U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _____________ to ________________
Commission file number: 333-49388
CHINA WIRELESS COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 91-1966948
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7365 VILLAGE SQUARE DRIVE #1611, CASTLE ROCK, COLORADO 801089
(Address of principal executive offices)
(720) 733-6214
(Issuer's telephone number)
I-TRACK, INC.
3031 COMMERCE DRIVE, BUILDING B, FORT GRATIOT, MICHIGAN 48058
(Former name, former address and former fiscal year, if changed
since last report)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
23,696,900 SHARES OF COMMON STOCK, $0.001 PAR VALUE,
AS OF MARCH 31, 2002
Transitional Small Business Disclosure Format (check one); Yes No X
----- -----
CHINA WIRELESS COMMUNICATIONS, INC. (FKA I-TRACK, INC. )
INDEX
PART I. FINANCIAL INFORMATION
Item 1. - Financial Statements
- Balance Sheet (unaudited)
March 31, 2002 ..............................................................................4
- Statements of Operations (unaudited)
Three Months Ended March 31, 2002 and 2001, and Period
from Inception (March 8, 1999) through March 31, 2002 .......................................5
- Statements of Cash Flows (unaudited)
Three Months Ended March 31, 2002 and 2001, and Period
from Inception (March 8, 1999) through March 31, 2002 .......................................6
- Notes to Financial Statements ...............................................................7
Item 2. - Management's Discussion and Analysis or Plan of Operations ...................................9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .............................................................................12
Item 2. Changes in Securities .........................................................................12
Item 3. Defaults Upon Senior Securities ...............................................................12
Item 4. Submission of Matters to a Vote of Security Holders ...........................................12
Item 5. Other Information .............................................................................12
Item 6. Exhibits and Reports on Form 8-K ..............................................................12
SIGNATURES ......................................................................................................14
CERTIFICATIONS...................................................................................................15
2
CHINA WIRELESS COMMUNICATIONS, INC.
(fka i-TRACK, INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
MARCH 31, 2002
(UNAUDITED)
3
China Wireless Communications, Inc.
fka i-Track, Inc.
(A Development Stage Company)
Balance Sheet
(Unaudited)
ASSETS
Current Assets
Cash $ 638
-------------
$ 638
==============
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 11,778
Operating Advances - Related Parties 11,099
--------------
Total Current Liabilities 22,877
Stockholders Equity
Preferred stock, 1,000,000 shares --
authorized, $.01 par value, none
issued or outstanding
Common Stock, 50,000,000 shares
authorized, $0.001 par value,
23,696,900 issued and outstanding 23,697
Additional Paid in Capital 1,493,453
Stock Issuance Costs (148,355)
Deficit Accumulated during the development stage (1,391,034)
--------------
(22,239)
--------------
$ 638
==============
The accompanying notes are an integral part of the financial statements.
4
China Wireless Communications, Inc.
fka i-Track, Inc.
(A Development Stage Company)
Statement of Operations
(Unaudited)
For the three For the three For the period
March 8, 1999
Months ended Months ended (inception)
March 31, March 31, through
2002 2001 March 31, 2002
----------------- ----------------- ------------------
Revenue $ 145,440 $ -- $ 205,440
Operating expenses:
Bad Debt Expense -- -- 1,301,761
Cost of Goods Sold 125,440 -- 176,800
General and Administrative Expenses 33,632 23807 102,913
Management Fees to Related Party 7,500 -- 15,000
-------------- ------------- -------------
Total Costs and Expenses 166,572 23807 1,596,474
-------------- ------------- -------------
Operating Advances - Related Parties
Net (Loss) $ (21,132) $ (23,807) $ (1,391,034)
============== ============= =============
Weighted Average Number of Common
Shares Outstanding 23,696,900 18,700,000 19,711,649
============== ============= =============
Net (Loss) per Common Share $ (0.001) $ (0.001) $ (0.071)
============== ============= =============
The accompanying notes are an integral part of the financial statements.
5
China Wireless Communications, Inc.
Fka I-Track, Inc.
(A Development Stage Company)
Statement of Cash Flow
(Unaudited)
For the period
For the Three For the Three March 8, 1999
Months ended Months ended (inception)
March 31, March 31, Through
2002 2001 March 31, 2002
----------------- ---------------- -----------------
Cash Flows from Operating Activities
Net (Loss) $ (21,132) $ (23,807) $ (1,391,034)
Adjustments to reconcile Net (Loss)
to net cash used in operating activities:
Write-off of notes receivable -- -- 1,301,761
(Increase) Decrease in Assets:
Accounts Receivable -- -- --
Increase (Decrease) in Liabilities:
Accounts Payable 7,999 14,080 11,778
Operating Advances - Related Parties -- -- 1,200
-------------- -------------- ---------------
7,999 14,080 1,314,739
-------------- -------------- ---------------
Net Cash (used in) Operating Activities (13,133) (9,727) (76,295)
Cash Flows from Investing Activities -- -- --
Cash Flows from Financing Activities:
Proceeds (repayments) of operating
advance-related party -- 6,500 15,000
Proceeds from Stock Issuance -- -- 400,950
Stock Issuance Costs -- -- (148,355)
Proceeds from (advances to) related party 11,099 -- (190,662)
-------------- -------------- --------------
Net Cash provided by Financing Activities 11,099 6,500 76,933
-------------- -------------- ---------------
Net increase (decrease) in cash (2,034) (3,227) 638
Beginning Cash 2,672 4,404 --
-------------- -------------- ---------------
Ending Cash $ 638 $ 1,177 $ 638
============== ============== ===============
The accompanying notes are an integral part of the financial statements.
6
CHINA WIRELESS COMMUNICATIONS, INC.
fka i-TRACK, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
(Unaudited)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") for interim
financial information and Item 310(b) of Regulation S-B. They do not include all
of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair presentation have
been included. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year. For
further information refer to the audited financial statements of the Company as
of December 31, 2001, including notes thereto, included in the Company's annual
report, as amended, on Form 10-KSB/A.
NOTE 2: EARNINGS PER SHARE
The Company calculates net income (loss) per share as required by SFAS No.
128, "Earnings per Share." Basic earnings (loss) per share is calculated by
dividing net income (loss) by the weighted average number of common shares
outstanding for the period. Diluted earnings (loss) per share is calculated by
dividing net income (loss) by the weighted average number of common shares and
dilutive common stock equivalents outstanding. During the periods presented,
common stock equivalents were not considered, as their effect would be
anti-dilutive.
NOTE 3: GOING CONCERN
The Company has been a development stage company since its inception on
March 8, 1999. The Company is dependent upon AVL Information Systems, Ltd. and
its subsidiary to provide all of its products sold and to supply management
services. Because of the uncertainty of AVL Information Systems, Ltd. to
continue as a going concern to supply these products and services, there is
substantial doubt about the Company's ability to continue as a going concern.
Management is investigating the acquisition of the U.S. subsidiary, AVL
Information Systems, Inc. from AVL Information Systems, Ltd.
The accompanying financial statements do not include an adjustment that
might result from the outcome of this uncertainty.
7
China Wireless Communications, Inc.
fka i-Track, Inc.
Notes to Financial Statements
March 31, 2002
(Unaudited)
Note 4: Supplemental Disclosure of Noncash Financing and Investing Activities
For the three For the three For the period
Months ended Months ended March 8, 1999 (inception)
March 31, March 31, through
2002 2001 March 31, 2002
------------------ ----------------- -------------------------
Issuance of 15,000,000 shares of
stock to satisfy debt $ - $ - $ 15,000
================== ================= =========================
Issuance of 1,200,000 shares of
stock for services rendered $ - $ - $ 1,200
================== ================= =========================
Net Cash from Stock Proceeds
received by a related corporation
in exchange for note receivable
from that related corporation $ - $ - $ 1,100,000
================== ================= =========================
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Unless the context otherwise requires, the terms "we", "our" and "us" refers to
i-Track, Inc.
CAUTION
Certain statements in this amended Quarterly Report on Form 10-QSB, our audited
financial statements for the fiscal year ended December 31, 2001 as filed in our
amended annual report on Form 10-KSB/A, as well as statements made by us in
periodic press releases, oral statements made by our officials to analysts and
shareholders in the course of presentations about ourselves, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors that may cause the actual
results, performance or achievements of us to be materially different from any
future results, performance or achievements expressed or implied by the forward
looking statements. Such factors include, among other things, (1) general
economic and business conditions; (2) interest rate changes; (3) the relative
stability of the debt and equity markets; (4) competition; (5) the availability
and cost of our products; (6) demographic changes; (7) government regulations
particularly those related to automatic vehicle location industry; (8) required
accounting changes; (9) equipment failures, power outages, or other events that
may interrupt Internet communications; (10) disputes or claims regarding our
proprietary rights to our software and intellectual property; and (11) other
factors over which we have little or no control.
OVERVIEW
We were incorporated in the state of Nevada on March 8, 1999 by AVL Information
Systems Ltd. and its principal officer and directors. AVL Information Systems
Ltd. is a Canadian public company that owns and licenses certain technology and
automatic vehicle location systems. Effective September 30, 2001, we entered
into an exclusive worldwide distribution agreement with AVL Information Systems
Ltd. Under the agreement, we are licensed to market and distribute all of the
products manufactured by AVL Information Systems Ltd.
We are in the development stage and have generated minimal revenues. We have a
deficit accumulated during the development stage of $1,391,034 as of March 31,
2002. We have suffered losses from operations and require additional financing.
Moreover, we are dependent upon AVL Information Systems Ltd. and its subsidiary
to provide all of our products and management services. Because of the
uncertainty of AVL Information Systems Ltd. to continue as a going concern to
supply these products and services, there is substantial doubt about our ability
to continue as a going concern. While we are investigating the acquisition of
the U.S. subsidiary of AVL Information Systems in partial satisfaction of the
debt, we cannot assure you that this acquisition will occur or that it will
eliminate this doubt about our ability to continue.
9
RESULTS FROM OPERATIONS
We generated our first revenues during the last quarter of fiscal 2001. For the
three months ended March 31, 2002, we generated revenues of $145,440. Cost of
goods sold, as a percentage of revenues, was 86.2%. General and administrative
expenses increased from $23,807 during the first quarter of 2001 to $33,632 in
2002, an increase of 41.3%. In addition, we incurred management fees of $7,500
in 2002 that were not incurred in 2001. As a result, we incurred an operating
loss of $21,132 for the quarter ended March 31, 2002, as compared to $23,807 for
the quarter ended March 31, 2001.
LIQUIDITY AND FINANCIAL CONDITION
For the three months ended March 31, 2002, the statement of cash flows reflects
net cash used in operating activities of $13,133, and net cash provided by
financing activities of $11,099. For the three months ended March 31, 2001, net
cash used in operating activities was $9,727, which was offset by proceeds of an
operating advance from a related party in the amount of $6,500.
On November 6, 2000, we filed a registration statement on Form SB-1 with the SEC
(file number 333-49388) for the offer and sale of 2,500,000 units, at a price
$0.10 per unit, with each unit consisting of one share of common stock and one
warrant to purchase one share of common stock. Our registration statement was
declared effective on April 10, 2001. We completed the offering on April 30,
2001, selling 2,500,000 Units for gross proceeds in the amount of $250,000. The
total amount of offering expenses were $28,005, with net proceeds of $221,995.
In August and September, 2001, we advanced a total of $209,000 to our affiliate,
AVL Information Systems Ltd., toward the purchase of 600 Chaperone tracking
units and marketing materials. This advance depleted most of our cash, leaving
$30,052 at September 30, 2001.
In October 2001, warrants for the purchase of 2,146,900 shares of our common
stock were exercised for $1,073,450. Theses funds have also been advanced to AVL
Information Systems Ltd. toward the purchase of tracking units. An additional
346,900 warrants were exercised in November 2001.
We adjusted our financial statements as of and for the year ended December 31,
2001 to reflect the notes receivable from AVL Information Systems as being
uncollectible, due to the deterioration of AVL's financial condition.
At March 31, 2002, we had cash of $638 and a working capital deficiency of
$22,239. This compares to cash of $2,672, and a working capital deficiency of
$1,107 at December 31, 2001.
We loaned funds to AVL Information Systems and its subsidiary to enable those
entities to get the Chaperone units to market more quickly. Through December 31,
2001, we had orders for approximately 5,000 units of the Chaperone unit, and
through March 31, 2002, we had orders for approximately 9,500 units. While we
had revenues of $145,440 for the quarter ended March 31, 2002, sales at this
level is not sufficient to cover our operating expenses or to engage in the type
of
10
marketing campaign that we need to pursue. Accordingly, we will have to pursue
funding from external sources through a line of credit arrangement and/or the
sale of debt and/or equity securities. We cannot assure you that we will be
successful in these pursuits.
PLAN OF OPERATION
At this time, we intend to establish relationships with a number of other
companies to accelerate the implementation of the distribution agreement and the
sale of the Spryte and Chaperone Systems(TM). We believe that our status as a
U.S. publicly traded company will assist us in establishing strategic alliances
because of our perceived level of credibility and access to capital in the U.S.
markets. We intend to establish relationships with existing companies engaged in
the automatic vehicle location industry, wireless carriers, manufacturers,
distributors, and Internet companies. We intend to create relationships and to
retain consultants and contractors with established connections in the
telecommunication and application service provider industries. We foresee that
the compensation would be commission based. Depending upon the market acceptance
of the Spryte and Chaperone Systems(TM), we may hire employees in the
foreseeable future.
We believe that establishing a network of alliances, while not a small task, can
be accomplished in a shorter period of time and at less cost than building a
comparable direct sales infrastructure. It is our priority to establish a
channel partner network in the U.S. and Canada, and recruit international
channel partners as opportunities present themselves.
We expect to generate revenues by selling the Spryte and Chaperone Systems(TM)
at cost plus margin. We believe the amount of margin will vary depending on the
time, expense, and size of sale.
We do not expect to purchase any significant equipment during the next twelve
months, nor do we expect to hire a significant number of employees during that
time period.
11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
2.1 Articles of Incorporation (1) N/A
2.2 Bylaws (1) N/A
2.3 Certificate of Amendment of Articles of Incorporation (1) N/A
10.1 Promissory Note dated August 20, 2000, in the amount of $15,000, payable to N/A
Peter Fisher (1)
10.2 International Distribution Agreement dated January 7, 2001 (2) N/A
10.3 Worldwide Exclusive Distribution Agreement dated September 30, 2001 (3) N/A
10.4 Management Services Agreement dated January 1, 2002 (4) N/A
10.5 2002 Stock Plan (4) N/A
99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
12
----------------------
1) Incorporated by reference from the exhibits to the Registration Statement
on Form SB-1 filed on November 6, 2000, File No. 333-49388.
(2) Incorporated by reference from the exhibits to the Registration
Statements on Form SB-1/A-1 filed on January 17, 2001, File No. 333-49388.
(3) Incorporated by reference from the exhibits to the Quarterly Report on
Form 10-QSB filed on December 6, 2001, File No. 333-49388.
(4) Incorporated by reference from the exhibits to the Annual on Form 10-KSB
for the fiscal year ended December 31, 2001, File No. 333-49388.
b) Reports on Form 8-K: None.
13
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.
CHINA WIRELESS COMMUNICATIONS, INC.
(Registrant)
Date: April 2, 2003 By: /s/ BRAD WOODS
----------------------------------------
Brad Woods, Chief Financial Officer
(Principal Financial and Accounting Officer)
14
CERTIFICATIONS
I, Phillip Allen, certify that:
1. I have reviewed this amended quarterly report on Form 10-QSB/A of China
Wireless Communications, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
Date: April 2, 2003
/s/ PHILLIP ALLEN
-----------------------------------------
Phillip Allen, President
(Principal Executive Officer)
I, Brad Woods, certify that:
1. I have reviewed this amended quarterly report on Form 10-QSB/A of China
Wireless Communications, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
Date: April 2, 2003
/s/ BRAD WOODS
-------------------------------------
Brad Woods, Chief Financial Officer
15