UNITED STATES
                       SECURITIES AND 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 ending September 30, 1996.

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15 (d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transaction period from                 to

Commission File No. 33-55254-29


                         STERLING WORLDWIDE CORPORATION
                      (formerly Koala Capital Corporation)
             (Exact name of Registrant as specified in its charter)


                  NEVADA                                       87-0438649
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                          Identification Number)

2200 NW BOCA RATON BOULEVARD
SUITE 220
BOCA RATON, FLORIDA                                            33431
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code (407) 367-8565


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  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. [X] Yes [ ] No

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.


             Class                          Outstanding as of September 30, 1996
------------------------------------        ------------------------------------
$.001 Par Value Class A Common Stock                   11,100,000 SHARES


<PAGE>






                         PART I - FINANCIAL INFORMATION

Item 1.           Financial Statements.

BASIS OF REPRESENTATION

General

     The accompanying unaudited financial statements,  as of September 30, 1996,
have  been  prepared  in  accordance  with the  instructions  to Form  10-Q and,
therefore, do not include all information and footnotes necessary for a complete
presentation,  of  financial  position,  results of  operations,  cash flows and
stockholders'   equity  in  conformity   with  generally   accepted   accounting
principles.  In the opinion of management,  all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been  included  and all  such  adjustments  are of a  normal  recurring  nature.
Operating  results for the quarter ended September 30, 1996, are not necessarily
indicative of the results that can be expected for the year ending  December 31,
1996.

     In addition to the  unaudited  financial  statements,  as of September  30,
1996,  attached  hereto,  the Company has elected to include an interim  audited
financial  statement prepared from the Company's books and records as of October
31, 1996. This added statement  reflects  certain changes which have occurred in
the  Company's  make up as a  result  of a  letter  of  intent  entered  into on
September  25,  1996 to  acquire  control  of  Travelnet  International  and its
subsidiary, Sterling Travel.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

Acquisition

     On  September  25, 1996 the Company  entered into a  non-binding  letter of
intent  with  the  controlling  shareholder  of  Travelnet  International.   The
agreement  provides that upon closing,  which shall occur on or before  December
25, 1996,  the Company  will own not less than 80% of  Travelnet  International.
Travelnet International owns and operates Sterling Travel. Sterling Travel is an
operating  travel  agency  with  unique  characteristics  and profit  generating
aspects.  Sterling actively recruits outside,  independent  travel  consultants.
Presently,  about 1,000 Sterling  Travel  affiliates  use  Sterling's  licenses,
memberships and bonding to introduce and sell travel products to their corporate
and individual clients nationwide.

     The travel affiliate receives up to 70% of the commission, with 30% or more
being retained by Sterling.  Sterling also  generates  earnings from the sale of
commercial sabre software,  professional  travel reference  materials,  training
seminars,  long  distance  services,  internet  virtual mall sites (retail store
fronts),  and other high profit  products  carried by  Sterling  cruise and tour
departments.  Management of the Company  believes  that the positive  aspects of
Sterling,  which include economies of scale,  available  financing for continued
growth,  higher  margin  products  that are  available  generally  in the travel
industry,   high  quality  management  and  demonstrated   successful  financial
management  make  Travelnet  and  Sterling  Travel  desirable   targets  for  an
acquisition.  The letter of intent calls for 10,000,000 common restricted shares
to be issued in the name of Lauri  Gladstone,  the  controlling  shareholder  of
Travelnet  International,  to be  deposited  in escrow and be delivered to Lauri
Gladstone upon closing of the transaction.  The shares have been issued in Lauri
Gladstone's  name and are currently held in escrow by Jim Barber,  the Company's
counsel.



<PAGE>



Change in Corporate Officers and Directors.

     As part of the  business  combination  and  reorganization  created  by the
letter of intent described above,  David Yeaman and Krista Nielson have resigned
as officers and directors of the Company.  At the same time Mark  Colacurcio was
appointed as the Company's  sole officer and director,  and currently  fills the
role of President,  Chairman of the Board and Corporate  Secretary.  The Company
filed Form 8-K with the  Securities  and  Exchange  Commission  describing  this
change.


Capital Requirements.

     Travelnet  International,  the designated  subsidiary of the Company,  must
have  capital to achieve  its  business  plan  which  calls for growth  from its
present level of 1,000 travel  affiliates to 10,000 travel affiliates by the end
of 1998 and an increase in revenue  from its current  annualized  level of about
$10,000,000 to an annualized level of about  $100,000,000 in two to three years.
In order to obtain the necessary capital, Travelnet International has undertaken
a private  placement  offering to raise  $1,000,000.  This offering is currently
under way and sufficient monies have been raised to break escrow and further the
business  of  Travelnet  International  and  Sterling  Travel.  At the  time  of
publication  of this  report,  slightly  less  than  $500,000  has been  raised.
Travelnet  International  expects that it will raise the entire $1,000,000 prior
to  closing  the  business   combination   between  the  Company  and  Travelnet
International, scheduled to be on or before December 25, 1996.

Participation in Prize Fight.

     The Company has obtained a minority  interest in the  upcoming  prize fight
between Sugar Ray Leonard and Macho  Comacho,  to be held in Atlantic  City, New
Jersey in February, 1997. The Company will participate in profits generated from
ticket sales, product sales, local and worldwide television  distribution,  etc.
The  Company's  designated  subsidiary,   Sterling  Travel,  will  benefit  from
international  exposure as a named  sponsor in all press  releases,  promotional
material,   television  and  printed  press  presentations  and  other  material
regarding the fight.

Name Change

     Pursuant  to the  letter  of  intent  and in  preparation  to  closing  the
transaction  described in the letter of intent,  the Company changed its name on
October 28, 1996 from Koala Capital Corporation to Sterling Worldwide
Corporation.



                                        3

<PAGE>




                           PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

         (a)      Exhibits                                                  Page
                  2  Letter of Intent                                       L-1
                  99-1 Financial Statements as of September 30, 1996.       F-1
                  99-1 Financial Statements as of October 31, 1996.         E-1
                  Financial Data Schedule

         (b)      Reports on Form 8-K

                    During the quarter ended September 30, 1996 an 8-K was filed
                    to announce  the  signing of a letter of intent  between the
                    Company and  Travelnet  International  Corporation.  The 8-K
                    also  announced  the  resignation  of two (2)  directors and
                    appointment of a new director,  as well as the  announcement
                    of change in  control of the  Registrant.  The 8-K was dated
                    August 27, 1996 and signed October 12, 1996.


                                        4

<PAGE>





                                    SIGNATURE

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                       STERLING WORLDWIDE CORPORATION




Dated:  November 11, 1996               /s/ Mark Colacurcio
                                        -------------------
                                        Mark Colacurcio
                                        President, Chairman of the Board,
                                        Corporate Secretary and Director


                                        5

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                             September 30,      December 31,
                                                                                                 1996                  1995
     ASSETS                                                                                   (unaudited)
     ------                                                                                   -----------       ------------------
CURRENT ASSETS
<S>                                                                                       <C>                   <C>
     Cash in bank                                                                         $           51,585    $           50,000
                                                                                          ------------------    ------------------

                                                                  TOTAL CURRENT ASSETS                51,585                50,000

OTHER ASSETS
     Investment (Note 5)                                                                              10,000                     0
                                                                                          ------------------    ------------------

                                                                                          $           61,585    $                0
                                                                                          ==================    ==================

     LIABILITIES & EQUITY
CURRENT LIABILITIES
     Payable - officer (Note 6)                                                           $            2,000    $                0
                                                                                          ------------------    ------------------

                                                             TOTAL CURRENT LIABILITIES                 2,000                     0

STOCKHOLDERS' EQUITY Common Stock $.001 par value:
       Authorized - 100,000,000 shares
       Issued and outstanding 11,100,000 shares
         (1,100,000 at 12/31/95)                                                                      11,100                 1,100
     Additional paid-in capital                                                                       50,900                50,900
     Deficit accumulated during the
       development stage                                                                              (2,415)               (2,000)
                                                                                          ------------------    ------------------

                                                            TOTAL STOCKHOLDERS' EQUITY                59,585                50,000
                                                                                          ------------------    ------------------

                                                                                          $           61,585    $           50,000
                                                                                          ==================    ==================
</TABLE>


See Selected Notes to Financial Statements.

                                      F - 1

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                                      5/2/86
                                                                                                                     (Date of
                                                        Three Months Ended              Nine Months Ended          inception) to
                                                    9/30/96           9/30/95        9/30/96         9/30/95          9/30/96
                                                    -------           -------        -------         -------          -------

<S>                                            <C>                <C>             <C>            <C>            <C>
Net Sales                                      $               0  $            0  $           0  $           0  $                0
Cost of sales                                                  0               0              0              0                   0
                                               -----------------  --------------  -------------  -------------  ------------------

                                GROSS PROFIT                   0               0              0              0                   0

General and administrative expenses                          415               0            415              0               2,415
                                               -----------------  --------------  -------------  -------------  ------------------

                           NET INCOME (LOSS)   $            (415) $            0  $        (415) $           0  $           (2,415)
                                               =================  ==============  =============  =============  ==================

Net income (loss) per weighted average share   $             .00  $          .00  $         .00  $         .00
                                               =================  ==============  =============  =============

Weighted average number of common shares
   used to compute net income (loss) per
   weighted average share                              2,186,957       1,000,000      1,464,964      1,000,000
                                               =================  ==============  =============  =============
</TABLE>


See Selected Notes to Financial Statements.

                                      F - 2

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                                     Deficit
                                                                                                                    Accumulated
                                                                    Common Stock                Additional            During
                                                                  Par Value $0.001                Paid-in           Development
                                                              Shares            Amount            Capital              Stage
                                                              ------            ------            -------              -----

<S>                                                    <C>                 <C>               <C>                <C>
Balances at 5/2/86 (Date of inception)                                  0  $             0   $               0  $                0
   Issuance of common stock (restricted)
     at $.002 per share at 8/7/86                               1,000,000            1,000               1,000
   Net loss for period                                                                                                      (1,950)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/86                                            1,000,000            1,000               1,000              (1,950)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/87                                            1,000,000            1,000               1,000              (1,960)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/88                                            1,000,000            1,000               1,000              (1,970)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/89                                            1,000,000            1,000               1,000              (1,980)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/90                                            1,000,000            1,000               1,000              (1,990)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/91                                            1,000,000            1,000               1,000              (2,000)
   Net income for year                                                                                                           0
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/92                                            1,000,000            1,000               1,000              (2,000)
   Net income for year                                                                                                           0
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/93                                            1,000,000            1,000               1,000              (2,000)
   Net income for year                                                                                                           0
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/94                                            1,000,000            1,000               1,000              (2,000)
   Issuance of common stock (restricted)
     at $.50 per share at 12/1/95                                 100,000              100              49,900
   Net income for year                                                                                                           0
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/95                                            1,100,000            1,100              50,900              (2,000)
   Issuance of common stock (restricted) at $.001
     per share at 9/20/96 (Note 5)                             10,000,000           10,000
   Net loss for period                                                                                                        (415)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 9/30/96                                            11,100,000  $        11,100   $          50,900  $           (2,415)
                                                       ==================  ===============   =================  ==================
</TABLE>


See Selected Notes to Financial Statements.

                                      F - 3

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                                      5/2/86
                                                                                                                     (Date of
                                                        Three Months Ended              Nine Months Ended          inception) to
                                                    9/30/96           9/30/95        9/30/96         9/30/95          9/30/96
                                                    -------           -------        -------         -------          -------

OPERATING ACTIVITIES
<S>                                            <C>                <C>             <C>            <C>            <C>
   Net income (loss)                           $            (415) $            0  $        (415) $           0  $           (2,415)
   Adjustments  to  reconcile  net  income
     (loss)  to cash  used  by  operating
     activities:
        Amortization                                           0               0              0              0                  50
                                               -----------------  --------------  -------------  -------------  ------------------

                          NET CASH (USED) BY
                        OPERATING ACTIVITIES                (415)              0           (415)             0              (2,365)

INVESTING ACTIVITIES
   Organization costs                                          0               0              0              0                 (50)
                                               -----------------  --------------  -------------  -------------  ------------------

                            NET CASH USED BY
                        INVESTING ACTIVITIES                   0               0              0              0                 (50)

FINANCING ACTIVITIES
   Proceeds from sale of common stock                          0               0              0              0              52,000
   Payable - officer                                       2,000               0          2,000              0               2,000
                                               -----------------  --------------  -------------  -------------  ------------------

                        NET CASH PROVIDED BY
                        FINANCING ACTIVITIES               2,000               0          2,000              0              54,000
                                               -----------------  --------------  -------------  -------------  ------------------

                            INCREASE IN CASH
                        AND CASH EQUIVALENTS               1,585               0          1,585              0              51,585

Cash and cash equivalents at beginning
   of period                                              50,000               0         50,000              0                   0
                                               -----------------  --------------  -------------  -------------  ------------------

                     CASH & CASH EQUIVALENTS
                            AT END OF PERIOD   $          51,585  $            0  $      51,585  $           0  $           51,585
                                               =================  ==============  =============  =============  ==================
</TABLE>

SUPPLEMENTAL INFORMATION
During the period ended September 30, 1996, the Company (pursuant to a letter of
intent)  issued  10,000,000  shares of its  restricted  common  stock to acquire
500,000  shares  of  Travelnet  International  Corporation  ("Travelnet").   The
transaction  has  been  recorded  at  par  value  of  the  stock  issued.  It is
anticipated  that  in the  near  future,  Travelnet  will  become  an  operating
subsidiary  of  the  Company  and  consolidated  financial  statements  will  be
prepared.


See Selected Notes to Financial Statements.

                                      F - 4

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                     SELECTED NOTES TO FINANCIAL STATEMENTS


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

          Accounting Methods
          The Company recognizes income and expenses based on the accrual method
          of accounting.

          Dividend Policy
          The  Company  has not yet  adopted  any  policy  regarding  payment of
          dividends.

          Organization Costs
          The Company amortized its organization costs over a five year period.

          Income Taxes
          The Company  records the income tax effect of transactions in the same
          year that the  transactions  enter into the  determination  of income,
          regardless of when the  transactions  are recognized for tax purposes.
          Tax credits are recorded in the year  realized.  Since the Company has
          not yet realized  income as of the date of this  report,  no provision
          for income taxes has been made.

          The Company  utilizes the liability  method of  accounting  for income
          taxes as set forth in Statement of Financial  Accounting Standards No.
          109,  "Accounting  for Income Taxes" (SFAS 109").  Under the liability
          method,  deferred taxes are determined based on the difference between
          the financial  statement and tax bases of assets and liabilities using
          enacted tax rates in effect in the years in which the  differences are
          expected to  reverse.  An  allowance  against  deferred  tax assets is
          recorded  when it is more likely than not that such tax benefits  will
          not be realized.

          At December 31, 1995, a deferred tax asset was not recorded due to the
          Company's  lack  of  operations  to  provide  income  to use  the  net
          operating loss carryover of $2,000 which expires as follows:

              Year Ended                    Expires                 Amount
     ---------------------------  --------------------------  ------------------
           December 31, 1986           December 31, 2001      $            1,950
           December 31, 1987           December 31, 2002                      10
           December 31, 1988           December 31, 2003                      10
           December 31, 1989           December 31, 2004                      10
           December 31, 1990           December 31, 2005                      10
           December 31, 1991           December 31, 2006                      10
                                                              ------------------

                                                              $            2,000
                                                              ==================

          A change in control of the Company will most likely  eliminate the net
          operating loss carryover.

          Cash and Cash Equivalents

          For financial  statement  purposes,  the Company  considers all highly
          liquid  investments with an original  maturity of three months or less
          when purchased to be cash equivalents.

NOTE 2: DEVELOPMENT STAGE COMPANY
          The  Company was  incorporated  under the laws of the State of Utah on
          May  2,  1986  as  Koala  Capital  Corporation  and  has  been  in the
          development  stage since  incorporation.  On December  30,  1993,  the
          Company was dissolved as a Utah  corporation and  reincorporated  as a
          Nevada  corporation.  On October  28,  1996,  the name was  changed to
          Sterling Worldwide Corporation.  The Company intends to enter into the
          business  of  offering  travel  related  services  once  Travelnet  is
          acquired.


                                      F - 5

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

               SELECTED NOTES TO FINANCIAL STATEMENTS (continued)


NOTE 3: CAPITALIZATION
          On the date of incorporation, the Company sold 1,000,000 shares of its
          common  stock to Capital  General  Corporation  for $2,000 cash for an
          average  consideration  of $.002 per share.  On December 1, 1995,  the
          Company  sold an  additional  100,000  shares of its  common  stock to
          Capital   General   Corporation   for  $50,000  cash  for  an  average
          consideration  of $.50  per  share.  The  Company's  authorized  stock
          includes 100,000,000 shares of common stock at $.001 par value.

NOTE 4: RELATED PARTY TRANSACTIONS
          The Company neither owns or leases any real property.  Office services
          through August 1996 were provided,  without charge, by Capital General
          Corporation.  Office  services are currently  being  provided  without
          charge by  Travelnet.  Such  costs  are  immaterial  to the  financial
          statements,  and,  accordingly,  have not been reflected therein.  The
          sole officer and director of the Company is involved in other business
          activities and may, in the future,  become  involved in other business
          opportunities.  If a specific business  opportunity becomes available,
          such person may face a conflict in  selecting  between the Company and
          his other business interests.  The Company has not formulated a policy
          for the  resolution  of such  conflicts.  Also  see  Note 6 for  other
          related party transactions.

NOTE 5: INVESTMENT
          The  investment  is 500,000  shares of the common  stock of  Travelnet
          International  Corporation,  a private Florida company. The investment
          is  recorded  at a cost of  $10,000,  represented  by par value of the
          10,000,000  restricted shares of the Company's stock issued to acquire
          the  500,000  shares  pursuant  to a letter of  intent.  The letter of
          intent needs to be finalized by December 25, 1996.  It is  anticipated
          that in the near future, Travelnet will become an operating subsidiary
          of the Company.

NOTE 6: PAYABLE - OFFICER
          At September  30, 1996,  the Company owes $2,000 to its  President for
          funds advanced to the Company. The advance is non-interest bearing and
          will be repaid in the near future.

NOTE 7: SUBSEQUENT EVENTS
          During  October,  the Company sold  2,000,000  shares of  Regulation S
          stock for $125,000 cash.


                                      F - 6

<PAGE>



                            KOALA CAPITAL CORPORATION
                            3098 South Highland Drive
                           Salt Lake City, Utah 84106
--------------------------------------------------------------------------------


August 14, 1996


Board of Directors
Travelnet International Corp.
2200 Northwest Boca Raton Blvd., Suite 220
Boca Raton, FL 33431

Lauri Doll Gladstone
2200 Northwest Boca Raton Blvd., Suite 220
Boca Raton, FL 33431

RE: Proposed reorganization

Dear Prospective Parties:

This letter  constitutes a letter of intent issued by Koala Capital Corp. on the
date first above written in contemplation of a reorganization in which Travelnet
International Corp. ("Travelnet"),  Lauri Doll Gladstone ("Gladstone") and Koala
Capital   Corp.   ("Koala")   will  be  parties.   The  terms  of  the  proposed
reorganization are as follows:

1.   Koala  offers to  acquire  500,000  common  shares of  Travelnet  which are
     presently  owned  beneficially  and of record by  Gladstone,  or such other
     number of  Travelnet  shares as shall  constitute  not less than 80% of the
     total number of Travelnet  shares which shall be outstanding on the date of
     the closing.

2.   As  consideration  for the aforesaid  shares held by Gladstone,  Koala will
     issue in favor of Gladstone or her designees 10,000,000 One Mil ($.001) par
     value common shares of Koala,  or such other number of shares as shall,  on
     the date of the  close,  constitute  not less than  90.0% of the issued and
     outstanding shares of Koala.

3.   The aforesaid transaction will be structured as a tax fee exchange pursuant
     to the provisions of Section  368(a)(1)(B)  and 351 of the Internal Revenue
     Code of 1954, as amended. A competent tax opinion presented by either party
     which  opines  that  either  party  will  suffer  a  taxable  gain  in  the
     contemplated  transaction  will constitute good cause to terminate or amend
     this letter of intent.

4.   Within ten (10) days of the  execution  of this letter of intent by all the
     parties,   Koala  will  cause  to  be  issued   certificates   representing
     10,000,000, or such other number of its One Mil par value common shares, as
     shall constitute 90.0% of the shares of Koala  outstanding after the close,
     registered  to  Gladstone  or such  other  persons  and in such  numbers as
     Gladstone may have theretofore  designated in writing.  These  certificates
     shall be delivered to James N. Barber,  Esq., Fourth Floor, Bank One Tower,
     50 West  Broadway,  Salt Lake  City,  Utah 84111 who shall hold the same as
     escrow agent pending the closing.  These shares will not, when issued, have
     been registered under the Securities Act of 1933, but will have been issued
     in reliance on the exemption from registration  provided by Section 4(2) of
     the Act for  transactions  by an issuer not involving any public  offering.
     The   certificates   representing   the  shares  will  bear  standard  form
     restrictive legends. By her signature hereon,  Gladstone  acknowledges that
     she has been  advised  that the  Koala  shares  to be  issued to her in the
     exchange will not,  when they are issued,  have been  registered  under the
     Securities Act of 1933, that they are "Restricted  Securities" as that term
     is defined by paragraph  (b) of SEC Rule 144 under the Act, and that she is
     purchasing the shares for  investment and not with a view to  distribution.
     Gladstone   consents  to  the  placement  of  investment   legends  on  the
     certificates  representing  the shares and the  placement of  stop-transfer
     instructions barring transfer of the shares on the books and records of the
     corporation  until they are registered,  or until in the opinion of counsel
     for Koala,  resale of the shares by their registered owners would be exempt
     from registration.

                                      L - 1

<PAGE>




Travelnet International Corp.
Lauri Doll Gladstone
August 14, 1996
Page 2



5.   Within  Fifteen  days of the date  first  above  written,  Gladstone  shall
     deliver to the Escrow Agent certificates  representing not less than 80% of
     the issued and outstanding common shares of Travelnet.

6.   Contemporaneously  with the execution of this letter of intent, Koala shall
     deliver the following documents to the Escrow Agent:

     a.   Duly executed resignations of all the present officers of Koala; and

     b.   Minutes  executed  by those  directors  prior  to  their  resignations
          appointing Mark Colacurcio,  1725 S.W. 8th Street, Boca Raton, Florida
          33486 as the sole interim director,  and as President and Secretary of
          Koala. Those minutes will also contain a description of this agreement
          and a specific authorization  directing Colacurcio to execute a formal
          plan and  agreement of  reorganization  including the  provisions  set
          forth in this agreement, at the closing.

7.   The plan and  Agreement of  Reorganization  contemplated  by this Letter of
     Intent shall be closed by the signature of the parties,  within twenty-five
     (25) days of the date  hereof,  at the  offices  of James N.  Barber at the
     address set forth above, at Salt Lake City, Utah.

8.   At the closing, James N. Barber shall:

     a.   Deliver all  certificates  representing  Koala shares which are in his
          possession to Gladstone or her written designees; and

     b.   Deliver the Travelnet certificates in his possession to Koala.

If, as  parties  to the  proposed  reorganization,  you agree with the terms set
forth  herein,  please sign this letter at the places  indicated  and return the
signed letters to the escrow agent at the address listed above,  within five (5)
days.

                                         KOALA CAPITAL CORP.



                                         By:
                                         President




         Lauri Doll Gladstone

                                         Accepted by Escrow Agent:




                                             James N. Barber


                                      L - 2

<PAGE>



                                    CONTENTS

                                      PAGE

INDEPENDENT AUDITOR'S REPORT...............................      E-2
BALANCE SHEETS.............................................      E-3
STATEMENTS OF OPERATIONS...................................      E-4
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY...............      E-5
STATEMENTS OF CASH FLOWS...................................      E-6
NOTES TO FINANCIAL STATEMENTS..............................      E-7

                                      E - 1

<PAGE>


                                 SMITH & COMPANY
                          CERTIFIED PUBLIC ACCOUNTANTS

MEMBERS OF:                                       CRANDALL BUILDING SUITE 700
AMERICAN INSTITUTE OF                             10 WEST 100 SOUTH
     CERTIFIED PUBLIC ACCOUNTANTS                 SALT LAKE CITY, UTAH 84101
UTAH ASSOCIATION OF                               TELEPHONE:     (801) 575-8297
     CERTIFIED PUBLIC ACCOUNTANTS                 FACSIMILE:     (801) 575-8306
--------------------------------------------------------------------------------



                          INDEPENDENT AUDITOR'S REPORT


Board of Directors
Sterling Worldwide Corporation
(A Development Stage Company)

We  have  audited  the  accompanying   balance  sheets  of  Sterling   Worldwide
Corporation  (formerly Koala Capital  Corporation) (a development stage company)
as of  October  31,  1996 and  December  31,  1995  and  1994,  and the  related
statements of operations,  changes in stockholders'  equity,  and cash flows for
the ten (10) months  ended  October 31,  1996 and the years ended  December  31,
1995,  1994 and 1993 and for the  period of May 2, 1986 (date of  inception)  to
October 31, 1996.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about 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 financial 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.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Sterling Worldwide Corporation
(formerly Koala Capital Corporation) (a development stage company) as of October
31,  1996 and  December  31,  1995 and 1994 and the  results of its  operations,
changes in stockholders' equity and its cash flows for the ten (10) months ended
October 31, 1996 and the years ended  December 31, 1995,  1994, and 1993 and for
the period of May 2, 1986 (date of  inception) to October 31, 1996 in conformity
with generally accepted accounting principles.


                                                   s/ Smith & Company
                                                    CERTIFIED PUBLIC ACCOUNTANTS

Salt Lake City, Utah
November 1, 1996


                                      E - 2

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                        October 31,                     December 31,
                                                                     -----------------    ---------------------------------------
                                                                           1996                  1995                  1994
                                                                     -----------------    ------------------    -----------------
     ASSETS
CURRENT ASSETS
<S>                                                                  <C>                  <C>                   <C>
     Cash in bank                                                    $         123,489    $           50,000    $                0
     Receivable - related party (Note 5)                                        53,750                     0                     0
     Prepaid expense                                                             2,000                     0                     0
                                                                     -----------------    ------------------    ------------------

                                            TOTAL CURRENT ASSETS               179,239                50,000                     0

OTHER ASSETS
     Organization costs (Note 1)                                                     0                     0                     0
     Investment (Note 6)                                                        10,000                     0                     0
                                                                     -----------------    ------------------    ------------------
                                                                                10,000                     0                     0
                                                                     -----------------    ------------------    ------------------

                                                                     $         189,239    $           50,000    $                0
                                                                     =================    ==================    ==================

     LIABILITIES & EQUITY
CURRENT LIABILITIES
     Payable - officer (Note 7)                                      $           2,000    $                0    $                0
                                                                     -----------------    ------------------    ------------------

                                       TOTAL CURRENT LIABILITIES                 2,000                     0                     0

STOCKHOLDERS' EQUITY Common Stock $.001 par value:
         Authorized - 100,000,000 shares
         Issued and outstanding 13,100,000 shares
             (1,100,000 at 12/31/95 and 1,000,000
              at 12/31/94)                                                      13,100                 1,100                 1,000
     Additional paid-in capital                                                173,900                50,900                 1,000
     Earnings (deficit) accumulated during the
         development stage                                                         239                (2,000)               (2,000)
                                                                     -----------------    ------------------    ------------------

                                      TOTAL STOCKHOLDERS' EQUITY               187,239                50,000                     0
                                                                     -----------------    ------------------    ------------------

                                                                     $         189,239    $           50,000    $                0
                                                                     =================    ==================    ==================
</TABLE>


See Notes to Financial Statements.

                                      E - 3

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                      Ten                                                             5/2/86
                                                    Months                                                           (Date of
                                                     Ended                   Year Ended December 31,               inception) to
                                                                  --------------------------------------------
                                                   10/31/96            1995           1994            1993           10/31/96
                                               -----------------  --------------  -------------  -------------  ------------------

<S>                                            <C>                <C>             <C>            <C>            <C>
Commissions                                    $           3,750  $            0  $           0  $           0  $            3,750
   Cost of sales                                               0               0              0              0                   0
                                               -----------------  --------------  -------------  -------------  ------------------

                                GROSS PROFIT               3,750               0              0              0               3,750

General and administrative expenses                        1,511               0              0              0               3,511
                                               -----------------  --------------  -------------  -------------  ------------------

                                  NET INCOME   $           2,239  $            0  $           0  $           0  $              239
                                               =================  ==============  =============  =============  ==================

Net income per weighted average share          $             .00  $          .00  $         .00  $         .00
                                               =================  ==============  =============  =============

Weighted average number of common shares
   used to compute net income per
   weighted average share                              2,457,377       1,008,333      1,000,000      1,000,000
                                               =================  ==============  =============  =============
</TABLE>


See Notes to Financial Statements.

                                      E - 4

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                                                     Earnings
                                                                                                                     (Deficit)
                                                                                                                    Accumulated
                                                                    Common Stock                Additional            During
                                                                  Par Value $0.001                Paid-in           Development
                                                              Shares            Amount            Capital              Stage
                                                              ------            ------            -------              -----

<S>                                                    <C>                 <C>               <C>                <C>
Balances at 5/2/86 (Date of inception)                                  0  $             0   $               0  $                0
   Issuance of common stock (restricted)
     at $.002 per share at 8/7/86                               1,000,000            1,000               1,000
   Net loss for period                                                                                                      (1,950)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/86                                            1,000,000            1,000               1,000              (1,950)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/87                                            1,000,000            1,000               1,000              (1,960)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/88                                            1,000,000            1,000               1,000              (1,970)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/89                                            1,000,000            1,000               1,000              (1,980)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/90                                            1,000,000            1,000               1,000              (1,990)
   Net loss for year                                                                                                           (10)
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/91                                            1,000,000            1,000               1,000              (2,000)
   Net income for year                                                                                                           0
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/92                                            1,000,000            1,000               1,000              (2,000)
   Net income for year                                                                                                           0
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/93                                            1,000,000            1,000               1,000              (2,000)
   Net income for year                                                                                                           0
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/94                                            1,000,000            1,000               1,000              (2,000)
   Issuance of common stock (restricted)
     at $.50 per share at 12/1/95                                 100,000              100              49,900
   Net income for year                                                                                                           0
                                                       ------------------  ---------------   -----------------  ------------------
Balances at 12/31/95                                            1,100,000            1,100              50,900              (2,000)
   Issuance of common stock (restricted) at $.001
     per share at 9/20/96 (Note 6)                             10,000,000           10,000
   Issuance of common stock (Regulation S) at
     $.0625 per share for cash at 10/29/96                      2,000,000            2,000             123,000
   Net income for period                                                                                                     2,239
                                                       ------------------  ---------------   -----------------  ------------------

Balances at 10/31/96                                           13,100,000  $        13,100   $         173,900  $              239
                                                       ==================  ===============   =================  ==================
</TABLE>


See Notes to Financial Statements.

                                      E - 5

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                      Ten                                                             5/2/86
                                                    Months                                                           (Date of
                                                     Ended                   Year Ended December 31,               inception) to
                                                                  --------------------------------------------
                                                   10/31/96            1995           1994            1993           10/31/96
                                               -----------------  --------------  -------------  -------------  -------------

OPERATING ACTIVITIES
<S>                                            <C>                <C>             <C>            <C>            <C>
   Net income                                  $           2,239  $            0  $           0  $           0  $              239
   Adjustments to reconcile net income
     to cash provided by operating activities:
       Amortization                                            0               0              0              0                  50
                                               -----------------  --------------  -------------  -------------  ------------------

                        NET CASH PROVIDED BY
                        OPERATING ACTIVITIES               2,239               0              0              0                 289

INVESTING ACTIVITIES
   Receivable - related party                            (53,750)              0              0              0             (53,750)
   Prepaid expense                                        (2,000)              0              0              0              (2,000)
   Organization costs                                          0               0              0              0                 (50)
                                               -----------------  --------------  -------------  -------------  ------------------

                            NET CASH USED BY
                        INVESTING ACTIVITIES             (55,750)              0              0              0             (55,800)

FINANCING ACTIVITIES
   Proceeds from sale of common stock                    125,000          50,000              0              0             177,000
   Payable - officer                                       2,000               0              0              0               2,000
                                               -----------------  --------------  -------------  -------------  ------------------

                        NET CASH PROVIDED BY
                        FINANCING ACTIVITIES             127,000          50,000              0              0             179,000
                                               -----------------  --------------  -------------  -------------  ------------------

                            INCREASE IN CASH
                        AND CASH EQUIVALENTS              73,489          50,000              0              0             123,489

Cash and cash equivalents at beginning
   of year                                                50,000               0              0              0                   0
                                               -----------------  --------------  -------------  -------------  ------------------

                     CASH & CASH EQUIVALENTS
                            AT END OF PERIOD   $         123,489  $       50,000  $           0  $           0  $          123,489
                                               =================  ==============  =============  =============  ==================
</TABLE>

SUPPLEMENTAL INFORMATION
During the period ended October 31, 1996,  the Company  (pursuant to a letter of
intent)  issued  10,000,000  shares of its  restricted  common  stock to acquire
500,000  shares  of  Travelnet  International  Corporation  ("Travelnet").   The
transaction  has  been  recorded  at  par  value  of  the  stock  issued.  It is
anticipated  that  in the  near  future,  Travelnet  will  become  an  operating
subsidiary  of  the  Company  and  consolidated  financial  statements  will  be
prepared.



See Notes to Financial Statements.

                                      E - 6

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
          Accounting Methods
          The Company recognizes income and expenses based on the accrual method
          of accounting.

          Dividend Policy
          The  Company  has not yet  adopted  any  policy  regarding  payment of
          dividends.

          Organization Costs
          The Company amortized its organization costs over a five year period.

          Income Taxes
          The Company  records the income tax effect of transactions in the same
          year that the  transactions  enter into the  determination  of income,
          regardless of when the  transactions  are recognized for tax purposes.
          Tax credits are recorded in the year  realized.  Since the Company has
          not yet realized  significant income as of the date of this report, no
          provision for income taxes has been made.

          The Company  utilizes the liability  method of  accounting  for income
          taxes as set forth in Statement of Financial  Accounting Standards No.
          109,  "Accounting  for Income Taxes" (SFAS 109").  Under the liability
          method,  deferred taxes are determined based on the difference between
          the financial  statement and tax bases of assets and liabilities using
          enacted tax rates in effect in the years in which the  differences are
          expected to  reverse.  An  allowance  against  deferred  tax assets is
          recorded  when it is more likely than not that such tax benefits  will
          not be realized.

          At December 31, 1995, a deferred tax asset was not recorded due to the
          Company's  lack  of  operations  to  provide  income  to use  the  net
          operating loss carryover of $2,000 which expires as follows:

                 Year Ended                 Expires                 Amount
        ---------------------------  -----------------------  ------------------
              December 31, 1986           December 31, 2001   $            1,950
              December 31, 1987           December 31, 2002                   10
              December 31, 1988           December 31, 2003                   10
              December 31, 1989           December 31, 2004                   10
              December 31, 1990           December 31, 2005                   10
              December 31, 1991           December 31, 2006                   10
                                                              ------------------

                                                              $            2,000
                                                              ==================

          A change in control of the Company will most likely  eliminate the net
          operating loss carryover.

          Cash and Cash Equivalents
          For financial  statement  purposes,  the Company  considers all highly
          liquid  investments with an original  maturity of three months or less
          when purchased to be cash equivalents.

NOTE 2: DEVELOPMENT STAGE COMPANY
          The  Company was  incorporated  under the laws of the State of Utah on
          May  2,  1986  as  Koala  Capital  Corporation  and  has  been  in the
          development  stage since  incorporation.  On December  30,  1993,  the
          Company was dissolved as a Utah  corporation and  reincorporated  as a
          Nevada  corporation.  On October  28,  1996,  the name was  changed to
          Sterling Worldwide Corporation.  The Company intends to enter into the
          business  of  offering  travel  related  services  once  Travelnet  is
          acquired.


                                      E - 7

<PAGE>


                         Sterling Worldwide Corporation
                      (Formerly Koala Capital Corporation)
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS (continued)


NOTE 3: CAPITALIZATION
          On the date of incorporation, the Company sold 1,000,000 shares of its
          common  stock to Capital  General  Corporation  for $2,000 cash for an
          average  consideration  of $.002 per share.  On December 1, 1995,  the
          Company  sold an  additional  100,000  shares of its  common  stock to
          Capital   General   Corporation   for  $50,000  cash  for  an  average
          consideration of $.50 per share. On October 29, 1996, the Company sold
          2,000,000  shares  of  Regulation  S stock  for  $125,000  cash for an
          average  consideration of $.0625 per share.  The Company's  authorized
          stock includes 100,000,000 shares of common stock at $.001 par value.

NOTE 4: RELATED PARTY TRANSACTIONS
          The Company neither owns or leases any real property.  Office services
          through August 1996 were provided,  without charge, by Capital General
          Corporation.  Office  services are currently  being  provided  without
          charge by  Travelnet.  Such  costs  are  immaterial  to the  financial
          statements,  and,  accordingly,  have not been reflected therein.  The
          sole officer and director of the Company is involved in other business
          activities and may, in the future,  become  involved in other business
          opportunities.  If a specific business  opportunity becomes available,
          such person may face a conflict in  selecting  between the Company and
          his other business interests.  The Company has not formulated a policy
          for the resolution of such conflicts. Also see Notes 5 and 7 for other
          related party transactions.

NOTE 5: RECEIVABLE - RELATED PARTY
          At October 31, 1996, the Company is owed $53,750 by Richard Gladstone,
          the  husband of the  controlling  shareholder  of  Travelnet.  Richard
          Gladstone  is owed  $500,000  for a loan made to the  promoters of the
          boxing match between  Sugar Ray Leonard and Hector  Camacho to be held
          in February,  1997. The loan bears interest at 24% per annum. $250,000
          is due by March 15, 1997 and $250,000  plus all unpaid  interest and a
          commission of $37,500 is due by April 15, 1997. The loan is secured by
          the promoter's sale of foreign transmission rights up to $600,000. The
          promoter is also to use and recommend  Sterling Travel,  controlled by
          Gladstone's   wife,  for  as  many  travel  services  as  possible  in
          connection  with the boxing event.  Sterling Travel is a subsidiary of
          Travelnet.

          During October,  the Company purchased 10% of Gladstone's  interest in
          the  receivable for $50,000.  A $3,750  commission has been accrued at
          October  31,  1996 which  represents  the  Company's  10% share of the
          commission.

NOTE 6: INVESTMENT
          The  investment  is 500,000  shares of the common  stock of  Travelnet
          International  Corporation,  a private Florida company. The investment
          is  recorded  at a cost of  $10,000,  represented  by par value of the
          10,000,000  restricted shares of the Company's stock issued to acquire
          the  500,000  shares  pursuant  to a letter of  intent.  The letter of
          intent needs to be finalized by December 25, 1996.  It is  anticipated
          that in the near future, Travelnet will become an operating subsidiary
          of the Company.

NOTE 7: PAYABLE - OFFICER
          At October 31,  1996,  the Company  owes $2,000 to its  President  for
          funds advanced to the Company. The advance is non-interest bearing and
          will be repaid in the near future.


                                      E - 8