SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-QSB
 
 (Mark
One)
 
 x Quarterly
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the quarterly period ended March 31, 2005
 
 OR
 
 oTransition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act  of 1934
for the transition period from ___________ to ____________
 
 
 Commission
File Number: 333-113564
  WAKO
LOGISTICS GROUP, INC.
 (Exact
Name of Registrant as Specified in Its Charter)
 
 Delaware
    20-0262555(State
      or Other Jurisdiction of
    (I.R.S.
      EmployerIncorporation
      or Organization)
    Identification
      No.)
 
 3606-8,
36/F, Citibank Tower, Citibank Plaza, 3 Garden Road, Central Hong
Kong
 (Address
of Principal Executive Offices)     (Zip
Code)
 
 852-27998000
- (212) 924-3548
 (Registrant's
Telephone Number, Including Area Code)
 
 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
past 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 xNo o
 
 As of May
13, 2005 the registrant had 20,641,000 shares of common stock, $.001 par value,
issued and outstanding.
 
 Transitional
Small Business Disclosure Format (Check one): Yes o;No x
  
   **WAKO
LOGISTICS GROUP, INC.**
 
 **FORM
10-QSB**
 
 **QUARTER
ENDED MARCH 31, 2005**
 
 Item
      Number inForm
      10-QSB
    PagePART
      I. FINANCIAL INFORMATION1.
    Financial
      statements quarter ended March 31, 20052.
    Management's
      Discussion and Analysis or Plan of Operation3.
    Controls
      and ProceduresPART
      II. OTHER INFORMATION1.
    Legal
      Proceedings2.
    Unregistered
      Sales of Equity Securities and Use of Proceeds3.
    Default
      Upon Senior Securities4.
    Submission
      of Matters to a Vote of Security Holders5.
    Other
      Information6.
    Exhibits
      and Reports on Form 8-K
 
 2
  
 **PART
I. FINANCIAL INFORMATION**
 
 ITEM
1.FINANCIAL
STATEMENTS (UNAUDITED)
 **Wako
Logistics Group, Inc.**

**Consolidated
Statements of Operations**
3 months
period ended March 31, 2004 and 2005

*(Dollars
in thousands except share data and per share amounts)*
**
  ****3
      months period ended**
      **March
      31,****2004**
    
    **2005***(unaudited)*
    
    *(unaudited)**Note*
    
    *US$*
    
    *US$*Revenues:Freight
    
    
    
    
    
    3,909
    
    
    5,889Agency
      services
    
    
    
    
    
    29
    
    
    234Other
      services
    
    
    
    
    
    639
    
    
    723**Total
      revenues**
    
    
    
    
    
    4,577
    
    
    6,846**Operating
      expenses**Cost
      of forwarding
    
    
    
    
    
    (3,783
    )
    
    (5,748
    )Selling
      and administrative expenses
    
    
    
    
    
    (650
    )
    
    (935
    )Depreciation
    
    
    
    
    
    (9
    )
    
    (22
    )Total
      operating expenses
    
    
    
    
    
    (4,442
    )
    
    (6,705
    )**Income
      from operations**
    
    
    
    
    
    **135**
    
    
    **141**Other
      income (expense)Interest
      income
    
    
    
    
    
    1
    
    
    4Interest
      expense
    
    
    
    
    
    -
    
    
    (4
    )Other
      income, net
    
    
    
    
    
    4
    
    
    25**Income
      before income taxes**
    
    
    
    
    
    140
    
    
    166Provision
      for income taxes
    
    
    
    
    
    (27
    )
    
    (40
    )**Income
      from operations**
    
    
    
    
    
    113
    
    
    126**Net
      income per share**
    
    
    
    
    
    0.01
    
    
    0.01**Weighted
      average common shares outstanding**
      **Basic
      and diluted**
    
    
    
    
    
    20,441,000
    
    
    20,441,000
The
financial statements should be read in conjunction with the accompanying
notes.
3


**Wako
Logistics Group, Inc.**

**Consolidated
Balance Sheets**
At March
31, 2005
*(Dollars
in thousands except share data and per share amounts)*
**
**At
      March 31, 2005***(unaudited)**Note*
    
    *US$***ASSETS**Current
      assetsCash
      and cash equivalents
    
    
    
    
    
    2,095Restricted
      cash
    
    
    
    
    
    524Trade
      receivables, net
    
    
    
    
    
    4,249Deposits,
      prepayments and other current assets
    
    
    
    
    
    90Due
      from related parties
    
    
    *4*
    
    
    304**Total
      current assets**
    
    
    
    
    
    7,262Property,
      plant and equipment, net
    
    
    
    
    
    210**Total
      assets**
    
    
    
    
    
    7,472**LIABILITIES
      AND STOCKHOLDERS' EQUITY**Current
      liabilitiesBank
      overdrafts
    
    
    
    
    
    4Trade
      payables
    
    
    
    
    
    3,379Accrued
      charges and other creditors
    
    
    
    
    
    219Bank
      loan - maturing within one year
    
    
    *2*
    
    
    224Due
      to related parties
    
    
    *4*
    
    
    54Due
      to directors
    
    
    *4*
    
    
    2,058Income
      tax payable
    
    
    
    
    
    163Total
      current liabilities
    
    
    
    
    
    6,101Non-current
      liabilitiesBank
      loan - maturing after one year
    
    
    *2*
    
    
    131Commitments
      and contingencies
    
    
    *3*
    
    
    -**Stockholders'
      equity**Preferred
      stock, US$0.001 par value, 5 million shares authorized and nil
      issuedCommon
      stock US$0.001 par value, 55 million shares authorized, 20,441,000 shares
      issued and outstanding
    
    
    
    
    
    20Additional
      paid-in capital
    
    
    
    
    
    456Accumulated
      other comprehensive income
    
    
    
    
    
    9Retained
      earnings
    
    
    
    
    
    755**Total
      stockholders' equity**
    
    
    
    
    
    1,240**Total
      liabilities and stockholders' equity**
    
    
    
    
    
    7,472

The
financial statements should be read in conjunction with the accompanying
notes.
4**


**Wako
Logistics Group, Inc.**
 
 **Consolidated
Statements of Cash Flows**
 3 months
period ended March 31, 2004 and 2005
 *(Dollars
in thousands except share data and per share amounts)*


**3
      months period ended**
      **March
      31,****2004**
    
    **2005***(unaudited)*
    
    *(unaudited)**US$*
    
    *US$***Cash
      flows from****operating
      activities:**Net
      income
    
    
    113
    
    
    126**Adjustments
      to reconcile net income to net cash provided by****operating activities**Depreciation
    
    
    9
    
    
    22Bad
      debts written off
    
    
    16
    
    
    -Other
      non-cash items
    
    
    61
    
    
    7**Changes
      in working capital:**Trade
      receivables
    
    
    (214
    )
    
    (558
    )Deposit
      and prepayment
    
    
    (81
    )
    
    64Due
      from related parties
    
    
    430
    
    
    37Trade
      payables
    
    
    62
    
    
    1,037Accrued
      charges and other creditors
    
    
    53
    
    
    -Due
      to related parties
    
    
    (52
    )
    
    -Due
      to directors
    
    
    381
    
    
    325Income
      tax payable
    
    
    27
    
    
    40**Net
      cash provided by operating activities**
    
    
    805
    
    
    1,100**Cash
      flows from investing activities:**Acquisitions
      of property, plant and equipment
    
    
    (80
    )
    
    (66
    )**Cash
      flows from financing activities:**Certificate
      of deposits
    
    
    -
    
    
    115Restricted
      cash
    
    
    -
    
    
    (179
    )Bank
      overdrafts
    
    
    (269
    )
    
    (135
    )Bank
      loan repaid
    
    
    -
    
    
    (73
    )Dividend
      paid
    
    
    (538
    )
    
    -Due
      from related parties
    
    
    -
    
    
    27Issue
      of new shares
    
    
    159
    
    
    -Advance
      from director
    
    
    -
    
    
    1,000**Net
      cash****(used
      in) provided by financing activities**
    
    
    (648
    )
    
    755**Net
      increase in cash and cash equivalents**
    
    
    77
    
    
    1,789**Cash
      and cash equivalents at beginning of period**
    
    
    70
    
    
    306**Cash
      and cash equivalents at end of period**
    
    
    147
    
    
    2,095
  The
financial statements should be read in conjunction with the accompanying
notes.
 5
  **Wako
Logistics Group, Inc.**
 
 **Notes
to the Consolidated Financial Statements**
 3 months
period ended March 31, 2004 and 2005
 **1.**
    **BASIS
      OF PRESENTATION**
 
 The
accompanying financial data as of March 31, 2005 and for the 3 months period
ended March 31, 2005 and 2004, have been prepared by the Company, without audit.
Following the change of the Company’s financial year end date from April 30 to
December 31, these quarterly financial statements including the corresponding
comparative figures are prepared based on the newly adopted financial year end
date.
 
 Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to such rules
and regulations. However, the Company believes that the disclosures are adequate
to make the information presented not misleading. These financial statements
should be read in conjunction with the financial statements and the notes
thereto included in the Company’s audited annual financial statements for the 8
months period ended December 31, 2004.
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingent assets and liabilities. Actual results
could differ from these estimates.
 
 In the
opinion of the management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows as of March 31, 2005 and for the 3 months period ended
March 31, 2005 and 2004, have been made. The results of operations for the 3
months period ended March 31, 2005 and 2004 are not necessarily indicative of
the operating results for the full year.
 **2.**
    **BANKING
      FACILITIES**
 
 The
      Wako Group has obtained bank facilities from creditworthy commercial banks
      in Hong Kong as follows:
 
 **At**
      **March
      31,**
      **2005***(unaudited)**US$***Facilities
      granted**Uncommitted
      guarantee line
    
    
    -Committed
      line  - bank guarantee
    
    
    510-
      bank loan
    
    
    449Total
      line
    
    
    959
 6
 ****
**Wako
Logistics Group, Inc.**
****
**Notes
to the Consolidated Financial Statements**
3 months
period ended March 31, 2004 and 2005 ****
****
  **2.**
    **BANKING
      FACILITIES (CONTINUED)**
  **At**
      **March
      31,**
      **2005***(unaudited)**US$***Utilized**Uncommitted
      guarantee lineCommitted
      line  - bank guarantee
    
    
    510-
      bank loan
    
    
    355Total
      utilized
    
    
    865
 
 The
facility amount is agreed by the banker and the Wako Group from time to time.
The facilities in relation to bank guarantees are fully cash-collateralised.
Bank loan is unsecured and repayable within two years by monthly installments.
During the 3 months period ended March 31, 2005, the interest rate of the bank
loan was 4.125% per annum.
  **3.**
    **COMMITMENTS
      AND CONTINGENCIES**
 
 ***Commitments
under operating leases***
 
 The
      Wako Group rent office space, directors’ quarters and certain office
      equipment under non-cancellable operating leases. The following table
      summarizes these approximate future minimum lease payments in effect as of
      March 31, 2005:
 
 **At**
      **March
      31,**
      **2005***(unaudited)**US$*Within
      one year
    
    
    257Over
      one year but not exceeding two years
    
    
    73Over
      two years but not exceeding three years
    
    
    13Over
      three years but not exceeding four years
    
    
    13Over
      four years but not exceeding five years
    
    
    -Thereafter
    
    
    -Total
      operating lease commitments
    
    
    356
 
 Rent
      expense under operating leases for the 3 months period ended March 31,
      2004 and 2005 was US$28 and US$54
respectively.
 7
 ****
 **Wako
Logistics Group, Inc.**
 
 **Notes
to the Consolidated Financial Statements**
 3 months
period ended March 31, 2004 and 2005
  **3.**
    **COMMITMENTS
      AND CONTINGENCIES (CONTINUED)**
 
 ***Cargo
      space commitments***
 
 The
      Group has entered into written agreements with various carriers pursuant
      to which the Group is committed to utilize a guaranteed minimum amount of
      cargo space each year. As of March 31, 2005, the minimum amount of such
      cargo space to be utilized in the next year are
  US$1,680.
 
 ***Contingencies – outstanding
      claims***
 
 Wako
      Group is subject to claims that arise primarily in the ordinary course of
      business. Such claims are in general covered by a group insurance policy.
 
 As of
March 31, 2005, the aggregate outstanding amount being claimed was US$66. It is
the opinion of management that the disposition or ultimate resolution of such
claims will not have a material adverse effect on the financial position of the
Wako Group.
  **4.**
    **RELATED
      PARTY TRANSACTIONS**
 ****
 **Name
and relationship of related parties**
 Name
    Relationship
      with the Wako GroupChristopher
      Wood (“CW”)
    Shareholder
      and director of the Wako GroupYip
      King Lin, Paul (“PY”)
    Director
      of the Group’s subsidiariesWako
      Express (China) Company Limited (“WEC”)
    Common
      shareholders and directorsAsean
      Cargo Services Pty Ltd (“ACSP”)
    CW
      was a shareholder and director of ACSP until June 25,
  2004Asean
      Logistics Inc (“ALI”)
    PY
      was a shareholder of ALI until January 3, 2005Wako
      Logistic (Thailand) Co. Ltd (“WLT”)
    CW
      is a shareholder and director of WLTMountland
      Development Limited (“MDL”)
    CW
      is a shareholder and director of MDLJoin
      Wing Properties Limited (“JWP”)
    CW
      is a shareholder and director of JWPYadley
      Hong Kong Limited (“YHKL”)
    PY
      is a shareholder and director of YHKL
  8
 
 ****
 **Wako
Logistics Group, Inc.**
 
 **Notes
to the Consolidated Financial Statements**
 3 months
period ended March 31, 2004 and 2005
 **4.**
    **RELATED
      PARTY TRANSACTIONS (CONTINUED)**
  **Details
of related parties**
 Name
    
    Principal
      activities
    
    Ownership
      (as of March 31, 2005)*Name
      of owner*
    
    *%
      held*WEC
    
    Provision
      of sea freight and air freight forwarding services in the PRC
      #
    
    CW
      PY
    
    50%
      50%ACSP
    
    Provision
      of sea freight and air freight forwarding services in Australia
      #
    
    CW
      (up to June 25, 2004)
      Others
    
    40%
      60%ALI
    
    Provision
      of sea freight and air freight forwarding services in the United States
      #
    
    PY
      Others
    
    35%
      55%WLT
    
    Provision
      of sea freight and air freight forwarding services in Thailand
      #
    
    CW
      (up to January 3, 2005)
      Others
    
    50%
      50%MDL
    
    Property
      holding for letting to the Wako Group until February 2004
    
    CW
    
    100%JWP
    
    Property
      holding for letting to the Wako Group
    
    CW
    
    100%YHKL
    
    Property
      holding for letting to the Wako Group
    
    PY
      and his spouse
    
    100%
 
 # : In the
normal course of business, Wako Group entered into agency agreements with
various overseas agents so that both the Wako Group and these overseas agents
can jointly handle the shipments in both the port of loading and the port of
destination.
 
 Under
these agency agreements, both the Wako Group and the overseas agents are obliged
to perform their respective services at their own places of business and, in
return, earn their respective services fees from the other party and either the
shipper or the consignee.
  In
addition to the above, under the agency agreements, sometimes either the Wako
Group or the overseas agent is obliged to act as “collection agent” to collect
the freight revenue from customers (either the shipper or the consignee). Since
the decision as to who has to pay the freight cost is solely determined by both
the shipper and the consignee, both Wako Group and the overseas agent only act
in accordance with the customers’ instructions in the collection process. In
case the collecting party is not the party who pays the freight cost to the
carrier, the collecting party has to reimburse the other party to enable it to
settle the freight cost.
  In both
cases, either the Wako Group or the overseas agent has to raise an invoice to
the other party for an amount attributable to him. The amounts include the
services fees earned and may also include the freight cost collected by the
other party.
  During
the period covered by these financial statements, certain overseas agents are
related parties as mentioned above. For the purposes of identifying the related
party transactions for accounting disclosure purposes, only the handling fee
income earned by Wako Group from related party overseas agents and the handle
fees paid by Wako Group to related party overseas agents are disclosed as
related party transactions. The amounts that Wako Group billed to the related
party overseas agents, who only acted as collection agents, were not shown as
related party transactions. Likewise, the amounts that the related party
overseas agents billed to Wako Group, who only acted as a collection agent, were
not shown as related party transactions.
 9
 
 ****
**Wako
Logistics Group, Inc.**
****
**Notes
to the Consolidated Financial Statements**
3 months
period ended March 31, 2004 and 2005
****
 
 **4.**
    **RELATED
      PARTY TRANSACTIONS
(CONTINUED)**
 
 The
following is a summary of the amounts included in the accompanying balance
sheets:
 
 **At**
      **March
      31,**
      **2005***(unaudited)***
    
    
    *US$***Due
      from related parties (Note (i))**WEC
    
    
    292WLT
    
    
    12304**Due
      to related parties (Note (i))**WEC
    
    
    52WLT
    
    
    254**Due
      to directors (Note (i))**CW
    
    
    2,058
  Notes :
 
 (i)
    The
      amounts due from / to related parties and director(s) are unsecured,
      interest-free and repayable on demand.
 
 10
 ****
 **Wako
Logistics Group, Inc.**
 
 **Notes
to the Consolidated Financial Statements**
 3 months
period ended March 31, 2004 and 2005
 **4.**
    **RELATED
      PARTY TRANSACTIONS (CONTINUED)**
 
 **Summary
of transactions with related entities (unaudited):**
 
 **WEC**
    
    **ACSP**
    
    **ALI**
    
    **WLT**
    
    **Total***US$*
    
    *US$*
    
    *US$*
    
    *US$*
    
    *US$*January
      1, 2004
    
    
    700
    
    
    224
    
    
    213
    
    
    25
    
    
    1,162Trade
      transactions
    
    
    -
    
    
    276
    
    
    64
    
    
    11
    
    
    351Expenses
      paid
    
    
    56
    
    
    34
    
    
    3
    
    
    -
    
    
    93Net
      settlements
    
    
    (310
    )
    
    (494
    )
    
    (4
    )
    
    (12
    )
    
    (820
    )March
      31, 2004
    
    
    446
    
    
    40
    
    
    276
    
    
    24
    
    
    786January
      1, 2005
    
    
    208
    
    
    -
    
    
    97
    
    
    11
    
    
    316Trade
      transactions
    
    
    202
    
    
    -
    
    
    -
    
    
    1
    
    
    203Expenses
      paid
    
    
    92
    
    
    -
    
    
    -
    
    
    -
    
    
    92Net
      settlements
    
    
    (262
    )
    
    -
    
    
    -
    
    
    (2
    )
    
    (264
    )Reclassified
      as non-related parties
    
    
    -
    
    
    -
    
    
    (97
    )
    
    -
    
    
    (97
    )March
      31, 2005
    
    
    240
    
    
    -
    
    
    -
    
    
    10
    
    
    250
 
 Notes :
 
 ·
    Trade
      transactions include revenues earned by the Group and amounts collected on
      behalf of the Group (or freight costs incurred by the Group and amounts
      collected on behalf of the agents) in the ordinary course of
      business.
 
 ·
    Expenses
      paid include amounts paid by the Group on the agents’ behalf (or paid by
      the agents on the Group’s behalf).
 
 ·
    Net
      settlements are the amounts which the Group paid (or
      received).
 11
 ****
 **Wako
Logistics Group, Inc.**
 
 **Notes
to the Consolidated Financial Statements**
 3 months
period ended March 31, 2004 and 2005
  **4.**
    **RELATED
      PARTY TRANSACTIONS (CONTINUED)**
 
 **Additional
details of transactions**
 
 **3
      months period ended**
      **March
      31,****2004**
    
    **2005***(unaudited)*
    
    *(unaudited)**US$*
    
    *US$***Handling
      income received/receivable**WEC
    
    
    -
    
    
    5**Handling
      fee paid/payable**ACSP
    
    
    39
    
    
    -ALI
    
    
    23
    
    
    -WEC
    
    
    -
    
    
    16WLT
    
    
    1
    
    
    -**Rental
      paid/payable**MDL
    
    
    12
    
    
    -JWP
    
    
    11
    
    
    16YHKL
    
    
    12
    
    
    -
 
 **Summary
of transactions during the periods with directors /
shareholders:**
 
 **CW**
    
    **PY**
    
    **Total***(unaudited)*
    
    *(unaudited)*
    
    *(unaudited)**US$*
    
    *US$*
    
    *US$*January
      1, 2004
    
    
    (1,007
    )
    
    (87
    )
    
    (1,094
    )Dividends
      paid by subsidiaries
    
    
    (404
    )
    
    (135
    )
    
    (539
    )Expenses
      / draws
    
    
    310
    
    
    123
    
    
    433March
      31, 2004
    
    
    (1,101
    )
    
    (99
    )
    
    (1,200
    )January
      1, 2005
    
    
    (733
    )
    
    -
    
    
    (733
    )Advance
    
    
    (1,325
    )
    
    -
    
    
    (1,325
    )March
      31, 2005
    
    
    (2,058
    )
    
    -
    
    
    (2,058
    )
 
 Notes :
 
 ·
    Dividends
      include the amounts declared as dividends and
payable.
  ·
    Expenses
      / Draws include amounts that were either paid directly to or for the
      benefit of CW or PY
 
 12
 ****
 **Wako
Logistics Group, Inc.**
 
 **Notes
to the Consolidated Financial Statements**
 3 months
period ended March 31, 2004 and 2005
 **5.**
    **SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATION**
 
 **3
      months period ended**
      **March
      31,****2004**
    
    **2005***(unaudited)*
    
    *(unaudited)**US$*
    
    *US$***Cash
      paid for:**Interest
      expenses
    
    
    -
    
    
    4
 13
 ****
 **Wako
Logistics Group, Inc.**
 
 **Notes
to the Consolidated Financial Statements**
 3 months
period ended March 31, 2004 and 2005
  **6.**
    **SEGMENTS
      OF THE BUSINESS**
 
 **(a)**
    **Business
      segments**
 
 The Group
operates mainly in two business segments, being the provision of (i) air
forwarding and (ii) sea forwarding services. The
following table summarized the Group ’s
operations analyzed into air and
sea forwarding services :
  **(i)**
    **During
      the 3 months period ended March 31, 2004 and 2005
      (unaudited)**
 
 **Air
      forwarding**
    
    **Sea
      forwarding**
    
    **Elimination**
    
    **Total****2004**
    
    **2005**
    
    **2004**
    
    **2005**
    
    **2004**
    
    **2005**
    
    **2004**
    
    **2005***US$*
    
    *US$*
    
    *US$*
    
    *US$*
    
    *US$*
    
    *US$*
    
    *US$*
    
    *US$*Revenue
    
    
    2,648
    
    
    4,121
    
    
    1,929
    
    
    3,058
    
    
    
    
    
    (333
    )
    
    4,577
    
    
    6,846Cost
      of forwarding
    
    
    (2,380
    )
    
    (3,742
    )
    
    (1,403
    )
    
    (2,339
    )
    
    
    
    
    333
    
    
    (3,783
    )
    
    (5,748
    )Depreciation
    
    
    (3
    )
    
    (7
    )
    
    (6
    )
    
    (15
    )
    
    
    
    
    
    
    
    (9
    )
    
    (22
    )Interest
      income
    
    
    1
    
    
    4
    
    
    -
    
    
    -
    
    
    
    
    
    
    
    
    1
    
    
    4Interest
      expenses
    
    
    -
    
    
    (1
    )
    
    -
    
    
    (3
    )
    
    
    
    
    
    
    
    -
    
    
    (4
    )Other
      segment income
    
    
    -
    
    
    5
    
    
    4
    
    
    56
    
    
    
    
    
    (36
    )
    
    4
    
    
    25Other
      segment expenses
    
    
    (217
    )
    
    (325
    )
    
    (370
    )
    
    (626
    )
    
    
    
    
    36
    
    
    (587
    )
    
    (915
    )Taxation
    
    
    -
    
    
    (12
    )
    
    (27
    )
    
    (28
    )
    
    
    
    
    
    
    
    (27
    )
    
    (40
    )49
    
    
    43
    
    
    127
    
    
    103
    
    
    
    
    
    
    
    
    176
    
    
    146Corporate
      expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63
    )
    
    (20
    )Segment
      income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113
    
    
    126Segment
      assets
    
    
    2,306
    
    
    4,050
    
    
    2,254
    
    
    4,717
    
    
    (960
    )
    
    (2,409
    )
    
    3,600
    
    
    6,358Unallocated
      assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    464
    
    
    1,114Total
      assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,064
    
    
    7,472Property,
      plant and equipment –
      additions
    
    
    23
    
    
    45
    
    
    57
    
    
    21
    
    
    
    
    
    
    
    
    80
    
    
    66
 
 14
 ****
 **Wako
Logistics Group, Inc.**
 
 **Notes
to the Consolidated Financial Statements**
 3 months
period ended March 31, 2004 and 2005
 **6.**
    **POST
      BALANCE SHEET EVENTS**
 
 In April
2005, the Group completed the acquisition of 100% equity in Kay O’Neill (USA)
LLC at a total consideration of US$1,625. The acquiree is engaged in freight
forwarding business in the United States.
   15


**ITEM
2.**  **MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





Certain
statements in this report, including statements in the following discussion, may
constitute forward-looking statements made pursuant to the Safe Harbor
provisions of the Private Securities Litigation Reform Act of 1995. The Company
would like to caution readers regarding certain forward-looking statements in
this document and in all of its communications to shareholders and others, press
releases, securities filings, and all other communications. Statements that are
based on management's projections, estimates and assumptions are forward-looking
statements. The words "believe," "expect," "anticipate," "intend," "will," and
similar expressions generally identify forward-looking statements. While we
believe in the veracity of all statements made herein, forward-looking
statements are necessarily based upon a number of estimates and assumptions
that, while considered reasonable by us, are inherently subject to significant
business, economic and competitive uncertainties and contingencies and known and
unknown risks. Many of the uncertainties and contingencies can affect events and
our actual results and could cause its actual results to differ materially from
those expressed in any forward-looking statements made by, or on our
behalf.





OVERVIEW





Wako
Logistics Group, Inc. through its operating subsidiaries Wako Express (HK) Co.
Ltd. (“WEHK”), Wako Air Express (HK) Co. Ltd.  (“WAE”) and Wako Express
(China) Co. Ltd., a wholly-owned subsidiary of WEHK (“WE China”), is an
international, non-asset-based logistics company that provides air and ocean
freight forwarding, contract logistics, customs clearances and other supply
chain management services, throughout the world, from its offices in Hong Kong
and Mainland China.  We serve our customers through a worldwide network of
agents.





We were
incorporated in Delaware on December 2, 2003 under the name of Wako Logistics
Inc. Under our certificate of incorporation, we were initially authorized to
issue 100 million shares of common stock, par value US$0.001 per share. Mr.
Christopher Wood was initially our sole shareholder. On January 8, 2004, we
changed our name to Wako Logistics Group, Inc. On the same date, we reduced our
number of authorized shares of capital stock to 60 million shares, of which 55
million shares were designated as common stock, and 5 million shares were
designated as blank check preferred stock. We do not carry on any business
activities directly, but have conducted all of our business from January 18,
2004 (the date we acquired WEHK and WAE) through March 31, 2005 through our two
Hong Kong based subsidiaries, as well as through our newly-formed subsidiary, WE
China, since February 2005.





Under the
new Closer Economic Partnership Agreement (“CEPA”) between Mainland China and
Hong Kong, which was signed in June 2003, Hong Kong companies are now permitted
to set up wholly-owned enterprises in Mainland China to provide logistics
services. Our Hong Kong subsidiary, WEHK, qualifies under the provisions of the
CEPA for the establishment of such an enterprise in China. In July 2004, we
formed WE China, which is a wholly-owned subsidiary of our subsidiary, WEHK, in
the People's Republic of China, under the provisions of the CEPA. This
subsidiary began operations in February 2005.




16





Pursuant
to Share Exchange Agreements entered into between us and Mr. Christopher Wood
(and his nominee) on January 18, 2004, we consummated a combination with WEHK
and WAE by issuing 20,000,900 shares of our common stock in exchange for 100% of
the outstanding stock of WEHK and WAE. After the share exchanges, WEHK and WAE
became our controlled subsidiaries, as a result of our owning all of the issued
and outstanding shares of each such company, and Mr. Christopher Wood was our
controlling shareholder having ownership of all 20,001,000 shares of our common
stock then issued and outstanding.





WEHK was
incorporated in Hong Kong on June 4, 1982. Its business is primarily focused on
the handling of sea freight export and import between Hong Kong and the rest of
the world, with particular focus on the USA, Australia and Europe.





WAE was
incorporated in Hong Kong on February 24, 1989. Its business is primarily
focused on the handling of air freight export and import between Hong Kong and
the rest of the world, particularly Australia, Europe and the USA.





In July
2004, we formed WE China, a wholly-owned subsidiary of WEHK, in the People’s
Republic of China. WE China began operations in February 2005 and its business
is primarily focused on the handling of both airfreight and sea freight export
and import between Mainland China and the rest of the world.





We do not
own or operate any aircraft, ships, river barges or railroads. We contract with
commercial freight air carriers, ships, river barges and railroads to provide
the transportation services for the forwarding of freight, on behalf of our
customers. Our revenue is generated from the freight transportation services
that we arrange for our customers, and other valued added services such as price
ticketing and warehousing. Our customers benefit from the extensive experience
we have in arranging freight transportation. This experience allows us to focus
our business on large cargo shipments rather than small parcel packages, as the
shipment of large cargo usually requires sophisticated retail
networks.





Due to
the volume of the shipments we arrange, we are generally able to negotiate more
competitive rates than our customers would otherwise be able to negotiate
directly with shippers and carriers. As a result, our customers benefit by
arranging their freight shipments through us, and we, in turn, are able to
recognize greater income from the business we book, due to the lower rates we
are charged by these shippers and carriers. Generally, the shipping rates we pay
are reduced based on the increase in the volume of freight that we arrange to
have shipped.





A
significant portion of our expenses are variable and therefore directly related
to the amount of business we book. Other than transportation costs, staff costs
represent our largest variable expense, as we normally staff our operations
based on the number of customer orders we need to fulfill. Staff costs are
generally less flexible than our other variable costs, in the near term, as we
normally are required to staff our operations based on uncertain future demand.





We also
derive a significant portion of our revenue from the consolidation of cargo. We
always seek to build a perfect mix of light and heavy cargo in order to enable
us to maximize the weight capacity and cubic capacity of all of our
shipments.





A
substantial portion of our costs are incurred under space contracts pursuant to
which we agree in advance to purchase cargo space from air and sea carriers or
guarantee a minimum volume of shipments. Under these contracts we are required
to pay the minimum amount we guarantee, even if we do not ship the full minimum
amount. In the past we have been able to minimize our risk of loss due to
failures to ship the minimum guaranteed amounts by carefully gauging customer
demand, and by entering into arrangements with other freight forwarders whereby
they pay to use the excess cargo space that we are unable to fill. We do not
have the ability to pass along any of this risk to our customers, by requiring
minimum guarantees from them, and therefore we must assume all risk relating to
these minimum guarantees.





17





RESULTS
OF OPERATIONS





THREE
MONTHS ENDED MARCH 31, 2005 COMPARED WITH THREE MONTHS ENDED MARCH 31,
2004





Total
revenue for the three months ended March 31, 2005 increased approximately 50%
compared with total revenue for the three months ended March 31, 2004, from
approximately $4.58 million to $6.85 million. This increase in revenue is
attributable primarily to the natural growth of our business, as well as the
addition of revenue of approximately $1.03 million from WE China, our subsidiary
in Mainland China, during the months of February and March 2005.





During
the three months ended March 31, 2005, our operating expenses increased
approximately 51% ,as compared to the three month period ended March 31, 2004,
from approximately $4.44 million to $6.71 million. This includes an increase of
approximately 52% in cost of forwarding expenses from $3.78 million to $5.74
million and an increase of approximately 44% from $650,000 to $935,000 in
selling and administrative expenses. These increases in costs were the result of
the increase of sales volume and the additional costs of sales attributable to
WE China. In particular, salaries payable to our employees increased
significantly as a result of the addition of several new employees, as well as
normal increases in salaries payable to our existing employees. See *Salaries
and Allowances* below.





Gross
profit margin decreased from 17.3% for the three months ended March 31, 2004 to
16.0% for the three months ended March 31, 2005. The decrease in gross profit
margin was primarily attributable to increases in freight costs that we were
unable to pass on fully to our customers.





Net
income from operations, after provision for income taxes, for three months ended
March 31, 2005 increased approximately 11% from approximately $113,000 to
$126,000 as compared to the similar period in 2004. The increase is mainly due
to increase in sales volume, including sales by WE China, **** our
newly-formed subsidiary in China, and as a result of the natural growth of our
business.





**Segment
Information**




***Airfreight
operations*** : Revenue
from airfreight operations for the three months ended March 31, 2005 increased
approximately 55% when compared with the three months ended March 31, 2004, from
approximately $2.65 million to $4.12 million. This increase in revenue was
primarily attributable to increased sales as a result of the natural growth of
our business, increases in airfreight traffic due to improvements in our agency
network, as well as the addition of new clients. Additionally, this increase in
revenue is also the result of new airfreight business generated, during February
and March 2005, by WE China, our newly-formed subsidiary in Mainland
China.




Costs for
our airfreight forwarding operations increased approximately 57%, from
approximately $2.38 million to $3.74 million for the three months ended March
2005 as compared to the same period in 2004. This increase was due primarily to
an increase in freight traffic arranged by us during the three months ended
March 31, 2005. Increases in costs were attributable to the same facts described
in the paragraph above with respect to increases in revenue. Profit margin
decreased from 10.1% for the three months ended March 31, 2004 to 9.2% for the
three months ended March 31, 2005. This reduction in our profit margin was
caused by our need to satisfy additional cargo traffic minimums with two new
airlines, during the first three months of 2005, some of which sales were at
lower margins. The increase in these costs can also be attributed to the
significant increase in fuel costs.




18





Total
segment overhead attributable to our airfreight operations increased by
approximately 53%, from approximately $219,000 in the three month period ended
March 31, 2004 to $336,000 in the same period in 2005. This increase is
primarily attributable to our need to expend more resources in the performance
of our airfreight operations in order to deal with the increase in air traffic.




Overall,
net segment income for our airfreight operations decreased 12% or approximately
$6,000 for the three months ended March 31, 2005 as compared with the three
months ended March 31, 2004. This decrease in net income was due primarily to an
increase in administrative expenses.




***Sea
freight operations:*** Revenue
from sea freight operations for the three months ended March 31, 2005 increased
approximately 59% when compared with the three months ended March 31, 2004, from
approximately $1.93 million to $3.06 million. This increase in revenue was
primarily attributable to increased sales as a result of the natural growth of
our business, and new sea freight business, during February and March 2005,
which was generated by WE China, our newly-formed subsidiary in Mainland
China.




Costs for
our sea freight forwarding operations increased 66% from $1.41 million for the
three months ended March 31, 2004 to $2.34 million for the three months ended
March 31, 2005. This increase was primarily attributable to a corresponding
increase in sea freight revenue due to increased sales. **** Overall
gross profit margin was reduced from approximately 27.3% to 23.5% due to
increased competition for sea freight forwarding business, which resulted in our
need, in certain cases, to lower our fees in order to remain
competitive.




Total
segment overhead attributable to our sea freight operations for the three months
ended March 31, 2005 was increased by 54% or approximately $217,000 from the
three months ended March 31, 2004. This increase is primarily attributable to
our need to expend more resources in the performance of our sea freight
operations in order to deal with our increase in sea freight business,
particularly shipments to the U.S and Europe.




Overall
net segment income for our sea freight operations decreased by 19% or
approximately $24,000 during the three months ended March 31, 2005 compared to
the three months ended March 31, 2004. The decrease in net income was due
primarily to an increase in administrative expenses.




**Other
Operating Expenses**




*Salaries
and allowances*




Salaries
and allowances for the three months ended March 31, 2005 increased 86.1% from
$302,000 in the three months ended March 31, 2004 to $562,000 in the three
months ended March 31, 2004. This increase in salaries and allowances was
attributable to normal increases in the salaries payable to our employees in
2005, and an increase in number of both operation and management staff. Most
notably, WE China, our subsidiary in Mainland China, which did not begin
operations until February 2005, added approximately 60 employees to our
staff.




*Sales
Commissions*




Sales
commissions payable by us during the three months ended March 31, 2005 were
$29,000 compared to $7,000 for the same period in 2004, reflecting a greater
than 300% increase. This increase was primarily attributable to an increase in
sales revenue.




19


**


*Rent*




Rent
payable for our facilities increased 89% from $27,000 for the three month period
ended March 31, 2004 to $51,000 for the same period in 2005. This increase was
primarily attributable to additional offices we leased for the operations of our
subsidiaries in Hong Kong and eight additional offices which we leased for WE
China in Mainland China.




*Depreciation
and Amortization*




Depreciation
on property, plant and equipment increased from $8,724 in the three months ended
March 31, 2004 to $22,368 in the three months ended March 31, 2005. This
increase in depreciation is primarily attributable to purchases of new fixed
assets and computer software for our recently implemented computerized logistic
system.




*Interest
Expenses*




Interest
expenses increased from zero in the three months ended March 31, 2004 to $3,890
in the three months ended March 31, 2005 as a result of the interest paid for
new bank loans obtained.




*Provision
for Income Taxes*




Provision
for income taxes increased by 48.1% from $27,000 in the three months ended March
31, 2004 to $40,000 in the three months ended March 31, 2005. This increase was
due to the increase in taxable income and also the high income tax rate for our
recently added operations in Mainland China **.**




**LIQUIDITY
AND CAPITAL RESOURCES**




For the
three months ended March 31, 2005, we generated approximately $1,100,000 in cash
from operating activities, compared with $805,000 for the three month ended
March 31, 2004. This increase in cash was almost entirely attributable to an
increase in changes of our trade payables which increased from $62,000 for the
three month period ended March 31, 2004 to approximately $1.04 million during
the same period in 2005.




We had
net cash provided by financing activities of $755,000 for the three months ended
March 31, 2005 compared with $648,000 used for financing activities for the
three months ended March 31, 2004. Cash used for financing activities in the
three month period ended March 31, 2004, consisted primarily of $538,000 in
dividend payments, in an aggregate amount, made to Christopher Wood and one
other shareholder of our two Hong Kong subsidiaries, and $269,000 in payment of
bank overdrafts. Cash provided by financing activities for the three month
period ended March 31, 2005, consisted almost entirely of a loan by Mr. Wood to
us in March 2005, in the amount of $1,000,000, for the cash portion of the
purchase price we paid for our Kay O’Neill USA subsidiary acquired by us
subsequent to the first quarter in April 2005.




At March
31, 2005, we have provided guarantees to certain banks which guarantee an
aggregate of $510,000 for the granting of credit facilities to a subsidiary for
airfreight payments to carriers, which must be advanced prior to payment by our
customers. These guarantees are secured by restricted cash, that we have
deposited in separate bank accounts for this purpose, along with certificates of
deposit, all of which aggregate to approximately $524,000. In April 2004, we
obtained a short-term bank loan of approximately $67,000 of which $45,000 was
for the installment of certain equipment and the remaining $22,000 was used for
general working capital. This short-term bank loan was repaid, in full, by March
31, 2005. In October 2004, we also obtained an additional bank loan of $449,000,
which was used to pay income taxes and for general working capital. This loan is
repayable in 24 equal monthly installments, with interest at the best rate
charged by the lending bank, less 1 percent. At March 31, 2005, the interest
rate payable on this loan was 4.125% per annum and the outstanding principal
amount was approximately $355,000.




20





Our
approximate contractual cash obligations at March 31, 2005 are outlined in the
table below including our equipment lease and office rental obligations, as well
as payments due under our cargo space commitments. These cash obligations
are expected to amount to approximately $161,000 per month for fiscal year ended
2005.











**Payments
      Due by Period**
      **(in
      thousands)****Contractual
      Obligations**
    
    **Total**
    
    **Less
      than 1 year**
    
    **1-3
      years**
    
    **4-5
      years**
    
    **After
      5 years**Facilities
      Obligation: Equipment lease and office rental obligation
    
    $
    356
    
    $
    257
    
    $
    86
    
    $
    13
    
    $
    -Other
      Obligations: Cargo space commitment
    
    
    1,680
    
    
    1,680
    
    
    -
    
    
    -
    
    
    -Total
      Contractual Cash Obligations
    
    $
    2,036
    
    $
    1,937
    
    $
    86
    
    $
    13
    
    $
    -





**CRITICAL
ACCOUNTING POLICIES AND ESTIMATES**




Management's
discussion and analysis of financial condition and results of operations are
based upon our consolidated financial statements. These statements have been
prepared in accordance with generally accepted accounting principles in the
United States of America. All intercompany balances and transactions have been
eliminated in consolidation.




**Use
of estimates in preparation of financial statements**




The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates, judgments
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates, based on
historical experience, and various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The following critical
accounting policies rely upon assumptions, judgments and estimates and were used
in the preparation of our consolidated financial statements:




**Revenue
Recognition Policy**




Because
of the way we conduct our business, we recognize revenue gross as a principal
rather than net as an agent. The reason we recognize revenue in this manner is
that we, as a freight forwarder, as distinguished from other logistics
forwarders, who are required to recognize revenues net as an agent, is because
we are subject to credit risk, inventory/cargo risk, and insurance risk.




21




As a
non-asset based carrier, we do not own transportation assets. Rather, we
generate the major portion of our air and ocean freight revenues by purchasing
transportation services from direct (asset-based) carriers and reselling those
services to our customers. The sell rate is the rate we bill to customers and
the buy rate is the rate we pay to the carrier. By consolidating shipments from
multiple customers and concentrating our buying power, we are able to negotiate
favorable buy rates from the direct carriers, while at the same time offering
lower sell rates than customers would otherwise be able to negotiate themselves.




Airfreight
revenues reflect income for carrying the shipments when we act as a freight
consolidator. Ocean freight revenues reflect income for carrying the shipments
when we act as a Non-Vessel Operating Common Carrier. In each case we are acting
as an indirect carrier. When acting as an indirect carrier, revenues related to
shipments are recognized when freight is received from the shipper (for import
freight) or when freight leaves the carrier's terminal (for export freight) with
accrual of the estimated direct costs to complete delivery of the
freight-in-transit.




Revenues
realized in other capacities, for instance, when we act as an agent for the
shipper, include only the commissions and fees earned for the services
performed. These revenues are recognized upon completion of the services.




Other
services include mainly terminal and documents handling fees earned. These
revenues are recognized upon completion of the services.




**Recognition
of Cost of Forwarding**




The
billing of cost of forwarding is usually delayed. As a result, we must estimate
the cost of purchased transportation and services, and accrue an amount on a
shipment by shipment basis in a manner that is consistent with revenue
recognition. Such estimates are based on past trends, and on the judgment of
management. Historically, upon completion of the payment cycle (receipt and
payment of transportation bills), the actual aggregate transportation costs are
not materially different than the amount accrued. Any differences where the
actual cost varies significantly from the accrual would require an adjustment as
soon as the actual amounts are known.




**Accounting
for Income Taxes**




In
preparing our consolidated financial statements, we are required to estimate our
income taxes in each of the jurisdictions where we operate. This process
involves estimating actual current tax exposure, together with assessing
temporary differences resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and
liabilities, which are included in our consolidated balance sheet. We must then
assess the likelihood that our deferred tax assets will be recovered from future
taxable income, and to the extent that we believe that recovery is not likely,
we must establish a valuation allowance. To the extent we establish a valuation
allowance, we must include an expense within the tax provision of the statement
of income in each period in which the allowance is increased.




Significant
judgment is required in determining the provision for income taxes, deferred tax
assets and liabilities, and any valuation allowance, against our deferred tax
assets. In the event that actual results differ from these estimates or the
estimates are adjusted in future periods, then we may need to establish an
additional valuation allowance, which could materially impact our financial
position and results of operations. Based on our current financial projections,
we currently believe that we will realize 100% of our deferred tax assets.




22





**ITEM
3.**  **CONTROL
AND PROCEDURES**





The
term "disclosure controls and procedures" is defined in Rules 13a-15d-15e and
15d-15e of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
This term refers to the controls and procedures of a company that are designed
to ensure that information required to be disclosed by a company in the reports
that it files under the Exchange Act is recorded, processed, summarized and
reported within the required time periods. Our Chief Executive Officer and our
Chief Financial Officer have evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this annual
report. They have concluded that, as of that date, our disclosure controls and
procedures were effective at ensuring that required information will be
disclosed on a timely basis in our reports filed under the Exchange
Act.





**PART
II. OTHER INFORMATION**


**ITEM
1.**  **LEGAL
PROCEEDINGS**




We have a
number of claims, currently outstanding, relating to lost or damaged cargo
occurring in the normal course of our business. Many of these claims are settled
by the carriers we engage to ship goods on behalf of our customers. In the event
that we are responsible to our customers, with regards to any of such claims, we
believe that these claims are sufficiently insured under the insurance policies
we have obtained to cover such losses. At March 31, 2005, and through the date
of filing of this transition report, we are not aware of any uninsured claim
that would have a materially adverse economic effect on the company.




**ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS**





Not
applicable.




**ITEM
3. DEFAULTS UPON SENIOR SECURITIES.**





Not
applicable **.**





**ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





**** Not
applicable.





**ITEM
5. OTHER INFORMATION**





**Subsequent
Events** **.**





In
connection with our acquisition of our Kay O’Neill USA subsidiary on April 1.
2005, we have undertaken to file audited financial statements for Kay O’Neill
USA and certain pro forma financial information, as required by the SEC, on or
before June 17, 2005. These financial statements will be filed by us in a Form
8-K/A Current Report on or before such date.





In
connection with the acquisition of our Kay O’Neill subsidiary, we entered into
an employment agreement, dated as of April 1, 2005, with Stewart Brown, in his
capacity as Chief Executive Officer of Kay O’Neill USA. Under the terms of Mr.
Brown’s employment agreement, he received a bonus in April 2005 of $38,850, and
is paid an annual salary of US$200,000. In addition, Mr. Brown is also entitled
to receive an annual bonus equal to 10% of Kay O’Neill USA’s net earnings after
payment of interest, but before payment of taxes, provided that Kay O’Neill USA
achieves certain pre-determined performance levels agreed to, in advance, by Mr.
Brown and us. This bonus is payable to Mr. Brown in cash, our securities, or a
combination of both, as shall be mutually agreed to by Mr. Brown and us. Mr.
Brown was also issued 200,000 shares of our common stock as additional
compensation, Mr. Brown is also entitled to customary health benefits and
payment of automobile expenses in an approximate amount of  $8,000 per
year.





23





On April
12, 2005 we changed our fiscal year from April 30 th to
December 31 st . As a
result, we will not file a Form 10-KSB with the SEC for our fiscal year that was
to have ended on April 30, 2005, but will instead file a Form 10-KSB for the
transition period from May 1, 2004 through December 31, 2004, which will contain
audited financial statements through December 31, 2004. Our Form 10-KSB will
also contain additional information, under subsequent events, on our
newly-acquired Kay O’Neill USA subsidiary.





**ITEM
6. EXHIBITS**





(a)
Exhibits (filed herewith)





10.1
    Employment
      Agreement dated as of April 1, 2005, by and between Kay O’Neill (USA) LLC
      and Stewart Brown
 
 31.1
    Certification of the Chief Executive Officer and Chief
      Financial Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002 (Rule
13a-4(a)).
 
 32.1
    Certification
      of the Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 (Rule
13a-14(b)).
 
 (b)
    Reports
      on Form 8-K


During
      the period covered by this report, we filed the following Form 8-Ks with
      the SEC:





Form
      8-K filed with the SEC on March 24, 2005 to report our execution of a
      Membership Interest Purchase Agreement with respect to the acquisition of
      our Kay O’Neill USA Subsidiary.





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**SIGNATURES**





In
accordance with the requirements of the Exchange Act, the registrant caused this
report be signed on its behalf by the undersigned, thereunto duly
authorized.





WAKO LOGISTICS GROUP,
      INC.By:
    /s/ Christopher WoodChristopher WoodChief
      Executive Officer, Principal Executive Officer,
      Principal
      Financial Officer and Director




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