Attached files
file | filename |
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EX-32.1 - NETWORK 1 FINANCIAL GROUP, INC. | v167361_ex32-1.htm |
EX-31.1 - NETWORK 1 FINANCIAL GROUP, INC. | v167361_ex31-1.htm |
EX-32.2 - NETWORK 1 FINANCIAL GROUP, INC. | v167361_ex32-2.htm |
EX-31.2 - NETWORK 1 FINANCIAL GROUP, INC. | v167361_ex31-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended September 30, 2009
OR
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from _______ to _______
COMMISSION
FILE NUMBER: 001-14753
NETWORK
1 FINANCIAL GROUP, INC.
(Exact
Name of Registrant as specified in its charter)
Delaware
|
|
11-3423157
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
2
Bridge Avenue, 4thFloor
Red
Bank, NJ 07701
(Address
of principal executive offices)
(732)
758-9001
(Registrant’s
telephone number)
Indicate by check mark whether the
Registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
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.
YES þ NO ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). YES ¨ NO ¨
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
|
Non-accelerated
filer ¨
|
Smaller
reporting company þ
|
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). YES ¨ NO þ
As of
November 20, 2009, the Registrant had 32,435,057 shares of its Common Stock,
$.001 par value, outstanding.
NETWORK
1 FINANCIAL GROUP, INC.
FORM
10-Q
SEPTEMBER
30, 2009
TABLE
OF CONTENTS
Page
|
|||
PART
I – FINANCIAL INFORMATION
|
1
|
||
ITEM
1.
|
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
1
|
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
2
|
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
4
|
|
ITEM
4T.
|
CONTROLS
AND PROCEDURES
|
4
|
|
PART
II – OTHER INFORMATION
|
5
|
||
ITEM
1.
|
LEGAL
PROCEEDINGS
|
5
|
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
5
|
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
5
|
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
5
|
|
ITEM
5.
|
OTHER
INFORMATION
|
5
|
|
ITEM
6.
|
EXHIBITS
|
5
|
|
SIGNATURES
|
6
|
PART
I – FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS (UNAUDITED)
Index
to Consolidated Financial Statements
Condensed
Consolidated Statement of Financial Condition
|
F–1 | |||
Condensed
Consolidated Statements of Operations
|
F–2 | |||
Condensed
Consolidated Statement of Equity
|
F–3 | |||
Condensed
Consolidated Statement of Cash Flows
|
F–4 | |||
Notes
to Condensed Consolidated Financial Statements
|
F–5 |
1
NETWORK
1 FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
September
30, 2009 (unaudited) and June 30, 2009
SEPTEMBER
|
JUNE
|
|||||||
2009
|
2009
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Cash
|
$ | 247,946 | $ | 91,882 | ||||
Certificates
of Deposit
|
- | 550,942 | ||||||
Notes
Receivable Network 1 Financial ADVISORS Inc.
|
100,000 | 100,000 | ||||||
Deposit
with clearing organization
|
760,197 | 751,319 | ||||||
Due
from Affiliates
|
49,779 | 46,881 | ||||||
Advances
to Registered Representatives: net of reserve for
uncollectible accounts of $ 90,100 and $90,000
respectively.
|
76,181 | 65,584 | ||||||
Securities
held for resale, at market
|
64,893 | 84,184 | ||||||
Property
and Equipment, net.
|
10,429 | 12,797 | ||||||
Other
Assets
|
9,000 | 26,600 | ||||||
TOTAL
ASSETS:
|
$ | 1,318,425 | $ | 1,730,189 | ||||
LIABILITIES
AND EQUITY LIABILITIES
|
||||||||
Line
of Credit
|
$ | 58,000 | $ | 93,000 | ||||
Notes
Payable
|
24,899 | 32,469 | ||||||
Due
to clearing organization
|
- | 17,477 | ||||||
Commissions
Payable
|
62,272 | 41,303 | ||||||
Securities
Sold, but not yet purchased, at market
|
10,151 | 1,215 | ||||||
Capital
Leases payable
|
11,427 | 13,023 | ||||||
Warrant
Liability
|
242,150 | 22,896 | ||||||
Accounts
Payable, accrued expenses and other liabilities
|
170,151 | 249,493 | ||||||
TOTAL
LIABILITIES
|
579,050 | 470,876 | ||||||
Commitments
and Contingencies
|
||||||||
EQUITY
|
||||||||
Common Stock, $.001 par value; | - | |||||||
100,000,000
shares authorized; 40,360,057 issued and 32,435,075
outstanding
|
40,360 | 40,360 | ||||||
Additional
Paid In Capital
|
1,397,181 | 1,397,181 | ||||||
Treasury
Stock at cost; 7,925,000 shares
|
(5,129 | ) | (5,129 | ) | ||||
Accumulated
deficit
|
(908,037 | ) | (388,099 | ) | ||||
Total
stockholders equity
|
524,375 | 1,044,313 | ||||||
Non-controlling
interest
|
215,000 | 215,000 | ||||||
TOTAL
EQUITY
|
739,375 | 1,259,313 | ||||||
TOTAL
LIABILITIES AND EQUITY
|
$ | 1,318,425 | $ | 1,730,189 |
(the
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements)
F-1
NETWORK
1 FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE
MONTHS ENDED SEPTEMBER 30, 2009 and 2008
(unaudited)
2009
|
2008
|
|||||||
Revenues:
|
||||||||
Commissions
|
$ | 191,780 | $ | 278,812 | ||||
Net
dealer inventory gains
|
40,405 | 48,830 | ||||||
Investment
banking
|
121,485 | 0 | ||||||
Interest
and Dividends
|
11,794 | 21,028 | ||||||
Transfer
fees and clearing services
|
6,562 | 5,870 | ||||||
Investment
advisory
|
68,188 | 59,544 | ||||||
Other
|
8,674 | 68,608 | ||||||
Total
Revenue
|
448,888 | 482,691 | ||||||
Operating
Expenses:
|
||||||||
Commissions
|
$ | 265,012 | 135,345 | |||||
Compensation
and Related Expenses
|
183,164 | 176,603 | ||||||
Clearing
Fees
|
56,519 | 52,182 | ||||||
Communications
and data processing
|
25,391 | 45,180 | ||||||
Interest
|
5,589 | 23,676 | ||||||
Occupancy
and related expenses
|
66,248 | 53,276 | ||||||
Office
Expenses
|
48,740 | 18,229 | ||||||
Professional
Fees
|
96,539 | 17,380 | ||||||
Depreciation
|
2,370 | 8,070 | ||||||
Total
Operating Expenses
|
749,572 | 529,942 | ||||||
Loss
from Operations
|
(300,684 | ) | (47,251 | ) | ||||
Other
Income
|
||||||||
Gain
on change in derivative liability
|
(219,254 | ) | - | |||||
Total
Other Income
|
(219,254 | ) | - | |||||
Net
loss
|
(519,938 | ) | (47,251 | ) | ||||
Income
attributable to non-controlling interest
|
- | 25,872 | ||||||
Net
loss attributable to common shareholders
|
$ | (519,938 | ) | $ | (73,123 | ) | ||
Loss
per common share (basic and diluted)
|
$ | (0.022 | ) | $ | (0.002 | ) | ||
Weighted
average common shares outstanding
|
23,393,529 | 22,018,084 |
(the
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements)
F-2
NETWORK
1 FINANCIAL GROUP, INC. and SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF EQUITY
For
the three months ended September 30, 2009
(Unaudited)
Preferred
Stock
|
Common
Stock
|
Additional
|
Treasury
|
Accumulated
|
Non-Controlling
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
paid-in-capital
|
Stock
|
Defecit
|
interest
|
Total
|
||||||||||||||||||||||||||||
Balance
- June 30, 2009
|
- | $ | - | 40,360,057 | $ | 40,360 | $ | 1,397,181 | $ | (5,129 | ) | $ | (388,099 | ) | $ | 215,000 | $ | 1,259,313 | ||||||||||||||||||
Net
loss
|
$ | (519,938 | ) | $ | (519,938 | ) | ||||||||||||||||||||||||||||||
Balance
- September 30, 2009
|
- | - | 40,360,057 | 40,360 | 1,397,181 | (5,129 | ) | (908,037 | ) | 215,000 | $ | 739,375 |
(the
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements)
F-3
NETWORK
1 FINANCIAL GROUP, INC. AND SUBSIDIARIES.
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
For
the three months ended September 30, 2009 and 2008
(unaudited)
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
Loss attributable to common shareholders
|
$ | (519,938 | ) | $ | (73,123 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Depreciation
|
2,368 | 10,644 | ||||||
Gain
on change in derivative liability
|
219,254 | - | ||||||
Net
income (loss) of non-controlling interest in subsidiaries
|
- | 25,872 | ||||||
Changes
in operating assets and liabilities
|
||||||||
Due
from clearing organization
|
(8,878 | ) | 2,709 | |||||
Securities
held for resale, at market
|
19,291 | 48,478 | ||||||
Advances
to/from registered representatives
|
10,372 | (34,276 | ) | |||||
Other
assets
|
17,600 | (2,475 | ) | |||||
Securities
sold, but not yet purchased, at market
|
8,936 | (5,577 | ) | |||||
Due
to clearing organization
|
(17,477 | ) | - | |||||
Accounts
Payable, accrued expenses & other Liabilities
|
(79,342 | ) | 92,819 | |||||
TOTAL
ADJUSTMENTS
|
172,124 | 138,194 | ||||||
NET
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
(347,814 | ) | 65,071 | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
- | - | ||||||
CASH FLOWS
FROM FINANCING ACTIVITIES
|
||||||||
Advances
to affiliated companies
|
(2,898 | ) | - | |||||
Advances
from affiliated companies
|
- | 27,612 | ||||||
Advance
to Officers
|
- | (141,357 | ) | |||||
Advances
From Officers
|
- | 24,100 | ||||||
Proceeds
from certificate of deposit
|
550,942 | - | ||||||
Repayment
of Notes Payable
|
(7,570 | ) | (8,381 | ) | ||||
Repayment
of Mortgage Payable
|
- | (5,099 | ) | |||||
Repayment
of line of credit
|
(35,000 | ) | - | |||||
Repayment
of capital lease
|
(1,596 | ) | (1,597 | ) | ||||
Cash
contributions from owner
|
- | 2,890 | ||||||
NET
CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES
|
503,878 | (101,832 | ) | |||||
NET
INCREASE (DECREASE) IN CASH
|
156,064 | (36,761 | ) | |||||
CASH
- Beginning of Year
|
91,882 | 39,734 | ||||||
CASH
- End of Year
|
$ | 247,946 | $ | 2,973 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||
Cash
paid during year
|
||||||||
Interest
|
$ | 5,589 | $ | 11,196 | ||||
Income
Taxes
|
$ | 644 | $ | - |
(the
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements)
F-4
NETWORK 1
FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
NOTE 1 –
Basis of Presentation
(Reverse Merger and Corporate Structure )
Network 1
Financial Securities, Inc. (“NETW”) was organized as a Texas corporation on
March 15, 1983 and is registered as a broker-dealer with the Securities and
Exchange Commission (SEC), the State of Texas and various other states. NETW is
an introducing broker-dealer that clears all transactions with and for customers
on a fully disclosed basis with a clearing broker. The accompanying unaudited
condensed consolidated statement of operations for the three months ended
September, 30 2008 consolidate the following variable interest entities
(“VIEs”): Network 1 Financial Advisors, Inc, Network 1 Financial Assurance,
Inc., National Financial Services Group, Inc. and Shark Rivers Investors, LLC
through the companies merger date of June 9, 2009. As of September
30, 2009, none of the assets, liabilities and results of operations of the VIEs
are included as part of the consolidation.
On June
9, 2009, NETW completed a merger transaction (the “Reverse Merger”) with
International Smart Sourcing, Inc. (“ISSI”), an inactive publicly registered
shell corporation with no significant assets or operations. ISSI was
incorporated in February 1998 in Delaware. As a result of the Reverse
Merger, NETW became a wholly owned subsidiary of ISSI and the current assets of
NETW were merged with ISSI, with the exception of the following consolidated
entities which have been deemed to be VIEs by NETW: Network 1 Financial
Advisors, Inc., Network 1 Financial Assurance, Inc, National Financial Services
Group, Inc. and Shark Rivers Investors, LLC. NETW’s shareholders
acquired control of ISSI.
Upon
completion of the Reverse Merger transaction, ISSI changed its name to Network 1
Financial Group, Inc. (the “Company”).
All
references to Common Stock, share and per share amounts have been retroactively
restated to reflect the exchange ratio of 17.16 shares of ISSI’s Common Stock
for 1 share of the acquirer's Common Stock outstanding immediately prior to the
Reverse Merger as if the exchange had taken place as of the beginning of the
earliest period presented.
The
accompanying consolidated financial statements present on a consolidated basis
the accounts of the Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
The
accompanying unaudited condensed consolidated financial statements for the three
month periods ended September 30, 2009 and 2008 have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission, including Form 10-Q and Regulation S-X. The information furnished
herein reflects all adjustments (consisting of normal recurring accruals and
adjustments) which are, in the opinion of management, necessary to fairly
present the operating results for the respective periods. Certain information
and footnote disclosures normally present in annual financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been omitted pursuant to such rules and
regulations. The Company believes that the disclosures provided are adequate to
make the information presented not misleading. These financial statements should
be read in conjunction with the audited financial statements and explanatory
notes for the year ended June 30, 2009 as disclosed in the Company's 10-K for
that year as filed with the SEC, as it may be amended.
The
results of the three months ended September 30, 2009 are not necessarily
indicative of the results to be expected for the pending full year ending June
30, 2010.
F-5
NETWORK 1
FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
NOTE 2 -
Summary of Significant
Accounting Policies
Use of
Estimates
The
preparation of the condensed consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements, as well as the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Revenue
Recognition
Customer
security transactions and the related commission income and expense are recorded
as of the trade date. Investment banking revenues include gains,
losses, and fees, net of syndicate expenses, arising from securities offerings
in which the Company acts as an underwriter or agent. Investment banking
revenues also include fees earned from providing financial advisory
services. Investment banking management fees are recorded on the
offering date, sales concessions on the settlement date, and underwriting fees
at the time the underwriting is completed and the income is reasonably
determinable. Customers who are financing their transaction on margin are
charged interest. The Company’s margin requirements are in accordance with the
terms and conditions mandated by its clearing firm. The interest is billed on
the average daily balance of the margin account.
Net
dealer inventory gains result from securities transactions entered into for the
account and risk of the Company. Net dealer inventory gains are recorded on a
trade date basis. Investment advisory fees are account management fees for high
net worth clients based on the amount of the assets under management. These fees
are billed quarterly and recognized at such time that the service is performed
and collection is probable.
The
Company generally acts as an agent in executing customer orders to buy or sell
listed and over-the-counter securities in which it does not make a market, and
charges commissions based on the services the Company provides to its customers.
In executing customer orders to buy or sell a security in which the Company
makes a market, the Company may sell to, or purchase from, customers at a price
that is substantially equal to the current inter-dealer market price plus or
minus a mark-up or mark-down. The Company may also act as agent and execute a
customer's purchase or sale order with another broker-dealer market-maker at the
best inter-dealer market price available and charge a commission. Mark-ups,
mark-downs and commissions are generally priced competitively based on the
services it provides to its customers. In each instance the commission charges,
mark-ups or mark-downs, are in compliance with guidelines established by the
FINRA.
Marketable
securities are carried at fair value, with changes in value included in the
statement of income in the period of change. Fair value is generally determined
by quoted market prices. Non-marketable securities are valued at fair value as
determined by management.
Noncontrolling
Interest
As a
result of adopting FASB ASC 810-10 Consolidations – Variable Interest Entities,
on July 1, 2009, we present non-controlling interests (previously shown as
minority interest) as a component of equity on our Condensed Consolidated
Statement of Financial Condition and Condensed Consolidated Statement of
Equity. The adoption of this guidance did not have any other material
impact on our financial position, results of operations or cash
flow.
F-6
NETWORK 1
FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
Fair Value of Financial
Instruments
FASB
requires that the Company disclose estimated fair values of financial
instruments. The carrying amounts reported in the statement of financial
position for current assets and current liabilities qualifying as financial
instruments approximate fair value because of their short
maturities.
In April
2009, the FASB issued provisions that require that companies also disclose the
fair value of financial instruments during interim reporting periods similar to
those that are currently provided annually. These pronouncements are effective
for interim reporting periods ending after June 15, 2009.
On July
1, 2008, the Company adopted the provisions of Accounting Standard Codification
(“ASC”) Topic 820, which defines fair value for accounting purposes, establishes
a framework for measuring fair value and expands disclosure requirements
regarding fair value measurements. The Company’s adoption of ASC 820
did not have a material impact on its condensed consolidated financial
statements. Fair value is defined as an exit price, which is the
price that would be received upon sale of an asset or paid upon transfer of a
liability in an orderly transaction between market participants at the
measurement date. The degree of judgment utilized in measuring the
fair value of assets and liabilities generally correlates to the level of
pricing observability. Financial assets and liabilities with readily
available, actively quoted prices or for which fair value can be measured from
actively quoted prices in active markets generally have more pricing
observability and require less judgment in measuring fair
value. Conversely, financial assets and liabilities that are rarely
traded or not quoted have less price observability and are generally measured at
fair value using valuation methods that require more judgment. These
valuation techniques involve some level of management estimation and judgment,
the degree of which is dependent on the price transparency of the asset,
liability or market and the nature of the asset or liability. The
Company has categorized its financial assets and liabilities measured at fair
value into a three level hierarchy in accordance with ASC 820.
Consolidation of Variable
Interest Entities
ASC 810
“Consolidation” requires a variable interest entity, as defined, to be
consolidated by a company, if that company is subject to a majority of the risk
of loss from the variable interest entity’s activities, entitled to receive a
majority of the entity’s residual returns, the purpose of the entity is for the
benefit of the reporting entity, or if the entity is substantially financed by
the reporting entity. For these purposes, variable interests held by related
parties should be consolidated with the reporting entity.
The
accompanying unaudited condensed consolidated financial statements for September
30, 2008 include the following variable interest entities in accordance with the
provisions of ASC 810: Network 1 Financial Advisors, Inc., Network 1 Financial
Assurance, Inc., National Financial Services Group, Inc. and Shark Rivers
Investors, LLC.
Network 1
Financial Advisors, Inc. provides advisory services and the in-house management
of client accounts. Network 1 Financial Assurance, Inc. acts as an
agent providing life and health insurance products for certain clients on behalf
of the Company.
National
Financial Services Group, Inc. enters into leases and functions as the guarantor
for any leases or investments on behalf of the Company.
Shark
Rivers Investors, LLC is a real estate investment company that owns and operates
two building facilities in New Jersey.
F-7
NETWORK 1
FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
The
following is a summary of certain financial data for Network 1 Financial
Advisors, Inc, Network 1 Financial Assurance, Inc. National Financial Services
Group, Inc. and Shark Rivers Investors, LLC for the three months ended September
30, 2009 and 2008:
2009
|
2008
|
||||
$ |
-
|
$ | 97,622 | ||
$ |
-
|
$ | 25,872 | ||
$ |
-
|
$ | 1,530,364 | ||
$ |
-
|
$ | 1,114,979 |
Reclassifications
Certain
reclassifications have been made in prior year’s financial statements to conform
to classifications used in the current year.
NOTE 3 -
Recent Accounting
Pronouncements
Accounting Standards Codification
and GAAP Hierarchy — Effective for interim and annual periods
ending after September 15, 2009, the Accounting Standards Codification and
related disclosure requirements issued by the FASB became the single official
source of authoritative, nongovernmental GAAP. The ASC simplifies GAAP, without
change, by consolidating the numerous, predecessor accounting standards and
requirements into logically organized topics. All other literature not included
in the ASC is non-authoritative. We adopted the ASC as of September 30, 2009,
which did not have any impact on our results of operations, financial condition
or cash flows as it does not represent new accounting literature or
requirements. All references to pre-codified U.S. GAAP have
been removed from this Form 10-Q.
Consolidation
— Effective for interim and annual periods beginning after
November 15, 2009, with earlier application prohibited, GAAP amends the
current accounting standards for determining which enterprise has a controlling
financial interest in a VIE and amends guidance for determining whether an
entity is a VIE. The new standards will also add reconsideration events for
determining whether an entity is a VIE and will require ongoing reassessment of
which entity is determined to be the VIE’s primary beneficiary as well as
enhanced disclosures about the enterprise’s involvement with a VIE. We are
currently assessing the future impact these new standards will have on our
results of operations, financial position or cash flows.
Transfers and Servicing –
Effective for interim and annual periods beginning after November 15, 2009,
GAAP eliminates the concept of a qualifying special purpose entity, changes the
requirements for derecognizing financial assets and requires additional
disclosures. We are currently assessing the future impact these new standards
will have on our results of operations, financial position or cash
flows.
NOTE 4 -
Securities Owned and
Securities Sold, But Not Yet Purchased, At Market
The
following table shows the market values of the Company's investment securities
owned and securities sold, but not yet purchased as of September 30, 2009 and
June 30, 2009, respectively:
F-8
NETWORK 1
FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
September 30, 2009
|
June 30, 2009
|
|||||||||||||||
Securities:
|
Owned
|
Sold Short
|
Owned
|
Sold Short
|
||||||||||||
$ | 64,893 | $ | 10,151 | $ | 84,184 | $ | 1,215 |
Securities
sold, but not yet purchased commit the Company to deliver specified securities
at predetermined prices. The transactions may result in market risk since, to
satisfy the obligation, the Company must acquire the securities at market
prices, which may exceed the values reflected in the consolidated statements of
financial condition.
NOTE 5 -
Due from Clearing
Organization
The
following represents amounts on deposit with Southwest Securities, Inc.
(“Southwest”) with the Company’s clearing broker inventory account:
September 30, 2009
|
June 30, 2009
|
|||||||
Cash
|
$ | 193,239 | $ | 417,034 | ||||
Marketable
securities
|
566,958 | 334,285 | ||||||
Total
|
$ | 760,197 | $ | 751,319 | ||||
Less: securities sold short | (10,151 | ) | (1,215 | ) | ||||
Total due from clearing organization | $ | 750,046 | $ | 750,104 |
The
marketable securities are primarily comprised of corporate stocks. Marketable
securities on deposit with Southwest Securities are reflected at fair
value. The Company is required to maintain a balance of $750,000 with
the clearing organization of cash and securities.
For the
three months ending September 30, 2009 and 2008, the Company used the services
of Southwest to clear its brokerage business. The Company incurred charges of
approximately $56,519 and $52,182 under this arrangement for the three months
ended September 30, 2009 and 2008, respectively.
NOTE 6 -
Related Party
Transactions
As of
September 30, 2009 and June 30, 2009, due to (from) affiliated companies
consisted of the following:
September 30,
|
June
30,
|
|||||||
2009
|
2009
|
|||||||
Legends
property development (a)
|
$ | 1,330 | $ | 1,330 | ||||
Mainport
LLC (b)
|
$ | - | $ | - | ||||
Network
1 Financial Advisors Inc.(c)
|
$ | 108,017 | $ | 104,867 | ||||
Network 1
Financial Assurance, Inc. (b)
|
$ | 548 | $ | 803 | ||||
National
Financial Services Group (b)
|
$ | 39,884 | $ | 39,881 |
|
(a)
|
Represents
expenses paid on behalf of an affiliated company whose directors are
officers and shareholders of the
Company.
|
F-9
NETWORK 1
FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
|
(b)
|
Represents
amounts due from an affiliated company whose officers and shareholders are
officers and shareholders’ of the
Company.
|
|
(c)
|
Represents
amounts due in the form of a promissory note from an affiliated company
whose officers and shareholders are officers and shareholders of the
Company.
|
NOTE 7 -
Line of Credit –
Bank
The
Company’s bank line of credit is payable on demand. The maximum amount the
Company could borrow is $100,000, indebtedness under the line of credit provides
for interest at the bank’s prime rate, plus 1.0% (approximately 5% at September
30, 2009). As of September 30, 2009 and June 30, 2009, the amount outstanding
under this credit facility was $58,000 and $93,000
respectively. As of the year ending June 30, 2009, the Company
was in default of the terms of the terms of the line of
credit. Subsequent to the year end the Company negotiated a payment
plan to pay down the balance to correct the default. As of September
30, 2009, the balance due was $58,000.
Indebtedness
under the credit agreement is collateralized by substantially all of the assets
of the Company and an officers’ personal guarantee.
NOTE 8 -
Net Capital
Requirements
NETW is a
registered broker-dealer and is subject to the SEC’s Uniform Net Capital Rule
15c3-1. This requires that NETW maintain minimum net capital of $100,000 and
also requires that the ratio of aggregate indebtedness, as defined, to net
capital, shall not exceed 15 to 1.
As of
September 30, 2009 and June 30, 2009, NETW’s net capital exceeded the
requirement by approximately $270,219 and $111,834, respectively.
Advances,
dividend payments and other equity withdrawals are restricted by the regulations
of the SEC, and other regulatory agencies are subject to certain notification
and other provisions of the net capital rules of the SEC. NETW qualifies under
the exemptive provisions of Rule 15c3-3 as NETW does not carry security accounts
for customers or perform custodial functions related to customer
securities.
NOTE 9 -
Warrants and Derivative
Liability
The
following is additional information with respect to the Company’s warrants as of
September 30, 2009:
F-10
NETWORK 1
FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
WARRANTS
OUTSTANDING AND EXERCISABLE
|
|||||||||
Number
of
|
Weighted
|
||||||||
Outstanding
|
Average
|
Weighted
|
|||||||
Shares
|
Remaining
|
Average
|
|||||||
Exercise
|
Underlying
|
Contractual
|
Exercise
|
||||||
Price
|
Warrants
|
Life
|
Price
|
||||||
$0.20
|
7,657,733 |
0.56 years
|
$ | 0.20 | |||||
|
7,657,733 |
0.56 years
|
$ | 0.20 |
Note: The
warrants’ expiration date is April 23, 2010.
In June
2008, the FASB issued new accounting guidance which requires entities to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock by assessing the instrument’s contingent exercise
provisions and settlement provisions. Instruments not indexed to their own stock
fail to meet the scope exception of ASC 815 “Derivative and Hedging” and should
be classified as a liability and marked-to-market. The statement is effective
for fiscal years beginning after December 15, 2008 and is to be applied to
outstanding instruments upon adoption with the cumulative effect of the change
in accounting principle recognized as an adjustment to the opening balance of
retained earnings. The Company’s warrants issued in connection with the IPO do
not have fixed settlement provisions because their exercise prices, may be
lowered if the Company issues securities at lower prices in the
future. The Company was required to include the reset provisions in
order to protect warrant holders from potential dilution associated with future
financings. In accordance with the guidance, the warrants have been
recharacterized as a derivative liability.
The
derivative liability was valued using the Black-Scholes option valuation model
and the following assumptions:
F-11
NETWORK 1
FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
September 30, 2009
|
June 30, 2009
|
|||||||
Warrants:
|
||||||||
Risk
Free interest rate
|
0.4 | % | 0.6 | % | ||||
Expected
volatility
|
119.22 | % | 103 | % | ||||
Expected
life (in years)
|
.56 | 0.93 | ||||||
Expected
dividend yield
|
0 | % | 0 | % | ||||
Fair
value Warrants:
|
$ | 242,150 | $ | 22,896 |
NOTE 10-
Fair Value
Measurements
The
financial assets of the Company measured at fair value on a recurring basis are
cash, due from clearing organization, marketable securities, derivatives and
debt. The Company’s cash equivalents, due from clearing organization
and marketable securities are generally classified within Level 1 of the
fair value hierarchy because they are valued using quoted market
prices, broker or dealer quotations, or alternative pricing sources with
reasonable levels of price transparency. The Company’s long-term
investments, derivative liabilities and debt are classified within level 3 of
the fair value hierarchy because they are valued using unobservable inputs, due
to the fact that observable inputs are not available, or situations which there
is little, if any, market activity for the asset or liability at the measurement
date.
·
|
Level
1: Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical unrestricted assets or
liabilities;
|
·
|
Level
2: Quoted prices in markets that are not active or inputs which are
observable, either directly or indirectly , for substantially the full
term of the asset or liability; or
|
·
|
Level
3: Prices or valuation techniques that require inputs that require inputs
that are both significant to the fair value measurement and are
unobservable.
|
The
following table sets forth the Company’s short and long term investments as of
September 30, 2009, which are measured at fair value on a recurring basis by
level within the fair value hierarchy. As required, by ASC 820
(formerly SFAS No. 157), these are classified based on the lowest level of input
that is significant to the fair value measurement (in thousands ):
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||
Cash
|
$ | 247,946 | $ | 247,946 | |||||||||
Due
from clearing organization
|
760,197 | 760,197 | |||||||||||
Securities
owned, at market values
|
64,893 | 64,893 | |||||||||||
(242,150 | ) | (242,150 | ) | ||||||||||
Line
of Credit and notes payable
|
(82,899 | ) | (82,899 | ) |
NOTE 11 -
Subsequent
Event
In
accordance with FASB ASC 855 “Subsequent Events,” the Company has evaluated
subsequent events through the date of filing (November 23, 2009).
Network 1
Financial Securities, Inc. requested a 30 day extension for its Rule 1017 filing
until October 30, 2009, which was granted by FINRA. On October 30,
2009 we received a letter of acceptance from FINRA.
F-12
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Some of the statements contained in
this Quarterly Report on Form 10-Q, which are not purely historical, are
forward-looking statements, including, but not limited to, statements regarding
the Company’s objectives, expectations, hopes, beliefs, intentions or strategies
regarding the future. In some cases, you can identify forward-looking statements
by the use of the words “may,” “will,” “should,” “expects,” “plans,” “intends,”
“anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue”
or the negative of those terms or other comparable terminology. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, our actual results could differ materially from those disclosed in
these statements due to various risk factors and uncertainties affecting our
business. We caution you not to place undue reliance on these forward-looking
statements. We do not assume responsibility for the accuracy and completeness of
the forward-looking statements and we do not intend to update any of the
forward-looking statements after the date of this report to conform them to
actual results. You should read the following discussion in conjunction with our
financial statements and related notes included elsewhere in this report. For a
more complete understanding of our industry, the drivers of our business and our
current period results, you should read the following Management’s Discussion
and Analysis of Financial Condition and Results of Operation in conjunction with
the audited financial
statements and notes thereto set forth in our Annual Report on Form 10-K for the
year ended June 30, 2009 and our other filings with the SEC.
OVERVIEW
On June
9, 2009, the Company (then known as “International Smart Sourcing, Inc.” or
“ISSI”) closed certain transactions contemplated in a certain Stock Purchase
Agreement dated as of March 26, 2009 (the “Agreement”) which we entered into
with Network 1 Financial Securities, Inc., a privately held Texas corporation
(“NETW”), and certain former shareholders of NETW. At the closing, we acquired
1,250,528 shares, or approximately 97.55%, of common stock of NETW outstanding
on such date (the “Reverse Merger”). In accordance with the terms of the
Agreement, we issued 21,460,622 shares of our common stock to the former
shareholders of NETW, in exchange for the acquisition, by the Company, of
approximately 97.55% of the outstanding common shares of NETW.
As of the
closing date, the former shareholders of NETW held approximately 66% of the
issued and outstanding common shares of the Company. The issuance of the
21,460,622 common shares to the former shareholders of NETW was deemed to be a
reverse acquisition for accounting purposes, by ISSI of NETW, as NETW will
control the post-merged company. Accordingly, NETW, the accounting acquirer
entity, is regarded as the predecessor entity as of June 9, 2009.
Upon the
completion of the Reverse Merger, we became the ultimate parent company of NETW
and we changed our name from “International Smart Sourcing, Inc.” to “Network 1
Financial Group, Inc.” (“NETW Group,” the “Company,” “we,” “us,” or
“our”).
During
the quarter ended September 30, 2009, we had an increase in our investment
banking and investment advisory consulting fees. In the same period,
we had a decrease in commission income and trading profits. The increase in
investment banking fees was attributable to the completion of a private
placement and the increase in advisory consulting fees was due to a greater
number of companies seeking our services. The decrease in commissions earned in
NETW’s daily transaction business was due primarily to a reduction in activity
from NETW’s retail clients. The decrease in trading profits was due to increased
market volatility. Overall, we experienced an increase in losses in the quarter
ended September 30, 2009 compared to the same period in the prior
year.
We had a
loss from operations of approximately $300,684 for the quarter ended September
30, 2009, which represents an increase of $253,433 over our net loss of $47,251
in the same period in the prior year. This increase was primarily due
to increased operating expenses, which consisted of higher investment banking
commissions, cost associated with being a public company, and an increase in
professional fees. Management continues to seek income stabilization from
consulting and investment banking fees as well as by reducing its exposure to
market positions. Management believes that in order to expand its marketing and
recruitment of experienced registered representatives it will need to seek
additional sources of funding.
NETW had
determined that the following entities were variable interest entities (“VIEs”):
Network 1 Financial Advisors, Inc., Network 1 Financial Assurance, Inc.,
National Financial Services Group, Inc., and Shark Rivers Investors, LLC.
Post-Reverse Merger, as a result of agreements executed with the VIE’s, NETW
determined that it was no longer the sole source of financial support and the
primary beneficiary for the VIEs. Accordingly, we deconsolidated the VIEs,
effective June 9, 2009, from our financial positions and results of operations.
No gain or loss was recorded upon deconsolidation as the estimated fair values
of the VIEs’ net assets equaled their carrying values.
2
On March
12, 2009, we were notified by our bank that our outstanding credit line was in
default. We were required to make certain minimum repayments of our line of
credit of aggregating approximately $37,200, which amount was not remitted.
Management negotiated the following repayment schedule with the bank: $15,000
due in July 2009; $10,000 due in August 2009; $10,000 due in September 2009, and
the balance of $2,200 due in October 2009. We have made all payments
through October, totaling $38,000.
Critical
Accounting Policies and Estimates
Our
discussion and analysis of financial condition and results of operations are
based upon the condensed consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles as
recognized in the United States of America. The preparation of these
financial statements requires that we make estimates and judgments that affect
the reported amounts of assets, liabilities, revenue and expenses, and
disclosure of contingent assets and liabilities. We base our
estimates on historical experience and on various other assumptions that
management believes to be reasonable under the circumstances. Actual
results may differ from these estimates under different assumptions or
conditions. For a complete description of accounting policies, see
Note 2 to our financial statements included in our Form 10-K for the year ended
June 30, 2009. There were no significant changes in critical
accounting estimates.
Results
of Operations
For
the three months ended September 30, 2009 and 2008
The
unaudited results of operations for the three months ended September 30, 2008
include the following VIEs in accordance with the provisions of ASC 810: Network
1 Financial Advisors, Inc., Network 1 Financial Assurance, Inc., National
Financial Services Group, Inc. and Shark Rivers Investors,
LLC. Effective June 9, 2009, we deconsolidated the VIEs from our
financial positions and results of operations.
For the
three months ended September 30, 2009 and 2008, we generated $448,888 and
$482,691 of consolidated revenue, respectively. The decrease in revenue of
$33,803 in the quarter ended September 30, 2009 represents a 7.0% decrease in
revenue over the corresponding period in 2008 and is due to a decrease in
commission income and trading profits. The decrease in commissions earned in our
daily transaction business was due primarily to a reduction in activity from our
retail clients. The decrease in trading profits was due to increased market
volatility.
The
revenue from continuing operations minus the consolidated revenue of the VIE’s
was $447,092 for the three months ended September 30, 2009 compared to $385,069
for the three months ended September 30, 2008, an increase of $62,023 or
16%. This increase was due to increased investment banking fees. The
increase in investment banking fees was attributable to the completion of a
private placement and the increase in advisory consulting fees was due to a
greater number of companies seeking our services.
We
reported an operating loss minus the consolidated revenue of the VIE’s of
$252,539 in the three months ended September 30, 2009 compared to $73,123 for
the corresponding period in the prior year, which represents an increase of
$179,416. The increase in operating loss was due to an increase in
commissions payable and compensation and related expenses, as well as costs
associated with being a public company, including professional
fees.
Our
consolidated operating expenses were $749,571 and $529,942 for the quarters
ended September 30, 2009 and 2008, respectively, representing an increase of
$219,629 or 41% from the prior period, and represents 167% and 109% of revenue,
respectively. The increase in our expenses in 2009 is primarily due
to costs associated with being a public company, an increase in commissions paid
to our brokers and an increase in professional fees related to the Reverse
Merger.
Interest
expense was $5,589 and $23,676 for the quarters ended September 30, 2009 and
2008, respectively, a decrease of $18,087 or 76.4 %. The decrease was due to a
reduction in interest rates, a reduction in debt financing and the
non-consolidation of the VIEs.
Our
consolidated loss before non-controlling interest in subsidiaries was $300,684
and $47,251 for the three months ended September 30, 2009 and 2008,
respectively. The income attributable to non-controlling interest in
subsidiaries was $0.00 and $25,872 for the three months ended September 30, 2009
and 2008, respectively.
LIQUIDITY
AND CAPITAL RESOURCES
Our
primary source of liquidity is cash generated from operations and from
short-term financing arrangements. We had $247,946 in cash and as of September
30, 2009.
We
generated a deficit in cash flow from operations of $347,814 for the three
months ended September 30, 2009. Cash flows provided by financing
activities for the three months ended September 30, 2009 were $503,878 comprised
primarily of cash proceeds from the liquidation of certificates of
deposits.
3
We
believe that we will have available resources to meet our liquidity
requirements, including debt service, for the next quarter. If our cash flow
from operations is insufficient to fund our debt service and other obligations,
we may be required to increase our borrowings, reduce or delay capital
expenditures, and seek additional capital or refinance our
indebtedness. There can be no assurance, however, that we will
continue to generate cash flows at or above current levels or that we will be
able to maintain our ability to borrow under revolving credit
facilities.
In the
upcoming year, we plan to finance operations with working capital and external
financing. We believe that we will need additional funds in the near term to
finance operations and meet revenue, profitability, growth, diversification and
other strategic goals for the foreseeable future. We expect to be able to
procure financing upon reasonable terms in order to finance operations. However,
if we are unable to do so, or if we do not meet anticipated future revenue
goals, management is committed to taking actions necessary to ensure the
conservation of adequate cash to continue to finance its
operations.
Off
Balance Sheet Arrangements
We do not
have any off-balance sheet arrangements that we are required to disclose
pursuant to these regulations. In the ordinary course of business, we
enter into operating lease commitments, purchase commitments and other
contractual obligations. These transactions are recognized in our
financial statements in accordance with generally accepted accounting principles
in the United States.
Inflation
We
believe that inflation has not had a material effect on our operations to
date.
Recent
Accounting Pronouncements
See
Note 2 of the Unaudited Condensed Consolidated Financial Statements for a
full description of new accounting pronouncements, including the respective
expected dates of adoption and effects on results of operations and financial
condition.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
ITEM
4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and
Procedures
As of the
end of the period covered by this report, the Company carried out an evaluation,
under the supervision and with the participation of the Company’s management,
including the Company’s Chief Executive Officer and the Company’s Chief
Financial Officer, of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on this
evaluation, the Company’s Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures were not
effective as of September 30, 2009 due to the identification of a material
weakness. A material weakness is a control deficiency or combination of control
deficiencies such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis.
To
address the material weakness described below, we performed additional analysis
and performed other procedures to ensure our financial statements were prepared
in accordance with GAAP. Accordingly, management believes that the financial
statements included in this Quarterly Report on Form 10-Q, fairly present, in
all material aspects, our financial condition, results of operations and cash
flows for the periods presented in accordance with GAAP.
The
weakness, identified by management, related to the lack of necessary
accounting resources to ensure consistently complete and accurate reporting of
financial reporting. To mitigate the current limited resources and limited
employees, we rely heavily on direct management oversight of transactions. As we
grow, we expect to increase our number of employees, which will enable us to
implement adequate segregation of duties within the internal control
framework.
We
believe that for the reasons described above, after we hire additional qualified
in-house personnel, we will be able to improve our disclosure controls and
procedures, remedy the material weaknesses identified above and provide
reasonable assurance that assets are safeguarded from loss or unauthorized use,
that transactions are recorded in accordance with GAAP under management’s
directions, and that financial records are reliable to prepare financial
statements. However, because of inherent limitations in all control systems, no
evaluation can provide absolute assurance that all control issues and instances
of fraud, if any, will be or have been detected.
4
(b) Changes in internal control over
financial reporting
There
were no changes in the Company’s internal control over financial reporting in
the Company’s first fiscal quarter of the fiscal year ending June 30, 2010
covered by this Quarterly Report on Form 10-Q, that have materially affected, or
are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
PART
II – OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
We are
not party to any material legal proceedings, nor to our knowledge, are there any
proceedings threatened against us.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We have
not sold any unregistered equity securities during the three-month period
covered by this quarterly report.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
We have
not submitted any matters to a vote of security holders during the three-month
period covered by this quarterly report.
ITEM
5. OTHER INFORMATION
On
November 19, 2009, director Richard A. Peters notified the Company’s Board of
Directors that he was resigning from the Board, effective immediately. Mr.
Peters’ resignation from the Board was not the result of any disagreement with
the Company known to an executive officer of the Company on any matter relating
to the Company's operations, policies or practices.
ITEM
6. EXHIBITS
Exhibits:
31.1
|
|
Rule
13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302
of the Sarbanes Oxley Act of 2002
|
31.2
|
Rule
13a – 14(a)/15d – 14(a) Certification, as adopted pursuant to Section 302
of the Sarbanes Oxley Act of 2002
|
|
32.1
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes Oxley Act of
2002
|
|
32.2
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes Oxley Act of
2002
|
5
SIGNATURES
Pursuant
to the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
NETWORK 1 FINANCIAL GROUP, INC. | ||
November
23, 2009
|
|
/s/
Richard W. Hunt
|
Date
|
Richard
W. Hunt
|
|
Chief
Executive Officer, Vice-President and Chairman
|
||
Principal
Executive Officer
|
||
|
||
November
23, 2009
|
/s/
Michael Rakusin
|
|
Date
|
Michael
Rakusin
|
|
Chief
Financial Officer
|
||
Principal
Financial
Officer
|
6