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zgoldies2

07/10/07 5:34 PM

#10208 RE: Nibbler16 #10207

Kite broadband is a part/division/whatever of
Kite Networks!!! Big difference!

The business of Kite Broadband is experiencing declining revenues. Revenues for the most recent quarter were approximately $2,533,000 representing a 25.2% decline over the last 18 months. Costs of sales consist substantially of payments due Sprint for network services, and they 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. With Sprint's consent, Kite Broadband has deferred the payment of certain costs incurred in the fourth quarter while discussions are conducted relating to an amendment to the master services agreement with Sprint covering this arrangement. However, Kite Networks is overdue on the payment of certain costs more recently incurred, and there can be no assurance that an amendment will be negotiated with Sprint on terms that provide 1) sufficient cost relief for Kite Broadband to continue operations with improved cash flows and 2) a basis for it to exercise its option to acquire the existing customers from Sprint.