SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-K-A1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
March 5, 2002
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Date of Report
(Date of Earliest Event Reported)
CYBERTEL COMMUNICATIONS CORP.
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(Exact Name of Registrant as Specified in its Charter)
Nevada 0-26913 86-0862532
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(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction)
2820 La Mirada Drive, #H
Vista, California 92083
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(Address of Principal Executive Offices)
(858) 646-7410
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Registrant's Telephone Number
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of Businesses Acquired.
Core Energy LLC
Financial Statements
December 31, 2003
CONTENTS
Page
Audit Report 1
Balance Sheets 2
Statements of Operations and Members' Equity 3
Statements of Cash Flows 4
Notes to Financial Statements 5-6
To the Members
Core Energy, LLC
Bakersfield, California
We have audited the accompanying balance sheet of Core Energy, LLC as of
December 31, 2003 and the related consolidated statements of operations,
members' deficit and cash flows for the year ended December 31, 2003 and
the period from inception, November 6, 2002, through December 31, 2002. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Core
Energy, LLC as of December 31, 2003 and the results of its operations and its
cash flows for the year ended December 31, 2003 and the period from inception,
November 6, 2002 through December 31, 2002, in conformity with accounting
principles generally accepted in the United States.
May 17, 2004
CORE ENERGY, LLC
BALANCE SHEET
December 31, 2003
ASSETS
CURRENT ASSETS
Cash $ 74,981
Accounts receivable 44,941
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TOTAL ASSETS $ 119,922
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LIABILITIES & MEMBERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 57,247
Notes payable, members 106,820
Accrued expenses 154,096
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Total Current Liabilities 318,163
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MEMBERS' DEFICIT (198,241)
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TOTAL LIABILITIES AND MEMBERS' DEFICIT $ 119,922
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See accompanying notes and accountants report.
CORE ENERGY, LLC
STATEMENT OF INCOME AND MEMBERS' EQUITY
Year Ended December 31, 2003 and period from
inception, November 6, 2002 through December 31, 2002
2003 2002
REVENUES $ 837,055 $ 15,000
Expenses:
Oil and Gas Royalties 197,632 1,875
Direct operating expense 470,743 -
Selling, General & administrative expense 370,183 75
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Total expenses 1,038,558 1,950
Income (Loss) from operations (201,503) 13,050
Other income and expense
Interest income 813 -
Interest expense (10,701) -
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Total other income and expense (9,888) -
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Net income (loss) (211,391) 13,050
Member contribution - 100
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Members' equity, as of December 31, 2002 13,150 13,150
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Members' deficit, as of December 31, 2003 $ (198,241) $ (105,241)
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See accompanying notes and accountants report.
CORE ENERGY, LLC
STATEMENT OF CASH FLOWS
Year Ended December 31, 2003 and period from
inception, November 6, 2002 through December 31, 2002
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (211,391) $ 13,050
Adjustments to reconcile net income to
net cash used in operating activities
Change in:
Accounts receivable (29,941) (15,000)
Accounts payable and accrued
expenses 209,468 1,875
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NET CASH USED IN OPERATING
ACTIVITIES (31,864) (75)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Member notes payables - 106,820
Initial Member investment - 100
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NET CASH PROVIDED BY
FINANCING ACTIVITIES - 106,920
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NET CHANGE IN CASH (31,864) 106,845
CASH AT BEGINNING OF YEAR 106,845 -
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CASH AT END OF YEAR $ 74,981 $ 106,845
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SUPPLEMENTAL DISCLOSURES:
Interest paid $ 1,443 $ -
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See accompanying notes and accountants report.
CORE ENERGY, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
NOTE 1 Summary of Significant Accounting Policies
Business Activity
Core Energy, LLC (the "Company"), a small oil and gas operator with operations
in Bakersfield, California is a Nevada limited liability company established
November 6, 2002. Since inception, Core has operated approximately 150
"stripper wells" (stripper wells are wells that produce ten barrels of oil a
day or less) that are under receivership in a court in Salt Lake City, Utah.
The wells were put into receivership when the original operating company
ceased operations on the wells. Core obtained an exclusive operating/purchase
agreement with the receivership class to produce the wells for a contract
period through 2006. At that time, if all option payments are made to the
class in accordance with the agreement, the full title to the described
properties will be transferred to Core Energy.
Core pumps the oil and delivers the oil to third parties for further treatment
and sale. Production tickets are issued by the delivery upon delivery of the
oil.
Revenue Recognition
Revenues are recognized on the date the products are shipped to the customers.
Cash and Cash Equivalents
Core considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. At December 31,
2003, Core did not hold any cash equivalents.
Use of Estimates
Management uses estimates and assumptions in preparing these financial
statements in accordance with accounting principles generally accepted in the
United States of America. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could
vary from the estimates that were used.
Income Taxes
The Company is treated as a partnership for federal income tax purposes and
does not incur income taxes. Instead, its earnings and losses are included in
the personal returns of the members and taxed depending on their personal tax
situations. The financial statements do not reflect a provision for income
taxes.
NOTE 2 Notes Payable, Members
The Company has unsecured notes totaling $106,820 to two members bearing
interest at prime plus 8%. The balance on these notes including accrued
interest at December 31, 2003 is $116,078.
NOTE 3 Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentration of
credit risk are accounts receivable. The Company performs ongoing credit
evaluations as to the financial condition of its customers, and, generally,
requires no collateral from its customers.
For the years ended December 31, 2003 and December 31, 2002, three customers
accounted for approximately 100% of total revenues. At December 31, 2003, one
customer accounted for 100% of accounts receivable. No allowance for doubtful
accounts has been established based on past history with this customer.
NOTE 4 Related Party Transactions
During 2003, the Company paid $127,947 in consulting expense to the two
members of the LLC. These amounts are included in selling, general and
administrative expense in the accompanying financial statements.
NOTE 5 Commitments
Core pays royalties to land owners for oil production based on the amounts due
under the original lease agreements. Core accrues 12.5% per month for
Royalties payable. In addition, until Core exercised its purchase option
under the operating agreement (note 1) it is required to pay a royalty to the
receivership class totaling 25% of net revenues after direct operating
expenses. At December 31, 2003, Core had approximately $144,838 included in
accrued liabilities related to royalties.
NOTE 6 Subsequent Event
On March 5, 2004, Core exercised its option to purchase the oil and gas
properties by issuing a $1,250,000 non-interest bearing note to the
receivership group. The note is due in monthly installments of $10,000 with
additional payments as follows: $100,000 on February 28, 2005, July 1, 2005,
August 1, 2005, October 1, 2005, November 1, 2005, December 31, 2005 and the
balance due February 15, 2006. The original plaintiffs in the receivership
case have first rights on the property until the note is paid in full. The
original plaintiff in the receivership case also have the right until August
1, 2004, to purchase these properties from Core for an amount not less than
$1,000,000 plus equity participation or other consideration having a market
value of $500,000.
On March 5, 2004, Cybertel Communications Corporation ("Cybertel"), a publicly
held company, acquired a 51% ownership interest in Core Energy for 10,000,000
shares of Cybertel's common stock and Cybertel agreed to fund Core up to
$300,000, of which $100,000 of that was paid at closing. In the event of a
public offering by Core or a merger or acquisition by Core with a publicly-
traded company, the other Core members will have the right to re-acquire
additional membership interests such that they collectively have a 75%
membership interest in Core. In such an event, the purchase price will be
$384.62 for each 1% interest so re-acquired. However, in no event is the
Cybertel's interest in Core to fall below 25%.
(b) Pro Forma Financial Information.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements
give effect to Cybertel Communication Corporation ("Cybertel") acquisition of
51% of Core Energy, LLC ("Core"). The unaudited pro forma condensed
consolidated balance sheet as of December 31, 2003 assumes that the
acquisition was consummated on December 31, 2003, and the unaudited pro forma
condensed consolidated statement of operations for the year ended December 31,
2003 assumes that the acquisition occurred on November 6, 2002 (date Core was
formed).
On March 5, 2004, Core exercised its option to purchase the oil and gas
properties by issuing a $1,250,000 non-interest bearing note to a receivership
group. On the same date, Cybertel issued 10,000,000 shares of its common stock
to purchase 51% ownership in Cybertel. This transaction was accounted for
using the purchase method of accounting. The pro forma adjustments included in
the following unaudited condensed consolidated pro forma financial statements
represent a preliminary determination of the purchase price allocation based
on available information, and there can be no assurance that the actual
adjustments will not differ significantly from such pro forma adjustments.
The unaudited pro forma condensed consolidated financial statements are not
necessarily indicative of the results that would have occurred if the
acquisition had been consummated as of the indicated dates or of the results
that may occur in the future.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical consolidated financial statements of
Core Energy, together with the related notes thereto.
CORE ENERGY, LLC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of December 31, 2003
Cybertel Core Pro Forma
Historical Historical Adjustments Pro Forma
ASSETS
Current assets:
Cash $ 751,518 $ 74,981 $ 826,499
Accounts receivable, trade 102,928 44,941 147,869
Other 15,128 - 15,128
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Total current assets 869,574 119,922 989,496
Other 4,111 - 4,111
Property and equipment, net 10,375 - 1,473,241(1) 1,483,616
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Total Assets $ 884,060 $ 119,922 $2,477,223
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LIABILITIES AND STOCKHOLDERS'
AND MEMBERS' DEFICIT
Current liabilities:
Accounts payable $ 421,696 $ 57,247 $ 478,943
Accrued officers
compensation 183,358 - 183,358
Notes payable, members - 106,820 106,820
Accrued dividends 190,381 - 190,381
Other accrued liabilities 302,226 154,096 456,322
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Total current
liabilities 1,097,661 318,163 1,415,824
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Long-term notes payable - - 1,250,000(1) 1,250,000
Stockholders' and
members' deficit:
Series A convertible
preferred stock 2 - 2
Series B voting
preferred stock 16,000 - 16,000
Common stock 1,081,155 - 1,081,155
Member's contribution - 100 (100)(2) -
Additional paid in
capital 14,600,105 - 25,000(2) 14,625,105
Accumulated deficit (15,910,863) (198,341) 198,341(2)(15,910,863)
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(213,601) (198,241) (188,601)
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Total liabilities and
stockholders' and
members' deficit $ 884,060 $ 119,922 $ 2,477,223
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CORE ENERGY, LLC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Cybertel Core Pro Forma
Historical Historical Adjustments Pro Forma
Revenues:
Telecommunications $ 844,079 $ - $ 844,079
Oil and gas - 837,055 837,055
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844,079 837,055 1,681,134
Costs and Expenses:
Directs cost of
telecommunication 107,806 - 107,806
Oil & gas operating expenses - 470,743 470,743
Oil and gas royalties - 197,632 197,632
General, administrative and
selling 2,778,531 370,183 3,148,714
Bad debt expense 495,341 - 495,341
Provision for asset
impairment 35,000 - 35,000
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3,416,678 1,038,558 4,455,236
Other Income (expense):
Interest income 264 813 1,077
Interest expense (4,730) (10,701) (15,431)
Other (12,210) - (12,210)
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Net Loss (3,129,816) (211,391) (3,341,207)
Preferred stock dividends (116,761) - (116,761)
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Net income (loss) (3,246,577) $(211,391) $(3,457,968)
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Net loss per share:
Basic and diluted $ (0.01) $ - $ (0.01)
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Weighted average shares
outstanding:
Basic and diluted 456,441,654 - 456,441,654
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
The following pro forma adjustments to the unaudited pro forma financial
statements give effect to the acquisition of 51% of ownership in Core Energy,
LLC by Cybertel Telecommunications, Inc. Cybertel issued 10,000,000 shares of
common stock valued at $25,000 using the stock price on the date of
acquisition. The pro forma adjustments are as follows:
(1) To reflect the exercise of the option to purchase the land in
receivership and the related goodwill at the time of the acquisition.
(2) To eliminate historical members? equity in Core Energy and reflect
the issuance of common stock.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
CYBERTEL COMMUNICATIONS CORP.
Date: 5-18-04 By: /s/Richard D. Mangiarelli
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Richard D. Mangiarelli
CEO, President and Director