Viper Networks, Inc. Form 10-QSB dated March 31, 2004

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark one)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________

Commission File Number: 0-032939

Viper Networks, Inc.
(Exact name of registrant as specified in its charter)

Utah		87-0140279
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

10373 Roselle Street, Suite 170 San Diego, California		92121
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (858) 452-8737

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, and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ¨ No x

On March 31, 2004 there were 92,801,707 shares of the registrant’s common stock, $.001 par value, outstanding.

VIPER NETWORKS, INC.
FORM 10-QSB QUARTERLY REPORT
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
		Page No.
ITEM 1.	FINANCIAL STATEMENTS

	Report of Independent Registered Public Accounting Firm	4

	Consolidated Balance Sheets – March 31, 2004 (Unaudited) and December 31, 2003	5

	Consolidated Statements of Operations - Three Months Ended March 31, 2004 and 2003 (Unaudited)	6

	Consolidated Statements of Changes in Stockholders’ Equity – Three Months Ended March 31, 2004 (Unaudited) and Year ended December 31, 2003	7

	Consolidated Statements of Cash Flows – Three Months Ended March 31, 2004 and 2003 (Unaudited)	8-9

	Notes to Consolidated Financial Statements (Unaudited)	10

ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	11

ITEM 3.	CONTROLS AND PROCEDURES	13

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	14

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	14

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	15

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	15

ITEM 5.	OTHER INFORMATION	15

ITEM 6.	EXHIBITS	15

VIPER NETWORKS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements

PART 1. FINANCIAL INFORMATION

ITEM 1 -	FINANCIAL STATEMENT

	The accompanying un-audited financial statements have been prepared in accordance with the instructions for Form 10-QSB pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, cash flows, and stockholders equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

	The un-audited balance sheet of the Company as of March 31, 2004, and the related balance sheet of the Company as of December 31, 2003, which is derived from the Company's audited financial statements, the un-audited statement of operations and cash flows for the three months ended March 31, 2004 and March 31, 2003 and the statement of stockholders equity for the period of December 31, 2002 to March 31, 2004 are included in this document.

	Operating results for the quarter ended March 31, 2004, are not necessarily indicative of the results that can be expected for the year ending December 31, 2004.

ARMANDO C. IBARRA
Certified Public Accountants
A Professional Corporation

Armando C. Ibarra, C.P.A.		Members of the California Society of Certified Public Accountants
Armando Ibarra, Jr., C.P.A., JD		Members of the American Institute of Certified Public Accountants
		Registered with the Public Company Accounting Oversight Board

To the Board of Directors of
Viper Networks Inc. and Subsidiaries

INDEPENDENT ACCOUNTANTS’ REPORT

We have reviewed the accompanying balance sheets of Viper Networks, Inc. and Subsidiaries as of March 31, 2004, and the related statements of operations, changes in stockholders’ equity, and cash flows for the three months ended March 31, 2004 and 2003 in accordance with Statements on Standards for Accounting Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Viper Networks, Inc. and Subsidiaries.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Management’s plans in regard to its current status are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

____________________________
Armando C. Ibarra, CPA-APC

May 30, 2005
Chula Vista, California

VIPER NETWORKS, INC. AND SUBSIDIARIES

Consolidated Balance Sheet

		March 31 2004 (Unaudited)			December 31, 2003

ASSETS
Current Assets:
Cash	$	212,372		$	170,340
Short-term investments		38,750			53,200
Accounts receivable, net of allowance for doubtful accounts and sales returns (Note 4)		160,680			90,904
Inventories		32,807			-
Other current assets (Note 4)		34,795			40,449

Total current assets		479,403			354,893

Property and equipment, net (Note 4)		636,147			535,415
Purchased intangible assets, net		424,541			338,441

Total assets	$	1,540,091		$	1,228,749


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	211,814		$	70,447
Accrued liabilities (Note 4)		75,937			5,159
Accounts payable to related party (Note 6)		-			11,658
Loans from related party (Note 6)		340,671			-
Taxes payable		2,234			3,508
Deferred revenues		-			-
Short term debt and current portions of long term debt (Note 8)		114,575			529,549
Stock subscription deposit (Note 9)		34,795			69,945

Total current liabilities		780,026			690,266

Long term debt, less current portions		5,630			216,625

Total liabilities		785,656			906,891

Commitments and Contingencies (Note 11)
Stockholders equity:
Preferred stock: Class A, authorized 100,000 shares at $1.00 par value, -0- shares issued and outstanding (Note 12)		-			-
Preferred stock: Class B, authorized 10,000,000 shares at $1.00 par value, -0- shares issued and outstanding (Note 12)		-			-
Common stock: 250,000,000 shares authorized of $0.001 par value, 92,801,707 and 78,796,146 shares issued and outstanding		92,802			78,796
Additional paid-in capital		8,551,811			3,901,379
Stock subscription receivable (Note 5)		(160,000	)		(125,000	)
Unearned stock-based compensation		(308,099	)		(324,548	)
Accumulated deficit		(7,359,610	)		(3,160,751	)
Accumulated comprehensive loss		(62,468	)		(48,018	)

Total stockholders’ equity		754,435			321,858

Total liabilities and stockholders’ equity	$	1,540,091		$	1,228,749

The referenced notes are an integral part of these consolidated financial statements.
5

VIPER NETWORKS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended March 31,

	2004			2003


Net Revenues	$	934,402		$	18,134
Cost of revenues		927,096			1,867

Gross Margin		7,306			16,267

General and administrative		787,247			163,657
Equity loss from unconsolidated subsidiaries		-			-

Loss from operations		(779,941	)		(147,391	)


Other income (expenses)
Realized gain on marketable securities		-			81
Interest expense		(23,160	)		(1,314	)
Bad debt expense		(1,100	)		-
Other income (expense)		1,480			(824	)

Total other income (expenses)		(22,780	)		(2,057	)

Loss before extraordinary item		(802,721	)		(149,448	)
Impairment of purchased intangibles		(3,396,138	)		-

Net loss	$	(4,198,859	)	$	(149,448	)


Basic loss per share	$	(0.05	)	$	(0.01	)


Weighted average number of shares outstanding		87,148,385			18,042,799

The referenced notes are an integral part of these consolidated financial statements.
6

VIPER NETWORKS, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Common Stock			Additional Paid-In Capital		Stock Subscriptions			Unearned stock-based			Accumulated			Other Comprehensive			Total Stockholders’
	Shares	Amount		(Deficit)		Receivable			Compensation			Deficit			Loss			Equity


Balance, December 31, 2002	17,640,689	$	17,641	$	1,046,165	$	(125,000	)	$	(4,700	)	$	(959,897	)	$	-		$	(25,791	)
Issuance of common stock for cash	7,538,457		7,538		400,722		-			-			-			-			408,260
Issuance of common stock for services received	28,130,000		28,130		930,095		-			-			-			-			958,225
Issuance of common stock loan interest	675,000		675		51,650		-			-			-			-			52,325
Issuance of common stock for acquisition	24,602,000		24,602		1,093,728		-			-			-			-			1,118,330
Employee Compensation Fund	210,000		210		54,745		-			-			-			-			54,955
Stock-based compensation	-		-		324,274		-			(319,848	)		-			-			4,426
Comprehensive loss	-		-		-		-			-			-			(48,018	)		(48,018	)
Net Loss for the year ended December 31, 2003	-		-		-		-			-			(2,200,854	)		-			2,200,854

Balance, December 31, 2003	78,796,146		78,796		3,901,379		(125,000	)		(324,548	)		(3,160,751	)		(48,018	)		321,858
Issuance of common stock for cash	6,043,784		6,044		1,152,069		(35,000	)		-			-			-			1,123,113
Issuance of common stock for services received	5,172,077		5,172		224,108		-			-			-			-			229,280
Issuance of common stock for acquisition	2,500,000		2,500		3,072,000		-			-			-			-			3,074,500
Conversion of notes payable and interest	139,700		140		50,667		-			-			-			-			50,807
Employee Compensation Fund	150,000		150		151,589		-			-			-			-			151,739
Stock-based compensation	-		-		-		-			16,449			-			-			16,449
Comprehensive loss	-		-		-		-			-			-			(14,450	)		(14,450	)
Net Loss for quarter ended March 31, 2004	-		-		-		-			-			(4,198,859	)		-			(4,198,859	)

Balance, March 31, 2004	92,801,707	$	92,802	$	8,551,811	$	(160,000	)	$	(308,099	)	$	(7,359,610	)	$	(62,468	)	$	754,435

The referenced notes are an integral part of these consolidated financial statements.
7

VIPER NETWORKS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,

	2004			2003


Cash flows from operating activities:
Net loss	$	(4,198,859	)	$	(149,448	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation		62,822			2,358
Allowance for doubtful accounts and sales returns		-			-
Amortization of stock-based compensation		16,449			235
Amortization of stock-based interest		11,743			-
Impairment of purchased intangibles		3,396,138			-
Stock based compensation		229,280			117,564
Interest accrual		4,284			1,314
(Gain) loss on sale of marketable securities		-			(5,081	)
Changes in assets and liabilities:
Accounts receivable		(15,197	)		-
Inventories		(32,807	)		-
Prepaid expenses		3,814			-
Other current assets		(5,423	)		-
Accounts payable		76,351			-
Accrued liabilities		61,813			4,356
Accounts payable related party		-			(25,835	)
Taxes payable		(1,274	)		800
Deferred revenues		-			-

Net cash used in operating activities		(390,866	)		(53,737	)


Cash flows from investing activities:
Acquisition, net of cash acquired		(457,091	)		-
Purchases of property and equipment		(91,039	)		-
Sales of marketable securities		-			581

Net cash used in investing activities		(548,130	)		581

The referenced notes are an integral part of these consolidated financial statements.
8

VIPER NETWORKS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	Three Months Ended March 31,

	2004			2003


Cash flows from financing activities:
Proceeds from issuance of common stock		1,274,852			41,780
Net borrowing (repayments) under revolving credit lines		(107,661	)		-
Repayment of debt from acquisition		(269,500	)		-
Proceeds from short term debt		-			9,450
Repayments of short term debt		(15,000	)		(5,000	)
Proceeds from shareholder loans		215,708			-
Repayments of shareholder loans		(54,473	)		-
Repayments of convertible loans		(25,000	)		-
Payments on capital lease obligations		(2,749	)		(1,500	)
Stock subscription deposits		(35,150	)		4,717

Net cash provided by financing activities		981,027			49,447

Net increase in cash		42,031			(3,709	)
Cash at the beginning of the period		170,340			4,697

Cash at the end of the period	$	212,371		$	988



Supplemental schedule of cash flow activities
Cash paid for:
Interest	$	8,534		$	-
Income taxes	$	127		$	-

Non-cash investing and financial activities:
Common stock issued for business acquisition	$	3,074,500		$	-
Common stock issued in payment of services	$	229,280		$	28,500
Common stock issued in payment of convertible loans and interest	$	50,806		$	-

The referenced notes are an integral part of these consolidated financial statements.
9

VIPER NETWORKS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements

NOTE 1 -	CONDENSED FINANCIAL STATEMENTS

	The accompanying March 31, 2004 financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2004 and 2003 and for all periods presented have been made. Certain information and Footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2003 audited financial statements. The results of operations for periods ended March 31, 2004 and 2003 are not necessarily indicative of the operating results for the full years.

NOTE 2 -	DESCRIPTION OF BUSINESS

	The consolidated financial statements presented are those of Viper Networks, Inc. and its wholly-owned Subsidiaries (the “Company”).

	We are a leading provider of Voice over Internet Protocol, or VoIP, communications products and services. The company has evolved from a pioneer in selling VIPER CONNECT, a “push to talk” technology developed by ITXC, to a next generation provider of high-quality telecommunication services and technology for internet protocol, or IP telephony applications. We utilize our VoIP technology to transmit digital voice communications over data networks and the Internet.

NOTE 3 -	GOING CONCERN

	The Company’s consolidated financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred a loss from inception on September 14, 2000 through March 31, 2004, which has resulted in an accumulated deficit of $(7,359,610) at March 31, 2004 which raises doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

	It is the intent of management to continue to develop it’s voice and data services to Web-based customers and expand its Voice-over-Internet Protocol networks for businesses, institutions, and Internet Service Providers (ISP).

	Company management will seek additional financing through new stock issuances and lines of credit.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures of contingent liabilities. On an ongoing basis, management evaluates its estimates, including those that relate to income tax contingencies, revenue recognition, and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. If actual results significantly differ from management's estimates, the Company's financial condition and results of operations could be materially impaired.

Comparison of Three Months Ended March 31, 2004 and Three Months Ended March 31, 2003

During the three months ended March 31, 2004, we recorded $934,402 as net sales revenues. This compares to the three months ended March 31, 2003 when we recorded $18,134 as net sales revenue. The dramatic increase in net sales from 2003 to 2004 was primarily due the acquisition and subsequent consolidation of Mid-Atlantic International, Inc. and Adoria Communications, LLC.

During the three months ended March 31, 2004, our Cost of sales was $927,096 which resulted in a gross margin as a percentage of net sales revenues of approximately 1%. This compares to the three months ended March 31, 2003 where our Cost of sales was $1,867 which resulted in a gross margin percentage of net sales revenues was approximately 90%. Competitive conditions, product and sales mix, and technology trends impacted our gross margin in both of these years.

During the three months ended March 31, 2004 we incurred $787,247 in selling, general and administrative expenses. This compares to the three months ended March 31, 2003 when we incurred $163,657 in selling, general and administrative expenses. The increase from the three months ended March 31, 2003 to the three months ended March 31, 2004 was due primarily to the increased average monthly amount of selling, general and administrative expenses incurred as the Company developing and implementing its business plan. Overall, selling, general and administrative expenses were primarily made up of wages and salaries, office expenses, fees and costs incurred for legal and accounting services, and other administrative costs.

During the three months ended March 31, 2004, we incurred an Operating Loss of $779,941 compared to an Operating Loss of $147,391 during the three months ended March 31, 2003. The increase in the amount of the loss in the three months ended March 31, 2004 was due primarily to the increased selling, general and administrative expenses.

During the three months ended March 31, 2004, we incurred interest expense of $23,160 compared to $1,314 in interest expense during the three months ended March 31, 2003. During the three months ended March 31, 2004, we had bad debt expense of $1,100 compared to the three months ended March 31, 2003 when we had $0 bad debt expense.

As a result, during the three months ended March 31, 2004 we had a net loss of $4,198,859 compared to the three months ended March 31, 2003 when we had a net loss of $149,448.

Basic loss per share for the three months ended March 31, 2004 was $.05 compared to the three months ended March 31, 2003 when we had a basic loss per share of $.01. During the three months ended March 31, 2005, we had 87,148,385 weighted average shares outstanding. By comparison, during the three months ended March 31, 2003 we had 18,042,799 weighted average shares outstanding.

Liquidity and Capital Resources

At March 31, 2004, we had $212,372 in cash. At the same time, we had $479,403 in total current assets. At December 31, 2003, we had $170,340 in cash. At the same time, we had $354,893 in total current assets.

As of March 31, 2004, our total current liabilities were $780,026 which consisted primarily of the following material amounts: $211,814 in Accounts payable, $75,937 in Accrued liabilities, $340,671 in Related party obligations, $114,575 in short term and current portion of long term debt.

In contrast, as of December 31, 2003, our total current liabilities were $690,266 which consisted primarily of the following material amounts: $70,447 in Accounts payable, $5,159 in Accrued liabilities, $11,658 in Related party obligations, $529,549 in short term and current portion of long term debt.

During the three months ended March 31, 2004, our cash needs were met primarily by the sale of common stock and loans from certain of our shareholders. We can not be assured that we will continue to obtain funds from these or any other sources to meet our need for additional capital resources.

Overall, our liquidity and access to capital is very limited. We have not received any commitment for additional financing and given the size of our company, we may be limited to loans and other cash infusions from officers, directors, existing stockholders, and persons affiliated or associated with one or more of them. If we are to implement our business plan, we will need to raise significant amounts of additional capital and during the period ended March 31, 2004 we had not received any commitment that any such additional financing would be forthcoming or, if could be obtained, that it can be obtained on reasonable terms in light of our circumstances at that time. In addition, if any financing should be obtained, existing shareholders will likely incur substantial, immediate, and permanent dilution of their existing investment.

Critical Accounting Policies

The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amount of revenues and expenses during the reporting periods. We are required to make judgments and estimates about the effect of matters that are inherently uncertain. Actual results could differ from our estimates. While we are a development-stage company, the most significant areas involving our judgments and estimates are principally those involving our current liabilities.

Safe Harbor for Forward-Looking Statements

This Form 10-QSB contains forward-looking statements as defined by federal securities laws which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements concerning plans, objectives, goals, strategies, expectations, intentions, projections, developments, future events, performance or products, underlying (express or implied) assumptions and other statements which are other than historical facts. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "intends," "plans," "anticipates," "contemplates," "believes," "estimates," "predicts," "projects," and other similar terminology or the negative of these terms. From time to time we may publish or otherwise make available forward-looking statements of this nature. All such forward-looking statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by the cautionary statements described in this Form 10-QSB, including those set forth in Section 1A entitled "Factors That May Affect Future Results." In addition, we undertake no obligation to update or revise any forward-looking statement to reflect events, circumstances, or new information after the date of this Form 10-QSB or to reflect the occurrence of unanticipated or other subsequent events, and we disclaim any such obligation.

Impact of Inflation

Because of the nature of its services, the Company does not believe that inflation had a significant impact on its sales or profits.

Recent Accounting Pronouncements

l. New Accounting Pronouncements
In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS 151, Inventory Costs – an amendment of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that “… under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges…” This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This Statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption is not expected to have a material effect on the Company’s results of operations or financial conditions.

In December 2004, the FASB issued SFAS No. 152, “Accounting for Real Estate Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67” (“SFAS 152). This Statement amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. This Statement is effective for financial statements for fiscal years beginning after June 15, 2005, with earlier application encouraged. The adoption is not expected to have a material effect on the Company’s results of operations or financial conditions.

On December 16, 2004, the Financial Accounting Standards Board (“FASB”) published Statement of Financial Accounting Standards No. 123 (Revised 2004), Shared-Based Payment (“SFAS 123R). SFAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans. The provisions of SFAS 123R are effective as of the first interim period that begins after June 15, 2005. Accordingly, the Company will implement the revised standard in the third quarter of fiscal year 2005. Currently, the Company accounts for its share-based payment transactions under the provisions of APB 25, which does not necessarily require the recognition of compensation cost in the financial statements. Management is assessing the implications of this revised standard, which may materially impact the Company’s results of operations in the third quarter of fiscal year 2005 and thereafter.

ITEM 3. 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 Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer has concluded that current disclosure controls and procedures are effective as of the end of the period covered by this quarterly report on Form 10-QSB.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In January 2004, the Company issued 2,100,000 shares of the Company’s Common Stock to one purchaser in exchange for the Company’s receipt of $210,000 in cash. All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchasers were sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

In early February 2004, the Company issued an aggregate of 1,800,000 shares of the Company’s Common Stock to one purchaser in exchange for the Company’s receipt of $450,000 in cash. The shares were valued at $0.25 per share. The shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

In early March 2004, the Company issued 1,802,000 shares of the Company’s Common Stock to nine investors in connection with the acquisition of Mid-Atlantic. The shares were accorded an aggregate value of $450,500. The shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchasers were sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

In mid March 2004, the Company issued an aggregate of 5,000,000 shares of the Company’s Common Stock to five officers and directors of the Company with each share valued at $0.04 per share. The share issuances were as follows: (1) 1,000,000 shares to Farid Shouekani; (2) 1,000,000 shares to Jason A. Sunstein; (3) 1,000,000 shares to John L. Castiglione; (4) 1,000,000 shares to Ronald G. Weaver; and (5) 1,000,000 shares to Stephen D. Young. All of the purchasers of the shares were Accredited Investors and the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchasers were sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

Later, in March 2004, the Company issued 2,500,000 shares of the Company’s Common Stock in connection with the acquisition of Adoria Communications. The shares were accorded an aggregate value of $3,074,500 and were issued to one purchaser. The purchaser of the shares was an Accredited Investor and the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

Later, in March 2004, the Company issued an aggregate of 1,295,000 shares of the Company’s Common Stock to nine purchasers in exchange for the Company’s receipt of an aggregate of $323,750 in cash. All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer, however the Company did pay a finder a finder’s fee equal to 8% of the aggregate amount received, with 7% paid in cash and 1% paid by the issuance of the Company’s Common Stock. Apart from the payment of a finder’s fee, no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

In late March 2004, the Company issued an aggregate of 1,669,184 shares of the Company’s Common Stock to 34 investors in exchange for the Company’s receipt of an aggregate of $310,500 in cash. All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer. The Company did pay 150,000 shares of the Company’s Common Stock as a finders fee in connection with the Company’s issuance of 1,062,500 of these shares. However, apart from the issuance of these shares to a finder, no other fees or commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchasers were sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

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

Not Applicable.

ITEM 5. OTHER INFORMATION

CHANGE OF CORPORATE DOMICILE

Pursuant to prior action by a majority of the shareholders, in May of 2005 the Company completed a change in corporate domicile from Utah to Nevada.

ITEM 6. EXHIBITS

EXHIBIT NUMBER	DESCRIPTION

23.1	Auditor’s Consent
31.1	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The Company did not file any Reports on Form 8-K during the three months ended March 31, 2004:

SIGNATURES

Pursuant to the requirements 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.

	VIPER NETWORKS, INC.


Date: May 31, 2005	By:	/s/ RONALD G. WEAVER

		RONALD G. WEAVER, CHIEF EXECUTIVE OFFICER


Date: May 31, 2005	By:	/s/ PAUL E. ATKISS

		PAUL E. ATKISS, CHIEF FINANCIAL OFFICER
		(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)