##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
  x
   o
  SECURUS TECHNOLOGIES, INC.
  Delaware
(State or other jurisdiction of
incorporation or organization)
    
    20-0673095
(I.R.S. Employer
Identification No.)
 
  x o
 o x
 o x




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##### Table of Contents



SECURUS TECHNOLOGIES, INC. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets (Unaudited)
    
    
    3Condensed Consolidated Statements of Operations (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3. Defaults Upon Senior Securities
    
    
    33Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33Item 5. Other Information
    
    
    33Item 6. Exhibits
    
    
    34Section 302 Certification of CEOSection 302 Certification of CFOSection 906 Certification of CEOSection 906 Certification of CFO
 -2-




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 SECURUS TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Amounts in thousands, except share and per share amounts)
 December 31,
    
    
    September 30,2004
    
    
    2005(Unaudited)ASSETSCash and cash equivalents
    
    $
    1,879
    
    
    $
    235Restricted cash
    
    
    1,347
    
    
    
    1,379Accounts receivable, net (note 2)
    
    
    67,498
    
    
    
    62,437Prepaid expenses and other current assets
    
    
    3,932
    
    
    
    3,184Refundable income taxes
    
    
    634
    
    
    
    1,400Current deferred income taxes
    
    
    2,806
    
    
    
    4,208Total current assets
    
    
    78,096
    
    
    
    72,843Property and equipment, net (note 2)
    
    
    36,170
    
    
    
    41,853Intangibles and other assets, net (note 2)
    
    
    107,657
    
    
    
    106,331Goodwill
    
    
    50,213
    
    
    
    49,325Total assets
    
    $
    272,136
    
    
    $
    270,412LIABILITIES AND STOCKHOLDERS DEFICITAccounts payable
    
    $
    40,532
    
    
    $
    37,061Accrued liabilities (note 2)
    
    
    41,891
    
    
    
    37,240Deferred revenue and customer advances
    
    
    4,317
    
    
    
    4,214Current portion of long-term debt (note 3)
    
    
    117
    
    
    
    138Total current liabilities
    
    
    86,857
    
    
    
    78,653Deferred income taxes
    
    
    18,300
    
    
    
    18,334Long-term debt, net of current portion (note 3)
    
    
    189,820
    
    
    
    200,690Other long-term liabilities
    
    
    
    
    
    
    1,777Total liabilities
    
    
    294,977
    
    
    
    299,454Commitments and contingenciesStockholders deficit:Common stock, $0.01 stated value, 1,000,000
shares authorized; 560,717 shares and 596,027
shares issued and outstanding at December 31,
2004 and September 30, 2005, respectively
    
    
    5
    
    
    
    5Additional paid-in capital
    
    
    33,902
    
    
    
    33,902Accumulated deficit
    
    
    (56,748
    )
    
    
    (62,949
    )Total stockholders deficit
    
    
    (22,841
    )
    
    
    (29,042
    )Total liabilities and stockholders deficit
    
    $
    272,136
    
    
    $
    270,412
  -3-




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##### Table of Contents



SECURUS TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months Ended September 30, 2004 (Successor) and 2005 (Successor) and
for the 62 Day Period from January 1, 2004 to March 2, 2004 (Predecessor) and
for the 262 Day Period from January 12, 2004 (Inception) to September 30, 2004 (Successor) and
for the Nine Months Ended September 30, 2005 (Successor)
(Amounts in thousands)
 For the62 Day
    
    
    For the
    
    
    For theFor the Three
    
    
    For the Three
    
    
    Period from
    
    
    262 Day Period from
    
    
    Nine MonthsMonths Ended
    
    
    Months Ended
    
    
    January 1, 2004 to
    
    
    January 12, 2004 to
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    March 2,
    
    
    September 30,
    
    
    September 30,2004
    
    
    2005
    
    
    2004
    
    
    2004
    
    
    2005(Unaudited)
    
    
    (Unaudited)
    
    
    
    
    
    
    (Unaudited)
    
    
    (Unaudited)Revenue:Telecommunication services
    
    $
    8,789
    
    
    $
    5,614
    
    
    $
    7,552
    
    
    $
    22,988
    
    
    $
    20,091Direct call provisioning
    
    
    30,261
    
    
    
    76,706
    
    
    
    9,651
    
    
    
    52,416
    
    
    
    224,935Solution services
    
    
    5,537
    
    
    
    12,074
    
    
    
    
    
    
    
    6,220
    
    
    
    35,184Equipment sales and other
    
    
    1,262
    
    
    
    358
    
    
    
    232
    
    
    
    2,021
    
    
    
    1,026Total revenue
    
    
    45,849
    
    
    
    94,752
    
    
    
    17,435
    
    
    
    83,645
    
    
    
    281,236Cost of service (exclusive of depreciation and
amortization shown separately below):Telecommunication services
    
    
    3,632
    
    
    
    2,748
    
    
    
    3,126
    
    
    
    9,415
    
    
    
    8,908Direct call provisioning, exclusive of bad debt expense
    
    
    20,346
    
    
    
    50,205
    
    
    
    6,536
    
    
    
    35,622
    
    
    
    147,447Direct call provisioning bad debt expense
    
    
    4,209
    
    
    
    9,325
    
    
    
    1,594
    
    
    
    6,522
    
    
    
    29,392Solution services
    
    
    5,120
    
    
    
    9,484
    
    
    
    
    
    
    
    5,609
    
    
    
    28,556Cost of equipment sold and other
    
    
    779
    
    
    
    50
    
    
    
    131
    
    
    
    1,069
    
    
    
    169Total cost of service
    
    
    34,086
    
    
    
    71,812
    
    
    
    11,387
    
    
    
    58,237
    
    
    
    214,472Selling, general and administrative
    
    
    7,541
    
    
    
    12,665
    
    
    
    3,032
    
    
    
    13,854
    
    
    
    36,112Compensation expense on employee stock options
    
    
    
    
    
    
    
    
    
    
    4,069
    
    
    
    
    
    
    
    Research and development
    
    
    749
    
    
    
    
    
    
    
    607
    
    
    
    1,747
    
    
    
    171Impairment of telecommunication assets
    
    
    
    
    
    
    
    
    
    
    285
    
    
    
    
    
    
    
    Gain on sale of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Employee severance
    
    
    1,746
    
    
    
    18
    
    
    
    
    
    
    
    3,127
    
    
    
    633Loss on debt extinguishment
    
    
    2,802
    
    
    
    
    
    
    
    1,239
    
    
    
    2,802
    
    
    
    Depreciation and amortization
    
    
    3,387
    
    
    
    5,741
    
    
    
    1,649
    
    
    
    6,867
    
    
    
    16,991Total operating costs and expenses
    
    
    50,311
    
    
    
    90,236
    
    
    
    22,268
    
    
    
    86,634
    
    
    
    268,375Operating (loss) income
    
    
    (4,462
    )
    
    
    4,516
    
    
    
    (4,833
    )
    
    
    (2,989
    )
    
    
    12,861Transaction fees and expenses
    
    
    120
    
    
    
    
    
    
    
    5,365
    
    
    
    181
    
    
    
    Interest and other expenses, net
    
    
    4,766
    
    
    
    6,570
    
    
    
    2,191
    
    
    
    7,701
    
    
    
    19,958Loss before income taxes
    
    
    (9,348
    )
    
    
    (2,054
    )
    
    
    (12,389
    )
    
    
    (10,871
    )
    
    
    (7,097
    )Income taxes benefit
    
    
    (1,705
    )
    
    
    (1,270
    )
    
    
    (2,575
    )
    
    
    (1,983
    )
    
    
    (896
    )Net (loss)
income applicable to common stockholders
    
    $
    (7,643
    )
    
    $
    (784
    )
    
    $
    (9,814
    )
    
    $
    (8,888
    )
    
    $
    (6,201
    )
  -4-




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SECURUS TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the 62 Day Period from January 1, 2004 to March 2, 2004 (Predecessor) and
for the 262 Day Period from January 12, 2004 (Inception) to September 30, 2004 (Successor) and
for the Nine Months Ended September 30, 2005 (Successor)
(Amounts in thousands)
 For the62 Day
    
    
    For the
    
    
    For thePeriod from
    
    
    262 Day Period from
    
    
    Nine MonthsJanuary 1, 2004 to
    
    
    January 12, 2004 to
    
    
    EndedMarch 2,
    
    
    September 30,
    
    
    September 30,2004
    
    
    2004
    
    
    2005(Unaudited)
    
    
    (Unaudited)CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS:Net loss from continuing operations
    
    $
    (9,814
    )
    
    $
    (8,888
    )
    
    $
    (6,201
    )Adjustments to reconcile net loss to net cash (used in)
provided by operating activities from continuing operations:Depreciation and amortization
    
    
    1,649
    
    
    
    6,867
    
    
    
    16,991Impairment of telecommunication assets
    
    
    285
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    (2,575
    )
    
    
    (1,983
    )
    
    
    (896
    )Conversion of interest paid-in-kind to secured subordinated notes
    
    
    
    
    
    
    919
    
    
    
    5,601Gain on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    (4
    )Equity income (loss) from unconsolidated affiliates
    
    
    27
    
    
    
    (122
    )
    
    
    Transaction costs
    
    
    5,365
    
    
    
    (5,195
    )
    
    
    Accretion of discount on subordinated note payable
    
    
    384
    
    
    
    
    
    
    
    378Loss on debt extinguishment
    
    
    1,239
    
    
    
    2,802
    
    
    
    Amortization of deferred financing costs and debt discounts
    
    
    
    
    
    
    3,406
    
    
    
    634Changes in operating assets and liabilities, net of effects of acquisitions:Restricted cash
    
    
    
    
    
    
    (1,077
    )
    
    
    (32
    )Accounts receivable
    
    
    (3,298
    )
    
    
    (2,789
    )
    
    
    5,061Prepaid expenses and other current assets
    
    
    (3,650
    )
    
    
    1,447
    
    
    
    751Other assets
    
    
    (3,302
    )
    
    
    1,066
    
    
    
    (664
    )Accounts payable
    
    
    915
    
    
    
    7,422
    
    
    
    (3,594
    )Accrued liabilities and other liabilities
    
    
    8,970
    
    
    
    (1,772
    )
    
    
    (5,095
    )Net cash (used in) provided by operating activities from continuing
operations
    
    $
    (3,805
    )
    
    $
    2,103
    
    
    $
    12,930CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment including cost of intangibles
    
    $
    (562
    )
    
    $
    (6,155
    )
    
    $
    (18,732
    )Purchase of T-Netix stock and repayment of T-Netix debt in connection with
merger, net of cash acquired
    
    
    
    
    
    
    (70,238
    )
    
    
    Purchase of Evercom stock and repayment of Evercom debt in connection with
merger, net of cash acquired
    
    
    
    
    
    
    (130,746
    )
    
    
    Net cash used in investing activities
    
    $
    (562
    )
    
    $
    (207,139
    )
    
    $
    (18,732
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from second-priority senior secured notes
    
    $
    
    
    
    $
    150,383
    
    
    $
    Proceeds from senior subordinate notes
    
    
    
    
    
    
    40,000
    
    
    
    Advances on revolving credit facility
    
    
    
    
    
    
    8,976
    
    
    
    5,000Payments on T-Netix senior secured term note (old)
    
    
    (875
    )
    
    
    
    
    
    
    Debt issuance costs
    
    
    
    
    
    
    (11,080
    )
    
    
    (755
    )Redemption of warrants in connection with merger
    
    
    
    
    
    
    (941
    )
    
    
    Payments on other debt
    
    
    (5
    )
    
    
    (43
    )
    
    
    (87
    )Proceeds from issuance of T-Netix senior secured notes, net of payments
    
    
    
    
    
    
    35,353
    
    
    
    Proceeds from issuance of T-Netix secured subordinated notes
    
    
    
    
    
    
    26,000
    
    
    
    Proceeds from issuance of common stock
    
    
    
    
    
    
    31,000
    
    
    
    Payment of long-term debt in connection with merger
    
    
    
    
    
    
    (67,396
    )
    
    
    Net cash (used in) provided by financing activities
    
    $
    (880
    )
    
    $
    212,252
    
    
    $
    4,158(Decrease) increase in cash and cash equivalents
    
    $
    (5,247
    )
    
    $
    7,216
    
    
    $
    (1,644
    )Cash and cash equivalents at beginning of period
    
    
    22,875
    
    
    
    
    
    
    
    1,879Cash and cash equivalents at end of period
    
    $
    17,628
    
    
    $
    7,216
    
    
    $
    235SUPPLEMENTAL DISCLOSURES:Cash paid during the period for:Interest
    
    $
    643
    
    
    $
    8,728
    
    
    $
    17,093Income taxes
    
    $
    43
    
    
    $
    195
    
    
    $
    NONCASH FINANCING AND INVESTING ACTIVITIES:Leasehold improvements
    
    $
    
    
    
    $
    
    
    
    $
    1,800
  -5-




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##### Table of Contents



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 (a) Unaudited Quarterly Financial Statements
  (b) Comprehensive Income
 Reporting Comprehensive Income
 (c) New Accounting Pronouncements
 Accounting for Conditional Asset Retirement Obligations  an
interpretation of SFAS No. 143 Accounting for Asset Retirement Obligations
 (d) Reclassification
  -6-




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##### Table of Contents



2. BALANCE SHEET COMPONENTS
  December 31,
    
    
    September 30,2004
    
    
    2005(Unaudited)Accounts receivable, net:Trade accounts receivable
    
    $
    75,284
    
    
    $
    78,844Advance commissions receivable
    
    
    1,641
    
    
    
    1,604Other receivables
    
    
    3,805
    
    
    
    9480,730
    
    
    
    80,542Less: Allowance for doubtful accounts
    
    
    (13,232
    )
    
    
    (18,105
    )$
    67,498
    
    
    $
    62,437
    December 31,
    
    
    September 30,2004
    
    
    2005(Unaudited)Property and equipment, net:Telecommunications equipment
    
    $
    27,372
    
    
    $
    31,178Leasehold improvements
    
    
    1,973
    
    
    
    4,229Construction in progress
    
    
    6,738
    
    
    
    7,685Vehicles
    
    
    65
    
    
    
    65Office equipment
    
    
    7,489
    
    
    
    9,26943,637
    
    
    
    52,426Less: Accumulated depreciation and amortization
    
    
    (7,467
    )
    
    
    (10,573
    )$
    36,170
    
    
    $
    41,853
 -7-




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##### Table of Contents



December 31, 2004Gross
    
    
    
    
    
    
    
    
    
    
    WeightedCarrying
    
    
    Accumulated
    
    
    
    
    
    
    AverageValue
    
    
    Amortization
    
    
    Net
    
    
    LifePatents and trademarks
    
    $
    18,163
    
    
    $
    (457
    )
    
    $
    17,706
    
    
    
    11.6Deferred financing costs
    
    
    7,983
    
    
    
    (229
    )
    
    
    7,754
    
    
    
    7.4Purchased technology assets
    
    
    2,102
    
    
    
    (133
    )
    
    
    1,969
    
    
    
    4.3Capitalized software development costs
    
    
    6,310
    
    
    
    (714
    )
    
    
    5,596
    
    
    
    3.1Acquired contract rights
    
    
    74,983
    
    
    
    (2,425
    )
    
    
    72,558
    
    
    
    11.8Non-current portion of commission advances to facilities
    
    
    111
    
    
    
    
    
    
    
    111Deposits and long-term prepayments
    
    
    1,367
    
    
    
    
    
    
    
    1,367Other
    
    
    600
    
    
    
    (4
    )
    
    
    596$
    111,619
    
    
    $
    (3,962
    )
    
    $
    107,657
 September 30, 2005Gross
    
    
    
    
    
    
    
    
    
    
    WeightedCarrying
    
    
    Accumulated
    
    
    
    
    
    
    AverageValue
    
    
    Amortization
    
    
    Net
    
    
    Life(Unaudited)Patents and trademarks
    
    $
    18,467
    
    
    $
    (1,761
    )
    
    $
    16,706
    
    
    
    11.6Deferred financing costs
    
    
    8,737
    
    
    
    (831
    )
    
    
    7,906
    
    
    
    7.4Purchased technology assets
    
    
    5,740
    
    
    
    (737
    )
    
    
    5,003
    
    
    
    4.7Capitalized software development costs
    
    
    6,310
    
    
    
    (2,251
    )
    
    
    4,059
    
    
    
    4.8Acquired contract rights
    
    
    78,476
    
    
    
    (8,011
    )
    
    
    70,465
    
    
    
    11.5Non-current portion of commission advances to facilities
    
    
    111
    
    
    
    
    
    
    
    111Deposits and long-term prepayments
    
    
    1,439
    
    
    
    
    
    
    
    1,439Other
    
    
    642
    
    
    
    
    
    
    
    642$
    119,922
    
    
    $
    (13,591
    )
    
    $
    106,331
  Period
ending September 30 (unaudited):2006
    
    $
    13,2422007
    
    
    13,1382008
    
    
    11,4372009
    
    
    10,4332010
    
    
    9,545Thereafter
    
    
    46,344$
    104,139
 -8-




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##### Table of Contents



December 31,
    
    
    September 30,2004
    
    
    2005(Unaudited)Accrued expenses
    
    $
    27,876
    
    
    $
    29,107Accrued compensation
    
    
    3,571
    
    
    
    2,905Accrued severance and exit costs
    
    
    1,953
    
    
    
    1,012Accrued taxes
    
    
    3,255
    
    
    
    2,727Accrued interest and other
    
    
    5,236
    
    
    
    1,489$
    41,891
    
    
    $
    37,240
  Balance
    
    
    
    
    
    
    
    
    
    
    BalanceSeptember 9,
    
    
    
    
    
    
    
    
    
    
    December 31,2004
    
    
    Additions
    
    
    Payments
    
    
    2004Severance and related costs
    
    $
    
    
    
    $
    2,301
    
    
    $
    (547
    )
    
    $
    1,754Leased facility and other costs
    
    
    
    
    
    
    199
    
    
    
    
    
    
    
    199$
    
    
    
    $
    2,500
    
    
    $
    (547
    )
    
    $
    1,953
 Employers Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,
 Balance
    
    
    
    
    
    
    
    
    
    
    BalanceJanuary 1,
    
    
    
    
    
    
    
    
    
    
    September 30,2005
    
    
    Additions
    
    
    Payments
    
    

2005Severance and related costs
    
    $
    1,754
    
    
    $
    633
    
    
    $
    (1,486
    )
    
    $
    901Leased facility and other costs
    
    
    199
    
    
    
    
    
    
    
    (88
    )
    
    
    111$
    1,953
    
    
    $
    633
    
    
    $
    (1,574
    )
    
    $
    1,012
 -9-




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##### Table of Contents



3. DEBT
  December 31,
    
    
    September 30,2004
    
    
    2005(Unaudited)Revolving credit facility
    
    $
    
    
    
    $
    5,000Second-priority senior secured notes
    
    
    154,000
    
    
    
    154,000Senior subordinated notes
    
    
    42,116
    
    
    
    47,717Other
    
    
    225
    
    
    
    138196,341
    
    
    
    206,855Less unamortized discount on senior
secured notes and senior subordinated
notes
    
    
    (6,404
    )
    
    
    (6,027
    )189,937
    
    
    
    200,828Less current portion of long-term debt
    
    
    (117
    )
    
    
    (138
    )$
    189,820
    
    
    $
    200,690
 Revolving Credit Facility.
  Second-priority Senior Secured Notes
 Senior Subordinated Notes.
 -10-




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##### Table of Contents



-11-




---



##### Table of Contents



4. SEGMENT INFORMATION
 Disclosures About Segments of an
Enterprise and Related Information
    Telecom-
    
    
    
    
    
    
    
    
    
    
    Equipmentmunication
    
    
    Direct Call
    
    
    Solutions
    
    
    Sales &
    
    
    CorporateServices
    
    
    Provisioning
    
    
    Services
    
    
    Other
    
    
    and Other
    
    
    TotalRevenue from
external customers
    
    $
    8,789
    
    
    $
    30,261
    
    
    $
    5,537
    
    
    $
    1,262
    
    
    $
    
    
    
    $
    45,849Gross margin
    
    $
    5,157
    
    
    $
    5,706
    
    
    $
    417
    
    
    $
    483
    
    
    $
    
    
    
    $
    11,763Depreciation and amortization
    
    
    988
    
    
    
    655
    
    
    
    94
    
    
    
    48
    
    
    
    1,602
    
    
    
    3,387Other operating costs and
expenses
    
    
    
    
    
    
    584
    
    
    
    73
    
    
    
    196
    
    
    
    11,985
    
    
    
    12,838Operating income (loss)
    
    $
    4,169
    
    
    $
    4,467
    
    
    $
    250
    
    
    $
    239
    
    
    $
    (13,587
    )
    
    
    (4,462
    )Transaction fees and expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120Interest and other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,766Segment loss from continuing
operations before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (9,348
    )
 -12-




---



##### Table of Contents



Telecom-
    
    
    
    
    
    
    
    
    
    
    Equipmentmunication
    
    
    Direct Call
    
    
    Solutions
    
    
    Sales &
    
    
    CorporateServices
    
    
    Provisioning
    
    
    Services
    
    
    Other
    
    
    and Other
    
    
    TotalRevenue from external customers
    
    $
    5,614
    
    
    $
    76,706
    
    
    $
    12,074
    
    
    $
    358
    
    
    $
    
    
    
    $
    94,752Gross margin
    
    $
    2,866
    
    
    $
    17,176
    
    
    $
    2,590
    
    
    $
    308
    
    
    $
    
    
    
    $
    22,940Depreciation and amortization
    
    
    1,159
    
    
    
    4,573
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    5,741Other operating costs and expenses
    
    
    
    
    
    
    2,030
    
    
    
    379
    
    
    
    
    
    
    
    10,274
    
    
    
    12,683Operating income (loss)
    
    $
    1,707
    
    
    $
    10,573
    
    
    $
    2,211
    
    
    $
    299
    
    
    $
    (10,274
    )
    
    
    4,516Interest and other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,570Segment loss from continuing
operations before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,054
    )
  Telecom-
    
    
    
    
    
    
    Equipmentmunication
    
    
    Direct Call
    
    
    Sales &
    
    
    CorporateServices
    
    
    Provisioning
    
    
    Other
    
    
    and Other
    
    
    TotalRevenue from external customers
    
    $
    7,552
    
    
    $
    9,651
    
    
    $
    232
    
    
    $
    
    
    
    $
    17,435Gross margin
    
    $
    4,426
    
    
    $
    1,521
    
    
    $
    101
    
    
    $
    
    
    
    $
    6,048Depreciation and amortization
    
    
    542
    
    
    
    268
    
    
    
    33
    
    
    
    806
    
    
    
    1,649Other operating costs and expenses
    
    
    
    
    
    
    
    
    
    
    103
    
    
    
    9,129
    
    
    
    9,232Operating income (loss)
    
    $
    3,884
    
    
    $
    1,253
    
    
    $
    (35
    )
    
    $
    (9,935
    )
    
    
    (4,833
    )Transaction fees and expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,365Interest and other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,191Segment loss from continuing
operations before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (12,389
    )Capital expenditures
    
    $
    211
    
    
    $
    351
    
    
    $
    
    
    
    $
    
    
    
    $
    562
 -13-




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##### Table of Contents



Telecom-
    
    
    
    
    
    
    
    
    
    
    Equipmentmunication
    
    
    Direct Call
    
    
    Solutions
    
    
    Sales &
    
    
    CorporateServices
    
    
    Provisioning
    
    
    Services
    
    
    Other
    
    
    and Other
    
    
    TotalRevenue from external customers
    
    $
    22,988
    
    
    $
    52,416
    
    
    $
    6,220
    
    
    $
    2,021
    
    
    $
    
    
    
    $
    83,645Gross margin
    
    $
    13,573
    
    
    $
    10,272
    
    
    $
    611
    
    
    $
    952
    
    
    $
    
    
    
    $
    25,408Depreciation and amortization
    
    
    1,785
    
    
    
    1,240
    
    
    
    137
    
    
    
    69
    
    
    
    3,636
    
    
    
    6,867Other operating costs and
expenses
    
    
    
    
    
    
    582
    
    
    
    73
    
    
    
    370
    
    
    
    20,505
    
    
    
    21,530Operating income (loss)
    
    $
    11,788
    
    
    $
    8,450
    
    
    $
    401
    
    
    $
    513
    
    
    $
    (24,141
    )
    
    
    (2,989
    )Transaction expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181Interest and other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,701Segment loss from continuing
operations before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (10,871
    )Capital expenditures
    
    $
    1,282
    
    
    $
    3,902
    
    
    $
    
    
    
    $
    
    
    
    $
    971
    
    
    $
    6,155
  Telecom-
    
    
    
    
    
    
    
    
    
    
    Equipmentmunication
    
    
    Direct Call
    
    
    Solutions
    
    
    Sales &
    
    
    CorporateServices
    
    
    Provisioning
    
    
    Services
    
    
    Other
    
    
    and Other
    
    
    TotalRevenue from external customers.
    
    $
    20,091
    
    
    $
    224,935
    
    
    $
    35,184
    
    
    $
    1,026
    
    
    $
    
    
    
    $
    281,236Gross margin
    
    $
    11,183
    
    
    $
    48,096
    
    
    $
    6,628
    
    
    $
    857
    
    
    $
    
    
    
    $
    66,764Depreciation and amortization
    
    
    2,600
    
    
    
    14,255
    
    
    
    
    
    
    
    37
    
    
    
    99
    
    
    
    16,991Other operating costs and
expenses
    
    
    
    
    
    
    3,988
    
    
    
    574
    
    
    
    34
    
    
    
    32,316
    
    
    
    36,912Operating income (loss)
    
    $
    8,583
    
    
    $
    29,853
    
    
    $
    6,054
    
    
    $
    786
    
    
    $
    (32,415
    )
    
    
    12,861Interest and other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,958Segment loss from continuing
operations before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (7,097
    )Total assets
    
    $
    12,925
    
    
    $
    222,259
    
    
    $
    17,670
    
    
    $
    1,381
    
    
    $
    16,177
    
    
    $
    274,012Goodwill
    
    $
    
    
    
    $
    49,325
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    49,325Capital expenditures
    
    $
    
    
    
    $
    12,356
    
    
    $
    
    
    
    $
    
    
    
    $
    6,376
    
    
    $
    18,732
 5.
STOCKHOLDERS EQUITY
  -14-




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6. SUBSEQUENT EVENT
   
 -15-




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Special Note Regarding Forward-Looking Statements
  Overview
   -16-




---



##### Table of Contents



Revenues
     -17-




---



##### Table of Contents



Cost of Service
    Facility Commissions
 Bad Debt
 -18-




---



##### Table of Contents



Field Operations and Maintenance Costs
 SG&A
 Purchase Accounting
 Integration Costs
 Industry Trends
  Telecommunication ServicesThree Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2005
    
    
    2005Verizon
    
    $
    1,227
    
    
    $
    6,138AT&T
    
    $
    1,125
    
    
    $
    3,298
 Solutions ServicesThree Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2005
    
    
    2005AT&T
    
    $
    8,753
    
    
    $
    25,301
  -19-




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-20-




---



##### Table of Contents



Results of Operations
  For the262 DayPeriod from
    
    
    
    
    
    
    For theFor the Three
    
    
    
    
    
    
    For the Three
    
    
    
    
    
    
    January 12,
    
    
    
    
    
    
    Nine MonthsMonths Ended
    
    
    
    
    
    
    Months Ended
    
    
    
    
    
    
    2004 to
    
    
    
    
    
    
    EndedSeptember 30,
    
    
    % of
    
    
    September 30,
    
    
    % of
    
    
    September 30,
    
    
    % of
    
    
    September 30,
    
    
    % of2004
    
    
    Rev.
    
    
    2005
    
    
    Rev.
    
    
    2004 (1)
    
    
    Rev.
    
    
    2005
    
    
    Rev.(Unaudited)
    
    
    
    
    
    
    (Unaudited)
    
    
    
    
    
    
    (Unaudited)
    
    
    
    
    
    
    (Unaudited)Revenue:Telecommunication services
    
    $
    8,789
    
    
    
    19
    %
    
    $
    5,614
    
    
    
    6
    %
    
    $
    22,988
    
    
    
    27
    %
    
    $
    20,091
    
    
    
    7
    %Direct call provisioning
    
    
    30,261
    
    
    
    66
    
    
    
    76,706
    
    
    
    81
    
    
    
    52,416
    
    
    
    63
    
    
    
    224,935
    
    
    
    80Solution services
    
    
    5,537
    
    
    
    12
    
    
    
    12,074
    
    
    
    13
    
    
    
    6,220
    
    
    
    7
    
    
    
    35,184
    
    
    
    13Equipment sales and other
    
    
    1,262
    
    
    
    3
    
    
    
    358
    
    
    
    0
    
    
    
    2,021
    
    
    
    3
    
    
    
    1,026
    
    
    
    0Total revenue
    
    
    45,849
    
    
    
    100
    
    
    
    94,752
    
    
    
    100
    
    
    
    83,645
    
    
    
    100
    
    
    
    281,236
    
    
    
    100Expenses:Cost of service
    
    
    34,086
    
    
    
    74
    
    
    
    71,812
    
    
    
    76
    
    
    
    58,237
    
    
    
    70
    
    
    
    214,472
    
    
    
    76Selling, general and administrative
    
    
    7,541
    
    
    
    17
    
    
    
    12,665
    
    
    
    13
    
    
    
    13,854
    
    
    
    17
    
    
    
    36,112
    
    
    
    13Research and development
    
    
    749
    
    
    
    2
    
    
    
    
    
    
    
    0
    
    
    
    1,747
    
    
    
    2
    
    
    
    171
    
    
    
    0Gain on sale of assets
    
    
    
    
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    (4
    )
    
    
    0Employee severance
    
    
    1,746
    
    
    
    4
    
    
    
    18
    
    
    
    0
    
    
    
    3,127
    
    
    
    4
    
    
    
    633
    
    
    
    0Loss on debt extinguishment
    
    
    2,802
    
    
    
    6
    
    
    
    
    
    
    
    0
    
    
    
    2,802
    
    
    
    3
    
    
    
    
    
    
    
    0Depreciation and amortization
    
    
    3,387
    
    
    
    7
    
    
    
    5,741
    
    
    
    6
    
    
    
    6,867
    
    
    
    8
    
    
    
    16,991
    
    
    
    6Total operating costs and expenses
    
    
    50,311
    
    
    
    110
    
    
    
    90,236
    
    
    
    95
    
    
    
    86,634
    
    
    
    104
    
    
    
    268,375
    
    
    
    95Operating (loss) income
    
    
    (4,462
    )
    
    
    (10
    )
    
    
    4,516
    
    
    
    5
    
    
    
    (2,989
    )
    
    
    (4
    )
    
    
    12,861
    
    
    
    5Transaction fees and expenses
    
    
    120
    
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    181
    
    
    
    0
    
    
    
    
    
    
    
    0Interest and other expenses, net
    
    
    4,766
    
    
    
    10
    
    
    
    6,570
    
    
    
    7
    
    
    
    7,701
    
    
    
    9
    
    
    
    19,958
    
    
    
    7Loss before income taxes
    
    
    (9,348
    )
    
    
    (20
    )
    
    
    (2,054
    )
    
    
    (2
    )
    
    
    (10,871
    )
    
    
    (13
    )
    
    
    (7,097
    )
    
    
    (2
    )Income taxes benefit
    
    
    (1,705
    )
    
    
    (4
    )
    
    
    (1,270
    )
    
    
    (1
    )
    
    
    (1,983
    )
    
    
    (2
    )
    
    
    (896
    )
    
    
    0Net loss applicable to common
stockholders
    
    $
    (7,643
    )
    
    
    (16
    )
    
    $
    (784
    )
    
    
    (1
    )
    
    $
    (8,888
    )
    
    
    (11
    )
    
    $
    (6,201
    )
    
    
    (2
    )
 
 (1)
    
    This column presents the data for Securus for the period from January 12, 2004 (inception)
to September 30, 2004 and does not include information from T-Netix (Predecessor) for the
period January 1, 2004 to March 2, 2004, prior to our acquisition of T-Netix on March 3, 2004. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 2004
 Total Revenues
  -21-




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##### Table of Contents



Cost of Service.
 SG&A
 Research and Development Expenses
 -22-




---



##### Table of Contents



Employee Severance
 Loss
on Debt Extinguishment
 Depreciation and Amortization Expenses.
 Interest and Other Expenses, Net.
 Income Tax Benefit.
 RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THE PERIOD FROM
JANUARY 12, 2004 TO SEPTEMBER 30, 2004
 Total Revenues
   -23-




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##### Table of Contents



Cost of Service.
 SG&A
 Research and Development Expenses
 Employee Severance
 Loss
on Debt Extinguishment
 -24-




---



##### Table of Contents



Depreciation and Amortization Expenses.
 Interest and Other Expenses, Net.
 Income Tax Benefit.
 Liquidity and Capital Resources
  Cash Flows
  For
the262 DayPeriod from
    
    
    For theJanuary 12,
    
    
    Nine Months2004 to
    
    
    EndedSeptember 30,
    
    
    September 30,2004
    
    
    2005(unaudited)Net cash provided by operating activities
    
    $
    2,103
    
    
    $
    12,930Net cash used in investing activities
    
    $
    (207,139
    )
    
    $
    (18,732
    )Net cash provided by financing activities
    
    $
    212,252
    
    
    $
    4,158
 Cash Flows for the Nine Months Ended September 30, 2005 Compared to the Period from
January 12, 2004 to September 30, 2004
  -25-




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##### Table of Contents



Debt and other Obligations
 Working Capital Facility.
 Second-priority Senior Secured Notes.
 -26-




---



##### Table of Contents



Senior Subordinated Notes.
  Other Long-Term Liabilities.
 -27-




---



##### Table of Contents



Capital Requirements
  2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    ThereafterLong-term debt (1)
    
    $
    
    *
    
    $
    
    *
    
    $
    
    *
    
    $
    
    *
    
    $
    
    *
    
    $
    194,000
    *Operating leases
    
    
    1,867
    
    
    
    1,455
    
    
    
    1,121
    
    
    
    889
    
    
    
    918
    
    
    
    4,495Capital leases
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total contractual
cash obligations
and commitments
    
    $
    2,005
    
    
    $
    1,455
    
    
    $
    1,121
    
    
    $
    889
    
    
    $
    918
    
    
    $
    198,495
 
 *
    
    Assumes no repurchases of second-priority senior secured notes or senior subordinated
notes during such periods. These amounts also do not give effect to mandatory purchases of
second-priority senior secured notes, if any, with excess cash flow.(1)
    
    Does not include any amounts that may be drawn under our working capital facility, which
expires on September 9, 2009, or accrued interest under our long-term debt. Surety Bonds
  Critical Accounting Policies
  
    
    revenue recognition and bad debt reserve estimates;
    
    goodwill and other intangible assets;
    
    accounting for income taxes; and
    
    acquisition-related assets and liabilities.
  Revenue Recognition
  -28-




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##### Table of Contents



Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets Accounting for Impairment or Disposal of
Long-Lived Assets
 Accounting for Income Taxes
  Acquisition Related Assets and Liabilities
  -29-




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##### Table of Contents



Changes in Accounting Standards
 Consolidation of Variable Interest Entities (VIE) - an interpretation of ARB No. 51
 Share-Based Payment Accounting for Stock Issued to
Employees
 Inventory Costs
 Exchanges of Nonmonetary Assets Accounting for Nonmonetary Transactions
 Accounting for Conditional Asset Retirement Obligations Accounting for Asset Retirement Obligations
 -30-




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##### Table of Contents



RISK FACTORS
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
    -31-




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  Elena
Condes, et al. v. Evercom Systems, Inc., SBC Communications, Inc., Pacific Bell Telephone Company,
et al. Condes Condes Condes Condes Condes Condes
 Sandy Judd, et al. v. American Telephone and Telegraph Company,
et al.
  -32-




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##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  -33-




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##### Table of Contents



ITEM 6. EXHIBITS
  Exhibit
No.
    
    Description of Exhibit2.1
    
    Agreement and Plan of Merger by and among TZ Holdings, Inc., New Mustang
Acquisition, Inc., Evercom Holdings, Inc. and such individual designated by
Evercom Holdings, Inc. who joins the Agreement and Plan of Merger (as
Indemnification Representative, solely with respect to Sections 1.10, 6.4, 7.11,
9.2, 11.5, 11.6 and 12.14), dated as of July 10, 2004, incorporated by reference
from the Companys Form S-4 filed with the SEC on May 16, 2005 (the S-4).3.1
    
    Amended and Restated Certificate of Incorporation of Securus Technologies, Inc.,
filed on August 6, 2004, incorporated by reference from the S-4.3.2
    
    Amended and Restated Bylaws of Securus Technologies, Inc., incorporated by
reference from the S-4.3.3
    
    Certificate of Incorporation of T-Netix, Inc., filed on September 7, 2001, as
amended, incorporated by reference from the S-4.3.4
    
    Bylaws of T-Netix, Inc, incorporated by reference from the S-4.3.5
    
    Articles of Incorporation of Telequip Labs, Inc., filed on November 9, 1987, as
amended, incorporated by reference from the S-4.3.6
    
    Amended and Restated Bylaws of Telequip Labs, Inc., incorporated by reference
from the S-4.3.7
    
    Articles of Incorporation of T-NETIX Telecommunications, Inc., filed on February
11, 1988, as amended, incorporated by reference from the S-4.3.8
    
    Bylaws of T-NETIX Telecommunications, Inc., incorporated by reference from the
S-4.3.9
    
    Articles of Incorporation of SpeakEZ, Inc., Inc., filed on February 6, 1987, as
amended, incorporated by reference from the S-4.3.10
    
    Bylaws of SpeakEZ, Inc., incorporated by reference from the S-4.3.11
    
    Articles of Incorporation of T-Netix Monitoring Corporation, filed on July 10,
1990, as amended, incorporated by reference from the S-4.3.12
    
    Bylaws of T-Netix Monitoring Corporation, incorporated by reference from the S-4.3.13
    
    Certificate of Incorporation of Evercom Holdings, Inc., filed on November 25,
2002, as amended, incorporated by reference from the S-4.3.14
    
    Bylaws of Evercom Holdings, Inc., incorporated by reference from the S-4.3.15
    
    Amended and Restated Certificate of Incorporation of Evercom, Inc., filed on
February 19, 2003, incorporated by reference from the S-4.3.16
    
    Bylaws of Evercom, Inc., incorporated by reference from the S-4.3.17
    
    Certificate of Incorporation of Evercom Systems, Inc., filed on August 22, 1997,
as amended, incorporated by reference from the S-4.3.18
    
    Bylaws of Evercom Systems, Inc., incorporated by reference from the S-4.3.19
    
    Certificate of Incorporation of Everconnect, Inc., filed on September 8, 1997,
as amended, incorporated by reference from the S-4.3.20
    
    Bylaws of Everconnect, Inc., incorporated by reference from the S-4.4.1
    
    Form of 11% Second-priority Senior
Secured Notes due 2011, incorporated by reference from the S-4.
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Exhibit
No.
    
    Description of Exhibit4.2
    
    Indenture, dated as of September 9, 2004, by and among Securus,
T-Netix, Inc., a Delaware corporation, T-NETIX Telecommunications
Services, Inc., a Texas corporation, T-Netix Monitoring Corporation, a
Colorado corporation, SpeakEZ, Inc., a Colorado corporation, Telequip
Labs, Inc., a Nevada corporation, Evercom Holdings, Inc., Evercom,
Inc., EverConnect, Inc., a Delaware corporation, Evercom Systems,
Inc., a Delaware corporation, and The Bank of New York Trust Company,
N.A., incorporated by reference from the S-4.4.3
    
    Registration Rights Agreement, dated August 18, 2004, by and among
Securus Technologies, Inc., Credit Suisse First Boston LLC and Morgan
Stanley & Co. Incorporated, incorporated by reference from the S-4.4.4
    
    Security Agreement, dated September 9, 2004, by and among Securus
Technologies, Inc., T-Netix, Inc., a Delaware corporation, T-NETIX
Telecommunications Services, Inc., a Texas corporation, T-Netix
Monitoring Corporation, a Colorado corporation, SpeakEZ, Inc., a
Colorado corporation, Telequip Labs, Inc., a Nevada corporation,
Evercom Holdings, Inc., a Delaware corporation, Evercom, Inc., a
Delaware corporation, EverConnect, Inc., a Delaware corporation,
Evercom Systems, Inc., a Delaware corporation, and The Bank of New
York Trust Company, N.A., incorporated by reference from the S-4.4.5
    
    Patent Security Agreement, dated September 9, 2004, by and among
Securus Technologies, Inc., T-Netix, Inc., a Delaware corporation,
T-NETIX Telecommunications Services, Inc., a Texas corporation,
T-Netix Monitoring Corporation, a Colorado corporation, SpeakEZ, Inc.,
a Colorado corporation, Telequip Labs, Inc., a Nevada corporation,
Evercom Holdings, Inc., a Delaware corporation, Evercom, Inc., a Delaware corporation, EverConnect, Inc., a Delaware
corporation, Evercom Systems, Inc., a Delaware corporation and The
Bank of New York Trust Company, N.A., incorporated by reference from
the S-4.4.6
    
    Copyright Security Agreement, dated September 9, 2004, by and among
Securus Technologies, Inc., T-Netix, Inc., a Delaware corporation,
T-NETIX Telecommunications Services, Inc., a Texas corporation,
T-Netix Monitoring Corporation, a Colorado corporation, SpeakEZ, Inc.,
a Colorado corporation, Telequip Labs, Inc., a Nevada corporation,
Evercom Holdings, Inc., a Delaware corporation, Evercom, Inc., a Delaware corporation, EverConnect, Inc., a Delaware
corporation, Evercom Systems, Inc., a Delaware corporation and The
Bank of New York Trust Company, N.A., incorporated by reference from
the S-4.4.7
    
    Trademark Security Agreement, dated September 9, 2004, by and among
Securus Technologies, Inc., T-Netix, Inc., a Delaware corporation,
T-NETIX Telecommunications Services, Inc., a Texas corporation,
T-Netix Monitoring Corporation, a Colorado corporation, SpeakEZ, Inc.,
a Colorado corporation, Telequip Labs, Inc., a Nevada corporation,
Evercom Holdings, Inc., a Delaware corporation, Evercom, Inc., a Delaware corporation, EverConnect, Inc., a Delaware
corporation, Evercom Systems, Inc., a Delaware corporation and The
Bank of New York Trust Company, N.A., incorporated by reference from
the S-4.4.8
    
    Pledge Agreement, dated September 9, 2004, by and among Securus
Technologies, Inc., T-Netix, Inc., a Delaware corporation, Evercom Holdings, Inc., a Delaware corporation, Evercom,
Inc., a Delaware corporation, and The Bank of New York Trust Company, N.A., incorporated by
reference from the S-4.
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Exhibit
No.
    
    Description of Exhibit4.9
    
    Credit Agreement, dated September 9, 2004, by and among Securus
Technologies, Inc., as the Borrower, the Subsidiaries of the Borrower,
as Guarantors, the Financial Institutions party thereto as the
Lenders, and ING Capital LLC as the Issuing Lender and Administrative
Agent, incorporated by reference from the S-4.4.10
    
    Intercreditor Agreement, dated as of September 9, 2004, by and among
Laminar Direct Capital, L.P., a Delaware limited partnership, Securus
Technologies, Inc.,
T-Netix, Inc., a Delaware corporation, T-NETIX Telecommunications
Services, Inc., a Texas corporation, T-Netix Monitoring Corporation,
a Colorado corporation,
SpeakEZ, Inc., a Colorado corporation, Telequip Labs, Inc., a Nevada
corporation, Evercom Holdings, Inc., a Delaware corporation, Evercom,
Inc., a Delaware corporation, EverConnect, Inc., a Delaware
corporation, Evercom Systems, Inc., a Delaware corporation, and The
Bank of New York Trust Company, N.A., incorporated by reference from
the S-4.4.11
    
    Intercreditor Agreement, dated as of September 9, 2004, by and among
ING Capital, LLC, as Intercreditor Agent, The Bank of New York Trust
Company, N.A., as Trustee, Securus Technologies, Inc., and each
subsidiary of Securus Technologies, Inc., incorporated by reference
from the S-4.4.12
    
    First Amendment to Credit Agreement, dated October 12, 2005 among
Securus Technologies, Inc., the subsidiary guarantors, ING Capital
LLC, as syndicated issuing lender, alternative issuing lender and
administrative agent, and lenders from time to time parties thereto,
incorporated by reference from the Companys current report on Form
8-K filed as Exhibit 10.1 with the SEC on October 13, 2005.10.1
    
    Stockholders Agreement, dated September 9, 2004, by and among Securus
Technologies, Inc., H.I.G., T-Netix, Inc., a company organized under
the laws of the Cayman Islands, American Capital Strategies, Ltd., a
Delaware corporation, Laminar Direct Capital, L.P., a Delaware limited
partnership, and each of the other investors then or thereafter set
forth on the signature pages thereto, incorporated by reference from
the S-4.10.2
    
    Amended and Restated Consulting Services Agreement, dated as of
September 9, 2004, by and between T-Netix, Inc., Evercom Systems, Inc.
and H.I.G. Capital, LLC, incorporated by reference from the S-4.10.3
    
    Amended and Restated Professional Services Agreement, dated as of
September 9, 2004, by and between T-Netix, Inc., Evercom Systems,
Inc., and H.I.G. Capital, LLC, incorporated by reference from the S-4.10.4
    
    Office Lease Agreement, dated as of November 8, 2004, by and between
T-Netix, Inc. and the Prudential Insurance Company of America,
incorporated by reference from the Companys Form 10-Q as filed with
the SEC on August 15, 2005.10.5
    
    First Amendment to the Office Lease Agreement, dated as of November
19, 2004, by and between T-Netix, Inc. and the Prudential Insurance
Company of America, incorporated by reference from the Companys Form
10-Q as filed with the SEC on August 15, 2005.31.1*
    
    Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley of 2002.31.2*
    
    Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley of 2002.32.1*
    
    Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley of 2002.32.2*
    
    Certification of Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley of 2002.
 _______________
* Filed herewith. -36-




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SECURUS TECHNOLOGIES, INC.
 Signatures
  SECURUS TECHNOLOGIES, INC.
(Registrant)DATE: November 14, 2005
    /s/ RICHARD FALCONERichard Falcone,President, Chief Executive Officer and DirectorDATE: November 14, 2005
    /s/ KEITH S. KELSONKeith S. Kelson,Chief Financial Officer -37-




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EXHIBIT INDEX


Exhibit
No.
    
    Description of Exhibit31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley of 2002.