Edgar Filing: NETWORK INSTALLATION CORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005.

[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ________

Commission File No. 000-25499

NETWORK INSTALLATION CORPORATION
(Exact name of issuer as specified in its charter)

(Exact name of registrant as specified in its charter)

Nevada 88-0390360
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

5625 Arville St., Suite E, Las Vegas, NV 89118
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (702) 889-8777

Securities registered under Section 12(b)
of the Exchange Act: None.

Securities registered under Section 12(g)
of the Exchange Act: Common stock, par value
$0.001 per share.
(Title of class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past twelve months (or such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

State issuer's revenues for its most recent fiscal year: $5,932,064.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
March 31, 2006: $2,745,135 (Based on 6,536,037 shares held by non-affiliates
and the closing price of our stock of $0.42 on March 31, 2006.)

State the number of shares outstanding of each of the registrant's classes of
common stock as of March 31, 2006: 28,870,437.

Documents incorporated by reference: None.

Transitional Small Business Disclosure Format (Check one): Yes [ ]; No [X]

NETWORK INSTALLATION CORPORATION TABLE OF CONTENTS

PART I PAGE NO.

ITEM 1. DESCRIPTION OF BUSINESS. 2
ITEM 2. DESCRIPTION OF PROPERTY. 5
ITEM 3. LEGAL PROCEEDINGS. 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 6

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. 6
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.8
ITEM 7. FINANCIAL STATEMENTS. 16
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE. 28
ITEM 8A. CONTROLS AND PROCEDURES. 29
ITEM 8B. OTHER INFORMATION. 29

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. 29
ITEM 10. EXECUTIVE COMPENSATION. 30
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS. 31
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. 31
ITEM 13. EXHIBITS. 34
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. 35

PART I

ITEM 1. DECRIPTION OF BUSINESS.

OVERVIEW

Through our wholly-owned subsidiary, Kelley Technologies, we are a one-source
solution company specializing in the design, project management, and deployment
of communication technology and systems networks. Our systems networks include
data, voice and audio/visual components, security and surveillance systems,
special effects, and videoconferencing solutions. We market our services
primarily to the gaming, resort and hospitality industries. We do most of our
work in the Las Vegas area, but we have also completed projects in Atlantic
City, New Jersey, the Caribbean and for Indian Tribes in several states in the
U.S.

HISTORY

We incorporated in the State of Nevada as Color Strategies on March 24, 1998. On
October 1, 1999, we created a wholly-owned subsidiary named Infinite Technology
Holding, Inc. On December 23, 1999, we changed our name to Infinite Technology
Corporation. On May 4, 2000, we changed our name from Infinite Technology
Corporation to Network Installation Corporation. On the same date, we changed
the name of our wholly-owned subsidiary to Network Installation Holdings, Inc.

In May 2000, we acquired Mardock, Inc., a designer, manufacturer and
distributor of apparel and promotional products. In August 2000, we acquired a
majority interest in North Texas Circuit Board Co., or NTCB, through the
acquisition of 67% of the common stock of Primavera Corporation, the parent
company of NTCB. In September 2000, we acquired 80% of the outstanding stock
of OpiTV.com.

In late 2000, we determined that our capital and management resources were
spread too thin to properly address the needs of our three subsidiaries. As a
result, in July of 2001, we sold all of our common stock ownership in Mardock,
Inc. and OpiTV.com.

In July 2001, we acquired the remaining 20% of Primavera's common stock. On
August 20, 2002, we sold NTCB to a third party. On December 27, 2002, we
disposed of 100% of Flexxtech Holdings, Inc. Flexxtech Holdings was the parent
corporation of Primavera Corporation. After the sale of NTCB, Flexxtech Holdings
had no significant assets and was disposed of to Western Cottonwood Corp., an
affiliate at the time of the transaction, for nominal consideration of $10.

On October 1, 2002, we agreed to acquire 80% of the outstanding common shares of
W3M, Inc., dba Paradigm Cabling Systems, a privately-held California
corporation, in a stock for stock exchange. At the time of the transaction,
Paradigm was a full-service computer cabling, networking and telecommunications
integrator contractor. As part of the transaction, we agreed to use our best
efforts to arrange for an infusion of $250,000 in additional capital to
Paradigm. However, we were unable to raise the capital. As a result, on April 8,
2003, we entered into an agreement with Paradigm that the acquisition of
Paradigm would be void ab initio, that is, at its inception, with the effect
that Paradigm remained the owner of all of its assets and the shares of our
preferred stock were restored to the status of authorized shares.

In May 2003, we acquired Irvine, California-based Network Installation
Corporation. Network Installation, or NIC, was established in July 1997 as a
California corporation. At the time of acquisition, NIC provided products,
project management, design and installation within the networking and
communications sector.

On March 1, 2004, we acquired Del Mar Systems International, Inc., a
telecommunications solutions provider. The acquisition of Del Mar allowed us
to provide integrated telecom solutions to our customers.

In January 2005, we acquired COM Services, Inc., a privately-held California
corporation. COM provided installations of cabling infrastructure for school
districts and universities and colleges.

On September 22, 2005, we acquired Kelley Communication Company, Inc., a single
source technology company specializing in providing design/build solutions for
casino/resort hotel owner requirements. Kelley Technologies designs, manages
projects, builds and deploys communication technology, large entertainment
technology and systems networks. Kelley's systems networks include: data,
telecommunications, audio and video components, casino surveillance, security
and access control systems, entertainment audio and video, special effects and
multi-million dollar video conference systems. Kelley does work primarily in
the Las Vegas area, but has also done projects in New Jersey, Oklahoma,
Colorado, California, and the Caribbean.

On November 4, 2005, we announced the acquisition of Spectrum Communications
Cabling Services, Inc., a complete solution network service firm which provides
network design, installation and maintenance of voice and data network systems.
On January 6, 2006, we announced that the rescission of our acquisition of
Spectrum due to material philosophical differences between the parties regarding
operations as well as our future direction.

INDUSTRY OVERVIEW - GAMING

The gaming industry is a high growth industry with ownership increasingly
consolidated among several large casino and hotel owners, and a large number of
much smaller competitors. The industry tends to be clustered in Las Vegas,
Nevada, but also has a presence in Atlantic City and the Caribbean, and on
Indian land in many states across the U.S. Casinos, resorts and hotels in the
gaming industry, more than most leisure industries, depend on flashy special
eaffects, large video boards and advanced audio systems to complete for the
attention of gamblers and consumers. We believe this offers us a growth
opportunity to sell our communication networks and systems technology.

INDUSTRY OVERVIEW - MULTI-DWELLING UNITS

We believe there is a trend is developing in the U.S. whereby Multiple Dwelling
Units, or MDUs, are increasingly being built in urban areas around the country.
Miami, San Diego and Las Vegas seem to be at the center of this trend. The
high-rise MDUs cater to upscale residents and visitors, many of which desire
"smart home" products for their condos. "Smart homes" include a level of
automation that allows touch panel control for any/all of the following systems:
audio, video, telephone, data, lighting, shades, HVAC, vacuum and security. Due
to less and less buildable land close in to these urban centers, the trend of
building upward seems likely to continue, as it did in larger cities that ran
out of space earlier in their development cycles. We believe this increase in
MDU developments will offer us the opportunity to sell "smart home" systems and
we have begun to target this industry as a potential area of growth for us,
however there can be no assurances that our efforts will be successful.

OUR BUSINESS

Prior to our acquisition of Kelley Technologies in September 2005, our business
was located in Irvine, California. We focused on the design, installation, and
deployment of specialty communication systems for data, voice, video and
telecom. Our technicians designed the applications required for network
build-outs, structured cabling, deployment, security, training, and technical
support and Wi-Fi, Voice over Internet Protocol, or VoIP, and traditional
telecom products. During 2005, we earned revenue from: (i) the installation of
data, voice, video and telecom networks; (ii) the resale of installed networking
products; and (iii) consulting services in the assessment of existing networks.
Our customers included Fortune 1000 companies, K-12 schools, colleges and local
and regional municipalities.

After our acquisition of Kelley Technologies in September 2005, we focused our
efforts on Kelley's primary markets as we believe those markets offer the best
opportunity for growth. We also analyzed our two locations and determined we
could decrease costs by consolidating our operations in Las Vegas. As a result,
in the fourth quarter of 2005, we began migrating our business toward Kelley's
opportunities. We stopped taking on new business through our subsidiaries
located in California, NIC and COM, and finished our existing projects. In
March 2006, we moved our corporate offices from Irvine, California to Las Vegas,
Nevada so we would be better able to serve the Las Vegas market. As of March
31, 2006, we had only minimal operations in California. In 2006, we intend to
focus our efforts on developing our Kelley Technologies subsidiary.

Kelley Technologies is a one-source solution company specializing in the design,
project management, and deployment of communication technology and systems
networks. Our systems networks include data, voice and audio/visual components,
security and surveillance systems, special effects, and videoconferencing
solutions. We also design an overlay to control the systems we create and
install. This overlay may include servers, routers, controllers and/or software
applications.

Some of our recent projects include designing and installing the following
systems:

- Restaurant sound and plasma displays;
- Race & Sports book technologies, including satellite, cable tv, live horse
racing, state of the art video displays with audio, voice and data;
- Spa and health club audio and video;
- Hotel guest room television, audio, telecommunications and internet, and
control systems to manage them;
- Convention center and meeting room technologies, including drop down video
projection, audio, voice and data networks;
- Back of the house closed circuit television and audio, voice and data;
- Hotel and casino public area audio, television voice and data services;
- Large casino surveillance and security systems;
- Access control systems;
- Corporate boardroom touch screen controlled audio, video, video
conference, internet, data and telecommunications systems;
- Large casino wide data networks for slot machines, cash machines, point of
sale devices and casino player tracking;
- Casino wide networked plasma displays for advertising;
- Casino parking garage and public area background music and paging systems,
access control and point of sale networks;
- Main showroom audio and video systems, theatrical lighting and special
effects;
- Lounge and nightclub systems, video projection, special effects, point of
sale networks, theatrical lighting; and
- Security and surveillance systems and control centers.

SUPPLIERS

While we are predominately a service company, we purchase and resell products
such as networking controllers, cable, TV, software, audio, video, surveillance
and other equipment involved in our project installations. We purchase our
products from various distributors, and, in some cases, directly from the
manufacturer. Should any of these distributors and vendors cease operations, our
business would not be materially effected because most of these products are
readily available from multiple distributors locally, regionally or
nationally.

OPERATIONS

After the acquisition of Kelley Technologies, we switched our focus to providing
design and project management for complex communication technology and systems
networks. We also fabricate the servers, routers and other control equipment
that run the systems we design. Our management and employees provide the
consulting, design and project management services to our customers. However,
we do not have employees to install cable in the projects we design, nor do we
install equipment. We fabricate all racked equipment at our facility, test such
equipment and then deliver the equipment to the job site. Racked equipment is
equipment contained in a rack or cabinet. The racked electronics, speakers,
equipment, televisions, conduit or cable on any project are installed by the
general or the electrical contractor.

SALES AND MARKETING

Through our wholly-owed subsidiary, Kelley Technologies, we focus primarily on
the gaming, resort and hospitality industries. We believe we are uniquely
positioned to serve this market with nearly two decades of service, long
standing relationships with key decision-makers, and a high quality design and
project management team. Additionally, we offer a one-stop shop for high
quality, reliable, and efficient system designs, which few of our competitors
can do. We believe we have significant growth opportunities within these
industries as the industries continue to grow and develop new properties and
continue to rely on improved security, audio/visual effects, and other
technology advancements.

We generate most new business through repeat business from existing or former
clients. We are also contacted directly by customers who learn about us from
our reputation in the marketplace. As of March 31, 2006, we didn't use sales
people to market our services to the gaming industry, however we may do so in
the future if we have adequate funding and believe the opportunity exists to
increase sales.

We market our services to the Multi Dwelling Unit industry because we believe
this market poses a growth opportunity for us. In Las Vegas, these high-rises
are often affiliated and in some cases attached to existing casino and hotels
complexes. Since Kelley has established relationships with many of the
developers, architects, and owners of Multi-Dwelling projects, and since the
design and project management for the communication technology and systems
networks needs of this segment are similar to that for gaming, we believe we can
enter this market successfully. We currently have two sales people to sell our
services in the Multi Dwelling Unit market.

Although we do not invest significant funds to market our services, we work
closely with existing customers to make sure they are satisfied with our
service. We believe this proactive approach to customer service builds our
reputation and allows us to generate new business in the future.

CUSTOMERS

Since our acquisition of Kelley Technologies in September 2005, we provide our
services primarily to the gaming industry. We typically work with developers
who put together the building project. We also work with architects who oversee
the primary design of the project. These individuals will subcontract out
specific projects to us as part of an overall building plan.

While the majority of our projects are in Las Vegas, we work with customers in
the gaming industry outside of Las Vegas including Atlantic City, the Caribbean
and with Indian tribes in the U.S.

During 2005, we provided services to Red Rock Hotel Casino Resort and Spa
located in Las Vegas, Nevada. The Red Rock project accounted for approximately
$1.7 million and approximately 29% of our net revenues for the year ended
December 31, 2005. The total value of the Red Rock contract is approximately $8
million. We completed approximately 25% of the work on the Red Rock project
during 2005 and we intend to finish the project in April 2006.

The Red Rock Hotel Casino Resort and Spa is owned by Station Casinos, Inc. In
addition to the Red Rock project, we have contracts with other Station Casino
properties. We are currently under contract to provide services to Green Valley
Ranch, in which Station Casinos owns a 50% interest. The Green Valley Ranch
contract is valued at approximately $3 million. We intend to work on the Green
Valley Ranch project from May through September of 2006, however the exact time
frame may vary depending on the progress of the project as a whole. In
addition, we have completed design services for Santa Fe Station, another
Stations Casino property, and we are currently in negotiations to provide
additional services to Santa Fe Station in the approximate amount of $3 million
during 2006. As of March 31, 2006, we do not know the status of this contract,
however we are working diligently to win the business.

We believe the Red Rock project was important for our company not only for the
revenues it generated but also as a platform to showcase our unique experience
in developing systems for the gaming industry. As part of the Red Rock
project, we developed a Race & Sports Book platform. This platform includes
three side-by-side jumbo screens that are each 18 by 32 feet. Each of the
screens can be divided into ten configurations to display horse races, sporting
events and Station Casinos odds. Additionally, there are 213 seats each with TV
monitors. Station Casinos is the first resort and gaming company to purchase
our proprietary Race & Sports Book platform. We believe this project sets a new
standard for casinos and will further establish our reputation in the industry.

We generate a substantial amount of our revenues from our relationship with
Stations Casinos, Inc. If this relationship were to end, our net revenues, cash
flows and net income would likely decrease in at least the short-term. We
believe we could eventually find other customers to replace any lost business.
However, we may need to lower our bid prices for projects to generate additional
business which could negatively impact our revenues and earnings. Additionally,
we may need to increase our marketing expenses to find new customers which could
increase our costs.

We are currently providing services to Borgata Hotel, Casino & Spa, located in
Atlantic City, New Jersey, a joint venture of MGM Mirage and The Boyd Group, in
the approximate amount of $1.5 million. We expect to work on this project during
the first half of 2006, however the exact time frame may vary depending on the
progress of the project as a whole.

We are currently providing services to Palms Hotel and Casino, located in Las
Vegas, Nevada, in the approximate amount of $1.1 million. We expect to complete
this project by September 2006, however the exact time frame may vary depending
on the progress of the project as a whole.

STRATEGIC ALLIANCES

Kelley Technologies has an agreement dated December 30, 2005, with Simplikate
Systems to resell techcierge(TM). Techcierge(TM) is smart software that ties
amenity, security and management functions together under one simple interface
that can be accessed by any PC over the web or integrated with many types of
wireless and in-wall touch panels. We resell this smart software as part of our
integrated solutions to our customers. Kelley Technologies has the worldwide
distribution rights within the hotel and casino market to resell techcierge(TM).
Kelley was also awarded the rights to techcierge(TM) for the Multi Dwelling Unit
market in Arizona, Nevada and California (our "Market").

The agreement is for a term of five years, with two automatic renewals for one
year terms. We are required to pay $10,000 per month to Simplikate, in addition
to a one time set up fee of $35,000 per association involved in the MDU, plus a
fee of $7.00 per month, per unit for unit owners who have access to the system.
In exchange, we are entitled to receive a fee of 15% (our "Commission") of any
recurring fees Simplikate received for techierge from sales made by any
authorized reseller of techierge to developers of new communities, associations
or other entities within our Market, or to reduce the $10,000 fee by the same
amount, not to exceed the amount of the one time set up fee.

Kelley has an agreement in place with DirecTV to resell DirecTV to approximately
30 casino-based sports books. As part of this service, we handle all billing
and customer service. We receive 10% commission from DirecTV for the services
purchased.

When we acquired Kelley, it had in place a strategic alliance with a real estate
developer to provide home development with approximately 2,000 homes, with cable
tv, high speed internet and telephone services. We don't currently intend to
expand this part of the business.

INTELLECTUAL PROPERTY

We filed for a patent pending on July 19, 2005 for integrating casino race and
sports book information (video and wagering information) and then displaying it
to multiple movie theatre sized screens. Capable of displaying dozens of
sporting and horse races simultaneously, this technology allows casino
management to immediately change video sources, as well as display them at
various sized images of choice, based on the operators desire. In addition, this
technology enables casino management to have wagering information shown anywhere
on the screens. We recently installed this technology at the Red Rock Hotel
Casino and Spa on a 100 foot wide screen and we expect to use this technology in
future projects this year. We regard this technology as an important part of our
service offerings.

Additionally we regard domain names, trade secrets, proprietary technologies,
and similar intellectual property as important to our success, and we rely on
trademark, and copyright law, trade-secret protection, and confidentiality
and/or license agreements with our employees, customers, partners, and others to
protect our proprietary rights. We have licensed in the past, and expect that we
may license in the future, certain of proprietary rights, technologies or
copyrighted materials, from third parties and we rely on those third parties to
defend their proprietary rights, copyrights and technologies.

Policing unauthorized use of our proprietary rights is inherently difficult, and
we may not be able to determine the existence or extent of any unauthorized use.
The protection of our intellectual property may require the expenditure of
significant financial and managerial resources. Moreover, we cannot be certain
that the steps we take to protect our intellectual property will adequately
protect our rights or that others will not independently develop or otherwise
acquire equivalent or superior technology or other intellectual property rights.

COMPETITION

While there are companies that provide communication technology and systems
networks, we believe the market is very fragmented and there is no one dominant
competitor. Our competitors offer some of the same services we offer but we are
not aware of any competitors that offer the same combination of expertise,
services and products that we offer to the gaming, resort and hospitality
industries. Additionally, we have nearly two decades of service, long standing
relationships with key decision-makers, and a high quality design and project
management team. While it is possible that our competitors will increase their
service offerings or develop expertise similar to ours, we believe we can
compete favorably in the industry.

EMPLOYEES

As of March 15, 2006, we employed 63 full time employees, 8 are executives, 2
are in sales and marketing, 7 are in administration, and the bulk of the
employees are either in design or project management roles. We believe our
relations with all of our employees are good.

SUBSIDIARIES

As of March 31, 2006, we have four wholly-owned subsidiaries: Network
Installation Corporation, Kelley Communications Company, Inc., COM Services,
Inc., and Del Mar Systems International, Inc.

ITEM 2. DESCRIPTION OF PROPERTY.

On June 29, 2004, we entered into a lease agreement with Alton Plaza Property
Inc. for office space located at 15235 Alton Parkway, Suite 200, Irvine, CA. Our
rent was approximately $13,475 and had a term of 51 months. We terminated the
lease on February 28, 2006, and forfeited approximately $26,000, which included
our security deposit and one month's rent, in order to consolidate our
operations in Las Vegas and continue to expand our operations around the Kelley
subsidiary.

On April 1, 2003, Kelley entered into a lease agreement with RMS Limited
Partnership, for office and warehouse space located at 5625 Arville Street, Las
Vegas, Nevada. The lease term is for 66 months and ends on September 30, 2008.
We acquired this obligation with the acquisition of Kelley. Rent expense from
September 22, 2005 through December 31, 2005 amounted to approximately $47,000.
Kelley is obligated to pay rent amounts as follows:

For the year ended:

December 31, 2006 $154,000
December 31, 2007 $160,000
December 31, 2008 $110,000

Kelley may extend the lease for two additional terms of three years from October
1,2008 to September 30, 2011 and from October 1, 2011 to September 30, 2014, at
a 4% annual increase in rent.

ITEM 3. LEGAL PROCEEDINGS.

On April 25, 2003, the Superior Court of the State of California, County of
Orange, entered a judgment in the amount of $46,120 against us and our former
management in favor of Insulectro Corp., a vendor of our former subsidiary,
North Texas Circuit Board. We believe that we were never issued proper service
of process for the complaint. In addition, on August 20, 2002, we sold North
Texas Circuit Board to BC Electronics Inc. Pursuant to terms of the share
purchase agreement, BC Electronics assumed all liabilities of North Texas
Circuit Board. In December 2003, we filed a motion to vacate the judgment for
lack of personal service. In February 2004, the Court ruled in our favor and the
judgment was vacated. In February 2004, the plaintiff re-filed the complaint. In
March 2005, the complaint was settled for the sum of $25,000. Commencing in
March 2005, we agreed to make five equal monthly installments of $5,000 to
Insulectro. As of December 31, 2005, we have paid all installments and have no
further obligations related to this case.

On January 24, 2005, we filed an action in the Superior Court of California,
County of Orange against Steve and Dorota Pearson for damages and injunctive
relief based on alleged fraud and breach of contract relating to our purchase of
Del Mar Systems International, Inc. from Steve and Dorota Pearson. The complaint
was amended on March 14, 2005 to seek rescission of our purchase of Del Mar
Systems from Steve and Dorota Pearson. The Defendant filed a cross-complaint in
the above action seeking recovery under various employment and contract theories
for unpaid compensation, expenses and benefits totaling approximately $90,000.
Defendant also sought payment of an outstanding balance of a note related to the
purchase by us of Del Mar Systems totaling approximately $85,000. Further,
Defendant was seeking injunctive relief for enforcement of the stock purchase
agreement of Del Mar Systems. This case was settled and we agreed to pay $84,000
over a 12 month period and we also agreed to issue 300,000 shares of our common
stock. To date, we have paid four of the required monthly installments and we
have issued the 300,000 shares of common stock at $.45 per share on the date of
issuance. At December 31, the Company has accrued $170,000 in its financial
statements related to this matter.

In March 2006, Lisa Cox sued Kelley Technologies, Mr. Kelley personally and us,
claiming damages related to promises she alleges were made to her husband, prior
to her husband's death. The alleged promises made resulted from business
transactions with Kelley and/or its affiliates and/or subsidiaries, prior to our
acquisition of Kelley. The suit was filed in Clark County, Nevada. At this time,
it is too early to determine the outcome of such allegations, however,
management intends to vigorously defend the claim. No adjustments have been made
in the accompanying financial statements as a result of this allegation, and
management believes that in the event Ms. Cox is successful in her pursuit, the
impact on us will not be material.

We may be involved in litigation, negotiation and settlement matters that may
occur in our day-to-day operations. Management does not believe the implication
of these litigations will, including those discussed above, have a material
impact on our financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Bid and ask quotations for our common shares are routinely submitted by
registered broker dealers who are members of the National Association of
Securities Dealers on the NASD Over-the-Counter Electronic Bulletin Board. These
quotations reflect inner-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions. The high and low bid
information for our shares for each quarter for the last two years, so far as
information is reported, through the quarter ended December 31, 2005, as
reported by the Bloomberg Financial Network, are as follows:

Quarter Ended High Bid Low Bid
31-Mar-04 $ 5.30 $ 3.50
30-Jun-04 $ 5.50 $ 2.90
30-Sep-04 $ 3.06 $ 1.27
31-Dec-04 $ 2.29 $ 1.42
31-Mar-05 $ 2.17 $ 1.74
30-Jun-05 $ 1.90 $ 0.84
30-Sep-05 $ 1.24 $ 0.71
31-Dec-05 $ 1.12 $ 0.60

NUMBER OF SHAREHOLDERS

As of December 31, 2005, we had approximately 2,982 shareholders of record.

DIVIDEND POLICY

We have not paid any dividends since inception and presently anticipate that all
earnings, if any, will be retained for development of our business. We expect
that no dividends on the shares of common stock will be declared in the
foreseeable future. Any future dividends will be subject to the discretion of
our Board of Directors and will depend upon, among other things, our future
earnings, operating and financial condition, capital requirements, general
business conditions and other pertinent facts.

RECENT SALES OF UNREGISTERED SECURITIES

On October 19, 2005, we issued convertible debentures of $12,120 to Dutchess
Private Equities Fund, II L.P. to satisfy interest on a Collateral Agreement
dated September 19, 2005, which related to Kelley bank debt refinancing as part
of the Kelley acquisition. The holders of the debentures are entitled to convert
the face amount of these debentures, plus accrued interest at the lesser of (i)
75% of the lowest bid price during the 15 trading days prior to the conversion
date or (ii) 100% of the lowest bid prices for the 20 trading days immediately
preceding the closing date. The convertible debentures shall pay 8% cumulative
interest, in cash or in shares of common stock, at our option, at the time of
each conversion. The convertible debentures are convertible into shares of our
common stock.

On November 19, 2005, we issued convertible debentures of $12,120 to Dutchess
Private Equities Fund, II L.P. to satisfy interest on a Collateral Agreement
dated September 19, 2005, which related to Kelley bank debt refinancing as part
of the Kelley acquisition. The holders of the debentures are entitled to convert
the face amount of these debentures, plus accrued interest at the lesser of (i)
75% of the lowest bid price during the 15 trading days prior to the conversion
date or (ii) 100% of the lowest bid prices for the 20 trading days immediately
preceding the closing date. The convertible debentures shall pay 8% cumulative
interest, in cash or in shares of common stock, at our option, at the time of
each conversion. The convertible debentures are convertible into shares of our
common stock.

On December 19, 2005, we issued convertible debentures of $12,120 to Dutchess
Private Equities Fund, II L.P. to satisfy interest on a Collateral Agreement
dated September 19, 2005, which related to Kelley bank debt refinancing as part
of the Kelley acquisition. The holders of the debentures are entitled to convert
the face amount of these debentures, plus accrued interest at the lesser of (i)
75% of the lowest bid price during the 15 trading days prior to the conversion
date or (ii) 100% of the lowest bid prices for the 20 trading days immediately
preceding the closing date. The convertible debentures shall pay 8% cumulative
interest, in cash or in shares of common stock, at our option, at the time of
each conversion. The convertible debentures are convertible into shares of our
common stock.

The sales set forth above were undertaken under Rule 506 of Regulation D under
the Securities Act of 1933, as amended, by the fact that:

- the sales were made to a sophisticated or accredited investors, as defined
in Rule 502;
- we gave each purchaser the opportunity to ask questions and receive
answers concerning the terms and conditions of the offering and to obtain
any additional information which we possessed or could acquire without
unreasonable effort or expense that is necessary to verify the accuracy of
information furnished;
- at a reasonable time prior to the sale of securities, we advised each
purchaser of the limitations on resale in the manner contained in Rule
502(d)2;
- neither we nor any person acting on our behalf sold the securities by any
form of general solicitation or general advertising; and
- we exercised reasonable care to assure that each purchaser of the
securities is not an underwriter within the meaning of Section 2(11) of the
Securities Act of 1933 in compliance with Rule 502(d).

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

You should read this section together with our consolidated financial statements
and related notes thereto included elsewhere in this report.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve risks and
uncertainties. We generally use words such as "believe," "may," "could," "will,"
"intend," "expect," "anticipate," "plan," and similar expressions to identify
forward-looking statements, including statements regarding our ability to
continue to create innovative technology products, our ability to continue to
generate new business based on referrals and existing relationships, our
financing strategy and ability to access the capital markets and other risks
discussed in our Risk Factor section below. Although we believe the expectations
expressed in the forward-looking statements included in this Form 10-KSB are
based on reasonable assumptions within the bounds of our knowledge of our
business, a number of factors could cause our actual results to differ
materially from those expressed in any forward-looking statements. We cannot
assure you that the results or developments expected or anticipated by us will
be realized or, even if substantially realized, that those results or
developments will result in the expected consequences for us or affect us, our
business or our operations in the way we expect. We caution readers not to place
undue reliance on these forward-looking statements, which speak only as of their
dates. We do not intend to update any of the forward-looking statements after
the date of this document to conform these statements to actual results or to
changes in our expectations, except as required by law.

CRITICAL ACCOUNTING POLICIES

We have identified the policies below as critical to our business operations and
the understanding of our results of operations. The impact and any associated
risks related to these policies on our business operations are discussed
throughout this section where such policies affect our reported and expected
financial results. Our preparation of our Consolidated Financial Statements
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities at
the date of our financial statements, and the reported amounts of revenue and
expenses during the reporting period. Our actual results may differ from those
estimates.

Our accounting policies that are the most important to the portrayal of our
financial condition and results, and which require the highest degree of
management judgment relate to revenue recognition, the provision for
uncollectible accounts receivable, analysis of the value of Goodwill, and
issuance of shares for service.

Revenue Recognition
--------------------

Our revenue recognition policies are in compliance with all applicable
accounting regulations, including American Institute of Certified Public
Accountants (AICPA) Statement of Position (SOP) 81-1, Accounting for Performance
of Construction-Type and Certain Production-Type Contracts. Revenues from
design, installations, cabling and networking contracts are recognized using the
percentage-of-completion method of accounting. Accordingly, income is recognized
in the ratio that costs incurred bears to estimated total costs. Adjustments to
cost estimates are made periodically, and losses expected to be incurred on
contracts in progress are charged to operations in the period such losses are
determined. The aggregate of costs incurred and income recognized on uncompleted
contracts in excess of related billings is shown as a current asset, and the
aggregate of billings on uncompleted contracts in excess of related costs
incurred and income recognized is shown as a current liability.

Our revenue recognition policy for sale of network products is in compliance
with Staff accounting bulletin or (SAB) 104. Revenue from the sale of network
products is recognized when a formal arrangement exists, the price is fixed or
determinable, the delivery is completed and collectibility is reasonably
assured. Generally, we extend credit to our customers and do not require
collateral. We perform ongoing credit evaluations of our customers and historic
credit losses have been within management's expectations.

We estimate the likelihood of customer payment based principally on a customer's
credit history and our general credit experience. To the extent our estimates
differ materially from actual results, the timing and amount of revenues
recognized or bad debt expense recorded may be materially misstated during a
reporting period.

Accounts Receivable and Allowance for Doubtful Accounts
----------------------------------

We maintain allowances for doubtful accounts, when appropriate, for estimated
losses resulting from the inability of our customers to make required payments.
If the financial condition of our customers were to deteriorate, our actual
losses may exceed our estimates, and additional allowances would be required.

Goodwill
--------

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
142, or SFAS 142, Goodwill and Other Intangible Assets. As required by SFAS 142,
goodwill is subject to annual impairment tests, or earlier if indicators of
potential impairment exist and suggest that the carrying value of goodwill may
not be recoverable from estimated discounted future cash flows. Because we have
one reporting segment under SFAS 142, we utilize the entity-wide approach to
assess goodwill for impairment and compare our market value to our net book
value to determine if an impairment exists. These impairment tests have resulted
in impairments of approximately $4.2 million in 2005 and may result in
additional impairment losses that could have a material adverse impact on our
results of operations in the future.

Stock-Based Compensation
-------------------------

In October 1995, the FASB issued SFAS No. 123R, "Accounting for Stock-Based
Compensation" amended by SFAS No 148, "Accounting for Stock Based Compensation
Transition and Disclosure". SFAS No. 123 prescribes accounting and reporting
standards for all stock-based compensation plans, including employee stock
options, restricted stock, employee stock purchase plans and stock appreciation
rights. SFAS No. 123 requires compensation expense to be recorded (i) using the
new fair value method or (ii) using the existing accounting rules prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for stock issued to
employees" (APB 25) and related interpretations with pro-forma disclosure of
what net income and earnings per share would have been had the Company adopted
the new fair value method. The Company uses the intrinsic value method
prescribed by APB 25 and has opted for the disclosure provisions of SFAS No.123.
On October 20, 2005, the Company issued 972,500 stock options to various Kelley
employees in accordance with the Company's 2005 Stock Option Plan. The exercise
price at the time of grant was $.79 per share, which was equal to the fair
market value of the common stock at the time of grant, and the right to exercise
the options were subject to vesting provisions over a three year period.
Subsequent to issuance, 132,500 of such options were retired resulting from
employees who left the Company prior to vesting.

On March 30, 2006, the Company issued 1,347,500 stock options to various Kelley
employees in accordance with the Company's 2005 Stock Option Plan. The exercise
price at the time of grant was $.42 per share, which was equal to the fair
market value of the common stock at the time of grant, and the right to exercise
the options were subject to vesting provisions over a three year period.

No options were issued during the year ended December 31, 2004.

Going Concern
--------------

Our audited financial statements for the fiscal year ended December 31, 2005,
reflect a net loss of $15,534,423. These conditions raise substantial doubt
about our ability to continue as a going concern if we do not acquire sufficient
additional funding or alternative sources of capital to meet our working capital
needs. Without such external funding, we would have to materially curtail our
operations and plans for expansion.

Cash and Cash Equivalents
----------------------------

We consider all highly liquid debt instruments, purchased with an original
maturity at date of purchase of three months or less, to be cash
equivalents. Cash and cash equivalents are carried at cost, which approximates
market value.

Property and Equipment
------------------------

Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets, e.g.
computers (5 years), software (3 years), office furniture and equipment (3
to7 years), and tenant improvements (life of the lease-approximately 60
months).

Inventory
---------

Inventory consists of networking materials and equipment in the process of
being installed at years end. Inventories are stated at the lower of cost or
market. Cost is determined by the average cost method at the Kelley subsidiary
and the first-in-first-out method at the COM and NIC subsidiaries, respectively.
The Company has reviewed its inventory for obsolescence on a quarterly
basis since operations began and has not written-off any inventory for
obsolescence.

Fair Value of Financial Instruments
---------------------------------------

The Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities are carried at
cost, which approximates their face value, due to the relatively short maturity
of these instruments. As of December 31, 2005 and 2004, the Company's notes
payable have stated borrowing rates that are consistent with those currently
available to the Company and, accordingly, the Company believes the
carrying value of these debt instruments approximates their fair value.

Accounting for Impairments in Long-Lived Assets
----------------------------------------------------

Long-lived assets and identifiable intangibles are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amounts
of assets may not be recoverable. Management periodically evaluates the carrying
value and the economic useful life of its long-lived assets based on the
Company's operating performance and the expected future undiscounted cash flows
and will adjust the carrying amount of assets which may not be recoverable.

Use of Estimates
------------------

The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Significant estimates made in preparing these financial
statements include the allowance for doubtful accounts, deferred tax asset
valuation allowance, impairment of goodwill, certain gross margins on long term
construction contracts and useful lives for depreciable and amortizable assets.
Actual results could differ from those estimates.

Basic and Diluted Net Loss Per Share
------------------------------------------

Net loss per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), "Earnings per share". Basic net
loss per share is based upon the weighted average number of common shares
outstanding. For all periods, all of the Company's common stock equivalents
were excluded from the calculation of diluted loss per common share because they
were anti-dilutive, due to the Company's net losses.

The Company's significant components of common stock equivalents are its
convertible debentures and stock options.

Stock options, which would have an anti-dilutive effect on the net loss per
common share once exercised, to purchase 972,500 shares of common stock remained
outstanding as of December 31, 2005. There were no stock options outstanding at
December 31, 2004. These stock options have a vesting period of three years from
the date of grant, October 20, 2005. An additional issuance of 1,347,500 stock
options, was granted on March 30, 2006.

Convertible debentures, which can be exercised on any date subsequent to the
issuance of the convertible debentures, would have an anti-dilutive effect on
the net loss per common share once and if the holders elect to exchange the
convertible debentures for shares of common stock. The number of common shares
which could be exchanged by the Company for a full release of the obligation to
repay the principal and interest balances associated with all convertible
debentures will possibly be based in part on the Company's price per common
share as quoted on the OTC bulletin board on the date of conversion. Since
management can not determine the price per common share of its common stock in
the future, management does not believe it can reasonably determine the number
of common shares to be issued pursuant to an exchange of its convertible
debentures for common shares. Therefore, management cannot accurately determine
the the number of common shares which could be exchanged by the Company that are
related to the convertible debentures as of December 31, 2005 and 2004,
respectively, and going forward.

TWELVE MONTH PERIOD ENDED DECEMBER 31, 2005 AS COMPARED TO TWELVE MONTH PERIODS
ENDED DECEMBER 31, 2004.

NET REVENUES
-------------
Net revenues for the year ended December 31, 2005 were $5,932,064 compared to
$1,889,739 for the year ended December 31, 2004 due to primarily to the
acquisitions of Kelley and Com during 2005, which accounted for $2,827,835 and
$2,771,560, respectively, in net revenues for the year ended December 31, 2005.
With the acquisition of Kelley, we acquired in excess of 60 contracts with over
50 customers. With the acquisition of Com, we acquired approximately 30 new
customers. Such increases were offset by a decrease in net revenues for NIC due
to management's decision to relocate the business from California to Nevada and
to focus on the Kelley business opportunity.

COST OF REVENUES
------------------

Cost of revenues for the year ended December 31, 2005 were $4,875,447 compared
to $1,705,562 for the year ended December 31, 2004. Our Cost of Revenue
increased for the 12 months ended December 31, 2005 when compared to the same
period in 2004 due to the acquisitions of Kelley and Com Services during 2005
which accounted for $2,461,323 and $1,884,362, respectively. Such amounts were
offset by a decrease in cost of revenues for NIC due to management's decision to
relocate the business from California to Nevada and to focus on the Kelley
business opportunity

GROSS MARGINS
--------------

Gross margins for the year ended December 31, 2005 were $1,056,617 or 17.8%
compared to $184,177 or 9.7% for the year ended December 31, 2004. The
increase in gross margin is attributable to management's decision to focus on
revenue growth and profitability in 2005.

OPERATING EXPENSES
-------------------

Operating Expenses for the year ended December 31, 2005 were $10,575,293
compared to $2,973,770 for the year ended December 31, 2004 due primarily to the
acquisitions of Kelley and Com Services during 2005, which accounted for
$789,920 and $1,172,742, respectively, for the year ended December 31, 2005.
Additionally, during 2005, we recorded $6,476,085 in Officer Compensation
resulting from the issuance of warrants to purchase common stock to certain
officers. Investor relations expenses were $634,094 in 2005, compared to
$1,143,058 in 2004, while bad debt expenses were $200,400 in 2005 due to write
offs of uncollectible receivables at Com Services, compared to $0
during 2004. Additionally, consulting fees were $158,942 during 2005, compared
to $342,179 during 2004. Other significant components of operating expenses for
2005 consisted of professional fees of $352,290, and salaries of $1,061,454..

OTHER INCOME (EXPENSE)
------------------------

Other Income (Expense) for the year ended December 31, 2005 was ($6,015,747)
compared to ($1,377,312) for the year ended December 31, 2004. The increase in
Other Expenses is primarily due to impairment of Goodwill related to the
Kelley acquisition in 2005 in the amount of $3,800,000, and impairment of
Goodwill related to the Com Services acquisition in 2005 of $628,614, compared
to a write off of Goodwill related to Del Mar Systems of $1,000,000 in 2004.
Additionally, we experienced a loss off $300,000 on disposal of assets at the
Com Services company during 2005. Interest expense for the year ended December
31, 2005 was $1,287,735 compared to $660,100 for the year ended December 31,
2004 due to an increased borrowings. In addition, beneficial conversion feature
expense of $617,000 was recorded and classified as interest expense in 2005 as
compared to $511,275 in 2004

NET LOSS
---------

Net Loss for the year ended December 31, 2005 was ($15,534,423) compared to
($4,167,705) for the year ended December 31, 2004 due to the acquisitions of
Kelley and Com Services during 2005, which generated Net Losses of ($4,360,339)
and ($1,434,776) respectively, for the period of acquisition through December
31, 2005 The Net Loss on Kelley was primarily attributable to Goodwill
Impairment in the amount of $3,800,000, and the Net Loss on Com was in part
attributable to Goodwill Impairment of approximately $620,000.

BASIC AND DILUTED LOSS PER SHARE
-------------------------------------

Our basic and diluted loss for the year ended December 31, 2005 was ($0.66)
compared to ($0.19) for the year ended December 31, 2004 due to an increase in
our net loss, as described above.

LIQUIDITY AND CAPITAL RESOURCES
----------------------------------

As of December 31, 2005, our Current Assets were $5,324,872 and Current
Liabilities were $7,057,036. Cash and cash equivalents were $438,467. Our
Stockholders' Equity at December 31, 2005 was $1,564,622. We had a net usage of
cash from operating activities for the years ended December 31, 2005 and 2004 of
$(2,811,342) and ($3,665,801) respectively. We had a net usage of cash from
investing activities for the years ended December 31, 2005 and 2004, of
$(82,437) and $(32,138), respectively. We had net cash provided by financing
activities of $3,330,514 and $3,699,004 for the years ended December 31, 2005
and 2004, respectively. We had $3,357,114 from borrowings in the period ended
December 31, 2005 as compared to $1,429,710 in the corresponding period last
year.

Historically, we have operated from a cash flow deficit funded by outside debt
and equity capital raised including funds provided by Dutchess Private Equities,
L.P., Dutchess Private Equities Fund II, L.P. and Preston Capital Partners, Inc.
Without the continued availability of external funding, we would have to
materially curtail our operations and plans for expansion. Our plan to continue
operations in relation to our going concern opinion is to continue to secure
additional equity or debt capital although there can be no guarantee that we
will be successful in our efforts.

COMMITMENTS
-----------

We assumed a $100,000 revolving line of credit with a Bank with a balance
of $100,538 in connection with the COM acquisition. This note bears interest
at a variable rate, which was 9.75% as of December 31, 2005, and was called due
as a result of the acquisition of Kelley, which was determined to be a
significant change in control of the Company. The balance outstanding as of
December 31, 2005 was $55,308. As of the date of these financial statements,
the balance on this debt is approximately $2,600.

Upon the acquisition of Kelley, we contracted a note payable to a Bank dated
August 30, 2005, and carrying interest at a variable rate,2% over the Prime
Rate, or 8.50% as of December 31, 2005. Principal payments of $20,834 per month
are due on this note through September 15, 2008. We had a balance of $686,551
outstanding as of December 31, 2005 which included a current portion of $186,535
as of December 31, 2005.

Upon the acquisition of Kelley, we contracted a note payable to a Bank dated
September 20, 2005 and carrying interest at a fixed rate of 7.50%. Principal and
interest payments of $32,672 per month are payable through September 20, 2008.
The balance of $970,399 remained outstanding as of December 31, 2005 and
included a current portion of $246,027 as of December 31, 2005.

Upon the acquisition of Kelley, we assumed a note payable to a Bank, secured by
an automobile, carrying interest at a fixed rate of 5.75%. Principal and
interest payments of $371 per month are payable through May 5, 2009. The balance
of $13,690 remained outstanding as of December 31, 2005.

Upon the acquisition of Kelley, we assumed a note payable to a Bank, secured by
an automobile, carrying interest at a fixed rate of 5.75%. Principal and
interest payments of $369 per month are payable through May 5, 2009. The balance
of $13,752 remained outstanding as of December 31, 2005.

We contracted a $126,000 note payable in January 2005 in connection with the COM
acquisition. This note bears interest at 6.00% and is payable in monthly
installments of $8,000 for nine months and $6,000 for the following nine months,
the final payment being due in January 2007. The balance outstanding as of
December 31, 2005 was $78,500. Four payments of $8,000 each have been paid
during 2006.

We contracted a $54,000 note payable in January 2005 in connection with the COM
acquisition. This note bears interest at 6.00% and is payable in monthly
installments of $2,250, maturing in January 2007. The balance outstanding as of
December 31, 2005 was $30,070. Four payments totaling $9,572 have been paid
during 2006.

The Company assumed a $7,850 note payable secured by an automobile with a
balance of $7,450 in connection with the COM acquisition. The loan bore
interest of 7.99%. This note payable was paid in full in 2005, subsequent to
the COM acquisition.

Upon the acquisition of Kelley, we assumed a note payable to a Bank, secured by
three automobiles, carrying interest at a fixed rate of 6.25%. Principal and
interest payments of $1,536 per month are payable through March 7, 2008. The
balance of $38,591 remained outstanding as of December 31, 2005.

During the year ended December 31, 2003, the Company issued $90,000 in
convertible debentures to certain shareholders of the Company. The convertible
debentures carry an interest rate of 6% per annum, and are due in April 2008.
Payments are not mandatory during the term of the convertible debenture.
However, the Company maintains the right to pay the balance in full without
penalty at any time. The Holder is entitled to convert the face amount of the
Debentures, plus accrued interest, anytime following the Closing Date, at the
lesser of (i) 75% of the lowest closing bid price during the fifteen (15)
trading days prior to the Conversion Date or (ii) 100% of the closing bid
prices for the twenty (20) trading days immediately preceding the Closing Date
("Fixed Conversion Price"), each being referred to as the "Conversion
Price". No fractional shares or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded up
or down, as the case may be, to the nearest whole share. The balance
outstanding on these convertible debentures as of December 31, 2005 was $25,000.

During the year ended December 31, 2003, the Company issued $338,000 in
convertible debentures to Dutchess Private Equities, LP. The convertible
debentures carry an interest rate of 6% per annum, and are due between April
and October of 2008. Payments are not mandatory during the term of the
convertible debenture. However, the Company maintains the right to pay the
balance in full without penalty at any time. The Holder is entitled to convert
the face amount of the Debentures, plus accrued interest, anytime following the
Closing Date, at the lesser of (i) 75% of the lowest closing bid price during
the fifteen (15) trading days prior to the Conversion Date or (ii) 100% of the
closing bid prices for the twenty (20) trading days immediately preceding the
Closing Date ("Fixed Conversion Price"), each being referred to as the
"Conversion Price". No fractional shares or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable shall be
rounded up or down, as the case may be, to the nearest whole share.
The balance outstanding on these convertible debentures as of December 31, 2005
was $316,400.

During the year ended December 31, 2004, the Company issued $1,867,718 in
convertible debentures to Dutchess Private Equities, LP. The convertible
debentures carry an interest rate of 6% and 8% per annum, and are due between
February and December of 2009. Payments are not mandatory during the term of the
convertible debenture. However, the Company maintains the right to pay the
balance in full without penalty at any time. These debentures were issued with
a discounted price from the face value of $248,600. The Holder is entitled to
convert the face amount of the Debentures, plus accrued interest, anytime
following the Closing Date, at the lesser of (i) 75% of the lowest closing
bid price during the fifteen (15) trading days prior to the Conversion Date or
(ii) 100% of the closing bid prices for the twenty (20) trading days
immediately preceding the Closing Date ("Fixed Conversion Price"), each
being referred to as the "Conversion Price". No fractional shares or
scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded up or down, as the case may
be, to the nearest whole share. In accordance with EITF 00-27 98-5, the
beneficial conversion feature on the issuance of the convertible debenture
for the year ended December 31, 2005 has been recorded in the amount of
$511,275. Additionally, the Company issued warrants to purchase 1,286,000 shares
of the Company's common stock at varying exercise prices between $1.73 and $1.90
per share. These warrants were valued at $466,790 and will be amortized as
interest expense through the maturity date of the convertible debentures. The
balance outstanding on these convertible debentures as of December 31, 2005 was
$1,847,718.

During the year ended December 31, 2005, the Company issued $2,136,360 in
convertible debentures to Dutchess Private Equities II, LP. The convertible
debentures carry an interest rate of 6% and 8% per annum, and are due between
February and December of 2009. Payments are not mandatory during the term of the
convertible debenture. However, the Company maintains the right to pay the
balance in full without penalty at any time. These debentures were issued with
a discounted price from the face value of $340,000. The Holder is entitled to
convert the face amount of the Debentures, plus accrued interest, anytime
following the Closing Date, at the lesser of (i) 75% of the lowest closing
bid price during the fifteen (15) trading days prior to the Conversion Date or
(ii) 100% of the closing bid prices for the twenty (20) trading days
immediately preceding the Closing Date ("Fixed Conversion Price"), each
being referred to as the "Conversion Price". No fractional shares or
scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded up or down, as the case may
be, to the nearest whole share. In accordance with EITF 00-27 98-5, the
beneficial conversion feature on the issuance of the convertible debenture
for the year ended December 31, 2005 has been recorded in the amount of
$529,500. Additionally, the Company issued warrants to purchase 1,020,000 shares
of the Company's common stock at varying exercise prices between $1.03 and $1.83
per share. These warrants were valued at $387,184 and will be amortized as
interest expense through the maturity date of the convertible debentures. The
balance outstanding on these convertible debentures as of December 31, 2005 was
$2,136,360.

During the year ended December 31, 2005, the Company issued $350,000 in
convertible debentures to Preston Capital Partners, Inc., a shareholder of the
Company. The convertible debentures carry an interest rate of 6% and 8% per
annum, and are due between February and December of 2009. Payments are not
mandatory during the term of the convertible debenture. However, the Company
maintains the right to pay the balance in full without penalty at any time.
These debentures were issued with a discounted price from the face value of
$340,000. The Holder is entitled to convert the face amount of the Debentures,
plus accrued interest, anytime following the Closing Date, at the lesser of (i)
75% of the lowest closing bid price during the fifteen (15) trading days prior
to the Conversion Date or (ii) 100% of the closing bid prices for the twenty
(20) trading days immediately preceding the Closing Date ("Fixed Conversion
Price"), each being referred to as the "Conversion Price". No fractional shares
or scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded up or down, as the case may be, to
the nearest whole share. In accordance with EITF 00-27 98-5, the beneficial
conversion feature on the issuance of the convertible debenture for the year
ended December 31, 2005 has been recorded in the amount of $87,500. The balance
outstanding on these convertible debentures as of December 31, 2005 was
$350,000.

During December 2004, the Company entered into a $84,956 factoring and security
agreement to sell, transfer and assign certain accounts receivable to Dutchess
Private Equities Fund, LP ("Dutchess"). Dutchess may on its sole discretion
purchase any specific account. All accounts sold are with recourse on seller.
All of the Company's property of NIC including accounts receivable, inventories,
equipment and promissory notes are collateral under these agreements. The
difference between the face amount of each purchased account and advance on the
purchased account shall be reserved and will be released after deductions of
discount and charge backs. In addition, Dutchess charges finance fees in
connection with these agreements. The balance of this factoring and security
agreement was paid in full in 2005. The balance as of December 31, 2005 and 2004
was $0 and $84,956, respectively.

During January 2005, the Company entered into a $128,750 factoring and security
agreement to sell, transfer and assign certain accounts receivable to Dutchess
Private Equities Fund, LP ("Dutchess"). Dutchess may on its sole discretion
purchase any specific account. All accounts sold are with recourse on seller.
All of the Company's property of NIC including accounts receivable, inventories,
equipment and promissory notes are collateral under these agreements. The
difference between the face amount of each purchased account and advance on the
purchased account shall be reserved and will be released after deductions of
discount and charge backs. In addition, Dutchess charges finance fees in
connection with these agreements. The balance of this factoring and security
agreement was paid in full in 2005.

Upon the acquisition of Kelley, we issued $360,000 in convertible debentures to
an individual unaffiliated with the Company. The convertible debentures carry
an interest rate of 0.00% and are due in September of 2006. These debentures
were issued with a discounted price from the face value of $60,000. The Holder
is entitled to convert the face amount of the Debentures, plus accrued
interest, anytime following the Closing Date, at the lesser of (i) 75% of the
lowest closing bid price during the fifteen trading days prior to the
Conversion Date or (ii) 100% of the closing bid prices for the twenty trading
days immediately preceding the Closing Date. In accordance with EITF 00-27
98-5, the beneficial conversion feature on the issuance of the convertible
debenture for the year ended December 31, 2005 has been recorded in the
amount of $90,000.

Upon the acquisition of Kelley, we assumed $540,000 in convertible debentures
due to Michael Kelley, who is now a member of our Board of Directors. At the
time of the transaction, Michael Kelley was not affiliated with us. The
convertible debentures carry an interest rate of 0.00% and are due in September
of 2006. These debentures were issued with a discounted price from the face
value of $90,000. The Holder is entitled to convert the face amount of the
Debentures, plus accrued interest, anytime following the Closing Date, at the
lesser of (i) 75% of the lowest closing bid price during the fifteen trading
days prior to the Conversion Date or (ii) 100% of the closing bid prices for
the twenty trading days immediately preceding the Closing Date. In accordance
with EITF 00-27 98-5, the beneficial conversion feature on the issuance
of the convertible debenture for the year ended December 31, 2005 has been
recorded in the amount of $135,000.

Upon the acquisition of Kelley, we assumed $492,856 in various notes payable to
Michael Kelley, who is now a member of our Board of Directors. At the time of
the transaction, Michael Kelley was not affiliated with us. The notes payable
carried interest at a fixed rate of 5.00%. These notes payable were refinanced
on October 7, 2005 with a $492,856 note payable carrying interest at 6.00% and
requiring 24 monthly payments of $17,412 in principal and interest through
September 2007. The balance of $357,299, including a current portion of
$261,802, remained outstanding as of December 31, 2005.

OTHER COMMITMENTS

For the year ended:

December 31, 2006 $154,000
December 31, 2007 $160,000
December 31, 2008 $110,000

Kelley may extend the lease for two additional terms of three years from October
1,2008 to September 30, 2011 and from October 1, 2011 to September 30, 2014, at
a 4% annual increase in rent.

The Company is obligated to pay $120,000 at $10,000 per month, for the years
ended December 31, 2006, through December 31, 2010 related to an exclusive five
year reseller agreement with Simplikate, a software company, dated December 30,
2005.

Payroll tax liabilities of $371,213 and $368,192, are payable at December 31,
2005 and 2004, respectively. As of the date of these financial statements, we
are in negotiations with the IRS for repayment terms. While the negotiations are
taking place, we have made four payments of $15,000 each, until final
settlements amount are agreed upon.

We are obligated to pay $84,000 over a 12 month period in settlement of a
lawsuit. We have paid the first four monthly installments as of the date of this
filing.

We are obligated to pay approximately $1,010,000 to Dutchess under various
factoring agreements we have executed with them in 2006. Such amounts due to
Dutchess are related to receivables to be collected by Kelley and Com during
2006.

MATERIAL TRENDS AND UNCERTAINITIES

The fourth quarter of 2005 was a period of substantial change for us. For most
of 2005, we focused on providing network solutions to businesses and
municipalities, primarily in Southern California. We entered this business with
the acquisition of Network Installations in May 2003. We further developed our
business in this area with the acquisition of Del Mar Systems in March 2004 and
COM Services in January 2005.

We acquired Kelley Technologies in September 2005. Kelley's primary focus is
providing complex communication technology and systems networks to the gaming
industry. Kelley was a substantial acquisition for us, representing
approximately 61% of our assets after the acquisition was completed. After
studying Kelley's business model, our management determined that, of our four
wholly-owned subsidiaries, Kelley offered the best opportunity for growth.
Additionally, we could reduce our costs by consolidating our California and Las
Vegas operations. As a result, in the fourth quarter of 2005, we stopped seeking
new customers in California and finished our existing contracts. In March 2006,
we relocated our business headquarters to Las Vegas and consolidated our
California operations with Kelley.

When we acquired Kelley, Kelley already had in place approximately 60 contracts.
The most significant of those contracts was the Red Rock Casino project in Las
Vegas. The contract required us to design and install most of the audio/visual
systems in addition to the design and installation of the Race and Sports book
technology and audio/visual systems, among designing and installing various
other systems throughout the hotel and casino. We completed approximately 25%
of the work in the fourth quarter of 2005 and expect to complete the remaining
work by April 2006. The Red Rock project represented 29% of our revenue for
the year ended December 31, 2005 and we expect our financials will reflect the
revenue from the Red Rock project primarily in the first quarter of 2006 with
some additional revenues reflected in the second quarter of 2006.

We used a substantial amount of our resources to service and deliver the Red
Rock project. As a result, our business development, and sales and marketing
efforts decreased during this time period and in some cases, we redeployed human
capital from other projects in process to service and deliver on the Red Rock
project. As a result, we expect to experience a decrease in revenues in the
first and second quarter of 2006, while we reestablish our business development,
and sales and marketing efforts and service and deliver on other ongoing
projects. At that point in time, we believe we will be able to take in
additional new business to fully use our operations capacity. However, it will
likely take time to reorient our operations into new projects. As a result, we
anticipate a decrease in net revenues, cash flows and net income in the first
and second quarter of 2006. It is possible that the same results might be
experienced in the third quarter of 2006 as well.

When we acquired Kelley, it already had negotiated contracts with customers. In
the fourth quarter of 2005, we worked primarily on those contracts already in
place at the time of the acquisition. The Kelley contracts provided us with a
substantial increase in our revenues during the fourth quarter of 2005, however
several of the larger Kelley contracts also had lower margins than our business
in California in 2005, particularly the margins realized on the Red Rock
project. In addition, a significant term of the contract with Red Rock, called
for a 10% retention by Red Rock on all billings. As a result of this clause,
10% of all billings by Kelley to Red Rock are being held by Red Rock. This is a
standard term in long term construction contracts, however, this had an adverse
impact on the cash flows of Kelley. The total amount of the Red Rock contract
will be approximately $8 million and at April 13, 2006, approximately $700,000
of billings to Red Rock is being held in retention. As a result, we have had to
factor receivables with Dutchess and we continue to experience cash flow short
falls. If such cash flow shortfalls continue, it will have an adverse impact on
our relationships with our vendors and may impact our ability to service our
clients and deliver our projects on time and on budget, which will have an
adverse impact on our net revenues and net income. While we are actively
assessing our cash flow needs and pursuing multiple avenues of financing and
cash flow generation, there can be no assurance that our activities will be
successful.

As we complete our migration to the business operated by Kelley and we continue
to complete the Kelley contracts, we expect the first two quarters of 2006 to
have lower margins than we experienced in the first two quarters of 2005, before
we acquired Kelley. Although it is difficult to precisely predict our margins
for the second half of 2006, we believe it is a top priority for management to
increase our margins on new contracts we negotiate through our Kelley
subsidiary.

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should
carefully consider the following risk factors, other information included in
this prospectus and information in our periodic reports filed with the SEC. If
any of the following risks actually occur, our business, financial condition or
results of operations could be materially and adversely affected, and you may
lose some or all of your investment.

RISKS ABOUT OUR BUSINESS

OUR INDEPENDENT ACCOUNTANTS HAVE ISSUED A GOING CONCERN OPINION.

Our audited financial statements for the fiscal year ended December 31, 2005,
reflect a net loss of $15,534,423. These conditions raised substantial doubt
about our ability to continue as a going concern. If we do not acquire
sufficient additional funding or alternative sources of capital to meet our
working capital, we may have to substantially curtail our operations and growth
plans.

WE HAVE SUBSTANTIAL INDEBTEDNESS WHICH MAY AFFECT OUR ABILITY TO MAINTAIN OR
GROW OUR OPERATIONS.

As of December 31, 2005, we had $7,057,036 in current liabilities. As a result
of our level of debt and the terms of our debt instruments:

- our vulnerability to adverse general economic conditions is
heightened;
- we will be required to dedicate a substantial portion of our cash flow
from operations to repayment of debt, limiting the availability of cash for
other purposes;
- we are and will continue to be limited by financial and other
restrictive covenants in our ability to borrow additional funds, consummate
asset sales, enter into transactions with affiliates or conduct mergers and
acquisitions;
- our flexibility in planning for, or reacting to, changes in our
business and industry will be limited; and
- our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, general corporate purposes or
other purposes may be impaired.

Our ability to pay principal and interest on our indebtedness and to satisfy our
other debt obligations will partly depend upon our future operating performance,
which will be affected by prevailing economic conditions and financial, business
and other factors, some of which are beyond our control. If we are unable to
service our indebtedness, we will be forced to take actions such as reducing or
delaying capital expenditures, selling assets, restructuring or refinancing our
indebtedness, or seeking additional equity capital. We may not be able to affect
any of these remedies on satisfactory terms, or at all.

WE GENERATE A SUBSTANTIAL AMOUNT OF BUSINESS FROM ONE CUSTOMER AND, IF WE LOST
THAT BUSINESS, OUR NET REVENUES, CASH FLOWS AND NET INCOME MAY DECREASE AND OUR
EXPENSES MAY INCREASE

During 2005, we worked on a project for Red Rock Hotel Casino Resort and Spa
located in Las Vegas, Nevada. The Red Rock project accounted for approximately
$1.7 million and approximately 29% of our net revenues for the year ended
December 31, 2005. The total value of the Red Rock contract is approximately $8
million. The Red Rock Hotel is owned by Stations Casinos, Inc. In addition to
the Red Rock project, we do other projects for Stations Casino. As a result, we
generate a substantial amount of our revenues from our relationship with
Stations Casinos, Inc. If this relationship were to end, our net revenues, cash
flows and net income would likely decrease in at least the short-term. We
believe we could eventually find other customers to replace any lost business.
However, we may need to lower our bid prices for projects to generate additional
business which could negatively impact our revenues and earnings. Additionally,
we may need to increase our marketing expenses to find new customers which could
increase our costs.

WE NEED ADDITIONAL CAPITAL FOR BUSINESS OPERATIONS AND WE MAY NOT BE ABLE TO
FIND SUCH CAPITAL ON FAVORABLE TERMS

As a result of the gross margins we are experiencing and the impact of retention
of billings commonly associated with long term construction contracts, we are
experiencing cash flow shortages. Additionally, some of the contracts entered
into by Kelley prior to our acquisition, will likely continue to generate gross
margins that are not sufficient to cover our operating costs. Therefore the cash
flow shortages are likely to continue and we are in need of additional capital
to fund existing operations. Such financing may not be available, and/or may not
be available on terms acceptable to us.

Additionally, we may not be able to successfully consummate additional offerings
of stock or other securities in order to meet our future capital requirements.
Historically, we have operated from a cash flow deficit funded by outside debt
and equity capital raised including funds provided by Dutchess Capital
Management LLC, our largest investor. Without such external funding, we would
have to materially curtail our operations and plans for expansion. Our plan to
continue operations in relation to our going concern opinion is to continue to
secure additional equity or debt capital although there can be no guarantee that
we will be successful in our efforts.

WE DEPEND ON OUR KEY PERSONNEL AND IF THOSE PERSONNEL LEAVE THE COMPANY, OUR
BUSINESS MAY BE HARMED.

At this time, we are almost totally dependent upon Jeffrey R. Hultman,
Christopher Pizzo and Michael Kelley as our principal operating officers and on
our directors. While we have an employment agreement with Mssrs. Hultman,
Pizzo and Kelley, it does not obligate them to remain as officers. We do not
maintain insurance on the lives of our officers, directors or key employees;
the loss of their services would have a material adverse effect on our
business. We elect our directors each year and while we expect to reelect our
directors currently on the Board, our directors are not obligated to
continue in their positions.

Competition for talented personnel is intense, and we may not be able to
continue to attract, train, retain or motivate other highly qualified technical
and managerial personnel in the future. In addition, market conditions may
require us to pay higher compensation to qualified management and technical
personnel than we currently anticipate. Any inability to attract and retain
qualified management and technical personnel in the future could have a material
adverse effect on our business, prospects, financial condition, and results of
operations.

OUR INDUSTRY HAS RAPIDLY CHANGING TECHNOLOGY AND, IF WE DO NOT STAY CURRENT, WE
MAY LOSE CUSTOMERS AND OUR BUSINESS WILL BE HARMED.

The systems installation industry and related technology business involve a
broad range of rapidly changing technologies. Our technologies may not remain
competitive over time, and others may develop technologies that are superior to
ours which may render our products non-competitive. Our business may depend on
trade secrets, know-how, continuing innovations and licensing opportunities to
develop and maintain our competitive position. Others may independently develop
equivalent proprietary information or otherwise gain access to or disclose our
information. Our confidentiality agreements on which we rely may not provide
meaningful protection of any trade secrets on which we may depend for success,
or provide adequate remedies in the event of unauthorized use or disclosure of
confidential information or prevent our trade secrets from otherwise becoming
known to or independently discovered by our competitors.

RISKS ABOUT OUR STOCK

OUR GROSS MARGINS AND OPERATING RESULTS WILL FLUCTUATE SIGNIFICANTLY FOR THE
FORESEEABLE FUTURE, WHICH MAY AFFECT OUR STOCK PRICE.

Our gross margins and quarterly results of operations have varied in the past
and are likely to continue to vary significantly from quarter to quarter. Our
operating expenses are based on expected future revenues and are relatively
fixed in the short term. If our revenues and/or gross margins are lower than
expected, our results of operations could be adversely affected. Many factors
can cause our financial results to fluctuate, some of which are outside of our
control. Quarter-to-quarter comparisons of our gross margins and operating
results may not be meaningful and you should not rely upon them as an indication
of our future performance. In addition, during certain future periods our gross
margins and/or operating results likely will fall below the expectations of
public market analysts and investors. In this event, the market price of our
common stock likely would decline.

OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES AS PROMULGATED UNDER THE
EXCHANGE ACT WHICH MAKES IT MORE DIFFICULT TO SELL OUR STOCK.

Our stock is a "penny stock" under the Securities Exchange Act of 1934, as
amended. Any broker engaging in a transaction in our common stock will be
required to provide our customers with a risk disclosure document, disclosure of
market quotations, if any, disclosure of the compensation of the broker-dealer
and its sales person in the transaction, and monthly account statements showing
the market values of our stock held in the customer's accounts. The bid and
offer quotation and compensation information must be provided prior to effecting
the transaction and must be contained on the customer's confirmation of sale.
Certain brokers are less willing to engage in transactions involving "penny
stocks" as a result of the additional disclosure requirements described above,
which may make it more difficult for holders of our common stock to sell their
shares.

ITEM 7. FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
9175 E. Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Network Installation Corporation and Subsidiaries
Las Vegas, Nevada

We have audited the consolidated balance sheet of Network Installation
Corporation and Subsidiaries as of December 31, 2005 and the related
consolidated statement of operations, shareholders' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. The December 31, 2004 financial
statements of Network Installation Corporation and Subsidiaries were audited by
another auditor who has ceased operations. That auditor expressed an unqualified
opinion on those financial statements in his report dated May 6, 2005.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Network Installation
Corporation and Subsidiaries as of December 31, 2005 and the results of
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company's recurring losses from operations,
stockholders deficit, and other conditions exist which raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 3. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ Jaspers + Hall, PC
April 12, 2006
Denver, Colorado

NETWORK INSTALLATION CORP. INC
Consolidated Balance Sheets
December 31,

2005 2004
------------ ------------
ASSETS:
CURRENT ASSETS:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 438,467 $ 1,732
Accounts Receivable, net of allowance
for doubtful accounts of $356,811 ($85,486 at 2004). . 1,499,704 405,347
Inventories . . . . . . . . . . . . . . . . . . . . . . . 3,020,113 -
Costs in Excess of Billings . . . . . . . . . . . . . . . 232,778 -
Prepaid Expenses and other current assets . . . . . . . . 133,810 595,812

------------- ------------
Total Current Assets . . . . . . . . . . . . . . . . . 5,324,872 1,002,891
------------- ------------

Fixed assets, net of accumulated depreciation
of $504,853 ($9,937 at 2004) . . . . . . . . . . . . . . . 383,728 36,161

OTHER ASSETS:
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . 7,344,216 -
Patents . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 -
Advances. . . . . . . . . . . . . . . . . . . . . . . . . 195,393 -
Security Deposits . . . . . . . . . . . . . . . . . . . . 20,691 19,916
------------- ------------
Total Other Assets . . . . . . . . . . . . . . . . . . 7,562,800 19,916
------------- ------------

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 13,271,400 $ 1,058,968
============= ============

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT):
CURRENT LIABILITIES
Bank Line of Credit. . . . . . . . . . . . . . . . . . . $ 432,562 $ -
Accounts Payable . . . . . . . . . . . . . . . . . . . . 3,420,922 780,236
Billings in Excess of Costs. . . . . . . . . . . . . . . 1,443,588 -
Payroll Taxes Payable. . . . . . . . . . . . . . . . . . 371,213 368,192
Notes Payable - Officer. . . . . . . . . . . . . . . . . - 120,580
Current Portion of Notes Payable. . . . . . . . . . . . 336,115 85,075
Current Portion of Related Party Notes Payable . . . . . 261,802 -
Current Portion of Convertible Debenture . . . . . . . . 316,333 -
Current Portion of Related Party Convertible Debentures 474,500 -
------------- ------------
Total current liabilities. . . . . . . . . . . . . . 7,057,036 1,354,083
------------- ------------

LONG-TERM DEBT
Notes Payable . . . . . . . . . . . . . . . . . . . . . . 1,262,979 -
Related Party Notes Payable 95,497 -
Related Party Convertible Debentures, net of Debt Discount 3,291,265 1,582,516
------------- ------------
Total long-term debt . . . . . . . . . . . . . . . . 4,649,741 1,582,516
------------- ------------

STOCKHOLDERS' EQUITY (DEFICIT):
Common Stock, $.001 par value; 100,000,000 shares authorized
49,534,721 and 23,483,873 shares issued and outstanding
in 2005 and 2004, respectively . . . . . . . . . . . . . 49,535 23,484
Additional paid-in Capital . . . . . . . . . . . . . . . . . 26,586,266 7,617,181
Shares to be Returned. . . . . . . . . . . . . . . . . . . . (18,568) -
Shares to be Issued. . . . . . . . . . . . . . . . . . . . . 116,358 116,249
Accumulated Deficit. . . . . . . . . . . . . . . . . . . . . (25,168,968) (9,634,545)
------------- ------------
Total stockholders' equity (deficit) . . . . . . . . . 1,564,623 (1,877,631)
------------- ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT). . . . $ 13,271,400 $ 1,058,968
============= ============

NETWORK INSTALLATION CORP., INC.
Consolidated Statements of Operations

Year Ended
December, 31
---------------------------
2005 2004
------------- ------------

REVENUE:
Sales. . . . . . . . . . . . . . . . $ 5,932,064 $ 1,889,739
Cost of Goods Sold . . . . . . . . . 4,875,447 1,705,562
------------- ------------
GROSS PROFIT . . . . . . . . . . . . . 1,056,617 184,177
------------- ------------
EXPENSES:
Investor relations . . . . . . . . . 634,094 1,143,058
Non cash officer compensation. . . . 6,476,085 -
Office salaries. . . . . . . . . . . 1,027,106 401,953
Other operating expenses . . . . . . 2,438,008 1,428,759
------------- ------------
Total Operating Expenses . . . . . 10,575,293 2,973,770
------------- ------------

LOSS FROM OPERATIONS. . . . . . . . . . (9,518,676) (2,789,593)
------------- ------------
OTHER INCOME/(EXPENSES):
Goodwill Impairment . . . . . . . . (4,428,614) (1,000,000)
Interest Expense . . . . . . . . . . (1,287,235) (660,100)
Loss on Sale of Assets/Inventory . . (300,000) -
Other Income . . . . . . . . . . . . 102 282,788
------------- ------------
Total Other Income/(Expenses) . . (6,015,747) (1,377,312)
------------- ------------

LOSS BEFORE INCOME TAXES. . . . . . . . (15,534,423) (4,166,905)
------------- ------------
Provision for income taxes. . . . . - 800
------------- ------------
NET LOSS. . . . . . . . . . . . . . . . $(15,534,423) $(4,167,705)
============= ============

BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.66) $ (0.19)
============= ============
WEIGHTED AVERAGE SHARES OUTSTANDING 23,628,575 21,935,289
============= ============

NETWORK INSTALLATION CORP., INC.
Consolidated Stockholders' Equity (Deficit)
December 31, 2005

Additional Shares Shares
Paid-In To Be To Be Accumulated
Common Stock Capital Issued Returned Deficit Total
------------------- ----------- ---------- --------- ------------ ------------
# of Shares Amount
---------- -------
Balance - December 31, 2003 . . . . . . . 12,616,330 $12,616 $ 2,743,222 $ 116,295 $ - $ (5,466,840) $ (2,594,707)
--------- ------- ----------- --------- --------- ------------- -------------

Recapitalization upon Reverse Merger (2,149,500) (2,150) 2,185 (35) - - -
Issuance of stock for services. . . . . . 372,383 372 365,778 - - - 366,150
Issuance of stock for cash. . . . . . . . 745,001 745 2,234,258 - - - 2,235,003
Beneficial conversion feature expense. . . - - 511,275 - - - 511,275
Issuance of stock for Acquisition . . . . . 130,549 131 499,869 - - - 500,000
Beneficial conversion feature expense. . . 188,365 189 706,044 (11) - - 706,222
Issuance of stock warrants. . . . . . . . . - - 566,131 - - - 566,131
Forward stock split . . . . . . . . . . . 11,580,745 11,581 (11,581) - - - -
Net Loss . . . . . . . . . . . . - - - - - (4,167,705) (4,167,705)
---------- --------- ----------- --------- --------- ------------- -------------
Balance - 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 - - - 387,184
Warrant Issuance, Executive Compensation - - 6,476,085 - - - 6,476,085
Issuance of Stock for Services. . . . . . 560,000 560 372,528 - - - 373,088
Issuance of Stock for Cash. . . . . . . . 1,460,692 1,461 941,990 - - - 943,451
Issuance of Stock, COM Acquisition. . - - 199,891 109 - - 200,000
Issuance of Stock, Kelley Acquisition. 14,016,577 14,016 10,218,085 - - - 10,232,101
Issuance of Stock, Spectrum Acquisition. 18,567,639 18,568 - - (18,568) - -
Debt Discount, Convertible Debt Issuances - - 213,358 - - - 213,358
Conversion of Debenture 18,939 19 64,981 - - - 65,000
Beneficial conversion feature expense . . - - 617,000 - - - 617,000
Rescinding 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) $ 1,564,623
========== ======= =========== ========== ========== ============ ============

NETWORK INSTALLATION CORP., INC.
Consolidated Statements of Cash Flows

Year Ended
December 31,
----------------------------
2005 2004
-------------- ------------
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net Loss . . . . . . . . . . . . . . . . . . . . . . $ (15,534,423) $(4,167,705)
Adjustments to reconcile net loss to net cash used
by operating activities
Non cash transactions
Stock issued for services & debt reduction . . . . 373,088 366,150
Stock warrants issued for management compensation. 6,476,085 466,790
Beneficial conversion feature expense. . . . . . . 617,000 (511,275)
Depreciation . . . . . . . . . . . . . . . . . . . 55,380 6,573
Amortization of debt discount. . . . . . . . . . . 295,979 -
Bad Debt Expense . . . . . . . . . . . . . . . . . 200,400 171,627
Goodwill Impairment. . . . . . . . . . . . . . . 4,428,614 1,000,000
Rescinding of common stock, investor . . . . . . . (530,090) -
Reversal of prior year discontinued operations . . - (278,911)

Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable. . . . 36,467 (52,228)
(Increase) decrease in inventories. . . . . . . . (2,054,186) 200,000
Decrease in costs over billings. . . . 255,592 -
(Increase) decrease in other current assets . . . (2,297) 2,289
(Increase) decrease in prepaid expenses . . . . . 464,299 (528,000)
(Increase) decrease in security deposits . . . . 4,825 (19,916)
Increase (decrease) in accounts payable and accruals 1,199,760 (321,195)
Increase in billings over costs . . . . 530,952 -
Increase in payroll taxes payable 371,213 -
-------------- ------------
NET CASH FLOWS USED IN OPERATING ACTIVITIES. . . . . (2,811,342) (3,665,801)
-------------- ------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment . . . . . . . . (62,039) (32,138)
Cash invested in partnership projects. . . . . . . (195,393) -
Cash paid for patent filing costs. . . . . . . . . (2,500) -
Cash received in acquisition of Kelly. . . . . . . 177,495 -
-------------- ------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES. . . . . (82,437) (32,138)
-------------- ------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from bank loans. . . . . . . . . . . . . 332,004 -
Proceeds from related party debt. . . . . . . . . 750,000 41,964
Proceeds from issuance of stock . . . . . . . . . 943,451 2,235,003
Payment on notes payable. . . . . . . . . . . . . (580,398) (7,673)
Payments on long-term debt. . . . . . . . . . . . (20,000) -
Proceeds from factor. . . . . . . . . . . . . . . 128,750 84,956
Payments to factor. . . . . . . . . . . . . . . . (213,706) -
Proceeds from long-term borrowing . . . . . . . . 2,146,360 1,344,754
Payments on officer note payable (155,947) -
-------------- ------------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES. . . 3,330,514 3,699,004
-------------- ------------

NET INCREASE IN CASH . . . . . . . . . . . 436,735 1,065
-------------- ------------

CASH AT BEGINNING OF PERIOD. . . . . . . . . . . . . 1,732 667
-------------- ------------

CASH AT END OF PERIOD. . . . . . . . . . . . . . . . $ 438,467 $ 1,732
============== ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

Cash paid for interest . . . . . . . . . . . . . $ 76,247 $ 22,918
============== ============
Cash paid for taxes. . . . . . . . . . . . . . . $ - $ 1,600
============== ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Stock issued for services & debt reduction . . . . $ 373,088 $ 366,150
Stock warrants issued for management compensation. $ 6,476,085 $ 466,790
Beneficial conversion feature expense. . . . . . . $ 617,000 $ (511,275)
Amortization of debt discount. . . . . . . . . . . $ 295,979 $ -
Write-off of Goodwill. . . . . . . . . . . . . . . $ 4,428,614 $ 1,000,000
Rescinding of common stock, investor $ (530,090) $ -

NETWORK INSTALLATION CORPORATION, INC.
Notes to Consolidated Financial Statements
December 31, 2005

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------

1. DESCRIPTION OF BUSINESS AND SEGMENTS

OVERVIEW

Network Installation Corporation (NIC or the "Company") was incorporated on July
18, 1997 under the laws of the state of California.

The Company specializes in the design, development and integration of
communication technology and system networks for the gaming, resort and
hospitality markets and has developed a patent-pending, proprietary,
next-generation race & sports book platform designed for the gaming industry.

The Company's wholly-owned subsidiary, Kelley Communication Company, Inc. (d/b/a
Kelley Technologies) ("Kelley"), is a single source technology company
specializing in providing design/build solutions for casino/resort hotel owner
requirements. Kelley Technologies designs, manages projects, builds and deploys
communication technology, large entertainment technology and systems networks.
Kelley's systems networks include: data, telecommunications, audio and video
components, casino surveillance, security and access control systems,
entertainment audio and video, special effects and multi-million dollar video
conference systems. Kelley does work primarily in the Las Vegas area, but has
also done projects in New Jersey, Oklahoma, Colorado, California, and the
Caribbean.

The Company has distinguished itself from its peers by employing experienced and
educated design personnel and by providing high quality products and service to
the gaming industry. The Company designs low voltage infrastructure, manages
the build of its jobs, provides equipment and upgrades and provides ongoing
services to its customers, offering a one-stop shop and leveraging long-standing
customer relationships and referrals.

ACQUISITION OF KELLEY COMMUNICATION COMPANY, INC. (d/b/a Kelley Technologies)
-------------------------------------------------------------------------------

Pursuant to an acquisition agreement, the Company acquired 100% of the
outstanding shares of common stock of Kelley Communication Company, Inc., a
Nevada corporation, on September 22, 2005 for $10,232,101 in common stock.
Goodwill of $11,144,216 was recorded upon the acquisition and was valued based
on Kelley's customer pipeline and customer backlog at the time of acquisition.
Kelley is a Las Vegas, Nevada-based businesses focusing on the design, project
management, installation, and deployment of data, voice, video, audio/visual,
security and surveillance systems, entertainment and special effects, and
telecom systems. Mike Kelley, the 100% owner of Kelley prior to the
acquisition, received 14,061,577 shares of the Company's common stock. Kelley's
results of operations for the period from September 22, 2005 through December
31, 2005 are included in these audited financial statements.

The audit of Kelley as of September 22, 2005 has not yet been completed.
However, the Company's preliminary financial analysis and due diligence related
to the acquisition is complete. Kelley's unaudited balance sheet as of the date
of acquisition is as follows.

Cash $ 177,495
Accounts receivable 1,234,668
Inventory 965,927
Costs in excess of billings 488,370
Other assets 5,599
Fixed assets 713,220
Accumulated depreciation (407,534)
Goodwill 11,144,216
Accounts payable (879,995)
Notes payable (2,297,227)
Billings in excess of earnings (912,638)
-------------
Total $ 10,232,101
=============

The following pro forma information is presented as though the Company had
completed the acquisition of Kelley as of the beginning of the year, on January
1, 2005. Revenues represent total revenues and net loss represents total net
loss of the Company for the twelve months ended December 31, 2005 if Kelley had
been acquired as of January 1, 2005.

Twelve Months Ended
December 31, 2005
-------------------
Net Revenues $ 10,635,948
Net loss $ (16,457,699)

ACQUISITION OF COM SERVICES, INC. ("COM")

On January, 17, 2005, the Company purchased 100% of the outstanding shares of
Com Services, Inc., a California corporation. The purchase price was $430,000,
of which $50,000 was paid in cash, $200,000 was paid in Company stock, issued at
market value, and $180,000 in promissory notes payable over a two year period,
with interest at 6%. Below is the unaudited condensed balance sheet of Com
Services, Inc. as of January 17, 2005, which is prepared only to present the
major asset captions for which the Company has applied the purchase price of
$430,000 towards.

Accounts receivable $ 142,073
Fixed Assets 56,032
Goodwill 331,895
Bank Line of Credit (100,000)
-----------
Total assets and liabilities $ 430,000
===========

The net revenues and net loss on a pro forma basis, as though the Company had
completed the acquisition of Com as of the beginning of the year, on January 1,
2005 would not be materially different then the net revenues and net loss
reported for the year ended December 31, 2005 due to the lack of net revenues
and expenses of Com from January 1, 2005 through January 16, 2005.

ACQUITISION OF DEL MAR SYSTEMS INTERNATIONAL, INC. ("DMSI")

On March 1, 2004, NIC acquired 100% of the outstanding shares of common stock of
DMSI, a telecommunication solutions provider. The operations of DMSI have been
consolidated with the operations of the Company, since March 1, 2004 and the
operations of DMSI were consolidated into NIC and DMSI was phased out.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
-----------------------------

The accompanying consolidated financial statements include the accounts
of Network Installation Corp. ("NIC") and its 100% owned subsidiaries,
Network Installation Corporation, Kelley Communication Company, Inc.("Kelley"),
COM Services, Inc. ("COM"), and Del Mar Systems International, Inc. ("DMSI").
All significant inter-company accounts and transactions have been eliminated in
consolidation. The results of operations included within these financial
statements include the accounts of NIC for the years ended December 31, 2005 and
2004, respectively, Kelley from September 22, 2005 through December 31, 2005,
COM from January 17, 2005 through December 31, 2005, and DMSI from March 1, 2004
through December 31, 2004.

CASH & CASH EQUIVALENTS
--------------------------

The Company considers all highly liquid debt instruments, purchased with an
original maturity at date of purchase of three months or less, to be cash
equivalents. Cash and cash equivalents are carried at cost, which approximates
market value.

PROPERTY & EQUIPMENT
----------------------

ACCOUNTS RECEIVABLE
--------------------

The Company maintains an allowance for doubtful accounts for estimated losses
that may arise if any of its consumers are unable to make required payments.
Management specifically analyzes the age of customer balances, historical bad
debt experience, customer credit-worthiness and changes in customer payment
terms when making estimates of the uncollectibility of the Company's
trade accounts receivable balances. If the Company determines that the
financial conditions of any of its customers have deteriorated, whether due
to customer specific or general economic issues, increase in the allowance
may be made. Accounts receivable are written off when all collection attempts
have failed.

INVENTORY
---------

FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------

GOODWILL
--------

Under SFAS No. 142. Goodwill and other Intangible Assets, all goodwill
amortization ceased effective January 1, 2002. Rather, goodwill is now subject
only to impairment reviews. A fair-value based test is applied at the reporting
level. This test requires various judgments and estimates. A goodwill
impairment loss will be recorded for any goodwill that is determined to be
impaired. Goodwill is tested for impairment at least annually.

ACCOUNTING FOR IMPAIRMENTS IN LONG-LIVED ASSETS
----------------------------------------------------

USE OF ESTIMATES
------------------

REVENUE RECOGNITION
--------------------

The Company's revenue recognition policies are in compliance with all applicable
accounting regulations, including American Institute of Certified Public
Accountants (AICPA) Statement of Position (SOP) 81-1, Accounting for Performance
of Construction-Type and Certain Production-Type Contracts. Revenues from
installations, cabling and networking contacts are recognized using the
percentage-of-completion method of accounting. Accordingly, income is recognized
in the ratio that costs incurred bears to estimated total costs. Adjustments to
cost estimates are made periodically, and losses expected to be incurred on
contracts in progress are charged to operations in the period such losses are
determined. The aggregate of costs incurred and income recognized on uncompleted
contracts in excess of related billings is shown as a current asset, and the
aggregate of billings on uncompleted contracts in excess of related costs
incurred and income recognized is shown as a current liability.

The Company's revenue recognition policy for the sale of network products is in
compliance with Staff accounting bulletin (SAB) 104. Revenue from the sale of
network products is recognized when a formal arrangement exists, the price is
fixed or determinable, the delivery is completed and collectibility is
reasonably assured. Generally, the Company extends credit to its customers and
does not require collateral. The Company performs ongoing credit evaluations of
its customers and historic credit losses have been within management's
expectations.

STOCK-BASED COMPENSATION
-------------------------

On October 20, 2005, the Company issued 972,500 stock options to various Kelley
employees in accordance with the Company's 2005 Stock Option Plan. The exercise
price at the time of grant was $.79 per share, which was equal to the fair
market value of the common stock on the date of grant, and the right to exercise
the options were subject to vesting provisions over a three year period.
Subsequent to issuance, 132,500 of such options were retired resulting from
employees who left the Company prior to vesting.

On March 30, 2006, the Company issued 1,347,500 stock options to various Kelley
employees in accordance with the Company's 2005 Stock Option Plan. The exercise
price at the time of grant was $.42 per share, which was equal to the fair
market value of the common stock on the date of grant, and the right to exercise
the options were subject to vesting provisions over a three year period.

No options were issued during the year ended December 31, 2004.

BASIC AND DILUTED NET LOSS PER SHARE
------------------------------------------

The Company's significant components of common stock equivalents are its
convertible debentures and stock options.

Convertible debentures, which can be exercised on any date subsequent to the
issuance of the convertible debentures, would have an anti-dilutive effect on
the net loss per common share once and if the holders elect to exchange the
convertible debentures for shares of common stock. The number of common shares
which could be exchanged by the Company for a full release of the obligation to
repay the principal and interest balances associated with all convertible
debentures will possibly be based in part on the Company's price per common
share as quoted on the OTC bulletin board on the date of conversion. Since the
Company can not determine the price per common share of its common stock in the
future, it does not believe it can reasonably determine the number of common
shares to be issued pursuant to an exchange of its convertible debentures for
common shares. Therefore, the Company cannot accurately determine the the number
of common shares which could be exchanged by the Company that are related to the
convertible debentures as of December 31, 2005 and 2004, respectively, and going
forward.

3. GOING CONCERN

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. However, the Company has accumulated deficit of
$25,168,968, and is generating losses from operations. The continuing losses
have adversely affected the liquidity of the Company. The Company faces
continuing significant business risks, including but, not limited, to its
ability to maintain vendor and supplier relationships by making timely payments
when due.

In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet is dependent upon continued operations of the Company, which in turn is
dependent upon the Company's ability to raise additional capital, obtain
financing and to succeed in its future operations. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts, or amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.

Management has taken several steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern in the near term. Management devoted
considerable effort toward obtaining additional equity financing through various
private placements, the issuance of convertible debentures in exchange for
cash, and has paid particular attention to the identification of potential
operational efficiency improvements.

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses is comprised of the following:

December 31, 2005 December 31, 2004
------------------- -------------------
Accounts payable $ 3,250,923 $ 651,236
Litigation accrual 170,000 129,000
------------------- -------------------
$ 3,420,923 $ 780,236
=================== ===================

5. GOODWILL IMPAIRMENT

Throughout 2005, the Company had witnessed declining profits within its Com
Services division. Upon the completion of an impairment review of the
division's assets, the Company decided wrote down goodwill by $628,614, which
had been generated from the acquisition of Com Services, Inc., on January 17,
2005.

At December 31, 2005, upon the completion of an impairment review of the
Goodwill related to the acquisition of Kelley, the Company decided wrote down
Goodwill by $3,800,000 resulting primarily from lower than expected gross
margins and the continued cash flow challenges faced by Kelley.

6. PAYROLL TAX LIABILITY

Payroll tax liabilities of $371,213 and $368,192, are payable at December 31,
2005 and 2004, respectively. As of the date of these financial statements, the
Company is in negotiations with the IRS for repayment terms. While the
negotiations are taking place, the Company has made four payments of $15,000
each, until final settlements amount are agreed upon.

7. BANK LINE OF CREDIT AND NOTES PAYABLE

Notes Payable Related to the Acquisition of Kelley
---------------------------------------------------------

Upon the acquisition of Kelley, the Company contracted a note payable to a Bank
dated August 30, 2005, and carrying interest at a variable rate,2% over the
Prime Rate, or 8.50% as of December 31, 2005. Principal payments of $20,834 are
due on this note through September 15, 2008. The balance of $686,551 remaining
outstanding as of December 31, 2005, and included a current portion of $186,535
as of December 31, 2005. This note payable is collateralized by amounts that
have been pledged by Dutchess, a related party to the Company.

Upon the acquisition of Kelley, the Company contracted a note payable to a Bank
dated September 20, 2005 and carrying interest at a fixed rate of 7.50%.
Principal and interest payments of $32,672 are payable through September 20,
2008. The balance of $970,399 remained outstanding as of December 31, 2005, and
included a current portion of $246,027 as of December 31, 2005. This note
payable is collateralized by amounts that have been pledged by Dutchess, a
related party to the Company.

Upon the acquisition of Kelley, the Company issued $360,000 in convertible
debentures to an unaffiliated individual. The convertible debentures carry an
interest rate of 0.00% and are due in September of 2006. These debentures were
issued with a discounted price from the face value of $60,000. The Holder is
entitled to convert the face amount of the Debentures, plus accrued interest,
anytime following the Closing Date, at the lesser of (i) 75% of the lowest
closing bid price during the fifteen (15) trading days prior to the Conversion
Date or (ii) 100% of the closing bid prices for the twenty (20) trading days
immediately preceding the Closing Date ("Fixed Conversion Price"), each
being referred to as the "Conversion Price". No fractional shares or
scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded up or down, as the case may
be, to the nearest whole share. In accordance with EITF 00-27 98-5, the
beneficial conversion feature on the issuance of the convertible debenture
for the year ended December 31, 2005 has been recorded in the amount of
$90,000. Additionally, the Company issued warrants to purchase 90,000 shares of
the Company's common stock at a purchase price equal to 120% of the fair market
value on the date of issuance. These warrants were valued at $14,160 and will
be amortized as interest expense through the maturity date of the convertible
debentures. The balance outstanding on this convertible debenture as of December
31, 2005 was $360,000.

Upon the acquisition of Kelley, the Company assumed $540,000 in convertible
debentures due Mike Kelley, who is a member of the Company's Board of Directors.
The convertible debentures carry an interest rate of 0.00% and are due in
September of 2006. These debentures were issued with a discounted price from
the face value of $90,000. The Holder is entitled to convert the face amount of
the Debentures, plus accrued interest, anytime following the Closing Date, at
the lesser of (i) 75% of the lowest closing bid price during the fifteen (15)
trading days prior to the Conversion Date or (ii) 100% of the closing bid
prices for the twenty (20) trading days immediately preceding the Closing Date
("Fixed Conversion Price"), each being referred to as the "Conversion
Price". No fractional shares or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded up
or down, as the case may be, to the nearest whole share. In accordance
with EITF 00-27 98-5, the beneficial conversion feature on the issuance
of the convertible debenture for the year ended December 31, 2005 has been
recorded in the amount of $135,000. Additionally, the Company issued
warrants to purchase 135,000 shares of the Company's common stock at a purchase
price equal to 120% of the fair market value on the date of issuance. These
warrants were valued at $21,239 and will be amortized as interest expense
through the maturity date of the convertible debentures. The balance outstanding
on this convertible debenture as of December 31, 2005 was $540,000.

Upon the acquisition of Kelley, the Company assumed $492,856 in various notes
payable to the CEO and founder of Kelley, carrying interest at a fixed rate of
5.00%. These notes payable were refinanced on October 7, 2005 with a $492,856
note payable carrying interest at 6.00% and requiring 24 monthly payments of
$17,412 in principal and interest through September 2007. The balance of
$357,299, including a current portion of $261,802, remained outstanding as of
December 31, 2005.

Upon the acquisition of Kelley, the Company assumed a note payable to a Bank,
secured by three automobiles, carrying interest at a fixed rate of 6.25%.
Principal and interest payments of $1,536 are payable through March 7, 2008. The
balance of $38,591 remained outstanding as of December 31, 2005.

Upon the acquisition of Kelley, the Company assumed a note payable to a Bank,
secured by an automobile, carrying interest at a fixed rate of 5.75%. Principal
and interest payments of $371 per month are payable through May 5, 2009. The
balance of $13,690 remained outstanding as of December 31, 2005.

Upon the acquisition of Kelley, the Company assumed a note payable to a Bank,
secured by an automobile, carrying interest at a fixed rate of 5.75%. Principal
and interest payments of $369 per month are payable through May 5, 2009. The
balance of $13,752 remained outstanding as of December 31, 2005.

Note payable Related to the Acquisition of COM
-----------------------------------------------------

The Company assumed a $100,000 revolving line of credit with a Bank with
a balance of $100,538 in connection with the COM acquisition. This note bears
interest at a variable rate, 9.75% as of September 22, 2005 and was called due
as a result of the acquisition of Kelley, which was determined to be a
significant change in control of the Company. The balance outstanding as of
December 31, 2005 was $55,308. As of the date of these financial statements,
the balance on this debt is approximately $2,600.

The Company assumed credit card liabilities in connection with the COM
acquisition. These credit card balances were paid in full in 2005.

The Company contracted a $126,000 note payable in January 2005 in connection
with the COM acquisition. This note bears interest at 6.00% and is payable in
monthly installments of $8,000 for nine months and $6,000 for the following nine
months, the final payment being due in January 2007. The balance outstanding as
of December 31, 2005 was $78,500. Four payments of $8,000 each have been paid
during 2006.

The Company contracted a $54,000 note payable in January 2005 in connection with
the COM acquisition. This note bears interest at 6.00% and is payable in monthly
installments of $2,250, maturing in January 2007. The balance outstanding as of
December 31, 2005 was $30,070. Four payments totaling $9,572 have been paid
during 2006.

Notes Payable Related to the Acquisition of DMSI
-------------------------------------------------------

The Company contracted a $500,000 note payable in March 2004 in connection with
the DMSI acquisition. This note bore interest at 5% and was payable in monthly
installments of $42,804, maturing in April 2005. The balance of this note
payable was paid in full during 2005.

Other Notes Payable and Convertible Debentures
-----------------------------------------------

During the year ended December 31, 2005, the Company issued $350,000 in
convertible debentures to a shareholder of the Company. The convertible
debentures carry an interest rate of 6% and 8% per annum, and are due between
February and December of 2009. Payments are not mandatory during the term of the
convertible debenture. However, the Company maintains the right to pay the
balance in full without penalty at any time. These debentures were issued with
a discounted price from the face value of $340,000. The Holder is entitled to
convert the face amount of the Debentures, plus accrued interest, anytime
following the Closing Date, at the lesser of (i) 75% of the lowest closing
bid price during the fifteen (15) trading days prior to the Conversion Date or
(ii) 100% of the closing bid prices for the twenty (20) trading days
immediately preceding the Closing Date ("Fixed Conversion Price"), each
being referred to as the "Conversion Price". No fractional shares or
scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded up or down, as the case may
be, to the nearest whole share. In accordance with EITF 00-27 98-5, the
beneficial conversion feature on the issuance of the convertible debenture
for the year ended December 31, 2005 has been recorded in the amount of
$87,500. The balance outstanding on these convertible debentures as of December
31, 2005 was $350,000.

8. RELATED PARTY TRANSACTIONS

RELATED PARTY NOTES PAYABLE
------------------------------

On January 19, 2005, the Company entered into a $128,750 factoring and security
agreement to sell, transfer and assign certain accounts receivable to Dutchess
Private Equities Fund II, LP ("Dutchess"). Dutchess may on its sole discretion
purchase any specific account. All accounts sold are with recourse on seller.
All of the Company's property of NIC including accounts receivable, inventories,
equipment and promissory notes are collateral under this agreement. The
difference between the face amount of each purchased account and advance on the
purchased account shall be reserve and will be released after deductions of
discount and charge backs on the 15th and the last day of each month. Dutchess
charged $5,205 for finance charges in connection with this agreement. During
2005, the Company collected and made payment to Dutchess on all amounts owed in
connection with this agreement. Due to factor amounted to $0 as of December 31,
2005.

During the year ended December 31, 2004 and 2003, the Company's President and
Founder advanced $13,400 and $138,180, respectively, in personal funds to the
Company to finance operations. Payment terms and interest were not scheduled.
Payments of $120,580 and $27,000 were made in 2005 and 2004, respectively. The
balance as of December 31, 2005 and 2004 was $0 and $120,580, respectively.

9. INCOME TAXES

No provision was made for Federal income tax since the Company has significant
net operating loss. Through December 31, 2005, and December 31, 2004, the
Company incurred net operating losses for tax purposes of approximately
$25,170,000 and $9,634,545, respectively. The net operating loss carry forwards
may be used to reduce taxable income through the year 2023. The availability of
the Company's net operating loss carry-forwards are subject to limitation if
there is a 50% or more positive change in the ownership of the Company's stock.
A valuation allowance for 100% of the deferred taxes asset has been recorded due
to the uncertainty of its realization.

Since the Company has not generated taxable income, no provision for income
taxes has been provided.

The availability of the Company's net operating loss carry-forwards are subject
to limitation if there is a 50% or more positive change in the ownership of the
Company's stock. The Company's total deferred tax asset is as follows:

December 31, 2005 December 31, 2005
------------------- -------------------

Tax benefit of net operating loss carry-forward $ 7,800,000 $ 1,518,000
Valuation allowance (7,800,000) (1,518,000)
------------------- -------------------
$ - $ -
=================== ===================

The following is a reconciliation of the provision for income taxes at the U.S.
federal income tax rate to the income taxes reflected in the Statement of
Operations:

December 31, 2005 and December 31, 2004
----------------------------------------

Tax expense (credit) at statutory rate-federal (34)% (34)%
State tax expense net of federal tax (6) (6)
Changes in valuation allowance 40 40
----- -----
Tax expense at actual rate - -
===== =====

The valuation allowance increased by approximately $5,282,000 in the year ended
December 31, 2005 and by $1,417,000 in the year ended December 31, 2004. Since
the realization of the operating loss carry-forwards are doubtful, it is
reasonably possible that the Company's estimate of the valuation allowance will
change

10. COMMITMENTS & CONTINGENCIES

LITIGATION
----------

On April 25, 2003 the Superior Court of the State of California, County of
Orange, entered a judgment in the amount of $46,120 against the Company and its
former management in favor of a vendor of the Company's former subsidiary, North
Texas Circuit Board, or NTCB. On August 20, 2002 the Company sold NTCB to BC
Electronics, Inc. Pursuant to terms of the share purchase agreement, BC
Electronics assumed all liabilities of NTCB. In December 2003 the Company filed
a motion to vacate the judgment for lack of personal services. In February 2004,
the Court ruled in favor of the Company and the judgment was vacated. Although
the Company was the guarantor on the loan, NTCB is the principal debtor (i) the
Company will bring action against NTCB to seek relief or (ii) because partial
payment was made by NTCB, it could affect the legal status of the guarantee,
which the Company believes may absolve it of liability. In February 2004, the
plaintiff re-filed the complaint. In March 2005, the complaint was settled for
the sum of $25,000. Commencing in March 2005, the Company agreed to make five
equal monthly installments of $5,000 to the vendor. As of December 31, 2005, the
Company has paid this obligation in full.

On April 29, 2003 a suit was brought against the Company by an investor,
alleging breach of contract pursuant to a settlement agreement executed between
the Company and investor dated November 20, 2002. The suit alleged that the
Company was delinquent in its repayment of a $20,000 promissory note, of which
$5,000 has been repaid at such time. The Company reached a settlement with the
plaintiff for $22,400 to be paid in four equal monthly installments of $5,600
beginning July 1, 2004. The plaintiff received all installments and on October
15, 2004 the Court entered a dismissal of the case.

On January 24, 2005, the Company filed an action in the Superior Court of
California, County of Orange against the former principals of DMSI for damages
and injunctive relief based on alleged fraud and breach of contract relating to
the Company's purchase of Del Mar Systems International, Inc. The complaint was
amended on March 14, 2005 to seek rescission of the Company's purchase of Del
Mar Systems from its former owners. The Defendant also filed a cross-complaint
in the above action seeking recovery under various employment and contract
theories for unpaid compensation, expenses and benefits totaling approximately
$90,000. Defendant also sought payment of an outstanding balance of a note
related to the purchase by the Company of DMSI totaling approximately $85,000.
Further, Defendant was seeking injunctive relief for enforcement of the stock
purchase agreement of DMSI. This case was settled and the Company agreed to pay
$84,000 over a 12 month period and also agreed to issue 300,000 shares of our
common stock. During 2006, the Company paid four of the required monthly
installments and we have issued the 300,000 shares of common stock at $.45 per
share on the date of issuance. At December 31, the Company has accrued $170,000
in its financial statements related to this matter.

In March of 2006, Lisa Cox sued Kelley, NIC, and Kelley's CEO personally,
claiming damages related to promises she alleges were made to her husband, prior
to her husband's death. The alleged promises made resulted from business
transactions between her husband and Kelley, prior to the Company's acquisition
of Kelley. At this time, it is too early to determine the outcome of such
allegations, however, management intends to vigorously defend the Company. No
adjustments have been made in the accompanying financial statements as a result
of this allegation, and management believes that in the event Ms. Cox is
successful in her pursuit, the impact on the Company will not be material.

The Company may be involved in litigation, negotiation and settlement matters
that may occur in the day-to-day operations of the Company and its subsidiaries.
Management does not believe implication of these litigations will have any
material impact on the Company's financial statements.

OTHER COMMITMENTS

The Company is obligated to pay rent amounts as follows:

For the year ended:

December 31, 2006 $154,000
December 31, 2007 $160,000
December 31, 2008 $110,000

The Company is obligated to pay $120,000 for the years ended December 31, 2006,
through December 31, 2010 related to an exclusive reseller agreement with a
software company.

11. STOCKHOLDERS' EQUITY

EQUITY
------

During the year ended December 31, 2005, the Company issued and agreed to issue
common stock as follows:

Pursuant to an acquisition agreement, on November 1, 2005, the Company acquired
100% of the outstanding shares of common stock of Spectrum Cabling Company,
Inc., a California corporation for $14,000,000 in common stock. Robert Rivera,
the 100% owner of Spectrum prior to the acquisition, received 18,567,639 shares
of the Company's common stock. This acquisition was rescinded on January 6,
2005, and the shares issued to Mr. Rivera were returned to the Company in 2006,
prior to the date of these financial statements.

Pursuant to an acquisition agreement, on September 22, 2005, the Company
acquired 100% of the outstanding shares of common stock of Kelley Communication
Company, Inc., a Nevada corporation for $10,232,101 in common stock. Mike
Kelley, the 100% owner of Kelley prior to the acquisition, received 14,061,577
shares of the Company's common stock.

The Company issued 1,460,692 shares of common stock to accredited investors for
a total of $943,451.

The Company 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.

The Company issued 560,000 shares of common stock valued at $373,088 for
services rendered on behalf of the Company.

The founder and former CEO agreed to rescind 7,887,482 shares of common stock
back to the Company. These shares of common stock had been acquired by the
founder and former CEO in connection with the organization of the Company. As
such, the shares were originally recorded with a $0 value and have been
rescinded with a $0 value.

The Company 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 had yet to be issued as of the date of these financial
statements.

A majority shareholder agreed to rescind 685,517 shares of common stock valued
at $530,590 back to the Company. These shares of common stock were acquired in
September 2003 by the majority shareholder in connection with various debt
financings consummated in 2003 and were valued at $.774 per share at the time of
issuance. Investor relations for the year ended December 31, 2005 includes a
reduction of the total expense for the period, of $530,590, recorded as a result
of the rescinding of these shares of common stock.

12. BASIC AND DILUTED NET LOSS PER SHARE

Basic and diluted net loss per share for the years ended December 31, 2005 and
December 31, 2004 was determined by dividing net loss for the periods by the
weighted average number of basic and diluted shares of common stock outstanding.
Weighted average number of shares used to compute basic and diluted loss per
share is the same since the effect of dilutive securities is anti-dilutive.

The Company's significant components of common stock equivalents are its
convertible debentures and stock options.

Convertible debentures, which can be exercised on any date subsequent to the
issuance of the convertible debentures, would have an anti-dilutive effect on
the net loss per common share once and if the holders elect to exchange the
convertible debentures for shares of common stock. The number of common shares
which could be exchanged by the Company for a full release of the obligation to
repay the principal and interest balances associated with all convertible
debentures will possibly be based in part on the Company's price per common
share as quoted on the OTC bulletin board on the date of conversion. Since the
Company can not determine the price per common share of its common stock in the
future, it does not believe it can reasonably determine the number of common
shares to be issued pursuant to an exchange of its convertible debentures for
common shares. Therefore, the Company cannot accurately determine the the number
of common shares which could be exchanged by the Company that are related to the
convertible debentures as of December 31, 2005 and 2004, respectively, and going
forward.

13. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS

The Company paid income taxes of $0 during the year ended December 31, 2005 and
2004, respectively.

14. SUBSEQUENT EVENTS

During 2006, the Company entered into the following factoring and security
agreements to sell, transfer and assign certain accounts receivable to Dutchess
Private Equities Fund, LP ("Dutchess"). Dutchess may on its sole discretion
purchase any specific account. All accounts sold are with recourse on seller.
All of the Company's property of NIC including accounts receivable, inventories,
equipment and promissory notes are collateral under these agreements. The
difference between the face amount of each purchased account and advance on the
purchased account shall be reserved and will be released after deductions of
discount and charge backs. In addition, Dutchess charges finance fees in
connection with these agreements.

Date Amount Financing Fees
--------- ---------- ---------------
4/13/2006 $500,000 $5,000
4/12/2006 $200,000 $5,000
3/27/2006 $450,000 $5,000
3/20/2006 $650,000 $5,000
3/9/2006 $360,000 $5,000
2/21/2006 $100,000 $5,000
2/16/2006 $850,000 $5,000
1/30/2006 $150,000 $5,000
1/27/06 $650,000 $5,000
Totals $3,910,000 $45,000

As of April 13, 2006, the Company has repaid approximately $2,900,000 to
Dutchess, related to the above factoring transactions.

On January 6, 2006, the Company rescinded the purchase of Spectrum
Communications Cabling Services, Inc., ("Spectrum") a California corporation,
for $14,000,000, which was consummated on November 1, 2005. Pursuant to the
Recission 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
director's to the Company's board resigned. The purchase and subsequent
recission of Spectrum had no financial impact on the Company's operations or
financial statements.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

ITEM 8A. CONTROLS AND PROCEDURES.

As of the end of the period covered by this Annual Report on Form 10-KSB, an
evaluation was performed under the supervision and with the participation of our
management, including the individual serving as both our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 of
the Securities Exchange Act of 1934). Based on that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective to ensure that information we are required
to disclose in reports that we file or submit under the Securities Exchange Act
of 1934 (i) is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms, and
(ii) is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. Our disclosure controls and procedures
are designed to provide reasonable assurance that such information is
accumulated and communicated to our management. Our disclosure controls and
procedures include components of our internal control over financial reporting.
Management's assessment of the effectiveness of our internal control over
financial reporting is expressed at the level of reasonable assurance that the
control system, no matter how well designed and operated, can provide only
reasonable, but not absolute, assurance that the control system's objectives
will be met.

There was no change in our internal controls, which are included within
disclosure controls and procedures, during our most recently completed fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal controls.

ITEM 8B. OTHER INFORMATION.

On January 6, 2006, the Company rescinded the purchase of Spectrum
Communications Cabling Services, Inc., ("Spectrum") a California corporation,
for $14,000,000, which was consummated on November 1, 2005. Spectrum's two
appointed members of our Board of Directors, Mr. Kurt Jensen and Mr. William
Sullivan, resigned effective immediately.

On March 27, 2006, our Board of Directors accepted the resignation of Michael
Rosenthal as our Chief Financial Officer and Director. In addition, the Board
of Directors has appointed Christopher Pizzo to the position of Chief Financial
Officer. The Board has also appointed Mr. Pizzo as Director to fill the vacancy
left by Michael Rosenthal.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following table sets forth the name, age, positions, and offices or
employments as of April 1, 2006, of our executive officers and directors.

NAME AGE POSITION

Jeffrey R. Hultman 66 Chief Executive Officer and Director

Michael Kelley 64 Director

Christopher Pizzo 37 Chief Financial Officer and Director

BIOGRAPHIES OF OFFICERS AND DIRECTORS

JEFFREY R. HULTMAN joined our Advisory Board in December 2004. In March 2005,
Mr. Hultman was appointed Chief Executive Officer and director. In addition,
Mr. Hultman took on de facto oversight of the NIC financial day to day
operations upon Mr. Rosenthal's acceptance of the President and COO role at
Kelley. From 1987 to 1991, Mr. Hultman served as Chief Executive Officer
of Pac Tel Cellular where he managed Pac Tel cellular properties in the United
States and oversaw operations and business development. In 1991 Mr. Hultman
became CEO of Dial Page, Inc. a wireless provider throughout the Southeast,
offering paging and digital mobile telephone services. Ultimately, Mr.
Hultman converted a series of limited partnerships into a corporation and
took Dial Page public leading four public offerings. In August 1995, he
negotiated the sale of the paging business to MobileMedia Communication, Inc.
and a merger of subsidiary Dial Call with Nextel Communications, Inc. in
February 1996. Mr. Hultman attained his Bachelor of Science Degree in
Agricultural Economics in 1961 and Master of Science Degree, in Business
Management in 1962, at the University of California, Davis. He currently
serves a director on the board of several organizations including Comarco
Inc., an Irvine, CA-based wireless performance engineering and publicly traded
company.

MICHAEL KELLEY has served as our director since September of 2005. Mr. Kelley
was the founder of Kelley Technologies, which began as a private company in
1988. We acquired Kelley in September 2005.

CHRISTOPHER PIZZO was appointed as our Chief Financial Officer in March 2006.
Mr. Pizzo has more than 15 years of corporate finance, accounting, and business
development experience in both corporate and entrepreneurial environments. Prior
to joining us, Mr. Pizzo served as the President and Founder of CP Film Co., LLC
formerly known as Eight Entertainment, LLC from January 2002 until September
2005. From January 2000 to December 2001, Mr. Pizzo was Senior Associate at
Vested Capital Partners, a venture capital firm in New York. Mr. Pizzo is a
Certified Public Accountant and received a B.S. in Accounting from SUNY at
Albany. He also received an MBA from the Stern School of Business at NYU.

BOARD OF DIRECTORS

We currently have three members of our Board of Directors, who are elected to
annual terms and until their successors are elected and qualified. Executive
officers are appointed by the Board of Directors on an annual basis and serve
until their successors have been duly elected and qualified. There are no family
relationships among any of our directors, officers or key employees.

AUDIT COMMITTEE

We do not have an Audit Committee. Our full board performs the functions usually
delegated to an Audit Committee. Mr. Pizzo qualifies as an "audit committee
financial expert" under the rules of the Securities and Exchange Commission.

SECTION 16(a)BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers and persons who beneficially own more than ten percent of our
common stock, to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission. Executive officers,
directors and greater than ten percent beneficial owners are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. To
our knowledge, based solely on a review of the copies of such reports furnished
to us and written representations from our executive officers and directors, all
required reports were filed during the fiscal year ended December 31, 2005
except that Michael Kelley did not file his Form 3 in 2005. Except for this late
filing, we believe that all other Section 16(a) filing requirements applicable
to the executive officers, directors and greater than ten percent beneficial
owners were complied with.

CODE OF ETHICS

We have adopted a code of ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. Our Code of Ethics is
attached to our Report on Form 10-KSB for the year ended December 31, 2003 as
Exhibit 14.1.

ITEM 10. EXECUTIVE COMPENSATION.

The following table presents a summary of the compensation paid to our Chief
Executive Officer and former President of Kelley. No other executive officer
received compensation in excess of $100,000 during 2005. Except as listed
below, there were no bonuses, other annual compensation, restricted stock
awards or stock options/SARs or any other compensation paid to the
executive officers.

ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------- -----------------------
AWARDS PAYOUTS
----------- -------------------
NAME AND PRINCIPAL YEAR(1) SALARY BONUS OTHER RESTRICTED SECURITIES LTIP ALLOTHER
POSITION ($) ($) ANNUAL STOCK UNDERLYING PAYOUT($) COMP.($)
COMP ($) AWARDS OPTIONS/SARS

Jeffrey R. Hultman, Chief 2005 $139,692 0 Warrant 2,500,000 shares (2)
Executive Officer(1)

Michael Cummings, Chief 2005 $144,000
Executive Officer (3) 2004 $192,000
2003 $100,000 $152,700

Michael V. Rosenthal, President 2005 $138,462 0 Warrant 1,000,000 shares (5)
Kelley technologies, former CFO (4)

(1) Mr. Hultman became our Chief Executive Officer in March 2005.

(2) Mr. Hultman received a warrant under which he may purchase up to 2,500,000 shares at a strike price of $0.10 per share subject
to certain vesting requirements the terms of which were reported to the SEC as part of his employment contract for March of 2005.

(3) Mr. Cummings resigned as our Chief Executive in March 2005. In 2003, Mr. Cummings received 100,000 shares of common stock
valued at $1.527 as compensation for serving on the Board of Directors.

(4) Mr. Rosenthal became our Chief Financial Officer in March of 2005 and President of Kelley in October 2005. Mr. Rosenthal
resigned from those positions in March 2006.

(5) Mr. Rosenthal received a warrant under which he may purchase up to 1,000,000 shares at a strike price of $0.10 per share
subject to certain vesting requirements.

We appointed Jeff Hultman as our Chief Executive Officer on March 7, 2005. We
executed an employment agreement with Mr. Hultman in March 2005. The employment
agreement shall continue in effect for a period of two years and can be renewed
upon mutual agreement between Mr. Hultman and us. We may terminate the
employment agreement at our discretion during the initial term, provided that we
shall pay Mr. Hultman an amount equal to payment at Mr. Hultman's base salary
rate for six months. We can also terminate the employment agreement for cause
with no financial obligations to Mr. Hultman. Mr. Hultman currently earns a
gross salary of $16,000 per month and retains a warrant to purchase 2.5 million
shares of our common stock at .10 per share. subject to a vesting schedule and
leakout agreement. Additionally, Mr. Hultman received a warrant to purchase
55,000 shares at $0.10 per share, subject to a vesting period and leak out
agreement, pursuant to a consulting agreement in December 2004, prior to his
appointment as CEO.

We appointed Michael V. Rosenthal as our Chief Financial Officer on March 14,
2005, and subsequently he was also appointed as the President of Kelley
Technologies, our wholly owned subsidiary. We executed an employment agreement
with Mr. Rosenthal in March 2005. The employment agreement was to continue in
effect for a period of two years and could be renewed upon mutual agreement
between Mr. Rosenthal and us. We had the ability to terminate the employment
agreement at our discretion during the initial term, provided that we paid Mr.
Rosenthal an amount equal to payment at Mr. Rosenthal's base salary rate for six
months. We were also able to terminate the employment agreement for cause with
no financial obligations to Mr. Rosenthal. Mr. Rosenthal earned a gross salary
of $15,000 per month and retained a warrant to purchase 1.0 million shares of
our common stock at .10 per share. subject to a vesting schedule and leak out
agreement. Mr. Rosenthal resigned from his positions as Chief Financial Officer
and Director of NIC as well as his position as President of Kelley Technologies
in March 2006.

We appointed Michael Kelley as Chief Executive Officer of Kelley Technologies,
the company he founded, upon it's acquisition on September 22, 2005. We executed
an employment agreement with Mr. Kelley in September 2005. The employment
agreement shall continue in effect for a period of two years and can be renewed
upon mutual agreement between Mr. Kelley and us. We may terminate the
employment agreement at our discretion during the initial term, provided that we
shall pay Mr. Kelley an amount equal to payment at Mr. Kelley's base salary
rate for six months. We can also terminate the employment agreement for cause
with no financial obligations to Mr. Kelley. Mr. Kelley currently earns a
gross salary of $10,000 per month and received 14,061,577 shares of common
stock in exchange for selling his company, which are subject to a vesting
schedule and leak out agreement.

We appointed Christopher Pizzo as our Chief Financial Officer on March 27, 2006.
We executed an employment agreement on that date with Mr. Pizzo, which will
continue in effect for two years and can be renewed upon mutual agreement
between Mr. Pizzo and us. We can terminate the employment agreement at our
discretion during the initial term, provided that we pay Mr. Pizzo an amount
equal to payment at Mr. Pizzo's base salary for six months. We can also
terminate the employment agreement for cause with no financial obligations to
Mr. Pizzo. Mr. Pizzo earns a gross salary of $12,500 per month and was also
issued options to purchase 1 million shares of common stock at $.45 per share,
subject to certain vesting provisions over a three year period.

DIRECTORS COMPENSATION

We do not have a formal plan to compensate directors. None of our directors were
compensated for the duties in 2005.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

The following table sets forth, to our knowledge, certain information concerning
the beneficial ownership of our common stock as of March 31, 2006 by each
stockholder known by us to be (i) the beneficial owner of more than 5% of the
outstanding shares of common stock, (ii) each current director, (iii) each of
the executive officers named in the Summary Compensation Table who were serving
as executive officers at the end of the 2005 fiscal year and (iv) all of our
directors and current executive officers as a group:

Unless otherwise indicated below, to our knowledge, all persons listed below
have sole voting and investment power with respect to their shares of common
stock except to the extent that authority is shared by spouses under applicable
law.

NAME AND ADDRESS
OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED OWNED OF CLASS(2)

Jeffrey Hultman(3) 55,000 *
Michael Kelley 14,061,577 48.7%
Christopher Pizzo 0 *
All directors and current executive officers as a group (3 Persons) 14,071,577 48.7%

* Less than 1%

(1) The address of all individual directors and executive officers is c/o
Network Installation Corporation, 5625 Arville Street, Ste E, Las Vegas, NV
89118.

(2) The number of shares of common stock issued and outstanding on March 31,
2006 was 28,870,437 shares. The calculation of percentage ownership for each
listed beneficial owner is based upon the number of shares of common stock
issued and outstanding on December 31, 2005, plus shares of common stock subject
to options held by such person on December 31,2005 and exercisable within 60
days thereafter.

(3) Mr. Hultman owns warrants to purchase 55,000 shares. The exercise price of
the warrants is $0.10 and they expire in 2010.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On January 6, 2005, we issued convertible debentures of $150,000 to Dutchess
Private Equities Fund, II L.P. The debentures face value was discounted by 20%.
The holders of the debentures are entitled to convert the face amount of these
debentures, plus accrued interest at the lesser of (i) 75% of the lowest bid
price during the 15 trading days prior to the conversion date or (ii) 100% of
the lowest bid prices for the 20 trading days immediately preceding the closing
date. The convertible debentures shall pay 10% cumulative interest, in cash or
in shares of common stock, at our option, at the time of each conversion. The
convertible debentures are convertible into shares of our common stock.

On January 21, 2005, we issued convertible debentures of $60,000 to Dutchess
Private Equities Fund, II L.P. The debentures face value was discounted by 20%.
The holders of the debentures are entitled to convert the face amount of these
debentures, plus accrued interest at the lesser of (i) 75% of the lowest bid
price during the 15 trading days prior to the conversion date or (ii) 100% of
the lowest bid prices for the 20 trading days immediately preceding the closing
date. The convertible debentures shall pay 8% cumulative interest, in cash or in
shares of common stock, at our option, at the time of each conversion. The
convertible debentures are convertible into shares of our common stock.

On April 22, 2005, we issued convertible debentures of $150,000 to Dutchess
Private Equities Fund, II L.P. The debentures face value was discounted by 20%.
The holders of the debentures are entitled to convert the face amount of these
debentures, plus accrued interest at the lesser of (i) 75% of the lowest bid
price during the 15 trading days prior to the conversion date or (ii) 100% of
the lowest bid prices for the 20 trading days immediately preceding the closing
date. The convertible debentures shall pay 8% cumulative interest, in cash or in
shares of common stock, at our option, at the time of each conversion. The
convertible debentures are convertible into shares of our common stock.

On May 12, 2005, we issued convertible debentures of $180,000 to Dutchess
Private Equities Fund, II L.P. The debentures face value was discounted by 20%.
The holders of the debentures are entitled to convert the face amount of these
debentures, plus accrued interest at the lesser of (i) 75% of the lowest bid
price during the 15 trading days prior to the conversion date or (ii) 100% of
the lowest bid prices for the 20 trading days immediately preceding the closing
date. The convertible debentures shall pay 8% cumulative interest, in cash or in
shares of common stock, at our option, at the time of each conversion. The
convertible debentures are convertible into shares of our common stock.

On May 27, 2005, we issued convertible debentures of $180,000 to Dutchess
Private Equities Fund, II L.P. The debentures face value was discounted by
12.5%. The holders of the debentures are entitled to convert the face amount of
these debentures, plus accrued interest at the lesser of (i) 75% of the lowest
bid price during the 15 trading days prior to the conversion date or (ii) 100%
of the lowest bid prices for the 20 trading days immediately preceding the
closing date. The convertible debentures shall pay 8% cumulative interest, in
cash or in shares of common stock, at our option, at the time of each
conversion. The convertible debentures are convertible into shares of our common
stock.

On June 6, 2005, we issued convertible debentures of $300,000 to Dutchess
Private Equities Fund, II L.P. The debentures face value was discounted by 20%.
The holders of the debentures are entitled to convert the face amount of these
debentures, plus accrued interest at the lesser of (i) 75% of the lowest bid
price during the 15 trading days prior to the conversion date or (ii) 100% of
the lowest bid prices for the 20 trading days immediately preceding the closing
date. The convertible debentures shall pay 8% cumulative interest, in cash or in
shares of common stock, at our option, at the time of each conversion. The
convertible debentures are convertible into shares of our common stock.

On September 14, 2005, we issued convertible debentures of $132,000 to Dutchess
Private Equities Fund, II L.P. The debentures face value was discounted by 20%.
The holders of the debentures are entitled to convert the face amount of these
debentures, plus accrued interest at the lesser of (i) 75% of the lowest bid
price during the 15 trading days prior to the conversion date or (ii) 100% of
the lowest bid prices for the 20 trading days immediately preceding the closing
date. The convertible debentures shall pay 8% cumulative interest, in cash or in
shares of common stock, at our option, at the time of each conversion. The
convertible debentures are convertible into shares of our common stock.

On September 22, 2005, we issued convertible debentures of $750,000 to Dutchess
Private Equities Fund, II L.P. The debentures face value was discounted by 20%.
The holders of the debentures are entitled to convert the face amount of these
debentures, plus accrued interest at the lesser of (i) 75% of the lowest bid
price during the 15 trading days prior to the conversion date or (ii) 100% of
the lowest bid prices for the 20 trading days immediately preceding the closing
date. The convertible debentures shall pay 8% cumulative interest, in cash or in
shares of common stock, at our option, at the time of each conversion. The
convertible debentures are convertible into shares of our common stock.

On October 13, 2005, we issued convertible debentures of $198,000 to Dutchess
Private Equities Fund, II L.P. The debentures face value was discounted by 20%.
The holders of the debentures are entitled to convert the face amount of these
debentures, plus accrued interest at the lesser of (i) 75% of the lowest bid
price during the 15 trading days prior to the conversion date or (ii) 100% of
the lowest bid prices for the 20 trading days immediately preceding the closing
date. The convertible debentures shall pay 8% cumulative interest, in cash or in
shares of common stock, at our option, at the time of each conversion. The
convertible debentures are convertible into shares of our common stock.

On October 19, 2005, we issued convertible debentures of $12,120 to
Dutchess Private Equities Fund, II L.P. to satisfy interest on a Collateral
Agreement dated September 19, 2005, which related Kelley bank debt refinancing
as part of the Kelley acquisition. The holders of the debentures are
entitled to convert the face amount of these debentures, plus accrued
interest at the lesser of (i) 75% of the lowest bid price during the 15
trading days prior to the conversion date or (ii) 100% of the lowest bid prices
for the 20 trading days immediately preceding the closing date. The convertible
debentures shall pay 8% cumulative interest, in cash or in shares of common
stock, at our option, at the time of each conversion. The convertible
debentures are convertible into shares of our common stock.

On November 19, 2005, we issued convertible debentures of $12,120 to
Dutchess Private Equities Fund, II L.P. to satisfy interest on a Collateral
Agreement dated September 19, 2005, which related Kelley bank debt refinancing
as part of the Kelley acquisition. The holders of the debentures are
entitled to convert the face amount of these debentures, plus accrued
interest at the lesser of (i) 75% of the lowest bid price during the 15
trading days prior to the conversion date or (ii) 100% of the lowest bid prices
for the 20 trading days immediately preceding the closing date. The convertible
debentures shall pay 8% cumulative interest, in cash or in shares of common
stock, at our option, at the time of each conversion. The convertible
debentures are convertible into shares of our common stock.

On December 19, 2005, we issued convertible debentures of $12,120 to
Dutchess Private Equities Fund, II L.P. to satisfy interest on a Collateral
Agreement dated September 19, 2005, which related Kelley bank debt refinancing
as part of the Kelley acquisition. The holders of the debentures are
entitled to convert the face amount of these debentures, plus accrued
interest at the lesser of (i) 75% of the lowest bid price during the 15
trading days prior to the conversion date or (ii) 100% of the lowest bid prices
for the 20 trading days immediately preceding the closing date. The convertible
debentures shall pay 8% cumulative interest, in cash or in shares of common
stock, at our option, at the time of each conversion. The convertible
debentures are convertible into shares of our common stock.

Upon the acquisition of Kelley, we assumed $540,000 in convertible debentures
due to Michael Kelley, our Director. At the time of the transaction, Michael
Kelley was not affiliated with us. The convertible debentures carry an interest
rate of 0.00% and are due in September of 2006. These debentures were issued
with a discounted price from the face value of $90,000. The Holder is entitled
to convert the face amount of the Debentures, plus accrued interest, anytime
following the Closing Date, at the lesser of (i) 75% of the lowest closing
bid price during the fifteen trading days prior to the Conversion Date or (ii)
100% of the closing bid prices for the twenty trading days immediately
preceding the Closing Date. In accordance with EITF 00-27 98-5, the
beneficial conversion feature on the issuance of the convertible debenture
for the year ended December 31, 2005 has been recorded in the amount of
$135,000.

Upon the acquisition of Kelley, we assumed $492,856 in various notes payable to
Michael Kelley, our Director. At the time of the transaction, Michael Kelley
was not affiliated with us. carrying interest at a fixed rate of 5.00%. These
notes payable were refinanced on October 7, 2005 with a $492,856 note payable
carrying interest at 6.00% and requiring 24 monthly payments of $17,412 in
principal and interest through September 2007. The balance of $357,299,
including a current portion of $261,802, remained outstanding as of December 31,
2005.

On January 19, 2005, we entered into a $128,750 factoring and security agreement
to sell, transfer and assign certain accounts receivable to Dutchess Private
Equities Fund II, LP. Dutchess may on its sole discretion purchase any specific
account. All accounts sold are with recourse on seller. All of the our property
held in our NIC subsidiary, including accounts receivable, inventories,
equipment and promissory notes, are collateral under this agreement. The
difference between the face amount of each purchased account and advance on the
purchased account shall be reserve and will be released after deductions of
discount and charge backs on the 15th and the last day of each month. Dutchess
charged $5,205 for finance charges in connection with this agreement. During the
three months ended March 31, 2005, we collected and made payment to Dutchess on
all amounts owed in connection with this agreement. Due to factor amounted to $0
as of March 31, 2005, respectively.

As of April 13, 2006, the Company has repaid approximately $2,900,000 to
Dutchess, related to the above factoring transactions.

ITEM 13. EXHIBITS.

NUMBER DESCRIPTION

2.1 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).

4.10 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).

4.30 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).

4.49 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).

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).

10.9 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).

10.29 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 Alton Plaza, First Amendment to Lease between the Company and Alton Plaza
Property dated January 31, 2006.

14.1 Code of Ethics (included as exhibit 14.1 to the Form 10-KSB filed April 9,
2004, and incorporated herein by reference).

21.1 List of Subsidiaries (included as exhibit 21.1 to the Form 10-QSB filed
November 21, 2005, and incorporated herein by reference).

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

31.2 Certification of the Interim Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

We incurred fees to our auditors, Jasper + Hall, PC, for professional services
rendered for the audit of our annual financial statements for the year ended
December 31, 2004 and, for the reviews of the financial statements included in
our quarterly reports on Form 10-QSB during the fiscal year ended December
31, 2005 were $20,000.

The independent auditors' report included in the 10-KSB for the year ended
December 31, 2004 was incorrectly attributed to Jaspers Hall & Johnson. It
should have been attributed to Michael Johnson & Co. LLC

TAX FEES

None.

ALL OTHER FEES

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Las Vegas, State
of
Nevada on April 17, 2006.

Network Installation Corporation

/s/ Jeffrey R. Hultman
-------------------------
By: Jeffrey R. Hultman
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company

Signature
Name Title Date

/s/ Jeffrey R. Hultman
-------------------------
Jeffrey R. Hultman Director and April 17, 2006
Chief Executive Officer

/s/ Michael Kelley Director April 17, 2006
--------------------
Michael Kelley

/s/ Christopher Pizzo Director, Chief Financial April 17, 2006
----------------------- Officer, Principal Accounting Officer
Christopher Pizzo