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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 2005
Securities and Exchange Commission File Number
000-26369
Reality Wireless Networks, Inc.
(Exact name of registrant as specified in its charter)
Nevada 88-0422026
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4916 Point Fosdick Dr., Suite 102
Gig Harbor, Washington 98335
(Address of principal executive offices, including zip code)
(253) 853-3632
(Registrant's Telephone Number, Including Area Code)
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
requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act)
YES [ ] NO [ X ]
The number of issued and outstanding shares of the Registrants Common Stock,
$0.001 par value, as of December 29, 2005, was 498,140,212 issued
and outstanding
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Reality Wireless Networks, Inc.
D/b/a Arabian Recab For Trading Co., Ltd
PART - 1 Financial Information
Item - 1 Financial Statements
Consolidated Balance Sheets as of December 30, 2004
Consolidated balance Sheets as of September 31, 2005
Consolidated Statements of Operations for three (3) months ended
March 30, 2004 & Nine (9) months ended Sept. 30 2004
Consolidated Statements of Operation for Three (3) months ended
March 30, 2005 & Nine (9) months ended Sept. 30, 2005
Consolidated Statement of Stockholder's Equity for nine (9) months
ended Sept. 30 2005
Consolidated Statements of Cash Flows for the nine (9) months ended
Sept. 30, 2004
Consolidated Statements of Cash Flows for the nine (9) months ended
Sept. 30, 2005
Item - 2 Policies & Note to Consolidated Financial Statements
Item - 3 Management's Discussion and Analysis of Financial Condition and
Result of Operations.
Item - 4 Controls and Procedures
Item - 5 Other Information
2
ARABIAN RECAB FOR TRADING CO. LTD.
(A Saudi Limited Liability Company)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
DECEMBER 31,2004.
(U.S Dollars)
Item # 1 Financial Statement:
ASSETS
2004 2003
---- ----
Current Assets:
Cash and bank balances 166,293 536,195
Accounts receivable, net (Note 3) 15,364,298 17,056,807
Inventory (Note 2b) 2,039,390 1,816,169
Prepayments and other assets (Note 4) 4,207,365 3,473,111
---------- ----------
Total current assets 21,777,346 22,882,282
Due from Affiliates, net (Note 5) 4,968,906 3,264,522
Investment in Affiliated Companies (Notes 2c and 6) 176,267 176,267
Deferred Installment interest, net (Note 2d and 7) 3,515,126 7,131,402
Property and Equipment, net (Note 2e and 8a) 14,576,738 24,347,471
Pre-operating Expenses, net (Notes2f and 9) 1,243,021 1,106,731
Project Under Progress (Note 10) 514,892 534,892
Goodwill, net 508,398 554,643
---------- ----------
47,280,694 59,997,477
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Short Liabilities:
Short terms Note payable (Note 11) 1,186,906 6,665,896
Accounts payable 18,612,569 19,289,058
Revenue from Deferred Installment interest 581,501 1,609,124
Accrued expenses and other liabilities (Note 12) 2,845,021 1,561,309
---------- ----------
Total current liabilities 23,225,997 29,125,387
Long terms Note payable (Note 11) 8,386,518 1,068,724
End of Service Benefits (Note 2g) 400,518 499,290
---------- ----------
Total Liabilities 32,013,033 30,693,401
---------- ----------
Partners' Equity:
Capital (Note 13) 213,333 213,333
Statutory reserve (Note 14) 106,667 106,667
Partners' current account 13,881,019 27,158,858
Retained earnings 1,066,642 1,825,218
---------- ----------
Total Partners' Equity 15,267,661 29,304,076
---------- ----------
47,280,694 59,997,477
========== ==========
3
ARABIAN RECAB FOR TRADING CO. LTD.
(A Saudi Limited Liability Company)
BALANCE SHEET (UNAUDITED)
SEPETEMBER 30, 2005.
(U.S Dollars)
ASSETS
9/30/2005 9/30/2004
Current Assets: ---------- ----------
Cash and bank balances 72,106 144,054
Accounts receivable, net (Note 3) 12,546,055 13,148,679
Inventory (Note 2b) 1,320,650 1,767,547
Prepayments and other assets (Note 4) 3,195,163 3,798,445
---------- ----------
Total current assets 17,133,974 18,858,724
Due from Affiliates, net (Note 5) 6,566,109 4,599,561
Investment in Affiliated Companies (Notes 2c and 6) 176,267 176,267
Deferred Installment interest, net (Note 2d and 7) 5,321,789 5,597,922
Property and Equipment, net (Note 2e and 8a) 11,759,010 14,954,971
Project Under Progress (Note 10) 514,892 514,892
---------- ----------
41,472,041 44,702,336
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Short Liabilities:
Short terms Note payable (Note 11) 8,655,857 1,186,906
Accounts payable 6,307,075 16,687,070
Revenue from interest in Installment -- 726,876
Accrued expenses and other liabilities (Note 12) 2,955,550 2,626,828
---------- ----------
Total current liabilities 17,918,482 21,227,679
Long terms Note payable (Note 11) 10,328,282 8,386,518
End of Service Benefits (Note 2g) 488,829 313,484
---------- ----------
Total Liabilities 28,735,593 29,927,681
---------- ----------
Partners' Equity:
Capital (Note 13) 10,666,667 213,333
Statutory reserve (Note 14) 106,667 106,667
Partners' Current Accounts -- 13,466,951
Retained earnings 1,963,114 987,704
---------- ----------
Total Partners' Equity 12,736,448 14,774,655
---------- ----------
41,472,041 44,702,336
========== ==========
4
ARABIAN RECAB FOR TRADING CO. LTD.
(A Saudi Limited Liability Company)
CONSOLIDATED STATEMENT OF INCOME (3 Months, Unaudited)
FOR THE PERIOD ENDED SEPTEMBER 30, 2004
(U.S Dollars)
September 30, 2004
------------------
Revenue 7,450,725
Cost of revenue 5,960,534
---------
Gross Income 1,490,190
Selling and marketing expenses 549,290
General and administrative expenses 679,148
Operation Net Profit 261,753
Amortization of deferred installment 36,880
Other income, net 20,407
---------
Net Income (Loss) before Zakat 245,279
Net Income (Loss) for the period 245,279
=========
ARABIAN RECAB FOR TRADING CO. LTD.
(A Saudi Limited Liability Company)
CONSOLIDATED STATEMENT OF INCOME (9 Months, Unaudited)
FOR THE PERIOD ENDED SEPTEMBER 30,2004
(U.S Dollars)
September 30, 2004
------------------
Revenue 20,523,086
Cost of revenue 16,228,213
----------
Gross Income 4,294,873
Selling and marketing expenses 1,521,348
General and administrative expenses 1,842,459
Operation Net Profit 931,066
Amortization of deferred installment 110,641
Other income, net 57,226
----------
Net Income (Loss) before Zakat 877,651
Net Income (Loss) for the period 877,651
==========
5
ARABIAN RECAB FOR TRADING CO. LTD.
(A Saudi Limited Liability Company)
CONSOLIDATED STATEMENT OF INCOME (3 Months, Unaudited)
FOR THE PERIOD ENDED SEPTEMBER 30,2005
(U.S Dollars)
September 30 2005
-----------------
Revenue 4,338,382
Cost of revenue 3,279,317
---------
Gross Income 1,059,065
Selling and marketing expenses 412,790
General and administrative expenses 378,072
Operation Net Profit 268,203
Amortization of deferred installment 64,645
Other income, net 22,924
---------
Net Income (Loss) before Zakat 226,481
Net Income (Loss) for the period 226,481
=========
ARABIAN RECAB FOR TRADING CO. LTD.
(A Saudi Limited Liability Company)
CONSOLIDATED STATEMENT OF INCOME (9 Months, Unaudited)
FOR THE PERIOD ENDED SEPTEMBER 30, 2005
(U.S Dollars)
September 30, 2005
------------------
Revenue 13,063,234
Cost of revenue 10,017,391
----------
Gross Income 3,045,843
Selling and marketing expenses 1,096,025
General and administrative expenses 913,732
Operation Net Profit 1,053,494
Amortization of deferred installment 240,458
Other income, net 76,315
----------
Net Income (Loss) before Zakat 871,943
Net Income (Loss) for the period 871,943
==========
6
ARABIAN RECAB FOR TRADING CO. LTD.
(A Saudi Limited Liability Company)
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' EQUITY (UNAUDITED)
FOR THE PERIOD (9 Months) ENDED SEPTEMBER 30,2005.
(U.S Dollars)
From 1/1/2005
To 09/30/2005.
-------------
Capital
Beginning of the period 213,333
Transfer to Capital 10,453,334
-----------
End of the period 10,666,667
-----------
Statutory reserve 106,667
Retained earnings:
Beginning of the period 1,091,171
Net income for the period 871,943
-----------
End of the period 1,963,114
-----------
Partners' Accounts
Beginning of the period 13,881,019
Transfer to Capital from Partners (10,453,333)
Partners' Withdrawals (3,427,686)
Total Partners' Equity 12,736,447
7
ARABIAN RECAB FOR TRADING CO. LTD.
(A Saudi Limited Liability Company)
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 2004.
(U.S Dollars)
September 30, 2004
------------------
Cash Flows from Operating Activities:
Net Income for the Period 877,651
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,009,823
Amortizing Deferred Installment interest 261,929
End of service benefits (90,126)
-----------
Changes in assets and liabilities:
Accounts receivable, net 1,764,380
Inventory (159,975)
Pre-payments and other assets (815,566)
Accounts payable (681,440)
Revenue from Deferred Installment interest (479,967)
Accrued expenses and other liabilities 1,423,804
Net cash provided by operating activities 4,110,513
-----------
Cash Flows from Investing Activities:
Purchases of property and equipment (1,611,154)
Net changes in Deferred Installment interest 3,183,800
Addition of Organization and Installment Interest 143,479
Project under Progress 83,066
Proceeds from sales of property and equipment 9,279,294
-----------
Net cash used in investing activities 11,078,486
-----------
Cash Flows from Financing Activities:
Net changes in Affiliates balance (46,044)
Net changes in Note payable 1,838,794
Dividend distribution (1715,310)
Partners' Current Account (15,508,862)
-----------
Net cash used in financing activities (15,431,422)
-----------
Net increase in cash and bank balances (242,423)
Beginning cash and bank balances 386,477
-----------
Ending cash and bank balances 144,054
===========
8
ARABIAN RECAB FOR TRADING CO. LTD.
(A Saudi Limited Liability Company)
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 2005.
(U.S Dollars)
September 2005
--------------
Cash Flows from Operating Activities:
Net Income for the Period 871,943
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,156,096
Amortizing Deferred Installment interest 194,638
End of service benefits 175,345
-----------
Changes in assets and liabilities:
Accounts receivable, net 602,624
Inventory 446,896
Pre-payments and other assets 603,282
Accounts payable (10,379,994)
Revenue from Deferred Installment interest (726,876)
Accrued expenses and other liabilities 328,723
Net cash provided by operating activities (6,727,324)
-----------
Cash Flows from Investing Activities:
Purchases of property and equipment (557,838)
Net changes in Deferred Installment interest 276,133
Proceeds from sales of property and equipment 2,506,531
-----------
Net cash used in investing activities 2,224,826
-----------
Cash Flows from Financing Activities:
Net changes in Affiliates balance (1,966,548)
Net changes in Note payable 9,410,715
Increase in Capital 10,453,333
Partners' Current Account (13,466,951)
-----------
Net cash used in financing activities (4,430,550)
-----------
Net increase in cash and bank balances (71,948)
Beginning cash and bank balances 144,054
-----------
Ending cash and bank balances 72,106
===========
9
Item # 2 Policies & Notes to Consolidated Financial Statements:
-----------------------------------------------------
1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited interim financial statements should be read in
conjunction with the audited financial statements and notes thereto contained in
the Company's Annual Report filed with the SEC on Form 10-KSB for the year ended
September 30, 2004. These interim financial statements are generated based on
the change in fiscal year in accordance with Reality Wireless, Inc.s' recent
acquisition of Arabian Recab for Trading Co, Ltd., ("Arabian Recab") and reflect
the third quarter financial assessment of Arabian Recab. The results of
operations for the interim period are not necessarily indicative of the results
to be expected for the full year.
The financial statements are prepared in accordance with accounting
principles generally accepted in Saudi Arabia. The following is a summary
of Company's significant accounting policies:
a) Accounting Convention- -
These accompanying financial statement have been prepared under
historical cost convention using accrual basis and going concern
concepts.
b) Inventory - -
Inventories are stated at the lower of cost or estimated net
realizable value. Cost is determined using the weighted average
method. Adjustments are made for obsolete and slow moving
inventories, if any.
c) Investment in Affiliated Companies - -
Investments in Affiliated Companies represent owner's investment
of 50% or greater for using the equity method, accounted for based
on the last financial statements for these companies.
d) Deferred Installment interest expenses - -
Deferred Installment interest expenses are amortized using the
straight-line method with percentage 10% annually.
e) Property and equipment - -
Property and equipment are stated at cost net of accumulated
depreciation. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets based on the
following annual percentage rates:
Heavy equipments 5 - 15%
Transportation vehicles 10%
Buses 10 - 25%
Decoration 3 -15%
Motor vehicles 10 - 25%
Furniture and fixtures 2.5 -20%
Electrical Equipment & Computers 20%
Air Conditions 10 - 20%
Office equipment 10 - 25%
Pre-fabricated houses 10%
Tools 25%
Advertising signs 20%
10
f) Pre-operating expenses - -
Pre-operating expenses represent various costs incurred during the
period from the formation of the Company until commencement of
operations. Pre-operating expenses are amortized using the
straight-line method with percentage between 6.67 - 20% annually.
g) End of Service benefits - -
Benefits payable to the employees of the Company's at the end of
their services are provided for in accordance with the guidelines
set by the Saudi Arabian Labor law.
h) Revenue recognition - -
Revenue is recognized when freight policies are signed upon
satisfactory completion of contract services to customers. Other
income is recorded when earned.
i) Expenses - -
Selling and distribution expenses comprise of the costs of selling
and distributing the products of the Company. Other expenses are
classified as General and administrative expenses, which include all
direct and indirect expenses that are not related to the cost of
sales in accordance with generally accepted accounting principles.
Expenses are allocated to general and administrative expenses and
cost of sales, if any, using fixed bases.
j) Zakat - -
Under the Zakat regulations of the Kingdom of Saudi Arabaia, Zakat
is the obligation of the Company. Estimated Zakat is provided for in
the accompanying financial statements and charged to the statement
of income.
k) Translation of foreign currencies - -
The accompanying financial statements are denominated in US Dollars.
Approximate exchange rates have been used to translate transactions
or balances denominated in foreign currencies. There were no
material exchange gains or losses incurred during the year.
2- ACCOUNTS RECEIVABLE, NET
Accounts receivable comprised of the following as a December 31:
2004 2003
---- ----
Trade receivable 16,489,711 18,182,220
Allowances of doubtful receivable (1,125,413) (1,125,413)
------------ ------------
Net 15,364,298 17,056,807
============ ============
3- PRE-PAYMENTS AND OTHER ASSETS
a) Pre-payments and other assets comprised of the following as of
December 31:
11
2004 2003
---- ----
Advance payments to suppliers 353,710 864,659
Employees receivable 341,274 476,513
Insurance 209,807 176,965
L/C &L/G margins 154,746 271,452
Rents 5,467 242,846
Unbilled Revenue -- 95,281
Pre-paid Housing -- 34,934
Refundable Deposits -- 31,338
Other Debit balance (Note 5b) 3,142,361 1,279,123
--------- ---------
4,207,365 3,473,111
========= =========
b) This amount includes $1,609,733 related to abandon partner Mansour
Al-Qasim as of December 31,2004.
4- DUE FROM (TO) RELATED PARTIES, NET
Following is a summary of related parties' balance as of December 31:
2004 2003
---- ----
Recab for Technology and Construction 2,945,536 2,914,804
Lamion for Restaurant 1,329,829 1,396,312
Granite Factory Branch 309,213 278,367
Freight and custom duty Branch 281,244 235,953
Maintenance & Services Branch 65,233 72,646
Hydraulic Branch 37,018 8,841
Material Transport Branch 833 833
Gulf Recab Co. -- 299,830
Abdullah Al-Bajadi Establishment -- --
Abed Trading Company -- (1,690,796)
Dar Al-Mourabha Establishment -- (196,967)
Other 55,301
---------- ----------
Net 4,968,906 3,264,522
========== ==========
12
5- INVESTMENT IN AFFLIATED COMPANIES
Investment in Affiliated companies comprised of the following as of
December 31 2004:
Ownership Rate
--------------
Recab for Technology and Construction Co. 82% 66,933
Lamion for Restaurant 50.2% 109,334
--------
176,267
========
6- DEFERRED INSTALLMENT INTEREST, NET
Deferred Installment Interests comprised of the following as of
December 31:
2004 2003
---- ----
Pre-operating Expenses 8,788,724 10,266,030
Disposal and other adjustment (3,479,987) (1,488,538)
Accumulated amortization (1,793,611) (1,646,090)
----------- -----------
Net 3,515,126 7,131,402
=========== ===========
7- PROPERTY AND QUIPMENT, NET
a) Property and equipment comprised of the following as of December 31:
2004 2003
------------------------------------ ----------
Accumulated Net Book Net Book
Cost Depreciation Value Value
---------- ---------- ---------- ----------
Land (Note 8b) 306,027 -- 306,027 306,027
Transportation Vehicles 6,915,633 1,274,664 5,640,969 6,546,203
Heavy Equipments 5,121,283 761,714 4,359,569 7,252,162
Buses 3,304,646 1,286,392 2,018,254 4,290,593
Machinery and Equip 3,246,776 285,684 2,252,162 1,073,542
Decoration 2,088,465 1,039,354 1,049,111 4,199,898
Motor Vehicles 1,618,678 1,035,420 583,258 1,054,412
Furniture and fixture 436,931 178,549 258,382 308,873
Eltrc'l Eq.& Computers 159,201 68,808 90,393 105,398
Air Conditions 130,217 70,968 59,249 80,809
Fabricated houses 128,327 29,173 99,154 83,091
Office Equipment 109,233 44,637 64,596 56,985
Tools 90,303 52,464 37,839 54,040
Advertising Signs 20,100 10,163 9,937 8,980
---------- ---------- ---------- ----------
20,429,044 5,852,306 14,576,738 24,347,471
========== ========== ========== ==========
Depreciation was amounted to $ 2,679,764 for year ended December 31, 2004.
13
8- PRE-OPERATING EXPENSES. NET
Pre-operating expenses comprised of the following as of December 31:
2004 2003
---- ----
Pre-operating Expenses 1,735,335 1,477,798
Accumulated amortization (492,314) (371,067)
----------- -----------
Net 1,243,021 1,106,731
=========== ===========
9- PROJECT UNER PROGRESS:
Project under progress represent advances to purchase land in Egypt for
investment purpose, where the title deed has not yet been issued until this
financial statements.
10- NOTE PAYABLE:
Note payable (short and long term) represent financing letter of credit to
purchase motor vehicles from outside the Kingdom of Saudi Arabia with
different maturity dates until 2006.
11- ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities comprised of the following as of
December 31:
2004 2003
---- ----
Salaries and benefits 921,022 761,273
Dues to Employees 41,697 83,821
Zakat 24,528 39,392
Commission 10,316 71,658
Advances from customers 5,835 440,850
Rent -- 63,310
Others 1,841,623 101,005
--------- ---------
Net 2,845,021 1,561,309
========= =========
12- CAPITAL
Capital consist 0f 800 shares of US $266.67 each fully paid and held as of
December 31, 2004 and 2003, as follows:
Number
% of Shares Amount
--- --------- --------
Abdullah Ayed Ali Albajady 60% 480 128,000
Ayid Ali Albajadi Alshahrany 20% 160 42,667
Mohammed Ayed Ali Albajady 10% 80 21,333
Saif Ayed Ali Albajady 10% 80 21,333
------- ------- -------
100% 800 213,333
======= ======= =======
14
13- STATUTORY RESERVE
In accordance with Saudi Arabian Companies Law and the Company's Articles
of Association, 10% of the annual net income is required to be transferred
to a statutory reserve until this reserve equals 50% of the capital. This
limit was attained accordingly, not further transfer is required. This
reserve is not available for dividend distribution.
14- REVENUE
Revenue comprised of the following for the year ended December 31:
2004 2003
---- ----
Trading Branch 16,130,850 21,078,373
Transportation Division 11,201,915 15,551,733
Building Material Division 2,470,134 4,586,203
---------- ----------
29,802,899 41,216,309
========== ==========
15- SELLING AND MARKETING EXPENSES
Selling and marketing expenses comprised of the following for the year
ended December 31:
2004 2003
---- ----
Salaries and benefits 704,788 762,220
Rent 399,739 426,618
Depreciation 171,433 307,643
Transportation 26,488 66,483
Maintenance -- 67,224
Others 215,810 431,574
--------- ---------
1,518,258 2,061,762
========= =========
16- GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses comprised of the following for the year
ended December 31:
2004 2003
---- ----
Salaries and benefits 1,596,995 1,915,951
Rent 94,036 204,139
Depreciation 64,729 357,013
Professional fees 59,133 71,386
Bad debt -- 134,211
Others 801,859 748,865
--------- ---------
2,616,752 3,431,565
========= =========
17- RECLASSIFICATIONS
Certain reclassifications have been made to the 2003 financial statements
to conform to the classification used in 2004.
15
Revenue Recognition: The Company follows the guidance of the Securities and
Exchange Commission' staff Accounting Bulletin 104 for
revenue recognition. In general, the Company records
revenue when persuasive evidence of an arrangement
exists, services have been rendered or product delivery
has occurred, the sales price to the customer is fixed
or determinable, and collectability is reasonably
assured. The following policies reflect specific
criteria for the revenue stream of the Company: Revenue
is recognized as pro-rated over the service period. A
customer's credit card is charged at the first of the
month and revenue is earned by the end of the month.
Therefore, no deferred revenue is recorded as of month
end.
Impairment: The Company records impairment losses on aging assets
used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to
be generated by those assets less than the assets'
carrying amount.
16
Reality Wireless Networks, Inc.
D/b/a Arabian Recab For Trading Co., Ltd
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
ITEM # 3 MANAGEMENT DISCUSSION AND ANALYSIS
Forward-looking Statements
Certain statements in this Quarterly Report on Form 10-QSB, as well as
statements made by the Company in periodic press releases, oral statements made
by the Company's officials to analysts and shareholders in the course of
presentations about the Company constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties, and
other factors that may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by the forward looking statements. Such
factors include, among other things, (1) general economic and business
conditions; (2) interest rate changes; (3) the relative stability of the debt
and equity markets; (4) competition; (5) risk associated with the relative lack
of conversion liquidity of Saudi Arabia Riyals to United States Dollars
(currently the fixed rate of exchange is 1.00 SAR = 0.266649 USD); (6) the
ability of the Company to comply with government regulations; (7) required
accounting changes; (8) the Company's ability to meet its debt obligations; and
(9) other factors over which Reality has little or no control.
GENERAL OVERVIEW
Reality was incorporated in the state of Nevada on March 17, 1999. On March 5,
2002 the Company entered into an asset purchase agreement with Reality Networks,
Inc., a Delaware corporation. Until September 2004, the Company was a service
provider of fixed, wireless, high-speed, broadband Internet access to
principally residential homes and small businesses. The Company provided this
service as an alternative to digital subscriber line ("DSL") or cable Internet
access service. The Company provided its service primarily in geographical areas
of northern California where DSL and cable services are not available.
In September 2004, the Company changed its strategy due to poor operating
conditions and poor operating results coupled with difficulties in raising
capital through debt and equity sources. The Company adopted a new strategy
during the fiscal fourth quarter of 2004 that committed to the shutting down of
its current business and to seek a merger or acquisition transaction with a
Company having better financial resources as well as advise such small, private
companies on conducting due diligence, strategic positioning and valuation
analysis for newly developing businesses. As of September 2004, the Company
ceased providing services to customers and disposed of most of its assets,
thereby entering a new development phase and formulating a plan to improve its
financial position.
On November 10, 2004 the Company and Genesis Electronics, Inc. ("Genesis"),
entered into an agreement to merge Genesis with and into Reality Wireless
Networks and to rename the Company Genesis Electronics, Inc., (the "Genesis
Merger Agreement "). The agreement provided that all of the shares of common
stock of Genesis issued and outstanding at the time the merger becomes effective
under applicable state law, would be converted into common stock of the Company
such that the current holder of Genesis common stock would hold 97% of all
shares of the Company's common stock outstanding immediately after the closing
of the merger transaction. Based on the Company's and Genesis' subsequent due
diligence assessments and on the Company's opportunity to pursue a merger
agreement with Arabian Recab For Trading Co. (as detailed in the paragraph
immediately below), Reality and Genesis restructured the Genesis Merger
Agreement such that the Company transferred the opportunity to merge with
Genesis Electronics, Inc., to Genesis Acquisitions Corp. ("GAq"), a wholly-owned
subsidiary of the Company, effecting a merger of GAq with and into Genesis (the
"Revised Merger"), which Revised Merger provides for a distribution of three
percent (3%) of the common stock of Genesis Electronics, Inc., to the
shareholders of the Company existing at the time immediately prior to the merger
between Reality Acquisition, Inc. and Arabian Recab for Trading Co., on a pro
rata basis, and which distribution is conditioned upon Genesis filing a
registration statement including such shares and upon the SEC declaring such
registration statement effective (the "Distribution"). Concurrent with the
filing of the registration statement, Genesis intends will file a Form 15c2-11
to post a quotation and obtain a trading symbol for the shares of Genesis on the
Over-The Counter Bulletin Board.
17
On July 21, 2005 the Company and Arabian Recab For Trading Co., ("Arabian
Recab"), entered into an agreement to merge a wholly owned subsidiary of the
Company with into Arabian Recab and to rename the Company "Recab International,"
which was subsequently amended, effective August 19, 2005 (the "reverse merger"
or "Merger Agreement"). The agreement provides that all of the shares of common
stock of Arabian Recab issued and outstanding at the time the merger (the
"Effective Time") are converted into common stock of the Company such that the
holders of Arabian Recab equity interests prior to the Effective Time will hold
98% of all shares of the Company 's common stock outstanding immediately after
the share exchange.
In connection with the Merger Agreement, the Company changed its Fiscal Year end
to December 31. As disclosed on Form 8-K filed November 3, 2005, the Company's
principal, independent accountant engaged to audit the Company's financial
statements, Salberg & Company, P.A. ("Salberg"), notified the registrant of its
resignation. Salberg had provided a report on Form 10-KSB for the fiscal year
ended September 30, 2004. Salberg's 2004 report was modified to reflect an
uncertainty as to the Corporation's ability to continue as a going concern but
did not otherwise contain any adverse opinion or disclaimer of opinion and were
not otherwise qualified or modified as to uncertainty, audit scope or accounting
principals. The Company subsequently engaged AlAzem, AlSudairy & AlNemer, a
Saudi Arabia based affiliate of Horwath International, specifically for the
purpose of completing US GAAP compliant audits in connection with the reverse
merger, which were filed on Form 8-K dated December 22, 2005. The Company is
currently seeking to engage a United States based principal account do conduct
its audits and review its SEC filings.
Arabian Recab is a Saudi Arabian based operating Company primarily focusing on
transportation, transportation-related industries and in construction materials.
Arabian Recab operates four primary divisions, including Automobile & Automotive
Equipment Importation (into Saudi Arabia), Transportation & Logistics, Private
Transportation, and Building Materials & Concrete Products.
GENERAL
Arabian Recab for Trading Co, Ltd., is a limited liability Company
operating in the Kingdom of Saudi Arabia under Commercial Registration No.
1010150978 issued in Riyadh and dated 18/5/1429H (corresponding to
9/9/1998).
The Company operates the following business divisions:
o The Building Material Division operating under Commercial
Registration No. 1010150978 issued in Riyadh and dated 18/5/1419H
(corresponding to 9/9/1998), engages in the wholesale and retail
trading in motor vehicles, spare parts, heavy equipment and related
spare parts, maintenance of the heavy equipment, buying land to
construct up building for investment purposes through selling or
renting these building, general construction activities of roads,
water sewage, dams electromechanical works, ornamentation,
decoration and buildings construction.
o The Transportation Division, Ministerial License No. 68 dated
28/3/1420H (corresponding to 7/12/1999), engages in school
transportation, Ministerial license No. 2532 dated 4/3/1421H
(corresponding to 6/7/2000), land transport of goods and belongings
and operating under Sub Commercial Registration No. 1010150978/003
issued in Riyadh and dated 12/7/1421H (corresponding to 10/10/2000).
o The Trading Branch operating under Commercial Registration No.
1010150978/005 issued in Riyadh (Traffic department letter No.
7/2/5262 dated 28/10/1421H corresponding to 1/23/2001), engages in
buying and selling of motor vehicles, trucks, and equipments.
18
Reality Wireless Networks, Inc.
D/b/a Arabian Recab For Trading Co., Ltd
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Forward-looking Statements:
Certain statements on this report on form 10 QSB as well as statements that will
be made by the Arabian Recab for Trading in periodic press releases, oral
statements made by the Company's officials to analysts and shareholders in the
course of presentations about the Company, constitute a "forward-looking
statement" within the meaning of the private securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by the
"forward-looking statements". Such factors include, among other things:
1) General economic & Business Conditions; 2) Interest rate
changes; 3) Relative stability of the debt & Equity markets; 4)
Competitions; 5) risk associated with the relative lack of
conversion liquidity of Saudi Arabia Riyals to United States Dollars
(currently the fixed rate of exchange is 1.00 SAR = 0.266649 USD);
6) Government regulations; 7) Required accounting changes; 8) Other
factors which Recab has little or no control
Management Discussion:
The sales (revenues) decreased by 28% between 2003 & 2004 and by 75% between
2004 and the 3rd quarter of 2005. The decline is due to the downsizing of the
commercial sector due to inadequate finance and the closing down of three income
generating facilities due to management problems. The facilities are:
1. The Stone Crusher in Jeddah
2. The Stone Crusher in Makkah
3. The Ready Mix Factory in Jeddah
Management believes that these facilities will be re-established and re-operated
within the 1st half of the year 2006. Management expects to sell certain
holdings of real property, which is expected to generate approximately USD $2.5
Million and which sum will be dedicated to the reinstallation of these
facilities.
Assets:
The decline in the assets over 2003, 2004 and 2005 is due to the sale of aging
vehicles, which we intend to replace by leasing to meet the requirements of our
clients (SABIC, AMERICANA etc.,) including, primarily, trucks with special
specifications that we are seeking to secure shortly.
Accounts Payable:
The decline in Accounts Payable is due to re-scheduling of debts with
significant creditors including JUFFALI (major Mercedes Benz agent in Saudi
Arabia). As a result of the re-scheduling, the debts to JUFFAL, against which
Promissory Notes are consequently issued, become payable over six years. The
rescheduling is also evident in the increase in short-term payables, which in
turn led to increase in current liabilities for 2004 and 2005.
19
Reality Wireless Networks, Inc.
D/b/a Arabian Recab For Trading Co., Ltd
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Partners Current Account
The decrease in Partners Current Account due to:
1. Settlement of accounts with an outgoing Partner (Mr. Mansour
Al-Qasim).
2. Transfer made from existing Partners' Current Account to the Capital
Account to raise the capital to USD $10.6M.
Ratio Analysis:
The table below shows the major business ratios for years 2003, 2004 & 9 months
of 2005.
- --------------------------------------------------------------------------------------------------
2003 2004 2005 (9Months)
- --------------------------------------------------------------------------------------------------
Gross Margin 18% 18% 23%
- --------------------------------------------------------------------------------------------------
Net Margin 2.8% 3.2% 6.7%
- --------------------------------------------------------------------------------------------------
Current Ratio 0.78 : 1 0.93 : 1 0.96 : 1
- --------------------------------------------------------------------------------------------------
Test Acid Ratio 0.72 : 1 0.84 : 1 0.88 : 1
- --------------------------------------------------------------------------------------------------
Receivables Turnover 151 days 188 days 350 days
- --------------------------------------------------------------------------------------------------
Payable Turnover 170 days 227 days 176 days
- --------------------------------------------------------------------------------------------------
Inventory Turnover 16 days 25 days 37 days
- --------------------------------------------------------------------------------------------------
Gearing Ratio 3.7% 2.5% 8.1%
- --------------------------------------------------------------------------------------------------
ROE 4% 6.4% 6.8%
- --------------------------------------------------------------------------------------------------
ROI 4% 6.4% 6.8%
- --------------------------------------------------------------------------------------------------
W/Capital (6,243,105) (1,448,651) (784,508)
- --------------------------------------------------------------------------------------------------
Management:
The Company is managed by a group of individuals who have experience in running
businesses specifically in Saudi Arabia and generally throughout the Gulf.
Engineer Abdullah Al-Shahrani, who was the CEO before the current reverse merger
with Reality Wireless Networks, Inc., had 15 years experience in project
management and maintenance at the Ministry of Interior before he resigned to
establish as the Arabian Recab for Trading Co. Mr. Abdullah Al-Shahrani is
assisted by a group of Executive Managers who are university graduates in
Engineering, along with other disciplines. The Finance Team consists of Mr. Ali
Abed, The Financial Controller, who is a graduate of Accounting with more than
25 years experience in managing finance at large-scale companies in Saudi
Arabia. The Financial Consultant, Mr. El-Fadil A. Mohammed, is an MBA and
qualified Chartered Banker from UK with a background in Finance and Business
consultancy who is now assisting with financial planning and feasibility studies
of projects and contracts. Mr. El-Fadil has 15 years of Business and Finance
Consultancy experience. Working beneath this upper level management team, the
Company has carefully selected a group of employees in view of achieving the
performance targets of the Company.
20
Profitability:
The Company has been operating profitability for the last 10 years, driven by
the region's growth in the transportation and construction sectors, which
provides sufficient demand for the Company products. Management believes that it
has successfully anticipated and realized opportunities available from this
demand and to, in turn, build relationships with suppliers and customers during
this period.
Over the last two years and up to the first 9 months of the year 2005, the
Company has been achieved increasing Gross & Net Margins. We believe that the
conditions giving rise to profit margins of the Company are fairly stable and
potentially poised for significant increase over the next two years, as we
intend to allocate more financing into the activities of the Company.
Additionally, the Company is planning activate to its newly acquired Mining
Businesses and Telecommunication businesses, for which it is currently
undertaking surveys and redeveloping operations strategies, respectively. The
Company intends to enhance its long-term profitability with additional, focused
acquisitions.
Current Ratio:
The Company has sound Current and quick Liquidity Ratio taking into account the
nature of the Company's business. In our assessment as management the Liquidity
Ratios are positive and we do not expect to face any material liquidity
challenges in the foreseeable future. The Company is currently able to meet all
its daily liquidity requirements.
Receivable & Payables Turnover:
The Company is currently granting generous credit terms to customers in an
effort to stimulate sales and enhance its customer base and believes that its
current liquidity provides this opportunity. In Saudi Arabia customers are often
attracted to, and retained by, the credit period that a Company is prepared
compared with the Company's competitors. Furthermore the Company is receiving an
even more generous credit terms from suppliers.
Inventory Turnover:
The Company has healthy Inventory Turnovers. This due to the fact that at least
75% of the Company income over the past three years has been coming from Auto &
Heavy Equipments leases, which are characterized by low risk, relatively low
return but high turnovers.
Gearing:
The Company had low gearing in the years 2003 & 2004 because the Company did not
to resort to external finance except when deemed advantageous or unavoidable.
The Company relies primarily on suppliers credits that are short-term in nature.
The increase in gearing during 2005 arises from the Company's use of its
liquidity to pay off an outgoing partner and settle short-term debts, which the
Company chose to meet with short-term bank loans.
Return of Equity & ROI:
The Return on Equity & Investment has increased in real terms over the last
three fiscal years. We expect that the rates of return will continue to increase
as we direct more funding into expansion of the Company's operating activities.
The Company's activities have thus far provided return for investors who have
low risk tolerance. We believe that investors seeking higher returns will find
the Company to be a favorable opporunity over the next two years.
Working Capital:
The progressive improvement in the Company's liquidity has been reflected by the
decrease in the deficit of working capital. We expect the Company to show
positive working capital during the first half of the year 2006.
21
Reality Wireless Networks, Inc.
D/b/a Arabian Recab For Trading Co., Ltd
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Specific Market Risks:
Competition: With the sustained growth in the Saudi economy it is
foreseeable that other companies may enter the market to
compete with Arabian Recab. Based on its established market
position, management expects Arabian Recab to successfully
compete against any new entrants, using its accumulated
experience established relationships with its clients.
Financing: Because of the relatively low margins in the transportation
market and the management risks involved, banks are not eager
to direct capital to the business of the Company. Our current
strategy, therefore, is to shift away from debt market
financing and grow by acquisitions and by issuing debts and
equity through private placements.
Pricing: Contracts are pricing-sensitive and, as a result of the
long-term nature of some of our contracts and potential
volatility among suppliers, there exists the possibility that
supplier prices may increase, impairing our margin.
22
Reality Wireless Networks, Inc.
D/b/a Arabian Recab For Trading Co., Ltd
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Item # 4 Controls and Procedures:
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer/Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
Controls and procedures" in Rule 13a-14 ( c ). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
At the end of period covered by this quarterly 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/Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. Based on the foregoing, the Company's Chief
Executive Officer / Chief Financial Officer concluded that the Company's
disclosure controls and procedures were effective to ensure that all material
information required to be filed in this quarterly report has been made known to
them in a timely fashion.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date the Company completed it evaluation.
23
Reality Wireless Networks, Inc.
D/b/a Arabian Recab For Trading Co., Ltd
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Item # 5 The Other information:
The Company focuses on managed growth through acquisitions and intends to
finance such acquisitions through equity financing such as acquisitions in
exchange for the issuance of shares. Currently the Company is negotiating to
acquire Recab for Re-construction and Technology to provide the Company with a
stronger base in the construction market, a rapidly expanding industry in the
Persian Gulf region, in general, and Saudi Arabia in particular. If successful,
the acquisition would have the potential to generate contracts in excess of USD
$500 Million with a profit margin of approximately 10% over five years.
The Company expects, in the near term, to conclude an acquisition with Advanced
Contracting Systems, a company based in the Eastern province in Saudi Arabia
(Dammam). The acquisition would provide Recab with foothold in the Eastern area
giving the Company access to contracts with the potential to eclipse USD $50
Million with profit margin of over 30% over a two year period.
The Company is also negotiating to acquire the Sharjah Environmental Company, a
Dubai based Company that operates in environmental clearing aspects. The merger,
if realized, is expected to generate contracts of approximately US $ 35 Million
over 3 years with profit margin of up to 60%.
Company's Future:
Management's assessment of the Company's current state provides confidence in
its ability to continue to exist as a going on concern for the foreseeable
future. The Company is currently based and operating within an expanding economy
where the demand for the Company products is expected to continue to rise in the
future. The Company's market reputation provides an opportunity to take
advantage of the macro economic strength of the market.
The Company is currently restructuring its management, finance operations and
processes to take advantage of the rapid expansion of the economies of the
Persian Gulf. The management of the Company believes that gross turnover could
exceed US $400 Million during the period including 2004-2008.
Conclusion:
The financial statements of the Company are satisfactory to management and
reflect an accurate picture of the Company. Management believes that it can
generate improved results during the year 2006.
24
Reality Wireless Networks, Inc.
D/b/a Arabian Recab For Trading Co., Ltd
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On January 13, 2005, Brent M. Haines, note holder of the Company, filed a
complaint in the Superior Court of the State of Washington, Kings County,
alleging that the Company breached its contract under a promissory note. In July
of 2005 the Court entered judgment in favor of Mr. Haines in the amount of
$209,251.57 plus interest. The Company is actively working to satisfy the
judgment.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
The following actions were taken by the Board of Directors of the Company (the
"Board") during the period ended September 30, 2005. Where agreements are
referenced, such agreements are incorporated herein by reference.
On July 14, 2005 the Board ratified a existing consulting agreements with Terry
Byrne, Bradford Van Siclen, Seth Elliot, Kevin Evans, Arthur Feldman, Keith
McNally, Joe Artusa, Timothy Fostick and Anthony John Doyle, and ratified an
existing engagement agreement with The Otto Law Group, PLLC, for legal services
rendered to the Company, and authorized the issuance of 30,000,000 shares,
30,000,000 shares, 30,000,000 shares, 4,000,000 shares, 2,300,000 shares,
2,300,00 shares, 2,300,000 shares, 2,300,000 shares, 3,100,000 shares and
50,000,000 shares, respectively, of common stock of the Company on Form S-8 to
Terry Byrne, Bradford Van Siclen, Seth Elliot, Kevin Evans, Arthur Feldman,
Keith McNally, Joe Artusa, Timothy Fostick, Anthony John Doyle, and David M.
Otto of The Otto Law Group, respectively.
On August 18, 2005 the Board ratified a existing consulting agreements with
Terry Byrne, Bradford Van Siclen, and Anthony John Doyle, and ratified an
existing engagement agreement with The Otto Law Group, PLLC, for legal services
rendered to the Company, and authorized the issuance of 22,500,000 shares,
22,500,000 shares, 22,500,000 shares, and 45,000,000 shares, respectively, of
common stock of the Company on Form S-8 to Terry Byrne, Bradford Van Siclen,
Anthony John Doyle, and David M. Otto of The Otto Law Group, respectively.
25
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
- --------------------------------------------------------------------------------------------------------------
Exhibit Number Title of Document Location of Document
- --------------------------------------------------------------------------------------------------------------
3 Articles of Incorporation Incorporated by reference to the 10-SB
Filed on June 15, 1999
- --------------------------------------------------------------------------------------------------------------
3.1 Bylaws Incorporated by reference to the 10-SB
Filed on June 15, 1999
- --------------------------------------------------------------------------------------------------------------
3.2 Certificate of Amendment to Articles Incorporated by reference to the 10-KSB
of Incorporation Filed on April 15, 2002
- --------------------------------------------------------------------------------------------------------------
3.3 Certificate of Amendment to Articles Incorporated by reference to the 8-K
of Incorporation Filed on May 3, 2002
- --------------------------------------------------------------------------------------------------------------
3.4 Certificate of Amendment to Articles Incorporated by reference to the 10-QSB
of Incorporation filed on August 25,2003
- --------------------------------------------------------------------------------------------------------------
4.5 Amendment No. 11 to Consulting Incorporated by reference to the S8 filed
Services Agreement between April 14, 2005
Bartholomew International Investments
and Reality Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.6 Amendment No. 5 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Kevin April 14, 2005
Evans and Reality Wireless Networks,
Inc.
- --------------------------------------------------------------------------------------------------------------
4.7 Amendment No. 3 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Bradford April 14, 2005
Van Siclen and Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.8 Amendment No. 12 to Consulting Incorporated by reference to the S8 filed
Services Agreement between May 27, 2005
Bartholomew International Investments
and Reality Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.9 Amendment No. 4 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Bradford May 27, 2005
Van Siclen and Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.10 Consulting Services Agreement between Incorporated by reference to the S8 filed
Seth Elliot and Reality Wireless May 27, 2005
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.11 Amendment No. 13 to Consulting Incorporated by reference to the S8 filed
Services Agreement between June 15, 2005
Bartholomew International Investments
and Reality Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.12 Amendment No. 5 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Bradford June 15, 2005
Van Siclen and Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.13 Amendment No. 1 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Seth June 15, 2005
Elliot and Reality Wireless Networks,
Inc.
- --------------------------------------------------------------------------------------------------------------
26
- --------------------------------------------------------------------------------------------------------------
4.14 Amendment No. 2 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Steve June 15, 2005
Careaga and Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.15 Amendment No. 6 to Consulting Incorporated by reference to the S8 filed
Services Agreement Kevin Evans and June 15, 2005
Reality Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.16 Amendment No. 14 to Consulting Incorporated by reference to the S8 filed
Services Agreement between 30, 2005
Bartholomew International Investments
and Reality Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.17 Amendment No. 6 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Bradford June 30, 2005
Van Siclen and Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.18 Amendment No. 2 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Seth June 30, 2005
Elliot and Reality Wireless Networks,
Inc.
- --------------------------------------------------------------------------------------------------------------
4.19 Consulting Services Agreement between Incorporated by reference to the S8 filed
Arthur Feldman and Reality Wireless June 30, 2005
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.20 Consulting Services Agreement between Incorporated by reference to the S8 filed
Keith McNally and Reality Wireless June 30, 2005
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.21 Consulting Services Agreement between Incorporated by reference to the S8 filed
Joe Artusa and Reality Wireless June 30, 2005
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.22 Consulting Services Agreement between Incorporated by reference to the S8 filed
Timothy Fostick and Reality Wireless June 30, 2005
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.23 Amendment No. 15 to Consulting Incorporated by reference to the S8 filed
Services Agreement between July 21, 2005
Bartholomew International Investments
and Reality Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.24 Amendment No. 7 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Bradford July 21, 2005
Van Siclen and Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.25 Amendment No. 3 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Seth July 21, 2005
Elliot and Reality Wireless Networks,
Inc.
- --------------------------------------------------------------------------------------------------------------
4.26 Amendment No. 7 to Consulting Incorporated by reference to the S8 filed
Services Agreement Kevin Evans and July 21, 2005
Reality Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.27 Amendment No. 1 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Arthur July 21, 2005
Feldman and Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
27
- --------------------------------------------------------------------------------------------------------------
4.28 Amendment No. 1 to Consulting Incorporated by reference to the S8 filed
Services Agreement Keith McNally and
July 21, 2005 Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.29 Amendment No. 1 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Joe Artusa July 21, 2005
and Reality Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.30 Amendment No. 1 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Timothy July 21, 2005
Fostick and Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.31 Consulting Services Agreement between Incorporated by reference to the S8 filed
Anthony John Doyle and Reality July 21, 2005
Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.32 Amendment No. 16 to Consulting Incorporated by reference to the S8 filed
Services Agreement between September 1, 2005
Bartholomew International Investments
and Reality Wireless Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.33 Amendment No. 8 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Bradford September 1
Van Siclen and Reality Wireless
Networks, Inc.
- --------------------------------------------------------------------------------------------------------------
4.34 Amendment No. 1 to Consulting Incorporated by reference to the S8 filed
Services Agreement between Anthony September 1
John Doyle and Reality Wireless
Networks, Inc
- --------------------------------------------------------------------------------------------------------------
31.1 Certification by Principal Executive Attached
Officer
- --------------------------------------------------------------------------------------------------------------
31.2 Certification by Principal Financial Attached
Officer
- --------------------------------------------------------------------------------------------------------------
32 Certification Pursuant to 906 Attached
- --------------------------------------------------------------------------------------------------------------
(b) Reports on Form 8-K.
During the period ended September 30, 2005, the Company filed the following
reports on Form 8-K:
- --------------------------------------------------------------------------------
Date of Event Reported Items Reported
- --------------------------------------------------------------------------------
July 21, 2005 Items 1.01 and 9.01
- --------------------------------------------------------------------------------
October 20, 2005 Items 1.01 and 5.03
- --------------------------------------------------------------------------------
November 3, 2005 Items 4.01 and 9.01
- --------------------------------------------------------------------------------
December 22, 2005 Item 9.01
- --------------------------------------------------------------------------------
28
SIGNATURES
Pursuant to the requirements 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.
REALITY WIRELESS NETWORKS, INC.
Dated: February 2, 2006 /s/ Steve Careaga
-----------------------
By: Steve Careaga
Its: Chief Executive Officer, Principal
Financial Officer/Acting Chief Financial
Officer, Director
29