UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2004
Commission file number 000-25499
NETWORK INSTALLATION CORPORATION
--------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 88-0390360
-------------------- -----------------------
State or other jurisdiction of (IRS Employer
Incorporation or organization Identification Number)
Irvine, CA 92618
--------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(949) 753-7551
--------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
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 1, 2004, the Issuer had outstanding 23,161,490 shares of its
common stock, $0.001 par value.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE) YES [ ] NO [X]
PART I - FINANCIAL INFORMATION
NETWORK INSTALLATION CORP.
(Formerly, Flexxtech Corporation)
CONSOLIDATED BALANCE SHEET
Unaudited
Three Months
Ended
Sept 30,
2004
----------
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . $ 239,240
Accounts receivable, net of allowance for
doubtful accounts of $95,486 . . . . . . . . . . 788,065
Prepaid Consulting Services. . . . . . . . . . . . . 685,750
----------
1,713,055
Property and Equipment, net. . . . . . . . . . . . . . . . . . . 6,844
Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 42,302
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $2,762,201
=========
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses . . . . . . $1,524,009
Loans payable . . . . . . . . . . . . . . . . . . 240,085
Loans payable related parties . . . . . . . . . . 139,180
---------
Total Current Liabilities . . . . . . . . . . . . . . . . 1,903,274
Long-term Liabilities:
Convertible debt. . . . . . . . . . . . . . . . . 1,072,073
STOCKHOLDERS' DEFICIT
Common stock, authorized 100,000,000 shares at $.001 par
value, issued and outstanding 23,161,490 shares. . 23,362
Additional paid in capital. . . . . . . . . . . . . . . 6,771,263
Shares to be issued . . . . . . . . . . . . . . . . . . 116,249
Accumulated deficit . . . . . . . . . . . . . . . . . . (7,124,020)
---------
Total Stockholders' Deficit . . . . . . . . . . . . 213,146
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT. . . . . . . . . . . $2,762,201
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
NETWORK INSTALLATION CORP.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Month Periods Nine Month Period
Ended September 30, Ended September 30,
2004 2003 2004 2003
---------------- ---------------- ------------ ------------
Net revenue. . . . . . . . . . . . . . . . . . . . . $ 760,835 $ 444,736 $ 2,000,762 $ 1,199,680
Cost of revenue. . . . . . . . . . . . . . . . . . . 374,335 358,131 1,041,646 916,244
---------------- ---------------- ------------ ------------
Gross profit . . . . . . . . . . . . . . . . . . . . 386,500 86,605 959,116 283,409
Operating Expenses . . . . . . . . . . . . . . . . . 816,042 1,332,236 2,298,866 1,823,409
---------------- ---------------- ------------ ------------
Loss from operations . . . . . . . . . . . . . . . . (429,542) (1,245,631) (1,339,750) (1,539,973)
Other income (expense)
Interest income. . . . . . . . . . . . . . . . . 1,860 - 3,210 1,320
Loss on conversion of debenture. . . . . . . . . - (59,740) - (59,740)
Interest expense . . . . . . . . . . . . . . . . (119,425) (1,214,533) (320,640) (1,216,981)
---------------- ---------------- ------------ ------------
Total other income (expense). . . . . . . (117,565) (1,274,533) (317,430) (1,276,721)
---------------- ---------------- ------------ ------------
Loss from continuing operations before
income taxes . . . . . . . . . . . . . . . . . . . (547,107) (2,520,164) (1,657,180) (2,816,964)
Provision of Income tax. . . . . . . . . . . . . . . - - - 800
---------------- ---------------- ------------ ------------
Loss from continuing operations. . . . . . . . . . . (2,520,164) (2,817,494)
Net loss . . . . . . . . . . . . . . . . . . . . . . (547,107) $ (2,520,164) (1,657,180) $(2,817,494)
================ ================ ============ ============
Basic and diluted net loss per share:*
Basic and diluted loss per share from continuing
operations . . . . . . . . . . . . . . . . . . . . . (.02) $ (0.12) (.15) $ (0.27)
---------------- ---------------- ------------ ------------
Basic and diluted loss per share from discontinued
operations. . . . . . . . . . . . . . . . . . . . . - $ 0.00 - $ 0.00
---------------- ---------------- ------------ ------------
Basic and diluted loss per share . . . . . . . . . . (.02) $ (0.12) (.15) $ (0.27)
================ ================ ============ ============
Basic and diluted weighted average shares
outstanding. . . . . . . . . . . . . . . . . . . . . 23,168,012 22,255,024 23,610,540 18,641,574
================ ================ ============ ============
Weighted average number of shares used to compute basic and diluted loss per share is the same since
since the effect of dilutive securities is anti-dilutive.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NETWORK INSTALLATION CORP.
(FORMERLY, FLEXXTECH CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2004 AND 2003
(UNAUDITED)
(RESTATED)
2004 2,003
------------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,657,180) (2,817,494)
Adjustments to reconcile net loss to cash provided by (used in)
operating activities
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . 107,883 2,523
Issuance of stocks for consulting services, compensation & interest . . . . . . . 195,000 2,089,250
Options granted for compensation. . . . . . . . . . . . . . . . . . . . . . . . . - 6,987
Loss on settlement of debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 59,740
Beneficial conversion feature of debentures. . . . . . . . . . . . . . . . . . . . 207,625 -
(Increase) / decrease in current assets
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (434,946) (337,763)
Work In Progress. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 -
Prepaid Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (644,500) 3,775
Deposits & other assets. . . . . . . . . . . . . . . . . . . . . . . . . . (40,013) (969)
Increase /(decrease) in current liabilities
Accrued expenses & accounts payable . . . . . . . . . . . . . . . . . . . . 59,722 537,229
Deferred Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (280,924) -
---------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES FROM CONTINUED OPERATIONS. . . . . . . . . . . . . . . . . (2,287,333) (460,497)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash received in acquisition of subsidiary . . . . . . . . . . . . . . . . . 3,233 667
----------- -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES. . . . . . . . . . . . . . . . . . 3,233 667
CASH FLOWS FROM FINANCING ACTIVITIES
Payments to factor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,056 -
Proceeds from issuance of shares . . . . . . . . . . . . . . . . . . . . . . 2,235,000 -
Proceeds from borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . 871,989 336,150
Payments of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (563,794) (98,901)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . . 2,529,139 443,178
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . 238,573 (16,652)
CASH AND CASH EQUIVALENTS -BEGINNING. . . . . . . . . . . . . . . . . . . . . . . . . . 667 17,319
---------- ----------
CASH AND CASH EQUIVALENTS -ENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . 239,240 667
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements
NETWORK INSTALLATION CORP. & SUBSIDIARY
(Formerly, Flexxtech Corporation)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SEGMENTS
Network Installation Corp (NIC) was incorporated on July 18, 1997, under the
laws of the State of California. NIC is a full service computer cabling,
networking and telecommunications integrator contractor, providing networks from
stem to stern in house. NIC participates in the worldwide network infrastructure
market to end users, structured cabling market and the telephony services. NIC,
Flexxtech and Del Mar Systems International, Inc. (DMSI) are together referred
to as "the Company".
Pursuant to a purchase agreement on May 23, 2003, Flexxtech Corporation
("Flexxtech") acquired 100% of the issued and outstanding common stock of NIC.
The purchase price consisted of $50,000 cash, 7,382,000 shares of Flexxtech's
common stock and five year option to purchase an additional 618,000 shares of
Flexxtech stock if NIC's total revenue exceeds $450,000 for the period beginning
on June 1, 2003 and ending August 31. The option was exercisable at a price
equal to the closing bid price of the stock on August 31, 2003. NIC has
forfeited the right to that option.
According to the terms of the share exchange agreement, control of the combined
companies (the "Company") passed to the former shareholders of NIC. Although
from a legal perspective, Flexxtech acquired NIC, the transaction is viewed as a
recapitalization of NIC, accompanied by an issuance of stock by NIC to the
shareholders of Flexxtech. This is because Flexxtech did not have operations
immediately prior to the transaction, and following the transaction, NIC was the
operating company.
On March 1, 2004, NIC acquired 100% of the outstanding shares of Del Mar Systems
International, Inc. (DMSI), a Company operating in the telecommunication
solutions industry. The operations of DMSI have been consolidated with the
operations of the Company, since March 1, 2004.
Flexxtech Corporation ("Flexxtech") was organized on March 24, 1998, under the
laws of the State of Nevada, as Color Strategies. On December 20, 1999,
Flexxtech changed its name to Infinite Technology Corporation. Flexxtech changed
its name to Flexxtech Corporation in April 2000.
A Certificate of Amendment was filed on July 10, 2003 to change the parent
company's name from Flexxtech Corporation to Network Installation Corp.
The accompanying unaudited condensed interim financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission for the presentation of interim financial information, but
do not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. The audited financial
statements for the two years ended December 31, 2003 and 2002 were filed on
April 9, 2004 with the Securities and Exchange Commission and is hereby
referenced. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Operating results for the
three-month period ended September 30, 2004 are not necessarily indicative of
the results that may be expected for the year ended December 31, 2004.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
-----------------------------
The accompanying financial statements include the accounts of Network
Installation Corp., formerly Flexxtech Corporation (legal acquirer, the
"Parent"), and its 100% owned subsidiaries, Network Installation Corporation and
Del Mar Systems International, Inc. All significant inter-company accounts and
transactions have been eliminated in consolidation. The results include the
accounts of Network Installation Corp. and Flexxtech for the nine months ended
September 30, 2004, and the results of DMSI from the date of acquisition, March
1, 2004 through September 30, 2004. The historical results for the three months
ended September 30, 2003 include Network Installation Corp and NIC.
REVENUE RECOGNITION
--------------------
The Company's revenue recognition policies are in compliance with all applicable
accounting regulations, including American Institute of Certified Public
Accountants (AICPA) Statement of Position (SOP) 81-1, Accounting for Performance
of Construction-Type and Certain Production-Type Contracts. Revenues from
installations, cabling and networking contacts are recognized when the contracts
are completed (Completed-Contract Method). The completed-contract method is used
because the contracts are short-term in duration or the Company is unable to
make reasonably dependable estimates of the costs of the contracts.
Under the Completed-Contract Method, revenues and expenses are recognized when
services have been performed and the projects have been completed. For projects,
which have been completed but not yet billed to customers, revenue is recognized
based on management's estimates of the amounts to be realized. When such
projects are billed, any differences between the initial estimates and the
actual amounts billed are recorded as increases or decreases to revenue.
Expenses are recognized in the period in which the corresponding liability is
incurred. Deferred revenue represents revenue that has been received or is
receivable before it is earned, i.e., before the related services are performed.
Deferred revenue amounted to $0 and $280,924 at September 30, 2004 and December
31, 2003, respectively.
The Company's revenue recognition policy for sale of network products is in
compliance with Staff accounting bulletin (SAB) 104. Revenue from the sale of
network products is recognized when a formal arrangement exists, the price is
fixed or determinable, the delivery is completed and collectibility is
reasonably assured. Generally, the Company extends credit to its customers and
does not require collateral. The Company performs ongoing credit evaluations of
its customers and historic credit losses have been within management's
expectations.
STOCK-BASED COMPENSATION
-------------------------
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation" amended by SFAS No 148, "Accounting for Stock Based Compensation
Transition and Disclosure". SFAS No. 123 prescribes accounting and reporting
standards for all stock-based compensation plans, including employee stock
options, restricted stock, employee stock purchase plans and stock appreciation
rights. SFAS No. 123 requires compensation expense to be recorded (i) using the
new fair value method or (ii) using the existing accounting rules prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for stock issued to
employees" (APB 25) and related interpretations with proforma disclosure of what
net income and earnings per share would have been had the Company adopted the
new fair value method. The Company uses the intrinsic value method prescribed by
APB 25 and has opted for the disclosure provisions of SFAS No.123. No options
were issued during the three months ended September 30, 2004.
BASIC AND DILUTED NET LOSS PER SHARE
------------------------------------------
Net loss per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), "Earnings per share". Basic net
loss per share is based upon the weighted average number of common shares
outstanding. Diluted net loss per share is based on the assumption that all
dilutive convertible debentures and warrants were converted or exercised.
SEGMENT REPORTING
------------------
Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure
About Segments of an Enterprise and Related Information" requires use of the
"management approach" model for segment reporting. The management approach model
is based on the way a company's management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments
are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. SFAS
131 has no effect on the Company's consolidated financial statements for the
period ended September 30, 2004 and 2003, as substantially all of the Company's
operations are conducted in one industry segment.
3. GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. However, the Company has accumulated deficit of
$7,124,020, is generating losses from operations, and has a negative cash flow
from operations. The continuing losses have adversely affected the liquidity of
the Company. The Company faces continuing significant business risks, including
but, not limited to, its ability to maintain vendor and supplier relationships
by making timely payments when due.
In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet is dependent upon continued operations of the Company, which in turn is
dependent upon the Company's ability to raise additional capital, obtain
financing and to succeed in its future operations. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.
Management has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. Management devoted considerable effort
towards obtaining additional equity financing through various private placements
and evaluation of its distribution and marketing methods.
4 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses is comprised of the following:
September 30,
2004
----------
Accounts payable. . $ 558,974
Payroll tax payable 290,801
Litigation accrual. 384,522
Accrued expenses. . 289,712
----------
$1,524,009
==========
5. NOTES PAYABLE
The Company contracted a $500,000 note payable in March 2004 in connection with
the DMSI acquisition. This note bears interest at 5% and is payable in monthly
installment of $42,804, maturing in April 2005. The balance outstanding at
September 30, 2004 is $211,369.
The Company has an unsecured, non-interest bearing note for $12,532 due November
2005. The Company also has a $16,184 non-interest bearing loan payable by
September 30, 2005.
6. RELATED PARTY TRANSACTIONS
RELATED PARTY NOTES PAYABLE - CURRENT
------------------------------------------
During the three months ended September 30, 2004, the Company had unsecured,
non-interest bearing notes for $139,180 due to an officer. Payments on the notes
are unscheduled.
CONVERTIBLE DEBENTURES - RELATED PARTIES
--------------------------------------------
During the three months ended September 30, 2004, the Company issued $240,000 in
debentures to a major shareholder of the Company. These debentures carry an
interest rate of 8% per annum, due in April 2009. The Holder is entitled to
convert the face amount of the Debentures, plus accrued interest, anytime
following the Closing Date, at the lesser of (i) 75% of the lowest closing bid
price during the fifteen trading days prior to the Conversion Date or (ii) 100%
of the closing bid prices for the twenty trading days immediately preceding the
Closing Date. No fractional shares or scrip representing fractions of shares
will be issued on conversion, but the number of shares issuable shall be rounded
up or down, as the case may be, to the nearest whole share. In accordance with
EITF 00-27 98-5, the beneficial conversion feature on the issuance of the
convertible debenture for the quarter ended September 30, 2004 was recorded in
the amount of $12,500. The debentures issued during the three months ended
September 30, 2004 had a discount of $40,000 of which $108 was recorded as
interest expense. During the three months ended September 30, 2004, $999 was
recorded as an interest expense. In connection with the issuance of these
debentures, the Company issued a warrant to purchase 200,000 additional shares
of common stock at $1.75 per share. The value of the warrants, $56,141, was
recorded as an increase to additional paid in capital and additional debt
discount of which $156 was amortized during the three months ended September 30,
2004
During the three months ended September 30, 2004, the Company repaid $107,382 of
convertible debt and paid a Redemption Premium of $37,370 for repayment of the
convertible debt.
7. INCOME TAXES
No provision was made for Federal income tax since the Company has significant
net operating loss. Through December 31, 2003, the Company incurred net
operating losses for tax purposes of approximately $3,450,000. The net operating
loss carry forwards may be used to reduce taxable income through the year 2022.
The availability of the Company's net operating loss carryforwards are subject
to limitation if there is a 50% or more positive change in the ownership of the
Company's stock. A valuation allowance for 100% of the deferred taxes asset has
been recorded due to the uncertainty of its realization.
8. COMMITMENTS & CONTINGENCIES
LITIGATION
----------
On April 25, 2003, the Superior Court of the State of California, County of
Orange, entered a judgment in the amount of $46,120 against the Company and its
former management in favor of Insulectro Corp., a vendor of the Company's former
subsidiary, North Texas Circuit Board. Management believes that the Company was
never issued proper service of process for the complaint. In addition, on August
20, 2002, the Company sold North Texas Circuit Board to BC Electronics Inc.
Pursuant to terms of the share purchase agreement, BC Electronics assumed all
liabilities of North Texas Circuit Board. In December 2003, the Company filed a
motion to vacate the judgment for lack of personal service. In February 2004,
the Court ruled in the Company's favor and the judgment was vacated. Although
the Company was the guarantor on the loan, North Texas Circuit Board is the
principal debtor and (i) the Company will bring action against North Texas
Circuit Board to seek relief or (ii) because partial payment was made by North
Texas Circuit Board, it could affect the legal status of the guarantee, which
management believes may absolve the Company of liability. In February 2004, the
plaintiff re-filed the complaint. Management plans to vigorously defend this
action.
On April 29, 2003, Arman Moheban brought a suit against the Company and its
former management in the Superior Court of the State of California, County of
Los Angeles, alleging breach of contract pursuant to a settlement agreement
dated November 20, 2002. The suit alleges that the Company is delinquent in its
repayment of a $20,000 promissory note. We reached a settlement with the
plaintiff for $22,400 to be paid in four equal monthly installments of $5,600
beginning July 1, 2004. The plaintiff has received all installments and on
October 15, 2004 the Court entered a dismissal of the case.
The Company may be involved in litigation, negotiation and settlement matters
that may occur in the day-to-day operations of the Company and its subsidiary.
Management does not believe the implication of these litigations will, including
those discussed above, have a material impact on the Company's financial
statements.
9. STOCKHOLDERS' EQUITY
STOCK SPLIT
------------
On September 20, 2004, the Company announced a 2 for 1 forward stock split of
its common stock. The Company's authorized shares remain the same. The
financial statements have been retroactively restated for the effects of the
stock splits.
EQUITY
------
During the three months ended March 31, 2004, the Company made the following
issuance of common stock.
The Company issued 130,549 shares of common stock valued at $500,000 for the
acquisition of its subsidiary, Del Mar Systems International, Inc.
The Company issued 8,000 shares of common stock to a shareholder for conversion
of a Promissory Note amounting to $40,000.
The Company issued 138,106 shares of common stock for conversion of debentures
and related accrued interest in the amount of $529,822.
The Company issued 11,462 share of common stock for assumption of liabilities in
the amount of $32,552 by a related party, a major shareholder of the Company.
The Company issued 50,000 shares of common stock to a consultant for services
rendered valued at $195,000.
The Company issued 6,410 shares of common stock for consideration of $24,358.
During the three months ended June 30, 2004, the Company issued $2,235,000 of
common stock as follows pursuant to a Private Placement Memorandum:
Jared Shaw & Candance Shaw 16,667
Northbar Capital 8,333
Camille Henry 8,333
Luca Minna 8,333
Professional Traders Fund 66,667
David Fisher 16,667
Wexford/Charles Mangione IRA 16,667
William Ballay 8,333
Gryphon Master Fund LP 83,333
Henry Robertelli 5,000
Generic Trading 16,667
Rock II LLC 40,000
Spectra Capital MGMT 66,667
Otape Investments LLC 33,333
SRG Investments LLC 66,667
Mark M. Mathes 50,000
Robert Gayner 66,667
Cammad 33,333
John Wykoff 66,667
David Wykoff 66,667
During the three months ended June 30, 2004, the Company issued 35,000 shares
pursuant to a restructuring agreement effective in April 2003.
During the three months ended June 30, 2004, our Chief Executive Officer,
Michael Cummings, retired 2,002,000 share of our common stock.
Another 182,500 shares of common stock were retired during the three months
ended June 20, 2004 by various investors in accordance with a restructuring
agreement consummated by the Company in April 2003.
During the three months ended September 30, 2004, the Company issued 200,000
shares pursuant to a consulting agreement with Pacific Shore Investments, LLC
effective in August 2004. The value of the shares was $68,750.
10. BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted net loss per share for the three-month period ended September
30, 2004 were determined by dividing net loss for the periods by the weighted
average number of basic and diluted shares of common stock outstanding. Weighted
average number of shares used to compute basic and diluted loss per share is the
same since the effect of dilutive securities is anti-dilutive. The weighted
average was retroactively restated to consider the stock split
11. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
The Company paid interest of $20,800 and $0 during the three months ended
September 30, 2004 and 2003, respectively. The Company paid income taxes of $0
during the three months ended September 30, 2004 and 2003.
12. ACQUISITION OF DEL MAR SYSTEMS INTERNATIONAL, INC.
Pursuant to an acquisition agreement, the Company acquired 100% of the
outstanding shares of San Diego area-based telecommunication solutions firm Del
Mar Systems International, Inc. on March 1, 2004 for $1 million structured as a
(i) $500,000 12 month 5% Note consisting of 12 equal monthly installments of
$42,804 and (ii) $500,000 in 130,549 shares of the Company's restricted common
stock. The pro forma information including the operations of DMSI is not
available for the three months ended September 30, 2004, and for the year ended
December 31, 2003, as they are in the process of being compiled.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis compares our results of operations for the
three and nine months ended September 30, 2004 to the same periods in 2003. This
discussion and analysis should be read in conjunction with our consolidated
condensed financial statements and related notes thereto included elsewhere in
this report and our Form 10-KSB for the year ended December 31, 2003.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Report on Form 10-QSB contains forward-looking statements, including,
without limitation, statements concerning possible or assumed future results of
operations and those preceded by, followed by or that include the words
"believes," "could," "expects," "intends" "anticipates," or similar expressions.
Our actual results could differ materially from these anticipated in the
forward-looking statements for many reasons including the risks described in our
10-KSB for the period ended December 31, 2003 and elsewhere in this report.
Although we believe the expectations reflected in the forward-looking statements
are reasonable, they relate only to events as of the date on which the
statements are made, and our future results, levels of activity, performance or
achievements may not meet these expectations. We do not intend to update any of
the forward-looking statements after the date of this document to conform these
statements to actual results or to changes in our expectations, except as
required by law.
OVERVIEW
We provide communications solutions including design, installation and
deployment of data, voice and video networks as well as wireless networks and
Wi-Fi. Through our wholly-owned subsidiary Del Mar Systems International, Inc.,
we also provide integrated telecommunications solutions including Voice over
Internet Protocol (VoIP) applications. Our customers include Fortune 1000
companies, government agencies, municipalities, educational facilities for
grades K through 12, universities and multiple property owners.
CRITICAL ACCOUNTING POLICIES
We have identified the policies below as critical to our business operations and
the understanding of our results of operations. The impact and any associated
risks related to these policies on our business operations are discussed
throughout this section where such policies affect our reported and expected
financial results. Our preparation of our Consolidated Financial Statements
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities at
the date of our financial statements, and the reported amounts of revenue and
expenses during the reporting period. Our actual results may differ from
those estimates.
Our accounting policies that are the most important to the portrayal of our
financial condition and results, and which require the highest degree of
management judgment relate to revenue recognition, the provision for
uncollectible accounts receivable, property and equipment, advertising and
issuance of shares for service.
Our revenue recognition policies are in compliance with all applicable
accounting regulations, including American Institute of Certified Public
Accountants (AICPA) Statement of Position (SOP) 81-1, Accounting for Performance
of Construction-Type and Certain Production-Type Contracts. Revenues from
installations, cabling and networking contacts are recognized when the contracts
are completed. The completed-contract method is used because the contracts are
short-term in duration or we are unable to make reasonably dependable estimates
of the costs of the contracts. Our revenue recognition policy for sale of
network products is in compliance with Staff accounting bulletin (SAB) 104.
Revenue from the sale of network products is recognized when a formal
arrangement exists, the price is fixed or determinable, the delivery is
completed and collectibility is reasonably assured.
We estimate the likelihood of customer payment based principally on a customer's
credit history and our general credit experience. To the extent our estimates
differ materially from actual results, the timing and amount of revenues
recognized or bad debt expense recorded may be materially misstated during a
reporting period.
Property and equipment is carried at cost. Depreciation of property and
equipment is provided using the declining balance method over the estimated
useful lives of the assets at five to seven years. Expenditures for maintenance
and repairs are charged to expense as incurred.
We expense advertising costs as incurred.
We account for the issuance of equity instruments to acquire goods and services
based on the fair value of the goods and services or the fair value of the
equity instrument at the time of issuance, whichever is more reliably
measurable.
GOING CONCERN OPINION
Our audited financial statements for the quarter ended September 30, 2004
reflect a net loss of $(547,107). These conditions raised substantial doubt
about our ability to continue as a going concern if we do not acquire
sufficient additional funding or alternative sources of capital to meet our
working capital needs. We are raising capital through convertible debentures.
We believe this will generate the additional cash required to fund our
operations and allow us to meet our obligations.
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AS COMPARED TO THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2003
NET REVENUES
-------------
We had net revenues of $760,835 and $2,000,762 for the three and nine months
ended September 30, 2004, respectively, as compared to $444,736 and $1,119,680
for the three and nine months ended September 30, 2003, respectively. The
increase in net revenues for the three and nine month periods ended 2004 as
compared to the same periods ended 2003, was primarily due to the increase in
sales orders from our marketing efforts due the opening of new sales offices.
COST OF REVENUE
-----------------
We incurred Cost of Revenue of $374,335 and 1,041,646 for the three and nine
month period ended September 30, 2004, respectively as compared to $368,131 and
$916,244 for the three and nine month period ended September 30, 2003. The
increase in Cost of Revenue for the three and nine month periods ended 2004 as
compared to the same periods ended 2003, is due the increase in the number of
project orders and the accompanying supplies and labor expense for those
projects.
OPERATING EXPENSES
-------------------
We incurred costs of $816,042 and $2,298,866 for the three and nine month
periods ended September 30, 2004 as compared to $1,332,236 and $1,539,973 for
the three month and nine month periods ended September 30, 2003, respectively.
The decrease in Operating Expenses for the three month period ended September
30, 2004 as compared to the same period ended 2003 was due to a decrease in the
issuance of our common stock as an incentive for investments into the Company
amount to $1,199,700. The selling, general and administrative expenses increased
for the three months ended September 30, 2004 as compared to the same period
ended September 30, 2004,, but the increase in selling, general and
administrative costs was offset by the decrease in stock issuances. The increase
in Operating Expenses for the nine months ended September 30, 2004 as compared
to the same period ended 2003, was due to an increase in our marketing expenses
due to the opening of additional sales offices.
LOSS FROM OPERATIONS
----------------------
We had a loss from operations of ($429,542) and ($1,339,750) for the three and
nine month period ended September 30, 2004, as compared to a loss of
($1,245,631) and ($1,539,973) for the three and nine month periods ended
September 30, 2003. The decrease in net loss from operations for the three and
nine month periods ended 2004 as compared to the same periods ended 2003, is due
to a reduction in common stock issuances for consulting services and an
increase in profit margins for projects completed.
NET LOSS
---------
We had a net loss of ($547,107) and ($1,657,180) for the three and nine month
periods ended September 30, 2004 as compared to a net loss of ($2,520,164) and
($2,817,494) for the three and nine month periods ended September 30, 2003.
BASIC AND DILUTED LOSS PER SHARE
-------------------------------------
Our basic and diluted loss per share for the quarter ended September 30, 2004
was $(0.02) as compared to $(0.12) for the quarter ended September 30, 2003.
LIQUIDITY AND CAPITAL RESOURCES
----------------------------------
We must continue to raise capital to fulfill our business plan of acquiring
companies and developing those companies internally. If we are unable to raise
additional capital, we may not be able to make further acquisitions and our
operations may be curtailed. As of September 30, 2004, we had Total Assets of
$2,762,201 and Current Liabilities of $1,903,274 . Cash and cash equivalents
were $239,240 at September 30, 2004 compared to $667 at September 30, 2003. Our
Stockholder's Deficit at September 30, 2004 was $(213,146).
We had a net usage of cash due to operating activities for the nine months ended
September 30, 2004 and 2003 of $2,287,333 and $(460,497) respectively. We had
net cash provided by financing activities of $2,529,139 and $443,178 in the nine
month period ended September 30, 2004 and 2003, respectively. The reason for the
increase in the current period for financing activities was the increase in the
issuance of shares due to a private placement as compared to the corresponding
period last year. We had $871,989 from borrowings in the nine month period ended
September 30, 2004 as compared to $336,150 in the corresponding period last
year. The proceeds from borrowings during the nine months ended September 30,
2004 consisted primarily of convertible debenture financing. The additional
financing in 2004 was provided to support our continued domestic expansion and
in particular our saleforce. Currently, our cash needs include, but are not
limited to operations and future acquisitions.
CAPITAL COMMITMENTS
--------------------
Before we acquired Network Installation, Network Installation issued an
unsecured note with an initial balance of $47,500, bearing an interest
rate of prime plus 3.25%. The note was payable through a revolving line of
credit, which commenced on November 6, 2001, the date the note was issued, and
expired three years following the note date. Network Installation agreed to
pay a total of 36 payments of interest only on the disbursed balance
beginning one month from the note date and every month thereafter. The
note is guaranteed by our officer and shareholder.
As a result of our acquisition of Network Installation, Network
Installation defaulted on this note, since the note prohibited a change of
ownership of over 25% of Network Installation's common stock outstanding. The
entire principal amount became due upon default and the revolving line of
credit is no longer available to us. We are in the process of making payment
arrangements with the financing institution. The amount outstanding at
September 30, 2004 was $16,184.
On March 1, 2004, we entered into a Promissory Note Agreement for $500,000 with
Stephen Pearson for the acquisition of Del Mar Systems, Inc. The note bears 5%
interest per annum and we make payments of $42,804 per month toward the balance,
maturing in April 2005. The balance outstanding September 30, 2004 was
$211,369.
As of July 22, 2004, a portion of the convertible debentures issued to Dutchess
Fund and Dutchess Private Equities Fund, II, collectively require us to make
interest payments. We made interest payments beginning on April 25, 2004, in an
amount equal to an aggregate of $3,500, in cash, to the holder for the
debentures on March 31, 2004, April 8, 2004 and April 13, 2004. Each subsequent
payment thereafter is tendered every thirty days from said date in the same
amount, in cash, to the holder. We may make prepayments at any time. The
debentures are payable five years from their respective dates of
issuance.
We have an unsecured, non-interest bearing promissory note for $46,489 due to
our Chief Executive Officer, Michael Cummings, on July 30, 2005.
We have an unsecured, non-interest bearing promissory note for $87,691 due to
our Chief Executive Officer, Michael Cummings, on June 15, 2005.
We settled litigation with Arman Moheban that requires us to pay $22,400 in four
equal monthly installments of $5,600 beginning July 1, 2004. As of September
30, 2004, we made payments totaling $22,400. The plaintiff has received all
installments and on October 15, 2004 the Court entered a dismissal of the case.
On June 29, 2004, we entered into a lease agreement with Alton Plaza Property
Inc. for an office located at 15235 Alton Parkway, Suite 200, Irvine, CA. Our
rent is approximately $12,430 and our lease runs for 51 months.
On June 1, 2004, we entered into a lease agreement for an office located at 7702
E. Doubletree Ranch Road Suite 500, Scottsdale, AZ, for approximately 1 year at
$750 per month.
On May 20, 2004, we entered into a lease agreement for an office located at 2377
Gold Meadow Way, Gold River, CA, for approximately 3 months at $596 per month.
On March 1, 2004, we entered into a lease agreement for an office located at
11601 Wilshire Blvd., Suite 500, Los Angeles, CA, for approximately 6 months at
$790 per month.
On June 1, 2004, we entered into a lease agreement for an office located at 601
Union Street, Two Union Square, 42nd Floor, Seattle, WA, for approximately 6
months at $260 per month.
We executed an employment agreement with our Chief Executive Officer,
Michael Cummings, on May 23, 2004, in which we agreed to pay Mr. Cummings a
gross salary of $16,000 per month and 5% of our adjusted net profits for a
one-year period ending on May 23, 2005.
FINANCING ACTIVITIES
---------------------
During the three months ended September 30, 2004, we issued $240,000 debentures
to a major shareholder. These debentures carry an interest rate of 8% per annum,
due in April 2009. The Holder is entitled to convert the face amount of the
Debentures, plus accrued interest, anytime following the Closing Date, at the
lesser of (i) 75% of the lowest closing bid price during the fifteen trading
days prior to the Conversion Date or (ii) 100% of the closing bid prices for the
twenty trading days immediately preceding the Closing Date. No fractional
shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded up or down, as the case may
be, to the nearest whole share. In accordance with EITF 00-27 98-5, the
beneficial conversion feature on the issuance of the convertible debenture for
the quarter ended September 30, 2004 has been recorded in the amount of $12,500.
The debentures issued during the three months ended September 30, 2004 were
issued with a discount of $40,000 of which $108 was recorded as interest
expense. During the three months ended September 30, 2004, $999 was recorded
as an interest expense. In connection with the issuance of the debentures, we
issued a warrant to purchase 200,000 additional shares of common stock at $1.75
per share. The value of the warrants, $56,141, was recorded as an increase to
additional paid in capital, and additional debt discount, of which $156 was
amortized during the quarter ended September 30, 2004.
SUBSIDIARIES
------------
As of September 30, 2004, we had two wholly-owned subsidiaries, Network
Installation Corp. and Del Mar Systems International, Inc.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. Our management, with the
participation of our principal executive officer and principal financial
officer, has evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this Quarterly Report on Form 10-QSB. Based on this
evaluation, our principal executive officer and principal financial officer
concluded that these disclosure controls and procedures are effective and
designed to ensure that the information required to be disclosed in our reports
filed or submitted under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the requisite time periods.
Changes in internal controls. There was no change in our internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934, as amended) that occurred during our last
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On April 25, 2003, the Superior Court of the State of California, County of
Orange, entered a judgment in the amount of $46,120 against us and our former
management in favor of Insulectro Corp., a vendor of our former subsidiary,
North Texas Circuit Board. We believe that we were never issued proper service
of process for the complaint. In addition, on August 20, 2002, we sold North
Texas Circuit Board to BC Electronics Inc. Pursuant to terms of the share
purchase agreement, BC Electronics assumes all liabilities of North Texas
Circuit Board. In December 2003, we filed a motion to vacate the judgment for
lack of personal service. In February 2004, the Court ruled in our favor and the
judgment was vacated. Although we are the guarantor on the loan, North Texas
Circuit Board is the principal debtor and (i) we will bring action against North
Texas Circuit Board to seek relief or (ii) because partial payment was made by
North Texas Circuit Board, it could affect the legal status of the guarantee,
which we believe may absolve us of liability. In February 2004, the plaintiff
re-filed the complaint. We plan to vigorously defend this action.
On April 29, 2003, Arman Moheban brought a suit against us and our former
management in the Superior Court of the State of California, County of Los
Angeles, alleging breach of contract pursuant to a settlement agreement dated
November 20, 2002. The suit alleges that we are delinquent in our repayment of a
$20,000 promissory note, of which $5,000 has been repaid to date. We reached a
settlement with the plaintiff for $22,400 to be paid in four equal monthly
installments of $5,600 beginning July 1, 2004. The plaintiff has received all
installments and on October 15, 2004, the Court entered a dismissal of the case.
We may be involved in litigation, negotiation and settlement matters that may
occur in our day-to-day operations. Management does not believe the implication
of these litigations will, including those discussed above, have a material
impact on our financial statements.
ITEM 2. Unregistered Sales of Equity Securities
During the three months ended September 30, 2004, we issued $240,000 in
debentures to a major shareholder. These debentures carry an interest rate of 8%
per annum, due in April 2009. The Holder is entitled to convert the face amount
of the Debentures, plus accrued interest, anytime following the Closing Date, at
the lesser of (i) 75% of the lowest closing bid price during the fifteen trading
days prior to the Conversion Date or (ii) 100% of the closing bid prices for the
twenty trading days immediately preceding the Closing Date. No fractional shares
or scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded up or down, as the case may be, to
the nearest whole share. In accordance with EITF 00-27 98-5, the beneficial
conversion feature on the issuance of the convertible debenture for the quarter
ended September 30, 2004 has been recorded in the amount of $12,500. The
debentures issued during the three months ended September 30, 2004 were issued
with a discount of $40,000 of which $108 was recorded as interest expense.
During the three months ended September 30, 2004, $999 was recorded as an
interest expense. In connection with the issuance of the debentures, we issued a
warrant to purchase 200,000 additional shares of common stock at $1.75 per
share. The value of the warrants, $56,141, was recorded as an increase to
additional paid in capital, and additional debt discount, of which $156 was
amortized during the quarter ended September 30, 2004.
With respect to the issuance of the securities described above, we relied on the
Section 4(2) and/or 4(6) exemptions from securities registration under the
federal securities laws for transactions not involving any public offering. No
advertising or general solicitation was employed in offering the shares. The
shares were sold to sophisticated and/or accredited investors. The securities
were offered for investment purposes only and not for the purpose of resale or
distribution, and the transfer thereof was appropriately restricted by us.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NOT APPLICABLE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended September 30, 2004, our board of directors and the
holders of a majority of our outstanding common stock executed a written consent
in favor of the following corporate action: (i) To amend our Articles of
Incorporation to authorize the Board of Directors in its discretion, to effect
by resolution, a forward split of the outstanding shares of common stock of the
Corporation, with the ratio to be selected and implemented by the Board of
Directors in its sole discretion without changing the number of authorized
shares of the Corporation. The number of votes cast for this amendment was
8,430,000. On September 20, 2004, we implemented a 2 for 1 forward stock split
for all common stock shareholders of record on that date and began trading under
the new ticker symbol "NWKI.OB."
ITEM 5. OTHER INFORMATION.
On September 20, 2004, we announced a 2 for 1 forward stock split to be
distributed to all shareholders of record as of September 20, 2004.
On September 20, 2004 we also began trading under the new ticker symbol "NWKI".
ITEM 6. EXHIBITS
Exhibit
Number Description of Exhibit
--------------------------------
3.1 Articles of Incorporation (filed as Exhibit 3.1 to the Registrant's Annual
Report on Form 10-KSB filed on March 5, 1999 and incorporated herein
by reference).
3.2 By-laws (filed as Exhibit 3.2 to the Registrant's Annual Report on Form
10-SB filed on March 5, 1999 and incorporated herein by reference).
3.3 Certificate of Amendment to the Certificate of Incorporation (filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-QSB filed on
November 13, 2003 and incorporated herein by reference).
3.4 Certificate of Amendment of Articles of Incorporation (filed as Exhibit 3.3
to the Registrant's Current Report on Form 8-K filed on November 29, 2000
and incorporated herein by reference).
3.5 Certificate of Amendment to the Certificate of Incorporation (filed as
Exhibit 3.3 to the Registrant's Annual Report on Form 10KSB filed on April
15, 2003 and incorporated herein by reference).
3.6 Certificate of Amendment of Articles of Incorporation (filed as Exhibit 3.2
to the Registrant's Current Report on Form 8-K filed on November 29, 2000
and incorporated herein by reference).
3.7 Amendment to Bylaws of the Registrant, dated May 6, 1999 (filed as Exhibit
3.2.2 to the Registrant's Form 10-SB filed on May 14, 1999 and incorporated
herein by reference).
4.1 Warrant 101 issued to C.C.R.I. Corp., dated September 29, 2003 (filed as
Exhibit 4.1 to the Registrant's Form SB-2 filed on October 16, 2003 and
incorporated herein by reference).
4.2 Warrant 102 issued to C.C.R.I. Corp., dated September 29, 2003 (filed as
Exhibit 4.2 to the Registrant's Form SB-2 filed on October 16, 2003 and
incorporated herein by reference).
4.3 Convertible Debenture Exchange Agreement between the Registrant and
Dutchess Private Equities Fund LP, dated February 27, 2004 (filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form 10QSB filed on May
24, 2004 and incorporated herein by reference).
4.4 Form of Debenture between the Registrant and Dutchess Private Equities Fund
LP, dated March 1, 2004 (filed as Exhibit 4.2 to the Registrant's Quarterly
Report on Form 10QSB filed on May 24, 2004 and incorporated herein by
reference).
4.5 Form of Debenture between the Registrant and Dutchess Private Equities
Fund, II, L.P., dated March 31, 2004 (filed as Exhibit 4.3 to the
Registrant's Quarterly Report on Form 10QSB filed on May 24, 2004 and
incorporated herein by reference).
4.6 Form of Warrant dated May 18, 2004 (filed as Exhibit 4.6 to the
Registrant's SB-2 filed on July 27, 2004 and incorporated herein by
reference).
4.7 Form of Warrant dated May 26, 2004 (filed as Exhibit 4.7 to the
Registrant's SB-2 filed on July 27, 2004 and incorporated herein by
Reference).
4.8 Convertible Debenture Agreement between the Registrant and Dutchess Private
Equities Fund II, dated March 31, 2004. (filed as Exhibit 4.3 to the
Registrant's Form 10-QSB filed on Mary 24, 2004)
4.9 Convertible Debenture Agreement between the Registrant and Dutchess Private
Equities Fund II, dated April 8, 2004.(filed as Exhibit 4.9 to the
Registrant's Form 10-QSB filed on August 23, 2004)
4.10 Convertible Debenture Agreement between the Registrant and Dutchess Private
Equities Fund II, dated April 13, 2004.(filed as Exhibit 4.10 to the
Registrant's Form 10-QSB filed on August 23, 2004)
4.11 Convertible Debenture Agreement between the Registrant and Dutchess Private
Equities Fund II, dated April 13, 2004.(filed herewith)
10.1 Corporate Consulting Agreement between the Registrant and Dutchess
Advisors, LLC, dated April 1, 2003 (filed as Exhibit 10.3 to the
Registrant's Current Report on Form 8-K filed on April 23, 2003 and
incorporated herein by reference).
10.2 Reseller Agreement between the Registrant and Vivato, Inc., dated August
14, 2003 (filed as Exhibit 10.1 to Registrant's Quarterly Report on Form
10-QSB dated November 13, 2003 and incorporated herein by reference).
10.3 Motorola Reseller Agreement between the Registrant and Motorola, Inc.,
dated August 18, 2003 (filed as Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-QSB dated November 13, 2003 and incorporated herein by
reference).
10.4 Short Term Rental Agreement between the Registrant and Vidcon Solutions
Group, Inc., dated February 5, 2003 (filed as Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-QSB dated November 13, 2003 and
incorporated herein by reference).
10.5 Stock Purchase Agreement between the Registrant and Michael Cummings, dated
May 16, 2003 (filed as Exhibit 2.1 to the Registrant's Current Report on
Form 8-K filed on June 13, 2003 and incorporated herein by reference).
10.6 Premier Reseller Agreement between the Registrant and Aruba Wireless
Networks, Inc., dated January 29, 2004 (filed as Exhibit 10.10 to the
Registrant's Form SB-2 filed on February 9, 2004 and incorporated herein by
reference).
10.7 Consulting Agreement between the Registrant and Marketbyte, LLC, dated July
24, 2003 (filed as Exhibit 10.8 to the Registrant's SB-2 filed on July 27,
2004 and incorporated herein by reference).
10.8 Investor Relations Service Agreement between the Registrant and Eclips
Ventures International, dated February 2, 2004 (filed as Exhibit 10.9 to
the Registrant's SB-2 filed on July 27, 2004 and incorporated herein by
reference).
10.9 Mpartner Independent Agent Agreement between the Registrant and Mpower
Communications Corp., dated March 23, 2004 (filed as Exhibit 10.10 to the
Registrant's SB-2 filed on July 27, 2004 and incorporated herein by
reference).
10.10 Sales Agent Agreement between the Registrant and PAETEC Communications,
dated March 23, 2004 (filed as Exhibit 10.11 to the Registrant's SB-2 filed
on July 27, 2004 and incorporated herein by reference).
10.11 Qwest Services Corporation Master Representative Agreement between the
Registrant and Qwest Services Corp., dated March 23, 2004 (filed as Exhibit
10.12 to the Registrant's SB-2 filed on July 27, 2004 and incorporated
herein by reference).
10.12 XO Communications, Inc. Agent Agreement between the Registrant and XO
Communications, Inc., dated March 8, 2004 (filed as Exhibit 10.13 to the
Registrant's SB-2 filed on July 27, 2004 and incorporated herein by
reference).
10.13 Lease Agreement-Las Vegas location between the Registrant and HQ Global
Workplaces, dated January 2, 2004 (filed as Exhibit 10.8 to the
Registrant's SB-2 filed on July 27, 2004 and incorporated herein by
reference).
10.14 Lease Agreement-Los Angeles location between the Registrant and HQ Global
Workplaces, dated March 1, 2004 (filed as Exhibit 10.15 to the Registrant's
SB-2 filed on July 27, 2004 and incorporated herein by reference).
10.15 Lease Agreement-Gold River location between the Registrant and HQ Global
Workplaces, dated May 20, 2004 (filed as Exhibit 10.16 to the Registrant's
SB-2 filed on July 27, 2004 and incorporated herein by reference).
10.16 Lease Agreement-Scottsdale location between the Registrant and HQ Global
Workplaces, dated June 1, 2004 (filed as Exhibit 10.17 to the Registrant's
SB-2 filed on July 27, 2004 and incorporated herein by reference).
10.17 Lease Agreement-Seattle location between the Registrant and HQ Global
Workplaces, dated June 1, 2004 (filed as Exhibit 10.18 to the Registrant's
SB-2 filed on July 27, 2004 and incorporated herein by reference).
10.18 Promissory Note Agreement between the Registrant and Stephen Pearson, for
the acquisition of Del Mar Systems, Inc., dated March 1, 2004 (filed as
Exhibit 10.19 to the Registrant's SB-2 filed on July 27, 2004 and
incorporated herein by reference).
10.19 Promissory Note between the Registrant and Dutchess Private Equities Fund,
dated December 17, 2003 (filed as Exhibit 10.20 to the Registrant's SB-2
filed on July 27, 2004 and incorporated herein by reference).
10.20 Promissory Note between the Registrant and Dutchess Private Equities Fund,
dated January 9, 2004 (filed as Exhibit 10.21 to the Registrant's SB-2
filed on July 27, 2004 and incorporated herein by reference).
10.21 Promissory Note between the Registrant and Dutchess Private Equities Fund,
dated February 2, 2004 (filed as Exhibit 10.22 to the Registrant's SB-2
filed on July 27, 2004 and incorporated herein by reference).
10.22 Promissory Note between the Registrant and Dutchess Private Equities Fund,
dated February 5, 2004 (filed as Exhibit 10.23 to the Registrant's SB-2
filed on July 27, 2004 and incorporated herein by reference).
10.23 Employment Agreement between the Registrant and Michael Cummings, dated
May 16, 2004 (filed as Exhibit 10.24 to the Registrant's SB-2 filed on July
27, 2004 and incorporated herein by reference).
10.24 Employment Agreement between the Registrant and Robert W. Barnett, dated
January 19, 2004 (filed as Exhibit 10.25 to the Registrant's SB-2 filed on
July 27, 2004 and incorporated herein by reference).
10.25 Promissory Note between the Registrant and Michael Cummings, dated
December 30, 2003 (filed as Exhibit 10.26 to the Registrant's SB-2 filed on
July 27, 2004 and incorporated herein by reference).
10.26 Promissory Note between the Registrant and Michael Cummings, dated March
15, 2004 (filed as Exhibit 10.27 to the Registrant's SB-2 filed on July 27,
2004 and incorporated herein by reference).
10.27 Territory License Agreement between the Registrant and 5G Wireless
Communications, Inc., dated February 2004 (filed as Exhibit 10.27 to the
Registrant's Form 10-QSB filed on August 23, 2004).
10.28 Lease Agreement between the Registrant and Alton Plaza Property, Inc.,
dated June 29, 2004. (filed as Exhibit 10.28 to the Registrant's Form
10-QSB filed on August 23, 2004).
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of the Interim Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, hereunto duly
authorized.
Date: November 22, 2004 Network Installation Corp.
/s/ Michael Cummings
-----------------------
Michael Cummings, Chief
Executive Officer
Dated: November 22, 2004
/s/ Michael Novielli
-----------------
Michael Novielli, Interim Chief
Financial Officer and Principal
Accounting Officer