Add
CNWT.OB to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| CNWT.OB > SEC Filings for CNWT.OB > Form 10QSB/A on 17-Oct-2008 | All Recent SEC Filings |
17-Oct-2008
Quarterly Report
The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Company's consolidated financial statements and related notes that appear in this filing. In addition to historical consolidated financial information, the following discussion contains forward-looking information as defined in Section 21E of the Securities Exchange Act of 1934.
Forward Looking Statements:
Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. Certain statements in this Form 10-QSB/A are forward-looking statements. Words such as "expects," "believes," "anticipates," "may," "intends," "projects," "estimates" and similar expressions are intended to identify forward-looking statements. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitation, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties, but there can be no assurance that management's expectation, beliefs or projections will be achieved or accomplished. However, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, limited operating history, historical operating losses and the uncertainty of the Company's profitability in the future, the need to raise additional capital to sustain operations and implement its future business plan, and other factors that may be beyond the Company's control. These factors include changes in regulations or legislation, adverse determination with respect to litigation or other claims, ability to recruit and retain employees, and increases in operating costs. Factors that could cause or contribute to these differences have been included throughout the public filings from the Company. The Company has no obligation to publicly update or revise these forward-looking statements to reflect the occurrence of future events or circumstances.
OVERVIEW
We provide IP network-based application appliances and services that add features and enhanced functionality to the telecommunications services used by large enterprises, small and mid-sized organizations, both in the commercial and public sector. Our software- and hardware-based solutions are delivered on our open-architecture, component-based platform known as the Cistera ConvergenceServer, which allows administrators to centrally manage advanced applications for IP telephony environments across large single-site and multi-site private voice/data networks. Because our solutions improve productivity and efficiencies for customers using IP telephony systems, we believe that our convergence solutions complement the efforts of IP telephony solution providers to increase the overall return on investment and value contribution associated with IP telephony systems. This has allowed us to establish cooperative relationships with IP telephony solution providers, as well as large value added resellers (VARs) and systems integrators (SIs) focused on delivering IP telephony systems and services.
Currently, we offer customers a robust IP-based applications platform pre-loaded with a variety of packaged applications (we refer to them as application engines). We market our software and hardware solutions through a VAR channel, and in some cases directly to Fortune 500 customers. To ensure growth scalability, our VAR channel is being trained to deliver professional services for standard installations, which we believe will allow us to focus on advanced professional services for complex installations.
Our objective is to be the leading provider of IP communications application platforms and advanced IP-based applications for businesses worldwide. To address our market opportunity, our management team is focused on a number of short and long-term challenges including: strengthening and extending our solution offerings; adding new customers and expanding our sales efforts into new territories; deepening our relationships with our existing customers, VARs, and SIs; and encouraging the development of third-party applications on our platform.
During the December 2007 quarter, the Company continued to focus on two initiatives that offer significant revenue growth opportunity for the company. The first initiative is the Cisco Industry Solution Partner Network (ISPN). Cisco Systems launched its ISPN program that is designed to streamline the design of IP communications solutions that incorporate robust features and functionality such as those delivered by the Cistera platform, and provide incentives to partners that incorporate these applications solutions into deployments. Cistera Networks was one of the first applications providers certified in the program and the only platform approved across the government, education, healthcare and financial services vertical markets. The second initiative is a hosted solution for providing IP application services to customers who prefer that their system be managed by an outsourced provider rather than owning and managing it themselves. We introduced our platform at the Sylantro Global Summit for use by Service Providers that want to offer hosted IP application services.
In order to increase our revenues and take advantage of our market opportunity, we will need to add substantial numbers of customer installations. We plan to reinvest our earnings for the foreseeable future in the following ways: hiring additional personnel, particularly in sales and engineering; expanding our domestic and international selling and marketing activities; increasing our research and development activities to upgrade and extend our solution offerings and to develop new solutions and technologies; growing our VAR and systems implementation channel; adding to our infrastructure to support our growth; and expanding our operational and financial systems to manage a growing business.
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS
The Company has restated its Consolidated Balance Sheet as of December 31, 2007, its Consolidated Statements of Operations for the three and nine months ended December 31, 2007 and 2006, its Consolidated Statement of Stockholders' Deficit for the nine months ended December 31, 2007 and its Consolidated Statements of Cash Flows for the nine months ended December 31, 2007 and 2006 to correct its accounting for its Senior Unsecured Convertible Promissory Notes and detachable warrants issued in private placements during the period from December 2004 to April 2007 (the "PP1 Notes," "PP1 Warrants," "PP2 Notes" and "PP2 Warrants"). The Company concluded that its original accounting for the PP1 Notes and PP1 Warrants issued in fiscal year 2005 and the PP2 Notes and PP2 Warrants issued in fiscal years 2007 and 2008, including the associated registration payments, was incorrect, and that the necessary adjustments were material to the consolidated financial statements as of December 31, 2007 and for the three and nine months ended December 31, 2007 and 2006.
In addition, the Company has restated its Consolidated Balance Sheet as of December 31, 2007, its Consolidated Statements of Operations for the three and nine months ended December 31, 2007 and its Consolidated Statements of Stockholders' Deficit and Cash Flows for the nine months ended December 31, 2007 to reflect a correction in its accounting for registration payment arrangements (associated with the aforementioned securities) as required under FASB Staff Position No. 00-19-2, "Accounting for Registration Payment Arrangements" ("FSP 00-19-2"). FSP 00-19-2 was effective April 1, 2007 for the Company, and the Company incorrectly accounted for its registration payment arrangements as of the effective date (which required the recording of a cumulative effect of a change in accounting principle) and for the three and nine months ended December 31, 2007.
Additionally, the Company has restated its Consolidated Statements of Operations for the three and nine months ended December 31, 2006 and its Consolidated Statement of Cash Flows for the nine months ended December 31, 2006 for share-based compensation related to employee stock options.
The impact of the restatement on the Consolidated Statements of Operations for the three and nine months ended December 31, 2007 and 2006 is summarized in the table below:
|
|