the nine months ended September 30, 2001, cash increased approximately $355,000, as a result of redeeming certificates of deposits. Interest receivable decreased from $28,235 at December 31, 2000, to $27,560 at September 30, 2001. Primarily as a result of redeeming certificates of deposit, current assets decreased by $1,649, from $1,517,025 at December 31, 2000, to $1,515,376 at September 30, 2001. Current liabilities decreased $5,625 from $52,959 at December 31, 2000, to $47,334 at September 30, 2001. The decrease is the result of accounts payable being paid before the end of the quarter. As a result of the Company's net income for the nine months of $3,976, the accumulated deficit decreased from $4,335,004 at December 31, 2000, to $4,331,028 at September 30, 2001. As a result, total stockholders equity increased from 2,032,066 at December 31, 2000, to $2,036,042 at September 30, 2001. In August of 1997, the Company completed a reverse stock split followed by a forward stock split. Following the reverse stock split, there were a number of fractional shares which were redeemed. Not all of the fractional shares had been submitted for payment by December 31, 2000 or September 30, 2001. As a result, the 'current liabilities' portion of the balance sheet reflects a "stock redemption payable." During the nine months ended September 30, 2001, the Company redeemed outstanding fractional shares with a value of approximately $125. The total number of outstanding shares of common stock reflected on the balance sheet does not give any effect to the fractional shares outstanding. 6 WORLD SERVICES, INC. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The company has sufficient funds available to meet its capital obligations in the foreseeable future. As noted, elsewhere in this report and in the Company's annual report on Form 10-KSB for the year ended December 31, 2000, the future conduct of World Services' business is dependent upon a number of factors, and there can be no assurance that World Services will be able to conduct its operations as contemplated herein. Certain statements contained in this report, such as the possibility that World Services may acquire an operating business or, if any such business is acquired that it can be successfully operated, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks including, but not limited to: the possibility that World Services will not be able to complete any such acquisition on economic terms, if at all; and if such an acquisition does occur, the possibility that World Services will not be able to operate the business successfully. Furthermore, if any acquisition does occur, it will likely be accompanied by a change of control, and there can be no assurance that such change of control will be beneficial to World Services or its existing shareholders. RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- Nine months ended September 30, 2001 September 30, 2000 ------------------ ------------------ Net income $ 3,976 $219,888 Operating Expenses 67,488 36,294 Weighted Average Number of Shares 2,640,000* 2,640,000* Net income per share Less than $0.01 $0.08 7 WORLD SERVICES, INC. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) * The weighted average number of shares has been adjusted for the reverse and forward stock splits completed in August of 1997 and for the repurchase of the fractional shares resulting from the reverse stock split, all as described in the Company's proxy statement for the shareholders' meeting in August of 1997. SUBSEQUENT EVENTS - -------------------------------------------------------------------------------- During the quarter that ended September 30, 2001, World Services was approached by and commenced negotiations with Super 8 Motel Developers, Inc. ("Developers") for a tender offer by which Developers offered to purchase all of the outstanding shares of World Services common stock for $0.85 per share. As a result of these negotiations and subsequent regulatory compliance requirements, World Services has been required to involve its legal counsel and incur greater expenses than customary. During the quarter ended September 30, 2001, World Services has allocated approximately $18,000 to the costs related to the negotiations and the tender offer; World Services expects to incur an additional $50,000 in fees relating to legal fees, and expenses relating to mailing tender offer materials to all shareholders, responding to other regulatory requirements, and calling and holding a shareholders' meeting (currently scheduled for December 11, 2001). Consequently, World Services expects that its liquidity and working capital will decrease as a result of the tender offer commenced by Developers, even though World Services does not have any obligation to purchase any shares tendered by shareholders. In order to protect World Services' liquidity and capital assets, during the negotiations, World Services obtained the following covenants from Developers should Developers complete the tender offer and acquire shares representing a controlling majority interest in World Services. World Services believes that these covenants will benefit shareholders who choose to remain minority shareholders in World Services should Developers complete the tender offer. o Developers will not cause World Services to divest or sell any material assets through a distribution, dividend, payment of any sort or to conduct any merger, consolidation, exchange or other 8 WORLD SERVICES, INC. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) transaction, in a manner which is inconsistent with the fiduciary duties or other legal obligations that a majority shareholder owes to any minority shareholders under all applicable state or federal laws; o Developers will not cause World Services to make any payment to Developers in exchange for any property or services other than at fair market value as determined in good faith by the Board of Directors of World Services at the time of such transaction; o For so long as World Services is subject to Exchange Act, Developers will cause World Services to comply with financial reporting and other obligations pursuant to such Act, and if Developers determines to take World Services private through filing a Form 15, engaging in a 13e-3 Transaction, or other means, Developers will (and will cause World Services to) comply with all relevant rules and statutes; and o For a period of twenty-four (24) months following the completion of the Tender Offer, o Developers will not cause World Services to make any dividend or distribution of cash, stock or other assets or consideration to its shareholders, or conduct any sale, merger, consolidation, exchange or other transaction, pursuant to which Developers would receive a disproportionate amount of cash, stock or other assets or consideration on a per share basis in comparison to World Services' other shareholders; o Developers will not cause World Services to enter into any sale of all or substantially all of its assets, merger, consolidation, exchange, voluntary dissolution or other transaction that would have the effect of eliminating the interests of the non-tendering shareholders and give rise to 9 WORLD SERVICES, INC. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) dissenters' rights under Section 47-6-23 of the South Dakota business corporations statutes, unless either (i) the per share price to be paid to the non-tendering shareholders is not less than the Tender Offer Price plus interest calculated from the date the Tender Offer is completed, minus dividends, as provided in Section 47-33-18(l)(a) of the business combinations provisions under the Takeover Act, or (ii) the World Services board has received a fairness opinion from an independent appraiser indicating that the per share price to be paid to the minority shareholders is fair (without applying a minority interest or lack of marketability discounts); and o Developers will not cause World Services to enter into any transaction with Developers or its affiliates not giving rise to dissenters' rights as provided above, other than at fair market value (as provided above), and if World Services were to enter into any such transaction Developers would cause the World Services board to give all World services shareholders notice of the transaction with an explanation of how the board reached its determination as to the value of the consideration that is detailed enough for the shareholders to reasonably evaluate the board's decision. Any shareholder(s) objecting to the amount or nature of the consideration will have the right to require World Services to have an independent appraisal completed, and o if the appraised value is within 10% of the price set by the board, then the price will stand and World Services will pay for the appraisal; o if the appraised value is more than 10% higher than the price set by the board, Developers will be required to pay such additional consideration to World Services and reimburse World Services for the reasonable cost of the appraisal; and 10 WORLD SERVICES, INC. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) o if the appraised value is more than 10% lower than the price set by the board, the price will stand and the shareholder(s) requesting the appraisal will reimburse World Services for the reasonable cost of the appraisal. To the extent that circumstances change (such as if Developers should extend the expiration of the tender offer beyond December 11, 2001, the current expiration date), World Services' costs in the tender offer/shareholder meeting process will likely increase, and the increased costs would adversely impact World Services' liquidity and working capital. 11 WORLD SERVICES, INC. PART II. OTHER INFORMATION ITEM 1. - LEGAL PROCEEDINGS - -------------------------------------------------------------------------------- None. ITEM 2. - CHANGES IN SECURITIES - -------------------------------------------------------------------------------- None. ITEM 3. - DEFAULT UPON SENIOR SECURITIES - -------------------------------------------------------------------------------- None. ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - -------------------------------------------------------------------------------- On June 28, 2001, the Company held a special meeting of its shareholders in lieu of an annual meeting. At that meeting, the following nominees were reelected to the Board of Directors: Ronne Tarrell, Delores Bower, David Jorgenson, Delbert Harty, and Terry Heinz. No other matters were considered at the special meeting. ITEM 5. - OTHER INFORMATION - -------------------------------------------------------------------------------- None. ITEM 6. - EXHIBITS - -------------------------------------------------------------------------------- None. 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. November 7, 2001 WORLD SERVICES, INC. By: /s/ Ronne Tarrell -------------------------------- Ronne Tarrell, President, Chief Executive Officer and Principal Financial Officer 13 -----END PRIVACY-ENHANCED MESSAGE-----