##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 o
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2005
 þ
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM JANUARY 1, 2005 TO JUNE 30, 2005
 Commission File Number 0-28579
 BERLINER COMMUNICATIONS, INC.
  DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)
    
    75-2233445
(I.R.S. Employer
Identification No.)
 20 BUSHES LANE
ELMWOOD PARK, NEW JERSEY 07407
 201.791.3200
 Securities Registered Pursuant to Section 12(b) of the Act:
    
    Name of Each Exchange on Which Registered:NONE
    
    NONE
 COMMON STOCK, PAR VALUE $0.00002 PER SHARE
 þ o
 þ
 o þ
 o þ




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PAGEPART IITEM 1. Business
    
    
    3ITEM 2. Properties
    
    
    7ITEM 3. Legal Proceedings
    
    
    7ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    7PART IIITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    8ITEM 6. Selected Financial Data
    
    
    10ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    11ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24ITEM 8. Financial Statements and Supplementary Data
    
    
    24ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    24ITEM 9A. Controls and Procedures
    
    
    24ITEM 9B. Other Information
    
    
    25PART IIIITEM 10. Directors and Executive Officers of the Registrant
    
    
    25ITEM 11. Executive Compensation
    
    
    25ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    25ITEM 13. Certain Relationships and Related Transactions
    
    
    25ITEM 14. Principal Accountant Fees and Services
    
    
    25PART IVITEM 15. Exhibits and Financial Statement Schedules
    
    
    25SIGNATURES
    
    
    29EXHIBIT INDEX
    
    
    A-1Amended and Restated Certificate of IncorporationAmendment to Amended/Restated Certificate of IncorporationAmendment to Amended/Restated Certificate of IncorporationCertificate of AmendmentCertificate of AmendmentAmended and Restated BylawsSubsidiariesConsent of BDO Seidman, LLPConsent of Grant Thornton LLPCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification Pursuant to Section 906
  2




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Cautionary Statement for the Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995
  General
  Strategic Combination
   §
    
    147,676,299 shares of newly issued, non-assessable shares of Novo Common Stock, par value
$0.00002 per share; and§
    
    3,913,669 shares of newly issued, non-assessable shares of Novo Series E Convertible
Preferred Stock (Series E Preferred Stock), par value $0.00002 per share.
 2005 Recapitalization Event
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§
    
    Increased the aggregate number of shares that we will have the authority to issue from
225,000,000 to 6,600,000,000 shares, of which 6,000,000,000 shares will he shares of Common
Stock, and 600,000,000 shares will be shares of Preferred Stock;§
    
    Changed our name from Novo Networks, Inc. to Berliner Communications, Inc.;§
    
    Amended the Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock to reduce the conversion price of the Series B Convertible Preferred Stock
to $0.014018, and thereby increase the number of shares of Common Stock issuable upon
conversion of such shares of the Series B Convertible Preferred Stock to 321,015,546;§
    
    Amended the Certificate of Designation, Preferences and Rights of Series D Convertible
Preferred Stock to reduce the conversion price of the Series D Convertible Preferred Stock
to $0.014018, and thereby increase the number of shares of Common Stock issuable upon
conversion of such shares of the Series D Convertible Preferred Stock to 675,773,394;§
    
    Provided that, upon the filing of the first Certificate of Amendment, all shares of
Series B Convertible Preferred Stock, Series D Convertible Preferred Stock, and Series E
Convertible Preferred Stock will be automatically converted into Common Stock;§
    
    Effected a 1:300 reverse stock split, such that the outstanding shares of Common Stock
and Convertible Preferred Stock will be reclassified and one new share of Common Stock will
be issued for every 300 shares of existing Common Stock; and§
    
    Amended the Certificate of Incorporation, such that, after giving effect to the reverse
stock split, the aggregate number of shares that we will have the authority to issue is
22,000,000 shares, of which 20,000,000 shares will be shares of Common Stock, and 2,000,000
shares will be shares of Preferred Stock.
  Business  Prior to the Transaction
   Business  Subsequent to the Transaction
  4




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Real Estate Site Acquisition and Zoning.
 Infrastructure Equipment Construction and Installation.
 Radio Frequency and Network Design and Engineering.
 Radio Transmission Base Station Modification.
 In-Building Network Design, Engineering and Construction.
 5




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Project Management.
 Competition
  Government Regulation
  Major Suppliers and Vendors
  Major Customers
  Seasonality
  6




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Backlog
  Employees
  
   Size in
    
    
    
    
    Monthly
    
    
    End ofLocation
    
    Square Feet
    
    
    Description
    
    Cost
    
    
    Lease Term20 Bushes Lane
    
    
    15,800
    
    
    Single-story brick building
    
    $
    7,970
    
    
    December ofElmwood Park, NJ
    
    
    
    
    
    (office and warehouse space)
    
    
    
    
    
    200810 Bushes Lane
    
    
    9,950
    
    
    Single-story brick building
    
    $
    6,200
    
    
    February ofElmwood Park, NJ
    
    
    
    
    
    (office and warehouse space)
    
    
    
    
    
    200897 Linden Avenue*
    
    
    11,700
    
    
    Single-story brick building
    
    $
    14,733
    
    
    June ofElmwood Park, NJ
    
    
    
    
    
    (office and warehouse space)
    
    
    
    
    
    20081100 Taylors Land
    
    
    10,209
    
    
    Single-story brick building
    
    $
    5,299
    
    
    November ofUnit 1
    
    
    
    
    
    (office and warehouse space)
    
    
    
    
    
    2006Cinnaminson, NJ7402 Virginia Manor
Road
    
    
    9,580
    
    
    Single-story brick building
    
    $
    10,355
    
    
    June ofBeltsville, MD
    
    
    
    
    
    (office and warehouse space)
    
    
    
    
    
    200811861 North Profit Road
    
    
    6,000
    
    
    Single-story metal building
    
    $
    1,500
    
    
    Month toForney, TX
    
    
    
    
    
    (office and warehouse space)
    
    
    
    
    
    Month6440 North Central
    
    
    861
    
    
    Ten-story brick building
    
    $
    1,363
    
    
    March ofExpressway, Suite 620
    
    
    
    
    
    (office space)
    
    
    
    
    
    2006Dallas, TX
 
 *
    
    We sublease one-half of this space 
   
   7




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From
    
    To
    
    Ticker
    
    MarketJanuary 1, 2002
    
    Present
    
    NVNW
    
    OTCBBDecember 12, 2000
    
    December 31, 2001 *
    
    NVNW
    
    NASDAQNovember 22, 2000
    
    December 11, 2000
    
    EVNT
    
    NASDAQAugust 25, 1999
    
    November 21, 2000
    
    EVNT
    
    OTCBBPrior to August 25,
1999
    
    
    
    ADII
    
    OTCBB
 
 *
    
    Trading was halted by NASDAQ from July 30, 2001, until December 31, 2001.  Quarter Ending
    
    Low
    
    
    HighJune 30, 2005
    
    $
    0.008
    
    
    $
    0.025March 31, 2005
    
    
    0.01
    
    
    
    0.28December 31, 2004
    
    
    0.01
    
    
    
    0.28September 30, 2004
    
    
    0.02
    
    
    
    0.03June 30, 2004
    
    
    0.02
    
    
    
    0.03March 31, 2004
    
    
    0.02
    
    
    
    0.03December 31, 2003
    
    
    0.02
    
    
    
    0.04September 30, 2003
    
    
    0.02
    
    
    
    0.05June 30, 2003
    
    
    0.03
    
    
    
    0.07March 31, 2003
    
    
    0.04
    
    
    
    0.08
   Recent Sales of Unregistered Securities
  8




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Securities Authorized for Issuance under Equity Compensation Plans
  (A)
    
    
    
    
    
    
    (B)
    
    
    (C)Number of securitiesremaining available forNumber of Securities to
    
    
    
    
    
    
    Weighted average
    
    
    future issuance underbe issued upon exercise
    
    
    
    
    
    
    exercise price of
    
    
    equity compensation plansof outstanding options,
    
    
    
    
    
    
    of outstanding options,
    
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    
    
    
    
    
    warrants and rights
    
    
    reflected in column (A)Equity Compensation
on Plans Approved by
Security Holders
    
    
    7,337,051
    
    (a)
    
    
    
    
    $
    4.99
    
    
    
    12,511,504Equity Compensation
on Plans Not Approved by
Security Holders
    
    
    5,611,072
    
    (b)
    
    
    
    
    $
    22.62
    
    
    
    12,948,123
    
    
    
    
    
    
    $
    12.63
    
    
    
    12,511,504
 
 (a)
    
    Represents options granted under our 1999 Omnibus Securities Plan and our 2001 Equity Incentive Plan,
each of which was approved by our stockholders (the Option Plans).(b)
    
    Represents options granted under stand-alone option agreements, which were not associated with the
Option Plans, and which vested over three or four-year periods. Dividend Policy
  9




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Six months ended
    
    
    Year endedJune 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2004
    
    
    2003
    
    
    2002Revenues
    
    $
    10,196,270
    
    
    $
    7,421,961
    
    
    $
    15,285,904
    
    
    $
    17,955,834
    
    
    $
    22,939,479Costs of revenues
    
    
    7,339,171
    
    
    
    4,926,639
    
    
    
    9,604,839
    
    
    
    13,098,669
    
    
    
    18,435,786Gross margin
    
    
    2,857,099
    
    
    
    2,495,322
    
    
    
    5,681,065
    
    
    
    4,857,165
    
    
    
    4,503,693Selling, general and administrative expenses
    
    
    3,830,947
    
    
    
    2,939,614
    
    
    
    6,123,328
    
    
    
    5,898,143
    
    
    
    8,132,762Depreciation and amortization
    
    
    139,220
    
    
    
    180,832
    
    
    
    342,934
    
    
    
    580,207
    
    
    
    703,519Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    413,801(Gain) loss on sale of fixed assets
    
    
    (22,785
    )
    
    
    (13,972
    )
    
    
    (9,699
    )
    
    
    45,445
    
    
    
    7,003Loss from operations
    
    
    (1,090,283
    )
    
    
    (611,152
    )
    
    
    (775,498
    )
    
    
    (1,666,630
    )
    
    
    (4,753,392
    )Other (income) expenseInterest expense
    
    
    22,282
    
    
    
    19,114
    
    
    
    46,813
    
    
    
    34,112
    
    
    
    61,215Interest income
    
    
    (5,487
    )
    
    
    (550
    )
    
    
    (1,639
    )
    
    
    (12,763
    )
    
    
    (43,542
    )Loss in equity of investments
    
    
    93,982
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,171,119
    )
    
    
    Impairment of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,741Other (income) loss
    
    
    (3,895
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) before income taxes
    
    
    (1,197,165
    )
    
    
    (629,716
    )
    
    
    (820,672
    )
    
    
    5,483,140
    
    
    
    (4,852,806
    )Income tax expense (benefit)
    
    
    (6,581
    )
    
    
    (1,840
    )
    
    
    16,160
    
    
    
    44,250
    
    
    
    253,987Net income (loss)
    
    
    (1,190,584
    )
    
    
    (627,876
    )
    
    
    (836,832
    )
    
    
    5,438,890
    
    
    
    (5,106,793
    )Preferred stock dividends and accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    378,355
    
    
    
    1,623,420Net income (loss) applicable to common
shareholders
    
    $
    (1,190,584
    )
    
    $
    (627,876
    )
    
    $
    (836,832
    )
    
    $
    5,060,535
    
    
    $
    (6,730,213
    )Net income (loss) per share  basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    0.30
    
    
    $
    (0.55
    )Weighted average number of shares
outstanding  basic and diluted
    
    
    151,331,446
    
    
    
    20,224,320
    
    
    
    20,224,320
    
    
    
    16,633,810
    
    
    
    12,134,591
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Basis of Presentation
   Industry Background
 Wireless Telecommunications Networks
     Growth and Evolution of the Wireless Telecommunications Industry
  11




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Industry Challenges
   Position in Industry
    Key Drivers of Change in Our Business
  §
    
    The issuance of new or additional licenses to wireless service providers. After
receiving new or additional licenses necessary to build out their wireless systems, wireless
service providers must make decisions about what type of technology and equipment will be
used, where it will be deployed and how it will be configured. In addition, detailed site
location designs must be prepared and radio frequency engineers must review interference to
or from co-located antennae. Construction and equipment installation must then be performed
and professional technicians
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must install and commission the new radio equipment, test and
integrate it with existing networks and tune the components to optimize performance.§
    
    The introduction of new services or technologies. Although wireless service providers
traditionally have relied upon their internal engineering workforces to address a
significant portion of their wireless network needs, the rapid introduction of new services
or technologies in the wireless market and the need to reduce operating costs in many cases
have resulted in wireless service providers and equipment vendors focusing on their core
competencies, and as a result, outsourcing an increasing portion of their network services.
In addition, the Federal Communications Commission (the FCC), in November of 2003, began
requiring wireless service providers to provide local number portability (LNP) to
customers, which makes it easier for consumers to switch wireless service providers by
giving consumers the ability to do so without changing their phone numbers. LNP increases
the complexity of call processing, number administration, service assurance and network
operations. We believe that nearly every United States-based wireless service provider is,
or will be, upgrading its network in order to mitigate the potential for customer
termination, or churn, as a result of the implementation of LNP. Such efforts involve
providing both additional network capacity and expanded geographic coverage to address
wireless customers perceptions of network quality.§
    
    The increases in the number of wireless subscribers served by wireless providers. The
increases in the number of subscribers served by wireless service providers, with the
concomitant increase in usage by those subscribers and scarcity of wireless spectrum,
require such carriers to expand and optimize system coverage and capacity to maintain
network quality. The wireless system also must be continually updated and optimized to
address changes in traffic patterns and interference from neighboring or competing networks
or other radio sources.§
    
    The increasing complexity of wireless systems in operation. As new technologies are
developed, wireless service providers must determine whether to upgrade their existing
networks or deploy new networks utilizing the latest available technologies in order to
maintain their market share. For example, overlaying new technologies, such as 2.5G and 3G,
with an existing network or deploying a new network requires wireless service providers to
reengage in the strategic planning, design, deployment, expansion, operations and
maintenance phases of a new cycle in the life of an existing or new network.§
    
    The current consolidation in the telecommunications sector. In light of recent
consolidation in the telecommunications sector, wireless service providers are faced with
issues regarding the integration of separate telecommunications networks. This may provide
us with the opportunity to provide services relating to performing network compatibility
testing and resolving integration solutions.
 Plan of Operation
  Increase Staffing
  Create a Strategic Partnership with an Electrical Contractor
  13




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Improve BCIs Fabrication Business Services
  Increase Production Capability
  Increase Marketing Activities
  Increase Business Development Activities
  Major Customers
   Revenues.
 14




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Cost of Revenues.
 Gross Margin.
 Selling, General and Administrative Expenses.
  Depreciation and Amortization.
 Other (Income) Expense.
  Revenues.
 Cost of Revenues.
 Gross Margin.
 15




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Selling, General and Administrative Expenses.
  Depreciation and Amortization.
 Gain on Extinguishment of Debt.
  Revenues.
 Cost of Revenues.
 Gross Margin
 Selling, General and Administrative Expenses
 .
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Depreciation and Amortization
 Gain on Extinguishment of Debt
          17




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Payments due in fiscal year ended June 30,Contractual Obligations
    
    Total
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010Long-term debt obligations
    
    $
    669,345
    
    
    $
    425,964
    
    
    $
    187,825
    
    
    $
    28,159
    
    
    $
    17,068
    
    
    $
    10,329Capital lease obligations
    
    
    56,832
    
    
    
    44,348
    
    
    
    12,484
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    1,086,329
    
    
    
    427,492
    
    
    
    323,830
    
    
    
    297,336
    
    
    
    37,671
    
    
    
    $
    1,812,506
    
    
    $
    897,804
    
    
    $
    524,139
    
    
    $
    325,495
    
    
    $
    54,739
    
    
    $
    10,329
 Forward-Looking Statements
    §
    
    our financial condition and strategic direction;§
    
    our ability to continue as a going concern;§
    
    our future capital requirements and our ability to satisfy our capital needs;§
    
    the potential generation of future revenues;§
    
    BCIs ability to adequately staff its service offerings;§
    
    opportunities for BCI from new and emerging wireless technologies;§
    
    our discussions with Presidential, or some other lender, to obtain additional financing;§
    
    our growth strategy for BCI;§
    
    trends in the wireless telecommunications industry;§
    
    key drivers of change in BCIs business;§
    
    BCIs position in the wireless telecommunications industry;§
    
    BCIs competitive position; and§
    
    other statements that contain words like believe, anticipate, expect and similar
expressions are also used to identify forward-looking statements.
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§
    
    risks inherent in our ability to continue as a going concern;§
    
    risks associated with competition in the wireless telecommunications sector we entered
with the acquisition of the Berliner Assets;§
    
    risks associated with our ability to monetize or capitalize on our interest in Paciugo;§
    
    risks that we will not be able to generate positive cash flow with the acquisition of the Berliner Assets;§
    
    BCIs function as an early stage company;§
    
    risk that we may not be able to obtain additional financing from Presidential or any other lender;§
    
    risks associated with Old Berliners history of losses;§
    
    risks related to a concentration in revenues from a small number of customers;§
    
    risks that BCI will not be able to take advantage of new and emerging wireless technologies; and§
    
    risks that BCI will be unable to adequately staff its service offerings.
   Business Risk Factors
 Our shareholders may not realize any benefit from our transaction with Old Berliner.
  We, in essence, are an early stage company. Therefore, in light of its anticipated significance,
our business prospects are difficult to evaluate.
   §
    
    adapt an successfully execute its evolving and unpredictable business model;§
    
    attract necessary working capital;§
    
    establish, train and manage a larger and more productive workforce;§
    
    develop meaningful customer and vendor relationships;§
    
    provide services that consistently meet customer demands in a rapidly evolving industry;§
    
    implement and improve operational, financial and management systems and processes;§
    
    respond effectively to competitive developments; and§
    
    otherwise manage and adapt to changing operations.
 19




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We may need additional financing, almost immediately, to grow our business.
  Old Berliner has a history of losses and we anticipate that our combined operations will generate
losses in the short term.
  If the percentage of our revenues derived from construction-related activities increases, our gross
margins may suffer.
  In any given year, we derive a significant portion of its revenues from a limited number of
projects, and, if it is unable to replace such jobs upon completion, it would have a significant
decrease in its revenues, which would negatively impact our operating results.
  We generate a substantial portion of its revenues from a limited number of customers, and if our
relationships with such customers were harmed, its business would suffer .
  If we experience delays and or defaults in customer payments, we could be unable to cover all
expenditures.
  20




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Many of our customers face difficulties in obtaining financing to fund the expansion of their
wireless networks, which may reduce demand for our services.
 .
 If we are unable to collect receivables from our smaller customers, our operating results may be
materially harmed.
  New technologies may reduce the demand for our services.
  Further delays in the adoption and deployment of next generation wireless networks could negatively
affect the demand for our services and its ability to grow our revenues.
  We bear the risk of cost overruns in some of its contracts.
  If we guarantee the timely completion or performance standard of a project, it could incur
significant, additional costs.
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The nature of our engineering and construction business exposes us to potential liability claims
and contract disputes that may negatively affect our results of operations.
  We maintain a workforce based upon current and anticipated workloads. If we do not receive future
contract awards or if these awards are delayed, significant costs may result.
  We may not be able to hire or retain sufficient number of qualified engineers and other employees
to meet our contractual obligations or maintain the quality of our services.
  Intense competition in the engineering and construction industry could reduce our market share.
  Past and future environmental, safety and health regulations could impose on us significant
additional costs that negatively affect our operations.
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We are vulnerable to the cyclical nature of the market we serve.
  We may experience significant fluctuations in its quarterly results as a result of uncertainties
relating to our ability to generate additional revenues, manage expenditures and other factors,
certain of which are outside of our control.
  §
    
    financing provided to potential customers;§
    
    the commencement, progress, completion or termination of contracts during any particular quarter;§
    
    the availability of equipment to deploy new technologies, such a 3G and broadband;§
    
    the growth rate of wireless subscribers, which has a direct impact on the rate at which
new cell sites are developed and built; and§
    
    telecommunications market conditions and economic generally.
  Because Old Berliner experienced, and we expect to continue to experience, long sales cycles, we
expect to incur significant costs to generate new business and our customer base may not experience
growth commensurate with such costs.
   Revenue Recognition
  Risks and Uncertainties.
  23




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24




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1.
    
    Financial Statements:Our Consolidated Financial Statements of as of June 30, 2005, and as of December 31, 2004,
2003 and 20022.
    
    Financial Statement Schedules
 25




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EXHIBIT
    
    
    
    
    
    
    
    
    
    
    
    FILEDNUMBER
    
    DESCRIPTION
    
    INCORPORATED BY REFERENCE
    
    HEREWITHFORM
    
    DATE
    
    NUMBER2.1
    
    
    Proposed Disclosure Statement with
respect to the Joint Plan by
AxisTel Communications, Inc., its
Affiliated Debtors and Novo
Networks, Inc. dated December 31,
2001
    
    10-Q
    
    2/14/02
    
    
    2.12.2
    
    
    Joint Plan of Liquidation by and
between AxisTel Communications,
Inc., Novo Networks Global
Services, Inc., Novo Networks,
International Services, Inc.,
e.Volve, Technology Group, Inc.,
Novo Networks Operating Corp.,
Novo Networks Metro services,
Inc., and Novo Networks, Inc.
dated December 31, 2001
    
    10-Q
    
    2/14/02
    
    
    2.23.1
    
    
    Amended and Restated Certificate
of Incorporation of eVentures
Group, Inc.
    
    
    
    
    
    
    
    
    
    X3.2
    
    
    Amendment to Amended and Restated
Certificate of Incorporation,
filed with the Secretary of State
of the State of Delaware on
November 13, 2000.
    
    
    
    
    
    
    
    
    
    X3.3
    
    
    Amendment to Amended and Restated
Certificate of Incorporation,
filed with the Secretary of State
of the State of Delaware on
December 11, 2000.
    
    
    
    
    
    
    
    
    
    X3.4
    
    
    Certificate of Amendment, dated
September 16, 2005, to the
Restated Certificate of
Incorporation
    
    
    
    
    
    
    
    
    
    X3.5
    
    
    Certificate of Amendment, dated
September 16, 2005, to the
Restated Certificate of
Incorporation
    
    
    
    
    
    
    
    
    
    X3.6
    
    
    Amended and Restated By-Laws of
eVentures Group, Inc.
    
    
    
    
    
    
    
    
    
    X10.01
    
    
    Stock Option Agreement, dated as
of April 4, 2000 between eVentures
Group, Inc. and Daniel J. Wilson.
(compensatory agreement)
    
    10-Q
    
    5/15/2000
    
    
    10.610.02
    
    
    Stock Option Agreement, dated as
of April 4, 2000 between eVentures
Group, Inc. and Chad E. Coben.
(compensatory agreement).
    
    10-Q
    
    5/15/2000
    
    
    10.810.03
    
    
    Stock Option Agreement, dated as
of April 4, 2000 between eVentures
Group, Inc. and Barrett N.
Wissman. (compensatory agreement).
    
    10-Q
    
    5/15/2000
    
    
    10.1010.04
    
    
    Stock Option Agreement, dated as
of April 17, 2000 between
eVentures Group, Inc. and Susie C.
Holliday. (compensatory
agreement).
    
    10-Q
    
    5/15/2000
    
    
    10.14
 26




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##### Table of Contents



EXHIBIT
    
    
    
    
    
    
    
    
    
    
    
    FILEDNUMBER
    
    DESCRIPTION
    
    INCORPORATED BY REFERENCE
    
    HEREWITHFORM
    
    DATE
    
    NUMBER10.05
    
    
    Amendment to Non-Qualified Stock
Option Agreement between eVentures
Group, Inc. and Susie C. Holliday,
dated October 2, 2000.
    
    10-Q
    
    11/14/2000
    
    
    10.710.06
    
    
    Common Stock Subscription
Agreement, dated as of April 4,
2000, by and among eVentures
Group, Inc. and the signatories
thereto.
    
    10-Q
    
    5/15/2000
    
    
    10.1510.07A
    
    
    Form of New Directors and Officers
Indemnification Agreement.
    
    10-K
    
    9/28/2000
    
    
    10.49
    A10.07B
    
    
    Schedule of Parties to New
Directors and Officers
Indemnification Agreement.
    
    10-K
    
    9/28/2000
    
    
    10.49
    B10.08A
    
    
    Form of Incumbent Directors and
Officers Indemnification
Agreement.
    
    10-K
    
    9/28/2000
    
    
    10.50
    A10.08B
    
    
    Schedule of Parties to Incumbent
Directors and Officers
Indemnification Agreement.
    
    10-K
    
    9/28/2000
    
    
    10.50
    B10.09
    
    
    2001 Equity Incentive Plan
    
    10-Q
    
    5/15/2000
    
    
    10.110.10A
    
    
    Employment Agreement, dated as of
March 10, 2000, between IGS
Acquisition Corporation and
Patrick G. Mackey. (compensatory
agreement)
    
    10-K
    
    9/28/2001
    
    
    10.4210.10B
    
    
    Amendment No. 1 to Employment
Agreement between eVentures Group,
Inc. and Patrick G. Mackey, dated
as of September 25, 2000.
    
    10-K
    
    9/28/2001
    
    
    10.4210.10C
    
    
    Amendment No. 2 to Employment
Agreement between Novo Networks,
Inc. and Patrick G. Mackey, dated
as of January 10, 2001.
    
    10-K
    
    9/28/2001
    
    
    10.4210.11
    
    
    Purchase Agreement by and among
Novo Networks, Inc., Paciugo
Management LLC, Ad Astra Holdings
LP, Ugo Ginatta, Cristiana Ginatta
and Vincent Ginatta
    
    8-K
    
    1/03/03
    
    
    10.110.12
    
    
    Nonqualified Stock Option
Agreement between the Registrant
and Barrett N. Wissman
    
    10-Q
    
    5/15/03
    
    
    10.110.13
    
    
    Nonqualified Stock Option
Agreement between the Registrant
and Steven W. Caple
    
    10-Q
    
    5/15/03
    
    
    10.210.14
    
    
    Nonqualified Stock Option
Agreement between the Registrant
and Jan Robert Horsfall
    
    10-Q
    
    5/15/03
    
    
    10.310.15
    
    
    Nonqualified Stock Option
Agreement between the Registrant
and John Stevens Robling
    
    10-Q
    
    5/15/03
    
    
    10.4
 27




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##### Table of Contents



EXHIBIT
    
    
    
    
    
    
    
    
    
    
    
    FILEDNUMBER
    
    DESCRIPTION
    
    INCORPORATED BY REFERENCE
    
    HEREWITHFORM
    
    DATE
    
    NUMBER10.16
    
    
    Nonqualified Stock Option
Agreement between the Registrant
and Russell W. Beiersdorf
    
    10-Q
    
    5/15/03
    
    
    10.510.17
    
    
    Nonqualified Stock Option
Agreement between the Registrant
and Patrick Mackey
    
    10-Q
    
    5/15/03
    
    
    10.610.18
    
    
    Nonqualified Stock Option
Agreement between the Registrant
and Susie C. Holliday
    
    10-Q
    
    5/15/03
    
    
    10.710.19
    
    
    Non-Qualified Stock Option
Agreement dated as of February 27,
2004 between Novo Networks, Inc.
and Barrett N. Wissman
    
    10-Q
    
    5/17/07
    
    
    10.110.20
    
    
    Non-Qualified Stock Option
Agreement dated as of February 27,
2004 between Novo Networks, Inc.
and John Stevens Robling, Jr.
    
    10-Q
    
    5/17/04
    
    
    10.210.21
    
    
    Non-Qualified Stock Option
Agreement dated February 27, 2004
between Novo Networks, Inc. and
Russell W. Beiersdorf
    
    10-Q
    
    5/17/04
    
    
    10.321.1
    
    
    Subsidiaries of Novo Networks, Inc.
    
    
    
    
    
    
    
    
    
    X23.1
    
    
    Consent of BDO Seidman, LLP
    
    
    
    
    
    
    
    
    
    X23.2
    
    
    Consent of Grant Thornton LLP
    
    
    
    
    
    
    
    
    
    X31.1
    
    
    Certification of the Chief
Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002
    
    
    
    
    
    
    
    
    
    X31.2
    
    
    Certification of the Chief
Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002
    
    
    
    
    
    
    
    
    
    X32.1
    
    
    Certification Pursuant to Section
906 of the Sarbanes-Oxley Act of
2002
    
    
    
    
    
    
    
    
    
    X
 28




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##### Table of Contents



Berliner Communications, Inc.By:
    /s/ Richard B. BerlinerName:
    Richard B. BerlinerTitle:
    Chief Executive Officer  SIGNATURE
    
    TITLE
    
    DATE/s/ Richard B. Berliner

Richard B. Berliner
    
    Chief Financial Officer
(Principal Executive Officer)
    
    September 27, 2005/s/ Patrick G. Mackey

Patrick G. Mackey
    
    Senior Vice President and Chief Financial
Officer
(Principal Financial and Accounting Officer)
    
    September 27, 2005/s/ Ralph R. Ianuzzi, Jr.

Ralph R. Ianuzzi, Jr.
    
    Director
    
    September 27, 2005/s/ Peter J. Mixter

Peter J. Mixter
    
    Director
    
    September 27, 2005/s/ Mehran Nazari.

Mehran Nazari
    
    Director
    
    September 27, 2005/s/ John Stevens Robling, Jr.

John Stevens Robling, Jr.
    
    Director
    
    September 27, 2005
 29




---



BERLINER
COMMUNICATIONS, INC. AND SUBSIDIARIES
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Reports of Independent Registered Public Accounting Firms
    
    F-2Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004, and 2003
    
    F-4Consolidated Statements of Operations for the six months ended June 30, 2005 and
June 30, 2004 (unaudited), and the years ended December 31, 2004, 2003, and 2002
    
    F-5Consolidated Statements of Shareholders Equity (Deficit) for the six months ended
June 30, 2005, and the years ended December 31, 2004, 2003, and 2002
    
    F-6Consolidated Statements of Cash Flows for the six months ended June 30, 2005, and
June 30, 2004 (unaudited), and the years ended December 31, 2004, 2003, and 2002
    
    F-7Notes to Consolidated Financial Statements
    
    F-9
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 F-2




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    
 F-3




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##### Table of Contents



BERLINER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2003ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    402,432
    
    
    $
    453,818
    
    
    $
    137,870Accounts receivable, net of allowance for doubtful
accounts of $91,572 in 2005, $106,061 in 2004 and
$147,724 in 2003
    
    
    5,261,311
    
    
    
    3,384,904
    
    
    
    5,495,679Inventories
    
    
    506,615
    
    
    
    515,565
    
    
    
    611,974Prepaid expenses and other current assets
    
    
    516,842
    
    
    
    212,943
    
    
    
    159,3496,687,200
    
    
    
    4,567,230
    
    
    
    6,404,872LONG-TERM ASSETSProperty and equipment, net
    
    
    469,855
    
    
    
    557,317
    
    
    
    780,032Other assets
    
    
    359,139
    
    
    
    68,032
    
    
    
    59,302$
    7,516,194
    
    
    $
    5,192,579
    
    
    $
    7,244,206LIABILITIES AND STOCKHOLDERS EQUITYCURRENT
LIABILITIESLine of credit
    
    $
    493,824
    
    
    $
    344,588
    
    
    $
    435,995Current portion of long-term debt
    
    
    425,964
    
    
    
    434,372
    
    
    
    339,513Current portion of capital lease obligations
    
    
    39,596
    
    
    
    56,573
    
    
    
    114,704Loan from shareholder
    
    
    
    
    
    
    101,640
    
    
    
    Accounts payable
    
    
    2,209,775
    
    
    
    1,704,187
    
    
    
    1,989,142Accrued liabilities
    
    
    2,285,889
    
    
    
    1,223,965
    
    
    
    1,936,539Deferred revenue
    
    
    
    
    
    
    9,435
    
    
    
    Income taxes payable
    
    
    
    
    
    
    12,581
    
    
    
    34,3715,455,048
    
    
    
    3,887,341
    
    
    
    4,850,264LONG-TERM LIABILITIESLong-term debt, net of current portion
    
    
    243,942
    
    
    
    404,484
    
    
    
    624,765Long-term capital lease obligations, net of current portion
    
    
    10,068
    
    
    
    26,977
    
    
    
    58,568254,010
    
    
    
    431,461
    
    
    
    683,333COMMITMENTS
    
    
    
    
    
    
    
    
    
    
    STOCKHOLDERS EQUITYPreferred stock
    
    
    79
    
    
    
    
    
    
    
    Common stock
    
    
    13
    
    
    
    202,243
    
    
    
    202,243Additional paid-in capital
    
    
    12,922,329
    
    
    
    10,531,131
    
    
    
    10,531,131Accumulated deficit
    
    
    (11,115,285
    )
    
    
    (9,859,597
    )
    
    
    (9,022,765
    )1,807,136
    
    
    
    873,777
    
    
    
    1,710,609$
    7,516,194
    
    
    $
    5,192,579
    
    
    $
    7,244,206
 The accompanying notes are an integral part of these financial statements.
 F-4




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##### Table of Contents



BERLINER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Six months ended
    
    
    Year endedJune 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2004
    
    
    2003
    
    
    2002(Unaudited)Revenues
    
    $
    10,196,270
    
    
    $
    7,421,961
    
    
    $
    15,285,904
    
    
    $
    17,955,834
    
    
    $
    22,939,479Costs of revenues
    
    
    7,339,171
    
    
    
    4,926,639
    
    
    
    9,604,839
    
    
    
    13,098,669
    
    
    
    18,435,786Gross margin
    
    
    2,857,099
    
    
    
    2,495,322
    
    
    
    5,681,065
    
    
    
    4,857,165
    
    
    
    4,503,693Selling, general and administrative expenses
    
    
    3,830,947
    
    
    
    2,939,614
    
    
    
    6,123,328
    
    
    
    5,898,143
    
    
    
    8,132,762Depreciation and amortization
    
    
    139,220
    
    
    
    180,832
    
    
    
    342,934
    
    
    
    580,207
    
    
    
    703,519Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    413,801(Gain) loss on sale of fixed assets
    
    
    (22,785
    )
    
    
    (13,972
    )
    
    
    (9,699
    )
    
    
    45,445
    
    
    
    7,003Loss from operations
    
    
    (1,090,283
    )
    
    
    (611,152
    )
    
    
    (775,498
    )
    
    
    (1,666,630
    )
    
    
    (4,753,392
    )Other (income) expenseInterest expense
    
    
    22,282
    
    
    
    19,114
    
    
    
    46,813
    
    
    
    34,112
    
    
    
    61,215Interest income
    
    
    (5,487
    )
    
    
    (550
    )
    
    
    (1,639
    )
    
    
    (12,763
    )
    
    
    (43,542
    )Loss in equity of investments
    
    
    93,982
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,171,119
    )
    
    
    Impairment of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,741Other (income) loss
    
    
    (3,895
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) before income taxes
    
    
    (1,197,165
    )
    
    
    (629,716
    )
    
    
    (820,672
    )
    
    
    5,483,140
    
    
    
    (4,852,806
    )Income tax expense (benefit)
    
    
    (6,581
    )
    
    
    (1,840
    )
    
    
    16,160
    
    
    
    44,250
    
    
    
    253,987Net income (loss)
    
    
    (1,190,584
    )
    
    
    (627,876
    )
    
    
    (836,832
    )
    
    
    5,438,890
    
    
    
    (5,106,793
    )Preferred stock dividends and accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    378,355
    
    
    
    1,623,420Net income (loss) applicable to common
shareholders
    
    $
    (1,190,584
    )
    
    $
    (627,876
    )
    
    $
    (836,832
    )
    
    $
    5,060,535
    
    
    $
    (6,730,213
    )Net income (loss) per share  basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    0.30
    
    
    $
    (0.55
    )Weighted average number of shares
outstanding  basic and diluted
    
    
    151,331,446
    
    
    
    20,224,320
    
    
    
    20,224,320
    
    
    
    16,633,810
    
    
    
    12,134,591
 The accompanying notes are an integral part of these financial statements.
 F-5




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##### Table of Contents



BERLINER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
  Preferred Stock
    
    
    Common Stock25,000,000 shares authorized;
    
    
    200,000,000 shares authorized
    
    
    Additional
    
    
    
    
    
    
    Total$0.00002 par value
    
    
    $0.00002 par value
    
    
    Paid-in
    
    
    Accumulated
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Equity (Deficit)Balance at December 31, 2002
    
    
    
    
    
    
    
    
    
    
    12,134,591
    
    
    $
    121,345
    
    
    $
    8,553,814
    
    
    $
    (14,083,300
    )
    
    $
    (5,408,141
    )Stock issued under standstill voting and
termination agreement
    
    
    
    
    
    
    
    
    
    
    8,089,729
    
    
    
    80,898
    
    
    
    1,977,317
    
    
    
    
    
    
    
    2,058,215Preferred dividends and accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (378,355
    )
    
    
    (378,355
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,438,890
    
    
    
    5,438,890Balance at December 31, 2003
    
    
    
    
    
    
    
    
    
    
    20,224,320
    
    
    
    202,243
    
    
    
    10,531,131
    
    
    
    (9,022,765
    )
    
    
    1,710,609Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (836,832
    )
    
    
    (836,832
    )Balance at December 31, 2004
    
    
    
    
    
    
    
    
    
    
    20,224,320
    
    
    $
    202,243
    
    
    $
    10,531,131
    
    
    $
    (9,859,597
    )
    
    $
    873,777Deemed retroactive stock split to recapitalize
Berliner Communications, Inc. with 147,676,299
common shares, $0.00002 par value
    
    
    
    
    
    
    
    
    
    
    127,451,979
    
    
    
    (199,210
    )
    
    
    199,131
    
    
    
    
    
    
    
    (79
    )Deemed retroactive stock split to recapitalize
Berliner Communications, Inc. with 3,913,699
Series E Preferred shares, $0.00002 par value;
liquidation preference of $0.26 per share
    
    
    3,913,699
    
    
    
    79
    
    
    
    
    
    
    
    (79
    )
    
    
    79
    
    
    
    
    
    
    
    79Deemed dividend of Berliner Communications, Inc.
of net assets not transferred in recapitalization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65,104
    )
    
    
    (65,104
    )Novo Networks, Inc. preferred stock recapitalized
as of February 18, 2005, into 4,500 Series B and 9,473
Series D Preferred shares, $0.00002 par value
liquidation preference of $1,000 per share
    
    
    13,973
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Novo Networks, Inc. shareholder equity recapitalized
as of February 18, 2005, into 52,323,701 common
shares, $0.00002 par value
    
    
    
    
    
    
    
    
    
    
    52,323,701
    
    
    
    1,046
    
    
    
    2,188,001
    
    
    
    
    
    
    
    2,189,047Reverse stock split of one share for every
300 shares on September 16, 2005
    
    
    
    
    
    
    
    
    
    
    (199,333,333
    )
    
    
    (3,987
    )
    
    
    3,987
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,190,584
    )
    
    
    (1,190,584
    )Balance at June 30, 2005
    
    
    3,927,672
    
    
    $
    79
    
    
    
    666,667
    
    
    $
    13
    
    
    $
    12,922,329
    
    
    $
    (11,115,285
    )
    
    $
    1,807,136
 The accompanying notes are an integral part of these financial statements.
 F-6




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##### Table of Contents



BERLINER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months ended
    
    
    For the year endedJune 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2004
    
    
    2003
    
    
    2002(Unaudited)Cash flows from operating activitiesNet income (loss)
    
    $
    (1,190,584
    )
    
    $
    (627,876
    )
    
    $
    (836,832
    )
    
    $
    5,438,890
    
    
    $
    (5,106,793
    )Adjustments to reconcile net income (loss)
to net cash (used in) provided by operationsDepreciation
    
    
    139,220
    
    
    
    180,832
    
    
    
    342,934
    
    
    
    580,207
    
    
    
    703,519Impairment of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,741Loss in equity investments
    
    
    93,982
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,171,119
    )
    
    
    Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    413,801Bad debt expense
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Gain) loss on sale of fixed assets
    
    
    (22,785
    )
    
    
    (13,972
    )
    
    
    (9,699
    )
    
    
    45,445
    
    
    
    7,003Changes in operating assets and liabilitiesAccounts receivable
    
    
    (1,886,407
    )
    
    
    2,060,024
    
    
    
    2,110,775
    
    
    
    (157,860
    )
    
    
    5,330,711Inventories
    
    
    8,950
    
    
    
    34,224
    
    
    
    96,409
    
    
    
    92,449
    
    
    
    452,995Prepaid expenses and other current assets
    
    
    (330,310
    )
    
    
    111,992
    
    
    
    (53,594
    )
    
    
    106,703
    
    
    
    (71,766
    )Other assets
    
    
    14,797
    
    
    
    (1,500
    )
    
    
    (8,730
    )
    
    
    4,561
    
    
    
    896Accounts payable
    
    
    505,588
    
    
    
    (288,276
    )
    
    
    (284,955
    )
    
    
    249,702
    
    
    
    (2,664,680
    )Accrued liabilities
    
    
    1,090,984
    
    
    
    (881,005
    )
    
    
    (712,574
    )
    
    
    (518,118
    )
    
    
    517,508Income taxes receivable and payable
    
    
    (12,581
    )
    
    
    290
    
    
    
    (21,790
    )
    
    
    34,371
    
    
    
    462,974Deferred revenues
    
    
    (11,435
    )
    
    
    (9,435
    )
    
    
    9,435
    
    
    
    (200,000
    )
    
    
    200,000Other liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,374Net cash (used in) provided by operating
activities
    
    
    (1,590,581
    )
    
    
    565,298
    
    
    
    631,379
    
    
    
    (1,494,769
    )
    
    
    338,283Cash flow from investing activitiesPurchase of property and equipment
    
    
    (89,397
    )
    
    
    (42,140
    )
    
    
    (80,358
    )
    
    
    (219,765
    )
    
    
    (330,699
    )Proceeds from the sale of property and equipment
    
    
    60,423
    
    
    
    10,268
    
    
    
    25,053
    
    
    
    28,849
    
    
    
    118,401Net cash used in investing activities
    
    
    (28,974
    )
    
    
    (31,872
    )
    
    
    (55,305
    )
    
    
    (190,916
    )
    
    
    (212,298
    )Cash flows from financing activitiesPayment of preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137,500
    )
    
    
    (660,000
    )Proceeds from line of credit
    
    
    1,237,080
    
    
    
    701,146
    
    
    
    1,887,663
    
    
    
    435,995
    
    
    
    Proceeds from long-term debt
    
    
    30,039
    
    
    
    
    
    
    
    101,640
    
    
    
    87,566
    
    
    
    Repayment of line of credit
    
    
    (1,087,844
    )
    
    
    (1,028,263
    )
    
    
    (1,979,070
    )
    
    
    
    
    
    
    Repayment of long-term debt
    
    
    (198,989
    )
    
    
    (89,256
    )
    
    
    (180,637
    )
    
    
    (89,288
    )
    
    
    Repayment of loan from shareholder
    
    
    (101,640
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repayment of capital leases
    
    
    (33,886
    )
    
    
    (43,761
    )
    
    
    (89,722
    )
    
    
    (97,154
    )
    
    
    (66,218
    )Cash paid on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (800,000
    )
    
    
    Net cash used in financing activities
    
    
    (155,240
    )
    
    
    (460,134
    )
    
    
    (260,126
    )
    
    
    (600,381
    )
    
    
    (726,218
    )Net increase (decrease) in cash and cash equivalents
    
    
    (1,774,795
    )
    
    
    73,292
    
    
    
    315,948
    
    
    
    (2,286,066
    )
    
    
    (600,233
    )Cash and cash equivalents at beginning of period
    
    
    453,818
    
    
    
    137,870
    
    
    
    137,870
    
    
    
    2,423,936
    
    
    
    3,024,169Cash and cash equivalents, acquired
    
    
    1,723,408
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents at end of period
    
    $
    402,431
    
    
    $
    211,162
    
    
    $
    453,818
    
    
    $
    137,870
    
    
    $
    2,423,936
 F-7




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##### Table of Contents



BERLINER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months ended
    
    
    For the year endedJune 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2004
    
    
    2003
    
    
    2002(Unaudited)Supplemental disclosure of cash flow informationInterest paid
    
    $
    21,113
    
    
    $
    19,114
    
    
    $
    46,813
    
    
    $
    35,776
    
    
    $
    61,215Income taxes paid
    
    $
    13,087
    
    
    $
    5,144
    
    
    $
    9,789
    
    
    $
    
    
    
    $
    167,631Non-cash investing and financing activitiesPreferred stock accretion
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    240,855
    
    
    $
    963,420Capital leases entered into
    
    $
    
    
    
    $
    
    
    
    $
    55,215
    
    
    $
    19,415
    
    
    $
    342,018Net assets acquired
    
    $
    392,123
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 The accompanying notes are an integral part of these financial statements.
 F-8




---



##### Table of Contents



BERLINER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Business
      2. Summary of Significant Accounting Policies
 Basis of Presentation
   Principals of Consolidation
  Reclassifications
  Cash and Cash Equivalents
  F-9




---



##### Table of Contents



Risks and Uncertainties
  Inventories
  Prepaid Expenses and Other Assets
  Property and Equipment
  Long-lived Assets
  Equity Investments
  F-10




---



##### Table of Contents



Revenue Recognition
   Income Taxes
  Stock Based Compensation
 Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation
   F-11




---



##### Table of Contents



Six MonthsEnded
    
    
    Fiscal Year Ended December 31,June 30, 2005
    
    
    June 30, 2004
    
    
    2004
    
    
    2003
    
    
    2002Pro forma net income (loss)Net income (loss) allocable to common shareholders,
as reported
    
    $
    (1,190,584
    )
    
    $
    (627,876
    )
    
    $
    (836,832
    )
    
    $
    5,060,535
    
    
    $
    (6,730,213
    )Less  Stock-based compensation determined under
fair value based method
    
    
    (12,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) allocable to common
shareholders, proforma
    
    $
    (1,203,084
    )
    
    $
    (627,876
    )
    
    $
    (836,832
    )
    
    $
    5,060,535
    
    
    $
    (6,730,213
    )Net income (loss) per share, pro
forma
    
    $
    (0.01
    )
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    0.30
    
    
    $
    (0.55
    )Net income (loss) per share, as
reported
    
    $
    (0.01
    )
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    0.30
    
    
    $
    (0.55
    )
  3. Accounts Receivable
  June 30,
    
    
    December 31,2005
    
    

2004
    
    
    2003Accounts receivable
    
    $
    4,209,743
    
    
    $
    2,788,188
    
    
    $
    4,492,837Unbilled receivables
    
    
    1,143,140
    
    
    
    702,777
    
    
    
    1,150,5665,352,883
    
    
    
    3,490,965
    
    
    
    5,643,403Allowance for doubtful accounts
    
    
    (91,572
    )
    
    
    (106,061
    )
    
    
    (147,724
    )Total
    
    $
    5,261,311
    
    
    $
    3,384,904
    
    
    $
    5,495,679
   Balance
    
    Charged
    
    
    
    
    
    Balanceat
    
    to Costs
    
    Recoveries/
    
    atBeginning of
    
    and
    
    Deductions/
    
    End ofPeriod
    
    Expenses
    
    Write-offs
    
    PeriodYear ended December 31, 2002
    
    $
    137,046
    
    
    
    25,390
    
    
    
    8,733
    
    
    $
    171,169Year ended December 31, 2003
    
    $
    171,169
    
    
    
    
    
    
    
    (23,445
    )
    
    $
    147,724Year ended December 31, 2004
    
    $
    147,724
    
    
    
    45,636
    
    
    
    (87,299
    )
    
    $
    106,061Six months ended June 30, 2005
    
    $
    106,061
    
    
    
    10,000
    
    
    
    (24,489
    )
    
    $
    91,572
 F-12




---



##### Table of Contents



4. Property and Equipment
  June 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2003Automobiles and trucks
    
    $
    392,143
    
    
    $
    239,464
    
    
    $
    813,713Furniture and fixtures
    
    
    252,361
    
    
    
    500,322
    
    
    
    276,047Equipment
    
    
    1,800,477
    
    
    
    1,766,906
    
    
    
    1,395,771Computer equipment and software
    
    
    81,490
    
    
    
    81,490
    
    
    
    71,506Leasehold improvements
    
    
    118,444
    
    
    
    110,131
    
    
    
    110,1322,644,915
    
    
    
    2,698,313
    
    
    
    2,667,169Less accumulated depreciation and amortization
    
    
    (2,175,060
    )
    
    
    (2,140,996
    )
    
    
    (1,887,137
    )Total
    
    $
    469,855
    
    
    $
    557,317
    
    
    $
    780,032
  5. Equity Investments
  6. Accrued Liabilities
  June 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2003Employee compensation
    
    $
    192,702
    
    
    $
    141,838
    
    
    $
    41,171Constructions costs
    
    
    1,937,786
    
    
    
    975,969
    
    
    
    1,862,469Other
    
    
    155,401
    
    
    
    106,158
    
    
    
    32,899$
    2,285,889
    
    
    $
    1,223,965
    
    
    $
    1,936,539
 F-13




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##### Table of Contents



7. Income Taxes
  June 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2003Tax expense (benefit) of statutory rate of 34%
    
    $
    (407,036
    )
    
    $
    (279,028
    )
    
    $
    1,864,268Increase in valuation allowance against deferred tax assets
    
    
    429,080
    
    
    
    305,009
    
    
    
    899,512State income tax expense (benefit), net of federal income tax benefit
    
    
    (71,112
    )
    
    
    (73,860
    )
    
    
    (159,333
    )Gain on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (2,438,180
    )Other, net
    
    
    42,487
    
    
    
    64,039
    
    
    
    (122,017
    )Income tax (benefit) expense
    
    $
    (6,581
    )
    
    $
    16,160
    
    
    $
    44,250
  June 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2003Deferred tax assetsAllowance for doubtful accounts
    
    $
    36,574
    
    
    $
    42,424
    
    
    $
    59,090Reserve for obsolete and slow moving inventory
    
    
    13,407
    
    
    
    6,084
    
    
    
    15,102Net operating loss carryforwards
    
    
    1,196,527
    
    
    
    3,402,205
    
    
    
    3,062,334Excess of financial statement depreciation over tax depreciation
    
    
    
    
    
    
    
    
    
    
    9,178Total gross deferred tax assets
    
    
    1,246,508
    
    
    
    3,450,713
    
    
    
    3,145,704Less valuation allowance
    
    
    1,246,508
    
    
    
    3,450,713
    
    
    
    3,145,074Net deferred tax assets
    
    
    
    
    
    
    
    
    
    
    Deferred tax liability  excess of tax depreciation over financial
statement depreciation
    
    
    
    
    
    
    
    
    
    
    Net deferred taxes
    
    $
    
    
    
    $
    
    
    
    $
    
   8. Revolving Credit Facility
   F-14




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##### Table of Contents



9. Long-term Debt
  June 30,
    
    
    December 31,2005
    
    
    2004
    
    
    2003Loans payable to financing companies, payable in monthly
installments of $2,656, interest at -0-% and 7.99% annually, due
May, 2008 through November, 2011, secured by automobilies
    
    $
    106,403
    
    
    $
    114,354
    
    
    $
    78,778Notes payable to Greenhill Capital Partners LP and PWIBD
Partners LP issued in 2003, payable in quarterly installments
$80,500, bearing interest from 0% to 6%, maturing in September 2006
    
    
    563,503
    
    
    
    724,502
    
    
    
    885,500669,906
    
    
    
    838,856
    
    
    
    964,278Less current maturities
    
    
    (425,964
    )
    
    
    (434,372
    )
    
    
    (339,513
    )$
    243,942
    
    
    $
    404,484
    
    
    $
    624,765
  June 30,2006
    
    $
    425,9642007
    
    
    187,8252008
    
    
    28,1592009
    
    
    17,0682010
    
    
    10,329Thereafter
    
    
    561$
    38,669,906
 10. Capitalized Leases
   2006
    
    $
    44,3482007
    
    
    12,48456,832Amounts representing interest
    
    
    (7,168
    )Future
minimum lease payments
    
    $
    49,664
 F-15




---



##### Table of Contents



11. Commitments and Contingencies
 Operating Leases
   June 30,2006
    
    $
    427,4922007
    
    
    323,8302008
    
    
    297,3362009
    
    
    37,671$
    1,086,329
 Legal Proceedings
  12. Employee Benefit Plan
  13. Concentration of Credit Risk
     F-16




---



##### Table of Contents



14. Related Party Transactions
  15. Gain on Extinguishment of Debt
  16. Stockholders Equity
  Preferred Stock
  Series A Convertible Preferred Stock
 Series B Convertible Preferred Stock
 Series C Convertible Preferred Stock
 Series D Convertible Preferred Stock
 F-17




---



##### Table of Contents



Series E Convertible Preferred Stock
 Stock Options
     2001 Plan
    
    
    1999 Plan
    
    
    Non-PlanWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageNumber
    
    
    Exercise
    
    
    Number
    
    
    Exercise
    
    
    Number
    
    
    Exerciseof Shares
    
    
    Price
    
    
    of Shares
    
    
    Price
    
    
    of Shares
    
    
    PriceBalance at February 18, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Existing Novo options
    
    
    5,377,051
    
    
    $
    4.63
    
    
    
    1,960,000
    
    
    $
    5.97
    
    
    
    5,611,074
    
    
    $
    22.62Options granted at fair value value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2005
    
    
    5,377,051
    
    
    $
    4.63
    
    
    
    1,960,000
    
    
    $
    5.97
    
    
    
    5,611,074
    
    
    $
    22.62Exercisable at June 30, 2005
    
    
    5,377,051
    
    
    $
    4.63
    
    
    
    1,960,000
    
    
    $
    5.97
    
    
    
    5,611,074
    
    
    $
    22.62
 F-18




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##### Table of Contents



Options Outstanding and ExercisableWeighted
    
    
    WeightedNumber
    
    
    Average
    
    
    AverageOption Price
    
    
    of
    
    
    Exercise
    
    
    RemainingRange
    
    
    Shares
    
    
    Price
    
    
    Contractual Life2001 Plan
    
    
    
    
    
    
    
    
    
    $
    4.63
    
    
    
    5,377,051
    
    
    $
    4.63
    
    
    
    5.54 years1999 Plan
    
    $
    0.03
    
    
    to
    
    $
    0.06
    
    
    
    1,300,000
    
    
    $
    0.05
    
    
    
    8.15 years$
    5.01
    
    
    to
    
    $
    10.00
    
    
    
    350,000
    
    
    $
    10.00
    
    
    
    4.25 years$
    15.01
    
    
    to
    
    $
    20.00
    
    
    
    60,000
    
    
    $
    16.88
    
    
    
    5.00 years$
    25.01
    
    
    to
    
    $
    30.00
    
    
    
    250,000
    
    
    $
    28.50
    
    
    
    4.71 yearsNon-Plan
    
    $
    10.01
    
    
    to
    
    $
    15.00
    
    
    
    191,574
    
    
    $
    12.00
    
    
    
    4.71 years$
    20.01
    
    
    to
    
    $
    25.00
    
    
    
    5,419,500
    
    
    $
    23.00
    
    
    
    4.75 years
 Outstanding Warrants and Options Issued in Connection with the iGlobal Acquisition
  17. Subsequent Event
  §
    
    To increase the aggregate number of shares that we will have the authority to issue from
225,000,000 to 6,600,000,000 shares, of which 6,000,000,000 shares will he shares of Common
Stock, and 600,000,000 shares will be shares of Preferred Stock;§
    
    To change our name from Novo Networks, Inc. to Berliner Communications, Inc.;§
    
    To amend the Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock to reduce the conversion price of the Series B Convertible Preferred Stock
to $0.014018, and thereby increase the number of shares of Common Stock issuable upon
conversion of such shares of the Series B Convertible Preferred Stock to 321,015,546
(in the quarter ended September 30, 2005, we will record a deemed dividend of approximately $2.9 million due to the reduction in the conversion price);§
    
    To amend the Certificate of Designation, Preferences and Rights of Series D Convertible
Preferred Stock to reduce the conversion price of the Series D Convertible Preferred Stock
to $0.014018, and thereby increase the number of shares of Common Stock issuable upon
conversion of such shares of the Series D Convertible Preferred Stock to 675,773,394 (in
the quarter ended September 30, 2005, we will record a deemed dividend of approximately $6.1 million due to the reduction in the conversion price);§
    
    To provide that, upon the filing of the Certificate of Amendment, all shares of the
Series B Convertible Preferred Stock, Series D Convertible Preferred Stock, and Series E
Convertible Preferred Stock will be automatically converted into Common Stock;§
    
    To effect a 1:300 reverse stock split, such that the outstanding shares of Common Stock
and Convertible
 F-19




---



##### Table of Contents



Preferred Stock will be reclassified and one new share of Common Stock will be issued for
every 300 shares of existing Common Stock (which has been retroactively reflected in the accompanying Balance Sheet); and§
    
    To amend the Certificate of Incorporation, such that, after giving effect to the reverse
stock split, the aggregate number of shares that we will have the authority to issue is
22,000,000 shares, of which 20,000,000 shares will be shares of Common Stock, and 2,000,000
shares will be shares of Preferred Stock.
 F-20




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##### Table of Contents



18. Unaudited Quarterly Results of Operations
  For the Six Months Ended June 30, 2005First Quarter
    
    
    Second Quarter
    
    
    Total(unaudited)Revenues
    
    $
    3,750,688
    
    
    $
    6,445,582
    
    
    $
    10,196,270Gross margin
    
    $
    954,481
    
    
    $
    1,902,619
    
    
    $
    2,857,099Loss from operations before other (income) expense
    
    $
    (916,371
    )
    
    $
    (173,912
    )
    
    $
    (1,090,283
    )Net loss
    
    $
    (946,907
    )
    
    $
    (243,678
    )
    
    $
    (1,190,584
    )Net loss allocable to common shareholders
    
    $
    (946,907
    )
    
    $
    (243,678
    )
    
    $
    (1,190,584
    )
 For the Fiscal Year Ended December 31, 2004First Quarter
    
    
    Second Quarter
    
    
    Third Quarter
    
    
    Fourth Quarter
    
    
    Total(unaudited)Revenues
    
    $
    3,579,826
    
    
    $
    3,915,747
    
    
    $
    3,838,201
    
    
    $
    3,952,130
    
    
    $
    15,285,904Gross margin
    
    $
    1,261,964
    
    
    $
    1,306,968
    
    
    $
    1,601,248
    
    
    $
    1,510,885
    
    
    $
    5,681,065Loss from operations before other (income) expense
    
    $
    (363,116
    )
    
    $
    (84,073
    )
    
    $
    (8,493
    )
    
    $
    (319,816
    )
    
    $
    (775,498
    )Net loss
    
    $
    (374,183
    )
    
    $
    (101,069
    )
    
    $
    (20,957
    )
    
    $
    (340,623
    )
    
    $
    (836,832
    )Net loss allocable to common shareholders
    
    $
    (374,183
    )
    
    $
    (101,069
    )
    
    $
    (20,957
    )
    
    $
    (340,623
    )
    
    $
    (836,832
    )
 For the Fiscal Year Ended December 31, 2003First Quarter
    
    
    Second Quarter
    
    
    Third Quarter
    
    
    Fourth Quarter
    
    
    Total(unaudited)Revenues
    
    $
    3,432,491
    
    
    $
    4,283,079
    
    
    $
    5,148,922
    
    
    $
    5,091,342
    
    
    $
    17,955,834Gross margin
    
    $
    876,565
    
    
    $
    1,111,685
    
    
    $
    1,314,858
    
    
    $
    1,554,057
    
    
    $
    4,857,165Loss from operations before other (income) expense
    
    $
    (698,558
    )
    
    $
    (284,910
    )
    
    $
    (244,279
    )
    
    $
    (438,883
    )
    
    $
    (1,666,630
    )Net income (loss)
    
    $
    (648,866
    )
    
    $
    (465,568
    )
    
    $
    (335,747
    )
    
    $
    6,889,071
    
    
    $
    5,438,890Net loss allocable to common shareholders
    
    $
    (1,054,721
    )
    
    $
    (465,568
    )
    
    $
    (335,747
    )
    
    $
    6,916,571
    
    
    $
    5,060,535
 F-21




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##### Table of Contents



EXHIBIT
    
    
    
    
    
    
    
    
    
    
    
    FILEDNUMBER
    
    DESCRIPTION
    
    INCORPORATED BY REFERENCE
    
    HEREWITHFORM
    
    DATE
    
    NUMBER2.1
    
    Proposed Disclosure Statement with
respect to the Joint Plan by
AxisTel Communications, Inc., its
Affiliated Debtors and Novo
Networks, Inc. dated December 31,
2001
    
    10-Q
    
    2/14/02
    
    
    2.12.2
    
    Joint Plan of Liquidation by and
between AxisTel Communications,
Inc., Novo Networks Global
Services, Inc., Novo Networks,
International Services, Inc.,
e.Volve, Technology Group, Inc.,
Novo Networks Operating Corp.,
Novo Networks Metro services,
Inc., and Novo Networks, Inc.
dated December 31, 2001
    
    10-Q
    
    2/14/02
    
    
    2.23.1
    
    Amended and Restated Certificate
of Incorporation of eVentures
Group, Inc.
    
    
    
    
    
    
    
    
    
    X3.2
    
    Amendment to Amended and Restated
Certificate of Incorporation,
filed with the Secretary of State
of the State of Delaware on
November 13, 2000.
    
    
    
    
    
    
    
    
    
    X3.3
    
    Amendment to Amended and Restated
Certificate of Incorporation,
filed with the Secretary of State
of the State of Delaware on
December 11, 2000.
    
    
    
    
    
    
    
    
    
    X3.4
    
    Certificate of Amendment, dated
September 16, 2005, to the
Restated Certificate of
Incorporation
    
    
    
    
    
    
    
    
    
    X3.5
    
    Certificate of Amendment, dated
September 16, 2005, to the
Restated Certificate of
Incorporation
    
    
    
    
    
    
    
    
    
    X3.6
    
    Amended and Restated By-Laws of
eVentures Group, Inc.
    
    
    
    
    
    
    
    
    
    X10.01
    
    Stock Option Agreement, dated as
of April 4, 2000 between eVentures
Group, Inc. and Daniel J. Wilson.
(compensatory agreement)
    
    10-Q
    
    5/15/2000
    
    
    10.610.02
    
    Stock Option Agreement, dated as
of April 4, 2000 between eVentures
Group, Inc. and Chad E. Coben.
(compensatory agreement).
    
    10-Q
    
    5/15/2000
    
    
    10.810.03
    
    Stock Option Agreement, dated as
of April 4, 2000 between eVentures
Group, Inc. and Barrett N.
Wissman. (compensatory agreement).
    
    10-Q
    
    5/15/2000
    
    
    10.1010.04
    
    Stock Option Agreement, dated as
of April 17, 2000 between
eVentures Group, Inc. and Susie C.
Holliday. (compensatory
agreement).
    
    10-Q
    
    5/15/2000
    
    
    10.14
 A-1




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##### Table of Contents



EXHIBIT
    
    
    
    
    
    
    
    
    
    
    
    FILEDNUMBER
    
    DESCRIPTION
    
    INCORPORATED BY REFERENCE
    
    HEREWITHFORM
    
    DATE
    
    NUMBER10.05
    
    Amendment to Non-Qualified Stock
Option Agreement between eVentures
Group, Inc. and Susie C. Holliday,
dated October 2, 2000.
    
    10-Q
    
    11/14/2000
    
    
    10.710.06
    
    Common Stock Subscription
Agreement, dated as of April 4,
2000, by and among eVentures
Group, Inc. and the signatories
thereto.
    
    10-Q
    
    5/15/2000
    
    
    10.1510.07A
    
    Form of New Directors and Officers
Indemnification Agreement.
    
    10-K
    
    9/28/2000
    
    
    10.49
    A10.07B
    
    Schedule of Parties to New
Directors and Officers
Indemnification Agreement.
    
    10-K
    
    9/28/2000
    
    
    10.49
    B10.08A
    
    Form of Incumbent Directors and
Officers Indemnification
Agreement.
    
    10-K
    
    9/28/2000
    
    
    10.50
    A10.08B
    
    Schedule of Parties to Incumbent
Directors and Officers
Indemnification Agreement.
    
    10-K
    
    9/28/2000
    
    
    10.50
    B10.09
    
    2001 Equity Incentive Plan
    
    10-Q
    
    5/15/2000
    
    
    10.110.10A
    
    Employment Agreement, dated as of
March 10, 2000, between IGS
Acquisition Corporation and
Patrick G. Mackey. (compensatory
agreement)
    
    10-K
    
    9/28/2001
    
    
    10.4210.10B
    
    Amendment No. 1 to Employment
Agreement between eVentures Group,
Inc. and Patrick G. Mackey, dated
as of September 25, 2000.
    
    10-K
    
    9/28/2001
    
    
    10.4210.10C
    
    Amendment No. 2 to Employment
Agreement between Novo Networks,
Inc. and Patrick G. Mackey, dated
as of January 10, 2001.
    
    10-K
    
    9/28/2001
    
    
    10.4210.11
    
    Purchase Agreement by and among
Novo Networks, Inc., Paciugo
Management LLC, Ad Astra Holdings
LP, Ugo Ginatta, Cristiana Ginatta
and Vincent Ginatta
    
    8-K
    
    1/03/03
    
    
    10.110.12
    
    Nonqualified Stock Option
Agreement between the Registrant
and Barrett N. Wissman
    
    10-Q
    
    5/15/03
    
    
    10.110.13
    
    Nonqualified Stock Option
Agreement between the Registrant
and Steven W. Caple
    
    10-Q
    
    5/15/03
    
    
    10.210.14
    
    Nonqualified Stock Option
Agreement between the Registrant
and Jan Robert Horsfall
    
    10-Q
    
    5/15/03
    
    
    10.310.15
    
    Nonqualified Stock Option
Agreement between the Registrant
and John Stevens Robling
    
    10-Q
    
    5/15/03
    
    
    10.4
 A-2




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##### Table of Contents



EXHIBIT
    
    
    
    
    
    
    
    
    
    
    
    FILEDNUMBER
    
    DESCRIPTION
    
    INCORPORATED BY REFERENCE
    
    HEREWITHFORM
    
    DATE
    
    NUMBER10.16
    
    Nonqualified Stock Option
Agreement between the Registrant
and Russell W. Beiersdorf
    
    10-Q
    
    5/15/03
    
    
    10.510.17
    
    Nonqualified Stock Option
Agreement between the Registrant
and Patrick Mackey
    
    10-Q
    
    5/15/03
    
    
    10.610.18
    
    Nonqualified Stock Option
Agreement between the Registrant
and Susie C. Holliday
    
    10-Q
    
    5/15/03
    
    
    10.710.19
    
    Non-Qualified Stock Option
Agreement dated as of February 27,
2004 between Novo Networks, Inc.
and Barrett N. Wissman
    
    10-Q
    
    5/17/07
    
    
    10.110.20
    
    Non-Qualified Stock Option
Agreement dated as of February 27,
2004 between Novo Networks, Inc.
and John Stevens Robling, Jr.
    
    10-Q
    
    5/17/04
    
    
    10.210.21
    
    Non-Qualified Stock Option
Agreement dated February 27, 2004
between Novo Networks, Inc. and
Russell W. Beiersdorf
    
    10-Q
    
    5/17/04
    
    
    10.321.1
    
    Subsidiaries of Novo Networks, Inc.
    
    
    
    
    
    
    
    
    
    X23.1
    
    Consent of BDO Seidman, LLP
    
    
    
    
    
    
    
    
    
    X23.2
    
    Consent of Grant Thornton LLP
    
    
    
    
    
    
    
    
    
    X31.1
    
    Certification of the Chief
Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of the Chief
Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002
    
    
    
    
    
    
    
    
    
    X32.1
    
    Certification Pursuant to Section
906 of the Sarbanes-Oxley Act of
2002
    
    
    
    
    
    
    
    
    
    X
 A-3