3W Cyber Logistics 10QSB 2005 Q3 Quarterly report (small business)

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  May 31, 2005
[	]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _________ to __________

	Commission file number  000-32525
3W Cyber Logistics, Inc.
(Exact name of small business issuer as specified in its charter)

Nevada	88-0409155
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1208-808 Nelson Street Vancouver, British Columbia, Canada

(Address of principal executive offices)

(604) 683-8018

(Issuer’s telephone number)

n/a

(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 [ ]

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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.     Yes x     No o

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:

8,000,000 common shares issued and outstanding as at April 1, 2004

Transitional Small Business Disclosure Format (Check one):    Yes o   No x

PART I

Item 1. Financial Statements

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

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3W CYBER LOGISTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

AS OF MAY 31, 2005

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3W CYBER LOGISTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

CONTENTS

PAGE	1	BALANCE SHEETS AS OF MAY 31, 2005 (UNAUDITED) AND AUGUST 31, 2004
PAGE	2	STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED MAY 31, 2005 AND 2004 AND FOR THE PERIOD FROM APRIL 10, 1995 (INCEPTION) TO MAY 31, 2005 (UNAUDITED)
PAGE	3	STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MAY 31, 2005 AND 2004 AND FOR THE PERIOD FROM APRIL 10, 1995 (INCEPTION) TO MAY 31, 2005 (UNAUDITED)
PAGES	4 - 5	NOTES TO FINANCIAL STATEMENTS AS OF MAY 31, 2005 (UNAUDITED)

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3W CYBER LOGISTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

ASSETS
		May 31, 2005 (Unaudited)		August 31, 2004
CURRENT ASSETS
Cash	$	8,051	$	18,194
Accounts receivable, net		19,665		2,060
Total Current Assets		27,716		20,254
PROPERTY AND EQUIPMENT, NET		697		887
TOTAL ASSETS	$	28,413	$	21,141
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	81,925	$	56,222
Accrued officer compensation		50,000		50,000
Deferred revenue		15,000		15,000
Loan payable – stockholder		414,740		365,343
Total Liabilities		561,665		486,565
STOCKHOLDERS’ DEFICIENCY
Common stock, $.001 par value, 100,000,000 shares authorized, 8,000,000 shares issued and outstanding		8,000		8,000
Additional paid in capital		26,325		26,325
Accumulated deficit during development stage		(567,577)		(499,749)
Total Stockholders’ Deficiency		(533,252)		(465,424)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY	$	28,413	$	21,141

See accompanying notes to financial statements

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3W CYBER LOGISTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

(UNAUDITED)

		For The Three Months Ended May 31, 2005		For The Three Months Ended May 31, 2004		For The Nine Months Ended May 31, 2005		For The Nine Months Ended May 31, 2004		For The Period From April 10, 1995 (Inception) To May 31, 2005
REVENUE	$	6,060	$	7,915	$	19,665	$	7,915	$	31,260
OPERATING EXPENSES
Office compensation	$	-	$	-	$	-	$	-		50,000
Software development		15,336		13,500		37,836		40,500	$	164,836
Depreciation expense		63		63		190		8,648		106,297
Professional fees		3,346		2,934		12,952		11,955		126,859
Other general and administrative		1,626		6,218		13,727		17,872		83,858
Total Operating Expenses		20,369		22,715		64,702		78,975		531,877
LOSS FROM OPERATIONS		(14,311)		(14,800)		(45,040)		(71,060)		(500,617)
OTHER INCOME
Interest expense		(7,645)		(6,921)		(22,908)		(19,355)		(68,412)
Interest income		44		-		120		-		1,452
Total Other Income		(7,601)		(6,921)		(22,788)		(19,355)		(66,960)
NET LOSS	$	(21,912)	$	(21,721)	$	(67,828)	$	(90,415)	$	(567,577)
NET LOSS PER SHARE - BASIC AND DILUTED	$	-	$	-	$	-	$	-	$	(0.08)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		8,000,000		8,000,000		8,000,000		8,000,000		6,820,891

See accompanying notes to financial statements

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3W CYBER LOGISTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

(UNAUDITED)

		For The Nine Months Ended May 31, 2005		For The Nine Months Ended May 31, 2004		For The Period From April 10, 1995 (Inception) To May 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(67,828)	$	(90,415)	$	(567,577)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		190		8,648		106,297
In-kind contribution of services		-		3,750		10,000
Changes in operating assets and liabilities: (Increase) in prepaid expenses		-		2,000		-
Increase in accounts payable and accrued expense		25,703		18,469		81,925
Increase in accounts receivable		(17,605)		(7,915)		(19,665)
Increase in officer compensation		-		-		50,000
Increase in deferred revenue		-		-		15,000
Net Cash Used In Operating Activities		(59,540)		(65,463)		(324,020)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		-		-		(1,268)
Net Cash Used In Investing Activities		-		-		(1,268)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan payable - stockholder		49,397		70,257		309,014
Proceeds from issuance of common stock		-		-		24,325
Net Cash Provided By Financing Activities		49,397		70,257		333,339
NET INCREASE (DECREASE) IN CASH		(10,143)		4,794		8,051
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		18,194		3,785		-
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	8,051	$	8,579	$	8,051

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:

During 2000, the Company acquired equipment totalling $105,726 which was paid for directly by a shareholder.

See accompanying notes to financial statements

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3W CYBER LOGISTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

AS AT MAY 31, 2005

(UNAUDITED)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

(A) Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles and the rules and regulations of the Securities and Exchange Commission for the interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position and results of operations.

It is management’s opinion, however, that all adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

For further information, refer to the financial statements and footnotes included in the Company’s Form 10-KSB for the year ended August 31, 2004.

(B) Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

(C) Loss Per Share

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by Financial Accounting Standards No. 128, “Earnings Per Share.” As of May 31, 2005 and May 31, 2004, there were no common share equivalents outstanding.

NOTE 2 LOAN PAYABLE - STOCKHOLDER

During the three months ended May 31, 2005 a stockholder of the Company paid $16,940 of operating expenses on behalf of the Company. The total loan of $414,740 bears interest at 8%, is payable on demand and unsecured (See Note 3).

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3W CYBER LOGISTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

AS AT MAY 31, 2005

(UNAUDITED)

NOTE 3 RELATED PARTIES

During the three months ended May 31, 2005, a stockholder paid $16,940 of operating expenses on behalf of the Company (See Note 2).

NOTE 4 STOCKHOLDERS’ EQUITY

During 2001 the Company issued 2,000,000 common shares for cash of $24,225.

During 2001 the Company amended its Articles of Incorporation to increase the authorized capital stock to 100,000,000 shares with a par value of $.001.

During 1995 the Company issued 100 (6,000,000 post recapitalization) common shares to founders for $100 of expenses paid on behalf of the Company by stockholders.

During 2003 and 2002 the Company recorded additional paid-in capital of $5,000 and $5,000, respectively for the fair value of services contributed to the Company by a consultant.

NOTE 5 GOING CONCERN

As reflected in the accompanying financial statements, the Company has incurred accumulated losses from operations from inception of $567,577, has an accumulated negative cash flow from operations from inception of $324,020, a working capital deficiency of $533,949, and a stockholders’ deficiency of $533,252 that raise substantial doubt about its ability to continue as a going concern. In the forth quarter of 2004, Hua Feng Logistics Group (HK) has started to use 3W in both air and ocean logistics systems as their complete operating solution.

The ability of the company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

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Item2. 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 financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “CDN$” 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 “3W Cyber” mean 3W Cyber Logistics Inc., unless otherwise indicated.

General

We were incorporated under the laws of the State of Nevada on September 24, 1996, under the name M+T Nursing Services. On September 29, 1999, we changed our name to 3W Cyber Logistics, Inc. By resolution of our shareholders and our board of directors, we effected a forward split on a 100:1 basis for all shareholders of record on September 29, 1999. Prior to the forward split, we had 20,000 shares issued and outstanding. After the forward split, we had 2,000,000 shares issued and outstanding. On June 15, 2000, we filed a Certificate of Amendment of Articles of Incorporation (which we subsequently corrected by filing a Certificate of Correction on January 23, 2001), increasing our authorized capital stock from 25,000 shares to 100,000,000 shares, and increasing the then issued and outstanding shares from 20,000 to 2,000,000.

Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.

Our Current Business

On July 11, 2000, we began operations as a software development company specializing in the development of an internet-based cargo logistics system. Our target market is primarily the freight forwarding industry. In an attempt to resolve the logistics problems presently encountered by freight forwarding companies and logistics companies, we continue to develop our internet-based cargo logistics system. Our cargo logistics system enables each of the entities involved in the shipping process to access a common, centralized database and to utilize a standardized user interface when entering, tracking or receiving shipments. Our cargo logistics system utilizes a centralized database that is accessible through the internet on our website at “www.3wcyberlogistics.com”. This centralized database architecture enables remote users to access real time information from any location in the world. Users access the database through cargo logistics “modules” using a personal computer or mobile device with an internet browser and internet connection. Security is provided through a combination of secure connections and password protected user accounts.

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Industry Description: Traditional Freight Forwarding Systems

Freight forwarding companies and logistics operators typically utilize between 15 and 20 agents, affiliates and associate companies worldwide to conduct their daily business. The nature of the freight forwarding industry dictates that each individual shipment may be handled numerous times, by many different organizations, prior to reaching its final destination. For each cargo transaction, a minimum of five entities are involved:

1.	the customer in the shipping country;
2.	the forwarder in the shipping country;
3.	the carrier between the shipping country and the destination country;
4.	the forwarder in the destination country; and
5.	the customer in the destination country.

Presently, each of these five entities typically utilizes an independent processing and tracking system, making the shipment difficult to track on an ongoing, real time basis. In addition, the typical freight forwarding process presently produces large volumes of paperwork, leading to increased costs and the possibility of human error, and generally slowing the dissemination of information.

The Cargo Logistics System

In an attempt to resolve the logistics problems presently encountered by freight forwarding companies and logistics companies, we are continuing the development of our internet-based cargo logistics system. Our cargo logistics system enables each of the entities involved in the shipping process to access a common, centralized database and to utilize a standardized user interface when entering, tracking or receiving shipments. Our cargo logistics system utilizes a centralized database that is accessible through the internet on our website at “www.3wcyberlogistics.com”. This centralized database architecture enables remote users to access real time information from any location in the world. Users access the database through cargo logistics “modules” using a personal computer or mobile device with an internet browser and internet connection. Security is provided through a combination of secure connections and password protected user accounts.

All administration modules in our AirLogistics system have been completed. From the feedback received from the testing users, we added a new module, client accounts, to the OceanLogistics system. This allows forwarder clients to perform certain business such as booking and tracking through the internet.

The AirLogistics system maintained over one thousand transactions per day during our testing. XML reports have been implemented and deployed for different offices in WICE Logistics Inc. Reports which indicate user privileges have been generated for an internal audit by WICE Logistics Inc. The Air Ocean Group, a publicly listed company on the Singapore Stock Exchange and with logistics networks covering Asian countries like Singapore, Malaysia, Indonesia and China, has expressed interest in our AirLogistics system. The Air Ocean Group is in the process of evaluating the software and we have set up demonstration accounts for their evaluation. We are currently working on an updated version of our AirLogistics system to incorporate certain modifications requested by the Air Ocean Group. We anticipate that they will test the new version of our AirLogistics system upon release.

We do continuously provide high quality support to the testing users in Hong Kong. In fact, Wice Freight Services (Hong Kong) Ltd. has been testing our AirLogistics system since 2002 for day-to-day operations and has now fully adopted our system for their day-to-day operations and has been paying us fees since March of 2004. Our OceanLogistics system is in the final stages of implementation with Wice Marine Services (Hong Kong). We have been providing on-site user training and user interface and reporting modifications since early October 2004. Wice Marine Services started to use our OceanLogistics system for their daily production transactions as of the last quarter in 2004.

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In the fourth quarter 2004, both Wice Marine Services (Hong Kong) and Hua Feng Logistics Group (Hong Kong) had used both of the AirLogistics and OceanLogistics systems as their comprehensive logistics system for daily operations. In the first quarter of 2005, the OceanLogistics system had totally replaced the existing logistics system of Wice Marine Services and acted as their only operations system.

In May 2005, AOE Freight (HK) Ltd. began implementing both our AirLogistics and OceanLogistics systems on a test basis. We expect that both systems will be used on a test basis starting in June 2005.

Ocean “Loose Container Load Planning/Checklist” and “Loose Container Load Plan List” modules are the latest developed modules in OceanLogistics system in the first quarter of 2005. The usage of both modules has enhanced the operation procedure and provides a more flexible real time online booking checklist and planning arrangement.

Our logistics systems integrate with two common accounting software packages, FlexSystem and Accpac. With our communications module, our systems will automatically transfer accounting data with related shipment and debtor information to these accounting software packages on a daily basis. The integration system was released in January, 2005 and operates both our AirLogistics and OceanLogistics systems currently. This system would also provide both daily and monthly accounting information checklists for verifying the data transmission.

In order to provide more capacity and better performance for more logistics transactions, in March 2005, we completed the migration of our AirLogistics and OceanLogistics systems into the new IBM WebSphere server environment. We also released a major upgrade as a result of this migration to take advantage of the features offered by IBM WebSphere. This new version was released in March 2005. The new version of our AirLogistics system provides more administrative control to freight company management, which includes customizable control in HAWB and invoicing generation, customer profile with alerting control and some read-only modules privilege. We are also continuing to improve the automation, document generation and integration features of our logistics software.

A new version of the AirLogistics system was released in the first quarter of 2005, with the newly implemented modules including master airway bill inventory control, and “super-job” level for accounting modules to allocate common cost within master airway bills. We also introduced the “true cost” comparison against “P/L” accounting analysis which could provide us with more background data to develop more advanced analysis like revenue analysis in the future. We anticipate that both Wice Air Freight (Hong Kong) and Hua Feng Logistics Group (Hong Kong) will upgrade to the new AirLogistics system in April 2005.

UBI Logistics is a logistics network in China with 23 offices in major ports of China. Hua Feng Logistics Group also has 10 offices in China’s major ports. We would expect to focus on the implementation of our logistics systems into operations in China. However, China has different customs regulations and clearance requirements, therefore we expect to have to develop need for our logistics systems before they can be used for the China market.

In 2005, Fortune Fame Logistics (Hong Kong) approached us to develop an online warehouse logistics system. We will start the interview and analysis of their warehouse operation procedures in the second quarter of 2005, but as this new system would involve a new interface for customer login and warehouse modules in a new concept, we would expect it to take approximately three to six months for developing a prototype for testing.

Freight forwarders in both the shipping and receiving countries access the same centralized database and therefore have access to the same real time information. Our cargo logistics system is also capable of providing and processing all cargo handling documentation and allowing the shipper, the receiver and all other related parties to track the shipment, provided that they have an enabled user account and password. Our cargo logistics system is modeled on air/ocean cargo shipping and tracking procedures and will provide the following advantages to its users:

-Decreased usage costs: the cost to each customer will be limited to the number of modules of our cargo logistics system used by that customer;

-Decreased software costs: the user will not be required to pay for software upgrades or monthly system maintenance fees;

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-Elimination of “networking” and “data center” costs: the customer’s personal computer will not need to be internally networked in order to run our cargo logistics system, nor will the customer have to maintain a costly and complex data center, as our cargo logistics system will serve as the corporate data center;

-Elimination of the need for extensive software training: our cargo logistics system is designed using the latest graphical user interface technology and is designed to be both intuitive and user friendly;

-Increased capacity: our cargo logistics system will contain information to provide answers to the questions most frequently asked by companies in the freight forwarding industry. Using our cargo logistics system, companies will be able to access relevant information without contacting a customer service representative, which will effectively increase the capacity and efficiency of any organization using our cargo logistics system;

-Reduced operating costs: our cargo logistics system will reduce operating costs through the elimination of document handling procedures and a corresponding reduction in the amount of time required in managing the documentation process; and

-Improved customer service: our cargo logistics system will assist its users in providing superior customer service to their clients by enabling users to provide prompt and accurate responses to customer queries.

Marketing

We intend on marketing our cargo logistics system to corporations operating in the freight forwarding and cargo industries. We are currently developing a sales and marketing program outlining four phases of operation. We intend to offer our primary services, which are services that we have determined to be essential to the daily operations of commercial logistics operators. We will charge for the primary services that we offer to such logistics operators. We also intend to offer complimentary services which are not essential to the daily operations of commercial logistics operators but which will add value to users of our website, thus encouraging such operators to visit our website. We will offer these complimentary services at no charge with the aim of establishing our cargo logistics system as the industry standard for logistics information. Descriptions and examples of each of these service offerings are described below.

The first phase will involve the distribution to an initial corporate user group. The second phase will involve rapid development of our corporate base clients through a process of network marketing. The third phase will involve expanding our corporate base clients by using marketing methods such as trade shows and targeted advertising. These first three phases focus on the implementation, deployment and sale of our primary services. The fourth phase will involve the introduction of our complimentary services.

We intend to adopt the following strategies with respect to the direct marketing of our cargo logistics software:

-advertising in international shipping and trade magazines such as Pacific Shipper and Shipping Gazette, and offering in each advertisement a 60 day free trial membership;

-promoting our software at road shows by conducting seminars in major cities and ports, and by demonstrating our software to freight forwarders, customs brokers and cargo carriers at their place of business;

-creating incentives for existing members (including usage fee discounts, commission or bonus point accumulation) based on the number of referrals they make, with the hope of inducing new memberships; and

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-promoting our software through strategic relationships within the freight forwarding industry, including airlines, ocean carriers and distribution warehouses, pursuant to which relationships we may agree to posting a link to one another’s websites or interfacing cargo information and tracking.

Our Project Manager will head our sales and marketing group under the supervision of our President during Phase One. We intend to hire a second person to assist our Project Manager during Phase Two, which is currently dependent on raising additional financing to carry out our business plans.

We intend to utilize the following pricing strategy at least through Phase One of the implementation of our cargo logistics software:

-one time membership set up fee of $500.00 including 5 hours basic training and 3 hours report customization;

-system transaction fee from $5.00 per export/import transaction with minimum $200 per month including 180 days of data storage and 10% current transaction charge for each additional year active online storage;

-monthly customization service fees of $500 including administration, email/phone help desk, and 7 hours onsite support with additional support available at $70 per hour; and

-program modification, customization on system module/reporting/integration fee of $100 per hour.

We anticipate that our services will be utilized in numerous international markets. In order to facilitate this complex process, we will concentrate on particular markets in a sequential fashion. This will allow us to successfully implement the standards and the practices of a particular country and to align these standards with existing universal standards and the practices of the United States. When developing the software for a particular market, we will consider issues including market specific port customs regulations, market specific duty tariffs, delivery orders and cargo releases. In order to ensure that the procedures and standards of a particular market are implemented, we intend to work closely with freight forwarding and cargo companies with extensive operations in the specific market under development. This partnership approach will greatly improve the likelihood of creating a software product that satisfies the requirements of clients operating within a particular region. Our existing partners and clients are presently assisting in the development of cargo logistics system software modules that will serve markets in the United States, Canada and a number of Asian countries.

Other Initiatives - AirLogistics System and OceanLogistics System

In January, 2002, the United States Customs Service launched the Container Security Initiative to prevent global containerized cargo from being exploited by terrorists. Starting December 2, 2002, the United States Customs Service implemented the 24-hour Cargo Manifest Rule as part of the new Homeland Security requirement. The rule requires carriers and non-vessel operating common carriers that are responsible for cargo shipments to the United States from foreign ports to file certain manifest information 24 hours before cargo is loaded on the ship.

In order to respond to the Container Security Initiative, we have been implementing and integrating the automatic manifest system and the automated commercial system with our logistics system during the last two quarters.

The automatic commercial system is the system used by the United States Customs Service to track, control, and process all commercial goods imported into the United States. The automatic commercial system facilitates merchandise processing, significantly cuts costs, and reduces paperwork requirements for both the United States Customs Service and the trade community. The automatic manifest system is one of the feature modules for manifest transmissions and communications between the United States Customs Service, carriers and non-vessel operating common carriers.

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The objective for integrating our logistics system with these systems is to achieve communication electronically with the United States Customs Service and to provide real-time manifest status to our customers. Minimizing the duplicate input for operation and customs systems provides users with a more efficient environment. In addition, integrating our logistics system with the systems of the United States Customs Service ensures our users do not ship products with incomplete or missing declarations.

There are thousands of non-vessel operating common carriers located throughout Hong Kong, China and Taiwan who need to comply with the United States Customs Service’s 24-hour manifest rule.

As a result of the launch of security policy Container Security Initiative by the United States Government, our OceanLogistics system has been delayed and interrupted several times. We developed a new version of our OceanLogistics system to comply with the United States Customs Service’s requirements which is under testing with Wice Marine Services (Hong Kong).

The United States Customs Service has also started a similar program in connection with air freight shipments into the United States. Since most air manifest data is currently prepared and submitted by the airline carrier to the United States Customs Service, we do not expect an immediate need to update our AirLogistics system.

Product Research and Development

We acquired the rights to our existing cargo logistics system technology from Farrington. Since inception and for the period ended May 31, 2005, we have expended over $149,000 on the research and development of the cargo logistics software technology. We anticipate that we will expend approximately $100,000 on further research and development through the twelve months ending May 31, 2006.

Employees

We currently employ nine part-time employees, including our President, Paul Dunn, our Manager, Research and Development, Wai Yip Chu, and our Chief Engineer, Gim Choon Teoh. We also have two full-time employees, including our Secretary and Treasurer, Li Ying Yan and our Project Manager, Walter Wing.

Intellectual Property

Our cargo logistics software, the first version of which was released on July 30, 2001, is not protected by any patents, nor do we intend to seek such protection. We do treat our software programs and their associated technology as proprietary and own all copyrights in such programs.

Competition

We are unaware of any companies that provide services directly in competition to those offered by our cargo logistics system.

Companies such as Federal Express (a courier service) and CH Robinson Worldwide, Inc. (a multimodal transportation and logistics provider) utilize software programs which offer their customers services similar to those offered by our cargo logistics system, although much narrower in scope, and only within each company’s respective network. In contrast, our cargo logistics system is available to anyone with a personal computer or mobile device with an internet connection and browser, a secure connection and a password protected user account, regardless of which shipping company or carrier that user chooses to utilize.

Companies such as Fountainhead International LLC and ALK have developed software which, although not as broad in scope as our system, is similar to our cargo logistics system. Fountainhead currently has four main software packages on the market, each of which are marketed to specific users. Fountainhead offers its “CargoWise” systems, including a “forwarder system”, a “shipper system”, a “tracking system” and a “warehouse system”, as opposed to the fully integrated system offered by our cargo logistics system, and usable by forwarders, shippers, carriers, receiver and any other party with an interest in the shipment. Also in contrast to our cargo

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logistics system, the software offered by Fountainhead may be uploaded to the user’s website, as opposed to our cargo logistics system, which operates as a centralized database from our website. Similarly, ALK’s “e Tracker” (shipment management), “Fleet Commander” (fleet tracking) and “PC Miler” (routing, mileage and mapping) software are marketed to specific users, and although each program is web enabled and can be integrated with other ALK systems, they lack the fully integrated, centralized database offered by the cargo logistics system.

Three Months Ended May 31, 2005 and May 31, 2004

During the three months ended May 31, 2005, operating expenses totalled $20,371, and we experienced a net loss of $21,912, with revenues of $6,060, as compared to operating expenses of $22,715 and a net loss of $21,721 against no revenues for the three months ended May 31, 2004. The increase in operating expenses was a result of an increase in software development and an increase in general and administration expenses.

Nine Months Ended May 31, 2005 and May 31, 2004

During the nine months ended May 31, 2005, operating expenses totalled $64,705, and we experienced a net loss of $67,828, with revenues of $19,665, as compared to operating expenses of $78,975 and a net loss of $90,415 against no revenues for the nine months ended May 31, 2004. The increase in operating expenses was a result of an increase in software development and an increase in general and administration expenses.

Liquidity and Capital Resources

Historically, we have financed our cash flow and operations from the sale of stock and advances from shareholders. Our total cash and cash equivalent position as at May 31, 2005 was $8,051 and as of May 31, 2004 was $8,579.

For the nine months ended May 31, 2005, net cash used in operating activities was ($59,540) compared to cash used in operating activities of ($65,463) for the nine months ended May 31, 2004. Net cash used in operating activities for the nine months ended May 31, 2005 consisted mostly of loss from operations.

Net cash provided by financing activity was $49,397 for the nine months ended May 31, 2005 and $70,257 for the nine months ended May 31, 2004. These amounts resulted from advances from shareholders and were used for operating expenses.

We have no external sources of liquidity in the form of credit lines from banks. Based on the plan of operation described below, management believes that our available cash will not be sufficient to fund our working capital requirements through May 31, 2006 and therefore, we will have to raise financing through the sale of our equity securities or arrange another advance from a shareholder of our company.

Plan of Operation - Cash Requirements

Since we were unable to raise any financing during the period ended May 31, 2005, our plan of operation has not changed. Our current plan of operation is entirely dependent on us raising financing of $500,000. Over the twelve months ending May 31, 2006, we will require approximately $500,000 to accomplish our plans, and we intend to use those funds as follows:

- to continue the research and development of our cargo logistics system ($100,000);

- to begin a marking/advertising campaign for our cargo logistics system ($100,000);

- to cover further hardware and software acquisition costs ($130,000);

- to hire software engineers to assist in developing our cargo logistics system ($100,000);

- to cover legal and patent application costs in connection with our cargo logistics system ($30,000);

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- to cover general and administrative expenses ($30,000) and

- to cover our miscellaneous general corporate costs ($10,000).

We intend to obtain the above-noted funds through the sale of our equity securities or by obtaining debt financing. At present, we have no agreements in place and have not taken any steps to raise such funds. There can be no assurance that we will be able to raise such funds, or that such funds will be available on terms that are acceptable to us. If we are unable to raise the funds necessary to carry out our plan of operation, then we will be unable to advance our business and our future operations may have to be scaled down or even ceased.

Product Research and Development

We acquired the rights to our existing cargo logistics system technology from Farrington. We anticipate that we will expend approximately $100,000 on further research and development through the twelve months ending May 31, 2006.

Future Research and Development Activities

We are committed to investing in product research and development and intend to undertake future activities using any revenues which we may generate in the future from sales of our products and services. We intend to spend approximately 20% of any revenue on research and development activities in order to ensure that we remain competitive. In the event that gaps in our existing products are identified, the above-noted proposals will be modified as necessary.

Purchase of Significant Equipment

We intend to purchase approximately $70,000 worth of new computer equipment and software through the twelve months ended May 31, 2006. In the past 12 months, our expense for equipment and software improvements were significantly under budget because we built our data centre on a development scale basis rather than on a production scale basis. For the next 12 months, we are planning to purchase the following equipment and software: delicate fire wall, two to four application and database servers, two to four workstations for development and testing, one EDI server with communication setup, some development tools for ms.net technology and XML/XSLT development tools, etc.

Employees

Over the twelve months ending May 31, 2006, we anticipate an increase in number of employees we retain, as we intend to hire one person to perform clerical and administrative tasks, two software engineers and one full-time and one part-time sales and marketing personnel.

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.

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WE ARE A DEVELOPMENT STAGE COMPANY WITH A LIMITED OPERATING HISTORY WHICH MAKES IT DIFFICULT TO EVALUATE WHETHER WE WILL OPERATE PROFITABLY

We are a development stage software company which is primarily involved in the development, manufacture and marketing of an internet-based cargo logistics system. As a relatively new company, having only entered into licensing agreements with two users, we do not have a historical record of sales and revenues nor an established business track record.

Unanticipated problems, expenses and delays are frequently encountered in ramping up sales and developing new products. Our ability to successfully develop, produce and sell our cargo logistics system and any future software products and to eventually generate operating revenues will depend on our ability to, among other things:

- successfully develop and market our cargo logistics system;

- successfully enhance our cargo logistics system to keep pace with changes in technology and changes demanded by users of our products;

- attract, retain and motivate qualified personnel; and

- obtain the necessary financing to implement our business plan.

We cannot be sure that we will be successful in addressing these risks and uncertainties, and our failure to do so could have a materially adverse effect on our financial condition and continued operations. In addition, our operating results are dependent to a large degree upon factors outside of our control, including among other things, increased competition and the acceptance and continued use of our cargo logistics system specifically and other internet-based technology generally. There are no assurances that we will be successful in addressing these risks, and failure to do so may adversely affect our business and financial condition.

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 as an internet-based cargo logistics software development company, including a loss of $67,828 for the nine months ended May 31, 2005. As of May 31, 2005, we have an accumulated deficit of $567,577. We expect to have net losses and negative cash flow and expect to spend significant amounts of capital to enhance our products and technologies, develop international sales and operations, 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 software product gains sufficient market acceptance to generate a commercially viable and sustainable level of sales, and/or additional software products are developed and commercially released and sales of such products 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 the financial statements for the year ended August 31, 2004, which form part of our annual report on Form 10-KSB (filed on November 29, 2004). To the extent we are unable to generate sufficient revenues to cover ongoing expenses, our business, results of operations, financial condition and prospects would be materially adversely affected.

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WE ARE UNCERTAIN THAT WE WILL BE ABLE TO OBTAIN ADDITIONAL CAPITAL THAT MAY BE NECESSARY TO ESTABLISH OUR BUSINESS.

We incurred a loss of $67,828 for the nine months ended May 31, 2005. As a result of these losses 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 can generate revenues to achieve profitability.

Our future capital requirements will depend on many factors, including cash flow from operations, progress in developing new products, competing knowledge and market developments and an ability to successfully market our products. 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 $500,000 over the twelve months ending May 31, 2006 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 cargo logistics system 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 software products; 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 cargo logistics system. 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 are unable to obtain financing in the amounts and on terms deemed acceptable to us, our business and future success may be adversely affected.

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 cargo logistics system, 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 products, 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 CARGO LOGISTICS SYSTEM, 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 cargo logistics system. We expect that this product and its 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

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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 cargo logistics system, and on the development, introduction and market acceptance of any future enhancements. There can be no assurance that we will be successful in marketing the cargo logistics system or any new software programs, applications or enhancements, and any failure to do so would significantly harm our business.

IF WE ARE UNABLE TO ACHIEVE MARKET ACCEPTANCE FOR OUR PRODUCTS, WE WILL BE UNABLE TO BUILD OUR BUSINESS

To date, we have entered into only three licensing agreements with respect to our cargo logistics system, one of which was subsequently terminated in September, 2001. We have not generated any significant revenues from these agreements. Our success will depend on the acceptance of our cargo logistics system by the freight forwarding and cargo logistics industry, as well as by related businesses and the general public. Achieving such acceptance will require significant marketing investment. Internet-based technology generally, and our cargo logistics system specifically, may not achieve widespread acceptance by businesses in general, or by freight carriers, freight forwarders or freight agents specifically, which could limit our ability to develop and expand our business. The market for internet-based cargo logistics systems is relatively new and is evolving. Our ability to generate revenue in the future depends on the acceptance by both our customers, and internet-based cargo logistics technology in general. The adoption of our cargo logistics system could be hindered by the perceived costs of this new technology, as well as by the reluctance of businesses that have invested substantial resources in existing document management systems to replace their current systems with this new technology. Accordingly, in order to achieve commercial acceptance, we will have to educate prospective customers, including large, established freight forwarding companies, about the uses and benefits of our cargo logistics system. If these efforts fail, or if our cargo logistics system does not achieve commercial acceptance, our business could be harmed.

The current and future development of the market for our cargo logistics system is also dependent upon:

- the widespread deployment of internet-based cargo logistics applications, which is driven by consumer demand for services having an internet-based cargo logistics component;

- the demand for new uses and applications of internet-based cargo logistics technology; and

- continuing improvements in technology that may reduce the costs of internet-based cargo logistics solutions and improve their efficiency.

RAPID TECHNOLOGICAL CHANGES IN THE COMPUTER SOFTWARE AND HARDWARE INDUSTRY COULD RENDER OUR PRODUCTS NON-COMPETITIVE OR OBSOLETE AND CONSEQUENTLY AFFECT OUR ABILITY TO GENERATE REVENUES AND BECOME OR REMAIN PROFITABLE

The development and sales of our current and future software programs are exposed to risks because of the rapidly changing technology in the computer software and hardware industry. Although we will engage software engineers and developers who are experienced in the software program market, we only have limited experience in developing and marketing such software programs.

Specifically, the cargo logistics and freight forwarding industry within which we operate is subject to technological change. The development of new technology by companies with products similar to those offered by us may render our cargo logistics system obsolete. Our success will depend upon our ability to continually enhance and support our cargo logistics system, and to develop and introduce new products that keep pace with technological developments and that address the changing needs of the marketplace. Although we expect to devote significant resources to research and development activities, there can be no assurance that these activities will result in the successful development of new internet-based cargo logistics technologies and internet-based cargo logistics software products or the enhancement of existing technologies and products. In addition, future advances in the computer software and hardware industry could lead to new technologies or software programs competitive with the software programs provided by us. Those technological advances could also lower the costs of other software

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programs that compete with our software programs resulting in pricing or performance pressure on our software programs, which could adversely affect our results of operations.

Unscheduled delays in development of our software products or the implementation of our sales program could result in lost or delayed revenues.

Delays and related increases in costs in the further development or improvement of our cargo logistics system or the implementation of our sales and marketing program could result from a variety of causes, including:

- delays in the development, testing and commercial release of our cargo logistics system and any future systems;

- delays in hiring or retaining experienced software developers and engineers;

- delays in locating and hiring experienced sales and marketing professionals; and

- delays caused by other events beyond our control.

There can be no assurance that we will successfully develop further enhancements to our cargo logistics system on a timely basis or that we will implement our sales and marketing program in a timely manner. A significant delay in the development, testing and commercial release of our software programs or a delay in the implementation of our sales and marketing program could result in increased costs and could have a materially adverse effect on our ability to generate revenues and continue our ongoing business.

UNSCHEDULED DELAYS IN DEVELOPMENT OF OUR SOFTWARE PRODUCTS OR THE IMPLEMENTATION OF OUR SALES PROGRAM COULD RESULT IN LOST OR DELAYED REVENUES

Delays and related increases in costs in the further development or improvement of our cargo logistics system or the implementation of our sales and marketing program could result from a variety of causes, including:

- delays in the development, testing and commercial release of our cargo logistics system and any future systems;

- delays in hiring or retaining experienced software developers and engineers;

- delays in locating and hiring experienced sales and marketing professionals; and

- delays caused by other events beyond our control.

There can be no assurance that we will successfully develop further enhancements to our cargo logistics system on a timely basis or that we will implement our sales and marketing program in a timely manner. A significant delay in the development, testing and commercial release of our software programs or a delay in the implementation of our sales and marketing program could result in increased costs and could have a materially adverse effect on our financial condition and results in operations.

COPYRIGHTS, PATENTS, TRADE SECRETS AND PROTECTION OF PROPRIETARY TECHNOLOGY

Our cargo logistics system, the first version of which was released on July 30, 2001, is not protected by any patents, nor do we intend to seek such protection. We do treat our software programs and their associated technology as proprietary and own all copyrights in such programs.

Any inability to adequately protect our proprietary technology could harm our ability to compete. Our future success and ability to compete depends in part upon our proprietary technology, which we attempt to protect with a combination of patent, copyright, trademark and trade secret laws, as well as with our confidentiality procedures and contractual provisions. These legal protections afford only limited protection and may be time-consuming and

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expensive to obtain and/or maintain. Further, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.

In the event that we do file patent applications, there is no guarantee that patents will be issued. Any patents that are issued could be invalidated, circumvented or challenged. If challenged, our patents might not be upheld or their claims could be narrowed. All of our employees are required to sign confidentiality agreements with respect to the work they do for us and with respect to the fact that rights to technology created by such employees in the course of their employment are retained by us.

As a precautionary measure, we have documented the entire architecture of our cargo logistics system chronologically, including but not limited to the database structure, design logic, systems architecture, data flow, information exchange and research. Despite precautions taken to protect our software program, unauthorized parties may attempt to reverse engineer, copy or obtain and use information we regard as proprietary. Policing unauthorized use of our products and infringement of our copyrights is difficult and software piracy is expected to be a persistent problem. Additionally, the laws of some foreign countries do not protect our proprietary rights, including our copyrights, to the same extent as do the laws of the United States.

We are not aware that our proprietary technology infringes the proprietary rights of third parties. However, from time to time, we may receive notices from third parties asserting that we have infringed their patents or other intellectual property rights. In addition, we may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Any such claims could be time-consuming, result in costly litigation, cause product shipment delays or lead us to enter into royalty or licensing agreements rather than disputing the merits of such claims. As the number of software products in the industry increases and the functionality of such products further overlap, we believe that software developers may become increasingly subject to infringement claims. Any such claims, with or without merit, can be time consuming and expensive to defend. An adverse outcome in litigation or similar proceedings could subject us to significant liabilities to third parties, require expenditure of significant resources to develop non-infringing technology, require disputed rights to be licensed from others or require that we cease the marketing or use of certain products, any of which could have a materially adverse effect on our business, operating results and financial condition.

INFRINGEMENT BY OUR PRODUCTS ON OTHER INTELLECTUAL PROPERTY

Our products may inadvertently infringe upon the intellectual property rights of others, and resulting claims against us could be costly and require that we enter into disadvantageous license or royalty arrangements. The software industry is characterized by the existence of a large number of patents and frequent litigation based on allegations of patent infringement and the violation of intellectual property rights. Although we attempt to avoid infringing known proprietary rights of third parties, we may be subject to legal proceedings and claims for alleged infringement by of third-party proprietary rights, such as patents, trade secrets, trademarks or copyrights, from time to time in the ordinary course of business. Any claims relating to the infringement of third-party proprietary rights, even if not successful or meritorious, could result in costly litigation, divert resources and management’s attention or require that we enter into royalty or license agreements which are not advantageous to us. In addition, parties making these claims may be able to obtain injunctions, which could prevent us from selling our products.

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 cargo logistics system;

- timing of completion of project phases;

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- our ability to develop, introduce and support new and enhanced products in a timely manner, such as new versions of our cargo logistics system, in response to changing technology trends, as well as our ability to manage product 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 internet-based cargo logistics systems 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.

IN CONVERTING POTENTIAL CLIENTS TO OUR CARGO LOGISTICS SYSTEM WE MAY EXPERIENCE LENGTHY SALES AND IMPLEMENTATION CYCLES, AND AS A RESULT, LICENSE AND SERVICES REVENUE AND OPERATING RESULTS MAY FLUCTUATE QUARTER TO QUARTER, WHICH MAY CAUSE OUR STOCK PRICE TO BE VOLATILE OR DECLINE

Converting a potential client to our cargo logistics system will a require significant commitment from and organizational restructuring by that client. Accordingly, the decision to convert a business from an in-house system to a system utilizing our cargo logistics system will typically involve a significant evaluation and analysis period. During the sales cycle, we may spend significant time and effort educating and providing information to our prospective customers and their agents. As a result of the lengthy sales and implementation cycles, we may not be able to immediately generate any licence and service revenues and our operations may be adversely affected if we are unable to generate such revenues.

Additionally, if we are performing significant professional services in connection with the implementation of our cargo logistics system, we will not recognize revenue until after acceptance of our cargo logistics system. We may, in the future, experience unexpected delays in recognizing revenue. Consequently, the length of our sales and implementation cycles and the varying order amounts for our cargo logistics system make it difficult to predict the quarter in which revenue recognition may occur and may cause license and services revenue and operating results to vary significantly from period to period. These factors could, in the future, cause our stock price to be volatile or to decline.

RESPONSE TO CHANGES IN THE INTERNET-BASED CARGO LOGISTICS SYSTEM MARKET

In the event that we fail to respond to changes in the market for internet-based cargo logistics systems, we may experience a loss of revenues. The internet-based cargo logistics system industry is relatively new and is evolving. Our success will depend substantially upon our ability to enhance our proposed products and to develop and introduce, on a timely and cost-effective basis, new products and features that meet changing end-user requirements and incorporate technological advancements. If we are unable to develop new products and enhanced functions or technologies to adapt to these changes, or if we cannot offset a decline in revenue from existing products with sales of new products, our business will likely suffer.

Among other things, commercial acceptance of our cargo logistics system and its applications will depend on:

- the ability of our products and technologies to meet and adapt to the needs of our target markets;

-the performance and price of our cargo logistics system and any future enhancements as compared to our competitors’ products; and

- our ability to deliver customer service directly and through our website.

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BECAUSE SALES TO CUSTOMERS OUTSIDE OF CANADA AND THE UNITED STATES MAY ACCOUNT FOR A SIGNIFICANT PORTION OF OUR REVENUES IN THE FUTURE, WE MAY BE SUBJECT TO A VARIETY OF RISKS ASSOCIATED WITH CONDUCTING BUSINESS INTERNATIONALLY

Sales to customers outside the United States and Canada may account for a significant portion of our revenues in the future, which would expose us to risks inherent in international operations. We would be subject to a variety of risks associated with conducting business internationally, any of which could have a materially adverse effect on our business. These risks include:

- difficulties in establishing and maintaining effective international customer service;

- the burden of complying with a wide variety of foreign laws, particularly with respect to intellectual property and license requirements;

- political and economic instability outside the United States and Canada;

- import or export licensing and product certification requirements;

- tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers imposed by foreign countries;

- potential adverse tax consequences, including higher marginal rates;

- unfavorable fluctuations in currency exchange rates; and

- limited ability to enforce agreements, intellectual property rights and other rights in some foreign countries.

We intend to focus on our international sales, which will require the investment of significant resources to create and refine different language models for each particular language or dialect. These language models are required to create versions of our products that allow end users in a variety of non-English speaking countries to communicate using the local language or dialect, as well as English. If we fail to develop localized versions of our products, our ability to address international market opportunities and to develop our international business will be limited.

GOVERNMENTAL REGULATION OF CARGO LOGISTICS SOFTWARE

To the best of our knowledge, as a software development company specializing in the development of an internet-based cargo logistics system, we are not currently subject to direct federal, state or local regulation in the United States, other than regulations applicable to businesses generally.

If any laws or regulations are enacted that we must comply with and are applicable to the development and sale of our cargo logistics software, then there can be no assurance that any such laws or regulations, if enacted, will not adversely affect or limit our current or future operations.

LOSS OF SERVICES OF KEY EMPLOYEES

As at June 30, 2005, our key personnel included Paul Dunn (President), Wai Yip Chu (Manager of Research and Development), Gim Choon Teoh (Chief Engineer), and Walter Wong (Project Manager). The loss of the services of Mr. Dunn 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 employees 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

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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 the 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 the 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.

SINCE A RELATIVELY SMALL GROUP OF SHAREHOLDERS OWN A LARGE PERCENTAGE OF OUR OUTSTANDING SHARES, THEY ARE ABLE TO SIGNIFICANTLY INFLUENCE MATTERS REQUIRING SHAREHOLDER APPROVAL

Shareholders owning a majority (i.e. 51%) of our outstanding voting stock represent the ultimate control over our affairs. Four shareholders currently control approximately 84% of the outstanding shares of our common stock. As a result of this ownership, these shareholders will likely be able to approve any major transactions including the election of directors without the approval of the other shareholders.

WE DO NOT EXPECT TO DECLARE OR PAY ANY DIVIDENDS.

We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future.

VOLATILITY OF STOCK PRICE

Our common shares are not currently publicly traded. In the future, the trading price of our common shares may be subject to wide fluctuations. Trading prices of the common shares may fluctuate in response to a number of factors, many of which will be beyond our control. In addition, the stock market in general, and the market for software technology companies in particular, has experienced extreme price and volume fluctuations that have often been

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unrelated or disproportionate to the operating performance of such companies. Market and industry factors may adversely affect the market price of the common shares, regardless of our operating performance.

In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources.

Item 3. Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this quarterly report, being May 31, 2005, 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 along with our company’s Secretary. Based upon that evaluation, our company’s President along with our company’s Secretary concluded that our company’s disclosure controls and procedures are effective. There have been no significant changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our President and Secretary as appropriate, to allow timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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.

Item 2. Recent Sales of Unregistered Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibits Required by Item 601 of Regulation S-B.

Exhibit Number/Description

(3) Charter and By-laws

3.1            Articles of Incorporation dated September 24, 1996 (incorporated by reference from our Form 10-SB/A filed on January 8, 2002).

3.2            By-laws, effective as of September 24, 1996 (incorporated by reference from our Form 10-SB/A filed on January 8, 2002).

3.3            Corporate Charter, dated September 24, 1996 (incorporated by reference from our Form 10-SB/A filed on January 8, 2002).

3.4            Certificate of Amendment of Articles of Incorporation, dated June 15, 2000 (incorporated by reference from our Form 10-SB/A filed on January 8, 2002).

3.5            Certificate of Correction, dated January 23, 2001 (incorporated by reference from our Form 10-SB/A filed on January 8, 2002).

(10) Material Contracts

10.1          Purchase and Sale Agreement between Farrington International Inc. and 3W Cyber Logistics, Inc. dated July 11, 2000 (incorporated by reference from our Form 10-SB/A filed on January 8, 2002).

10.2          Licensing Agreement between 3W Cyber Logistics, Inc. and Wice Marine Services Ltd., dated August 30, 2000 (incorporated by reference from our Form 10-SB/A filed on January 8, 2002).

10.3          Licensing Agreement between 3W Cyber Logistics, Inc. and AA Freight Forwarding Inc., dated September 22, 2000 (incorporated by reference from our Form 10-SB/A filed on January 8, 2002).

10.4          Licensing Agreement between 3W Cyber Logistics, Inc. and Wice Freight Services Inc., dated August 2, 2000 (incorporated by reference from our Form 10-SB/A filed on January 8, 2002).

10.5          Reseller Agreement between 3W Cyber Logistics, Inc. and Integrated Export Services Inc., dated January 15, 2003 (incorporated by reference from our Form 10-QSB filed on April 14, 2003).

(31)	Section 302 Certifications
31.1*	Certification of Paul Dunn.
31.2*	Certification of Li Ying Yan.
(32)	Section 906 Certifications
32.1*	Certification of Paul Dunn.
32.2*	Certification of Li Ying Yan.

* Filed herewith.

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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.

3W CYBER LOGISTICS, INC.

By:/s/ Paul Dunn

Paul Dunn, President and Director (Principal Executive Officer)

Date: July 13, 2005

By:/s/ Li Ying Yan

Li Ying Yan, Secretary and Director (Principal Financial Officer and Principal Accounting Officer)

Date: July 13, 2005

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/ Paul Dunn

Paul Dunn, President and Director

Date: July 13, 2005

By:/s/ Li Ying Yan

Li Ying Yan, Secretary and Director (Principal Financial Officer and Principal Accounting Officer)

Date: July 13, 2005