##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 (Mark One)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period from  to
 Commission file number 000-25499
 SIENA TECHNOLOGIES, INC.
  Nevada
    
    88-0390360State or other jurisdiction of
    
    (IRS EmployerIncorporation or organization
    
    Identification Number)5625 South Arville Street, Suite E, Las Vegas Nevada
    
    89118(Address of principal executive offices)
    
    (Zip Code)
  (Issuers telephone number, including area code)
 þ o
 o þ
  o þ




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##### Table of Contents



PagePart I  Financial Information
    
    
    3Item 1  Financial Statements
    
    
    3Consolidated Balance Sheets as of June 30, 2007 (Unaudited) and December 31, 2006
    
    
    3Unaudited Consolidated Statements of Operations for the Three and Six Months
Ended June 30, 2007 and June 30, 2006, as restated
    
    
    4Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June
30, 2007 and June 30, 2006, as restated
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2  Managements Discussion and Analysis or Plan of Operation
    
    
    22Item 3  Controls and Procedures
    
    
    33Part II  Other Information
    
    
    33Item 1  Legal Proceedings
    
    
    33Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3  Defaults Upon Senior Securities
    
    
    34Item 4  Submission of Matters to a Vote of Security Holders
    
    
    34Item 5  Other Information
    
    
    34Item 6   Exhibits
    
    
    35Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification Pursuant to Section 906
 2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS.
 
 
  June 30, 2007(Unaudited)
    
    
    December 31, 2006ASSETS:CURRENT ASSETS:Cash
    
    $
    73,413
    
    
    $
    7,808Accounts Receivable, Net of Allowance for Doubtful Accounts of $49,803
($11,044 at 2006)
    
    
    1,019,457
    
    
    
    1,388,169Inventories
    
    
    620,207
    
    
    
    511,817Costs in Excess of Billings
    
    
    257,435
    
    
    
    590,484Current Assets of Discontinued Operations
    
    
    
    
    
    
    41,981Prepaid Expenses and Other Current Assets
    
    
    27,576
    
    
    
    22,152Total Current Assets
    
    
    1,998,088
    
    
    
    2,562,411Fixed Assets, Net of Accumulated Depreciation of $618,995 ($568,296 at 2006)
    
    
    203,016
    
    
    
    250,687OTHER ASSETS:Goodwill
    
    
    7,344,216
    
    
    
    7,344,216Patents
    
    
    5,679
    
    
    
    5,679Investment in Tuscany Services LLC
    
    
    354,851
    
    
    
    Assets Held for Sale
    
    
    
    
    
    
    771,325Total Other Assets
    
    
    7,704,746
    
    
    
    8,121,220TOTAL ASSETS
    
    $
    9,905,850
    
    
    $
    10,934,318LIABILITIES & STOCKHOLDERS DEFICIT:CURRENT LIABILITIESBank Loans Payable
    
    $
    283,764
    
    
    $
    606,089Accounts Payable
    
    
    1,641,736
    
    
    
    1,937,463Billings in Excess of Costs
    
    
    1,675,456
    
    
    
    924,963Current Liabilities of Discontinued Operations
    
    
    223,737
    
    
    
    391,836Current Portion of Notes Payable
    
    
    53,839
    
    
    
    36,264Current Portion of Related Party Notes Payable
    
    
    326,842
    
    
    
    303,303Factor Advances Payable
    
    
    365,030
    
    
    
    Fair Market Value of Derivative Liabilities
    
    
    173,396
    
    
    
    1,827,108Total Current Liabilities
    
    
    4,743,800
    
    
    
    6,027,026LONG-TERM DEBTNotes Payable
    
    
    1,429,957
    
    
    
    1,215,797Related Party Notes Payable
    
    
    6,577,682
    
    
    
    6,665,816Litigation Settlement Obligation
    
    
    45,000
    
    
    
    Total Long-Term Debt
    
    
    8,052,639
    
    
    
    7,881,613STOCKHOLDERS DEFICIT:Common Stock, $.001 par value; 100,000,000 shares authorized 42,163,691
and 34,125,937 shares issued and outstanding in 2007 and 2006,
respectively
    
    
    42,163
    
    
    
    34,126Additional Paid-in Capital
    
    
    29,451,998
    
    
    
    29,204,486Shares to be Issued
    
    
    116,411
    
    
    
    116,994Accumulated Deficit
    
    
    (32,501,161
    )
    
    
    (32,329,927
    )Total Stockholders Deficit
    
    
    (2,890,589
    )
    
    
    (2,974,321
    )TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
    
    $
    9,905,850
    
    
    $
    10,934,318
  3




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##### Table of Contents



Six Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006, as restated
    
    
    2007
    
    
    2006, as restatedREVENUESales
    
    $
    2,793,506
    
    
    $
    11,643,300
    
    
    $
    1,706,219
    
    
    $
    4,939,067Cost of Goods Sold
    
    
    1,882,142
    
    
    
    9,518,873
    
    
    
    1,141,265
    
    
    
    3,840,020GROSS PROFIT
    
    
    911,364
    
    
    
    2,124,427
    
    
    
    564,954
    
    
    
    1,099,047OPERATING EXPENSESInvestor Relations
    
    
    110,182
    
    
    
    65,783
    
    
    
    38,490
    
    
    
    56,333Salaries
    
    
    1,961,219
    
    
    
    1,002,763
    
    
    
    999,483
    
    
    
    535,186Other Operating Expenses
    
    
    1,128,228
    
    
    
    1,193,172
    
    
    
    671,178
    
    
    
    613,022Total Operating Expenses
    
    
    3,199,629
    
    
    
    2,261,718
    
    
    
    1,709,151
    
    
    
    1,204,541LOSS FROM CONTINUING OPERATIONS
    
    
    (2,288,265
    )
    
    
    (137,291
    )
    
    
    (1,144,197
    )
    
    
    (105,494
    )OTHER INCOME (EXPENSE)Interest Expense
    
    
    (356,064
    )
    
    
    (2,698,366
    )
    
    
    (193,554
    )
    
    
    (1,809,047
    )Employee Stock Option Expense
    
    
    (138,147
    )
    
    
    (93,461
    )
    
    
    (57,010
    )
    
    
    (57,089
    )Change in Fair Value of Derivatives
    
    
    2,698,894
    
    
    
    4,581,826
    
    
    
    833,522
    
    
    
    2,584,527Loss on Investment in Tuscany Services LLC
    
    
    (45,149
    )
    
    
    
    
    
    
    (45,149
    )
    
    
    Impairment of Assets Held for Sale
    
    
    (42,503
    )
    
    
    
    
    
    
    
    
    
    
    Gain on Debt Restructuring
    
    
    
    
    
    
    1,229,954
    
    
    
    
    
    
    
    1,229,954Gain on Disposition of Assets
    
    
    
    
    
    
    6,955
    
    
    
    
    
    
    
    6,955Total Other Income
    
    
    2,117,031
    
    
    
    3,026,908
    
    
    
    537,809
    
    
    
    1,955,300LOSS FROM DISCONTINUED OPERATIONS
    
    
    
    
    
    
    (1,170,241
    )
    
    
    
    
    
    
    (408,263
    )Net (Loss) Income
    
    $
    (171,234
    )
    
    $
    1,719,376
    
    
    $
    (606,388
    )
    
    $
    1,441,543Basic (Loss) Earnings Per Common Share
    
    $
    
    
    
    $
    0.04
    
    
    $
    (0.02
    )
    
    $
    0.05Diluted Earnings Per Common Share
    
    
    N/A
    
    
    $
    0.04
    
    
    
    N/A
    
    
    $
    0.04Weighted Average Shares Used to Compute:Basic (Loss) Earnings Per Common Share
    
    
    39,942,075
    
    
    
    39,221,488
    
    
    
    40,396,633
    
    
    
    29,243,319Diluted Earnings Per Common Share
    
    
    N/A
    
    
    
    47,610,283
    
    
    
    N/A
    
    
    
    37,517,942
  4




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Six Months EndedJune 30,2007
    
    
    2006 As RestatedCASH USED IN OPERATING ACTIVITIES:Net (loss) income
    
    $
    (171,234
    )
    
    $
    1,719,376Adjustments to reconcile net (loss) income to net cash used in operating activitiesStock issued for services
    
    
    40,000
    
    
    
    Loss on Tuscany Services LLC
    
    
    45,149
    
    
    
    Cost of assets, inventory sold
    
    
    
    
    
    
    140,164Depreciation
    
    
    50,699
    
    
    
    70,311Amortization of debt discount
    
    
    
    
    
    
    746,754Fair value adjustments of derivative liabilities
    
    
    (2,698,894
    )
    
    
    (4,581,826
    )Fair value of derivative liabilities in excess of proceeds
    
    
    
    
    
    
    1,456,777Bad debt expense
    
    
    136,560
    
    
    
    22,691Conversion of debt
    
    
    
    
    
    
    152,955Impairment of assets held for sale
    
    
    42,503
    
    
    
    Employee stock option expense
    
    
    138,147
    
    
    
    93,461Gain on debt restructuring
    
    
    
    
    
    
    (1,229,954
    )Accretion of notes payable balances
    
    
    64,623
    
    
    
    Changes in operating assets and liabilitiesDecrease in accounts receivable
    
    
    232,152
    
    
    
    942,351(Increase) decrease in inventories
    
    
    (108,390
    )
    
    
    1,466,290Decrease (increase) in costs in excess of billings
    
    
    333,049
    
    
    
    (983,910
    )Increase in prepaid expenses and other current assets
    
    
    (5,424
    )
    
    
    (140,084
    )Decrease in other assets
    
    
    
    
    
    
    20,690Increase in litigation settlement obligation
    
    
    45,000
    
    
    
    Decrease in accounts payable
    
    
    (309,474
    )
    
    
    (712,326
    )Decrease (increase) in billings in excess of costs
    
    
    750,493
    
    
    
    (939,177
    )(Decrease) increase in liabilities of discontinued operations, net
    
    
    (126,118
    )
    
    
    125,431NET CASH USED IN OPERATING ACTIVITIES
    
    
    (1,541,159
    )
    
    
    (1,630,026
    )NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (3,028
    )
    
    
    (44,927
    )Proceeds from asset sale
    
    
    375,000
    
    
    
    Cash invested in Tuscany Services LLC
    
    
    (25,000
    )
    
    
    Cash invested in assets held for sale
    
    
    (21,178
    )
    
    
    (323,856
    )NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    325,794
    
    
    
    (368,783
    )CASH PROVIDED BY FINANCING ACTIVITIES:Proceeds from notes payable
    
    
    42,418
    
    
    
    154,195Payments of bank loans
    
    
    (125,232
    )
    
    
    Proceeds from convertible debt financing
    
    
    
    
    
    
    3,210,000Net proceeds from issuance of stock
    
    
    1,132,000
    
    
    
    Payments of notes payable
    
    
    (22,055
    )
    
    
    (701,936
    )Payments of notes payable related party
    
    
    
    
    
    
    (106,282
    )Proceeds from factor
    
    
    1,422,000
    
    
    
    4,560,000Payments to factor
    
    
    (1,056,970
    )
    
    
    (4,560,000
    )Payments of officer note payable
    
    
    (111,191
    )
    
    
    NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    1,280,970
    
    
    
    2,555,977NET INCREASE IN CASH & CASH EQUIVALENTS
    
    
    65,605
    
    
    
    557,168BEGINNING CASH & CASH EQUIVALENTS
    
    
    7,808
    
    
    
    415,937ENDING CASH & CASH EQUIVALENTS
    
    $
    73,413
    
    
    $
    973,105SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid for interest
    
    $
    261,458
    
    
    $
    430,255Cash paid for income taxes
    
    $
    
    
    
    $
    SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONSStock issued for services and debt reduction
    
    $
    40,000
    
    
    $
    253,908Accrued commissions in connection with private placement
    
    $
    10,000
    
    
    $
    Assets contributed to Tuscany Services LLC in exchange for Joint Venture Interest
    
    $
    375,000
    
    
    $
    Issuance of warrants in connection with private placement
    
    $
    1,045,182
    
    
    $
    
  5




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##### Table of Contents



SIENA TECHNOLOGIES, INC.
(Formerly Network Installation Corp.)
 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  OVERVIEW
    ACQUISITION OF KELLEY COMMUNICATION COMPANY, INC. (d/b/a Kelley Technologies)
    Cash
    
    $
    177,495Accounts receivable
    
    
    1,234,668Inventory
    
    
    965,927Costs in excess of billings
    
    
    488,370Other assets
    
    
    5,599Fixed assets
    
    
    713,220Accumulated depreciation
    
    
    (407,534
    )Goodwill
    
    
    11,144,216Accounts payable
    
    
    (879,995
    )Notes payable
    
    
    (2,297,227
    )Billings in excess of earnings
    
    
    (912,638
    )Total
    
    $
    10,232,101
 6




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RESTATEMENT OF INTERIM UNAUDITED FINANCIAL STATEMENTS AT AND FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2006
  EFFECT OF RESTATEMENTS
 Effect on Income Statement
 Six Months Ended
    
    
    Three Months EndedJune 30, 2006
    
    
    June 30, 2006Description
    
    (Unaudited)
    
    
    (Unaudited)Net Loss as Reported
    
    $
    (1,936,341
    )
    
    $
    (607,111
    )Basic and Diluted Net Loss Per Common Share as Reported
    
    $
    (0.05
    )
    
    $
    (0.02
    )Total Other Expense as Reported
    
    $
    (628,809
    )
    
    $
    (93,354
    )RestatementsEmployee Stock Option Expense
    
    $
    (93,461
    )
    
    $
    (57,089
    )Additional Gain on Debt Restructuring
    
    
    326,183
    
    
    
    326,183Reduction of Amortization of Debt Discount Related to Beneficial Conversion
Feature into Interest Expense
    
    
    297,946
    
    
    
    309,950Fair Value of Conversion and Warrant Derivative Liabilities in Excess of Proceeds
    
    
    (1,456,777
    )
    
    
    (1,114,917
    )Change in Fair Value of Derivative Liabilities Related to Beneficial Conversion
Features and Related Warrants
    
    
    3,861,915
    
    
    
    2,181,377Change in Fair Value of Derivative Liability Related to Issuance of Warrant
    
    
    719,911
    
    
    
    403,150Total Restatements
    
    $
    3,655,717
    
    
    $
    2,048,654Net Income as Restated
    
    $
    1,719,376
    
    
    $
    1,441,543Basic Net Income Per Common Share as Restated
    
    $
    0.04
    
    
    $
    0.05Diluted Net Income Per Common Share as Restated
    
    $
    0.04
    
    
    $
    0.04Total Other Income as Restated
    
    $
    3,026,908
    
    
    $
    1,955,300
 PRINCIPLES OF CONSOLIDATION
  CASH & CASH EQUIVALENTS
  PROPERTY & EQUIPMENT
  7




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ACCOUNTS RECEIVABLE
  INVENTORY
  FAIR VALUE OF FINANCIAL INSTRUMENTS
  GOODWILL
  ACCOUNTING FOR IMPAIRMENTS IN LONG-LIVED ASSETS
  USE OF ESTIMATES
   8




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REVENUE RECOGNITION
    STOCK-BASED COMPENSATION
    Stock
    
    
    
    
    
    Stock
    
    Stock
    
    CliffDate(s) of
    
    Options
    
    Exercise
    
    Options
    
    Options
    
    VestingGrant
    
    Granted
    
    Price
    
    Forfeited
    
    Remaining
    
    Period10/20/2005
    
    
    972,500
    
    
    
    0.79
    
    
    
    530,000
    
    
    
    442,500
    
    
    26 months3/30/2006
    
    
    1,347,500
    
    
    
    0.42
    
    
    
    1,142,500
    
    
    
    205,000
    
    
    36 months6/2/2006
    
    
    600,000
    
    
    
    0.41
    
    
    
    0
    
    
    
    600,000
    
    
    36 months8/8/2006
    
    
    192,500
    
    
    
    0.21
    
    
    
    17,500
    
    
    
    175,000
    
    
    36 months9/1/2006
    
    
    350,000
    
    
    
    0.42
    
    
    
    0
    
    
    
    350,000
    
    
    36 months9/21/2006
    
    
    750,000
    
    
    
    0.39
    
    
    
    750,000
    
    
    
    0
    
    
    30 months9/25/06 to 2/1/2007
    
    
    200,000
    
    
    0.27 to 0.42
    
    
    
    50,000
    
    
    
    150,000
    
    
    36 monthsBalance at June 30, 2007
    
    
    4,412,500
    
    
    
    
    
    
    
    2,490,000
    
    
    
    1,922,500
 9




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BASIC AND DILUTED NET (LOSS) INCOME PER SHARE
      401(k) AND PROFIT SHARING PLANS
    DEFINED BENEFIT PLAN
  10




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At December 31,2006Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    400,194Actuarial gain
    
    
    (2,161
    )Interest cost
    
    
    21,892Benefit obligation at end of year
    
    $
    419,925Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    402,659Actual return on plan assets
    
    
    33,516Fair value of plan assets at end of year
    
    $
    436,175
 For the YearEndedDecember 31,2006Funded status
    
    $
    (16,250
    )Unrecognized net actuarial gain
    
    
    12,648Net amount recognized
    
    $
    (3,602
    )Amounts recognized in the statement of financial position consist of:Prepaid benefit cost
    
    $
    (3,602
    )Net amount recognized
    
    $
    (3,602
    )Weighted-average assumptions as of December 31:Discount rate
    
    
    5.50
    %Expected return on plan assets
    
    
    6.00
    %Rate of compensation increase
    
    
    3.00
    %
  2006Service cost
    
    $
    0Interest cost
    
    
    21,892Net asset gain during the period deferred for later recognition
    
    
    9,356Expected return on plan assets
    
    
    (33,516
    )Net periodic benefit cost
    
    $
    (2,268
    )
       11




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Asset Sale
     12




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June 30, 2007
    
    
    December 31, 2006Derivative liability related to the issuance of warrants
in exchange for common stock in March 2006
    
    $
    1,036,673
    
    
    $
    1,497,416Adjustment to record fair market value of derivative liability
    
    
    (921,486
    )
    
    
    (460,743
    )Subtotal
    
    
    115,187
    
    
    
    1,036,673Derivative liability related to the issuance of warrants
related to private placement in November 2006
    
    
    790,435
    
    
    
    729,820Adjustment to record fair market value of derivative liability
    
    
    (770,771
    )
    
    
    60,615Subtotal
    
    
    19,664
    
    
    
    790,435Derivative liability related to the issuance of warrants
related to private placement in January 2007
    
    
    1,045,182
    
    
    
    Adjustment to record fair market value of derivative liability
    
    
    (1,006,637
    )
    
    
    Subtotal
    
    
    38,545
    
    
    
    Balance
    
    $
    173,396
    
    
    $
    1,827,108
  Notes Payable  Related to the Acquisition of Kelley
       13




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
    
    if prior to the Companys full payment and satisfaction of the Amended
and Restated Promissory Notes, the Company borrows monies or raises
capital from the sale of its common stock in excess of $3,500,000
(after the payment of all financing fees and expenses), the Company is
obligated to pay to Mr. Unger 20% and Mr. Kelley 30% of such excess up
to the unpaid balance on the new promissory note within 10 days after
receipt of such funds and if such funds are raised prior to when the
Company is obligated to begin making payments, such obligation will be
accelerated and will begin one month following such financing
(Effective December 31, 2006, the Second Amendment and Restated
Promissory Note with Robert Unger, increased this threshold to
$4,000,000); and
    
    if at any time during which the Amended and Restated Promissory Notes
remain unpaid, the Companys earnings on a consolidated basis during
any calendar year exceed $1,000,000 (before interest, taxes,
depreciation and amortization, but after deducting of all principal
and interest payments on outstanding debts, other than certain
mandatory prepayments as discussed herein), the Company is obligated
to pay Mr. Unger 13% and Mr. Kelley 20% of the excess earnings, up to
the unpaid balance of the new promissory note as a prepayment, within
10 business days of the filing of its Annual Report on Form 10-KSB.
    Other Notes Payable and Convertible Debentures
  14




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RELATED PARTY NOTES PAYABLE and DEBT RESTRUCTURING
    2007
    
    $
    300,0002008
    
    
    600,0002009
    
    
    900,0002010
    
    
    1,200,0002011
    
    
    1,500,000January 1, 2012
    
    
    3,817,859Total
    
    $
    8,317,859
 15




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##### Table of Contents




    
    that the Company must obtain written consent from Dutchess, not to be
unreasonably withheld, in order to grant a lien or security interest
in any of its assets and to borrow money or sell shares of its common
stock, which borrowing or sale either alone or aggregated during any
six month period exceeds $250,000. The Second Loan Restructuring
Agreement modified those terms to allow the Company to borrow money as
it deems reasonable with no necessity for Dutchess consent;
    
    if prior to full payment and satisfaction of the new promissory note,
the Company borrows money or raises capital from the sale of its
common stock in excess of $3,500,000 (after the payment of all
financing fees and expenses), the Company is obligated to pay to
Dutchess 50% of such excess up to the unpaid balance on the new
promissory note within 10 days after receipt of such funds. The Second
Loan Restructure Agreement changed the threshold for this repayment
from $3,500,000 net proceeds to $4,000,000 in gross proceeds;
    
    if at any time during which the new promissory note remains unpaid,
the Companys earnings on a consolidated basis during any calendar
year exceeds $1,000,000 (before interest, taxes, depreciation and
amortization, but after deducting all principal and interest payments
on outstanding debts, other than certain mandatory prepayments as
discussed herein), the Company is obligated to pay Dutchess 33% of the
excess earnings, up to the unpaid balance of the new promissory note
as a prepayment, within 10 business days of the filing of its Annual
Report on Form 10-KSB; and
    
    that the Company must obtain written consent of Dutchess, not to be
unreasonably withheld, to sell any of its assets (other than the sales
of inventory or other assets sold in the normal course of business)
and in the event of an asset sale, the Company shall pay to Dutchess
33% of the proceeds of the asset sale, up to the unpaid principal
balance as a prepayment on the new promissory note, within 10 business
days after the Company receives the funds. The Second Loan Restructure
Agreement excluded the sale of the Companys broadband services system
at Tuscany from the definition of an Asset Sale.
     16




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##### Table of Contents



June 30,
    
    
    December 31,2007
    
    
    2006Assets of discontinued operationsCash
    
    $
    
    
    
    $
    Accounts receivable, net
    
    
    
    
    
    
    41,981Inventory
    
    
    
    
    
    
    Fixed assets, net
    
    
    
    
    
    
    Security deposit
    
    
    
    
    
    
    Total assets
    
    $
    
    
    
    $
    41,981Liabilities of discontinued operationsAccounts payable and accrued expenses
    
    $
    89,595
    
    
    $
    152,694Payroll taxes payable
    
    
    134,142
    
    
    
    239,142Total liabilities
    
    
    223,737
    
    
    
    391,836Net liabilities of discontinued operations
    
    $
    223,737
    
    
    $
    349,855
 17




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##### Table of Contents



Six Months ended
    
    
    Three Months endedJune 30
    
    
    June 302007
    
    
    2006
    
    
    2007
    
    
    2006Sales
    
    $
    
    
    
    $
    101,913
    
    
    $
    
    
    
    $
    Cost of Goods sold
    
    
    
    
    
    
    175,626
    
    
    
    
    
    
    
    55,177Gross Profit
    
    
    
    
    
    
    (73,713
    )
    
    
    
    
    
    
    (55,177
    )Salaries
    
    
    
    
    
    
    97,413
    
    
    
    
    
    
    
    14,939Insurance
    
    
    
    
    
    
    24,931
    
    
    
    
    
    
    
    18,000Travel
    
    
    
    
    
    
    22,206
    
    
    
    
    
    
    
    8,413Contingency accrual
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    150,000Interest expense
    
    
    
    
    
    
    39,009
    
    
    
    
    
    
    
    16,678Other
    
    
    
    
    
    
    762,969
    
    
    
    
    
    
    
    145,056Loss from Discontinued Operations
    
    $
    
    
    
    $
    (1,170,241
    )
    
    $
    
    
    
    $
    (408,263
    )
   December 31,June 30, 2007
    
    
    2006Tax benefit of net operating loss carry-forward
    
    $
    8,935,000
    
    
    $
    8,887,000Valuation allowance
    
    
    (8,935,000
    )
    
    
    (8,887,000
    )$
    
    
    
    $
    
  June 30, 2007 andDecember 31, 2006Tax expense (credit) at statutory rate-federal
    
    
    (34
    )%State tax expense net of federal tax
    
    
    (6
    )%Changes in valuation allowance
    
    
    (40
    )%Tax expense at actual rate
    
    
    
   LITIGATION
  18




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##### Table of Contents



OTHER COMMITMENTS
   2008
    
    $
    160,0002009
    
    $
    30,000
    19




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##### Table of Contents



EQUITY
   Common Stock Exchanged for a Warrant
   Q1 2006
    
    $
    316,761Q2 2006
    
    
    403,150Q3 2006
    
    
    (259,168
    )Q4 2006
    
    
    0Total 2006
    
    $
    460,743Q1 2007
    
    $
    575,929Q2 2007
    
    $
    345,557
 Private Placements
  Warrant Valuation Information for the Value on:
 June 30,
    
    March 31,
    
    January 23,2007
    
    2007
    
    2007Valuation AssumptionsStock price on grant date
    
    $0.32
    
    $0.32
    
    $0.32Number of warrants
    
    7,231,250
    
    7,231,250
    
    7,231,250Expected option term (in years)
    
    4.5
    
    4.75
    
    5Expected duration from grant to expiration date (in years)
    
    10
    
    10
    
    10Option vesting term (in years)
    
    1.88
    
    1.94
    
    2.00Expected volatility
    
    66.97%
    
    61.07%
    
    60.75%Risk-free interest rate
    
    4.92%
    
    4.56%
    
    4.60%Expected forfeiture rate
    
    5%
    
    5%
    
    5%Estimated corporate tax rate
    
    40%
    
    40%
    
    40%Expected dividend yield
    
    0%
    
    0%
    
    0%
  20




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##### Table of Contents



Warrant Valuation Information for the Value on:
 June 30,
    
    March 31,
    
    December 31,
    
    November 13,2007
    
    2007
    
    2006
    
    2006Valuation AssumptionsStock price on grant date
    
    $
    0.37
    
    
    $
    0.37
    
    
    $
    0.37
    
    
    $
    0.37Number of warrants
    
    
    5,000,000
    
    
    
    5,000,000
    
    
    
    5,000,000
    
    
    
    5,000,000Expected option term (in years)
    
    
    4.25
    
    
    
    4.58
    
    
    
    5
    
    
    
    5Expected duration from grant to expiration date (in years)
    
    
    9
    
    
    
    9
    
    
    
    10
    
    
    
    10Option vesting term (in years)
    
    
    2.25
    
    
    
    2.9
    
    
    
    3
    
    
    
    3Expected volatility
    
    
    66.97
    %
    
    
    61.07
    %
    
    
    55.12
    %
    
    
    55.12
    %Risk-free interest rate
    
    
    4.92
    %
    
    
    4.58
    %
    
    
    4.60
    %
    
    
    4.60
    %Expected forfeiture rate
    
    
    5
    %
    
    
    5
    %
    
    
    5
    %
    
    
    5
    %Estimated corporate tax rate
    
    
    40
    %
    
    
    40
    %
    
    
    40
    %
    
    
    40
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
   
    
    Issued 294,871 shares of common stock, valued at $110,000 for financial advisory services rendered on behalf of the
Company, such shares were issued in November 2006;
    
    Wrote off $48,991 related to the fair market value of derivative liabilities for beneficial conversion features that were
converted into common stock;
    
    Issued 300,000 shares of common stock related to the DMSI settlement;
    
    Issued 265,152 shares of common stock valued at $105,125 for services rendered on behalf of the Company;
    
    Retired approximately 5,954,000 million warrants to purchase common stock of the Company related to the aforementioned debt
restructurings. As a result, the Company wrote off $1,149,412 in unamortized discounts against Additional Paid in Capital;
    
    Issued 434,484 shares of common stock to Dutchess upon Dutchess conversion of a convertible debenture, valued at $153,783.
  21




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
  CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
  22




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES
    Revenue Recognition
    Accounts Receivable and Allowance for Doubtful Accounts
  Goodwill
  23




---



##### Table of Contents



Stock-Based Compensation
   Going Concern
  Cash and Cash Equivalents
  Property and Equipment
  Inventory
  Fair Value of Financial Instruments
  Accounting for Impairments in Long-Lived Assets
  24




---



##### Table of Contents



Use of Estimates
   Basic and Diluted Net Income (Loss) Per Share
      25




---



##### Table of Contents



SIX MONTH PERIOD ENDED JUNE 30, 2007 AS COMPARED TO THE SIX MONTH PERIOD ENDED JUNE 30, 2006, AS
RESTATED
 RESULTS OF OPERATIONS
 SALES
  COST OF GOODS SOLD
  GROSS PROFITS
  OPERATING EXPENSES
  OTHER INCOME (EXPENSE)
  NET (LOSS) INCOME
  26




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##### Table of Contents



BASIC AND DILUTED NET (LOSS) INCOME PER SHARE
  THREE MONTH PERIOD ENDED JUNE 30, 2007 AS COMPARED TO THE THREE MONTH PERIOD ENDED JUNE 30, 2006,
AS RESTATED
 RESULTS OF OPERATIONS
 SALES
   COST OF GOODS SOLD
  GROSS PROFITS
  OPERATING EXPENSES
  OTHER INCOME (EXPENSE)
  NET (LOSS) INCOME
  27




---



##### Table of Contents



BASIC AND DILUTED (LOSS) INCOME PER SHARE
  LIQUIDITY AND CAPITAL RESOURCES
   FINANCING ACTIVITIES
  28




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##### Table of Contents



COMMITMENTS
       
    
    if prior to our full payment and satisfaction of the Amended and
Restated Promissory Notes, we borrow monies or raise capital from the
sale of our common stock in excess of $3,500,000 (after the payment of
all financing fees and expenses), we are obligated to pay to Mr. Unger
20% and Mr. Kelley 30% of such excess up to the unpaid balance on the
new promissory note within 10 days after receipt of such funds and if
such funds are raised prior to when we are obligated to begin making
payments, such obligation will be accelerated and will begin one month
following such financing (Effective December 31, 2006, the Second
Amendment and Restated Promissory Note with Robert Unger, increased
this threshold to $4,000,000); and
    
    if at any time during which the Amended and Restated Promissory Notes
remain unpaid, our earnings on a consolidated basis during any
calendar year exceed $1,000,000 (before interest, taxes, depreciation
and amortization, but after deducting of all principal and interest
payments on outstanding debts, other than certain mandatory
prepayments as discussed herein), we are obligated to pay to Mr. Unger
13% and Mr. Kelley 20% of the excess earnings, up to the unpaid
balance of the new promissory note as a prepayment, within 10 business
days of the filing of our Annual Report on Form 10-KSB.
 29




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##### Table of Contents



2007
    
    $
    300,0002008
    
    
    600,0002009
    
    
    900,0002010
    
    
    1,200,0002011
    
    
    1,500,000January 1, 2012
    
    
    3,817,859Total
    
    $
    8,317,859
  
    
    that we must obtain written consent from Dutchess, not to be
unreasonably withheld, in order to grant a lien or security interest
in any of our assets and to borrow money or sell our common stock,
which borrowing or sale either alone or aggregated during any six
month period exceeds $250,000. The Second Loan Restructuring Agreement
modified those terms to allow us to borrow money as we deems
reasonable with no necessity for Dutchess consent;
    
    if prior to our full payment and satisfaction of the new promissory
note, we borrow money or raise capital from the sale of our common
stock in excess of $3,500,000 (after the payment of all financing fees
and expenses), we are obligated to pay to Dutchess 50% of such excess
up to the unpaid balance on the new promissory note within 10 days
after receipt of such funds. The Second Loan Restructure Agreement
changed the threshold for this repayment from $3,500,000 net proceeds
to $4,000,000 in gross proceeds;
    
    if at any time during which the new promissory note remains unpaid,
our earnings on a consolidated basis during any calendar year exceeds
$1,000,000 (before interest, taxes, depreciation and amortization, but
after deducting all principal and interest payments on outstanding
debts, other than certain mandatory prepayments as discussed herein),
we are obligated to pay Dutchess 33% of the excess earnings, up to the
unpaid balance of the new promissory note as a prepayment, within 10
business days of the filing of our Annual Report on Form 10-KSB; and
    
    that we must obtain written consent of Dutchess, not to be
unreasonably withheld, to sell any of our assets (other than the sales
of inventory or other assets sold in the normal course of business)
and in the event of an asset sale, we shall pay to Dutchess 33% of the
proceeds of the asset sale, up to the unpaid principal balance as a
prepayment on the new promissory note, within 10 business days after
we receive the funds. The Second Loan Restructure Agreement excluded
the sale of our broadband services system at Tuscany from the
definition of an Asset Sale.
 30




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##### Table of Contents



OTHER COMMITMENTS
  For the twelve months ended June 30,:2008
    
    $
    160,0002009
    
    $
    30,000
      31




---



##### Table of Contents



MATERIAL TRENDS AND UNCERTAINTIES
    32




---



##### Table of Contents



SUBSIDIARIES
  
 ITEM 3. CONTROLS AND PROCEDURES.
   
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  33




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##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
   
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 ITEM 5. OTHER INFORMATION.
  34




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##### Table of Contents



ITEM 6. EXHIBITS.
 Exhibits.No
    
    Description31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed herewith.31.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed herewith.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, filed herewith.
 35




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##### Table of Contents



SIGNATURE
  SIENA TECHNOLOGIES, INC.(Registrant)Date: July 11, 2007
    
    By:
    
    /s/ Anthony DeliseAnthony DeliseInterim Chief Executive OfficerBy:
    
    /s/ Christopher G. PizzoChristopher G. PizzoChief Financial Officer, (Principal Accounting Officer)
 36