10QSB 1 q602.txt U. S. Securities and Exchange Commission Washington, D. C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------- --------------- Commission File No. 0-26913 --------------------------- CYBERTEL COMMUNICATIONS CORP. ----------------------------- (Name of Small Business Issuer in its Charter) NEVADA 86-0862532 ------ ---------- (State or Other Jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 2820 La Mirada Drive, Suite H Vista, California 92083 ----------------------- (Address of Principal Executive Offices) Issuer's Telephone Number: (858) 646-7410 ------------------------------------------ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes X No (2) Yes X No --- --- --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Not applicable. APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: 10,553,961 June 30, 2002 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. The Financial Statements of the Registrant required to be filed with this 10-QSB Quarterly Report were prepared by management, and commence on the following page, together with Related Notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant for the periods then ended.
CYBERTEL COMMUNICATIONS CORP. BALANCE SHEET June 30, 2002 ASSETS Current Assets Cash $ 14,022 Restricted Cash 51,517 Accounts receivable, net of allowance for doubtful accounts of $90,570 238,073 Prepaid expenses 4,277 ------------ Total Current Assets 307,889 ------------ Equipment, net of $273,633 accumulated depreciation 107,086 Other assets 80,031 ------------ TOTAL ASSETS $ 495,006 ============ LIABILITIES & STOCKHOLDERS' DEFICIT Current Liabilities Installment debt $ 5,989 Due to related parties 36,102 Accounts payable and accrued expenses 806,464 Dividends payable 270,505 ------------ Total Current Liabilities 1,119,060 ------------ Note payable, net of unamortized loan costs of $71,827 128,173 ------------ Total Liabilities 1,247,233 ------------ STOCKHOLDERS' DEFICIT Convertible preferred stock, $.001 par value, 5,000,000 shares authorized, 1,833 shares issued and outstanding 2 Common stock, $.001 par value, 20,000,000 shares authorized, 10,553,961 shares issued and outstanding 10,554 Paid in capital 10,866,883 Deficit (11,629,666) ------------ TOTAL STOCKHOLDERS' DEFICIT ( 752,227) ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 495,006 ============
CYBERTEL COMMUNICATIONS CORP. CONSOLIDATED INCOME STATEMENTS For the Three Months and Six Months Ended June 30, 2002 and 2001 Three Months Six Months Ended June 30, Ended June 30, (restated) (restated) 2002 2001 2002 2001 --------- ----------- --------- ----------- Revenues $ 305,172 $ 410,726 $ 623,709 $ 673,255 Cost of sales 197,899 230,064 390,728 595,451 --------- ----------- --------- ----------- Gross Margin 107,273 180,662 232,981 77,804 Operating Expenses Selling (20,128) (118,160) (47,405) (204,300) General and admin. (440,147) (733,295) (839,812) (1,464,825) Depreciation (17,644) ( 25,089) (39,153) (67,160) Interest and other income 653 12,234 1,341 14,183 Interest expense (8,521) (3,939) (9,526) (15,540) Minority interest in net loss of subsidiary (4,048) (4,048) Gain on sale of marketable securities 1,098,161 1,741,981 --------- ---------- --------- ----------- Net Income (Loss) from Continuing Operations (378,514) 406,526 (701,574) 78,095 Preferred dividend requirements (27,415) (34,402) (54,227) (68,428) --------- ---------- --------- ----------- Net Income (Loss) Available to Common Shareholders from Continuing Operations (405,929) 372,124 (755,801) 9,667 --------- ---------- --------- ----------- Net Loss from Discontinued Operations (155,928) (201,677) --------- ---------- --------- ----------- NET INCOME (LOSS) (378,514) 250,598 (701,574) (192,010) Reclassification of prior period unrealized gains to net loss (443,287) (1,171,242) --------- ---------- --------- ----------- NET COMPREHENSIVE LOSS $(378,514) $ (192,689) $ (701,574) $(1,294,824) ========= ========== ========= =========== Basic & diluted earnings (loss) per common share - from continuing operations $ (.04) $ .05 $ (.08) $ .00 - from discontinued operations (.02) (.03) Weighted average common shares outstanding 9,608,961 6,919,166 9,385,391 6,622,434
CYBERTEL COMMUNICATIONS CORP. STATEMENTS OF CONSOLIDATED CASH FLOWS For the Six Months Ended June 30, 2002 and 2001 (restated) 2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES Net comprehensive loss $ (701,574) $(1,294,824) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 39,153 67,160 Stock issued for services 146,043 270,645 Gain on sale of marketable securities (570,739) Allowance for doubtful accounts (3,031) Current year writedowns of cash investments made 44,734 Amortization of loan costs 3,780 Changes in: Accounts receivable (26,250) 78,153 Other current assets (4,277) (87,497) Accounts payable and accrued expenses 301,739 (293,139) ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (244,417) (1,785,507) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equipment (39,732) Proceeds from sale of marketable securities 2,249,864 ----------- NET CASH PROVIDED BY INVESTING ACTIVITIES 2,210,132 ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of common stock 92,484 13,000 Costs of fundraising (3,750) Proceeds from new notes payable 124,393 Payments on installment debt (10,284) (11,017) Advances by related parties 36,102 ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 238,945 1,983 ----------- ----------- NET INCREASE (DECREASE) IN CASH (5,472) 426,608 CASH BALANCES - Beginning of period 71,011 126,137 ----------- ----------- - End of period $ 65,539 $ 552,745 =========== ===========
CYBERTEL COMMUNICATIONS CORP. NOTES TO FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited interim financial statements of Cybertel Communications Corp. ("Cybertel") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in Cybertel's Annual Report filed with the SEC on Form 10-KSB. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for 2001 as reported in the 10-KSB have been omitted. NOTE 2 DUE TO RELATED PARTIES In June 2002, $36,102 was advanced to Cybertel by two related parties. NOTE 3 NOTE PAYABLE In March 2002, Cybertel issued a promissory note for $200,000 that bears interest of 8% and matures in March 2007. The holder has the right at any time to convert any unpaid principal and accrued interest into Cybertel's common stock. The conversion price will be the lower of $.216 per share or 80% of the three lowest closing bid prices for Cybertel's common stock for the thirty days prior to but not including the conversion date. In connection with the note, Cybertel issued 200,000 warrants to purchase Cybertel common stock at an exercise price of $.33 per share that expire in March 2007. Of the $200,000 gross proceeds, $75,607 was paid to consultants and attorneys for costs in connection with raising the funds. The net proceeds to Cybertel totaled $124,393. NOTE 4 COMMON STOCK In January 2002, Cybertel sold 25,000 shares of common stock for $.20 per share for total proceeds of $5,000. Also, in January 2002 Cybertel issued 197,825 shares of common stock for services valued at $44,543. In February 2002, Cybertel sold 250,001 shares of common stock for $.15 per share for gross proceeds of $37,500 and net proceeds of $33,750 after offering costs of $3,750. In January 2002, $49,984 was advanced to Cybertel under an agreement to purchase Cybertel common stock. In April 2002, 250,001 shares of common stock were issued for approximately $.20 per share. In May 2002, Cybertel issued 30,000 shares of common stock as payment of $5,000 owed to a vendor. In April and June 2002, Cybertel issued 950,000 shares of common stock for services valued at $101,500. NOTE 5 RESTATEMENTS In December 1999 and June 2000, Cybertel acquired Telenomics, Inc. ("Telenomics"), LDVL, Inc. ("LDVL"), and Like Dat Music, Inc. ("LDM") by exchanging stock in transactions recorded using the pooling-of-interests method of accounting. All three entities were dissolved or sold back to their founders in 2001. The 2001 statements show the operations of all three as discontinued items. Both LDVL and LDM were closed in March 2001. Cybertel ceased funding Telenomics in May 2001, and operations were transferred back to the founders of Telenomics in June 2001. The 2001 restatements reclassify these amounts as discontinued operations. Item 2. Management's Discussion and Analysis. ----------------------------------------------- Results of Operations. ---------------------- Three months ended June 30, 2002, compared to three months ended June 30, 2001. ----- Revenues for the three month period ended June 30, 2002, decreased to $305,172 as compared to $410,726 for the three month period ended June 30, 2001, as the result of the discontinuance of our fixed cost business. Selling expenses and general and administrative costs have decreased to $20,128 and $440,147, respectively, for the three month period ended June 30, 2002, as compared to $118,160 and $733,295, respectively, for the three month period ended June 30, 2001. The reasons for these decreases were our reduction in overhead expenses, including personnel and rent. During the three months ended June 30, 2002, we had a net loss from continuing operations of $378,514, as compared to net income of $406,526 in the year-ago period. In addition to the foregoing factors, this decrease is partially the result of a gain on marketable securities of $1,098,161 in 2001. After taking into account preferred dividend requirements of $27,415 and $34,402, respectively, net income (loss) available to common stockholders from continuing operations was ($405,929) during the three months ended June 30, 2002, and $372,124 during the three months ended June 30, 2001. The Company's 2001 financial statements have been restated to show the operations of Telenomics, Inc.; LDVL, Inc.; and Like Dat Music, Inc. as discontinued operations, as each of these entities was either dissolved or sold back to its founders in 2001. Net loss in the three months ended June 30, 2002, was $378,514, as compared to net income of $250,598 during the three months ended June 30, 2001, after accounting for a net loss from these discontinued operations of $155,928 in that period. After reclassification of unrealized gains to net loss of $443,287 in the three months ended June 30, 2001, the Company had a net comprehensive loss of $192,689, as compared to the net comprehensive loss of $378,514 in the three months ended June 30, 2002. Six months ended June 30, 2002, compared to six months ended June 30, 2001. --------------------------------------------------------------------------- The Company received revenues of $623,709 during the six months ended June 30, 2002. In the six months ended June 30, 2001, revenues were $673,255. Operating expenses and general and administrative expenses during the six month period ended June 30, 2002, declined to $47,405, and $839,812, respectively, from $204,300 and $1,464,825, respectively, in the year-ago period. These declines resulted from the discontinuance of our fixed cost business. Net income (loss) from continuing operations was ($701,574) during the six months ended June 30, 2002, as compared to $78,095 during the six months ended June 30, 2001. Again, this change is partly due to a gain on sale of marketable securities of $1,741,981 in the 2001 period. After accounting for preferred dividend requirements of $54,227 and $68,428, net income (loss) available to common stockholders from continuing operations was ($755,801) and $9,667, respectively. Net loss was $701,574 during the six months ended June 30, 2002. During the six months ended June 30, 2001, the Company had a net loss from discontinued operations of $201,677, resulting in a net loss of $192,010. After reclassification of unrealized gains to net loss of $1,171,242 in the six months ended June 30, 2001, the Company had net comprehensive losses of $701,574 and $1,294,824 respectively, in the six months ended June 30, 2002, and June 30, 2001. Liquidity and Capital Resources. -------------------------------- We had cash of $14,022 at June 30, 2002. Management believes that our current cash on hand will be insufficient to meet our expenses during the next 12 months. Unless we are able to raise substantial additional funding, our plans to expand our IP Gateway may be significantly delayed. In June, 2002, two related parties advanced $36,102 to the Company. We will need to raise more cash by selling debt or equity securities to continue operations into the fourth quarter of 2002. There can be no guarantee that the required funds will be raised. Forward Looking Statement. -------------------------- Statements made in this Form 10-QSB which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of the Company, including, without limitation, (i) our ability to gain a larger share of the telecommunications industry, our ability to continue to develop products acceptable to the industry, our ability to retain relationships with suppliers and distributors, our ability to raise capital, and the growth of the telecommunications industry, and (ii) statements preceded by, followed by or that include the words "may", "would", "could", "should", "expects", "projects", "anticipates", "believes", "estimates", "plans", "intends", "targets" or similar expressions. Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond the Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, in addition to those contained in the Company's reports on file with the SEC: general economic or industry conditions, nationally and/or in the communities in which the Company conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, changes in the telecommunications industry, the development of products and that may be superior to the products and services offered by the Company, demand for telecommunications, competition, changes in the quality or composition of the Company's products and services, our ability to develop new products and services, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting the Company's operations, products, services and prices. Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements. PART II - OTHER INFORMATION Item 1. Legal Proceedings. ---------------------------- On or about January 25, 2002, Prudential Home Building Investors, Inc., a New Jersey corporation ("Prudential"), filed a complaint against the Company in the Superior Court of California, County of San Diego, Central Division. The case was designated Case No. GIC 782069, and sought damages in the amount of $32,000 for unpaid rent on our former La Jolla facility from September, 2001, through December, 2001, when the lease terminated. The Company has accrued this expense. This case is still pending. Item 2. Changes in Securities and Use of Proceeds. --------------------------------------------------- None; not applicable. Item 3. Defaults Upon Senior Securities. ------------------------------------------ None; not applicable. Item 4. Submission of Matters to a Vote of Security Holders. -------------------------------------------------------------- None; not applicable. Item 5. Other Information. ---------------------------- None; not applicable. Item 6. Exhibits and Reports on Form 8-K. ------------------------------------------- (a) Exhibits. None; not applicable. (b) Reports on Form 8-K. None; not applicable. SIGNATURES 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. CYBERTEL COMMUNICATIONS CORP. Date: 08/13/02 By: /s/ Richard D. Mangiarelli -------------- ------------------------------------- Richard D. Mangiarelli Chief Executive Officer, President and Director Date: 8/13/02 By: /s/ Richard Schmidt -------------- ------------------------------------- Richard Schmidt Chief Financial Officer and Director Date: Aug. 8, 2002 By: /s/ John E. Jordan -------------- ------------------------------------- John E. Jordan Director CERTIFICATION PURSUANT TO 18 U.S.C.SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Cybertel Communications Corp. (the "Company") on Form 10-QSB for the period ending June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Richard D. Mangiarelli, Chief Executive Officer and President, and Richard Schmidt, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge and belief: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Dated: 8/13/02 /s/ Richard D. Mangiarelli ------------ ----------------------------- Richard D. Mangiarelli, Chief Executive Officer and President Dated: 8/13/02 /s/ Richard Schmidt ------------ ----------------------------- Richard Schmidt, Chief Financial Officer