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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 2002
-----------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from n/a to n/a
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000-32749
Commission file number
KOALA INTERNATIONAL WIRELESS INC.
---------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada #76-0616468
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(State or other jurisdiction of organization)(I.R.S. Employer Identification No)
366 Bay Street, Suite 800
Toronto, Ontario, Canada
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(Address of principal executive offices)
(416) 304-1474 (223)
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(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 issuer 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 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 February 15, 2003, the Issuer
had 14,181,000 shares of common stock, par value $0.001, issued and outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS 3
Consolidated Balance Sheets 4
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 8
Plan of Operations 8
Liquidity and Capital Resources 8
Special Note Regarding Forward Looking Statements 8
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 9
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 9
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9
ITEM 5. OTHER INFORMATION 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
- ---------------------------------
The accompanying consolidated balance sheets of Koala International Wireless
Inc. (a development stage company) at December 31, 2002 and September 30, 2002,
and the related consolidated statements of operations and the consolidated
statements of cash flows for the three months ended December 31, 2002 and
December 31, 2001 and for the period August 25, 2000 (inception) to December 31,
2002, have been prepared by Koala International Wireless Inc.'s management and
they do not include all information and notes to the consolidated financial
statements necessary for a complete presentation of the consolidated financial
position, results of operations and cash flows in conformity with accounting
principles generally accepted in the United States of America. In the opinion
of management, all adjustments considered necessary for a fair presentation of
the consolidated results of operations and consolidated financial position have
been included and all such adjustments are of a normal recurring nature.
Consolidated operating results for the quarter ended December 31, 2002 are not
necessarily indicative of the results that can be expected for the year ending
September 30, 2003.
Koala International Wireless Inc.
(a Development Stage Company)
Consolidated BALANCE SHEETS
As at December 31, 2002 and September 30, 2002 (Unaudited)
U.S. Dollars
December 31 September 30
2002 2002
---- ----
ASSETS
Current
Cash
$ 111 $ -
Accounts receivable - -
Prepaid expense - -
-------- ----------
111 -
Fixed assets, net of accumulated depreciation $17,496
(September 30, 2002 $15,556)
22,012 23,952
------ ------
Total Assets $ 22,123 $ 23,952
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LIABILITIES
Current
Accounts payable and accrued liabilities $ 878,702 $ 841,583
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STOCKHOLDERS' EQUITY
Common Stock
Authorized
100,000,000 shares of common stock with a par value of $0.001 each
20,000,000 shares of preferred stock with a par value of $0.001 each
Issued and outstanding
14,181,000 shares of common stock 14,181 13,696
(13,696,000 at September 30, 2002)
Additional paid in capital 2,540,404 2,526,339
Other comprehensive income 5,013 5,013
Deficit accumulated during development stage of operations
(3,416,177) (3,362,679)
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Total Stockholders' Equity (Deficit) (856,579) (817,631)
-------- -------
Total Liabilities and Stockholders' Equity $ 22,123 $ 23,952
------ ------
The accompanying notes are an integral part of these consolidated financial
statements.
Koala International Wireless Inc.
(a Development Stage Company)
Consolidated STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2002 and 2001 and
the Period August 25, 2000 (Inception) to December 31, 2002 (Unaudited)
U.S. Dollars
August 25, 2000
(Inception) to
Three Months Three Months December 31
2002 2001 2002
---- ---- ----
Revenue $ - $ - $ -
-------- --------- --------
Expenses
Website - 3,100 74,499
Professional fees 5,659 15,075 162,815
Depreciation 1,940 2,367 17,496
Rent, office and administration 30,899 9,774 89,509
Consulting 15,000 2,490 2,414,550
Marketing - - 193,410
Product development - - 129,040
Financing and due diligence - - 73,450
Write-off merger goodwill - - 38,013
Salaries - - 145,719
Investor relations - - 27,112
Travel and business development - - 50,564
------ ------ ---------
53,498 32,806 3,416,177
------ ------ ---------
Net income (loss) for period $ (53,498) $ (32,806) $ (3,416,177)
------ ------ ---------
Net income (loss) per share $(0.00) $(0.00)
Weighted average number of
shares outstanding 12,739,867 5,192,308
The accompanying notes are an integral part of these consolidated financial
statements.
Koala International Wireless Inc.
(a Development Stage Company)
Consolidated STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 2002 and 2001 and
the Period August 25, 2000 (Inception) to December 31, 2002 (Unaudited)
U.S. Dollars
August 25, 2000
(Inception) to
Three Months Three Months December 31
2002 2001 2002
---- ---- ----
Operating Activities
Net income (loss) $(53,498) $(32,806) $(3,416,177)
Adjustments to reconcile net income (loss) to net
cash used by operating activities
Depreciation 1,940 2,367 17,496
Stock option benefit - - 2,263,560
Other expenses paid by share issuance
- - 27,500
Shares issued to relinquish debt
- - 89,069
Changes in operating assets and liabilities
37,119 31,726 908,975
------ ------ -------
Net cash provided by (used by) operating activities
(14,439) 1,287 (109,577)
Investing Activities
Fixed assets - - (39,508)
Financing Activities
Common stock issued for:
Cash 14,550 - 149,196
------ -------- -------
Inflow (outflow) of cash 111 1,287 111
Cash, beginning of period - 558 -
------ ------ -------
Cash, end of period $ 111 $ 1,845 $ 111
------ ------ -------
Supplemental information
Interest paid $0 $0 $0
Shares issued for services $0 $0 $27,500
Corporate income taxes paid $0 $0 $0
The accompanying notes are an integral part of these consolidated financial
statements.
Koala International Wireless Inc.
(a Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended December 31, 2002
1. ORGANIZATION AND BASIS OF PRESENTATION
Koala International Wireless Inc. (the "Company" or "Koala" and formerly Kettle
River Group Inc.) was incorporated August 18, 1999 in the State of Nevada and is
in the development stage. The financial statements include the accounts of
Urbanesq.com retroactively to incorporation, giving retroactive effect to its
acquisition as a wholly owned subsidiary. Urbanesq was incorporated August 25,
2000, which became the effective date of inception of Koala after the reverse
takeover of Urbanesq.
2. DEVELOPMENT STAGE COMPANY
In a development stage company, management devotes most of its activities to
preparing the business for operations. Planned principal activities have not
yet begun. The ability of the Company to emerge from the development stage with
respect to any planned principal business activity is dependent upon its
successful efforts to raise additional equity financing and/or attain profitable
operations. There is no guarantee that the Company will be able to raise any
equity financing or sell any of its products at a profit. There is, therefore,
doubt regarding the Company's ability to continue as a going concern.
3. BASIS OF ACCOUNTING PRESENTATION
These unaudited financial statements have been prepared by management in
accordance with accounting principles generally accepted in the United States of
America for interim financial information, are condensed and do not include all
disclosures required for annual financial statements. The organization and
business of the Company, accounting policies followed by the Company and other
information are contained in the notes to the Company's audited financial
statements filed as part of the Company's Form 10-SB and Form 10K-SB for the
year ended September 30, 2002.
In the opinion of the Company's management, these financial statements reflect
all adjustments necessary to present fairly the Company's financial position at
December 31, 2002 and the results of its operations for the three months then
ended. The results of operations for the three months ended December 31, 2002
are not necessarily indicative of the results to be expected for the entire
fiscal year.
4. COMMON CAPITAL STOCK
Pursuant to a voluntary share exchange agreement dated October 17, 2001 and
effective October 18, 2001, the Company issued 6,500,000 shares of common stock
to acquire 100% of the outstanding share capital of Urbanesq.com, Inc., a
private Ontario, Canada company. Certain shareholders of the Company in turn
surrendered 7,500,000 shares of the Company's common stock to the Company,
resulting in 12,500,000 shares of common stock of the Company issued and
outstanding as of October 18, 2001. On completion of the acquisition,
Urbanesq.com, Inc. became a wholly-owned subsidiary of the Company. Urbanesq was
incorporated August 25, 2000, which became the effective date of inception of
Koala after the reverse takeover of Urbanesq.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- ---------------------------------------------------------------------------
The following discussion should be read in conjunction with the accompanying
unaudited interim consolidated financial statements.
Plan of Operations.
- --------------------
The Company has not generated any revenues from operations since inception.
During this quarter, the Company actively pursued agreements to acquire Route 1
Corporation., a private Ontario corporation, and NoWire Telecom, Inc., an
Egyptian partnership based in Cairo, Egypt in return for the Company's common
stock. Subsequently, the Company and Route1 Corporation have mutually agreed
not to complete the closing of the Share Exchange Agreement (the "Agreement") as
contemplated.
The Company's business following its acquisition of Urbanesq was to
produce and market a product called the Hipster and the subscription services
associated with that product. The Company has ceased to pursue this business
and has extended its business model to launch a Windows based communication
device and associated services. The new device is being designed to access
information from the Internet, provide email service and other communication
functionality such as text messaging. The plan is to deliver multiple services,
some on a subscription basis, in a manner similar to the way a consumer
currently pays for a cellular telephone. The first market for the device and
services will be Europe followed by other GPRS markets.
No revenue was recorded for the three month period ended December 31, 2002 and
no revenue has been generated since inception.
Net loss for the three month period ended December 31, 2002 was $(53,498)
compared to a loss of $(32,806) for the three months ended December 31, 2001.
The expenditures reflected in the loss represent the Company's administrative
expenses, including maintenance of an office.
Liquidity and Capital Resources
- ----------------------------------
The Company has been able to pay its expenses and costs through the increase in
its accounts payable. As of December 31, 2002, the Company had a working
capital deficiency of $878,591. The Company needs to raise additional funds
through the sale of stock or borrowing just to maintain the corporate existence
of the Company and to maintain the quotation of the Company's common stock on
the OTC Bulletin Board. The Company may not be successful in its efforts to
raise equity financing and /or attain profitable operations. There is doubt
regarding the Company's ability to continue as a going concern.
Special Note Regarding Forward Looking Statements
- ------------------------------------------------------
Certain statements in this report and elsewhere (such as in other filings by the
company with the Securities and Exchange Commission ("SEC"), press releases,
presentations by the Company of its management and oral statements) may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," and
"should," and variations of these words and similar expressions, are intended to
identify these forward-looking statements. Actual results may materially differ
from any forward-looking statements. Factors that might cause or contribute to
such differences include, among others, competitive pressures and constantly
changing technology and market acceptance of the Company's products and
services. The Company undertakes no obligation to publicly release the result
of any revisions to these forward-looking statements, which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- -----------------------------
To the Company's knowledge, there are no lawsuits nor were any lawsuits
commenced against the Company during the quarter ended December 31, 2002, nor
did the Company commence any lawsuits during the same period.
Item 2. Changes in Securities and Use of Proceeds.
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Changes in Securities
- -----------------------
During the three months ended December 31, 2002 the Company issued 485,000
shares of common stock for cash of $14,550 pursuant to the exercising of stock
options.
Use of Proceeds
- -----------------
Not applicable.
Item 3. Defaults Upon Senior Securities.
- ---------------------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
- ----------------------------------------------------------------------
No matters were put forward to a vote of the security holders of the Company
this quarter.
Item 5. Other Information.
- -----------------------------
None.
Item 6. Exhibits and Reports on form 8-K.
- ------------------------------------------------
Exhibits
- --------
none
Reports on Form 8-K
- ----------------------
Form 8-K filed October 15, 2002.
Form 8-K filed December 5, 2002.
Form 8-K/A filed December 13, 2002.
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.
Koala International Wireless Inc.
Date: February 19, 2003 By: /s/ Miguel Caron
-------------------------
Miguel Caron, President and Director
302 CERTIFICATION*
I, Miguel Caron, acting Chief Financial Officer, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
5. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: February 19, 2003
-------------------
/s/ Miguel Caron
_________________________________
Miguel Caron
Acting Chief Financial Officer
EXHIBIT 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Koala International Wireless
Inc. (the "Company") on Form 10-QSB for the period ended December 31, 2002, as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Miguel Caron, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act
of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Miguel Caron
_______________________
Miguel Caron
President
Date: February 19, 2003