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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 two 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; and Sleipner, S. A. which was incorporated in 2003 under the laws of Switzerland and doing business in Milan, Italy.

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.) 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.

Calypso Wireless’ technology allows you to switch and connect from either a cellular network or a Wireless Local Area Network Access Point (WLAN), seamlessly without the user noticing the change. This means uninterrupted connectivity as you travel in and out of the range of WLAN access points. The use of ASNAP™ (Automatic Switching of Network Access Points) also increases the amount of available wireless bandwidth from the current state of technology of 9.6 kbps to 11 Mbps.

The Company has revised its business model such that it will sell licensing agreements with OEMs and businesses that cater to enterprise companies to license the technology based on our patented ASNAP™ technology (U.S. Patent Number: 6,680,923) and or license the patent rather than become a supplier of cellular and other devices. Calypso Wireless’ mission is to conduct research and develop products which can be licensed to manufacturers, carriers and enterprise companies in the global wireless communications industry. We believe our commercial success depends on identifying broad-based technology solutions for our customers, and ultimately the end user. Our company is distinctive in its focus on creating products which minimize the technological barriers to change and accelerate the communication industry’s operating efficiency.

On October 4, 2005, Calypso acquired Sleipner SA, a leader in advanced wireless telecommunications technology. Sleipner’s COMOB software enables smart phones and wireless PDA (personal digital assistants)/Pocket PCs to switch between GSM or CDMA cellular towers and WiFi (Wireless Fidelity) access points (hot spots). The Sleipner software enhanced and helped implement the Calypso patented ASNAP™ technology that allows the seamless switching between cell towers and various access points. The acquisition was made to expedite the delivery to market of the Calypso ASNAP™ patented technology on the C1250i WiFi-GSM-GPRS (Global System for Mobile Communications/General Packet Radio Service) VoIP ("Voice Over Internet Protocol") smart cellular phone and so that Calypso Wireless can now provide VoIP and IP solutions and application for the enterprise and vertical markets.

On July 22, 2005, 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 and Calypso wireless is the third largest shareholder. RV Technology develops and designs WiFi wireless handheld devices such as smart phones and wireless PDA/Pocket PCs for the consumer market.

The Company's Products and Services

Calypso Wireless developed the solution that allows any mobile device to seamlessly roam between cellular networks and wireless local area networks. On January 20, 2004 Calypso received a patent entitled "Communication System and Method." This solution is known by the trademarked acronym ASNAP™ which stands for Automatic Switching of Network Access Points. It is the only technology that spans voice, video and data session transparency across macro-cellular networks and wireless local area networks. 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.

Fixed-mobile convergence (FMC) is a term that has traditionally been used by the telecom industry when discussing the physical integration of wireline and wireless technologies. However, physical integration of networks typically requires expensive carrier network overhauls and replacement of business equipment (i.e. legacy PBXs (Private Branch Exchange) replaced with SIP-based IP PBXs, etc.) Before the networks are to be replaced it must be determined how converged technologies, trends and drivers can be leveraged by the industry to deliver on users needs. Four distinct categorizations of convergence exist- applications convergence, terminal convergence, network convergence, and service-provider convergence. Calypso Wireless has the keys to solving the seamless mobility and WiFi convergence puzzle.

Convergence is multi-dimensional.

Communications services and multiple media will be coming together in the communications and media industries, largely enabled by open applications, ubiquitous and competitive broadband access, IP-based (Internet Protocol based) protocols and Information Technology (IT). These services will be used because they are convenient, cost effective or just compelling. ASNAP™ technology allows for seamless integration to the existing core networks, existing cellular/landline devices, without requiring a carrier forklift to an elusive unified core network. Being able to seamlessly tie together assets from the mobile and fixed networks to reduce costs and enable better applications has been too cost prohibitive for large scale deployments, until recently with Calypso Wireless ASNAP™ technology. Calypso Wireless offers controlled seamless session transparency.

Calypso’s products and services include the Calypso Wireless ASNAP™ PATENT.

The ASNAP™ system implements the Calypso patented ASNAP™ technology that allows the seamless switching between PSTN and VoIP, through the ASNAP™ seamless session control. In addition, the Calypso-Sleipner ASNAP™ MediaGateway/Media Server which is a comprehensive and flexible development environment for business and carrier-grade critical Next Generation Network( NGN) solutions. It is a script driven telephony and VoIP application server. As such, it has its own scripting language built by class extensions from the ASNAP™ Script Interpreter. While the server scripting language can support the creation of complete telephony and VoIP applications, it was designed to be a specific programming language made for the NGN. Further, the IDE/Script Editor an easy to use Integrated Development Environment for Windows. This Editor is specifically designed for ASNAP™ Script and has features for beginners and professional developers.

The supported PSTN Hardware/Protocols are: Multi-ISDN protocol support. T-1 ISDN protocols supported- NI-2, 4ESS, 5ESS, DMS100, DMS250, INS1500, and Q.sig. the E-1 ISDN protocols supported- NET5 and Q.sig. There are many supported IP Hardware/Protocols/Codecs.

ASNAP™ is also able to process or to integrate with external libraries the way traditional languages do and has support for high density applications. Our products have substantial monitoring features.

ASNAP™ comes complete with a library of sample applications on install. VoIP development can be simplified because ASNAP™ provides the tools and solutions that let our customers make the most of VoIP by using the script development tool to build IP telephony applications such as IP-based conferencing, VoIP interactive voice response applications, debit and prepaid calling card applications, or hardware-less telephony based on Host Media Processing technology.

Our PBX Integration allows our customers to connect their legacy PBX system with the Internet world through IP gateways.

Calypso Wireless Professional Services not only designs custom interactive voice response and computer telephony systems, we can assist with implementing our customers own design solution. Our consulting services range from specialized training services, to one-on-one support with our developers to assist our customers in the design, development, and implementation of their custom system.

Industry Background

Calypso Wireless stays in touch with the changes among the various segments of the industry around the world. Seamless switching between cellular and wireless IP networks will allow carriers to free up a broad area of cellular spectrum for data and voice, increasing the availability of bandwidth for other users. ASNAP™ saves money because its application increases efficiency, and accelerates the development of handsets, carrier deployment strategies and the role of VoIP for the ISP providers. This cross-spectrum impact requires an understanding of the industry.

Carriers form the backbone of the wireless industry. Wireless carriers are the most capital vested segment of the industry, having built the first two generations of wireless infrastructure around the world. The carriers have invested heavily in building wide area networks, as well as managing the billing and backend services needed to sell wireless service to mobile phone users. Network operators across the world are currently dealing with a variety of issues including the slowdown of real growth of wireless subscribers, the transition to next-generation wireless voice and data service, the move to generate more revenue from data (ARPU- average revenue per user), and the introduction of more data-centric wireless devices like smart phones and wireless PDA’s. All these category trends, coupled with 20% or higher user churn rates in the U.S. and the introduction of streaming video or other data-rich applications, make the transitions that carriers are willing to embrace sensitive strategies.

The largest wireless carriers in the U.S. include Verizon Wireless, Sprint/Nextel Communications, T-Mobile and Cingular/AT&T. Europe’s main wireless carriers include Vodafone, Orange, KPN, Telefonica Espana and T-Mobile. In Asia, NTT DoCoMo, J-Phone, and KDDI dominate Japan; China Mobile and China Unicom dominate China; Telstra dominates Australia and New Zealand; and SK Telecom and KTF control the South Korean market; and finally, America Movil is in the process of consolidating most of the cellular operations in Latin America.

Wide area networks are essentially the cellular networks maintained by major carriers introduced above. Wireless Internet access over wide-area networks is still slow and conducted mostly through what are currently known as 2G or 2.5G wireless networks. Data speeds are slow (averages run between 20 and 60 Kbps), but coverage is nearly ubiquitous. 3G, or the next generation of wireless wide-area networks promise greater data speeds (up to 384 Kbps) with the same level of nearly flawless coverage as current wireless networks.

In the enterprise segment, WiFi infrastructure is growing rapidly, with centralized WiFi switches the fastest growing segment. WiFi switches by companies such as Airespace (acquired by Cisco), Aruba Wireless, Meru Networks, Trapeze Networks and Symbol provide a better infrastructure for Voice over IP by reducing latency, a users roam across subnets so voice quality is maintained. Centralized WiFi networks are also more scalable which further supports mobile VoIP adoption.

With more than 400 VoIP service providers in North America including small companies as TelVita, pioneers such as Vonage, and large public companies such as Time Warner, there is clearly an oversupply of service providers to subscribers. Innovators like Vonage, BroadVoice and Net2Phone are offering Voice over WiFi (VoWiFi) handsets as a way to differentiate their offerings and encourage more subscriber loyalty. Major advantages of VoWiFi phones are that subscribers can use their phone at home and take it with them to use in any WiFi network, hotspot or hot zone. Business travelers benefit by being able to make low cost Internet calls wherever they go to anywhere in the world and not have to pay for roaming. While many cell phones do not work internationally, business travelers will be able to use their VoWiFi handsets in airports, hotel lobbies, train stations and cafes in all major cities worldwide. There are only a handful of ODM/OEMs today including Net2Phone, Pulver and UTStarcom that have announced VoWiFi handsets.

The next generation of wireless networks is being called 3G or third generation—analog was first, 2G/PCS digital was second. Data will be transmitted faster on 3G (up to 384 Kbps) which will enhance streaming video and other sophisticated requirements. 3G will work on wireless interfaces using UMTS, EDGE, WCDMA and CDMA technologies. The rollout of 3G is proving to be slower, more complicated and more costly than expected, especially in the U.S. While 3G is fairly common in Japan and South Korea, 3G is available on a very minimal basis in select parts of Western Europe and less in the United States. Most wireless carriers are completing the upgrades of their networks in the U.S. to 2.5G, adding packet data service. This GPRS technology has been added to GSM networks making this upgrade another step forward for the industry.

Dual mode devices are beginning to emerge at a rate faster than the deployment of 3G around the world, especially in the U.S. Nearly all major network operators worldwide are deploying WiFi based hotspots and a large number of them such as AT&T (now Cingular), British Telecom, NTT DoCoMo, SBC, Sprint and Verizon are also offering VoIP. Therefore, the ideal mobile device for the established operators will be capable of dual mode voice operation (cellular and VoWiFi). This device will roam seamlessly between cell to cell, and WLAN to WLAN and from cell to WLAN.

Competitors

Calypso's products are based on patented technology (U.S. Patent Number: 6,680,923). Based on this patented technology and our knowledge of wireless products and technology, we are in a favorable position to begin licensing the use of our patented ASNAP™ technology to other original equipment manufacturers (OEM's) that manufacture cellular phones, WLAN access points, laptops computers, personal computers, personal digital assistants (PDA's), network servers, call-control media gateways, telecommunication equipment, and microprocessors.

We believe that our key competition will come from existing companies that currently market products and services that provide communication with wireless communication devices. While we believe that our patented ASNAP™ technology provides numerous benefits to, and is a superior solution for, both end-users and Mobile Carriers, primarily based upon the fact that our technology enables users of wireless communication devices to seamlessly roam between existing cellular systems (i.e., WAN's- Wide Area Network's, GSM/GPRS - Global System for Mobile Communications/General Packet Radio Service, or CDMA - Code Division Multiple Access) and Internet broadband access through WLAN (Wireless Local Area Networks), there can be no assurance that these benefits will be realized or utilized, or that other companies will not suitably improve these parameters through the use of other technology.

Patents and Proprietary Rights

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. This technology enables users of cellular phones, PCMCIA (Personal Computer Media Interface Card Accessory) cards and other wireless devices to seamlessly roam between existing cellular WAN (Wide Area Network's) GSM/GPRS (Global System for Mobile Communications/General Packet Radio Service) or CDMA (Code Division Multiple Access) and WLAN (Wireless Local Area Networks) utilizing the 802.11 Wi-Fi standard (Wireless Fidelity).

The Company pursues patent protection for its technology and products as soon as such technology and products are developed. To this end, we have filed United States patent applications and related technology international patent applications. The Company has filed foreign patent applications on some of its technology and products in countries where business considerations warrant such fillings. Such countries include Australia, Japan, Canada, China, Brazil, and Mexico, countries of the European Economic Community and other European countries.

We also rely on proprietary technology, trade secrets, and know-how, which are not patented. To protect our rights in these areas, the Company requires its employees, directors, consultants, members of the Advisory Board, outside engineers and other advisors to execute confidentiality agreements upon the commencement of employment, consulting or other contractual relationships with the Company. These agreements provide that all confidential information developed or made known to the individual during the course of the relationship is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of employees, the agreements provide that all inventions conceived by the individual shall be the exclusive property of the Company. There can be no assurance, however, that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information.

We believe that our intellectual property gives us an advantage over potential competitors in that it will allow us to offer products that bring substantial savings to both the end users and the mobile service providers (cellular operators).

The company has filed for patent protection covering an extension of its technology to allow users of mobile devices such as cellular phones, PDA's, satellite radios and portable music players, to receive satellite broadcasts on those devices from either satellite transmitters or wireless LAN access points, such as Wi-Fi. Calypso built upon its patented technology to create a new solution that allows satellite radio signals from carriers such as XM Satellite Radio and Sirius Satellite Radio to be readily received by various types of wireless devices.

Employees

In conjunction with its direction towards licensing its technology, the Company has reduced its operating costs by reducing the number of employees to approximately 15 employees. We have not experienced any work stoppages and consider our relations with our employees to be good.