UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
  WASHINGTON, D.C. 20549

FORM 10-Q
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2008
  
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
 
 
Commission File No.   000-26913
 
NW TECH CAPITAL, INC.
((Exact Name of Registrant as Specified in its Charter)

NEVADA
 
86-0862532
(State or Other Jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
     
4603 NE St. Johns Road, Ste. B
Vancouver, Washington
 
98661
(Address of Principal Executive Offices)
 
(Zip Code)
 
Issuer's Telephone Number:   (360)-635-6521

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   x   No   o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer o
 
Accelerated filer o
     
Non-accelerated filer o
 
Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x  
 
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
 
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.   Yes   o   No   o
 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of November 07, 2008, there were 316,185,705 outstanding shares of the Registrant's Common Stock, $.00001 par value.
     
TABLE OF CONTENTS
 
 
Page   
 
PART I – FINANCIAL INFORMATION
 
  
  
  
Item 1.
Condensed Consolidated Financial Statements
3
     
 
Condensed Consolidated Balance Sheets
3
     
 
Condensed Consolidated Statement Of Operations
5
     
 
Cash Flows From Operating Activities
6
     
 
Notes To The Condensed Consolidated Financial Statements
8
 
 
 
Item 2.
Management’s Discussion and Analysis and Results of Operations
19
 
 
 
Item 3.
Quantitative and Qualitative Market Risk
23
     
Item 4.
Controls and Procedures
23
     
 
PART II - OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
24
 
 
 
Item 1A.
Risk Factors
24
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
24
 
 
 
Item 3.
Defaults Upon Senior Securities
25
 
 
 
Item 4.
Submission of Matters to a Vote of Security Holders
25
 
 
 
Item 5.
Other Information
25
 
 
 
Item 6.
Exhibits
25

           
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
 
NW TECH CAPITAL, INC.
(FORMERLY CYBERTEL CAPITAL CORPORATION)
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
September 30, 
2008
 
December 31, 
2007
 
 
 
(UNAUDITED)
     
ASSETS
             
Current assets
             
Cash
 
$
20,258
 
$
16,675
 
Accounts receivable, net of $7,781 allowance for doubtful accounts
   
163,327
   
-
 
Inventory
   
51,520
   
-
 
Other current assets
   
-
   
40,000
 
Total current assets
   
235,105
   
56,675
 
Fixed assets, net of depreciation
   
141,991
   
-
 
Goodwill
   
586,516
   
-
 
Other Assets
   
680
   
-
 
TOTAL ASSETS
 
$
964,292
 
$
56,675
 
     
See accompanying notes to condensed consolidated financial statements.

3

NW TECH CAPITAL, INC.
(FORMERLY CYBERTEL CAPITAL CORPORATION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)

   
September 30, 2008
 
December 31, 2007
 
 
 
(UNAUDITED)
     
  LIABILITIES AND STOCKHOLDERS' DEFICIT
         
LIABILITIES
         
Current liabilities
         
Accounts payable
 
$
428,542
 
$
228,082
 
Accrued expenses
   
17,697
   
67,806
 
Bank credit line
   
70,940
   
-
 
Notes payable
   
43,195
   
-
 
Notes payable to shareholders, net
   
492,393
   
293,064
 
Derivative liability
   
618,637
   
140,187
 
Total current liabilities
   
1,671,404
   
729,139
 
Long term notes payable
   
27,397
   
-
 
Long term notes payable to shareholders
   
570,735
   
-
 
Total long term liabilities
   
598,132
   
-
 
TOTAL LIABILITIES
   
2,269,536
   
729,139
 
               
 STOCKHOLDERS’ DEFICIT
             
Series A convertible preferred stock, $.001 per share,
             
5,000 shares authorized; 55 and 164 shares issued and outstanding
   
-
   
-
 
Series B Convertible and Voting Preferred Stock,
             
par value $.00001 per share; 100,000,000 shares authorized;
             
49,200,000 and 50,000,000 shares issued and outstanding
   
492
   
500
 
Series E convertible preferred stock, par value $0.00001 per share,
             
10,000,000 shares authorized; 107,840 and 0 shares issued and outstanding
   
1
   
-
 
Series F convertible preferred stock, par value $1.00 per share,
             
10,000,000 shares authorized; 7,500 and 0 shares issued and outstanding
   
7,500
   
-
 
Common stock; $.00001 par value; 2,500,000,000 shares authorized;
             
310,685,705 and 550,363 issued and outstanding
   
3,107
   
6
 
Additional paid-in-capital
   
24,663,196
   
23,656,194
 
Accumulated deficit
   
(25,979,540
)
 
(24,329,164
)
TOTAL STOCKHOLDERS’ DEFICIT
   
(1,305,244
)
 
(672,464
)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
$
964,292
 
$
56,675
 
 
See accompanying notes to condensed consolidated financial statements.

4
 
NW TECH CAPITAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
 
 
 
For the Three Months
Ended September 30,
 
  For the Nine Months
Ended September 30,
 
 
 
2008
 
2007
 
2008
 
2007
 
 
                 
REVENUES
 
$
511,465
 
$
-
 
$
574,200
 
$
-
 
Cost of goods sold
   
222,034
   
-
   
252,631
   
-
 
Gross profit
   
289,431
   
-
   
321,569
   
-
 
EXPENSES
                         
Selling, general and administrative
   
495,581
   
181,251
   
888,516
   
297,289
 
Stock based compensation
   
19,200
   
79,970
   
193,730
   
820,225
 
Litigation judgment
   
87,775
   
-
   
87,775
   
-
 
Depreciation and amortization
   
1,137
   
-
   
2,071
   
-
 
TOTAL OPERATING EXPENSES
   
603,693
   
261,221
   
1,172,092
   
1,117,514
 
OPERATING LOSS
   
(314,262
)
 
(261,221
)
 
(850,523
)
 
(1,117,514
)
 
                         
OTHER INCOME (EXPENSE)
                         
Interest income
   
-
   
-
   
1
   
35
 
Interest expense
   
(169,371
)
 
(440
)
 
(293,059
)
 
(1,903
)
Change in fair value of derivative liability
   
1,225,077
   
(92,145
)
 
(478,450
)
 
(112,232
)
Other income
   
-
   
27
   
199
   
27
 
TOTAL OTHER INCOME/(EXPENSE)
   
1,055,706
   
(92,558
)
 
(771,309
)
 
(114,073
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
   
741,444
   
(353,779
)
 
(1,621,832
)
 
(1,231,587
)
 
                         
DISCONTINUED OPERATIONS
                         
Income (Loss) from operations of discontinued business
   
-
   
17,480
   
-
   
(6,129
)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
   
-
   
17,480
   
-
   
(6,129
)
NET INCOME (LOSS)
   
741,444
   
(336,299
)
 
(1,621,832
)
 
(1,237,716
)
Preferred dividend  
   
(1,891
)
 
(463
)
 
(28,544
)
 
(3,567
)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
 
$
739,553
 
$
(336,762
)
 
(1,650,376
)
 
(1,241,283
)
 
                         
NET INCOME (LOSS) PER COMMON SHARE
– BASIC AND DILUTED
                   
Continuing operations
 
$
0.00
 
$
(2.04
)
 
(0.02
)
 
(13.71
)
Discontinued operations
 
$
0.00
 
$
0.10
   
0.00
   
(0.07
)
Net loss per common share
 
$
0.00
 
$
(1.94
)
 
(0.02
)
 
(13.82
)
Weighted average number of shares outstanding:
                         
Basic and diluted
   
216,772,270
   
173,319
   
102,135,601
   
89,821
 
 
See accompanying notes to condensed consolidated financial statements.
 
5
 
NW TECH CAPITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 
 
For the Nine Months
Ended September 30,
 
 
 
2008
 
2007
 
CASH FLOWS FROM OPERATING ACTIVITIES
         
Net loss from continuing operations  
 
$
(1,621,832
)
$
(1,231,587
)
Adjustments to reconcile net income to net cash provided by operating activities
             
Depreciation
   
2,072
   
-
 
Notes issued for expenses
   
286,878
   
-
 
Interest expense associated with beneficial conversion feature
   
252,965
   
-
 
Change in fair value of derivative liability
   
478,450
   
112,232
 
Common stock issued to third parties for services
   
193,730
   
820,225
 
Common stock issued for interest payment on debt
   
22,389
   
-
 
Changes in assets and liabilities
             
Accounts receivable
   
12,860
   
-
 
Inventory
   
(4,712
)
 
-
 
Prepaid expenses
   
20,000
   
-
 
Accounts payable and accrued expenses
   
194,389
   
111,783
 
Net cash used in continuing operations
   
(162,811
)
 
(187,347
)
Net loss from discontinued operations
   
-
   
(6,129
)
Net cash provided by discontinued operations
   
  -
   
2,129
 
Net cash used in operating activities
   
(162,811
)
 
(191,347
)
               
CASH FLOW FROM INVESTING ACTIVITIES
             
Purchases of fixed assets
   
(5,860
)
 
-
 
Net cash used in continuing operations
   
(5,860
)
 
-
 
Net cash provided by discontinued operations
   
-
   
(999
)
Net cash provided by investing activities
   
(5,860
)
 
(999
)
 
             
CASH FLOW FROM FINANCING ACTIVITIES
             
Proceeds from related party notes payable
   
21,073
   
-
 
Proceeds from shareholder notes payable
   
79,000
   
-
 
Proceeds from notes payable
   
35,400
   
51,000
 
Repayment of notes payable
   
(30,092
)
 
-
 
Proceeds from issuance of common stock
   
45,000
   
-
 
Proceeds from issuance of preferred stock & note payable for purchase of Teledigit
   
21,873
   
-
 
Payment of dividends
   
-
   
(3,567
)
Proceeds from exercise of ESOP
   
-
   
189,991
 
Net cash provided by continuing operations
   
172,254
   
237,424
 
Net cash used in discontinued operations
   
-
   
(28,179
)
Net cash provided by financing activities
   
172,254
   
209,245
 

See accompanying notes to condensed consolidated financial statements.
 
6
 
NW TECH CAPITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED)

 
 
For the Nine Months
Ended September 30,
 
 
 
2008
 
2007
 
 Cash and cash equivalents:
         
Increase in cash
   
3,583
   
16,899
 
Cash, beginning of period
   
16,675
   
1,718
 
Cash of discontinued operations, beginning of period
   
-
   
19,736
 
Less cash of discontinued operations, end of period
   
-
   
(37,493
)
Cash, end of period
 
$
20,258
 
$
860
 
               
SUPLLEMENTAL DISCLOSURES
             
Cash paid for interest & taxes
 
$
3,726
 
$
22
 
               
Non-cash financing and investing activities
             
Issuance of note for accrued expense
 
$
286,878
 
$
-
 
Common stock issued to third parties for services
 
$
193,730
 
$
820,225
 
Issuance of common stock for payment of debt
 
$
196,522
 
$
-
 
Conversion of accrued dividend to common stock
 
$
63,427
 
$
-
 
Accrued preferred stock dividends
 
$
3,145
 
$
3,567
 
Issuance of note payable for purchase of Teledigit
 
$
720,000
 
$
-
 
Issuance of preferred stock for purchase of Teledigit
 
$
80,000
 
$
-
 

See accompanying notes to condensed consolidated financial statements.
 
7

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements
September 30, 2008
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

NW Tech Capital, Inc. (OTCBB: NWTT) (the “Company”) is organized for the primary purpose of engaging in all facets of the business comprising the telecommunications industry and is a provider of long distance voice and data telecommunications. The Company actively identifies other companies in the telecommunications industry for acquisition or strategic partnerships. These companies may be providers of long distance service, Voice over Internet Protocol providers, consulting companies, prepaid service companies, network management operations, or other companies in the telecommunication arena. The Company is also looking into acquisition possibilities and funding from China. The Company has a Hong Kong/China company named “NW Tech Capital Group Limited” to engage in completing merger and acquisitions opportunities with private China companies. As of June 16, 2008 the Company has acquired a locally owned and operated Data and Telecommunications Integrator, Teledigit, Inc. (“Teledigit”) of Portland, Oregon as its wholly owned subsidiary.

Teledigit, Inc. is a Select Certified Registered Partner with Cisco Systems. Teledigit is expanding the Routing, Switching, Firewall & Wireless products they have been selling and supporting for the last 3 years. Teledigit, Inc. will now be offering the Cisco Unified Communications Product line, featuring IP, SIP, and VoIP communications. Focusing mainly on the Small & Medium Businesses market target, Teledigit will be offering the Unified Communications 500 Series for Small Business. The UC500 Series Solutions unify voice, video, data, and mobile applications on fixed and mobile networks, delivering a media-rich collaboration experience across business workspaces. Cisco Unified Communications is part of a comprehensive solution that includes network infrastructure, security, wireless, management applications, lifecycle services, flexible deployment and outsourced management options, and third-party applications.

Becoming a Select Certified Registered Partner with Cisco requires that the Company has Technicians and Account Managers that are trained and certified not only in the Network technologies but also now in the Unified Communications product lines. The benefits the company gains are increased knowledge in the products Cisco Systems offers, as well as additional training opportunities for the Teledigit, Inc. staff. Teledigit also has access to Cisco Campaign Builder, which is a database of co-branded collateral you can use to build customizable messaging to your customers. Campaign Builder can be used to create customizable e-mail blasts, postcards, ads, flyers and more to build customer awareness, while reducing time-to-market and overall costs. As a Select Certified Registered Partner, Teledigit will be working closely with Cisco Systems to build the marketplace in the Pacific Northwest for the existing Cisco products and offering the new Unified Communication Series of products for Small Businesses to service and support their customers.

Basis of Presentation

The accompanying unaudited interim financial statements of NW Tech Capital ("NWTT" or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 filed with the SEC on March 31, 2008 (the “2007 Form 10K-SB”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full fiscal year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for 2007 as reported in the 2007 Form 10K-SB have been omitted.

Allowance for Doubtful Accounts

Bad debt expense is recognized based on management’s estimate of likely losses per year, based on past experience and an estimate of current year uncollectible amounts.
 

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

Inventories

Inventories are stated at the lower of cost (principally standard cost which approximates actual cost on a first-in, first-out basis) or market value. Adjustments for potentially excess and obsolete inventory are made based on management’s analysis of inventory levels and future sales forecasts. Once the value is adjusted, the original cost of the Company’s inventory less the related inventory write-down represents the new cost basis of such products. Reversal of these write downs is recognized only when the related inventory has been scrapped or sold. The Company’s inventory consists primarily of telecommunication equipment.

Property and Equipment and Leasehold Improvements

Property and equipment are stated at cost and depreciated using the straight-line method over their estimated useful lives of three to five years. Leasehold improvements are being depreciated over the term of the lease, excluding option periods. When assets are disposed of, the cost and accumulated depreciation (net book value of the assets) are eliminated and any resultant gain or loss reflected accordingly. Upgrades and improvements are capitalized over their estimated useful lives whereas repairs and maintenance expenditures on the assets are charged to expense as incurred.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. This typically occurs when the services have been performed.

The Company’s revenues are derived primarily from the servicing, installation, and sales of telecommunication products with the majority of the business in the West Coast of the United States and the Portland, metropolitan area but ranging all over the United States.

Basic and Diluted Net Loss per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the quarter ended September 30, 2008 and 2007, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. In January 2008, the Company effected a 1:1000 reverse split. All shares and per share amounts for the quarters ended September 30, 2008 and 2007 have been restated to reflect the splits as if it had occurred on the first day of the first period presented.
 
NOTE 2 – MATERIAL EVENTS

Acquisitions

On January 29, 2008 the company signed an acquisition agreement to purchase a Portland, OR based company named Teledigit, Inc. The acquisition agreement is to purchase 100% of Teledigit in exchange for 80,000 shares of the Company’s Series E Preferred Stock convertible to $1.00 of common stock per share and a $720,000 convertible note payable. The note is convertible into 720,000 shares of Series E Preferred Stock plus interest of 6%. The acquisition was completed on June 16, 2008. See Note 7 – Acquisitions and Investments.

Reverse Split

On January 21, 2008, the Company effected a 1000 to 1 reverse split. All shareholder deficit accounts have been restated to reflect the stock splits and change in par value as of the earliest date presented in the financial statements.
 
9

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

Name Change

On January 18, 2008, the Company filed a Certificate of Amendment with the State of Nevada changing its corporate name from Cybertel Capital Corporation to NW Tech Capital, Inc.

Discontinued Operations

On December 31, 2007, a separation agreement was reached between the Company and AireWire releasing AireWire back to its original state (before the acquisition) and returning $1,000,000 dollars worth of Series C Preferred Stock back to the Company.
 
NOTE 3 - GOING CONCERN
 
As shown in the accompanying financial statements, for the nine months ended September 30, 2008, NWTT incurred recurring net losses from continuing operations in the amount of $1,621,832 and has an accumulated deficit of $25,979,540 and a working capital deficit of $1,436,299 as of September 30, 2008. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. Management’s plans to support the Company’s operations include increasing revenues, cutting overhead costs, borrowing additional funds and raising additional capital. The Company’s inability to obtain additional capital or obtain such capital on favorable terms could have a material adverse effect on its consolidated financial position, results of operations and its ability to continue operations. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
NOTE 4 - NOTES PAYABLE

As of the quarter ended September 30, 2008, the Company and its subsidiary have two lines of credit with two banking institutions. One of the credit lines, originating from the acquisition of Teledigit, provides for borrowings up to $100,000 at a variable interest rate of prime plus 1%. The second credit line provides for borrowings up to $10,000 at an interest rate of 14.25%. As of September 30, 2008, the Company has a total outstanding bank credit line balance of $70,940.

As of the quarter ended September 30, 2008, the Company has four notes originating from the acquisition of Teledigit. Teledigit purchased four company vehicles totaling $92,100 with a down payment of $12,600 and total notes payable equating to $79,500. The terms of the notes call for total monthly payments of $1,584, interest rates ranging from 4.49% to 9.99%, and maturity dates ranging from September 2010 to June 2011. As of September 30, 2008, the balances of the notes totaled $43,096. The total current portions due on the notes are $15,699.

As of the quarter ended September 30, 2008, the Company has three notes which may be converted into shares of the Company’s common stock based on 75% of the average of the lowest three closing bid prices in the past 20 trading days immediately preceding the conversion as long as such conversions do not exceed 4.99% of the then-outstanding common stock of the Company. In relation to the convertible feature of these notes, a debt discount totaling $85,846 was calculated in accordance with EITF 00-27 and is being amortized over the life of the debenture. The amortization is being recorded as interest expense and totaled $40,718 for the quarter ended September 30, 2008 and $68,042 for the period from inception to September 30, 2008. The embedded conversion option is also accounted for under EITF 00-19 and we have accounted for the embedded conversion option as a derivative liability. Accordingly, the embedded conversion option is marked to market through earnings at the end of each reporting period. The conversion option is valued using the Black-Scholes valuation model and totaled $82,285 as of September 30, 2008. During the quarter, the noteholders converted a total of $21,556 of principal and interest payments. As of September 30, 2008, the balances of the notes totaled $55,726.
 
10

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

As of the quarter ended September 30, 2008, the Company has fourteen notes which may be converted into shares of the Company’s common stock based on 70% of the average of the lowest three closing bid prices in the past 20 trading days immediately preceding the conversion as long as such conversions do not exceed 4.99% of the then outstanding common stock of the Company. As of September 30, 2008, two of these notes are not convertible until a later date. In relation to the convertible feature of these notes, a debt discount totaling $291,651 was calculated in accordance with EITF 00-27 and is being amortized over the life of the debenture. The amortization is being recorded as interest expense and totaled $107,966 for the quarter ended September 30, 2008 and $169,922 for the period from inception to September 30, 2008. The embedded conversion option is also accounted for under EITF 00-19 and we have accounted for the embedded conversion option as a derivative liability. Accordingly, the embedded conversion option is marked to market through earnings at the end of each reporting period. The conversion option is valued using the Black-Scholes valuation model and totaled $454,122 for the quarter. During the quarter, the noteholders converted a total of $42,971 of principal and interest payments. As of September 30, 2008, the balances of the fourteen notes were $311,885.

As of the quarter ended September 30, 2008, the Company has one note which may be converted into shares of the Company’s common stock based on 50% of the average of the lowest three closing bid prices in the past 20 trading days immediately preceding the conversion as long as such conversions do not exceed 4.99% of the then outstanding common stock of the Company. In relation to the convertible feature of the note, a debt discount totaling $15,000 was calculated in accordance with EITF 00-27 and is being amortized over the life of the debentures. The amortization is being recorded as interest expense and was fully accreted as of June 30, 2008. The embedded conversion option is also accounted for under EITF 00-19 and we have accounted for the embedded conversion option as a derivative liability. Accordingly, the embedded conversion option is marked to market through earnings at the end of each reporting period. The conversion option is valued using the Black-Scholes valuation model and totaled $82,230 for the quarter. During the quarter, the noteholder converted a total of $9,967 of principal and interest payments. As of September 30, 2008, the balance of the note was $33,556.

As of the quarter ended September 30, 2008, the Company owes a related party $125,702 without interest.

As of the quarter ended September 30, 2008, the Company has a $720,000 note payable for the purchase of Teledigit at a 6% interest rate with a maturity date of July 31, 2013. This note is convertible into 720,000 shares of the Company’s Series E Preferred Stock at a monthly payment of 13,920 shares of Series E Preferred Stock commencing August 31, 2008. During the quarter the note holder converted a total of $27,840 principal and interest payments represented by 27,840 shares of the Company’s Series E preferred stock. As of September 30, 2008, the balance of the note was $699,309. The current portion of the note is $128,574.

As of the quarter ended September 30, 2008, the Company has a $25,000 note payable at an 18% interest rate with a maturity date of 2/20/2009. The terms of the notes call for interest only monthly payments of $375.
 
11

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

The unaudited Chart below summarizes the Notes Payable mentioned in Note 4:

Terms
 
Amount
 
       
Bank Lines of Credit:
     
-   $100,000 Credit line at prime plus 1%
 
$
61,390
 
-   $10,000 Credit line at 14.25%
   
9,550
 
Total Bank Lines of Credit
 
$
70,940
 
         
Short Term Notes Payable to Non-Shareholders:
       
-   Current portion of 4.49% interest; principal of $6,479; due 9/30/10; monthly payments of $318
 
$
3,596
 
-   Current portion of 9.99% interest; principal of $10,388; due 5/15/11; monthly payments of $358
   
3,432
 
-   Current portion of 9.99% interest; principal of $14,368; due 5/19/11; monthly payments of $509
   
4,884
 
-   Current portion of 9.99% interest; principal of $11,861; due 6/29/11; monthly payments of $399
   
3,787
 
-   8% interest; principal of $10,846; convertible to common stock based on 75% of average price; due on 9/8/09; net of unamortized discount related to debt discount of $8,350
   
2,496
 
-   18% interest; principal of $25,000; due on 2/20/09; monthly payments of $375
   
25,000
 
Total Short Term Notes Payable to Non-Shareholders
 
$
43,195
 
         
Short Term Notes Payable to Shareholders:
       
-   8% interest; principal of $19,444; convertible to common stock based on 75% of average price; due on 10/11/08; net of unamortized discount related to the debt discount of $1,017
 
$
18,427
 
-   12% interest; principal of $25,436; convertible to common stock based on 75% of average price; due on 02/29/09; net of unamortized discount related to the debt discount of $8,437
   
16,999
 
-   10% interest; principal of 30,000; convertible to common stock based on 70% of average price; due on 10/1/08
   
30,000
 
-   10% interest; principal of $6,281; convertible to common stock based on 70% of average price; due on 10/1/08
   
6,281
 
-   10% interest; principal of 19,336; convertible to common stock based on 70% of average price; due on 12/20/08; net of unamortized discount related to the debt discount of $9,436
   
9,900
 
-   8% interest; principal of $7,022 convertible to common stock based on 70% of average price; due on 12/31/08
   
7,022
 
-   10% interest; principal of $20,000; convertible to common stock based on 70% of average price; due on 2/28/09; net of unamortized discount related to the debt discount of $14,068
   
5,932
 
-   10% interest; principal of $25,000; convertible to common stock based on 70% of average price; due on 3/31/09; net of unamortized discount related to the debt discount of $11,415
   
13,585
 
-   10% interest; principal of $10,000; convertible to common stock based on 70% of average price; due on 4/30/09
   
10,000
 
-   10% interest; principal of $20,000; convertible to common stock based on 70% of average price; due on 5/20/09
   
20,000
 
-   10% interest; principal of $81,717; convertible to common stock based on 70% of average price; due on 5/29/09; net of unamortized discount related to debt discount of $52,827
   
28,890
 
-   10% interest; principal of $9,728; convertible to common stock based on 70% of average price; due on 5/29/09; net of unamortized discount related to debt discount of $6,374
   
3,354
 
-   10% interest; principal of $20,000; convertible to common stock based on 70% of average price; due on 5/29/09; net of unamortized discount related to debt discount of $9,722
   
10,278
 
-   8% interest; principal of $33,556; convertible to common stock based on 50% of average price; due on 3/15/09
   
33,556
 
-   8% interest; principal of $30,000; convertible to common stock based on 70% of average price; due on 5/1/09; net of unamortized discount related to debt discount of $18,843
   
11,157
 
-   8% interest; principal of $28,800; convertible to common stock based on 50% of average price; due on 3/15/09; net of unamortized discount related to debt discount of $18,089
   
10,711
 
-   No interest; principal of $4,000; convertible to common stock based on 70% of average price; due on 3/9/09; net of unamortized discount related to debt discount of $1,975
   
2,025
 
-   No interest; principal of $125,702
   
125,702
 
-   Current portion of 6% interest; principal of $720,000; due 7/31/13 convertible to Series E Preferred Stock; monthly payments of 13,920 shares
   
128,574
 
Total Short Term Notes Payable to Shareholders
 
$
492,393
 
         
Long Term Notes Payable to Non-Shareholders:
       
-   Long term portion of 4.49% interest; principal of $6,479; due 9/30/10; monthly payments of $318
   
2,883
 
-   Long term portion of 9.99% interest; principal of $10,388; due 5/15/11; monthly payments of $358
   
6,956
 
-   Long term portion of 9.99% interest; principal of $14,368; due 5/19/11; monthly payments of $509
   
9,484
 
-   Long term portion of 9.99% interest; principal of $11,861; due 6/29/11; monthly payments of $399
   
8,074
 
Total Long Term Notes Payable to Non-Shareholders
 
$
27,397
 
         
Long Term Notes Payable to Shareholders:
       
-   Long term portion of 6% interest; principal of $720,000; due 7/31/13 convertible to Series E Preferred Stock; monthly payments of 13,920 shares
   
570,735
 
Total Long Term Notes Payable to Shareholders
 
$
570,735
 
         

12

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

NOTE 5 - STOCK HOLDER’S DEFICIT

Common Stock

During the quarter ended September 30, 2008, the Company issued the following shares of its Common stock:
 
Date of Issue
 
Number of Shares Issued
 
Aggregate Sales Price
 
Nature of Transaction
 
 
07/02/08
   
4,600,000
 
$
2,254
   
Debt Repayment
 
 
07/08/08
   
3,000,000
   
1,470
   
Debt Repayment
 
 
07/10/08
   
3,000,000
   
4,200
   
Payment for Services
 
 
07/10/08
   
3,000,000
   
1,470
   
Debt Repayment
 
 
07/18/08
   
10,000,000
   
10,000
   
Cash for Stock
 
 
08/07/08
   
8,193,000
   
5,735
   
Debt Repayment
 
 
08/07/08
   
9,226,663
   
7,381
   
Preferred A conversion
 
 
08/07/08
   
4,509,707
   
3,608
   
Preferred A Dividend
 
 
08/13/08
   
4,000,000
   
6,000
   
Payment for Services
 
 
08/13/08
   
9,000,000
   
6,750
   
Debt Repayment
 
 
08/18/08
   
5,000,000
   
9,000
   
Payment for Services
 
 
08/18/08
   
16,980,000
   
12,335
   
Debt Repayment
 
 
08/20/08
   
12,000,000
   
8,400
   
Debt Repayment
 
 
08/27/08
   
11,600,000
   
5,800
   
Debt Repayment
 
 
08/28/08
   
9,000,000
   
6,300
   
Debt Repayment
 
 
09/03/08
   
8,800,000
   
10,000
   
Cash for Stock
 
 
09/05/08
   
32,500,000
   
17,583
   
Debt Repayment
 
 
09/08/08
   
7,000,000
   
3,696
   
Repayment of debt
 
 
09/24/08
   
9,000,000
   
2,700
   
Repayment of debt
 
                       
 
Total
   
170,409,370
 
$
124,682
       
 
During the quarter ended June 30, 2008, the Company issued a total of 22,000,000 shares of common stock for services valued at $62,100. The Company also issued a total of 38,695,110 shares of common stock for repayment of debt valued at $27,718 and 12,063,492 shares of common stock valued at $17,500.

During the quarter ended March 31, 2008, the Company issued a total of 6,550,000 shares of common stock for services valued at $112,430. The Company also issued a total of 8,927,502 shares of common stock for repayment of debt valued at $66,471.

Preferred Stock

During the quarter ended September 30, 2008:

 
·
Holders of the Company’s Series A Preferred stock converted 7.38 shares of Series A preferred stock into 9,226,663 shares of the Company’s common stock and $3,608 of dividends into 4,509,707 shares of the Company’s common stock as indicated on the chart above.

 
·
The Company issued 27,840 shares of the Company’s Series E preferred stock valued at $27,840 as partial payment for the acquisition of Teledigit. Since the Series E Preferred Stock has a convertible feature, a Preferred Dividend of $1,127 was calculated in accordance with EITF 00-27.

During the quarter ended June 30, 2008:

 
·
Holders of the Company’s Series A Preferred stock converted 28.96 shares of Series A preferred stock into 29,462,800 shares of the Company’s common stock.


13
 
NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

 
·
The Company designated a new series of preferred stock named the Series F Preferred Stock with 10,000,000 authorized shares with each share convertible to $1.00 worth of the Company’s common stock. The Company issued 7,500 shares of the Company’s Series F Preferred Stock during the quarter. Since the Series F Preferred Stock has a convertible feature, a Preferred Dividend of $1,098 was calculated in accordance with EITF 00-27.

 
·
The Company issued 80,000 shares of the Company’s Series E Preferred Stock as partial payment for the acquisition of Teledigit. Since the Series E Preferred Stock has a convertible feature, a Preferred Dividend of $23,175 was calculated in accordance with EITF 00-27.

During the quarter ended March 31, 2008:

 
·
Holders of the Company’s Series A preferred stock converted 80.47 shares of the Series A Preferred Stock and $59,819 of Series A dividends into 2,027,068 shares of the Company’s common stock.

 
·
The Company amended the Series B Preferred Stock by increasing the authorized shares from 50,000,000 shares to 100,000,000 million shares with a par value of $0.00001 per share. The Company also added a conversion feature which allows shareholders of the Series B Preferred Stock to convert one share of Series B Preferred Stock into 25 shares of Common Stock upon request of the shareholder.

 
·
The President and CEO of the Company converted 800,000 shares of his Series B Preferred Stock into 20,000,000 shares of the Company’s common stock.

 
·
The Company designated a new series of preferred stock named the Series E Preferred Stock with 10,000,000 authorized shares and a par value of $0.00001. Each share of the Series E Preferred Stock is convertible to $1.00 of the Company’s Common Stock six months after issuance.
 
14

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

NOTE 6 – DISCONTINUED OPERATIONS

On December 15, 2007, the Company entered into a Mutual Separation Agreement (the “Separation Agreement”) with AireWire, Inc. (“AireWire”). The Company and AireWire were parties to an acquisition agreement dated March 31, 2006 (the “Acquisition Agreement”). Both parties deemed it in their best interests to unwind the Acquisition Agreement. The Separation Agreement provided that the Company would return the 1,000,000 shares of the Company that AireWire owned and that AireWire would return the 500,000 shares of NW Tech Capital, Inc. that AireWire owned. As of the effective date of December 31, 2007, neither party had any obligation to the other.
 
On December 31, 2007, the Company recorded a loss from their discontinued operations and recorded a gain on the disposition of this subsidiary. Prior year financial statements for 2007 have been reclassified to present the operations of AireWire as Discontinued Operations. There is no activity in the current year related to AireWire.

The following amounts, related to our AireWire business, have been segregated from Continuing Operations and included in Discontinued Operations   in the Consolidated Statements of Operations:

   
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
   
2008
 
2007
 
2008
 
2007
 
                   
Revenue
 
$
-
 
$
98,072
 
$
-
 
$
371,671
 
Cost of goods sold
         
(1,931
)
       
(7,754
)
Gross profit
   
-
   
96,141
   
-
   
363,917
 
                           
Operating expenses
                         
Selling, general and administrative
   
-
   
78,674
   
-
   
368,805
 
Total operating expenses
   
-
   
(78,674
)
 
-
   
(368,805
)
Other Income (expense):
                         
Interest expense
   
-
   
(359
)
 
-
   
(2,309
)
Other income
   
-
   
372
   
-
   
1,068
 
Total other income
   
-
   
13
   
-
   
(1,241
)
Loss from discontinuing operations
 
$
-
 
$
17,480
 
$
-
 
$
(6,129
)

15

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

NOTE 7 – ACQUISITIONS AND INVESTMENTS

Teledigit, Inc.

On January 29, 2008 the company signed an acquisition agreement to purchase a Portland, OR based company named Teledigit Inc. The acquisition agreement is to purchase 100% of Teledigit in exchange for 80,000 shares of the Company’s series “E” Preferred Stock convertible to $1.00 common stock per share and a $720,000 convertible note payable. The note is convertible into 720,000 Series “E” Preferred Shares plus interest of 6%. As of June 16, 2008, the acquisition of Teledigit was completed.

Teledigit was a locally owned and operated Telecommunications & Data company in the Pacific Northwest. Established in 1995, Teledigit bases its operations out of Portland, Oregon serving customers in the greater Portland Metropolitan/Vancouver, WA areas.  It provides installation and service for business voice needs, including key systems, PBX’s, voicemail, data networking and cabling. Revenues for fiscal year 2007 exceeded $1.7 million dollars. As of June 16, 2008, Teledigit is now a wholly owned subsidiary of NW Tech Capital, Inc. The general operations of Teledigit remain the same.

The acquisition has been accounted for as a purchase in accordance with Statement of Financial Accounting Standard No. 141 Business Combinations . The total purchase price was allocated as follows:
 
Cash
 
$
21,871
 
Accounts receivable
   
176,187
 
Inventories
   
46,808
 
Fixed assets
   
138,203
 
Other assets
   
680
 
Accounts payable
   
(18,835
)
Current liabilities
   
(1,080
)
Bank line of credit
   
(82,580
)
Notes payable
   
(47,770
)
Goodwill
   
586,516
 
Purchase price
 
$
820,000
 

None of the $586,516 of goodwill is subject to amortization, but an annual impairment test. As of the date of these financial statements, no triggering event has occurred which would indicate an impairment of this amount.

The Company’s condensed consolidated financial statements include Teledigit’s results of operations subsequent to its acquisition on June 16, 2008.
 
16

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

The following is the supplemental pro forma information that discloses the results of operations as though the business combination had been completed as of the beginning of the period being reported on.

NW TECH CAPITAL, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 
 
For the Three Months
Ended September 30,
 
For the Nine Months
Ended September 30,
 
 
 
2008
 
2007
 
2008
 
2007
 
 
                 
REVENUES
 
$
511,465
 
$
485,104
 
$
1,202,011
 
$
1,322,786
 
Cost of goods sold
   
222,034
   
146,928
   
466,691
   
407,452
 
Gross profit
   
289,431
   
338,176
   
735,320
   
915,334
 
EXPENSES
                         
Selling, general and administrative
   
302,614
   
(26,311
)
 
2,003,823
   
1,160,614
 
Stock based compensation
   
299,942
   
588,348
   
174,530
   
740,255
 
Depreciation and amortization
   
1,137
   
11,609
   
18,916
   
23,218
 
TOTAL OPERATING EXPENSES
   
603,693
   
573,646
   
2,197,269
   
1,924,087
 
OPERATING LOSS
   
(314,262
)
 
(235,470
)
 
(1,461,949
)
 
(1,008,753
)
 
                         
OTHER INCOME (EXPENSE)
                         
Interest income
   
- -
   
1
   
-
   
38
 
Interest expense
   
(171,598
)
 
(1,891
)
 
(233,478
)
 
(6,041
)
Change in fair value of derivative liability
   
1,225,077
   
(92,145
)
 
(478,450
)
 
(112,232
)
Other income
   
-
   
27
   
(829,681
)
 
21
 
TOTAL OTHER INCOME/(EXPENSE)
   
1,053,479
   
(93,936
)
 
(1,541,609
)
 
(118,214
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
   
739,216
   
(329,405
)
 
(3,003,559
)
 
(1,126,967
)
 
                         
DISCONTINUED OPERATIONS
                         
Income (loss) from operations of discontinued business
   
-
   
17,479
   
-
   
(6,129
)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
   
-
   
17,479
   
-
   
(6,129
)
NET INCOME (LOSS)
   
739,216
   
(311,926
)
 
(3,003,559
)
 
(1,133,096
)
Preferred dividend  
   
(1,890
)
 
(463
)
 
(28,544
)
 
(3,567
)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
 
$
737,326
 
$
(312,389
)
$
(3,032,103
)
$
(1,136,663
)
 
                         
NET INCOME (LOSS) PER COMMON SHARE
– BASIC AND DILUTED
                   
Continuing operations
 
$
0.00
 
$
(1.90
)
$
(0.03
)
$
(12.55
)
Discontinued operations
 
$
-
 
$
0.10
 
$
-
 
$
(0.07
)
 Net loss per common share
 
$
0.00
 
$
(1.80
)
$
(0.03
)
$
(12.62
)
Weighted average number of shares outstanding:
                         
Basic and diluted
   
216,772,270
   
173,319
   
102,135,601
   
89.821
 
 
17

NW TECH CAPITAL, INC.
FORMERLY CYBERTEL CAPITAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (continued)
September 30, 2008

NOTE 8 – RELATED PARTY TRANSACTIONS

For the quarter ended September 30, 2008:

The President and CEO lent the Company $17,073 in exchange for promissory notes in the same amount. During the quarter, the President and CEO assigned $10,846 of the promissory note to an unrelated party.
 
NOTE 9 – LITIGATION JUDGMENT

Litigation judgment expense of $87,775 was related to a Notice of Judgment in a case between GRE Mira Mesa LLC (“GRE”), a California limited liability company, and Cybertel Communications Corp. (“Cybertel”), dated May 7, 2007, in the amount of $87,775 in favor of GRE. Cybertel Communications Corp. (formerly ProTel Communications, Inc.) is a former subsidiary of the Company and is no longer operational. The designated Case No. is GIC875633 in which GRE stated that Cybertel owed unpaid rent. A hearing on the matter occurred on August 22, 2008 in which the Company tried to appeal the judgment. The judgment was ruled against the Company and the amount is accrued as of September 30, 2008.
 
NOTE 10 - CONCENTRATIONS

Major Customers
The Company’s business is driven by many small businesses throughout the West Coast of the United States. The Company has a few large customers, none of which consist of more than 15% of the overall revenue of the company. Therefore the Company’s revenue does not rely heavily on any major company contract that could adversely affect their business significantly in a negative fashion.

Major Suppliers
The Company has a few major suppliers all of which are large national and international companies. Examples of these major suppliers are Cisco, Nortel, Comdial, Vertical Communications, Adtran, VMWare, Kaspersky Labs and Graybar. Each of these companies are well funded and at this time we have no indication that the Company will have any problems getting adequate supplies from any of these suppliers. There are also alternative sources that could be used if necessary to get supplies.
 
NOTE 11 - SUBSEQUENT EVENTS  
 
Stock Issuances:
 
 
-
The Company issued a total of 9,500,000 shares of Common stock valued at $1,995 for repayment of debt.
 
-
4,000,000 shares were returned to the company and subsequently canceled as of the quarter ended September 30, 2008 in connection with services rendered.

Shareholder Loan

The President and CEO lent the Company $3,500.

Acquisitions
In October, the Company entered into a Letter of Intent to acquire the Pink Sheet listed company, Microholdings US (OTC:MCHU.PK) on or before November 15, 2008.

Notes Payable

Three notes totaling $55,725 originally due subsequent to the end of the quarter was extended one year.

18

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS.
 
Overview

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements in the Form 10-KSB for the year ended December 31, 2007 and the other financial data appearing elsewhere in this Form 10-Q.

The information set forth in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains certain "forward-looking statements," including, among others (i) expected changes in the Company's revenues and profitability, (ii) prospective business opportunities and (iii) the Company's strategy for financing its business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as "believes," "anticipates," "intends" or "expects." These forward-looking statements relate to the plans, objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved.

In light of these risks and uncertainties, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. The Company undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
 
Executive Overview

NW Tech Capital, Inc. (the “Company,” “we,” “us,” or “our”), formerly Cybertel Capital Corporation, was originally organized for the primary purpose of engaging in all facets of the business comprising the telecommunications industry and is a provider of long distance voice and data telecommunications. 
 
On June 16, 2008, the Company acquired Teledigit, Inc. (“Teledigit”), an Oregon corporation, pursuant to an acquisition agreement entered into by the Company and Teledigit on January 29, 2008 (the “Acquisition Agreement”). Teledigit was established in 1995, and bases its operations out of Portland, Oregon, serving customers in the greater Portland Metropolitan/Vancouver, WA areas. Teledigit has had a progressive growth rate over the last several years. Its revenues for its last year exceeded $1.7 million. Teledigit provides installation and service for business voice needs, including key systems, PBX’s, Voicemail, VoIP systems, Managed Data Services, Data network service and support and Structured and Low Voltage cabling. The Acquisition Agreement is to purchase 100% of Teledigit in exchange for 80,000 shares of the Company’s Series E Preferred Stock worth $1.00 per share and a $720,000 convertible note payable. The note is convertible into 720,000 shares of Series E Preferred Stock plus interest of 6%. The acquisition was completed on June 16, 2008 and the results of operations have been consolidated into the Company’s results as of acquisition date.

Through our subsidiary, Teledigit, we are now a Data and Telecommunications Integrator. Our mission is to provide business technology and support solutions to our customers so they can achieve a competitive edge. The majority of our customers are on the West Coast of the United States but have a few national contracts that cover the entire United States. We believe in building long lasting, honest relationships with our customers.
 
19

The company is fluent in the following areas of Voice and Data technologies:

 
·
VoIP, TDM, and Hybrid voice functionality and networking.
 
·
10G, Switched Gigabit, Wireless voice, and multi-protocol networking.
 
·
Computer/Telephony integration for call centers or Database backends.
 
·
Converged multimedia applications such as contact centers, desktop conferencing.
 
·
Managed IT Support Services and Outsourcing.
 
·
LAN / WAN design and network planning.
 
·
Data network support and desktop support.
 
·
VoIP network support and integration.
 
·
VPN and Branch office data deployment.
 
·
Wireless LAN survey and installation support and deployment.
 
·
Outdoor Wireless/Microwave data integration and service (Unlicensed & FCC Licensed).
 
·
Remote network support and management.
 
·
CCTV and IP Video surveillance network design, installation and support.
 
·
Cat5e and Cat6 Copper networking cabling installation.
 
·
Single-Mode and Multi-Mode Fiber Optic Cabling installation and support.
 
·
CATV Distribution Design, Service and Installation.
 
·
Data and Telecommunication room design and installation.

In addition to the services provided by Teledigit, we also are actively involved in identifying other companies in the telecommunications industry for acquisition or strategic partnerships. These companies may be providers of long distance service, Voice over Internet Protocol providers, consulting companies, prepaid service companies, network management operations, or other companies in the telecommunication arena.

We also are looking into acquisition possibilities and funding from China. During the second quarter of 2008, we incorporated a new Hong Kong/China company named “NW Tech Capital Group Limited” to engage in completing merger and acquisitions opportunities with private China companies. In August, we signed a Letter of Intent to acquire 51% of the controlling shares of Zhuihai Jialun Guangcai Chain Drugstore co, Ltd (“ZJG Drugstores”) subject to a financial audit and upon satisfactory completion of the final acquisition agreement. ZJD Drugstores is a retail and wholesale chain offering a variety of pharmaceutical and health products. We are currently re-evaluating this LOI and working toward a joint venture with ZJG Drustores on a new distribution center.
 
We currently have insufficient funds to operate our business according to its proposed business plan. In addition, if unanticipated expenses, problems, and difficulties occur which result in material delays in the development of its products, we will not be able to operate within our budget. If we do not operate within our budget, we will require additional funds to continue its business. We may not be able to obtain additional financing as needed, on acceptable terms, or at all, which would force us to delay our plans for growth and implementation of our strategy, which could seriously harm our business, financial condition, and results of operations. If we need additional funds, we may seek to obtain them primarily through stock or debt financings. Those additional financings could result in dilution to our stockholders.

Recent Developments

Effective as of June 16, 2008, we acquired Teledigit pursuant to an acquisition agreement entered into by the Company and Teledigit on January 29, 2008 (the “Acquisition Agreement.”). Teledigit is a Portland, Oregon based telecommunications sales and service company that has been in business since 1995 and has grown progressively over the last 10 years. Teledigit does a wide range of business for a national dental company which has locations all across the United States, supplying everything from new phone systems to servicing old systems and engineering wiring for new offices.

On January 21, 2008, we effected a 1000 to 1 reverse split of our common stock. All shareholder deficit accounts have been stated to reflect the stock splits and change in par value as of the earliest date presented in the financial statements.
 
20

On January 18, 2008, we filed a Certificate of Amendment with the State of Nevada changing our corporate name to NW Tech Capital, Inc.
 
On December 31, 2007, a separation agreement was reached between us and AireWire releasing AireWire back to its pre-acquisition state and returning $1,000,000 dollars worth of Series C Preferred Stock back to us.

Critical Accounting Policies

Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios.
 
We carry notes with convertible features embedded and we accounted for them under the Financial Accounting Standards Board’s Emerging Issues Task Force (“EITF”) 00-27 and 00-19.
 
EITF 00-27 requires us to calculate the fair value of stock-based embedded convertible feature in notes as a debt discount, also known as a beneficial conversion feature “BCF”. The convertible notes allow the note holder to convert the note into common shares of the company at a specified discounted rate. The value of the debt discount is calculated on the date of the note issuance using the intrinsic value method. Essentially the debt discount equates to the difference between the note and the fair market value of the stocks if the entire note were to be converted. The debt discount is expensed as interest ratably on a straight-line basis over the requisite service period.
 
EITF 00-19 requires the use of a valuation model to calculate the fair value of the embedded convertible feature in the notes. We use the Black-Scholes Model (the “BSM”) to calculate the fair value of the embedded convertible feature. The BSM incorporates various assumptions including expected volatility, expected life, and interest rates. The expected volatility is based on the historical volatility of our common stock. We base our expected life assumption on our historical experience and on the terms and conditions of the notes. Accordingly, the embedded conversion feature is marked to market through earnings at the end of each reporting period and reported as a derivative liability.
 
Results of Operations

We have changed our business by discontinuing and disposing of our former subsidiary AireWire and acquiring Teledigit. While AireWire was also in the telecommunications business, the disposal of AireWire is not indicative of current or future results of operations. We have included a supplemental Pro Forma Financials of Operations, which discloses the results of operations as though the business combination with Teledigit had been completed as of the beginning of the reporting period (see Acquisitions and Investments – Note 7 in Item 1).

Three Months Ended September 30, 2008 and 2007

For the three months ending September 30, 2008, our revenues totaled $511,465 including revenue contributed by the acquisition of Teledigit on June 16, 2008. There were no revenues for the three months ending September 30, 2007 (see Note 6 – Discontinued Operations in Item 1). The difference between the two periods is attributable to the difference in the two subsidiaries, Teledigit versus AireWire. 100% of the Company’s revenues for the quarter were brought in through our subsidiary, Teledigit.

We generated a net income of $741,444 for the quarter ended September 30, 2008, compared to a net loss of $336,299 for the same quarter in 2007. The difference of $1,077,743 increase in net income was primarily due to decreased stock based compensation and the change in the value of the derivative liability calculated in accordance with EITF 00-19.

The majority of the difference in net income between the two periods is attributed to a non-cash expense which calculates the change in the derivative liability in accordance with EITF 00-19 amounting to a decrease of $1,225,077. Compared to the same period last year, there is an increase in interest expense consisting mainly of a non-cash amortization of the beneficial conversion feature or “BCF” as calculated in accordance with EITF 00-27. Selling, general, and administrative costs were $495,581 during the three months ended September 30, 2008, as compared to $181,251 for the corresponding period in 2007. The increase of $314,330 is due to expenses associated with the operation of our Teledigit subsidiary.
 
21

Litigation judgment expense of $87,775 was related to a Notice of Judgment in a case between GRE Mira Mesa LLC and a former subsidiary of the Company. The creditor stated the subsidiary owed unpaid rent. A hearing on the matter occurred on August 22, 2008 in which the Company tried to appeal the judgment. The court ruled against the Company and the amount is accrued as of September 30, 2008. (see Note 9 – Litigation Judgment in Item 1)

Nine months ended September 30, 2008 and 2007

For the nine months ending September 30, 2008, our revenues totaled $574,200 including revenue contributed by the acquisition of Teledigit on June 16, 2008. There were no revenues for the same period during the prior year (see Note 6 – Discontinued Operations in Item 1). The difference between the two periods is attributed to the difference in the two subsidiaries, Teledigit versus AireWire. 100% of the Company’s revenues for the nine months ending September 30, 2008 were brought in through our subsidiary, Teledigit.

We generated a net loss of $1,621,832 for the nine months ended September 30, 2008, compared to $1,237,716 for the same quarter in 2007. The $390,245 increase in net loss was primarily due to increases in the change in the value of the derivative liability in accordance with EITF 00-19, interest expense, and selling and administrative expenses.

The majority of the difference in net loss between the two periods is attributed to a $591,227 increase in selling, general, and administrative costs associated with operating our subsidiary, Teledigit. Also contributing to the difference in net loss between the two periods are a non-cash expense which calculates the change in the derivative liability in accordance with EITF 00-19 and an increase in interest expense consisting largely of a non-cash amortization of the beneficial conversion feature or “BCF” as calculated in accordance with EITF 00-27.

Litigation judgment expense of $87,775 was related to a Notice of Judgment in a case between GRE Mira Mesa LLC and a former subsidiary of the Company. The creditor stated the subsidiary owed unpaid rent. A hearing on the matter occurred on August 22, 2008 in which the Company tried to appeal the judgment. The court ruled against the Company and the amount is accrued as of September 30, 2008. (see Note 9 – Litigation Judgment in Item 1)

Liquidity and Capital Resources

During the nine-month period ended September 30, 2008, cash used by operations was $162,811. We intend to continue to search for ways to expand our business through new service contracts and by continuing to search for new acquisitions. We anticipate that we will incur smaller losses in the future if we are able to expand our business and the marketing of our products and services now offered. The losses will continue until the excess of operation and marketing expenses is overcome by the increase in revenue from operations.

During the nine months ended September 30, 2008, we incurred a net loss of $1,621,832, had cash used for operations of $162,811, and cash provided by financing activities was $172,254. All of these proceeds were used to fund operations. We continue to seek short-term financing through debt and equity financing and are also seeking long-term financing through debt and/or equity financing through a private placement or a retail offering of our common stock.

In order to execute our business plan, we will need to acquire additional capital from debt or equity financing. Our independent certified public accountants have stated in their report for the year-end that there is a substantial doubt about our ability to continue as a going concern. In the absence of significant revenue and profits, we will be completely dependent on additional debt and equity financing arrangements. There is no assurance that any financing will be sufficient to fund our capital expenditures, working capital and other cash requirements for the fiscal year ending December 31, 2008. We cannot assure you that any such additional funding will be available or that, if available, can be obtained on terms favorable to us. If we are unable to raise needed funds on acceptable terms, we will not be able to execute our business plan, develop or enhance existing services, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements. A material shortage of capital will require us to take drastic steps such as further reducing our level of operations, disposing of selected assets or seeking an acquisition partner. If cash is insufficient, we will not be able to continue operations.


Off-Balance Sheet Transactions
 
As of the date of this Quarterly Report, there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which the we have (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Material Commitments

As of the date of this Quarterly Report, we do not have any material commitments that are not reflected as liabilities on our consolidated balance sheet included elsewhere in this report, nor does management anticipate any further material commitments within the next twelve months.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures. As of the end of the period covered by this Quarterly Report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Changes in internal control. In addition, we have reviewed our internal controls over financial reporting, and there have been no changes in our internal controls over financial reporting in the last fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting. 
 
23

PART II - OTHER INFORMATION
     
Item 1. Legal Proceedings.

Except as indicated below, the Company is not a party to any pending legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. No director, executive officer or other person who may be deemed to be an “affiliate” of the Company or owner of record or beneficially of more than five percent of its common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.

On or about January 25, 2002, Prudential Home Building Investors, Inc., a New Jersey corporation (“Prudential”), filed a complaint against the Company in the Superior Court of California, County of San Diego, and Central Division. The case was designated Case No. GIC 782069, and sought damages in the amount of $32,000 for unpaid rent due on the Company’s former La Jolla, California facility for the period of September, 2001, through December, 2001, when the lease terminated. The Company has accrued this expense and expects no additional cost or expense upon settlement of this case.
 
On March 2, 2006, Epstein, Fitzsimmons, Brown, Gioia, Jacobs & Sprouls, P.C., obtained a $15,000 default judgment against the Company in the Superior Court of New Jersey for Morris County. The Company expects no additional cost or expense upon settlement of this case.

On June 20, 2008, the Company received a Notice of Judgment in a case between GRE Mira Mesa LLC (“GRE”), a California limited liability company, and Cybertel Communications Corp. (“Cybertel”), dated May 7, 2007, in the amount of $87,775 in favor of GRE. Cybertel (formerly ProTel Communications, Inc.) is a former subsidiary of the Company and it is no longer operational. The designated Case No. is GIC875633 in which GRE stated that Cybertel owed unpaid rent. A hearing on the matter occurred on August 22, 2008 in which the Company tried to appeal the judgment. The court ruled against the Company in the amount of $87,775.

Item 1A. Risk Factors
 
There have been no material changes from the Risk Factors described in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table indicates all sales of unregistered securities by NWTT during the quarterly period ended September 30, 2008:
 
Date of Issue
 
Number of Shares Issued
 
Aggregate Sales Price
 
Nature of Transaction
 
 
07/02/08
   
4,600,000
 
$
2,254
   
Debt Repayment
 
 
07/08/08
   
3,000,000
   
1,470
   
Debt Repayment
 
 
07/10/08
   
3,000,000
   
1,470
   
Debt Repayment
 
 
07/18/08
   
10,000,000
   
10,000
   
Cash for Stock
 
 
08/07/08
   
8,193,000
   
5,735
   
Debt Repayment
 
 
08/07/08
   
9,226,663
   
7,381
   
Preferred A conversion
 
 
08/07/08
   
4,509,707
   
3,608
   
Preferred A Dividend
 
 
08/13/08
   
9,000,000
   
6,750
   
Debt Repayment
 
 
08/18/08
   
16,980,000
   
12,335
   
Debt Repayment
 
 
08/20/08
   
12,000,000
   
8,400
   
Debt Repayment
 
 
08/27/08
   
11,600,000
   
5,800
   
Debt Repayment
 
 
08/28/08
   
9,000,000
   
6,300
   
Debt Repayment
 
 
09/03/08
   
8,800,000
   
10,000
   
Cash for Stock
 
 
09/05/08
   
32,500,000
   
17,583
   
Debt Repayment
 
 
09/08/08
   
7,000,000
   
3,696
   
Repayment of debt
 
 
09/24/08
   
9,000,000
   
2,700
   
Repayment of debt
 
                   
 
 
 
Total
   
158,409,370
 
$
105,482
       
 
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Management believes each of the foregoing persons or entities was either an "accredited investor," or "sophisticated investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”). Each such person or entity had access to all material information about NWTT prior to the offer, sale or issuance of these "restricted securities." Management believes that these shares were exempt from the registration requirements of the Act, pursuant to Section 4(2) thereof.
Item 3. Defaults Upon Senior Securities.

None .

Item 4. Submission of Matters to a Vote of Security Holders.

None
 
Item 5. Other Information.

None
  
Item 6. Exhibits.
 
Exhibit No.
 
Description
     
4.1
 
Amendment of Designation After Issuance of Class or Series for Series B “Super Voting” Preferred Stock (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10Q for the quarter ended March 31, 2008, filed with the SEC on May 14, 2008).
     
4.2
 
Certificate of Designation for Series E Convertible Preferred Stock (incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10Q for the quarter ended March 31, 2008, filed with the SEC on May 14, 2008).
     
4.3
 
Certificate of Designation for Series F Convertible Preferred Stock (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10Q for the quarter ended March 31, 2008, filed with the SEC on May 14, 2008)
     
31.1
 
Certification of Chief Executive Officer and Chief Financial Officer, James A. Wheeler, pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.
     
32.1
 
Certification of Chief Executive Officer and Chief Financial Officer, James A. Wheeler, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

25
     
SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
NW TECH CAPITAL, INC.
 
   
 
By:  
/s/ James A. Wheeler
   
James A. Wheeler
CEO, CFO, President and Director
     
Dated: November 7, 2008
   
 

 
Exhibit No.
 
Description
     
4.1
 
Amendment of Designation After Issuance of Class or Series for Series B “Super Voting” Preferred Stock (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10Q for the quarter ended March 31, 2008, filed with the SEC on May 14, 2008).
     
4.2
 
Certificate of Designation for Series E Convertible Preferred Stock (incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10Q for the quarter ended March 31, 2008, filed with the SEC on May 14, 2008).
     
4.3
 
Certificate of Designation for Series F Convertible Preferred Stock (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10Q for the quarter ended March 31, 2008, filed with the SEC on May 14, 2008).
     
31.1
 
Certification of Chief Executive Officer and Chief Financial Officer, James A. Wheeler, pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.
     
32.1
 
Certification of Chief Executive Officer and Chief Financial Officer, James A. Wheeler, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
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