UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549






FORM
10-K





(Mark
One)





xANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2008


OR




oTRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM _______ TO _______





Commission
File Number: 0-25356








AZZURRA
HOLDING CORPORATION





(Exact
Name of Registrant as Specified in its Charter)








DELAWARE
              
              77-0289371(State
      or Other Jurisdiction of
              
              (IRS
      Employer Identification Number)Incorporation
      or Organization)







6080
CENTRE DRIVE, SUITE 600, LOS ANGELES, CALIFORNIA 90045


(310)
242-5699


(Address
and Telephone Number of Principal Executive Offices)





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





Securities
Registered Pursuant to Section 12(g) of the Act:


COMMON
STOCK, $0.0001 PAR VALUE








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





Check
whether the issuer (1) 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





Check if
there is no 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. Yes o No
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 definition 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
              oNon-Accelerated
      Filer
                (Do
      not check if a smaller reporting company)
              o
              
              Smaller
      Reporting Company
              x





Indicate
by check mark whether the registrant is a shell company (as defined in rule
12b-2 of the Exchange Act).  Yes x   Noo




The
aggregate market value of voting stock held by non-affiliates of registrant,
based upon the closing price of $0.001 for shares of the registrant’s common
stock on June 30, 2008, the last business day of the registrant’s most recently
completed second fiscal quarter as reported in the National Quotation Bureau’s
“pink sheets.”, was approximately $100.00.  In calculating such
aggregate market value, shares of Common Stock held by each officer, director
and holder of 5% or more of the outstanding Common Stock (including shares with
respect to which a holder has the right to acquire beneficial ownership within
60 days) were excluded because such persons may be deemed to be
affiliates.  This determination of affiliate status is not necessarily
a conclusive determination for other purposes.




Indicate
by check mark whether the registrant has filed all documents and reports requird
to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a
court.  Yes x No o





The
number of shares of Common Stock outstanding as of April 7, 2009 was
100,000.





TABLEOF CONTENTS





PART I
              PAGEItem 1. Description of Business
              1Item 1A. Risk Factors
              1Item 1B. Unresolved Staff Comments
              3Item 2. Properties
              3Item 3. Legal Proceedings
              3Item 4 Submission of Matters to a Vote of Security
      Holders
              3PART IIItem 5. Market for Common Equity, Related Stockholder Matters
      and Issuer Purchases of Equity Securities
              4Item 6. Selected Financial Data
              4Item 7.  Management’s Discussion and Analysis of
      Financial Condition and Results of Operations
              5Item 7A.  Quantitative and Qualitative Disclosures
      about Market Risk
              7Item 8.  Financial Statements and Supplementary
      Data
              8Item 9. Changes in and Disagreements with Accountants on
      Accounting and Financial Disclosures
              8Item 9A(T).  Controls and
      Procedures
              8Item 9B. Other Information
              9PART IIIItem 10. Directors, Executive Officers and Corporate
      Governance
              9Item 11. Executive Compensation
              11Item 12. Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholder Matters
              12Item 13. Certain Relationships and Related
      Transactions
              12Item 14. Principal Accountant Fees and
      Services
              12PART IVItem 15. Exhibits and Reports on Form
    8-K
              13FINANCIAL STATEMENTSReport of Cherry, Bekaert & Holland,
      L.L.P.
              14Consolidated Balance Sheets at December 31, 2008 and
      2007
              15Consolidated Statements of Operations
              16Consolidated Statements of Stockholders' Equity
      (Deficit)
              17Consolidated Statements of Cash Flows
              18Notes to Consolidated Financial
      Statements
              19SIGNATURE PAGE
              24INDEX TO EXHIBITS
              25
 -i-
 Table of Contents




The
following information contains forward-looking statements, which involve risks
and uncertainties. Forward-looking statements are characterized by words such as
"plan," "expect," "believe," "intend," "would", "will" and similar words. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth under, "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Certain Risk Factors Affecting Azzurra Holding
Corporation," and elsewhere in this Annual Report on Form 10-K.





PART 1





ITEM1.
            DESCRIPTION
      OF BUSINESS




Company
Overview





Azzurra
Holding Corporation, formerly, Wave Wireless Corporation (“Azzurra”, the
“Company,” “we,” “us,” “our”) was incorporated in 1991 as a Delaware
Corporation.  Our executive offices are located at 6080 Centre Drive,
Suite 600, Los Angeles, California 90045, and our telephone number is
310-242-5699.





On
October 31, 2006, Azzurra filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for
the District of Delaware (“Court”).  During the pendency of the bankruptcy
proceedings, and with Court approval, the Company sold substantially all of its
assets prior to December 31, 2006.  The Company’s remaining operating
assets were sold in August 2007, subsequent to the confirmation by the Court on
June 14, 2007 of a Joint Plan of Reorganization.  Because of the sale
of all of our operating businesses, the Company has no ongoing
operations.   The Board has determined to maintain the Company as a
public shell corporation, which will seek suitable business combination
opportunities.  The Board believes that a business combination with an
operating company has the potential to create greater value for the Company’s
stockholders than a liquidation or similar distribution.





During
the year ended December 31, 2008, the Company was a non-operating shell company
and its business operations were limited to sustaining the public shell, and
winding down the affairs of the Company’s wholly-owned subsidiary, WaveRider
Communications Corporation.





Employees




As of
December 31, 2008, we did not have any full- or part-time
employees.  Our President and Chief Executive Officer, who also serves
as our Chief Financial Officer, works part-time as a consultant to the
Company.





ITEM1A.                                RISK
FACTORS





An
investment in our common stock is subject to many risks. You should carefully
consider the risks described below, together with all of the other information
included in this Annual Report on Form 10-K, including the financial statements
and the related notes, before you decide whether to invest in our common stock.
Our business, operating results and financial condition could be harmed by any
of the following risks. The trading price of our common stock could decline due
to any of these risks, and you could lose all or part of your
investment.


-1-
 Table of Contents





THE
COMPANY LACKS OPERATIONS AND HAS LOSSES WHICH ARE EXPECTED TO CONTINUE INTO THE
FUTURE.





As a
result of the sale of substantially all of the Company’s operating assets, the
Company has no operations from which to derive revenue.  The Company’s
operating history is not a useful measure upon which an evaluation of its future
success or failure can be made.  The Company’s ability to achieve and
maintain profitability and positive cash flow is dependent upon its ability to
generate revenues, and the ability to raise the capital necessary to acquire an
operating entity or engage in a merger or other transaction with an operating
entity.





The
Company is a “shell” corporation as that is defined under Rule 12b-2.
 Based upon current plans, the Company expects to incur operating losses in
future periods.  The Company cannot guarantee that it will be successful in
generating revenues in the future.





IF
THE COMPANY DOES NOT SUCCESSFULLY CONSUMMATE A BUSINESS COMBINATION, THE COMPANY
WILL REQUIRE ADDITIONAL FUNDS





For the
Company to once again engage in operations, it will either need to raise
additional funds through public or private debt or sale of equity, or it will
need to acquire or enter into a merger transaction with an operating entity. The
Company is currently seeking to engage in such a merger with an operating
entity, but there is no guarantee that this merger will reach a successful
completion.   If the merger fails and the Company seeks additional
financing, this financing may not be available when needed.  Even if this
financing is available, it may be on terms that the Company deems unacceptable
or are materially adverse to its interests with respect to dilution of book
value, dividend preference, liquidation preference, or other terms.





THE
COMPANY IS NOT AN OPERATING COMPANY AND DOES NOT HAVE ANY SIGNIFICANT
CAPITAL.





Because
the Company does not have significant capital, it must limit its operations and
there is little chance that operations will begin at any time soon, as a result
of such limited capital, unless the Company obtains additional funding to
acquire an operating entity or enters into a merger transaction with an
operating entity.





BECAUSE
SDS CAPITAL SPC, LTD. GROUP OWNS MORE THAN 50% OF THE COMPANY’S OUTSTANDING
COMMON SHARES AND WILL BE ABLE TO DECIDE WHO WILL BE OUR DIRECTORS, YOU MAY NOT
BE ABLE TO ELECT ANY DIRECTORS.





SDS
Capital Group SPC, Ltd. (“SDS”) owns 80,000 common shares, constituting 80% of
the Company’s outstanding common stock, and controls the Company.  As a
result, unless the Company issues more shares to persons other than SDS or SDS
sells some of its shares, SDS will be able to elect all of the Company’s
directors and control its operations.  If the Company does enter into an
acquisition or merger transaction, the Company may issue a significant number of
shares in connection with that transaction.  This could result in a
reduction in value to the common stock you own because of the ineffective voting
power. SDS’ majority ownership could adversely affect the value of your shares
and prevent the Company from undergoing a change of control in the
future.





THE
COMPANY HAS NOT PAID DIVIDENDS AND NONE ARE ANTICIPATED.





To date,
the Company has paid no cash dividends on its common stock.  For the
foreseeable future, the Company expects that earnings generated from the
Company’s operations, if any, will be retained for use in its business and not
to pay dividends.


-2-
 Table of Contents





"PENNY
STOCK" RULES MAY MAKE BUYING OR SELLING THE COMPANY’S COMMON STOCK
DIFFICULT.





Trading
in the Company’s securities is subject to the “Penny Stock” Rules.





The SEC
has adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. These rules require that any broker-dealer who recommends
our securities to persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability determination for
the purchaser and receive the purchaser’s written agreement to execute the
transaction. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated with trading
in the penny stock market. In addition, broker-dealers must disclose commissions
payable to both the broker- dealer and the registered representative and current
quotations for the securities they offer. The additional burdens imposed upon
broker-dealers by such requirements may discourage broker-dealers from effecting
transactions in our securities, which could severely limit the market price and
liquidity of our securities. Broker-dealers who sell penny stocks to certain
types of investors are required to comply with the Commission’s regulations
concerning the transfer of penny stock. These regulations require broker-dealers
to:




·
            Make
      a suitability determination prior to selling a penny stock to the
      purchaser;





·
            Receive
      the purchaser’s written consent to the transaction;
  and





·
            Provide
      certain written disclosures to the
purchaser.





These
requirements may restrict the ability of broker-dealers to sell the Company’s
common stock and may affect your ability to resell our common
stock.





ITEM1B.        UNRESOLVED STAFF
COMMENTS





Not
Applicable.





ITEM2.
            DESCRIPTION
      OF PROPERTY




We do not
own any real property.  The Company’s corporate headquarters are
located in the offices of our President and Chief Executive Officer, located in
Los Angeles, California.  The Company is not obligated under the terms
of the lease, which continues through April 2009.





ITEM 3.
            LEGAL
      PROCEEDINGS


None.





ITEM4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS


None.


-3-
 Table of Contents





PARTII





ITEM5.
            MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
      EQUITY SECURITIES


There is
currently no established public trading market for the Company’s common stock,
which is quoted in the National Quotation Bureau’s “pink sheets.”  The
following table sets forth the range of high and low sale prices of our common
stock, as quoted in the National Quotation Bureau’s “pink
sheets”.  These quotations reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not necessarily represent actual
transactions.





On April
9, there were three stockholders of record of our common stock.


PRICE
      RANGE OF COMMON STOCKHIGH
                
                
                LOWYear
      Ended December 31, 2008:First
      Quarter
                
                $
                0.
      001
                
                
                $
                0.
      001Second
      Quarter
                
                
                0.
      001
                
                
                
                0.
      001Third
      Quarter
                
                
                0.
      001
                
                
                
                0.
      001Fourth
      Quarter
                
                
                0.
      001
                
                
                
                0.
      001Year
      Ended December 31, 2007:First
      Quarter
                
                $
                0.001
                
                
                $
                0.001Second
      Quarter
                
                
                0.001
                
                
                
                0.001Third
      Quarter
                
                
                0.001
                
                
                
                0.001Fourth
      Quarter
                
                
                0.001
                
                
                
                0.001




DIVIDENDS





To date,
we have not paid any cash dividends on shares of our common stock. We do not
anticipate that funds will be legally available to make the required dividend
payments in the foreseeable future, and such obligations therefore will accrue
in arrears until such time as we have legally available funds to make the
required distributions.





EQUITY
COMPENSATION PLANS





The
Company does not currently have any equity compensation plans for which equity
securities are authorized to be issued.





ITEM6.                      SELECTED
FINANCIAL DATA





Not
Applicable.


-4-
 Table of Contents




ITEM7.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS


Management's
discussion and analysis of financial condition and results of operations
contains forward-looking statements, which involve risks and uncertainties. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth in the section entitled "Risk Factors" beginning on Page _ of this Annual
Report on Form 10-K.





See also
the Notes to the Consolidated Financial Statements in the accompanying financial
statements starting at F-2.





RESULTS
OF OPERATIONS (in Thousands)





On June
28, 2007, the Joint Plan was declared effective.  Pursuant to Fresh
Start Accounting, the Company will discuss in the results of operation below,
the results for the year ended December 31, 2008, and the six months ended
December 31, 2007, as the Successor Company and the results for the six months
ended June 30, 2007, as the Predecessor Company.





During
the six months ended December 31, 2007, the Company sold all of its remaining
assets and ceased operations.





Sales





During
the year ended December 31, 2008 (Successor) and the six months ended December
31, 2007 (Successor) the Company had no sales.  During the six months
ended June 30, 2007 (Predecessor), the Company’s sales are included in
Discontinued Operations due to discontinuation of all of its product
lines.  See “Discontinued Operations” discussion
below.  Because the Company has ceased all operations, and is
currently a “shell” company, no sales are expected in the future, pending the
acquisition of an operating business.





Gross
Profit (Loss)





During
year ended December 31, 2008 (Successor) and the six months ended December 31,
2007 (Successor), the Company had no gross profit (loss) as it did not have
sales during the periods.  During  the six months ended June
30, 2007 (Predecessor), the Company’s gross profits are included in Discontinued
Operations, due to the discontinuation of its product lines.  See
“Discontinued Operations” discussion below.




General
and Administrative




During
the year ended December 31, 2008 (Successor), and the six months ended December
31, 2007 (Predecessor), general and administrative expenses were approximately
$131,000 and $272,000, respectively.  During the six months ended June
30, 2007 (Predecessor), general and administrative expenses were approximately
$601,000.  General and administrative expenses during the period
reported consist principally of legal, auditing, and related costs associated
with the preparation of the Company’s financial statements, the administration
of the bankruptcy proceeding, and related costs and expenses.  The
decrease in general and administrative expenses during the 2008 periods relates
primarily to the discontinuation of operations and reduction of general and
administrative support.  Ongoing general and administrative costs
relate to public company compliance, preparation of and filing of tax returns,
and related costs and expenses.


-5-
 Table of Contents





Interest
Expense





During
the six months ended June 30, 2007 (Predecessor), interest expense was $738,000
related to outstanding debt which was retired in the Joint
Plan.





Gain
on Settlement of Accrued Liabilities





For the
six months ended June 30, 2007, we recorded gains on the settlement of accrued
liabilities of approximately $602,000.  These gains are the result of
negotiations with vendors to reduce amounts owed and settle claims outside of
those discharged as a result of the confirmation of the Joint Plan.





Other
Income





During
the year ended December 31, 2008 (Successor), the six months ended December 31,
2007 (Successor) and six months ended June 30, 2007 (Predecessor), other income
consisted of the following:





SUCCESSOR
                    
                    
                    SUCCESSOR
                    
                    
                    PREDECESSORYear
      Ended December 31, 2008
                    
                    
                    Three
      Months Ended December 31, 2007
                    
                    
                    Six
      Months Ended June 30, 2007Collection
      of amounts previously considered bad debts
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    61,000Interest
      income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    36,000Proceeds
      from the sale of office equipment, with no book value
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    13,000Other
      income (expense), net
                    
                    
                    9,000
                    
                    
                    
                    39,000
                    
                    
                    
                    37,000Total
      other income, net
                    
                    $
                    9,000
                    
                    
                    $
                    39,000
                    
                    
                    $
                    147,000





Bankruptcy
Expense





During
the year ended December 31, 2008, the Company did not incur any material
expenses related to the Joint Plan.  During the six months ended
December 31, 2007 (Predecessor), the Company incurred expenses related to the
Joint Plan of $116,000.  During the six months ended June 30, 2007
(Predecessor), the Company incurred expenses related to the Joint Plan of
$255,000.  The Company has no material ongoing expenses related to the
Joint Plan.




Gain
(Loss) from Discontinued Operations





During
the year ended December 31, 2008, the Company had no losses from discontinued
operations.





During
the six months ended December 31, 2007 and the and six months ended June 30,
2007, gain (loss) on discontinued operations primarily relates to the sale of
the Company’s SPEEDLAN product line on August 10, 2007.  During the
six months ended June 30, 2007, the Company received $438,000 on the settlement
of a royalty agreement with WaveRider Australia, which was sold during
2006.


-6-
 Table of Contents





Following
is a summary of discontinued operations for the six months ended December 31,
2007 (Successor) and six months ended June 30, 2007
(Predecessor):


SUCCESSOR
                      
                      PREDECESSORSix
      Months Ended
                      
                      Six
      Months EndedDecember
      31,
                      
                      June
      30,2007
                      
                      2007SPEEDLAN
      Revenues
                      
                      $
                      11
                      
                      
                      $
                      344SPEEDLAN
      Cost of Sales
                      
                      
                      33
                      
                      
                      
                      91SPEEDLAN
      Gross Profit
                      
                      
                      (22
                      )
                      
                      
                      253Proceeds
      from the sale of Wave Rider
                      
                      
                      -
                      
                      
                      
                      438Gain
      (Loss) from discontinued operations
                      
                      $
                      (22
                      )
                      
                      $
                      691




LIQUIDITY
AND CAPITAL RESOURCES





At
December 31, 2008, the Company had cash of approximately $66,000, compared to
approximately $139,000 in cash at December 31, 2007.  During the
twelve month period ended December 31, 2008, overall cash decreased by
approximately $73,000, primarily due to losses incurred in the period and
payments of accounts payable, partially offset by the recovery of $70,000,
representing cash balances recovered from a former subsidiary of WaveRider,
representing cash balances maintained in a closed account owned by WaveRider,
and recovery of $11,000 from certain escrows maintained by the Company in
connection with the administration of the Joint Plan, and collection of certain
accounts receivable previously deemed uncollectable.  These receipts
have been accounted for as an increase in Additional Paid-in Capital in the
accompanying condensed consolidated financial statement.





The
Company currently has no operations and intends to locate and combine with an
existing, privately-held company that is profitable or which, in management's
view, has growth potential, irrespective of the industry in which it is
engaged.  However, the Company does not intend to combine with a
private company, which may be deemed to be an investment company subject to the
Investment Company Act of 1940. A combination may be structured as a merger,
consolidation, exchange of the Company's common stock for stock or assets or any
other form which will result in the combined enterprise's becoming a
publicly-held corporation.





Pending
negotiation and consummation of a combination, the Company anticipates that it
will have, aside from carrying on its search for a combination partner, no
business activities, and, thus, will have no source of revenue.  To
continue as a going concern, pending consummation of a transaction, the Company
intends to either seek additional equity or debt financing.  No
assurances can be given that such equity or debt financing will be available to
the Company nor can there be any assurance that a combination transaction will
be consummated.  Should the Company need to incur any significant
liabilities prior to a combination transaction, including those associated with
the current minimal level of general and administrative expenses, it may not be
able to satisfy those liabilities in the event it was unable to obtain
additional equity or debt financing.





ITEM7A.                                QUANTITATIVE
AND QUALITATIVE DISLOSURES ABOUT MARKET RISK





Not
Applicable.


-7-
 Table of Contents





ITEM 8.
            FINANCIAL
      STATEMENTS




The
information required hereunder in this Annual Report on Form 10-K is set forth
in the financial statements and the notes thereto beginning on Page
__.




ITEM9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURES


None.





ITEM9A(T).
            CONTROLS
      AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934, as amended. The Company's internal control over
financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles in the United States of America. The Company's management assessed
the effectiveness of our internal control over financial reporting as of
December 31, 2008. In making the assessment, our management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") in Internal Control-Integrated
Framework.Based upon this assessment, management identified the
following material weakness in the Company's internal control over financial
reporting.




A
material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the Company's annual or quarterly financial
statements will not be prevented or detected on a timely basis.





Following
the filing of the Bankruptcy Petition on October 31, 2006, the Company
terminated substantially all of its accounting personnel.  In
addition, we changed our accounting software systems.  These factors
resulted in the delayed preparation and timely filing of our financial
statements.  Each of these factors contributed to a material weakness
in our entity level control environment.  While the Company is now
current in its reporting with the Securities and Exchange Commission, the
weaknesses in our entity level control environment arguably
persist.





All
internal control systems have inherent limitations, including the possibility of
circumvention and overriding the control. Accordingly, even effective internal
control can provide only reasonable assurance as to the reliability of financial
statement preparation and presentation. Further, because of changes in
conditions, the effectiveness of internal control may vary over
time.





Changes in Internal Control Over Financial
Reporting




As
discussed above, as a result of the filing of the Bankruptcy Petition on October
31, 2006, we terminated the employment of a substantial portion of our
accounting staff, including our Chief Financial Officer, and changed our
accounting software systems.  Each of these factors resulted in a
substantial change in our internal controls over our financial reporting, and
resulted in a material weakness in our entity level control
environment.


-8-
 Table of Contents





Our
management has discussed the material weakness described above with our Audit
Committee. In an effort to remediate the identified material weakness, we have
initiated and/or undertaken the following actions:




Management
has retained, and will continue to retain, additional personnel with technical
knowledge, experience, and training in the application of generally accepted
accounting principles commensurate with our financial reporting and
U.S. GAAP requirements.




Where
necessary, we will supplement personnel with qualified external
advisors.





ITEM9B.
            OTHER
      INFORMATION




None.





PARTIII





ITEM10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


Directors and Executive
Officers





The
following table sets forth information concerning our executive officers and
directors as of April 9, 2009:





Name
                        
                        Age
                        
                        PositionDaniel
      W. Rumsey
                        
                        48
                        
                        President,
      Chief Executive Officer, Chief Financial Officer and Chairman of the
      Board of DirectorsMark
      Schaftlein
                        
                        47
                        
                        DirectorRichard
      Reiss
                        
                        52
                        
                        Director





Daniel W.
Rumsey.   Mr. Rumsey was appointed Chief Restructuring
Officer on March 10, 2005, and to the Board of Directors on May 13, 2005. Mr.
Rumsey resigned from his position as Chief Restructuring Officer and was
reappointed in October 2006 upon the filing of the Bankruptcy
Petition.  Mr. Rumsey is currently serving as a consultant to the
Company in the capacity of President, Chief Executive Officer and Chief
Financial Officer.  Prior to his appointment as Chief Restructuring
Officer in March 2005, he served as the Company’s Vice President, Chief
Financial Officer and General Counsel. Mr. Rumsey currently is the President and
Founder of SEC Connect, LLC, an EDGAR filing agent, and is Managing Partner of
the Disclosure Law Group.  He also serves as a director of World
Racing Group, Inc. and XELR8 Holdings, Inc.  Mr. Rumsey received his
J.D. from the University of Denver College of Law in 1985, and his B.S. from the
University of Denver in 1983.




Richard Reiss.Mr. Reiss has
served as director of the Company since March 2005. Mr. Reiss is currently a
director of Glowpoint, Inc., where he has served since May 2000. He served as
the Chief Executive Officer of Glowpoint from May 2000 to April 2002, and as
President from May 2000 to April 2002. Mr. Reiss served as Chairman of the Board
of Directors, President and Chief Executive Officer of All Communications
Corporation from its formation in 1991 until the formation of Glowpoint's
predecessor pursuant to a merger of All Communications Corporation and View
Tech, Inc. in May 2000.


-9-
 Table of Contents





Mark
Schaftlein.Mr. Schaftlein has served as a director of Azzurra
Holding Corporation since June 28, 2007.  Mr. Schaftlein is currently
Chief Executive Officer of Epicus Communications Group, Inc., and is President
of GlobalNet Corporation and Pacificap Entertainment Holdings,
Inc.  Mr. Schaftlein is also a consultant with Ocean Avenue Advisors,
focusing on corporate finance, restructuring and management
consulting.  At Ocean Avenue Advisors, he concentrates on small and
microcap companies with an emphasis on telecommunications, technology and
finance.  Mr. Schaftlein is a member of the Board of Directors of
GlobalNet Corporation, Pacificap Entertainment Holdings, Inc. and Epicus
Communications Group, Inc.





BOARD
COMMITTEES AND MEETINGS





Each
member of the Board of Directors serves for annual terms or until his successor
is elected.  The Board of Directors currently has an Audit
Committee.





Audit Committee. The Audit
Committee currently consists of two directors, Messrs. Reiss and Schaftlein. The
Audit Committee is primarily responsible for approving the services performed by
the Company’s independent registered public accounting firm and reviewing their
reports regarding the Company’s accounting practices and systems of internal
accounting controls. The Board of Directors has determined that Mr. Reiss is a
financial expert in that Mr. Reiss has (i) an understanding of generally
accepted accounting principles and financial statements; (ii) has the ability to
assess the general application of such principles in connection with the
accounting for estimates, accruals and reserves; (iii) has experience preparing,
auditing, analyzing or evaluating financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable to
the breadth and complexity of issues that can reasonably be expected to be
raised by the Company’s financial statements, or experience actively supervising
one or more persons engaged in such activities; and (iv) an understanding of
internal control over financial reporting; and an understanding of audit
committee functions.




CODE
OF ETHICS





The
Company has adopted a Code of Ethics that applies to the Company’s Chief
Executive Officer and Chief Financial Officer, or persons performing similar
functions. A copy of the Company’s Code of Ethics is filed as Exhibit 14.1
hereto. The Company will provide to the public, free of charge, a copy of the
code of ethics upon request in writing to the Company’s Chief Executive Officer
at Azzurra Holding Corporation at 6080 Centre Drive, Suite 600, Los Angeles,
California 90045.





SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE





Section
16(a) of the Exchange Act requires the Company’s directors and executive
officers, and persons who beneficially own more than 10% of the Common Stock, to
file with the SEC initial reports of beneficial ownership ("Form 3") and reports
of changes in beneficial ownership of Common Stock and other equity securities
of the Company ("Form 4"). Officers, directors and greater than 10% stockholders
of the Company are required by SEC rules to furnish to the Company copies of all
Section 16(a) reports that they file. To the Company’s knowledge, based solely
on a review of the copies of such reports furnished to the Company and written
representations that no other reports were required, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with for fiscal 2008.


-10-
 Table of Contents





ITEM11.
            EXECUTIVE
      COMPENSATION




SUMMARY
COMPENSATION TABLE





The
following table sets forth certain information about the compensation paid or
accrued during the fiscal year converted by this Annual Report to our Chief
Executive Officer and our Chief Financial Officer, along with our former Chief
Executive Officers, and Chief Financial Officer.




Name
      and Principal Position
                                Year
                                Salary
                                  ($)
                                Bonus
                                  ($)
                                All
      Other
                                  Compensation
                                  ($)
                                Total
                                  ($)Daniel
      W. Rumsey(1)
                                  Chief
      Executive Officer and Chief Financial Officer
                                2008
                                
                                
                                15,000(2)
                                15,0002007
                                110,638
                                20,000
                                45,000(3)
                                175,6382006
                                191,442
                                -
                                15,000(3)
                                206,442





(1)                   Mr.
Rumsey’s employment was terminated on April 1, 2006 as a result of the WaveRider
Merger; however, Mr. Rumsey continued to receive severance payments under his
employment agreement until September 2007.  Mr. Rumsey assumed the
position of Chief Restructuring Officer upon the filing of the Bankruptcy
Petition.  Mr. Rumsey is currently a consultant to the Company,
serving in the capacity as President and Chief Executive Officer, and Chief
Financial Officer.





(2)                   Mr.
Rumsey was paid $15,000 for consulting services to the Company during
2008.  In addition, the Company reimburses Mr. Rumsey $1,000 per month
for expenses incurred in maintaining the books and records of the Company, among
other expenses.





(3)                   From
November 2006 to January 1, 2007, WaveRider paid Mr. Rumsey $7,500 per month for
administrative services relating to the liquidation of WaveRider, and paid Mr.
Rumsey $45,000 for his services to WaveRider during 2007.





DIRECTOR
COMPENSATION





During
2007, Richard Reiss was paid $16,500 in consideration for his service to the
Board of Directors.  No other director received any consideration for
service to the Board during 2008 or 2007, due to the deteriorating financial
condition of the Company.  In is not intended that non-employee
directors will receive cash compensation for their service as directors in the
immediate future.





EMPLOYMENT
CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND CHANGE OF CONTROL
AGREEMENTS





None.


-11-
 Table of Contents





ITEM12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS




Under the
terms and conditions of the Joint Plan, as confirmed by the Court, holders of
our equity interests, including common stock and preferred stock, as of the
effective date of the Joint Plan, June 28, 2007, have terminated.  The
following table presents information concerning the beneficial ownership of all
shares of common stock of the Company issued in connection with the Joint Plan,
as of December 1, 2007.  The Company has no other shareholders at
December 1, 2008.





Beneficial
ownership is determined under the rules of the Securities and Exchange
Commission and generally includes voting or investment power over securities.
Except in cases where community property laws apply or as indicated in the
footnotes to this table, the Company believes that each stockholder identified
in the table possesses sole voting and investment power over all shares of
common stock shown as being beneficially owned by that stockholder. The
percentage of beneficial ownership is based on 100,000 shares of common stock
outstanding as of December 31, 2008.





Name
      and Address of Beneficial Owner
                  
                  Common
                    Stock
                  
                  
                  Percentage
      of
                    Shares
      OutstandingSDS
      Capital Group SPC, Ltd.
                    113
      Church Street
                    P.O.
      Box 134GT
                    Grand
      Canyon, Cayman Islands
                  
                  
                  80,000
                  
                  
                  
                  80
                  %CGA
      Resources LLC
                    c/o
      Cass G. Adelman
                    30
      E. 72nd Street, 5th Floor
                    New
      York, NY 10021
                  
                  
                  10,000
                  
                  
                  
                  10
                  %Smithfield
      Fiduciary LLC
                    c/o
      Highbridge Capital Management
                    1350
      Avenue of the Americas
                    33rd
      Floor
                    New
      York, NY 10019
                  
                  
                  10,000
                  
                  
                  
                  10
                  %







ITEM13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE


Not
applicable.





ITEM14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES




AUDIT
FEES





Cherry,
Bekaert & Holland, L.L.P. ("Cherry Bekaert") has been retained by the Audit
Committee as the independent registered public accounting firm to audit our
financial statements for the fiscal year ending December 31, 2008. The aggregate
fees Cherry Bekaert billed us in 2008 for audit services, including for review
of our interim financial statements, post-report review procedures and the
issuance of consents in connection with the filing of registration statements,
was approximately $29,000.


-12-
 Table of Contents





TAX
FEES





The
Company engaged Cherry Bekaert for preparation of the Company’s 2007 Federal and
state tax returns in 2008, for which Cherry Bekaert billed us
$4,500.  Cherry Bekaert did not perform any other non-audit related
services in 2008.





AUDIT
COMMITTEE PRE-APPROVAL POLICIES





The Audit
Committee has adopted an Audit Committee Charter, which sets forth the
procedures and policies pursuant to which services to be performed by the
independent auditor are to be pre-approved. Under the Charter, proposed services
either may be pre-approved by agreeing to a framework with descriptions of
allowable services with the Audit Committee ("general pre-approval"), or require
the specific pre-approval of the Audit Committee. Unless a type of service has
received general pre-approval, it requires specific pre-approval by the Audit
Committee if it is to be provided by the independent registered public
accounting firm.





The Audit
Committee will annually review and pre-approve the services that may be provided
by the independent auditor that are subject to general pre-approval. Under the
Charter, the Audit Committee may delegate pre-approval authority one or more
designated members of the Audit Committee the authority to pre-approve audit and
permissible non-audit services, provided such pre-approval decision is presented
to the full Audit Committee at its scheduled meetings. The member to whom such
authority is delegated must report, for informational purposes only, any
pre-approval decisions to the Audit Committee at its next
meeting.




PART
IV




ITEM15.
            EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES




We have
listed the exhibits filed as part of this Annual Report on Form 10-K in the
accompanying exhibit index, which follows the signature page to this Annual
Report. The exhibits marked with an asterisk (*) are included with and filed as
part of this Annual Report on Form 10-K.


-13-
 Table of Contents





REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM




The Board
of Directors


Azzurra
Holding Corporation





We have
audited the accompanying consolidated balance sheets of Azzurra Holding
Corporation and subsidiaries (the “Company”) as of December 31, 2008 and 2007,
and the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for each of the years then ended. These consolidated
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated 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
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, 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 consolidated financial position of Azzurra Holding
Corporation and subsidiaries as of December 31, 2008 and 2007, and the
consolidated results of their operations and their cash flows for each of the
years then ended in conformity with accounting principles generally accepted in
the United States of America.





As more
fully discussed in Notes 2 and 3, the Company reorganized under Chapter 11 of
the U.S. Bankruptcy Code under a plan of reorganization that was confirmed by
the Bankruptcy Court on June 28, 2007.  Additionally, during 2007 the
Company discontinued its remaining operations.  As a result, the
Company is exploring opportunities to effect an acquisition of the Company by
merger, exchange or issuance of securities.  The discontinuance of all
the Company's remaining operations in 2007 raises substantial doubt
about the Company’s ability to continue as a going concern.  The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.






/s/ Cherry, Bekaert & Holland,
      L.L.P.Tampa,
      Florida
                April
      9, 2009




-14-
 Table of Contents


PART I - FINANCIAL INFORMATION





ITEM 1.  FINANCIAL
STATEMENTS





AZZURRA
HOLDING CORPORATION AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(In
thousands)





December
      31,
                      2008
                    
                    
                    December
      31,
                      2007ASSETSCurrent
      assets:Cash and cash
      equivalents
                    
                    $
                    66
                    
                    
                    $
                    139Accounts
    receivable
                    
                    
                    -
                    
                    
                    
                    9Total current
    assets
                    
                    
                    66
                    
                    
                    
                    148Total assets
                    
                    $
                    66
                    
                    
                    $
                    148LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts payable
                    
                    
                    31
                    
                    
                    
                    56Other accrued
      liabilities
                    
                    
                    6
                    
                    
                    
                    22Total current liabilities and
      total liabilities
                    
                    
                    37
                    
                    
                    
                    78Commitments
      and contingencies
                    
                    
                    -
                    
                    
                    
                    -Stockholders'
      equity:Common
      stock, par value $0.01 per share; 250,000 shares authorized; 100,000
      shares issued and outstanding
                    
                    
                    1
                    
                    
                    
                    1Additional
      paid-in capital
                    
                    
                    521
                    
                    
                    
                    440Accumulated
      deficit
                    
                    
                    (493
                    )
                    
                    
                    (371
                    )Total stockholders'
      equity
                    
                    
                    29
                    
                    
                    
                    70Total
      liabilities and stockholders' equity
                    
                    $
                    66
                    
                    
                    $
                    148





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


-15-
 Table of Contents


AZZURRA
HOLDING CORPORATION AND SUBSIDIARIES


CONSOLIDATEDSTATEMENTS OF OPERATIONS


(In
thousands, except per share data)





SUCCESSOR
                                          
                                          
                                          PREDECESSORYear
      Ended
                                            December
      31,
                                            2008
                                          
                                          
                                          Six
      Months Ended
                                            December
      31,
                                            2007
                                          
                                          
                                          Six
      Months Ended
                                            June
      30,
                                            2007(1)Sales
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -Cost
      of sales
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Gross
      profit (loss)
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -OPERATING
      EXPENSES:General
      and administrative
                                          
                                          
                                          131
                                          
                                          
                                          
                                          272
                                          
                                          
                                          
                                          601Total
      operating expenses
                                          
                                          
                                          131
                                          
                                          
                                          
                                          272
                                          
                                          
                                          
                                          601LOSS
      FROM OPERATIONS:
                                          
                                          
                                          (131
                                          )
                                          
                                          
                                          (272
                                          )
                                          
                                          
                                          (601
                                          )OTHER
      INCOME (EXPENSE):Interest
      expense
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (738
                                          )Gain
      on settlement of accrued liabilities
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          602Other
      income, net
                                          
                                          
                                          9
                                          
                                          
                                          
                                          39
                                          
                                          
                                          
                                          147LOSS
      FROM CONTINUING OPERATIONS BEFORE REORGANIZATION ITEMS
                                          
                                          
                                          (122
                                          )
                                          
                                          
                                          (233
                                          )
                                          
                                          
                                          (590
                                          )Bankruptcy
      expenses
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (116
                                          )
                                          
                                          
                                          (255
                                          )Gain
      on settlement of liabilities subject to compromise and
      recapitalization
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          6,207Gain
      from fresh start adjustments
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          243INCOME
      (LOSS) FROM CONTINUTING OPERATIONS
                                          
                                          
                                          (122
                                          )
                                          
                                          
                                          (349
                                          )
                                          
                                          
                                          5,605Gain
      (loss) from discontinued operations
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (22
                                          )
                                          
                                          
                                          691Net
      income (loss)
                                          
                                          
                                          (122
                                          )
                                          
                                          
                                          (371
                                          )
                                          
                                          
                                          6,296Basic
      and diluted loss per common shareIncome
      (loss) from continuing operations
                                          
                                          $
                                          (1.22
                                          )
                                          
                                          $
                                          (3.49
                                          )
                                          
                                          $
                                          0.08Income
      (loss) from discontinued operations
                                          
                                          $
                                          (0.00
                                          )
                                          
                                          $
                                          (0.22
                                          )
                                          
                                          $
                                          0.00Basic
      and diluted loss per common share
                                          
                                          $
                                          (1.22
                                          )
                                          
                                          $
                                          (3.71
                                          )
                                          
                                          $
                                          0.08Shares
      used in basic and diluted per share computation(1)
                                          
                                          
                                          100
                                          
                                          
                                          
                                          100
                                          
                                          
                                          
                                          75,111




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





(1)
            On
      June 28, 2007, the Joint Plan (see Note 1) was declared
      effective.  The Company is reporting the periods ended June 30,
      2007, as the Predecessor Company.  The Company determined that
      the days following June 28, 2007 were non-business days, and accordingly,
      results through June 28 are identical to the results through June 30,
      2007.


-16-
 Table of Contents


AZZURRA
HOLDING CORPORATION AND SUBSIDIARIES


STATEMENTSSTOCKHOLDERS' EQUITY (DEFICIT)


FOR
THE YEARS ENDED DECEMBER 31, 2007 AND 2008


(In
thousands)





Preferred
      Stock
                                                                                    
                                                                                    
                                                                                    Common
      Shares
                                                                                    
                                                                                    
                                                                                    Common
      Stock
                                                                                    
                                                                                    
                                                                                    Additional
      Paid-in Capital
                                                                                    
                                                                                    
                                                                                    Treasury
      Stock
                                                                                    
                                                                                    
                                                                                    Accumulated
      Deficit
                                                                                    
                                                                                    
                                                                                    TotalBalance
      at December 31, 2006
                                                                                    
                                                                                    
                                                                                    20,380
                                                                                    
                                                                                    
                                                                                    
                                                                                    75,111
                                                                                    
                                                                                    
                                                                                    
                                                                                    8
                                                                                    
                                                                                    
                                                                                    
                                                                                    391,660
                                                                                    
                                                                                    
                                                                                    
                                                                                    (74
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (417,859
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (5,885
                                                                                    )Net
      income
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    6,296
                                                                                    
                                                                                    
                                                                                    
                                                                                    6,296Reorganization
      pursuant to Joint Plan
                                                                                    
                                                                                    
                                                                                    (20,380
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (75,111
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (8
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (391,249
                                                                                    )
                                                                                    
                                                                                    
                                                                                    74
                                                                                    
                                                                                    
                                                                                    
                                                                                    411,563
                                                                                    
                                                                                    
                                                                                    
                                                                                    -Issuance
      of new common stock
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    100
                                                                                    
                                                                                    
                                                                                    
                                                                                    1
                                                                                    
                                                                                    
                                                                                    
                                                                                    29
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    30Balance
      at June 30, 2008 (1)
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    100
                                                                                    
                                                                                    
                                                                                    
                                                                                    1
                                                                                    
                                                                                    
                                                                                    
                                                                                    440
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    441Net
      loss
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    (371
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (371
                                                                                    )Balance
      at December 31, 2007
                                                                                    
                                                                                    $
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    100
                                                                                    
                                                                                    
                                                                                    $
                                                                                    1
                                                                                    
                                                                                    
                                                                                    $
                                                                                    440
                                                                                    
                                                                                    
                                                                                    $
                                                                                    -
                                                                                    
                                                                                    
                                                                                    $
                                                                                    (371
                                                                                    )
                                                                                    
                                                                                    $
                                                                                    70Recovery
      of predecessor funds
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    70
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    70Recovery
      of funds from bankruptcy court
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    11
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    11Net
      loss
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    
                                                                                    (122
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (122
                                                                                    )Balance
      at December 31, 2008
                                                                                    
                                                                                    $
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    100
                                                                                    
                                                                                    
                                                                                    $
                                                                                    1
                                                                                    
                                                                                    
                                                                                    $
                                                                                    521
                                                                                    
                                                                                    
                                                                                    $
                                                                                    -
                                                                                    
                                                                                    
                                                                                    $
                                                                                    (493
                                                                                    )
                                                                                    
                                                                                    $
                                                                                    29





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





(1)
            On
      June 28, 2007, the Joint Plan (see Note 1) was declared
      effective.  The Company is reporting the periods ended June 30,
      2007, as the Predecessor Company.  The Company determined that
      the days following June 28, 2007 were non-business days, and accordingly,
      results through June 28 are identical to the results through June 30,
      2007.


-17-
 Table of Contents


AZZURRA
HOLDING CORPORATION AND SUBSIDIARIES


CONSOLIDATED
STATEMENTSOF CASH FLOWS


(In
thousands)





SUCCESSOR
                                    
                                    
                                    PREDECESSORYearEnded 
      December 31, 2008
                                    
                                    
                                    July
      1, 2007
                                      to
      December 31, 2007
                                    
                                    
                                    January
      1, 2007
                                      to
      June 30, 2007(1)Cash
      flows from operating activities:Net
      income (loss)
                                    
                                    $
                                    (122
                                    )
                                    
                                    $
                                    (371
                                    )
                                    
                                    $
                                    6,296Adjustments
      to reconcile net income (loss) to cash provided by (used in) operating
      activities:Gain
      on sale of equipment
                                    
                                    
                                    -
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (13
                                    )Gain
      on settlement of accounts payable
                                    
                                    
                                    -
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (602
                                    )Gain
      on settlement of liabilities subject to compromise
                                    
                                    
                                    -
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (6,207
                                    )Gain
      on fresh start accounting
                                    
                                    
                                    -
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (243
                                    )Gain
      (loss) on disposal of discontinued operations
                                    
                                    
                                    -
                                    
                                    
                                    
                                    22
                                    
                                    
                                    
                                    (438
                                    )Changes
      in operating assets and liabilities:Current
      assets
                                    
                                    
                                    9
                                    
                                    
                                    
                                    26
                                    
                                    
                                    
                                    368Current
      liabilities
                                    
                                    
                                    (41
                                    )
                                    
                                    
                                    26
                                    
                                    
                                    
                                    133Net
      cash provided by (used in) operating activities
                                    
                                    
                                    (154
                                    )
                                    
                                    
                                    (297
                                    )
                                    
                                    
                                    706Cash
      flows from investing activities:Proceeds
      from the sale of discontinued operations
                                    
                                    
                                    -
                                    
                                    
                                    
                                    70
                                    
                                    
                                    
                                    864Proceeds
      from the sale of property and equipment
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    29Net
      cash provided by investing activities
                                    
                                    
                                    -
                                    
                                    
                                    
                                    70
                                    
                                    
                                    
                                    893Cash
      flows from financing activities:Proceeds from the sale of common
      stock
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    30Proceeds from recovered bank
      account
                                    
                                    
                                    70
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Proceeds
      recovered from bankruptcy court
                                    
                                    
                                    11
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Repayment of debt pursuant to
      the Joint Plan
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (1,700
                                    )Net
      cash provided by (used in) financing activities
                                    
                                    
                                    81
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (1,670
                                    )Net
      decrease in cash and cash equivalents
                                    
                                    
                                    (73
                                    )
                                    
                                    
                                    (227
                                    )
                                    
                                    
                                    (1,483
                                    )Cash
      and cash equivalents at beginning of the period
                                    
                                    
                                    139
                                    
                                    
                                    
                                    366
                                    
                                    
                                    
                                    1,849Cash
      and cash equivalents at end of the period
                                    
                                    $
                                    66
                                    
                                    
                                    $
                                    139
                                    
                                    
                                    $
                                    366





On June
28, 2007, in accordance with the Joint Plan, the Company issued 70,000 shares of
new AHC common Stock, $0.01 par value, to SDS in consideration for relief of
debt obligations (see Note 1).





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





(1)
            On
      June 28, 2007, the Joint Plan (see Note 1) was declared
      effective.  The Company is reporting the periods ended June 30,
      2007, as the Predecessor Company.  The Company determined that
      the days following June 28, 2007 were non-business days, and accordingly,
      results through June 28 are identical to the results through June 30,
      2007. -18-
 Table of Contents




1.
            BACKGROUNDAND
ORGANIZATION





Azzurra
Holding Corporation, formerly known as Wave Wireless Corporation (“Old AHC”),
became Azzurra Holding Corporation (“New AHC”), subsequent to the consummation
of the transactions contemplated by the Joint Plan of Reorganization, as amended
(the “Joint Plan”), of Old AHC, pursuant to Chapter 11 of Title 11 of the United
States Code (the “Bankruptcy Code”) on June 28, 2007.  Since the days
following June 28, 2007 through the end of that quarter were non-business days,
the “Effective Date” of June 30, 2007 is used throughout these consolidated
financial statements.  In these notes to the consolidated financial
statements, references to the “Company” in respect to time periods preceding the
Effective Date are references to Old AHC and its consolidated subsidiaries
(collectively, the “Predecessor”), while such references in respect to time
periods commencing with the Effective Date shall refer to New AHC and its
consolidated subsidiaries (collectively, the “Successor”).





Bankruptcy
Proceedings under Chapter 11 of the Bankruptcy Code and
Reorganization





On
October 31, 2006 (“Petition Date”), Old AHC filed a voluntary petition for
reorganization under Chapter 11 of the Code in the United States Bankruptcy
Court for the District of Delaware (“Court”) (the “Bankruptcy Petition”).
 The Company’s significant operating losses, working capital deficit,
defaults on certain outstanding debentures, together with the significant cash
required to maintain operations, delays in commercializing next-generation
products, and the loss of a key executive, precipitated the need to seek
protection under Chapter 11 of the Code.





On April
5, 2007, the Company and the Committee of Unsecured Creditors (“Creditors
Committee”) filed a Joint Plan of Reorganization, which Joint Plan was amended
and restated and filed with the Court on May 2, 2007.  The Joint Plan
was confirmed by the Court on June 14, 2007 and became effective June 28,
2007.  Under the terms and conditions of the Joint Plan, as confirmed
by the Court, holders of our equity interests as of the effective date of the
Joint Plan, have terminated.  The Joint Plan contained the following
additional major provisions:





SDS
Capital Group SPC, Ltd. ("SDS"), the secured creditor, became the owner of 80%
of the issued and outstanding shares of common stock, which includes 70%
received under the terms of the Joint Plan, and an additional 10% as a result of
SDS’s participation in the Equity Financing, described
below.   In addition, all priority unsecured claims and
administrative claims were paid in full, through either: (i) payment on the
effective date of the Joint Plan; (ii) payment through an escrow account
established with a Plan Administration Trust (“Trust”); or (iii) payment from
the reorganized Company following the allowance of a claim. The initial funding
for the Trust was $250,000 less certain professional fees and other charges set
forth in more detail in the Joint Plan.  The payment to the Trust was
recorded as a reduction of gain on settlement of liabilities subject to
compromise and recapitalization in the accompanying 2007 Predecessor statement
of operations. This initial funding was provided from funds that were otherwise
distributable to SDS. The Trust is responsible for, among other things,
objecting to general unsecured claims and making distributions, as appropriate,
to holders of general unsecured claims. The Company has no future rights to any
Trust assets.  The Joint Plan also permitted general unsecured
claimants and preferred shareholders to participate in an equity financing
("Equity Financing"), pursuant to which each party was permitted to purchase a
portion of 30,000 shares of new common stock at $1.00 per share, based upon the
terms and conditions set forth in the Joint Plan. As a result of the Equity
Financing, three preferred shareholders each acquired 10,000 shares of common
stock.


-19-
 Table of Contents





The Joint
Plan required that the Company issue a Contingent Promissory Note in favor of
the trust (“Contingent Note”). The Contingent Note provides for a further
recovery to the Trust under the terms of the Joint Plan in the event SDS
receives a distribution under the Joint Plan that exceeds $2,476,658, plus all
fees and expenses accrued under the Contingent Note (the “Maximum Amount”).
Under the terms of the Contingent Note, if SDS receives an amount in excess of
the Maximum Amount, the Company will pay to the Trust an amount equal to 50% of
any cash that remains or has accrued after (i) satisfying the Maximum Amount and
all other distributions or dividends required under the Joint Plan, (ii)
reserving cash sufficient to satisfy, in full, all obligations of, and claims
against, the Company that have accrued during the one year period following the
effective date of the Joint Plan, and (iii) reserving reasonably sufficient
cash, in the Company's sole discretion, to fund ongoing business operations. No
amounts became payable under the Contingent Note and the Contingent Note
terminated on June 28, 2008.  On June 28, 2007, SDS received $1.7
million under the terms of the Joint Plan.  No further payments have
been made to SDS, and no payments are currently contemplated.





2.
            BASIS
      OF PRESENTATION SIGNIFICANT ACCOUNTING
POLICIES





SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES





Basis
of Presentation





As
discussed in Note 1, the Company filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code and, accordingly, the accompanying
consolidated financial statements of the Predecessor have also been prepared in
accordance with Statement of Position 90-7, Financial Reporting by Entities in
Reorganization under the Bankruptcy Code (“SOP 90-7”) which requires an
entity to distinguish pre-petition liabilities subject to compromise from
post-petition liabilities on its balance sheets.


The
accompanying consolidated financial statements have been prepared in accordance
with Statement of Position 90-7, Financial Reporting by Entities in
Reorganization under the Bankruptcy Code("SOP 90-7") which requires an
entity to distinguish pre-petition liabilities subject to compromise from
post-petition liabilities.  In addition, SOP 90-7 requires that
charges and credits resulting from the reorganization and restructuring of the
organization be reported separately in the statements of operations as
reorganization items, except those required to be reported as discontinued
operations.  The Company’s emergence from bankruptcy resulted in a new
reporting entity with no retained earnings or accumulated losses as of June 28,
2007 (for presentation purposes, June 30, 2007).  Accordingly, the
Company’s consolidated financial statements for periods prior to June 30, 2007
will not be comparable to subsequent periods.
 
 The
Company implemented “fresh start” accounting and reporting in accordance with
SOP 90-7 upon its emergence from bankruptcy.  Assets and liabilities
were adjusted, as necessary, to their fair values. The determination of fair
values of assets and liabilities is subject to significant estimation and
assumptions.
  The
following table reflects the debt and equity restructuring, reorganization
adjustments and the adoption of fresh start accounting to the Company’s
consolidated balance sheet as of June 28, 2007.
 -20-
 Table of Contents
  Predecessor
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                SuccessorJune
      28, 2007
                                                
                                                
                                                Debt
      and Equity Restructuring
                                                
                                                
                                                
                                                Reorganization
      Adjustments
                                                
                                                
                                                
                                                Fresh
      Start Adjustments
                                                
                                                
                                                June
      28, 2007ASSETSCurrent
      assets:Cash
      and cash equivalents
                                                
                                                $
                                                2,036
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                
                                                $
                                                (1,670
                                                )
                                                (a)
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                366Accounts
      receivable
                                                
                                                
                                                27
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                27Prepaid
      taxes
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Total
      current assets
                                                
                                                
                                                2,063
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                (1,670
                                                )
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                393Goodwill
                                                
                                                
                                                100
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                100Total
      assets
                                                
                                                $
                                                2,163
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                
                                                $
                                                (1,670
                                                )
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                493LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities (subject to compromise):Accounts
      payable
                                                
                                                $
                                                864
                                                
                                                
                                                $
                                                (834
                                                )
                                                (b)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                30Other
      accrued liabilities
                                                
                                                
                                                2,607
                                                
                                                
                                                
                                                (2,342
                                                )
                                                (b)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                (243)
                                                (e)
                                                
                                                
                                                22Deferred
      revenue
                                                
                                                
                                                1,322
                                                
                                                
                                                
                                                (1,322
                                                )
                                                (b)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Derivative
      liability for excess shares
                                                
                                                
                                                30
                                                
                                                
                                                
                                                (30
                                                )
                                                (b)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Current
      maturities of long-term debt
                                                
                                                
                                                3,379
                                                
                                                
                                                
                                                (1,679
                                                )
                                                (b)
                                                
                                                
                                                (1,700
                                                )
                                                (a)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Total
      current liabilities and total liabilities
                                                
                                                
                                                8,202
                                                
                                                
                                                
                                                (6,207
                                                )
                                                
                                                
                                                
                                                (1,700
                                                )
                                                
                                                
                                                
                                                (243
                                                )
                                                
                                                
                                                52Stockholders'
      equity (deficit):Preferred
      Stock
                                                
                                                
                                                20,380
                                                
                                                
                                                
                                                (20,380
                                                )
                                                (c)(1)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Common
      Stock
                                                
                                                
                                                8
                                                
                                                
                                                
                                                (7
                                                )
                                                (c)
                                                
                                                
                                                -
                                                
                                                (d)
                                                
                                                
                                                
                                                
                                                
                                                
                                                1Treasury
      Stock
                                                
                                                
                                                (74
                                                )
                                                
                                                
                                                74
                                                
                                                (c)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Additional
      paid-in capital
                                                
                                                
                                                391,660
                                                
                                                
                                                
                                                20,313
                                                
                                                (b)(c)
                                                
                                                
                                                30
                                                
                                                (a)(d)
                                                
                                                
                                                (411,563)
                                                (f)
                                                
                                                
                                                440Accumulated
      deficit
                                                
                                                
                                                (418,013
                                                )
                                                
                                                
                                                6,207
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                411,806
                                                (e)(f)
                                                
                                                
                                                -Total
      stockholders' equity (deficit)
                                                
                                                
                                                (6,039
                                                )
                                                
                                                
                                                6,207
                                                
                                                
                                                
                                                
                                                30
                                                
                                                
                                                
                                                
                                                243
                                                
                                                
                                                
                                                441Total
      liabilities and stockholders' equity (deficit)
                                                
                                                $
                                                2,163
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                
                                                $
                                                (1,670
                                                )
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                493
 -21-
 Table of Contents
 Debt and equity restructuring, reorganization
adjustments, and fresh start accounting adjustments consist primarily of the
following:
 
 (a)
                To
      record payment of $1,700,000 to SDS on June 28, 2007, subject to the Joint
      Plan, and receipt of $30,000 from the Equity Financing.(b)
                To
      record the discharge of subject to compromise liabilities as described in
      the Joint Plan.
 
 (c)
                To
      record the discharge/termination of all outstanding Series E, Series G,
      Series J and Series J-1 Preferred Stock. Common Stock, and Treasury Stock
      of Old AHC in accordance with the Joint Plan.(d)
                To
      record issuance of 30,000 shares of common stock, $0.01 par value, under
      the Equity Financing valued at $1.00 per
share.
 
 (e)
                During
      prior periods management had recorded estimated liabilities for inventory
      and other services for which they estimated the Company was obligated but
      for which the Company was never invoiced.  In connection with
      fresh start accounting, the Company’s management evaluated certain of
      these estimates and has adjusted the accrual to estimated fair
      value.(f)
                To
      close out the remaining equity balances of Old AHC in accordance with the
      recapitalization provisions of fresh start
  accounting.
  During
the year ended December 31, 2008, the Company was a non-operating shell company
and its business operations were limited to sustaining the public shell, and
winding down the affairs of the Company’s wholly-owned subsidiary, WaveRider
Communications Corporation.





Accounting
Estimates





In
preparing the financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes 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 expense during the
reporting period. Actual results could differ from those estimates.





Consolidation





The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiary.  All significant inter-company accounts and
transactions have been eliminated.





Income
Tax





Deferred
income tax assets and liabilities are computed annually for differences between
the financial statement and federal income tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future, based on
enacted tax laws and rates applicable to the periods in which the differences
are expected to affect taxable income.  Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized.


-22-
 Table of Contents


Net
Income (Loss) per Share





Basic and
diluted income (loss) per common share are computed by dividing the net income
(loss) by the weighted average common shares outstanding.  No options
or warrants with an exercise price below market were outstanding for any
period.  Any such shares issuable subject to those option and warrant
agreements were not considered in the determination of net income or loss per
share because their effect would have been anti-dilutive.  All options
were cancelled in 2006 and warrants were cancelled upon the effective date of
the Joint Plan in 2007.





Discontinued
Operations





As a
result of the sale of all of the Company’s operating businesses in 2007, no
continuing operations exist other than on-going continuing general and
administrative expenses relating to sustaining the public shell and winding down
the affairs of the Company’s wholly-owned subsidiary.  As such, all
operations other than on-going general and administrative expenses are presented
as discontinued operations in the accompanying statement of
operations.





Recent
Accounting Pronouncements





There
have been no recent accounting pronouncements which would have any impact on the
Company.





3.
            GOING
      CONCERN





The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern.





The
Company currently has no operations and intends to locate and combine with an
existing, privately-held company that is profitable or which, in management's
view, has growth potential, irrespective of the industry in which it is
engaged.  However, the Company does not intend to combine with a
private company, which may be deemed to be an investment company subject to the
Investment Company Act of 1940. A combination may be structured as a merger,
consolidation, exchange of the Company's common stock for stock or assets or any
other form which will result in the combined enterprise's becoming a
publicly-held corporation.





Pending
negotiation and consummation of a combination, the Company anticipates that it
will have, aside from carrying on its search for a combination partner, no
business activities, and, thus, will have no source of revenue.  To
continue as a going concern, pending consummation of a transaction, the Company
intends to either seek additional equity or debt financing.  No
assurances can be given that such equity or debt financing will be available to
the Company nor can there be any assurance that a combination transaction will
be consummated.  Should the Company need to incur any significant
liabilities prior to a combination transaction, including those associated with
the current minimal level of general and administrative expenses, it may not be
able to satisfy those liabilities in the event it was unable to obtain
additional equity or debt financing.





4.
            STOCKHOLDERS’
      EQUITY





At
December 31, 2008, the authorized shares of Azzurra Holding Corporation consist
of 250,000 shares of common stock, $0.01 par value and 100,000 shares were
issued and outstanding.


-23-
 Table of Contents




Activity
with respect to the various equity instruments for the period from January 1,
2007 through June 28, 2007 is as follows:





·
            Series
      E and G Convertible Preferred Stock – The Company had designated 2,000 and
      10,000 shares of its Preferred Stock as Series E and G, respectively,
      Convertible Preferred Stock.  Both issuances had a liquidation
      preference amount equal to $1,000 per share and were convertible into a
      number of shares of common stock equal to the liquidation preference
      amount divided by the conversion price of $0.50.  All
      outstanding shares were discharged in accordance with the Joint
      Plan.


·
            Series
      J and J-1 Convertible Preferred Stock – The Company had designated 10,000
      and 300 shares of its Preferred Stock as Series J and J-1, respectively,
      Convertible Preferred Stock.  Both issuances had a liquidation
      preference amount equal to $7,500 per share and were convertible into a
      number of shares of common stock equal to the liquidation preference
      amount divided by the conversion price of $0.075.  All
      outstanding shares were discharged in accordance with the Joint
      Plan.


·
            At
      January 1, 2007, 51,351,000 common stock warrants were outstanding at
      prices ranging from $0.0001 to $1,275 per share.  All
      outstanding common stock warrants were discharged in accordance with the
      Joint Plan.


·
            The
      Company had a Stockholder Rights Agreement that was terminated under the
      Joint Plan.





5.
            CONTINGENCIES





In
connection with the liquidation of a former subsidiary during 2007, the Company
has recovered approximately $70,000 related to a lockbox account.  Had the
account been recorded on the Company's books when fresh-start accounting
was adopted, the adjustment to Additional Paid-in Capital would have been
impacted.  As such, the Company has recorded the recovery as Additional
Paid-in Capital.  While management believes the cash is rightfully the
assets of the Company, any liability which could subsequently be raised
regarding this recovery will be recorded when and if asserted and the amount is
estimable.





6.
            INCOME
      TAXES





Deferred
tax assets consist of the following (in thousands):


December
      31,2008
                              
                              
                              2007Net
      operating loss carry-forwards
                              
                              $
                              134,790
                              
                              
                              $
                              134,721Credit
      carry-forwards
                              
                              
                              3,888
                              
                              
                              
                              4,028Reserves
      and other
                              
                              
                              82
                              
                              
                              
                              82Total
      deferred tax assets
                              
                              $
                              138,760
                              
                              
                              $
                              138,831Valuation
      allowance
                              
                              
                              (138,760
                              )
                              
                              
                              (138,831
                              )Net
      deferred tax asset
                              
                              $
                              --
                              
                              
                              $
                              --





The
Federal and state net operating loss carryforward for tax purposes is
approximately $362.4 million and $138.3 million, respectively, at December
31, 2008, which begin to expire in 2012.  The Company's ability to utilize
these carryforwards may be severely limited or lost pursuant to Section 382 of
the Internal Revenue Code as a result of the change in control of the Company
under the Joint Plan confirmed by the Court on June 14, 2007.  Other
limitations may apply as well.  The Company has made no determination as to
what these limitations may be.




Deferred
income taxes reflect the tax consequences on future years of differences between
the tax bases of assets and liabilities and their bases for financial reporting
purposes. In addition, future tax benefits, such as net operating loss
carry-forwards, are recognized to the extent that realization of such benefits
is more likely than not. The Company has assessed its ability to realize future
tax benefits, and concluded that as a result of the history of losses, it was
more likely than not, that such benefits would not be realized. Accordingly, the
Company has recorded a full valuation allowance against future tax
benefits.


-24-
 Table of Contents




Reconciliation
of the staturory Federal income tax rate to its effective tax rate is as
follows:





December
      31,2008
                                            
                                            
                                            2007Income
      tax benefit at federal statutory rate
                                            
                                            
                                            -35.0
                                            %
                                            
                                            -35.0
                                            %State
      income taxes net of federal benefit
                                            
                                            
                                            -5.8
                                            %
                                            
                                            -5.8
                                            %Expiring
      credits and other
                                            
                                            
                                            -15.9
                                            %
                                            
                                            -5.8
                                            %Change
      in valuation allowance
                                            
                                            
                                            56.7
                                            %
                                            
                                            46.6
                                            %Total
                                            
                                            
                                            0.0
                                            %
                                            
                                            0.0
                                            %





7.
            DISCONTINUED
      OPERATIONS





During
the six months ended December 31, 2007 and the and six months ended June 30,
2007, gain (loss) on discontinued operations primarily relates to the sale of
the Company’s SPEEDLAN product line on August 10, 2007.  During the
six months ended June 30, 2007, the Company received $438,000 on the settlement
of a royalty agreement with WaveRider Australia, which was sold during
2006.





Following
is a summary of discontinued operations for the six months ended December 31,
2007 (Successor) and six months ended June 30, 2007 (Predecessor):





SUCCESSOR
                              
                              PREDECESSORSix
      Months Ended
                              
                              Six
      Months EndedDecember
      31,
                              
                              June
      30,2007
                              
                              2007SPEEDLAN
      Revenues
                              
                              $
                              11
                              
                              
                              $
                              344SPEEDLAN
      Cost of Sales
                              
                              
                              33
                              
                              
                              
                              91SPEEDLAN
      Gross Profit
                              
                              
                              (22
                              )
                              
                              
                              253Proceeds
      from the sale of Wave Rider
                              
                              
                              -
                              
                              
                              
                              438Gain
      (Loss) from discontinued operations
                              
                              $
                              (22
                              )
                              
                              $
                              691




-25-
 Table of Contents





SIGNATURES





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




Date:
      April 13, 2009
            By:
            /s/ 
      Daniel W.
      RumseyDaniel
      W. RumseyChief
      Executive Officer




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Company and in the
capacities and on the dates indicated.








Signature
            
            Title
            
            Date/s/
      Daniel W. Rumsey
            
            Chief
      Executive OfficerDaniel
      W. Rumsey
            
            (Principal
      Executive Officer)
            
            April
      13, 2009/s/
      Daniel W. Rumsey
            
            (Principal
      Financial Officer andDaniel
      W. Rumsey
            
            Principal
      Accounting Officer)
            
            April
      13, 2009/s/
      Richard Reiss
            
            Director
      of the Company
            
            April
      13, 2009Richard
      Reiss/s/
      Mark Shaftlein
            
            Director
      of the Company
            
            April
      13, 2009Mark
      Shaftlein




-26-
 Table of Contents





INDEXOF
EXHIBITS




2.3
      (1)
              Joint
      Plan of Reorganization3.1
      (1)
              Amended
      and Restated Articles of Incorporation3.2
      (1)
              Amended
      and Restated Bylaws10.5
      (1)
              Contingent
      Unsecured Promissory Note of the Registrant in Favor of the Plan
      Trust.10.6
      (1)
              Secured
      Promissory Note in Favor of SDS Capital Group SPC, Ltd.10.7
      (1)
              Security
      Agreement in Favor of SDS Capital Group SPC, Ltd.31.1
              Rule
      13a-14(a)/15d-14(a) Certification31.2
              Rule
      13a-14(a)/15d-14(a) Certification32.1
              Section
      1350 Certification32.2
              Section
      1350 Certification





(1)
                Incorporated
      by reference to Exhibits 3.1 and 3.2 of the Company’s Current Report on
      Form 8-K filed with the Securities and Exchange Commission on July 5,
      2007.