SOURCE: Cyber Digital, Inc.

February 13, 2007 07:30 ET

Cyber Digital Reports Third Quarter Financial Results and Provides Insight Into New Market Opportunity

HAUPPAUGE, NY -- (MARKET WIRE) -- February 13, 2007 -- Cyber Digital, Inc. (OTCBB: CYBD), a leading designer and software developer of advanced digital voice and broadband data switches, today announced financial results for the third quarter and nine months ended December 31, 2006.

Recent Developments:

--  Letter of intent signed in Dec. 2006 to acquire two competitive local
    exchange carriers (CLECs), New Rochelle Telephone Corp (NRT) and
    Telecarrier Services, Inc.  (TSI) whose combined trailing 12 month revenue
    and net income totaled $7.5 million and $800,000 respectively
--  Upon the anticipated completion of the acquisitions in March 2007, NRT
    and TSI will be accretive to Cyber Digital and will bring a customer base
    of 13,000 subscribers
--  Change in regulatory environment has opened up a $221 billion market
    opportunity for building the 'next generation' last mile voice-over
    Internet Protocol (VoIP) and IP broadband data networks, an area in which
    Cyber Digital is uniquely positioned

Mr. J.C. Chatpar, Chairman and CEO of Cyber Digital, commented, "This is an exciting time for Cyber Digital. As a result of an FCC ruling initiated in 2005, CLECs (competitive local exchange carriers) are being forced to move all their customers to non-Bell networks or pay exorbitant rates to the Bells for using their local switching facilities. Since these CLECs do not have their own networks and lack the technical expertise, we have seized this opportunity to launch our own cost-effective proprietary digital switching technology in the United States by selectively acquiring CLECs at attractive valuations, and then improving their margins substantially by migrating their customers over to our 'last mile' VoIP and IP broadband data network.

"The new ruling has opened up a $221 billion market and we are positioning ourselves to pursue it aggressively. We have begun to ramp up our business and capture market share in this new regulatory environment by signing agreements in December 2006 to acquire two CLECs, New Rochelle Telephone Corp (NRT) and Telecarrier Services, Inc. (TSI). On a proforma basis, these acquisitions, which we acquired in exchange for the assumption of just $1.3 million of debt, will add over $7.5 million in revenue and $800,000 of net income. In addition, each of these CLECs brings a seasoned sales and marketing team and an existing customer base. As an alternative local switching network provider to these CLECs, we plan to offer local voice-over IP and IP broadband data switching infrastructure systems to their 13,000 customers over time and to cross-sell other services, as well. Profitability of the CLECs we acquire can be improved by as much as 250% once their customers are migrated to our low-cost voice and data network.

"To effectively implement our business strategy, we signed an agreement with Level 3 Communications in March 2005 whereby Level 3 will provide global voice and data termination services to all traffic originating on our local switching systems. Our data switching technology will be co-located in various Bell central offices around the country."

Mr. Chatpar continued, "The advantages of our technology are many, not the least of which is cost-savings for both residential customers and small businesses -- our target markets. Cost savings are achieved by eliminating the need to dispatch personnel to the customer location to install the service, since no equipment installation is required at the customer site. Migration of the end customer's service to Cyber Digital's systems will not be apparent to them with the entire process handled in the central office.

"Geographically, we plan to focus our efforts in high density areas of the Northeast after we have obtained regulatory approval to provide our services in New York, New Jersey and Pennsylvania. We plan to grow the company through additional acquisitions and augmentation of our product offerings."

Mr. Chatpar concluded, "Once we complete our first two acquisitions, expected in March 2007, we will have the sales and marketing foundation upon which to begin growing the company organically. When all regulatory approvals associated with these acquisitions are completed, we will be licensed to provide services in NY, NJ, PA, MA, OH and FL. Accretive acquisitions will further accelerate our growth and we look forward to becoming a major force in providing the 'last mile' solution."

Given the development stage status of the company, net sales were $0 for the quarter ended December 31, 2006 as compared to $0 for the quarter ended December 31, 2005. Net loss from operations was $(169,845) or $(.005) per share for the quarter ended Dec. 31, 2006 versus $(86,490) or $(.003) for the comparable period in 2005. The increase in net loss is principally attributable to an increase in SG&A due to acquisition related expenses of $41,503 and compensation expense of $22,809. The increase in compensation expense is the result of the adoption of Financial Accounting Standard No. 123R that requires any stock based compensation to be recorded at fair value.

For the nine months ended December 31, 2006, net sales were $0 versus $0 for the period ended December 31, 2005. Net loss from operations was $(562,754) or $(.017) per share for the period ended December 31, 2006 versus $(267,266) or $(.008) per share for the period ended December 31, 2005. The increase in net loss was mainly due to acquisition related expenses of $62,484 and compensation expense of $185,066 attributable to the adoption of Financial Accounting Standards No. 123R.

About Cyber Digital, Inc.

Cyber Digital, Inc. is a leading designer and software developer of advanced distributed digital voice switches and high-performance Internet Protocol (IP) broadband systems, such as softswitches, routers, gateways, firewalls and servers for network operators worldwide. For more information, visit

This press release contains forward-looking statements, pursuant to the "safe harbor" provisions as fully described in Cyber's SEC filings.

Contact Information

    Klea Theoharis/David Waldman
    Crescendo Communications, LLC
    Tel: 212-671-1020
    Email: Email Contact