SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 December 31, 2004 | |
[_] |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____. |
Commission File No.: 0-13992
CYBER DIGITAL, INC. .
(Name of small business issuer in its charter)
New York . |
11-2644640 . | |
(State or other jurisdiction of |
(I.R.S. Employer | |
Incorporation or organization) |
Identification No.) |
400 Oser Avenue, Hauppauge, New York |
11788 | |
(Address of principal executive offices) |
(Zip Code) |
Issuer's telephone number: (631) 231-1200
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 [X] |
No [_] |
The number of shares of stock outstanding at February 8, 2005: 22,326,542 shares of Common Stock; par value $.01 per share.
CYBER DIGITAL, INC. |
|||||||||||||||
BALANCE SHEETS |
|||||||||||||||
December 31, 2004 |
March 31, 2004 | ||||||||||||||
ASSETS |
(Unaudited) |
(Audited) | |||||||||||||
Current Assets |
|||||||||||||||
Cash and cash equivalents |
$ |
18,661 |
$ |
29,990 | |||||||||||
Inventories |
582,575 |
582,575 | |||||||||||||
Prepaid and other current assets |
35,175 |
35,175 | |||||||||||||
Total Current Assets |
636,411 |
647,740 | |||||||||||||
Property and Equipment, net |
|||||||||||||||
Equipment |
$ |
339,394 |
$ |
339,394 | |||||||||||
Furniture and Fixtures |
64,355 |
64,355 | |||||||||||||
Leasehold Improvements |
4,786 |
4,786 | |||||||||||||
$ |
408,535 |
$ |
408,535 | ||||||||||||
Accumulated depreciation |
402,118 |
401,784 | |||||||||||||
Total Property and Equipment |
$ |
6,417 |
$ |
6,751 | |||||||||||
Other Assets |
26,374 |
26,374 | |||||||||||||
TOTAL ASSETS |
$ |
669,202 |
$ |
680,865 | |||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) |
|||||||||||||||
Current Liabilities |
|||||||||||||||
Accounts payable, accrued expenses, and taxes |
$ |
208,823 |
$ |
214,850 | |||||||||||
Accrued interest |
151,132 |
92,439 | |||||||||||||
Officer/ shareholder notes payable |
811,300 |
672,300 | |||||||||||||
Settlement payable-current portion |
13,758 |
10,626 | |||||||||||||
Total Current Liabilities |
1,185,013 |
990,215 | |||||||||||||
Long Term Debt |
|||||||||||||||
Settlement payable |
6,342 |
16,881 | |||||||||||||
Total Liabilities |
1,191,355 |
1,007,096 | |||||||||||||
Commitments and Contingencies |
|||||||||||||||
Shareholders' Equity (Deficit) |
|||||||||||||||
Preferred stock - $.05 par value; cumulative, convertible and |
|||||||||||||||
Participating; authorized 10,000,000 shares |
|||||||||||||||
Series C; issued and outstanding 310 shares at |
|||||||||||||||
December 31, 2004 and March 31, 2004 |
16 |
16 | |||||||||||||
Series E, issued and outstanding - 50 and 0 shares at |
|||||||||||||||
December 31, 2004 and March 31, 2004, respectively |
3 |
0 | |||||||||||||
Common stock - $.01 par value; authorized 60,000,000 shares; |
|||||||||||||||
issued and outstanding 22,326,542 and 22,326,542 |
|||||||||||||||
shares at December 31, 2004 and March 31, 2004, respectively |
223,266 |
223,266 | |||||||||||||
Additional paid-in-capital |
18,866,737 |
18,816,740 | |||||||||||||
Accumulated deficit |
(19,612,175) |
(19,366,253) | |||||||||||||
Total Shareholders' Equity (Deficit) |
(522,153) |
(326,231) | |||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
669,202 |
$ |
680,865 | |||||||||||
The accompanying notes are an integral part of these statements. | |||||||||||||||
| |||||||||||||||
CYBER DIGITAL, INC. |
|||||||||||||||
STATEMENTS OF OPERATIONS |
|||||||||||||||
(Unaudited) |
|||||||||||||||
Three months ended December 31, | |||||||||||||||
2004 |
2003 | ||||||||||||||
Net Sales |
$ |
0 |
$ |
0 | |||||||||||
Cost of Sales |
0 |
0 | |||||||||||||
Gross Profit |
0 |
0 | |||||||||||||
Operating Expenses |
|||||||||||||||
Selling, general and administrative expenses |
$ |
57,809 |
$ |
63,435 | |||||||||||
Research and development |
5,769 |
9,231 | |||||||||||||
Total Operating Expenses |
63,578 |
72,666 | |||||||||||||
Loss from Operations |
(63,578) |
(72,666) | |||||||||||||
Other Income (Expense) |
|||||||||||||||
Interest expense |
(19,126) |
(15,093) | |||||||||||||
Other expense |
0 |
0 | |||||||||||||
Total Other Income (Expense) |
(19,126) |
(15,093) | |||||||||||||
Net Loss |
(82,704) |
(87,759) | |||||||||||||
Preferred Stock Dividend |
0 |
0 | |||||||||||||
Income Available to Common Shareholders |
$ |
(82,704) |
$ |
(87,759) | |||||||||||
Net Loss Per Share of Common Stock |
|||||||||||||||
Loss from Operations - Basic |
$ |
(.004) |
$ |
(.004) | |||||||||||
Diluted |
$ |
(.004) |
$ |
(.004) | |||||||||||
Net Loss - Basic |
$ |
(.004) |
$ |
(.004) | |||||||||||
Diluted |
$ |
(.004) |
$ |
(.004) | |||||||||||
Weighted average number of common shares outstanding |
22,326,542 |
22,249,402 | |||||||||||||
The accompanying notes are an integral part of these statements. | |||||||||||||||
| |||||||||
CYBER DIGITAL, INC. |
|||||||||
STATEMENTS OF OPERATIONS |
|||||||||
(Unaudited) |
|||||||||
Nine months ended December 31, | |||||||||
2004 |
2003 | ||||||||
Net Sales |
$ |
0 |
$ |
0 | |||||
Cost of Sales |
0 |
0 | |||||||
Gross Profit |
0 |
0 | |||||||
Operating Expenses |
|||||||||
Selling, general and administrative expenses |
$ |
166,592 |
$ |
226,074 | |||||
Research and development |
18,269 |
34,808 | |||||||
Total Operating Expenses |
184,861 |
260,882 | |||||||
Loss from Operations |
(184,861) |
(260,882) | |||||||
Other Income (Expense) |
|||||||||
Interest expense |
(61,061) |
(38,896) | |||||||
Other expense |
0 |
0 | |||||||
Total Other Income (Expense) |
(61,061) |
(38,896) | |||||||
Net Loss |
(245,922) |
(299,778) | |||||||
Preferred Stock Dividend |
0 |
0 | |||||||
Income Available to Common Shareholders |
$ |
(245,922) |
$ |
(299,778) | |||||
Net Loss Per Share of Common Stock |
|||||||||
Loss from Operations - Basic |
$ |
(.011) |
$ |
(.013) | |||||
Diluted |
$ |
(.011) |
$ |
(.013) | |||||
Net Loss - Basic |
$ |
(.011) |
$ |
(.013) | |||||
Diluted |
$ |
(.011) |
$ |
(.013) | |||||
Weighted average number of common shares outstanding |
22,326,542 |
22,249,402 | |||||||
The accompanying notes are an integral part of these statements. | |||||||||
CYBER DIGITAL, INC. |
||||||||||
STATEMENTS OF CASH FLOWS |
||||||||||
(Unaudited) |
||||||||||
Nine months ended, December 31, | ||||||||||
2004 |
2003 | |||||||||
Cash Flows from Operating Activities |
||||||||||
Net loss |
$ |
(245,922) |
$ |
(299,778) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||||
Depreciation |
334 |
14,622 | ||||||||
Amortization |
0 |
257 | ||||||||
(Increase) decrease in operating assets: |
||||||||||
Prepaid expenses |
0 |
(630) | ||||||||
Increase (decrease) in operating liabilities: |
||||||||||
Accounts payable, accrued expenses and taxes |
52,666 |
(1,436) | ||||||||
Settlement payable |
(7,407) |
(2,000) | ||||||||
Net Cash Used in Operating Activities |
(200,329) |
(288,965) | ||||||||
Cash Flows from Investing Activities |
||||||||||
Purchase of equipment |
$ |
0 |
$ |
(1,421) | ||||||
Net Cash Used in Investing Activities |
$ |
0 |
$ |
(1,421) | ||||||
Cash Flows from Financing Activities |
||||||||||
Issuance of preferred stock |
$ |
50,000 |
0 | |||||||
Issuance of common stock |
0 |
$ |
86,364 | |||||||
Proceeds from officer/ shareholder loan |
139,000 |
203,700 | ||||||||
Net Cash Provided by Financing Activities |
189,000 |
290,064 | ||||||||
Net Increase (Decrease) in Cash and Cash Equivalents |
(11,329) |
(322) | ||||||||
Cash and Cash Equivalents at Beginning of Period |
29,990 |
7,445 | ||||||||
Cash and Cash Equivalents at End of Period |
$ |
18,661 |
$ |
7,123 | ||||||
Supplemental Disclosures of Cash Flow Information |
||||||||||
Cash paid during the period for: |
||||||||||
Income taxes |
$ |
531 |
$ |
2,099 | ||||||
The accompanying notes are an integral part of these statements. | ||||||||||
CYBER DIGITAL, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended December 31, 2004 are not necessarily indicative of the results that may be expected for the year ending March 31, 2005. For further information, refer to the financial statements and footnotes thereto included in our company's Form 10-KSB, for the year ended March 31, 2004.
NOTE 2 INVENTORIES
Inventory of purchased parts for eventual resale to customers are valued at the lower of cost or market, as determined by the first-in, first-out (FIFO) method and consisted of the following:
December 31, 2004 |
March 31, 2004 | |||
Raw Materials |
$ |
515,918 |
$ |
515,918 |
Finished Goods |
66,657 |
66,657 | ||
$ |
582,575 |
$ |
582,575 |
PART 1
ITEM 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
Statements contained in this Report on Form 10-QSB that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements regarding industry trends, strategic business development, pursuit of new markets, competition, results from operations, and are subject to the safe harbor provisions created by that statute. A forward-looking statement may contain words such as "intends", "plans", "anticipates", "believes", "expect to", or words of similar import. Management cautions that forward-looking statements are subject to risks and uncertainties that could cause our company's actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, marketing success, product development, production, technological difficulties, manufacturing costs, changes in economic conditions, competition, the ability to obtain financing on acceptable terms, future profitability, future profitability of acquired businesses or product lines, and those included in our company's Annual Report on Form 10KSB for the fiscal year ended March 31, 2004. Our company undertakes no obligation to release revisions to forward-looking statements to reflect subsequent events, changed circumstances, or the occurrence of unanticipated events.
Overview
We are a designer, software developer, manufacturer and seller of a range of unique distributed digital-voice-switching infrastructure equipment for public switched-voice-network operators worldwide. We are also a software developer, manufacturer and seller of a vast array of high-performance Internet infrastructure systems, such as soft-switches, routers, gateways, firewalls and servers for Internet service providers to create digital broadband services, voice-over Internet protocol (VoIP) services, and virtual private networks (VPN) services. In 2005, the Federal Communications Commission decided to phase out rules that forced the Bells to lease local switching networks to its competitors at cut-rate prices. This ruling favor us to evolve as an alternative local switching network provider, that is as an UNE-P migration provider, to these competitors for Mass Market Local Circuit Switching and High-Capacity Loops for broadband markets. Our new mission is to become a leading service provider of UNE-P migration services to competitive service providers by deploying our vast array of local voice and broadband data switching infrastructure systems in the United States. We expect to generate recurring revenues from wholesaling our UNE-P migration services to competitive service providers at affordable rates. We believe that we are the first company to offer such services.
Unlike our competitor's systems, our systems are neither labor nor capital intensive but are software intensive. This capability, in contrast to that of our competitor's, makes our systems more affordable for both voice and Internet service providers worldwide. Our digital voice switching and Internet Protocol (IP) infrastructure systems are based on our proprietary operating system software, which provides high performance, reliability and functionality. We believe that we are one of a very few companies in the world with proprietary technology of distributed digital switching. We have expended over $20 million dollars on the development of our rock solid proprietary state-of-the-art technology, which is built on 21 years of experience. Our systems are ideally suited for the U.S. pursuant to the recent FCC rulings.
Emerging Growth Market Opportunity in the FCC Regulated Market
On June 15, 2004, Supreme Court finally approved the Federal Communications Commission's (FCC) new ruling on the regulated phone policy released on August 21, 2003, requiring the Bells' competitors, such as competitive local exchange carriers (CLECs) and long distance carriers (LDCs), to use their own voice and data switches for connecting calls instead of leasing the Bells' voice and data switches (hereinafter referred to as "UNE-P Phase Out Policy"). UNE-P is an acronym for Unbundled Network Element - Platform, where Platform means the Bells' voice and data switches, the leasing of which is being phased out. Prior, to this UNE-P Phase Out Policy, there was no incentive for CLECs or LDCs to build their local voice and data switching networks in the U.S. On October 12, 2004, the Supreme Court declined to hear an appeal by AT&T and MCI and other competitive local exchange carriers (CLECs) that had requested access to the Bells' voice and data switches. As a result of the court's and FCC's decisions, AT&T and MCI have pulled back in their marketing of residential telephone services. On December 15, 2004, FCC issued the new tariffs and the UNE-P Phase Out Policy mandating CLECs and LDCs to move all their customers on an alternate network within 12 months from the effective date of January 2005. We believe that the UNE-P Phase Out Policy has created an emerging growth market opportunity, because CLECs and LDCs are forced to allocate capital towards building their local switching infrastructure or obtain UNE-P migration services from companies, like Cyber Digital, that are envisioning to enter this market. As of now, there are no UNE-P migration providers in the U.S.
Telecom competitors, such as CLECs and LDCs, have lost the battle with the Bells. Beginning year 2005, the Bells will begin to virtually shut off access to their local voice and data switches. The local voice switch access charges will be rising from 40 percent to over 60 percent by 2007, making local voice switch ownership by CLECs and LDCs an increasingly key factor for their future or seek UNE-P migration services from other providers. However, CLECs, LDCs and nascent UNE-P migration providers would be able to lease the copper wires to subscriber premises at cut-rate prices from the Bells, under the UNE-L policy. UNE-L is an acronym for Unbundled Network Element - Line, where Line means the copper wires to subscriber premises. This would permit CLECs, LDCs and nascent UNE-P migration providers (such as Cyber Digital) to co-locate their voice and data switches in the Bells' central offices. Hence, CLECs, LDCs and nascent UNE-P migration providers must rapidly build their own local switching facilities and networks. FCC further rules that CLECs and LDCs must also provide broadband data services along with voice services. So also FCC mandates that Internet service providers (ISP) must also provide voice along with broadband data services. Hence, CLECs, LDCs and ISPs must build their own local voice and broadband switching facilities and networks to serve their business and residential customers or obtain such services from nascent UNE-P migration providers. This means huge demand for our digital voice switches and broadband systems by nascent UNE-P migration providers and competitive service providers (CSPs) (hereinafter includes CLECs, LDCs and ISPs). We believe that combined power of our digital voice switches and broadband Internet systems offers nascent UNE-P migration providers and CSPs affordable one-stop solution for their local switching needs.
We believe that we are at the threshold of the local telephone switching metamorphosis in the U.S. According to data released by FCC, to-date less than 6 million local switched voice lines were owned by the CSPs as compared to 163 million such lines owned by the Bells. Hereafter, CSPs have to continuously invest, year after year, in bringing their local voice-switching infrastructure at par with those of the Bells or obtain such services from nascent UNE-P migration providers such as Cyber Digital. Beginning in 2005, we expect nascent UNE-P migration providers and CSPs to increase their capital expenditures towards that end. We intend to serve this high growth market, expected to be rising from almost zero today to several billions of dollars annually in the future.
We believe that the telecommunication service provision business will be rapidly consolidating in the next few years, especially in response to the UNE-P Phase Out Policy by FCC. The distinction between the services offered by LDCs, CLECs and ISPs are being eroded, and moreover, a greater emphasis is being placed on the build out and ownership of local switching network for both voice and broadband data. Since, the building of local switching networks is highly capital intensive, we project that we are at the threshold of a local switching networks metamorphosis and that it is expected to continue for many years. This marks the beginning of the Next Revolution in telecommunication (i.e. the deregulation of the local voice and data services) as a successor to the First Revolution in January 1984 (i.e. the break-up of AT&T creating deregulation of long distance service). During the last 20 years, LDCs such as Sprint, MCI, and others have competed fiercely against AT&T by building their own long distance networks. This has resulted in long distance charges to be about 30% of a typical telephone bill. While, the local voice charges are about 70% today, largely controlled by the Bells. We want to be the premier provider of UNE-P migration services on wholesale basis to non-facilities based CSPs as well as supplier of local voice and broadband switches to those CSPs electing to build their own local networks. Moving forward, we see ourselves offering UNE-P migration services to these CSPs at affordable rates instead of them obtaining from the Bells at uneconomical rates.
We intend to provide UNE-P migration services to CSPs with our proven, intelligent, distributed voice switches and broadband systems that can be co-located in central offices as follows:
We believe that our CDCO, CTSX and CIAN systems are ideally suited for building local digital voice switching and broadband data networks that requires increased reliability, performance, scalability, interoperability, and flexibility. Due to the UNE-P Phase Out Policy, we believe that we are poised to be a premier UNE-P migration service provider to CSPs because of our highly compact digital voice switches and broadband systems.
Our objective is to build, own and operate (BOO) UNE-P migration based voice and broadband local networks for CSPs initially in 1 Metropolitan Service Areas (MSA), namely New York, as rapidly as our financial resources allow us. There is abundant capacity of optically-enabled TDM (voice) and IP (broadband) backbone network between all major cities in the United States, but as yet businesses or consumers do not have any access to that capacity for both voice and broadband without using the Bell switches. Industry experts estimate that only between 2.6% to 5% of this capacity is currently being utilized. Our high-performance CDCO and CTSX distributed TDM switches, and CIAN IP distribution softswitch/ routers are specifically designed to allow nascent UNE-P migration providers and CSPs to efficiently deploy, on co-location basis, local digital TDM (voice) and IP (broadband) networks including TDMoIP (TDM voice over IP), connecting their customers to their respective TDM and IP backbone network. Fortunately, in major MSAs, abundant optical fiber backbone capacity is available at costs far below their actual construction costs. Nascent UNE-P migration providers and CSPs can rapidly deploy our local switching systems and connect to this inexpensive optical fiber backbone. We believe that we will establish a strong market position ourselves as well as with early adopters of our technology as this competitive service provision market establishes itself, however, there can be no assurance that we will be successful in this market.
Market Opportunity in Developing Countries
We were selected, over established companies such as Alcatel and Siemens, to provide Nigeria with a 10,000-line digital voice switch, IP network switches and optical network for $26 million for their Public Switched Telephone Network (PSTN). Since we offer affordable systems, the Nigerian authorities have selected us as one of the suppliers of digital voice switches and Internet systems. However, there can be no assurance that we will be successful in supplying any of our digital voice switches or Internet systems to the Nigerian telecommunications market.
Results of Operations
For Three Months Ended December 31, 2004
Net sales
Net sales for the quarter ended December 31, 2004 was zero as compared to zero for the quarter ended December 31, 2003. We are in early stages of developing the UNE-P migration services market in the U.S. We were waiting for the FCC's deregulation policies on local voice and data switching in order to enter this lucrative market with our systems.
Gross profit
We include in our cost of sales the materials and labor used, subcontractor costs and overhead incurred in the manufacture of our systems, which was zero for both quarter ended December 31, 2004 and 2003 because of zero sales.
Selling, general and administrative
Selling, general and administrative expenses decreased from $63,435 in quarter ended December 31, 2003 to $57,809 in quarter ended December 31, 2004, representing a decrease of $5,626 or approximately 9%, principally due to cutback in marketing efforts in Nigeria and capital constraints to enter the U.S. market.
Research and development
Research and development expenses decreased from $9,231 in quarter ended December 31, 2003 to $5,769 in quarter ended December 31, 2004, representing a decrease of $3,462 or approximately 37%, principally due to capital constraints. All development costs are expensed in the period incurred.
Net income (loss) available to Common Stockholders
The net loss in quarter ended December 31, 2004 was $(82,704) or $(.004) per share as compared with a loss of $(87,759) or $(.004) per share in quarter ended December 31, 2003.
For Nine Months Ended December31, 2004
Net sales
Net sales for the period ended December 31, 2004 was zero as compared to zero for the same period ended December 31, 2003. We are in early stages of developing the UNE-P migration services market in the U.S. We were waiting for the FCC's deregulation policies on local voice and data switching in order to enter this lucrative market with our systems.
Gross profit
We include in our cost of sales the materials and labor used, subcontractor costs and overhead incurred in the manufacture of our systems, which was zero for both period ended December 31, 2004 and 2003 because of zero sales.
Selling, general and administrative
Selling, general and administrative expenses decreased from $226,074 in period ended December 31, 2003 to $166,592 in period ended December 31, 2004, representing a decrease of $59,482 or approximately 26%, principally due to cutback in marketing efforts in Nigeria and capital constraints to enter the U.S. market.
Research and development
Research and development expenses decreased from $34,808 in period ended December 31, 2003 to $18,269 in period ended December 31, 2004, representing a decrease of $16,539 or approximately 47%, principally due to capital constraints. All development costs are expensed in the period incurred.
Net income (loss) available to Common Stockholders
The net loss in period ended December 31, 2004 was $(245,922) or $(.011) per share as compared with a loss of $(299,778) or $(.013) per share in period ended December 31, 2003.
Liquidity and Capital Resources
Our ability to generate cash adequate to meet our needs results primarily from sale of preferred and common stock, cash flow from operations and cash advances in the form of loan from our Chief Executive Officer and a shareholder. Total working capital decreased by $206,127 to $(548,602) at December 31, 2004 from $(342,475) at March 31, 2004. The current ratio of current assets to current liabilities decreased to 0.5 to 1 as at December 31, 2004 from 0.7 to 1 as at March 31, 2004. Current levels of inventory are adequate to meet sales for a few months. We believe that our current sources of liquidity are insufficient to meet our needs. We need to obtain additional funds to pursue the domestic market. We have no off-balance sheet arrangements.
As of the period ended December 31, 2004, our company has received cash advances of $634,300 and $177,000 from our Chief Executive Officer and a shareholder, respectively.
Period ended September 30, 2004, our company had issued 50 shares of its Series E preferred stock, par value $.05 per share, to an accredited investor at a price of $1,000 per share, under a private placement, and received net proceeds of $50,000. The Series E preferred stock was issued without registration in reliance on Section 4(2) of the Securities Act of 1933, as amended.
Additional financing will be needed to support the future growth plans of our company. The search for financing continues. However, economic factors have greatly decreased the availability and increased the cost of financing for our industry and hampered our progress in this area. In addition, our common stock trades sporadically on the Over-the-Counter Bulletin Board as a "penny stock", mitigating our ability to obtain equity capital at reasonable terms. Therefore, there is no assurance that there will be future financing available at terms that are acceptable to us. If we fail to obtain sufficient funds, we may need to delay, scale back or terminate some or all of our research and development programs and our anticipated expansion or otherwise curtail our operations.
Impact of Inflation
Inflation has historically not had a material effect on our operations.
PART II
ITEM 1 - Legal Proceedings
Although, as of the date hereof, no legal action has commenced against our company by our former legal counsel, Mr. Rajan K. Pillai and Uniworld Communications Co., (UCC), a New York company, in which Mr. Pillai is the principal, Mr. Pillai has threatened our company for a possible litigation arising due to the contention that our company refused to remove restrictive legend on 500,000 shares of our common stock held by UCC. Our company had issued 500,000 restricted shares to UCC pursuant to a stock option agreement for the purposes of UCC to deliver "Cyber India Project". On March 23, 2000, Mr. Pillai notified our company officially, for the first time, that he or UCC did not intend to deliver "Cyber India Project". Mr. Pillai was also our company's Managing Director (Asia) from June 1997 until his resignation on March 9, 2000. Our company believes that Mr. Pillai's or UCC's threatened claims, if any, are without merit and our company will vigorously defend its position, if and when required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Registrant for the three months ended December 31, 2004.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DATED: February 8, 2005 |
CYBER DIGITAL, INC | |
By: /s/ J.C. Chatpar Chairman of the Board, President Chief Executive Officer and Chief Financial Officer |
CERTIFICATIONS OF
CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER
PURSUANT TO
SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, J.C. Chatpar, certify that:
a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
February 8, 2005
/s/ J.C. Chatpar
J.C. Chatpar
Chief Executive Officer and
Chief Financial Officer
Exhibit 99.1
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 Cyber Digital, Inc. (the "Company") on Form 10-QSB for the period ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, J.C. Chatpar, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to ? 906 of the Sarbanes-Oxley Act of 2002, that:
/s/ J.C. Chatpar
J.C. Chatpar
Chief Executive Officer and
Chief Financial Officer
February 8, 2005