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PART
I - FINANCIAL INFORMATION
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PART
II - OTHER INFORMATION
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Calypso Wireless, Inc - Recent Material EventPART
I - FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
The
preparation of financial statements in conformity with generally accepted
accounting principles require the appropriate application of certain accounting
policies, many of which require us to make estimates and assumptions about
future events and their impact on amounts reported in the financial statements,
and related notes. Since future events and their impact cannot be determined
with certainty, the actual results will inevitably differ from our estimates.
Such differences could be material to the financial statements.
We
believe application of accounting policies, and the estimates inherently
required by the policies, are reasonable. These accounting policies and
estimates are periodically reevaluated, and adjustments are made when the facts
and circumstances dictate a change. Our accounting policies are more fully
described in note 1 to the notes to consolidated financial statements,
contained in this Form 10-QSB.
The
company’s financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. The company is in the development stage and has
primarily been involved in research and development and capital raising
activities; as such the company has incurred losses from operations in 2006
and
year to date 2007. As a result the company has a need for capital to continue
its operations, and it will need to raise additional funds to implement its
business plan. Management believes that actions presently being taken to obtain
additional debt and/or equity financing will provide the opportunity to continue
as a going concern. Our Auditor’s opinion letter for the year ended December 31,
2006 included a modification related to our ability to continue as a going
concern.
The
Registrant's financial statements for the three month periods ended March 31,
2007 and 2006, are attached to this quarterly report.
Consolidated
Financial Statements
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATION
Forward-Looking
Statements; Market Data
As
used
in this Quarterly Report, the terms "we", "us", "our" "CLYW" and the "Company"
means Calypso Wireless, Inc., a Delaware corporation, and its subsidiaries,
Industria de Telecomunicaciones Americanas ATEL, S.A. To the extent that we
make
any forward-looking statements in the "Management's Discussion and Analysis
of
Financial Condition or Plan of Operations" in this Quarterly Report, we
emphasize that forward-looking statements involve risks and uncertainties and
our actual results may differ materially from those expressed or implied by
our
forward-looking statements. Important factors to consider in evaluating such
forward-looking statements include (i) changes in external factors or in our
internal budgeting process which might impact trends in our results of
operations; (ii) unanticipated working capital or other cash requirements;
(iii)
changes in our business strategy or an inability to execute our strategy due
to
unanticipated changes in the industries in which we operate; and (iv) various
competitive market factors that may prevent us from competing successfully
in
the marketplace. Our forward-looking statements in this Quarterly Report reflect
our current views about future events and are based on assumptions and are
subject to risks and uncertainties. Generally, forward-looking statements
include phrases with words such as "expect", "anticipate", "intend", "plan",
"believe", "seek", "estimate" and similar expressions to identify
forward-looking statements.
Company
History
Calypso
Wireless, Inc. (the "Company", "we", "Calypso" or Calypso Wireless), formerly
Kleer-Vu Industries, Inc. (Kleer-Vu), was incorporated in the State of Delaware
on March 22, 1983. The Company operates as a holding company with three
subsidiaries, Industria de Telecomunicaciones Americanas ATEL, S.A. (American
Telecom Industries ATEL, S.A.), which was incorporated in 1997 under the Laws
of
the Republic of Costa Rica; Sleipner, S. A. which was incorporated in 2003
under
the laws of Switzerland and doing business in Milan, Italy; and Calypso
Technology Holdings, Inc which was incorporated in 2006 in the State of
Florida.
The
Company is a result of a business combination on October 4, 2002, between
Kleer-Vu Industries, Inc., a public shell company, and Calypso Wireless, Inc.,
a
privately held development stage company incorporated in the State of Florida
in
1998. Kleer-Vu acquired all of the outstanding capital stock of Calypso
Wireless, Inc. by issuing 90,000,000 shares of its restricted common stock.
For
accounting purposes, the acquisition has been treated as the recapitalization
of
Calypso Wireless, Inc., with Calypso Wireless, Inc. being deemed the acquirer
of
Kleer-Vu in a reverse merger. At the conclusion of the merger, Calypso Wireless,
Inc. stockholders held 99.8% of the combined company. The Company is a
development stage company. The company has been in the development stage since
inception of its wholly owned subsidiary; Industria de Telecomunicaciones
Americanas ATEL, S.A. (American Telecom Industries ATEL, S.A.) which was
incorporated in 1997 under the Laws of the Republic of Costa Rica. American
Telecom Industries ATEL, S.A. began its research and development activities
in
1997. In July, 2006, Calypso Wireless acquired a 16.8% interest in RV Technology
Ltd. (RV Technology). RV Technology is a limited company under the laws of
Hong
Kong. The company is privately held. In October, 2006 Calypso acquired Sleipner
S. A. to obtain software to complement ASNAP. In September, 2006 the board
of
Directors authorized the creation of a wholly owned subsidiary Calypso
Technology Holding, Inc. which was incorporated in Florida to explore a proposed
contract with VoipTel to propose on a contract in Argentina that would have
Calypso providing a dual mode device operating on GSM and Wi-Fi in 802.11a
standard (5Ghz). Calypso Technology Holdings received $10,000 Buenos Aires
VoipTel the prime bidder to travel to Argentina and assist in the proposal
to the Argentina government officials. VoipTel has not received the frequencies
required to proceed with any work. There was no other activity in Calypso
Technology Holdings.
Calypso
Wireless received a patent for its technology (U.S. Patent Number: 6,680,923)
on
January 20, 2004. Our patent covers a communication and system method for
establishing communication with any one of a variety or different wireless
communication devices. The ASNAP™ technology enables seamless session
transparency of all sessions, voice/video/data across antennae on dual mode
cell
phones, WiFi and macro-cellular, as well as across devices-residential,
enterprise to macro networks (cellular phones, WiFi enabled PCs/TVs/Stereos,
Satellite devices, and wireline devices). Additionally the ASNAP™ patent covers
Revenue Settlements with in-building networks to macro-network
carriers.
Overview
Calypso
Wireless’ has developed and
patented technology that spans voice, video and data session transparency across
macro-cellular networks and wireless local area
networks. During 2007, Calypso began the development of
a test unit with a large US based network company. in Boca Raton,
Florida. Upon completion of the test unit, using the Calypso ASNAP
technology, the companies expect to conduct a field trial with a large GSM
wireless carrier. Further, the Company has been in
discussion with companies regarding licensing. It is now shifting
from pure research and development to beginning to work with companies regarding
licenses. This was previously reported as the new business model for
Calypso.
Fixed-mobile
convergence (FMC) technology allows individuals to unite their mobile and
business or home communications under a single phone number and voicemail system
by using a combination of software, hardware and wireless services to register
multiple handsets with a system. Proponents of FMC include mobile OEMs such
as
Motorola, Nokia and Sony Ericsson along with carriers such as AT&T Wireless,
Cingular Wireless and T-Mobile all of which are supporting a mobile-centric
model. Unlicensed Mobile Access (UMA) would allow cellular GSM (Global System
for Mobile Communications) and GPRS (General Packet Radio Service) transmissions
to travel over broadband networks operating in unlicensed radio bands. Dual-mode
handsets would be able to seek out public and private wireless broadband
internet networks (Wi-Fi and potentially WiMAX) and switch transmissions over
to
those networks to improve coverage or reduce airtime costs.
Facilities
Effective
January 1, 2007 Calypso entered into a lease to occupy office space at 2500
N.
W. 79th Ave.,
Doral, FL 33122, Suite 220. The terms are $3600 per month from January 1, 2007
to December 31, 2008. This new lease reduces operating costs.
Results
of Operations
Three
Months Ended March 31, 2007 Compared to Three Months Ended March 31,
2006
The
first
quarter of 2007 was devoted to reducing expenses based on the licensing model;
pursing investors; pursuing contracts; continued product development and risk
mitigation.
Revenues:
During the three month period ended March 31, 2007 and 2006, the Company did
not
generate any revenues related to the sale of its products.
Operating
expenses: Operating expenses incurred for the three ended March 31, 2007,
were $191,880 compared to $1,548,400 for the three months ended March 31, 2006.
Operating expenses, for the three months ended March 31, 2007, have been
significantly reduced and consist primarily of staff salaries and
rent.
Net
Loss and Loss Per Share: The Company's net loss for the three months ended
March 31, 2007, was $191,880 compared to $1,548,400 for the three and ended
March 31, 2006. For the three months ended March 31, 2007, the net loss per
share was $0.00 compared to $0.01 for the three months ended March 31, 2006.
The
net loss for the three months ended March 31, 2007 was significantly less in
2007 as amortization of software development cost has been completed and salary
and other expenses have been reduced.
Off-Balance
Sheet Arrangements: The Company had no off-balance sheet arrangements for
the three month period ended March 31, 2007
Liquidity
and Capital Resources
At
March
31, 2007, we had a working capital deficit of $1,004,056 compared to a negative
working capital of $1,090,835 at December 31, 2006. The Company's
cash position at March 31, 2007 was $14,816 compared to $4,609 at December
31,
2006. Calypso was in the process of changing its business model did not generate
any revenue in this quarter from operations. During this period the Company
was
focused on working with companies to begin licensing the patented software
and
working with investors who had expressed an interest in investing in the Company
but ultimately did not finalize those plans for various
reasons. Personnel and operating expenses were reduced even more
during this period. To assist with liquidity, on March 16, 2007, the Company
entered into a “Patent Mortgage and Security Agreement” with several individuals
where it received $200,000 and issued Promissory Notes payable on
March 18, 2008, to these individuals which granted the lenders a security
interest and mortgage as collateral security to Debtor’s entire right, title and
interest in, and under the following, now or hereafter existing, created,
acquired or held by Debtor to its Intellectual Property. At the
option of the lender, the loans can be converted into shares of common stock
at
a conversion price of $0.05. The Company received $56,000 from I. Medicas
Central, a related party, in January 2007 which under the terms of the
subscription agreement was converted from debt to 1.4 million shares of stock
on
January 22, 2007 In addition, effective March 1, 2007,
the Company signed an agreement with Coastal Bend Capital, LLC. to promote
the
company’s stock to potential investors and provide other consulting services for
5 million shares of restricted stock to assist further with improving
liquidity. As of April 30, 2007 the Company has raised $160,000 in
private placements.
ITEM
3. CONTROLS AND PROCEDURES
Evaluation
of disclosure controls and procedures. As of March 31, 2007, the Company's
chief executive officer and chief financial officer conducted an evaluation
regarding the effectiveness of the Company's disclosure controls and procedures
(as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based
upon the evaluation of these controls and procedures, our chief executive
officer and chief financial officer concluded that our disclosure controls
and
procedures were not effective as of the end of the period covered by this
report.
Changes
in internal controls. During the quarterly period covered by this report,
no changes occurred in our internal control over financial reporting that
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
PART
II - OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
On
November 5, 2004, Drago Daic d/b/a Tribeca Inc, filed a lawsuit against
the Company, Texas, alleging that the Company delivered restricted shares
rather than registered shares in a stock purchase; that he was assigned an
interest in a lawsuit and the Company refused to acknowledge his interest;
that
he was hired to assist in obtaining the grant of a patent in exchange for
4,500,000 shares. Although, the Company disputes the claims; has never issued
any shares to Mr. Drago, is not pursing litigation against anyone, never signed
a contract for assistance with the patent and has used its attorneys Malloy
& Malloy to obtain such patent; on December 8, 2006, the Court rendered a
judgment against Calypso in the amount of $117,000,000. Our attorneys felt
that
the Company had not adequately presented information in its defense due to
new
evidence becoming available. Therefore, after entry of this judgment, Calypso
has filed a lawsuit seeking a “bill of review”, in effect a suit to set aside
the Daic judgment, based on new information. The bill of review was granted
:Calypso Wireless, Inc. v. Drago Daic, Cause No. 2007-22571 in the
151st District Court of Harris County, Texas. The trial was originally set
for
August 27, 2007 but has been postponed until November 7, 2007. The
Company believes that this new trial will reverse the judgment; however the
outcome of this case is uncertain.
On
October 6, 2006, Robert Leon, the Company's former Chief Technology Officer,
commenced an action against the Company seeking additional compensation and
reimbursement of certain expenses. On June 23, 2006, the Company agreed to
a
Stipulated Settlement Agreement, General Release and Proposed Order for the
payment of $70,000 and issuance of 150,000 shares of stock. The shares have
been
issued, however payment of the cash portion has not been made. The amount is
accrued in the financial statements as presented.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
During
the first quarter of 2007, the Company incurred the obligation to issue
unregistered shares as set forth below:
The
issuances of shares as compensation for consulting, employee, officer and
director services as for broker commissions and debt conversion were also made
in reliance upon Section 4(2) of the Act. The offering and sale of shares to
accredited investors for cash consideration in connection with private
placements were made in reliance upon Section 4(2) of the Act. The Company
believes that the above issuances of restricted shares were exempt from
registration pursuant to Section 4(2) of the Act as privately negotiated,
isolated, non-recurring transactions not involving any public solicitation.
The
recipients in each case represented their intention to acquire the securities
for investment only and not with a view to the distribution thereof. Appropriate
restrictive legends are affixed to the stock certificates issued in such
transactions.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
ITEM
5. OTHER INFORMATION
Effective
March 1, 2007, Mr. Cristian Turrini entered into a two year employment agreement
with the Company to serve as President and Chief Executive Officer which
provided for an annual salary of $150,000 with Calypso being responsible for
payments of all taxes, social security and any other payments required by state
and federal law. The employment agreement provides for a 10,000 shares of R-144
stock each month.. The employment agreement grants Mr. Turrini
an option to purchase 250,000 shares of common stock at an exercise price of
$0.03 per year for each year of the duration of this employment
Agreement. The employment agreement provides that upon termination of
the term of the contract Calypso has the option, upon mutual consent of the
parties and agreed upon terms, to extend for an additional period negotiated
by
the parties.
On
February 16, 2007, Mr. Turrini also entered into four Performance Bonus
Agreements.
Effective
August 21, 2007, Cheryl L. Dotson was reappointed by the Board as chief
financial officer. Ms. Dotson had been serving as a Consultant to the
Board for preparation of the 10QSB for September 30, 2006, the 10KSB for
December 31, 2006, and the 10QSB for the periods March 31, 2007 and June 30,
2007. Ms. Dotson’s consulting agreement, February 2007 called for her
to be issued 200,000 shares for these services. These shares have
been accrued in the financial statements for the period ending March 31,
2007.
ITEM
6. EXHIBITS
(a)
The
following documents are filed as exhibits to this report on Form 10-QSB or
incorporated by reference herein. Any document incorporated by reference is
identified by a parenthetical reference to the SEC filing that included such
document.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been
signed below by the following persons on behalf of the registrant and in the
capacities and on the date indicated.
By:
/s/ Cristian Turrini
CEO
and
President
Dated:
August 27, 2007
By:
/s/ Cheryl L. Dotson
Chief
Financial Officer
Dated:
August 27, 2007
Financial
Statements
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