Amended Current Report Filing (8-k/a)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act Of 1934

Date of Report (Date of earliest event reported): October 1, 2014



	GTT Communications, Inc.
	(Exact Name of Registrant as Specified in its Charter)



Delaware	000-51211	20-2096338
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)



	7900 Tysons One Place Suite 1450 McLean, Virginia 22102
	(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (703) 442-5500



	N/A
	(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.01.	Completion of Acquisition or Disposition of Assets.

In our Current Report on Form 8−K filed on October 7, 2014, we reported that on October 1, 2014, GTT Communications, Inc., a Delaware corporation (the “Company”), Global Telecom & Technology Americas, Inc., a Virginia corporation and wholly owned subsidiary of the Company (the “Purchaser”), and GTT USNi, Inc., a Delaware corporation and wholly owned subsidiary of the Purchaser (“Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with American Broadband, Inc. d/b/a United Network Services, Inc., a Delaware corporation (“UNSi”) and Francis D. John, as the representative of UNSi’s stockholders and warrant holders. Upon the terms and subject to the conditions set forth in the Merger Agreement, the Purchaser acquired UNSi through the merger of Merger Sub with and into UNSi (the “Merger”), with UNSi being the surviving corporation. The closing of the Merger occurred simultaneously with the signing of the Merger Agreement.

As permitted by Item 9.01 of Form 8-K, we indicated in the initial Form 8-K that we would file financial statements for UNSi and pro forma financial information reflecting the effect of the acquisition by amendment to the initial Form 8-K. This amendment is being filed to amend and supplement the initial Form 8-K to include such financial statements and financial information.



Item 9.01	Financial Statements and Exhibits

(a) Financial Statements of Business Acquired.

The audited consolidated financial statements of UNSi and subsidiaries for the year ended December 31, 2013 are filed herewith as Exhibit 99.1 to this Amendment No. 1 and incorporated by reference into this Item 9.01(a).

The audited consolidated financial statements of UNSi and subsidiary for the years ended December 31, 2012 and 2011 are filed herewith as Exhibit 99.2 to this Amendment No. 1 and incorporated by reference into this Item 9.01(a).

The reviewed consolidated financial statements of UNSi and subsidiaries for the nine months ended September 30, 2014 and 2013 are filed herewith as Exhibit 99.3 to this Amendment No. 1 and incorporated by reference into this Item 9.01(a).

(b) Pro Forma Financial Information.

The following unaudited pro forma combined financial information of us and UNSi are filed herewith as Exhibit 99.4 to this Amendment No. 1 and incorporated by reference into this Item 9.01(b):


•	Unaudited Pro Forma Combined Balance Sheets as of September 30, 2014.


•	Unaudited Pro Forma Combined Statement of Operations for the Nine Months Ended September 30, 2014.


•	Unaudited Pro Forma Combined Statement of Operations for the Year Ended December 31, 2013.


•	Notes to Unaudited Pro Forma Combined Financial Statements.

(d) Exhibits.



Exhibit No.		Description of Exhibit
99.1		The audited consolidated financial statements of UNSi and Subsidiaries for the year ended December 31, 2013.
99.2		The audited consolidated financial statements of UNSi and Subsidiaries for the years ended December 31, 2012 and 2011.
99.3		The reviewed consolidated financial statements of UNSi and Subsidiaries for the nine months ended September 30, 2014 and 2013.
99.4		The unaudited pro forma combined financial information for the year ended December 31, 2013 and for the nine months ended September 30, 2014, giving effect to the acquisition.
23.1		Consent of Grassi & Co. CPAS, P.C.
23.2		Consent of Sisterson & Co, LLP

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 hereunto duly authorized.



Date: November 28, 2014	GTT COMMUNICATIONS, INC.

	/s/ Michael Bauer
	Michael Bauer
	Chief Financial Officer

EXHIBIT INDEX



Exhibit No.		Description of Exhibit
99.1		The audited consolidated financial statements of UNSi and Subsidiaries for the year ended December 31, 2013.
99.2		The audited consolidated financial statements of UNSi and Subsidiaries for the years ended December 31, 2012 and 2011.
99.3		The reviewed consolidated financial statements of UNSi and Subsidiaries for the nine months ended September 30, 2014 and 2013.
99.4		The unaudited pro forma combined financial information for the year ended December 31, 2013 and for the nine months ended September 30, 2014, giving effect to the acquisition.
23.1		Consent of Grassi & Co. CPAS, P.C.
23.2		Consent of Sisterson & Co, LLP

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the inclusion in this Current Report on Form 8-K/A of GTT Communications, Inc. of our report dated November 25, 2014, with respect to the consolidated financial statements of United Network Services, Inc. and Subsidiaries as of and for the year ended December 31, 2013, appearing in this Form 8-K/A. GRASSI & CO., CPAs, P.C. Jericho, New York November 28, 2014

EXHIBIT 99.1

UNITED NETWORK SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013

EXHIBIT 99.1

UNITED NETWORK SERVICES, INC. AND SUBSIDIARIES



	Page
Independent Auditors’ Report	1
Consolidated Financial Statements
Consolidated Balance Sheet at December 31, 2013	2 - 3
Consolidated Statement of Operations for the Year Ended December 31, 2013	4
Consolidated Statement of Changes in Stockholders’ Equity for the Year Ended December 31, 2013	5
Consolidated Statement of Cash Flows for the Year Ended December 31, 2013	6 - 7
Notes to Consolidated Financial Statements	8 - 19

EXHIBIT 99.1

INDEPENDENT AUDITORS' REPORT

To The Stockholders

United Network Services, Inc. and Subsidiaries

We have audited the accompanying consolidated financial statements of United Network Services, Inc. and Subsidiaries, which comprise the consolidated balance sheet at December 31, 2013, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Network Services, Inc. and Subsidiaries at December 31, 2013, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

GRASSI & CO., CPAs, P.C.

Jericho, New York

November 25, 2014

EXHIBIT 99.1

UNITED NETWORKS SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2013



ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	609,048
Accounts receivable, net of allowance for doubtful accounts of $907,520	3,703,555
Deferred charges	902,577
Prepaid expenses and other current assets	957,627
Total Current Assets	6,172,807

PROPERTY AND EQUIPMENT, NET	14,243,454

NONCURRENT ASSETS:
Goodwill	9,114,776
Intangible assets, net	7,642,814
Deferred charges	931,852
Other assets	185,195
Total Non-current Assets	17,874,637

Total Assets	$	38,290,898

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

EXHIBIT 99.1

UNITED NETWORKS SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2013



LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - bank	$	4,350,000
Current maturities of subordinated debt	2,277,367
Current portion of obligations under capital leases	475,580
Accounts payable	9,310,554
Accrued expenses and other current liabilities	2,241,586
Deferred revenue	446,517
Total Current Liabilities	19,101,604

LONG-TERM LIABILITIES:
Long-term subordinated debt, less current maturities	14,087,057
Obligations under capital leases, less current portion	529,927
Deferred revenue	524,838
Total Long-term Liabilities	15,141,822

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, liquidation value $1,400,000	1,400,000
Common stock, $.01 par value, 30,000,000 shares authorized, 21,371,951 shares issued and outstanding at December 31, 2013	213,720
Additional paid-in capital	27,983,050
Accumulated deficit	(25,549,298		)
Total Stockholders' Equity	4,047,472

	$	38,290,898

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

EXHIBIT 99.1

UNITED NETWORK SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2013



REVENUE	$	49,443,164

OPERATING ACTIVITIES:
Cost of telecommunication services provided	33,777,435
Selling, general and administrative expenses	17,124,261
Depreciation and amortization	7,004,984
Impairment of goodwill, fixed and intangible assets	2,248,450
Total operating expenses	60,155,130

LOSS FROM OPERATIONS	(10,711,966		)

OTHER EXPENSE:
Interest expense, net	1,874,460

LOSS BEFORE PROVISION FOR INCOME TAXES	(12,586,426		)

PROVISION FOR INCOME TAXES	454,136

NET LOSS	$	(13,040,562	)

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

EXHIBIT 99.1

UNITED NETWORK SERVIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2013



	Preferred Stock		Common Stock			Additional Paid-in Capital		Accumulated Deficit			Total

BALANCE AT DECEMBER 31, 2012	$	—	$	90,183		$	14,566,517	$	(12,508,736	)	$	2,147,964

ISSUANCE OF COMMON STOCK	—		26,276			2,600,673		—			2,626,949

ISSUANCE OF COMMON STOCK IN CONNECTION WITH ACQUISITION (NOTE 4)	—		96,291			10,753,907		—			10,850,198

ISSUANCE OF COMMON STOCK WARRANTS IN CONNECTION WITH ACQUISITION (NOTE 4)	—		—			61,944		—			61,944

ISSUANCE OF PREFERRED STOCK	1,400,000		—			—		—			1,400,000

PURCHASE OF COMMON STOCK	—		(10		)	9		—			(1		)

EXERCISE OF COMMON STOCK WARRANTS	—		980			—		—			980

NET LOSS	—		—			—		(13,040,562		)	(13,040,562		)

BALANCE AT DECEMBER 31, 2013	$	1,400,000	$	213,720		$	27,983,050	$	(25,549,298	)	$	4,047,472

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

EXHIBIT 99.1

UNITED NETWORK SERVICES, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2013



CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(13,040,562	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Bad debt	441,165
Depreciation and amortization of property and equipment	4,345,933
Amortization of intangible assets	2,659,051
Accrued interest on subordinated debt	1,451,115
Increase in deferred tax valuation allowance	427,938
Impairment of goodwill and other intangible assets	2,248,450
Changes in Assets (Increase) Decrease:
Accounts receivable	2,759,593
Deferred charges	46,028
Prepaid expenses and other current assets	(484,304		)
Other assets	(107,088		)
Changes in Liabilities Increase (Decrease):
Accounts payable	(1,451,778		)
Accrued expenses and other current liabilities	(265,022		)
Deferred revenue	(2,070,372		)
NET CASH USED IN OPERATING ACTIVITIES	(3,039,853		)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash and cash equivalents acquired in business acquisition	464,611
Purchases of property and equipment	(2,871,395		)
NET CASH USED IN INVESTING ACTIVITIES	(2,406,784		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from note payable - bank	2,250,000
Principal payments of subordinated debt	(115,072		)
Principal payments of obligations under capital leases	(283,409		)
Proceeds from issuance of preferred stock	1,400,000
Proceeds from issuance of common stock, net of repurchases	2,626,948
Proceeds from exercise of common stock warrants	980
NET CASH PROVIDED BY FINANCING ACTIVITIES	5,879,447

NET INCREASE IN CASH AND CASH EQUIVALENTS	432,810

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	176,238

CASH AND CASH EQUIVALENTS, END OF YEAR	$	609,048

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	423,345

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

EXHIBIT 99.1

UNITED NETWORK SERVICES, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2013



SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Common stock issued as consideration in connection with business acquisition	$	10,912,142
Subordinated debt assumed as consideration in connection with business acquisition	$	14,751,970
Fair value of non-cash assets acquired	$	35,552,904
Fair value of liabilities assumed	$	10,353,403
Property and equipment acquired through long-term financing	$	937,932

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

EXHIBIT 99.1

UNITED NETWORK SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013


Note 1 -	Nature of Operations and Principles of Consolidation

Principles of Consolidation

American Broadband, Inc. (dba “United Network Services, Inc.”), a Delaware corporation, and its wholly owned subsidiaries are collectively referred to as the (“Company”). The Company was founded in 2001 as a single source provider of ubiquitous networks for broadband and Ethernet service to multi-location clients of all sizes.

The consolidated financial statements include the accounts of United Network Services, Inc. and its three wholly owned subsidiaries, Trinity Networks, LLC (“Trinity Networks”), Sparkplug, Inc. (“Sparkplug”), and Airband Communications, Inc. (“Airband”). All intercompany account balances and transactions have been eliminated in the consolidated financial statements.

Business Activity

The Company is a national provider of internet connectivity and managed services for voice and data networks. The Company provides a managed solution by combining managed network services, managed connectivity and professional services to give enterprises a cost-efficient, end-to-end managed solution for their network. It custom designs, monitors, and manages networks for information technology organizations of small and mid-size enterprises. The Company’s extensive solutions include multiprotocol label switching (“MPLS”), Ethernet, dedicated internet access (“DIA”), broadband, same IP failover, managed local-area network (“LAN”), managed firewall, voice-over-IP (“VoIP”), and hosted monitoring. The Company services organizations in numerous industries with multiple, diverse geographic locations.

On February 10, 2012, the Company executed a stock purchase agreement with IPNetZone Communications Inc. (“IPNZ”) and IPNZ’s stockholders. In connection with this agreement, the Company also purchased all of the stock of BendLogic, Inc. (“BL”), which was a wholly owned subsidiary of IPNZ. The transaction qualified as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986. The effective date of the agreement was January 31, 2012, which was also the acquisition date, as this was the date that the Company effectively assumed control of IPNZ. The acquired assets and liabilities of IPNZ were recorded at their fair value as of the acquisition date and the results of operations for IPNZ from the acquisition date are included with the Company’s operations for the year ended December 31, 2012. The acquired companies merged into United Network Services, Inc.

On May 14, 2013, the Company executed a stock purchase agreement with Airband and Airband’s stockholders (see Note 4). The transaction qualified as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986. The effective date of the agreement was May 14, 2013 which was also the acquisition date, as this was the date that the Company effectively assumed control of Airband. The acquired assets and liabilities of Airband were recorded at their fair value as of the acquisition date and the results of operations for Airband from the acquisition date are included with the Company’s operations for the year ended December 31, 2013. The acquired company merged into United Network Services, Inc.


Note 2 -	Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

EXHIBIT 99.1

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measurements, a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is as follows:

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

At December 31, 2013, the fair value of the Company’s financial instruments including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, approximated book value due to the short maturity of these instruments.

At December 31, 2013, the Company does not have assets or liabilities required to be measured at fair value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements.

Revenue Recognition

The Company’s principal source of revenues is long-term contracts for broadband aggregation and private network services to enterprise and institutional customers throughout the United States and end-to-end turnkey solutions for wireless operators for cell site turn up and full connectivity to the mobile telephone switching office. Certain of the Company’s current revenue activities have features that may be considered multiple elements. The Company believes that there is insufficient evidence to determine each element’s fair value and as a result, in those arrangements where there are multiple elements, revenue is recorded ratably over the term of the arrangement.

Taxes collected from customers and remitted to governmental authorities are presented in the accompanying consolidated financial statements on a net basis.

Network Services and Support

The Company’s services are provided pursuant to contracts that typically provide for payments of recurring charges on a monthly basis for use of the services over a committed term. Each service contract has a fixed monthly cost and a fixed term, in addition to a fixed installation charge (if applicable). At the end of the initial term of most service contracts, the contracts roll forward on a month-to-month or other periodic basis and continue to bill at the same fixed recurring rate. If any cancellation or termination charges become due from the customer as a result of early cancellation or termination of a service contract, those amounts are calculated pursuant to a formula specified in each contract. Recurring costs relating to supply contracts are recognized ratably over the term of the contract.

Non-recurring Fees and Deferred Revenue

Non-recurring fees for data connectivity typically take the form of one-time, non-refundable provisioning fees established pursuant to service contracts. The amount of the provisioning fee included in each contract is generally determined by marking up or passing through the corresponding charge from the Company’s supplier, imposed pursuant to the Company’s purchase agreement. Non-recurring revenue earned for providing provisioning services in connection with the delivery of recurring communications services is recognized ratably over the contractual term of the recurring service starting upon commencement of the service contract term. Fees recorded or billed from these provisioning services are initially recorded as deferred revenue then recognized ratably over the contractual term of the recurring service. Installation costs related to provisioning incurred by the Company from independent third party suppliers, directly attributable and necessary to fulfill a particular service contract, and which costs would not have been incurred but for the occurrence of that service contract, are recorded as deferred contract costs and expensed proportionally over the contractual term of service in the same manner as the deferred revenue arising from that contract. Deferred costs do not exceed deferred upfront fees. Based on operating activity, the Company believes the initial contractual term is the best estimate of the period of earnings.

EXHIBIT 99.1

Other Revenue

From time to time, the Company recognizes revenue in the form of fixed or determinable cancellation (pre-installation) or termination (post-installation) charges imposed pursuant to the service contract. This revenue is earned when a customer cancels or terminates a service agreement prior to the end of its committed term. This revenue is recognized when billed if collectability is reasonably assured.

Accounts Receivable

The Company's accounts receivable are recorded at amounts billed to customers and presented on the balance sheet net of the allowance for doubtful accounts. The allowance is determined by a variety of factors, including the aged receivables, current economic conditions, historical losses and other information management obtains regarding the financial condition of customers. Receivables are charged off when they are deemed uncollectible. The Company does not accrue interest on past due receivables.

Property and Equipment

Property and equipment is stated at cost. The costs of additions and betterments are capitalized and expenditures for repairs and maintenance are expensed in the year incurred. When items of property and equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in income.

Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives of the respective assets as follows:



Telecommunications equipment	3 to 7 years
Computer equipment and software	3 to 5 years
Fiber optic network	3 to 15 years
Furniture and fixtures	3 to 10 years
Vehicles	5 years

Leasehold improvements are amortized over the shorter of the remaining term of the lease or the useful life of the improvement utilizing the straight-line method.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable in accordance with FASB ASC Subtopic 360-10-35, Impairment or Disposal of Long-Lived Assets. Recoverability of long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the asset or asset group is expected to generate. If the undiscounted cash flows of such assets are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount, if any, exceeds its fair value. At December 31, 2013, the Company determined that there is no impairment of property and equipment.

Goodwill

Goodwill is tested for impairment at least on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired in accordance with FASB ASC Topic 350, Intangibles - Goodwill and Other (“ASC 350”). The Company compares each reporting unit’s fair value, by considering comparable company market valuations and estimating expected future discounted cash flows to be generated by the reporting unit, to its carrying value. If the carrying value exceeds the reporting unit’s fair value, the Company performs an additional fair value measurement calculation to determine the impairment loss. The amount of impairment is determined by comparing the implied fair value of the reporting unit’s goodwill to the carrying value of the goodwill.

During the year ended December 31, 2013, the Company recorded a goodwill impairment charge of approximately $2.2 million as a result of the impairment test performed during the fourth quarter of 2013 (see Note 6, “Goodwill and Intangibles, Net”).

Intangible Assets

Definite-lived intangible assets are amortized utilizing the straight-line method over their estimated useful lives as follows:

EXHIBIT 99.1



Customer lists	3 to 5 years
FCC Licenses	3 to 5 years

The Company reviews the carrying value of definite-lived intangibles and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the asset or asset group is expected to generate. If the undiscounted cash flows of such assets are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount, if any, exceeds its fair value.

During the year ended December 31, 2013, the Company recorded intangible assets impairment charges of approximately $76,224, as a result of an impairment test performed during the fourth quarter of 2013. The results of the test are further described in Note 6, “Goodwill and Intangibles, Net”.

Employee Benefit Plans

The Company has established a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code. The 401(k) plan covers employees who have reached age 21 and completed one-half year of service. The Company can make profit sharing contributions at its discretion. Additional safe harbor contributions can be required by the Company to meet certain nondiscrimination requirements. Company profit sharing contributions are generally allocable among eligible participants in the proportion of their compensation to the compensation of all participants, subject to restrictions imposed by the Internal Revenue Code. Participants’ rights to the Company’s profit sharing contributions vest at the rate of 20% per year starting with the second year of vesting service. In addition, the Company maintained Airband’s defined contribution plan, consisting of a 401(k) retirement savings plan, which covered substantially all eligible Airband employees. The Company has the option of making discretionary matching contributions to plan participants’ accounts. Expense under the plans was $73,601 in 2013.

Income Taxes

Income tax expense includes income taxes currently payable and deferred taxes arising from temporary differences between income for financial reporting and income tax purposes. Deferred tax assets and liabilities are determined based on the difference between the financial statement balances and the tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

Applicable accounting literature requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by taxing authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than a 50% likelihood of being realized upon ultimate settlement. Accounting provisions also require that a change in judgment that results in subsequent recognition, derecognition, or change in a measurement of a tax position taken in a prior annual period (including any related interest and penalties) be recognized as a discrete item in the period in which the change occurs. The Company regularly evaluates the likelihood of recognizing the benefit from income tax positions taken by considering all relevant facts, circumstances, and information available.

New Accounting Pronouncements

In January 2014, the FASB issued ASU No. 2014-02, Intangibles-Goodwill and Other (Topic 350): Accounting for Goodwill. This ASU allows nonpublic companies to elect a new accounting alternative within U.S. GAAP wherein goodwill is amortized on a straight-line basis over 10 years, or less than 10 years if the company demonstrates that another useful life is more appropriate. For companies making the election, the ASU requires a more simple impairment test than is required for companies not making the election. In the simplified impairment test, goodwill must be tested for impairment when a triggering event occurs that indicates that the fair value of an entity or a reporting unit, if applicable, may be below its carrying amount, with impairment recorded for any excess of the carrying amount over fair value. For companies not making the election, U.S. GAAP requires an annual impairment test in addition to whenever a triggering event occurs, and also requires a more complex calculation of impairment that requires companies to calculate the implied fair value of the reporting unit’s goodwill.

EXHIBIT 99.1

and for interim periods in fiscal years beginning after December 15, 2015. Early application is permitted. The Company does not expect the new guidance to have an impact on its consolidated financial statements.


Note 3 -	Concentration of Credit Risk

The Company maintains cash balances in several financial institutions, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) for up to $250,000 per institution. From time to time, the Company’s balances may exceed these limits.

For the year ended December 31, 2013, one customer accounted for approximately 13% of net sales and 22% of accounts receivable, respectively.

Note 4 - Acquisition

Airband was a privately-held company headquartered in Carrollton, Texas which owned and operated its own fixed wireless and VoIP network. In accordance with the terms of the stock purchase agreement, the Company acquired 100% of the stock of Airband for the following consideration: (i) 9,629,129 shares of common stock, (ii) warrants to purchase 54,973 shares of common stock and (iii) assumption of $14,751,970 of debt (see Note 8, “Subordinated Debt”).

Management estimated that the price of the Airband acquisition was $25,664,112. This represents 9,629,129 shares of the Company’s common stock and 54,973 warrants to purchase the Company’s common stock at a value of $1.12681 per share and the assumption of debt.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of the acquisition of Airband:



Cash and cash equivalents	$	464,611
Accounts receivable	2,966,917
Other current assets	412,689
Property and equipment	13,148,522
Intangible assets	9,910,000
Goodwill	9,114,776
Total assets acquired	36,017,515
Accounts payable	6,561,256
Capital lease obligations	130,022
Other liabilities	3,662,125
Total liabilities assumed	10,353,403

Net assets acquired	$	25,664,112

The Company allocated the fair value of the consideration transferred to identifiable assets acquired and liabilities assumed based on their fair values on the date of acquisition. The Company recognized $9,114,776 of goodwill related to the acquisition which represents the excess of the purchase price over the estimated fair values of the identifiable net assets. The goodwill relates principally to the expected revenue and cost synergies that the Company expects to realize from the acquisition. Since the acquisition is intended to be a non-taxable exchange, none of the goodwill will be tax deductible for income tax purposes.

Note 5 - Property and Equipment

Property and equipment, net is summarized as follows:

EXHIBIT 99.1



Telecommunications equipment	$	16,596,753
Computer equipment and software	4,246,340
Fiber optic network	825,052
Furniture and fixtures	744,427
Vehicles	300,718
Leasehold improvements	148,624
	22,861,914
Less Accumulated depreciation and amortization	8,618,460
	$	14,243,454

Depreciation and amortization expense related to property and equipment amounted to approximately $4,346,000 for the year ended December 31, 2013.

Note 6 - Goodwill and Intangibles, Net

Goodwill

The following table sets summarizes the details of the Company’s goodwill balance, by reporting unit, at December 31, 2013:



	IPNZ			Airband		Total
Balance at January 1, 2013	$	2,172,226		$	—	$	2,172,226
ADD: Acquisition of goodwill	—			9,114,776		9,114,776
LESS: Impairment of goodwill	(2,172,226		)			(2,172,226		)
Balance at December 31, 2013	$	—		$	9,114,776	$	9,114,776

Goodwill represents the excess of costs over the fair value of assets acquired in conjunction with the acquisitions of IPNZ and Airband. The Company accounts for goodwill according to the provisions of FASB ASC Topic 350, which requires that goodwill and other indefinite-lived intangible assets not be amortized, but instead tested for impairment at least annually by applying a fair value based test, and more frequently if events and circumstances indicate that the asset might be impaired. Accordingly, the annual assessment of the Airband reporting unit at December 31, 2013 indicated no impairment of goodwill.

During 2013, the Company concluded that it was required to record a material impairment charge for goodwill and intangible assets related to the IPNZ reporting unit. Factors that the Company considered in the recognition of impairment included (i) the decline in revenues from IPNZ’s customer base, and (ii) negative EBITDA and negative cash flows attributed to the IPNZ reporting unit. The Company utilized FASB ASC Topic 350 guidance to test the goodwill and intangible assets for realizability and determined that the lowest level of its cash flow generation was its reporting units. During Step 1 of the impairment analysis, the Company compared the discounted cash flows attributable to the IPNZ reporting unit over the projection period of five years based upon the annual revenues and related cost of revenues from the reporting unit’s top ten customers. The sum of the discounted cash flows was less than the carrying value of the net assets for the reporting unit. This indicated that the Company failed Step 1 and was required to complete Step 2 under ASC 350 guidance that would quantify the impairment amount. During Step 2, the Company fair valued the assets using three generally accepted approaches: the cost, income and market approaches. As a result of the Step 2 analysis, the Company recorded a goodwill impairment charge of $2,172,226 included in operating expenses at December 31, 2013.

Intangible assets, net

Intangible assets remaining as of December 31, 2013, net consist of the following:

EXHIBIT 99.1



	Useful Life
Customer relationships, net of accumulated amortization of $1,604,032	3 years	$	6,045,968
FCC Licenses, net of accumulated amortization of $420,114	3 years	1,596,846
		$	7,642,814

Amortization expense related to intangible assets for the year ended December 31, 2013 was approximately $2,659,000.

Estimated future amortization expense of intangible assets is as follows:



Years Ending December 31:
2014	$	3,217,873
2015	3,217,873
2016	1,207,068
	$	7,642,814

As described above, in conjunction with the impairment analysis, the Company applied the excess earnings method, a form of the income approach, to estimate the value of the customer based intangible assets. Based on the analysis, the Company concluded that the intangible assets had no value and accordingly an impairment charge of $76,224 was recorded. Prior to the impairment charges, the intangible assets, which consisted of customer relationships, had a definite life and were amortized over the periods expected to be benefited from the customer relationships.

Note 7 - Note payable - bank

The Company entered into a line of credit agreement on August 15, 2007. The agreement provided for maximum borrowings of the lesser of $2,100,000 or the borrowing base, representing 80% of eligible receivables. Borrowings on the line of credit were bearing interest at the prime rate (3.25%) plus 1.50%, payable monthly. This debt, which had been due on demand, was paid off in May 2013.

The Company entered into a new credit facility on May 14, 2013. The new line of credit provides for borrowings of the lesser of $4,500,000 or two times the amount of the Company’s recurring revenue (as defined) for the most recent month. Borrowings bear interest at the prime rate (3.25%) plus 2.25% subject to a floor of 5.50%. The line of credit matures on May 14, 2015. As of December 31, 2013, $4,350,000 was outstanding under the credit facility, and $150,000 was collateral related to a bank credit card. Substantially all of the Company’s assets other than assets under capital lease obligations collateralize the line of credit. Among other things, the line of credit requires the Company to maintain a customer churn rate (as defined) below specified levels and to achieve specified levels of EBITDA (as defined) and limits capital expenditures. The credit agreement limits the incurrence of additional indebtedness and liens and generally limits payments of dividends. The Company was not in compliance with the EBITDA covenant as of December 31, 2013. This debt was paid off in October 2014 (see Note 13, “Subsequent Events”).

Note 8 - Subordinated and Related Party Debt

In 2008, the Company borrowed $999,980 from existing stockholders and affiliates and members of management under subordinated debt agreements. These related party borrowings are junior to any and all borrowings under agreements with Square 1 Bank as described in Note 7. The interest rate on the subordinated debt is 15.0% per annum. Interest-only payments were due quarterly through June 30, 2013, at which time the principal was due and payable. As of December 31, 2013, no principal remains outstanding under these agreements.

The Company issued subordinated notes to stockholders and affiliates and members of management in the amount of $528,256 during 2011 in lieu of payment of cash dividends on the Series A Preferred Stock. These related party borrowings are junior to borrowings under agreements with Square 1 Bank as described in Note 7. The interest rate on these borrowings is 15.0% per annum. Interest-only payments are due quarterly through the maturity date of the notes at various dates between 2013 and 2016 for the notes discussed above and notes issued under comparable arrangements during 2008, 2009, and 2010 for similar purposes. As of December 31, 2013, $161,339 remains outstanding under these agreements.

EXHIBIT 99.1

amount of $14,751,970 and issued warrants to purchase 500,000 shares of the Company’s common stock at a price of $1.12 per share.

The second lien secured notes bear interest payable quarterly at 13% per annum or, at the Company’s option, at a 15% payment-in-kind rate, compounded quarterly. If interest is paid at the 13% rate, 12% will be payable in cash and 1% will be payable in kind via the issuance of additional notes. The Company elected the 15% payment-in-kind option.

Payments of principal equal to 5% of the aggregate original note amounts are due quarterly starting June 30, 2014 to March 31, 2016 and the final maturity of the notes is May 14, 2016. Among other things, the note and warrant purchase agreement requires the Company to maintain a leverage ratio below specified levels and limits new debt, liens, dividends and stock repurchases. As of December 31, 2013, $16,203,085 in principal, including payment-in-kind interest, remains outstanding under these second lien secured notes.

Aggregate maturities of subordinated debt at December 31, 2013 are as follows:



Years Ending December 31:
2014	$	2,277,367
2015	3,014,965
2016	11,072,092
	$	16,364,424

All subordinated debt was paid off in October 2014 (see Note 13, “Subsequent Events”).

Note 9 - Capital Lease Obligations

The Company’s property and equipment under capital leases, which is included in telecommunications equipment and vehicles, is summarized as follows:



Telecommunications equipment	$	922,973
Vehicles	257,052
	1,180,025
Less Accumulated depreciation	277,083
	$	902,942

The capital leases require monthly payments, ranging from approximately $300 to $10,800, including effective interest at rates ranging from approximately 3% to 32% per annum through April 2018.

The following is a schedule of future minimum lease payments under capital leases, together with the present value of the minimum lease payments:



Year ending December 31,
2014	$	578,526
2015	439,612
2016	77,286
2017	18,426
2018	15,802
Total minimum lease payments	1,129,652
Less: amounts representing interest	124,145
Present value of future minimum lease payments	1,005,507
Less: current portion	475,580
	$	529,927

Depreciation of assets held under capital leases is included in depreciation and amortization expense.

EXHIBIT 99.1

Note 10 - Commitments and Contingencies

Claims

The Company is involved in various legal proceedings and litigation arising in the ordinary course of business. The Company intends to vigorously dispute liability for the various claims. It is too early to determine whether the outcome of such proceedings and litigation will have a material adverse effect on the Company’s consolidated financial statements

Office Space and Operating Leases

The Company leases its various office facilities under noncancellable operating leases expiring through February 2018, requiring approximate future minimum rental payments as follows:



Years Ending December 31:
2014	$	790,670
2015	689,194
2016	541,394
2017	312,033
2018	31,444
	$	2,364,735

Rent expense charged to operations amounted to approximately $920,000 for the year ended December 31, 2013.

Supply Agreements

As of December 31, 2013, the Company has supplier purchase obligations associated with telecommunications services that the Company has contracted to purchase from its vendors. The Company’s contracts are generally such that the terms and conditions in the vendor and client customer contracts are substantially the same in terms of duration. The back-to-back nature of the Company’s contracts means that the largest component of its contractual obligations is generally mirrored by its customer’s commitment to purchase the services associated with those obligations.

Estimated annual commitments under supplier contractual agreements are as follows at December 31, 2013:



Years Ending December 31:
2014	$	17,368,164
2015	11,094,010
2016	5,143,517
2017	2,900,654
2018	993,928
Thereafter	$	674,891
	$	38,175,164

If a customer disconnects its service before the term ordered from the vendor expires, and if the Company were unable to find another customer for the capacity, the Company may be subject to an early termination liability. Under standard telecommunications industry practice (commonly referred to in the industry as “portability”), this early termination liability may be waived by the vendor if the Company were to order replacement service with the vendor of equal or greater value to the service cancelled. Additionally, the Company maintains some fixed network costs and from time to time, if it deems portions of the network are not economically beneficial, the Company may disconnect those portions and potentially incur early termination liabilities.

Note 11 - Income Taxes

Deferred income taxes consisted of the following as of December 31, 2013:

EXHIBIT 99.1



Current deferred income tax asset	$	985,137
Current deferred income tax liability	(186,400		)
Less valuation allowance	(798,737		)
	—
Noncurrent deferred tax asset	14,398,722
Noncurrent deferred tax liability	(2,916,886		)
Less: valuation allowance	(11,481,836		)
	—
Total deferred income tax asset, net	$	—

The provision (benefit) for income taxes consisted of the following for the year ended December 31, 2013:



Current income tax expense	$	15,980
Deferred, excluding net operating loss carryforwards	58,510
Deferred, net operating loss carryforwards	(3,088,011		)
Increase in valuation allowance	3,467,657
	$	454,136

Deferred taxes are recognized for temporary differences between the bases of assets and liabilities for consolidated financial statement and income tax purposes. As of December 31, 2013, the differences relate primarily to the use of accelerated depreciation methods for income tax purposes, the deferral and subsequent amortization of certain revenues and costs for financial reporting purposes, and the recognition of the expected future benefits of net operating loss (“NOL”) carryforwards. As of December 31, 2013, the differences also reflect the recognition of deferred income taxes on differences in the bases of assets other than goodwill and liabilities acquired from IPNZ and Airband (see Note 4).

The Company recorded valuation allowance for deferred income tax assets of $12,280,572 as of December 31, 2013 as management estimates it is not likely that the Company will realize the benefit of these assets by generating taxable income to use the NOL carryforwards.

The Company’s provision for income taxes differs from applying the statutory U.S. federal tax rate to income before taxes. The primary differences relate to state income taxes, IPNZ goodwill impairment, transaction costs attributable to the Airband acquisition, the provision for changes in the valuation allowance in 2013 of $3,467,657 and certain expenses that are not deductible for income tax purposes.

The Company has estimated NOL carryforwards for federal income tax purposes of $17,779,516 as of December 31, 2013 that expire as follows:



Year ending December 31:
2026	$	1,070,750
2027	1,343,347
2028	379,634
2029	485,683
2030	2,311,294
2031	—
2032	1,760,642
2033	807,274
2034	$	9,620,892
	$	17,779,516

EXHIBIT 99.1

three-year period. A recapitalization during 2007 combined with previous changes in ownership of the Company triggered these limitations. Further, the Airband acquisition during 2013 combined with previous changes in ownership of the Company triggered these limitations. As a result, the annual utilization of the Company’s NOL carryforwards is limited to an amount equal to the estimated fair value of the Company’s stock immediately before the ownership changes multiplied by a Federal long-term tax-exempt rate. As of December 31, 2013, the Company had NOL carryforwards of $2,438,416 that were generated prior to 2007 and $5,720,208 that were generated prior to 2013.

Note 12 - Stockholders’ Equity

Preferred Stock

In December 2013, the Company issued 1,120,000 shares of Series B Convertible Preferred Stock (“Series B”) in exchange for $1,400,000 from existing stockholders. The Series B shares shall rank senior to common stock and shall not be entitled to dividends. The Series B shares are subject to certain proportional adjustments for stock splits, stock dividends, recapitalizations, reorganizations and the like, subject to certain exceptions.

In the event of any liquidation event, either voluntary or involuntary, the holders of Series B shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of common stock, an amount per share equal to the sum of $1.25 for each outstanding share of Series B share. Upon the completion of the liquidation preference, the remaining assets of the Company available for distribution to stockholders shall be distributed among the holders of Series B shares and common stock pro rata based on the number of shares of common stock held by each, with the shares of Series B being treated for this purpose as if they had been converted to shares of common stock.

Each share of Series B is convertible, at the option of the holder, into common stock by dividing $1.25, by the applicable conversion price at the date of the conversion. The conversion price per share is the original issue price adjusted for any stock splits, stock dividends, recapitalizations, reorganizations and the like. The shares automatically convert upon the earlier of (i) a qualified public offering, as defined in the Company’s articles of incorporation, (ii) the merger of the Company with a publicly traded entity or (iii) upon vote of holders of at least 50% of the issued and outstanding shares of Preferred Stock.

The holders of shares of preferred stock have the right to one vote for each share of common stock into which such shares of preferred stock are convertible, and with respect to such vote, the preferred stockholders have full voting rights and powers equal to the voting rights and powers of the common stockholders.

In March 2014, all Series B preferred stock was converted into common stock; and all common stock was subject to a 4,000,000:1 reverse stock split. All fractional shares were then repurchased by the Company for a nominal amount (see Note 13, “Subsequent Events”).

Common Stock

In the year ended December 31, 2013, the Company issued 2,627,591 of common stock in exchange for $2,627,591. The Company also issued 9,629,129 shares of common stock and warrants to purchase 54,973 shares of common stock in conjunction with the Airband acquisition (see Note 4).

At any time after September 15, 2016, upon written request of holders of at least 25% of the outstanding shares of common stock, the Company shall seek consent from its common stockholders for redemption. If at least 50% of such stockholders consent to the redemption, the Company shall then offer to redeem all of the outstanding shares of common stock from any source of funds legally available for such redemption. The redemption price will be an amount equal to the fair market value of the common stock. As of December 31, 2013, the Company estimated the fair market value of the common stock to be zero.

In March 2014, all common stock was subject to a 4,000,000:1 reverse stock split. All fractional shares were then repurchased by the Company for a nominal amount. Subsequently, the Company issued 1,200,000 shares of common stock in exchange for $1,200,000. On October 1, 2014, in conjunction with an acquisition of the Company, all common stock was exchanged for cash and stock of the acquirer (see Note 13, “Subsequent Events”).

Note 13 - Subsequent Events

The Company has evaluated all events or transactions that occurred after December 31, 2013 through the date of these consolidated financial statements, which is the date that the consolidated financial statements were available to be issued.

EXHIBIT 99.1

The Company had stock and warrant agreements that originated in 2012. However, as a result of the reverse stock split and the subsequent sale of the Company to GTT Communications, Inc. (“GTT”) described below, the Company deemed the fair value of the stock and warrant agreements to be worthless at December 31, 2013 and accordingly, did not include the impact of these agreements in the December 31, 2013 consolidated financial statements and the related notes.

In March 2014 through the actions of the Board of Directors, all Series B preferred stock was converted into common stock; and all common stock (including warrants and options to purchase common stock) was subject to a 4,000,000:1 reverse stock split. All fractional shares were then repurchased by the Company for a nominal amount. Subsequently, the Company issued 1,200,000 shares of common stock in exchange for $1,200,000.

Also in March 2014, the Company sold its fixed wireless assets and associated customer base located in Las Vegas, Nevada for approximately $1 million.

On October 1, 2014, the Company was acquired by and merged into GTT. In conjunction with the acquisition, GTT assumed and repaid substantially all of the Company’s debt, including its line of credit (see Note 7, “Line of Credit”), subordinated debt (see Note 8, “Subordinated Debt”) and capital lease obligations (see Note 9, “Capital Lease Obligations”). In addition, the Company’s stockholders received cash and GTT common stock in exchange for the Company’s outstanding shares at the date of the acquisition.

EXHIBIT 99.2

UNITED NETWORK SERVICES, Inc.

AND SUBSIDIARY

AUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Years ended December 31, 2012 and 2011

EXHIBIT 99.2

UNITED NETWORKS SERVICES, INC AND SUBSIDIARY

CONTENTS



	Page
Independent Auditors’ Report	1
Audited Consolidated Financial Statements as of and for the years ended December 31, 2012 and 2011
Consolidated Balance Sheets	2
Consolidated Statements of Operations	3
Consolidated Statements of Changes in Stockholders’ Equity(Deficit)	4
Consolidated Statements of Cash Flows	5 - 6
Notes to Consolidated Financial Statements	7 - 23

EXHIBIT 99.2

INDEPENDENT AUDITOR'S REPORT

To the Stockholders of

United Network Services, Inc.

We have audited the accompanying consolidated financial statements of United Network Services, Inc. and Subsidiary, which comprise the consolidated balance sheets as of December 31, 2012 and 2011, and the related consolidated statements of operations, changes in stockholder’s equity (deficit), and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Network Services, Inc. and Subsidiary as of December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

May 15, 2013

EXHIBIT 99.2

UNITED NETWORK SERVICES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS



	December 31,
	2012			2011
ASSETS
Current assets
Cash	$	176,238		$	774,951
Receivables, net (Note 4)	3,937,396			1,890,777
Deferred charges	707,998			683,034
Prepaid and other current assets	60,634			59,800
Deferred income tax asset (Note 11)	292,391			15,483
Total current assets	5,174,657			3,424,045

Property and equipment, net (Note 5)	1,695,158			1,510,263

Other assets
Goodwill and other intangible assets (Note 3)	2,576,695			100,483
Deferred charges	1,172,459			1,605,639
Deferred income tax asset (Note 11)	135,547			666,215
Deposits	75,540			23,202
Deferred financing costs, net	2,567			11,595
Total other assets	3,962,808			2,407,134
	$	10,832,623		$	7,341,442

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit (Note 6)	$	2,100,000		$	1,742,000
Current maturities of subordinated debt (Note 7)	115,127			—
Current maturities of capital lease obligations (Note 8)	104,047			17,677
Accounts payable	4,201,076			1,455,986
Accrued expenses	418,888			476,134
Deferred revenue	990,823			445,486
Total current liabilities	7,929,961			4,137,283

Long-term liabilities
Subordinated debt, net of current maturities (Note 7)	161,284			382,719
Capital lease obligations, net of current maturities (Note 8)	116,915			6,305
Deferred revenue	476,499			399,686
Deferred rent	—			15,053
Total liabilities	8,684,659			4,941,046

Stockholders’ equity (Notes 9 and 10)
Common stock, $.01 par value, 10,500,000 and 8,600,000 shares authorized, respectively, 9,018,290 and 7,104,531 shares issued and outstanding at December 31, 2012 and 2011, respectively	90,183			71,045
Additional paid-in capital	14,566,517			12,309,223
Accumulated deficit	(12,508,736		)	(9,979,872		)
Total stockholders’ equity	2,147,964			2,400,396
	$	10,832,623		$	7,341,442

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

EXHIBIT 99.2

UNITED NETWORK SERVICES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS



	Year ended December 31,
	2012			2011

Revenues	$	27,595,715		$	19,580,548

Cost of revenues	20,137,859			13,176,185

Gross profit	7,457,856			6,404,363

Operating expenses
Payroll expenses, including employer taxes	5,171,460			4,050,252
Other general and administrative	690,368			495,615
Occupancy	665,073			504,466
Employee benefits	551,222			442,278
Travel and entertainment	488,484			333,493
Consulting and contract labor	305,224			224,760
Professional fees	225,660			124,871
Bad debts	203,658			6,212
Insurance	107,157			92,125
Stock compensation expense	104,824			73,989

Total operating expenses	8,513,130			6,348,061

Income (loss) from operations before depreciation
and amortization	(1,055,274)			56,302

Depreciation and amortization of property and equipment	856,500			643,209
Amortization of customer relationship intangible asset	452,715			--

Loss from operations	(2,364,489)			(586,907)

Interest expense	155,347			435,849
Amortization of deferred financing costs	9,028			9,027

Loss before income taxes	(2,528,864)			(1,031,783)

Income taxes (Note 11)	—			—

Net loss	$	(2,528,864	)	$	(1,031,783	)

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

EXHIBIT 99.2

UNITED NETWORK SERVICES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)



	Preferred stock		Common stock		Additional paid-in capital		Accumulated deficit			Total

Balance, December 31, 2010	$	812	$	2,770	$	7,829,895	$	(8,422,478	)	$	(589,001	)
Stock compensation awards (Note 9)
Compensatory award of 300 restricted Series A preferred shares					10,479					10,479
Compensatory award of 50 restricted Series A preferred shares					4,075					4,075
Compensatory award of 50 restricted Series A preferred shares					3,056					3,056
Issuance of 300 Series A preferred shares upon vesting	3				(3)					—
Issuance of 50 Series A preferred shares upon vesting	1				(1)					—
Dividends on Series A preferred stock (Notes 7 and 9)
Paid via issuance of subordinated debt in 2011							(261,399)			(261,399)
Paid via issuance of common stock							(264,212		)	(264,212)
Effects of recapitalization (Note 9)
Retire Series A preferred stock in exchange for common stock	(816)		12,232		(11,416)					--
Conversion of subordinated debt			50,709		4,006,040					4,056,749
Payment of accrued interest payable			1,896		149,810					151,706
Payment of accumulated dividends			3,303		260,909					264,212
Stock options exercised (Note 10)			135							135
Compensatory award of performance condition stock options (Note 10)					56,379					56,379
Net loss							(1,031,783)			(1,031,783)
Balance, December 31, 2011	—		71,045		12,309,223		(9,979,872		)	2,400,396
Stock compensation awards (Note 9)
Compensatory award of 750 restricted common shares					1,019					1,019
Issuance of 750 common shares upon vesting			8		(8)					--
Consideration transferred in stock purchase (Notes 3 and 9)
Issuance of 1,250,000 unrestricted common shares			12,500		1,462,500					1,475,000
Issuance of 500,000 restricted common shares			5,000		585,000					590,000
Conversion of subordinated debt (Note 7)			1,329		104,978					106,307
Stock options exercised (Note 10)			301							301
Compensatory award of performance condition stock options (Note 10)					103,805					103,805
Net loss							(2,528,864)			(2,528,864)
Balance, December 31, 2012	$	—	$	90,183	$	14,566,517	$	(12,508,736	)	$	2,147,964

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

EXHIBIT 99.2

UNITED NETWORK SERVICES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS



	Year ended December 31,
	2012			2011

Cash flows from operating activities
Net loss	$	(2,528,864	)	$	(1,031,783	)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization of property and equipment	856,500			643,209
Amortization of customer relationship intangible asset	452,715			—
Amortization of deferred financing costs	9,028			9,027
Stock compensation expense	104,824			73,989
Increase (decrease) in cash from changes in
Receivables	(1,917,209)			796,317
Deferred charges	408,216			(14,695)
Prepaid and other current assets	1,531			14,461
Deposits	(40,958)			(7,906)
Accounts payable	1,434,547			(917,877)
Accrued expenses	(57,246)			96,175
Deferred revenue	622,150			(42,794)
Deferred rent	(15,053)			(13,434)
Net cash used in operating activities	(669,819)			(395,311)

Cash flows from investing activities
Cash acquired in business combination	116,962			—
Purchases of property and equipment	(336,082)			(376,918)
Net cash used in investing activities	(219,120)			(376,918)

Cash flows from financing activities
Net increase in line of credit	358,000			—
Payments on capital lease obligations	(68,075)			(18,572)
Proceeds from exercises of stock options	301			135
Net cash provided by (used in) financing activities	290,226			(18,437)

Net decrease in cash	(598,713)			(790,666)

Cash
Beginning of year	774,951			1,565,617

End of year	$	176,238		$	774,951

Supplemental disclosures of cash flow information
Cash paid for interest	$	186,287		$	361,979

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

EXHIBIT 99.2

UNITED NETWORK SERVICES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(continued)



	Year ended December 31,
	2012		2011
Supplemental disclosures of non-cash investing and financing activities

Non-cash consideration, assets acquired and liabilities assumed
in business combination (Note 3)
Common stock issued as consideration	$	2,065,000	$	—
Fair value of non-cash assets acquired	(3,644,454)		—
Fair value of liabilities assumed	1,696,416		—

Conversion of subordinated debt to common stock	106,307		—

Acquisition of property and equipment through capital leases	132,942		—

Dividends on preferred stock paid via the issuance of subordinated debt	—		528,256

Subordinated debt paid via the issuance of common stock in connection with recapitalization	—		4,056,749

Accrued interest paid via the issuance of common stock in connection with recapitalization	—		151,796

Accumulated dividends paid via the issuance of common stock in connection with recapitalization	—		264,212

Residual net book value of property and equipment reclassified to deferred charges (Note 15)	—		710,362

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

EXHIBIT 99.2

UNITED NETWORK SERVICES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011


NOTE 1 -	HISTORY AND ORGANIZATION

American Broadband, Inc. (dba “United Network Services, Inc.”) (a Delaware corporation) and, its wholly owned subsidiary, Trinity Networks, LLC, are collectively referred to as the “Company”. The Company was founded in 2001 as a single source provider of ubiquitous networks for broadband and Ethernet service to multi-location clients of all sizes.

The Company is a leading national carrier with a sophisticated next generation network and provider of intelligent internet connectivity and managed services for voice and data networks. The Company provides a complete managed solution by combining managed network services, managed connectivity, professional services, back-office services and online performance reporting to give enterprises a complete cost-efficient, end-to-end managed solution for their network. It custom designs, monitors, and manages networks for information technology organizations of mid-size enterprises. The Company’s extensive solutions include MPLS, CloudMPLS, VPLS, Ethernet, DIA, broadband, Same IP Failover, managed LAN, managed firewall, managed back-office, managed co-location, and hosted monitoring. The Company services organizations in numerous industries with multiple, diverse geographic locations.

On February 10, 2012, the Company executed a stock purchase agreement with IPNetZone Communications Inc. (“IPNZ”) and IPNZ’s stockholders (see Note 3). In connection with this agreement, the Company also purchased all of the stock of BendLogic, Inc. (“BL”), which was a wholly owned subsidiary of IPNZ. The transaction qualified as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986. The effective date of the agreement was January 31, 2012, which was also the acquisition date, as this was the date that the Company effectively assumed control of IPNZ. The acquired assets and liabilities of IPNZ were recorded at their fair value as of the acquisition date and the results of operations for IPNZ from the acquisition date are included with the Company’s operations for the year ended December 31, 2012. The acquired companies merged into United Network Services, Inc.


NOTE 2 -	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements include the accounts of United Network Services, Inc. and its wholly owned subsidiary, Trinity Networks, LLC, after elimination of all inter-company accounts and transactions.

Cash

The Company’s principal bank accounts were maintained at Dollar Bank and Bank of America as of December 31, 2012. Amounts in excess of federally insured limits, if any, represent a concentration of credit risk arising from cash deposits. The Company does not believe it is exposed to any significant credit risk on cash.

Receivables

The Company assesses the need for an allowance for doubtful accounts based upon management’s review of outstanding receivables, historical collection information, and existing economic conditions. The allowance for doubtful accounts has been provided as of December 31, 2012 and 2011 based on management’s assessment. Receivables are charged off when management determines that further collection efforts will not be pursued.

Property and equipment

Property and equipment are stated at cost and are depreciated over estimated useful lives, using both straight-line and accelerated methods, except that certain equipment purchased for use in connection with customer contracts is depreciated over the shorter of the useful life or the term of the applicable contract. Estimated useful lives are principally as follows: telecommunications equipment, 3 to 7 years; computer equipment, 3 to 5 years; fiber optic network, 3 to 15 years; furniture, fixtures, and computer software, 3 to 10 years; leasehold improvements, 5 to 10 years; and vehicle, 5 years.

EXHIBIT 99.2

Maintenance and repairs are expensed as incurred. Expenditures that significantly increase asset values or extend useful lives are capitalized. When an asset is sold or retired, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in income.

The Company reviews the carrying value of property and equipment for possible impairment when events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated undiscounted future cash flows expected to result from the use or eventual disposition of these assets. If the estimated undiscounted future cash flows were less than the carrying value, an impairment loss would be recognized equal to an amount by which the carrying value exceeds the estimated fair value of the assets.

Goodwill and other intangible assets

Goodwill represents the excess of costs over the fair value of assets acquired in conjunction with the acquisitions of IPNZ and Trinity Networks, LLC. The Company accounts for goodwill according to the provisions of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 350, Intangibles-Goodwill and Other, which requires that goodwill and other indefinite-lived intangible assets not be amortized, but instead tested for impairment at least annually by applying a fair value based test, and more frequently if events and circumstances indicate that the asset might be impaired.

Accordingly, the Company compares the fair value of the reporting unit with its carrying value to determine if there is potential impairment of goodwill. If the fair value of the reporting unit is less than its carrying value at the valuation date, a permanent impairment loss would be recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value. The fair value of the reporting unit is measured based on the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Company to make assumptions about estimated future cash flows, these assumptions require significant judgment and actual results may differ from assumed and estimated amounts. No impairment losses were recorded as of December 31, 2012 and 2011.

The Company applies FASB ASC Topic 805, Business Combinations, for recognizing separately from goodwill all identifiable intangible assets in a business combination. The Company considers an intangible asset separately identifiable if it meets either the separability criterion or the contractual-legal criterion. The Company recognized a separate long-lived intangible asset for customer relationships acquired from IPNZ totaling $831,016, as customer relationships met the contractual-legal criterion. The fair value of customer relationships acquired was based on a discounted value of projected net future cash flows from the relationships, including related income tax amortization benefits. The Company systematically recognizes amortization expense over the periods expected to be benefited from the customer relationships. The Company recognized $452,715 in amortization expense for the year ended December 31, 2012 for customer relationships. Future amortization expense of the fair value of customer relationships as of December 31, 2012 is projected to be as follows for the years ending December 31: 2013 - $267,711; 2014 - $96,547; 2015 - $8,530; 2016 - $5,208; and 2017 - $305.

The Company also considers whether the customer relationship intangible asset is impaired. An impairment loss would be recognized if the carrying amount of the intangible asset is not expected to be recoverable and its carrying amount exceeds its fair value.

Recognition of revenues and accounting for related direct costs

The Company’s principal source of revenues is long-term contracts for broadband aggregation and private network services to enterprise and institutional customers throughout the United States and end-to-end turnkey solutions for wireless operators for cell site turn up and full connectivity to the mobile telephone switching office. These contracts typically provide for monthly recurring charges to customers over the contract term and often provide for payments of non-recurring charges at the inception of the contract. The contract terms typically extend up to five years and are cancelable by customers only with the payment of substantial cancellation penalties. Although there could be circumstances where these penalties may not cover the costs incurred by the Company, management expects such situations to be rare. At the end of the initial contract term, the Company sometimes extends the contract or begins serving the customer on a month-to-month basis.

Pursuant to guidance set out in FASB ASC Topic 605, Multiple-Element Arrangements, the Company considers non-recurring charges due from customers under long-term contracts to be part of revenues from broadband aggregation, private network, and wireless backhaul services rather than a separate unit of accounting. These non-recurring charges are recorded as deferred revenue when billed and amortized into revenue on a straight-

EXHIBIT 99.2

line basis over the contract term. Recurring charges due from customers under contracts are recognized as revenue ratably over the contract term.

The Company typically enters into long-term contracts with infrastructure providers entitling the Company to use the provider’s network capacity to provide services to customers. These contracts provide for payments of monthly recurring charges to providers over the contract term and often provide for payments of non-recurring charges at the inception of the contract. In addition, the Company incurs other incremental direct costs to acquire customer contracts and establish services under those contracts, such as engineering costs, travel costs and sales commissions.

The Company records non-recurring costs under long-term contracts to suppliers and other incremental direct costs relating to customer contracts as deferred charges and amortizes those deferred charges against revenues on a straight-line basis over the term of the applicable contracts. Recurring charges payable under contracts to providers are recognized as costs of services ratably over the contract term.

The Company periodically sells various equipment to customers in transactions independent of its long-term contracts. The Company recognizes revenue and related costs of sales for such transactions when the equipment has been shipped to and accepted by the customer. In addition, the Company may enter into customer and vendor service agreements related to the sales of this equipment. The Company also provides professional services such as network design, implementation and support to assist organizations with the complete network life cycle. The amounts related to these service agreements are recognized as income or expense as services are rendered or received.

Income taxes

The Company recognizes deferred income tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which related temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in this assessment. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change.

FASB ASC Topic 740, Income Taxes, clarifies recognition, measurement, presentation, and disclosure relating to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and numerous states. The Company’s federal income tax returns for tax years 2009 and beyond remain subject to examination by the Internal Revenue Service. The Company’s state income tax returns for tax years 2009 and beyond remain subject to examination by the applicable state taxing authorities. The Company is unaware of any unrecognized tax benefits or uncertain tax positions that are significant in relation to the Company’s consolidated financial statements.

Software development costs

FASB ASC Topic 350, Internal-Use Software, establishes criteria for capitalization of software development costs during the application development stage and ending when the project is substantially complete and ready for its intended use. Management has evaluated the criteria of FASB ASC Topic 350 applicable to its software development project activities, and has capitalized $804,174 of software development costs as of December 31, 2012 and 2011. Once a project has been completed, these costs are being amortized generally on a straight-line basis over a three to five-year period. Accumulated amortization of these costs was $377,668 and $232,962 as of December 31, 2012 and 2011, respectively.

Share-based compensation

The Company applies FASB ASC Topic 718, Stock Compensation, for all stock option awards issued. FASB ASC Topic 718 requires the Company to recognize compensation expense in an amount equal to the fair value of stock option awards. The fair value of option awards is estimated on the date of grant using the Black-Scholes option-pricing model.

EXHIBIT 99.2

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Subsequent events

The Company evaluates events and transactions occurring subsequent to the date of the consolidated financial statements for matters requiring recognition or disclosure in the consolidated financial statements. The accompanying consolidated financial statements consider events through May 15, 2013 the date on which the consolidated financial statements were available to be issued.

Reclassifications

Certain 2011 amounts presented in these consolidated financial statements have been reclassified for comparative purposes.


NOTE 3 -	ACQUISITION OF IPNETZONE COMMUNICATIONS, INC.

On February 10, 2012, the Company entered into a stock purchase agreement with IPNZ and IPNZ's shareholders. In connection with this agreement, the Company also purchased all of the stock of BendLogic, Inc. (“BL”), which was a subsidiary of IPNZ. The transaction is intended to qualify as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986. The effective date of the agreement was January 31, 2012, which was also the acquisition date, as this was the date that the Company effectively assumed control of IPNZ. Under the acquisition method of accounting, the Company began recording the results of IPNZ’s operations as of January 31, 2012.

IPNZ was a privately-held company headquartered in New York City which owned and operated its own 16 node MPLS/VPLS and Carrier Ethernet network. In addition, it provided intelligent internet connectivity, managed network services, and proactive monitoring of network assets for both enterprise and carrier customers. The Company and IPNZ plan to collaborate in providing enterprise customers with custom MPLS/VPLS networks and related managed services.

In accordance with the terms of the stock purchase agreement, the Company acquired 100% of the stock of IPNZ and BL for the following consideration: (i) 1,250,000 unrestricted shares of the Company’s common stock and (ii) 500,000 restricted shares of the Company’s common stock. The restricted shares will vest upon the satisfaction of the following performance criteria: (i) one-third of the restricted shares will vest upon achieving at least $1,000,000 in EBITDA (as defined) in any rolling twelve month period; (ii) two-thirds of the restricted shares will vest upon achieving at least $2,000,000 in EBITDA in any rolling twelve month period; and (iii) the final third of the restricted shares will vest upon achieving at least $3,000,000 in EBITDA in any rolling twelve month period. The selling shareholders of IPNZ are entitled to nominate one director who will serve on the Company’s Board of Directors; the nomination is subject to approval by a simple majority of the other directors.

Management estimated that the price of the IPNZ acquisition was $2,065,000. This represents 1,250,000 unrestricted shares and the 500,000 restricted shares of the Company’s common stock at a value of $1.18 per share. The value of the 500,000 shares is included in the acquisition price because management considered it probable as of the acquisition date that the Company will achieve more than $3,000,000 in EBITDA in coming years.

The Company entered into employment agreements effective January 31, 2012 with four members of management of IPNZ. As part of these agreements, these individuals were granted options with contractual terms of ten years to buy an aggregate of 400,000 shares of the Company’s common stock at an exercise price of $.01 per share (see Note 10 for further information regarding these stock options).

The following table summarizes the consideration transferred and the amounts of identified assets acquired and liabilities assumed at the acquisition date:

EXHIBIT 99.2




Fair Value of consideration transferred
	Common Stock - 1,250,000 unrestricted shares	$	1,475,000
	Common Stock - 500,000 restricted shares	590,000
	Total consideration	$	2,065,000

Recognized amounts of identifiable assets acquired and liabilities assumed:
	Cash	$	116,962
	Accounts Receivable	129,411
	Property and equipment	572,372
	Customer relationship intangible asset	831,016
	Other assets	13,745
	Accounts payable	(1,101,372		)
	Capital lease obligations	(132,113		)
	Deferred income tax liabilities	(253,760		)
	Other liabilities	(209,171		)
	Total identifiable net assets	(32,910		)

	Goodwill	$	2,097,910

The Company allocated the fair value of the common stock transferred of $2,065,000 to identifiable assets acquired and liabilities assumed based on their fair values on the date of acquisition. The Company recognized $2,097,910 of goodwill related to the acquisition which represents the excess of the purchase price over the estimated fair values of the identifiable net assets. The goodwill relates principally to the expected revenue and cost synergies that the Company expects to realize from the acquisition. Since the acquisition is intended to be a non-taxable exchange, none of the goodwill will be tax deductible for income tax purposes.


NOTE 4 -	RECEIVABLES

Receivables consisted of the following as of December 31:



	2012		2011

Receivables	$	4,234,042	$	1,941,369
Less: allowance doubtful accounts	296,646		50,592
	$	3,937,396	$	1,890,777

The Company, in the normal course of business, extends credit to its customers based on various terms. The Company does not require collateral for these receivables.

Following is a table of customers who accounted for more than 10% of the Company’s revenues and/or receivables as of and for the years ended December 31, 2012 and 2011:



	Revenues		Receivables
Customer	2012	2011	2012	2011

A	27%	38%	29%	63%
B	15%	19%
C	10%	16%

EXHIBIT 99.2

The Company services sites for Customer A under a master service agreement that expires on October 31, 2017, and includes options that extend the base period of performance for three successive three year renewals thereafter. The arrangements with Customer A for services to these sites have terms ranging from month-to-month up to twenty-four months.


NOTE 5 -	PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of December 31:



	2012		2011

Telecommunications equipment	$	2,887,577	$	2,058,903
Computer equipment, software, furniture and fixtures	2,107,054		1,892,747
Fiber optic network	825,052		825,052
Leasehold improvements	102,047		97,194
Vehicle	40,853		40,853
Project in progress	—		6,440
	5,962,583		4,921,189
Less Accumulated depreciation and amortization	4,267,425		3,410,926
	$	1,695,158	$	1,510,263


NOTE 6 -	LINE OF CREDIT

The Company entered into a line of credit agreement with Dollar Bank on August 15, 2007. The agreement presently provides for maximum borrowings of the lesser of $2,100,000 or the borrowing base, representing 80% of eligible receivables. On October 31, 2011, the commitment decreased from $2,500,000 to $2,100,000 and the borrowing base decreased from 85% to 80% of eligible receivables.

Borrowings on the line of credit bear interest at the prime rate (3.25% as of December 31, 2012 and 2011) plus 1.50% as of December 31, 2012 and 2011, payable monthly. The interest rate was increased from prime plus 1.00% to prime plus 1.50% on October 31, 2011. This debt, which had been due on demand, was paid off in May 2013 (see Note 17).

The credit agreement requires, among other things, that the Company maintain a current ratio of not less than 0.75 to 1, a ratio of total liabilities to tangible net worth (as defined) of not more than 2.50 to 1, tangible net worth of at least $2,400,000 as of December 31, 2012 and increasing by $300,000 as of the end of each succeeding year, and a fixed charge coverage ratio (as defined) of not less than 1 to 1 for each calendar year. The credit agreement limits the incurrence of additional indebtedness and liens and generally limits payments of dividends. The Company was not in compliance with various covenants as of December 31, 2012.

The credit agreement contains a subjective acceleration clause under which the lender can deem the Company to be in default if the lender determines that the Company has suffered a material adverse effect (as defined). Management has not been notified by the lender of any default under this clause. Substantially all of the Company's assets, including its receivables, an assignment of government contracts, property and equipment, and other assets, are pledged as collateral under the credit agreement.


NOTE 7 -	SUBORDINATED DEBT AND WARRANTS

As described in Note 9, $4,056,749 in subordinated debt and $151,706 in related accrued interest payable were exchanged for common stock of the Company in connection with a recapitalization effective June 30, 2011.

In 2008, the Company borrowed $999,980 from existing stockholders and affiliates and members of management under subordinated debt agreements. All borrowings are junior to any and all borrowings under agreements with Dollar Bank (see Note 6). The interest rate on the subordinated debt is 15.0% per annum. Interest-only payments are due quarterly through June 30, 2013, at which time the principal is due and payable. As of December

EXHIBIT 99.2

31, 2012, $63,414 in principal remains outstanding under these agreements after the Company’s recapitalization (see Note 9). Additionally, under these agreements, the Company issued warrants to the note holders entitling them to purchase 62,494 shares of the Company’s common stock at a price of $10 per share. The warrants will expire on April 30, 2018. No value was assigned to these warrants based on an estimate made in 2008 using the Black-Scholes option model.

The Company issued subordinated notes to stockholders and affiliates and members of management in the amount of $528,256 during 2011 in lieu of payment of cash dividends on the Series A Preferred Stock (see Note 9). All borrowings are junior to borrowings under agreements with Dollar Bank (see Note 6). The interest rate on these borrowings is 15.0% per annum. Interest-only payments are due quarterly through the maturity date of the notes at various dates between 2013 and 2016 for the notes discussed above and notes issued under comparable arrangements during 2008, 2009, and 2010 for similar purposes. As of December 31, 2012, $212,997 in principal remains outstanding under these agreements after the Company’s recapitalization (see Note 9).

In 2012, the Company repurchased $106,307 in subordinated debt from a note holder at a 10.0% discount using proceeds advanced from an existing stockholder of the Company. The existing stockholder then exchanged the $106,307 in subordinated debt for 132,884 shares of common stock at a conversion rate of 1 share of common stock for each $.80 in outstanding principal. The Company did not recognize a gain on the repurchase of subordinated debt since in effect the Company acted as an agent for the note holder and existing stockholder.

In total, amounts outstanding under all subordinated debt arrangements are $276,411 and $382,719 as of December 31, 2012 and 2011, respectively. Of the outstanding balance of subordinated debt as of December 31, 2012, $115,127 matures in 2013, $64,571 matures in 2014, $64,571 matures in 2015, and $32,142 matures in 2016. Prior to maturity, without penalty, the Board authorized the Company to sell to qualified buyers, if any, at a price of $.80 per share, a number of shares of common stock sufficient to repurchase and extinguish any or all outstanding subordinated debt held by those note holders who declined to convert their subordinated debt to common stock in connection with the Company’s recapitalization.


NOTE 8 -	CAPITAL LEASE OBLIGATIONS

The Company leases certain furniture and fixtures and telecommunications equipment under various capital leases. The economic substance of the leases is that the Company is financing the acquisition of the property through the leases and, accordingly, the property is recorded as assets and the leases are recorded as liabilities. Certain payments are guaranteed by a stockholder of the Company. The capital lease obligations are payable through 2015.

Future minimum payments under the capitalized lease obligations are as follows as of December 31:



	2012		2011

Year ending December 31,
2013	$	119,263	$	—
2014	82,122
2015	44,250
Total minimum lease payments	245,635
Less: amounts representing interest	24,673
Amounts representing principal	220,962		23,982
Less: current maturities	104,047		17,677
Capital lease obligations, net of current maturities	$	116,915	$	6,305

Property and equipment includes the following amounts for the assets under the capital lease obligations as of December 31:

EXHIBIT 99.2



	2012		2011

Furniture and fixtures	$	100,837	$	100,837
Telecommunications equipment	240,442		—
	341,279		100,837
Less Accumulated depreciation	132,961		81,013
	$	208,318	$	19,824


NOTE 9 -	STOCKHOLDERS' EQUITY

Stockholders’ deficit prior to 2011 recapitalization

The Company’s authorized capital as of January 1, 2011 included 1,500,000 shares of common stock with a par value of $.01 per share and 100,000 shares of preferred stock with a par value of $.01 per share. The Series A Preferred Stock provided for a 13% cumulative dividend and liquidation preference. The Series A Preferred Stock was convertible to common stock of the Company at any time at a conversion ratio of 10 shares of common stock per share of Series A Preferred Stock, subject to any adjustments (as defined). The holders of Series A Preferred Stock were entitled to vote as if their stock were converted to common stock and they were entitled to elect three members of the Board of Directors of the Company.

The Company had the option to redeem all or part of the Series A Preferred Stock at 1.50 times its original issue price of $100 per share plus accrued dividends within 30 days following the fifth anniversary and each succeeding anniversary of issuance. The liquidation value of the Series A Preferred Stock was an amount per share equal to the greater of (i) 1.50 times its original issue price of $100 per share plus accrued dividends or (ii) the amount which would have been payable in respect of such share if such share had been converted into common stock prior to liquidation.

Dividends on Series A Preferred Stock

Dividends payable for the fourth quarter of 2010 of $266,857 were paid in the form of subordinated debt during January 2011. Dividends for the first quarter of 2011 of $261,399 were paid via the issuance of subordinated debt. Dividends for the second quarter of 2011 of $264,612, which were payable as of the date of the recapitalization, were paid via the issuance of common stock of the Company (see below).

Effects of 2011 recapitalization

On May 29, 2011, the Company’s Board of Directors developed a recapitalization plan for the Company and approved a resolution for the Company to move forward with the plan. At the recommendation of the Board of Directors, the stockholders of the Company approved the recapitalization plan by a majority vote effective June 30, 2011.

Under the approved recapitalization plan, effective June 30, 2011, the Company: (i) converted all outstanding Series A Preferred Stock into common stock at a conversion rate of 15 shares of common stock for each share of Series A Preferred Stock; (ii) offered holders of subordinated notes the right to convert outstanding subordinated notes to common stock at a conversion rate of 1 share of common stock for each $.80 of outstanding principal and accrued interest (see Note 7); (iii) offered to subordinated note holders who declined to convert their note holdings into common stock the opportunity to sell to qualified buyers a number of shares of common stock sufficient to repurchase and extinguish all outstanding subordinated debt at a price of $.80 per share (see Note 7); (iv) amended and restated its certificate of incorporation to increase the authorized number of shares of common stock to 8,600,000 shares; and, (v) reserved 1,000,000 shares of common stock for a management incentive pool for option grants that will vest if the Company achieves certain earnings targets determined by the Board of Directors (see Note 10).

Following is a summary of the effects of the recapitalization that are reflected in the statement of changes in stockholders’ equity (deficit) for 2011:


a.	81,546 shares of Series A Preferred Stock with a par value of $.01 per share were converted to 1,223,190 shares of common stock with a par value of $.01 per share and such preferred stock was extinguished and retired.

EXHIBIT 99.2


b.	Outstanding subordinated notes in the amount of $4,056,749 were converted to 5,070,936 shares of common stock with a par value of $.01 per share.


c.	Accrued interest payable on subordinated notes in the amount of $151,706 was converted to 189,632 shares of common stock with a par value of $.01 per share.


d.	Accumulated dividends on previously issued Series A Preferred Stock in the amount of $264,212 were paid via the issuance of 330,265 shares of common stock with a par value of $.01 per share.

Stock compensation awards

On May 1, 2009, the Company made an award of 300 shares of Series A Preferred Stock to the Company’s former President and Chief Executive Officer pursuant to the terms of a restricted stock award agreement. His rights to the stock were to vest upon completion of continuous employment by the Company through April 1, 2012. However, effective April 12, 2011, pursuant to the terms of the restricted stock award agreement, the 300 shares of Series A Preferred Stock vested immediately upon his termination of employment without cause. Compensation expense was being recorded ratably over the thirty-five month period from May 1, 2009 to April 1, 2012 with an offsetting credit to additional paid-in capital. The remaining compensation expense was recognized during 2011 to reflect the accelerated vesting and issuance of such stock. Compensation expense was $10,479 in 2011.

On March 7, 2011, the Company made an award of 100 shares of Series A Preferred Stock to the Company’s former Senior Vice President of Sales & Marketing pursuant to the terms of a restricted stock award agreement. The award was approved with an effective date of June 1, 2010 and was retroactively issued as such. His rights to the stock were dependent upon continuous employment by the Company and were to vest as follows: (i) 50 shares after the passage of one year from the date of issuance and (ii) 50 shares after the passage of two years from the date of issuance. Compensation expense was being recorded ratably over the two vesting periods, with an offsetting credit to additional paid-in-capital. During 2011, compensation expense was $4,075 and $3,056 for the shares vesting on June 1, 2011 and 2012, respectively. The first 50 shares vested and were issued on June 1, 2011. The remaining 50 shares were converted to 750 shares of common stock with a par value of $.01 per share in connection with the Company’s 2011 recapitalization. On February 24, 2012, the employee’s employment with the Company was terminated without cause, and pursuant to the terms of the restricted stock award agreement, his rights to the stock awards vested immediately and the stock was issued. Compensation expense was $1,019 in 2012.

Authorization of additional stock

In connection with the acquisition of IPNZ (see Note 3), by a majority vote, the stockholders of the Company authorized the Company to amend and restate its certificate of incorporation to increase the authorized number of shares of common stock to 10,500,000 with a par value of $.01 per share.


NOTE 10 -	STOCK OPTIONS

Employee stock option plan

In October 2008, the Board of Directors approved the Stock Option Plan effective January 1, 2009 to attract and retain personnel and to promote the success of the Company’s business. Stock options can be granted through December 31, 2013 to employees for up to 115,310 shares of common stock. Stock options are subject to vesting and other limitations as established by the Board of Directors, provided that the life of a grant will be no more than ten years. Generally, the Company’s stock options vest 25% at the date of grant and 25% on each succeeding anniversary over a three-year period from the date of grant. The Company can issue both nonqualified and incentive stock options under the plan. The exercise price of each incentive and nonqualified stock option shall not be less than the fair value on the date of the grant. In all cases, the fair value of the common stock shall be determined in good faith by the Board of Directors.

No compensation expense was recognized for any options granted under the plan because compensation expense estimated using the Black-Scholes option model was not significant to the Company’s consolidated financial statements.

Information regarding stock options granted under the plan is as follows:

EXHIBIT 99.2



		Weighted			Weighted
	Number of	average		Number of	average
	nonvested	exercise price		vested	exercise price
	options	per option		options	per option

Outstanding as of December 31, 2010	38,750	$	0.01	11,000	$	0.01
Granted	—	—		—	—
Vested	(21,375)	.01		21,375	.01
Exercised	—	—		(13,500)	.01
Forfeited	(1,250)	.01		—	—
Expired	—			(3,750)	.01

Outstanding as of December 31, 2011	16,125	.01		15,125	.01
Granted	—	—		—	—
Vested	(16,125)	.01		16,125	.01
Exercised	—	—		(30,125)	.01
Forfeited	—	—		—	—

Outstanding as of December 31, 2012	—	$	0.01	1,125	$	0.01

The vested options have a weighted average remaining contractual term of 6.1 years as of December 31, 2012.

Performance obligation stock options

In accordance with FASB ASC Topic 718, Stock Compensation, the Company recognizes compensation expense for stock options with performance obligations based upon the grant date fair value and the likelihood of achieving the performance targets. Accordingly, management analyzes the likelihood of achieving performance targets and estimates requisite service periods based upon the projected dates of achieving each performance target. If achieving a performance target is no longer deemed probable or the performance target is achieved earlier than expected, the requisite service period is adjusted for the related performance target and compensation expense is revised prospectively. Additionally, if an award is forfeited before vesting, or fails to vest or become exercisable, any previously recognized compensation expense is reversed in the period of change accumulatively. The Company recognizes compensation expense for these awards with an offsetting credit to additional paid-in-capital.

On November 1, 2011, various executives were granted options with contractual terms of ten years to buy 900,000 shares at an exercise price of $.01 per share. During 2012, 700,000 of these options were forfeited either through termination of employment or election by the recipient. The remaining 200,000 stock options vest upon the satisfaction of the following performance thresholds: (i) one-third of the stock options will vest after the Company achieves $2,000,000 in EBITDA (as defined) in any calendar year; (ii) two-thirds of the stock options will vest after the Company achieves $3,000,000 in EBITDA in any calendar year; and, (iii) the final third of the stock options will vest after the Company achieves $4,000,000 in EBITDA in any calendar year. In 2011, management expected the Company to achieve the first two performance thresholds in the 2013 calendar year and the third one in the 2014 calendar year, resulting in estimated requisite service periods of 26 months and 38 months, respectively, and the recognition of $56,379 in compensation expense during 2011, which was estimated using the Black-Scholes option model with the following assumptions:

EXHIBIT 99.2



Number of shares under options	466,667	233,333
Requisite service period	26 months	38 months
Value of common stock	$1.18 per share	$1.18 per share
Calculated volatility	72%	72%
Expected dividends	—%	—%
Expected life	5 years	5 years
Risk-free interest rate	0.31%	0.45%

In 2012, the recipients of 700,000 of these options agreed to forfeit them and management reversed the 2011 compensation expense of $40,270 by reducing 2012 stock compensation expense and increasing additional paid-in-capital. Management now expects the Company to achieve all of the performance thresholds in the 2014 calendar year, which resulted in a revision to the requisite period for 133,333 of remaining options to 38 months from 26 months. Compensation expense of $70,119 was recognized for remaining options in 2012.

On February 1, 2012, various executives and employees were granted options with contractual terms of ten years to buy 400,000 shares at an exercise price of $.01 per share. However, certain recipients agreed to forfeit options on 300,000 of these shares, and accordingly, compensation expense for these options was not recognized during 2012. These stock options vest upon the satisfaction of the following performance thresholds: (i) one-third will vest after the Company achieves $2,000,000 in EBITDA in any rolling twelve month period year; (ii) two-thirds will vest after the Company achieves $3,000,000 in EBITDA in any rolling twelve month period; and, (iii) the final third will vest after the Company achieves $4,000,000 in EBITDA in any rolling twelve month period. Management expects the Company to achieve each of these performance thresholds in the 2014 calendar year.

Compensation expense of $36,781 was recognized for these stock options during 2012, which was estimated using the Black-Scholes option model with the following assumptions:



Number of shares under options	100,000
Requisite service period	35 months
Value of common stock	$1.18 per share
Calculated volatility	75%
Expected dividends	—%
Expected life	5 years
Risk-free interest rate	0.45%

On March 1, 2012, various employees were granted options with contractual terms of ten years to buy 108,000 shares at an exercise price of $.01 per share. These stock options vest upon the satisfaction of the following performance thresholds: (i) one-third of the stock options will vest after the Company achieves $2,000,000 in EBITDA in any calendar year; (ii) two-thirds of the stock options will vest after the Company achieves $3,000,000 in EBITDA in any calendar year; and, (iii) the final third of the stock options will vest after the Company achieves $4,000,000 in EBITDA in any given calendar year. Management expects the Company to achieve each of these performance thresholds in the 2014 calendar year.

Compensation expense of $37,175 was recognized for these stock options during 2012, which was estimated using the Black-Scholes option model with the following assumptions:

EXHIBIT 99.2



Number of shares under options	108,000
Requisite service period	34 months
Value of common stock	$1.18 per share
Calculated volatility	75%
Expected dividends	—%
Expected life	5 years
Risk-free interest rate	0.45%

Expected volatility is the measure of change in the market price of common stock over the contractual term of the option. As the Company’s stock is not traded on a regular basis, a measurement of expected volatility is not readily available. Therefore, the expected volatility was estimated based on the average historical volatility from the (i) Dow Jones United States Total Market Indexes for the Telecommunications sector and (ii) actual volatility from certain public companies similar to the Company, which is believed by management to be reflective of the volatility of the Company’s common stock. The historical period used for the calculation of expected volatility was similar to the estimated exercise period of the related options. Expected dividends represent expected annual dividends on common stock for the contractual life of the options. The expected life represents the estimated period over which the options may be exercised. The risk-free interest rate for the years during the contractual life of the options was the average implied yields at the date of grant for the zero coupon U.S. Treasury Securities with a maturity similar to the expected life of the options.

Information regarding performance based stock options granted is as follows:



			Weighted
			average
	Number of		exercise
	outstanding		price
	options		per option

Outstanding as of December 31, 2010	$	—	$	—
Granted	900,000		.01
Vested	—		—
Exercised	—		—
Forfeited	—		—

Outstanding as of December 31, 2011	900,000		.01
Granted	508,000		.01
Vested	—		—
Exercised	—		—
Forfeited	(1,000,000)		.01

Outstanding as of December 31, 2012	$	408,000	$	0.01

The nonvested options have a weighted average remaining contractual term of 8.99 years as of December 31, 2012.

EXHIBIT 99.2


NOTE 11 -	INCOME TAXES

Deferred income taxes consisted of the following as of December 31:



	2012			2011
Current deferred tax asset	$	575,590		$	288,697
Current deferred tax liability	(283,199		)	(273,214		)
	292,391			15,483

Noncurrent deferred tax asset	3,520,159			3,134,657
Noncurrent deferred tax liability	(980,873		)	(1,007,868		)
Less: valuation allowance	(2,403,739		)	(1,460,574		)
	135,547			666,215
Total deferred income tax asset, net	$	427,938		$	681,698

The provision (benefit) for income taxes consisted of the following for the years ended December 31:



	2012			2011
Deferred, excluding net operating loss carryforwards	$	(594,072	)	$	303,754
Deferred, net operating loss carryforwards	(349,093		)	(727,513		)
Increase in valuation allowance	943,165			423,759
	$	—		$	—

Deferred taxes are recognized for temporary differences between the bases of assets and liabilities for consolidated financial statement and income tax purposes. As of December 31, 2012 and 2011, the differences relate primarily to the use of accelerated depreciation methods for income tax purposes, the deferral and subsequent amortization of certain revenues and costs for financial reporting purposes, and the recognition of the expected future benefits of net operating loss (“NOL”) carryforwards. As of December 31, 2012, the differences also reflect the recognition of deferred income taxes on differences in the bases of assets other than goodwill and liabilities acquired from IPNZ (see Note 3).

The Company recorded valuation allowances for deferred income tax assets of $2,403,739 and $1,460,574 as of December 31, 2012 and 2011, respectively, to the extent that management estimates it is more likely than not that the Company will not realize the benefit of these assets by generating taxable income to use the NOL carryforwards and because of expected limitations on the use of NOL carryforwards that are discussed below. If the Company is not successful in utilizing NOL carryforwards at least in amounts used as the basis for estimating the valuation allowance as of December 31, 2012, it would be necessary for the Company to write off or reduce the related deferred income tax assets at that time.

During 2012 and 2011, there was no current income tax expense as losses were incurred for income tax purposes.

The Company’s provision for income taxes differs from applying the statutory U.S. federal tax rate to income before taxes. The primary differences relate to state income taxes, the provision for changes in the valuation allowance of $943,165 and $423,759 in 2012 and 2011, respectively, and certain expenses that are not deductible for income tax purposes.

The Company has estimated NOL carryforwards for federal income tax purposes of $8,158,624 as of December 31, 2012 that expire as follows:

EXHIBIT 99.2



Year ending December 31:
2026	$	1,070,750
2027	1,343,347
2028	379,634
2029	485,683
2031	2,311,294
2032	1,760,642
2033	807,274
	$	8,158,624

The Internal Revenue Code imposes an annual limitation on the use of NOL carryforwards following a change of ownership in a loss corporation of more than 50 percentage points by one or more five-percent stockholders within a three-year period. A recapitalization during 2007 combined with previous changes in ownership of the Company triggered these limitations. As a result, the annual utilization of the Company’s NOL carryforwards generated prior to 2007 is limited to an amount equal to the estimated fair value of the Company’s stock immediately before the ownership change multiplied by a Federal long-term tax-exempt rate. As of December 31, 2012, the Company had NOL carryforwards of $2,438,416 that were generated prior to 2007.


NOTE 12 -	RELATED PARTY TRANSACTIONS

The Company had the following related party transactions as of and for the years ended December 31:



	2012		2011
Consolidated balance sheet amounts
Receivables from companies owned by certain stockholders	$	63,014	$	—
Payables to companies owned by certain stockholders or their relatives	86,730		93,802

Consolidated statement of operations amounts
Revenues from companies owned by certain stockholders	550,082		—
Expenses from companies owned by certain stockholders or their relatives	447,004		452,210


NOTE 13 -	RETIREMENT PLANS

The Company has established a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code. The 401(k) plan covers employees who have reached age 21 and completed one-half year of service. The Company can make profit sharing contributions at its discretion. Additional safe harbor contributions can be required by the Company to meet certain nondiscrimination requirements. Company profit sharing contributions are generally allocable among eligible participants in the proportion of their compensation to the compensation of all participants, subject to restrictions imposed by the Internal Revenue Code. Participants’ rights to the Company’s profit sharing contributions vest at the rate of 20% per year starting with the second year of vesting service. Expense under the plan was $70,465 and $78,675 in 2012 and 2011, respectively.


NOTE 14 -	COMITTMENTS

The Company leases office facilities in Lemont Furnace, Pennsylvania, St. Louis, Missouri, New York, New York, and near Philadelphia, Pennsylvania.

The Company leases an office building in Lemont Furnace, Pennsylvania covering approximately 10,000 square feet with parking. The lease has a term that ends in 2018. The Company has two five-year renewal options. The lease provides for minimum annual rent of $116,793 with annual cost of living adjustments (as defined) and additional rent for real estate taxes on the leased property.

EXHIBIT 99.2

In May 2007 the Company entered into a lease for approximately 5,600 square feet of office space in St. Louis, Missouri. This lease expired on December 31, 2012. The lease provided for minimum annual rent of $111,240 during 2012. The Company also pays its share of common area charges. In October 2012, the Company entered into a new lease for approximately 10,000 square feet of space in St. Louis, Missouri with a term of 88 months beginning in January 2013. The Company decided to terminate this lease in March 2013. The Company made a payment of $65,000 and forfeited a deposit of $10,000 as consideration for this termination.

The Company leases approximately 3,285 square feet of office space in Doylestown Township, Pennsylvania under a lease extending until March 2017. The monthly rent during 2012 was $6,844 and is subject to annual escalation.

The Company assumed the obligations for two leases of office space of IPNZ in New York, New York, the latest of which extends until June 2014.

As described in Note 2, the Company has entered into long-term contracts with infrastructure providers entitling the Company to use the provider’s network capacity to provide services to customers. These contracts provide for payments of monthly recurring charges to providers over the term of the contracts.

Future minimum rental payments due under real estate and office equipment leases and future monthly recurring charges due under long-term contracts with infrastructure providers were as follows as of December 31, 2012 (excluding the lease of office space in St. Louis, Missouri that was terminated in March 2013):



	Commitments to infrastructure providers		Real estate lease commitments		Office equipment lease commitments
Year ending December 31,
2013	$	7,575,785	$	200,149	$	9,655
2014	4,527,720		210,792		9,655
2015	2,361,977		203,434		5,938
2016	1,788,901		205,077		5,601
2017	987,756		138,966		1,772
Thereafter	—		33,110		—
	$	17,242,139	$	991,528	$	32,621

Rent expense recognized under operating leases was $465,237 and $291,793 for the years ended December 31, 2012 and 2011, respectively. Minimum rentals are recorded as rent expense on a straight-line basis over the term of the lease for leases where minimum rentals differ significantly from straight-line amounts and differences between minimum rental payments and the expense amounts are reflected as deferred rent on the consolidated balance sheets.


NOTE 15 -	CUSTOMER AGREEMENT EXTENSION

During 2010, the Company extended an existing customer’s contract through 2015, which was due to expire in 2012, resulting in the Company agreeing to provide upgraded service over an extended contract period. In order to convert services, the Company, along with a certain service partner, installed new equipment at each customer location during 2010. The equipment that was previously in use at these sites was decommissioned during 2011. Management determined that the net book value of the decommissioned equipment was a component cost of providing the upgraded service. Therefore, the net book value of $710,362 related to this equipment was transferred to deferred charges in 2011 and is being amortized over the extended contract terms.


NOTE 16 -	FAIR VALUE MEASUREMENTS

Generally accepted accounting principles (“GAAP”) defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements and disclosures for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

EXHIBIT 99.2

Fair value hierarchy

GAAP establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value measurement of each class of assets and liabilities is dependent upon its categorization within the fair value hierarchy, based upon the lowest level of input that is significant to the fair value measurement of each class of asset and liability. GAAP establishes three levels of inputs that may be used to measure fair value:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 - Unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3 - Unobservable inputs for the asset or liability.

The fair value estimates made by the Company in connection with the acquisition of IPNZ and the assessment of potential impairments of goodwill described below represent Level 3 fair value measurements. These fair value measurements involve the use of various unobservable Level 3 inputs as well as observable Level 2 inputs that have been adjusted in a manner consistent with the Company’s assessment of how market participants would arrive at the fair values of the subject assets or instruments.

Fair value of financial instruments

The Company’s financial instruments consist of cash, accounts receivable, accounts payable, the line of credit, subordinated debt and capital lease obligations as of December 31, 2012 and 2011. The carrying values of these financial instruments approximated their fair values at December 31, 2012 and 2011.

Fair value measurements in connection with acquisition of IPNZ

The Company accounted for its acquisition of IPNZ using the acquisition method of accounting. The cost of the acquisition was measured as the fair value of the Company’s common stock transferred on the acquisition date. The fair value of $1.18 per common share of the Company's common stock was based on an internal valuation of the Company’s common stock prior to the acquisition.

Management used a combination of methods to arrive at this fair value, including but not limited to a discounted cash flow method to apply the income approach and a guideline transactions method to apply the market approach. The fair value was determined on a non-marketable, non-controlling interest basis and has been reduced by discounts for lack of control and lack of marketability because market participants would be expected to take account of the characteristics of the block of Company common stock issued to IPNZ's shareholders that give rise to such discounts in making purchases or sales of such common stock.

The Company determined the fair value of the customer relationships intangible asset acquired from IPNZ using a discounted cash flow method based on the estimated cash flows the Company expects to receive over the terms of the contracts with the customers reduced to present value at a rate that reflects the risk associated with the realization of these cash flows.

Fair value measurements in connection with assessment of goodwill impairment

The Company completed a quantitative assessment and determined that there was no impairment of goodwill as of December 31, 2012 and 2011, respectively. This involved considering whether the fair value of the reporting unit exceeded the carrying value of the reporting unit. IPNZ was merged into the Company and its operating results are part of the Company’s overall results. Therefore, the Company as a whole represents the reporting unit for purposes of assessing goodwill impairment. Management used a combination of methods to consider the fair value of the Company, including but not limited to a discounted cash flow method to apply the income approach and a guideline transactions method to apply the market approach.


NOTE 17 -	EVENTS SUBSEQUENT TO DECEMBER 31, 2012

Effective May 14, 2013, the Company completed the acquisition of all of the capital stock of Airband Communications Holdings, Inc. ("Airband"). Airband merged with and into the Company with the Company issuing 9,684,114 shares of its common stock to Airband’s shareholders. This common stock was valued at

EXHIBIT 99.2

$10,912,142 based on an independent valuation. The transaction is intended to qualify as a tax-free reorganization under the Internal Revenue Code. Under the acquisition method of accounting, the Company will begin recording the results of Airband’s operations as of the acquisition date.

Airband is a large fixed wireless provider serving businesses in the United States. It delivers a portfolio of high-bandwidth Internet access, point-to-point private line services and managed solutions over a scalable last-mile network. Founded in 2000, Airband built its wholly-owned network to bypass the local phone and cable companies, providing customers with faster install times, improved scalability and complete path redundancy from the traditional wireline infrastructure.

The Company entered into a new credit facility on May 14, 2013. The Company’s existing bank line of credit was paid off using drawdowns on the new line of credit. The new line of credit provides for borrowings of the lesser of $4,500,000 or two times the amount of the Company’s recurring revenue (as defined) for the most recent month. Borrowings will bear interest at the prime rate plus 2.25% subject to a floor of 5.50%. The line of credit matures on May 14, 2015. Substantially all of the Company’s assets other than assets under capital lease obligations will collateralize the line of credit. Among other things, the line of credit requires the Company to maintain a customer churn rate (as defined) below specified levels and to achieve specified levels of EBITDA (as defined) and limits capital expenditures.

The Company entered into a note and warrant purchase agreement dated May 14, 2013 to refinance certain of Airband’s existing debt obligations. As a result, the Company entered into second lien secured notes in the aggregate principal amount of $14,751,970 and issued warrants to purchase 500,000 shares of the Company’s common stock at a price of $1.12 per share. The aggregate purchase price of $14,751,970 includes $14,191,970 for the notes and $560,000 for the warrants.

The second lien secured notes bear interest payable quarterly at 13% per annum or, at the Company’s option, at a 15% payment-in-kind rate. If interest is paid at the 13% rate, 12% will be payable in cash and 1% will be payable in kind via the issuance of additional notes.

Payments of principal equal to 5% of the aggregate original note amounts are due quarterly starting June 30, 2014 to March 31, 2016 and the final maturity of the notes is May 16, 2016. Among other things, the note and warrant purchase agreement requires the Company to maintain a leverage ratio below specified levels and limits new debt, liens, dividends and stock repurchases.

During April 2013, certain shareholders of the Company contributed $2,000,000 in cash in return for convertible preferred stock. These purchases were made to fulfill a condition of the acquisition agreement with Airband.

Based on the financial projections and business plans for the combined operations of the Company and Airband, management expects to realize significant cost reduction synergies and other operating synergies from the Airband acquisition. Management expects the Company to be able to meet its obligations as they come due in 2013.

The Company issued 293,750 shares of common stock to certain members of the management of Airband.

The Company has not finalized a determination of the fair value of Airband's assets and liabilities as of the issuance date of these financial statements.

EXHIBIT 99.3

UNITED NETWORK SERVICES, INC AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND 2013

EXHIBIT 99.3

UNITED NETWORK SERVICES, INC. AND SUBSIDIARIES

CONTENTS



	Page
Consolidated Financial Statements
Consolidated Balance Sheet at September 30, 2014 and 2013	1 - 2
Consolidated Statement of Operations for the Nine Months Ended September 30, 2014 and 2013	3
Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2014 and 2013	4
Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2014 and 2013	5 - 6
Notes to Consolidated Financial Statements	7 - 18

EXHIBIT 99.3

UNITED NETWORK SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2014 AND 2013

(UNAUDITED)



ASSETS
	2014		2013
CURRENT ASSETS:
Cash and cash equivalents	$	315,806	$	821,434
Accounts receivable, net of allowance for doubtful accounts of $1,775,462 and $522,172 in 2014 and 2013, respectively	3,204,620		3,377,923
Deferred charges	1,281,923		964,583
Prepaid expenses and other current assets	1,131,364		982,554
Total Current Assets	5,933,713		6,146,494

PROPERTY AND EQUIPMENT, NET	11,408,857		14,001,773

NONCURRENT ASSETS:
Goodwill	9,114,776		11,287,002
Intangible assets, net	5,153,700		8,677,137
Deferred charges	786,361		676,040
Other assets	213,863		248,292
Total Non-current Assets	15,268,700		20,888,471

Total Assets	$	32,611,270	$	41,036,738

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

EXHIBIT 99.3

UNITED NETWORK SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2014 AND 2013

(UNAUDITED)



LIABILITIES AND STOCKHOLDERS' EQUITY
	2014			2013
CURRENT LIABILITIES:
Note payable - bank	$	4,370,602		$	4,350,000
Current maturities of subordinated debt	64,571			1,539,768
Current portion of obligations under capital leases	880,001			315,117
Accounts payable	9,137,685			8,944,253
Accrued expenses and other current liabilities	1,596,125			1,485,083
Deferred revenue	539,492			502,905
Total Current Liabilities	16,588,476			17,137,126

LONG-TERM LIABILITIES:
Long-term subordinated debt, less current maturities	18,102,513			14,249,008
Obligations under capital leases, less current portion	405,128			444,898
Deferred revenue	957,258			512,812
Total Long-term Liabilities	19,464,899			15,206,718

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 30,000,000 shares authorized, 1,200,000 and 21,353,028 shares issued and outstanding at September 30, 2014 and 2013, respectively	12,000			213,531
Additional paid-in capital	30,756,054			28,014,959
Accumulated deficit	(34,210,159		)	(19,535,596		)
Total Stockholders' Equity	(3,442,105		)	8,692,894

	$	32,611,270		$	41,036,738

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

EXHIBIT 99.3

UNITED NETWORK SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(UNAUDITED)



	2014			2013

REVENUE	$	45,299,355		$	34,391,995

OPERATING ACTIVITIES:
Cost of telecommunication services provided	30,825,893			23,664,111
Selling, general and administrative expenses	13,347,327			11,754,353
Depreciation and amortization	8,116,451			4,522,933
Total operating expenses	52,289,671			39,941,397

LOSS FROM OPERATIONS	(6,990,316		)	(5,549,402		)

OTHER EXPENSE:
Gain on sale of assets	554,547			—
Interest expense, net	2,225,092			1,023,322

LOSS BEFORE PROVISION FOR INCOME TAXES	(8,660,861		)	(6,572,724		)

PROVISION FOR INCOME TAXES	—			454,136

NET LOSS	$	(8,660,861	)	$	(7,026,860	)

EXHIBIT 99.3

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

UNITED NETWORK SERVIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(UNAUDITED)



	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit			Total

BALANCE AT JANUARY 1, 2013	$	—		$	90,183		$	14,566,517	$	(12,508,736	)	$	2,147,964

ISSUANCE OF COMMON STOCK	—			26,087			2,632,582		—			2,658,669

ISSUANCE OF COMMON STOCK IN CONNECTION WITH ACQUISITION (NOTE 4)	—			96,291			10,753,907		—			10,850,198

ISSUANCE OF COMMON STOCK WARRANTS IN CONNECTION WITH ACQUISITION (NOTE 4)	—			—			61,944		—			61,944

PURCHASE OF COMMON STOCK	—			(10		)	9		—			(1		)

EXERCISE OF COMMON STOCK WARRANTS	—			980			—		—			980

NET LOSS	—			—			—		(7,026,860		)	(7,026,860		)

BALANCE AT SEPTEMBER 30, 2013	$	—		$	213,531		$	28,014,959	$	(19,535,596	)	$	8,692,894

BALANCE AT JANUARY 1, 2014	$	1,400,000		$	213,720		$	27,983,050	$	(25,549,298	)	$	4,047,472

CONVERSION OF PREFERRED STOCK TO COMMON STOCK (NOTE 12)	(1,400,000		)	1,400,000			—		—			—

RECAPITALIZATION OF EQUITY (NOTE 12)	—			(1,613,720		)	1,613,720		—			—

ISSUANCE OF COMMON STOCK ACQUISITION (NOTE 12)	—			12,000			1,159,284		—			1,171,284

NET LOSS	—			—			—		(8,660,861		)	(8,660,861		)

BALANCE AT SEPTEMBER 30, 2014	$	—		$	12,000		$	30,756,054	$	(34,210,159	)	$	(3,442,105	)

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

EXHIBIT 99.3

UNITED NETWORK SERVICES, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

(UNAUDITED)



	2014			2013

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(8,660,861	)	$	(7,026,860	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt	264,196			134,230
Depreciation and amortization of property and equipment	5,685,962			2,846,395
Amortization of intangible assets	2,430,489			1,676,538
Gain on sale of assets	(554,547		)	—
Accrued interest on subordinated debt	1,846,682			859,192
Increase in deferred tax valuation allowance	—			427,938
Changes in Assets (Increase) Decrease:
Accounts receivable	234,739			3,392,160
Deferred charges	(233,855		)	239,834
Prepaid expenses and other current assets	(173,737		)	(509,231		)
Other assets	(28,668		)	(170,185		)
Changes in Liabilities Increase (Decrease):
Accounts payable	(172,869		)	(1,818,079		)
Accrued expenses and other current liabilities	(783,498		)	(1,021,525		)
Deferred revenue	525,395			(2,026,010		)
NET CASH USED IN OPERATING ACTIVITIES	379,428			(2,995,603		)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash and cash equivalents acquired in business acquisition	—			464,611
Purchases of property and equipment	(2,294,378		)	(1,520,852		)
Proceeds from sale of assets	950,000			—
NET CASH USED IN INVESTING ACTIVITIES	(1,344,378		)	(1,056,241		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from note payable - bank	20,602			2,250,000
Principal payments of subordinated debt	(44,022		)	(98,797		)
Principal payments of obligations under capital leases	(476,156		)	(113,811		)
Proceeds from issuance of common stock, net of repurchases	1,171,284			2,658,668
Proceeds from exercise of common stock warrants	—			980
NET CASH PROVIDED BY FINANCING ACTIVITIES	671,708			4,697,040

NET INCREASE IN CASH AND CASH EQUIVALENTS	(293,242		)	645,196

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	609,048			176,238

CASH AND CASH EQUIVALENTS, END OF YEAR	$	315,806		$	821,434

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	378,410		$	164,130

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

EXHIBIT 99.3

UNITED NETWORK SERVICES, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2013

(UNAUDITED)



SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:	2014		2013

Common stock issued as consideration in connection with business acquisition	$	—	$	10,912,142
Subordinated debt assumed as consideration in connection with business acquisition	$	—	$	14,751,970
Fair value of non-cash assets acquired	$	—	$	35,552,904
Fair value of liabilities assumed	$	—	$	10,353,403
Conversion of preferred stock to common stock	$	1,400,000	$	—
Property and equipment acquired through long-term financing	$	755,778	$	522,842

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

EXHIBIT 99.3

UNITED NETWORK SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014 AND 2013

(UNAUDITED)


Note 1 -	Nature of Operations and Principles of Consolidation

Principles of Consolidation

Business Activity

On February 10, 2012, the Company executed a stock purchase agreement with IPNetZone Communications Inc. (“IPNZ”) and IPNZ’s stockholders. In connection with this agreement, the Company also purchased all of the stock of BendLogic, Inc. (“BL”), which was a wholly owned subsidiary of IPNZ. The transaction qualified as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986. The effective date of the agreement was January 31, 2012, which was also the acquisition date, as this was the date that the Company effectively assumed control of IPNZ. The acquired assets and liabilities of IPNZ were recorded at their fair value as of the acquisition date and the results of operations for IPNZ from the acquisition date are included with the Company’s operations for the nine months ended September 30, 2013 and 2014. The acquired companies merged into United Network Services, Inc.

On May 14, 2013, the Company executed a stock purchase agreement with Airband and Airband’s stockholders (see Note 4). The transaction qualified as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986. The effective date of the agreement was May 14, 2013 which was also the acquisition date, as this was the date that the Company effectively assumed control of Airband. The acquired assets and liabilities of Airband were recorded at their fair value as of the acquisition date and the results of operations for Airband from the acquisition date are included with the Company’s operations for the nine months ended September 30, 2013 and 2014. The acquired company merged into United Network Services, Inc.


Note 2 -	Summary of Significant Accounting Policies

Use of Estimates

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

EXHIBIT 99.3

Fair Value of Financial Instruments

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.

At September 30, 2014 and 2013, the fair value of the Company’s financial instruments including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, approximated book value due to the short maturity of these instruments.

At September 30, 2014 and 2013, the Company does not have assets or liabilities required to be measured at fair value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements.

Revenue Recognition

Taxes collected from customers and remitted to governmental authorities are presented in the accompanying consolidated financial statements on a net basis.

Network Services and Support

Non-recurring Fees and Deferred Revenue

EXHIBIT 99.3

Other Revenue

Accounts Receivable

Property and Equipment

Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives of the respective assets as follows:



Telecommunications equipment	3 to 7 years
Computer equipment and software	3 to 5 years
Fiber optic network	3 to 15 years
Furniture and fixtures	3 to 10 years
Vehicles	5 years

Leasehold improvements are amortized over the shorter of the remaining term of the lease or the useful life of the improvement utilizing the straight-line method.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable in accordance with FASB ASC Subtopic 360-10-35, Impairment or Disposal of Long-Lived Assets. Recoverability of long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the asset or asset group is expected to generate. If the undiscounted cash flows of such assets are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount, if any, exceeds its fair value. At September 30, 2014 and 2013, the Company determined that there is no impairment of property and equipment.

Goodwill

During the fourth quarter of 2013, the Company recorded a goodwill impairment charge of approximately $2.2 million as a result of the impairment test performed during the fourth quarter of 2013 (see Note 7, “Goodwill and Intangibles, Net”).

Intangible Assets

Definite-lived intangible assets are amortized utilizing the straight-line method over their estimated useful lives as follows:

EXHIBIT 99.3



Customer lists	3 to 5 years
Trademarks	6 months
FCC Licenses	3 to 5 years

During the fourth quarter of 2013, the Company recorded an intangible assets impairment charge of approximately $76,000 as a result of the impairment test performed during the fourth quarter of 2013 (see Note 7, “Goodwill and Intangibles, Net”).

Employee Benefit Plans

Income Taxes

New Accounting Pronouncements

EXHIBIT 99.3

If elected, the accounting alternative in ASU 2014-02 should be applied prospectively to goodwill existing as of the beginning of the period of adoption and new goodwill recognized in fiscal years beginning after December 15, 2014, and for interim periods in fiscal years beginning after December 15, 2015. Early application is permitted. The Company does not expect the new guidance to have an impact on its consolidated financial statements.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This ASU clarifies that an unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward and not as a liability except in certain limited circumstances.

The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The Company does not expect the new guidance to have an impact on its consolidated financial statements.


Note 3 -	Concentration of Credit Risk

For the nine months ended September 30, 2014 and 2013, one customer accounted for approximately 11% and 14% of net sales and 15% and 18% of accounts receivable, respectively.


Note 4 -	Acquisition

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of the acquisition of Airband:



Cash and cash equivalents	$	464,611
Accounts receivable	2,966,917
Other current assets	412,689
Property and equipment	13,148,522
Intangible assets	9,910,000
Goodwill	9,114,776
Total assets acquired	36,017,515
Accounts payable	6,561,256
Capital lease obligations	130,022
Other liabilities	3,662,125
Total liabilities assumed	10,353,403

Net assets acquired	$	25,664,112

EXHIBIT 99.3

realize from the acquisition. Since the acquisition is intended to be a non-taxable exchange, none of the goodwill will be tax deductible for income tax purposes.


Note 5 -	Sale of Assets

In March 2014, the Company sold its fixed wireless assets and associated customer base located in Las Vegas, Nevada for approximately $950,00. The sales resulted in a gain of approximately $555,000, which is recorded in other income in the accompanying consolidated statement of operations for the nine months ended September 30, 2014.


Note 6 -	Property and Equipment

Property and equipment, net is summarized as follows:



	2014		2013

Telecommunications equipment	$	19,223,126	$	15,140,553
Computer equipment and software	4,368,656		3,978,087
Fiber optic network	825,052		825,052
Furniture and fixtures	789,486		729,728
Vehicles	300,718		300,718
Leasehold improvements	155,548		158,416
	25,662,586		21,132,554
Less Accumulated depreciation and amortization	14,253,729		7,130,781
	$	11,408,857	$	14,001,773

Depreciation and amortization expense related to property and equipment amounted to approximately $5,686,000 and $2,846,000 for the nine months ended September 30, 2014 and 2013, respectively.


Note 7 -	Goodwill and Intangibles, Net

Goodwill

The following table sets summarizes the details of the Company’s goodwill balance, by reporting unit, at September 30, 2014 and 2013:



	IPNZ		Airband		Total
Balance at January 1, 2013	$	2,172,226	$	—	$	2,172,226
ADD: Acquisition of goodwill	—		9,114,776		9,114,776
Balance at September 30, 2013	$	2,172,226	$	9,114,776	$	11,287,002

Balance at January 1, 2014	$	—	$	9,114,776	$	9,114,776
Balance at September 30, 2014	$	—	$	9,114,776	$	9,114,776

During December of 2013, the Company concluded that it was required to record a material impairment charge for goodwill and intangible assets related to the IPNZ reporting unit. Factors that the Company considered in the recognition of impairment included (i) the decline in revenues from IPNZ’s customer base, and (ii) negative EBITDA and negative cash flows attributed to the IPNZ reporting unit. The Company utilized FASB ASC Topic 350 guidance to test the

EXHIBIT 99.3

goodwill and intangible assets for realizability and determined that the lowest level of its cash flow generation was its reporting units. During Step 1 of the impairment analysis, the Company compared the discounted cash flows attributable to the IPNZ reporting unit over the projection period of five years based upon the annual revenues and related cost of revenues from the reporting unit’s top ten customers. The sum of the discounted cash flows was less than the carrying value of the net assets for the reporting unit. This indicated that the Company failed Step 1 and was required to complete Step 2 under ASC 350 guidance that would quantify the impairment amount. During Step 2, the Company fair valued the assets using three generally accepted approaches: the cost, income and market approaches. As a result of the Step 2 analysis, the Company recorded a goodwill impairment charge of $2,172,226 million noncash write-down included in operating expenses at December 31, 2013. The Company’s annual assessment of the Airband reporting unit at December 31, 2013 indicated no impairment of goodwill.

Intangible assets, net

Intangible assets remaining as of September 30, 2014 and 2013, net consist of the following:



		2014		2013
	Useful Life
Customer relationships, net of accumulated amortization of $1,638,758 and $3,495,475, respectively	3 years	$	4,076,524	$	6,891,284
Trademarks, net of accumulated amortization of $242,581 and $320,000 respectively	6 months	—		77,419
FCC Licenses, net of accumulated amortization of $420,114	3 years	1,077,176		1,708,434
		$	5,153,700	$	8,677,137

Amortization expense related to intangible assets for the nine months ended September 30, 2014 and 2013 was approximately $2,430,000 and $1,677,000, respectively.

Estimated future amortization expense of intangible assets is as follows:



Nine Months Ending September 30:
2015	$	3,176,861
2016	1,974,553
2017	2,286
	$	5,153,700

As described above, in conjunction with the December 2013 impairment analysis, the Company applied the excess earnings method, a form of the income approach, to estimate the value of the customer based intangible assets. Based on the analysis, the Company concluded that the intangible assets had no value and accordingly an impairment charge of $76,224 was recorded in operating expenses at December 31, 2013. Prior to the impairment charges, the intangible assets, which consisted of customer relationships, had a definite life and were amortized over the periods expected to be benefited from the customer relationships.


Note 8 -	Note payable - bank

EXHIBIT 99.3

credit requires the Company to maintain a customer churn rate (as defined) below specified levels and to achieve specified levels of EBITDA (as defined) and limits capital expenditures. The credit agreement limits the incurrence of additional indebtedness and liens and generally limits payments of dividends. The Company was not in compliance with the EBITDA covenant as of September 30, 2014 and 2013. This debt was paid off in October 2014 (see Note 14, “Subsequent Events”).


Note 9 -	Subordinated and Related Party Debt

In 2008, the Company borrowed $999,980 from existing stockholders and affiliates and members of management under subordinated debt agreements. These related party borrowings are subordinate to any and all borrowings under agreements with Square 1 Bank as described in Note 8. The interest rate on the subordinated debt is 15.0% per annum. Interest-only payments were due quarterly through June 30, 2013, at which time the principal was due and payable. At September 30, 2014 and 2013, no principal remains outstanding under these agreements.

The Company issued subordinated notes to stockholders and affiliates and members of management in the amount of $528,256 during 2011 in lieu of payment of cash dividends on the Series A Preferred Stock. These related party borrowings are subordinate to borrowings under agreements with Square 1 Bank as described in Note 8. The interest rate on these borrowings is 15.0% per annum. Interest-only payments are due quarterly through the maturity date of the notes at various dates between 2013 and 2016 for the notes discussed above and notes issued under comparable arrangements during 2008, 2009, and 2010 for similar purposes. At September 30, 2014 and 2013, $117,317 and $177,614 remains outstanding under these agreements, respectively.

The Company entered into a note and warrant purchase agreement dated May 14, 2013 to refinance certain of Airband’s existing debt obligations. As a result, the Company entered into second lien secured notes in the aggregate principal amount of $14,751,970 and issued warrants to purchase 500,000 shares of the Company’s common stock at a price of $1.12 per share. These secured notes are collateralized by all assets of the borrower.

At September 30, 2013, payments of principal equaled 5% of the aggregate original note amounts due quarterly starting June 30, 2014 to March 31, 2016 and the final maturity of the notes is May 14, 2016. The note and warrant purchase agreement requires the Company to maintain a leverage ratio below specified levels and limits new debt, liens, dividends and stock repurchases. At September 30, 2013, $15,611,162 in principal, including payment-in-kind interest, remained outstanding under these second lien secured notes.

During March 2014, the Company amended its note and warrant purchase agreement. As a result, the payment of the entire principal balance of the second lien secured notes are due at the maturity date of May 14, 2016. The note and warrant purchase agreement requires the Company to maintain a leverage ratio below specified levels and limits new debt, liens, dividends and stock repurchases. At September 30, 2014, $18,049,767 in principal, including payment-in-kind interest, remains outstanding under these second lien secured notes.

Aggregate maturities of subordinated debt at September 30, 2014 are as follows:



Nine Months Ending September 30:
2015	$	64,571
2016	18,102,513
	$	18,167,084

All subordinated debt was paid off in October 2014 (see Note 14, “Subsequent Events”).


Note 10 -	Capital Lease Obligations

The Company’s property and equipment under capital leases, which is included in telecommunications equipment and vehicles, is summarized as follows:

EXHIBIT 99.3



	2014		2013

Telecommunications equipment	$	1,678,751	$	864,121
Vehicles	257,052		257,052
	1,935,803		1,121,173
Less Accumulated depreciation	761,438		207,812
	$	1,174,365	$	913,361

The capital leases require monthly payments, ranging from approximately $300 to $10,800, including effective interest at rates ranging from approximately 3% to 32% per annum through April 2018.

The following is a schedule of future minimum lease payments under capital leases, together with the present value of the minimum lease payments:



Nine Months Ending September 30:
2015	890,570
2016	370,602
2017	29,510
2018	12,499
Total minimum lease payments	1,303,181
Less: amounts representing interest	18,052
Present value of future minimum lease payments	1,285,129
Less: current portion	880,001
	$	405,128

Depreciation of assets held under capital leases is included in depreciation and amortization expense. All capital leases were paid off in October 2014 (see Note 14, “Subsequent Events”).


Note 11 -	Commitments and Contingencies

Claims

Office Space and Operating Leases

The Company leases its various office facilities under noncancellable operating leases expiring through February 2018, requiring approximate future minimum rental payments as follows:



Nine Months Ending September 30:
2015	650,719
2016	531,000
2017	388,132
2018	109,212
	$	1,679,063

Rent expense charged to operations amounted to approximately $696,000 for the nine months ended September 30, 2014.

EXHIBIT 99.3

Supply Agreements

At September 30, 2014 and 2013, the Company has supplier purchase obligations associated with telecommunications services that the Company has contracted to purchase from its vendors. The Company’s contracts are generally such that the terms and conditions in the vendor and client customer contracts are substantially the same in terms of duration. The back-to-back nature of the Company’s contracts means that the largest component of its contractual obligations is generally mirrored by its customer’s commitment to purchase the services associated with those obligations.

Estimated annual commitments under supplier contractual agreements are as follows at September 30, 2014:



Nine Months Ending September 30:
2015	$	15,810,657
2016	9,209,583
2017	4,921,627
2018	1,980,413
2019	902,295
Thereafter	194,339
	$	33,018,914


Note 12 -	Income Taxes

Deferred income taxes consisted of the following as of September 30, 2014 and 2013:



	2014			2013

Current deferred income tax asset	$	1,194,565		$	888,314
Current deferred income tax liability	(48,676		)	(220,153		)
Less valuation allowance	(1,145,889		)	(668,161		)
	—			—
Noncurrent deferred tax asset	16,515,562			14,122,271
Noncurrent deferred tax liability	(2,246,564		)	(3,766,660		)
Less: valuation allowance	(14,268,998		)	(10,355,611		)
	—			—
Total deferred income tax asset, net	$	—		$	—

The provision (benefit) for income taxes consisted of the following for the nine months ended September 30, 2014 and 2013:



	2014			2013
Current income tax expense	$	—		$	—
Deferred, excluding net operating loss carryforwards	(628,103		)	(82,788		)
Deferred, net operating loss carryforwards	(2,506,211		)	(1,673,934		)
Increase in valuation allowance	3,134,314			2,210,858
	$	—		$	454,136

EXHIBIT 99.3

Deferred taxes are recognized for temporary differences between the bases of assets and liabilities for financial statement and income tax purposes. At September 30, 2014 and 2013, the differences relate primarily to the use of accelerated depreciation methods for income tax purposes, the deferral and subsequent amortization of certain revenues and costs for financial reporting purposes, and the recognition of the expected future benefits of net operating loss (“NOL”) carryforwards. At September 30, 2014 and 2013, the differences also reflect the recognition of deferred income taxes on differences in the bases of assets other than goodwill and liabilities acquired from IPNZ and Airband (see Note 4).

The Company recorded a valuation allowance for deferred income tax assets of $15,414,887 and $11,023,772 at September 30, 2014 and 2013, respectively, as management estimates it is not likely that the Company will realize the benefit of these assets by generating taxable income to use the NOL carryforwards.

The Company’s provision for income taxes differs from applying the statutory U.S. federal tax rate to income before taxes. The primary differences relate to the provision for changes in the valuation allowance in 2014 of $3,134,314 and certain expenses that are not deductible for income tax purposes.

The Company has estimated NOL carryforwards for federal income tax purposes of $24,682,594 at September 30, 2014 that expire as follows:



Nine Months Ending September 30:
2026	$	1,070,750
2027	1,343,347
2028	379,634
2029	485,683
2030	2,311,294
2031	—
2032	1,760,642
2033	807,274
2034	9,620,892
2035	6,903,078
	$	24,682,594

The Internal Revenue Code imposes an annual limitation on the use of NOL carryforwards following a change of ownership in a loss corporation of more than 50 percentage points by one or more five-percent stockholders within a three-year period. A recapitalization during 2007 combined with previous changes in ownership of the Company triggered these limitations. Further, the Airband acquisition during 2013 combined with previous changes in ownership of the Company triggered these limitations. As a result, the annual utilization of the Company’s NOL carryforwards is limited to an amount equal to the estimated fair value of the Company’s stock immediately before the ownership changes multiplied by a Federal long-term tax-exempt rate. At September 30, 2014, the Company had NOL carryforwards of $2,438,416 that were generated prior to 2007 and $15,341,100 that were generated prior to 2014.


Note 13 -	Stockholders’ Equity

Preferred Stock

EXHIBIT 99.3

of common stock.

Common Stock

In the nine months ended September 30, 2013, the Company issued 2,608,668 of common stock in exchange for $2,658,668. The Company also issued 9,629,129 shares of common stock and warrants to purchase 54,973 shares of common stock in conjunction with the Airband acquisition (see Note 4).

At any time after September 15, 2016, upon written request of holders of at least 25% of the outstanding shares of common stock, the Company shall seek consent from its common stockholders for redemption. If at least 50% of such stockholders consent to the redemption, the Company shall then offer to redeem all of the outstanding shares of common stock from any source of funds legally available for such redemption. The redemption price will be an amount equal to the fair market value of the common stock. As of September 30, 2013, the Company estimated the fair market value of the common stock to be zero.

The Company had stock and warrant agreements that originated in 2012. However, as a result of the reverse stock split and the subsequent sale of the Company to GTT Communications, Inc. (“GTT”) (see Note 14, “Subsequent Events”), the Company deemed the fair value of the stock and warrant agreements to be worthless at September 30, 2014 and 2013 and accordingly, did not include the impact of these agreements in the September 30, 2014 and 2013 consolidated financial statements and the related notes.


Note 14 -	Subsequent Events

The Company has evaluated all events or transactions that occurred after September 30, 2014 through the date of these consolidated financial statements, which is the date that the consolidated financial statements were available to be issued.

On October 1, 2014, the Company was acquired by and merged into GTT. In conjunction with the acquisition, GTT assumed and repaid substantially all of the Company’s debt, including its line of credit (see Note 8, “Note payable- bank”), subordinated debt (see Note 9, “Subordinated Debt”) and capital lease obligations (see Note 10, “Capital Lease Obligations”). In addition, the Company’s stockholders received cash and GTT common stock in exchange for the Company’s outstanding shares at the date of the acquisition.

EXHIBIT 99.4

GTT Communications, Inc.

Unaudited Pro Forma Combined Financial Information

Introduction

On October 1, 2014, GTT Communications, Inc., a Delaware corporation (“GTT” or the “Company”), Global Telecom & Technology Americas, Inc., a Virginia corporation and wholly owned subsidiary of the Company (the “Purchaser”), and GTT USNi, Inc., a Delaware corporation and wholly owned subsidiary of the Purchaser (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with American Broadband, Inc. d/b/a United Network Services, Inc., a Delaware corporation (“UNSi”), and Francis D. John, as the representative of UNSi’s stockholders and warrantholders. Upon the terms and subject to the conditions set forth in the Merger Agreement, the Purchaser acquired UNSi through the merger of Merger Sub with and into UNSi (the “Merger”), with UNSi being the surviving corporation. The closing of the Merger occurred simultaneously with the signing of the Merger Agreement.

Under the terms of the acquisition agreement, the consideration consisted of $30.0 million in cash paid at closing, $4.0 million of deferred cash payable October 1, 2015, the assumption of $18.8 million of liabilities and 231,539 shares of common stock of the Company.

The unaudited pro forma combined balance sheet combines (i) the historical consolidated balance sheets of GTT and UNSi, giving effect to the acquisition as if it had been consummated on September 30, 2014, and (ii) the unaudited pro forma combined statements of operations for the nine months ended September 30, 2014 and for the year ended December 31, 2013, giving effect to the acquisition as if it had occurred on January 1, 2013.

The historical consolidated financial statements of GTT and UNSi have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The historical consolidated financial information has been adjusted to give effect to pro forma events that are (i) directly attributable to the acquisition, (ii) factually supportable, and (iii) with respect to the statement of operations, expected to have a continuing impact on the combined results.

The unaudited pro forma combined financial statements are not necessarily indicative of the operating results or financial position that would have occurred if the acquisition had been completed at the dates indicated. It may be necessary to further reclassify UNSi’s combined financial statements to conform to those classifications that are determined by the combined company to be most appropriate. While some reclassifications of prior periods have been included in the unaudited pro forma combined financial statements, further reclassifications may be necessary.

The unaudited pro forma combined financial statements were prepared using the acquisition method of accounting with GTT treated as the acquiring entity. Accordingly, consideration paid by GTT to complete the acquisition of UNSi has been allocated to UNSi’s assets and liabilities based upon their estimated fair values as of the date of completion of the acquisition.

The pro forma purchase price allocations are preliminary, subject to further adjustments as additional information becomes available and as additional analyses are performed and have been made solely for the purpose of providing the unaudited pro forma combined financial information presented below. GTT estimated the fair value of UNSi’s assets and liabilities based on discussions with UNSi’s management, due diligence and information presented in financial statements. There can be no assurance that the final determination will not result in material changes. GTT expects to incur significant costs associated with integrating GTT’s and UNSi’s businesses. The unaudited pro forma combined financial statements do not reflect the cost of any integration activities or benefits that may result from synergies that may be derived from any integration activities. In addition, the unaudited pro forma combined financial statements do not reflect one-time fees and expenses of approximately $6 - 7 million payable by GTT as a result of the acquisition.

EXHIBIT 99.4

GTT COMMUNICATIONS, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEETS

AS OF SEPTEMBER 30, 2014



(Amounts in thousands, except for share and per share data)		GTT			UNSi			Pro forma Adjustments				Pro forma Combined
ASSETS
Current assets:
	Cash and cash equivalents	41,610			316			(29,978		)	(d)	11,948
	Accounts receivable, net	23,658			3,205			—				26,863
	Deferred contract costs	3,111			1,282			—				4,393
	Prepaid expenses and other current assets	2,391			1,131			—				3,522
	Total current assets	70,770			5,934			(29,978		)		46,726
Property and equipment, net		16,269			11,409			—				27,678
Intangible assets, net		45,085			5,154			18,811			(e)	69,050
Other assets		8,164			1,000			—				9,164
Goodwill		71,082			9,115			4,269			(f)	84,466
	Total assets	$	211,370		$	32,612		$	(6,898	)		$	237,084

	LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable	18,941			9,138			—				28,079
	Accrued expenses and other current liabilities	22,718			1,596			4,000			(i)	28,314
	Capital leases current portion	—			880			(880		)	(j)
	Short-term debt	5,500			4,435			(4,435		)	(c)	5,500
	Deferred revenue	7,486			540			—				8,026
	Total current liabilities	54,645			16,589			(1,315		)		69,919

Long-term debt		119,500			18,103			(18,103		)	(c)	119,500
Deferred revenue and other long-term liabilities		2,891			957			6,599			(k)	10,447
Capital leases, less current portion					405			(405		)	(j)	—
	Total liabilities	177,036			36,054			(13,224		)		199,866

Commitments and contingencies

Stockholders' equity:
	Common stock, par value $.0001 per share, 80,000,000 shares authorized, 28,889,596 shares issued and outstanding as of September 30, 2014	3			12			(12		)	(g)	3
	Additional paid-in capital	116,244			30,756			(30,756		)	(g)	119,128
								2,884			(h)
	Retained earnings (accumulated deficit)	(81,551		)	(34,210		)	34,210			(g)	(81,551		)
	Accumulated other comprehensive income (loss)	(362		)	—			—				(362		)
	Total stockholders' equity	34,334			(3,442		)	6,326				37,218
Total liabilities and stockholders' equity		$	211,370		$	32,612		$	(6,898	)		$	237,084

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

EXHIBIT 99.4

GTT COMMUNICATIONS, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014



(Amounts in thousands, except for share and per share data)		GTT			UNSi			Pro forma Adjustments				Pro forma Combined
Revenue:
	Telecommunications services sold	$	144,684		$	45,299		—				$	189,983

Operating expenses:
	Cost of telecommunications services provided	89,233			30,826			—				120,059
	Selling, general and administrative expense	31,349			13,347			—				44,696
	Restructuring costs, employee termination and other items	3,342			—			—				3,342
	Depreciation and amortization	16,911			8,116			2,822			(a)	27,849
Total operating expenses		140,835			52,289			2,822				195,946

Operating income (loss)		3,849			(6,990		)	(2,822		)		(5,963		)

Other income (expense):
	Interest expense, net	(6,755		)	(2,225		)	1,720			(b)	(7,260		)
	Loss on debt extinguishment	(3,104		)	—							(3,104		)
	Gain on sale of assets	—			555			—				555
	Other income (expense), net	(8,504		)	—							(8,504		)
	Total other income (expense)	(18,363		)	(1,670		)	1,720				(18,313		)
Loss before taxes		(14,514		)	(8,660		)	(1,102		)		(24,276		)
Provision for income taxes		811			—			—				811
Net loss		$	(15,325	)	$	(8,660	)	$	(1,102	)		$	(25,087	)
Loss per share
	Basic	$	(0.59	)								$	(0.97	)
	Diluted	$	(0.59	)								$	(0.97	)
Weighted average shares:
	Basic	25,873,938										25,873,938
	Diluted	25,873,938										25,873,938

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

EXHIBIT 99.4

GTT COMMUNICATIONS, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2013



(Amounts in thousands, except for share and per share data)		GTT			UNSi			Pro forma Adjustments				Pro forma Combined
Revenue:
	Telecommunications services sold	$	157,368		$	49,443		—				$	206,811

Operating expenses:
	Cost of telecommunications services provided	102,815			33,777			—				136,592
	Selling, general and administrative expense	31,675			17,124			—				48,799
	Impairment of goodwill and intangible assets	—			2,248			—				2,248
	Restructuring costs, employee termination and other items	7,677			—			—				7,677
	Depreciation and amortization	17,157			7,005			3,762			(a)	27,924
Total operating expenses		159,324			60,154			3,762				223,240

Operating loss		(1,956		)	(10,711		)	(3,762		)		(16,429		)

Other income (expense):
	Interest expense, net	(8,408		)	(1,874		)	2,022			(b)	(8,260		)
	Loss on debt extinguishment	(706		)	—							(706		)
	Other expense, net	(11,724		)	—							(11,724		)
	Total other income (expense)	(20,838		)	(1,874		)	2,022				(20,690		)
Loss before taxes		(22,794		)	(12,585		)	(1,740		)		(37,119		)
(Benefit) Provision for income taxes		(2,005		)	454			—				(1,551		)
Net loss		$	(20,789	)	$	(13,039	)	$	(1,740	)		$	(35,568	)

Loss per share
	Basic	$	(0.95	)								$	(1.62	)
	Diluted	$	(0.95	)								$	(1.62	)
Weighted average shares:
	Basic	21,985,241										21,985,241
	Diluted	21,985,241										21,985,241

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

EXHIBIT 99.4

GTT Communications, Inc.

Notes to Unaudited Pro Forma Combined Financial Statements

Note 1. Basis of Presentation

The accompanying unaudited pro forma combined financial statements present the pro forma combined financial position and results of operations of the combined company based upon the historical financial statements of GTT and UNSi, after giving effect to the acquisition and adjustments described in these footnotes, and are intended to reflect the impact of the acquisition on GTT.

The accompanying unaudited pro forma combined financial statements are presented for illustrative purposes only and do not give effect to any cost savings, revenue synergies or restructuring costs which may result from the integration of our and UNSi's operations.

The unaudited pro forma combined balance sheet reflects the acquisition as if it has been consummated on September 30, 2014 and includes pro forma adjustments for our preliminary valuations of certain intangible assets. The unaudited pro forma combined statements of operations for the nine months ended September 30, 2014 and for the year ended December 31, 2013, reflects the acquisition as if it had occurred on January 1, 2013.

The pro forma combined balance sheet has been adjusted to reflect the allocation of the purchase price to identifiable net assets acquired and the excess purchase price to goodwill. The preliminary consideration is as presented in the following table.



		Amounts in thousands

Purchase Price
	Total cash consideration	$	29,978
	Total deferred cash consideration	4,000
	Total stock consideration	2,884
	Fair value of liabilities assumed	18,830
	Total consideration	$	55,692

Purchase Price Allocation:
Acquired Assets
	Current assets	$	5,934
	Property and equipment	11,409
	Other assets	1,000
	Intangible assets	23,965
	Total fair value of assets acquired	42,308
	Goodwill	13,384
	Total consideration	$	55,692

Upon completion of the fair value assessment, we anticipate that the estimated purchase price and its allocation may differ from that outlined above primarily due to changes in assets and liabilities between the date of the preliminary assessment and that of our final assessment.

The current intangible assets acquired were valued based on a preliminary valuation and consist of customer relationships and trade names. Upon completion of the fair value assessment, we anticipate that the final purchase price allocation may differ from the preliminary assessment outlined above. Any changes to the initial estimates of the fair value of the assets and liabilities will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill.

EXHIBIT 99.4

Note 2. Pro Forma Adjustments



a.		Reflect additional amortization expense related to acquired intangibles as of the beginning of the period.
b.		On September 30, 2014,GTT borrowed $15.0 million under a Delayed Draw Term Loan (or "DDTL") from its existing credit facility to partially finance the transaction and cover additional cash needs involved in the transaction. On October 1, 2014, GTT repaid UNSi's subordinated debt of $18.1 million and a bank note of $4.4 million at closing, in full settlement respectively.



(Dollars in thousands)	Year Ended December 31, 2013			Nine Months Ended September 30, 2014

Additional GTT debt under DDTL	$	15,000		$	15,000
Effective annual interest rate	4.48		%	4.48		%
Estimated GTT interest on DDTL	672			504

UNSi Subordinated debt	16,364			18,167
Effective annual interest rate	15.00%			15.00%
Less: Estimated interest on UNSi subordinated debt	(2,455		)	(2,044		)

UNSi Bank note	4,350			4,371
Effective annual interest rate	5.50		%	5.50		%
Less: Estimated interest on UNSi bank note	(239		)	(180		)

Interest Expense Adjustment	$	(2,022	)	$	(1,720	)



c.	On September 30, 2014, GTT borrowed $15.0 million under the DDTL from its existing credit facility to partially finance the transaction and cover additional cash needs involved in the transaction. On October 1, 2014, GTT repaid UNSi's subordinated debt of $18.1 million and a bank note of $4.4 million at closing, in full settlement respectively.
d.	Cash consideration paid to the seller in the transaction (See Note 1).
e.	Intangible assets generated by the transaction represent customer relationships of $24.0 million.
f.	The goodwill adjustment of $4.3 million includes goodwill created from the acquisition (See Note 1) and working capital differences.
g.	Eliminate the historical stockholders’ equity accounts of UNSi at September 30, 2014.
h.	Additional Paid In Capital generated from the issuance of 231,539 shares to UNSi shareholders.
i.	Recognition of deferred cash consideration of $4.0 million payable on October 1, 2015 less any adjustments for undisclosed liabilities identified subsequent to closing.
j.	Payoff of capital leases at closing.
k.	Deferred tax liability resulting from the tax impact of the intangibles assets acquired in the acquisition.

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