jbwins, would these factual statements be included as part
of your accusations?
_____________
However, most of our acquired businesses experienced declining revenues. Although restructuring measures helped to control other operating expenses, we have been unable to reduce the corresponding costs of services sufficiently to maintain profitability. In addition, we have funded the start-up and operations of the municipal wireless networks and online gaming businesses without these companies achieving expected revenues.
As a result, our business has historically lost money. Our accumulated deficit at June 30, 2007 was $82,259,910. In the quarter ended June 30, 2007, we sustained a net loss of $4,988,665. In the fiscal years ended March 31, 2007, 2006 and 2005, we sustained net losses of $45,898,288, $10,176,407 and $5,359,722, respectively. As a result, the amounts of cash used in operations during the fiscal quarter ended June 30, 2007 and the fiscal year ended March 31, 2007 were $1,111,698 and $6,558,708, respectively. Future losses are likely to occur. Accordingly, we are likely to continue to experience liquidity and cash flow problems if we are unable to improve the Company’s operating performance, to raise additional capital as needed and on acceptable terms, or to sell assets for cash.
The ramp-up time from selection to the completion of a municipal wireless network deployment can be protracted. As a result, we incur significant costs related to each deployment before any significant revenues are expected. Generally, the addition of wireless network subscribers has occurred more slowly than expected. As a result, we have realized that it may take up to 2 years or more for deployed networks to achieve positive cash flows. There can be no assurance that any deployment will achieve positive cash flow. Although this business contributed revenues of $133,318 in the current quarter (revenues were insignificant in the prior year), operating costs for Kite Networks were approximately $1,274,000 in the quarter ended June 30, 2007 before depreciation expense. The capital equipment costs for the completed networks in Tempe, Arizona; Farmers’ Branch, Texas; Longmont, Colorado, and other scheduled deployments have approximated $13.0 million. To date, the cash needs of this business have been substantially funded through borrowings by Mobilepro Corp. from Cornell Capital under a variety of debt instruments and over $5 million in equipment lease financing. Kite Networks has also been provided extended payment terms by certain significant equipment suppliers. However, we realized that sufficient funds will not be available from these existing sources for Kite Networks to effectively continue the execution of its current business plan. As a result, we commenced the search for capital as described below during the fourth quarter of the fiscal year.
The business of Kite Broadband is experiencing declining revenues. Revenues for the most recent quarter were approximately $2,573,000 representing a 24.0% decline over the last 21 months. Costs of sales consist substantially of payments due Sprint for network services, which costs are mostly fixed. Although a substantial portion of the management cost of this business is now borne by Kite Networks, the declining revenues and the fixed costs of the services provided by Sprint have adversely affected the cash flows of this business.
Many of the other companies that we have acquired have also experienced declining revenues. For example, over 80% of the customers of our Internet services business are subscribers to dial-up service. The revenues of this business segment have declined from a level of approximately $4,220,433 for the three months ended June 30, 2006, to approximately $3,193,000 for the three months ended June 30, 2007, a decline of approximately 24.3%. Likewise, the pay telephone business is declining due primarily to the public’s increasing usage of competitive technologies. Revenues for Davel for the quarter ended June 30, 2007 were approximately $5,968,000 compared with revenues of approximately $8,197,000 for the corresponding quarter of the prior year, a decline of 27.2%.
The declining revenues of these businesses, without proportional decreases in the costs of such services, and the operating costs of Kite Networks are the major causes of our operating losses and unfavorable cash flows from operations. As a result and as discussed above, we are engaged in various stages of negotiation with parties who have expressed interest in acquiring certain other portions of our business.
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