---

---

|                                  
|----------------------------------
|UNITED
STATES                     
|SECURITIES
AND EXCHANGE COMMISSION
|WASHINGTON
D.C. 20549             




|         
|---------
|FORM 10-K

|           |                                                     
|---------- | ----------------------------------------------------
|(Mark One)
|          
|x          | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|           | SECURITIES EXCHANGE ACT OF 1934                     
|          
|           | For
the fiscal year ended March 31, 2009            
|          
|           | OR                                                  
|          
|o          | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE  
|           | SECURITIES EXCHANGE ACT OF 1934                     
|          
|           | For the transition period from           to         
|          
|           | Commission file number: 0-22122                     



---

|                                                      
|------------------------------------------------------
|MTM TECHNOLOGIES, INC.                                
|(Exact
name of registrant as specified in its charter)



---

|                                         |                                     
|---------------------------------------- | ------------------------------------
|New York                                 | 13-3354896                          
|(State or other jurisdiction of          | (I.R.S. Employer Identification No.)
|incorporation or organization)           |                                     
|                                         |                                     
|1200 High Ridge Road                     | 06905                               
|Stamford, CT                             | (Zip Code)                          
|(Address of principal executive offices) |                                     

Registrants telephone number, including area code: (203)
975-3700



---

Securities registered pursuant to Section 12(b) of the
Act:

|                                          |  |                                          
|----------------------------------------- |  | -----------------------------------------
|Title of Each Class                       |  | Name of Each Exchange on Which Registered
|                                          |  |                                          
|Common
 stock, par value $0.001 per share |  | Nasdaq
 Capital Market                   

Securities registered under Section 12(g) of the Act:None

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.
Yes o No x

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act.
Yes o No x

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes x No o

Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company
in Rule 12b-2 of the Exchange Act. (Check one):

|                           |                      |                                                |                             
|-------------------------- | -------------------- | ---------------------------------------------- | ----------------------------
|Large
 Accelerated Filer o | Accelerated
 Filer o | Non-Accelerated
 Filer o                       | Smaller
 Reporting Company x
|                          
|                           |                      | (Do
 not check if a smaller reporting company) |                             
|                           |                      |                                                |                             

Indicate by check mark
whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o No x

The aggregate market value of
the voting and non-voting common equity held by non-affiliates of the
registrant as of the last business day of the registrants most recently completed
second fiscal quarter, at September 30, 2008, was $1.3 million based on the
closing sale price of the registrants common stock on such date of $1.45 per
share, as reported by The NASDAQ Stock Market, Inc.

There were a total of
914,005 shares of the registrants common stock outstanding as of May 31, 2009.

Documents Incorporated by Reference:None

---

---



MTM TECHNOLOGIES, INC.

ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended March 31, 2009

|            |                                                                                                                |     
|----------- | -------------------------------------------------------------------------------------------------------------- | ----
|            |                                                                                                                | Page
|            |                                                                                                                |     
|            |                                                                                                                |     
|            | Introductory
 CommentTerminology                                                                              | i   
|            | Introductory
 CommentForward-Looking Statements                                                               | i   
|            |                                                                                                                |     
|            | PART I                                                                                                         |     
|            |                                                                                                                |     
|Item 1.     | Business                                                                                                       | 1   
|Item 1A.    | Risk
 Factors                                                                                                  | 5   
|Item 2.     | Properties                                                                                                     | 9   
|Item 3.     | Legal
 Proceedings                                                                                             | 9   
|Item 4.     | Submission
 of Matters to a Vote of Security Holders                                                           | 9   
|            |                                                                                                                |     
|            | PART II                                                                                                        |     
|            |                                                                                                                |     
|Item 5.     | Market for
 Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
 of Equity Securities | 10  
|Item 6.     | Selected
 Financial Data                                                                                       | 11  
|Item 7.     | Managements
 Discussion and Analysis of Financial Condition and Results of Operations                         | 12  
|Item 7A.    | Quantitative
 and Qualitative Disclosure about Market Risk                                                     | 21  
|Item 8.     | Financial
 Statements and Supplementary Data                                                                   | 21  
|Item 9.     | Changes in
 and Disagreements with Accountants on Accounting and Financial Disclosure                          | 22  
|Item 9A.    | Controls
 and Procedures                                                                                       | 22  
|Item 9A(T). | Controls
 and Procedures                                                                                       | 22  
|Item 9B.    | Other
 Information                                                                                             | 22  
|            |                                                                                                                |     
|            | PART III                                                                                                       |     
|            |                                                                                                                |     
|Item 10.    | Directors,
 Executive Officers of the Registrant and Corporate Governance Matters                              | 23  
|Item 11.    | Executive
 Compensation                                                                                        | 26  
|Item 12.    | Security
 Ownership of Certain Beneficial Owners and Management and Related
 Stockholders Matters              | 31  
|Item 13.    | Certain
 Relationships and Related Transactions, and Director Independence                                     | 35  
|Item 14.    | Principal
 Accountant Fees and Services                                                                        | 36  
|            |                                                                                                                |     
|            | PART IV                                                                                                        |     
|            |                                                                                                                |     
|Item 15.    | Exhibits
 and Financial Statement Schedules                                                                    | 37  

---



Introductory CommentTerminology

Throughout
this Annual Report on Form 10-K, the terms we, us, our and Company
refers to MTM Technologies, Inc. (MTM) and, unless the context indicates
otherwise, our subsidiaries on a consolidated basis.

Effective
June 25, 2008, the Company implemented a one for fifteen reverse stock split
(Reverse Stock Split) of its common stock. All common stock numbers set forth
in this Annual Report on Form 10-K (including the tables and footnotes), have
been retroactively adjusted to reflect the Reverse Stock Split.

Effective
August 20, 2008, FirstMark Capital, L.L.C., a Delaware limited liability
company (FirstMark Capital), became the investment manager of certain funds
formerly managed by Pequot Capital Management Inc. (Pequot). These funds
included Pequot Private Equity Fund III, L.P. and Pequot Offshore Private
Equity Partners III, L.P., now known as FirstMark III L.P. (FirstMark Fund)
and FirstMark III Offshore Partners, L.P. (FirstMark Offshore Partners
together with FirstMark Fund, FirstMark), respectively. Constellation
Venture refers to Constellation Venture Capital II, L.P., Constellation
Offshore refers to Constellation Venture Capital Offshore II, L.P., BSC
refers to The BSC Employee Fund VI, L.P., CVC refers to CVC II Partners, LLC,
and collectively with Constellation Venture, Constellation Offshore and BSC,
Constellation, and together with FirstMark, the Investors.

Introductory CommentForward-Looking
Statements

Statements
contained in this Annual Report on Form 10-K include forward-looking
statements within the meaning of such term in Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which could cause actual financial or operating results,
performances or achievements expressed or implied by such forward-looking
statements not to occur or be realized. Forward-looking statements made in this
Form 10-K generally are based on our best estimates of future results,
performances or achievements, predicated upon current conditions and the most
recent results of the companies involved and their respective industries.
Forward-looking statements may be identified by the use of forward-looking
terminology such as may, will, could, should, project, expect,
believe, estimate, anticipate, intend, continue, potential,
opportunity or similar terms, variations of
those terms or the negative of those terms or other variations of those terms
or comparable words or expressions.

Readers
are urged to carefully review and consider the various disclosures made by us
in this Annual Report on Form 10-K including the factors discussed in Part I,
Item 1A. Risk Factors and our
other filings with the Securities Exchange Commission (SEC). These reports
attempt to advise interested parties of the risks and factors that may affect
our business, financial condition and results of operations and prospects. The
forward-looking statements made in this Form 10-K speak only as of the date
hereof and we disclaim any obligation to provide updates, revisions or
amendments to any forward-looking statements to reflect changes in our
expectations or future events.

i

---



PART I

Item 1. Business

Overview

We
are a leading national provider of innovative information technology (IT)
solutions including Application Delivery, Unified Communications, Virtualization,
and Managed Services. With specialization in these advanced technologies we
enable our clients to achieve improved operational efficiency and to focus on
growth, while mitigating the risk of implementing complex IT systems. We
achieve these results by providing solutions that address the full life cycle
of a clients IT requirements from needs analysis, through planning,
development, deployment, and testing, to on-going maintenance and support. We
combine these services with technology from leading software and hardware
manufacturers delivering strategic IT solutions that solve many of todays
business challenges.

Our
clients consist of middle market corporations (generally those with $50 million
to $1 billion in revenues), divisions of Global 2000 corporations, municipal,
state and federal government agencies, and educational, financial and
health-care institutions. We serve clients in most major US metropolitan
markets.

History

The
certificate of incorporation of MTM was filed by the New York Department of
State on May 12, 1986 under the original name of Micros To Mainframes, Inc. On
May 21, 2004 we changed the name of our Company to MTM Technologies, Inc.

Since
July 2004, we have acquired the following six companies, either through the
purchase of operating assets or the acquisition of capital stock:

| |   |                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | DataVox Technologies, Inc.,
 a Cisco AVVID (Architecture for Voice, Video and Integrated Data) authorized
 partner, offering advanced technology solutions, including IP telephony,
 security, storage, networking and wireless technologies solutions, as well as
 network facilities engineering and data center technology consulting and
 services.
| |   |                                                                                                                                                                                                                                                                                                                                                        
| |  | Network Catalyst, Inc., a
 provider of advanced technology solutions in the VOIP (Voice Over Internet
 Protocol), infrastructure and security fields to clients located throughout
 the Southern California region.                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                        
| |  | Vector ESP, Inc. and Vector
 ESP Management, Inc., providers of secure access, consulting services,
 information technology products, technology solutions, applications,
 messaging and collaboration products and services, remote connectivity and
 workforce mobility products and services.                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                        
| |  | Info Systems, Inc., a
 provider of VOIP, security and storage solutions, as well as
 telecommunications and structured cabling services, outsourced IT, staff
 augmentation and remote network monitoring, management and support services
 through its network operations center.                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                        
| |  | Nexl, Inc., a provider of
 enterprise storage, network infrastructure, security, IP telephony, and managed
 services to clients primarily located in the Northeast.                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                        
| |  | Axcent Solutions, Inc., a
 provider of access, infrastructure and availability solutions based on
 technologies from Citrix, Microsoft, Network Appliance, VMware and Cisco.                                                                                                                                                                           

Fiscal 2009  In review

For
fiscal 2009 comparable revenues for both product and service declined each
quarter with product revenue down 28.8% over the prior year and service revenue
in fiscal 2009 down over 26.2% from the prior year. We believe that the slowdown
in product sales and the related decrease in service revenue are in a large
part due to the downturn in the economy, whereby customers are experiencing a
freeze in capital spending and large infrastructure deals are being put on hold
or delayed. The unprecedented deterioration of the global financial system and
capital markets have all contributed to the sharp decline in customer
confidence, and as a result have deterred any discretionary spending. As a
highly leveraged Company with significant fixed costs, the decrease in revenue
pressured margins, and operating expenses as a percentage of revenues was
significantly higher even though there was substantial cost savings year over
year. Our business requires significant levels of working capital to fund
future revenue growth and current operations. Working capital at March 31, 2009
was a deficit of $(5.8) million as compared to a working capital deficit of
$(3.3) million at March 31, 2008.

We
exited the year under tremendous financial pressure as we had increased
restrictions on our current credit facilities and our borrowing capacity was
severely reduced in large part because of lower levels of revenue in the second
half of fiscal 2009. Net of the impact of a goodwill impairment charge of $19.6
million in fiscal 2009, operating results were approximately 43% lower than the
prior year. We have taken steps to address the deterioration in our revenue and
its impact on our Company as well as our current financing arrangements. These
include the implementation of several strategic initiatives during fiscal 2010.
These significant actions have been designed to structure our business for
profitable growth.

1

---



Business Strategy  in Fiscal 2010

The
following are key components of our strategy to improve our liquidity and our
earnings.

Get
funding in place that will enable us to better weather the current financial
crisis.

In
June 2009 we successfully negotiated an additional $7.0 million in borrowing
capacity under our existing Credit Facilities Agreement with GE Commercial
Distribution Finance Corporation (CDF). In addition the maturity date of the
Credit Facilities Agreement was extended to March 31, 2010 from August 21,
2009, the line was reduced to a maximum of $25 million from $34 million, but
most financial covenants were eliminated and other borrowing restrictions were
relaxed. Our other Senior Lenders and our Investors entered into agreements as
well, confirming their commitment to the Company in the form of guarantees and
letters of credit totaling $8.5 million securing the additional financing from
CDF. Lastly, the Investors entered into an amendment which extended the
maturity date of all the Investors Notes to November 30, 2010 from December 15,
2009. See Note 12 Subsequent Events
to the Consolidated Financial Statements, for a further discussion of all of
the relevant agreements.

Refocus
our go to market strategy with a revenue plan that builds on our regional
core competencies.

Our
strategy is to be the national leader in providing IT solutions to the middle
market, focusing on our core competencies of Application Delivery, Unified
Communications, Virtualization and Managed Services. We intend to build our
revenue through regional sales strengths that focus on core products. We plan
to significantly reduce low margin business and we intend to increase our focus
on selling our solutions to selected industry segments or industry verticals
that we believe have the greatest potential for revenue growth and gross margin
improvement.

We
believe that we can improve the overall profitability of our product resale
business by focusing on selling the products of certain vendors, typically
those for whom we sell the largest volume of products, and eliminating or
deemphasizing smaller and less profitable vendors. We believe that by properly
rationalizing our product sales we will reduce the extra cost burden associated
with supporting a large number of smaller vendors.

Institute
a comprehensive sales training program to better fulfill the expectations of
our go to market strategy.

We
are in the process of launching a sales apprenticeship program designed to
better train the entire sales force. Our training program will include the use
of a national virtual training platform, a stronger sales support network, an
improved uniform forecasting process and an aggressively managed lead follow-up
process.

Engage
a restructuring firm to execute a plan of significantly reducing our fixed
costs.

In
addition to realigning our headcount with our future revenue projections, we
are planning on taking a hard look at exiting and consolidating facilities,
negotiating current leases, utilizing increased virtual space and significantly
reducing our IT infrastructure and public company costs.

We
expect that results for fiscal 2010 will continue to be impacted by a very
difficult economic environment in the U.S. and a potentially widening global
recession. We believe, however, that the combination of adequate immediate
financing, a focused go to market strategy and strong cost controls will
enable us to lay a foundation for improved future operating results and the
ability to generate cash flow.

Business Services

Our
approach to the market aligns our solutions and professional services with
strategic manufacturer and supply chain relationships to deliver an end-to-end
solution for our clients.

Solutions

We
have developed our IT solutions to deliver immediate business value and return
on investment for our clients. Our solutions consist of the following:

Application
Delivery.Our
Application Delivery solutions offer our clients secure, on-demand access to
all of their corporate applications and information from remote locations using
both wired and wireless technologies. These solutions combine system, network,
and security technologies to create a cohesive infrastructure that improves the
efficiency, mobility and agility of clients businesses.

Unified
Communications.Our
Unified Communications solutions provide our clients the ability to combine
voice, data and video content on a common network, offering a feature-rich,
cost-effective and flexible platform for business communications. By using a
single converged network rather than multiple networks, clients are able to
lower their total cost of ownership and simplify network management and
deployment.

Consolidation.Our Consolidation
solutions provide our clients the ability to streamline their IT infrastructure
by consolidating operating systems, applications, and storage into
high-performance, scalable systems thereby improving efficiency, control and
manageability. These solutions combine server and storage consolidation,
application centralization, data management and migration and disaster recovery
services.

Virtualization.Our Virtualization
solutions provide our clients the ability to separate applications, operating
systems, and storage from physical hardware enabling a more flexible, scalable,
fault-tolerant and cost-effective IT infrastructure. Virtualization allows
clients to lower their total cost of ownership, maximize the utilization of
their infrastructure resources and achieve operational efficiencies.

2

---



Professional
Services

Our
staff of experienced and certified technology professionals provide our clients
with a full suite of IT professional services. The services range from advanced
configurations and complex project management to project logistics and
planning. We provide design, consulting, implementation and support services in
our six areas of core competence. These are systems, networks, IP telephony,
storage and security.

| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | Our systems practice
 includes Windows servers, open system servers, directories, messaging, fax
 and server-based computing.         
| |   |                                                                                                                                       
| |  | Our networks practice
 includes wide-area networks, local-area networks, wireless, intelligent
 switching and routing.                
| |   |                                                                                                                                       
| |  | Our IP telephony practice
 includes voice, video and data integration on IP network.                                                  
| |   |                                                                                                                                       
| |  | Our storage practice
 includes enterprise storage and data management.                                                                
| |   |                                                                                                                                       
| |  | Our security practice
 includes essential systems and tools to secure, monitor and defend data and
 networks from unauthorized access.

Our
capability to address all phases of technology projects, from needs analysis
and definition through implementation and support, allows us to offer our
customers a single point of accountability for a broad range of technology
projects. As technology infrastructure becomes progressively more sophisticated
and complex, our clients demand total project accountability from a single
vendor. With our national presence, engineering expertise, and high-level
relationships with top tier vendors, we are able to undertake most technology
infrastructure projects for our clients and provide them that critical single
point of accountability.

Many
of our clients require a guaranteed response to their system outages. Through
our national staff of certified technicians and related field resources, we
provide service level guarantees to our customers in response to problems with
their infrastructure technology outages that are communicated to us, or that are
detected through our automated remote monitoring systems as part of a managed
services solution. We offer our clients various degrees of guaranteed response
depending on the severity of the outage or the clients specific response
requirements.

Technology
Partners

We
maintain strategic relationships with many of todays leading hardware and
software technology manufacturers enabling us to deliver to our clients
advanced and comprehensive solutions at competitive prices. For example, we are
a Cisco Gold partner, a Citrix Platinum Solutions Advisor, a Hewlett Packard
Gold partner, a Microsoft Gold partner, an EMC Velocity Premier partner and a
Sun Advantage partner. For those manufacturers that we believe are critical to
our clients technology infrastructure we generally hold the highest levels of
certification granted by such manufacturers. We work with our strategic
partners to develop national training programs to ensure consistent service
delivery methodologies across our entire national footprint. With over 200
technical professionals nationwide, we train and certify our service
professionals to maintain the highest levels of manufacturer certifications and
authorizations. We often times work in conjunction with our partners to utilize
our own accredited professional training service centers to train and deliver
technical content to our service professionals.

We
provide all aspects of infrastructure technology product delivery to our
clients. Through our relationships as a certified partner with most of the key
top tier infrastructure technology product manufacturers and with key
infrastructure technology distributors, we are able to provide our clients with
cost-effective product sourcing solutions to meet their requirements for
managed, timely and competitive product procurement.

We
offer an on-line, Web-based, secure product purchasing option for those clients
who prefer a self-service alternative. Our e-commerce portal allows our clients
to obtain product pricing, place unit or volume orders, and track the delivery
process of their orders on line.

Managed
Services

Our
automated remote management system and proactive support services monitor,
manage, and protect our clients business-critical infrastructure and
applications from down time and failure.

Remote
Monitoring & Management.Our automated remote management system provides our clients with
real-time monitoring of their computing and storage systems, IP telephony
systems and network infrastructure to immediately detect component failures,
critical security events (such as hacking attempts), and deteriorating
performance, with reporting on key operating metrics of these systems. The
system is a combination of our proprietary network management and monitoring
software and third party licensed software. Monitoring of our clients networks
is performed by our certified engineering staff operating on a 24x7x365 basis
from our network operations center.

Remote
Support.Our remote
phone support service is a virtual extension of our clients IT staff. We
provide support for a wide range of technologies including Microsoft, Citrix,
Sun, Cisco and Captaris.

Remote
Helpdesk.Our helpdesk
services provide end-user support customized to meet our clients specific
application requirements. Virtually all helpdesk analysts are HDI (Help Desk
International) certified and available 24x7.

IT
Outsourcing. Many of
our clients and potential clients have adopted an approach to technology of
focusing on their core business competencies, while outsourcing non-core
technology systems. These clients, however, often find it more cost-effective
to outsource than to fund the cost of a full-time internal IT staff to operate
the sophisticated technology systems necessary to support their core business.
Additionally, some clients are faced with extensive legal and regulatory
compliance mandates that require sophisticated technology solutions. Again, for
some of these clients, maintaining a full-time internal staff to operate those
systems is not feasible. Our IT outsourcing solutions provide a cost effective
solution to such clients by providing targeted support to fill gaps in their
technology staffing on a project basis.

3

---



Industry

The
IT solution and service provider industry is a multi-billion dollar industry
that is focused on providing services to clients in building and maintaining IT
infrastructures, safeguarding data and systems, optimizing applications and ensuring
regulatory compliance. Industry participants face intense competition, the
challenge of constant technological advancement and the ongoing need for
business process optimization. The outsourcing of computer solutions is a
rapidly growing trend in which a client company obtains all or a portion of its
data processing requirements from an IT solutions provider, such as us, that
specializes in the computer service, product or application required by the
client.

We
believe the strongest demand for our IT solutions is amongst companies which
typically lack the time and technical resources to satisfy all of their IT
needs internally. These companies typically require sophisticated, experienced
IT assistance to achieve their business objectives and often rely on IT service
providers to help implement and manage their systems. However, many of these
companies rely on multiple providers for their IT needs. Generally, we believe
that this reliance on multiple providers results from the fact that larger IT
service providers do not target these companies, while smaller IT service
providers lack sufficient breadth of services or industry knowledge to satisfy
all of these companies needs.

Companies
have recognized the importance of IT systems in supporting their business
processes and are turning to IT solutions to compete more effectively. At the
same time the process of designing, developing and implementing IT solutions
has become increasingly complex. The accelerated rate of development of new
technologies is placing increasing demand on our clients to understand the
opportunity and impact that these technologies can have on their business. IT
services organizations like ours are faced with an increasing demand to keep up
with these developments so as to effectively serve as consultants and advisors
to our clients.

Consolidation
of clients voice and data communications to IP-based networks and advances of
virtualization at the device and application level are indicative of a trend toward
a more centralized computing model. This cycle, which started with mainframes,
then workgroup mini-computers, then highly distributed applications running on
micro-computers and PCs, may now be returning to a model where an increasing
portion of business applications are implemented in a centralized computing
model, using increasingly sophisticated terminal services to access these
applications. This shift may be one of the most significant developments
driving the re-definition by IT providers of product and service solutions for
the foreseeable future.

Sales and Marketing

Our
primary target market for acquiring new clients consists of middle market
corporations (generally those worth $50 million to $1 billion in revenues),
divisions of Global 2000 corporations, municipal, state and federal government
agencies, and educational, financial and health-care institutions. We further
define our target market as organizations with 100 to 3,000 technology seats in
a single or in multiple US locations.

Sales.We have a direct sales
force in the United States consisting of account executives, sales assistants,
and subject matter expert sales personnel located in four areas (Northeast,
Mid-Atlantic, Central, and West), each of whom report to an area vice president
of sales. Account executives have the direct responsibility for selling and
account management and the adoption of our technology at customer sites. A
subject matter expert sales specialist is a quota-carrying, outbound sales professional
with generally ten-plus years of relevant experience and with advanced
knowledge of a specific technology that drives specific vendor and solution
sales.

Indirect
Sales.Through our
partnership organization, we seek to build a set of relationships with
strategic partners and value added resellers, in order to establish, and then
expand an indirect channel of sales for our products.

Marketing.Our marketing strategy
is to position ourselves as the premier IT solutions provider to the middle
market. We do this primarily through demand generation activities, and by
identifying new business opportunities. Demand generation activities are
targeted to both vertical markets (e.g. industry-specific markets such as
financial services, healthcare, government, and retail) and horizontal markets,
consisting primarily of national and regional events, trade shows, and
advertising. Event and trade show attendance is driven by targeted mass email
campaigns, telemarketing and the local sales organization. Most marketing
initiatives involve participation by one or more of our technology partners,
which both enhances our visibility and resources, and significantly defrays our
out-of-pocket marketing costs. We also identify business opportunities through
new and existing contacts generated by our sales force.

Suppliers

We
purchase software, computers and related products directly from numerous
suppliers as either an authorized dealer or a value added reseller. We have
entered into authorization agreements with our major suppliers including Cisco
Systems, Inc., Citrix Systems, Inc., Hewlett-Packard Company, Microsoft
Corporation, EMC Corporation and Sun Microsystems, Inc. Typically, these
agreements provide that we have been appointed, on a non-exclusive basis, as an
authorized dealer and systems integrator of specified products of the supplier
at specified locations. Most of the authorization agreements provide that the
supplier may terminate the agreement with or without cause upon 30 to 90 days
notice or immediately upon the occurrence of certain events. If these
agreements are terminated, we may have difficulty in obtaining inventory at a
sufficiently low cost to allow for resale at a competitive price. The sales of
products from the Companys two largest suppliers accounted for 27% and 26% of
all product sales for the year ended March 31, 2009.

We
receive certain discretionary cost subsidies, typical for the industry, from
certain major suppliers to promote sales and support activities relating to
their products. We have used these funds to subsidize marketing, advertising
and our connectivity and communication laboratory.

Our
suppliers generally permit us to pass through to clients all warranties and
return policies applicable to the suppliers products. To date, we have
experienced few returns of product and have generally been reimbursed by the
suppliers for most warranty work done for clients. All service work after the
expiration of the warranty period is at the clients expense. We offer service
contracts of varying lengths under which we agree to be responsible for all
service costs for a fixed term in exchange for a set fee paid by the client.

Software
and other related products are purchased from numerous industry suppliers. As
is customary, we do not have any long-term agreements or commitments with these
suppliers, because competitive sources of supply are generally available for
such products.

4

---



Competition

The
markets in which we operate are highly competitive with respect to performance,
quality and price. In our professional services business our competition ranges
from small, specialty integrators, to other service providers of comparable
size and profile to us, as well as large national and global professional
services firms and integrators. Our smaller competitors generally are highly
focused on their immediate market segment. Our larger competitors generally
have greater financial resources and may be able to compete more effectively
than we can on prices and payment terms offered to potential clients. In our
product provisioning business we directly compete with local, regional and
national distributors and mail order providers of computer and IT products and
services, including network integrators and corporate divisions of retail
superstores. Our product competitors include Verizon, AT&T, Dell, and local
market niche companies.

In
addition, some of our competitors have, or may have, greater financial,
marketing and other resources than us. As a result, they may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements, benefit from greater purchasing economies, offer more aggressive
hardware and service pricing to customers, or devote greater resources to the
promotion of their products and services. We also compete with manufacturers,
including those serving as our vendors, which market through direct sales
forces and distributors. More aggressive competition by principal manufacturers
of computer and IT products, such as offering a full range of services in
addition to products, could have a material adverse effect on our operations
and financial results. We believe that our backlog of unfilled customer orders
is not material.

Proprietary Information

We
do not hold any patents, but have several trademarks and service marks. We also
may affix copyright notices on our support service, training and service
manuals. While such protection may become important to use, it is not
considered essential to the success of our business. We rely on the know-how,
experience and capabilities of our management, sales and service personnel. We
generally require our employees to sign confidentiality or non-solicitation
agreements.

Employees

As
of March 31, 2009 we employed approximately 416 associates (as measured on a
full-time equivalent basis) in the United States. Of these associates, 26 were
in management, 92 were in sales and marketing, 214 were in technical support,
and 84 were in operations, finance and administration. At fiscal year end none
of our personnel was represented by a union.

Item 1A. Risk
Factors

The
statements in this Section describe the major risks to our business and should
be considered carefully. We provide the following cautionary discussion of
risks, uncertainties and possibly inaccurate assumptions relevant to our
business. These are factors that, individually or in the aggregate, we think
could cause our actual results to differ materially from expected and
historical results. We note these factors for investors as permitted by the
Private Securities Litigation Reform Act of 1995. It is not possible to predict
or identify all such factors. Consequently, you should not consider the following
to be a complete discussion of all potential risks or uncertainties.

Risks Relating to our Business

We
have incurred losses in our last three fiscal years and our losses may
continue.

We
incurred a net loss of approximately $39.6 million for our fiscal year ended
March 31, 2009, $14.4 million for our fiscal year ended March 31, 2008 and
$32.0 million for our fiscal year ended March 31, 2007. Our net losses may
continue and our ability to achieve and sustain profitability will be impacted
by the following:

| |   |                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our access to sufficient
 working capital and vendor credit to fund our sales and other operating
 activities.                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                            
| |  | Our revenue may not
 increase or even remain at its current level.                                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                            
| |  | Our operating expenses may
 increase as a percentage of revenue. If our expenses increase more rapidly
 than our revenue, or if revenue and expense levels remain the same, we may
 never become profitable.                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                            
| |  | Our ability to successfully
 execute our go to market strategy.                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                            
| |  | Our ability to keep pace
 with rapidly changing technology and frequent introductions of new IT
 products, services, and product and service enhancements, and our ability to
 fulfill increasingly sophisticated client requirements.                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                            
| |  | Our ability to attract,
 train, retain and motivate qualified IT, sales and senior management
 personnel in a market place where competition for qualified personnel is
 significant. There is a shortage of qualified personnel in these fields and
 we compete with other companies for this limited pool of IT professionals and
 sales and senior management personnel.

There
is no assurance that we will be able to successfully implement our new
strategic initiatives or improve future operating results. Failure to do so may
adversely affect our business and our financial results.

5

---



Increased
leverage and/or increases in interest rates may harm our financial condition
and results of operations.

At
March 31, 2009, we had outstanding approximately $15.7 million on our credit
facilities, $6.8 million of related party notes payable and a long-term secured
promissory note including long-term accrued interest of approximately $41.6
million. Future increases in our level of financial obligations or in the
related interest rates could significantly impact our ability to satisfy said
obligations including the payment of periodic interest as they become due.

If
we are unable to generate sufficient cash flow from operations in the future to
satisfy our obligations or if we are unable to refinance or restructure our
indebtedness our financial condition could be materially and adversely
affected.

We
require access to significant working capital and vendor credit to fund our
day-to-day operations. Our failure to comply with the covenants under our
working capital facility and other credit arrangements could lead to a
termination of those agreements and an acceleration of our outstanding debt.

We
require access to significant working capital and vendor credit to fund our
day-to-day operations, particularly at the end of our fiscal quarters when
demand for our products and services increases substantially. Our Credit
Facilities Agreement (described in Part II, Item 7) with CDF, as Administrative
Agent, and our CP/NEBF Credit Agreement (described in Part II, Item 7) with
Columbia Partners, L.L.C. Investment Management, as Investment Manager (CP
Investment Management), and National Electric Benefit Fund (NEBF), as
Lender, contain a number of covenants. A breach of these covenants, unless
waived, would be a default under each facility. Upon an event of default, each
of these lenders may terminate their respective facilities and/or declare all
amounts outstanding under such facilities immediately due and payable and
exercise other remedies including foreclosure of the security for the
obligations under such facilities. The acceleration of our debt would have a
material adverse effect on our financial condition and liquidity. Additionally,
the amount of working capital available to us under the credit facilities
agreement is dependent upon the amount and quality of our accounts receivable.
Significant defaults, or payment delays, of our accounts receivable could
materially adversely affect our borrowing base and our access to sufficient
working capital.

Our
vendor agreements and lines of credit are generally terminable by the vendor at
any time. Any significant termination of these arrangements would adversely
impact our ability to deliver our IT solutions and reduce our working capital
availability.

Our
auditors have qualified their report on our financial statements to indicate
that there is substantial doubt as to our ability to continue as a going
concern, which could adversely affect our ability to obtain third party
financing.

Our
auditors, McGladrey & Pullen, LLP (McGladrey & Pullen), have included
an explanatory paragraph in their report on the current financial statements to
indicate that there is substantial doubt about our ability to continue as a
going concern. The existence of the going concern could affect
our ability to obtain financing from third parties or could result in increased
cost of such financing. The accompanying consolidated financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.

A
prolonged downturn in economic conditions may impact our revenues and
negatively affect our business in the future.

The
recent economic slowdown in particular within the lending industry may
negatively affect our business. As the financial crisis broadens or intensifies
it may impact our ability to raise additional capital or obtain additional
financing, if needed. Customers may cancel or delay orders for our products or
services, and we could fall short of our revenue projections for 2010 and
beyond. Slower growth and budget tightening among our customers and other
general economic factors all have had, and could in the future have a
materially adverse effect on our revenue, capital resources, financial
condition and results of operations.

We
may be required to record additional goodwill impairment charges, which could
result in an additional significant charge to earnings.

Under
generally accepted accounting principles, we test goodwill for impairment at
least annually. During fiscal 2009, we recorded a goodwill impairment charge of
$19.6 million. The goodwill impairment charge resulted from a decline in our
stock price and market capitalization, reduced estimates of our future cash
flows, and slower industry growth rates. Further declines in our stock price,
the markets or reductions in our future cash flow estimates and future
operating results may require us to record significant additional goodwill
impairment charges in our financial statements in future periods, negatively
impacting our financial results.

We
may need additional funds to support our current and future operations which,
if available, could result in a dilution of your shareholdings. If these funds
are not available, our business could be adversely affected.

We
may raise funds through public or private debt or equity financing. If funds
are raised through the issuance of equity securities, the percentage ownership
of our then current shareholders may be reduced and such securities may have
rights, preferences or privileges senior to those of the holders of our common
stock. If additional funds are raised through the issuance of debt securities,
such securities could have rights, preferences and privileges senior to those
of the holders of our common stock and the terms of such debt could impose
restrictions on our operations. If additional funds become necessary, additional
financing may not be available on terms favorable to us, or at all. If adequate
funds are not available on acceptable terms, we may not be able to continue to
fund our current operations.

6

---



The
failure to maintain our status as an authorized reseller/service provider of IT
products or a significant change in the terms of our supplier agreements could
have a material adverse effect on our business and operations.

We
are materially dependent on our continued status as an approved reseller of IT
products and our continued authorization as an IT service provider. We would be
unable to provide the range of products and services we currently offer,
including warranty services, without such authorization. Our resale agreements
with manufacturers generally are terminable by manufacturers on short notice.
The sales of products from our two largest suppliers accounted for 27% and 26%
of all product sales for the year ended March 31, 2009. The loss of one or more
of such authorizations could have a material adverse effect on our business and
results of operations.

In
addition, our professional services revenues depend in large part on our
accreditations with other vendors such as Citrix, Cisco, and Microsoft. Most of
our major vendors require that we maintain specifically trained and accredited
staff at each of our offices in order to resell and provide services associated
with such products. Furthermore, certain such vendors require that we make
annual purchases of their products for use in our labs and for marketing
purposes. Each vendor independently determines these requirements for those
organizations which it authorizes to provide services in connection with their
products. If these requirements should become substantially more burdensome,
they could affect our business in either of two ways: (1) we would elect not to
continue our accreditation with such vendor and forgo the revenues associated
with the resale of such vendors products and associated services, or (2) we
would incur the additional expense associated with additional staff training or
equipment purchase requirements. In either case, this could have a negative
impact on our operating results.

We
are subject to substantial competition which could adversely affect our
operating results.

The
markets in which we operate are highly competitive with respect to performance,
quality and price. In our professional services business our competition ranges
from small, specialty integrators, to other service providers of comparable
size and profile to us, as well as large national and global professional
services firms and integrators. Our smaller competitors generally are highly
focused on their immediate market segment. Our larger competitors generally have
greater financial resources and may be able to compete more effectively than we
can on prices and payment terms offered to potential clients. This competition
impacts our ability to acquire and retain clients and reduces the prices we can
charge for our offering.

We
also compete with manufacturers, including those serving as our vendors, which
market through direct sales forces and distributors. More aggressive
competition by principal manufacturers of computer and IT products, such as
offering a full range of services in addition to products, could have a
material adverse effect on our operations and financial results.

The
loss of key personnel or difficulties recruiting and retaining qualified
personnel could jeopardize the Companys ability to remain competitive.

The
success of the Companys efforts to grow its business and remain viable depends
on the contributions and abilities of key executive and operating officers and
other personnel. We must continue to recruit, retain and motivate management
and operating personnel sufficient to maintain our current business and support
our projected growth. We may have difficulty attracting or retaining
highly-skilled personnel during periods of poor operating performance, and as a
result of recent actions to suspend the Companys 401(k) contributions to
participant accounts, eliminate merit increases and increase benefit costs to
the employee. A shortage or loss of these key employees might jeopardize the
Companys ability to meet its strategic targets.

If
we are unable to protect our trade secrets, our financial condition could be
materially adversely affected.

We
rely upon a combination of nondisclosure and other contractual arrangements and
trade secret, copyright, and trademark laws to protect our proprietary rights
and the proprietary rights of third parties from whom we license intellectual
property. We enter into confidentiality agreements with our employees and limit
distribution of proprietary information. However, we cannot assure that the
steps taken in this regard will be adequate to deter misappropriation of
proprietary information or that we will be able to detect unauthorized use and
take appropriate steps to enforce our intellectual property rights. We also are
subject to the risk of litigation alleging infringement of third-party
intellectual property rights. Any such claims could require us to spend
significant sums in litigation, pay damages, develop non-infringing
intellectual property, or acquire licenses to the intellectual property that is
the subject of the alleged infringement. Our inability or failure to establish
rights or to protect our rights may have a material adverse effect on our
business, results of operations, and financial condition.

Our
dependence on third party licenses could have adverse affects.

We
rely on certain software, technology and content that we license or have
licensed from third parties, including software, technology and content that is
integrated with internally developed software and used in our products to
perform key functions. These third-party licenses may not continue to be
available to us on commercially reasonable terms. Also, the licensed software,
technology and content may not be appropriately supported, maintained or
enhanced by the licensors such that the license would not continue to provide
the necessary commercial benefits to us. In addition, we may not be able to
license additional software, technology and content on terms advantageous to
us. The loss of or inability to obtain or replace licenses to, or inability to
support, maintain and enhance, any of such licensed software, could result in
increased costs, including the expense of internally developing the required
software, technology and/or content, as well as delays or reductions in product
shipments.

In
certain parts of our managed services business we utilize software obtained as
open-source. Such software is supported through various informal developer
communities and may be more susceptible to internal vulnerabilities than
commercial grade products. In the event that any of these software products
would need to be replaced by an equivalent commercial product (because of
discovered flaws or difficulty in obtaining support), we could incur
significant costs associated with licensing equivalent commercial products,
possibly rendering the services provided to clients based on these products
unprofitable.

7

---



We
have and may continue to have fluctuations in our quarterly operating results.

Our
quarterly operating results have and, in the future, may fluctuate
significantly, depending on a variety of factors, many of which are outside of
our control. Factors that may affect our quarterly results include:

| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | changes in the level of our
 operating expenses;                                             
| |   |                                                                                              
| |  | the demand for our products
 and services;                                                   
| |   |                                                                                              
| |  | timing and amount of vendor
 and manufacturer incentive programs;                            
| |   |                                                                                              
| |  | the size, timing and timely
 fulfillment of orders for our products and services;            
| |   |                                                                                              
| |  | the financial impact of and
 possible business interruptions caused by restructuring efforts;
| |   |                                                                                              
| |  | the level of product, price
 and service competition;                                        
| |   |                                                                                              
| |  | changes in our sales
 incentive strategy, as well as sales personnel changes; and            
| |   |                                                                                              
| |  | general economic conditions
 and economic conditions specific to the IT market.              

Our
operating expenses and capital expenditures are expected to be based in large
part on our expectations of future revenues. Therefore, if revenue levels are
below expectations, operating results are likely to be adversely affected.
Operating results may be disproportionately affected negatively by an
unanticipated decline in revenue for a particular quarter because a relatively
small amount of our expenses will vary with our revenue in the short term. As a
result, we believe that period-to-period comparisons of our results of
operations are not and will not necessarily be meaningful and should not be
relied upon as any indication of future performance.

Risks Relating to Ownership of our Common Stock

FirstMark
can be deemed our controlling shareholder and FirstMarks interests may not be
the same as our other shareholders.

FirstMark
currently holds approximately 57% of the voting power of our outstanding
securities and has the right to acquire up to 62% of our voting securities.
FirstMark Capital also has the power to nominate two directors to our Board of
Directors. FirstMark will receive additional voting power when we pay dividends
on outstanding Series A Preferred Stock in the form of additional shares of
Series A Preferred Stock. As a result, FirstMark may be deemed in control
because the approval of FirstMark is effectively required to consummate any
transaction requiring the approval of shareholders. These transactions could
include mergers, consolidations, dissolutions or sales of assets. These
transactions could benefit FirstMark at the expense of our other shareholders
or benefit FirstMark disproportionately when compared to our other
shareholders.

There
is significant potential volatility in our stock price.

The
market for our common stock is highly volatile and we have a limited average
daily trading volume when compared to the total number of shares of our common
stock outstanding. Consequently, even moderate selling pressure on our common
stock could have a depressive effect on its market price.

We
may issue substantial amounts of additional shares of our common and preferred stock
without shareholder approval, which could dilute the equity interests of our
shareholders.

As
of May 31, 2009, we had outstanding an aggregate of 914,005 shares of our
common stock and an aggregate of 32,303,332 shares of Series A Preferred Stock
which are subsequently convertible into a total of 3,979,280 shares of our
common stock. As of May 31, 2009, the Investors hold warrants to purchase
260,799 shares of our common stock and 1,456,969 shares of preferred stock. We
also have an additional 12,446,668 shares of Series A Preferred Stock
authorized but unissued, all of which shares are not reserved for specific
purposes, other than pursuant to the anti-dilution provisions of the Series A
Preferred Stock or for issuance in lieu of cash dividends on the Series A
Preferred Stock, an additional 3,250,000 shares of serial preferred that are
not designated as Series A Preferred Stock and an additional (a) 377,694 shares
of our common stock issuable upon the exercise of stock options or restricted stock
units granted or available for grant under our various stock plans and (b)
aggregate of approximately 93,332 shares of our common stock issuable upon
exercise of other warrants previously granted and outstanding, all as of May
31, 2009. All of such shares may be issued without any action or approval by
our shareholders, except as may be limited under NASDAQ Marketplace Rules. Any
shares issued by us in the future would further dilute the percentage ownership
held by our shareholders.

Our
stock may lose access to a viable trading market.

Given
the increasing cost and resource demands of being a public company, the Company
has decided to deregister its common stock currently registered under the
Securities Exchange Act of 1934, as amended, and go dark. By going dark, our
obligations to file reports (including periodic reports, proxy statements, and
tender offer statements) with the SEC would cease and there would be a
substantial decrease in disclosure by the Company of its operations and
prospects. Additionally, by going dark, our common stock would no
longer trade on the NASDAQ Stock Market (the NASDAQ) but may continue to
trade on the Pink Sheets, which would likely lead to a substantial decrease in
the liquidity in the Companys common stock. The markets interpretation of a
companys motivation for going dark varies from cost savings, to negative
changes in the firms prospects, to serving insider interests, all of which may
affect the overall price and liquidity of a companys securities.

8

---



Item 2. Properties

Our
principal executive offices are located at 1200 High Ridge Road, Stamford,
Connecticut. We lease approximately 20,000 square feet of office space at this
location. The Company additionally leases approximately 158,000 square feet of
space in another 20 locations throughout the United States for regional and
administrative offices. The Company currently occupies 15 of these offices,
subleases office space consisting of approximately 21,000 square feet and
maintains leases on approximately 17,000 square feet of abandoned space that
the Company is trying to sublet.

Item 3. Legal
Proceedings

From
time to time, in the normal course of business, various claims are made against
the Company. Except for the proceedings described below, there are no material
proceedings to which the Company is a party.

On
January 22, 2009, the parties entered into a Confidential Settlement Agreement
and Release of Claims (Mhanna Confidential Settlement) with the plaintiff in
the lawsuit styled Amanda Mhanna v. MTM Technologies, Inc, et al., filed on
December 4, 2007 in the Superior Court of the State of California. The
plaintiff, a former Company employee, alleged discrimination, harassment, retaliation
and other causes of action against the defendants, and sought an unstated
amount of compensatory and punitive damages, attorneys fees, and costs. Under
the terms of the Mhanna Confidential Settlement all claims against Company and
the individual defendant have been dismissed with prejudice and without
admission of liability or wrongdoing.

On
May 18, 2009, the parties entered into a Confidential Settlement Agreement and
Release of Claims (Patel Confidential Settlement) with the plaintiff in the
lawsuit styled Sonal Patel v. MTM Technologies, Inc, et al., filed on March 14,
2008 in the Superior Court of the State of California. The plaintiff, a former
Company employee, alleged hostile work environment, harassment, and intentional
infliction of emotional distress against the defendants and sought an unstated
amount of compensatory and punitive damages, attorneys fees, and costs. Under
the terms of the Patel Confidential Settlement all claims against Company and
the individual defendant have been dismissed with prejudice and without
admission of liability or wrongdoing.

As
permitted under New York law, the Company has agreements under which it
indemnifies its officers, directors and certain employees for certain events or
occurrences while the officer or director is or was serving at the Companys
request in such capacity. The maximum potential amount of future payments the
Company could be required to make under these indemnification agreements is
unlimited. The Company has a director and officer insurance policy that limits
its exposure and enables it to recover a portion of any future amounts paid.
Given the insurance coverage in effect, the Company believes the estimated fair
value of these indemnification agreements is minimal. The Company has no
liabilities recorded for these agreements as of March 31, 2009.

The
Company is a party to other various claims and legal actions arising in the
ordinary course of its business. The Company believes that the ultimate outcome
of these matters would not have a material adverse impact on the Companys
financial condition or the results of its operations.

Item 4. Submission
of Matters to a Vote of Security Holders

No
matters were submitted to a vote of security holders during the fourth quarter
of fiscal 2009.

9

---



PART II

Item 5. Market
for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.

Market for Our Common Stock

Our
common stock is traded on The NASDAQ Capital Market under the symbol MTMC.
Set forth in the following table is the closing high and low sales prices for
our common stock for each of the quarters during our last two fiscal years,
based upon data provided by the NASDAQ:

|                                  |  |      |      |     |   |      | 
|--------------------------------- |  | ---- | ---- | --- | - | ---- | 
|Fiscal
 Year Ended March 31, 2009 |  | High |      | Low |  
|                                  |  |      |      |     |  
|                                  |  |      |      |     |   |      | 
|Quarter ended June 30, 2008       |  | $    | 7.20 |     | $ | 2.25 | 
|Quarter ended September 30,
 2008 |  |      | 2.99 |     |   | 1.26 | 
|Quarter ended December 31,
 2008  |  |      | 1.98 |     |   | 0.23 | 
|Quarter ended March 31,
 2009     |  |      | 0.74 |     |   | 0.33 | 

|                                  |  |      |      |     |   |      | 
|--------------------------------- |  | ---- | ---- | --- | - | ---- | 
|Fiscal Year
 Ended March 31, 2008 |  | High |      | Low |  
|                                  |  |      |      |     |  
|                                  |  |      |      |     |   |      | 
|Quarter ended June 30, 2007       |  | $    | 1.30 |     | $ | 0.80 | 
|Quarter ended September 30,
 2007 |  |      | 1.15 |     |   | 0.90 | 
|Quarter ended December 31,
 2007  |  |      | 0.99 |     |   | 0.53 | 
|Quarter ended March 31,
 2008     |  |      | 0.75 |     |   | 0.39 | 

Record Holders

As
of May 31, 2009 there were 159 record holders of our common stock and
approximately 1,300 beneficial holders of our common stock.

Dividends

We
have never declared or paid any dividends to the holders of our common stock
and we do not expect to pay cash dividends in the foreseeable future. Our Board
of Directors will have the sole discretion in determining whether to declare
and pay dividends in the future. The declaration of dividends will depend on
our profitability, financial condition, cash requirements, future prospects and
other factors deemed relevant by our Board of Directors. In addition,
provisions contained in our Certificate of Incorporation governing the terms of
our Series A Preferred Stock, provisions contained in our Credit Facilities
Agreement (described in Part II, Item 7) with CDF, as Administrative Agent, and
in our CP/NEBF Credit Agreement (described in Part II, Item 7) with CP
Investment Management and NEBF, as Lender, place restrictions on our ability to
declare or make any cash dividends on our common stock. In addition, our
ability to pay cash dividends on our common stock in the future could be
further limited or prohibited by the terms of future financing agreements that
we may enter into or by the terms of any preferred stock that we may authorize
and issue.

10

---



Equity Compensation Plan Information

The
following table sets forth, as of March 31, 2009:

| |   |                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the number of shares of our
 common stock issuable upon exercise of outstanding options, warrants and
 rights, separately identified by those granted under equity compensation
 plans approved by our shareholders and those granted under plans, including
 individual compensation contracts, not approved by our shareholders (column
 A),
| |   |                                                                                                                                                                                                                                                                                                                                               
| |  | the weighted average
 exercise price of such options, warrants and rights, also as separately
 identified (column B), and                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                               
| |  | the number of shares
 remaining available for future issuance under such plans, other than those
 shares issuable upon exercise of outstanding options, warrants and rights
 (column C).                                                                                                                                                      

|                                                       |  |                                                                                              |         |                                                                                |   |                                                                                                                                           |  |  |         | 
|------------------------------------------------------ |  | -------------------------------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------ | - | ----------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------- | 
|                                                       |  | Column A                                                                                     |         | Column B                                                                       |   | Column C                                                                                                                                  | 
|                                                       |  |                                                                                              |         |                                                                                |   |                                                                                                                                           | 
|                                                       |  | Number of shares
 to be issued
 upon exercise of
 outstanding
 options, warrants
 and rights |         | Weighted average
 exercise price of
 outstanding
 options warrants
 and rights |   | Number of shares
 remaining
 available for
 future issuance
 under equity
 compensation
 plans (excluding
 shares reflected
 in column A) | 
|                                                       |  |                                                                                              |         |                                                                                |   |                                                                                                                                           | 
|                                                      
|Equity compensation plans approved by shareholders     |  |                                                                                              | 195,566 |                                                                                | $ | 31.71                                                                                                                                     |  |  | 173,068 | 
|Equity compensation plans not approved by shareholders |  |                                                                                              |        |                                                                                |   |                                                                                                                                           |  |  |        | 
|                                                       |  |                                                                                              |         |                                                                                |   |                                                                                                                                           |  |  |         | 
|Totals                                                 |  |                                                                                              | 195,566 |                                                                                | $ | 31.71                                                                                                                                     |  |  | 173,068 | 

Equity
Compensation Plan Information excludes, for the purposes of Columns A and B,
8,561 Restricted Stock Units with a weighted-average fair value of $27.30.

Item 6. Selected
Financial Data

Not applicable.

11

---



Item 7.Managements Discussion
and Analysis of Financial Condition and Results of Operations.

The following
discussion and analysis of our results of operations and financial condition
should be read in conjunction with our audited consolidated financial statements
and related notes included elsewhere in this Annual Report on Form 10-K.

Overview

We are a
leading national provider of innovative IT solutions including Application
Delivery, Unified Communications, Virtualization, and Managed Services. With specialization
in these advanced technologies we enable our clients to achieve improved
operational efficiency and to focus on growth, while mitigating the risk of
implementing complex IT systems. We achieve these results by providing
solutions that address the full life cycle of a clients IT requirements from
needs analysis, through planning, development, deployment, and testing, to
on-going maintenance and support. We combine these services with technology
from leading software and hardware manufacturers delivering strategic IT
solutions that solve many of todays business challenges.

Our clients
consist of middle market corporations (generally those with $50 million to $1
billion in revenues), divisions of Global 2000 corporations, municipal, state
and federal government agencies, and educational, financial and health-care
institutions. We serve clients in most major US metropolitan markets.

In the first
quarter of fiscal 2009, the Company affected a 1-for-15 reverse stock split of
its common stock (Reverse Stock Split) which occurred on June 25, 2008. The
Reverse Stock Split was implemented to avoid being delisted from the NASDAQ due
to the failure to comply with the minimum bid price requirement. Following a
hearing held on July 10, 2008, the NASDAQ Listing Qualifications Panel (the
Panel), by letter dated July 16, 2008, indicated that MTM had regained
compliance with the continued listing standards of the NASDAQ. Accordingly, the
Panel determined to continue the listing of the Companys shares on the NASDAQ.

In the fourth
quarter of fiscal 2009, we conducted our annual assessment of goodwill for
impairment. We performed extensive valuation analyses, utilizing both income
and market approaches in our goodwill assessment process. Over the past few
quarters the Company has experienced a significant decline in its stock price
for both common and preferred stock resulting in a lower estimated fair value
of the Company. The decline in the fair value of the Company below its book
value is also attributable to the current economic crisis and lower than
expected revenues and cash flows, and the uncertainty related to future cash
flows. As a result, for the year ended March 31, 2009, we recorded a pretax
impairment charge of $19.6 million to reduce the carrying value of the
Companys goodwill. Additional impairment charges could be recognized in the
near term if current conditions continue to decline. No goodwill impairment
charge was required for the year ended March 31, 2008.

As of March
31, 2009 the FirstMark and Constellation investment totaled approximately $73
million. We had used these funds, dating back to July 2004, to acquire six
strategic providers of advanced technology solutions and products, as well as
for working capital needs.

The Company
sustained net losses during the fiscal years ended March 31, 2009 and 2008. Our
decline in performance in during fiscal 2009 continued to be impacted by a
weaker US economy and reduced access to business credit. Our business requires
significant levels of working capital to fund future revenue growth and current
operations. Working capital at March 31, 2009 was a deficit of $(5.8) million
as compared to a working capital deficit of $(3.3) million at March 31, 2008.
We have historically relied on and continue to rely heavily on, trade credit
from vendors and our credit facilities for our working capital needs. We have
made a concerted effort to improve our working capital position over the past
few years and during fiscal 2009 had taken significant measures to further reduce
headcount, streamline operations, consolidate facilities and manage costs in
response to the impact of the economic downturn. We have also significantly
reduced our infrastructure investment by limiting future capital expenditures
including the internal development of purchased and developed software. We
continue to drive accounts receivable and have made strong progress in
collecting overdue accounts.

We continue to
actively pursue additional financing arrangements including the successful
negotiation in June of fiscal 2010 of an additional $7.0 million in borrowing
capacity under our existing Credit Facilities Agreement with CDF. Most recently
prior to that we were able to secure an additional $2.0 million in financing
during the fourth quarter of fiscal 2009; $1.0 million from the Investors and
an increase of $1.0 million under the CP/NEBF Credit Agreement. We were also
able to complete several other financing arrangements with the Investors over
the past two years amounting to $6.0 million, we secured an additional $3.0
million in financing under our Secured Promissory Note with CP Investment
Management and NEBF during the first quarter of fiscal 2009, and issued
additional shares of Series A Preferred Stock raising over $9.0 million in the
prior fiscal year alone.

The Companys
ability to continue as a going concern, however, is contingent upon its ability
to obtain debt and or capital financing in order to meet obligations that
mature in fiscal 2010; including the Companys current Credit Facilities
Agreement with CDF, which matures in March 2010, as well as the Companys
ability to restructure its operations in order to improve future operating
results and to generate cash flow.

12

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Critical Accounting Policies

Our
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP). The
preparation of these financial statements 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, as well as the reported amounts of revenues and expenses during the
reporting period. The methods, estimates, and judgments we use in applying our
most critical accounting policies have a significant impact on the results we
report in our financial statements. Actual results may differ from these
estimates under different assumptions or conditions. The SEC has defined
critical accounting policies as policies that involve critical accounting
estimates that require (a) management to make assumptions that are highly
uncertain at the time the estimate is made and (b) different estimates that
could have been reasonably used for the current period, or changes in the
estimates that are reasonably likely to occur from period to period, which
would have a material impact on the presentation of our financial condition,
changes in financial condition or in results of operations. Based on this
definition, our most critical policies include: revenue recognition, the
assessment of recoverability of long-lived assets, allowance for doubtful
accounts, accrual of unreported medical claims, and stock-based compensation.

Revenue Recognition

We recognize
revenue in accordance with Staff Accounting Bulletin No. 104. We recognize
revenue from the sales of hardware when the rights and risks of ownership have
passed to the client, upon shipment or receipt by the client, depending on the
terms of the sales contract with the client. Revenue from the sales of software
not requiring significant modification or customization is recognized upon
delivery or installation. Revenue from services is recognized upon performance
and acceptance after consideration of all of the terms and conditions of the
client contract. Service contracts generally do not extend over one year, and
are billed when persuasive evidence of an arrangement exists, the sales price
is fixed and determinable, and collection of the resulting receivable is reasonably
assured. Revenue arrangements generally do not include specific client
acceptance criteria. For arrangements with multiple deliverables, delivered
items are accounted for separately, provided that the delivered item has value
to the client on a stand-alone basis and there is objective and reliable
evidence of the fair value of the undelivered items. Revenue billed on retainer
is recognized as services are performed and amounts not recognized are recorded
as deferred revenue.

Impairment of
Long-lived Assets

When facts and
circumstances indicate that the carrying values of long-lived assets may be
impaired, an evaluation of recoverability is performed by comparing the
carrying values of the assets to projected future cash flows, in addition to
other quantitative and qualitative analyses. For goodwill and other intangible
assets, we test for impairment on a consolidated basis at least annually or
more frequently if we believe indicators of impairment exist. Upon indication
that the carrying values of such assets may not be recoverable, the Company
recognizes an impairment loss as a charge against current operations. Property
and equipment assets are grouped at the lowest level for which there are
identifiable cash flows when assessing impairment. Factors that may cause a
goodwill, intangible asset or other long-lived asset impairment include
negative industry or economic trends and significant underperformance relative
to historical or projected future operating results. Our valuation
methodologies include, but are not limited to, estimating the net present value
of the projected cash flows of our Company. If actual results are substantially
lower than our projections underlying these assumptions, or if market discount
rates substantially increase, our future valuations could be adversely
affected, potentially resulting in future impairment charges.

Allowance for
Doubtful Accounts

We estimate
the allowance for doubtful accounts based on historical experience, customer
credit risk and application of the specific identification method. The Company
writes off accounts receivable against the allowance when a balance is
determined to be uncollectible. If actual customer performance were to
deteriorate to an extent not expected by us, additional allowances may be required
which could have an adverse effect on our consolidated financial results.
Conversely, if actual customer performance were to improve to an extent not
expected by us, a reduction in allowances may be required which could have a
favorable effect on our consolidated financial results.

Stock-based
Compensation

We account for
stock-based compensation in accordance with the fair value recognition
provisions of Statement of Financial Accounting Standards No. 123 (revised
2004), Share-Based Payment (SFAS No. 123(R)). The Company uses the
Black-Scholes option pricing model which requires the input of highly
subjective assumptions. These assumptions include estimating the length of time
employees will retain their stock options before exercising them, the estimated
volatility of the Companys common stock price over the expected term and the
number of options that will ultimately not complete their vesting requirements.
Changes in the subjective assumptions can materially affect the estimate of
fair value stock-based compensation and consequently, the related amount
recognized on the consolidated statement of operations. RSUs issued by the
Company are equivalent to nonvested shares, as defined by SFAS No. 123(R). No
stock-based compensation expense was recognized in the consolidated financial
statements related to the Associate Stock Purchase Plan, since the related
purchase discounts did not exceed the amount allowed under SFAS No. 123(R) for
non-compensatory treatment.

13

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Consolidated Results of Operations

The following
table sets forth for the periods presented information derived from our audited
consolidated statement of operations expressed as a percentage of net revenues,
unless otherwise noted:

|                                              |  |                       |       |      |  |       |   
|--------------------------------------------- |  | --------------------- | ----- | ---- |  | ----- | --
|                                              |  | Year Ended
 March 31, |      
|                                              |  |                       |      
|                                              |  | 2009                  |       | 2008 | 
|                                              |  |                       |       |      |  |       |   
|Net
 revenues:                                |  |                       |       |      |  |       |   
|Products                                      |  |                       | 70.1  | %    |  | 70.8  | % 
|Services                                      |  |                       | 29.9  |      |  | 29.2  |   
|                                              |  |                       |       |      |  |       |   
|Total net
 revenues                           |  |                       | 100.0 |      |  | 100.0 |   
|                                             
|Gross Profit
  products (a)                  |  |                       | 16.7  |      |  | 15.8  |   
|Gross Profit
  services (a)                  |  |                       | 37.2  |      |  | 40.2  |   
|Gross Profit
  total                         |  |                       | 22.8  |      |  | 22.9  |   
|Selling,
 general and administrative expenses |  |                       | 28.3  |      |  | 25.7  |   
|Goodwill
 Impairment                          |  |                       | 11.2  |      |  | 0.0   |   
|                                              |  |                       |       |      |  |       |   
|Operating
 loss                               |  |                       | (16.8 | )    |  | (2.8  | ) 
|Interest
 expense and other, net              |  |                       | 6.0   |      |  | 2.7   |   
|                                              |  |                       |       |      |  |       |   
|Net loss                                      |  |                       | (22.7 | )%   |  | (5.9  | )%
|                                              |  |                       |       |      |  |       |   

|    |                                                                          | 
|--- | ------------------------------------------------------------------------ | 
|    |                                                                         
|(a) | Expressed as
 a percentage of the applicable product or service revenue.

Fiscal 2009 Compared to Fiscal 2008

Net Revenue

Net revenues
for the year ended March 31, 2009 decreased $68.0 million, or 28.0% from the
comparable prior year, to $174.7 million. The decrease in net revenues for the
year ended March 31, 2009 was primarily due to a 28.8% decrease in product
revenue of nearly $49.5 million over the prior year. During the second half of
fiscal 2009 the Company experienced a slow down in product sales to customers,
primarily due to the downturn in the economy, whereby customers are
experiencing a freeze on capital spending and large infrastructure deals are
being put on hold or delayed. Despite this decrease, the Company has also seen
sustained revenue growth in product lines that offer greater efficiencies of
scale to customers related to security and access. Overall the decrease in
product revenue for the year ended March 31, 2009 has been impacted by reduced
demand for IT products as a result of the downturn in the economic environment
as customers either freeze or delay non  essential purchases and due to the
change in the mix and volume of the type of deals the Company is currently
closing versus that in the prior year. The decrease in product revenue has
directly impacted the volume of professional services revenue by limiting the
Company in its ability to offer add-on professional services solutions to
product revenue. Service revenue for the fiscal year ended March 31, 2009
decreased 26.2% or $18.5 million over the comparable prior year.

Gross Profit

Gross profit
for the year ended March 31, 2009 decreased $15.8 million, or 28.4% from the
comparable prior year, to $39.8 million. Product gross margin was 16.7% for the
year ended March 31, 2009 as compared with 15.8% for the year ended March 31,
2008. Overall the decrease in product gross profit was directly related to the
decrease in product revenue. However, the product gross margin percentage
increased over the year ended March 31, 2009 by almost 1.0% due to the mix in
the type of deals the Company is currently closing versus that in the prior
year. Service gross margin was 37.2% for the year ended March 31, 2009 as
compared with 40.2% for the year ended March 31, 2008. The overall decrease in
service gross profit primarily related to the decrease in service revenue. The
service gross margin percentage for the year ended March 31, 2009 was also
negatively impacted because fixed expenses did not decrease proportionately
with the revenue decline and the Company experienced
 lower utilization in certain regions as well as an increase in the use of
outside contractors with specialized expertise.

Selling, General and Administrative

Selling,
general and administrative expenses (S,G&A) for the year ended March 31,
2009 decreased by $12.8 million, or 20.6% from the comparable prior year, to
$49.5 million. S,G&A net of non-cash charges for depreciation, amortization
and stock-based compensation expense expressed as a percentage of revenue
increased to 23.6% for the year ended March 31, 2009 compared with 21.3% for
the year ended March 31, 2008. Many of the Companys operating expenses are
fixed in nature. Although net S,G&A increased as a percentage of revenue,
due to lower sales year over year, it decreased by $10.6 million, or 20.4%,
from the comparable prior year period, to $41.2 million. Overall, the $10.6
million decrease in net S,G&A was due primarily to a reduction in personnel
costs over the prior year, with headcount decreasing over 138 full time
equivalents over the prior year period and due to the impact of mandatory days
off and periodic salary reductions during the second half of fiscal 2009. The
Company also realized significant cost savings from several initiatives
including revised compensation programs of the sales force, its self insurance
plan for health coverage and increased health contributions by employees,
reductions in operating costs for non-essential services and reduced travel
expense programs. The decrease was also due to a reduction over the
corresponding prior year in professional fees related to outside consultants
and overall cost reduction efforts, and lower selling expenses as a result of the
decrease in revenue in the year ended March 31, 2009, as compared with the year
ended March 31, 2008. Intangible amortization decreased $1.1 million, the
impact of fully amortized intangible assets on current year results, and
depreciation for the year ended March 31, 2009 decreased $1.0 million over the
prior year, the impact of a decrease in the level of capital spending over the
past two years. Stock-based compensation costs decreased $0.2 million in the
periods as a result of an increase in the rate of actual forfeitures of
unvested options from employee terminations.

14

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Goodwill Impairment

In the fourth
quarter of fiscal 2009, the Company conducted its annual assessment of goodwill
for impairment. The Company performed extensive valuation analyses, utilizing
both income and market approaches, in its goodwill assessment process. As a
result, for the year ended March 31, 2009, the Company recorded a pretax
impairment charge of $19.6 million to reduce the carrying value of the
Companys goodwill. No goodwill impairment charge was required for the year
ended March 31, 2008. See Note 1 to the Consolidated Financial Statements for a
discussion of goodwill.

EBITDA

Earnings
before interest, income taxes, depreciation, amortization, stock-based
compensation cost and other (income) expense (EBITDA) amounted to negative
$21.1 million for the year ended March 31, 2009, as compared to $3.8 million
for the year ended March 31, 2008. EBITDA results for fiscal 2009 include a
$19.6 million non-cash charge related to the impairment of goodwill, which
charges were not expenses in the prior period. Net of this charge EBITDA for
year ended March 31, 2009 decreased $5.2 million over the year ended March 31,
2008, the overall decline in EBITDA results was the result of a decline in
gross margin of both product and service revenue of $15.8 million offset by the
reduction in S,G&A expenses of $10.6 million as noted above.

The following
table sets forth a reconciliation of EBITDA to net loss for the periods
presented.

|                                 |  |                      |         |      |   |         |  
|-------------------------------- |  | -------------------- | ------- | ---- | - | ------- | -
|                                 |  | Year Ended March 31, |        
|                                 |  |                      |        
|(in
thousands)                   |  | 2009                 |         | 2008 |  
|                                 |  |                      |         |      |   |         |  
|EBITDA                           |  | $                    | (21,055 | )    | $ | 3,763   |  
|Depreciation
 and amortization   |  |                      | 7,250   |      |   | 9,294   |  
|Interest
 expense and other, net |  |                      | 10,442  |      |   | 6,628   |  
|Stock-based
 compensation cost   |  |                      | 997     |      |   | 1,224   |  
|Income taxes                     |  |                      | (100    | )    |   | 1,022   |  
|                                 |  |                      |         |      |   |         |  
|Net loss                         |  | $                    | (39,644 | )    | $ | (14,405 | )
|                                 |  |                      |         |      |   |         |  

We believe
that EBITDA, which is not a recognized measure for financial presentation under
GAAP, provides investors and management with a useful supplemental measure of
our operating performance because it more closely approximates the cash
generating ability of the Company as compared to operating income (loss). Operating
income (loss) includes charges for depreciation and amortization of intangible
assets as well as stock-based compensation cost. These non-GAAP results should
be evaluated in light of our financial results prepared in accordance with
GAAP. EBITDA is not a recognized measure for financial statement presentation
under GAAP. Non-GAAP earnings measures do not have any standardized definition
and are therefore unlikely to be comparable to similar measures presented by
other reporting companies. This non-GAAP measure is provided to assist readers
in evaluating our operating performance. Readers are encouraged to consider
this non-GAAP measure in conjunction with our GAAP results.

Interest Expense and Other, net

Interest
expense and other, net was $10.4 million for the year ended March 31, 2009
compared to $6.6 million for the year ended March 31, 2008, an increase of $3.8
million or 57.5%. The increase in interest expense for the year ended March 31,
2009 is primarily due to the impact of the amendment entered into by the
Company in June 2008, whereby the principal amount of the Secured Promissory
Note under the CP/NEBF Credit Agreement (the CP/NEBF Note) with CP Investment
Management and NEBF was increased by $3,000,000 to $28,000,000 and higher
interest rates were imposed on the CP/NEBF Note as a result of the amendments
entered into since the second quarter of fiscal 2008. The current internal rate
of return is 15% compared with a blended rate of 13.5% for the comparable prior
year. In accordance with Amendment No. 5 to the secured promissory note entered
into during the first quarter of fiscal 2009, results for the year ended March
31, 2009 include a retroactive adjustment since the inception of the CP/NEBF
Note that amends the IRR to 15% for all periods since the Closing Date,
November 23, 2005. The increase in interest expense for the year ended March
31, 2009 was also attributable to the impact of the interest due on the
unsecured subordinated promissory notes payable to the Investors.

Liquidity and Capital Resources

The Company
measures its liquidity in a number of ways, including the following:

|                                              |  |           |        |      |   |        |  
|--------------------------------------------- |  | --------- | ------ | ---- | - | ------ | -
|                                              |  | March 31, |       
|                                              |  |           |       
|(In
thousands)                                |  | 2009      |        | 2008 |  
|                                              |  |           |        |      |   |        |  
|Cash                                          |  | $         | 2,150  |      | $ | 3,210  |  
|Working
 capital(deficit)                     |  | $         | (5,782 | )    | $ | (3,326 | )
|Current
 ratio                                |  |           | 0.86:1 |      |   | 0.94:1 |  
|Related
 party notes payable                  |  | $         | 6,833  |      | $ | 2,431  |  
|Secured
 financing facilities                 |  | $         | 15,667 |      | $ | 23,901 |  
|Secured
 promissory note and related interest |  | $         | 41,640 |      | $ | 30,116 |  

We require
access to significant working capital and vendor credit to fund our day-to-day
operations, particularly at the end of our fiscal quarters when demand for our
products and services increases substantially. Our primary source of day-to-day
working capital is from our Credit Facilities Agreement with CDF (described below
in this Item) and vendor lines of credit. We have made a concerted effort to
improve our working capital position over the past few years and during fiscal
2009 had taken significant measures to further reduce headcount, streamline
operations, consolidate facilities and manage costs in response to the impact
of the economic downturn. We have also significantly reduced our infrastructure
investment by limiting future capital expenditures including the internal
development of purchased and developed software. We continue to drive accounts
receivable and have made strong progress in collecting overdue accounts.

15

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For the year
ended March 31, 2009 cash decreased $1.1 million to $2.1 million compared with
$3.2 million at March 31, 2008. Working capital at March 31, 2009 was a deficit
of $(5.8) million as compared to a working capital deficit of $(3.3) million at
March 31, 2008. Included in current liabilities at March 31, 2009 are
obligations of $6.8 million of related party notes payable and $15.7 million
relating to the Companys secured financing facilities, described below.

As of March
31, 2009 the FirstMark and Constellation investment totaled approximately $73
million. We had used these funds, dating back to July 2004, to acquire six
strategic providers of advanced technology solutions and products, as well as
for working capital needs. The Company successfully raised an additional $6.5
million in financing during the first fiscal quarter of 2009, the proceeds of
which were primarily used to pay trade accounts payable and raised another $2.0
million in financing in the fourth quarter of fiscal 2009 which proceeds were
used to fund working capital needs.

A detailed
review of the financing arrangements entered into by the Company during fiscal
year 2009, as well as several related arrangements which have been entered
since the beginning of fiscal year 2010 follows.

Letter of Credit Agreement

On June 11,
2009, the Company entered into a Letter of Credit Commitment and Reimbursement
Agreement with NEBF, CP Investment Management, FirstMark and Constellation
(collectively, the L/C Guarantors) and CP Investment Management, as
Investment Manager for the L/C Guarantors (the L/C Agreement). As a condition
of CDF continuing to make advances under the Credit Facilities Agreement, CDF
required that one or more of the L/C Guarantors provide letters of credit in
the aggregate amount of $8,500,000 to provide credit support and additional
collateral to secure the Companies obligations under the CDF Credit Facilities
Agreement. The terms of the L/C Agreement provide that the letters of credit
shall expire no later than May 31, 2010.

The Company is
obligated to reimburse the L/C Guarantors for any drawing made on a letter of
credit immediately following any payment made by the issuing bank of such
letter of credit. The Company is required to pay a drawing fee equal to the
amount required to provide the L/C Guarantors with a 15% rate of return on
drawings made on the letters of credit. Additionally, in the event of a Change
of Control, Event of Default or Liquidity Event (as such terms are defined in
the L/C Agreement), the Company is required to pay to the L/C Guarantors a
Success Fee payable in cash in the amount of $34,000,000.

To secure the
repayment obligations of the Company under the L/C Agreement (including the
obligation to pay the Success Fee), the Company has granted to CP Investment
Management, as investment manager, a security interests in: (i) all of the
Companies rights, title and interest in and to certain property of the Company
pursuant to a Security Agreement between the Company and the L/C Guarantors;
(ii) certain trademarks of the Company pursuant to an Intellectual Property
Security Agreement between the Company and the L/C Guarantors; and (iii) 100% of
the capital stock of the Company pursuant to a Stock Pledge Agreement between
the Company and the L/C Guarantors.

FirstMark and Constellation Notes and
Warrants

On February
28, 2008, the Company issued and sold to FirstMark promissory notes in the
principal amount of $2,500,000 (the FirstMark Notes) and warrants entitling
FirstMark to purchase 392,157 shares of the Companys Series A-9 Preferred
Stock at an exercise price of $0.6375 per share (the FirstMark A-9 Warrants).
The FirstMark Notes bear interest at a rate per annum equal to 8.5%. Interest
on the FirstMark Notes shall be due and payable in cash or, at the option of
the Company, in shares of the Companys Series A-9 Preferred Stock at a price
per share of $0.561. Proceeds from the FirstMark Notes were used to fund
working capital needs.

On March 28,
2008, the Company and FirstMark amended the FirstMark Notes (the Amended
FirstMark Notes) to change the maturity as follows: thirty percent (30%) of
the principal amount of the Amended FirstMark Notes ($750,000) was due and
payable on December 28, 2008, and the remaining principal balance and all
interest accrued from February 28, 2008 to the date of payment of the principal
amount is due on March 28, 2009.

On June 11,
2008, the Company and FirstMark further amended the Amended FirstMark Notes to
change the maturity and payment terms such that all principal and all interest
accrued on such notes from the date of original issuance of February 28, 2008
through the date of payment of the principal amount shall be due on December
15, 2009 (the Second Amended FirstMark Notes).

The FirstMark
A-9 Warrants expire on March 29, 2012. The holders of the FirstMark A-9
Warrants may exercise the purchase rights represented by the FirstMark A-9
Warrants at any time. Cashless exercise is permitted. The Company allocated and
charged approximately $0.1 million to debt discount, which will be amortized
over the life of the Second Amended FirstMark Notes to interest expense, and
assigned and credited to additional paid in capital approximately $0.1 million
for the fair value of the FirstMark A-9 Warrants. A more complete description
of the FirstMark A-9 Warrants can be found in its entirety by reference to the
full text of such document.

On June 11,
2008 and June 16, 2008, the Company issued and sold to FirstMark promissory
notes in the aggregate principal amount of $3,000,000 (the June FirstMark
Notes) and warrants entitling FirstMark to purchase 733,333 shares of the
Companys Series A-10 Preferred Stock at an exercise price of $0.375 per share
and 64,516 shares of the Companys Series A-11 Preferred Stock at an exercise
price of $0.3875 per share, at June 11, 2008 and June 16, 2008, respectively
(the FirstMark A-10 and A-11 Warrants). Proceeds from the June FirstMark
Notes were used to fund working capital needs.

On June 16,
2008, the Company issued and sold to Constellation promissory notes in the
aggregate principal amount of $500,000 (the Constellation Notes) and warrants
entitling Constellation to purchase 129,032 shares of the Companys Series A-11
Preferred Stock at an exercise price of $0.3875 per share (the Constellation
A-11 Warrants). Proceeds from the Constellation Notes were used to fund
working capital needs.

The June
FirstMark Notes and the Constellation Notes are due and payable in full on
December 15, 2009 and bear interest at a rate per annum equal to 8.5%. Interest
on the June 11 FirstMark Notes is due and payable in cash or, at the option of
the Company, in shares of the Companys Series A-10 Preferred Stock at a price
per share of $0.33. Interest on the June 16 FirstMark Notes and the
Constellation Notes is due and payable in cash or, at the option of the
Company, in shares of the Companys Series A-11 Preferred Stock at a price per
share of $0.341.

16

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The holders of
the FirstMark A-10 and A-11 Warrants and the Constellation A-11 Warrants,
collectively (the June Warrants) may exercise the purchase rights represented
by the June Warrants at any time. Cashless exercise is permitted. The June Warrants
expire four years after the issue date. The Company allocated and charged
approximately $0.2 million to debt discount, which will be amortized over the
life of the June FirstMark Notes and the Constellation Notes to interest
expense, and assigned and credited to additional paid in capital approximately
$0.2 million for the fair value of the June Warrants. A more complete
description of the June Warrants can be found in its entirety by reference to
the full text of the respective documents.

On January 29,
2009, the Company issued and sold to FirstMark the following Promissory Notes
(the FirstMark 09 Notes): (1) a promissory note in the principal amount of
$876,449 to FirstMark III L.P., and (2) a promissory note in the principal
amount of $123,551 to FirstMark III Offshore Partners, L.P. The FirstMark 09
Notes bear interest at a rate per annum equal to 15%. Interest on the FirstMark
09 Notes shall be due and payable in cash or, at the option of the Company, in
shares of the Companys Series A-12 Preferred Stock at a price per share of
$0.638. Proceeds from the FirstMark 09 Notes were used to fund working capital
needs.

On February
11, 2009, the Company and FirstMark amended the FirstMark 09 Notes (the
Amended FirstMark 09 Notes) to (i) change the maturity date from February 13,
2009 (or the date on which the Company obtained all necessary consents from its
Senior Lenders to such payment if later) to December 15, 2009, (ii) change the
interest rate on overdue unpaid principal or interest from 10.5% to 16.5% and
(iii) change the priority of payments if the Company is not able to pay the
full amounts due under all of its Subordinated Promissory Notes, such that
payments to FirstMark with respect to all Subordinated Promissory Notes held by
it (the FirstMark Notes) have first preference over the Constellation Notes.

On February
11, 2009, the Company also issued warrants to FirstMark (the FirstMark A-12
Warrants) entitling: (i) FirstMark III L.P. to purchase 120,889 shares of the
Companys Series A-12 Preferred Stock and (ii) FirstMark III Offshore Partners,
L.P. warrants to purchase 17,042 shares of the Companys Series A-12 Preferred
Stock, both at an exercise price of $0.725 per share. The holders of the
FirstMark A-12 Warrants may exercise the purchase rights represented by the
FirstMark A-12 Warrants at any time. Cashless exercise is permitted. The
FirstMark A-12 Warrants expire on February 11, 2013.

The Second
Amended FirstMark Notes together with the June FirstMark Notes, the
Constellation Notes and the Amended FirstMark 09 Notes, collectively are
sometimes referred to herein as the Investors Notes. At March 31, 2009 the
balance of the Investors Notes was approximately $6.8 million, net of debt discounts. At March 31,
2009, approximately $0.5 million in interest has been accrued on the Investors
Notes and is payable at maturity.

The Company
entered into an amendment to the Investors Notes (the Amendment) on February
11, 2009. The Amendment (i) amends all Subordinated Promissory Notes issued to
FirstMark (or its predecessors) or Constellation to change the priority of
payments if the Company is not able to pay the full amounts due under all of
its Subordinated Promissory Notes, such that payments to FirstMark with respect
to the FirstMark Notes have first preference over the Constellation Notes; (ii)
amends the Constellation Notes to provide that the rights of Constellation to
the payment of principal and interest with respect to such Constellation Notes
are subordinated to the payment rights of FirstMark in connection with the
FirstMark Notes (as well as the payment rights of the Senior Lenders with
respect to the Senior Debt); and (iii) provides for the express subordination
of the payment of the Constellation Notes to the prior payment in full of the
FirstMark Notes.

The foregoing
description of the Investors Notes and the related warrants as well as the
Amendment does not purport to be complete, and is qualified in its entirety by
reference to the full text of such documents, which are incorporated by
reference herein.

The right of
repayment of principal and interest on the Investors Notes is subordinated to
the rights and security interest of (i) CDF in connection with the August 21,
2007 Credit Facilities Agreement (described below in this Item), and (ii) CP
Investment Management and NEBF in connection with the CP/NEBF Credit Agreement
(described below in this Item), (CDF and NEBF collectively, the Senior
Lenders and the Credit Facilities Agreement and the CP/NEBF Credit Agreement
collectively, the Senior Debt). While any default or event of default has
occurred and is continuing with respect to any Senior Debt, the Company is
prohibited from making any payments or distribution in respect of the Investors
Notes.

Upon an event
of default, as set forth in the Investors Notes, the holders of the Investors
Notes may declare all amounts outstanding under the Investors Notes immediately
due and payable and exercise other remedies permitted by the Investors Notes or
at law or in equity, subject to the above mentioned subordination. A more
complete description of the Investors Notes can be found in its entirety by
reference to the full text of the applicable documents.

Since the
commencement of the Companys fiscal year 2010, the Company entered in the
following further amendment with FirstMark and Constellation.

The Company
entered into a Second Amendment to the Investors Notes (the Second Amendment)
on June 11, 2009. The Second Amendment (i) amends all of the Investors Notes to
extend the maturity dates to November 30, 2010 from December 15, 2009; (ii)
amends the FirstMark Notes to provide that the rights of FirstMark to the
payment of principal and interest with respect to such FirstMark Notes are
subordinated to the payment rights of CP Investment Manager, as Investment
Manager for the L/C Guarantors under the L/C Agreement; and (iii) amends the
Constellation Notes to provide that the rights of Constellation to the payment
of principal and interest with respect to such Constellation Notes are
subordinated to the payment rights of CP Investment Manager, as Investment
Manager for the L/C Guarantors under the L/C Agreement.

NEBF Guarantee

On May 29,
2009, the Company received a $1,900,000 advance from CDF under the Credit
Facilities Agreement. As a condition of such advance, CDF required NEBF to
enter into a Limited Guarantee for the benefit of CDF, whereby NEBF guaranteed
the repayment obligations of the $1,900,000 advance to the Company (the NEBF
Guarantee).

17

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Credit Facilities Agreement

On August 21,
2007, the Company entered into a secured Credit Facilities Agreement (the
Credit Facilities Agreement) with CDF as Administrative Agent, GECC Capital
Markets Group, Inc. as Sole Lead Arranger and Sole Bookrunner, and CDF and the
other lenders listed in the Credit Facilities Agreement as (the Lenders),
providing a combined maximum availability of up to $34 million.

The Credit
Facilities Agreement refinanced the Companys prior senior lender facilities
and is secured by a first priority lien on and security interest in
substantially all of the present and future assets of the Company, including
the issued and outstanding stock of the Company (other than MTM Technologies,
Inc.), except for permitted encumbrances. Credit and advances to the Company
pursuant to the Credit Facilities Agreement will be used to fund working
capital and floor-planning needs, and for general corporate purposes. Terms not
otherwise defined in this discussion have the meaning ascribed to them in the
Credit Facilities Agreement.

The Revolving
Credit Facility under the Credit Facilities Agreement encompasses a two year
revolving credit facility, unless earlier terminated by the Company or the
Lenders, for up to $15 million, pursuant to the Sixth Amendment to the Credit
Facilities Agreement (the Sixth Amendment), subject to a borrowing base based
on eligible accounts receivable, minus the sum of any outstanding Swingline
Loan, Floorplan Shortfall, Letter of Credit Exposure, and Bid Bonds, and
certain other limitations. All amounts under the Credit Facilities
Agreement are due upon the termination thereof, subject to optional prepayment
in accordance with the terms of the Credit Facilities Agreement, and mandatory
repayment of any Swingline Loan in the event that any of the Lenders fails to
pay its allocated portion thereof. Amounts borrowed under the Revolving
Credit Facility, pursuant to the Sixth Amendment, bear interest at LIBOR plus
3.5% or LIBOR plus 4.5% during any default period.

The Floorplan
Loan Facility under the Credit Facilities Agreement is not a commitment to lend
or advance funds but is a discretionary facility, for up to $20 million,
pursuant to the Sixth Amendment, unless terminated by the Company or the
Lenders, which allows the Company to finance inventory purchases from vendors as
may be approved by the Administrative Agent, on an up to 45-day interest-free
basis in many cases. Interest accrues after expiration of any applicable
interest free period at a rate to be determined under each Transaction
Statement, and not to exceed a maximum rate of 16% per annum in the event the
Company objects to the terms under any Transaction Statement. Generally,
the Company would receive at least 60 days advance notice of a termination of
the Floorplan Facility, during which period the Company would continue to be
able to finance inventory purchases under the facility.

The Letter of
Credit Facility under the Credit Facilities Agreement will allow the Company to
request standby letters of credit and commercial letters of credit for the
account of the Company from time to time up to the lesser of $2 million or then
applicable availability limits less certain outstanding obligations of the
Company under the Credit Facilities Agreement. As of March 31, 2009, the
Company has no outstanding letters of credit.

During fiscal
2008 and 2009, the Company entered into several amendments to the Credit
Facilities Agreement with CDF in order to waive compliance with and or modify
certain financial covenants, modify certain terms including the definitions
regarding certain covenant calculations, eligible accounts receivable, cash
reserves applicable to the Borrowing Base, and floor plan inventory value, and
to consent to and approve various indebtedness incurred by the Company and to
update disclosures.

The Credit Facilities
Agreement, as amended through March 31, 2009 requires, among other things, that
the Company maintain certain financial covenants including Maximum Total Funded
Indebtedness to EBITDA, as defined, of not greater than 4.00 to 1.00 for the
preceding four fiscal quarters then ended, beginning with the period ended
March 31, 2008; Minimum EBITDA, as defined, for the fiscal quarter ending on
March 31, 2009 of $800,000, and for the fiscal quarter ending on June 30, 2009
of $2,000,000; Minimum Excess Cash/Marketable Securities plus Availability of
$1,500,000 on the last day of each calendar month; and Minimum Liquidation
Multiple of 1.20 to 1.00 as of the last day of each fiscal month; as well as
restrictions on the Companys ability to incur certain additional indebtedness,
and various customary provisions, including affirmative and negative covenants,
representations and warranties and events of default.

Upon a breach
or an event of default by the Company with respect to any of the Investors
Notes or the Senior Debt not cured by the Company within any applicable grace
period, any of the Lenders may terminate the Credit Facilities Agreement and/or
declare all amounts outstanding under the Credit Facilities Agreement
immediately due and payable and exercise other remedies including foreclosure
of the security for the obligations under the Credit Facilities Agreement.

As of March
31, 2009, the Company was not in compliance with all covenants and was in
default of certain other provisions prescribed under the Credit Facility. On
June 2, 2009, the Company entered into the Eighth Amendment to the Credit
Facilities Agreement with CDF, (the Eighth Amendment), whereby CDF waived all
existing defaults. In consideration of CDF agreeing to the Eighth Amendment and
the waivers contained therein the Company agreed to pay an Eighth Amendment fee
of $250,000.

Available
funds under the Credit Facilities Agreement as of March 31, 2009, net of the
$1,750,000 cash reserve, amounted to approximately $2,400,000.

Since the
commencement of the Companys fiscal year 2010, the Company entered in the
following amendments of the Credit Facilities Agreement.

On June 2,
2009 and June 11, 2009, the Company entered into, respectively, the Eighth and
Ninth Amendments to the Credit Facilities Agreement with CDF. The Eighth
Amendment provides for, among other things, (a) an acknowledgement of the NEBF
Guarantee; (b) the waiver by CDF of the Companies existing defaults as of June
2, 2009 under the Credit Facilities Agreement; (c) the termination of all
existing Commitments and replacement with new Facilities comprised of a
$15,000,000 Revolving Loan Facility and a $15,000,000 Floorplan Loan Facility,
with the aggregate limit of such Facilities not to exceed $25,000,000; and (d)
amendments to certain definitions and the elimination of most financial
covenants, including Maximum Total Funded Indebtedness to EBITDA, Minimum
EBITDA and the Minimum Liquidation Multiple. The Ninth Amendment provides for,
among other things, (a) consent to the incurrence by the Company of the
indebtedness provided for in the L/C Agreement, (b) amendments relating to the
L/C Agreement, (c) consent to the sale by the Company of its facilities
business, (d) a change in the maturity date of the Revolving Loan Facility under
the Credit Facilities Agreement to March 31, 2010 from August 21, 2009, and (e)
amendments to certain definitions including the computation of the Borrowing
Base and (f) amendments to representations and warranties.

On June 29,
2009 CDF consented to certain extensions to the compliance provisions under the
Credit Facilities Agreement to July 14, 2009 and agreed to modify certain other
qualification provisions related to the issuance of the 2009 annual financial
statements.

18

---



CP/NEBF Credit Agreement

On November
23, 2005, the Company entered into a secured Credit Agreement (the CP/NEBF
Credit Agreement) and accompanying promissory note in the principal amount of
$25 million (the CP/NEBF Note), with CP Investment Management and NEBF, as
Lender (the Lender). During fiscal 2008 and 2009, the Company entered into
several amendments to the CP/NEBF Credit Agreement in order to modify certain
terms including extending the maturity date, subordinating the CP/NEBF Note,
modifying and or waiving compliance with certain financial covenants,
consenting to and approving various indebtedness incurred by the Company and to
update disclosures.

Pursuant to
the Subordination Agreement dated as of August 21, 2007 (the Subordination
Agreement) with CDF, for itself and agent to the Lenders under the Credit
Facilities Agreement, the CP/NEBF Credit Agreement was extended until November
23, 2010.

On June 11,
2008 and June 17, 2008, the Company entered into Amendments No. 4 and 5 to the
CP/NEBF Credit Agreement with CP Investment Management and the Lender whereby
each (a) consented to and approved the Second Amended Notes, the June FirstMark
Notes and the Constellation Notes in the principal amount of up to $6,000,000,
(b) modified certain financial covenants contained in the CP/NEBF Credit
Agreement, (c) amended the existing CP/NEBF Note to increase the principal
amount by $3,000,000 to $28,000,000 (the CP/NEBF Amended Note), and (d)
amended the payment premium in respect of the CP/NEBF Amended Note equal to an
amount which, when combined with previous payments made, will yield an internal
rate of return of 15% per annum from the Closing Date. Proceeds from the
additional funding of $3,000,000 were used to fund working capital needs.

The amount
outstanding on the CP/NEBF Amended Note bears interest equal to 4.52%; of which
the Applicable Current Cash Rate of interest was 1% per annum through August
21, 2008, which rate was increased to 2% per annum through November 22, 2009,
and then will increase to 8% per annum thereafter. The Applicable Current Cash
Rate is payable quarterly in cash and all remaining interest will accrue and
only become due at maturity. Pursuant to Amendment No. 5, upon maturity or in
the event of acceleration or upon the occurrence of certain liquidity events,
the Company will pay a payment premium in respect of the Note equal to an
amount which, when combined with previous payments made, will yield an internal
rate of return to the Lender of 15% per annum from the Closing Date, except
during any period in which an Event of Default shall have occurred and be
continuing, in which case the internal rate of return for such period shall be
adjusted to 17% per annum. At March 31, 2009, $13.7 million in interest has
been accrued on the Note, $0.2 million is accrued and payable within the next
quarter, and $13.5 million is accrued and is payable at maturity.

Required
financial covenants under the CP/NEBF Agreement are less restrictive in nature
and coincide substantially with those under the Credit Facilities Agreement.
The CP/NEBF Credit Agreement requires, among other things, that the Company
maintain certain financial covenants including Maximum Total Funded
Indebtedness to EBITDA, as defined, of not greater than 4.40 to 1.00 for the
preceding four fiscal quarters then ended, beginning with the period ended
March 31, 2008.

On January 29,
2009, the Company entered into Amendment No. 7 to the CP/NEBF Credit Agreement
with CP Investment Management and the Lender, whereby each of Investment
Manager and Lender (a) consented to and approved the incurrence by the Company
of certain unsecured subordinated indebtedness to FirstMark in the principal
amount up to $1,000,000, and the issuance of warrants in connection therewith,
(b) obtained a waiver of certain terms of the CP/NEBF Credit Agreement in
relation to the foregoing request, (c) modified effective December 1, 2008
certain financial covenants and financial covenant definitions and waived
compliance with the Maximum Total Funded Indebtedness to EBITDA covenant for the
period ended December 31, 2008, and (d) amended the existing CP/NEBF Note to
increase the principal amount by $1,000,000 to $29,000,000. Proceeds from the
additional funding of $1,000,000 were used to fund working capital needs.

Subject to the
terms of the Subordination Agreement, upon an event of default, the lenders
under the CP/NEFB Credit Agreement may terminate such Credit Agreement and/or
declare all amounts outstanding immediately due and payable and exercise other
remedies including foreclosure of the security for the obligations under the
CP/NEFB Credit Agreement, as amended. Terms not otherwise defined in this
discussion have the meaning ascribed to them in the CP/NEFB Credit Agreement,
as amended or in the Subordination Agreement.

As of March 31,
2009, the Company was not in compliance with all covenants and was in default
of certain other provisions prescribed under the CP/NEBF Credit Agreement. On
June 2, 2009, the Company entered into Amendment No. 8, with CP Investment
Management and the Lender, to the CP/NEBF Credit Agreement (Amendment No. 8),
whereby CP Investment Management and the Lender waived all existing defaults.

Since the
commencement of the Companys fiscal year 2010, the Company entered in the
following amendments of the CP/NEBF Credit Agreement.

On June 2,
2009 and June 11, 2009, the Company entered into Amendments No. 8 and 9,
respectively, to the CP/NEBF Credit Agreement with CP Investment Management, as
Investment Manager and NEBF, as Lender. Amendment No. 8 provides for, among
other things, (a) the waiver by CP Investment Management and NEBF of the
Companies existing defaults as of June 2, 2009 under the terms of the CP/NEBF
Credit Agreement; (b) the Companies guarantee of reimbursement of payments
made by NEBF under the NEBF Guarantee; (c) setting the interest rate equal to
(i) 4.52% per annum for the term between the date of issuance and June 30,
2010, and (ii) 8.00% per annum thereafter; with (iii) the Current Cash Rate for
April 1, 2009 through June 30, 2010 reduced to 0% on an annualized basis, and
then the rate will increase to 8% per annum thereafter; (d) an amendment to the
definition of Senior Indebtedness and the elimination of all financial
covenants; and (e) the waiver by the Company of any claims it may have against
CP Investment Management and NEBF existing or occurring on or prior to the date
of Amendment No. 8. Amendment No. 9 provides for, among other things, (a)
consent to the incurrence by the Company of the indebtedness provided for in
the L/C Agreement, (b) amendments relating to the L/C Agreement, (c) consent to
the sale by the Company of its facilities business; and (d) amendments to
certain definitions and rights of CP Investment Management and NEBF.

19

---



For the year
ended March 31, 2009, the Company generated cash of $1.4 million in operating
activities. The cash generated is derived from a net loss of $39.6 million
offset by a decrease in net operating assets of $4.4 million and non-cash
charges of $36.6 million. The decrease in net operating assets relates
primarily to a decrease in accounts receivable and in payables. Accounts
receivable at March 31, 2008 includes a $3.6 million receivable of which $3.5
million was subsequently collected in June 2008. The decrease in accounts
receivable is also directly related to approximately 32% lower billings in the
second half of fiscal 2009 as compared to the prior year. The Company also had
strong cash collections in fiscal 2009 especially with regard to past due
accounts. Accounts payable decreased as proceeds from the promissory notes with
FirstMark and Constellation received in the first quarter of fiscal 2009 were
used to pay vendors. The decrease in accrued expenses and in deferred revenue
is due to lower operating costs over the prior year, primarily the result of
cost cutting initiatives and the impact of lower revenues. Prepaid expenses
also decreased over the prior year, primarily as a function of less rebates
and deal commissions earned by the Company in the current year due to lower
volumes of product sold and due to the timing of expenses.

Cash used in
investing activities was $2.2 million for the year ended March 31, 2009 related
to additions to capital expenditures. The level of investment was comparable to
the prior year period. The Company has no plans for any material purchases of
property and equipment including capital software projects for fiscal 2010.

Cash used in
financing activities was $0.3 million for the year ended March 31, 2009, which
was primarily the result of net cash proceeds received of $4.3 million from our
issuance of promissory notes to the Investors during fiscal 2009 amounting to
$4.5 million, and an additional $3.9 million of net cash proceeds received
under the CP/NEBF Credit Agreement which increased the principal amount by $4.0
million, both for the purpose of funding working capital needs. The increase in
cash generated from financing activities was offset by the increase in cash
collections used to repay a portion of the borrowings on our working capital
lines under our Credit Facilities Agreement with CDF. The Company had net
borrowings under its Credit Facilities Agreement of a decrease of $8.2 million
during fiscal 2009, which consisted of additional gross borrowings of $289.3
million offset by gross repayments of $297.5 million.

Contractual Obligations

The following
table sets forth, as of March 31, 2009, the Companys known contractual
obligations and borrowings, and the timing and effect that such commitments are
expected to have on the Companys liquidity and capital requirements in future
periods (in thousands).

|                                     |  |                           |        |                   |   |            |  |            |        |                    |   |       |  |   |       | 
|------------------------------------ |  | ------------------------- | ------ | ----------------- | - | ---------- |  | ---------- | ------ | ------------------ | - | ----- |  | - | ----- | 
|                                     |  | Payment Due by Period     |       
|                                     |  |                           |       
|Contractual Obligations              |  | Total                     |        | Less than
 1 year |   | 1-3
 years |  | 3-5
 years |        | More than
 5 years |  
|                                     |  |                           |        |                   |   |            |  |            |        |                    |   |       |  |   |       | 
|                                     |  | (In thousands of dollars) |       
|                                     |  |                           |       
|Secured
 revolving credit facilities |  | $                         | 5,898  |                   | $ | 5,898      |  |            |       |                    |   |      |  |   |      | 
|Inventory
 financing agreements      |  |                           | 9,769  |                   |   | 9,769      |  |            |       |                    |   |      |  |   |      | 
|Related
 party notes payable (1)     |  |                           | 7,966  |                   |   | 7,966      |  |            |       |                    |   |      |  |   |      | 
|Secured
 promissory note (1)         |  |                           | 54,168 |                   |   | 1,194      |  | $          | 52,974 |                    |   |      |  |   |      | 
|Capital
 lease obligations           |  |                           | 122    |                   |   | 116        |  |            | 6      |                    |   |      |  |   |      | 
|Operating
 lease obligations         |  |                           | 11,151 |                   |   | 3,363      |  |            | 4,148  |                    | $ | 2,005 |  | $ | 1,635 | 
|                                     |  |                           |        |                   |   |            |  |            |        |                    |   |       |  |   |       | 
|Total                                |  | $                         | 89,074 |                   | $ | 28,306     |  | $          | 57,128 |                    | $ | 2,005 |  | $ | 1,635 | 
|                                     |  |                           |        |                   |   |            |  |            |        |                    |   |       |  |   |       | 

|    |                                                                          
|--- | -------------------------------------------------------------------------
|(1) | Amounts
 include the principal maturities and expected interest payments.

The Company
sustained net losses during the fiscal years ended March 31, 2009 and 2008. Our
decline in performance during fiscal 2009 continued to be impacted by a weaker
US economy and reduced access to business credit. Our business requires
significant levels of working capital to fund future revenue growth and current
operations. We have historically relied on and continue to rely heavily on,
trade credit from vendors and our credit facilities for our working capital
needs. The Company has made a concerted effort to improve its working capital
position over the past few years and during fiscal 2009 had taken significant
measures to further reduce headcount, streamline operations, consolidate facilities
and manage costs in response to the impact of the economic downturn. We have
also significantly reduced our infrastructure investment by limiting future
capital expenditures including, the internal development of purchased and
developed software. We continue to drive accounts receivable and have made
strong progress in collecting overdue accounts. The Company continues to
actively pursue additional financing arrangements including the successful
negotiation in June of fiscal 2010 of an additional $7.0 million in borrowing
capacity under our existing Credit Facilities Agreement with CDF.

We expect that
results for fiscal 2010 will continue to be impacted by a very difficult
economic environment in the U.S. and a potentially widening global recession. We
believe, however, that the combination of adequate immediate financing, a
focused go to market strategy and strong cost controls will enable us to lay
a foundation for improved future operating results and the ability to generate
cash flow.

Our ability to
continue as a going concern, however, is contingent upon our ability to obtain
debt and or capital financing in order to meet obligations that mature in
fiscal 2010; including the Companys current Credit Facilities Agreement with
CDF, which matures in March 2010, as well as our ability to restructure our
operations in order to improve future operating results and to generate cash
flow.

Our immediate
liquidity and capital requirements going forward will depend on numerous
factors, including general economic conditions and conditions in the financial
services, government and technology industry in particular; the ability to
extend or refinance our current maturities; the ability to negotiate additional
flexibility in borrowing restrictions and reserves under our current financing
facilities and vendor lines of credit; our dependence on third party licenses
and our ability to maintain our status as an authorized reseller/service
provider of IT products; the cost effectiveness of our product and service development
activities and our ability to reduce and leverage our centralized
infrastructure, all of which may impact our ability to fund our operations for
the foreseeable future. The Company currently has no commitments for material
capital expenditures. To the extent that our existing capital resources are
insufficient to meet our working capital requirements, we may seek to raise
additional funds or seek additional financing arrangements. However, no
assurance can be given that such financing may be obtained on terms attractive
to us, or at all. Furthermore, any additional debt or equity financing
arrangements may be dilutive to shareholders, and debt financing, if available,
may involve restrictive covenants. Our failure to raise capital when needed
could have a material adverse effect on our business, operating results and
financial condition.

20

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Recent Accounting
Pronouncements

See Note 1 to
the Consolidated Financial Statements in this Annual Report on Form 10-K for a
discussion of the accounting standards adopted in fiscal 2009 and recent
accounting standards not yet adopted.

Subsequent Events

Subsequent
events which relate to the financial arrangements entered into by the Company
during the Companys fiscal year 2009 have been included within the discussion
hereinabove set forth in this Item 7.

Item 7A.Quantitative and Qualitative Disclosures About
Market Risk

Not applicable

Item 8. Financial Statements and Supplementary Data

Set forth
below is a list of our audited consolidated financial statements included in
this Annual Report on Form 10-K and their location.

|                                                                                                                                      |  |      
|------------------------------------------------------------------------------------------------------------------------------------- |  | -----
|Item                                                                                                                                  |  | Page*
|                                                                                                                                      |  |      
|Report of McGladrey & Pullen, LLP                                                                                                     |  | F-1  
|MTM Technologies, Inc. and subsidiaries Consolidated Balance Sheets
 at March 31, 2009 and 2008                                       |  | F-2  
|MTM Technologies, Inc. and subsidiaries
 Consolidated Statements of Operations for the years ended March 31, 2009 and
 2008           |  | F-3  
|MTM Technologies, Inc. and subsidiaries Consolidated
 Statements of Shareholders Equity for the years ended March 31, 2009 and
 2008 |  | F-4  
|MTM Technologies, Inc. and subsidiaries
 Consolidated Statements of Cash Flows for the years ended March 31, 2009 and
 2008           |  | F-5  
|MTM Technologies, Inc. and subsidiaries Notes to Consolidated
 Financial Statements                                                   |  | F-6  

|                                                                
|----------------------------------------------------------------
|                                                                
|* Page F-1
 follows Part III to this Annual Report on Form 10-K.

21

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Item 9.Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

Not
applicable.

Item 9A.Controls and Procedures

Not
applicable.

Item 9A(T).Controls and Procedures

(a) Evaluation of disclosure controls and
procedures.

As
of the end of the period covered by this Annual Report on Form 10-K, we conducted
under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, an evaluation
of the effectiveness of our disclosure controls and procedures (as that term
is defined under the Rule 13a-15(e) under the Securities Exchange Act of
1934, as amended, or the Exchange Act). Based on that evaluation, our principal
executive officer and principal financial officer concluded as of the period
covered by this report that our disclosure controls and procedures were
effective in recording, processing, summarizing and reporting information
required to be disclosed within the time periods specified in the Securities
and Exchange Commissions rules and forms.

(b) Managements report on internal control
over financial reporting.

Management
of the Company is responsible for establishing and maintaining adequate
internal control over financial reporting. The Companys internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with U.S.
generally accepted accounting principles.

Our
internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect transactions and dispositions of assets;
(ii) provide reasonable assurances that transactions are recorded as necessary
to permit preparation of financial statements in accordance with U.S. generally
accepted accounting principles, and that receipts and expenditures are being
made only in accordance with authorizations of management and the directors of
the Company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the
Companys assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements.

Management
assessed the effectiveness of the Companys internal control over financial
reporting as of March 31, 2009 based on the framework established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on that assessment,
management concluded that, as of March 31, 2009, the Companys internal control
over financial reporting was effective based on the criteria established in
Internal ControlIntegrated Framework.

This
Annual Report on Form 10-K does not include an attestation report of the
Companys registered public accounting firm regarding internal control over
financial reporting since temporary rules of the SEC permit the Company to
provide only managements report on this Annual Report on Form 10-K.

(c) Changes in internal control over
financial reporting.

As
of the end of the period covered by this report, there have been no changes in
our internal controls over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act) during the quarter ended March 31, 2009 that materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.

Limitations on the Effectiveness of Controls

We believe
that a control system, no matter how well designed and operated, cannot provide
absolute assurance that the objectives of the control system are met, and no
evaluation of controls can provide absolute assurance that all controls issues
and instances of fraud, if any, within a company have been detected. Our
disclosure controls and procedures are designed to provide a reasonable
assurance of achieving their objectives and our principal executive officer and
principal financial officer have concluded that the controls and procedures
evaluated are effective at the reasonable assurance level.

Item 9B. Other Information

None.

22

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PART III

Item 10.
Directors, Executive Officers of the
Registrant and Corporate Governance Matters

Directors
and Executive Officers

Set forth below is a brief description of the
background of each of our directors and current executive officers as of May 31,
2009, based on information provided to us by them. Each director currently
serving has been elected to a term that expires at the next Annual Meeting of
shareholders.

|                    |  |     |  |                                                   |  |                
|------------------- |  | --- |  | ------------------------------------------------- |  | ---------------
|Name                |  | Age |  | Principal Positions and
 Offices with our Company |  | Director
 Since
|                    |  |     |  |                                                   |  |                
|                   
|Gerald A. Poch      |  | 62  |  | Non-executive Chairman of the Board of Directors  |  | 2004           
|Keith B. Hall       |  | 55  |  | Director                                          |  | 2008           
|William Lerner      |  | 74  |  | Director                                          |  | 1995           
|Alvin E. Nashman    |  | 82  |  | Director                                          |  | 1998           
|Sterling Phillips   |  | 62  |  | Director                                          |  | 2008           
|Arnold J. Wasserman |  | 71  |  | Director                                          |  | 1998           
|Thomas Wasserman    |  | 34  |  | Director                                          |  | 2005           
|Steven Stringer     |  | 54  |  | President and Chief Executive Officer             |  | N/A            
|J.W. Braukman III   |  | 55  |  | Senior Vice President and Chief Financial Officer |  | N/A            

Gerald
A. Poch has served as Managing Director of FirstMark Capital,
L.L.C. (FirstMark Capital) since August 2008. FirstMark is the investment
manager of certain funds formerly managed by Pequot Capital Management Inc.
(Pequot). These funds included, among other securities, all of Pequots
interests in the Pequot Private Equity Fund III, L.P. (Pequot Fund) and
Pequot Offshore Private Equity Partners III, L.P. (Pequot Partners) now known
as FirstMark III L.P. (FirstMark Fund) and FirstMark III Offshore Partners,
L.P. (FirstMark Offshore Partners) respectively. Previously Mr. Poch served
as Managing Director of Pequot, since 1999. Mr. Poch also served as a Managing
General Partner of both Pequot Fund and Pequot Partners. From August 1998
through January 2000, he was a principal of Pequot and co-leader of Pequot
Funds and Pequot Partners venture capital team. From August 1996 to June 1998
he was the Chairman, President and Chief Executive Officer of GE Capital
Information Technology Solutions, Inc., a technology solutions provider. Prior
to that, he was a founder, and served as Co-Chairman and Co-President, of
AmeriData Technologies, Inc., a value-added reseller and systems integrator of
hardware and software systems. Mr. Poch is a director of a number of private
companies.

Keith
B. Hall has served as a director since February 2008. Mr.
Hall was Senior Vice President and Chief Financial Officer of LendingTree,
Inc., (TREE) from 1999 to 2007, a public company and subsequently a division of
InterActive Corp, (IACI). Prior to LendingTree, Mr. Hall served as Vice
President and Chief Financial Officer for three other publicly traded companies
that were subsequently acquired (Broadway & Seymour, Inc., from 1997 to
1999; Loctite Corporation from 1996 to 1997; and Legent in 1995). Mr. Hall also
served in the financial organization of United Technologies (UTX) from
1983-1995. Mr. Hall serves as a member of the board of directors of the
following companies: Polymer Group, Inc. (NASDAQ: POLGA), a one billion global
leader of non-woven materials (since 2009; and Chairman of its Capital
Expenditures & Investment Committee); Tectura, one of the worlds leading
providers, implementers and integrators of Microsoft business management
solutions (since 2008; and Chairman of its Corporate Governance Committee); CoreLogic,
a leading provider of technological solutions to the home mortgage risk
management and property valuation industries (since 2008; and Chairman of its
Audit Committee); and NewRiver, Inc., a private company that provides
technology solutions that enable financial services companies to ensure mutual
fund and variable insurance product sales are compliant with federal
regulations (since 2004). Mr. Hall is also on the Board of Trustees of Coe
College in Cedar Rapids, Iowa and is Chairman of its Budget & Accounting
Committee.

William
Lerner has served as chairman of our Corporate Governance and
Nominating Committee since November 2003. Mr. Lerner has been engaged in the
private practice of corporate and securities law in New York since 1961 and in
Pennsylvania since 1990. Mr. Lerner is a director/trustee of the Reich &
Tang Family of Money Market Mutual Funds including The Daily Income Fund, and
several state tax free money market funds including California, Connecticut,
New Jersey and New York.

Alvin
E. Nashman has been an independent consultant in the field of
computer service for the past ten years. Dr. Nashman is a director of Freedom
Bank of Virginia.

Sterling
Phillips is a Venture Partner with FirstMark Capital. Mr.
Phillips joined FirstMark Capital in 2007. Prior to joining FirstMark Capital,
Mr. Phillips served for six years as Chairman and Chief Executive Officer of
Analex Corporation, a publicly traded federal professional services firm that
was acquired in March 2007 by QinetiQ North America. Prior to joining Analex
Corporation, Mr. Phillips was Senior Vice President of Federal Data Corporation
(now part of Northrop Grumman).

Arnold
J. Wasserman has served as chairman of our Audit Committee
since March 1999. Mr. Wasserman has been a principal of Panda Financial
Associates, Inc., a leasing/consulting firm, for the past 40 years. He was a
director of Stratasys, Inc., a NASDAQ National Market listed company which
manufactures rapid prototyping systems and materials, and served as Chairman of
its Audit Committee for the past fifteen years.

Thomas
Wasserman has served as Managing Director at Constellation
Ventures which he joined in June 2001 as an associate before becoming a Vice
President. From March 2000 to June 2001, he served as a senior manager of
corporate development for 360Networks, a global telecommunications service
provider. Prior to 360Networks Mr. Wasserman worked at Charterhouse Group
International, a private equity firm, and at the investment banking firm of
Donaldson, Lufkin and Jenrette. Mr. Wasserman is a director of a number of
private companies including Bridgevine, Inc., One Phone AB and Crispy Gamer,
Inc.

23

---



Steven
Stringer has served as our President since June 2005 and as
our Chief Executive Officer since August 12, 2008. From June through September
2004 he was employed by Pequot as a consultant and was made available by Pequot
to us to assist with the selection, evaluation and integration of acquisitions.
From January 2002 through May 2004, Mr. Stringer pursued private investment
opportunities. Prior to that time he served in a number of senior executive
roles with Rhythms NetConnections Inc. (Rhythms), including as Chief
Executive Officer and President from July through December 2001, Chief Executive
Officer, President and Chief Operating Officer from April through July 2001,
and President and Chief Operating Officer from April 1999 through March 2001.
Rhythms was a national provider of digital subscriber line services and
operated one of the largest DSL networks in the United States, serving 60 major
markets with 67,000 digital subscriber lines in service.

J.W.
(Jay) Braukman III has served as a Senior Vice President, as
well as our Chief Financial Officer, since September 2006. Mr. Braukmans experience
includes 23 years with The General Electric Company (GE), where he held
numerous executive positions, including Chief Financial Officer of several
divisions. In addition to his experience at GE, Mr. Braukman served during 2006
as Chief Financial Officer of Cleartel Communications, Inc., a CLEC. His prior
experience also includes serving from 2004 until 2005 as Chief Financial
Officer of Chiquita Brands International, Inc., a publicly traded company in
the New York Stock Exchange, as Chief Operating Officer from 2002 until 2004 of
ITC ^Deltacom, Inc., a publicly held company, and as Chief Financial Officer
from 2000 until 2001 of Rhythms, a publicly traded company in the NASDAQ stock
market. In late May 2009, the Company was advised that Mr. Braukman would be
taking a leave of absence for medical reasons.

Under the terms of the Restated Shareholders
Agreement, each of Mr. Poch and Mr. Phillips are directors designated by
FirstMark Capital and Mr. T. Wasserman is a director designated by Constellation.
See Item 12, Security Ownership of Certain Beneficial Owners and
ManagementRestated Shareholders Agreement.

Compliance
with Section 16(a) of the Exchange Act

Based solely upon a review of Forms 3, 4 and 5 and
amendments to these forms furnished to us, all parties subject to the reporting
requirements of Section 16(a) of the Exchange Act filed on a timely basis all
such required reports during and with respect to our 2009 fiscal year.

Code of
Ethics

Our Board of Directors has established a code of business
conduct and ethics (Code) that applies to all employees and our principal
executive, financial and accounting officer(s). On April 2, 2008, the Board of
Directors modified the Code. A copy of our Code is filed as Exhibit 14.1 to our
Annual Report on Form 10-K for the fiscal year ended March 31, 2008. The Code
is posted on the Companys website at http://www.mtm.com/investorrelations/codeofbusinessconductethics.asp.

Committees
of our Board of Directors

Our Board of Directors currently has four standing
committees, consisting of an Audit Committee, a Compensation Committee, a
Corporate Governance and Nominating Committee and an Independent Directors
Committee.

Audit
Committee

Our Audit Committee currently is composed of Keith B.
Hall, William Lerner, Alvin E. Nashman and Arnold J. Wasserman, with Mr.
Wasserman serving as its chairman. We believe that each of these committee
members is independent, within the meaning of such term under applicable law
and the Marketplace Rules of The NASDAQ Stock Market, Inc. Our Board of
Directors has determined that Mr. Hall and Mr. Wasserman are each an audit
committee financial expert, as such term is defined by the SEC. The Audit
Committee is primarily concerned with the accuracy and effectiveness of the
audits of our financial statements by our independent auditors. Its duties
include:

| |   |                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | selecting and retaining the independent auditors, as
 well as ascertaining the auditors independence;                                              
| |   |                                                                                                                                                     
| |  | reviewing the scope of the audits to be conducted,
 as well as the results of their audits;                                                         
| |   |                                                                                                                                                     
| |  | approving non-audit services provided to our Company
 by the independent auditors;                                                                  
| |   |                                                                                                                                                     
| |  | reviewing the organization and scope of our internal
 system of audit, financial and disclosure controls;                                           
| |   |                                                                                                                                                     
| |  | appraising our financial reporting activities,
 including our Annual Report on Form 10-K, and the accounting standards and
 principles followed; and
| |   |                                                                                                                                                     
| |  | conducting other reviews relating to compliance by
 employees with our internal policies and applicable laws.                                       

Our Board of Directors adopted a charter for its Audit
Committee in 2001. We amended the Audit Committee Charter in June 2003 in order
to comply with rules mandated by the SEC. The Audit Committee charter is posted
on the Companys website at http://www.mtm.com/InvestorRelations/AuditCommitteeCharter.asp.

24

---



Compensation
Committee

Our Compensation Committee currently is composed of
William Lerner, Alvin E. Nashman and Sterling Phillips, each of whom is an
independent director, within the meaning of the current NASDAQ rules, with
Mr. Phillips serving as its chairman. The duties of our Compensation Committee
include recommending to the full Board of Directors remuneration to be paid our
executive officers, determining the number of and conditions related to the
exercise of options and other equity incentives granted pursuant to our various
stock plans and recommending the establishment and monitoring of a compensation
and incentive program for all of our executive officers.

The Compensation Committee charter is posted on the
Companys website at http://www.mtm.com/InvestorRelations/CompensationCommitteeCharter.asp.

Corporate
Governance and Nominating Committee

Our Corporate Governance and Nominating Committee
currently is composed of William Lerner, Sterling Phillips, Arnold J. Wasserman
and Thomas Wasserman, with Mr. Lerner serving as its chairman. The duties of
our Corporate Governance and Nominating Committee include overseeing our
boards policies, reviewing director compensation, as well as ensuring that we
are in compliance with all applicable federal and state securities laws and the
NASDAQ rules, and determining our Board of Directors slate of
director-nominees for each shareholder election of directors.

The Corporate Governance and Nominating Committee charter
is attached as Appendix A to the Proxy Statement contained as a part of our
definitive Schedule 14A filed with the Securities Exchange Commission on
October 20, 2004, and can be found on our website at http://www.mtm.com/InvestorRelations/CorporateGovernanceCommitteeCharter.asp.

In identifying and evaluating nominees for director,
including nominees recommended by shareholders, the Corporate Governance and
Nominating Committee shall take into consideration any criteria approved by the
board, which may include:

| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | judgment, skill, diversity, experience with business
 and other organizations in related industries and of comparable size;
| |   |                                                                                                                            
| |  | the interplay of the candidates experience with the
 experience of the other board members; and                           
| |   |                                                                                                                            
| |  | the extent to which the candidate would be a
 desirable addition to the board and any committees of the board              
| |   |                                                                                                                            

Other than the foregoing, and the independence
requirements discussed above, there are no stated minimum criteria for director
nominees.

Nominating Process

The Corporate Governance and Nominating Committee will
consider all candidates recommended by shareholders in accordance with the
procedures set forth below. Shareholders who wish to recommend a nominee for
election as director at an annual shareholders meeting must submit their
recommendations at least 120 calendar days before the date that our Proxy
Statement is released to shareholders in connection with the previous years
annual meeting of shareholders. Shareholders may recommend candidates for
consideration by the Board by writing to Investor Relations, at our corporate
offices, 1200 High Ridge Road, Stamford, Connecticut 06905, giving the
candidates name, business and residence contact information, biographical
data, including the principal occupation or employment of the candidate,
qualifications, the class and number of our shares, if any, beneficially owned
by such candidate, a description of all arrangements or understandings between
the shareholder and the candidate and any other person or persons (naming them)
pursuant to which the nominations are to be made by the shareholder and any
other information relating to the candidate that is required to be disclosed in
solicitations of proxies for election of directors, or as otherwise required,
pursuant to Regulation 14A under the Exchange Act of 1934. A written statement
from the candidate consenting to be named as a candidate and, if nominated and
elected, to serve as a director must accompany any shareholder recommendation.
Any shareholder who wishes to recommend a nominee for election as director also
must provide his, her or its name and address, as they appear in our books, the
number and class of shares beneficially owned by such shareholder and any other
information that is required to be provided by the shareholder pursuant to
Regulation 14A under the Exchange Act of 1934.

Independent
Directors Committee

Our Independent Directors Committee was formed by our
Board of Directors in September 2004. It consists only of directors who are neither
members of management nor associated with FirstMark Capital or Constellation
and is to consider, review and provide guidance and oversight regarding
transactions or other situations in which other board members, who are either
members of management or employees of FirstMark Capital or Constellation, have
interests that may be in addition to, or different from, the interests of the
shareholders in general. This committee currently is composed of Keith B. Hall,
William Lerner, Alvin E. Nashman and Arnold J. Wasserman.

Meetings
of Our Board of Directors and its Committees

Our Board of Directors held eight formal meetings
during our fiscal year ended March 31, 2009 and acted nine times by unanimous
written consent. During our 2009 fiscal year: (i) Our Audit Committee held
twelve formal meetings, (ii) our Compensation Committee held two formal
meetings, (iii) our Corporate Governance and Nominating Committee held four
formal meetings and acted one time by unanimous written consent, and (iv) our
Independent Directors Committee held two formal meetings and acted six times by
unanimous written consent. Each member of our Board of Directors attended, in
person or telephonically, at least 75% of the total number of meetings of our
board and each committee of the board on which the director serves.

25

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Item 11.
Executive Compensation

The compensation of the Companys executive officers
is determined by the Compensation Committee of the Board. The Committee has
three members, each of whom is independent of management. None of the members
of the Committee has any insider or interlocking relationship with the Company,
and each of them is a non-employee director, as these terms are defined in
applicable rules and regulations of the SEC.

The Company has entered into agreements with its
current named executive officers and certain other key employees. The purpose
of these agreements is to ensure predictability in determining the executives
terms and conditions of employment, to provide the executives with some
security so that they are able to devote their full attention to providing
superior performance, and to provide a reasonable level of protection, based on
their relative position in the organization, in the event they are terminated
without cause. Each named executive officers employment or severance agreement
provides for certain severance payments and benefits in the event that his
employment is terminated by the Company without cause, or by the executive
with good reason, or upon the executives death or total disability. These
payments and benefits are more fully described below.

Summary
Compensation Table for Fiscal Year 2009

The following table sets forth, with respect to our
fiscal year ended March 31, 2009 and 2008, all compensation earned by our
Principal Executive Officer (PEO), and one other of our most highly
compensated named executive officers other than our PEO who was serving as an
executive officer at the end of our 2009 fiscal year and whose total compensation
exceeded $100,000, and one other individual who would have been among the most
highly compensated executive officers except for the fact that such person was
not serving as an executive officer at the end of our 2009 fiscal year.

|                                                   |  |              |      |           |   |                   |  |                   |        |                         |   |         |  |   |       |     |   |         | 
|-------------------------------------------------- |  | ------------ | ---- | --------- | - | ----------------- |  | ----------------- | ------ | ----------------------- | - | ------- |  | - | ----- | --- | - | ------- | 
|Name and
 Principal Position(s)                    |  | Fiscal
 Year |      | Salary(1) |   | Stock 
 Awards(2) |  | Option
 Awards(3) |        | All Other
 Compensation |   | Total   | 
|                                                   |  |              |      |           |   |                   |  |                   |        |                         |   |         | 
|Steven Stringer (4)                                |  |              | 2009 |           | $ | 336,057           |  | $                 | 28,354 |                         | $ | 165,068 |  |   |       |     | $ | 529,479 | 
|President and
 Chief Executive Officer             |  |              | 2008 |           | $ | 335,000           |  | $                 | 28,354 |                         | $ | 212,286 |  |   |       |     | $ | 575,640 | 
|                                                   |  |              |      |           |   |                   |  |                   |        |                         |   |         |  |   |       |     |   |         | 
|J.W. Braukman III (5)                              |  |              | 2009 |           | $ | 276,730           |  | $                 | 13,125 |                         | $ | 89,375  |  |   |       |     | $ | 379,230 | 
|Senior Vice
 President and Chief Financial Officer |  |              | 2008 |           | $ | 260,000           |  | $                 | 13,125 |                         | $ | 89,375  |  |   |       |     | $ | 362,500 | 
|                                                   |  |              |      |           |   |                   |  |                   |        |                         |   |         |  |   |       |     |   |         | 
|Stephen Hicks (6)                                  |  |              | 2009 |           | $ | 179,644           |  |                   |        |                         | $ | 6,407   |  | $ | 8,994 | (7) | $ | 195,045 | 
|Senior Vice
 President and General Counsel         |  |              | 2008 |           | $ | 51,826            |  |                   |        |                         | $ | 1,281   |  |   |       |     | $ | 53,107  | 

|
|
|

(1) Amounts shown as Salary include gross salary
earned for the fiscal year ended March 31.

(2) The Stock Awards column reports the dollar
amount recognized for financial statement reporting purposes in accordance with
SFAS No. 123(R), for restricted stock units held, excluding the impact of
estimated forfeitures related to service based vesting conditions. See Note 6
of the Notes to Consolidated Financial Statements contained herein for a
discussion of the assumptions made in the valuation of Stock Awards for
financial reporting purposes. Amounts shown in the Stock Awards column do not
reflect compensation actually received by the named executive officer.

(3) The Option Awards column reports the dollar
amount recognized for financial statement reporting purposes in accordance with
SFAS No. 123(R), for options held, excluding the impact of estimated
forfeitures related to service based vesting conditions. See Note 6 of the
Notes to Consolidated Financial Statements contained herein for a discussion of
the assumptions made in the valuation of Option Awards for financial reporting
purposes. Amounts shown in the Option Awards column do not reflect compensation
actually received by the named executive officer.

(4) Mr. Stringer has served as our PEO since April 27,
2007. Mr. Stringer was named Chief Executive Officer on August 12, 2008.

(5) Mr. Braukman has served as our Senior Vice
President and Chief Financial Officer since September 28, 2006.

(6) Mr. Hicks served as our Senior Vice President and
General Counsel from January 2, 2008 to February 16, 2009. In connection with
the voluntary termination of Mr. Hicks employment with the Company, all of his
unvested stock options were forfeited.

(7) The amount reported for Mr. Hicks in All Other
Compensation consists of accrued paid time off paid by the Company during
fiscal 2009 in connection with the termination of Mr. Hicks employment with
the Company.

Essential to an understanding of the Summary
Compensation Table is an understanding of the Employment and Termination of
Employment Arrangements of the named executive officers.

Summary
of Employment Agreements

Named
Executive Officers who Terminated Employment During 2009.

Stephen Hicks.
Effective February 16, 2009, Mr. Hicks terminated his employment with the
Company voluntarily. Mr. Hicks vested options remain exercisable until May 16,
2009 in accordance with the termination provisions of the 2004 Equity Incentive
Plan (the 2004 Plan). Mr. Hicks forfeited all equity awards that were not
vested on his termination date, and did not receive any other payments or benefits
in connection with his termination.

26

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All
Other Named Executive Officers.

Steve
Stringer. We entered into an employment agreement dated October 1, 2004
with Mr. Stringer which agreement was superseded by an agreement dated August
10, 2006 (the Stringer Employment Agreement), to employ Mr. Stringer as our
President and Chief Operating Officer. The Stringer Employment Agreement has an
initial term ending December 31, 2009 (the Initial Term Date). On the Initial
Term Date and each subsequent anniversary of the Initial Term Date, the term of
the agreement shall automatically be extended for an additional period of
twelve (12) months; provided, however, that either party may elect not to
extend the agreement by giving written notice to the other party at least
twelve (12) months prior to the Initial Term Date or any anniversary date
thereof. The Stringer Employment Agreement as amended provided that Mr.
Stringer be paid a base salary of $335,000 per annum and he was eligible to
receive an annual bonus based upon the achievement of performance targets of up
to 75% of his base salary payable 67% in cash and 33% in common stock
consisting of 1,666 shares of common stock, subject to certain limitations on
the number of shares to be issued. Payment of the annual bonus is subject to
the achievement of performance targets established under the Companys
management bonus plan. Concurrent with the execution of the Stringer Employment
Agreement, Mr. Stringer was granted 7,133 options to purchase shares of Company
stock and a grant of 1,333 restricted stock units. On June 30, 2008, the
Compensation Committee approved an amendment to the Stringer Employment
Agreement whereby Mr. Stringer is to be paid (i) an annual salary of $400,000
effective July 1, 2008 and (ii) cash bonuses of up to $200,000 provided the
Company achieves certain EBITDA targets in the 2009 fiscal year. Mr. Stringer
did not receive a bonus in fiscal years 2009 and 2008 because the Company did
not achieve its performance targets. Mr. Stringer was named Chief Executive
Officer of the Company on August 12, 2008 and was appointed Principal Financial
Officer of the Company on June 15, 2009.

The Stringer Employment Agreements termination
related clauses and benefits are described below. The tables below provide an
estimate of the payments that would be made to Mr. Stringer under various
termination scenarios. These include voluntary termination, termination by the
Company without cause or by the executive with good reason, and for cause
termination by the Company. The amounts shown are estimates assuming that such
termination was effective as of March 31, 2009. The actual amounts to be paid
can only be determined at the time of such executives termination of
employment from the Company.

|                                                                    |  |                        |   |                                                                                            |   |                        |  |   |   | 
|------------------------------------------------------------------- |  | ---------------------- | - | ------------------------------------------------------------------------------------------ | - | ---------------------- |  | - | - | 
|Steven
 Stringer - Executive
 Benefits and Payments on
 Termination |  | Voluntary
 Termination |   | Involuntary
 Termination
 Without Cause,
 due to Death or
 Disability, or
 for Good Reason |   | For Cause
 Termination | 
|                                                                    |  |                        |   |                                                                                            |   |                        | 
|Severance Payments                                                  |  | $                      | 0 |                                                                                            | $ | 400,000                |  | $ | 0 | 
|Post Termination Employee Benefits                                  |  |                        | 0 |                                                                                            |   | 20,520                 |  |   | 0 | 
|Acceleration of Equity Awards (1)                                   |  |                        | 0 |                                                                                            |   | 102,310                |  |   | 0 | 
|                                                                    |  |                        |   |                                                                                            |   |                        |  |   |   | 
|                                                                    |  | $                      | 0 |                                                                                            | $ | 522,830                |  | $ | 0 | 
|                                                                    |  |                        |   |                                                                                            |   |                        |  |   |   | 

(1) Represents the dollar amount recognized for
financial statement reporting purposes in accordance with SFAS No. 123(R).

In the event of a termination of Mr. Stringers
employment during the term of the Stringer Employment Agreement by the Company
without cause or by Mr. Stringer for good reason or as a result of his
death or permanent and total disability, the Company agreed to provide to Mr.
Stringer (or his legal representative):

| |   |                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A continuance of his salary at one hundred percent
 (100%) of his then current base salary, for a period equal to the greater of
 (i) one year from the date of termination of Mr. Stringers employment or
 (ii) the period ending on the Initial Term Date (the Severance Period).                                           
| |   |                                                                                                                                                                                                                                                                                                                                  
| |  | Subject to certain limitations, during the Severance
 Period, Mr. Stringer will be entitled to a continuance of coverage under all
 health, life, disability and similar employee benefit plans and programs on
 the same basis as he was entitled to participate immediately prior to the
 commencement of the Severance Period.

Additionally, the impact of Mr. Stringers termination
of employment on the stock options or other equity incentives held by him
(including the maximum period that any such option or other equity incentive
shall remain exercisable) shall be governed by the applicable equity incentive
plan and agreement. All stock options and other equity incentives granted to
Mr. Stringer provide that, upon termination of his employment by the Company
other than for cause or by him for good reason, any unvested shares subject
to such options or other equity incentives shall become fully vested and
immediately exercisable in connection with such termination.

In connection with any termination by the Company
other than for cause or by Mr. Stringer for good reason or as a result of
his death or permanent and total disability the Company is required to execute
a release and waiver of claims in favor of Mr. Stringer, as consideration for
the execution and non-revocation by Mr. Stringer of a release agreement in
favor of the Company and its shareholders and their respective directors,
officers and employees. The foregoing payments shall be in lieu of any other
severance benefits to which Mr. Stringer is entitled pursuant to any other
severance plans, programs, arrangements, or policies of the Company.

In the event that Mr. Stringers employment with the
Company is terminated during the term of the Stringer Employment Agreement by
the Company for cause, or by Mr. Stringer other than for good reason, the
Company will pay to him (or his legal representative) any earned but unpaid
salary amounts and any unreimbursed expenses through his final date of
employment with the Company, and the Company shall have no further obligations
to him.

The foregoing payments are in lieu of any other
severance benefits to which Mr. Stringer is entitled pursuant to any other
severance plans, programs, arrangements, or policies of the Company.

27

---



During the term of the Stringer Employment Agreement
and for a period of: (i) two years thereafter upon Mr. Stringers non-renewal
of that agreement, (ii) one year thereafter upon the Companys non-renewal of
that agreement, or (iii) two years thereafter upon termination of employment by
either Mr. Stringer or the Company for any reason other than non-renewal, Mr.
Stringer is prohibited from engaging in any Business Activities on behalf of
any person, firm or corporation, and, subject to certain limitations, he shall
not acquire any financial interest in any entity which engages in Business
Activities within 200 miles of any of the Companys offices in operation on the
commencement date of the Stringer Employment Agreement and within 100 miles of
any office of the Company established after such commencement date. During the
period that the foregoing non-competition restriction applies, Mr. Stringer
shall not, without the written consent of the Company: (i) solicit any employee
of the Company or any of the Companys affiliates to terminate his employment,
or (ii) solicit any customers, partners, resellers, vendors or suppliers of the
Company on behalf of any individual or entity other than the Company or its
affiliates. Business Activities means conduct of business as a computer and
communications technology management and/or consulting business providing
information technology networking and data center services, including secure
access, VOIP, storage, security, messaging solutions, network and mainframe
connectivity consulting, remote network monitoring and management, network and
system diagnostics, product maintenance and support, training, and product
procurement solutions.

J.W. Braukman III.
We entered into a letter agreement with Mr. Braukman dated September 12, 2006,
which was amended by an agreement dated September 28, 2006 (the Braukman
Agreement), to employ Mr. Braukman as our Senior Vice President and Chief
Financial Officer at a base salary of $260,000 per annum. Mr. Braukman is
eligible to receive a bonus to be determined by the Board of Directors and the
Compensation Committee consistent with our management bonus plan. Concurrent
with the execution of the Braukman Agreement, Mr. Braukman was granted 16,666
options to purchase shares of Company stock and a grant of 2,333 restricted
stock units. On June 30, 2008, the Compensation Committee approved an amendment
to the Braukman Agreement whereby Mr. Braukman is to be paid (i) an annual
salary of $300,000 effective July 1, 2008 and (ii) cash bonuses of up $50,000
provided the Company achieves certain EBITDA targets in the 2009 fiscal year.
Mr. Braukman did not receive a bonus in fiscal years 2009 and 2008 because the
Company did not achieve its performance targets. In late May 2009, the Company
was advised that Mr. Braukman would be taking a leave of absence for medical
reasons.

The Braukman Agreements termination related clauses and
benefits are described below. The tables below provide an estimate of the
payments that would be made to Mr. Braukman under various termination
scenarios. These include voluntary termination, termination by the Company
without cause or by the executive with good reason, and for cause
termination by the Company. The amounts shown are estimates assuming that such
termination was effective as of March 31, 2009. The actual amounts to be paid
can only be determined at the time of such executives termination of
employment from the Company.

|                                                                 |  |                        |   |                                                                                            |   |                        |  |   |   | 
|---------------------------------------------------------------- |  | ---------------------- | - | ------------------------------------------------------------------------------------------ | - | ---------------------- |  | - | - | 
|Jay Braukman
 - Executive
 Benefits and Payments on
 Termination |  | Voluntary
 Termination |   | Involuntary
 Termination
 Without Cause,
 due to Death or
 Disability, or
 for Good Reason |   | For Cause
 Termination | 
|                                                                 |  |                        |   |                                                                                            |   |                        | 
|Severance Payments                                               |  | $                      | 0 |                                                                                            | $ | 300,000                |  | $ | 0 | 
|Post Termination Employee Benefits                               |  |                        | 0 |                                                                                            |   | 14,208                 |  |   | 0 | 
|Acceleration of Equity Awards (1)                                |  |                        | 0 |                                                                                            |   | 155,671                |  |   | 0 | 
|                                                                 |  |                        |   |                                                                                            |   |                        |  |   |   | 
|                                                                 |  | $                      | 0 |                                                                                            | $ | 469,879                |  | $ | 0 | 
|                                                                 |  |                        |   |                                                                                            |   |                        |  |   |   | 

(1) Represents the dollar amount recognized for
financial statement reporting purposes in accordance with SFAS No. 123(R).

In the event of a termination of Mr. Braukmans
employment on or before the fourth anniversary date of the Braukman Agreement
by the Company without cause or by Mr. Braukman for good reason or as a
result of his death or permanent and total disability, the Company agreed to
provide to Mr. Braukman (or his legal representative):

| |   |                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A continuance of his salary at one hundred percent
 (100%) of his then current base salary, for a period equal to one year from
 the date of termination of Mr. Braukmans employment (the Severance
 Period).                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                  
| |  | Subject to certain limitations, during the Severance
 Period, Mr. Braukman will be entitled to a continuance of coverage under all
 health, life, disability and similar employee benefit plans and programs on
 the same basis as he was entitled to participate immediately prior to the
 commencement of the Severance Period.

Additionally, the impact of Mr. Braukmans termination
of employment on the stock options or other equity incentives held by him
(including the maximum period that any such option or other equity incentive
shall remain exercisable) shall be governed by the applicable equity incentive
plan and agreement. All stock options and other equity incentives granted to
Mr. Braukman provide that, upon termination of his employment by the Company
other than for cause or by him for good reason, any unvested shares subject
to such options or other equity incentives shall become fully vested and
immediately exercisable in connection with such termination.

In connection with any termination by the Company
other than for cause or by Mr. Braukman for good reason or as a result of
his death or permanent and total disability the Company is required to execute
a release and waiver of claims in favor of Mr. Braukman, as consideration for
the execution and non-revocation by Mr. Braukman of a release agreement in
favor of the Company and its shareholders and their respective directors,
officers and employees. The foregoing payments shall be in lieu of any other
severance benefits to which Mr. Braukman is entitled pursuant to any other
severance plans, programs, arrangements, or policies of the Company.

In the event that Mr. Braukmans employment with the
Company is terminated by the Company for cause, or by Mr. Braukman other than
for good reason, the Company shall pay to him (or his legal representative)
any earned but unpaid salary amounts and any unreimbursed expenses through his
final date of employment with the Company, and the Company shall have no
further obligations to him.

The foregoing payments are in lieu of any other
severance benefits to which Mr. Braukman is entitled pursuant to any other
severance plans, programs, arrangements, or policies of the Company.

28

---



During the term of Mr. Braukmans employment and for a
period of: (i) two years following Mr. Braukmans termination of his employment
or (ii) one year following the Companys termination of his employment, Mr.
Braukman is prohibited from engaging in any Business Activities on behalf of
any person, firm or corporation, and, subject to certain limitations, he shall
not acquire any financial interest in any entity which engages in Business
Activities within 200 miles of any of the Companys offices in operation on the
commencement date of the Braukman Employment Agreement and within 100 miles of
any office of the Company established after such commencement date. During the
period that the foregoing non-competition restriction applies, Mr. Braukman
shall not, without the written consent of the Company: (i) solicit any employee
of the Company or any of the Companys affiliates to terminate his employment,
or (ii) solicit any customers, partners, resellers, vendors or suppliers of the
Company on behalf of any individual or entity other than the Company or its
affiliates. Business Activities means conduct of business as a computer and
communications technology management and/or consulting business providing information
technology networking and data center services, including secure access, VOIP,
storage, security, messaging solutions, network and mainframe connectivity
consulting, remote network monitoring and management, network and system
diagnostics, product maintenance and support, training, and product procurement
solutions.

Outstanding
Equity Awards at Fiscal 2009 Year End

|                  |  |                                                          |        |                              |  |                          |     |                                                                 |       |                                                                         |  |           |  |  |       |     |   |       | 
|----------------- |  | -------------------------------------------------------- | ------ | ---------------------------- |  | ------------------------ | --- | --------------------------------------------------------------- | ----- | ----------------------------------------------------------------------- |  | --------- |  |  | ----- | --- | - | ----- | 
|                  |  | Option Awards                                            |        | Stock Awards                 | 
|                  |  |                                                          |        |                              | 
|                  |  | Number of Securities Underlying
 Unexercised Options (#) |        | Option
 Exercise
 Price
 ($) |  | Option
 Expiration
 Date |     | Number of
 Shares or Units of
 Stock That
 Have Not Vested
 (#) |       | Market Value
 of Shares or
 Units of
 Stock
 That Have
 Not
 Vested (1) | 
|                  |  |                                                          |        |                              |  |                          |     |                                                                 |       |                                                                         | 
|Name              |  | Exercisable                                              |        | Unexercisable                |  |                          |     |                                                                 |       |                                                                         |  |           |  |  |       |     |  
|                  |  |                                                          |        |                              |  |                          |     |                                                                 |       |                                                                         |  |           |  |  |       |     |  
|Steven Stringer   |  |                                                          | 14,333 |                              |  |                          |     | $                                                               | 43.05 |                                                                         |  | 11/2/2014 |  |  |       |     |   |       | 
|                  |  |                                                          | 2,360  |                              |  | 786                      | (2) | $                                                               | 60.75 |                                                                         |  | 4/15/2015 |  |  |       |     |   |       | 
|                  |  |                                                          | 3,566  |                              |  | 3,567                    | (3) | $                                                               | 45.45 |                                                                         |  | 8/10/2016 |  |  |       |     |   |       | 
|                  |  |                                                          |        |                              |  |                          |     |                                                                 |       |                                                                         |  |           |  |  | 2,666 | (4) | $ | 1,466 | 
|                  |  |                                                          |        |                              |  |                          |     |                                                                 |       |                                                                         |  |           |  |  | 393   | (5) | $ | 216   | 
|                  |  |                                                          |        |                              |  |                          |     |                                                                 |       |                                                                         |  |           |  |  | 667   | (6) | $ | 367   | 
|                  |  |                                                          |        |                              |  |                          |     |                                                                 |       |                                                                         |  |           |  |  |       |     |   |       | 
|J.W. Braukman III |  |                                                          | 8,332  |                              |  | 8,334                    | (7) | $                                                               | 33.00 |                                                                         |  |           |  |  |       |     |   |       | 
|                  |  |                                                          |        |                              |  |                          |     |                                                                 |       |                                                                         |  | 9/28/2016 |  |  | 1,167 | (8) | $ | 642   | 
|                  |  |                                                          |        |                              |  |                          |     |                                                                 |       |                                                                         |  |           |  |  |       |     |   |       | 
|Stephen Hicks (9) |  |                                                          | 1,250  |                              |  |                          |     |                                                                 |       |                                                                         |  |           |  |  |       |     |   |       | 

|    |                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | Market value is calculated by multiplying the
 adjusted closing market price of the Companys common stock as of March 31,
 2009 by the number of unvested restricted stock units.                                                                      
|    |                                                                                                                                                                                                                                                         
|(2) | The remaining 786 options vest on April 15, 2009.                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                         
|(3) | 1,783 options vest on August 10, 2009 and 1,784
 options vest on August 10, 2010.                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                         
|(4) | All restricted stock units vest on November 2, 2009,
 provided that vesting will accelerate in the event that the Companys common
 stock trades at $150 or higher for any thirty trading days within a sixty
 trading day period.                      
|    |                                                                                                                                                                                                                                                         
|(5) | All restricted stock units vest on April 15, 2010,
 provided that vesting will accelerate in the event that the Companys common
 stock trades at $150 or higher for any thirty trading days within a sixty
 trading day period.                        
|    |                                                                                                                                                                                                                                                         
|(6) | 333 restricted stock units vest on August 10, 2009
 and 334 restricted stock units vest on August 10, 2010.                                                                                                                                             
|    |                                                                                                                                                                                                                                                         
|(7) | 4,166 options vest on September 28, 2009 and 4,168
 options vest on September 28, 2010.                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                         
|(8) | 583 restricted stock units vest on September 28,
 2009 and 584 restricted stock units vest on September 28, 2010.                                                                                                                                       
|    |                                                                                                                                                                                                                                                         
|(9) | 3,750 unvested options were cancelled upon Mr.
 Hicks resignation with the Company, effective February 16, 2009. Mr. Hicks
 1,250 vested options remain exercisable until May 16, 2009 in accordance with
 the termination provisions of the 2004 Plan.

Outstanding
Equity Awards at Fiscal Year End Table Narrative.

The outstanding options listed under Option Awards
primarily relate to options granted under the 2004 Equity Incentive Plan
pursuant to option agreements, the principal terms of which are disclosed in
the table.

The outstanding awards listed under Stock Awards
primarily relate to restricted stock units under the 2004 Equity Incentive Plan
pursuant to restricted stock unit agreements, the principal terms of which are
disclosed in the table.

Accelerated
Vesting of Equity Awards.

The applicable award agreement governing the
outstanding equity awards may accelerate vesting in connection with a
termination of employment, change in control, or other specified events.

29

---



Director Compensation for Fiscal Year 2009

The following
table shows the cash paid to each non-employee director for services rendered
in that capacity during the fiscal year ended March 31, 2009.

|                         |  |                                |        |                   |  |                 |  |       |     |  |   |        | 
|------------------------ |  | ------------------------------ | ------ | ----------------- |  | --------------- |  | ----- | --- |  | - | ------ | 
|Name                     |  | Fees 
 Earned 
 or Cash 
 Paid |        | Stock 
 Awards(5) |  | Option 
 Awards |  | Total |    
|                         |  |                                |        |                   |  |                 |  |       |    
|Arnold J.
 Wasserman (1) |  | $                              | 32,500 |                   |  | 6,150           |  |       | N/A |  | $ | 38,650 | 
|Alvin E.
 Nashman (2)    |  | $                              | 30,000 |                   |  | 6,150           |  |       |     |  | $ | 36,150 | 
|William
 Lerner (3)      |  | $                              | 33,500 |                   |  | 6,150           |  |       |     |  | $ | 39,650 | 
|Keith B.
 Hall (4)       |  | $                              | 27,500 |                   |  | 16,400          |  |       |     |  | $ | 43,900 | 

|                                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                    
|                                                                                                                                                    
|(1) As of
March 31, 2009, Mr. Wasserman held options to purchase 6,532 shares of common
stock. These options were fully vested prior to fiscal 2009.

(2) As of
March 31, 2009, Dr. Nashman held options to purchase 5,032 shares of common stock.
These options were fully vested prior to fiscal 2009.

(3) As of
March 31, 2009, Mr. Lerner held options to purchase 5,032 shares of common
stock. These options were fully vested prior to fiscal 2009.

(4) Mr. Hall
became a director on February 8, 2008.

(5) On April
2, 2008 each non-employee director was awarded 1,000 shares of common stock.
Mr. Hall was awarded an additional 1,666 shares of common stock upon his
initial appointment to the Board of Directors. The shares were fully vested at
the date of grant.

Director Compensation Table Narrative

The Fees
Earned or Cash Paid column includes the aggregate of all fees earned or paid
in cash for services as a director, including annual retainer fees, committee
and/or chairman fees, and meeting fees.

The Stock
Awards column reports the dollar amount recognized for financial statement
reporting purposes for the applicable fiscal year, in accordance with SFAS No.
123(R), for common stock awards in fiscal 2009.

Directors who
are employees of the Company or who are designated as a director by FirstMark
Capital or Constellation, receive no compensation for their service as
directors. As a result, we did not pay any compensation to Mr. Poch, Mr.
Phillips, or Mr. Thomas Wasserman for serving on our Board of Directors.

Director Fees

Each director
who is not an employee of our Company or who is not appointed to the Board of
Directors by either FirstMark Capital or Constellation receives an annual fee
of $25,000 as compensation for serving on our Board of Directors. Each such
member of the boards Audit, Compensation and Corporate Governance and
Nominating Committees receives $2,500 per year, and each chairman of the
committees receives $3,500 (except the chairman of the Audit Committee who
receives $5,000), as compensation for serving on such committees. Effective
April 2, 2008, non-employee directors who are not appointed to the Board of
Directors by either FirstMark Capital or Constellation are also granted stock
awards of 1,666 shares of common stock on their initial appointment or election
to the Board of Directors. Beginning in January 2009 and each year thereafter
these directors will be granted a stock award of shares of common stock in an
amount to be determined by the Board. The Board of Directors waived its right
to make such an award for January 2009.

The Company
does not provide non-equity plan compensation or pension benefits to directors;
nor does it provide any deferred compensation programs for directors.

30

---



Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholders
Matters

Our Current Beneficial Owners

Our Series A-1
Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred Stock, Series
A-4 Preferred Stock, Series A-5 Preferred Stock, Series A-6 Preferred Stock,
Series A-7 Preferred Stock, Series A-8 Preferred Stock, Series A-9 Preferred
Stock, Series A-10 Preferred Stock, Series A-11 Preferred Stock and Series A-12
Preferred Stock (collectively referred to as the Series A Preferred Stock) and
common stock are the only classes of our voting securities presently
outstanding. The Series A Preferred Stock votes on an as converted basis, such
that the holder of each share of Series A Preferred Stock is entitled to a
number of votes equal to the number of shares of common stock that the holder
of such share of Series A Preferred Stock would receive upon conversion of the
share of Series A Preferred Stock, provided that (i) for the shares of the
Series A-1, A-2, and A-3 Preferred Stock, such number of votes shall not exceed
such number of shares of common stock which would be received if the conversion
price were $28.9425 per preferred share (subject to appropriate adjustment for
stock splits, stock dividends, combinations and other similar recapitalizations
affecting such shares), (ii) for the shares of the Series A-4, A-5, A-6, and
A-7 Preferred Stock, such number of votes shall not exceed one-fifteenth vote
per share, (iii) for the shares of the Series A-8 Preferred Stock, such number
of votes shall be one vote for each share of common stock which would be
received if the conversion price were $17.655 per share (subject to appropriate
adjustment for stock splits, stock dividends, combinations and other similar
recapitalizations affecting such shares), (iv) for the shares of the Series A-9
Preferred Stock, such number of votes shall be one vote for each share of
common stock which would be received if the conversion price were $8.415 per
share (subject to appropriate adjustment for stock splits, stock dividends,
combinations and other similar recapitalizations affecting such shares), (v)
for the shares of the Series A-10 Preferred Stock, such number of votes shall
be one vote for each share of common stock which would be received if the
conversion price were $4.95 per share (subject to appropriate adjustment for
stock splits, stock dividends, combinations and other similar recapitalizations
affecting such shares), (vi) for the shares of the Series A-11 Preferred Stock,
such number of votes shall be one vote for each share of common stock which
would be received if the conversion price were $5.115 per share (subject to
appropriate adjustment for stock splits, stock dividends, combinations and
other similar recapitalizations affecting such shares), and (vii) for the
shares of the Series A-12 Preferred Stock, such number of votes shall be one
vote for each share of common stock which would be received if the conversion
price were $0.638 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other similar recapitalizations
affecting such shares).

The Company
has authorized and designated Series A-9, Series A-10, Series A-11 and Series
A-12 Preferred Stock. No Preferred Stock from Series A-9 through Series A-12 is
outstanding, but the Company has issued Preferred Stock warrants for each of
these Series of Preferred Stock. Series A-9 Preferred Stock became effective
and the warrants exercisable upon the filing of the Fourth Restated Certificate
of Incorporation on June 25, 2008. In addition, the Series A-10, A-11 and A-12
Preferred Stock became effective, and the warrants exercisable, upon the filing
of the Fifth Restated Certificate of Incorporation on February 17, 2009.

The following
table sets forth as of May 31, 2009 the beneficial ownership of the following
persons:

| |   |                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | each person
 known by us to beneficially own 5% or more of our Series A Preferred Stock
 and/or our common stock, based on filings with the SEC and certain other
 information;
| |   |                                                                                                                                                                                
| |  | each of our
 named executive officers and directors; and                                                                                                                     
| |   |                                                                                                                                                                                
| |  | all of our
 executive officers and directors as a group.                                                                                                                       

Beneficial
ownership is determined in accordance with the rules of the SEC and includes
voting and investment power. In addition, under SEC rules, a person is deemed
to be the beneficial owner of securities which may be acquired by such person
upon the exercise of options and warrants or the conversion of convertible
securities within 60 days from the date on which beneficial ownership is to be
determined. Our named executive officers, in accordance with SEC rules, are
those executive officers who are required to be listed in the Summary
Compensation Table provided in Item 11 of this Annual Report on Form 10-K.
Except as otherwise indicated in the notes to the Beneficial Ownership Table,
we believe that all shares are beneficially owned, and investment and voting
power is held by, the persons named as owners; and the address for each
beneficial owner listed in the table, except where otherwise noted, is MTM
Technologies, Inc., 1200 High Ridge Road, Stamford, Connecticut 06905.

|                                                             |  |                                             |      |                                    |      |                                             |  |                                    |      |  |      |   | 
|------------------------------------------------------------ |  | ------------------------------------------- | ---- | ---------------------------------- | ---- | ------------------------------------------- |  | ---------------------------------- | ---- |  | ---- | - | 
|                                                             |  | Series A Preferred Stock                    |      | Common Stock                       |     
|                                                             |  |                                             |      |                                    |     
|Name of
 Shareholder                                         |  | Amount and Nature
 of Beneficial
 Ownership |      | Percentage of
 Outstanding
 Shares |      | Amount and Nature
 of Beneficial
 Ownership |  | Percentage of
 Outstanding
 Shares |     
|                                                             |  |                                             |      |                                    |      |                                             |  |                                    |     
|FirstMark Capital (1)                                        |  | 26,451,323                                  | (2)  |                                    | 78.4 | %                                           |  | 3,820,423                          | (3)  |  | 71.2 | % | 
|Gerald A. Poch (4)                                           |  | 26,451,323                                  | (5)  |                                    | 78.4 | %                                           |  | 3,827,756                          | (6)  |  | 71.3 | % | 
|Constellation (7)                                            |  | 7,308,978                                   | (8)  |                                    | 21.6 | %                                           |  | 697,545                            | (9)  |  | 14.1 | % | 
|Arnold Wasserman                                             |  | 0                                           |      |                                    | 0.0  | %                                           |  | 10,048                             | (10) |  | 0.2  | % | 
|William Lerner                                               |  | 0                                           |      |                                    | 0.0  | %                                           |  | 6,848                              | (11) |  | 0.1  | % | 
|Alvin E. Nashman                                             |  | 0                                           |      |                                    | 0.0  | %                                           |  | 7,815                              | (12) |  | 0.2  | % | 
|Steven Stringer                                              |  | 0                                           |      |                                    | 0.0  | %                                           |  | 21,711                             | (13) |  | 0.4  | % | 
|J.W. Braukman III                                            |  | 0                                           |      |                                    | 0.0  | %                                           |  | 9,498                              | (14) |  | 0.2  | % | 
|Keith B. Hall                                                |  | 0                                           |      |                                    | 0.0  | %                                           |  | 2,666                              |      |  | 0.1  | % | 
|Sterling Phillips (15)                                       |  | 0                                           | (16) |                                    | 0.0  | %                                           |  | 0                                  | (17) |  | 0.0  | % | 
|Thomas Wasserman (18)                                        |  | 0                                           | (19) |                                    | 0.0  | %                                           |  | 0                                  | (20) |  | 0.0  | % | 
|                                                             |  |                                             |      |                                    |      |                                             |  |                                    |      |  |      |   | 
|All directors and executive officers as a
 group (9 persons) |  | 26,451,323                                  | (21) |                                    | 78.4 | %                                           |  | 3,886,342                          | (22) |  | 71.7 | % | 

(footnotes on the next page)

31

---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(1) | According to
 a Schedule 13D filed with the SEC on August 25, 2008, effective August 20,
 2008, FirstMark Capital, L.L.C., a Delaware limited liability company (FirstMark
 Capital), became the investment manager of certain funds formerly managed by
 Pequot Capital Management Inc. These funds included Pequot Private Equity
 Fund III, L.P. and Pequot Offshore Private Equity Partners III, L.P. now
 known as FirstMark III L.P. (FirstMark Fund) and FirstMark III Offshore
 Partners, L.P. (FirstMark Offshore Partners together with FirstMark Fund,
 FirstMark), respectively. Gerald Poch is Chairman & Managing Director
 of FirstMark and Sterling Phillips is a Venture Partner at FirstMark. Gerald
 A. Poch, the chairman of our Board of Directors since May 21, 2004, and
 Sterling Phillips, one of our directors since April 2, 2008, disclaim
 beneficial ownership over the shares held by FirstMark Capital, except to the
 extent of their pecuniary interest. The address for FirstMark, as well as the
 FirstMark Fund and FirstMark Offshore Partners, is 1221 Avenue of the
 Americas, New York, NY 10020.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) | Represents
 (a) ownership of the following Series of Preferred Stock:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                            |  |            |           |            |  |            |  |            |           |            |  |            |  |            |           |            |  |           |  |  |           |  |  |         | 
|--------------------------- |  | ---------- | --------- | ---------- |  | ---------- |  | ---------- | --------- | ---------- |  | ---------- |  | ---------- | --------- | ---------- |  | --------- |  |  | --------- |  |  | ------- | 
|Record
      Holder         |  | Series A-1 |           | Series A-2 |  | Series A-3 |  | Series A-4 |           | Series A-5 |  | Series A-6 |  | Series A-7 |           | Series A-8 | 
|                            |  |            |           |            |  |            |  |            |           |            |  |            |  |            |           |            | 
|FirstMark Fund              |  |            | 3,406,475 |            |  | 2,092,547  |  |            | 2,012,066 |            |  | 5,336,716  |  |            | 2,736,410 |            |  | 2,008,938 |  |  | 3,700,502 |  |  | 725,736 | 
|                            |  |            |           |            |  |            |  |            |           |            |  |            |  |            |           |            |  |           |  |  |           |  |  |         | 
|FirstMark Offshore Partners |  |            | 480,199   |            |  | 294,980    |  |            | 283,634   |            |  | 752,300    |  |            | 385,741   |            |  | 283,193   |  |  | 521,648   |  |  | 102,301 | 

| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | and (b) the
 following Series A-9 through Series A-12 Preferred Stock warrants which are
 exercisable within the 60 days following the date of this Beneficial
 Ownership Table:

|                             |  |            |  |             |         |             |  |             |  |  |         |  | 
|---------------------------- |  | ---------- |  | ----------- | ------- | ----------- |  | ----------- |  |  | ------- |  | 
|                             |  | Series A-9 |  | Series A-10 |         | Series A-11 |  | Series A-12 | 
|                             |  |            |  |             |         |             |  |             | 
|FirstMark
 Fund              |  | 343,705    |  |             | 642,729 |             |  | 56,545      |  |  | 120,889 |  | 
|                             |  |            |  |             |         |             |  |             |  |  |         |  | 
|FirstMark
 Offshore Partners |  | 48,452     |  |             | 90,604  |             |  | 7,971       |  |  | 17,042  |  | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Does not
 include any shares of Series A Preferred Stock that we may issue in lieu of
 cash dividends on the Series A Preferred Stock for any period after May 21,
 2009. Accrual of dividends on the Series A Preferred Stock commenced on May
 21, 2006.                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(3) | Represents
 (a) the maximum 3,344,565 shares of our common stock issuable upon conversion
 of all of the Series A-1 through Series A-8 Preferred Stock currently owned
 of record by FirstMark Fund and FirstMark Offshore Partners, as discussed in
 note (2) to this Beneficial Ownership Table, which shares are convertible
 within the 60 days following the date of the Beneficial Ownership Table, and
 (b) the following shares of our common stock issuable upon exercise of common
 stock warrants which shares are exercisable within the 60 days following the
 date of this Beneficial Ownership Table:

|                             |  |                       |  | 
|---------------------------- |  | --------------------- |  | 
|Record Holder                |  | Common Stock Warrants | 
|                             |  |                       | 
|                             |  |                       |  | 
|FirstMark Fund               |  | 195,620               |  | 
|                             |  |                       |  | 
|FirstMark
 Offshore Partners |  | 27,573                |  | 

| |                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | and (c) the
 following shares of common stock issuable upon the conversion of Series A-9
 through Series A-12 Preferred Stock issuable upon exercise of the Series A-9
 through Series A-12 Preferred Stock warrants, which shares are exercisable
 within the 60 days following the date of this Beneficial Ownership Table:

|                             |  |                                                                                   |  | 
|---------------------------- |  | --------------------------------------------------------------------------------- |  | 
|Record Holder                |  | Series A-9 to Series A-12 Preferred Stock Warrants 
 as converted to Common Stock | 
|                             |  |                                                                                   | 
|                             |  |                                                                                   |  | 
|FirstMark
 Fund              |  | 221,449                                                                           |  | 
|                             |  |                                                                                   |  | 
|FirstMark
 Offshore Partners |  | 31,216                                                                            |  | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The number
 of shares of our common stock issuable upon conversion of the Series A
 Preferred Stock and the exercise of the warrants which the FirstMark Fund and
 FirstMark Offshore Partners own of record are subject to an anti-dilution
 adjustment. Amounts do not include (i) Series A-1 common stock warrants that
 expired on May 21, 2008; (ii) Series A-2 common stock warrants that expired
 on September 16, 2008; (iii) Series A-3 common stock warrants that expired on
 December 7, 2008; and (iv) Series A-4 common stock warrants that expired on
 December 10, 2008 and on March 11, 2009. Amounts also do not include any
 shares of Series A Preferred Stock that we may issue in lieu of cash
 dividends on the Series A Preferred Stock for any period after May 21, 2009.
 Accrual of dividends on the Series A Preferred Stock commenced May 21, 2006.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(4) | The address
 for Mr. Poch is c/o FirstMark Capital, 1221 Avenue of the Americas, New York,
 NY 10020.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(5) | Includes the
 shares of Series A Preferred Stock beneficially owned by FirstMark Capital
 (see note (2) to this Beneficial Ownership Table), of which Mr. Poch is a
 Managing Director. Mr. Poch disclaims beneficial ownership to the Series A
 Preferred Stock beneficially owned by FirstMark Capital, except to the extent
 of his pecuniary interest therein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(6) | Represents
 7,333 shares of our common stock held by Mr. Poch in his personal account
 plus the 3,820,423 shares of our common stock beneficially owned by FirstMark
 Capital (see note (3) to this Beneficial Ownership Table), of which Mr. Poch
 is a Managing Director. Mr. Poch disclaims beneficial ownership to our common
 stock beneficially owned by FirstMark Capital, except to the extent of his
 pecuniary interest therein.                                                                                                                                                                                                                                                                                                                                                                                                                                     

(footnotes continued on next page)

32

---



(footnotes continued from previous page)

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) | According to
 Amendment No. 7 to Schedule 13D filed with the SEC on August 17, 2007 and
 information provided to us by Constellation, The Bear Stearns Companies LLC,
 a JP Morgan Chase company (BSCL) is the sole managing member of
 Constellation Ventures Management II, LLC (Management) and the sole
 stockholder of Bear Stearns Asset Management Inc. (BSAM). Management is the
 sole managing general partner of BSC, the sole general partner of
 Constellation Venture and the sole general partner of Constellation Offshore.
 Mr. Clifford H. Friedman, who served on our Board of Directors from December
 7, 2004 to August 9, 2005, is a member of Management and a senior managing
 director of BSAM. Mr. Thomas Wasserman, who has served as our director since
 August 9, 2005, is an employee of BSAM. BSAM is the sole managing member of
 CVC and investment adviser to BSC, Constellation Ventures, Constellation
 Offshore and CVC. Management, BSAM and Mr. Friedman share investment and
 voting control of shares beneficially owned by BSC, Constellation Ventures
 and Constellation Offshore. BSAM exercises sole investment and voting control
 of shares beneficially owned by CVC. BSCL, Management, BSAM and Mr. Friedman
 disclaim beneficial ownership over the shares held by BSC, Constellation
 Ventures, Constellation Offshore and CVC except to the extent of their
 pecuniary interests therein. The address for each entity in Constellation and
 each individual referenced in this footnote is 40 West 57th
 Street, 30th Floor, New York, New York 10019.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(8) | Represents
 (a) ownership of the following Series of Preferred Stock:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|                        |  |            |           |            |  |            |  |            |         |            |  |         |  |  |         | 
|----------------------- |  | ---------- | --------- | ---------- |  | ---------- |  | ---------- | ------- | ---------- |  | ------- |  |  | ------- | 
|Record
 Holder          |  | Series A-3 |           | Series A-4 |  | Series A-5 |  | Series A-6 |         | Series A-7 | 
|                        |  |            |           |            |  |            |  |            |         |            | 
|Constellation
 Venture  |  |            | 1,146,093 |            |  | 1,636,088  |  |            | 275,060 |            |  | 293,277 |  |  | 233,981 | 
|Constellation
 Offshore |  |            | 609,897   |            |  | 870,649    |  |            | 146,373 |            |  | 156,068 |  |  | 124,512 | 
|BSC                     |  |            | 511,085   |            |  | 729,590    |  |            | 122,657 |            |  | 130,781 |  |  | 104,338 | 
|CVC                     |  |            | 28,617    |            |  | 40,852     |  |            | 6,866   |            |  | 7,321   |  |  | 5,841   | 

| |                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | and (b) the
 following Series A-11 Preferred Stock warrants which are exercisable within
 the 60 days following the date of this Beneficial Ownership Table:

|                        |  |             |  | 
|----------------------- |  | ----------- |  | 
|Record
 Holder          |  | Series A-11 | 
|                        |  |             | 
|Constellation
 Venture  |  | 64,417      |  | 
|Constellation
 Offshore |  | 34,280      |  | 
|BSC                     |  | 28,726      |  | 
|CVC                     |  | 1,609       |  | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Does not
 include any shares of Series A Preferred Stock that we may issue in lieu of
 cash dividends on the Series A Preferred Stock for any period after May 21,
 2009. Accrual of dividends on the Series A Preferred Stock commenced May 21,
 2006.                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(9) | Represents
 (a) the maximum 634,715 shares of our common stock issuable upon conversion
 of all of the Series A Preferred Stock currently owned of record by
 Constellation, as discussed in note (8) to this Beneficial Ownership Table,
 which shares are convertible within the 60 days following the date of the
 Beneficial Ownership Table, and (b) the following shares of our common stock
 issuable upon exercise of common stock warrants which shares are exercisable
 within the 60 days following the date of this Beneficial Ownership Table:

|                        |  |                       |  | 
|----------------------- |  | --------------------- |  | 
|Record
 Holder          |  | Common Stock Warrants | 
|                        |  |                       | 
|Constellation
 Venture  |  | 9,991                 |  | 
|Constellation
 Offshore |  | 18,776                |  | 
|BSC                     |  | 8,372                 |  | 
|CVC                     |  | 467                   |  | 

| |                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | and (c) the following shares of common
stock issuable upon the conversion of Series A-11 Preferred Stock issuable
upon exercise of the Series A-11 Preferred Stock warrants, which shares are
exercisable within the 60 days following the date of this Beneficial
Ownership Table:

|                        |  |                                                                     |  | 
|----------------------- |  | ------------------------------------------------------------------- |  | 
|Record
 Holder          |  | Series A-11 Preferred Stock Warrants as converted to 
 Common Stock | 
|                        |  |                                                                     | 
|Constellation
 Venture  |  | 12,593                                                              |  | 
|Constellation
 Offshore |  | 6,701                                                               |  | 
|BSC                     |  | 5,616                                                               |  | 
|CVC                     |  | 314                                                                 |  | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | The number
 of shares of our common stock issuable upon conversion of the Series A
 Preferred Stock and the exercise of the warrants which Constellation owns of
 record are subject to an anti-dilution adjustment. Amounts do not include (i)
 Series A-3 common stock warrants that expired on December 7, 2008; and (ii)
 Series A-4 common stock warrants that expired on December 10, 2008 and on
 March 11, 2009. Amounts do not include any shares of Series A Preferred Stock
 that we may issue in lieu of cash dividends on the Series A Preferred Stock
 for any period after May 21, 2009. Accrual of dividends on the Series A Preferred
 Stock commenced May 21, 2006.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(10) | Includes
 6,532 shares of our common stock issuable upon exercise of options granted to
 Mr. Wasserman, which are exercisable within the 60 days following the date of
 this Beneficial Ownership Table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(11) | Includes
 5,032 shares of our common stock issuable upon exercise of options granted to
 Mr. Lerner, which are exercisable within the 60 days following the date of
 this Beneficial Ownership Table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(12) | Includes
 5,032 shares of our common stock issuable upon exercise of options granted to
 Dr. Nashman, which are exercisable within the 60 days following the date of
 this Beneficial Ownership Table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

(footnotes continued on next page)

33

---



(footnotes continued from previous page)

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(13) | Includes
 21,045 shares of our common stock issuable upon exercise of options granted
 to Mr. Stringer and 666 shares of our common stock issuable upon vesting of
 restricted stock units granted to Mr. Stringer, which are exercisable in the
 case of options or vest in the case of restricted stock units within 60 days
 following the date of this Beneficial Ownership Table. Does not include 3,567
 shares of our common stock issuable upon exercise of options, which are not
 exercisable within the 60 days following the date of this Beneficial
 Ownership Table nor does it include 3,726 restricted stock units which do not
 vest within the 60 days following the date of this Beneficial Ownership
 Table.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(14) | Includes
 8,332 shares of our common stock issuable upon exercise of options granted to
 Mr. Braukman and 1,166 shares of our common stock issuable upon vesting of
 restricted stock units granted to Mr. Braukman, which are exercisable in the
 case of options or vest in the case of restricted stock units within 60 days
 following the date of this Beneficial Ownership Table. Does not include 8,334
 shares of our common stock issuable upon exercise of options granted to Mr.
 Braukman, which are not exercisable within 60 days following the date of this
 Beneficial Ownership Table nor does it include 1,167 units which do not vest
 within 60 days following the date of this Benefit Ownership Table.    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(15) | The address
 for Mr. Phillips is c/o FirstMark Capital, Inc., 1221 Avenue of the Americas,
 New York, NY 10020.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(16) | Does not
 include the shares of Series A Preferred Stock beneficially owned by
 FirstMark Capital (see note (2) to this Beneficial Ownership Table), of which
 Mr. Phillips is a Venture Partner. Mr. Phillips does not have voting power
 nor investment power with respect to the Series A Preferred Stock
 beneficially owned by FirstMark Capital.                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(17) | Does not
 include the shares of our common stock beneficially owned by FirstMark
 Capital (see note (3) to this Beneficial Ownership Table), of which Mr.
 Phillips is a Venture Partner. Mr. Phillips does not have voting power nor
 investment power with respect to our common stock beneficially owned by
 FirstMark Capital.                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(18) | The address
 for Mr. Wasserman is c/o Constellation Growth Capital, 40 West 57th
 Street, 30th Floor, New York, New York 10019.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(19) | Does not
 include the shares of our Series A Preferred Stock beneficially owned by
 Constellation Venture, Constellation Offshore, BSC and CVC (see note (8) to
 this Beneficial Ownership Table). Mr. Wasserman is a Vice President of
 Constellation Ventures. Mr. Wasserman does not have voting power nor
 investment power with respect to the Series A Preferred Stock beneficially
 owned by Constellation Venture, Constellation Offshore, BSC or CVC.                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(20) | Does not
 include the shares of our common stock beneficially owned by Constellation
 Venture, Constellation Offshore, BSC and CVC (see note (9) to this Beneficial
 Ownership Table). Mr. Wasserman is a Vice President of Constellation
 Ventures. Mr. Wasserman does not have voting power nor investment power with
 respect to the common stock beneficially owned by Constellation Venture,
 Constellation Offshore, BSC or CVC.                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(21) | Includes
 those Series A Preferred Stock beneficially owned by our current executives
 officers and directors, as set forth in notes to this Beneficial Ownership
 Table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(22) | Includes
 those common shares beneficially owned by our current executives officers and
 directors, as set forth in notes to this Beneficial Ownership Table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Restated Shareholders Agreement

On August 1,
2005 we entered into an Amended and Restated Shareholders Agreement (as
amended, the Restated Shareholders Agreement) with Pequot (now FirstMark
Capital), Constellation, Howard A. Pavony and Steven H. Rothman. The Restated
Shareholders Agreement reflected certain amendments to the original
Shareholders Agreement entered into by the parties on May 21, 2004, as a
condition to the consummation of our sale to the FirstMark Fund and FirstMark
Offshore Partners of our Series A-1 Preferred Stock.

The Restated
Shareholders Agreement provides that parties agree to vote, or cause to be
voted, all securities of the Company owned by such party or over which such
party has voting control so that the number of directors will consist of: (i)
the Companys CEO; (ii) two directors designated by FirstMark Capital, or its
assignee; (iii) one director designated by Constellation or its assignee; (iv)
Mr. Rothman; (v) three independent directors, within the meaning of
independent under the current rules of NASDAQ, selected by the Companys
nominating and corporate governance committee; and (vi) two additional
independent directors to be selected by the CEO and reasonably acceptable to
the Companys nominating and corporate governance committee. Under certain
circumstances where FirstMark Capital holds less than 25% of the securities
FirstMark Capital purchased pursuant to the Purchase Agreement, the right to
designate two directors in (ii) above will be reduced to one director and the
above voting provisions will be adjusted in the manner described in the
Restated Shareholders Agreement. On July 7, 2006, in connection with the
termination of his employment with the Company, Mr. Rothman waived the
obligation that FirstMark Capital and Constellation vote in favor of his
appointment.

The obligation
of the parties under the Restated Shareholders Agreement will expire upon the
earliest to occur of (i) the completion of any voluntary or involuntary
liquidation or dissolution of the Company, (ii) the sale of all or
substantially all of the Companys assets or of a majority of the outstanding
equity of the Company to any person that is not a party to the Restated
Shareholders Agreement, or (iii) December 10, 2009. Messrs. Rothman and
Pavonys obligation to vote for (i) two directors designated by FirstMark
Capital, and (ii) one director designated by Constellation or its assignee,
shall terminate if (a) FirstMark Capital or their assignees own less than 10%
of the outstanding Series A Preferred Stock (or shares of our common stock issuable
upon conversion thereof) issued to FirstMark Capital, (b) Constellation or its
assignees own less than 10% of the Series A-3 Preferred Stock (or shares of our
common stock issuable upon conversion thereof) issued to Constellation, or (c)
any other shareholders that are introduced to the Company by FirstMark Capital
own less than 10% of the shares acquired by such shareholders from the Company
in a transaction not including a public offering or (ii) if Messrs. Pavony and
Rothman individually own less than 10% of the number of shares of common stock
owned by such person on December 10, 2004.

The Restated
Shareholders Agreement also contains a provision restricting the transfer of
any securities by shareholders party to the Restated Shareholders Agreement in
certain circumstances.

34

---



Item 13. Certain
Relationships and Related Transactions, and Director Independence

Thomas
Wasserman a director of the Company, became an employee of JP Morgan Chase
& Co. as a result of its merger with Bear Stearns Companies Inc. on May 29,
2008. Since 1999, the Company has maintained a banking relationship with JP
Morgan Chase. The amount the Company maintained on deposit averaged
approximately $3,500,000 during fiscal 2009 and $4,415,000 during fiscal 2008.
The Company paid approximately $51,000 and $19,800 in fees to JP Morgan Chase
during fiscal 2009 and 2008, respectively.

During fiscal
2009 and 2008 the Company paid approximately $248,000 and $152,000,
respectively in fees to Tectura Corporation (Tectura) for certain consulting
services related to the customization and management of the Companys
accounting systems. Funds controlled by FirstMark Capital hold more than 10% of
the equity securities of Tectura and Gerald A. Poch, Non-executive Chairman of
the Board of the Company, is a director of Tectura.

During fiscal
2009 and 2008 the Company paid approximately $1,000,000 and $1,200,000,
respectively in fees to Savvis, Inc. (Savvis) for certain technology and data
center services. Members of the Constellation Group or funds affiliated with
them held, during fiscal 2009 and 2008, more than 10% of the preferred equity
securities of Savvis and Clifford Friedman, who is a member of Constellation
Ventures Management II, LLC and a senior managing director of Bear Stearns Asset
Management Inc., was a director of Savvis.

Director Independence

Our
Independent Directors Committee, which consists only of directors who are
neither members of the management nor associated with FirstMark or
Constellation (or other similar investors) considers, reviews and provides
guidance and oversight regarding transactions or other situations in which
other Board members, who are either members of management or employees of
FirstMark or Constellation (or other similar investors), have interests that
may be in addition to, or different from, the interests of the shareholders in
general. Additionally, we have adopted a Code of Business Conduct and Ethics
which mandates that directors, officers and employees of the Company must avoid
any conflicts of interest between their personal interests and the Companys
interests. Other than as set forth above, our Board does not have a specific
policy regarding review of transactions involving directors, management or
other related parties. However, we discourage such transactions and have
historically limited the approval of such transactions to specific and rare
instances with the full disclosure to, and approval of, the disinterested
members of our Board.

We undertook a
review of the independence of our directors and, using the definitions and
independence standards for directors provided in the rules of the NASDAQ, we
determined that all of our directors are independent directors as defined
under the rules of the NASDAQ.

In determining
director independence for fiscal 2009, the Board of Directors considered the
following transactions or relationships:


          Any indirect
payments Mr. Poch and Mr. Phillips have received from us from their affiliation
with FirstMark arose solely from FirstMarks investments in our securities.
Further, while through the end of fiscal 2009, FirstMark has loaned us $6.5
million, this amount does not exceed 5% of our gross revenues for such fiscal
year. FirstMark has not loaned us any other amounts in the past three fiscal
years.


          Any indirect
payments Mr. Thomas Wasserman has received from us from his affiliation with
Constellation arose solely from Constellations investments in our securities.
Further, while through the end of fiscal 2009, Constellation has loaned us
$500,000, this amount does not exceed 5% of our gross revenues for such fiscal
year. Constellation has not loaned us any other amounts in the past three
fiscal years.

35

---



Item 14. Principal
Accountant Fees and Services

Principal Accounting Fees and Services

On November
15, 2007, we were notified that certain of the partners of Goldstein Golub
& Kessler LLP (GGK) became partners of McGladrey & Pullen in a
limited asset purchase agreement. As a result, GGK resigned as our independent
registered public accounting firm effective as of November 15, 2007 and
McGladrey & Pullen was appointed by our Audit Committee as our new
independent registered public accounting firm for the Companys annual
financial statements for the year ended March 31, 2008. Our Board of Directors
has approved the selection of McGladrey & Pullen to audit our financial
statements for the year ending March 31, 2009, and such appointment was
ratified by the shareholders.

Through
November 15, 2007, GGK had a continuing relationship with RSM McGladrey, Inc.
(RSM) from which it leased auditing staff who were full time, permanent
employees of RSM and through which its partners provided non-audit services.
Subsequent to November 15, 2007, this relationship ceased and McGladrey &
Pullen established, and maintains, a similar relationship with RSM. McGladrey
& Pullen has no full time employees and, therefore, none of the audit
services were provided by permanent full-time employees of McGladrey & Pullen.
McGladrey & Pullen manages and supervises the audit and audit staff and is
exclusively responsible for the opinion rendered in connection with its
examination.

The following
table sets forth the fees billed by our independent accountants for each of our
last two fiscal years for the categories of services indicated.

|                      |  |      |         |      |   |         | 
|--------------------- |  | ---- | ------- | ---- | - | ------- | 
|                      |  | 2009 |         | 2008 |  
|                      |  |      |         |      |  
|                      |  |      |         |      |   |         | 
|Audit fees(1)         |  | $    | 317,500 |      | $ | 327,000 | 
|Audit-related fees(2) |  |      |        |      |   |        | 
|Tax fees(3)           |  |      |        |      |   |        | 
|All other fees(4)     |  |      |        |      |   |        | 
|                     
|                     

|    |                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consists of
 fees billed for the audit of our annual financial statements, review of
 financial statements included in our Quarterly Reports on Form 10-Q and
 services that are normally provided by the accountant in connection with
 statutory and regulatory filings or engagements.                                                      
|    |                                                                                                                                                                                                                                                                                                                                                
|(2) | Consists of
 assurance and related services that are reasonably related to the performance
 of the audit and reviews of our financial statements and are not included in
 audit fees in this table. The services provided by our accountants within
 this category consisted of advice relating to SEC matters and employee
 benefit matters.
|    |                                                                                                                                                                                                                                                                                                                                                
|(3) | Consists of
 professional services rendered by a company aligned with our principal
 accountant for tax compliance, tax advice and tax planning.                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                
|(4) | Not
 applicable.                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                
|    | Such fees
 have been pre-approved by our audit committee.                                                                                                                                                                                                                                                                                      

Audit Committee Pre-Approval Policy

We understand
the need for McGladrey & Pullen to maintain objectivity and independence in
its audit of our financial statements. To minimize relationships that could
appear to impair the objectivity of McGladrey & Pullen, our Audit Committee
has restricted the non-audit services that McGladrey & Pullen may provide
to us primarily to merger and acquisition due diligence and audit services, and
valuation services and has determined that we would obtain even these non-audit
services from McGladrey & Pullen only when the services offered by
McGladrey & Pullen are more effective or economical than services available
from other service providers.

The Audit
Committee also has adopted policies and procedures for pre-approving all
non-audit work performed by McGladrey & Pullen and any other accounting
firms we may retain. Specifically, the Audit Committee has pre-approved the use
of McGladrey & Pullen for detailed, specific types of services within the
following categories of non-audit services: merger and acquisition due
diligence and audit services; valuation services; internal control reviews; and
reviews and procedures that we request McGladrey & Pullen to undertake to
provide assurances of accuracy on matters not required by laws or regulations.
In each case, the Audit Committee has also set a specific annual limit on the
amount of such services which we would obtain from McGladrey & Pullen, and
has required management to report the specific engagements to the committee on
a quarterly basis and to obtain specific pre-approval from the Audit Committee
for all engagements.

36

---



PART IV

Item 15.
Exhibits, Financial Statements Schedules.

(a)
Exhibits

Set forth below is a list of the exhibits to this
Annual Report on Form 10-K.

|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 
|--------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|Exhibit
 Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                      
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|2.1             |  | Asset Purchase Agreement, dated September 17, 2004, among
 Network Catalyst, Inc., William Corbin, Rocci J. Della Maggiore and MTM
 Technologies, Inc. *                                                                                                                                                                                                                                                         
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|2.2             |  | Asset Purchase Agreement, dated December 1, 2004, by
 and among Vector ESP, Inc., Vector ESP Management, Inc. and Vector Global
 Services, Inc. and MTM Technologies, Inc. *                                                                                                                                                                                                                                     
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|2.3             |  | Stock Purchase Agreement, dated January 27, 2005,
 among Info Systems, Inc., Mark Stellini, Emidio F. Stellini, Jr., Jay Foggy,
 Richard Roux, Jennifer McKenzie and MTM Technologies, Inc. *                                                                                                                                                                                                                    
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|2.4             |  | Merger Agreement, dated August 16, 2005, among NEXL,
 Inc., MTM Technologies (Massachusetts), LLC, MTM Technologies, Inc. and
 Clifford L. Rucker *                                                                                                                                                                                                                                                              
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.1             |  | Fifth Restated Certificate of Incorporation dated
 March 5, 2009 *                                                                                                                                                                                                                                                                                                                                               
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.2             |  | Amended and Restated By-Laws *                                                                                                                                                                                                                                                                                                                                                                                   
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.1             |  | Purchase Agreement, dated January 29, 2004, among
 Micros-to-Mainframes, Inc., Pequot Private Equity Fund III, L.P. and Pequot
 Offshore Private Equity Partners III, L.P. *                                                                                                                                                                                                                                     
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.2             |  | Purchase Agreement, dated December 7, 2004, among
 MTM Technologies, Inc., Pequot Private Equity Fund III, L.P., Pequot Offshore
 Private Equity Partners III, L.P., Constellation Venture Capital II, L.P.,
 Constellation Venture Capital Offshore II, L.P., The BSC Employee Fund VI,
 L.P. and CVC II Partners, LLC *                                                                                        
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.3             |  | Amendment No. 1 to the Purchase Agreement, dated
 December 7, 2004, among MTM Technologies, Inc., Pequot Private Equity Fund
 III, L.P., Pequot Offshore Private Equity Partners III, L.P., Constellation
 Venture Capital II, L.P., Constellation Venture Capital Offshore II, L.P.,
 The BSC Employee Fund VI, L.P. and CVC II Partners, LLC *                                                                 
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.4             |  | Amendment No. 2 to the Purchase Agreement, dated
 December 7, 2004, among MTM Technologies, Inc., Pequot Private Equity Fund
 III, L.P., Pequot Offshore Private Equity Partners III, L.P., Constellation
 Venture Capital II, L.P., Constellation Venture Capital Offshore II, L.P.,
 The BSC Employee Fund VI, L.P. and CVC II Partners, LLC *                                                                 
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.5             |  | Waiver Letter dated December 9, 2005, by Pequot
 Private Equity Fund III, L.P., Pequot Offshore Private Equity Partners III,
 L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC *                                                                                                                          
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.6             |  | Purchase Agreement, dated March 29, 2007, among MTM
 Technologies, Inc., Pequot Private Equity Fund III, L.P., Pequot Offshore
 Private Equity Partners III, L.P., Constellation Venture Capital II, L.P.,
 Constellation Venture Capital Offshore II, L.P., The BSC Employee Fund VI,
 L.P. and CVC II Partners, LLC *                                                                                          
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.7             |  | Purchase Agreement, dated May 24, 2007, among MTM
 Technologies, Inc., Pequot Private Equity Fund III, L.P., Pequot Offshore
 Private Equity Partners III, L.P., Constellation Venture Capital II, L.P.,
 Constellation Venture Capital Offshore II, L.P., The BSC Employee Fund VI,
 L.P. and CVC II Partners, LLC *                                                                                            
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.8             |  | Purchase Agreement, dated July 25, 2007, among MTM
 Technologies, Inc., Pequot Private Equity Fund III, L.P., and Pequot Offshore
 Private Equity Partners III, L.P. *                                                                                                                                                                                                                                           
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.9             |  | Amended and Restated Shareholders Agreement, dated
 August 1, 2005, among MTM Technologies, Inc., Steven Rothman, Howard Pavony,
 Pequot Private Equity Fund III, L.P., Pequot Offshore Private Equity Partners
 III, L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC *                                 
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.10            |  | Amended and Restated Registration Rights Agreement,
 dated August 1, 2005, among MTM Technologies, Inc., Steven Rothman, Howard
 Pavony, Pequot Private Equity Fund III, L.P., Pequot Offshore Private Equity
 Partners III, L.P., Constellation Venture Capital II, L.P., Constellation
 Venture Capital Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II
 Partners, LLC *                          
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.11            |  | Amendment No. 1 to the Amended and Restated
 Registration Rights Agreement, dated November 23, 2005, among MTM
 Technologies, Inc., Steven Rothman, Howard Pavony, Pequot Private Equity Fund
 III, L.P., Pequot Offshore Private Equity Partners III, L.P., Constellation
 Venture Capital II, L.P., Constellation Venture Capital Offshore II, L.P.,
 The BSC Employee Fund VI, L.P. and CVC II Partners, LLC *
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.12            |  | Amendment No. 2 to the Amended and Restated
 Registration Rights Agreement, dated March 29, 2007, among MTM Technologies,
 Inc., Steven Rothman, Howard Pavony, Pequot Private Equity Fund III, L.P.,
 Pequot Offshore Private Equity Partners III, L.P., Constellation Venture
 Capital II, L.P., Constellation Venture Capital Offshore II, L.P., The BSC
 Employee Fund VI, L.P. and CVC II Partners, LLC *   

37

---



|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.13 |  | Amendment No. 3 to the Amended and Restated
 Registration Rights Agreement, dated April 9, 2007, among MTM Technologies,
 Inc., Steven Rothman, Howard Pavony, Pequot Private Equity Fund III, L.P.,
 Pequot Offshore Private Equity Partners III, L.P., Constellation Venture
 Capital II, L.P., Constellation Venture Capital Offshore II, L.P., The BSC
 Employee Fund VI, L.P. and CVC II Partners, LLC *                                                                                              
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.14 |  | Amendment No. 4 to the Amended and Restated
 Registration Rights Agreement, dated May 24, 2007, among MTM Technologies,
 Inc., Steven Rothman, Howard Pavony, Pequot Private Equity Fund III, L.P.,
 Pequot Offshore Private Equity Partners III, L.P., Constellation Venture
 Capital II, L.P., Constellation Venture Capital Offshore II, L.P., The BSC
 Employee Fund VI, L.P. and CVC II Partners, LLC *                                                                                               
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.15 |  | Amendment No. 5 to the Amended and Restated
 Registration Rights Agreement, dated July 25, 2007, among MTM Technologies,
 Inc., Steven Rothman, Howard Pavony, Pequot Private Equity Fund III, L.P.,
 Pequot Offshore Private Equity Partners III, L.P., Constellation Venture
 Capital II, L.P., Constellation Venture Capital Offshore II, L.P., The BSC
 Employee Fund VI, L.P. and CVC II Partners, LLC *                                                                                              
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.16 |  | Amendment No. 6 to the Amended and Restated
 Registration Rights Agreement, dated February 13, 2009, among MTM
 Technologies, Inc., Steven Rothman, Howard Pavony, FirstMark III, L.P.,
 FirstMark III Offshore Partners, L.P., as successors-in-interest to Pequot
 Private Equity Fund III, L.P., Pequot Offshore Private Equity Partners III,
 L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC *
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.17 |  | Columbia Voting Agreement, dated November 4, 2005 *                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.18 |  | Series A-5 Voting Agreement, dated November 23, 2005
 *                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.19 |  | Form of the Series A-4 Warrant Certificate *                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.20 |  | Form of the Series A-5 Warrant Certificate *                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.21 |  | Warrant Certificate issued to National Electrical
 Benefit Fund (2005) *                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.22 |  | Form of the Series A-6 Warrant Certificate *                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.23 |  | Form of the Series A-7 Warrant Certificate *                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.24 |  | Form of the Series A-8 Warrant Certificate *                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.25 |  | Warrant Certificate issued to National Electrical
 Benefit Fund (2007) *                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.26 |  | Warrant Certificate, evidencing 343,705 warrants
 registered in the name of Pequot Private Equity Fund III, LLP *                                                                                                                                                                                                                                                                                                                                                                                          
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.27 |  | Warrant Certificate, evidencing 48,452 warrants
 registered in the name of Pequot Offshore Private Equity Partners III, L.P. *                                                                                                                                                                                                                                                                                                                                                                             
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.28 |  | Form of June 11, 2008 Warrant Certificate *                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.29 |  | Form of June 16, 2008 Warrant Certificate *                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.30 |  | Warrant Certificate, evidencing 120,889 warrants
 registered in the name FirstMark III, L.P. *                                                                                                                                                                                                                                                                                                                                                                                                             
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.31 |  | Warrant Certificate, evidencing 17,042 warrants
 registered in the name FirstMark III Offshore Partners, L.P. *                                                                                                                                                                                                                                                                                                                                                                                            
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.1 |  | Credit Agreement, dated November 23, 2005, among MTM
 Technologies, Inc., MTM Technologies (California), Inc., MTM Technologies
 (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies (Massachusetts),
 LLC, and Info Systems, Inc. as borrowers and Columbia Partners, LLC
 Investment Management as Investment Manager and National Electrical Benefit
 Fund as Lender *                                                                                                                         
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.2 |  | Amendment No.1 dated July 31, 2007, to the Credit
 Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, L.L.C. Investment
 Management, as Investment Manager and National Electrical Benefit Fund, as
 Lender *                                                                        
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.3 |  | Amendment No.2 dated August 21, 2007, to the Credit
 Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, L.L.C. Investment
 Management, as Investment Manager and National Electrical Benefit Fund, as
 Lender*                                                                       
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.4 |  | Amendment No.3 dated February 28, 2008, to the
 Credit Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, L.L.C. Investment
 Management, as Investment Manager and National Electrical Benefit Fund, as
 Lender *                                                                    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.5 |  | Amendment No.4 dated June 11, 2008, to the Credit
 Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, L.L.C. Investment
 Management, as Investment Manager and National Electrical Benefit Fund, as
 Lender *                                                                        
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.6 |  | Amendment No.5 dated June 17, 2008, to the Credit
 Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, L.L.C. Investment
 Management, as Investment Manager and National Electrical Benefit Fund, as
 Lender *                                                                        

38

---



|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7  |  | Amendment No.6 dated November 11, 2008, to the
 Credit Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, L.L.C. Investment
 Management, as Investment Manager and National Electrical Benefit Fund, as
 Lender *                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.8  |  | Amendment No.7 dated January 29, 2009, to the Credit
 Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, L.L.C. Investment
 Management, as Investment Manager and National Electrical Benefit Fund, as
 Lender *                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.9  |  | Amendment No.8 dated June 2, 2009, to the Credit
 Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, L.L.C. Investment
 Management, as Investment Manager and National Electrical Benefit Fund, as
 Lender *                                                                                                                  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.10 |  | Amendment No.9 dated June 11, 2009, to the Credit
 Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, L.L.C. Investment
 Management, as Investment Manager and National Electrical Benefit Fund, as
 Lender *                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.11 |  | Subordination Agreement dated as of August 21, 2007,
 among GE Commercial Distribution Finance Corporation, and National Electrical
 Benefit Fund and Columbia Partners, L.L.C. Investment Management *                                                                                                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.12 |  | Credit Facilities Agreement dated August 21, 2007
 among MTM Technologies, Inc, MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as Borrowers, and GE Commercial
 Distribution Finance Corporation (CDF), as Administrative Agent, and CDF
 and the other lenders listed therein, as Lenders *                                                                                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.13 |  | First Amendment dated August 21, 2007 to Credit
 Facilities entered into as of August 21, 2007 among MTM Technologies, Inc,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc., as Borrowers, and GE Commercial Distribution Finance Corporation
 as Administrative Agent and the sole lender *                                                                                                                                                                                                           
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.14 |  | Second Amendment dated February 4, 2008 to Credit
 Facilities entered into as of August 21, 2007 among MTM Technologies, Inc,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc., as Borrowers, and GE Commercial Distribution Finance
 Corporation as Administrative Agent and the sole lender *                                                                                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.15 |  | Third Amendment dated February 28, 2008 to Credit
 Facilities entered into as of August 21, 2007 among MTM Technologies, Inc,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc., as Borrowers, and GE Commercial Distribution Finance
 Corporation as Administrative Agent and the sole lender *                                                                                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.16 |  | Fourth Amendment dated May 16, 2008 but effective as
 of May 1, 2008 to Credit Facilities entered into as of August 21, 2007 among
 MTM Technologies, Inc, MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc., as Borrowers, and GE Commercial
 Distribution Finance Corporation as Administrative Agent and the sole lender
 *                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.17 |  | Fifth Amendment dated June 16, 2008 to Credit
 Facilities entered into as of August 21, 2007 among MTM Technologies, Inc,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc., as Borrowers, and GE Commercial Distribution Finance
 Corporation as Administrative Agent and the sole lender *                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.18 |  | Sixth Amendment dated November 11, 2008 to Credit
 Facilities entered into as of August 21, 2007 among MTM Technologies, Inc,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc., as Borrowers, and GE Commercial Distribution Finance
 Corporation as Administrative Agent and the sole lender *                                                                                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.19 |  | Seventh Amendment dated January 29, 2009 to Credit
 Facilities entered into as of August 21, 2007 among MTM Technologies, Inc,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc., as Borrowers, and GE Commercial Distribution Finance
 Corporation as Administrative Agent and the sole lender *                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.20 |  | Eighth Amendment dated June 2, 2009 to Credit
 Facilities entered into as of August 21, 2007 among MTM Technologies, Inc,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc., as Borrowers, and GE Commercial Distribution Finance
 Corporation as Administrative Agent and the sole lender *                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.21 |  | Ninth Amendment dated June 11, 2009 to Credit
 Facilities entered into as of August 21, 2007 among MTM Technologies, Inc,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc., as Borrowers, and GE Commercial Distribution Finance
 Corporation as Administrative Agent and the sole lender *                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.22 |  | Consent to Credit Facilities Agreement dated June
 16, 2008 among MTM Technologies, Inc., MTM Technologies (US), Inc., MTM
 Technologies (Massachusetts), LLC and Info Systems, Inc., as borrowers and GE
 Commercial Distribution Finance Corporation as Administrative Agent and the
 sole lender *                                                                                                                                                                                                                                               
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.23 |  | Letter of Credit Commitment and Repayment Agreement
 dated June 11, 2009 among MTM Technologies, Inc., MTM Technologies (US),
 Inc., MTM Technologies (Massachusetts), LLC and Info Systems, Inc., as
 borrowers, and National Electrical Benefit Fund, FirstMark III L.P.,
 FirstMark III Offshore Partners, L.P., Constellation Venture Capital II,
 L.P., Constellation Venture Capital Offshore II, L.P., CVC II Partners LLC,
 BSC Employee Fund VI, L.P. and Columbia Partners, L.L.C. Investment
 Management as Investment Manager *         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.24 |  | Security Agreement dated June 11, 2009 by and among
 MTM Technologies, Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC and Info Systems, Inc., as borrowers, and Columbia
 Partners, L.L.C. Investment Management as Investment Manager, for the benefit
 of itself and National Electrical Benefit Fund, FirstMark III L.P., FirstMark
 III Offshore Partners, L.P., Constellation Venture Capital II, L.P.,
 Constellation Venture Capital Offshore II, L.P., CVC II Partners LLC, and the
 BSC Employee Fund VI, L.P. *

39

---



|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.25 |  | Intellectual Property Security Agreement dated June
 11, 2009 by and among MTM Technologies, Inc., MTM Technologies (US), Inc.,
 MTM Technologies (Massachusetts), LLC and Info Systems, Inc., as borrowers,
 and Columbia Partners, L.L.C. Investment Management as Investment Manager,
 for the benefit of itself and National Electrical Benefit Fund, FirstMark III
 L.P., FirstMark III Offshore Partners, L.P., Constellation Venture Capital
 II, L.P., Constellation Venture Capital Offshore II, L.P., CVC II Partners
 LLC, and the BSC Employee Fund VI, L.P. *
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.26 |  | Stock Pledge Agreement dated June 11, 2009 by and
 among MTM Technologies, Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC and Info Systems, Inc., as borrowers, and Columbia
 Partners, L.L.C. Investment Management as Investment Manager, for the benefit
 of itself and National Electrical Benefit Fund, FirstMark III L.P., FirstMark
 III Offshore Partners, L.P., Constellation Venture Capital II, L.P.,
 Constellation Venture Capital Offshore II, L.P., CVC II Partners LLC, and the
 BSC Employee Fund VI, L.P. *                  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.27 |  | Third Amended and Restated Subordinated Promissory
 Note dated June 11, 2009 issued by MTM Technologies, Inc. in favor of
 FirstMark III, L.P. in the amount of $2,191,123 *                                                                                                                                                                                                                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.28 |  | Amended and Restated Subordinated Promissory Note
 dated June 11, 2009 issued by MTM Technologies, Inc. in favor of FirstMark
 III, L.P. in the amount of $2,410,235 *                                                                                                                                                                                                                                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.29 |  | Amended and Restated Subordinated Promissory Note
 dated June 11, 2009 issued by MTM Technologies, Inc. in favor of FirstMark
 III, L.P. in the amount of $219,112 *                                                                                                                                                                                                                                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.30 |  | Second Amended and Restated Subordinated Promissory
 Note dated June 11, 2009 issued by MTM Technologies, Inc. in favor of
 FirstMark III, L.P. in the amount of $876,449 *                                                                                                                                                                                                                                                                                                                                                                                               
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.31 |  | Third Amended and Restated Subordinated Promissory
 Note dated June 11, 2009 issued by MTM Technologies, Inc. in favor of
 FirstMark III Offshore Partners, L.P. in the amount of $308,877 *                                                                                                                                                                                                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.32 |  | Amended and Restated Subordinated Promissory Note
 dated June 11, 2009 issued by MTM Technologies, Inc. in favor of FirstMark
 III Offshore Partners, L.P. in the amount of $339,765 *                                                                                                                                                                                                                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.33 |  | Amended and Restated Subordinated Promissory Note
 dated June 11, 2009 issued by MTM Technologies, Inc. in favor of FirstMark
 III Offshore Partners, L.P. in the amount of $30,888 *                                                                                                                                                                                                                                                                                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.34 |  | Second Amended and Restated Subordinated Promissory
 Note dated June 11, 2009 issued by MTM Technologies, Inc. in favor of
 FirstMark III Offshore Partners, L.P. in the amount of $123,551 *                                                                                                                                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.35 |  | Amended and Restated Subordinated Promissory Note
 dated June 11, 2009 issued by MTM Technologies, Inc. in favor of
 Constellation Venture Capital II, L.P. in the amount of $249,617.80 *                                                                                                                                                                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.36 |  | Amended and Restated Subordinated Promissory Note
 dated June 11, 2009 issued by MTM Technologies, Inc. in favor of
 Constellation Venture Capital Offshore II, L.P. in the amount of $132,834.65
 *                                                                                                                                                                                                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.37 |  | Amended and Restated Subordinated Promissory Note
 dated June 11, 2009 issued by MTM Technologies, Inc. in favor of The BSC
 Employee Fund VI, L.P. in the amount of $111,313.95 *                                                                                                                                                                                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.38 |  | Amended and Restated Subordinated Promissory Note
 dated June 11, 2009 issued by MTM Technologies, Inc. in favor of CVC Partners
 II, LLC in the amount of $6,233.60 *                                                                                                                                                                                                                                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.39 |  | Micros-to-Mainframes, Inc. 1993 Employee Stock
 Option Plan *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.40 |  | Micros-to-Mainframes, Inc. 1996 Stock Option Plan *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.41 |  | Micros-to-Mainframes, Inc. 1998 Stock Option Plan *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.42 |  | Micros-to-Mainframes, Inc. 2000 Long-Term
 Performance Plan *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.43 |  | Micros-to-Mainframes, Inc. 2002 Long-Term
 Performance Plan *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.44 |  | Micros-to-Mainframes, Inc. 2004 Equity Incentive
 Plan *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.45 |  | Form of Employee Stock Option Agreement *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.46 |  | MTM Technologies, Inc. Associates Stock Purchase
 Plan *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.47 |  | Form of Employee Restricted Stock Unit Agreement *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.48 |  | Form of Executive Stock Option Agreement *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.49 |  | Form of Executive Restricted Stock Unit Agreement *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.50 |  | Employment Agreement, dated August 10, 2006 between
 MTM Technologies, Inc. and Steven Stringer*                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.51 |  | Letter Agreement, dated September 28, 2006 between
 MTM Technologies, Inc. and J.W. Braukman, III*                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.52 |  | Lease Agreement, dated August 15, 2005 between 1200
 High Ridge Company, LLC and MTM Technologies, Inc. *                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|14.1  |  | Code of Ethics*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

40

---



| |      |  |                                                                                                                                                                                                                                           | 
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | 16.1 |  | Letter dated November 15, 2007 from Goldstein Golub
 Kessler LLP (GGK) to MTM Technologies, Inc. notifying MTM that certain of
 the partners of GGK became partners of McGladrey & Pullen, LLP in a
 limited asset purchase agreement * | 
| |      |  |                                                                                                                                                                                                                                           | 
| | 16.2 |  | Goldstein Golub Kessler LLP Letter to the Securities
 and Exchange Commission dated November 15, 2007 *                                                                                                                                   | 
| |      |  |                                                                                                                                                                                                                                           | 
| | 21.1 |  | Subsidiaries of MTM Technologies, Inc.                                                                                                                                                                                                    | 
| |      |  |                                                                                                                                                                                                                                           | 
| | 31.1 |  | Certification pursuant to Exchange Act Rule
 13a-14(a) of Steven Stringer, as PEO and PFO                                                                                                                                                 | 
| |      |  |                                                                                                                                                                                                                                           | 
| | 32.1 |  | Certification pursuant to Section 1350 of the
 Sarbanes-Oxley Act of 2002 of Steven Stringer, as PEO and PFO                                                                                                                             

|                                                | 
|----------------------------------------------- | 
|                                                | 
|* Incorporated by Reference. See Exhibit Index.

Financial
Statements and Schedules

We have provided in Item 8 to this Annual Report on
Form 10-K a complete list of the financial statements being filed with this
Form 10-K. There are no financial statement schedules applicable to this Form
10-K.

41

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To the Board of Directors and Shareholders
MTM TECHNOLOGIES, INC.

We
have audited the accompanying consolidated balance sheets of MTM Technologies,
Inc. and Subsidiaries as of March 31, 2009 and 2008, and the related
consolidated statements of operations, shareholders equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of MTM Technologies,
Inc. and Subsidiaries as of March 31, 2009 and 2008, and the results of their
operations and their cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1, Liquidity,the Company has recurring
losses from operations and a working capital deficiency at March 31, 2009.
These conditions raise substantial doubt about the Companys ability to continue as a
going concern. Managements plans concerning these matters are also discussed
in Note 1. The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.

We
were not engaged to examine managements assertion about the effectiveness of
MTM Technologies, Inc.s internal control over financial reporting as of March
31, 2009 included in the accompanying Managements Annual Report on Internal
Control over Financial Reporting and, accordingly, we do not express an opinion
thereon.

/S/ MCGLADREY & PULLEN, LLP

New York, New York 
July 13, 2009

F-1

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS(In thousands, except share data)

|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | -------- | ---- | - | ------- | -
|                                                                                                                                                                                                     |  | March 31, |         
|                                                                                                                                                                                                     |  |           |         
|                                                                                                                                                                                                     |  | 2009      |          | 2008 |  
|                                                                                                                                                                                                     |  |           |          |      |  
|ASSETS                                                                                                                                                                                               |  |           |          |      |   |         |  
|Current assets:                                                                                                                                                                                      |  |           |          |      |   |         |  
|Cash                                                                                                                                                                                                 |  | $         | 2,150    |      | $ | 3,210   |  
|Accounts receivable-trade, net of allowance
 of $867 and $974, respectively                                                                                                                          |  |           | 31,193   |      |   | 42,207  |  
|Inventories                                                                                                                                                                                          |  |           | 149      |      |   | 576     |  
|Prepaid expenses and other current
assets                                                                                                                                                            |  |           | 3,248    |      |   | 5,958   |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|Total current assets                                                                                                                                                                                 |  |           | 36,740   |      |   | 51,951  |  
|Property and equipment, net                                                                                                                                                                          |  |           | 6,648    |      |   | 10,813  |  
|Goodwill                                                                                                                                                                                             |  |           | 50,346   |      |   | 69,960  |  
|Intangible assets, net                                                                                                                                                                               |  |           | 844      |      |   | 1,783   |  
|Other assets                                                                                                                                                                                         |  |           | 666      |      |   | 968     |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|Total assets                                                                                                                                                                                         |  | $         | 95,244   |      | $ | 135,475 |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|LIABILITIES AND
SHAREHOLDERS EQUITY                                                                                                                                                                 |  |           |          |      |   |         |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|Current liabilities:                                                                                                                                                                                 |  |           |          |      |   |         |  
|Secured revolving credit facilities                                                                                                                                                                  |  | $         | 5,898    |      | $ | 8,100   |  
|Inventory financing agreements                                                                                                                                                                       |  |           | 9,769    |      |   | 15,801  |  
|Related party notes payable                                                                                                                                                                          |  |           | 6,833    |      |   | 2,431   |  
|Accounts payable                                                                                                                                                                                     |  |           | 12,712   |      |   | 18,603  |  
|Accrued expenses                                                                                                                                                                                     |  |           | 2,633    |      |   | 4,225   |  
|Deferred revenue                                                                                                                                                                                     |  |           | 4,564    |      |   | 5,734   |  
|Current portion of capital lease
 obligations                                                                                                                                                        |  |           | 113      |      |   | 383     |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|Total current liabilities                                                                                                                                                                            |  |           | 42,522   |      |   | 55,277  |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|Secured promissory note                                                                                                                                                                              |  |           | 28,117   |      |   | 23,578  |  
|Long-term accrued interest on secured
 promissory note                                                                                                                                               |  |           | 13,523   |      |   | 6,538   |  
|Other long-term liabilities                                                                                                                                                                          |  |           | 2,591    |      |   | 3,135   |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|Total liabilities                                                                                                                                                                                    |  |           | 86,753   |      |   | 88,528  |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|Shareholders equity:                                                                                                                                                                                |  |           |          |      |   |         |  
|Series A preferred stock, $.001 par value;
 44,750,000 and 39,300,000 shares authorized; 31,369,986 and 29,569,259 shares
 issued and outstanding at March 31, 2009 and March 31, 2008, respectively |  |           | 71,311   |      |   | 66,515  |  
|Common stock, $.001 par value; 150,000,000
 shares authorized, 912,511 and 890,228 shares issued and outstanding at March
 31, 2009 and March 31, 2008, respectively                                 |  |           | 1        |      |   | 1       |  
|Additional paid-in capital                                                                                                                                                                           |  |           | 50,543   |      |   | 54,151  |  
|Accumulated deficit                                                                                                                                                                                  |  |           | (113,364 | )    |   | (73,720 | )
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|Total shareholders equity                                                                                                                                                                           |  |           | 8,491    |      |   | 46,947  |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  
|Total liabilities and shareholders
equity                                                                                                                                                           |  | $         | 95,244   |      | $ | 135,475 |  
|                                                                                                                                                                                                     |  |           |          |      |   |         |  

See Notes to Consolidated Financial
Statements.

F-2

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands,
except per share data)

|                                                       |  |                      |         |      |   |         |  
|------------------------------------------------------ |  | -------------------- | ------- | ---- | - | ------- | -
|                                                       |  | Year Ended March 31, |        
|                                                       |  |                      |        
|                                                       |  | 2009                 |         | 2008 |  
|                                                       |  |                      |         |      |  
|                                                       |  |                      |         |      |   |         |  
|Net revenues:                                          |  |                      |         |      |   |         |  
|Products                                               |  | $                    | 122,485 |      | $ | 171,940 |  
|Services                                               |  |                      | 52,220  |      |   | 70,745  |  
|                                                       |  |                      |         |      |   |         |  
|Total net revenues                                     |  |                      | 174,705 |      |   | 242,685 |  
|                                                       |  |                      |         |      |   |         |  
|Costs and expenses:                                    |  |                      |         |      |   |         |  
|Cost of products sold                                  |  |                      | 102,085 |      |   | 144,831 |  
|Cost of services provided                              |  |                      | 32,814  |      |   | 42,283  |  
|Selling, general and administrative
 expenses          |  |                      | 49,494  |      |   | 62,326  |  
|Goodwill impairment                                    |  |                      | 19,614  |      |   |        |  
|                                                       |  |                      |         |      |   |         |  
|                                                       |  |                      |         |      |   |         |  
|Total costs and
expenses                               |  |                      | 204,007 |      |   | 249,440 |  
|                                                       |  |                      |         |      |   |         |  
|Operating loss                                         |  |                      | (29,302 | )    |   | (6,755  | )
|                                                       |  |                      |         |      |   |         |  
|Interest (expense) and other, net                      |  |                      | (10,442 | )    |   | (6,628  | )
|                                                       |  |                      |         |      |   |         |  
|Loss before income tax provision                       |  |                      | (39,744 | )    |   | (13,383 | )
|                                                       |  |                      |         |      |   |         |  
|(Benefit from) provision for income
taxes              |  |                      | (100    | )    |   | 1,022   |  
|                                                       |  |                      |         |      |   |         |  
|                                                       |  |                      |         |      |   |         |  
|Net loss                                               |  | $                    | (39,644 | )    | $ | (14,405 | )
|                                                       |  |                      |         |      |   |         |  
|                                                       |  |                      |         |      |   |         |  
|Preferred stock dividend                               |  |                      | (4,890  | )    |   | (4,509  | )
|                                                       |  |                      |         |      |   |         |  
|                                                       |  |                      |         |      |   |         |  
|Net loss available to common
shareholders              |  | $                    | (44,534 | )    | $ | (18,914 | )
|                                                       |  |                      |         |      |   |         |  
|Net loss per common share:                             |  |                      |         |      |   |         |  
|Basic and Diluted                                      |  | $                    | (49.31  | )    | $ | (21.79  | )
|                                                       |  |                      |         |      |   |         |  
|Weighted average number of common shares
 outstanding: |  |                      |         |      |   |         |  
|Basic and Diluted                                      |  |                      | 903     |      |   | 868     |  
|                                                       |  |                      |         |      |   |         |  

See Notes to Consolidated Financial
Statements.

F-3

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY(In thousands)

|                                                                        |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   |        |   |   |          |   |   |         |  
|----------------------------------------------------------------------- |  | ----------------- | ------ | ------------ | - | ---------------------------- |  | -------------------- | --- |  | - | ----- |  | - | ------ | - | - | -------- | - | - | ------- | -
|                                                                        |  | Preferred Stock   |        | Common Stock |   | Additional
 Paid-in
 Capital |  | Accumulated
 Deficit |     |  |  
|                                                                        |  |                   |        |              |   |                              |  |                      |    
|                                                                        |  | Number of
 Shares |        | Amount       |   | Number of
 Shares            |  | Amount               |     |  |   | Total | 
|                                                                        |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   |       
|Balance at March 31, 2007                                               |  |                   | 22,646 |              | $ | 54,307                       |  |                      | 795 |  | $ | 1     |  | $ | 54,326 |   | $ | (59,315  | ) | $ | 49,319  |  
|Issuance of preferred stock                                             |  |                   | 5,431  |              |   | 8,051                        |  |                      |     |  |   |       |  |   | 1,131  |   |   |          |   |   | 9,182   |  
|Dividends on Series A preferred stock                                   |  |                   | 1,492  |              |   | 4,157                        |  |                      |     |  |   |       |  |   | (4,510 | ) |   |          |   |   | (353    | )
|Additional warrants issued for secured
 promissory note                 |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   | 476    |   |   |          |   |   | 476     |  
|Issuance of common stock to employees
 pursuant to employee stock plans |  |                   |        |              |   |                              |  |                      | 10  |  |   |      |  |   | 71     |   |   |          |   |   | 71      |  
|Issuance of common stock in connection with
 Nexl acquisition           |  |                   |        |              |   |                              |  |                      | 85  |  |   |      |  |   | 1,358  |   |   |          |   |   | 1,358   |  
|Warrants issued with related party notes
 payable                       |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   | 75     |   |   |          |   |   | 75      |  
|Stock-based compensation expense                                        |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   | 1,224  |   |   |          |   |   | 1,224   |  
|Net loss                                                                |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   |        |   |   | (14,405  | ) |   | (14,405 | )
|                                                                        |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   |        |   |   |          |   |   |         |  
|Balance at March 31, 2008                                               |  |                   | 29,569 |              |   | 66,515                       |  |                      | 890 |  |   | 1     |  |   | 54,151 |   |   | (73,720  | ) |   | 46,947  |  
|Dividends on Series A preferred stock                                   |  |                   | 1,801  |              |   | 4,796                        |  |                      |     |  |   |       |  |   | (4,890 | ) |   |          |   |   | (94     | )
|Issuance of common stock to Board                                       |  |                   |        |              |   |                              |  |                      | 6   |  |   |      |  |   | 35     |   |   |          |   |   | 35      |  
|Issuance of common stock to employees
 pursuant to employee stock plans |  |                   |        |              |   |                              |  |                      | 17  |  |   |      |  |   | 20     |   |   |          |   |   | 20      |  
|Warrants issued with related party notes
 payable                       |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   | 265    |   |   |          |   |   | 265     |  
|Stock-based compensation expense                                        |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   | 962    |   |   |          |   |   | 962     |  
|Net loss                                                                |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   |        |   |   | (39,644  | ) |   | (39,644 | )
|                                                                        |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   |        |   |   |          |   |   |         |  
|Balance at March 31, 2009                                               |  |                   | 31,370 |              | $ | 71,311                       |  |                      | 913 |  | $ | 1     |  | $ | 50,543 |   | $ | (113,364 | ) | $ | 8,491   |  
|                                                                        |  |                   |        |              |   |                              |  |                      |     |  |   |       |  |   |        |   |   |          |   |   |         |  

See Notes to Consolidated Financial Statements.

F-4

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)

|                                                                                           |  |                      |         |      |   |         |  
|------------------------------------------------------------------------------------------ |  | -------------------- | ------- | ---- | - | ------- | -
|                                                                                           |  | Year Ended March 31, |        
|                                                                                           |  |                      |        
|                                                                                           |  | 2009                 |         | 2008 |  
|                                                                                           |  |                      |         |      |  
|OPERATING ACTIVITIES:                                                                      |  |                      |         |      |   |         |  
|Net loss                                                                                   |  | $                    | (39,644 | )    | $ | (14,405 | )
|Adjustments to reconcile net loss to net
 cash provided by (used in) operating activities: |  |                      |         |      |   |         |  
|Goodwill impairment                                                                        |  |                      | 19,614  |      |   |        |  
|Provision for uncollectible accounts                                                       |  |                      | 148     |      |   | (168    | )
|Depreciation                                                                               |  |                      | 6,311   |      |   | 7,268   |  
|Amortization of intangibles                                                                |  |                      | 939     |      |   | 2,026   |  
|Provision for deferred income taxes                                                        |  |                      | (219    | )    |   | 772     |  
|Amortization of debt discount                                                              |  |                      | 706     |      |   | 553     |  
|Non-cash interest on secured subordinated
 promissory note                                 |  |                      | 6,985   |      |   | 3,723   |  
|Amortization of debt issuance costs                                                        |  |                      | 589     |      |   | 590     |  
|Stock-based compensation                                                                   |  |                      | 997     |      |   | 1,224   |  
|Non-cash interest on note payable                                                          |  |                      | 479     |      |   | 17      |  
|Loss on disposal of fixed assets                                                           |  |                      | 47      |      |   |        |  
|Cash provided/(used) by changes in
 operating assets and liabilities:                      |  |                      |         |      |   |         |  
|(Increase)decrease in assets:                                                              |  |                      |         |      |   |         |  
|Accounts receivable                                                                        |  |                      | 10,713  |      |   | 3,927   |  
|Inventories                                                                                |  |                      | 427     |      |   | 1,634   |  
|Prepaid expenses and other current
assets                                                  |  |                      | 2,348   |      |   | (1,159  | )
|Other assets                                                                               |  |                      | 302     |      |   | 111     |  
|Increase(decrease) in liabilities:                                                         |  |                      |         |      |   |         |  
|Accounts payable and accrued expenses                                                      |  |                      | (8,169  | )    |   | (17,310 | )
|Deferred revenue                                                                           |  |                      | (1,170  | )    |   | (743    | )
|                                                                                           |  |                      |         |      |   |         |  
|Net cash provided by (used in) operating
activities                                        |  |                      | 1,403   |      |   | (11,940 | )
|                                                                                           |  |                      |         |      |   |         |  
|                                                                                           |  |                      |         |      |   |         |  
|INVESTING ACTIVITIES:                                                                      |  |                      |         |      |   |         |  
|Additions to property and equipment                                                        |  |                      | (2,193  | )    |   | (2,368  | )
|                                                                                           |  |                      |         |      |   |         |  
|Net cash used in investing activities                                                      |  |                      | (2,193  | )    |   | (2,368  | )
|                                                                                           |  |                      |         |      |   |         |  
|                                                                                           |  |                      |         |      |   |         |  
|FINANCING ACTIVITIES:                                                                      |  |                      |         |      |   |         |  
|Repayments on secured revolving credit
 facility                                           |  |                      | (2,202  | )    |   | (2,592  | )
|(Repayments) borrowings on inventory
 financing                                            |  |                      | (6,032  | )    |   | 4,443   |  
|Proceeds from issuance of preferred stock,
 net                                            |  |                      |        |      |   | 9,182   |  
|Proceeds from issuance of related party
 notes payable                                     |  |                      | 4,344   |      |   | 2,500   |  
|Proceeds from issuance of secured
 promissory note                                         |  |                      | 3,929   |      |   |        |  
|Common stock issued under stock plans                                                      |  |                      | 20      |      |   | 71      |  
|Principal payments on capital lease
 obligations                                           |  |                      | (329    | )    |   | (525    | )
|                                                                                           |  |                      |         |      |   |         |  
|Net cash(used in) provided by financing
activities                                         |  |                      | (270    | )    |   | 13,079  |  
|                                                                                           |  |                      |         |      |   |         |  
|Net decrease in cash                                                                       |  |                      | (1,060  | )    |   | (1,229  | )
|Cash at beginning of year                                                                  |  |                      | 3,210   |      |   | 4,439   |  
|                                                                                           |  |                      |         |      |   |         |  
|Cash at end of year                                                                        |  | $                    | 2,150   |      | $ | 3,210   |  
|                                                                                           |  |                      |         |      |   |         |  
|Supplemental disclosures of cash flow
 information:                                        |  |                      |         |      |   |         |  
|Cash paid during the year for:                                                             |  |                      |         |      |   |         |  
|Interest                                                                                   |  | $                    | 1,621   |      | $ | 1,937   |  
|Income taxes                                                                               |  | $                    | 101     |      | $ | 181     |  
|Supplemental disclosure of non-cash
 financing activities:                                 |  |                      |         |      |   |         |  
|Series A Preferred Stock dividend
accrued                                                  |  | $                    | 4,890   |      | $ | 4,509   |  
|Series A Preferred Stock dividend settled
 with preferred stock                            |  | $                    | 4,796   |      | $ | 4,157   |  
|Warrants issued in connection with notes
 payable                                          |  | $                    | 265     |      | $ | 75      |  
|Warrants issued in connection with secured
 promissory note                                |  | $                    |        |      | $ | 476     |  
|Supplemental disclosure of non-cash
 investing activities:                                 |  |                      |         |      |   |         |  
|Common stock issued to settle contingent
 consideration relative to acquisition            |  | $                    |        |      | $ | 1,358   |  
|Non-cash adjustments to goodwill                                                           |  | $                    |        |      | $ | 27      |  

See Notes to Consolidated Financial
Statements.

F-5

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Business and Summary of Significant
Accounting Policies

Principles of
Consolidation and Nature of Operations

The
accompanying consolidated financial statements include the accounts of MTM
Technologies, Inc. and its wholly owned subsidiaries, MTM Technologies (US),
Inc., Info Systems, Inc. and MTM Technologies (Massachusetts) LLC, collectively
referred to as (the Company). All significant intercompany accounts and
transactions have been eliminated. The Company operates on a fiscal year that
ends on March 31.

The Company is
a leading national provider of sophisticated information technology solutions
services including information technology networking, communications, software
applications and data center services, including secure access, voice over
internet protocol, storage, security and messaging solutions. The Company
serves as a single source provider of advanced technology solutions to support
its clients mission-critical business processes. The Companys clients consist
of divisions of Global 2000 corporations, middle market corporations (generally
those with $50 million to $1 billion in revenues), municipal, state and federal
government agencies, and educational, financial and health-care institutions.
The Company serves clients in most major metropolitan markets in the United
States.

The Company
purchases software, computers and related products directly from suppliers as
either an authorized dealer or a value-added reseller. The Company has entered
into authorization agreements with major suppliers, which can be terminated by
the suppliers, with or without cause, upon short notice, or immediately upon
the occurrence of certain events. The sales of products from the Companys two
largest suppliers accounted for 27% and 26% of all product sales for the year
ended March 31, 2009. The Company believes that it has excellent relationships
with its major suppliers; however, there can be no assurance that the
aforementioned agreements will be renewed. If these agreements are not renewed,
the Company may have difficulty in obtaining inventory at an amount to allow
for profitable resale at a competitive market price.

Certain prior
years balances have been reclassified to conform to the current format.

Effective
August 20, 2008, FirstMark Capital, L.L.C., a Delaware limited liability
company (FirstMark Capital), became the investment manager of certain funds
formerly managed by Pequot Capital Management Inc. (Pequot). These funds
included Pequot Private Equity Fund III, L.P. and Pequot Offshore Private
Equity Partners III, L.P., now known as FirstMark III L.P. (FirstMark Fund)
and FirstMark III Offshore Partners, L.P. (FirstMark Offshore Partners together
with FirstMark Fund, FirstMark), respectively.
Constellation Venture refers to Constellation Venture Capital II, L.P.,
Constellation Offshore refers to Constellation Venture Capital Offshore II,
L.P., BSC refers to The BSC Employee Fund VI, L.P., CVC refers to CVC II
Partners, LLC, and collectively with Constellation Venture, Constellation
Offshore and BSC, Constellation, and together with FirstMark, the
Investors.

The
consolidated financial statements have been prepared by the Company under the
assumption that it will continue as a going concern, which contemplates the
realization of assets and the satisfaction of liabilities during the normal
course of business. In preparing these consolidated financial statements the
Company has considered the liquidity issues below which may raise substantial
doubt about its ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.

Liquidity

The Company
sustained net losses during the fiscal years ended March 31, 2009 and 2008. The
Companys decline in performance during fiscal 2009 continued to be impacted by
a weaker US economy and reduced access to business credit. The Companys
business requires significant levels of working capital to fund future revenue
growth and current operations. Working capital at March 31, 2009 was a deficit
of $(5.8) million as compared to a working capital deficit of $(3.3) million at
March 31, 2008. The Company has historically relied on and continues to rely
heavily on, trade credit from vendors and its credit facilities for its working
capital needs. The Company has made a concerted effort to improve its working
capital position over the past few years and during fiscal 2009 had taken
significant measures to further reduce headcount, streamline operations,
consolidate facilities and manage costs in response to the impact of the
economic downturn. The Company has also significantly reduced its
infrastructure investment by limiting future capital expenditures including,
the internal development of purchased and developed software. The Company
continues to drive accounts receivable and has made strong progress in
collecting overdue accounts. The Company continues to actively pursue
additional financing arrangements including the successful negotiation in June
of fiscal 2010 of an additional $7.0 million in borrowing capacity under our
existing Credit Facilities Agreement with GE Commercial Distribution Finance
Corporation (CDF), See Note 12 Subsequent Eventsand most recently prior
to that the Company was able to secure an additional $2.0 million in financing
during the fourth quarter of fiscal 2009; $1.0 million from the Investors and
an increase of $1.0 million under the CP/NEBF Credit Agreement. We were also
able to complete several other financing arrangements with the Investors over
the past two years amounting to $6.0 million, we secured an additional $3.0
million in financing under our Secured Promissory Note with CP Investment
Management and NEBF during the first quarter of fiscal 2009, and issued
additional shares of Series A Preferred Stock raising over $9.0 million in the
prior fiscal year alone.

The Companys
ability to continue as a going concern, however, is contingent upon its ability
to obtain debt and or capital financing in order to meet obligations that
mature in fiscal 2010; including the Companys current Credit Facilities
Agreement with CDF, which matures in March 2010, See Note 12 Subsequent
Eventsas well as the Companys ability to restructure its
operations in order to improve future operating results and to generate cash
flow.

The Companys
immediate liquidity and capital requirements going forward will depend on
numerous factors, including general economic conditions and conditions in the
financial services, government and technology industry in particular; the
ability to extend or refinance its current maturities; the ability to negotiate
additional flexibility in borrowing restrictions and reserves under its current
financing facilities and vendor lines of credit; the Companys dependence on
third party licenses and the Companys ability to maintain its status as an
authorized reseller/service provider of IT products; the cost effectiveness of
our product and service development activities and our ability to reduce and
leverage our centralized infrastructure, all of which may impact the Companys
ability to fund its operations for the foreseeable future. The Company
currently has no commitments for material capital expenditures. To the extent
that the Companys existing capital resources are insufficient to meet its
working capital requirements, the Company will seek to raise additional funds
or seek additional financing arrangements. However, no assurance can be given
that such financing may be obtained on terms attractive to the Company, or at
all. Furthermore, any additional debt or equity financing arrangements may be
dilutive to shareholders, and debt financing, if available, may involve
restrictive covenants. The Companys failure to raise capital when needed could
have a material adverse effect on its business, operating results and financial
condition.

F-6

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

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 disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from these
estimates.

Concentrations of
Credit Risk

Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash and trade accounts receivable. The Company
places its cash with high credit quality institutions. At times, such amounts
may be in excess of the FDIC insurance limits. Credit risk related to trade
accounts receivable is limited due to
the large number of customers and their dispersion across geographic areas. The
Company did not have any customer at March 31, 2009 or 2008 which accounted for
more than 10% of its total accounts receivable. At March 31, 2009 the combined
top four customer balances accounted for approximately 11% of the Companys
total accounts receivable. Credit is extended to customers based on an
evaluation of their financial condition in an effort to reduce the risk of
loss. Collateral is generally not required.

Accounts Receivable

Accounts
receivable are reported at their outstanding unpaid principal balances reduced
by an allowance for doubtful accounts. The Company estimates the allowance for
doubtful accounts based on historical experience, customer credit risk and
application of the specific identification method. The Company writes off accounts
receivable against the allowance when a balance is determined to be
uncollectible.

Information
relating to the allowance for doubtful accounts is as follows (in thousands):

|                      |  |                     |       |                |   |                 |  |             |     |  |   |     | 
|--------------------- |  | ------------------- | ----- | -------------- | - | --------------- |  | ----------- | --- |  | - | --- | 
|                      |  | Beginning
 of
 Year |       | Additions
 (a) |   | Deductions
 (b) |  | End of Year |    
|                      |  |                     |       |                |   |                 |  |             |    
|Year ended
 March 31, |  |                     |       |                |   |                 |  |             |     |  |   |     | 
|2008                  |  | $                   | 1,552 |                | $ |                |  | $           | 578 |  | $ | 974 | 
|2009                  |  | $                   | 974   |                | $ | 148             |  | $           | 255 |  | $ | 867 | 

|
|

|    |                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------
|(a) | Includes bad
 debt provisions.                                                                      
|    |                                                                                                     
|(b) | Includes
 write-offs for uncollectible accounts receivables and net changes to allowance
 estimates.

Inventories

Inventories,
comprised principally of computer hardware and software, are stated at the
lower of cost or market using the first-in, first-out method.

Fair Value of
Financial Instruments

The estimated
fair value of amounts reported in the consolidated financial statements has
been determined by using available market information and appropriate valuation
methodologies. All current assets are carried at their cost and current
liabilities are recorded at their contract amount, which approximates fair
value because of their short term nature. The carrying value of short-term
financing arrangements approximates fair value because interest rates over the
relative term of these instruments approximate current market interest rates. The
fair value of the Companys long-term debt obligations is estimated based on
the current rates offered to the Company for debt of the same remaining
maturities.

Software Development
Costs

The cost of
software developed for internal use incurred during the preliminary project
stage is expensed as incurred. Direct costs incurred during the application
development stage are capitalized. Costs incurred during the post
implementation/operation stage are expensed as incurred. Capitalized software
development costs are amortized on a straight-line basis over their estimated
useful lives, generally three years.

F-7

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Property and
Equipment

Property and
equipment, which includes assets under capital leases, are stated at cost and
are depreciated using the straight-line method over estimated useful lives,
generally ranging from three to seven years. Leasehold improvements are
amortized over the shorter of the lease term or economic life of the related
improvement. Expenditures which extend the useful lives of the existing assets
are capitalized. The cost of maintenance and repairs are charged to operations
as incurred. When assets are retired or sold, the asset cost and related
accumulated depreciation are eliminated with any remaining gain or loss
reflected in net earnings.

The Company
incurred approximately $6.3 million and $7.3 million of depreciation and
amortization expense for the years ended March 31, 2009 and 2008, respectively.

The following
is a summary of property and equipment held by the Company at:

|                                                 |  |           |         |      |   |         |  
|------------------------------------------------ |  | --------- | ------- | ---- | - | ------- | -
|                                                 |  | March 31, |        
|                                                 |  |           |        
|(in thousands)                                   |  | 2009      |         | 2008 |  
|                                                 |  |           |         |      |  
|                                                
|Furniture, fixtures and office
equipment         |  | $         | 17,544  |      | $ | 16,662  |  
|Software and software development costs          |  |           | 18,904  |      |   | 17,276  |  
|Capitalized lease equipment                      |  |           | 708     |      |   | 1,650   |  
|Leasehold Improvements                           |  |           | 2,567   |      |   | 2,532   |  
|Vehicles                                         |  |           | 97      |      |   | 783     |  
|                                                 |  |           |         |      |   |         |  
|                                                 |  |           | 39,820  |      |   | 38,903  |  
|Less: accumulated depreciation and
 amortization |  |           | (33,172 | )    |   | (28,090 | )
|                                                 |  |           |         |      |   |         |  
|Property and equipment, net                      |  | $         | 6,648   |      | $ | 10,813  |  
|                                                 |  |           |         |      |   |         |  

Goodwill

Goodwill is
recorded when the purchase price paid for an acquisition exceeds the estimated
fair value of net identified tangible and intangible assets acquired. Goodwill
is tested for impairment on an annual basis and more frequently if facts and
circumstances indicate goodwill carrying values exceed estimated fair values.
Because the Company has fully integrated its acquisitions, it has determined
that it has only one reporting unit for purposes of testing for goodwill
impairment.

In the fourth
quarter of fiscal 2009, the Company conducted its annual assessment of goodwill
for impairment. The Company performed extensive valuation analyses, utilizing
both income and market approaches, in its goodwill assessment process. Over the
past few quarters the Company has experienced a significant decline in its
stock price for both common and preferred stock resulting in a lower estimated
fair value of the Company. The decline in the fair value of the Company below
its book value is also attributable to the current economic crisis and lower
than expected revenues and cash flows, and the uncertainty related to future
cash flows. As a result, for the year ended March 31, 2009, the Company
recorded a pretax impairment charge of $19.6 million to reduce the carrying
value of the Companys goodwill. Additional impairment charges could be
recognized in the near term if current conditions continue to decline. No
goodwill impairment charge was required for the year ended March 31, 2008.

The change in
goodwill during the years ended March 31, 2008 and 2009, respectively, was as
follows (in thousands):

|                                                   |  |   |         |  
|-------------------------------------------------- |  | - | ------- | -
|Balance at
 March 31, 2007                         |  | $ | 69,987  |  
|                                                   |  |   |         |  
|Purchase price adjustment of previous
 acquisition |  |   | (27     | )
|                                                   |  |   |         |  
|Balance at
 March 31, 2008                         |  |   | 69,960  |  
|                                                   |  |   |         |  
|Goodwill impairment                                |  |   | (19,614 | )
|                                                   |  |   |         |  
|Balance at
 March 31, 2009                         |  | $ | 50,346  |  
|                                                   |  |   |         |  

F-8

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Intangible Assets

Definite-lived
intangibles, which mainly consist of client relationships, are amortized over
their estimated useful lives, three to five years.

Intangible
assets consist of the following at:

|                                |  |           |        |   |   |        |  
|------------------------------- |  | --------- | ------ | - | - | ------ | -
|                                |  | March 31, |       
|                                |  |           |       
|(in
thousands)                  |  |           | 2009   |   |   | 2008   |  
|                                |  |           |        |   |   |        |  
|                                |  |           |        |   |   |        |  
|Client
 relationships           |  | $         | 8,915  |   | $ | 8,915  |  
|Know-how                        |  |           | 710    |   |   | 710    |  
|Non-compete
 agreements         |  |           | 250    |   |   | 250    |  
|                                |  |           |        |   |   |        |  
|                                |  |           | 9,875  |   |   | 9,875  |  
|Less:
 accumulated amortization |  |           | (9,031 | ) |   | (8,092 | )
|                                |  |           |        |   |   |        |  
|Intangible
 assets, net         |  | $         | 844    |   | $ | 1,783  |  
|                                |  |           |        |   |   |        |  

Amortization
expense amounted to approximately $0.9 million and $2.0 million for the years
ended March 31, 2009 and 2008, respectively. Estimated amortization expense for
each of the next few fiscal years is as follows (in thousands):

|                      |  |   |     | 
|--------------------- |  | - | --- | 
|Year ending March 31, |  |   |     | 
|                      |  |   |     | 
|                      |  |   |     | 
|2010                  |  | $ | 506 | 
|2011                  |  |   | 338 | 
|                      |  |   |     | 
|Total                 |  | $ | 844 | 
|                      |  |   |     | 

Impairment of
Long-Lived Assets

The Company
reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of a long-lived asset may not
be recoverable. An asset is considered to be impaired when its carrying amount
exceeds the sum of the undiscounted future net cash flows expected to result
from the use of the asset and its eventual disposition. Long-lived assets
include property and equipment. The amount of impairment loss, if any, is
charged by the Company to current operations. For each of the fiscal years
ended March 31, 2009 and 2008, no such impairment existed.

Revenue Recognition

The Company
recognizes revenue from the sales of hardware when the rights and risks of
ownership have passed to the client, upon shipment or receipt by the client,
depending on the terms of the sales contract with the client. Revenue from the
sales of software not requiring significant modification or customization is
recognized upon delivery or installation. Revenue from services is recognized
upon performance and acceptance after consideration of all of the terms and
conditions of the client contract. Service contracts generally do not extend
over one year, and are recognized when persuasive evidence of an arrangement
exists, the sales price is fixed and determinable, and collection of the
resulting receivables is reasonably assured. Revenue is recognized as services
are performed or over the contracted period, as specified in the agreement. For
arrangements with multiple deliverables, delivered items are accounted for
separately, provided that the delivered item has value to the client on a
stand-alone basis and there is objective and reliable evidence of the fair
value of the undelivered items. Revenue billed on retainer is recognized as
services are performed and amounts not recognized are recorded as deferred
revenue. Shipping and handling costs are included in the cost of sales.

Vendor Programs

Funds received
from vendors for product rebates, commissions and marketing programs are
recorded as adjustments to product costs, revenue, or selling, general and
administrative expenses according to the nature of the program. Some of these
programs may extend over one or more quarterly reporting periods. The Company
accrues rebates or other vendor incentives as earned based on sales of
qualifying products or as services are provided in accordance with the terms of
the related program.

Accrual of
Unreported Medical Claims

The Company adopted a self-funded medical insurance plan effective May
1, 2008 covering all enrolled employees with regard to medical, dental, vision
and prescription benefits. Beginning in the first quarter of fiscal 2009, the
Company established an estimate of an amount to accrue for medical costs
incurred but not yet reported under these self-funded employee medical
insurance plans. The Company estimates the reserve based on an evaluation of
past rates of claim payouts and trends in the amount of payouts. To mitigate a
portion of the claim risk, the Company maintains a stop loss policy for
individual and aggregate claims.

F-9

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Operating Leases

The Company
leases office space under operating leases. Most lease agreements contain rent
escalation clauses and/or contingent rent provisions. For purposes of
recognizing minimum rental expenses on a straight-line basis over the terms of
the leases, the Company uses the date of initial possession to begin
amortization, which is generally when the Company enters the space.

Accounting for
Stock-Based Compensation

The Company
maintains several stock equity incentive plans under which incentive stock
options, non-qualified stock options, and restricted stock units (RSUs)
may be granted to employees (including officers), consultants, independent
contractors, and non-employee directors. The Company also has an Associate
Stock Purchase Plan (ASPP). Effective April 1, 2006, the Company
adopted the fair value recognition provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, Share-Based Payment (SFAS
No. 123(R)), which replaced
SFAS No. 123, Accounting for Stock-Based Compensation (SFAS
No. 123) and
superseded Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees,
and related interpretations. Stock-based compensation expense represents the
cost related to stock-based awards granted by the Company. RSUs issued by the
Company are equivalent to nonvested shares, as defined by SFAS No. 123(R). No
stock-based compensation expense was recognized in the consolidated financial
statements related to the ASPP, since the related purchase discounts did not
exceed the amount allowed under SFAS No. 123(R) for non-compensatory treatment.
See Note 6 Stock
and Benefit Plansfor additional details.

Reverse
Stock Split

On June 25,
2008, the Company affected a reverse stock split of its Common Stock at a split
ratio of 1-for-15 (Reverse Stock Split).

The Reverse
Stock Split was approved by the Independent Committee of the Board of Directors
on April 25, 2008 and by our Board of Directors on April 28, 2008. On May 1,
2008, FirstMark and Constellation, the holders of a majority of the Companys
voting stock delivered to the Company an executed written stockholders consent
approving the Reverse Stock Split. As of May 1, 2008, FirstMark and
Constellation collectively owned approximately 70% of the Companys voting
securities and 100% of the Companys Series A Preferred Stock. As a result of
FirstMark and Constellations approval, no further stockholder approval or
action was necessary.

As a result of the Reverse Stock Split, every fifteen shares of the
Companys Common Stock were converted into one share of Common Stock. The
Reverse Stock Split affected all of the Companys common stockholders uniformly
and did not affect any common stockholders percentage ownership interest in
the Company or proportionate voting power, except for minor changes resulting
from the cash payment of fractional shares. All outstanding options, restricted
stock units, warrants and convertible securities were appropriately adjusted
for the Reverse Stock Split automatically on the effective date of the Reverse
Stock Split.

The effects of
the Reverse Stock Split have been reflected retroactively in the accompanying
consolidated financial statements and notes thereto for all periods presented.

The Reverse
Stock Split was implemented to avoid being delisted from the NASDAQ Stock
Market (the NASDAQ) due to the failure to comply with the minimum bid price
requirement.

On May 14,
2008, the Company received a NASDAQ Staff Determination indicating our failure
    to comply with NASDAQ Marketplace Rule 4310(c)(4)- the minimum bid price
    requirement- for continued listing, and that our securities were subject
    to delisting from The NASDAQ Capital Market. Pursuant to the NASDAQ rules,
    we requested a hearing before a NASDAQ Listing Qualifications Panel (the Panel).
    The hearing request stayed the suspension of trading and delisting of our
    Common Stock. Following a hearing held on July 10, 2008, the Panel, by letter
    dated July 16, 2008, indicated that MTM had regained compliance with the
    continued listing standards of the NASDAQ. Accordingly, the Panel determined
    to continue the listing of the Companys shares on the NASDAQ.

Per Share Data

Basic net loss
per share is calculated using the weighted-average number of common shares
outstanding during the period. Diluted net income per share is calculated using
the weighted-average number of common shares plus dilutive potential common
shares outstanding during the period. Dilutive securities, which are
convertible into 3.9 million and 2.5 million common shares as of March 31, 2009
and 2008, respectively, have not been included in the weighted-average shares
used for the calculation of earnings per share for the years then ended since
the effect of such securities would be anti-dilutive.

Income Taxes

Deferred
income taxes are provided, using the asset and liability method, for temporary
differences between financial and tax reporting purposes which arise
principally from the deductions related to the allowances for doubtful
accounts, certain capitalized software costs, the basis of inventory and
differences arising from book versus tax depreciation methods. A valuation
allowance for deferred tax assets will be established if it is more likely than
not that these items will either expire before the Company is able to realize
their benefits, or that future deductibility is uncertain. We have recorded a
100% valuation allowance against the deferred tax assets as of March 31, 2009
and 2008.

F-10

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Adoption of New
Accounting Standards

On April 1,
2008, the Company adopted the Financial Accounting Standards Board (FASB)
Statement No. 157, Fair Value Measurements (SFAS No.
157). SFAS No. 157, issued in September 2006, defines fair value, establishes
a framework for measuring fair value and expands fair value measurement
disclosures. In February 2008, the FASB deferred the effective date for SFAS
No. 157 for one year for certain nonfinancial assets and nonfinancial
liabilities and removed certain leasing transactions from its scope.
The adoption of SFAS No. 157 did not have a material
impact on the Companys financial position or results of operations.

Effective
April 1, 2008, the Company adopted FASB Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities(SFAS No. 159), which was issued
in February 2007. SFAS No. 159 permits entities to choose to measure many
financial instruments and certain other items at fair value. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. The Company has not elected to apply the fair value option to any of
its financial instruments. As a result, adoption of this statement had no
impact on the Companys consolidated financial statements.

Recently Issued
Accounting Pronouncements

In December
2007, the FASB issued SFAS No. 141(Revised), Business Combinations
(SFAS No. 141(R)), which replaces SFAS No. 141, Business Combinations, and
requires an acquirer to recognize the assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree at the acquisition date,
measured at fair values as of that date, with limited exceptions. SFAS No.
141(R) requires the acquirer to record contingent consideration at the
estimated fair value at the time of purchase and establishes principles for
treating subsequent changes in such estimates which could affect earnings in
those periods. SFAS 141(R) also requires additional disclosures designed to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination and disallows the capitalization of
acquisition costs. This statement applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. The
Company will implement the provisions of SFAS No. 141(R) for any acquisitions
made by the Company on or subsequent to April 1, 2009.

In February
2008, the FASB issued Staff Position (FSP) No. 157-1 and FSP No. 157-2. FSP
No. 157-1 removes certain leasing transactions from the scope of SFAS No. 157.
FSP No. 157-2 partially defers the effective date of SFAS No. 157 for one year
for certain nonfinancial assets and nonfinancial liabilities that are
recognized at fair value on a nonrecurring basis. Under FSP No. 157-2, the
effective date for non-financial assets and liabilities that are recognized at
fair value on a nonrecurring basis will be for fiscal years beginning after
November 15, 2008. FSP No. 157-2 is effective for the Company from the first
quarter of fiscal year 2010. The Company is assessing the potential impact of
adopting FSP No. 157-2, but does not believe that the adoption will have a
significant impact on the Companys consolidated financial statements.

In April 2008,
the FASB issued FSP No. FAS 142-3, Determination of the Useful Life of Intangible
Assets (FSP FAS 142-3). FSP FAS 142-3 amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS
No. 142, Goodwill and Other Intangible Assets(SFAS No. 142). The
intent of the position is to improve the consistency between the useful life of
a recognized intangible asset under SFAS No. 142 and the period of
expected cash flows used to measure the fair value of the asset under SFAS
No. 141(R). FSP FAS 142-3 is effective for fiscal years beginning after
December 15, 2008 and is effective for the Company from the first quarter
of fiscal year 2010. The Company is assessing the potential impact that the
adoption of FSP FAS 142-3 will have on the useful lives of its intangible
assets, but does not expect it to have a material impact on its consolidated
results of operations and financial condition.

In May 2008,
the FASB issued FSP Accounting Principles Board (APB) 14-1 Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement) (FSP APB 14-1). FSP APB 14-1
requires the issuer of certain convertible debt instruments that may be settled
in cash (or other assets) on conversion to separately account for the liability
(debt) and equity (conversion option) components of the instrument in a manner
that reflects the issuers non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a
retroactive basis and will be adopted by the Company in the first quarter of
fiscal year 2010. The Company is assessing the potential impact that the
adoption of FSP APB 14-1 may have on its consolidated results of operations and
financial condition. However, it is expected that the allocation of the
proceeds to the conversion option will result in an increase in interest expense.

In May 2008,
the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting
Principles (SFAS No. 162). SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
used in the preparation of financial statements of nongovernmental entities
that are presented in conformity with GAAP. This statement shall be effective
60 days following the SECs approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles. The Company is
assessing the potential impact that the adoption of SFAS No. 162 may have on
its consolidated results of operations and financial condition.

F-11

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Note 2. Related Party Notes Payable

The Company
has issued and sold a series of unsecured subordinated promissory notes and
warrants to the Investors during the period from February 28, 2008 to March 31,
2009 as follows:

|                  |  |                                                           |  |                        |           |                                                                                                      |   |       |  |                                       |   |                                        |  |                                                 |  |                                     |        |  |                          |  |  |      | 
|----------------- |  | --------------------------------------------------------- |  | ---------------------- | --------- | ---------------------------------------------------------------------------------------------------- | - | ----- |  | ------------------------------------- | - | -------------------------------------- |  | ----------------------------------------------- |  | ----------------------------------- | ------ |  | ------------------------ |  |  | ---- | 
|Issue 
      Date |  | Party to Promissory Note                                  |  | Principal
      Amount |           | Price
            per share if
      Interest is
      Paid in 
      Series A
      Preferred Stock |   |       |  | Number of
      Warrants
      Issued |   | Exercise
      Price of
      Warrants |  | Warrant
      Exercisable
      Expiration Date |  | Preferred
      Stock 
      Series |       
|                  | 
|2/28/08           |  | FirstMark
          III L.P.                              |  | $                      | 2,191,123 |                                                                                                      | $ | 0.561 |  | (a                                    | ) |                                        |  | 343,705                                         |  | $                                   | 0.6375 |  | March 29,
          2012 |  |  | A-9  | 
|2/28/08           |  | FirstMark
          III Offshore Partners, L.P.           |  | $                      | 308,877   |                                                                                                      | $ | 0.561 |  | (a                                    | ) |                                        |  | 48,452                                          |  | $                                   | 0.6375 |  | March 29, 2012           |  |  | A-9  | 
|6/11/08           |  | FirstMark
          III L.P.                              |  | $                      | 2,410,235 |                                                                                                      | $ | 0.33  |  | (b                                    | ) |                                        |  | 642,729                                         |  | $                                   | 0.375  |  | June 11,
          2012  |  |  | A-10 | 
|6/11/08           |  | FirstMark
          III Offshore Partners, L.P.           |  | $                      | 339,765   |                                                                                                      | $ | 0.33  |  | (b                                    | ) |                                        |  | 90,604                                          |  | $                                   | 0.375  |  | June 11, 2012            |  |  | A-10 | 
|6/16/08           |  | FirstMark
          III L.P.                              |  | $                      | 219,112   |                                                                                                      | $ | 0.341 |  | (b                                    | ) |                                        |  | 56,545                                          |  | $                                   | 0.3875 |  | June 16,
          2012  |  |  | A-11 | 
|6/16/08           |  | FirstMark
          III Offshore Partners, L.P.           |  | $                      | 30,888    |                                                                                                      | $ | 0.341 |  | (b                                    | ) |                                        |  | 7,971                                           |  | $                                   | 0.3875 |  | June 16, 2012            |  |  | A-11 | 
|6/16/08           |  | Constellation
          Venture Capital II, L.P.          |  | $                      | 249,618   |                                                                                                      | $ | 0.341 |  | (b                                    | ) |                                        |  | 64,417                                          |  | $                                   | 0.3875 |  | June 16,
          2012  |  |  | A-11 | 
|6/16/08           |  | Constellation
          Venture Capital Offshore II, L.P. |  | $                      | 132,834   |                                                                                                      | $ | 0.341 |  | (b                                    | ) |                                        |  | 34,280                                          |  | $                                   | 0.3875 |  | June 16, 2012            |  |  | A-11 | 
|6/16/08           |  | The
          BSC Employee Fund VI, L.P.                  |  | $                      | 111,314   |                                                                                                      | $ | 0.341 |  | (b                                    | ) |                                        |  | 28,726                                          |  | $                                   | 0.3875 |  | June 16, 2012            |  |  | A-11 | 
|6/16/08           |  | CVC
          II Partners, LLC                            |  | $                      | 6,234     |                                                                                                      | $ | 0.341 |  | (b                                    | ) |                                        |  | 1,609                                           |  | $                                   | 0.3875 |  | June 16, 2012            |  |  | A-11 | 
|1/29/09           |  | FirstMark
          III L.P.                              |  | $                      | 876,449   |                                                                                                      | $ | 0.638 |  | (c                                    | ) |                                        |  | 120,889                                         |  | $                                   | 0.7250 |  | February 11, 2013        |  |  | A-12 | 
|1/29/09           |  | FirstMark
          III Offshore Partners, L.P.           |  | $                      | 123,551   |                                                                                                      | $ | 0.638 |  | (c                                    | ) |                                        |  | 17,042                                          |  | $                                   | 0.7250 |  | February 11, 2013        |  |  | A-12 | 
|                  |  |                                                           |  |                        |           |                                                                                                      |   |       |  |                                       |   |                                        |  |                                                 |  |                                     |        |  |                          |  |  |      | 
|                  |  | Total
          Investors Notes (d)                       |  | $                      | 7,000,000 |                                                                                                      |   |       |  |                                       |   |                                        |  |                                                 |  |                                     |        |  |                          |  |  |      | 
|                  |  |                                                           |  |                        |           |                                                                                                      |   |       |  |                                       |   |                                        |  |                                                 |  |                                     |        |  |                          |  |  |      | 
|                  |  |                                                           |  |                        |           |                                                                                                      |   |       |  |                                       |   |                                        |  |                                                 |  |                                     |        |  |                          |  |  |      | 

(a) On
February 28, 2008, the Company issued and sold to FirstMark promissory notes in
the principal amount of $2,500,000 (the FirstMark 08 Notes) and warrants
entitling FirstMark to purchase 392,157 shares of the Companys Series A-9
Preferred Stock at an exercise price of $0.6375 per share (the FirstMark A-9
Warrants). The FirstMark 08 Notes bear interest at a rate per annum equal to
8.5%. Interest on the FirstMark 08 Notes shall be due and payable in cash or,
at the option of the Company, in shares of the Companys Series A-9 Preferred
Stock at a price per share of $0.561. Proceeds from the FirstMark Notes were
used to fund working capital needs.

On March 28,
2008, the Company and FirstMark amended the FirstMark 08 Notes (the Amended
FirstMark Notes) to change the maturity as follows: thirty percent (30%) of
the principal amount of the Amended FirstMark Notes ($750,000) was due and
payable on December 28, 2008, and the remaining principal balance and all
interest accrued from February 28, 2008 to the date of payment of the principal
amount is due on March 28, 2009.

On June 11,
2008, the Company and FirstMark further amended the Amended FirstMark Notes to
change the maturity and payment terms such that all principal and all interest
accrued on such notes from the date of original issuance of February 28, 2008
through the date of payment of the principal amount shall be due on December
15, 2009 (the Second Amended FirstMark Notes).

The holders of
the FirstMark A-9 Warrants may exercise the purchase rights represented by the
FirstMark A-9 Warrants at any time. Cashless exercise is permitted. The Company
allocated and charged approximately $0.1 million to debt discount, which will
be amortized over the life of the Second Amended FirstMark Notes to interest
expense, and assigned and credited to additional paid in capital approximately
$0.1 million for the fair value of the FirstMark A-9 Warrants. The values
attributed to the FirstMark A-9 Warrants were determined utilizing the
Black-Scholes model.

(b) On June
11, 2008 and June 16, 2008, the Company issued and sold to FirstMark promissory
notes in the aggregate principal amount of $3,000,000 (the June FirstMark
Notes) and warrants entitling FirstMark to purchase 733,333 shares of the
Companys Series A-10 Preferred Stock at an exercise price of $0.375 per share
and 64,516 shares of the Companys Series A-11 Preferred Stock at an exercise
price of $0.3875 per share, at June 11, 2008 and June 16, 2008, respectively
(the FirstMark A-10 and A-11 Warrants). Proceeds from the June FirstMark
Notes were used to fund working capital needs.

On June 16,
2008, the Company issued and sold to Constellation promissory notes in the
aggregate principal amount of $500,000 (the Constellation Notes) and warrants
entitling Constellation to purchase 129,032 shares of the Companys Series A-11
Preferred Stock at an exercise price of $0.3875 per share (the Constellation
A-11 Warrants). Proceeds from the Constellation Notes were used to fund
working capital needs.

The June
FirstMark Notes and the Constellation Notes are due and payable in full on
December 15, 2009 and bear interest at a rate per annum equal to 8.5%. Interest
on the June FirstMark Notes and the Constellation Notes is due and payable in
cash or, at the option of the Company, in shares of the Companys Series A-10
Preferred Stock or Series A-11 Preferred Stock (as noted in the chart above).

The holders of
the FirstMark A-10 and A-11 Warrants and the Constellation A-11 Warrants,
collectively (the June Warrants) may exercise the purchase rights represented
by the June Warrants at any time. Cashless exercise is permitted. The Company
allocated and charged approximately $0.2 million to debt discount, which will
be amortized over the life of the June FirstMark Notes and the Constellation
Notes to interest expense, and assigned and credited to additional paid in
capital approximately $0.2 million for the fair value of the June Warrants. The
values attributed to the June Warrants were determined utilizing the Black-Scholes
model.

F-12

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

(c) On January
29, 2009, the Company issued and sold to FirstMark the following Promissory
Notes (the FirstMark 09 Notes): (1) a promissory note in the principal amount
of $876,449 to FirstMark III L.P., and (2) a promissory note in the principal
amount of $123,551 to FirstMark III Offshore Partners, L.P. The FirstMark 09
Notes bear interest at a rate per annum equal to 15%. Interest on the FirstMark
09 Notes shall be due and payable in cash or, at the option of the Company, in
shares of the Companys Series A-12 Preferred Stock at a price per share of
$0.638. Proceeds from the FirstMark 09 Notes were used to fund working capital
needs.

On February
11, 2009, the Company and FirstMark amended the FirstMark 09 Notes (the
Amended FirstMark 09 Notes) to (i) change the maturity date from February 13,
2009 (or the date on which the Company obtained all necessary consents from its
Senior Lenders to such payment if later) to December 15, 2009, (ii) change the
interest rate on overdue unpaid principal or interest from 10.5% to 16.5% and
(iii) change the priority of payments if the Company is not able to pay the
full amounts due under all of its Subordinated Promissory Notes, such that
payments to FirstMark with respect to all Subordinated Promissory Notes held by
it (the FirstMark Notes) have first preference over the Constellation Notes.

On February
11, 2009, the Company also issued warrants to FirstMark (the FirstMark A-12
Warrants) entitling: (i) FirstMark III L.P. to purchase 120,889 shares of the
Companys Series A-12 Preferred Stock and (ii) FirstMark III Offshore Partners,
L.P. warrants to purchase 17,042 shares of the Companys Series A-12 Preferred
Stock, both at an exercise price of $0.725 per share. The holders of the
FirstMark A-12 Warrants may exercise the purchase rights represented by the
FirstMark A-12 Warrants at any time. Cashless exercise is permitted.

(d) The Second
Amended FirstMark Notes together with the June FirstMark Notes, the
Constellation Notes and the Amended FirstMark 09 Notes, collectively are
sometimes referred to herein as the Investors Notes. At March 31, 2009 the
balance of the Investors Notes was approximately $6.8 million, net of debt discounts. At March 31,
2009, approximately $0.5 million in interest has been accrued on the Investors
Notes and is payable at maturity. FirstMark currently owns approximately 57% of
the Companys voting stock and had the right to acquire up to 62% of the
Companys voting stock. Gerald A. Poch and Sterling Phillips are members of the
Companys Board of Directors and are also affiliated with FirstMark.
Additionally, Constellation currently owns approximately 15% of the Companys
voting stock and has the right to acquire up to 15% of the Companys Voting
Stock. Thomas Wasserman is a member of the Companys Board of Directors and is
also affiliated with Constellation.

The Company
entered into an amendment to the Investors Notes (the Amendment) on February
11, 2009. The Amendment (i) amends all Subordinated Promissory Notes issued to
FirstMark (or its predecessors) or Constellation to change the priority of
payments if the Company is not able to pay the full amounts due under all of
its Subordinated Promissory Notes, such that payments to FirstMark with respect
to the FirstMark Notes have first preference over the Constellation Notes; (ii)
amends the Constellation Notes to provide that the rights of Constellation to
the payment of principal and interest with respect to such Constellation Notes
are subordinated to the payment rights of FirstMark in connection with the
FirstMark Notes (as well as the payment rights of the Senior Lenders with
respect to the Senior Debt); and (iii) provides for the express subordination
of the payment of the Constellation Notes to the prior payment in full of the
FirstMark Notes.

The foregoing
description of the Investors Notes and the related warrants as well as the
Amendment does not purport to be complete, and is qualified in its entirety by
reference to the full text of such documents, which are incorporated by
reference herein.

The right of
repayment of principal and interest on the Investors Notes is subordinated to
the rights and security interest of (i) CDF in connection with the August 21,
2007 Credit Facilities Agreement with CDF, as Administrative Agent, GECC
Capital Markets Group, Inc. as Sole Lead Arranger and Sole Bookrunner, and CDF
and the other lenders listed in the Credit Facilities Agreement, See Note 3 Credit
Facilities, and (ii) Columbia Partners, L.L.C. Investment
Management, as Investment Manager, and National Electric Benefit Fund (NEBF),
as Lender, in connection with the November 23, 2005, secured credit agreement
(the CP/NEBF Credit Agreement), See Note 5 Long-term Debt - Secured Promissory
Note, (CDF and NEBF collectively, the Senior Lenders and the
Credit Facilities Agreement and the CP/NEBF Credit Agreement collectively, the
Senior Debt). While any default or event of default has occurred and is
continuing with respect to any Senior Debt, the Company is prohibited from
making any payments or distribution in respect of the Investors Notes.

Upon an event
of default, as set forth in the Investors Notes, the holders of the Investors
Notes may declare all amounts outstanding under the Investors Notes immediately
due and payable and exercise other remedies permitted by the Investors Notes or
at law or in equity, subject to the above mentioned subordination. A more
complete description of the Investors Notes can be found in its entirety by
reference to the full text of the applicable documents.

Note 3. Credit Facilities

On August 21,
2007, the Company entered into a secured Credit Facilities Agreement (the
Credit Facilities Agreement) with CDF as Administrative Agent, GECC Capital
Markets Group, Inc. as Sole Lead Arranger and Sole Bookrunner, and CDF and the
other lenders listed in the Credit Facilities Agreement as (the Lenders),
providing a combined maximum availability of up to $34 million.

The Credit
Facilities Agreement refinanced the Companys prior senior lender facilities
and is secured by a first priority lien on and security interest in
substantially all of the present and future assets of the Company, including
the issued and outstanding stock of the Company (other than MTM Technologies,
Inc.), except for permitted encumbrances. Credit and advances to the Company
pursuant to the Credit Facilities Agreement will be used to fund working
capital and floor-planning needs, and for general corporate purposes. Terms not
otherwise defined in this discussion have the meaning ascribed to them in the
Credit Facilities Agreement.

The Revolving Credit Facility
under the Credit Facilities Agreement encompasses a two year revolving credit
facility, unless earlier terminated by the Company or the Lenders, for up to
$15 million, subject to a borrowing base based on eligible accounts receivable,
minus the sum of any outstanding Swingline Loan, Floorplan Shortfall, Letter of
Credit Exposure, and Bid Bonds, and certain other limitations. All amounts
under the Credit Facilities Agreement are due upon the termination thereof,
subject to optional prepayment in accordance with the terms of the Credit
Facilities Agreement, and mandatory repayment of any Swingline Loan in the
event that any of the Lenders fails to pay its allocated portion
thereof. Amounts borrowed under the Revolving Credit Facility bear
interest at LIBOR plus 3.5%, or LIBOR plus 4.5% during any default period.

F-13

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

The Floorplan
Loan Facility under the Credit Facilities Agreement is not a commitment to lend
or advance funds but is a discretionary facility, for up to $20 million, unless
terminated by the Company or the Lenders, which allows the Company to finance
inventory purchases from vendors as may be approved by the Administrative
Agent, on an up to 45-day interest-free basis in many cases. Interest
accrues after expiration of any applicable interest free period at a rate to be
determined under each Transaction Statement, and not to exceed a maximum rate
of 16% per annum in the event the Company objects to the terms under any
Transaction Statement. Generally, the Company would receive at least 60
days advance notice of a termination of the Floorplan Facility, during which
period the Company would continue to be able to finance inventory purchases
under the facility.

The Letter of
Credit Facility under the Credit Facilities Agreement will allow the Company to
request standby letters of credit and commercial letters of credit for the
account of the Company from time to time up to the lesser of $2 million or then
applicable availability limits less certain outstanding obligations of the
Company under the Credit Facilities Agreement. As of March 31, 2009, the
Company has no outstanding letters of credit.

During fiscal
2008 and 2009, the Company entered into several amendments to the Credit
Facilities Agreement with CDF in order to modify certain terms including the
definitions regarding certain covenant calculations, eligible accounts
receivable, and floor plan inventory value, to consent to and approve various
indebtedness incurred by the Company and to update disclosures.

On November
13, 2008, the Company entered into the Sixth Amendment to the Credit Facilities
Agreement with CDF (the Sixth Amendment), whereby CDF modified effective
September 1, 2008 certain financial covenants and financial covenant
definitions and waived compliance with the Maximum Total Funded Indebtedness to
EBITDA covenant for the period ended September 30, 2008. Certain other
provisions of the Sixth Amendment, as reflected above, became effective as of
November 1, 2008 whereby CDF (a) amended the definition of Eligible Accounts
to exclude previously allowed items, (b) reduced the Revolving Credit Facility
to $15 million from $20 million and increased the Floorplan Loan Facility to
$20 million from $14 million, (c) increased the cash reserve applicable to the
Borrowing Base to $1,750,000 for the period November 1, 2008 to December 31,
2008, for all other times $1,500,000: minus and (d) modified the definition of
the adjusted LIBOR rate and increased the LIBOR Increment to 3.5% from 3.0%.

On February 3,
2009, the Company entered into the Seventh Amendment to the Credit Facilities
Agreement with CDF (the Seventh Amendment), whereby CDF modified effective
December 1, 2008 the Minimum EBITDA financial covenant and waived compliance
with the Maximum Total Funded Indebtedness to EBITDA covenant for the period
ended December 31, 2008. Certain other provisions of the Seventh Amendment
became effective subsequent to December 31, 2008, whereby CDF (a) amended
certain definitions and other provisions related to other creditor
indebtedness, intercreditor documents, subordinated indebtedness and FirstMark
indebtedness and (b) increased the cash reserve applicable to the Borrowing
Base to $1,750,000: minus from $1,500,000: minus, effective December 31, 2008.

The Credit
Facilities Agreement, as amended through March 31, 2009 requires, among other
things, that the Company maintain certain financial covenants including Maximum
Total Funded Indebtedness to EBITDA, as defined, of not greater than 4.00 to
1.00 for the preceding four fiscal quarters then ended, beginning with the
period ended March 31, 2008; Minimum EBITDA, as defined, for the fiscal quarter
ending on March 31, 2009 of $800,000, and for the fiscal quarter ending on June
30, 2009 of $2,000,000; Minimum Excess Cash/Marketable Securities plus
Availability of $1,500,000 on the last day of each calendar month; and Minimum
Liquidation Multiple of 1.20 to 1.00 as of the last day of each fiscal month;
as well as restrictions on the Companys ability to incur certain additional
indebtedness, and various customary provisions, including affirmative and
negative covenants, representations and warranties and events of default.

Upon a breach
or an event of default by the Company with respect to any of the Investors
Notes or the Senior Debt not cured by the Company within any applicable grace
period, any of the Lenders may terminate the Credit Facilities Agreement and/or
declare all amounts outstanding under the Credit Facilities Agreement
immediately due and payable and exercise other remedies including foreclosure
of the security for the obligations under the Credit Facilities Agreement.

As of March
31, 2009, the Company was not in compliance with all covenants and was in
default of certain other provisions prescribed under the Credit Facility. On
June 2, 2009, the Company entered into the Eighth Amendment to the Credit
Facilities Agreement with CDF, (the Eighth Amendment), whereby CDF waived all
existing defaults. In consideration of CDF agreeing to the Eighth Amendment and
the waivers contained therein the Company agreed to pay an Eighth Amendment fee
of $250,000.

Available
funds under the Credit Facilities Agreement as of March 31, 2009, net of the
$1,750,000 cash reserve, amounted to approximately $2,400,000.

Note 4. Accrued Expenses

Accrued
expenses consisted of the following (in thousands):

|                            |  |           |       |      |   |       | 
|--------------------------- |  | --------- | ----- | ---- | - | ----- | 
|                            |  | March 31, |      
|                            |  |           |      
|                            |  | 2009      |       | 2008 |  
|                            |  |           |       |      |  
|                           
|Accrued
 interest           |  | $         | 639   |      | $ | 79    | 
|Acquisition
 related costs  |  |           | 260   |      |   | 984   | 
|Compensation
 related costs |  |           | 558   |      |   | 1,174 | 
|Accrued
 sales tax          |  |           | 383   |      |   | 778   | 
|Accrued rent                |  |           | 103   |      |   | 480   | 
|Accrued
 other              |  |           | 689   |      |   | 730   | 
|                            |  |           |       |      |   |       | 
|                            |  | $         | 2,633 |      | $ | 4,225 | 
|                            |  |           |       |      |   |       | 

F-14

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Note 5. Long-Term Debt

Secured Promissory Note

On November
23, 2005, the Company entered into the CP/NEBF Credit Agreement and
accompanying promissory note in the principal amount of $25 million (the
CP/NEBF Note), with Columbia Partners, L.L.C. Investment Management, as
Investment Manager (CP Investment Management), and NEBF, as Lender (the
Lender). During fiscal 2008 and 2009, the Company entered into several
amendments to the CP/NEBF Credit Agreement in order to modify certain terms
including extending the maturity date, subordinating the CP/NEBF Note,
modifying certain financial covenants, consenting to and approving various
indebtedness incurred by the Company and to update disclosures.

Pursuant to
the Subordination Agreement dated as of August 21, 2007 (the Subordination
Agreement) with CDF, for itself and agent to the Lenders under the Credit
Facilities Agreement, the CP/NEBF Credit Agreement was extended until November
23, 2010.

On June 11,
2008 and June 17, 2008, the Company entered into Amendments No. 4 and 5 to the
CP/NEBF Credit Agreement with CP Investment Management and the Lender whereby
each (a) consented to and approved the Second Amended Notes, the June FirstMark
Notes and the Constellation Notes in the principal amount of up to $6,000,000,
(b) modified certain financial covenants contained in the CP/NEBF Credit
Agreement, (c) amended the existing CP/NEBF Note to increase the principal
amount by $3,000,000 to $28,000,000 (the CP/NEBF Amended Note), and (d)
amended the payment premium in respect of the CP/NEBF Amended Note equal to an
amount which, when combined with previous payments made, will yield an internal
rate of return of 15% per annum from the Closing Date. Proceeds from the
additional funding of $3,000,000 were used to fund working capital needs.

The amount
outstanding on the CP/NEBF Amended Note bears interest equal to 4.52%; of which
the Applicable Current Cash Rate of interest was 1% per annum through August
21, 2008, which rate was increased to 2% per annum through November 22, 2009,
and then will increase to 8% per annum thereafter. The Applicable Current Cash
Rate is payable quarterly in cash and all remaining interest will accrue and
only become due at maturity. Pursuant to Amendment No. 5, upon maturity or in
the event of acceleration or upon the occurrence of certain liquidity events,
the Company will pay a payment premium in respect of the Note equal to an
amount which, when combined with previous payments made, will yield an internal
rate of return to the Lender of 15% per annum from the Closing Date, except
during any period in which an Event of Default shall have occurred and be
continuing, in which case the internal rate of return for such period shall be
adjusted to 17% per annum. At March 31, 2009, $13.7 million in interest has
been accrued on the Note, $0.2 million is accrued and payable within the next
quarter, and $13.5 million is accrued and is payable at maturity.

Required
financial covenants under the CP/NEBF Agreement are less restrictive in nature
and coincide substantially with those under the Credit Facilities Agreement.
The CP/NEBF Credit Agreement requires, among other things, that the Company
maintain certain financial covenants including Maximum Total Funded
Indebtedness to EBITDA, as defined, of not greater than 4.40 to 1.00 for the
preceding four fiscal quarters then ended, beginning with the period ended
March 31, 2008.

On November
11, 2008, the Company entered into Amendment No. 6 to the CP/NEBF Credit
Agreement with CP Investment Management and the Lender, whereby CP Investment
Management and the Lender modified effective September 1, 2008 certain
financial covenants and financial covenant definitions and waived compliance
with the Maximum Total Funded Indebtedness to EBITDA covenant for the period
ended September 30, 2008.

On January 29,
2009, the Company entered into Amendment No. 7 to the CP/NEBF Credit Agreement
with CP Investment Management and the Lender, whereby each of Investment
Manager and Lender (a) consented to and approved the incurrence by the Company
of certain unsecured subordinated indebtedness to FirstMark in the principal
amount up to $1,000,000, and the issuance of warrants in connection therewith,
(b) obtained a waiver of certain terms of the CP/NEBF Credit Agreement in
relation to the foregoing request, (c) modified effective December 1, 2008
certain financial covenants and financial covenant definitions and waived
compliance with the Maximum Total Funded Indebtedness to EBITDA covenant for
the period ended December 31, 2008, and (d) amended the existing CP/NEBF Note
to increase the principal amount by $1,000,000 to $29,000,000. Proceeds from
the additional funding of $1,000,000 were used to fund working capital needs.

Subject to the
terms of the Subordination Agreement, upon an event of default, the lenders under
the CP/NEFB Credit Agreement may terminate such Credit Agreement and/or declare
all amounts outstanding immediately due and payable and exercise other remedies
including foreclosure of the security for the obligations under the CP/NEFB
Credit Agreement, as amended. Terms not otherwise defined in this discussion
have the meaning ascribed to them in the CP/NEFB Credit Agreement, as amended
or in the Subordination Agreement.

As of March
31, 2009, the Company was not in compliance with all covenants and was in
default of certain other provisions prescribed under the CP/NEBF Credit
Agreement. On June 2, 2009, the Company entered into Amendment No. 8, with CP
Investment Management and the Lender, to the CP/NEBF Credit Agreement
(Amendment No. 8), whereby CP Investment Management and the Lender waived all
existing defaults.

On November
23, 2005, in connection with the issuance of the CP/NEBF Note the Company
issued and sold to the Lender a warrant entitling the Lender to purchase 46,666
shares of the Companys Common Stock at an exercise price of $60.90 per share
(the Lender Warrant), the Company allocated and charged $2.2 million to debt
discount, which will be amortized over the life of the CP/NEBF Amended Note to
interest expense, and assigned and credited to additional paid in capital $2.2
million for the fair value of the Lender Warrant. The Company is permitted to
settle the warrants with unregistered shares. On August 21, 2007, in connection
with the Subordination Agreement, the Company issued a second Warrant to the
Lender for the right to purchase up to the maximum number of 46,666 shares of
the Companys Common Stock at an exercise price of $17.55 per share
(collectively with the Lender Warrant, the Lender Warrants), and allocated
and charged $0.5 million to debt discount, which will be amortized over the
remaining life of the CP/NEBF Amended Note to interest expense, and assigned
and credited to additional paid-in capital $0.5 million for the fair value of
the second Warrant. The values attributed to the Lender Warrants were
determined utilizing the Black-Scholes model.

F-15

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Note 6. Stock and Benefit Plans

The Company
maintains several stock equity incentive plans under which incentive stock
options, non-qualified stock options, stock bonuses and RSUs may be granted to
employees (including officers), consultants, independent contractors, and
non-employee directors.

Stock Option Plans:

The 1993
Employee Stock Option Plan, the 1996 Stock Option Plan and the 1998 Stock
Options Plan, all previously adopted by the Company have expired. Accordingly,
we can no longer grant new options under such plans. The Company had also
adopted a 2000 Long-Term Performance Plan, which provides for the award of an
aggregate of 23,333 shares of our common stock, of which, as of March 31, 2009,
8,666 shares are subject to outstanding awards; and a 2002 Long-Term
Performance Plan, which provides for the award of an aggregate of 16,666 shares
of our common stock of which, as of March 31, 2009, 1,998 shares are subject to
outstanding awards. The Company has chosen, with the approval of the Board of
Directors, not to grant future options from the 2000 and 2002 Plans.

Lastly, the Company
adopted a 2004 Equity Incentive Plan (the 2004 Plan), which provides for the
award of an aggregate of 400,000 shares of our common stock, of which, as of
March 31, 2009, 28,048 shares have been issued upon the exercise of options and
vested RSUs and 188,170 shares are subject to outstanding awards. Under the
terms of the 2004 Plan, options to purchase common stock generally are granted
at not less than fair market value, become exercisable as established by the
Board of Directors (generally ratably over four years) and generally expire ten
years from the date of grant. At March 31, 2009, we had outstanding options and
RSUs to purchase approximately 0.2 million shares of common stock and
approximately 0.2 million shares of common stock are available for future
awards.

The Company
recognizes stock-based compensation cost under the provisions of Statement of
Financial Accounting Standards No. 123 (revised 2004), Share-Based
Payment (SFAS No. 123(R)), which requires the measurement
and recognition of compensation expense for all share-based payment awards made
based on estimated fair values. The estimated fair value of the Companys
stock-based awards, less expected forfeitures, is amortized on a straight-line
basis over the awards requisite service period, typically the vesting period.
In determining whether an award is expected to vest, we generally use an
estimated forfeiture rate based on historical forfeiture rates. The estimated
forfeiture rate is updated for actual forfeitures quarterly.

Total
stock-based compensation cost recognized in the consolidated statement of
operations in selling, general and administrative expenses for the years ended
March 31, 2009 and 2008 was as follows:

|                                                    |  |           |     |      |   |       | 
|--------------------------------------------------- |  | --------- | --- | ---- | - | ----- | 
|                                                    |  | March 31, |    
|                                                    |  |           |    
|(in thousands)                                      |  | 2009      |     | 2008 |  
|                                                    |  |           |     |      |  
|                                                   
|Stock-based
 compensation expense by type of award: |  |           |     |      |   |       | 
|Stock
 options                                      |  | $         | 863 |      | $ | 1,083 | 
|Stock bonus                                         |  |           | 35  |      |   |      | 
|Restricted
 stock units                             |  |           | 99  |      |   | 141   | 
|                                                    |  |           |     |      |   |       | 
|Total
 stock-based compensation                     |  |           | 997 |      |   | 1,224 | 
|Tax effect
 on stock-based compensation             |  |           |    |      |   |      | 
|                                                    |  |           |     |      |   |       | 
|Net effect
 of stock-based compensation on net loss |  | $         | 997 |      | $ | 1,224 | 
|                                                    |  |           |     |      |   |       | 

No income tax
benefit has been recognized in the consolidated statement of operations related
to stock-based compensation expense, due to the Company fully reserving against
the related deferred tax assets.

On April 2,
2008, the Board of Directors approved an aggregate stock bonus of 5,666 shares
to those directors who are not employees of the Company and who were not
appointed to the Board of Directors by either FirstMark or Constellation. The
shares were fully vested at the date of grant.

F-16

---



MTM
TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Stock
Options

Consistent with the provisions of SFAS No. 123(R)
and SEC Staff Accounting Bulletin No. 107, the fair value of each stock option
grant was estimated at the date of grant using the Black-Scholes option pricing
model (Black-Scholes) with the following weighted-average assumptions:

|                                                           |  |                      |           |      |   |           |  
|---------------------------------------------------------- |  | -------------------- | --------- | ---- | - | --------- | -
|                                                           |  | Year Ended March 31, |          
|                                                           |  |                      |          
|                                                           |  | 2009                 |           | 2008 |  
|                                                           |  |                      |           |      |  
|Expected term                                              |  |                      | 5.9 years |      |   | 4.4 years |  
|Expected stock price volatility                            |  |                      | 84        | %    |   | 73        | %
|Risk-free interest rate                                    |  |                      | 2.7       | %    |   | 3.8       | %
|Expected dividend yield                                    |  |                      | 0         | %    |   | 0         | %
|Weighted-average grant-date fair value of options
 granted |  | $                    | 1.45      |      | $ | 7.50      |  

The expected term of the options represents the
estimated period of time until exercise and is based on historical exercise
patterns and expectations of future employee behavior. The risk-free interest
rate is based on United States Treasury instruments as of the grant dates and
represents the yields on securities for terms equal to the expected term of the
options. Expected volatility is calculated based on historical volatility of
the Companys common stock over the expected term of the stock option. We do
not currently pay cash dividends on our common stock and do not anticipate
doing so in the foreseeable future. Accordingly, our expected dividend yield is
zero.

A summary of stock option activity under these plans
as of March 31, 2009 and 2008, and changes during the years then ended, is
presented below:

|                                      |  |                    |         |                                     |   |                                                     |  |                                                 |        |  |  |           | 
|------------------------------------- |  | ------------------ | ------- | ----------------------------------- | - | --------------------------------------------------- |  | ----------------------------------------------- | ------ |  |  | --------- | 
|                                      |  | Number of 
 Shares |         | Weighted-
 Average 
 Exercise Price |   | (In the money options)
 Aggregate
 Intrinsic
 Value |  | Weighted-
 Average
 Remaining
 Contractual Term |       
|                                      |  |                    |         |                                     |   |                                                     |  |                                                 |       
|Outstanding at March 31, 2007         |  |                    | 207,802 |                                     | $ | 44.25                                               |  | $                                               | 11,130 |  |  | 6.8 years | 
|Granted                               |  |                    | 91,467  |                                     |   | 12.97                                               |  |                                                 |        |  |  |           | 
|Exercised                             |  |                    | (133    | )                                   |   | 11.25                                               |  |                                                 |        |  |  |           | 
|Canceled/Expired                      |  |                    | (74,442 | )                                   |   | 42.60                                               |  |                                                 |        |  |  |           | 
|                                      |  |                    |         |                                     |   |                                                     |  |                                                 |        |  |  |           | 
|Outstanding at March 31, 2008         |  |                    | 224,694 |                                     | $ | 31.99                                               |  | $                                               |       |  |  | 7.4 years | 
|Granted                               |  |                    | 22,682  |                                     |   | 2.74                                                |  |                                                 |        |  |  |           | 
|Exercised                             |  |                    |        |                                     |   |                                                    |  |                                                 |        |  |  |           | 
|Canceled/Expired                      |  |                    | (51,810 | )                                   |   | 20.25                                               |  |                                                 |        |  |  |           | 
|                                      |  |                    |         |                                     |   |                                                     |  |                                                 |        |  |  |           | 
|Outstanding at March 31, 2009         |  |                    | 195,566 |                                     | $ | 31.71                                               |  | $                                               |       |  |  | 6.6 years | 
|                                      |  |                    |         |                                     |   |                                                     |  |                                                 |        |  |  |           | 
|Exercisable at March 31, 2009         |  |                    | 139,489 |                                     | $ | 37.54                                               |  | $                                               |       |  |  | 5.8 years | 
|                                      |  |                    |         |                                     |   |                                                     |  |                                                 |        |  |  |           | 
|Expected to vest after March 31, 2009 |  |                    | 50,988  |                                     | $ | 18.25                                               |  | $                                               |       |  |  | 8.4 years | 
|                                      |  |                    |         |                                     |   |                                                     |  |                                                 |        |  |  |           | 
|                                      |  |                    |         |                                     |   |                                                     |  |                                                 |        |  |  |           | 

The aggregate intrinsic value in the table above is
before applicable income taxes and represents the amount optionees would have
received if all in the money options had been exercised on the last business
day of the period indicated, based on the Companys closing stock price.

The unrecognized stock-based compensation expense
associated under the fair value method for shares expected to vest (unvested
shares net of expected forfeitures) as of March 31, 2009 was approximately $0.4
million and is expected to be recognized over a weighted average period of 1.8
years. Relatively all of the remaining outstanding options are expected to
vest.

F-17

---



MTM
TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Additional information regarding options outstanding
as of March 31, 2009 is as follows:

|                          |  |                     |         |                                                           |     |                                       |  |        |       |                                       |  |         |  |   |       | 
|------------------------- |  | ------------------- | ------- | --------------------------------------------------------- | --- | ------------------------------------- |  | ------ | ----- | ------------------------------------- |  | ------- |  | - | ----- | 
|                          |  | OPTIONS OUTSTANDING |         | OPTIONS EXERCISABLE                                       |    
|                          |  |                     |         |                                                           |    
|Range of
 Exercise Prices |  | Shares              |         | Weighted
 Average
 Remaining 
 Contractual 
 Life (Years) |     | Weighted 
 Average 
 Exercise 
 Price |  | Shares |       | Weighted 
 Average 
 Exercise 
 Price | 
|                          |  |                     |         |                                                           |     |                                       |  |        |       |                                       | 
|$0.66-$9.00               |  |                     | 21,848  |                                                           | 9.3 |                                       |  | $      | 4.12  |                                       |  | 1,832   |  | $ | 8.22  | 
|$9.01-$14.55              |  |                     | 41,723  |                                                           | 8.2 |                                       |  | $      | 14.28 |                                       |  | 21,075  |  | $ | 14.19 | 
|$14.56-$21.60             |  |                     | 12,063  |                                                           | 3.8 |                                       |  | $      | 18.90 |                                       |  | 10,763  |  | $ | 19.27 | 
|$21.61-$33.00             |  |                     | 50,225  |                                                           | 5.7 |                                       |  | $      | 32.50 |                                       |  | 41,891  |  | $ | 32.40 | 
|$33.01-$48.75             |  |                     | 35,345  |                                                           | 5.2 |                                       |  | $      | 44.03 |                                       |  | 31,778  |  | $ | 43.87 | 
|$48.76-$60.75             |  |                     | 25,008  |                                                           | 6.8 |                                       |  | $      | 56.44 |                                       |  | 23,152  |  | $ | 56.16 | 
|$60.76-$78.30             |  |                     | 9,354   |                                                           | 5.9 |                                       |  | $      | 73.44 |                                       |  | 8,998   |  | $ | 73.79 | 
|                          |  |                     |         |                                                           |     |                                       |  |        |       |                                       |  |         |  |   |       | 
|                          |  |                     | 195,566 |                                                           | 6.6 |                                       |  | $      | 31.71 |                                       |  | 139,489 |  | $ | 37.54 | 
|                          |  |                     |         |                                                           |     |                                       |  |        |       |                                       |  |         |  |   |       | 
|                          |  |                     |         |                                                           |     |                                       |  |        |       |                                       |  |         |  |   |       | 

Restricted
Stock Units

RSUs are awarded to eligible employees under the 2004
Plan and entitle the grantee to receive shares of common stock at the end of a
vesting period, typically annually over four years, subject to the employees
continuing employment. A summary of the status of RSUs nonvested shares as of
March 31, 2009 and changes during the year then ended is presented below:

|                            |  |                  |        |                                          |   |       | 
|--------------------------- |  | ---------------- | ------ | ---------------------------------------- | - | ----- | 
|                            |  | Number of Shares |        | Weighted-Average 
 Grant-Date Fair Value |  
|                            |  |                  |        |                                          |  
|Nonvested at April 1, 2008  |  |                  | 15,006 |                                          | $ | 27.09 | 
|Granted                     |  |                  |       |                                          |   |      | 
|Vested                      |  |                  | (3,317 | )                                        |   | 29.31 | 
|Forfeited                   |  |                  | (3,128 | )                                        |   | 24.16 | 
|                            |  |                  |        |                                          |   |       | 
|Nonvested at March 31, 2009 |  |                  | 8,561  |                                          | $ | 27.30 | 
|                            |  |                  |        |                                          |   |       | 

As of March 31, 2009 there was $0.1 million of total
unrecognized compensation cost related to nonvested share-based compensation
arrangements granted under the 2004 Plan for RSUs. That cost is expected to be
recognized over a weighted-average period of 1.0 year. The total fair value of
shares vested during the years ended March 31, 2009 and 2008 were approximately
$0.1 million and $0.1 million, respectively.

Associate
Stock Purchase Plan

Effective April 15, 2005, the Company adopted the MTM
Technologies, Inc. Associate Stock Purchase Plan. The ASPP allows eligible
employees to contribute up to 15% of their base earnings to a maximum annual
contribution of $25,000 toward the semi-annual purchase of the Companys common
stock. The employees purchase price is 95% of the fair market value of the
stock on the last business day of the offering period. Employees may purchase
shares up to a maximum of 233 shares per offering period. The total numbers of
shares issuable under the ASPP is 66,666. From the inception of the ASPP
through March 31, 2009, the Company has issued approximately 23,000 shares of
common stock to the ASPP at an average price of $11.06. Of the 416 associates
eligible to participate, approximately 11 were participants in the ASPP during
fiscal 2009. No stock-based compensation expense was recognized in the
consolidated financial statements related to the ASPP, since the related
purchase discounts did not exceed the amount allowed under SFAS No. 123(R) for
non-compensatory treatment. Effective April 1, 2009, the Company discontinued
the ASPP.

F-18

---



MTM
TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Employee
Savings Plan

MTM maintains a voluntary defined contribution savings
plan (the MTM 401(k) Plan) covering eligible employees as defined in the plan
documents. Participating employees may elect to defer and contribute a portion
of their compensation to the plan up to limits stated in the plan documents,
not to exceed the dollar amounts set by applicable laws. Beginning April 1,
2006, MTM adopted a discretionary match contribution of 25% for the first 6% of
each employees eligible contribution, senior management was excluded from
receiving this match. Eligible participants become fully vested in the match
following four years of qualified service. Effective December 1, 2008 the
Company suspended payment of any matching contributions to the participants
under the MTM 401(k) Plan. The Company contributed approximately $217,000 and
$336,000 to the MTM 401(k) Plan for the years ended March 31, 2009 and 2008,
respectively.

Note 7.
Shareholders Equity

Common
Stock

At March 31, 2008 and 2009, respectively, the Company
had 150,000,000 shares of Common Stock authorized, par value $.001 per share.

As described in Note 1 under Reverse Stock Split, on
    June 25, 2008, the Company affected a Reverse Stock Split of its Common Stock
    at a split ratio of 1-for-15. Shareholders equity reflects the stock
    split by reclassifying to
Additional paid-in capital from Common Stock an amount
equal to the change in par value of the shares arising from the Reverse Stock
Split. The par value and the amount of authorized shares were not impacted by
the Reverse Stock Split. All outstanding options, restricted stock units, warrants
and convertible securities were appropriately adjusted for the Reverse Stock
Split automatically on the effective date of the Reverse Stock Split. As of March
31, 2009, there were approximately 913,000 shares of Common Stock outstanding.

Preferred
Stock

At March 31, 2008, the Company had authorized
48,000,000 shares of preferred stock, 39,300,000 of which were designated
Series A Preferred Stock, par value $.001 per share and 8,700,000 of which were
blank check preferred stock, par value $.001 per share. At March 31, 2008,
there were approximately 29,600,000 shares of Series A Preferred Stock issued.

Effective upon the filing of the Fifth Restated
Certificate of Incorporation on March 6, 2009 the Company increased the
authorized number of shares of Series A Preferred Stock from 39,300,000 shares
to 44,750,000 shares, including the designation of 1,200,000 shares of Series
A-9 Preferred Stock, 1,900,000 shares of Series A-10 Preferred Stock, 600,000
shares of Series A-11 Preferred Stock and 500,000 shares of Series A-12
Preferred Stock. No preferred stock from the A-9 to A-12 series is outstanding.
The Company has issued Preferred Stock Warrants for these series, see Note 2 Related Party Notes Payable. The holders
of the Series A-9 to A-12 Preferred Stock Warrants may exercise the purchase
rights represented by the respective warrants at any time. Cashless exercise is
permitted.

As of March 31, 2009, the Company had authorized 48,000,000
shares of preferred stock, 44,750,000 shares of which are designated Series A
Preferred Stock, par value $.001 per share and 3,250,000 shares of which are
blank check preferred stock, par value $.001 per share. As of March 31, 2009,
there were approximately 31,370,000 shares of Series A Preferred Stock issued.

Series
A Preferred Stock

During the year ended March 31, 2005, the Investors
purchased $41.0 million of Series A-1, Series A-2, Series A-3 and Series A-4
Convertible Preferred Stock and associated common stock warrants. During the
year ended March 31, 2006, the Investors purchased an additional $19.0 million
of Series A-4 and Series A-5 Convertible Preferred Stock, and associated common
stock warrants. During the year ended March 31, 2007, the Investors purchased
an additional $3.0 million of Series A-6 Convertible Preferred Stock, and
associated common stock warrants.

On April 9, 2007, FirstMark exercised its option to
purchase additional shares under the A-6 Purchase Agreement and the Company
issued and sold to FirstMark 517,526 shares of Series A-6 Convertible Preferred
Stock and Series A-6 Warrants to purchase 10,349 shares of the Companys common
stock for an aggregate purchase price of $0.8 million. This transaction
resulted in a further adjustment to the conversion price of each of the series
of Series A Preferred Stock. During the first quarter of fiscal 2008 the
Company allocated and recorded $0.7 million to Series A Preferred Stock and
assigned and credited to additional paid-in capital $0.1 million for the fair
value of the warrants. The value attributed to the Series A-6 warrants was
determined by utilizing Black-Scholes.

On May 24, 2007, the Company entered into the A-7
Purchase Agreement with the Investors to sell to the Investors up to an
aggregate of $5.0 million of Series A-7 Convertible Preferred Stock, together
with warrants to purchase additional shares of common stock. On May 24, 2007,
the Company issued and sold to FirstMark 3,753,127 shares of Series A-7
Preferred Stock and Series A-7 Warrants to purchase up to 75,062 shares of the
Companys common stock for an aggregate purchase price of $4.5 million. At the
same time, the Company also granted an option to Constellation to purchase up
to 417,015 shares of Series A-7 Preferred Stock and Series A-7 Warrants to
purchase up to 8,338 shares of the Companys common stock. On May 30, 2007
Constellation exercised its rights under the foregoing options and the Company
issued and sold to Constellation 417,015 shares of Series A-7 Preferred Stock
and 8,338 Series A-7 Warrants for an aggregate purchase price of $0.5 million.
This transaction resulted in a further adjustment to the conversion price of
each of the series of Series A Preferred Stock. During the first quarter of
fiscal 2008 the Company allocated and recorded $4.4 million to Series A
Preferred Stock and assigned and credited to additional paid-in capital $0.6
million for the fair value of the warrants. The value attributed to the Series
A-7 warrants was determined by utilizing Black-Scholes.

F-19

---



MTM
TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

On July 25, 2007, the Company entered into the A-8
Purchase Agreement with FirstMark, whereby the Company issued and sold to
FirstMark 743,415 shares of Series A-8 Convertible Preferred Stock and Series
A-8 Warrants to purchase up to 59,472 shares of the Companys common stock for
an aggregate purchase price of $3.5 million. This transaction resulted in a
further adjustment to the conversion price of each of the series of Series A
Preferred Stock. Each share of Series A-8 Convertible Preferred Stock is
convertible into four shares of the Companys common stock at a conversion
price equal to $1.1770 per share (subject to adjustment). During the second
quarter of fiscal 2008 the Company allocated and recorded $3.0 million to
Series A Preferred Stock and assigned and credited to additional paid-in
capital $0.5 million for the fair value of the warrants. The value attributed
to the Series A-8 warrants was determined by utilizing Black-Scholes.

In the event of any liquidation of the Company, the
holders of the Series A Preferred Stock shall be entitled to be paid in
preference to any distribution to holders of common stock, in an amount per share
equal to the sum of the applicable Series A Purchased Shares Purchase Price
plus any accrued but unpaid dividends on the Series A Preferred Stock.

The following table sets forth the Series A Preferred
Stock and associated warrants issued to the Investors under the various
purchases agreements, including in-kind dividends paid.

|                                       |  |                              |                                |                |   |                | 
|-------------------------------------- |  | ---------------------------- | ------------------------------ | -------------- | - | -------------- | 
|                                       |  | No. of Shares (in thousands) |                                | Purchase Price |  
|                                       |  |                              |                                |                |  
|                                       |  |                              |                                |                |   |                | 
|Series A-1 Convertible Preferred Stock |  |                              | 3,774                          |                | $ | 2.15           | 
|Series A-2 Convertible Preferred Stock |  |                              | 2,319                          |                | $ | 2.75           | 
|Series A-3 Convertible Preferred Stock |  |                              | 4,459                          |                | $ | 3.25           | 
|Series A-4 Convertible Preferred Stock |  |                              | 9,096                          |                | $ | 3.25           | 
|Series A-5 Convertible Preferred Stock |  |                              | 3,567                          |                | $ | 3.25           | 
|Series A-6 Convertible Preferred Stock |  |                              | 2,796                          |                | $ | 1.485          | 
|Series A-7 Convertible Preferred Stock |  |                              | 4,555                          |                | $ | 1.199          | 
|Series A-8 Convertible Preferred Stock |  |                              | 804                            |                | $ | 4.708          | 
|                                       |  |                              |                                |                |   |                | 
|                                       |  |                              | 31,370                         | (a)            |   |                | 
|                                       |  |                              |                                |                |   |                | 
|                                       |  |                              |                                |                |   |                | 
|                                       |  |                              | No.
of Warrants (in thousands) |                |   | Exercise
Price | 
|                                       |  |                              |                                |                |  
|                                       |  |                              |                                |                |   |                | 
|Series A-1 Common Stock Warrants       |  |                              |                               | (b)            |   |                | 
|Series A-2 Common Stock Warrants       |  |                              |                               | (b)            |   |                | 
|Series A-3 Common Stock Warrants       |  |                              |                               | (b)            |   |                | 
|Series A-4 Common Stock Warrants       |  |                              | 37                             | (c)            | $ | 60.90          | 
|Series A-5 Common Stock Warrants       |  |                              | 30                             |                | $ | 60.90          | 
|Series A-6 Common Stock Warrants       |  |                              | 51                             |                | $ | 24.45          | 
|Series A-7 Common Stock Warrants       |  |                              | 83                             |                | $ | 19.7835        | 
|Series A-8 Common Stock Warrants       |  |                              | 59                             |                | $ | 19.4205        | 
|                                       |  |                              |                                |                |   |                | 
|                                       |  |                              | 260                            |                |   |                | 
|                                       |  |                              |                                |                |   |                | 
|                                       |  |                              |                                |                |   |                | 
|                                       |  |                              | No.
of Warrants(in thousands)  |                |   | Exercise
Price | 
|                                       |  |                              |                                |                |  
|                                       |  |                              |                                |                |   |                | 
|Series A-9 Preferred Stock Warrants    |  |                              | 392                            |                | $ | 0.6375         | 
|Series A-10 Preferred Stock Warrants   |  |                              | 733                            |                | $ | 0.3750         | 
|Series A-11 Preferred Stock Warrants   |  |                              | 194                            |                | $ | 0.3875         | 
|Series A-12 Preferred Stock Warrants   |  |                              | 138                            |                | $ | 0.7250         | 
|                                       |  |                              |                                |                |   |                | 
|                                       |  |                              | 1,457                          | (d)            |   |                | 
|                                       |  |                              |                                |                |   |                | 

| | 
| | 
| | 

| |     |                                                                                                                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | The funds raised from the sales of Series A
 Convertible Preferred Stock were used to fund the cash portion of the
 purchase price for the Companys various acquisitions, as well as for working
 capital and general corporate purposes.
| |     |                                                                                                                                                                                                                                           
| | (b) | The option to exercise the A-1, A-2 and the A-3
 Common Stock Warrants expired on May 21, 2008, September 16, 2008 and on
 December 7, 2008, respectively.                                                                                
| |     |                                                                                                                                                                                                                                           
| | (c) | The option to exercise 41,024 and 24,612 of the A-4
 Common Stock Warrants expired on December 10, 2008 and on March 11, 2009,
 respectively.                                                                                             
| |     |                                                                                                                                                                                                                                           
| | (d) | See Note 2 Related
 Party Notes Payable regarding details of the transactions
 involving the Preferred Stock Warrants.                                                                                                                    

The funds raised from the sales of Series A
Convertible Preferred Stock were used to fund the cash portion of the purchase
price for the Companys various acquisitions, as well as for working capital
and general corporate purposes.

F-20

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Beginning May
21, 2006, the Series A Preferred Stock began to accrue dividends, payable
semi-annually in arrears, in an amount equal to 6% of the applicable Series A
purchase price. Until and including November 21, 2009 dividends may, at the
option of the Company, be paid in cash or in shares of the applicable Series A
Preferred Stock valued at the applicable Series A purchase price. During fiscal
2009 the Company paid $4.8 million in preferred dividends for the period
November 21, 2007 to November 20, 2008 in the form of 1,800,727 shares of
Series A Preferred Stock. The Series A purchase prices ranged from $1.199 to
$4.708. For the year ended March 31, 2009, the Company has accrued and charged
to equity $4.9 million in preferred dividends. At March 31, 2009 $1.8 million
was accrued in preferred dividends for the period beginning November 21, 2008.
The Preferred Stock Series A-1 to A-8 purchase prices accrued range from $1.199
to $4.708. Dividends are accrued as other long-term liabilities since the
current intention of the Company is to pay dividends in the form of equity.

Note 8. Income Taxes

Effective
April 1, 2007, the Company adopted the provisions of the Financial Accounting
Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109 (FIN 48),
which provides criteria for the recognition, measurement, presentation and
disclosure of uncertain tax positions. A tax benefit from an uncertain position
may be recognized only if it is more likely than not that the position
is sustainable based on its technical merits. Upon the adoption of FIN 48, the
Company had no unrecognized tax benefits. The application of FIN 48 did not
have any impact on the Companys consolidated balance sheets, statements of
operations, or statements of cash flows during the years ended March 31, 2009
and 2008, respectively.

The asset and
liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.

The (benefit
from) provision for income taxes consisted of the following (in thousands):

|                                           |  |                      |      |      |   |       | 
|------------------------------------------ |  | -------------------- | ---- | ---- | - | ----- | 
|                                           |  | Year Ended March 31, |     
|                                           |  |                      |     
|                                           |  | 2009                 |      | 2008 |  
|                                           |  |                      |      |      |  
|Current:                                   |  |                      |      |      |   |       | 
|Federal                                    |  | $                    |     |      | $ |      | 
|State                                      |  |                      | 119  |      |   | 250   | 
|                                           |  |                      |      |      |   |       | 
|                                           |  |                      | 119  |      |   | 250   | 
|Deferred:                                  |  |                      |      |      |   |       | 
|Federal                                    |  |                      | (191 | )    |   | 673   | 
|State                                      |  |                      | (28  | )    |   | 99    | 
|                                           |  |                      |      |      |   |       | 
|                                           |  |                      | (219 | )    |   | 772   | 
|                                           |  |                      |      |      |   |       | 
|(Benefit
 from) provision for income taxes |  | $                    | (100 | )    | $ | 1,022 | 
|                                           |  |                      |      |      |   |       | 

The
reconciliations of income tax (benefit) provision computed at the federal
statutory tax rates to actual income tax (benefit) provision are as follows (in
thousands):

|                                                               |  |                      |         |      |   |        |  
|-------------------------------------------------------------- |  | -------------------- | ------- | ---- | - | ------ | -
|                                                               |  | Year Ended March 31, |        
|                                                               |  |                      |        
|                                                               |  | 2009                 |         | 2008 |  
|                                                               |  |                      |         |      |  
|Tax benefit
 at federal statutory rates applied to pretax loss |  | $                    | (13,479 | )    | $ | (4,898 | )
|State income
 taxes, net of federal benefit                    |  |                      | 91      |      |   | 149    |  
|Federal
 income taxes                                          |  |                      | (191    | )    |   | 673    |  
|Changes in
 valuation allowance                                |  |                      | 6,766   |      |   | 3,676  |  
|Other
 permanent items                                         |  |                      | 6,900   |      |   | 476    |  
|Adjustments
 to prior provisions                               |  |                      | (187    | )    |   | 946    |  
|                                                               |  |                      |         |      |   |        |  
|(Benefit
 from) provision for income taxes                     |  | $                    | (100    | )    | $ | 1,022  |  
|                                                               |  |                      |         |      |   |        |  

F-21

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

The tax
effects of temporary differences that give rise to the net short-term deferred
income tax asset are presented below (in thousands):

|                                           |  |           |      |      |   |      |  
|------------------------------------------ |  | --------- | ---- | ---- | - | ---- | -
|                                           |  | March 31, |     
|                                           |  |           |     
|                                           |  | 2009      |      | 2008 |  
|                                           |  |           |      |      |  
|                                           |  |           |      |      |   |      |  
|Reserve for
 bad debts                     |  | $         | 338  |      | $ | 380  |  
|Inventory                                  |  |           | 1    |      |   | 11   |  
|Accrued
 compensation                      |  |           | 53   |      |   |     |  
|                                           |  |           |      |      |   |      |  
|                                           |  |           | 392  |      |   | 391  |  
|Valuation
 allowance                       |  |           | (392 | )    |   | (391 | )
|                                           |  |           |      |      |   |      |  
|Total short-term deferred income tax asset |  | $         |     |      | $ |     |  
|                                           |  |           |      |      |   |      |  

The tax
effects of temporary differences that give rise to the net long-term deferred
income tax asset (liability) are presented below (in thousands):

|                                                     |  |           |         |      |   |         |  
|---------------------------------------------------- |  | --------- | ------- | ---- | - | ------- | -
|                                                     |  | March 31, |        
|                                                     |  |           |        
|                                                     |  | 2009      |         | 2008 |  
|                                                     |  |           |         |      |  
|                                                     |  |           |         |      |   |         |  
|Property and
 Equipment, net                         |  | $         | (4,521  | )    | $ | (3,837  | )
|Goodwill                                             |  |           | (2,894  | )    |   | (2,524  | )
|Other                                                |  |           | 36      |      |   | 50      |  
|Net
 operating loss                                  |  |           | 35,101  |      |   | 27,268  |  
|Research and
 development credit                     |  |           | 190     |      |   | 190     |  
|                                                     |  |           |         |      |   |         |  
|                                                     |  |           | 27,912  |      |   | 21,147  |  
|Valuation
 allowance                                 |  |           | (28,465 | )    |   | (21,919 | )
|                                                     |  |           |         |      |   |         |  
|Net
 long-term deferred income tax asset (liability) |  | $         | (553    | )    | $ | (772    | )
|                                                     |  |           |         |      |   |         |  

At March 31,
2009, the Company has net operating loss carry forwards of approximately $90
million to offset taxable income through the year 2029. Realization of the
benefit of the carry forward losses depends on earning sufficient taxable
income before expiration of loss carry forwards. The utilization of the net
operating loss carry forwards may also be limited as a result of change of
ownership provision under section 382 of the Internal Revenue Services Code.
At March 31, 2009 and 2008, the Company has established a valuation allowance
that offsets the deferred tax assets.

Note 9. Related Party Transactions

During fiscal
2009 and 2008 the Company paid approximately $248,000 and $152,000,
respectively in fees to Tectura Corporation (Tectura) for certain consulting
services related to the customization and management of the Companys
accounting systems. Funds controlled by FirstMark Capital hold more than 10% of
the equity securities of Tectura and Gerald A. Poch, Non-executive Chairman of
the Board of the Company, is a director of Tectura.

During fiscal
2009 and 2008 the Company paid approximately $1,000,000 and $1,200,000,
respectively in fees to Savvis, Inc. (Savvis) for certain technology and data
center services. Members of the Constellation Group or funds affiliated with
them held, during fiscal 2009 and 2008, more than 10% of the preferred equity
securities of Savvis and Clifford Friedman, who is a member of Constellation
Ventures Management II, LLC and a senior managing director of Bear Stearns
Asset Management Inc., was a director of Savvis.

F-22

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Note 10. Commitments and Contingencies

Lease Commitments

The Company
leases 21 locations for its administrative and operational functions under
operating leases expiring at various dates through 2016. Certain leases are
subject to escalation based on the Companys share of increases in operating
expenses for the locations. In addition, the Company leases equipment, software
and vehicles used in operations under both operating and capital leases.

Future annual
minimum lease payments including estimated escalation amounts under
non-cancelable operating and capital leases as of March 31, 2009 are as follows
(in thousands):

|                       |  |       |        |           |   |         |  |   |     | 
|---------------------- |  | ----- | ------ | --------- | - | ------- |  | - | --- | 
|                       |  | Total |        | Operating |   | Capital | 
|                       |  |       |        |           |   |         | 
|                       |  |       |        |           |   |         |  |   |     | 
|Year Ending
 March 31, |  |       |        |           |   |         |  |   |     | 
|2010                   |  | $     | 2,924  |           | $ | 2,811   |  | $ | 113 | 
|2011                   |  |       | 2,559  |           |   | 2,553   |  |   | 6   | 
|2012                   |  |       | 1,595  |           |   | 1,595   |  |   |    | 
|2013                   |  |       | 1,266  |           |   | 1,266   |  |   |    | 
|2014                   |  |       | 739    |           |   | 739     |  |   |    | 
|Thereafter             |  |       | 1,635  |           |   | 1,635   |  |   |    | 
|                       |  |       |        |           |   |         |  |   |     | 
|                       |  | $     | 10,718 |           | $ | 10,599  |  | $ | 119 | 
|                       |  |       |        |           |   |         |  |   |     | 

Rental expense
for operating leases including amounts from non-cancelable leases approximated
$2.9 million and $3.2 million for the years ended March 31, 2009 and 2008,
respectively.

Legal Proceedings

From time to
time, in the normal course of business, various claims are made against the
Company. Except for the proceedings described below, there are no material
proceedings to which the Company is a party.

On January 22,
2009, the parties entered into a Confidential Settlement Agreement and Release
of Claims (Mhanna Confidential Settlement) with the plaintiff in the lawsuit
styled Amanda Mhanna v. MTM Technologies, Inc, et al., filed on December 4,
2007 in the Superior Court of the State of California. The plaintiff, a former
Company employee, alleged discrimination, harassment, retaliation and other
causes of action against the defendants, and sought an unstated amount of
compensatory and punitive damages, attorneys fees, and costs. Under the terms
of the Mhanna Confidential Settlement all claims against Company and the
individual defendant have been dismissed with prejudice and without admission
of liability or wrongdoing.

On May 18,
2009, the parties entered into a Confidential Settlement Agreement and Release
of Claims (Patel Confidential Settlement) with the plaintiff in the lawsuit
styled Sonal Patel v. MTM Technologies, Inc, et al., filed on March 14, 2008 in
the Superior Court of the State of California. The plaintiff, a former Company
employee, alleged hostile work environment, harassment, and intentional
infliction of emotional distress against the defendants and sought an unstated
amount of compensatory and punitive damages, attorneys fees, and costs. Under
the terms of the Patel Confidential Settlement all claims against Company and
the individual defendant have been dismissed with prejudice and without
admission of liability or wrongdoing.

As permitted
under New York law, the Company has agreements under which it indemnifies its
officers, directors and certain employees for certain events or occurrences
while the officer or director is or was serving at the Companys request in
such capacity. The maximum potential amount of future payments the Company
could be required to make under these indemnification agreements is unlimited.
The Company has a director and officer insurance policy that limits its
exposure and enables it to recover a portion of any future amounts paid. Given
the insurance coverage in effect, the Company believes the estimated fair value
of these indemnification agreements is minimal. The Company has no liabilities
recorded for these agreements as of March 31, 2009.

The Company is
a party to other various claims and legal actions arising in the ordinary
course of its business. The Company believes that the ultimate outcome of these
matters would not have a material adverse impact on the Companys financial
condition or the results of its operations.

F-23

---



MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)

Note 11. Segment Information

The Company
currently operates only within the United States. Substantially, all of the
Companys revenue generating operations have similar economic characteristics,
including the nature of the products and services sold; the type and class of
clients for products and services; the methods used to deliver products and
services and regulatory environments.

Note 12. Subsequent Events

NEBF Guarantee

On May 29,
2009, the Company received a $1,900,000 advance from CDF under the Credit Facilities
Agreement. As a condition of such advance, CDF required NEBF to enter into a
Limited Guarantee for the benefit of CDF, whereby NEBF guaranteed the repayment
obligations of the $1,900,000 advance to the Company (the NEBF Guarantee).

Letter of Credit Agreement

On June 11,
2009, the Company entered into a Letter of Credit Commitment and Reimbursement
Agreement with NEBF, CP Investment Management, FirstMark and Constellation
(collectively, the L/C Guarantors) and CP Investment Management, as Investment
Manager for the L/C Guarantors (the L/C Agreement). As a condition of CDF
continuing to make advances under the Credit Facilities Agreement, CDF required
that one or more of the L/C Guarantors provide letters of credit in the
aggregate amount of $8,500,000 to provide credit support and additional
collateral to secure the Companies obligations under the CDF Credit Facilities
Agreement. The terms of the L/C Agreement provide that the letters of credit
shall expire no later than May 31, 2010.

The Company is
obligated to reimburse the L/C Guarantors for any drawing made on a letter of
credit immediately following any payment made by the issuing bank of such
letter of credit. The Company is required to pay a drawing fee equal to the
amount required to provide the L/C Guarantors with a 15% rate of return on
drawings made on the letters of credit. Additionally, in the event of a Change
of Control, Event of Default or Liquidity Event (as such terms are defined in
the L/C Agreement), the Company is required to pay to the L/C Guarantors a
Success Fee payable in cash in the amount of $34,000,000.

To secure the
repayment obligations of the Company under the L/C Agreement (including the
obligation to pay the Success Fee), the Company has granted to CP Investment Management,
as Investment Manager, a security interest in: (i) all of the Companies
rights, title and interest in and to certain property of the Company pursuant
to a Security Agreement between the Company and the L/C Guarantors; (ii)
certain trademarks of the Company pursuant to an Intellectual Property Security
Agreement between the Company and the L/C Guarantors; and (iii) 100% of the
capital stock of the Company pursuant to a Stock Pledge Agreement between the
Company and the L/C Guarantors.

FirstMark and Constellation Notes

The Company
entered into a Second Amendment to the Investors Notes (the Second Amendment)
on June 11, 2009. The Second Amendment (i) amends all of the Investors Notes to
extend the maturity dates to November 30, 2010 from December 15, 2009; (ii)
amends the FirstMark Notes to provide that the rights of FirstMark to the
payment of principal and interest with respect to such FirstMark Notes are
subordinated to the payment rights of CP Investment Manager, as Investment
Manager for the L/C Guarantors under the L/C Agreement; and (iii) amends the
Constellation Notes to provide that the rights of Constellation to the payment
of principal and interest with respect to such Constellation Notes are
subordinated to the payment rights of CP Investment Manager, as Investment
Manager for the L/C Guarantors under the L/C Agreement.

Credit Facilities Agreement

On June 2,
2009 and June 11, 2009, the Company entered into, respectively, the Eighth and
Ninth Amendments to the Credit Facilities Agreement with CDF. The Eighth
Amendment provides for, among other things, (a) an acknowledgement of the NEBF
Guarantee; (b) the waiver by CDF of the Companies existing defaults as of June
2, 2009 under the Credit Facilities Agreement; (c) the termination of all existing
Commitments and replacement with new Facilities comprised of a $15,000,000
Revolving Loan Facility and a $15,000,000 Floorplan Loan Facility, with the
aggregate limit of such Facilities not to exceed $25,000,000; and (d)
amendments to certain definitions and the elimination of most financial
covenants, including Maximum Total Funded Indebtedness to EBITDA, Minimum
EBITDA and the Minimum Liquidation Multiple. The Ninth Amendment provides for,
among other things, (a) consent to the incurrence by the Company of the
indebtedness provided for in the L/C Agreement, (b) amendments relating to the
L/C Agreement, (c) consent to the sale by the Company of its facilities
business, (d) a change in the maturity date of the Revolving Loan Facility
under the Credit Facilities Agreement to March 31, 2010 from August 21, 2009,
and (e) amendments to certain definitions including the computation of the
Borrowing Base and (f) amendments to representations and warranties.

On June 29,
2009 CDF consented to certain extensions to the compliance provisions under the
Credit Facilities Agreement to July 14, 2009 and agreed to modify certain other
qualification provisions related to the issuance of the 2009 annual financial
statements.

F-24

---



CP/NEBF Credit Agreement

On June 2,
2009 and June 11, 2009, the Company entered into Amendments No. 8 and 9,
respectively, to the CP/NEBF Credit Agreement with CP Investment Management, as
Investment Manager and NEBF, as Lender. Amendment No. 8 provides for, among
other things, (a) the waiver by CP Investment Management and NEBF of the
Companies existing defaults as of June 2, 2009 under the terms of the CP/NEBF
Credit Agreement; (b) the Companies guarantee of reimbursement of payments
made by NEBF under the NEBF Guarantee; (c) setting the interest rate equal to
(i) 4.52% per annum for the term between the date of issuance and June 30,
2010, and (ii) 8.00% per annum thereafter; with (iii) the Current Cash Rate for
April 1, 2009 through June 30, 2010 reduced to 0% on an annualized basis, and
then the rate will increase to 8% per annum thereafter; (d) an amendment to the
definition of Senior Indebtedness and the elimination of all financial
covenants; and (e) the waiver by the Company of any claims it may have against
CP Investment Management and NEBF existing or occurring on or prior to the date
of Amendment No. 8. Amendment No. 9 provides for, among other things, (a)
consent to the incurrence by the Company of the indebtedness provided for in
the L/C Agreement, (b) amendments relating to the L/C Agreement, (c) consent to
the sale by the Company of its facilities business; and (d) amendments to
certain definitions and rights of CP Investment Management and NEBF.

The Eighth
Amendment and Amendment No. 8 were intended to provide the MTM with bridge financing
until the Ninth Amendment and Amendment No. 9 could be finalized.

Any term not
otherwise defined in this discussion has the meaning ascribed to such term in
the respective agreement or amendment thereto.

Going Dark

On July 13, 2009, the Companys Board of Directors voted to voluntarily deregister MTMs common stock under the Exchange Act
and become a non-reporting company.  In connection therewith, the Board of Directors approved the filing of Post-Effective Amendments
to the Companys previously filed Forms S-3 and S-8 to deregister all shares unsold to date pursuant to such forms, and, after the
filing of this Form 10-K, to file with the SEC a Form 15, Notice of Termination of Registration and Suspension of Duty to File, to
terminate its reporting obligations under the Exchange Act. Once the Company files the Form 15, its obligation to file reports and
other information under the Exchange Act, such as Forms 10-K, 10-Q and 8-K, will be suspended immediately. The deregistration of the
Companys common stock under the Exchange Act will become effective 90 days after the date on which the Form 15 is filed.  The
Company is eligible to deregister under the Exchange Act because its common stock is held by fewer than 300 shareholders of record.

F-25

---



SIGNATURES

Pursuant to
the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this annual report to be signed on
its behalf by the undersigned, thereunto duly authorized.

|                      |                         |                                      
|--------------------- | ----------------------- | -------------------------------------
|                      | MTM
 TECHNOLOGIES, INC.
|                      |                         |                                      
|Dated: July
 14, 2009 | By:                     | /S/ STEVEN STRINGER                  
|                      |                         |                                      
|                      |                         | Steven Stringer                      
|                      |                         | President and Chief Executive Officer

Pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, this annual report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:

|                        |  |                                                    |  |               
|----------------------- |  | -------------------------------------------------- |  | --------------
|/S/ GERALD A. POCH      |  | Chairman of
 the Board of Directors                |  | July 14, 2009 
|                        |  |                                                    |  |               
|Gerald A. Poch          |  |                                                    |  |               
|                        |  |                                                    |  |               
|/S/ STEVEN STRINGER     |  | President
 and Chief Executive Officer             |  | July 14, 2009 
|                        |  | (Principal
 Executive Officer)                     |  |               
|Steven Stringer         |  | (Principal
 Financial and Accounting Officer)      |  |               
|                        |  |                                                    |  |               
|                        |  | Senior Vice
 President and Chief Financial Officer |  | July    , 2009
|                        |  |                                                    |  |               
|J.W. Braukman III       |  |                                                    |  |               
|                        |  |                                                    |  |               
|/S/ KEITH B. HALL       |  | Director                                           |  | July 14, 2009 
|                        |  |                                                    |  |               
|Keith B. Hall           |  |                                                    |  |               
|                        |  |                                                    |  |               
|/S/ WILLIAM LERNER      |  | Director                                           |  | July 14, 2009 
|                        |  |                                                    |  |               
|William Lerner          |  |                                                    |  |               
|                        |  |                                                    |  |               
|/S/ ALVIN E. NASHMAN    |  | Director                                           |  | July 14, 2009 
|                        |  |                                                    |  |               
|Alvin E. Nashman        |  |                                                    |  |               
|                        |  |                                                    |  |               
|/S/ STERLING PHILLIPS   |  | Director                                           |  | July 14, 2009 
|                        |  |                                                    |  |               
|Sterling Phillips       |  |                                                    |  |               
|                        |  |                                                    |  |               
|/S/ ARNOLD J. WASSERMAN |  | Director                                           |  | July 14, 2009 
|                        |  |                                                    |  |               
|Arnold J. Wasserman     |  |                                                    |  |               
|                        |  |                                                    |  |               
|/S/ THOMAS WASSERMAN    |  | Director                                           |  | July 14, 2009 
|                        |  |                                                    |  |               
|Thomas Wasserman        |  |                                                    |  |               

---



MTM TECHNOLOGIES, INC.

ANNUAL REPORT ON FORM 10-K
Fiscal Year Ended March 31, 2009

EXHIBIT INDEX

|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |             | 
|--------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | 
|Exhibit
 Number |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Description | 
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |             | 
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.1             |  | Asset
 Purchase Agreement, dated September 17, 2004 among Network Catalyst, Inc.,
 William Corbin, Rocci J. Della Maggiore and MTM Technologies, Inc.
 [Incorporated by reference to Exhibit 10.1 to the registrants Current Report
 on Form 8-K (Date of Report: September 16, 2004), filed with the Securities
 and Exchange Commission on September 22, 2004.]                                                                                                                                                                                         
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.2             |  | Asset
 Purchase Agreement, dated December 1, 2004, among Vector ESP, Inc., Vector ESP
 Management, Inc. and Vector Global Services, Inc. and MTM Technologies, Inc.
 [Incorporated by reference to Exhibit 2.1 to the registrants Current Report
 on Form 8-K (Date of Report: December 7, 2004), filed with the Securities and
 Exchange Commission on December 13, 2004.]                                                                                                                                                                               
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.3             |  | Stock
 Purchase Agreement, dated January 27, 2005, among Info Systems, Inc., Mark
 Stellini, Emidio F. Stellini, Jr., Jay Foggy, Richard Roux, Jennifer McKenzie
 and MTM Technologies, Inc. [Incorporated by reference to Exhibit 2.1 to the
 registrants Current Report on Form 8-K (Date of Report: January 26, 2005)
 filed with the Securities and Exchange Commission on February 1, 2005.]                                                                                                                                                         
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.4             |  | Merger
 Agreement, dated August 16, 2005, among NEXL, Inc., MTM Technologies
 (Massachusetts), LLC, MTM Technologies, Inc. and Clifford L. Rucker
 [Incorporated by reference to Exhibit 2.1 to the registrants Current Report
 on Form 8-K (Date of Report: August 15, 2005), filed with the Securities and
 Exchange Commission on August 19, 2005.]                                                                                                                                                                                                    
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3.1             |  | Fifth
 Restated Certificate of Incorporation dated March 5, 2009 [Incorporated by
 reference to Exhibit 3.1 to the registrants Current Report on Form 8-K (Date
 of Report: March 3, 2009), filed with the Securities and Exchange Commission
 on March 6, 2009.]                                                                                                                                                                                                                                                                                         
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3.2             |  | Amended and
 Restated By-Laws. [Incorporated by reference to Exhibit 3.1 to the
 registrants Current Report on Form 8-K (Date of Report: August 5, 2004),
 filed with the Securities and Exchange Commission on August 13, 2004.]                                                                                                                                                                                                                                                                                                                         
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.1             |  | Purchase
 Agreement, dated January 29, 2004, among Micros-to-Mainframes, Inc., Pequot
 Private Equity Fund III, L.P. and Pequot Offshore Private Equity Partners
 III, L.P. [Incorporated by reference to Appendix A to the proxy statement
 contained as part of the registrants definitive Schedule 14A, filed with the
 Securities and Exchange Commission on April 15, 2004.]                                                                                                                                                                         
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.2             |  | Purchase
 Agreement, dated December 7, 2004, among MTM Technologies, Inc., Pequot
 Private Equity Fund III, L.P., Pequot Offshore Private Equity Partners III,
 L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC
 [Incorporated by reference to Exhibit 10.1 to the registrants Current Report
 on Form 8-K (Date of Report: December 7, 2004), filed with the Securities and
 Exchange Commission on December 13, 2004.]                          
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.3             |  | Amendment
 No. 1 to the Purchase Agreement, dated December 7, 2004, among MTM
 Technologies, Inc., Pequot Private Equity Fund III, L.P., Pequot Offshore
 Private Equity Partners III, L.P., Constellation Venture Capital II, L.P.,
 Constellation Venture Capital Offshore II, L.P., The BSC Employee Fund VI,
 L.P. and CVC II Partners, LLC [Incorporated by reference to Exhibit 4.3 to
 the registrants Quarterly Report on Form 8-K (Date of Report: December 31,
 2005), filed with the Securities and Exchange Commission on February 14,
 2006.]
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.4             |  | Amendment
 No. 2 to the Purchase Agreement, dated December 7, 2004, among MTM
 Technologies, Inc., Pequot Private Equity Fund III, L.P., Pequot Offshore
 Private Equity Partners III, L.P., Constellation Venture Capital II, L.P.,
 Constellation Venture Capital Offshore II, L.P., The BSC Employee Fund VI,
 L.P. and CVC II Partners, LLC [Incorporated by reference to Exhibit 10.1 to
 the registrants Current Report on Form 8-K (Date of Report: November 22,
 2005), filed with the Securities and Exchange Commission on November 29,
 2005.] 
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.5             |  | Waiver
 Letter dated December 9, 2005, by Pequot Private Equity Fund III, L.P., Pequot
 Offshore Private Equity Partners III, L.P., Constellation Venture Capital II,
 L.P., Constellation Venture Capital Offshore II, L.P., The BSC Employee Fund
 VI, L.P. and CVC Partners II, LLC [Incorporated by reference to Exhibit 99.7
 to the registrants Registration Statement on Form S-3, filed with the
 Securities and Exchange Commission on December 28, 2005.]                                                                                       
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.6             |  | Purchase
 Agreement, dated March 29, 2007, among MTM Technologies, Inc., Pequot Private
 Equity Fund III, L.P., Pequot Offshore Private Equity Partners III, L.P.,
 Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC
 [Incorporated by reference to Exhibit 10.1 to the registrants Current Report
 on Form 8-K (Date of Report: March 29, 2007), filed with the Securities and
 Exchange Commission on April 2, 2007.]                                  
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.7             |  | Purchase
 Agreement, dated May 24, 2007, among MTM Technologies, Inc., Pequot Private
 Equity Fund III, L.P., Pequot Offshore Private Equity Partners III, L.P.,
 Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC
 [Incorporated by reference to Exhibit 10.1 to the registrants Current Report
 on Form 8-K, (Date of Report: May 24, 2007), filed with the Securities and
 Exchange Commission on May 31, 2007.]                                      
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.8             |  | Purchase
 Agreement, dated July 25, 2007, among MTM Technologies, Inc., Pequot Private
 Equity Fund III, L.P., and Pequot Offshore Private Equity Partners III, L.P.
 [Incorporated by reference to Exhibit 10.1 to the registrants Current Report
 on Form 8-K (Date of Report: July 25, 2007), filed with the Securities and
 Exchange Commission on July 31, 2007.]                                                                                                                                                                                    

---



|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.9  |  | Amended and
 Restated Shareholders Agreement, dated August 1, 2005, among MTM
 Technologies, Inc., Steven Rothman, Howard Pavony, Pequot Private Equity Fund
 III, L.P., Pequot Offshore Private Equity Partners III, L.P., Constellation
 Venture Capital II, L.P., Constellation Venture Capital Offshore II, L.P.,
 The BSC Employee Fund VI, L.P. and CVC II Partners, LLC [Incorporated by
 reference to Exhibit 10.1 to the registrants Current Report on Form 8-K
 (Date of Report: August 1, 2005), filed with the Securities and Exchange
 Commission on August 4, 2005.]                                                                                                                        
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.10 |  | Amended and
 Restated Registration Rights Agreement, dated August 1, 2005, among MTM
 Technologies, Inc., Steven Rothman, Howard Pavony, Pequot Private Equity Fund
 III, L.P., Pequot Offshore Private Equity Partners III, L.P., Constellation
 Venture Capital II, L.P., Constellation Venture Capital Offshore II, L.P.,
 The BSC Employee Fund VI, L.P. and CVC II Partners, LLC [Incorporated by
 reference to Exhibit 10.2 to the registrants Current Report on Form 8-K
 (Date of Report: August 1, 2005), filed with the Securities and Exchange
 Commission on August 4, 2005.]                                                                                                                  
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.11 |  | Amendment
 No. 1 to the Amended and Restated Registration Rights Agreement, dated
 November 23, 2005, among MTM Technologies, Inc., Steven Rothman, Howard
 Pavony, Pequot Private Equity Fund III, L.P., Pequot Offshore Private Equity
 Partners III, L.P., Constellation Venture Capital II, L.P., Constellation
 Venture Capital Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II
 Partners, LLC [Incorporated by reference to Exhibit 10.3 to the registrants
 Current Report on Form 8-K (Date of Report: November 22, 2005), filed with
 the Securities and Exchange Commission on November 29, 2005.]                                                                                  
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.12 |  | Amendment
 No. 2 to the Amended and Restated Registration Rights Agreement, dated March
 29, 2007, among MTM Technologies, Inc., Steven Rothman, Howard Pavony, Pequot
 Private Equity Fund III, L.P., Pequot Offshore Private Equity Partners III,
 L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC
 [Incorporated by reference to Exhibit 10.3 to the registrants Current Report
 on Form 8-K (Date of Report: March 29, 2007), filed with the Securities and
 Exchange Commission on April 2, 2007.]                                                                                            
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.13 |  | Amendment
 No. 3 to the Amended and Restated Registration Rights Agreement, dated April
 9, 2007, among MTM Technologies, Inc., Steven Rothman, Howard Pavony, Pequot
 Private Equity Fund III, L.P., Pequot Offshore Private Equity Partners III,
 L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC
 [Incorporated by reference to Exhibit 10.1 to the registrants Current Report
 on Form 8-K (Date of Report: April 9, 2007), filed with the Securities and
 Exchange Commission on April 13, 2007.]                                                                                             
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.14 |  | Amendment
 No. 4 to the Amended and Restated Registration Rights Agreement, dated May
 24, 2007, among MTM Technologies, Inc., Steven Rothman, Howard Pavony, Pequot
 Private Equity Fund III, L.P., Pequot Offshore Private Equity Partners III,
 L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC
 [Incorporated by reference to Exhibit 10.3 to the registrants Current Report
 on Form 8-K (Date of Report: May 24, 2007), filed with the Securities and
 Exchange Commission on May 31, 2005.]                                                                                                 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.15 |  | Amendment
 No. 5 to the Amended and Restated Registration Rights Agreement, dated July 25,
 2007, among MTM Technologies, Inc., Steven Rothman, Howard Pavony, Pequot
 Private Equity Fund III, L.P., Pequot Offshore Private Equity Partners III,
 L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., The BSC Employee Fund VI, L.P. and CVC II Partners, LLC
 [Incorporated by reference to Exhibit 10.3 to the registrants Current Report
 on Form 8-K (Date of Report: July 25, 2007), filed with the Securities and
 Exchange Commission on July 31, 2007.]                                                                                              
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.16 |  | Amendment
 No. 6 to the Amended and Restated Registration Rights Agreement, dated
 February 13, 2009, among MTM Technologies, Inc., Steven Rothman, Howard
 Pavony, FirstMark III, L.P., FirstMark III Offshore Partners, L.P., as
 successors-in-interest to Pequot Private Equity Fund III, L.P., Pequot
 Offshore Private Equity Partners III, L.P., Constellation Venture Capital II,
 L.P., Constellation Venture Capital Offshore II, L.P., The BSC Employee Fund
 VI, L.P. and CVC II Partners, LLC [Incorporated by reference to Exhibit 10.1
 to the registrants Current Report on Form 8-K (Date of Report: March 3,
 2009), filed with the Securities and Exchange Commission on March 6, 2009.]
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.17 |  | Columbia
 Voting Agreement, dated November 4, 2005 [Incorporated by reference to Exhibit
 99.1 to the registrants Current Report on Form 8-K (Date of Report: November
 4, 2005), filed with the Securities and Exchange Commission on November 4,
 2005.]                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.18 |  | Series A-5
 Voting Agreement, dated November 23, 2005 [Incorporated by reference to Exhibit
 99.2 to the registrants Current Report on Form 8-K (Date of Report: November
 22, 2005), filed with the Securities and Exchange Commission on November 29,
 2005.]                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.19 |  | Form of the
 Series A-4 Warrant Certificate [Incorporated by reference to Exhibit 10.3 to
 the registrants Current Report on Form 8-K (Date of Report: December 7,
 2004), filed with the Securities and Exchange Commission on December 13,
 2004.]                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.20 |  | Form of the
 Series A-5 Warrant Certificate [Incorporated by reference to Exhibit 10.2 to
 the registrants Current Report on Form 8-K (Date of Report: November 22,
 2005), filed with the Securities and Exchange Commission on November 29,
 2005.]                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.21 |  | Warrant
 Certificate issued to National Electrical Benefit Fund [Incorporated by reference
 to Exhibit 10.5 to the registrants Current Report on Form 8-K (Date of
 Report: November 22, 2005), filed with the Securities and Exchange Commission
 on November 29, 2005.]                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.22 |  | Form of the
 Series A-6 Warrant Certificate [Incorporated by reference to Exhibit 10.2 to
 the registrants Current Report on Form 8-K (Date of Report: March 29, 2007),
 filed with the Securities and Exchange Commission on April 2, 2007.]                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.23 |  | Form of the
 Series A-7 Warrant Certificate [Incorporated by reference to Exhibit 10.2 to
 the registrants Current Report on Form 8-K (Date of Report: May 24, 2007),
 filed with the Securities and Exchange Commission on May 31, 2007.]                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.24 |  | Form of the
 Series A-8 Warrant Certificate [Incorporated by reference to Exhibit 10.2 to
 the registrants Current Report on Form 8-K, (Date of Report: July 25, 2007),
 filed with the Securities and Exchange Commission on July 31, 2007.]                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.25 |  | Warrant
 Certificate issued to National Electrical Benefit Fund [Incorporated by
 reference to Exhibit 10.6 to the registrants Current Report on Form 8-K
 (Date of Report: August 21, 2007), filed with the Securities and Exchange
 Commission on August 23, 2007.]                                                                                                                                                                                                                                                                                                                                                                                                                                      

---



|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.26 |  | Warrant
 Certificate, evidencing 343,705 warrants registered in the name of Pequot
 Private Equity Fund III, LLP [Incorporated by reference to Exhibit 10.3 of
 the registrants Current Report on Form 8-K (Date of Report: February 28,
 2008), filed with the Securities and Exchange Commission on March 3, 2008.]                                                                                                                                                                                                                                                                                                                                  
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.27 |  | Warrant
 Certificate, evidencing 48,452 warrants registered in the name of Pequot
 Offshore Private Equity Partners III, L.P. [Incorporated by reference to
 Exhibit 10.4 of the registrants Current Report on Form 8-K (Date of Report:
 February 28, 2008), filed with the Securities and Exchange Commission on
 March 3, 2008.]                                                                                                                                                                                                                                                                                                                    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.28 |  | Form of the
 June 11, 2008 Warrant Certificate [Incorporated by reference to Exhibit 10.5
 to the registrants Current Report on Form 8-K (Date of Report: June 11,
 2008), filed with the Securities and Exchange Commission on June 17, 2008.]                                                                                                                                                                                                                                                                                                                                                                                                        
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.29 |  | Form of the
 June 16, 2008 Warrant Certificate [Incorporated by reference to Exhibit 10.6
 to the registrants Current Report on Form 8-K (Date of Report: June 11,
 2008), filed with the Securities and Exchange Commission on June 17, 2008.]                                                                                                                                                                                                                                                                                                                                                                                                        
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.30 |  | Warrant
 Certificate, evidencing 120,889 warrants registered in the name FirstMark
 III, L.P. [Incorporated by reference to Exhibit 4.1 of the registrants
 Current Report on Form 8-K (Date of Report: February 11, 2009), filed with
 the Securities and Exchange Commission on February 18, 2009.]                                                                                                                                                                                                                                                                                                                                                  
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.31 |  | Warrant
 Certificate, evidencing 17,042 warrants registered in the name FirstMark III
 Offshore Partners, L.P. [Incorporated by reference to Exhibit 4.2 of the
 registrants Current Report on Form 8-K (Date of Report: February 11, 2009),
 filed with the Securities and Exchange Commission on February 18, 2009.]                                                                                                                                                                                                                                                                                                                                 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.1 |  | Credit
 Agreement, dated November 23, 2005, among MTM Technologies, Inc., MTM
 Technologies (California), Inc., MTM Technologies (Texas), Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as borrowers and Columbia Partners, LLC Investment Management
 as Investment Manager and National Electrical Benefit Fund as Lender
 [Incorporated by reference to Exhibit 10.4 to the registrants Current Report
 on Form 8-K (Date of Report: November 22, 2005), filed with the Securities
 and Exchange Commission on November 29, 2005.]                                                             
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.2 |  | Amendment
 No.1 dated July 31, 2007, to the Credit Agreement, dated November 23, 2005,
 among MTM Technologies, Inc., MTM Technologies (California), Inc., MTM
 Technologies (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as borrowers and Columbia
 Partners, L.L.C. Investment Management, as Investment Manager and National
 Electrical Benefit Fund, as Lender [Incorporated by reference to Exhibit 10.5
 to the registrants Quarterly Report on Form 10-Q for the quarter ended June
 30, 2007, filed with the Securities and Exchange Commission on August 13,
 2007.]           
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.3 |  | Amendment
 No.2 dated August 21, 2007, to the Credit Agreement, dated November 23, 2005,
 among MTM Technologies, Inc., MTM Technologies (California), Inc., MTM
 Technologies (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as borrowers and Columbia
 Partners, L.L.C. Investment Management, as Investment Manager and National
 Electrical Benefit Fund, as Lender [Incorporated by reference to Exhibit 10.2
 to the registrants Current Report on Form 8-K (Date of Report: August 21,
 2007), filed with the Securities and Exchange Commission on August 23, 2007.]               
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.4 |  | Amendment
 No.3 dated February 28, 2008, to the Credit Agreement, dated November 23,
 2005, among MTM Technologies, Inc., MTM Technologies (California), Inc., MTM
 Technologies (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as borrowers and Columbia
 Partners, L.L.C. Investment Management, as Investment Manager and National
 Electrical Benefit Fund, as Lender [Incorporated by reference to Exhibit 10.6
 to the registrants Current Report on Form 8-K (Date of Report: February 28,
 2008), filed with the Securities and Exchange Commission on March 3, 2008.]             
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.5 |  | Amendment
 No.4 dated June 11, 2008, to the Credit Agreement, dated November 23, 2005,
 among MTM Technologies, Inc., MTM Technologies (California), Inc., MTM
 Technologies (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as borrowers and Columbia
 Partners, L.L.C. Investment Management, as Investment Manager and National
 Electrical Benefit Fund, as Lender [Incorporated by reference to Exhibit
 10.15 to the registrants Current Report on Form 8-K (Date of Report: June
 11, 2008), filed with the Securities and Exchange Commission on June 17,
 2008.]                   
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.6 |  | Amendment
 No.5 dated June 17, 2008, to the Credit Agreement, dated November 23, 2005,
 among MTM Technologies, Inc., MTM Technologies (California), Inc., MTM
 Technologies (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as borrowers and Columbia
 Partners, L.L.C. Investment Management, as Investment Manager and National
 Electrical Benefit Fund, as Lender [Incorporated by reference to Exhibit
 10.16 to the registrants Current Report on Form 8-K (Date of Report: June
 11, 2008), filed with the Securities and Exchange Commission on June 17,
 2008.]                   
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.7 |  | Amendment No.6
 dated November 11, 2008, to the Credit Agreement, dated November 23, 2005,
 among MTM Technologies, Inc., MTM Technologies (California), Inc., MTM
 Technologies (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as borrowers and Columbia
 Partners, L.L.C. Investment Management, as Investment Manager and National
 Electrical Benefit Fund, as Lender [Incorporated by reference to Exhibit 10.1
 to the registrants Quarterly Report on Form 10-Q for the quarter ended
 September 30, 2008, filed with the Securities and Exchange Commission on
 November 14, 2008.]
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.8 |  | Amendment
 No.7 dated January 29, 2009, to the Credit Agreement, dated November 23,
 2005, among MTM Technologies, Inc., MTM Technologies (California), Inc., MTM
 Technologies (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as borrowers and Columbia
 Partners, L.L.C. Investment Management, as Investment Manager and National
 Electrical Benefit Fund, as Lender [Incorporated by reference to Exhibit 10.4
 to the registrants Current Report on Form 8-K (Date of Report: January 29,
 2009), filed with the Securities and Exchange Commission on February 4,
 2009.]           
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.9 |  | Amendment
 No.8 dated June 2, 2009, to the Credit Agreement, dated November 23, 2005,
 among MTM Technologies, Inc., MTM Technologies (California), Inc., MTM
 Technologies (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as borrowers and Columbia
 Partners, L.L.C. Investment Management, as Investment Manager and National
 Electrical Benefit Fund, as Lender [Incorporated by reference to Exhibit 10.2
 to the registrants Current Report on Form 8-K (Date of Report: June 1,
 2009), filed with the Securities and Exchange Commission on June 4, 2009.]                        

---



|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10 |  | Amendment
 No.9 dated June 11, 2009, to the Credit Agreement, dated November 23, 2005,
 among MTM Technologies, Inc., MTM Technologies (California), Inc., MTM
 Technologies (Texas), Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC, and Info Systems, Inc. as borrowers and Columbia
 Partners, L.L.C. Investment Management, as Investment Manager and National
 Electrical Benefit Fund, as Lender [Incorporated by reference to Exhibit 10.6
 to the registrants Current Report on Form 8-K (Date of Report: June 11,
 2009), filed with the Securities and Exchange Commission on June 17, 2009.]                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.11 |  | Subordination
 Agreement dated as of August 21, 2007, among GE Commercial Distribution
 Finance Corporation, and National Electrical Benefit Fund and Columbia
 Partners, L.L.C. Investment Management [Incorporated by reference to Exhibit
 10.3 to the registrants Current Report on Form 8-K (Date of Report: August
 21, 2007), filed with the Securities and Exchange Commission on August 23,
 2007.]                                                                                                                                                                                                                                                                                                                               
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.12 |  | Credit
 Facilities Agreement dated August 21, 2007 among MTM Technologies, Inc, MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc. as Borrowers, and GE Commercial Distribution Finance
 Corporation (CDF), as Administrative Agent, and CDF and the other lenders
 listed therein, as Lenders [Incorporated by reference to Exhibit 10.1 to the
 registrants Current Report on Form 8-K (Date of Report: August 21, 2007),
 filed with the Securities and Exchange Commission on August 23, 2007.]                                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.13 |  | First
 Amendment dated August 21, 2007 to Credit Facilities entered into as of
 August 21, 2007 among MTM Technologies, Inc, MTM Technologies (US), Inc., MTM
 Technologies (Massachusetts), LLC, and Info Systems, Inc., as Borrowers, and
 GE Commercial Distribution Finance Corporation as Administrative Agent and
 the sole lender [Incorporated by reference to Exhibit 10.2 to the
 registrants Quarterly Report on Form 10-Q for the quarter ended September
 30, 2007, filed with the Securities and Exchange Commission on November 14,
 2007].                                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.14 |  | Second
 Amendment dated February 4, 2008 to Credit Facilities entered into as of
 August 21, 2007 among MTM Technologies, Inc, MTM Technologies (US), Inc., MTM
 Technologies (Massachusetts), LLC, and Info Systems, Inc., as Borrowers, and
 GE Commercial Distribution Finance Corporation as Administrative Agent and
 the sole lender [Incorporated by reference to Exhibit 10.3 to the registrants
 Quarterly Report on Form 10-Q for the quarter ended December 31, 2007, filed
 with the Securities and Exchange Commission on November 14, 2008].                                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.15 |  | Third
 Amendment dated February 28, 2008 to Credit Facilities entered into as of
 August 21, 2007 among MTM Technologies, Inc, MTM Technologies (US), Inc., MTM
 Technologies (Massachusetts), LLC, and Info Systems, Inc., as Borrowers, and
 GE Commercial Distribution Finance Corporation as Administrative Agent and
 the sole lender [Incorporated by reference to Exhibit 10.5 to the
 registrants Current Report on Form 8-K (Date of Report: February 28, 2008),
 filed with the Securities and Exchange Commission on March 3, 2008.]                                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.16 |  | Fourth
 Amendment dated May 16, 2008 but effective as of May 1, 2008 to Credit
 Facilities entered into as of August 21, 2007 among MTM Technologies, Inc,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC, and Info
 Systems, Inc., as Borrowers, and GE Commercial Distribution Finance
 Corporation as Administrative Agent and the sole lender [Incorporated by
 reference to Exhibit 10.19 to the registrants Annual Report on Form 10-K for
 the fiscal year ended March 31, 2008, filed with the Securities and Exchange
 Commission on June 24, 2008].                                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.17 |  | Fifth
 Amendment dated June 16, 2008 to Credit Facilities entered into as of August
 21, 2007 among MTM Technologies, Inc, MTM Technologies (US), Inc., MTM
 Technologies (Massachusetts), LLC, and Info Systems, Inc., as Borrowers, and
 GE Commercial Distribution Finance Corporation as Administrative Agent and
 the sole lender [Incorporated by reference to Exhibit 10.13 to the
 registrants Current Report on Form 8-K (Date of Report: June 11, 2008),
 filed with the Securities and Exchange Commission on June 17, 2008.]                                                                                                                                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.18 |  | Sixth Amendment
 dated November 11, 2008 to Credit Facilities entered into as of August 21,
 2007 among MTM Technologies, Inc, MTM Technologies (US), Inc., MTM
 Technologies (Massachusetts), LLC, and Info Systems, Inc., as Borrowers, and
 GE Commercial Distribution Finance Corporation as Administrative Agent and
 the sole lender [Incorporated by reference to Exhibit 10.2 to the
 registrants Quarterly Report on Form 10-Q for the period ended September 30,
 2008, filed with the Securities and Exchange Commission on November 14,
 2008.]                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.19 |  | Seventh
 Amendment dated January 29, 2009 to Credit Facilities entered into as of
 August 21, 2007 among MTM Technologies, Inc, MTM Technologies (US), Inc., MTM
 Technologies (Massachusetts), LLC, and Info Systems, Inc., as Borrowers, and
 GE Commercial Distribution Finance Corporation as Administrative Agent and
 the sole lender [Incorporated by reference to Exhibit 10.3 to the
 registrants Current Report on Form 8-K (Date of Report: January 29, 2009),
 filed with the Securities and Exchange Commission on February 4, 2009.]                                                                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.20 |  | Eighth
 Amendment dated June 2, 2009 to Credit Facilities entered into as of August
 21, 2007 among MTM Technologies, Inc, MTM Technologies (US), Inc., MTM
 Technologies (Massachusetts), LLC, and Info Systems, Inc., as Borrowers, and
 GE Commercial Distribution Finance Corporation as Administrative Agent and
 the sole lender [Incorporated by reference to Exhibit 10.1 to the
 registrants Current Report on Form 8-K (Date of Report: June 1, 2009), filed
 with the Securities and Exchange Commission on June 4, 2009.]                                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.21 |  | Ninth
 Amendment dated June 11, 2009 to Credit Facilities entered into as of August
 21, 2007 among MTM Technologies, Inc, MTM Technologies (US), Inc., MTM
 Technologies (Massachusetts), LLC, and Info Systems, Inc., as Borrowers, and
 GE Commercial Distribution Finance Corporation as Administrative Agent and
 the sole lender [Incorporated by reference to Exhibit 10.5 to the
 registrants Current Report on Form 8-K (Date of Report: June 11, 2009), filed
 with the Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.22 |  | Consent to
 Credit Facilities Agreement dated June 16, 2008 among MTM Technologies, Inc.,
 MTM Technologies (US), Inc., MTM Technologies (Massachusetts), LLC and Info
 Systems, Inc., as borrowers and GE Commercial Distribution Finance
 Corporation as Administrative Agent and the sole lender [Incorporated by
 reference to Exhibit 10.14 to the registrants Current Report on Form 8-K
 (Date of Report: June 11, 2008), filed with the Securities and Exchange
 Commission on June 17, 2008.]                                                                                                                                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.23 |  | Letter of
 Credit Commitment and Repayment Agreement dated June 11, 2009 among MTM
 Technologies, Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC and Info Systems, Inc., as borrowers, and National
 Electrical Benefit Fund, FirstMark III L.P., FirstMark III Offshore Partners,
 L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., CVC II Partners LLC, BSC Employee Fund VI, L.P. and Columbia
 Partners, L.L.C. Investment Management as Investment Manager [Incorporated by
 reference to Exhibit 10.1 to the registrants Current Report on Form 8-K
 (Date of Report: June 11, 2009), filed with the Securities and Exchange
 Commission on June 17, 2009.]

---



|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.24 |  | Security
 Agreement dated June 11, 2009 by and among MTM Technologies, Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC and Info
 Systems, Inc., as borrowers, and Columbia Partners, L.L.C. Investment
 Management as Investment Manager, for the benefit of itself and National
 Electrical Benefit Fund, FirstMark III L.P., FirstMark III Offshore Partners,
 L.P., Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., CVC II Partners LLC, and the BSC Employee Fund VI, L.P.
 [Incorporated by reference to Exhibit 10.2 to the registrants Current Report
 on Form 8-K (Date of Report: June 11, 2009), filed with the Securities and
 Exchange Commission on June 17, 2009.]                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.25 |  | Intellectual
 Property Security Agreement dated June 11, 2009 by and among MTM
 Technologies, Inc., MTM Technologies (US), Inc., MTM Technologies
 (Massachusetts), LLC and Info Systems, Inc., as borrowers, and Columbia
 Partners, L.L.C. Investment Management as Investment Manager, for the benefit
 of itself and National Electrical Benefit Fund, FirstMark III L.P., FirstMark
 III Offshore Partners, L.P., Constellation Venture Capital II, L.P.,
 Constellation Venture Capital Offshore II, L.P., CVC II Partners LLC, and the
 BSC Employee Fund VI, L.P. [Incorporated by reference to Exhibit 10.3 to the
 registrants Current Report on Form 8-K (Date of Report: June 11, 2009),
 filed with the Securities and Exchange Commission on June 17, 2009.]
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.26 |  | Stock Pledge
 Agreement dated June 11, 2009 by and among MTM Technologies, Inc., MTM
 Technologies (US), Inc., MTM Technologies (Massachusetts), LLC and Info
 Systems, Inc., as borrowers, and Columbia Partners, L.L.C. Investment
 Management as Investment Manager, for the benefit of itself and National Electrical
 Benefit Fund, FirstMark III L.P., FirstMark III Offshore Partners, L.P.,
 Constellation Venture Capital II, L.P., Constellation Venture Capital
 Offshore II, L.P., CVC II Partners LLC, and the BSC Employee Fund VI, L.P.
 [Incorporated by reference to Exhibit 10.4 to the registrants Current Report
 on Form 8-K (Date of Report: June 11, 2009), filed with the Securities and
 Exchange Commission on June 17, 2009.]                  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.27 |  | Third
 Amended and Restated Subordinated Promissory Note dated June 11, 2009 issued
 by MTM Technologies, Inc. in favor of FirstMark III, L.P. in the amount of
 $2,191,123 [Incorporated by reference to Exhibit 10.8 of the registrants
 Current Report on Form 8-K (Date of Report: June 11, 2009), filed with the
 Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.28 |  | Amended and
 Restated Subordinated Promissory Note dated June 11, 2009 issued by MTM
 Technologies, Inc. in favor of FirstMark III, L.P. in the amount of
 $2,410,235 [Incorporated by reference to Exhibit 10.9 of the registrants
 Current Report on Form 8-K (Date of Report: June 11, 2009), filed with the
 Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.29 |  | Amended and
 Restated Subordinated Promissory Note dated June 11, 2009 issued by MTM
 Technologies, Inc. in favor of FirstMark III, L.P. in the amount of $219,112
 [Incorporated by reference to Exhibit 10.10 of the registrants Current
 Report on Form 8-K (Date of Report: June 11, 2009), filed with the Securities
 and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.30 |  | Second
 Amended and Restated Subordinated Promissory Note dated June 11, 2009 issued
 by MTM Technologies, Inc. in favor of FirstMark III, L.P. in the amount of
 $876,449 [Incorporated by reference to Exhibit 10.11 of the registrants
 Current Report on Form 8-K (Date of Report: June 11, 2009), filed with the
 Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.31 |  | Third
 Amended and Restated Subordinated Promissory Note dated June 11, 2009 issued
 by MTM Technologies, Inc. in favor of FirstMark III Offshore Partners, L.P.
 in the amount of $308,877 [Incorporated by reference to Exhibit 10.12 of the
 registrants Current Report on Form 8-K (Date of Report: June 11, 2009),
 filed with the Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.32 |  | Amended and
 Restated Subordinated Promissory Note dated June 11, 2009 issued by MTM
 Technologies, Inc. in favor of FirstMark III Offshore Partners, L.P. in the
 amount of $339,765 [Incorporated by reference to Exhibit 10.13 of the
 registrants Current Report on Form 8-K (Date of Report: June 11, 2009),
 filed with the Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.33 |  | Amended and
 Restated Subordinated Promissory Note dated June 11, 2009 issued by MTM
 Technologies, Inc. in favor of FirstMark III Offshore Partners, L.P. in the
 amount of $30,888 [Incorporated by reference to Exhibit 10.14 of the
 registrants Current Report on Form 8-K (Date of Report: June 11, 2009),
 filed with the Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.34 |  | Second
 Amended and Restated Subordinated Promissory Note dated June 11, 2009 issued
 by MTM Technologies, Inc. in favor of FirstMark III Offshore Partners, L.P.
 in the amount of $123,551 [Incorporated by reference to Exhibit 10.15 of the
 registrants Current Report on Form 8-K (Date of Report: June 11, 2009),
 filed with the Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.35 |  | Amended and
 Restated Subordinated Promissory Note dated June 11, 2009 issued by MTM
 Technologies, Inc. in favor of Constellation Venture Capital II, L.P. in the
 amount of $249,617.80 [Incorporated by reference to Exhibit 10.16 of the
 registrants Current Report on Form 8-K (Date of Report: June 11, 2009),
 filed with the Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                               
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.36 |  | Amended and
 Restated Subordinated Promissory Note dated June 11, 2009 issued by MTM
 Technologies, Inc. in favor of Constellation Venture Capital Offshore II,
 L.P. in the amount of $132,834.65 [Incorporated by reference to Exhibit 10.17
 of the registrants Current Report on Form 8-K (Date of Report: June 11,
 2009), filed with the Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.37 |  | Amended and
 Restated Subordinated Promissory Note dated June 11, 2009 issued by MTM
 Technologies, Inc. in favor of The BSC Employee Fund VI, L.P. in the amount
 of $111,313.95 [Incorporated by reference to Exhibit 10.18 of the
 registrants Current Report on Form 8-K (Date of Report: June 11, 2009),
 filed with the Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.38 |  | Amended and
 Restated Subordinated Promissory Note dated June 11, 2009 issued by MTM
 Technologies, Inc. in favor of CVC Partners II, LLC in the amount of
 $6,233.60 [Incorporated by reference to Exhibit 10.19 of the registrants
 Current Report on Form 8-K (Date of Report: June 11, 2009), filed with the
 Securities and Exchange Commission on June 17, 2009.]                                                                                                                                                                                                                                                                                                                                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.39 |  | Micros-to-Mainframes,
 Inc. 1993 Employee Stock Option Plan [Incorporated by reference to Exhibit
 10.2 to Amendment Number 2 to the registrants Registration Statement on Form
 S-2, filed with the Securities and Exchange Commission on July 14, 1993.]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.40 |  | Micros-to-Mainframes,
 Inc. 1996 Stock Option Plan [Incorporated by reference to Exhibit 4.1 to the
 registrants Quarterly Report on Form 10-Q for the quarter ended September
 30, 1998, filed with the Securities and Exchange Commission on November 2,
 1998.]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---



|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.41 |  | Micros-to-Mainframes,
 Inc. 1998 Stock Option Plan [Incorporated by reference to Exhibit 4.2 to the
 registrants Quarterly Report on Form 10-Q for the quarter ended September
 30, 1998, filed with the Securities and Exchange Commission on November 2,
 1998.]                                                                                                                                                                               
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.42 |  | Micros-to-Mainframes,
 Inc. 2000 Long-Term Performance Plan [Incorporated by reference to Exhibit 99.B1
 to the Companys definitive Schedule 14A, filed with the Securities and
 Exchange Commission on September 25, 2000.]                                                                                                                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.43 |  | Micros-to-Mainframes,
 Inc. 2002 Long-Term Performance Plan [Incorporated by reference to Exhibit
 10.2 to the registrants Registration Statement on Form S-8, filed with the
 Securities and Exchange Commission on March 4, 2005.]                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.44 |  | Micros-to-Mainframes,
 Inc. 2004 Equity Incentive Plan [Incorporated by reference to Appendix L to
 the proxy statement contained as part of the Companys definitive Schedule
 14A, filed with the Securities and Exchange Commission on April 15, 2004.]                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.45 |  | Form of
 Employee Stock Option Agreement [Incorporated by reference to Exhibit 10.4 to
 the registrants Quarterly Report on Form 10-Q for the Quarter ended
 September 30, 2004, filed with the Securities and Exchange Commission on
 November 15, 2004.]                                                                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.46 |  | MTM
 Technologies, Inc. Associates Stock Purchase Plan [Incorporated by reference
 to Exhibit 10.1 to the registrants Registration Statement on Form S-8, filed
 with the Securities and Exchange Commission on July 1, 2005.]                                                                                                                                                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.47 |  | Form of
 Employee Restricted Stock Unit Agreement [Incorporated by reference to
 Exhibit 10.19 to the registrants Annual Report on Form 10-K/A (Date of Report:
 March 31, 2006), filed with the Securities and Exchange Commission on
 September 12, 2006.]                                                                                                                                                                                     
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.48 |  | Form of
 Executive Stock Option Agreement [Incorporated by reference to Exhibit 10.20
 to the registrants Annual Report on Form 10-K/A (Date of Report: March 31,
 2006), filed with the Securities and Exchange Commission on September 12,
 2006.]                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.49 |  | Form of
 Executive Restricted Stock Unit Agreement [Incorporated by reference to
 Exhibit 10.21 to the registrants Annual Report on Form 10-K/A (Date of
 Report: March 31, 2006), filed with the Securities and Exchange Commission on
 September 12, 2006.]                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.50 |  | Employment
 Agreement, dated August 10, 2006 between MTM Technologies, Inc. and Steven
 Stringer [Incorporated by reference to Exhibit 10.1 to the registrants
 Current Report on Form 8-K (Date of Report: August 10, 2006), filed with the
 Securities and Exchange Commission on August 14, 2006.]                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.51 |  | Letter
 Agreement, dated September 28, 2006 between MTM Technologies, Inc. and J.W.
 Braukman, III [Incorporated by reference to Exhibit 10.1 to the registrants
 Current Report on Form 8-K (Date of Report: September 28, 2006), filed with
 the Securities and Exchange Commission on October 3, 2006.]                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.52 |  | Lease
 Agreement, dated August 15, 2005 between 1200 High Ridge Company, LLC and MTM
 Technologies, Inc. [Incorporated by reference to Exhibit 10.1 to the
 registrants Current Report on Form 8-K (Date of Report: August 15, 2005),
 filed with the Securities and Exchange Commission on August 19, 2005.]                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|14.1  |  | Code of
 Ethics [Incorporated by reference to Exhibit 14.1 to the registrants Annual
 Report on Form 10-K for the fiscal year ended March 31, 2008, filed with the
 Securities and Exchange Commission on June 24, 2008].                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|16.1  |  | Letter dated
 November 15, 2007 from Goldstein Golub Kessler LLP (GGK) to MTM
 Technologies, Inc. notifying MTM that certain of the partners of GGK became
 partners of McGladrey & Pullen, LLP in a limited asset purchase agreement
 [Incorporated by reference to Exhibit 16.1 to the registrants Current Report
 on Form 8-K (Date of Report: November 15, 2007), filed with the Securities
 and Exchange Commission on November 15, 2007.]
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|16.2  |  | Goldstein
 Golub Kessler LLP Letter to the Securities and Exchange Commission dated
 November 15, 2007 [Incorporated by reference to Exhibit 16.2 to the
 registrants Current Report on Form 8-K (Date of Report: November 15, 2007),
 filed with the Securities and Exchange Commission on November 15, 2007.]                                                                                                                                  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|21.1  |  | Subsidiaries
 of MTM Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                                           
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|31.1  |  | Certification
 pursuant to Exchange Act Rule 13a-14(a) of Steven Stringer, as PEO and PFO                                                                                                                                                                                                                                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|32.1  |  | Certification
 pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 of Steven
 Stringer, as PEO and PFO                                                                                                                                                                                                                                                                                                                                     

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