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: September 30, 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 SEPTEMBER 30, 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)
September 30, 2002 ..........................................................................4
- Statements of Operations (unaudited)
Three and Nine Months Ended September 30, 2002 and 2001, and Period
from Inception (March 8, 1999) through September 30, 2002 ...................................5
- Statements of Cash Flows (unaudited)
Nine Months Ended September 30, 2002 and 2001, and Period
from Inception (March 8, 1999) through September 30, 2002 ...................................6
- Notes to Financial Statements ...............................................................7
Item 2. - Management's Discussion and Analysis or Plan of Operations ...................................9
Item 3. - Controls and Procedures......................................................................11
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
SEPTEMBER 30, 2002
(UNAUDITED)
3
China Wireless Communications, Inc.
Fka I-Track, Inc.
(A Development Stage Company)
Balance Sheet
(Unaudited)
ASSETS
Current Assets
Cash $ 1,273
$ 1,273
==============
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 34,737
Operating Advances - Related Parties 5,784
--------------
Total Current Liabilities 40,521
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 (1,408,043)
--------------
(39,248)
--------------
$ 1,273
==============
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 period
For the three For the three For the nine For the nine March 8, 1999
Months ended Months ended Months ended Months ended (inception)
September 30, September 30, September 30, September 30, through
2002 2001 2002 2001 September 30, 2002
-------------- ------------- ------------- ------------- ------------------
Revenue $ 86,438 -- $ 302,738 -- $ 362,738
Operating expenses:
Bad Debt Expense -- -- -- -- 1,301,761
Cost of Goods Sold 69,335 -- 250,635 -- 301,995
General and Administrative Expenses 12,166 1624 67,744 29,486 137,025
Management Fees to Related Party 7,500 -- 22,500 -- 30,000
-------------- ------------- ------------- ------------- ------------------
Total Costs and Expenses 89,001 1,624 340,879 29,486 1,770,781
-------------- ------------- ------------- ------------- ------------------
Net Income (Loss) $ (2,563) $ (1,624) $ (38,141) $ (29,486) $ (1,408,043)
============== ============= ============= ============= ==================
Weighted Average Number of Common
Shares Outstanding 23,696,900 21,200,000 23,696,900 19,808,059 20,011,366
============== ============= ============= ============= ==================
Net Income (Loss) per Common Share $ (0.000) $ (0.000) $ (0.002) $ (0.001) $ (0.070)
============== ============= ============= ============= ==================
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 nine For the nine March 8, 1999
Months ended Months ended (inception) through
September 30, September 30, September 30,
2002 2001 2002
---------------- ---------------- -------------------
Cash Flows from Operating Activities
Net Income (Loss) $ (38,141) $ (29,486) $ (1,408,043)
Adjustments to reconcile Net Income (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 30,958 (190) 34,737
Operating Advances - Related Parties 1,200 1,200
---------------- ---------------- -------------------
30,958 1,010 1,337,698
---------------- ---------------- -------------------
Net Cash provided by (used in) Operating Activities (7,183) (28,476) (70,345)
Cash Flows from Investing Activities -- -- --
Cash Flows from Financing Activities:
Proceeds (repayments) of operating
advance-related party -- 17,284 15,000
Proceeds from Stock Issuance -- 250,000 400,950
Stock Issuance Costs -- (28,005) (148,355)
Proceeds from (advances to) related party 5,784 (185,230) (195,977)
---------------- ---------------- -------------------
Net Cash used in Financing Activities 5,784 54,049 71,618
---------------- ---------------- -------------------
Net increase (decrease) in cash (1,399) 25,573 1,273
Beginning Cash 2,672 4,479 -
---------------- ---------------- -------------------
Ending Cash $ 1,273 $ 30,052 $ 1,273
================ ================ ===================
The accompanying notes are an integral part of the financial statements.
6
CHINA WIRELESS COMMUNICATIONS, INC.
Fka i-TRACK, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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
he 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 amended
Annual Report on Form 10-KSB.
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
SEPTEMBER 30, 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)
September 30, September 30, through
2002 2001 September 30, 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
================ ================== =============================
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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 $1,408,043 as of September
30, 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 and nine months ended September 30, 2002, we generated revenues of $86,438
and $302,738, respectively. Cost of goods sold, as a percentage of revenues, was
80.2% and 82.8% for these periods, respectively. General and administrative
expenses increased from $29,486 during the first nine months of 2001 to $67,744
in 2002, an increase of 129.8%. In addition, we incurred management fees of
$22,500 in 2002 that were not incurred in 2001. As a result, we incurred an
operating loss of $38,141 for the nine months ended September 30, 2002, as
compared to $29,486 for the nine months ended September 30, 2001. The operating
loss for the three months ended September 30, 2002 was $2,563, as compared to
$1,624 for the three months ended September 30, 2001.
LIQUIDITY AND FINANCIAL CONDITION
For the nine months ended September 30, 2002, the statement of cash flows
reflects net cash used in operating activities of $7,183, and net cash provided
by financing activities of $5,784. For the nine months ended September 30, 2001,
operating activities used cash of $28,476 and financing activities, primarily
the sale of stock described below, provided cash of $54,049.
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 was $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 September 30, 2002, we had cash of $1,273 and a working capital deficiency of
$39,248. 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. We have
had to work closely with the original orders since the market has slowed and
delivery has not been requested for all of the units
10
manufactured as of now. While we had revenues of $302,738 for the nine months
ended September 30, 2002, sales at this level are not sufficient to cover our
operating expenses or to engage in the type of 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.
ITEM 3. CONTROLS AND PROCEDURES
We have recently evaluated our internal controls. As of November 13, 2002, there
were no significant corrective actions taken by us or other changes made to
these internal controls. Our management does not believe there were changes in
other factors that could significantly affect these controls subsequent to the
date of the evaluation.
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