##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 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
 NETWORK INSTALLATION CORP.
  Nevada
    
    88-0390360State or other jurisdiction of
Incorporation or organization
    
    (IRS Employer
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
    
    
    2Item 1 - Financial Statements.
    
    
    2Consolidated Balance Sheets as of June 30, 2006 (Unaudited)
and December 31, 2005
    
    
    2Unaudited Consolidated Statements of Operations for
the Three and Six Months Ended June 30, 2006 and June 30, 2005
    
    
    3Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and June 30, 2005
    
    
    4Unaudited Consolidated Stockholders Equity (Deficit)
as of June 30, 2006
    
    
    5Report of Independent Registered Public Accounting Firm
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2 - Managements Discussion and Analysis or Plan of Operation.
    
    
    20Item 3 - Controls and Procedures.
    
    
    30Part II  Other Information
    
    
    31Item 1 - Legal Proceedings.
    
    
    31Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    31Item 3 - Defaults Upon Senior Securities.
    
    
    31Item 4 - Submission of Matters to a Vote of Security Holders.
    
    
    31Item 5 - Other Information.
    
    
    31Item 6  Exhibits
    
    
    32Promissory NotePromissory NoteAmended and Restated Promissory NoteAmended and Restated Promissory NoteEmployment AgreementLoan Restructure AgreementLoan Restructure AgreementLetter Re: Unaudited Interim Financial InformationCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certifications of CEO and CFO Pursuant to Section 906




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS.
  
  June 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)ASSETS:CURRENT ASSETS:Cash
    
    $
    973,105
    
    
    $
    415,937Accounts Receivable, net of allowance
for doubtful accounts of $86,581 ($62,631 at 2005)
    
    
    534,512
    
    
    
    911,137Inventories
    
    
    1,553,823
    
    
    
    2,928,366Costs in Excess of Billings
    
    
    1,216,688
    
    
    
    232,778Prepaid Expenses and other current assets
    
    
    273,894
    
    
    
    133,810Total Current Assets
    
    
    4,552,022
    
    
    
    4,622,028Fixed assets, net of accumulated depreciation
of $507,209 ($446,661 at 2005)
    
    
    291,284
    
    
    
    328,599OTHER ASSETS:Goodwill
    
    
    7,344,216
    
    
    
    7,344,216Patents
    
    
    2,500
    
    
    
    2,500Assets held for sale
    
    
    519,249
    
    
    
    195,393Total Other Assets
    
    
    7,865,965
    
    
    
    7,542,109TOTAL ASSETS
    
    $
    12,709,271
    
    
    $
    12,492,736LIABILITIES & STOCKHOLDERS EQUITY (DEFICIT):CURRENT LIABILITIESBank Line of Credit
    
    $
    593,084
    
    
    $
    432,562Accounts Payable
    
    
    2,377,066
    
    
    
    2,232,295Billings in Excess of Costs
    
    
    504,411
    
    
    
    1,443,588Current Portion of Notes Payable
    
    
    73,652
    
    
    
    27,444Current Portion of Related Party Notes Payable
    
    
    273,210
    
    
    
    261,802Current Portion of Convertible Debenture
    
    
    
    
    
    
    316,333Current Portion of Related Party Convertible Debentures
    
    
    
    
    
    
    474,500Total current liabilities
    
    
    3,821,423
    
    
    
    5,188,524LONG-TERM DEBTNotes Payable
    
    
    7,515,190
    
    
    
    1,262,979Related Party Notes Payable
    
    
    454,057
    
    
    
    95,497Related Party Convertible Debentures, net of Debt Discount
    
    
    
    
    
    
    3,291,265Total long-term debt
    
    
    7,969,247
    
    
    
    4,649,741NET LIABILITIES OF DISCONTINUED OPERATIONS
    
    
    966,440
    
    
    
    1,089,848STOCKHOLDERS EQUITY (DEFICIT):Common Stock, $.001 par value; 100,000,000 shares authorized
29,180,914 and 49,534,721 shares issued and outstanding
in 2006 and 2005, respectively
    
    
    29,181
    
    
    
    49,535Additional paid-in Capital
    
    
    26,883,244
    
    
    
    26,586,266Shares to be Returned
    
    
    
    
    
    
    (18,568
    )Shares to be Issued
    
    
    116,249
    
    
    
    116,358Warrants
    
    
    28,796
    
    
    
    Accumulated Deficit
    
    
    (27,105,309
    )
    
    
    (25,168,968
    )Total stockholders equity (deficit)
    
    
    (47,839
    )
    
    
    1,564,623TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
    
    $
    12,709,271
    
    
    $
    12,492,736
 2




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##### Table of Contents



Six Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005REVENUESales
    
    $
    11,643,300
    
    
    $
    
    
    
    $
    4,939,067
    
    
    $
    Cost of Goods Sold
    
    
    9,518,873
    
    
    
    
    
    
    
    3,840,020
    
    
    
    GROSS PROFIT
    
    
    2,124,427
    
    
    
    
    
    
    
    1,099,047
    
    
    
    OPERATING EXPENSESInvestor Relations
    
    
    65,783
    
    
    
    241,685
    
    
    
    56,333
    
    
    
    104,025Non Cash Officer Compensation
    
    
    
    
    
    
    6,575,426
    
    
    
    
    
    
    
    Salaries
    
    
    1,002,763
    
    
    
    
    
    
    
    535,186
    
    
    
    Other Operating Expenses
    
    
    1,193,172
    
    
    
    136,178
    
    
    
    613,022
    
    
    
    118,989Total Operating Expenses
    
    
    2,261,718
    
    
    
    6,953,289
    
    
    
    1,204,541
    
    
    
    223,014LOSS FROM CONTINUING OPERATIONS
    
    
    (137,291
    )
    
    
    (6,953,289
    )
    
    
    (105,494
    )
    
    
    (223,014
    )OTHER INCOME (EXPENSE)Interest expense
    
    
    (1,539,535
    )
    
    
    (499,451
    )
    
    
    (1,004,080
    )
    
    
    (327,879
    )Gain on Debt Restructuring
    
    
    903,771
    
    
    
    
    
    
    
    903,771
    
    
    
    Gain on Disposition of Assets
    
    
    6,955
    
    
    
    
    
    
    
    6,955
    
    
    
    Total Other (Expense)
    
    
    (628,809
    )
    
    
    (499,451
    )
    
    
    (93,354
    )
    
    
    (327,879
    )LOSS FROM DISCONTINUED OPERATIONS
    
    
    (1,170,241
    )
    
    
    (750,462
    )
    
    
    (408,263
    )
    
    
    (424,566
    )Net Loss
    
    $
    (1,936,341
    )
    
    $
    (8,203,202
    )
    
    $
    (607,111
    )
    
    $
    (975,459
    )Basic and Diluted Loss Per Common
Share
    
    $
    (0.05
    )
    
    $
    (0.38
    )
    
    $
    (0.02
    )
    
    $
    (0.05
    )Weighted Average Shares Outstanding
    
    
    39,221,488
    
    
    
    21,586,663
    
    
    
    29,243,319
    
    
    
    19,509,180
  3




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##### Table of Contents



Six-Months EndedJune 30,2006
    
    
    2005CASH FLOWS USED IN OPERATING ACTIVITIES:Net Loss
    
    $
    (1,936,341
    )
    
    $
    (8,203,202
    )Stock issued for services and debt reduction
    
    
    
    
    
    
    6,476,085Beneficial conversion feature expense
    
    
    777,090
    
    
    
    377,803Stock rescinded
    
    
    
    
    
    
    (530,590
    )Stock warrants issued for debt inducement
    
    
    
    
    
    
    109,342Bad debt expense
    
    
    22,691
    
    
    
    Amortization of debt discount
    
    
    267,610
    
    
    
    Conversion of debt
    
    
    152,955
    
    
    
    Depreciation
    
    
    70,311
    
    
    
    Cost of assets, inventory sold
    
    
    140,164
    
    
    
    Gain on Debt Restructuring
    
    
    (903,771
    )
    
    
    Adjustments to reconcile net loss to net cash used
in operating activities (net of effects of discontinued operations)Changes in operating assets and liabilitiesDecrease in accounts receivable
    
    
    942,351
    
    
    
    Decrease in inventories
    
    
    1,466,290
    
    
    
    Increase in costs in excess of billings
    
    
    (983,910
    )
    
    
    Increase in other current assets
    
    
    (140,084
    )
    
    
    Decrease in other assets
    
    
    20,690
    
    
    
    Decrease in accounts payable
    
    
    (712,326
    )
    
    
    Decrease in billings in excess of costs
    
    
    (939,177
    )
    
    
    Increase in net liabilities of discontinued
Operations
    
    
    125,431
    
    
    
    1,022,015NET CASH USED IN OPERATING ACTIVITIES
    
    
    (1,630,026
    )
    
    
    (748,547
    )CASH FLOWS USED IN INVESTING ACTIVITIESInvestments in Assets Held for Sale
    
    
    (323,856
    )
    
    
    Purchase of property and equipment
    
    
    (44,927
    )
    
    
    NET CASH FLOWS USED IN INVESTING ACTIVITIES
    
    
    (368,783
    )
    
    
    (
    )CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:Payments made on notes payable  related party
    
    
    (106,282
    )
    
    
    (67,790
    )Proceeds from notes payable
    
    
    154,195
    
    
    
    Proceeds from long-term borrowing
    
    
    
    
    
    
    200,029Proceeds from convertible debt financing
    
    
    3,210,000
    
    
    
    Proceeds from factor
    
    
    4,560,000
    
    
    
    Payments to factor
    
    
    (4,560,000
    )
    
    
    Payments on notes payable
    
    
    (701,936
    )
    
    
    Issuances of stock for cash
    
    
    
    
    
    
    1,023,476NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    2,555,977
    
    
    
    1,155,715NET INCREASE IN CASH & CASH EQUIVALENTS
    
    
    557,168
    
    
    
    407,168BEGINNING CASH & CASH EQUIVALENTS
    
    
    415,937
    
    
    
    1,732ENDING CASH & CASH EQUIVALENTS
    
    $
    973,105
    
    
    $
    408,900SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid for interest
    
    $
    430,255
    
    
    $
    452,157Cash paid for Income Taxes
    
    $
    
    
    
    $
    NON-CASH TRANSACTIONSStocks issued for Services & Debt reduction
    
    $
    253,908
    
    
    $
    6,476,085Stock rescinded
    
    $
    
    
    
    $
    (530,590
    )Stock issued for acquisition
    
    $
    
    
    
    $
    200,000Stocks issued for Debt Inducement
    
    $
    302,493
    
    
    $
    109,342Beneficial conversion feature expense
    
    $
    777,090
    
    
    $
    377,803
  4




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Additional
    
    
    Shares
    
    
    
    
    
    
    SharesPaid-In
    
    
    To Be
    
    
    
    
    
    
    To Be
    
    
    AccumulatedCommon Stock
    
    
    Capital
    
    
    Issued
    
    
    Warrants
    
    
    Returned
    
    
    Deficit
    
    
    Total# of Shares
    
    
    AmountBalance  December 31, 2004
    
    
    23,483,873
    
    
    $
    23,484
    
    
    $
    7,617,181
    
    
    $
    116,249
    
    
    
    
    
    
    
    
    
    
    $
    (9,634,545
    )
    
    $
    (1,877,631
    )Warrant Issuance, Finance Inducement
    
    
    
    
    
    
    
    
    
    
    387,184
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    387,184Warrant Issuance, Executive Compensation
    
    
    
    
    
    
    
    
    
    
    6,476,085
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,476,085Issuance of Stock for Services
    
    
    560,000
    
    
    
    560
    
    
    
    372,528
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    373,088Issuance of Stock for Cash
    
    
    1,460,692
    
    
    
    1,461
    
    
    
    941,990
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    943,451Issuance of Stock, COM Acquisition
    
    
    
    
    
    
    
    
    
    
    199,891
    
    
    
    109
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000Issuance of Stock, Kelley Acquisition
    
    
    14,016,577
    
    
    
    14,016
    
    
    
    10,218,085
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,232,101Issuance of Stock, Spectrum Acquisition
    
    
    18,567,639
    
    
    
    18,568
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,568
    )
    
    
    
    
    
    
    Debt Discount, Convertible Debt Issuances
    
    
    
    
    
    
    
    
    
    
    213,358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    213,358Conversion of Debenture
    
    
    18,939
    
    
    
    19
    
    
    
    64,981
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,000Beneficial conversion feature expense
    
    
    
    
    
    
    
    
    
    
    617,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    617,000Rescinding of Stock, CEO
    
    
    (7,887,482
    )
    
    
    (7,887
    )
    
    
    7,887
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rescinding of Stock, Majority Investor
    
    
    (685,517
    )
    
    
    (686
    )
    
    
    (529,904
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (530,590
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,534,423
    )
    
    
    (15,534,423
    )Balance  December 31, 2005
    
    
    49,534,721
    
    
    
    49,535
    
    
    
    26,586,266
    
    
    
    116,358
    
    
    
    
    
    
    
    (18,568
    )
    
    
    (25,168,968
    )
    
    
    1,564,623Warrant Issuance, Finance Inducement
    
    
    
    
    
    
    
    
    
    
    302,493
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302,493Issuance of Stock, Del Mar Acquisition
    
    
    300,000
    
    
    
    300
    
    
    
    139,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139,800Issuance of Stock, COM Acquisition
    
    
    108,993
    
    
    
    109
    
    
    
    
    
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock exchanged for warrants
    
    
    (2,879,645
    )
    
    
    (2,880
    )
    
    
    (25,916
    )
    
    
    
    
    
    
    28,796
    
    
    
    
    
    
    
    
    
    
    
    Stock issued for services
    
    
    250,000
    
    
    
    250
    
    
    
    99,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,125Conversion of debentures
    
    
    434,484
    
    
    
    435
    
    
    
    153,348
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153,783Beneficial conversion feature expense
    
    
    
    
    
    
    
    
    
    
    777,090
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    777,090Rescinding of Stock, Spectrum Acquisition
    
    
    (18,567,639
    )
    
    
    (18,568
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,568
    
    
    
    
    
    
    
    Debt restructuring
    
    
    
    
    
    
    
    
    
    
    (1,149,412
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,149,412
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,936,341
    )
    
    
    (1,936,341
    )Balance  June 30, 2006
    
    
    29,180,914
    
    
    $
    29,181
    
    
    $
    26,883,244
    
    
    $
    116,249
    
    
    $
    28,796
    
    
    $
    
    
    
    $
    (27,105,309
    )
    
    $
    (47,839
    )
  5




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##### Table of Contents



NETWORK INSTALLATION CORP.
   
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  OVERVIEW
      ACQUISITION OF KELLEY COMMUNICATION COMPANY, INC. (d/b/a Kelley Technologies)
  7




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##### Table of Contents



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
  Six Months Ended
    
    Three Months EndedJune 30, 2005
    
    June 30, 2005Net Revenues
    
    $
    3,035,615
    
    
    $
    1,223,930Net loss
    
    $
    (7,806,671
    )
    
    $
    (881,397
    )
 ACQUISITION OF COM SERVICES, INC. (COM)
  Accounts receivable
    
    $
    142,073Fixed Assets
    
    
    56,032Goodwill
    
    
    331,895Bank Line of Credit
    
    
    (100,000
    )Total assets and liabilities
    
    $
    430,000
  ACQUISITION OF DEL MAR SYSTEMS INTERNATIONAL, INC. (DMSI)
   PRINCIPLES OF CONSOLIDATION
  8




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##### Table of Contents



CASH & CASH EQUIVALENTS
  PROPERTY & EQUIPMENT
  ACCOUNTS RECEIVABLE
  INVENTORY
  FAIR VALUE OF FINANCIAL INSTRUMENTS
  GOODWILL
  ACCOUNTING FOR IMPAIRMENTS IN LONG-LIVED ASSETS
  USE OF ESTIMATES
  9




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REVENUE RECOGNITION
   STOCK-BASED COMPENSATION
      BASIC AND DILUTED NET LOSS PER SHARE
   10




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##### Table of Contents



June 30, 2006
    
    
    December 31, 2005Consulting services
    
    $
    47,250
    
    
    $
    124,360Investor relations services
    
    
    84,556
    
    
    
    9,450Deferred financing fees
    
    
    142,088
    
    
    
    $
    273,894
    
    
    $
    133,810
  11




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##### Table of Contents



June 30, 2006
    
    
    December 31, 2005Accounts payable
    
    $
    2,346,866
    
    
    $
    2,062,295Litigation accrual
    
    
    30,200
    
    
    
    170,000$
    2,377,066
    
    
    $
    2,232,295
       Notes Payable  Related to the Acquisition of Kelley
    12




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##### Table of Contents




    
    if prior to the Companys full payment and satisfaction of the Amended and Restated
Promissory Notes, the Company borrows money or raises capital from the sale of the
Companys common stock in excess of $3,500,000 (after the payment of all financing fees and
expenses), the Company is obligated to pay to both holders 20% 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; 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 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 to both holders 13% 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 the Companys Annual Report on Form 10-KSB.
   Notes Payable Related to the Acquisition of COM
    13




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##### Table of Contents



Notes Payable Related to the Acquisition of DMSI
  Other Notes Payable and Convertible Debentures
     RELATED PARTY NOTES PAYABLE and DEBT RESTRUCTURING
   14




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##### Table of Contents



2007
    
    $
    375,0002008
    
    
    825,0002009
    
    
    1,275,0002010
    
    
    1,650,0002011
    
    
    2,025,0002012 (due July 1, 2011)
    
    
    1,460,642Total
    
    $
    7,610,642
  
    
    the Company to obtain written consent from Dutchess, not to be unreasonably withheld,
in order to grant a lien or security interest in any of the assets of the Company and to
borrow money or sell common stock of the Company, which borrowing or sale either alone
or aggregated during any six month period exceeds $250,000;
    
    if prior to the Companys full payment and satisfaction of the new promissory note,
the Company borrows money or raises capital from the sale of the Companys 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;
    
    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 the Companys Annual Report on Form
10-KSB; and
    
    the Company to obtain written consent of Dutchess, not to be unreasonably withheld,
to sell any assets of the Company (other than 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
receipt of funds by the Company.
   15




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##### Table of Contents



Date
    
    Amount
    
    
    Financing Fees5/15/2006
    
    $
    650,000
    
    
    $
    5,0004/13/2006
    
    $
    500,000
    
    
    $
    5,0004/12/2006
    
    $
    200,000
    
    
    $
    5,0003/27/2006
    
    $
    450,000
    
    
    $
    5,0003/20/2006
    
    $
    650,000
    
    
    $
    5,0003/9/2006
    
    $
    360,000
    
    
    $
    5,0002/21/2006
    
    $
    100,000
    
    
    $
    5,0002/16/2006
    
    $
    850,000
    
    
    $
    5,0001/30/2006
    
    $
    150,000
    
    
    $
    5,0001/27/2006
    
    $
    650,000
    
    
    $
    5,000Totals
    
    $
    4,560,000
    
    
    $
    50,000Repayments
    
    $
    4,560,000Balance at
June 30, 2006
    
    $
    0
   June 30,
    
    
    December 31,2006
    
    
    2005Assets of discontinued operationsCash
    
    $
    23,420
    
    
    $
    22,530Accounts receivable, net
    
    
    64,316
    
    
    
    588,567Inventory
    
    
    6,500
    
    
    
    91,747Fixed
assets, net
    
    
    
    
    
    
    55,129Security
deposit
    
    
    
    
    
    
    20,690Total assets
    
    $
    94,236
    
    
    $
    778,663Liabilities of discontinued operationsAccounts payable and accrued expenses
    
    $
    666,623
    
    
    $
    1,188,628Payroll taxes payable
    
    
    318,281
    
    
    
    371,213Loans payable
    
    
    75,772
    
    
    
    308,671Total liabilities
    
    $
    1,060,676
    
    
    $
    1,868,512Net
liabilities of discontinued operations
    
    $
    966,440
    
    
    $
    1,089,848
 16




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##### Table of Contents



Six Months ended

    Three Months endedJune 30

June 302006

    2006

    2005

    2005Sales

$
101,913


$
1,889,099


$


    
$
1,138,383Cost of Goods sold
    
    
    175,626
    
    
    
    1,326,698
    
    
    
    55,177
    
    
    
    902,620Gross Profit
    
    
    (73,713
    )
    
    
    562,401
    
    
    
    (55,177
    )
    
    
    235,763Salaries
    
    
    97,413
    
    
    
    475,259
    
    
    
    14,939
    
    
    
    265,004Insurance
    
    
    24,931
    
    
    
    71,244
    
    
    
    18,000
    
    
    
    58,266Travel
    
    
    22,206
    
    
    
    14,418
    
    
    
    8,413
    
    
    
    Contingency accrual
    
    
    150,000
    
    
    
    
    
    
    
    150,000
    
    
    
    Interest expense
    
    
    39,009
    
    
    
    3,073
    
    
    
    16,678
    
    
    
    2,468Other
    
    
    
    
    
    
    748,869
    
    
    
    145,056
    
    
    
    334,591Loss from Discontinued Operations
    
    $
    (1,170,241
    )
    
    $
    (750,462
    )
    
    $
    (408,263
    )
    
    $
    (424,566
    )
     June 30, 2006
    
    
    December 31, 2005Tax benefit of net operating
loss carry-forward
    
    $
    8,400,000
    
    
    $
    7,800,000Valuation allowance
    
    
    (8,400,000
    )
    
    
    (7,800,000
    )$
    
    
    
    $
    
  June 30, 2006 and December 31, 2005Tax expense (credit) at
statutory rate-federal
    
    
    (34
    )%
    
    
    (34
    )%State tax expense net of
federal tax
    
    
    (6
    )
    
    
    (6
    )Changes in valuation allowance
    
    
    40
    
    
    
    40Tax expense at actual rate
    
    
    
    
    
    
    
  17




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##### Table of Contents



LITIGATION
     OTHER COMMITMENTS
   June 30, 2007
    
    $
    157,000June 30, 2008
    
    $
    70,000
    18




---



##### Table of Contents



EQUITY
  
    
    Issued 2,349,000 warrants to purchase common stock, valued at $302,493 as an
inducement to certain shareholders to invest in the Company;
    
    Issued 300,000 shares of Common Stock related to the acquisition of DMSI;
    
    Recorded beneficial conversion feature expense of $777,090 in conjunction with the
debt financing consummated during this period;
    
    Issued warrants to purchase approximately 2,887,600 shares of common stock in
exchange for 2,880,000 shares of common stock to be returned to the Company;
    
    Issued 250,000 shares of common stock valued at $100,125 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 upon notification of an investors intent to
exchange a convertible debenture for common stock, valued at $153,783.
  
    
    Acquired 100% of the outstanding shares of common stock of Spectrum Cabling Company,
Inc., a California corporation for $14,000,000 in common stock, pursuant to an
acquisition agreement dated November 1, 2005. Robert Rivera, the 100% owner of Spectrum
prior to the acquisition, received 18,567,639 shares of the Companys common stock. On
January 6, 2006, the Company rescinded the purchase. Pursuant to the Rescission
Agreement, Spectrum returned 18,567,639 shares of the Companys common stock and a
promissory note for $1.5 million in exchange for 100% of the outstanding shares of
Spectrum. Additionally, Spectrums two appointed directors to the Companys board
resigned. The purchase and subsequent rescission of Spectrum had no financial impact on
the Companys operations or financial statements;
    
    Acquired 100% of the outstanding shares of common stock of Kelley Communication
Company, Inc., a Nevada corporation for $10,232,101 in common stock, pursuant to an
acquisition agreement dated September 22, 2005. Mike Kelley, the 100% owner of Kelley
prior to the acquisition, received 14,061,577 shares of the Companys common stock;
    
    Issued 1,460,692 shares of common stock to accredited investors for a total of
$943,451;
    
    Issued 18,939 shares of common stock upon notification of an investors intent to
exchange a convertible debenture for common stock, valued at $65,000;
    
    Issued 560,000 shares of common stock valued at $373,088 for services rendered on
behalf of the Company;
    
    Issued 2,094,000 warrants to purchase common stock, valued at $387,184 as an
inducement to certain shareholders to invest in the Company;
    
    Issued 3,000,000 warrants to Officers of the Company valued at 6,476,085;
    
    Recorded beneficial conversion feature of $617,000 in conjunction with the debt
financing consummated during this time period; and
    
    Agreed to issue 108,696 shares of common stock in connection with the acquisition of
COM. These shares were valued at $200,000 on the date of the acquisition. These shares
were issued during the six months ended June 30, 2006.
 19




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
  CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
  CRITICAL ACCOUNTING POLICIES
  20




---



##### Table of Contents



Revenue Recognition
    Accounts Receivable and Allowance for Doubtful Accounts
  Goodwill
  Stock-Based Compensation
   21




---



##### Table of Contents



Going Concern
  Cash and Cash Equivalents
  Property and Equipment
  Inventory
  Fair Value of Financial Instruments
  Accounting for Impairments in Long-Lived Assets
  Use of Estimates
  Basic and Diluted Net Loss Per Share
  22




---



##### Table of Contents



SIX MONTH PERIOD ENDED JUNE 30, 2006 AS COMPARED TO SIX MONTH PERIOD ENDED JUNE 30, 2005
 RESULTS OF OPERATIONS
 NET REVENUE
  COST OF REVENUES
  GROSS MARGINS
  23




---



##### Table of Contents



OPERATING EXPENSES
  OTHER INCOME (EXPENSE)
  NET LOSS
  BASIC AND DILUTED LOSS PER SHARE
  THREE MONTH PERIOD ENDED JUNE 30, 2006 AS COMPARED TO THREE MONTH PERIOD ENDED JUNE 30, 2005
 RESULTS OF OPERATIONS
 NET REVENUE
  24




---



##### Table of Contents



COST OF REVENUES
  GROSS MARGINS
  OPERATING EXPENSES
  OTHER INCOME (EXPENSE)
  NET LOSS
  BASIC AND DILUTED LOSS PER SHARE
  25




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
   FINANCING ACTIVITIES
  Date
    
    Amount
    
    
    Financing Fees5/15/2006
    
    $
    650,000
    
    
    $
    5,0004/13/2006
    
    $
    500,000
    
    
    $
    5,0004/12/2006
    
    $
    200,000
    
    
    $
    5,0003/27/2006
    
    $
    450,000
    
    
    $
    5,0003/20/2006
    
    $
    650,000
    
    
    $
    5,0003/9/2006
    
    $
    360,000
    
    
    $
    5,0002/21/2006
    
    $
    100,000
    
    
    $
    5,0002/16/2006
    
    $
    850,000
    
    
    $
    5,0001/30/2006
    
    $
    150,000
    
    
    $
    5,0001/27/2006
    
    $
    650,000
    
    
    $
    5,000Totals
    
    $
    4,560,000
    
    
    $
    50,000Repayments
    
    $
    4,560,000Balance at
June 30, 2006
    
    $
    0
   
    
    if prior to the 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 both holders 20% 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; 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 both holders 13% 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.
 26




---



##### Table of Contents



2007
    
    $
    375,0002008
    
    
    825,0002009
    
    
    1,275,0002010
    
    
    1,650,0002011
    
    
    2,025,0002012 (due
July 1, 2011)
    
    
    1,460,642Total
    
    $
    7,610,642
  
    
    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;
    
    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;
    
    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 of 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.
  COMMITMENTS
  27




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##### Table of Contents



OTHER COMMITMENTS
  For the year ended:June 30, 2007
    
    $
    157,000June 30, 2008
    
    $
    70,000
     28




---



##### Table of Contents



MATERIAL TRENDS AND UNCERTAINTIES
       29




---



##### Table of Contents



SUBSIDIARIES
  
 ITEM 3. CONTROLS AND PROCEDURES.
  30




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
    
 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.
  31




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##### Table of Contents



ITEM 6. EXHIBITS.
 Exhibits.No.
    
    Description2.1
    
    Plan of Reorganization between the Company and Michael Kelley, dated September 22, 2005
(included as exhibit 2.1 to the Form 8-K filed October 6, 2005, and incorporated herein by
reference).2.2
    
    Acquisition Agreement and Plan of Reorganization between the Company and Robert and Sherry
Rivera dated November 1, 2005 (included as exhibit 10.1 to the Form 8-K filed November 7,
2005, and incorporated herein by reference).3.1
    
    Articles of Incorporation, dated March 24, 1998 (included as exhibit 3.1 to the Form 10-SB
filed March 5, 1999, and incorporated herein by reference).3.2
    
    By-laws, dated March 24, 1998 (included as exhibit 3.2 to the Form 10-SB filed March 5, 1999,
and incorporated herein by reference).3.3
    
    Amendment to By-laws, dated May 6, 1999 (included as exhibit 3.2.2 to the Form 10-SB filed
May 14, 1999, and incorporated herein by reference).3.4
    
    Certificate of Amendment of Articles of Incorporation (included as exhibit 3.2 to the Form
8-K filed November 29, 2000, and incorporated herein by reference).3.5
    
    Certificate of Amendment of Articles of Incorporation (included as exhibit 3.3 to the Form
8-K filed November 29, 2000, and incorporated herein by reference).3.6
    
    Certificate of Amendment to Articles of Incorporation, dated January 10, 2003 (included as
exhibit 3.3 to the Form 10-KSB filed April 15, 2003, and incorporated herein by reference).3.7
    
    Certificate of Amendment to the Certificate of Incorporation, dated June 26, 2003 (included
as exhibit 4.1 to the Form 10-QSB filed November 13, 2003, and incorporated herein by
reference).4.1
    
    Warrant #101 issued to C.C.R.I. Corp., dated September 29, 2003 (included as exhibit 4.1 to
the Form SB-2 filed October 16, 2003, and incorporated herein by reference).4.2
    
    Warrant #102 issued to C.C.R.I. Corp., dated September 29, 2003 (included as exhibit 4.2 to
the Form SB-2 filed October 16, 2003, and incorporated herein by reference).4.3
    
    Convertible Debenture Exchange Agreement between the Company and Dutchess Private Equities
Fund LP, dated February 27, 2004 (included as exhibit 4.1 to the Form 10-QSB filed May 24,
2004, and incorporated herein by reference).4.4
    
    Form of Debenture between the Company and Dutchess Private Equities Fund LP, dated March 1,
2004 (included as exhibit 4.2 to the Form 10-QSB filed May 24, 2004, and incorporated herein
by reference).4.5
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, L.P., dated
March 31, 2004 (included as exhibit 4.3 to the Form 10-QSB filed May 24, 2004, and
incorporated herein by reference).4.6
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, II,
dated March 31, 2004 (included as exhibit 4.8 to the Form 10-QSB filed August 23, 2004, and
incorporated herein by reference).4.7
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, II,
dated April 8, 2004 (included as exhibit 4.9 to the Form 10-QSB filed August 23, 2004, and
incorporated herein by reference).4.8
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, II,
dated April 13, 2004 (included as exhibit 4.10 to the Form 10-QSB filed August 23, 2004, and
incorporated herein by reference).4.9
    
    Form of Warrant, dated May 18, 2004 (included as exhibit 4.6 to the Form SB-2 filed July 27,
2004, and incorporated herein by reference).
 32




---



##### Table of Contents



Exhibits.No.
    
    Description4.10
    
    Form of Warrant, dated May 26, 2004 (included as exhibit 4.7 to the Form SB-2 filed July 27,
2004, and incorporated herein by Reference).4.11
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, II,
dated September 25, 2004 (included as exhibit 4.11 to the Form 10-QSB filed November 22, 2004,
and incorporated herein by reference).4.12
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, II,
dated October 21, 2004 (included as exhibit 4.12 to the Form 10-KSB filed May 6, 2005, and
incorporated herein by reference).4.13
    
    Form of Warrant, dated October 21, 2004 (included as exhibit 4.13 to the Form 10-KSB filed
May 6, 2005, and incorporated herein by reference).4.14
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, II,
L.P., dated November 2, 2004 (included as exhibit 4.14 to the Form 10-KSB filed May 6, 2005,
and incorporated herein by reference).4.15
    
    Form of Warrant, dated November 2, 2004 (included as exhibit 4.15 to the Form 10-KSB filed
May 6, 2005, and incorporated herein by reference).4.16
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, II,
L.P., dated November 9, 2004 (included as exhibit 4.16 to the Form 10-KSB filed May 6, 2005,
and incorporated herein by reference).4.17
    
    Form of Warrant, dated November 9, 2004 (included as exhibit 4.17 to the Form 10-KSB filed
May 6, 2005, and incorporated herein by reference).4.18
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, L.P.,
dated December 1, 2004 (included as exhibit 4.18 to the Form 10-KSB filed May 6, 2005, and
incorporated herein by reference).4.19
    
    Form of Warrant, dated December 1, 2004 (included as exhibit 4.19 to the Form 10-KSB filed
May 6, 2005, and incorporated herein by reference).4.20
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, L.P.,
dated December 9, 2004 (included as exhibit 4.20 to the Form 10-KSB filed May 6, 2005, and
incorporated herein by reference).4.21
    
    Form of Warrant, dated December 9, 2004 (included as exhibit 4.21 to the Form 10-KSB filed
May 6, 2005, and incorporated herein by reference).4.22
    
    Convertible Debenture Agreement between the Company and Dutchess Private Equities Fund, L.P.,
dated December 22, 2004 (included as exhibit 4.22 to the Form 10-KSB filed May 6, 2005, and
incorporated herein by reference).4.23
    
    Form of Warrant, dated December 22, 2004 (included as exhibit 4.23 to the Form 10-KSB filed
May 6, 2005, and incorporated herein by reference).4.24
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, LP, dated
January 6, 2005 (included as exhibit 4.24 to the Form 10-QSB filed May 24, 2005, and
incorporated herein by reference).4.25
    
    Warrant Agreement between the Company and Dutchess Private Equities Fund, II, LP, dated
January 6, 2005 (included as exhibit 4.25 to the Form 10-QSB filed May 24, 2005, and
incorporated herein by reference).4.26
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, LP, dated
January 21, 2005 (included as exhibit 4.26 to the Form 10-QSB filed May 24, 2005, and
incorporated herein by reference).4.27
    
    Warrant Agreement between the Company and Dutchess Private Equities Fund, II, LP, dated
January 21, 2005 (included as exhibit 4.27 to the Form 10-QSB filed May 24, 2005, and
incorporated herein by reference).4.28
    
    Form of Debenture between the Company and Preston Capital Partners, LLC, dated February 3,
2005 (included as exhibit 4.28 to the Form 10-QSB filed May 24, 2005, and incorporated herein
by reference).4.29
    
    Form of Debenture between the Company and Preston Capital Partners, LLC, dated February 10,
2005 (included as exhibit 4.29 to the Form 10-QSB filed May 24, 2005, and incorporated herein
by reference).
 33




---



##### Table of Contents



Exhibits.No.
    
    Description4.30
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, LP, dated April
22, 2005 (included as exhibit 4.30 to the Form 10-QSB filed July 29, 2005, and incorporated
herein by reference).4.31
    
    Warrant Agreement between the Company and Dutchess Private Equities Fund, II, LP, dated April
22, 2005 (included as exhibit 4.31 to the Form 10-QSB filed July 29, 2005, and incorporated
herein by reference).4.32
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, LP, dated May
12, 2005 (included as exhibit 4.32 to the Form 10-QSB filed July 29, 2005, and incorporated
herein by reference).4.33
    
    Warrant Agreement between the Company and Dutchess Private Equities Fund, II, LP, dated May
12, 2005 (included as exhibit 4.33 to the Form 10-QSB filed July 29, 2005, and incorporated
herein by reference).4.34
    
    Form of Debenture between the Company and Preston Capital Partners, dated May 26, 2005
(included as exhibit 4.34 to the Form 10-QSB filed July 29, 2005, and incorporated herein by
reference).4.35
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, LP, dated May
27, 2005 (included as exhibit 4.35 to the Form 10-QSB filed July 29, 2005, and incorporated
herein by reference).4.36
    
    Warrant Agreement between the Company and Dutchess Private Equities Fund, II, LP, dated May
27, 2005 (included as exhibit 4.36 to the Form 10-QSB filed July 29, 2005, and incorporated
herein by reference).4.37
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, LP, dated June
6, 2005 (included as exhibit 4.37 to the Form 10-QSB filed July 29, 2005, and incorporated
herein by reference).4.38
    
    Warrant Agreement between the Company and Dutchess Private Equities Fund, II, LP, dated June
6, 2005 (included as exhibit 4.38 to the Form 10-QSB filed July 29, 2005, and incorporated
herein by reference).4.39
    
    Form of Debenture between the Company and Preston Capital Partners, dated June 20, 2005
(included as exhibit 4.39 to the Form 10-QSB filed July 29, 2005, and incorporated herein by
reference).4.40
    
    Collateral Agreement between the Company and Dutchess Private Equities Fund, II, L.P., dated
September 19, 2005 (included as exhibit 4.1 to the Form 8-K filed October 6, 2005, and
incorporated herein by reference).4.41
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, L.P., dated
September 22, 2005 (included as exhibit 4.2 to the Form 8-K filed October 6, 2005, and
incorporated herein by reference).4.42
    
    Debenture Registration Rights Agreement between the Company and Dutchess Private Equities
Fund L.P., Dutchess Private Equities Fund, II, L.P., Dutchess Capital Management, LLC, dated
September 22, 2005 (included as exhibit 4.3 to the Form 8-K filed October 6, 2005, and
incorporated herein by reference).4.43
    
    Subscription Agreement between the Company and Dutchess Private Equities Fund L.P., Dutchess
Private Equities Fund, II, L.P., Dutchess Capital Management, LLC, dated September 22, 2005
(included as exhibit 4.4 to the Form 8-K filed October 6, 2005, and incorporated herein by
reference).4.44
    
    Warrant between the Company and Dutchess Private Equities Fund, II, L.P., dated September 22,
2005 (included as exhibit 4.5 to the Form 8-K filed October 6, 2005, and incorporated herein
by reference).4.45
    
    Promissory Note between the Company and Michael Kelley, dated September 22, 2005 (included as
exhibit 4.6 to the Form 8-K filed October 6, 2005, and incorporated herein by reference).4.46
    
    Promissory Note between the Company and Robert Unger, dated September 22, 2005 (included as
exhibit 4.7 to the Form 8-K filed October 6, 2005, and incorporated herein by reference).4.47
    
    Security Agreement between the Company and Dutchess Private Equities Fund L.P. and Dutchess
Private Equities Fund, II, L.P., dated September 22, 2005 (included as exhibit 4.8 to the Form
8-K filed October 6, 2005, and incorporated herein by reference).4.48
    
    Promissory Note between the Company and Robert and Sherry Rivera, dated November 1, 2005
(included as exhibit 10.2 to the Form 8-K filed November 7, 2005, and incorporated herein by
reference).
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##### Table of Contents



Exhibits.No.
    
    Description4.49
    
    Security Agreement between the Company and Spectrum Communication Cabling Services, Inc.,
dated November 1, 2005 (included as exhibit 10.3 to the Form 8-K filed November 7, 2005, and
incorporated herein by reference).4.50
    
    Form of Debenture between the Company and Preston Capital Partners, dated July 20, 2005
(included as exhibit 4.50 to the 10QSB/A filed November 22, 2005, and incorporated herein by
reference).4.51
    
    Form of Debenture between the Company and Preston Capital Partners, dated August 17, 2005
(included as exhibit 4.51 to the 10QSB/A filed November 22, 2005, and incorporated herein by
reference).4.52
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, LP, dated
September 14, 2005 (included as exhibit 4.52 to the 10QSB/A filed November 22, 2005, and
incorporated herein by reference).4.53
    
    Warrant Agreement between the Company and Dutchess Private Equities Fund, II, LP, dated
September 14, 2005 (included as exhibit 4.53 to the 10QSB/A filed November 22, 2005, and
incorporated herein by reference).4.54
    
    Form of Debenture between the Company and Dutchess Private Equities Fund, II, LP, dated
September 19, 2005 (included as exhibit 4.54 to the 10QSB/A filed November 22, 2005, and
incorporated herein by reference).4.55
    
    Warrant Agreement between the Company and Dutchess Private Equities Fund, II, LP, dated
September 19, 2005 (included as exhibit 4.55 to the 10QSB/A filed November 22, 2005, and
incorporated herein by reference).4.56
    
    Common Stock for Warrant Exchange Agreement between the Company and Dutchess Private Equities
Fund, LP, dated March 10, 2006 (included as exhibit 4.1 to the Form 8-K filed March 20, 2006,
and incorporated herein by reference).4.57
    
    Common Stock for Warrant Exchange Agreement between the Company and Dutchess Advisors, Ltd.,
dated March 10, 2006 (included as exhibit 4.2 to the Form 8-K filed March 20, 2006, and
incorporated herein by reference).4.58
    
    Promissory Note dated August 1, 2000 by the Company and Kelley in favor of Dutchess Private
Equities Fund LP, Dutchess Private Equities Fund II, LP and Dutchess Advisors, Ltd., filed
herewith.4.59
    
    Promissory Note dated August 7, 2000 by the Company in favor of Preston Capital Partners,
LLC, filed herewith.4.60
    
    Amended and Restated Promissory
Note dated August 14, 2006, by the Company in favor of
Michael Kelley, filed herewith.4.61
    
    Amended and Restated Promissory
Note dated August 14, 2006 by the Company in favor of Robert
Unger field herewith.10.1
    
    Reseller Agreement between the Company and Vivato, Inc., dated August 14, 2002 (included as
exhibit 10.1 to the Form 10-QSB filed November 13, 2003, and incorporated herein by
reference).10.2
    
    Short Term Rental Agreement between the Company and Vidcon Solutions Group, Inc., dated
February 5, 2003 (included as exhibit 10.3 to the Form 10-QSB filed November 13, 2003, and
incorporated herein by reference).10.3
    
    Consulting Agreement between the Company and Dutchess Advisors, LLC, dated April 1, 2003
(included as exhibit 10.3 to the Form 8-K filed April 23, 2003, and incorporated herein by
reference).10.4
    
    Restructuring and Release Agreement between the Company, Dutchess Advisors LLC, Dutchess
Capital Management LLC, Michael Novielli, Western Cottonwood Corporation, Atlantis Partners,
Inc., John Freeland, Greg Mardock, and VLK Capital Corp., dated April 9, 2003 (included as
exhibit 10.2 to the Form 8-K filed April 23, 2003, and incorporated herein by reference).10.5
    
    Stock Purchase Agreement between the Company and Michael Cummings, dated May 16, 2003
(included as exhibit 2.1 to the Form 8-K filed June 13, 2003, and incorporated herein by
reference).10.6
    
    Consulting Agreement between the Company and Marketbyte, LLC, dated July 24, 2003 (included
as exhibit 10.8 to the Form SB-2 filed July 27, 2004, and incorporated herein by reference).10.7
    
    Motorola Reseller Agreement between the Company and Motorola, Inc., dated August 18, 2003
(included as exhibit 10.2 to the Form 10-QSB filed November 13, 2003, and incorporated herein
by reference).10.8
    
    Investment Agreement between the Company and Preston Capital Partner, LLC, dated January 21,
2004 (included as exhibit 10.7 to the Form SB-2 filed January 21, 2004, and incorporated
herein by reference).
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##### Table of Contents



Exhibits.No.
    
    Description10.9
    
    Registration Rights Agreement between the Company and Preston Capital Partners, LLC, dated
January 21, 2004 (included as exhibit 10.8 to the Form SB-2 filed January 21, 2004, and
incorporated herein by reference).10.10
    
    Placement Agent Agreement between the Company and Park Capital Securities, LLC, dated
January 21, 2004 (included as exhibit 10.9 to the Form SB-2 filed January 21, 2004, and
incorporated herein by reference).10.11
    
    Premier Reseller Agreement between the Company and Aruba Wireless Networks, Inc., dated
January 29, 2004 (included as exhibit 10.10 to the Form SB-2/A filed February 9, 2004, and
incorporated herein by reference).10.12
    
    Investor Relations Service Agreement between the Company and Eclips Ventures International,
dated February 2, 2004 (included as exhibit 10.9 to the Form SB-2 filed July 27, 2004, and
incorporated herein by reference).10.13
    
    XO Communications, Inc. Agent Agreement between the Company and XO Communications, Inc.,
dated March 8, 2004 (included as exhibit 10.13 to the Form SB-2 filed July 27, 2004, and
incorporated herein by reference).10.14
    
    Mpartner Independent Agent Agreement between the Company and Mpower Communications Corp.,
dated March 23, 2004 (included as exhibit 10.10 to the Form SB-2 filed on July 27, 2004, and
incorporated herein by reference).10.15
    
    Sales Agent Agreement between the Company and PAETEC Communications, dated March 23, 2004
(included as exhibit 10.11 to the Form SB-2 filed July 27, 2004, and incorporated herein by
reference).10.16
    
    Qwest Services Corporation Master Representative Agreement between the Company and Qwest
Services Corp., dated March 23, 2004 (included as exhibit 10.12 to the Form SB-2 filed July
27, 2004, and incorporated herein by reference).10.17
    
    Lease Agreement  Las Vegas location between the Company and HQ Global Workplaces, dated
January 2, 2004 (included as exhibit 10.8 to the Form SB-2 filed July 27, 2004, and
incorporated herein by reference).10.18
    
    Lease Agreement  Los Angeles location between the Company and HQ Global Workplaces, dated
March 1, 2004 (included as exhibit 10.15 to the Form SB-2 filed July 27, 2004, and
incorporated herein by reference).10.19
    
    Lease Agreement  Gold River location between the Company and HQ Global Workplaces, dated
May 20, 2004 (included as exhibit 10.16 to the Form SB-2 filed July 27, 2004, and incorporated
herein by reference).10.20
    
    Lease Agreement  Scottsdale location between the Company and HQ Global Workplaces, dated
June 1, 2004 (included as exhibit 10.17 to the Form SB-2 filed July 27, 2004, and incorporated
herein by reference).10.21
    
    Lease Agreement  Seattle location between the Company and HQ Global Workplaces, dated June
1, 2004 (included as exhibit 10.18 to the Form SB-2 filed July 27, 2004, and incorporated
herein by reference).10.22
    
    Promissory Note Agreement between the Company and Stephen Pearson, for the acquisition of
Del Mar Systems, Inc., dated March 1, 2004 (included as exhibit 10.19 to the Form SB-2 filed
July 27, 2004, and incorporated herein by reference).10.23
    
    Promissory Note between the Company and Dutchess Private Equities Fund, dated December 17,
2003 (included as exhibit 10.20 to the Form SB-2 filed July 27, 2004, and incorporated herein
by reference).10.24
    
    Promissory Note between the Company and Dutchess Private Equities Fund, dated January 9,
2004 (included as exhibit 10.21 to the Form SB-2 filed July 27, 2004, and incorporated herein
by reference).10.25
    
    Promissory Note between the Company and Dutchess Private Equities Fund, dated February 2,
2004 (included as exhibit 10.22 to the Form SB-2 filed July 27, 2004, and incorporated herein
by reference).10.26
    
    Promissory Note between the Company and Dutchess Private Equities Fund, dated February 5,
2004 (included as exhibit 10.23 to the Form SB-2 filed July 27, 2004, and incorporated herein
by reference).*10.27
    
    Employment Agreement between the Company and Robert W. Barnett, dated January 19, 2004
(included as exhibit 10.25 to the Form SB-2 filed July 27, 2004, and incorporated herein by
reference).10.28
    
    Promissory Note between the Company and Michael Cummings, dated December 30, 2003 (included
as exhibit 10.26 to the Form SB-2 filed July 27, 2004, and incorporated herein by reference).
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##### Table of Contents



Exhibits.No.
    
    Description10.29
    
    Promissory Note between the Company and Michael Cummings, dated March 15, 2004 (included as
exhibit 10.27 to the Form SB-2 filed July 27, 2004, and incorporated herein by reference).10.30
    
    Territory License Agreement between the Company and 5G Wireless Communications, Inc., dated
February 2004 (included as exhibit 10.27 to the Form 10-QSB filed August 23, 2004, and
incorporated herein by reference).10.31
    
    Lease Agreement between the Company and Alton Plaza Property, Inc., dated June 29, 2004
(included as exhibit 10.28 to the Form 10-QSB filed August 23, 2004, and incorporated herein
by reference).10.32
    
    Stock Purchase Agreement between the Company, Raymond Mallory, and Will Stice, dated January
17, 2005 (included as exhibit 2.1 to the Form 8-K filed January 24, 2005, and incorporated
herein by reference).*10.33
    
    Employment Agreement between the Company and Jeffrey R. Hultman, dated March 7, 2005
(included as exhibit 99.2 to the Form 8-K filed March 9, 2005, and incorporated herein by
reference).*10.34
    
    Employment Agreement between the Company and Michael V. Rosenthal, dated March 14, 2005
(included as exhibit 99.2 to the Form 8-K filed March 14, 2005, and incorporated herein by
reference).10.35
    
    Intercreditor Agreement between the Company and Nottingham Mayport, LLC, Dutchess Private
Equities Fund L.P., Dutchess Private Equities Fund II, L.P., and Robert Unger, dated September
22, 2005 (included as exhibit 10.1 to the Form 8-K filed October 6, 2005, and incorporated
herein by reference).10.36
    
    Rescission and Settlement Agreement among the Company and Robert Rivera, Sherry Perry Rivera
and Spectrum Communications Cabling Services, Inc., dated January 6, 2006 (included as exhibit
10.1 to the Form 8-K filed January 6, 2006, and incorporated herein by reference).*10.37
    
    Employment Agreement between the
Company and Chris Pizzo effective March 27, 200610.38
    
    Loan Restructure Agreement dated August 1, 2006, by and between the Company, Kelley,
Dutchess Private Equities Fund, LP, Dutchess Private Equities Fund II, LP and Dutchess
Advisors, Ltd., filed herewith.10.39
    
    Loan Restructure Agreement dated August 7, 2006, by and between the Company and Preston Capital partners, LLC, filed herewith.15
    
    Letter re. Unaudited Interim
Financial Information.31.1
    
    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.
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SIGNATURE
  NETWORK INSTALLATION CORP.
(Registrant)Date: August 14, 2006
    By:
    /s/  Jeffrey  R.  HultmanJeffrey  R.  HultmanPresident  &  Chief  Executive  Officer By:
    /s/  Christopher  G.  PizzoChristopher  G.  PizzoChief  Financial  Officer, (Principal
Accounting Officer) 38