Exhibit 99.1
 
 EYAK TECHNOLOGY, LLC AND SUBSIDIARY
A SUBSIDIARY OF EYAK CORPORATION
 AUDITED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007 AND 2006




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PageReport of Independent Registered Public Accounting Firm
    
    
    1Audited Consolidated Financial StatementsConsolidated Balance Sheets
    
    
    2  3Consolidated Statements of Income
    
    
    4Consolidated Statements of Members Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    6  7Notes to Consolidated Financial Statements
    
    
    8  19




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- 1 -




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Eyak Technology, LLC and Subsidiary
 Consolidated Balance Sheets
 December 31,
    
    2007
    
    
    2006AssetsCurrent assetsCash and cash equivalents
    
    $
    387,707
    
    
    $
    3,906,870Accounts receivable, net
    
    
    69,683,093
    
    
    
    26,812,518Inventory
    
    
    2,863,627
    
    
    
    855,448Deferred contract costs
    
    
    13,577,256
    
    
    
    21,781,829Prepaid expenses and other current assets
    
    
    2,839,129
    
    
    
    1,554,497Total current assets
    
    
    89,350,812
    
    
    
    54,911,162Property and equipment, net
    
    
    232,185
    
    
    
    207,559Other assetsLoans receivable  related parties
    
    
    142,991
    
    
    
    145,557Intangible assets, net
    
    
    627,340
    
    
    
    Long term lease receivables
    
    
    1,456,428
    
    
    
    Deposits
    
    
    173,359
    
    
    
    69,582Total other assets
    
    
    2,400,118
    
    
    
    215,139Total assets
    
    $
    91,983,115
    
    
    $
    55,333,860
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Eyak Technology, LLC and Subsidiary
 Consolidated Balance Sheets
 2007
    
    
    2006Liabilities and Members EquityCurrent liabilitiesBorrowings under credit facilities
    
    $
    25,476,781
    
    
    $
    5,814,279Accounts payable and accrued expenses
    
    
    24,066,347
    
    
    
    16,433,469Accounts payable  related party
    
    
    12,855,118
    
    
    
    6,026,138Financed lease debt
    
    
    1,515,996
    
    
    
    Accrued salaries and related liabilities
    
    
    1,581,674
    
    
    
    929,040Deferred revenue
    
    
    16,350,133
    
    
    
    22,207,718Total current liabilities
    
    
    81,846,049
    
    
    
    51,410,644Long term liabilitiesLong term financed lease debt
    
    
    1,456,428
    
    
    
    Deferred rent
    
    
    127,332
    
    
    
    114,173Total liabilities
    
    
    83,429,809
    
    
    
    51,524,817Commitments and contingenciesMembers equity
    
    
    8,553,306
    
    
    
    3,809,043Total liabilities and members equity
    
    $
    91,983,115
    
    
    $
    55,333,860
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Eyak Technology, LLC and Subsidiary
 Consolidated Statements of Income
 Years Ended December 31,
    
    2007
    
    
    2006RevenueProduct revenue
    
    $
    128,950,838
    
    
    $
    45,940,596Services revenue
    
    
    99,634,078
    
    
    
    46,044,333Total revenue
    
    
    228,584,916
    
    
    
    91,984,929Direct CostsProduct direct costs (related party purchases of $68,973,976
and $14,587,528 in 2007 and 2006, respectively;
see footnote 11)
    
    
    121,247,302
    
    
    
    42,019,729Services direct costs
    
    
    86,969,652
    
    
    
    37,863,144Total direct costs
    
    
    208,216,954
    
    
    
    79,882,873Gross Margin on RevenueProduct gross margin
    
    
    7,703,536
    
    
    
    3,920,867Services gross margin
    
    
    12,664,426
    
    
    
    8,181,189Total gross margin on revenue
    
    
    20,367,962
    
    
    
    12,102,056Selling, general and administrative costs
    
    
    12,278,686
    
    
    
    9,644,550Income from operations
    
    
    8,089,276
    
    
    
    2,457,506Other income (expense)Interest income
    
    
    153,942
    
    
    
    70,578Interest expense
    
    
    (360,837
    )
    
    
    (15,034
    )Total
    
    
    (206,895
    )
    
    
    55,544Income before minority interest
    
    
    7,882,381
    
    
    
    2,513,050Minority interest
    
    
    877,843
    
    
    
    Net income
    
    $
    7,004,538
    
    
    $
    2,513,050
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Eyak Technology, LLC and Subsidiary
 Consolidated Statements of Members Equity
 Years Ended December 31, 2007 and 2006Balance, January 1, 2006
    
    $
    1,595,993Distributions
    
    
    (300,000
    )Net income
    
    
    2,513,050Balance, December 31, 2006
    
    $
    3,809,043Distributions
    
    
    (2,260,275
    )Net income
    
    
    7,004,538Balance, December 31, 2007
    
    $
    8,553,306
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Eyak Technology, LLC and Subsidiary
 Consolidated Statements of Cash Flows
 Years Ended December 31,
    
    2007
    
    
    2006Cash flows from operating activitiesNet income
    
    $
    7,004,538
    
    
    $
    2,513,050Adjustments to reconcile net income to net cash used
by operating activitiesDepreciation
    
    
    135,769
    
    
    
    117,346Amortization
    
    
    33,018
    
    
    
    Bad debt expense
    
    
    64,605
    
    
    
    178,861Minority interest
    
    
    877,843
    
    
    
    Distribution of profits to minority interest
    
    
    (877,843
    )
    
    
    (Increase) decrease inAccounts receivable
    
    
    (48,044,252
    )
    
    
    (10,991,407
    )Inventory
    
    
    (2,008,180
    )
    
    
    (855,448
    )Deferred contract costs
    
    
    8,204,574
    
    
    
    (18,466,390
    )Prepaid expenses and other current assets
    
    
    (1,284,632
    )
    
    
    (532,341
    )Deposits
    
    
    (103,777
    )
    
    
    40Increase (decrease) inAccounts payable and accrued expenses
    
    
    7,632,879
    
    
    
    934,961Accounts payable  related party
    
    
    6,828,980
    
    
    
    1,717,811Accrued salaries and related liabilities
    
    
    652,635
    
    
    
    757,929Deferred revenue
    
    
    (5,857,585
    )
    
    
    18,605,094Deferred rent
    
    
    13,159
    
    
    
    (15,607
    )Net cash used by operating activities
    
    
    (26,728,269
    )
    
    
    (6,036,101
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    (160,395
    )
    
    
    (88,323
    )Purchase of minority interest of subsidiary from
related party
    
    
    (660,358
    )
    
    
    Advances to related party
    
    
    
    
    
    
    (41,968
    )Repayments from related party
    
    
    2,566
    
    
    
    54,055Net cash used by investing activities
    
    
    (818,187
    )
    
    
    (76,236
    )
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Eyak Technology, LLC and Subsidiary
 Consolidated Statements of Cash Flows (Continued)
 Years Ended December 31,
    
    2007
    
    
    2006Cash flows from financing activitiesProceeds from credit facilities, net
    
    
    19,662,502
    
    
    
    5,814,279Proceeds from financed lease debt
    
    
    6,625,066
    
    
    
    Distributions
    
    
    (2,260,275
    )
    
    
    (300,000
    )Net cash provided by financing activities
    
    
    24,027,293
    
    
    
    5,514,279Net change in cash and cash equivalents
    
    
    (3,519,163
    )
    
    
    (598,058
    )Cash and cash equivalents at beginning of year
    
    
    3,906,870
    
    
    
    4,504,928Cash and cash equivalents at end of year
    
    $
    387,707
    
    
    $
    3,906,870Supplemental cash flow informationInterest paid
    
    $
    256,046
    
    
    $
    15,034
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Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 1.
    
    
    Organization and significant
accounting policies
    
    Organization: Eyak
Technology, LLC (the
Company and Eyaktek), a
subsidiary of The Eyak
Corporation, was
incorporated on January 2,
2002, under the laws of the
State of Delaware. The
Company provides
communication solutions,
information technology
solutions, health care
services, and architecture
and engineering services to
government and civilian
federal agencies.The Company is an Alaskan
Native owned 8(a) certified
contractor under a program
administered by the U.S.
Small Business
Administration (SBA) and
will graduate from the 8(a)
program in May 2011. GTSI
Corporation (GTSI) is a 37%
member in the Company.EG Solutions, LLC (EGS) was
formed on January 24, 2006
under the laws of the State
of Delaware and provides
hardware and software sales
and maintenance to the
federal government and
federal government
contractors. EGS operations
began during 2007. GTSI
Corporation was a 49% member
in EGS. On September 30,
2007 the Company purchased
GTSIs membership interest
in the joint venture for
$660,358. This acquisition
of the noncontrolling
interest in EGS was
accounted for under the
purchase method. The excess
of the purchase price over
the net book value of the
assets acquired resulted in
intangible assets of
$660,358 (See Note 6).
Under the terms of the
purchase agreement, the
Company signed a subcontract
agreement with GTSI to
continue providing services
under the First Source
Contract for which the joint
venture was formed. At
September 30, 2007, EGS was
a wholly owned subsidiary of
Eyaktek.Principles of consolidation: The accompanying
consolidated balance sheet
includes the accounts of
Eyak Technology, LLC and its
subsidiary, EG Solutions,
LLC (collectively, the
Company). The consolidated
statements of income,
members equity, and cash
flows include the accounts
of Eyak Technology, LLC and
its interest in EG
Solutions, LLC. All contract
activity in the subsidiary
is presented at full value
with the minority interest
in the subsidiary presented
on the accompanying
consolidated balance sheets
and statements of income.
All significant intercompany
balances and transactions
have been eliminated in
consolidation.Revenue:The Company
recognizes revenue when
persuasive evidence of a
sale arrangement exists,
delivery has occurred or
services have been rendered,
the sales price is fixed or
determinable, and
collectibility is reasonably
assured. The Company
recognizes revenue from
product sales when title
passes to the customer,
typically upon delivery.
When a customer order
contains multiple items such
as hardware, software and
services which are delivered
at varying times, the
Company determines whether
the delivered items can be
considered separate units of
accounting as prescribed
under Emerging Issues Task
Force (EITF) Issue No.
00-21, Revenue Arrangements
with Multiple Deliverables
(EITF 00-21). EITF 00-21
states that delivered items
should be considered
separate units of accounting
if delivered items have
value to the customer on a
standalone basis, there is
objective and reliable
evidence of the fair value
of undelivered items, and if
delivery of undelivered
items is probable and
substantially in Eyak Teks
control.
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Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 Generally, the Company is
able to establish fair value
for all elements of the
arrangement. In these
instances, revenue is
recognized on each element
separately. However, if fair
value cannot be established
or if the delivered items do
not have standalone value to
the customer without
additional services being
provided, the Company
recognizes revenue on the
contract as a single unit of
accounting.In most cases, revenue from
hardware and software
product sales is recognized
when title passes to the
customer. Based upon the
Companys standard shipping
terms, FOB destination,
title passes upon delivery
of the products to the
customer. However,
occasionally Eyak Teks
customers will request
bill-and-hold transactions
in situations where the
customer does not have space
available to receive
products or is not able to
immediately take possession
of products for other
reasons, in which case Eyak
Tek will store the purchased
equipment in its
distribution center. Under
Staff Accounting Bulletin
104, the Company onlyrecognizes revenue for
bill-and-hold transactions
when the goods are complete
and ready for shipment,
title and risk of loss have
passed to the customer,
management receives a
written request from the
customer for bill-and-hold
treatment, and the ordered
goods are physically
segregated in Eyak Teks
warehouse from other
inventory and cannot be used
to fulfill other customer
orders.In accordance with EITF
Issue No. 00-10, Accounting
for Shipping and Handling
Fees and Costs,the Company
records freight billed to
customers as sales and the
related shipping costs as
cost of sales.The Company leases products
under lease arrangements.
The Company accounts for its
leases according to the
provisions of Financial
Accounting Standards Board
(FASB) Statement of
Financial Accounting
Standards (FAS) No. 13,
Accounting for Leases,(FAS
13). The Company may
transfer the rights to
future payments and the
related equipment to a
financing company, and,
accounts for the transfer in
accordance with FAS No. 140,
Accounting for the Transfers
and Servicing of Financial
Assets and Extinguishments
of Liabilitiesa
Replacement of FASB
Statement 125(FAS 140).
The transfer in 2007 did not
meet the criteria for a sale
under FAS 140 and is
accounted for as a secured
borrowing with a pledge of
collateral. As a result, the
Company has recorded
receivables and secured
borrowings, within accounts
receivable and long-term
receivables, and as financed
lease debt on the balance
sheet.Revenue from fixed-price
type service contracts is
recognized under the
proportional performance
method of accounting, with
costs and estimated profits
included in contract revenue
as work is performed. If
actual and estimated costs
to complete a contract
indicate a loss, a provision
is made currently for the
loss anticipated on the
contract. Revenue from time
and materials contracts is
recognized as costs are
incurred at amounts
represented by the
agreed-upon billing amounts.
Occasionally the Company
hires third party
contractors to carry out our
service obligations. In
this circumstance, revenue
is recognized over the
performance period.
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Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 Revenue recognized on
contracts for which billings
have not been presented to
customers at year end is
included in the accounts
receivable classification on
the accompanying
consolidated balance sheets.Payments received in advance
of the performance of
services are included in the
accompanying consolidated
balance sheet as deferred
revenue.Cash and cash equivalents:For purposes of financial
statement presentation, the
Company considers all highly
liquid debt instruments with
initial maturities of ninety
days or less to be cash
equivalents. The Company
maintains cash balances
which may exceed federally
insured limits. Management
does not believe that this
results in any significant
credit risk.Accounts receivable: The
Company provides for an
allowance for doubtful
accounts based on
managements best estimate
of possible losses
determined principally on
the basis of historical
experience and specific
allowances for known
troubled accounts, if
needed. All accounts, or
portions thereof that are
deemed to be uncollectible
or that require an excessive
collection cost are written
off to the allowance for
doubtful accounts. At
December 31, 2007 and 2006
management recorded an
allowance of $243,465 and
$178,861, respectively for
estimated doubtful accounts.Marketing assistance fees:The Company has entered into
agreements that provide for
the payment of marketing
assistance funds from
certain vendors based on the
amount of products sold.
These fees are considered to
be a reduction of direct
costs.Deferred contract costs:Deferred contract costs
consist primarily of amounts
paid to third party vendors
in support of annual or
periodic service agreements
directly related to amounts
included in deferred revenue
at the period end. These
annual or periodic service
agreements relate to
contracts to provide
satellite bandwidth;
computer and networking
hardware maintenance;
software support and upgrade
rights; and other service
agreements. Deferred
contract costs are charged
to direct costs in the
period in which the service
is rendered to the customer.Prepaid expenses: Direct
cost payments made to
vendors in advance of
shipments of products are
charged to prepaid expenses
in the accompanying
consolidated balance sheets.
Payments made to vendors in
advance of performance of
services for indirect costs
are charged to prepaid
expenses in the accompanying
consolidated balance sheets.
Prepaid expenses are charged
to direct and indirect costs
in the period in which the
service or product is
rendered to the Company.Inventory: Inventory
consists primarily of
computer equipment and is
stated at the lower of cost
or market using the specific
identification method. The
majority of the Companys
inventory at any time is
made up of in-transit
inventory. There are
products that have been drop
shipped by a vendor but not
received by the end user
prior to period end.
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Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 Property and equipment:Property and equipment are
recorded at the original
cost and are being
depreciated on a
straight-line basis over
estimated lives of three to
seven years. Leasehold
improvements are amortized
over the life of the assets
or the remaining period of
the lease whichever is
shorter.Intangible assets:Intangible and other
long-lived assets are
reviewed for impairment
whenever events or changes
in circumstances indicate
that the carrying amount may
not be recoverable. In
reviewing for impairment,
the Company compares the
carrying value of the
relevant assets to the
estimated undiscounted
future cash flows expected
from the use of the assets
and their eventual
disposition. When the
estimated undiscounted
future cash flows are less
than their carrying amount,
an impairment loss is
recognized equal to the
difference between the
assets fair value and its
carrying value.Deferred rent: The Company
recognizes the minimum
non-contingent rents
required under operating
leases as rent expense on a
straight-line basis over the
life of the lease, with
differences between amounts
recognized as expense and
the amounts actually paid
recorded as deferred rent on
the accompanying
consolidated balance sheets.Income taxes: The Company
is taxed as a partnership,
and therefore, does not pay
Federal and state corporate
income taxes since the tax
attributes of the Company
are reported on the members
income tax returns.
Consequently, no provision
for income taxes has been
provided in the accompanying
consolidated financial
statements.Use of accounting estimates:The preparation of
financial statements in
conformity with accounting
principles generally
accepted in the United
States of America requires
management to make estimates
and assumptions that affect
the reported amounts of
assets and liabilities and
disclosure of contingent
assets and liabilities at
the date of the financial
statements and the reported
amounts of revenues and
expenses during the
reporting period. Actual
results could differ from
those estimates.Reclassifications: Certain
2006 balances have been
reclassified to conform with
the 2007 presentation.New Accounting
Pronouncements:In June
2006, the Emerging Issues
Task Force reached a
consensus on Issue No. 06-3,
Disclosure Requirements for
Taxes Assessed by a
Governmental Authority on
Revenue-Producing
Transactions(EITF 06-3).
The consensus allows an
entity to choose between two
acceptable alternatives
based on their accounting
policies for transactions in
which the entity collects
taxes on behalf of a
governmental authority, such
as sales taxes. Under the
gross method, taxes
collected are accounted for
as a component of revenue
with an offsetting expense.
Conversely, the net method
excludes such taxes from
revenue. Companies are
required to disclose the
method selected pursuant to
APB Opinion No. 22,
Disclosure of Accounting
Policies.If such taxes are
reported gross and are
significant, companies are
required to disclose the
amount of those taxes. The
guidance should be applied
to financial reports through
retrospective application
for all periods presented,
if amounts are significant,
for interim and annual
reporting periods beginning
after December 15, 2006. The
Company records revenue net
of such taxes.
  - 11 -




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Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 In September 2006, the FASB
issued Statement of
Financial Accounting
Standards (SFAS) No. 157,
Fair Value Measurement,
(FAS 157), which
establishes a framework for
measuring fair value in
generally accepted
accounting principles, and
expands disclosures about
fair value measurements. FAS
157 is effective for interim
periods beginning after
November 15, 2007 and is not
expected to have a material
impact on the Companys
consolidated financial
position or results of
operations.In February 2007, the FASB
issued SFAS No. 159, The
Fair Value Option for
Financial Assets and
Financial Liabilities(FAS
159). This statement gives
entities the option to
report most financial assets
and liabilities at fair
value, with changes in fair
value recorded in earnings.
This statement, which is
effective for fiscal years
beginning after November 15,
2007, is not expected to
have a material impact on
the Companys consolidated
financial position or
results of operations.In June 2006 the FASB issued
Interpretation No. 48,
Accounting for Uncertainty
in Income Taxes(FIN 48).
FIN 48 clarifies the
accounting for income taxes
by prescribing a minimum
probability threshold that a
tax position must meet
before a financial statement
benefit is recognized. This
statement is effective for
the Company on January 1,
2009 and is not expected to
have a material impact on
the Company.In December 2007, the
Financial Accounting
Standards Board issued
Statement of Financial
Accounting Standards No.
160, Noncontrolling
Interests in Consolidated
Financial Statements  an
amendment of ARB No. 51
(FAS 160). FAS 160
establishes new accounting
and reporting standards for
the noncontrolling interest
in a subsidiary and for the
deconsolidation of a
subsidiary. FAS 160 also
clarifies that changes in a
parents ownership interest
in a subsidiary that do not
result in deconsolidation
are equity transactions if
the parent retains its
controlling financial
interest and requires that a
parent recognize a gain or
loss in net income when a
subsidiary is
deconsolidated. The gain or
loss will be measured using
the fair value of the
noncontrolling equity
investment on the
deconsolidation date.
Moreover, FAS 160 includes
expanded disclosure
requirements regarding the
interests of the parent and
its noncontrolling interest.
This statement will be
applied by the Company
beginning January 1, 2009,
and earlier adoption is
prohibited.
  - 12 -




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Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 2.
    
    
    Accounts receivable
    
    Accounts receivable at
December 31, 2007 and 2006,
consist primarily of amounts
collectible from US federal
government agencies and
prime contractors to the
government. The components
of accounts receivable are:
 2007
    
    
    2006Billed receivables
    
    $
    68,140,712
    
    
    $
    26,779,228Lease receivable, current
    
    
    1,515,996
    
    
    
    Unbilled receivables
    
    
    269,850
    
    
    
    212,151Total
    
    
    69,926,558
    
    
    
    26,991,379Less: Allowance for doubtful accounts
    
    
    (243,465
    )
    
    
    (178,861
    )Total
    
    $
    69,683,093
    
    
    $
    26,812,518
 Of the total receivables
outstanding as of December 31,
2007 and 2006 approximately 71%
and 38%, respectively, were
outstanding with civilian
agencies and approximately 28%
and 57%, respectively, with The
Department of Defense. Of the
receivables due from civilian
agencies at December 31, 2007
and 2006, 66% and 93%,
respectively were due from one
and two agencies. At December
31, 2007 accounts receivables
totaling $16,670,689 were
assigned as collateral pursuant
to the Companys credit
facility (Note 8).3.
    
    
    Transferred receivables and
financed lease debt
    
    During the year ended December
31, 2007, rights under a
leasing arrangement were
transferred to a third party
financing company. This amount
is included in cash flows from
financing activities in the
consolidated statement of cash
flows. Though the Company
received cash for the transfer
of these rights, the transfer
did not meet the criteria for a
sale under FAS 140. As a
result, receivables are
reflected on the Companys
consolidated balance sheet. As
payments on these receivables
are made by customers directly
to the third party financing
companies, the related
reduction of these receivables
and financed lease debt will be
a non-cash transaction and will
be excluded from the statement
of cash flows.The financed lease debt has an
interest rate of 4.09%. The
Company recognized $46,304 of
income associated with the
lease for the year ended
December 31, 2007.Future minimum maturities of
the financed lease debt as of
December 31, 2007, are as
follows:
 Year2008
    
    $
    1,515,9962009
    
    
    1,456,428Total
    
    $
    2,972,424
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Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 4.
    
    
    Prepaid expenses
and other current
    
    Prepaid expenses and other current assets consist of the
following at December 31:assets
 2007
    
    
    2006Prepaid direct contract costs
    
    $
    2,449,105
    
    
    $
    1,452,553Prepaid indirect costs
    
    
    144,674
    
    
    
    98,957Other current assets
    
    
    245,350
    
    
    
    2,987Total
    
    $
    2,839,129
    
    
    $
    1,554,497
 5.
    
    Property and equipment
    
    Property and equipment consist of the following at December 31:
 2007
    
    
    2006Furniture, fixtures and equipment
    
    $
    487,272
    
    
    $
    359,659Software
    
    
    85,324
    
    
    
    61,694Leasehold improvements
    
    
    30,528
    
    
    
    54,966Total
    
    
    603,124
    
    
    
    476,319Less: Accumulated depreciation
    
    
    (370,939
    )
    
    
    (268,760
    )Net
    
    $
    232,185
    
    
    $
    207,559
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##### 



Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 6.
    
    Intangible assets
    
    Intangible assets resulted from the purchase of
the minority interest in EG Solutions, LLC from
GTSI Corporation during 2007. Intangible assets
consisted of the following at December 31,
2007:
 Accumulated
    
    
    WeightedCost
    
    
    Amortization
    
    
    Average LifeContract rights
    
    $
    557,330
    
    
    $
    (27,867
    )
    
    
    5Contract backlog
    
    
    103,028
    
    
    
    (5,151
    )
    
    
    1Total
    
    $
    660,358
    
    
    $
    (33,018
    )
 The intangible assets have no residual value at the end of their useful life. Amortization expense
for the year ended December 31, 2007 was $33,018. Estimated amortization expense for the next five
years as of December 31, 2007 is as follows:
 Year EndingDecember 31,
    
    Amount2008
    
    $
    161,2522009
    
    
    146,3542010
    
    
    143,7412011
    
    
    123,7652012
    
    
    52,228
 7.
    
    
    Accounts payable
    
    Accounts payable and accrued expenses consist of the following at December 31:and accrued
expenses
 2007
    
    
    2006Trade payables
    
    $
    22,057,200
    
    
    $
    15,600,455Other accrued expenses
    
    
    2,009,147
    
    
    
    833,014Total
    
    $
    24,066,347
    
    
    $
    16,433,469
  - 15 -




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##### 



Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 8.
    
    
    Credit facilities
    
    In January 2007 the Company entered into a
financing arrangement with GE Commercial
Distribution Finance Corporation (CDF). The
arrangement consists of two separate
agreements: a Business Financing Agreement
(BFA) and an Inventory Financing Agreement
(IFA). Under the terms of the agreements, the
Company may borrow, between the two facilities,
up to a total of $6,000,000 between January 1
and August 31, and $10,000,000 between
September 1 and December 31. Amounts are
advanced at the discretion of GE. The
arrangements are secured by the assets of the
Company and are guaranteed by The Eyak
Corporation, a 51% owner of the Company and are
due on demand.The IFA is to be used to purchase inventory
from approved vendors. Interest on the IFA
portion of the facility varies depending on the
terms that GE has with the specific vendor. The
Company can obtain advances under the BFA up to
the lesser of 85% of eligible receivables, or,
the maximum amount of the facility. Interest
on the BFA portion of the facility is payable
monthly at the London InterBank Offered Rate
(LIBOR) plus 2.5%. The weighted average
interest rate on outstanding advances at
December 31, 2007 was 7.13%.The financing arrangements contain certain
financial covenants that require the Company to
retain at least 50% of its net income on a
quarterly basis and to maintain a ratio of
funded debt to EBITDA of not more than 4.5:1 as
of September 30 and December 31, and 3.5:1 as
of March 31, and June 30.At December 31, 2007 the GE CDF extended the
Company a temporary over-line increasing the
line to $18,000,000 from December 31, 2007 to
February 29, 2008. There was no additional cost
to the Company associated with the temporary
over-line.During 2006, the Company entered into a Short
Term Accounts Receivable Program (STAR
Agreement) with a finance company. Under the
terms of the agreement, the Company may obtain
advances on approved customer purchase orders.
Interest charges accrue at LIBOR plus 3.50% per
annum once the advance has been outstanding for
45 days. No interest accrues for advances
outstanding less than 45 days. The Company
includes amounts advanced as borrowings under
the credit facility in the accompanying
consolidated balance sheets. Advances under the
agreement are secured by
specific accounts
receivable of the Company and are due on
demand.At December 31, 2007 $16,670,689 of accounts
receivable have been assigned as collateral
pursuant to the credit facilities.
  - 16 -




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##### 



Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 As of December 31, 2007 and 2006 borrowings
under the credit facilities were comprised of:
 2007
    
    
    2006Borrowings under BFA
    
    $
    12,009,879
    
    
    $
    Borrowings under IFA
    
    
    1,024,496
    
    
    
    Borrowings under STAR agreement
    
    
    12,442,406
    
    
    
    5,814,279Toal borrowings under credit facilities
    
    $
    25,476,781
    
    
    $
    5,814,279
 9.
    
    
    Retirement plan
    
    The Company sponsors a 401(k) tax deferred
retirement plan under the Internal Revenue Code
to provide retirement benefits for all eligible
employees. Participating employees may
voluntarily contribute up to limits provided by
Internal Revenue Service regulations. Beginning
January 1, 2007 the Board of Directors approved
an employer match to the 401(k) plan. The
Company recorded $111,541 in matching
contributions for the year ended December 31,
2007. The Company did not make any contributions
to the plan during the year ended December 31,
2006.10.
    
    
    Operating leases
    
    The Company is obligated, as lessee, under
non-cancelable operating leases for office space
in Alaska, Pennsylvania, Virginia and Seoul,
South Korea. The minimum payments required
under the leases are expensed on a pro rata
basis over the term of the leases. The
difference between the amounts expensed and the
required lease payments is reflected as deferred
rent in the accompanying consolidated balance
sheets.The following is a schedule by years of future
minimum rental payments required under the
operating leases that have an initial or
remaining non-cancelable lease term in excess of
one year as of December 31, 2007:
 Year EndingDecember 31
    
    Total2008
    
    $
    627,6912009
    
    
    649,8872010
    
    
    48,186Total
    
    $
    1,325,764
 Total rent expense for the
years ended December 31, 2007
and 2006 was $684,916 and
$326,856, respectively. Due to
the growth of the organization,
the Company entered into a new
office lease during 2007 moving
its headquarters to Dulles,
Virginia. As of December 31,
2007, there are nineteen months
remaining on the lease for the
old headquarters office space.
The Company is currently trying
to sub-lease that space.
Included in rent expense at
December 31, 2007 is $149,840
representing the Companys
remaining lease obligation, net
of expected sublease recoveries
and the write off of leasehold
improvements. This charge is
included in selling, general
and administrative costs in the
accompanying consolidated
statements of income. Cash
payments since the cease-use
date were $138,573 and the
remaining liability at December
31, 2007 was $139,129.
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##### 



Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 11.
    
    
    Related party transactions
    
    The Company has an unsecured
loan to The Eyak Corporation, a
51% member in the Company.
Interest is due annually at
3.75% and there are no stated
repayment terms. The balance at
December 31, 2007 and 2006 is
$9,352 and $12,981,
respectively. During 2007 and
2006, The Eyak Corporation made
payments on the loan of $3,629
and $1,276, respectively.During the year ended December
31, 2006, the Company provided
assistance to a wholly-owned
subsidiary of The Eyak
Corporation, Eyak Environmental
Sciences, LLC (EES), in the
form of managerial governance
and project management. In the
course of this assistance, the
Company paid on behalf of EES
operating expenses in the
amount of $268,411, which is to
be fully reimbursable to the
Company by The Eyak
Corporation. Additional
advances made by the Company
during 2007 related to EES were
$1,063. The receivable balance
at December 31, 2007 and 2006
is $133,639 and $132,576,
respectively.The Company executed a
mentor-protege agreement with
GTSI Corporation, a 37% member
in the Company. As part of the
mentor-protégé relationship,
the Company purchases products
offered for resale directly
from GTSI. During the years
ended December 31, 2007 and
2006, the Company had
$68,973,976 and $14,587,528,
respectively, of related party
transactions with GTSI, of
which $32.4 million and $14.6
million were purchased directly
from GTSI in the respective
years. Sales commissions are
allocated between the Company
and GTSI based on 7.5% and 15%,
respectively, of gross profit
margin from transactions when
the Company resells GTSIs
products. The adjusted gross
profit margin for these
transactions is then split
between the Company and GTSI.At December 31, 2007 and 2006,
the Company has outstanding
accounts payable to GTSI of
$12,855,118 and $6,026,138,
respectively, for purchases of
GTSIs products.During the years ended December
31, 2007 and 2006, the Company
recorded $36,000 of expenses to
the Andrews Group, Inc., a
Company owned by a member of
the Companys board of
directors, for subcontractor
services.The Company leases office space
from the Andrews Group in
Anchorage, Alaska with an
annual term that expires in
2010. Payments are due monthly
in the amount of $1,200. During
the years ended December 31,
2007 and 2006, rent expense
under this lease was $9,600 and
$14,400, respectively. During
2007, The Andrews Group sold
the property being rented by
the Company and the Company was
released from their lease.
  - 18 -




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##### 



Eyak Technology, LLC and Subsidiary
 Notes to Consolidated Financial Statements
 The Company entered into a new
lease for office space in
Anchorage, Alaska with Plaza
201 Properties, LLC. Plaza 201
Properties, LLC is owned by a
one of the partners in Global
Technology Group, a twelve
percent owner in the Company.
Rent expense paid to Plaza 201
Properties, LLC during 2007 was
$4,193.During 2006, the Company formed
a joint venture with GTSI
called EG Solutions, LLC (EGS).
Under the operating agreement
of EGS, the Company owned
fifty-one percent and GTSI
owned forty-nine percent.
During 2007, EGS was awarded
its first major contract.
Shipments under the contract
started in April of 2007. Due
to operational challenges, the
two entities decided to change
their relationship from a joint
venture to a more market driven
prime  subcontractor
relationship. Thus, EGS
distributed to GTSI their
forty-nine percent share of
earnings through September 30,
2007 activity and purchased
GTSIs forty-nine percent of
EGS. Distributions made during
2007 to GTSI related to EGS
were $877,843. The Company paid
GTSI $660,358 for the
forty-nine percent ownership
and EGS is now a wholly-owned
subsidiary of the Company.12.
    
    
    Commitments and contingencies
    
    The Company derives a
substantial portion of its
revenue under contracts with
the Federal government. These
revenues are subject to
adjustment upon audit.
Management does not expect such
adjustments, if any, to have a
material effect on the
Companys financial position or
results of operations.The Company is occasionally
involved in various lawsuits,
claims, and administrative
proceedings arising in the
normal course of business. The
Company believes that any
liability or its loss
associated with such matters,
individually or in aggregate
will not have a material
adverse effect on the Companys
financial condition or its
results of operations.
  - 19 -