17-Nov-2006
Quarterly Report
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
You should read the following discussion and analysis in conjunction with the Consolidated Financial Statements in Form 10-KSB, Form 10-QSB and Notes thereto, and the other financial data appearing elsewhere in this Form 10-QSB Report.
The information set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains certain "forward-looking statements", including, among others (i) expected changes in the Company's revenues and profitability, (ii) prospective business opportunities and (iii) the Company's strategy for financing its business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as "believes", "anticipates", "intends" or "expects". These forward-looking statements relate to the plans, objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved.
In light of these risks and uncertainties, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. The Company undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
General
CyberTel Capital Corp. (the "Company" or "CyberTel") is a technology consulting and management firm offering full service capabilities in the wireless, telecommunications and broadband business. CyberTel works with clients to develop and deploy wireless and fiber broadband services for service providers, large and small with its select group of consultants, vendor partners and key relationships within the telecommunications and venture capital community.
The Company provides: Business planning and advisory services; Engineering, Furnishing and Installation of WiMAX systems, IP infrastructure and IMS applications for service providers; Managed services to operate and maintain WiMAX networks for our business partners; Operations Support and Customer Care systems to support our partners' business operations integrated with their operating assets in a simplified user interface.
The Company relies heavily on technology and service partners to provide the equipment, service management and expertise to deploy these communication solutions. The Company markets its services to a wide variety of agencies, companies and institutions including the Department of Homeland Security, Department of Defense, FEMA, public safety and first responder agencies such as police and fire departments, municipalities and government agencies.
Recent Developments
Effective as of October 26, 2005, the Company filed a Certificate of Amendment with the Nevada Secretary of State, by which the Company effectuated a reverse split of its issued and outstanding shares of common stock in the ratio of one for 500, while retaining the par value of the common stock of one mill ($0.001) per share, with appropriate adjustments being made in the additional paid in capital and stated capital accounts of the Company, and with all fractional shares being rounded up to the nearest whole share. For more information on this Certificate of Amendment to our Articles, see the 8-K Current Report dated October 26, 2005. See Part III, Item 13.
On March 17, 2006, Albert A. Gomez, M.D. and James A. Wheeler entered into a Stock Sale and Purchase Agreement, pursuant to which Dr. Gomez sold 50,000,000 shares of Cybertel's Series B Preferred Stock to Mr. Wheeler at a purchase price of $20,000.
Each share of Series B Preferred Stock entitles the holder to 100 votes per share. Accordingly, the sale and transfer of the 50,000,000 shares of the Series B Preferred Stock to Mr. Wheeler effectively transferred control of Cybertel to Mr. Wheeler.
In connection with this change in control, Dr. Gomez resigned as President and Chief Executive Officer of Cybertel. The board of directors appointed Mr. Wheeler as the new President and Chief Executive Officer, replacing Dr. Gomez. The board of directors also appointed Mr. Wheeler to fill one of the vacancies on the board of directors. Andrew Mercer and Reuben Gomez resigned as directors.
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Thereafter, the board agreed to reduce the number of authorized directors, and concurrently therewith, Dr. Gomez and Richard D. Mangiarelli agreed to resign from the board of directors. The reduction in the number of authorized directors and the concurrent resignations of Dr. Gomez and Mr. Mangiarelli became effective 11 days after the transmittal of the information statement pursuant to Rule 14(f)1 of the Securities Exchange Act of 1934, as amended. The sale of the shares of Series B Preferred Stock was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(1) of the Securities Act (under the so-called "4(1 1/2) exemption" of the Securities Act). See the 8-K Current Report dated March 17, 2006. See Part III, Item 13.
On March 31, 2006, the Company entered into an agreement to merge with HBLN Services, Inc., an established provider of consulting services to government and commercial telecommunications providers. The agreement states that HBLN will exchange 100% of its common stock for 500,000 shares of Cybertel Series C Preferred Stock, each share of which will convert in two years into $2.00 of Cybertel common stock. The transaction was consummated on June 30, 2006.
On April 7, 2006, the Company entered into an agreement to acquire The Swiftsure Group, Inc., Virginia-based company that was established in 2002. This agreement has not been consummated.
On October 10, 2006 HBLN Services, a subsidiary of the company, changed its name to Air Wire, Inc. The new name, AireWire, describes the subsidiary's focus of creating the wireless local loop. The future of the Internet is wireless. The subsidiary's new name will help the market understand the company's focus on building and operating WiMAX networks.
Results of Operations.
Our Company generated a net loss of $1,712,490 and $1,011,790 for the nine months ending September 30, 2006 and 2005, respectively, and $874,999 and $112,160 for the three months ending September 30, 2006 and 2005, respectively. After a preferred stock dividend the net loss attributable to common stockholders was $1,728,141 and $1,033,871 for the nine months ending September 30 2006 and 2005, respectively, and $878,820 and $118,950 for the three months ending September 30, 2006 and 2005, respectively.
We currently have insufficient funds to operate our business according to our proposed business plan. In addition, it is anticipated we will require additional funds to continue our business. We may not be able to obtain additional financing as needed, on acceptable terms, or at all, which would force us to delay our plans for growth and implementation of our strategy which could seriously harm our business, financial condition, and results of operations. If we need additional funds, we may seek to obtain them primarily through stock sales or debt financings. Those additional financings could result in dilution to our stockholders.
Liquidity
Cybertel incurred net losses of $1,712,490 and $1,011,790 during the nine months ended September 30, 2006 and 2005, respectively, and a working capital deficit of $1,139,760 as of September 30, 2006. Our management is attempting to raise sufficient additional capital through sales of stock, but has not done so as of November 6, 2006. These conditions raise substantial doubt about Cybertel's ability to continue as a going concern, as expressed in our auditor's report