UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2001
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from n/a to n/a
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000-32749
Commission file number
KOALA INTERNATIONAL WIRELESS INC.
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(Exact name of small business issuer as specified in its charter)
Nevada #76-0616468
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(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
Suite #676, 141-757 West Hastings Street,
Vancouver, British Columbia,
Canada V6C 1A1
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(Address of principal executive offices)
(604) 681-7806
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ x ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date: As of
February 01, 2002, the Issuer had 12,500,000 shares of common stock, par value $0.001, issued and outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ x ]
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS 3
Consolidated Balance Sheets 4
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 8
Plan of Operations 8
Liquidity and Capital Resources 8
Special Note Regarding Forward Looking Statements 8
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 9
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 9
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9
ITEM 5. OTHER INFORMATION 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURES 10
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
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The accompanying consolidated balance sheets of Koala International Wireless
Inc. (a development stage company) at December 31, 2001 and September 30, 2001,
and the related consolidated statements of operations and the consolidated
statements of cash flows for the three months ended December 31, 2001 and
December 31, 2000 and for the period August 18, 1999 (date of inception) to
December 31, 2001, have been prepared by Koala International Wireless Inc.'s
management and they do not include all information and notes to the consolidated
financial statements necessary for a complete presentation of the consolidated
financial position, results of operations and cash flows in conformity with
accounting principles generally accepted in the United States of America. In
the opinion of management, all adjustments considered necessary for a fair
presentation of the consolidated results of operations and consolidated
financial position have been included and all such adjustments are of a normal
recurring nature.
Consolidated operating results for the quarter ended December 31, 2001 are not
necessarily indicative of the results that can be expected for the year ending
September 30, 2002.
3
Koala International Wireless Inc.
(a Development Stage Company)
Consolidated BALANCE SHEETS
As at December 31, 2001 and September 30, 2001 (Unaudited)
U.S. Dollars
December 31 September 30
2001 2001
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ASSETS
Current
Cash $ 1,845 $ 558
Accounts receivable - 2,992
Prepaid expense 4,960 -
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6,805 3,550
Fixed assets 36,254 38,621
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Total Assets $ 43,059 $ 42,171
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LIABILITIES
Current
Accounts payable and accrued liabilities $ 73,158 $ 65,194
Loans payable 39,236 15,444
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Total Liabilities 112,394 80,638
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STOCKHOLDERS' EQUITY
Common Stock
Authorized
100,000,000 shares of common stock with a par value of $0.001 each
20,000,000 shares of preferred stock with a par value of $0.001 each
Issued and outstanding
12,500,000 shares of common stock 11,000 11,000
Additional paid in capital 309,813 309,813
Deficit accumulated during development stage of operations (390,148) (359,280)
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Total Stockholders' Equity (Deficit) (69,335) (38,467)
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Total Liabilities and Stockholders' Equity $ 43,059 $ 42,171
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The accompanying notes are an integral part of these consolidated financial statements.
4
Koala International Wireless Inc.
(a Development Stage Company)
Consolidated STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2001 and 2000 and
the Period August 18, 1999 (Date of Inception) to December 31, 2001 (Unaudited)
U.S. Dollars
August 18, 1999
(Inception) to
Three Months Three Months December 31
2001 2000 2001
---- ---- ----
Revenue $ - $ - $ -
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Expenses
Website 3,100 46,394 95,266
Professional fees 15,075 7,200 59,778
Depreciation 2,367 - 11,836
Rent, office and administration 9,774 7,606 65,061
Consulting 2,490 - 2,490
License write off and fees - - 1,000
Salaries - 31,500 65,670
Events - 56,808 67,344
Travel and business development - 10,759 21,703
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30,868 160,267 390,148
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Net income (loss) for period $ (30,868) $(160,267) $(390,148)
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Net income (loss) per share $ (0.0059) $ (0.0356) $ (0.0821)
Weighted average number of shares outstanding 5,192,308 4,500,000 4,750,000
The accompanying notes are an integral part of these consolidated financial statements.
5
Koala International Wireless Inc.
(a Development Stage Company)
Consolidated STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 2001 and 2000 and
the Period August 18, 1999 (Date of Inception) to December 31, 2001 (Unaudited)
U.S. Dollars
August 18, 1999
(Inception) to
Three Months Three Months December 31
2001 2000 2001
---- ---- ----
Operating Activities
Net income (loss) $ (30,868) $ (160,267) $ (390,148)
Adjustments to reconcile net income (loss) to net
cash used by operating activities 2,367 - 11,836
Changes in operating assets and liabilities 29,788 34,675 107,434
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Net cash provided by (used by) operating activities 1,287 (125,592) (270,878)
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Investing Activities
Fixed assets - (34,338) (48,090)
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Financing Activities
Common stock issued for:
License - - 2,000
Organizational expense - - 2,500
Acquisition of Urbanesq.com - - 6,500
Additional paid in capital - cash - 137,411 309,813
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- - 320,813
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Inflow (outflow) of cash 1,287 (22,519) 1,845
Cash, beginning of period 558 25,834 -
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Cash, end of period $ 1,845 $ 3,315 $ 1,845
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Supplemental information
Interest paid $ 0 $ 0 $ 0
Shares issued for services $ 0 $ 0 $ 0
Corporate income taxes paid $ 0 $ 0 $ 0
The accompanying notes are an integral part of these consolidated financial statements.
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Koala International Wireless Inc.
(a Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended December 31, 2001
1. ORGANIZATION AND BASIS OF PRESENTATION
Koala International Wireless Inc. (the "Company" or "Koala" and formerly Kettle
River Group Inc.) was incorporated August 18, 1999 in the State of Nevada and is
in the development stage. The September 30, 2001 comparative balance sheet
includes the accounts of Urbanesqu.com retroactively to incorporation, giving
retroactive effect to its acquisition as a wholly owned subsidiary.
2. DEVELOPMENT STAGE COMPANY
In a development stage company, management devotes most of its activities to
preparing the business for operations. Planned principal activities have not
yet begun. The ability of the Company to emerge from the development stage with
respect to any planned principal business activity is dependent upon its
successful efforts to raise additional equity financing and/or attain profitable
operations. There is no guarantee that the Company will be able to raise any
equity financing or sell any of its products at a profit. There is, therefore,
doubt regarding the Company's ability to continue as a going concern.
3. LICENSES
A license to market and distribute vitamins, minerals, nutritional supplements
and other health and fitness products in Great Britain was acquired on February
14, 2000 for a term of three years for consideration of 2,000,000 common shares
valued at $2,000.00. These shares were paid evenly to ten partners. The
general manager of that partnership was, at the time, the spouse of a (former)
director and officer of the Company. All costs of acquiring the licenses have
been written off. The Company agreed to pay an annual fee of $500.00 for
maintenance of the grantor's web site commencing February 14, 2001. The grantor
of the license retains 50% of the profit on all sales made through the web-site.
To date, no sales have occurred.
The Company has agreed to expend a minimum of $110,400 with a developer for the
development of the "Hipster" internet access device. To date, the Company has
advanced $4,960 to the developer. At December 31st, 2001, the Company is not
able to fund this contract.
4. BASIS OF ACCOUNTING PRESENTATION
These unaudited financial statements have been prepared by management in
accordance with accounting principles generally accepted in the United States of
America for interim financial information, are condensed and do not include all
disclosures required for annual financial statements. The organization and
business of the Company, accounting policies followed by the Company and other
information are contained in the notes to the Company's audited financial
statements filed as part of the Company's Form 10-SB and Form 10K-SB for the
year ended September 30, 2001.
In the opinion of the Company's management, these financial statements reflect
all adjustments necessary to present fairly the Company's financial position at
December 31, 2001 and the results of its operations for the three months then
ended. The results of operations for the three months ended December 31, 2001
are not necessarily indicative of the results to be expected for the entire
fiscal year.
5. COMMON CAPITAL STOCK
Pursuant to a voluntary share exchange agreement dated October 17, 2001 and
effective October 18, 2001, the Company issued 6,500,000 shares of common stock
to acquire 100% of the outstanding share capital of Urbanesq.com, Inc., a
private Ontario, Canada company. Certain shareholders of the Company in turn
surrendered 7,500,000 shares of the Company's common stock to the Company,
resulting in 12,500,000 shares of common stock of the Company issued and
outstanding as of October 18, 2001. On completion of the acquisition,
Urbanesq.com, Inc. became a wholly-owned subsidiary of the Company.
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Subsequent to September 30, 2001 and the voluntary share exchange, the Company
changed its year end from December 31st to September 30th.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
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The following discussion should be read in conjunction with the accompanying
unaudited interim consolidated financial statements.
Plan of Operations.
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The Company has not generated any revenues from operations since inception.
During this quarter, the Company actively pursued an agreement to acquire all
the outstanding share capital of Urbanesq.com, Inc., a private Ontario
corporation in return for the Company's common stock. Both companies' boards
approved the transaction. The Company issued 6,500,000 shares of common stock to
acquire 100% of the outstanding share capital of Urbanesq.com, Inc. The
shareholders of Urbanesq.com, Inc. were parties to the voluntary share exchange
agreement. Certain shareholders of the Company in turn surrendered 7,500,000
shares of the Company's common stock to the Company, resulting in 12,500,000
shares of common stock of the Company issued and outstanding as of October 18,
2001.
Urbanesq.com, Inc. was incorporated in 2000. Urbanesq.com, Inc. is developing a
portable communication's device called The Hipster, which will be designed to
quickly source information from the Internet.
On October 18, 2001, Urbanesq.com, Inc. became a wholly-owned subsidiary of the
Company. Messrs. Michael McGrath and Robert Vivacqua, two principals of
Urbanesq.com, Inc., have joined the Board of Directors of the Company, in
addition to Lorne Catling and Larry Wintemute. Christine Cerisse has remained a
member of the Board.
No revenue was recorded for the three month period ended December 31, 2001 and
no revenue has been generated since inception.
Net loss for the three month period ended December 31, 2001 was $(30,868)
compared to a loss of $(160,267) for the three months ended December 31, 2000.
The expenditures reflected in the loss represent the Company's administrative
expenses, including maintenance of an office, expenses to take the Company
public, costs of maintaining the Company's website and expenses associated with
pursuing its vitamineralherb license business. During this period, the Company
advanced $4,960 to Bolton Pass Electronics Inc. of Montreal, Quebec, for the
design and manufacture of its Hipster device. The Company has committed to
expend a further $105,440 for the completion of a prototype and manufacturing
specifications for a "Hipster" unit. The Company is actively seeking sources of
financing for its "Hipster" development program.
Liquidity and Capital Resources
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The Company has been able to pay its expenses and costs through the increase in
its accounts payable. As of December 31, 2001, the Company had a working
capital deficiency of $105,589. The Company needs to raise additional funds
through the sale of stock or borrowing just to maintain the corporate existence
of the Company and to maintain the listing of the Company's common stock on the
OTC Bulletin Board. The Company may not be successful in its efforts to raise
equity financing and /or attain profitable operations. There is doubt regarding
the Company's ability to continue as a going concern.
Special Note Regarding Forward Looking Statements
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Certain statements in this report and elsewhere (such as in other filings by the
company with the Securities and Exchange Commission ("SEC"), press releases,
presentations by the Company of its management and oral statements) may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," and
"should," and variations of these words and similar expressions, are intended to
identify these forward-looking statements. Actual results may materially differ
8
from any forward-looking statements. Factors that might cause or contribute to
such differences include, among others, competitive pressures and constantly
changing technology and market acceptance of the Company's products and
services. The Company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements, which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings.
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To the Company's knowledge, there are no lawsuits nor were any lawsuits
commenced against the Company during the quarter ended December 31, 2001, nor
did the Company commence any lawsuits during the same period.
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Item 2. Changes in Securities and Use of Proceeds.
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Changes in Securities
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On October 18, 2001, the Company issued 6,500,000 shares of common stock to
acquire 100% of the outstanding share capital of Urbanesq.com, Inc., a private
Ontario, Canada company. Certain shareholders of the Company in turn
surrendered 7,500,000 shares of the Company's common stock to the Company. The
Company offered and issued its common stock to the shareholders of Urbanesq
pursuant to Rule 506 of Regulation D and/or Section 4(2) and/or Regulation S
under the Securities Act of 1933, as amended. All of the Urbanesq shareholders
reside in Canada and were provided an offering memorandum a reasonable time
prior to exchanging their Urbanesq stock for the Company's stock.
Use of Proceeds
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Not applicable.
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Item 3. Defaults Upon Senior Securities.
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Not applicable.
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Item 4. Submission of Matters to a Vote of Security Holders.
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No matters were put forward to a vote of the security holders of the Company
this quarter.
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Item 5. Other Information.
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None.
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Item 6. Exhibits and Reports on form 8-K.
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Exhibits
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Exhibit
Number Description
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2.1* Voluntary Share Exchange Agreement
* Previously filed by the Company on November 1, 2001 as an exhibit to a report
on Form 8-K dated October 18, 2001 and incorporated herein by reference.
9
Reports on Form 8-K
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On November 1, 2001, the Company filed a report on Form 8-K dated October 18,
2001, which included an Item 2 disclosing the acquisition of Urbanesq.com, Inc.,
including financial statements under Item 7, an Item 4 disclosing a change of
the Company's principal accountant and an Item 8 disclosing a change of the
Company's year end from December 31st to September 30th.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Koala International Wireless Inc.
Date: February 13, 2002 By: /s/ Michael McGrath
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Name: Michael McGrath
Title: President and Director