UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
- -----------------------------------------------------------------
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 2001
- -----------------------------------------------------------------
20/20 WIRELESS, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-4054666
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
511-475 Howe Street
Vancouver, British Columbia V6A 1A4
- ---------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (604) 939-2560
--------------
Check here whether the issuer (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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_______
As of December 31, 2001, the following shares of the
Registrant's common stock were issued and outstanding:
10,765,514 shares of voting common stock
PART I - FINANCIAL INFORMATION
To the Board of Directors of 20/20 Wireless Inc.
We have audited the consolidated balance sheet of 20/20 Wireless
Inc., as of December 31, 2001 and the consolidated statements of
operations and deficit, and cash flows for the six months then
ended. These financial statements are the responsibility of the
company's management. Our responsibility is to express an
opinion on these financial statements on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financials statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the
company as at December 31, 2001 the results of its operations
and its cash flows for the years then ended in accordance with
generally accepted accounting principles. As required by the
Company Act of British Columbia, we report that in our opinion,
these principles have been applied on a basis consistent with
that of the preceding years.
COQUITLAM, B.C. PEACH GODDARD
March 14, 2002 CHARTERED ACCOUNTANTS
20/20 WIRELESS INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Audited)
U.S. Funds
As Of As Of
Dec. 31, 2001 March 31, 2001
(Audited) (Audited)
--------------------------------
ASSETS
Current Assets
Cash $ 168 $ 8
Technology License (Note 2e) 373,388 361,192
Capital Assets (Note 4) 1,446 1,690
Incorporation Costs 629 629
_________ __________
TOTAL ASSETS $381,631 $363,510
LIABILITIES
Current Liabilities
Accounts Payable $ 3,400 $ 689
_________ ________
Due to Shareholders (Note 5) 195,990 166,297
---------- ----------
Total Liabilities $199,390 $166,986
SHAREHOLDERS' EQUITY
Share Capital (Note 6) 362,257 362,257
Deficit (180,016) (165,724)
---------- ----------
Total Stockholders' Equity 182,241 196,533
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $381,631 $363,519
========== ==========
The accompanying notes and accountant's report are an integral
part of these financial statements.
20/20 WIRELESS INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2001
(U.S. Funds)
For the 3 Mos Ended For the 3 Mos Ended
December 31, 2001 December 31, 2000
-------------------- --------------------
TOTAL REVENUES: $ 0 $ 0
OPERATING EXPENSES:
Advertising & Promotion 1,253 1,491
Auto 660 1,500
Amortization 244 628
Insurance, licenses and fees - 95
Legal & Accounting 4,900 2,183
Office 1,545 2,781
Rent 5,417 4,450
Telephone & Utilities 273 842
Testing - -
Travel - 2,105
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14,292 16,075
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LOSS FOR THE PERIOD $(14,292) $(16,075)
========== ==========
LOSS PER SHARE - BASIC $ (.01) $ (.01)
========== ==========
The accompanying notes and accountant's report are an integral
part of these financial statements.
20/20 WIRELESS INC.
STATEMENT OF CONSOLIDATED CASH FLOWS
FOR THE Three MONTHS ENDED DECEMBER 31, 2001
U.S. FUNDS
For the 3 Mos Ended For the 3 Mos Ended
December 31, 2001 December 31, 2000
-------------------- --------------------
CASH RESOURCE PROVIDED
BY(USED IN):
OPERATIONS
Cash flow provided by operations
before the undernoted $ (14,292) $ (16,076)
Non-cash working capital 2,711 ( 552)
Amortization 244 628
------------ ------------
( 11,337) (16,000)
INVESTING
Purchase Technology License ( 18,196) (361,192)
Additions to Capital Assets - (2,318)
Incorporation Cost -
------------ ------------
( 18,196) (363,510)
FINANCING
Issue of Share Capital - 361,192
Shareholder's loans 29,693 18,318
------------ ------------
29,693 379,510
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NET INCREASE(DECREASE) IN CASH 160 0
CASH POSITION AT BEGINNING OF PERIOD 8 0
------------ ------------
CASH POSITION AT END OF PERIOD $ 168 $ 0
============ ============
The accompanying notes and accountant's report are an integral
part of these financial statements.
20/20 WIRELESS INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2001
(U.S. FUNDS)
1. CONTINUED OPERATIONS
These financial statements have been prepared on the basis of
accounting principles applicable to a "going concern", which
assume that the company will continue in operation for the
foreseeable future and will be able to realize its assets and
discharge its liabilities in the normal course of operations.
Several adverse conditions and events cast doubt upon the
validity of the assumption. The company has incurred operating
losses since its inception, has a working capital deficiency, and
is currently unable to self-finance its operations.
The continuation of the company as a going concern is dependent
upon its ability to obtain additional financing to meet its
obligations for future development and the attainment of
successful operations. The company is currently seeking new
investors to raise the needed working capital.
These financial statements do not reflect adjustments that would
be necessary if the "going concern" assumption were not
appropriate because management believes that the actions already
taken or planned, as described above, will mitigate the adverse
conditions and events which raise doubts about the validity of
the "going concern" assumption used in preparing the financial
statements.
If the "going concern" assumption were not appropriate for these
financial statements, then adjustments would be necessary in the
carrying values of assets and liabilities, the reported revenues
and expenses, and the balance sheet classifications used.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared on the historical cost
basis in accordance with accounting principles generally accepted
in Canada.
a) Principles of Consolidation
These consolidated financial statements include the accounts of
the company and the wholly owned subsidiary, Global Wireless
Services Inc. The effective date of purchase was December 20,
2000. Included in these consolidated financial statements are
the results of operations of Global Wireless Services Inc. from
May 29, 2000 (date of incorporation) to March 31, 2001.
The subsidiary is accounted for using the pooling of interests
method.
All companies are located in British Columbia, Canada.
b) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. These
estimates are based on management's best knowledge of current
events and actions that the company may undertake in the future.
c) Foreign currency transactions
The financial statements of the company are reflected in United
States dollars. The company uses the temporal method of
accounting for foreign currency translations, whereby monetary
items are translated at the rate of exchange in effect at the
balance sheet date, non-monetary items are translated at
historical rates and revenue and expense items are translated at
the rate of exchange on the dates they occur.
d) Capital Assets
Capital Assets are recorded at cost. Amortization is provided
using the declining balance method at the following rates:
Computer Hardware 30%
e) Technology License
In a related party transaction the company purchased from its
President $361,192 for a license to certain technology relating
to wireless communications systems. The company may use the
licensed technology for a period of six years at which time it
can purchase for $100 (US) any residual values in the technology
from the President. Amortization of the license will begin once
revenues are generated.
f) Revenue recognition
All revenue is recorded and related cost transferred to cost of
sales at the time the product shipped or the service provided.
g) Loss per Share
Basic loss per share computations is based on the weighted
average number of shares outstanding during the year. Fully
diluted earnings per shares have not been disclosed, as it is
anti-dilutive.
3. FAIR VALUE OF FINANCIAL STATEMENTS
The company's financial instruments consist of accounts payable.
Unless otherwise noted, it is management's opinion that the
company is not exposed to significant interest, currency or
credit risks arising from the financial instruments. The fair
value of these financial instruments approximates their carrying
value due to their short-term maturity or capacity of prompt
liquidation.
4. CAPITAL ASSETS
2001
Accumulated Net Book
Cost Amortization Value
------------------------------------
Computer Hardware $2,318 $ 872 $ 1,446
5. DUE TO SHAREHOLDERS
Amounts due to shareholders are non-interest bearing and have no
specific terms of repayment. The shareholders have indicated
that these amounts need not be repaid within the next fiscal
period and consequently these have been classified as long term.
6. SHARE CAPITAL
Authorized
The authorized capital of the company consists of 25,000,000
common shares with a par value of $.001.
Issued and Outstanding
Number Amount
----------- ----------
Balance March 31, 1999 1,000,000 $ 1,000
Issued for cash 65,000 65
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Balance March 31, 2000 1,065,000 1,065
Issued for cash 50,000 50
Stock Split 4,460,000 0
Issued for purchase of
technology 5,190,514 361,142
----------- ----------
Balance March 31 & June 30, 2001 10,765,514 362,257
=========== ==========
7. BUSINESS COMBINATION
Effective December 20, 2000, Eurokiosk Inc., entered into a
business combination with Global Wireless Services Inc. The
details of the combination are as follows:
(i) The companies in this combination have been incorporated to
develop and market a wireless technology that provides
wireless monitoring and diagnostic systems to electrical,
cable television, telephone vending and petroleum industries.
20/20 Wireless Inc., a company formed principally to obtain
secondary financing for producing and marketing the wireless
technology.
Global Wireless Services Inc., a company formed to
principally develop wireless technology.
(ii) At the date of the business combination, the book values of
the assets and liabilities of Eurokiosk, Inc., and Global
Wireless Inc., are as follows:
20/20 Wireless Global Wireless
-------------------------------
ASSETS
Current assets $ 0 $ 1,856
Capital assets 0 1,691
Other assets 0 361,821
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0 365,368
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LIABILITIES
Current liabilities 2,803 1,325
Other 78,571 28,699
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81,374 30,024
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SHAREHOLDERS EQUITY(DEFICIENCY) 81,374 335,344
---------- ---------
$ 0 $365,368
========== =========
The operating results of 20/20 Wireless Inc., and Global Services
Inc., for the nine-month period ended March 31, 2001 were as
follows:
20/20 Wireless Global Wireless
-------------------------------
Revenues $ 0 $ 0
---------- ---------
Net Loss $(67,780) $(25,847)
iii) The business combination was effected by the shareholders of
each of the companies exchanging 100% of their shares in the
combined entity.
iv) The number of shares received by the shareholders of Global
Wireless Services Inc., immediately after the combination in the
combined entry is 5,490,514 common shares.
v) The method of accounting for this combination was the pooling
method. Under the pooling method, the assets and liabilities are
combined and accounted for in the combined companies financial
statements at their carrying values. The reported loss of the
combining companies includes the results of operations of the
combining companies for the entire fiscal period in which the
combination took place.
The pooling of interest method was used for the following
reasons:
- The combination is an arrangement between shareholder groups
uniting business interests to carry on their previous operation
together in combination.
- The controlling group of shareholders controlled 100% of the
company's shares, in aggregate, prior to the combination and 51%
of the shares after the combination.
- The directorship in each of the combining companies was
similar.
- The officers and day-to-day management in each of the
combining companies was similar.
- The combination was effected solely to consolidate assets
and shareholdings to allow ease of acquisition by a public
company.
- No assets are brought into the combination other than those
of the parties to the combination.
8. INCOME TAX LOSSES
The company has non-capital income tax losses of $39,020, which
may be carried forward to reduce future year's taxable income,
these losses expire as follows:
2006 $78,097
2007 $94,689
=======
The potential future tax benefit of these expenditures and tax
losses have not been recognized in the accounts of the company.
9. COMMITMENTS
(i.) By agreement dated 29 May 2000, the company entered into a 5
year lease for premises. The minimum lease payments, not
including common area costs, are as follows:
2001 $ 23,841
2002 23,841
2003 23,841
2004 23,841
------------
$ 95,364
============
10. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of accounts
receivable, accounts payable and amounts due from shareholders.
Unless otherwise noted, it is management's opinion that the
company is not exposed to significant interest, currency or
credit risks arising from these financial instruments. The fair
value of these financial instruments approximates their carrying
values, unless otherwise noted.
12. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
These financial statements have been prepared in accordance with
generally accepted accounting principles in Canada. These
financial statements also comply, in all material respects, with
accounting principles accepted in the United States and the rules
and regulations of the Securities and Exchange Commission.
FORWARD LOOKING STATEMENTS
Except for the Historical Information Contained Herein, Certain
Matters Discussed in this Report May Be Considered
"Forward-looking Statements" Within The Meaning of The Securities
Act of 1933 And The Securities Exchange Act of 1934, as Amended
by The Private Securities Litigation Reform Act of 1995. Those
Statements Include Statements Regarding The Intent, Belief or
Current Expectations of The Company and Members of its Management
as Well as the Assumptions on Which Such Statements Are Based.
Prospective Investors Are Cautioned That Any Such Forward-looking
Statements Are Not Guarantees of Future Performance and Involve
Risks and Uncertainties, and That Actual Results May Differ
Materially from Those Contemplated by Such Forward-looking
Statements. Important Factors Currently Known to Management That
Could Cause Actual Results to Differ Materially from Those in
Forward-looking Statements Include "The Company's Operating
Results Could Fluctuate, Causing Its Stock Price to Fall", "If
the Company Cannot Integrate Acquired Companies in its Business,
its Profitability May Be Adversely Effected", and "The Company
May Not Be Able to Compete Successfully Against Other Companies."
These and Additional Important Factors to Be Considered Are Set
Forth in the Safe Harbor Compliance Statement for Forward-looking
Statements the Company Undertakes No Obligation to Update or
Revise Forward-looking Statements to Reflect Changed Assumptions,
the Occurrence of Unanticipated Events or Changes to Future
Operating Results.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General Statement - Factors that may affect future results
With the exception of historical information, the matters
discussed in Management's Discussion and Analysis of Financial
Condition and Results of Operations contain forward looking
statements under the 1995 Private Securities Litigation Reform
Act (the "Reform" Act) that involve various risks and
uncertainties. Typically, these statements are indicated by
words such as "anticipates", "expects", "believes", "plans",
"could", and similar words and phrases. Factors that could cause
the Company's actual results to differ materially from
management's projections, forecasts, estimates and expectations
include but are not limited to the following:
- - Ability of the Company to raise additional capital
- - Ability of the Company to secure sales of its products
and services through its distributors
- - Unexpected economic changes in Canada and/or the United
States
To the extent possible, the following discussion will highlight
the relative needs of the Company with respect to its business
activities.
20/20 is a development stage company which has minimal operating
history. As a result, investors are alerted that any investment
in the company entails a high degree of risk. The company has
not yet generated any revenue from its products or services.
During the past quarter 20/20, has not been able to attract
investors for the purpose of securing funding or capital to
assist in the marketing of its services and products. There is
no guarantee that the company will be able to secure funding or
capital to develop its operations.
The Company seeks to derive revenue from (i) wireless telemetry
devices (ii) associated wireless network air time (iii) third
party products and services, consisting of the provision of
non-20/20 products and services as part of the total contract.
20/20 seeks to design, develop, manufacture and market, wireless
telemetry technologies for use by a wide variety of companies
that have remote equipment, such as electronic vending, cable
television, and utilities (electric, gas and water). 20/20's
technology will utilize both public and private wireless data
networks to transmit mission critical information. The Company
seeks to provide products that feature a cost-effective method
for companies with remote equipment to utilize wireless data to
immediately connect equipment to the operations center and with
mobile workers.
The Company believes that recent economic developments and trends
may adversely affect levels of capital spending by companies in a
variety of industries, including companies in the vertical
markets that the Company serves. The Company anticipates that
such economic conditions and regulatory trends may affect demand
in 2002 for the products and services which 20/20 seeks to offer.
A decline in demand for 20/20's products in these markets as a
result of economic conditions, or otherwise, may have a material
adverse effect on 20/20's business, financial condition,
operating results and cash flows.
20/20 will seek to have customers enter into ongoing maintenance
agreements that provide for maintenance and technical support
services for a period commencing after expiration of the initial
warranty period. Maintenance agreements will have a term of
twelve months and are invoiced either annually or monthly.
Revenue for these services is recognized ratably over the term of
the contract.
The Company expects to be periodically required to provide, in
addition to 20/20 products and services, certain third party
products, such as host computer hardware and operating system
software, and mobile computing. The Company recognizes revenue
of the supply on third party hardware upon transfer of title to
the customer. The Company expects to recognize revenue on the
supply on third party services using a percentage of completion
method based on the costs incurred over the total estimated cost
to complete the third party services contract.
The Company expects to supply some portion of third party
products and services to customers where it is successful in
selling its own products and services. There can be no
assurance, however, that any contracts entered into by the
Company to supply third party software and products in the future
will represent a substantial portion of revenue in any future
period. Since the revenue generated from the supply of third
party products and services may represent a significant portion
of certain contracts and the installation and rollout of third
party products is generally at the discretion of the customer,
the Company may, depending on the level of third party products
and services provided during a period, experience large quarterly
fluctuations in revenue.
The Company's revenue is dependent, in large part, on securing
contracts from a limited number of customers. As a result, any
substantial delay in the Company's completion of a contract, the
inability of the Company to obtain new contracts or the
cancellation of an existing contract by a customer could have a
material adverse effect on the Company's results of operations.
Although 20/20 has executed contracts with parties for the
distribution of 20/20's telemetry products, no products have yet
been sold and no revenue has been generated. 20/20 does not
believe that any revenue will be generated from the contracts it
has previously executed owing to the failure of the distributor
to fulfil its contractual obligations.
Some of the Company's contracts are subject to cancellation upon
notice by the customer. The loss of certain contracts could have
a material adverse effect on the Company's business, financial
condition, operating results and cash flows. As a result of these
and other factors, the Company's results of operations have
fluctuated in the past and may continue to fluctuate from
period-to-period.
The future success of the Company's business development strategy
will depend on the Company's ability to develop and implement the
technology related to its wireless telemetry solutions; the
Company's ability to enter into contracts with end-users and
distributors; raising additional capital to finance growth in the
company and development of new products. Growth in the Company's
business revenue is anticipated to be derived primarily from the
sale of wireless telemetry devices and monthly wireless network
air time.
RISK FACTORS
- ------------
20/20's believes that its operations and the overall success of
its business may be subject to the following risks.
Liquidity
The Company requires additional capital principally to meet its
costs for the development of its business, for general and
administrative expenses and to fund costs associated with the
development of its products. It is not anticipated that the
Company will be able to meet its financial obligations through
internal net revenue in the foreseeable future. The Company does
not have a working capital line of credit with any financial
institution. Therefore, future sources of liquidity will be
limited to the Company's ability to obtain additional debt or
equity funding.
Potential Fluctuations in Quarterly Operating Results
In the event 20/20 begins to generate revenues and secures firm
contract orders, its results of operations may fluctuate from
period to period depending on a number of factors, including the
timing and receipt of significant orders, the timing of
completion of contracts, increased competition, changes in the
demand for 20/20's products and services, the cancellation of
contracts, the timing of new product announcements and
introductions, changes in pricing policies by 20/20 and its
competitors, delays in the introduction of products or
enhancements by 20/20, expenses associated with the acquisition
of products or technology from third parties, the mix of sales of
20/20's products and services and third party products,
seasonality of customer purchases, personnel changes, and general
economic conditions.
20/20 will rely upon its ability to implement and integrate
wireless telemetry solutions on schedule and to the satisfaction
of its customers. 20/20 from time to time may experience certain
implementation and other problems that may delay the completion
of certain projects, including the failure of third parties to
deliver products or services on a timely basis and delays caused
by customers. There can be no assurance that 20/20 will be able
to complete projects on a timely and cost effective basis or that
delays will not result in cancellations of contracts or result in
the imposition of substantial penalties. Any such material
delay, cancellation or penalty could have a material adverse
effect upon 20/20's business, financial condition, operating
results and cash flows.
Lengthy Sales Cycles for 20/20's Products
The purchase of a wireless telemetry solution is often an
enterprise-wide decision for prospective customers and will
require 20/20 and its distribution partners to engage in sales
efforts over an extended period of time and to provide a
significant level of education to prospective customers regarding
the use and benefits of such systems. Due in part to the
significant impact that the application of wireless telemetry
solutions has on the operations of a business and the commitment
of capital required by such a system, potential customers tend to
be cautious in making acquisition decisions. As a result, 20/20
believes that its products will generally have a lengthy sales
cycle of several months. Consequently, if sales forecasted from
a specific customer for a particular quarter are not realized in
that quarter, 20/20 may not be able to generate revenue from
alternative sources in time to compensate for the shortfall. The
loss or delay of a large contract could have a material adverse
effect on 20/20's quarterly financial condition, operating
results and cash flows, which may cause such results to be less
than analysts' expectations. Moreover, to the extent that
significant contracts are entered into and required to be
performed earlier than expected, operating results for subsequent
quarters may be adversely affected.
Dependence on Large Contracts and Concentration of Customers
20/20's ability to generate revenue is dependent, in large part,
on significant contracts from a limited number of customers. The
inability of 20/20 to secure and maintain a sufficient number of
large contracts will have a material adverse effect on 20/20's
business, financial condition, operating results and cash flows.
Moreover, 20/20's success will depend in part upon its ability to
obtain orders from new customers, as well as the financial
condition and success of its customers and general economic
conditions.
The size of a contract for a particular customer can vary
substantially depending on whether 20/20 provides its own
products and services or is also responsible for supplying third
party products and services. Any significant increase in the
costs required to complete a project, or any significant delay in
a project schedule, could have a material adverse effect on that
contract's profitability and because of the size of each
contract, on 20/20's overall results of operations. Any
significant failure by 20/20 to accurately estimate the scope of
work involved, plan and formulate a contract proposal,
effectively negotiate a favorable contract price, properly manage
a project or efficiently allocate resources among several
projects could have a material adverse effect on 20/20's
business, financial condition, operating results and cash flows.
Although 20/20 has executed contracts with parties for the
distribution of 20/20's telemetry products, no products have yet
been sold and no revenue has been generated. 20/20 does not
believe that any revenue will be generated from the contracts it
has previously executed owing to the failure of the distributor
to fulfil its contractual obligations.
Potential Fluctuations in Backlog
Due to the long, complex sales process and the mix of sales of
20/20's products and services and third party products and
services, 20/20's backlog may fluctuate significantly from
period-to-period. Contracts for software maintenance and support
are generally renewable every year and are subject to
renegotiation upon renewal. There can be no assurance that any
customer of 20/20 will renew its maintenance contracts or that
renewal terms will be favorable to 20/20.
Limited Operating History; History of Losses; Increased Expenses
20/20 has only a limited operating history upon which an
evaluation of its business and prospects can be based. As of
December 31, 2001, 20/20 had an accumulated deficit of $180,016.
There can be no assurance of profitability or that, 20/20 will
realize revenue or be profitable on a quarterly or annual basis.
In addition, 20/20 plans to increase its operating expenses to
expand its sales and marketing operations, fund greater levels of
research and development, enhance distributor training, and
increase its administration resources. A relatively high
percentage of 20/20's expenses will be typically fixed in the
short term as 20/20's expense levels are based, in part, on its
expectations of future revenue. To the extent that such expenses
precede or are not subsequently followed by increased revenue,
20/20's business, financial condition, operating results and cash
flows would be materially adversely affected. 20/20 believes
that period-to-period comparisons of financial results are not
necessarily meaningful and should not be relied upon as an
indication of future performance.
Integration of Acquisitions
20/20 may, when and if the opportunity arises, acquire other
products, technologies or businesses involved in activities, or
having product lines, that are complementary to 20/20's business.
Acquisitions involve numerous risks, including difficulties in
the assimilation of the operations, technologies and products of
the acquired companies, the diversion of management's attention
from other business concerns, risks associated with entering
markets or conducting operations with which 20/20 has no or
limited direct prior experience and the potential loss of key
employees of the acquired company. Moreover, there can be no
assurance that any anticipated benefits of an acquisition will be
realized. Future acquisitions by 20/20 could result in
potentially dilutive issuance's of equity securities, the
incurrence of debt and contingent liabilities, amortization of
expenses related to goodwill and other intangible assets and
write-off of restructuring costs and acquired research and
development costs, all of which could materially and adversely
affect 20/20's financial condition, results of operations and
cash flows.
Dependence on Key Personnel
20/20's success and operating results are substantially dependent
on the continued service and performance of its senior
management. Competition for such personnel is intense, and there
can be no assurance that 20/20 can retain its key managerial
employees or that it will be able to attract or retain
highly-qualified technical and managerial personnel in the
future. The loss of the services of any of 20/20's senior
management or other key employees or the inability to attract and
retain the necessary technical, sales and managerial personnel
could have a material adverse effect upon 20/20's business,
financial condition, operating results and cash flows.
Dependence on Selected Vertical Markets
20/20's believes that any revenue will be derived from the sale
of products and services to customers in the CATV and electronic
vending industries. 20/20 believes that 75% of such revenue will
come from the vending application, with the remaining 25% from
CATV. Adverse economic developments and trends may affect levels
of capital spending by companies in our target markets. A decline
in demand for 20/20's products in the CATV and electronic vending
industries as a result of economic conditions, regulatory trends,
competition, technological change or otherwise, would have a
material adverse effect on 20/20's business, financial condition,
operating results and cash flows. There can be no assurance that
20/20 will be able to continue to diversify its product offerings
or revenue base by entering into new vertical markets.
Dependence on Marketing Relationships
20/20's products are marketed by 20/20's distribution partner.
To date, the company's distribution partner has failed to achieve
any sales on behalf of the company and there is doubt as to
whether the partner will be able to successfully market 20/20's
products. The loss of this other any other partners, the failure
of parties to perform under agreements with 20/20 or the
inability of 20/20 to attract and retain new distributors with
the technical, industry and application experience required to
market 20/20's products successfully could have a material
adverse effect on 20/20's business, financial condition,
operating results and cash flows. 20/20 expects that it may
enter into certain joint ventures in order to facilitate its
expansion into other markets. To the extent that such joint
ventures are not successful, there could be a material adverse
effect on 20/20's business, financial condition, operating
results and cash flows.
Competition
The market for wireless telemetry solutions is highly
competitive. Numerous factors affect 20/20's competitive
position, including price, product features, product performance
and reliability, ease of use, product scalability, product
availability on multiple platforms (server, wireless carrier, and
mobile workstation), meeting customer schedules, integration of
products with other enterprise solutions, availability of project
consulting services and timely ongoing customer service and
support. Within these markets, there are a small number of new
ventures, either small companies attempting to establish a
business in this market or large companies attempting to
diversify their product offerings. 20/20 expects such
competition to intensify as acceptance and awareness of wireless
telemetry continues.
Current or potential competitors may establish cooperative
arrangements among themselves or with third parties to increase
the ability of their products to address customer requirements.
Certain of 20/20's competitors have substantially greater
financial, technical, marketing and distribution resources than
20/20. As a result, they may be able to respond more quickly to
new or emerging technologies and changing customer requirements,
or to devote greater resources to the development and
distribution of existing products.
There can be no assurance that 20/20 will be able to compete
successfully against current or future competitors or alliances
of such competitors, or that competitive pressures faced by 20/20
will not materially adversely affect its business, financial
condition, operating results and cash flows.
20/20 primarily competes in the vending market with Isochron of
Austin, TX, and Marconi of London, England. 20/20's competitors
in the CATV industry is limited to companies such as Cheetah
Technologies which offer a similar power supply monitoring
product, that uses part of the CATV bandwidth to connect power
supplies to the operations center.
Risk of Product Defects
Wireless telemetry products, including those offered by 20/20,
from time-to-time contain undetected errors or failures. There
can be no assurance that, despite testing by 20/20 and by current
and potential customers, errors will not be found in 20/20's
products. Such errors could result in loss of or delay in market
acceptance of 20/20's products, which could have a material
adverse effect on 20/20's business, financial condition,
operating results and cash flows.
Proprietary Technology
20/20's success is dependent on its ability to protect its
protect its proprietary technology and property rights. 20/20
intends on making appropriate applications to governmental bodies
to secure its trademark and to patent any future inventions or
developed technologies. 20/20 also utilizes non-disclosure
agreements and other contractual provisions to establish and
maintain its rights and to maintain confidentiality. As part of
its confidentiality procedures, 20/20 enters into non-disclosure
and confidentiality agreements with each of its key employees,
consultants, distributors, customers and corporate partners, to
limit access to and distribution of its software, documentation
and other proprietary information. There can be no assurance
that 20/20's efforts to protect its intellectual property rights
will be successful. Despite 20/20's efforts to protect its
proprietary technology, unauthorized third parties, including
competitors, may be able to copy or reverse engineer certain
portions of 20/20's software products, and use such copies to
create competitive products. Policing the unauthorized use of
20/20's products is difficult.
In addition, because third parties may attempt to develop similar
technologies independently, 20/20 expects that wireless telemetry
developers will be increasingly subject to infringement claims as
the number of products and competitors in 20/20's industry
segments grow and the functionality of products in different
industry segments overlaps. Although 20/20 believes that its
products do not infringe on the intellectual property rights of
third parties, there can be no assurance that third parties will
not bring infringement claims (or claims for indemnification
resulting from infringement claims) against 20/20 with respect to
copyrights, trademarks, patents and other proprietary rights.
Any such claims, whether with or without merit, could be time
consuming, result in costly litigation and diversion of
resources, cause product shipment delays or require 20/20 to
enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms
acceptable to 20/20 or at all. A claim of product infringement
against 20/20 and failure or inability of 20/20 to license the
infringed or similar technology could have a material adverse
effect on 20/20's business, financial condition, operating
results and cash flows.
Dependence on Third Parties
Certain contracts entered in the future may require 20/20 to
supply, coordinate and install third party products and services.
20/20 believes that there are a number of acceptable vendors and
subcontractors for most of its required products, but in many
cases, despite the availability of multiple sources, 20/20 may
select a single source in order to maintain quality control and
to develop a strategic relationship with the supplier or may be
directed by a customer to use a particular product. The failure
of a third party supplier to provide a sufficient supply of parts
and components or products and services in a timely manner could
have a material adverse effect on 20/20's results of operations.
In addition, any increase in the price of one or more of these
products, components or services could have a material adverse
effect on 20/20's business, financial condition, operating
results and cash flows. Additionally, under certain
circumstances, 20/20 supplies products and services to a customer
through a larger company with a more established reputation
acting as a project manager or systems integrator. In such
circumstances, 20/20 has a sub-contract to supply its products
and services to the customer through the prime contractor. In
these circumstances, 20/20 is at risk that situations may arise
outside of its control that could lead to a delay, cost over-run
or cancellation of the prime contract which could also result in
a delay, cost over-run or cancellation of 20/20's sub-contract.
The failure of a prime contractor to supply its products and
services or perform its contractual obligations to the customer
in a timely manner could have a material adverse effect on
20/20's financial condition, results of operations and cash
flows.
Foreign Currency Exchange Rate Fluctuations
Because 20/20's reporting currency is the United States dollar,
its operations outside the United States face additional risks,
including fluctuating currency values and exchange rates, hard
currency shortages and controls on currency exchange. 20/20 has
operations outside the United States and is hedged, to some
extent, from foreign exchange risks because of its ability to
purchase, develop and sell in the local currency of those
jurisdictions. In addition, 20/20 does enter into foreign
currency contracts under certain circumstances to reduce 20/20's
exposure to foreign exchange risks. There can be no assurance,
however, that the attempted matching of foreign currency receipts
with disbursements or hedging activities will adequately moderate
the risk of currency or exchange rate fluctuations which could
have a material adverse effect on 20/20's business, financial
condition, operating results and cash flows. In addition, to the
extent 20/20 has operations outside the United States, 20/20 is
subject to the impact of foreign currency fluctuations and
exchange rate charges on 20/20's reporting in its financial
statements of the results from such operations outside the United
States.
Product Liability
The license and support of products by 20/20 may entail the risk
of exposure to product liability claims. A product liability
claim brought against 20/20 or a third party that 20/20 is
required to indemnify, whether with or without merit, could have
a material adverse effect on 20/20's business, financial
condition, operating results and cash flows. 20/20 carries
insurance coverage for product liability claims which it believes
to be adequate for its operations.
SUBSEQUENT EVENT
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On December 31, 2001, Mr. Dwight Martin resigned as a director
of the corporation. On the same date, the shareholders elected
one new member to the Board of Directors to fill the vacancy of
Mr. Dwight Martin. Mr. Grant Morrison of Langley B.C. was
appointed to the Board of directors.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
The company does not maintain a market in its securities. The
risk associated with any investment in the company's securities
are those set forth in the Risk Factors section of Item 2 of this
document.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are currently no pending legal proceedings against the
company.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
On December 31, 2001, Mr. Dwight Martin resigned as a director
of the corporation. On the same date, the shareholders elected
one new member to the Board of Directors to fill the vacancy of
Mr. Dwight Martin. Mr. Grant Morrison of Langley B.C. was
appointed to the Board of directors.
Item 5. Other information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
20/20 WIRELESS INC.
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(Registrant)
Date: April 26, 2002
By: /s/ Daniel Mercier
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Director