Dow Jones 11179.84 +81.97 7:42 am PDT, August 15, 2006 NASDAQ 2091.46 +22.42 For info, visit access.smallcapnetwork.com S & P 500 1277.65 +9.44 Change your subscription status here Russell 2000 690.82 +9.09 VOLUME 06: ISSUE 63 Network Installation's 'Then' and 'Now' - Like Apples to Oranges  Well, we hate to say we told you so, but - we told you so. Back in April, when we first profiled Network Installation Corp. (OTCBB: NWKI), we pointed out that the company's sales growth was just astronomical...and certainly too strong to not own shares. In May, when the quarterly results were reported, the strength became official, and again we begged you to take note of this company's earnings turn-around. So, it should be no surprise today when we tell you quarterly revenue growth has remained uncanny, and the quarter-over-quarter loss is just pennies away from turning into a gain. And at this point, we have no reason to think the swing to profit isn't in the cards for Network Installation; the top line is just getting too big too quickly to think otherwise. Plus - as you'll read below - the middle and bottom lines are getting a big boost too. But, first things first...  Fact is, the Network Installation Corporation we knew a year ago isn't even the same company we know and love today. Oh, they existed...they have the expenses to prove it. In fact, for the quarter ending June 30th of 2005, the company lost over $975K dollars, or 5 cents per share, with no revenue. For the six months ending on the same date, the company lost more than $8.2 million, or 38 cents per share. Again, there was no revenue. OK, so why are we singing the company's praises then? We had to tell you about last year's struggle to verify exactly what we're talking about now...those days are h-i-s-t-o-r-y.  For Q2 of this year, revenues totaled $4.9 million, and the loss was pared to $607K. For the first six months of the year, revenues totaled $11.6 million, with losses of $1.9 million. Go back and compare those results to the 2005 results again in the paragraph above. Yes, you're reading it right - there really is no comparison. That's the whole point...it's apples to oranges. If you were afraid to own NWKI shares based on 2005 numbers, then you definitely want to take into account the 2006 results. We're sure you'll change your mind, and want to add some shares to your holdings.  And if you're wondering whether or not it was just some sort of one-time accounting fluke, no, it wasn't. The books - and the stock - went through a rough patch in 2005 because of a strategic purchase of a company called Kelley Technologies, which obviously wasn't free. A fitting analogy would be growing pains...CEO Jeff Hultman had the bigger picture in mind back then, and was willing to do the right thing for the long haul, and not be trapped by just settling for the easy path. Now he, and shareholders, are on the verge of enjoying the fruits of their patience (and enjoy them in a major way).  So what gives? The lesson to be learned is simple - there's always more to the story than just the numbers. Anyone who was only looking at Network's books last year missed the news about the company's acquisition of Kelley Technologies. For those who did their homework, you knew the Kelley acquisition was going to give a huge boost to Network's bottom line. Kelley had 50 customers, and 60 contracts, all of which became Network Installation's. Well, it did provide a nice boost...clearly. Needless to say, it was a brilliant acquisition, and the improvement of earnings results proves it. Hopefully the new growth benchmark for sales and earnings results will inspire you, but if not, keep reading - there's more good news.    A Monkey Off Its Back Think investors don't collectively read enough of the fine print? Historically that may have been the case, but the market has become pretty savvy in recent years. While earnings and growth rates are still priorities, some of the best (i.e. most helpful to know) data is in the middle of the balance sheet...if it's actually detailed there at all.  Take Network Installation's financing deal with Dutchess Private Equities as an example. In terms of secured loans at the corporate level, the deal was relatively standard. It originally included convertible debentures and warrants. A debenture is the most traditional kind of loan, with specific payments and installments determined as part of the agreement. Being 'convertible' just meant Dutchess could turn the loan into a dollar-commensurate number of shares.  However, the original deal also included outright warrants for NWKI stock...a lot of it, in fact. Dutchess owned the right to purchase more than 5.7 millions shares of Network Installation, but was never required to do so if they chose not to. (Just for perspective, the original deal could have diluted currently-issued shares by up to 50%.) Obviously that flexibility provides some nice choices for the lender, such as guaranteed loan payments as long as the convertible debt is not actually converted, and/or the option to buy shares at a low price - after the fact - if the stock appreciates in value.  Although an individual may not be willing to enter such an agreement for, say a mortgage loan, the financing agreement was fairly typical in the world of seed capital funding. The lender offered a little extra flexibility, yet took on more risk. In return, Dutchess was given a little more upside potential, to reflect such risk and flexibility.  As a result of the same agreement, though, Network's financial flexibility was diminished. Not only was Network Installation making the required installment payments, had the company seen massive growth in revenues and earnings, then the lender would have most likely stepped in and converted the debentures...as well as exercised the warrants. In fact, it would have been crazy not to, since they'd be leaving profits on the table otherwise. The thing is, if Dutchess wanted shares, Network Installation was going to have to issue new ones to fulfill the obligation.  You don't have to be Einstein to figure out why such a deal could be a potential headache for current stock owners. It means more shareholders to split any gains with, and more shares to spread the returns out to - it's called 'dilution' by most Wall Streeters. Plus, issuing new shares isn't exactly a cakewalk for the company either.  Well, there's good news for everyone concerned. Network Installation and Dutchess have cancelled the old agreement and entered a new one. Where the prior one included the possibility of Dutchess demanding the issuance of shares, the new deal is more like a traditional loan...payments are structured and specific, and can't force Network Installation to come up with as many as 5.7 million new shares of its stock. The loan is secured by the assets of the company, much the same way your car or house is the collateral for your auto loan or mortgage. In other words, the monkey is off Network's back, or books, in this particular case.  That's a relief for current and prospective shareholders. The truth is, there are plenty of investors and institutions who read the fine print. The kind of potential Dutchess had to dilute Network's results and shareholder returns may have kept some potential buyers away. Now when these same people read the next batch of fine print, they're going to be pleased to see a more owner-friendly version. Plus, the restructured debt added an extraordinary (one-time) gain of $900,000 to second quarter revenues. Based on the news, the current price of 30 cents per share of NWKI makes for a great low-risk entry point relative to where they've been priced recently. The stock just needs a catalyst, and the news just might do the trick...and it looks like it may already have. To check out the complete quarterly filing, click here. For more on the debt restructuring, here you go...    Network Installation Corporation Announces Board Approves Significant Debt Restructuring Plan New Management Continues Turnaround and Positions Company for Growth in  Key Markets Beyond Advanced Gaming Technologies  The board of Network Installation Corp. (OTC Bulletin Board: NWKI) has unanimously approved the restructuring of $9.1 million of convertible debentures and the retirement of the attached 5.7 million warrants to purchase the company's common stock. This action allows Network Installation to recognize an extraordinary gain on the restructuring in the amount of more than $900,000 for its second quarter ending June 30, 2006.  According to CEO Jeff Hultman, the second quarter results combined with record first quarter revenues will make the first half of 2006 the best revenue performance in company history, Hultman adds.  "Since 2005, we have undertaken an aggressive strategy to help Network Installation unlock its potential for growth, including the acquisition of Kelley Technologies, developing proprietary technologies for growing markets and restructuring of our debt situation," says Hultman. "Thanks to the support of our employees, financial partners and board, the turnaround of Network Installation Corporation is generating excellent results and positions the company well for further enhancement of shareholder value as well as securing future capital infusions to maintain this momentum."  According to Hultman, highlights of the restructuring plan include:  Removes potential for up to 50% shareholder dilution.  $9.1 million in debt converted into $7.5 million.  5.7 million warrants retired.  $900,000 payment due in September 2006 has been reduced to $780,000 at 7% interest termed out over two years beginning in January 2007.  All debt reduction was achieved without use of any cash.  "It's a real testament to the financial and business acumen of CEO Jeff Hultman and CFO Chris Pizzo to lead the company's restructuring of its debt in this fashion," says Bill Tkacs, Managing Partner of New York-based Vested Capital Partners. "Network Installation has solid technology, a strong client list and an excellent position in rapidly growing markets. With the restructuring in place, the Company is now well positioned to move towards achieving its potential." .    We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402 San Diego, CA 92130 Sense Holdings Completes Phase One Testing of Explosive Detection Device Last week , Sense Holdings Inc. (OTCBB: SEHO) announced the completion of phase one testing for a biometric and explosive detection device. The goal of phase one testing was simply to verify the hand-held detection device worked, and to demonstrate its ease of use by airport and law-enforcement personnel. The passage on to phase two does indeed mean phase one testing results were positive. During phase two, the device's sensitivity and signature analysis will be enhanced by the Department of Energy's Oak Ridge national Laboratory (or ORNL).  Although Sense isn't actually on our coverage list anymore, for your sake, we're still interested in how they're doing. With that in mind, there are a couple of key points which you may want to be reminded about - both of them positive. First and foremost, Sense is the developer and sole commercializing partner of the MEMS-based (Micro Electro Mechanical System) technology used in the detection device, meaning nobody but them has manufacturing rights. Second, the potential market for these devices is huge. If the device works well - and it apparently already has - every government agency, police department, and branch of the military will have a need for them, not to mention the FAA.  This is one of those times when there's a light at the end of the tunnel, proverbially speaking. We knew Sense's success largely depended on successful phase one testing, but we also knew the company had the right technology and people to accomplish what they set out to do. Last week, it came to at least partial fruition.    Execute Sports Is Executing Over the course of the last several weeks, we've touched on several of Execute Sports' (OTCBB: EXCS) initiatives designed to get top line growth going, so the bottom line earnings line would get out of the red. Today, the quarterly results release tells the story...Execute made some huge progress. The company's 2nd quarter loss narrowed from $2.5 million in 2005 to only $1.0 million in 2006. On a per share basis, an 18 cent loss from a year ago is now only about a 5 cent loss. The six-month results are about as equally dramatic.  While the sales and marketing enhancements are a key part of the turnaround plan, Execute did just as well (maybe better) at cutting out the expenses from the middle portion of the income statement. The trend bodes well for the company, and for shareholders. As aggressively as the company is promoting itself, opening new lines of business, and fostering new distribution networks, we don't think it's going to be long until the scales are tipped towards profitability. Of course, to reap the full benefit of that, you'll want to own shares before then.    Biocurex Holds Steady On Per-Share Loss, Cuts Expenses Biocurex (BOCX.PK) submitted quarterly results yesterday, reporting the same per-share loss of 1 cent they reported for the same quarter a year ago. On a six-month basis, the loss was narrowed considerably. For the two quarters ended in June of 2006, Biocurex posted an operating loss of $942K (or 3 cents per share). For the same six-month period a year earlier, the loss was $1.5 million (or 5 cents per share).  Considering there's no revenue to work with, the numbers are actually pretty impressive...it's never easy to cut costs, with or without revenue. Of course, that brings up another important point about the opportunity - shares of Biocurex should be owned not for current results, but for potential future results. As a reminder, Biocurex is the sole creator and licensor of the RECAF prostate cancer test, which has been proven to work so much more effectively than current PSA tests. As we've said before, it's a true medical breakthrough...and a reason to patiently own shares  Subscribe Information is power and timely information is profitable. Become informed and profit from SmallCapDigest Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the SmallCapDigest Email Newsletter on a regular basis. To ensure newsletter delivery, you can add any additional email addresses you may have to the SmallCapDigest Member List. 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TGR is not a registered investment advisor or broker-dealer. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible.  Moreover, as detailed below, TGR accepts compensation from third party consultants and/or companies, which it features in the publication and circulation of SCD. To the degrees enumerated herein, SCD should not be regarded as an independent publication.  Click Here or go to http://access.smallcapnetwork.com/compensation_disclosure.html to view our compensation on every company we have ever covered, or visit the following web address: http://www.smallnetwork.net/profile_disclosure.html for our full profiles and http://access.smallcapnetwork.com/short_term_alerts.html for Trading Alerts.  TGR Group LLC has been paid a fee of $30,000 and 200,000 newly issued restricted shares of Network Installation for coverage of the company. In addition, one of the principles of TGR Group LLC is also a principle of MarketByte LLC. In a separate contractual relationship in 2003, MarketByte LLC was paid a fee of $25,000 in cash and 500,00 newly issued, restricted shares by Network Installation for coverage of the company. The term of MarketByte's obligation to Network Installation has expired. The aforementioned 500,000 shares issued to MarketByte LLC have become free trading, and whatever number remains could be sold at anytime. This should be viewed as a potential conflict of interest. TGR Group LLC has been paid a fee of $30,000 and 300,000 newly issued restricted shares by Execute Sports for coverage of the company. In addition, one of the prinicipals of TGR Group purchased 100,000 shares of Execute Sports at a cost of $.25 per share prior to the public offering. The shares are now eligible to be free trading.That individual may choose to sell the shares at any time. This should be viewed as a potential conflict of interest. Sense Holdings Inc. has paid TGR Group LLC a fee of $30,000 for coverage of the company. In addition, TGR Group LLC has been granted 350,000 warrants, convertible into common stock at $.19, by Trilogy Capital Partners for coverage of Sense Holdings Inc. 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