United Consortium (UCSO) 10QSB 2003 Q1 Quarterly report (small business)

THIS FORM 10-QSB IS THE SUBJECT OF A FORM 12b-25

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  January 31, 2003

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from  to 

Commission file number  000-27131

Storage Alliance, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada	98-0222922
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
725, 435 Fourth Avenue SW, Calgary, Canada
(Address of principal executive offices)
(403) 264-2500
(Issuer's telephone number)
Cascadia Capital Corporation Suite 800, 885 West Georgia Street, Vancouver, British Columbia Canada
(Former name, former address and former fiscal year, if changed since last report)

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 CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

10,623,810 common shares issued and outstanding as at March 1, 2003.

Transitional Small Business Disclosure Format (Check one):      Yes [ ]     No [X]

PART I

Item 1. Financial Statements

Our consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

DISCLOSURE

To: The Shareholders of Storage Alliance, Inc.

It is the opinion of management that the consolidated interim financial statements for the quarter ended January 31, 2003 include all adjustments necessary in order to ensure that the consolidated financial statements are not misleading.

Vancouver, British Columbia
Date: March 24, 2003

/s/ Jeff Ascah
President, Treasurer, Secretary and Director of Storage Alliance, Inc.

Storage Alliance Inc.

Consolidated Balance Sheets

(United States Dollars)

(Unaudited)

As at	January 31, 2003	October 31, 2002 (audited)
Assets
Current
Cash	$ 7,685	$ -
Accounts receivable (net of allowance of $181,833 and $100,000)	13,849	16,139
Investment tax credit receivable	58,500	57,780
Prepaid expense	7,143	7,055
	87,177	80,974
Fixed assets, net of accumulated depreciation	42,537	44,593
Goodwill (Note 3)	1,020,165	1,020,165
	$1,149,879	$1,145,732
Liabilities and Stockholders' Equity
Liabilities
Current
Bank indebtedness	$ -	$ 455
Accounts payable and accrued liabilities	207,467	285,741
	207,467	286,196
Stockholders' equity
Capital stock 100,000,000 common shares authorized, par value of $0.0001 10,000,000 (October 31, 2002 - 10,000,000) common shares issued	1,000	1,000
Additional paid in capital	1,026,650	1,003,650
Shares to be issued (Note 4(b))	599,550	235,050
Other comprehensive loss - cumulative translation adjustment	(18,179)	(7,799)
Accumulated deficit	(666,609)	(372,365)
	942,412	859,536
	$1,149,879	$1,145,732

Storage Alliance Inc.

Consolidated Statements of Operations

(United States Dollars)

(Unaudited)

For the three month period ended	January 31 2003	January 31 2002(1)	January 31 2002(2)
Revenues
Application hosting (Note 6)	$78,969	$12,868	$-
Less: direct costs	7,400	10,632	-
Gross profit exclusive of depreciation expense shown separately below	71,569	2,236	-
Expenses
Depreciation	3,221	3,812	-
General and administrative expenses (Note 9)	364,213	270,477	-
	367,434	274,289	-
Loss for the period before other items	(295,865)	(272,053)	-
Interest income	1,621	-	-
Loss for the period before discontinued operations	(294,244)	(272,053)	-
Loss from discontinued operations	-	-	(2,749)
Net loss for the period	$(294,244)	$ (272,053)	$(2,749)
Basic and diluted loss per share - continuing operations	$(0.03)		$(0.00)
Basic and diluted loss per share - discontinued operations	(0.00)		(0.00)
Basic and diluted loss per share	$(0.03)		$(0.00)
Weighted average number of shares outstanding	10,483,561		4,900,000

(1) Represents the results of operations of Storage Alliance Inc. (predecessor company).

(2)Represents the results of operations of Storage Alliance Inc. (formerly Cascadia Capital Corp., the successor company).

Storage Alliance Inc.

Consolidated Statements of Cash Flows

(United States Dollars)

(Unaudited)

For the three month period ended	January 31 2003	January 31 2002(1)	January 31 2002(2)
Cash flows from operating activities
Net loss for the period	$(294,244)	$ (272,053)	$ (2,749)
Adjustments for:
Allowance for doubtful accounts	81,833	14,067	-
Depreciation	3,221	3,812	-
Stock option compensation	23,000	-	-
Changes in non-cash assets and liabilities
Accounts receivable	(85,543)	44,589	-
Accounts payable and accrued liabilities	(85,319)	31,371	-
Investment tax credit receivable	780	-	-
Prepaid expense	(88)	-	-
	(356,360)	(178,214)	(2,749)
Cash flows from financing activities
Shareholder loan	-	184,881	-
Bank indebtedness	(455)	1,885	-
Proceeds on shares to be issued	364,500	-	-
	364,045	186,766	-
Cash flows from investing activity
Acquisition of fixed assets	-	(8,552)	-
Increase (decrease) in cash	7,685	-	(2,749)
Cash, beginning of period	-	-	28,880
Cash, end of period	$7,685	$-	$26,131

Supplemental Information (Note 5)

(1)Represents the cash flows of Storage Alliance Inc. (predecessor company).

(2)Represents the cash flows of Storage Alliance Inc. (formerly Cascadia Capital Corp., the successor company).

Storage Alliance Inc.

Consolidated Statements of Comprehensive Loss

(United States Dollars)

(Unaudited)

For the three month period ended	January 31 2003	January 31 2002(1)	January 31 2002(2)
Net loss for the period	$ (294,244)	$ (272,053)	$ (2,749)
Other comprehensive income (loss)
Cumulative translation adjustment	(10,380)	396	-
Comprehensive loss for the period	$ (304,624)	$ (271,657)	$ (2,749)

(1) Represents the comprehensive loss of Storage Alliance Inc. (predecessor company).

(2) Represents the comprehensive loss of Storage Alliance Inc. (formerly Cascadia Capital Corp., the successor company).

Storage Alliance Inc.

Consolidated Statements of Stockholders' Equity

(United States Dollars)

(Unaudited)

	No. of shares	$ Amount	Additional paid-in capital	Shares to be issued	Other comprehen-sive loss	Accum. Deficit	Total
Balance October 31, 2002	10,000,000	$ 1,000	$1,003,650	$ 235,050	$ (7,799)	$ (372,365)	$ 859,536
To be issued for private placement (Note 4)	-	-	-	364,500	-	-	364,500
Stock option compensation (Note 7)	-	-	23,000	-	-	-	23,000
Currency translation adjustment	-	-	-	-	(10,380)	-	(10,380)
Net loss for the period ended January 31, 2003	-	-	-	-	-	(294,244)	(294,244)
Balance, January 31, 2003	10,000,000	$ 1,000	$1,026,650	$ 599,550	$ (18,179)	$ (666,609)	$ 942,412

Storage Alliance Inc.

Notes to Consolidated Financial Statements

(United States Dollars)

(Unaudited)

As at January 31, 2003 and 2002, and October 31, 2002

1. Organization and Ability to Continue Operations

Storage Alliance Inc. ("the Company") (formerly Cascadia Capital Corporation) was incorporated on October 29, 1999 under the laws of the State of Nevada to engage in any lawful business or activity for which operations may be organized under the laws of the state of Nevada. The Company was in the business of exploration and development of mineral properties with minimal operations. During its 2002 fiscal year the Company abandoned all its mineral properties and as a result of the acquisition ceased to be an exploration stage company. For financial statement purposes Storage Alliance Inc. (the acquired subsidiary) is the predecessor.

On September 19, 2002, the Company acquired Storage Alliance Inc. through the issuance of 1,000,000 common shares (Note 3). The Company changed its name and now operates under the name of Storage Alliance Inc. Storage Alliance Inc. was incorporated as a provider of availability infrastructure and infrastructure and storage management services to the business marketplace. Currently, all of the Company's customers are located in Canada.

The consolidated financial statements have been prepared using United States generally accepted accounting principles that are applicable to a going concern. The Company has incurred a loss of $294,244 in the three-month period ended January 31, 2003 and has an accumulated deficit of $666,609 at January 31, 2003. Ultimate recovery of the Company's assets and continuation of the business is dependent on the Company, after an expected period of initial losses, achieving and maintaining profitability which is dependant on market conditions, successful rollout of the Company's business plan and the ability to obtain adequate financing to meet capital and operational requirements. Management's plan to continue as a going concern includes the current pilot hosting of Murphy Oil Company Limited digital seismic information, enhancements to the Company's products, the addition of new hosting clients and pursuit of strategic alliances. The Company anticipates requiring $1,000,000 to $1,250,000 over the next twelve months for operations to pursue its plans and goals. The Company must supplement shortfalls in operational cash flow with additional debt or equity financing. During the three-month period ended January 31, 2003, the Company finalized a private placement financing of $655,000, of which $364,500 was received during the three-month period ended January 31, 2003. Management cannot provide any assurances that the Company will be successful in any of its plans. During the 2002 fiscal year, upon acquisition of Storage Alliance Inc., the Company abandoned all its mineral properties and have reflected them as discontinued operations in these financial statements. As a result of the acquisition the Company has ceased to be an exploration stage company.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Storage Alliance Inc.

Notes to Consolidated Financial Statements

(United States Dollars)

(Unaudited)

As at January 31, 2003 and 2002, and October 31, 2002

1. Organization and Ability to Continue Operations - continued

These unaudited financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these consolidated interim financial statements be read in conjunction with the consolidated financial statements for the year ended October 31, 2002 and notes thereto included in the Company's Annual report on Form 10-KSB. The Company follows the same accounting principles in preparation of interim reports.

The consolidated interim financial statements included herein have been prepared by the Company, without audit, in accordance with accounting principles generally accepted in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. Operating results for the interim periods are not necessary indicative of the results that may be expected for the year or any future period.

2. Accounting Policies

(1)Stock-based compensation

The Company has adopted Statement of Financial Accounting Standard SFAS No. 123, "Accounting for Stock-Based Compensation" and has elected to continue to measure compensation cost for employees under Accounting Principles Board ("APB") Opinion No. 25, including interpretations provided in Interpretation ("FIN") No. 44. Generally, under APB No. 25 compensation expense is recognized for the difference between the market price of the underlying common stock and the exercise price of the stock options.

SFAS No. 123 requires the Company to provide pro-forma information regarding net income as if compensation cost for the stock options granted to the Company's employees had been determined in accordance with the fair value based method prescribed in SFAS No. 123. The value of stock options granted to non-employees is recognized as compensation expense under SFAS No. 123 using the Black-Scholes option pricing model.

The Company does not plan to adopt the fair value method of accounting for stock-based compensation awarded to employees. Consequently, related pro-forma information as described in SFAS No. 123 has been disclosed in Note 7 in accordance with SFAS No. 148.

Storage Alliance Inc.

Notes to Consolidated Financial Statements

(United States Dollars)

(Unaudited)

As at January 31, 2003 and 2002, and October 31, 2002

2. Accounting Policies - continued

For the three month period ended January 31	2003	2002(1)	2002(2)
Net loss, as reported	$(294,244)	$(272,053)	$(2,749)
Add: Stock-based compensation expense included in reported net loss	23,000	-	-
Deduct: Total stock-based compensation expense determined under fair-value based method for all awards	(35,005)	-	-
Pro-forma net loss	$(306,249)	$(272,053)	$(2,749)
Loss per share - basic and diluted - as reported	$(0.03)		$(0.00)
- basic and diluted - proforma	$(0.03)		$(0.00)

(1) Represents the net loss of Storage Alliance Inc. (predecessor company).

(2) Represents the net loss of Storage Alliance Inc. (formerly Cascadia Capital Corp., the successor company).

(2)Provision for doubtful accounts

Included in accounts receivable as at January 31, 2003 is $181,833 (October 31, 2002 - $106,297) due from a customer for services rendered in connection with hosting. The Company has filed a lawsuit seeking payment of outstanding amounts at January 31, 2003 to which the customer has counterclaimed (Note 8). A provision for doubtful debts has been recorded equal to the full amount of the receivable balance due to concerns over full collection given the litigation. Any recovery will be recognized when the proceeds are received. Other receivables are reviewed for collectibility on an account by account basis with any provision set up based on considerations including economic indicators.

(3)New accounting pronouncements

FIN 46, "Consolidation of Variable Interest Entities", clarifies the application of Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities crated prior to January 31, 2003, the provisions of FIN 46 are applicable no later than July 1, 2003.

The implementation of this new standard is not expected to have a material effect on the Company's financial statements.

Storage Alliance Inc.

Notes to Consolidated Financial Statements

(United States Dollars)

(Unaudited)

As at January 31, 2003 and 2002, and October 31, 2002

3. Business Combination

In September 2002, Cascadia has effected the purchase of all the shares of Storage Alliance via the issuance of 1,000,000 shares of Cascadia to DKJ Technologies Inc. at a value of $0.35/share which represents quoted market prices at the date the transaction was publically announced. In conjunction with this acquisition, Cascadia assumed the Storage Alliance loans, except for the loan to parent of $606,000 which was forgiven prior to the acquisition.

The acquisition of Storage Alliance has been accounted for by the purchase method, with Cascadia being the acquirer, based on the fair values of the assets or liabilities acquired, as follows:

	Book Value	Fair Value	Discrepancy
Current assets	$ 242,348	$ 242,348	$-
Current liabilities	(956,898)	(956,898)	-
Negative working capital	(714,550)	(714,550)	-
Property, plant and equipment	44,385	44,385	-
Goodwill	-	1,020,165	1,020,165
Net assets acquired	$ (670,165)	$ 350,000	$1,020,165
Purchase price being the value attributed to the shares acquired	$ 350,000	$ 350,000

These consolidated financial statements include the operating results of Storage Alliance Inc. from the date of acquisition. Proforma results had the acquisition occurred at November 1, 2001 would approximate as follows:

	January 31 2002
Revenues	$ 12,868
Loss from continuing operations	(272,053)
Loss from discontinued operations	(2,749)
Net loss for the period	$ (274,802)
Basic and diluted loss per share - continuing operations	$ (0.04)
Basic and diluted loss per share - discontinued operations	$ (0.00)
Basic and diluted loss per share	$ (0.04)

Storage Alliance Inc.

Notes to Consolidated Financial Statements

(United States Dollars)

(Unaudited)

As at January 31, 2003 and 2002, and October 31, 2002

4. Capital Stock

(a) On February 18, 2002, the Company forward split its stock on a 3.25:1 basis. Accordingly all references to the number of common shares and per share data in accompanying financial statements have been adjusted to reflect the stock split on a retroactive basis.

(b)Shares to be issued

i) On September 19, 2002, the Company received proceeds from a private placement for 470,000 common shares totalling $235,050. The common shares were issued on March 10, 2003.

ii) On January 29, 2003, the Company entered into stock subscription agreements for a private placement of 623,810 common shares at $1.05 per share for total consideration of $655,000. The common shares were issued on February 5, 2003. As at January 31, 2003, $364,500 of the proceeds was received (pertaining to 347,143 common shares subscribed).

Shares to be issued for which cash was received prior to January 31, 2003 have been included in weighted average shares outstanding for the period for the purposes of loss per share.

(c)Options and warrants

Prior to November 1, 2002, there were no options or warrants outstanding. During the quarter ended January 31, 2003, 1,160,000 options were issued to employees, consultants and directors of the Company exercisable into shares of the Company at a weighted average exercise price of $0.61 per share. These options vest 1/3 one year from the date of grant with 1/2 of the remainder vesting annually thereafter. The options expire between September 20, 2006 and January 7, 2007. As at January 31, 2003, there were no options exercisable. Compensation expense in connection with options granted is set out in Note 7.

5. Statement of Cash Flows

Interest and taxes paid

	January 31 2003	January 31 2002(1)	January 31 2002(2)
Interest paid	$ 423	$ 1,014	$ -
Taxes paid	$ -	$ -	$ -

(1) Represents cash flows of Storage Alliance Inc. (predecessor company).

(2) Represents cash flows of Storage Alliance Inc. (formerly Cascadia Capital Corp., the successor company).

Storage Alliance Inc.

Notes to Consolidated Financial Statements

(United States Dollars)

(Unaudited)

As at January 31, 2003 and 2002, and October 31, 2002

6. Major Customers

During the three-month period ended January 31, 2003, 100% of the revenue was earned from one customer. (Note 8) As at January 31, 2002, the predecessor earned 100% of its revenue from one customer.

7. Stock Option Compensation

The Company applies Accounting Principles Board ("APB") Opinion 25, "Accounting for Stock issued to Employees," and related interpretations in accounting for the stock option plan. Under APB Opinion 25, compensation cost would be recognized for stock options granted to employees and directors for their services as directors if the option price is less than the market price of the underlying common stock on the date of the grant.

Compensation expense of $23,000 was recognized in the period ended January 31, 2003 for options granted to employees and directors having a exercise price less than the trading value of the underlying common shares on the grant date. Such compensation expense is amortized over the relevant vesting periods. Total compensation to be recognized over the vesting periods of options granted to employees is approximately $355,000, leaving $332,000 of compensation expense still to be recognized.

SFAS No. 123, "Accounting for Stock-Based Compensation," requires the Company to provide pro-forma information regarding net loss as if the compensation costs for the Company's stock option grants had been determined in accordance with the fair value based method prescribed in SFAS No. 123. To provide the required pro-forma information, the Company estimates the fair value of each stock option at the grant date using the Black-Scholes option-pricing model. Compensation expense for stock options granted to non-employees is recorded using the fair value based method prescribed in SFAS 123. No compensation was recognized on options granted to consultants during the period as such amounts were insignificant.

Had compensation expense related to employees been determined based on the fair value at the grant dates, the net loss and loss per share for the three month period ended January 31, 2003 would have been as follows:

Net loss - as reported	$ (294,244)
- pro forma	$ (306,249)
Loss per share - basic and diluted
- as reported	$ (0.03)
- pro forma	$ (0.03)

Storage Alliance Inc.

Notes to Consolidated Financial Statements

(United States Dollars)

(Unaudited)

As at January 31, 2003 and 2002, and October 31, 2002

7. Stock Option Compensation - continued

The fair value of stock options granted during the three months ended January 31, 2003 was $0.32 per option estimated using the Black-Scholes option-pricing model with the following assumptions: Dividend yield (Nil), Expected volatility (32%), risk-free interest rate (5.0%), and weighted average life of 3.81 years.

There is no effect for the periods prior to November 1, 2002.

8. Contingent Liabilities

On February 5, 2003, the Company commenced a lawsuit in the Alberta Court of Queen's Bench, Judicial District of Calgary, against International Datashare Corporation seeking payment for services rendered to International Datashare pursuant to a LinkPort Application Hosting Services Agreement, dated May 1, 2002. The Company has claimed $159,000 (CDN$246,455) plus interest and costs. On February 27, 2003, International Datashare filed a statement of defence and a counterclaim. The counterclaim alleges that the Company engaged in a civil conspiracy with a former employee and director of International Datashare, in connection with the LinkPort Application Hosting Services Agreement. International Datashare alleges that the Company conspired to propose terms for the agreement which were far more beneficial to the Company than if the Company had negotiated with any other representative of International Datashare. International Datashare also alleges that the employee was not authorized to en ter into the agreement and that the terms of the agreement would have not been accepted by International Datashare. In the alternative, International Datashare alleges that the Company fundamentally breached the agreement by failing to make International Datashare's software available to its customers and by failing to perform the other terms of the agreement. In addition, International Datashare alleges that it provided the Company with computer equipment and software valued at approximately $13,000 (CDN$20,000) and data logs valued at aminimum of approximately $3.2 million (CDN$5,000,000) which the Company has never paid for or returned. International Datashare alleges that it has suffered damages and loss of reputation and goodwill as a result of the alleged conspiracy or, in the alternative, the Company's failure to perform the terms of the agreement in an amount of not less than approximately $484,000 (CDN$750,000). International Datashare alleges that it has suffered damages of not less than approximat ely $3.9 million (CDN$6,000,000) and is seeking damages of approximately $3.9 million (CDN$6,000,000) and an order that the computer equipment and software and the data logs be returned or that the Company pay them approximately $3.2 million (CDN$5,000,000) in lieu of returning such items. International Datashare is also seeking interest, costs and punitive damages.

Storage Alliance Inc.

Notes to Consolidated Financial Statements

(United States Dollars)

(Unaudited)

As at January 31, 2003 and 2002, and October 31, 2002

8. Contingent Liabilities - continued

On March 10, 2003, the Company filed a statement of defence to counterclaim alleging that the counterclaim is without merit, frivolous and vexatious and constitutes an abuse of the court process.

Management of the Company believes that all of International Datashare's allegations are without merit, frivolous and vexatious and constitute an abuse of the court process. The Company is currently considering bringing a court application to have International Datashare's counterclaim struck as a frivolous and vexatious abuse of process.

9. Research and Development

Research and development costs are expensed as incurred. During the three month period ended January 31, 2003, an estimated $90,000 (predecessor, January 31, 2002 - $81,000) was incurred on research and development.

Item 2. Management's Discussion and Analysis and Plan of Operation.

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "CDN$" refer to Canadian dollars and all references to "common shares" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our", and "Storage Alliance" mean Storage Alliance, Inc., unless otherwise indicated.

General Overview

We were incorporated in the state of Nevada on October 29, 1999. Since our incorporation, we were in the business of the exploration and development of mineral properties. Our mining properties consisted of a placer claim and two blocks of hardrock mineral claims. We had completed some exploration on both of our properties but decided to abandon further exploration after the acquisition of our new business. These operations are reflected as discontinued operations in the consolidated financial statements.

Effective September 19, 2002, we acquired 100% of the issued and outstanding shares of Storage Alliance Inc., a company incorporated in the Province of Alberta, Canada. Effective on November 12, 2002, we changed our name from Cascadia Capital Corporation to Storage Alliance Inc. to reflect the operations of our newly acquired business. For financial statement purposes, Storage Alliance Inc., the acquired subsidiary, is the predecessor.

For the purposes of the quarterly report, we will refer to Cascadia Capital Corporation as "Storage Alliance" and to Storage Alliance Inc., the acquired corporation, as "Storage Alliance Alberta".

In our new business, we design, market and deploy content and storage management solutions and professional services for customers in the petroleum exploration and production and other data-intensive industries. Our data storage and content management solutions protect and manage seismic and related petroleum exploration and production data and delivers this data with analytical software applications and tools. We have created a set of solutions which include our Storage Experts^TM professional fee-based consulting services, our Data Port^TMstorage utility data storage services, our Portage^TM backup utility data and recovery services and our Link Port^TMdata and computer hosting services. For a detailed description of our current business, refer to our annual report on Form 10-KSB for the year ended October 31, 2002 filed with the Securities and Exchange Commission on February 19, 2003.

We are still in our infancy as a viable commercial entity, and consequently our focus has been on the identification of market needs, the development of products and services to meet these needs, and the branding of our company and our services. We anticipate that the expected growth in revenues will assist us in attracting additional financing to allow us to add the needed resources in order to further support the growth of our operations. Despite our expectations, there are no assurances that an increase in our revenues can be achieved, or that we will be able to attract additional financing on acceptable terms, if at all. Should we be unable to achieve the anticipated revenue growth or to attract additional financing on acceptable terms, our ongoing business and future success may be adversely affected.

Explanation of Comparative Periods

Our January 31, 2003 consolidated financial statements include the accounts of Storage Alliance and Storage Alliance Alberta for the three-month period then ended. As Storage Alliance Alberta is the predecessor business by virtue of the acquisition completed on September 19, 2002, information and discussion of the results of operations has been provided for each of Storage Alliance and Storage Alliance Alberta for the comparative three months ended January 31, 2002. Effective upon the acquisition of Storage Alliance Alberta, we discontinued our involvement in the mineral exploration. Information pertaining to the mineral exploration business has been segregated in the consolidated interim financial statements as "discontinued operations".

RESULTS OF OPERATIONS

Quarters ended January 31, 2003 and January 31, 2002 of Storage Alliance

The following discussion relates to the operations of Storage Alliance. Our net loss for the three month period ended January 31, 2003 was $294,244 as compared to $2,749 for the similar period in 2002. At January 31, 2002, we were essentially an inactive mineral exploration company.

Revenues

Gross revenue for the quarter ended January 31, 2003 were $78,969 compared to nil for the quarter ended January 31, 2002. This increase in revenue was a result of the acquisition of our new business effective September 19, 2002. All revenues were generated by our subsidiary, Storage Alliance Alberta. Direct costs were $7,400 leaving a gross profit of $71,569 compared to direct costs of $nil and a gross profit of $nil for the quarter ended January 31, 2002. We did not realize a gross profit for the quarter ended January 31, 2002 as we had not generated any revenues from our previous mineral exploration business. Prior to the acquisition of Storage Alliance Alberta, we had not generated any revenues from our previous mineral exploration business.

Expenses

Total expenses increased to $367,434 for the quarter ended January 31, 2003 compared to $2,749 for the quarter ended January 31, 2002. This increase was a result of the acquisition of Storage Alliance Alberta.

General and administrative expenses were $364,213 for the quarter ended January 31, 2003 compared to $2,749 (presented as discontinued operations) for the quarter ended January 31, 2002. The increase was attributed to increased operational activity, higher insurance premiums and higher wages associated with the addition of the business operations of Storage Alliance Alberta. General and administration expenses are expected to increase in the next year from the level of expense incurred in the year due to the additional operational expenses associated with Storage Alliance Alberta.

Depreciation expense was $3,221 for the quarter ended January 31, 2003 compared to nil for the quarter ended January 31, 2002 due to the depreciation of existing capital equipment in Storage Alliance Alberta. Depreciation and amortization expense is expected to increase in 2003 with the continued depreciation and amortization of existing and new capital purchases for the infrastructure and operations of Storage Alliance Alberta.

Quarter ended January 31, 2003 of Storage Alliance compared to the Quarter Ended January 31, 2002 of Storage Alliance Alberta

The following discussion relates to the operations of Storage Alliance for the quarter ended January 31, 2003 as compared to the operations of Storage Alliance Alberta (the predecessor business) for the quarter ended January 31, 2002. Our net loss for the three months ended January 31, 2003 was $294,244 as compared to $272,053 for the similar period in 2002 of Storage Alliance Alberta.

Revenues

Gross revenues for the three months ended January 31, 2003 were $78,969 compared to $12,868 for the three months ended January 31, 2002. This increase of $66,101 or 513%, was a result of the commercialization of our LinkPort ™ application hosting solution and early adopter International Datashare as well as the pilot project to host Murphy Oil data. Direct costs were $7,400 leaving a gross profit of $71,569 for the quarter ended January 31, 2003 compared to direct costs of $10,632 and a gross profit of $2,236 for the quarter ended January 31, 2002.

Expenses

Total expenses were $367,434 for the quarter ended January 31, 2003 compared to $274,289 for the quarter ended January 31, 2002 an increase of $93,736 or 35%. General and administrative expenses were $364,213 for the quarter ended January 31, 2003 compared to $270,477 for the quarter ended January 31, 2002. The increase was a result of additional accounting and legal costs for regulatory filings associated with the acquisition, some post acquisition closing costs for shareholder disclosure and mailings and investment relations support as well as the additional salary of our Executive Vice-President and Chief Operating Officer. Also included in general administrative expenses is approximately $90,000 pertaining to research and development, a $9,000 increase over the similar period in 2002. A provision for doubtful accounts has been rendered in respect of the uncertainty surrounding an additional $81,833 of accounts receivable in the January 2003 quarter. This uncertainty stems from the current dispute with International Datashare Corporation (see "Part II-Item 1-Legal Proceedings for details regarding the dispute). General and administrative expenses are expected to increase in the next year from the level of expense incurred in the year due to the additional operation expenses associated with Storage Alliance Alberta.

Depreciation expense was $3,221 for the quarter ended January 31, 2003 compared to $3,812 for the quarter ended January 31, 2002. We also earned $1,621 of interest income in the quarter ended January 31, 2003 (2002-$nil) due to proceeds received from private placements in the most recent quarter.

LIQUIDITY AND CAPITAL RESOURCES

Quarter ended January 31, 2003

We have continued to finance our activities primarily through the issuance and sale of our equity securities. We have incurred recurring losses from operations in each year since inception and our current liabilities exceed our current assets. Our net loss for the quarter ended January 31, 2003 was $294,244 and for the year ended October 31, 2002 was $293,945, compared to $272,053 for the quarter ended January 31, 2002 and $73,618 for the year ended October 31, 2001. As of January 31, 2003, we had an accumulated deficit of $666,609 and we had a working capital deficiency of $120,290.

Our cash position at January 31, 2003 was $7,685 and at October 3l, 2002 was $nil. Our net inflow of cash of $7,685 in the three months ended January 31, 2003 primarily related to operating and financing activities. During the three months ended January 31, 2003, we used $356,360 in operating activities, primarily related to our loss for the quarter ended January 31, 2003 of $294,244. Additionally, we reduced our accounts payable and accrued liabilities by $85,319 due to receipt of cash on stock subscriptions following the quarter. Our net loss of $294,244 for the quarter ended January 31, 2003 includes non-cash charges of $3,221 for depreciation and $23,000 in respect of stock option compensation.

Cash provided by financing activities for the three months ended January 31, 2003 was $364,045, primarily consisting of the proceeds of a private placement during the quarter. The private placement was completed in February 2003 and involved the issuance of a total of 623,810 shares at a price of $1.05 per share for a total gross cash proceed of $655,000. The net proceeds will be used for working capital purposes. To preserve cash flow, we use stock options to compensate key employees, directors and consultants. During the quarter ended January 31, 2003, we granted 1,160,000 stock options vesting over varying periods and varying amounts from 12 months (post grant) to three years (post grant). At January 31, 2003 no stock options were exercisable.

Cash used in investing activities for the three months ended January 31, 2003 was nil.

Future Operations

Presently, our revenues are not sufficient to meet operating and capital expenses. We have incurred operating losses since inception, and this is likely to continue during the remainder of fiscal 2003. Management projects that we may require an additional $1.0 to $1.25 million to fund our ongoing operating expenses, working capital requirements for the next twelve months, broken down as follows:

Estimated Funding Required During the Next Twelve Months
Operating expenses
Marketing	$100,000 - $150,000
General and Administrative	$200,000 - $250,000
Engineering research and development	$200,000 - $250,000
Capital Expenditures	$300,000 - $350,000
Working capital	$200,000 - $250,000
Total	$1,000,000 - $1,250,000

As at January 31, 2003, we had a working capital deficiency of $120,290. In January, 2003, we effected an equity private placement of $655,000 which will enable us to address current payables, continue with the support of existing clients and sales and marketing activity connected with the continued rollout of LinkPort™ application hosting. We anticipate that these funds will allow us to continue our planned operations through the quarter ended September 30, 2003. We plan to raise the additional capital required to meet the balance of our estimated funding requirements for the balance of the twelve months, primarily through the private placement of our securities. We do not anticipate that we will be able to satisfy any of these funding requirements internally until we significantly increase our revenues.

Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on the annual consolidated financial statements for the year ended October 31, 2002, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our consolidated financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further financing, successful and sufficient market acceptance of our current service offerings and any new service offerings that we may introduce, the continuing successful development of our service offerings and related technologies, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due.

NEW ACCOUNTING PRONOUNCEMENTS

FIN 46, "Consolidation of Variable Interest Entities", clarifies the application of Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities created prior to January 31, 2003, the provisions of FN 46 are applicable no later than July 1, 2003.

The implementation of this new standard is not expected to have a material effect on our financial statements.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials.

Going Concern

These consolidated financial statements have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, these consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

In order to continue as a going concern, we require additional financing. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to continue as a going concern, we would likely be unable to realize the carrying value of our assets reflected in the balances set out in the preparation of the consolidated financial statements.

Revenue Recognition and Provision for Doubtful Accounts

Revenue from hosting, including non-refundable fees received up front, is recognized as the service is provided. Included in accounts receivable as at January 31, 2003 is $181,833 (October 31, 2002-$106,297) due from a customer for services rendered in connection with hosting. We have filed a lawsuit seeking payment of outstanding amounts at January 31, 2003 to which the customer has counterclaimed. A provision for doubtful debts has been recorded equal to the full amount of the receivable balance due to concerns over full collection given the litigation. Any recovery will be recognized when the proceeds are received. Other receivables are reviewed for collectibility on an account by account basis with any provision set up based on considerations including economic indicators.

Research and Development

Research costs are expensed as incurred. During the three-month period ended January 31, 2003, an estimated $90,000 (2002, Storage Alliance, Alberta, $81,000) was incurred on research and development.

Foreign Exchange

The financial position and results of operations of our subsidiary are determined using local currency (the Canadian dollar) as the functional currency. Assets and liabilities of this subsidiary are translated at the exchange rate in effect at each period end. Statement of operation accounts is translated at the average rate of exchange prevailing during the period. Translation gains and losses are included in the cumulative translation adjustment and other comprehensive income on the consolidated statements. The functional currency is Canadian dollars.

RISK FACTORS

Much of the information included in this quarterly report includes or is based upon estimates, projections or other "forward-looking statements". Such forward-looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Such estimates, projections or other "forward-looking statements" involve various risks and uncertainties as outlined below. We caution readers of this quarterly report that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward-looking statements". In evaluating us, our business and any investment in our business, readers should carefully consider the following factors.

Storage Alliance has had negative cash flows from operations and may not be able to secure additional financing if we need it in the future.

We incurred a loss of $294,244 for the three months ended January 31, 2003 and as at January 31, 2003 we have an accumulated deficit of $666,609. As a result of this lose and negative cash flows from operations, our ability to continue operations will be dependent upon the availability of capital from outside sources unless and until we achieve profitability.

Our future capital requirements will depend on many factors, including cash flow from operations, progress in developing new services, competing knowledge and market developments and an ability to successfully market our services. Our recurring operating losses and growing working capital needs will require us to obtain additional capital to operate our business before we have established that our business will generate significant revenue. We predict that we will require approximately $1,000,000 to $1,250,000 over the next twelve months in order to accomplish our goals. However, there is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that:

• we incur unexpected costs in completing the development of our technology or encounter any unexpected technical or other difficulties;
• we incur delays and additional expenses as a result of technology failure;
• we are unable to create a substantial market for our services; or
• we incur any significant unanticipated expenses.

The occurrence of any of the aforementioned events could adversely affect our ability to meet our business plans.

We will depend almost exclusively on outside capital to pay for the continued development of our technology and the marketing of our services. Such outside capital may include the sale of additional stock and/or commercial borrowing. There can be no assurance that capital will continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business and growth strategies, respond to changing business or economic conditions, withstand adverse operating results, consummate desired acquisitions or compete effectively. If we are unable to raise additional financing when required, then our business operations would be adversely affected.

We have a history of net losses and a lack of established revenues, and as a result, we expect to incur net losses in the future.

We have had a history of losses and expect to continue to incur losses, and may never achieve or maintain profitability. We have incurred losses since we began operations, including a loss of $294,244 for the three months ended January 31, 2003. As of January 31, 2003, we have an accumulated deficit of $666,609. Our ability to achieve profitability in the future will depend upon our ability to expand the Storage Alliance brand awareness and customer base, increase our market presence and enhance and maintain our service offerings. To achieve these goals, we will need to increase spending on marketing, technology, product development and other operating costs. We expect to have net losses and negative cash flow and expect to spend significant amounts of capital to enhance our services and technologies and fund research and development. As a result, we will need to generate significant revenue to break even or achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If we do not achieve and maintain profitability, the market price for our common stock may decline, perhaps substantially.

Although we anticipate that we will be able to generate revenues, we also expect that development costs and operating costs will increase as well. Consequently, we expect to incur operating losses and negative cash flow until our existing services gain sufficient market acceptance to generate a commercially viable and sustainable level of sales, and/or additional services are developed and commercially released and sales of such services made so that we are operating in a profitable manner. These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our independent auditor's opinion with respect to our audited financial statements for the year ended October 31, 2002. To the extent that such expenses are not followed in a timely manner by increased revenues, our business, results of operations, financial condition and prospects would be materially adversely affected.

We may not be able to develop and increase public recognition of our LinkPort™, DataPort™ and PortAge™ trade brands.

Storage Alliance has a limited offering of services which are only producing marginal revenues. Therefore, market acceptance of Storage Alliance's services is critical to Storage Alliance's future success. Factors such as performance, market positioning, the availability and price of competing services, and the introductions of new technologies will affect the market acceptance of Storage Alliance's current and future service offerings.

We believe that establishing and maintaining favorable consumer perception of our branded service offerings is critical to attracting and expanding our petroleum exploration and production customer base. The importance of developing our brand will increase due to the growing number of data storage services available to consumers. To build our brand, we must succeed in our marketing efforts, provide high-quality services, increase the number of visitors to our website and continue to receive high ratings from leading oil and gas industry publications. If we do not accomplish each of these goals, our reputation could be harmed, and we may not be able to attract and retain customers.

Our business operations will be subject to substantial competition and if we are unable to maintain our competitive advantages, then our continuing business operations may be adversely affected.

Our current primary competitors are storage hardware, software and service vendors such as EMC, Compaq, Hitachi Data Systems, Sun Microsystems, Network Appliance, Hewlett-Packard, EMC Software, Legato Systems and VERITAS Software, and other content management entrants to the storage management services market, including Documentum and Interwoven. NetDriven Solutions, also based in Calgary, Alberta, appears to be focussed on the data storage market for the petroleum industry. We estimate that there are numerous companies providing generic storage hardware or software that directly or indirectly compete with our services and we are aware of numerous other start-up companies that have identified themselves as providers of storage services. There are two large service companies, Schlumberger and Halliburton, which offer end to end integrated solutions. Their solutions do not appear to be focussed on content management or on data aggregation. Both have developed and launched software focuss ed on prospect generation for the petroleum exploration and production industry. Two smaller companies which do not appear to have a significant presence in Canada include Upstreaminfo.com and Petris. Both offer software applications and services for the petroleum exploration and production industry.

Many of our existing and potential competitors may have one or more of the following:

• longer operating histories,
• greater name recognition,
• greater management depth and experience,
• larger customer bases,
• greater financial, technical and marketing resources, and
• a wider range of services and products.

As a result, these competitors may be able to adopt more aggressive pricing policies, respond more quickly to new technologies, industry standards and customer demands, undertake more extensive marketing campaigns, expand globally more quickly and make more attractive offers to potential employees and content providers.

The data storage industry is characterized by rapid changes in technology and customer demands. As a result, our current services could quickly become obsolete and unmarketable. Our future success will depend on our ability to adapt to technological advances, anticipate customer demands, develop new services and enhance our current services on a timely and cost-effective basis. Further, our services must remain competitive with those of other companies with substantially greater resources.

We are subject to economic and political risk and such risks may affect our ability to generate revenues and operate profitably.

The storage services business may be sensitive to any general downturn in the overall economy. Substantial adverse or ongoing economic, currency, government or political conditions in various world markets, and specifically the oil and gas market, may have a negative impact on Storage Alliance's ability to generate revenues and eventually operate profitably. Furthermore, the markets for storage services are highly competitive as noted above.

Our operations may be disrupted by technological problems which may affect our ability to provide our services and keep our customers satisfied.

The computer servers through which we provide our data storage, backup and recovery services are housed at the offices of a third party telecommunications company. If the systems of this third party slows down significantly or fail even for a short time, our customers would suffer delays to their data access. These delays could damage our reputation, cause customers to close their accounts with us and cause customers to incur substantial losses. We could be subject to claims or litigation with respect to these losses. Our property and business interruption insurance may not adequately compensate us for all losses we may incur.

These computer systems could also be overwhelmed or could fail for any number of reasons. We offer and perform bulk of our services through the Internet. Heavy usage volumes of the Internet or our particular services could cause significant backlogs or could cause these systems to fail. We may not be able to expand and upgrade the technology and network hardware and software to accommodate increased usage by our customers on a timely basis. Also, the systems of the third parties on which we depend, may not operate properly in the event of:

• a hardware or software error, failure or crash,
• a power or telecommunications failure,
• human error, or
• a fire, flood or other natural disaster.

These systems may be more likely to suffer problems while such third parties implement upgrades to their network hardware and software. Additionally, our computer systems, and those of the third parties on which we depend, may be vulnerable to damage or interruption due to sabotage, computer viruses or other criminal activities or security breaches.

Our current services may become obsolete and unmarketable if we are not able to respond adequately to rapidly changing technology and customer demands.

Our industry is characterized by rapid changes in technology and customer demands. As a result, our current services may quickly become obsolete and unmarketable. Our future success will depend on our ability to adapt to technological advances, anticipate customer demands, develop new services and enhance our current services on a timely and cost-effective basis. Further, our services must remain competitive with those of other companies with substantially greater resources. We may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new services or enhanced versions of existing services. Also, we may not be able to adapt new or enhanced services to emerging industry standards, and our new services may not be favorably received.

We could be subject to legal claims and our business could be harmed if there are breaches of our security or misappropriation of our customers' information.

The computer systems through which we provide our data storage, backup and recovery services may be vulnerable to physical or electronic computer break-ins, viruses and similar disruptive problems. A person who is able to circumvent such security measures could misappropriate proprietary information or cause interruptions in our operations. If a person is able to penetrate such network security or misappropriate our customers' information, we could be liable for the misuse of such information. We could also be subject to claims for other misuses of information, such as for unauthorized marketing purposes. Any security breach or misappropriation of customer information could damage our reputation and materially adversely affect our business, financial condition and operating results. General concerns over the security of Internet transactions and the privacy of users could also inhibit the use of the Internet as a means of conducting commercial transactions.

We could lose our competitive advantages if we are not able to protect any proprietary technology and intellectual property rights against infringement, and any related litigation could be time-consuming and costly.

Our success and ability to compete depend to a significant degree on proprietary technology that we use for the provision of our data storage backup and recovery services . If any of our competitors copies or otherwise gains access to the proprietary technology or develops similar technology independently, we would not be able to compete as effectively. We also consider our service marks, particularly our family of trademarks, invaluable to our ability to continue to develop and maintain the goodwill and recognition associated with our brand. The measures we take to protect the proprietary technology and other intellectual property rights, which presently are based upon a combination of copyright, trade secret and trademark laws, may not be adequate to prevent their unauthorized use. Further, the laws of foreign countries may provide inadequate protection of such intellectual property rights. We may need to bring legal claims to enforce or protect such intellectual property rights. Any lit igation, whether successful or unsuccessful, could result in substantial costs and diversions of resources. In addition, notwithstanding the rights we have secured in our intellectual property, other persons may bring claims against us that we have infringed on their intellectual property rights, including claims based upon the content we license from third parties or claims that our intellectual property right interests are not valid. Any claims against us, with or without merit, could be time consuming and costly to defend or litigate, divert our attention and resources, result in the loss of goodwill associated with our service marks or require us to make changes to our websites or other of our technologies.

Employee misconduct could harm us and is difficult to detect and deter.

Our employees could make improper use of confidential customer information, which could result in regulatory sanctions and harm to our reputation. The precautions we take to prevent and detect employee misconduct may not effectively deter these activities. If we do not prevent or detect these activities, we may incur losses that we are not able to recover.

If the use of the Internet does not continue to grow or its growth cannot be supported by its infrastructure, the growth in usage of our online services could be impaired.

Our market is new and rapidly evolving. Since we provide the bulk of our service offerings through the Internet, business will be adversely affected if Internet usage does not continue to grow. Use of the Internet may be inhibited by a number of factors, including:

• inadequate network infrastructure,
• security concerns,
• inconsistent quality of services, and
• lack of cost-effective, high-speed service.

If Internet usage continues to grow, the Internet infrastructure may be unable to support the demands placed on it by this growth. The Internet's performance and reliability may decline. In addition, websites have experienced interruptions as a result of outages and other delays occurring throughout the Internet infrastructure. If these outages or delays frequently occur in the future, Internet usage, as well as usage of our services through the Internet, could grow more slowly or decline.

If we are unable to protect our Internet domain name, our efforts to increase public recognition of our brand may be impaired.

We currently hold the Internet domain name "storagealliance.com" and various other related names. The acquisition and maintenance of domain names generally is regulated by governmental agencies and their designees. The regulation of domain names in the United States and in foreign countries is subject to change. As a result, we may be unable to acquire or maintain relevant domain names in all countries in which we intend to conduct business. This could impair our efforts to build brand recognition and to increase traffic to our websites. Furthermore, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. Therefore, we may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our trademarks and other proprietary rights.

If we fail to effectively manage our growth our future business results could be harmed and our managerial and operational resources may be strained.

As we proceed with the development of our technology and expand our offering services, we expect to experience significant and rapid growth in the scope and complexity of our business. We will need to add staff to market our services, manage operations, handle sales and marketing efforts and perform finance and accounting functions. We will be required to hire a broad range of additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our potential business, or the failure to manage growth effectively, could have a materially adverse effect on our business and financial condition.

Unless we can establish significant sales of our current services, our potential revenues may be significantly reduced.

We expect that a substantial portion, if not all, of our future revenue will be derived from the sale of our data storage and backup services, our web hosting services and our professional consulting services. We expect that these service offerings and their extensions and derivatives will account for a majority, if not all, of our revenue for the foreseeable future. Broad market acceptance of this system is, therefore, critical to our future success and our ability to generate revenues. Failure to achieve broad market acceptance of this system, as a result of competition, technological change, or otherwise, would significantly harm our business. Our future financial performance will depend primarily on the successful introduction and market acceptance of our current service offerings, and on the development, introduction and market acceptance of any future enhancements. There can be no assurance that we will be successful in marketing our current service offerings or any new service o fferings, applications or enhancements, and any failure to do so would significantly harm our business.

Our ability to forecast our quarterly results is limited.

Our ability to accurately forecast our quarterly sales is limited, as a result of which, our quarterly operating results may fluctuate significantly. We expect that our results will vary significantly from quarter to quarter in the future. These quarterly variations may be caused by a number of factors, including:

• delays in customer orders of our data storage software;
• timing of completion of project phases;
• our ability to develop, introduce and support new and enhanced services in a timely manner in response to changing technology trends, as well as our ability to manage service transitions; and
• the amount and timing of increases in expenses associated with our growth.

Due to these and other factors, and because the market for data storage software is new and evolving, our ability to accurately forecast our quarterly sales is limited. In addition, in the near future, most of our costs will be related to personnel, facilities, and research and development, which are relatively fixed in the short term. If we do not generate significant revenue in relation to our expenses, we may be unable to reduce our expenses quickly enough to avoid lower quarterly operating results. We do not know whether our business will grow rapidly enough to absorb the costs of our future employees and facilities. As a result, our quarterly operating results could fluctuate and this fluctuation could adversely affect the market price of our common stock in the future.

Loss of services of key employees.

As at January 31, 2003, our key personnel included Jeff Ascah (President, Chief Executive Officer), Ken Akerley (VP Business Development), Ed Kokts-Porietis (Chief Technology Officer), Ken MacKinnon (Chief Architect), Fred Moore (Director of the Strategic Advisory Board) and Robert (Bob) J. Irwin (Executive Vice President and Chief Operating Officer). The loss of the services of Mr. Ascah or the other key employees, or the services of any future key employees for any reason may have a materially adverse effect on our prospects. There can be no assurance that we would be able to find a suitable replacement in the event that the services of any of these key employees, or of a future key employee, is lost. Furthermore, we do not presently maintain "key man" life insurance on the lives of our key personnel. We rely upon the continued service and performance of a relatively small number of key senior management personnel, and our future success depends on our retention of these key employee s whose knowledge of our business and technical expertise would be difficult to replace. At this time, none of our key personnel are bound by employment agreements, and as a result, any of these employees could leave with little or no prior notice. If we lose any of our key personnel, our business may be adversely affected.

If we are unable to hire and retain technical, sales and marketing and operational personnel, our business could be materially adversely affected. We intend to hire a significant number of additional personnel, including software engineers, sales and marketing personnel and operational personnel in the future. Competition for these individuals is intense, and we may not be able to attract, assimilate, or retain additional highly qualified personnel in the future. The failure to attract, integrate, motivate and retain these employees could harm our business.

Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.

The U.S. Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in t he penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for t he stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.

If the market price of our common stock fluctuates widely, you may not be able to sell your shares at or above the price at which you purchase them and, therefore, you may suffer a loss on your investment.

We believe the following factors could cause the market price of our common stock to fluctuate widely and could cause our common stock to trade at a price below the price at which you purchase your shares:

• actual or anticipated variations in our quarterly operating results,
• announcements of new services, products, acquisitions or strategic relationships by us or our competitors,
• announcements of system slowdowns or failures by us or our competitors,
• new regulations or interpretations of regulations applicable to our data storage activities,
• trends or conditions in the Internet industry,
• changes in accounting treatments or principles,
• changes in earnings estimates by securities analysts and in analyst recommendations,
• changes in market valuations of other data storage companies, and
• general political, economic and market conditions.

The market price for our common stock may also be affected by our ability to meet or exceed expectations of analysts or investors. Any failure to meet these expectations, even if minor, could materially adversely affect the market price of our common stock. In addition, the market prices of equity securities of technology and Internet companies often fluctuate significantly for reasons unrelated to the operating performance of these companies. In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been instituted against that company. If any securities litigation is initiated against us, we could incur substantial costs and our management's attention and resources could be diverted from our business.

If plans to phase-out the OTC Bulletin Board are implemented, we may not qualify for listing on the proposed Bulletin Board Exchange or any other marketplace, in which event investors may have difficulty buying and selling our securities.

We understand that in 2003, subject to approval of the Securities and Exchange Commission, the NASDAQ Stock Market intends to phase-out the OTC Bulletin Board, and replace it with the "Bulletin Board Exchange" or "BBX". As proposed, the BBX will include an electronic trading system to allow order negotiation and automatic execution. The NASDAQ Stock Market has indicated its belief that the BBX will bring increased speed and reliability to trade execution, as well as improve the overall transparency of the marketplace. Specific criteria for listing on the BBX have not yet been finalized, and the BBX may provide for listing criteria which we do not meet. If the OTC Bulletin Board is phased-out and we do not meet the criteria established by the BBX, there may be no market on which our securities may be included. In that event, shareholders may have difficulty reselling any of the shares they own.

Item 3. Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to the filing date of this quarterly report, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company's management, including our company's president. Based upon that evaluation, our company's president a concluded that our company's disclosure controls and procedures are effective. There have been no significant changes in our company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried our evaluation.

Part II - OTHER INFORMATION

Item 1. Legal Proceedings.

Other than as set forth below, we know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

On February 5, 2003, we commenced a lawsuit in the Alberta Court of Queen's Bench, Judicial District of Calgary, against International Datashare Corporation seeking payment for services rendered to International Datashare pursuant to a LinkPort Application Hosting Services Agreement, dated May 1, 2002. We have claimed $159,000 (CDN$246,455) plus interest and costs. On February 27, 2003, International Datashare filed a statement of defence and a counterclaim. The counterclaim alleges that we engaged in a civil conspiracy with a former employee and director of International Datashare, Todd Chuckry, in connection with the LinkPort Application Hosting Services Agreement. International Datashare alleges that we and Todd Chuckry conspired to propose terms for the agreement which were far more beneficial to us than if we had negotiated with any other representative of International Datashare. International Datashare also alleges that Todd Chuckry was not authorized to enter into the agreement and that the terms of the agreement would have not been accepted by International Datashare. In the alternative, International Datashare alleges that we fundamentally breached the agreement by failing to make International Datashare's software available to its customers and by failing to perform the other terms of the agreement. In addition, International Datashare alleges that it provided us with computer equipment and software valued at CDN$20,000 and data logs valued at a minimum of CDN$5,000,000 which we have never paid for or returned. International Datashare alleges that it has suffered damages and loss of reputation and goodwill as a result of the alleged conspiracy or, in the alternative, our failure to perform the terms of the agreement in an amount of not less than CDN$750,000. International Datashare alleges that it has suffered damages of not less than CDN$6,000,000 and is seeking damages of CDN$6,000,000 and an order that the computer equipment and software and the data logs be returned or that we pay them CDN$5,000,000 in lieu of returning such items. International Datashare is also seeking interest, costs and punitive damages.

On March 10, 2003, we filed a statement of defence to counterclaim alleging that the counterclaim is without merit, frivolous and vexatious and constitutes an abuse of the court process.

Management of our company believes that all of International Datashare's allegations are without merit, frivolous and vexatious and constitute an abuse of the court process. We are currently considering bringing a court application to have International Datashare's counterclaim struck as a frivolous and vexatious abuse of process.

Item 2. Changes in Securities.

Recent Sales of Unregistered Securities

On November 13, 2002, we issued 705,000 options to one director and three senior officers of our company. The options are exercisable at $0.40 per share and vest as to 235,000 on September 20, 2003, 235,000 on September 20, 2004 and 235,000 on September 20, 2005. The options expire on September 20, 2006. The options were issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

In connection with the share exchange transaction with Storage Alliance Inc., DKJ Technologies Inc. and the shareholders of DKJ Technologies Inc., we issued 2,500,000 shares of our common stock to 28 individuals in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933. As part of the acquisition, we sold an aggregate of 470,000 shares of our common stock at $0.50 per share for gross proceeds of $235,000 relying on Regulation S and/or Section 4(2) of the Securities Act of 1933. The 470,000 common shares were issued in March 2003.

On January 6, 2003 we issued 50,000 options to an individual on our advisory board. The options are exercisable at $0.50 per share and vest on January 6, 2004. The options expire on January 6, 2006. We issued the options relying on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933.

On January 6, 2003 we issued 405,000 options to one of our senior officers. The options are exercisable at $0.50 for the first 135,000 options exercised, $1.00 for the next 135,000 options exercised and $1.50 for the final 135,000 options. The options vest as to 135,000 on January 6, 2004, 135,000 on January 6, 2005 and 135,000 on January 6, 2006. The options expire on January 6, 2007. The options were issued in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On January 29, 2003, we effected an equity private placement whereby we issued 623,810 shares to two entities at a price of $1.05 per share. The shares were issued in an offshore transaction pursuant to Regulation S and/or Section 4(2) of the Securities Act of 1933. The shares were issued in February 2003.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits and Reports on Form 8-K.

Reports of Form 8-K

On November 20, 2002 we filed an amended Form 8-K Current Report which reported on our acquisition of all of the common shares of Storage Alliance, Inc.

Exhibits Required by Item 601 of Regulation S-B.

Exhibit Number/Description

(2) Plan of Acquisition

** Exhibits 2.1 through 2.2 are incorporated by reference from our Form 10-QSB filed on September 16, 2002

2.1 Agreement and Plan of Share Exchange between Cascadia Capital Corporation, DKJ Technologies Inc., and Storage Alliance Inc. and Ed Kokts-Porietis, Jeff Ascah, Louise Ascah, Ken MacKinnon, 2 Inc. and Raymark Investment Corp. Inc. dated August 9, 2002.

2.2 Letter Agreement between Cascadia Capital Corporation, DKJ Technologies Inc. and Storage Alliance Inc. dated September 6, 2002.

(3) Articles of Incorporation

**Exhibits 3.1 through 3.2 are incorporated by reference from our SB-2 filed on May 23, 2001.

3.1 Articles of Incorporation

3.2 Bylaws

3.3 Certificate of Amendment to Articles of Incorporation amending the name from Cascadia Capital Corporation to Storage Alliance Inc.

(10) Material Contracts

**Exhibits 10.1 through 10.2 are incorporated by reference from our Form 8-K, filed on October 3, 2002. Exhibits 10.3 through 10.4 are incorporated by reference from our Form 10-KSB filed on February 19, 2003.

10.1 Letter Agreement dated April 29, 2002 between International Datashare Corporation and Storage Alliance Inc.

10.2 LinkPort Application Hosting Services Agreement dated May 1, 2002 between International Datashare Corporation and Storage Alliance Inc.

10.3 LinkPort Application Hosting Services Agreement, dated January 6, 2003, between Murphy Oil Company Ltd. and Storage Alliance Inc.

10.4 LinkPort Application Hosting Services Agreement, dated January 6, 2003, between Racing Resources Ltd. and Storage Alliance Inc.

21. Subsidiaries of Storage Alliance, Inc.

Storage Alliance Inc. (Alberta corporation).

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.

STORAGE ALLIANCE, INC.

By:/s/ Jeff Ascah
Jeff Ascah, President, Treasurer, Secretary and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
Date: March 24, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:/s/ Jeff Ascah
Jeff Ascah, President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
Date: March 24, 2003

CERTIFICATION

I, Jeff Ascah, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Storage Alliance, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to date 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 are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the registrant's disclosure controls and procedures and internal controls and procedures for financial reporting as of the end of the period covered by this report (the "Evaluation Date"); and

(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the small business issuer's auditors and the audit committee of small business issuer'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 small business issuer'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 procedures for financial reporting; and

6. 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: March 24, 2003

/S/ Jeff Ascah
Signature:  Jeff Ascah
Title:   President and Chief Executive Officer (Principal Executive Officer and Principal Accounting Officer)