10-Q 1 fm10q1201.txt FORM 10Q 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 -------- ---------- (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 ---------- ---------- 14,292 16,075 ---------- ---------- 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 ------------ ------------ 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 ----------- ---------- 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 ---------- --------- 0 365,368 ---------- --------- LIABILITIES Current liabilities 2,803 1,325 Other 78,571 28,699 ---------- --------- 81,374 30,024 ---------- --------- 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 ---------------- 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. ------------------- (Registrant) Date: April 26, 2002 By: /s/ Daniel Mercier ---------------------- Director

20 20 WIRELESS INC 10-Q