**SECURITIES
      AND EXCHANGE COMMISSION** **WASHINGTON,
      D.C. 20549**





________________





**FORM
      10-KSB**





(Mark
      One)





x
            ANNUAL
                REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE FISCAL YEAR ENDED APRIL 30,
                2007.





 ̈
            TRANSITION
                REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE TRANSITION PERIOD FROM ______ TO
                ________





**Commission
      File No. 000-18292**




**CHARYS
                HOLDING COMPANY, INC.**(Name
                of small business issuer in its charter)**Delaware**
            **54-2152284**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)**1117
                Perimeter Center West, Suite N415**
              **Atlanta,
                Georgia**
            **30338**(Address
                of principal executive offices)
            (Zip
                Code)Registrant’s
                telephone number, including area code:  **(678)
                443-2300**Securities
                registered under Section 12(b) of the Exchange Act:
            **None.**Securities
                registered under Section 12(g) of the Exchange Act:
            **Common
                stock, par value $0.001 per share.**(Title
                of class)




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15
      (d) of the Exchange Act.   ̈





Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 12 months (or 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  ̈





Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-B contained in this form, and no disclosure will 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-KSB or any amendment
      to
      this Form 10-KSB.   ̈





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





State
      issuer’s revenues for its most recent fiscal year:  $77.3
      million.













State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      last sold, or the average bid and asked price of such common equity as of
      September 30, 2007: $20,732,656





State
      the
      number of shares outstanding of each of the issuer’s classes of common stock as
      of September 30, 2007:  54,837,254





Documents
      incorporated by reference:  Items 9, 10, 11, 12 and 14 of Part III of
      this Form 10-KSB, which incorporate by reference the issuer’s 2007 Proxy
      Statement.




2





**TABLE
      OF CONTENTS**





Item
                1.
            Description
                of Business.
            4Item
                2.
            Description
                of Property.
            38Item
                3.
            Legal
                Proceedings.
            39Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders.
            41Item
                5.
            Market
                for Common Equity and Related Stockholder
                Matters.
            41Item
                6.
            Management’s
                Discussion and Analysis or Plan of
                Operation.
            43Item
                7.
            Financial
                Statements.
            56Item
                8.
            Changes
                In and Disagreements With Accountants on
                Accounting and Financial Disclosure.
            56Item
                8A.
            Controls
                and Procedures.
            56Item
                8B.
            Other
                Information.
            57Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons
                and Corporate Governance; Compliance with Section 16(a) of the Exchange
                Act.
            57Item
                10.
            Executive
                Compensation.
            58Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management
                and Related Stockholder Matters.
            58Item
                12.
            Certain
                Relationships and Related
                Transactions.
            58Item
                13.
            Exhibits.
            59Item
                14.
            Principal
                Accountant Fees and Services.
            71




3
 ***Table
            of Contents***





**PART
      I**





**Item
                1.**
            **Description
                of Business.**





**Forward-Looking
      Statements**





Statements
      in this Annual Report may be “forward-looking
      statements.”  Forward-looking statements include, but are not limited
      to, statements that express our intentions, beliefs, expectations, strategies,
      predictions or any other statements relating to our future activities or other
      future events or conditions.  These statements are based on current
      expectations, estimates and projections about our business based, in part,
      on
      assumptions made by our management.  These statements are not
      guarantees of future performance and involve risks, uncertainties and
      assumptions that are difficult to predict.  Therefore, actual outcomes
      and results may, and probably will, differ materially from what is expressed
      or
      forecasted in the forward-looking statements due to numerous factors, including
      those described above and those risks discussed from time to time in this Annual
      Report, including the risks described under “Description of Business - Risk
      Factors” and “Management’s Discussion and Analysis or Plan of Operation” and in
      other documents which we file with the Securities and Exchange
      Commission.





In
      addition, such statements could be affected by risks and uncertainties related
      to our financial condition, factors that affect our industry, market and
      customer acceptance, competition, government regulations and requirements and
      pricing, as well as general industry and market conditions and growth rates,
      and
      general economic conditions.  Any forward-looking statements speak
      only as of the date on which they are made, and we do not undertake any
      obligation to update any forward-looking statements to reflect events or
      circumstances after the date of this Annual Report.





**Company
      History**





We
      were
      initially incorporated in Minnesota in February 1959 under the name Rogers
      Hardware and Lumber Company.  Through a share exchange on October 12,
      2000, we became Spiderboy International, Inc.  On February 27, 2004,
      as a result of a change of control transaction, we changed our business to
      that
      of a holding company.  On June 25, 2004, our stockholders voted to
      approve a change in our state of incorporation from Minnesota to Delaware by
      means of a short form merger.  The merger was between Spiderboy and
      Charys Holding Company, Inc., a Delaware corporation, organized by our
      management for the specific purpose of the change of
      domicile.  Following the merger, Charys was the surviving
      entity.





The
      terms
      of the short form merger provided that the existing stockholders of Spiderboy
      received one share of Charys common stock for every 10 shares of the common
      stock of Spiderboy they owned (in effect, a one-for-10 reverse
      split).  Further, Billy V. Ray, Jr., our chief executive officer, as
      the holder of all of the shares of Series A Preferred Stock of Spiderboy,
      received one share of Charys Series A Preferred Stock for each share of
      Spiderboy Series A Preferred Stock he owned.





**Business
      Strategy**





Our
      initial business strategy was to acquire companies in specific industries and
      grow rapidly.  Now that we have recently identified the businesses we
      want to pursue and have acquired a number of operating companies in the targeted
      industries, our primary focus is to manage the companies we have acquired
      efficiently and integrate them into our business model.





Our
      material subsidiaries are organized into two primary business
      lines:





·
            Remediation
                and reconstruction; and





·
            Wireless
                communications and data
                infrastructure.





*Remediation
      and Reconstruction.*  Our remediation and reconstruction business
      line includes emergency planning and coordination, response to catastrophic
      losses, reconstruction and restoration and environmental
      remediation.  Our services cover the restoration and maintenance of
      commercial, industrial, marine, residential and institutional properties that
      have suffered catastrophic or other casualty losses.  Our services
      include:





4
 ***Table
            of Contents***





·
            Emergency
                planning and coordination services designed to minimize the human
                and
                asset risk in unexpected catastrophic incidents.  Personnel
                situations are predefined, and business continuity is ensured through
                comprehensive preparedness plans.  Services include developing
                responses for emergencies ranging from minor calamities to major
                disasters.  Emergency preparedness management plans are prepared
                that establish clear practices and procedures for our public and
                private
                sector clients.  Assessments are performed and tactics are
                developed, and tested.  In the event of a catastrophe, the
                response teams are deployed, with trained professional tactical leaders
                as
                first responders, to establish control, communications and contingency
                management that ensure discipline of procedures for asset recovery
                and
                resumption of business.





·
            Fire
                restorative services involve using the latest techniques and equipment
                to
                remove hazardous contaminants; restoring structures and equipment
                to full
                productivity; assessing and implementing the most effective and timely
                reconstruction procedures; and decontaminating and restoring facilities
                and equipment.  Specific services we provide include 24-hour
                emergency rapid response and mobilization; content and structure
                cleaning;
                smoke deodorization; cleaning and decontamination of air systems;
                emergency securing of buildings; electronic file recovery; document
                recovery and reproduction; moving and storage; monitoring of air
                quality
                during restoration; carpet cleaning; debris removal; and furniture
                refurbishing.





·
            Water
                restoration services include providing rapid response to water damage
                and
                extraction of water in order to minimize losses and subsequent
                reconstruction.  Unique services relating to commercial
                properties address business interruption, business continuity and
                loss of
                revenue in connection with restorative services.  In addition,
                we also offer content and structural mold
                remediation.





·
            We
                also offer a wide range of expanded professional catastrophic emergency
                services, including our Nationwide Catastrophe Response program,
                pursuant
                to which, in connection with major catastrophes, such as a major
                hurricane
                or earthquake, we provide resource management and coordination of
                a
                network of pre-qualified firms.  We also assist clients in
                complying with the financial procedures required for acceptance of
                their
                claims by federal government agencies and insurance
                providers.





*Wireless
      Communications and Data Infrastructure.*  Our wireless
      communications and data infrastructure business line provides an array of
      telecommunications infrastructure services to large services providers and
      other
      business enterprises.  This family of companies provides engineering
      services, program management, construction, installation and maintenance
      services, premise wiring services, tower and radio infrastructure services,
      and
      technology implementation and integration services.  As a provider
      with a complete portfolio of infrastructure engineering and construction
      capabilities, we also provide rapid deployment and restoration services in
      support of our remediation and reconstruction business unit.  Our
      services include:





·
            Engineering
                and project management services, including outside plant, civil and
                environmental engineering and design of towers, and aerial, underground
                fiber optic and copper cable systems.  Systems integration is
                performed for technology deployments, including wide area radio systems,
                municipal broadband networks and business enterprise
                systems.  Project management services for nationwide wireless
                installations include site survey and acquisition, site environmental
                engineering and tower engineering and
                evaluation.





·
            Construction,
                installation and maintenance services include placing and splicing
                cable,
                excavation and placement of conduit and cable systems, placing of
                structures such as poles, cabinets and closures and installation
                and
                maintenance of transmission and central office equipment.  Tower
                and infrastructure services include site acquisition, engineering,
                construction, build to suit, electronics installation and
                maintenance.  Radio and electronics technology is staged,
                assembled and tested in our secure and environmentally controlled
                facilities.





·
            Technology
                implementation and integration services are designed to assist
                organizations of all sizes to build more effective customer relationships
                by streamlining business processes, leveraging sophisticated technologies
                and increasing the efficiency of critical business
                interactions.  Services include business process consulting,
                communication systems auditing and analysis, custom system design,
                application development, system implementation integration, technical
                support and contact center
                outsourcing.





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            of Contents***





**Material
      Subsidiaries**





***Remediation
      and Reconstruction***





Our
      remediation and reconstruction business line includes the following
      subsidiaries:





***The
      Cotton Companies***





Cotton
      Holdings 1, Inc., Cotton Commercial USA, L.P., and Cotton Restoration of Central
      Texas, LP (sometimes collectively hereinafter referred to as, the “Cotton
      Companies”) are a group of disaster recovery firms specializing in fire and
      water restoration services ranging from initial project assessment and planning
      through catastrophe management, reconstruction, restoration and environmental
      remediation.  The strategy of the Cotton Companies is to provide high
      quality service to meet their customers’ expectations and anticipate
      opportunities.  Successful execution of this strategy has produced a
      broad portfolio of successful projects and satisfied clients.  The
      Cotton Companies employ state of the art technology, equipment, management
      and
      personnel techniques to carry out national and international
      operations.





The
      Cotton Companies were started in 1996 as a local fire and water damage
      restoration business in Houston, Texas.  Their primary goal was to
      become a large restoration company in Houston, handling residential and
      commercial claims.  By 2000, the Cotton Companies had achieved a
      leading position in the Houston market, where they continue to do
      business.





In
      1999,
      mold was introduced as a new covered loss under insurance policies in
      Texas.  At that time, mold remediation was new to the restoration and
      insurance industries.  The Cotton Companies used this opportunity to
      expand their service offerings to customers.  As profitability
      increased, the Cotton Companies expanded their geographic reach and, in 2001,
      formed Cotton Restoration of Central Texas, LP to serve the Austin and San
      Antonio, Texas markets.  This expansion enabled the Cotton Companies
      to take a large share of the restoration and remediation market in
      Texas.  In the same year, the Cotton Companies formed Cotton
      Commercial USA, L.P. to serve as their national catastrophe
      division.





In
      2001,
      Tropical Storm Allison significantly impacted the Houston business
      community.  As a result, the Cotton Companies met and secured new
      insurance and commercial accounts through Cotton Commercial USA,
      L.P.  The Cotton Companies invested their Tropical Storm Allison
      profits into their expansion beyond the borders of the State of
      Texas.  In 2002, the Cotton Companies commenced operations in both
      Florida and Georgia.





In
      2003,
      the Cotton Companies focused their energy on building their reconstruction
      division so that they would be able to provide more complete service to their
      accounts.  This division is the fastest growing division within the
      Cotton Companies.  During 2003, the Cotton Companies introduced to
      their commercial customers their Preferred Client Program, which consists of
      selling contingency contracts to Fortune 500 companies.  This program
      can be implemented to perform immediate service for clients in the event a
      disaster hits one of their properties.  All pricing and contracts are
      negotiated in advance under the provisions of the Preferred Client
      Program.





In
      2004,
      Florida was hit by four major hurricanes enabling the Cotton Companies to
      provide national disaster recovery service to their key accounts and several
      others.  By building new relationships with businesses and the
      insurance community, the Cotton Companies grew quickly.  Again, the
      Cotton Companies used their additional profits from the 2004 hurricane season
      to
      expand operations, opening offices in Charlotte, North Carolina and the District
      of Columbia.





In
      2005,
      the Cotton Companies further expanded their geographic reach by opening offices
      in Chicago, Illinois, Phoenix, Arizona and Denver, Colorado.  In the
      same year, the Cotton Companies also began providing services internationally,
      restoring properties in Jamaica and Cancun, Mexico.





With
      major insurance and Fortune 500 companies making disaster recovery plans a
      priority, the Cotton Companies are focused on securing accounts that have
      thousands of locations across the country.  The Cotton Companies’
primary focus is to secure day-to-day fire and water damage claims and
      capitalize on disasters recoveries.  This model worked well during the
      2004 and 2005 hurricane seasons. Following Hurricanes Katrina, Rita and Wilma,
      the Cotton Companies restored over 400 buildings and continue to provide
      services to clients in the areas affected by the storms.





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            of Contents***





***Crochet
      & Borel Services, Inc.***





Crochet
      & Borel Services, Inc. was established in 1995 to provide property owners
      with restoration and maintenance services in residential, commercial,
      industrial, marine, and institutional markets during times of
      distress.  Crochet & Borel provides fire and water restoration,
      content and structural cleaning, reconstruction, mold remediation and asbestos
      abatement services based out of offices in Houston, Austin and Beaumont, Texas
      and Lake Charles, Louisiana.  Crochet & Borel is one of the few
      restoration companies that has acquired an Environmental HVAC License, which
      is
      required by the State of Texas in order to engage in the replacement or cleaning
      of air ducts and air conditioning systems, carpet and upholstery.





Crochet
      & Borel enhances the effectiveness of its services through the use of
      innovative restoration processes and technologies.  Many members of
      Crochet & Borel’s staff currently hold industry related
      certificates.  Other members are involved in ongoing professional
      training and professional association memberships.  Crochet &
Borel is also dedicated to balancing its relationship between work with the
      insured as well as the insurance companies.





Through
      the years, Crochet & Borel has developed a niche within the disaster
      recovery industry of servicing governmental agencies, municipalities and school
      districts from Florida to Texas, and clients that depend on assistance through
      insurance and the Federal Emergency Management Agency (“FEMA”)  an
      agency of the U.S. government tasked with disaster mitigation, preparedness,
      response and recovery planning.  Crochet & Borel’s operational and
      administrative processes are compliant with the requirements of
      FEMA.  In some cases, Crochet & Borel brings in third party
      consultants to assist clients with the claims process to ensure that the clients
      receive the greatest governmental assistance possible.  Additionally,
      Crochet & Borel has passed audits by FEMA and assisted beneficiaries with
      the collection of obligated funds from FEMA.





Crochet
      & Borel has shaped its business model around the ability to mobilize quickly
      in the event of a catastrophic loss.  Prior to 2003, Crochet &
Borel focused on day-to-day residential mitigation, remediation and
      reconstruction work.  Beginning in 2003, Crochet & Borel decided
      to invest in portable equipment and other assets that could be utilized in
      disaster recovery.  Crochet & Borel began to aggressively market
      itself in the highly profitable large loss arena.  Over the past three
      years, Crochet & Borel has successfully proven its ability to tackle
      numerous large loss projects simultaneously and has established a solid
      reputation in the industry.





In
      December 2001, Crochet & Borel became a network member of Disaster Kleenup
      International, a cooperative business network of the top independent restoration
      companies across North America.  This network is comprised of some of
      the most experienced, highly informed and best equipped companies in the
      restoration industry.  The ability to pool network members together
      provides the resources and support to take on projects of a much larger
      magnitude than any one member could manage independently.





Focusing
      on catastrophe management after Tropical Storm Allison in 2001, Crochet &
Borel directed its growth efforts toward becoming a leader in catastrophe
      recovery and management.  Since 2001, Crochet & Borel has managed
      millions of dollars in FEMA, government/municipality and school related projects
      for clients that own or operate millions of square feet of structures in
      effected catastrophe regions.  From 2001 through the 2005 disaster
      season, Crochet & Borel became a market leader in handling restoration and
      recovery operations following large catastrophes.





Due
      to
      the increased number of storms along the Gulf Coast in recent years, contingency
      agreements between disaster restoration companies and property owners and
      managers have been on the rise.  Crochet & Borel has been using
      this “pre-season” approach that allows property managers in these coastal
      regions to pre-select and pre-negotiate with contractors, including their rates,
      in the event of a loss.  Crochet & Borel has executed these
      non-binding contingency agreements with various customers.





***Wireless
      Communications and Data Infrastructure***





Our
      wireless communications and data infrastructure subsidiaries include the
      following subsidiaries:





7
 ***Table
            of Contents***





***Cotton
      Telecom, Inc.***





Located
      in Houston, Texas, Cotton Telecom, Inc., formerly Ayin Holding Company, Inc.,
      was formed to serve as a holding company for the companies comprising our
      wireless communications services, namely Complete Tower Sources Inc., Mitchell
      Site Acq, Inc., LFC, Inc., and Ayin Tower Management Services, Inc. Through
      these companies, Cotton Telecom provides wireless operators with
      knowledge-driven solutions, specializing in the provision of fast, flexible
      end-to-end site deployments.  In today’s competitive
      telecommunications market, the wireless operators are beginning to concentrate
      on their core business, leaving the acquisition, development and construction
      functions to professional service companies such as Complete Tower Sources,
      Mitchell Site, LFC, Inc., and Ayin Tower Management, Inc.





Through
      its operating subsidiaries, Cotton Telecom offers a “turn-key solution,” a full
      spectrum of engineering and management services required for the development
      of
      wireless network infrastructure.  Cotton Telecom is located in
      Houston, Texas.





The
      wireless operator’s greatest challenge is providing the consumer with a reliable
      network at a competitive price.  As a combined unit, our greatest
      challenge is earning the confidence of the wireless operator and taking a more
      strategic role in the overall site management and development process by
      providing a true “one-stop” solution.





As
      a full
      service provider, Cotton Telecom offers clients tower rental services on towers
      owned by another of its subsidiaries, Ayin Tower Management Services, Inc.,
      in
      prime markets; site services including site selection, leasing, zoning and
      construction; new tower build-out to tenant specifications; and tower operation
      services, including 24-hour monitoring and an extensive inspections
      program.  Tower locator services provide clients with a one-stop
      source to search for a tower solution across multiple markets and
      owners.  Where a tower is not the solution, we locate, engineer and
      install a distributed antenna system on buildings or other
      structures.





On
      June
      20, 2006, Cotton Telecom executed a tower asset purchase agreement and tower
      asset exclusive option agreement with The Tower Company of Louisiana, LLC.
      pursuant to which we acquired an exclusive option, for a term of 36 months,
      to
      purchase towers in groups of 25 at a price of $325,000 per cell tower less
      pro-ratable items such as prepaid rent, utilities, taxes and maintenance fees.
      On July 11, 2006, Cotton Telecom purchased 19 cell towers for $6,142,309 less
      pro-ratable items such as prepaid rent, utilities, taxes and maintenance
      fees.





***Complete
      Tower Sources Inc.***





Complete
      Tower Sources Inc. is a wholly-owned subsidiary of Cotton Telecom and is engaged
      in the construction and installation of communication towers, principally in
      Louisiana and Mississippi.  Headquartered in Lafayette, Louisiana,
      Complete Tower Sources provides full service, in-house tower construction,
      installation and maintenance services to major wireless carriers in the Gulf
      Coast region.





Wireless
      carriers are focused on building and expanding their networks, increasing
      capacity, upgrading their networks with new technologies and maintaining their
      existing infrastructure.  Our engineers install, test and commission
      radio equipment at the carrier cell site, including installations of new
      equipment, technology upgrades, equipment modifications and
      reconfigurations.  These services may also include tower
      construction.  The range of infrastructure services includes
      installation, testing and commissioning of base station equipment, which is
      the
      installation of radio frequency equipment inside the shelter at a cell site,
      and
      testing to ensure that the equipment is operating prior to cell site activation;
      equipment modification and reconfiguration, which involves replacing old
      equipment with new equipment, routing cables and re-locating equipment at the
      cell site; network modifications, which refers to work done on existing cell
      sites to increase capacity or change the direction of sectors or antennas;
      sectorization, which is the installation of antennas to existing cell towers
      to
      increase the capacity of the cell site; and maintenance, which includes antenna
      maintenance to replace damaged antennas, installing tower lighting control
      panels or sensors or repairing damaged shelters.





The
      capabilities of Complete Tower Sources include building new towers ranging
      from
      60 to 450 feet, installing new shelters, lines and antennas on existing towers
      in metropolitan and rural areas, providing an array of technical deployment
      services, including installing emergency generators, hanging new lines and
      antennas, testing existing equipment and purchasing, constructing and
      maintaining tower facilities.  In addition to constructing towers,
      Complete Tower Sources also maintains a fabrication facility where steel
      platforms are designed, manufactured and deployed for shelters that need to
      be
      elevated above areas prone to flooding.  Our fabrication customers
      include wireless operators and governmental entities.





8
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            of Contents***





***Mitchell
      Site Acq, Inc.***





Mitchell
      Site Acq, Inc. is a wholly-owned subsidiary of Cotton Telecom engaged in site
      acquisition, zoning, permitting and project management for cell tower sites,
      primarily in Louisiana and Mississippi.  The company is headquartered
      in Lafayette, Louisiana.





For
      Mitchell Site, site acquisition is not a stand-alone service, but a service
      offered in conjunction with professional project management and site
      coordination functions.  Mitchell Site assists its customers with all
      facets of the design phase, including site location and identification, lease
      negotiation and execution, zoning and planning approval process coordination,
      filing and appearance, ordinance writing, permitting, governmental interaction,
      coordination of title, architectural design, regulatory, environmental
      management, site surveys, photographic simulations and as-built
      drawings.  Mitchell Site also provides general construction management
      services, including power and telephone company coordination, bid management,
      on-site construction management and project management.  Mitchell Site
      will process search rings on behalf of clients, identifying all viable candidate
      locations, and then prepare a comprehensive planning guide for client
      prioritization.





***LFC,
      Inc.***





Headquartered
      in Houston, Texas, LFC, Inc. is a wholly-owned subsidiary of Cotton Telecom
      that
      provides professional consulting support services to the wireless communication,
      petroleum exploration, industrial, commercial and residential development
      industries.  Historically, LFC has marketed its services primarily to
      the telecommunications site development industry.  However, LFC’s
      marketing efforts have evolved to include the traditional (*i.e.*,
      retail, commercial and industrial) site development industry.  This
      evolution results from the realization that the site development consulting
      and
      engineering services utilized by the wireless telecommunication site development
      industry are the same services utilized by the broader commercial real estate
      development industry.  Furthermore, client diversification is
      desirable to LFC due to potential negative impacts caused by business cycles
      occurring throughout various industries.





LFC
      offers and markets the following professional services: wireless
      telecommunications site development; environmental consulting; wireless site
      architecture and engineering services; structural engineering; geotechnical
      engineering; construction materials testing; petroleum land management; and
      surveying.  LFC believes the breadth of its service offering gives it
      an advantage over its competitors.  Therefore, LFC will present a
“turn-key” offering of integrated and diverse services to potential clients
      during the sales process.





***Aeon
      Technologies Group, Inc.***





Aeon
      Technologies Group, Inc., formerly, CCI Telecom, Inc., another wholly-owned
      subsidiary of Cotton Telecom Inc., is a telecommunications infrastructure
      service provider with offices in San Antonio, Dallas and Houston, Texas and
      Lee,
      Massachusetts.  It supplies design, deployment and maintenance
      services to the communications industry and manages a wide range of
      communication infrastructure projects from wireless and wireline networks to
      satellite and radar systems.





Aeon
      Technologies serves a diverse customer base of approximately 100 customers
      that
      include large and small companies.  Aeon Technologies is also a
      broadband network deployment and maintenance provider, specializing in the
      design and integration of fixed wireless broadband networks.  Aeon
      Technologies provides a wide range of technical services for wireless and
      wire-line telecom equipment and power systems installation projects, including
      national surveys, site engineering, installation and testing of microwave and
      other radio equipment; a single point of project management; services to
      identify, acquire and engineer the sites best suited to meet the specialized
      needs of its customers; development and implementation services to wireless
      carriers and equipment manufacturers involved in the cellular, microwave,
      broadband wireless and fixed wireless markets; and a broad range of services
      designed to assist service providers in locating and repairing faults in their
      primary and back haul radio structures and components.





9
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            of Contents***





Aeon
      Technologies has built and/or modified radar installations in the United States
      and has provided site construction and installation services on both satellite
      ground station and radio telescope building projects, building and modifying
      telecom facilities for wire line and wireless service providers.





Aeon
      Technologies is a turn-key infrastructure builder for its customers, performing
      facility upgrades for switching equipment and civil construction and
      installation of regeneration huts along fiber optic cable routes.  It
      also has particular expertise in constructing around active telecom equipment,
      where temperature and dust variations can significantly impact network
      operations.  Power system projects vary from installing a string of
      batteries to live “cut-overs.”  Aeon Technologies specializes in
      working around live equipment, routinely performing “hot-cuts” in the central
      office and switch environment.





***Viasys
      Companies***





Viasys
      Network Services, Inc. and Viasys Services, Inc. (collectively the “Viasys
      Companies”) provide a variety of services to the transportation, utility,
      telecommunication and manufacturing industries.  The corporate
      headquarters are located in Lakeland, Florida with divisional offices in Tampa
      and Orlando, Florida, Atlanta and Albany, Georgia, and Raleigh and Charlotte,
      North Carolina, with various project offices covering 18 states in the eastern
      United States.





The
      Viasys Companies’ telecommunications infrastructure services include
      engineering, construction, installation and maintenance of aerial, underground
      and buried fiber-optic, coaxial and copper cable systems owned by local and
      long
      distance communications carriers and cable television multiple system
      operators.  Their telecommunications services include engineering,
      installation and maintenance of broadband networks.  These services
      also address copper, hybrid fiber coax and passive optical
      networks.





The
      Viasys Companies provide an extensive range of general contracting and
      maintenance services to the manufacturing and government sector.  They
      also seek to recruit and retain a competent, skilled work force to meet the
      needs of their customers.





In
      addition, the Viasys Companies provide transportation services in various state
      projects throughout the southeastern United States, where they install, test
      and
      maintain technology, including cameras, sensors, weigh-in-motion scales, traffic
      signal systems and variable message signs.





Viasys
      Network Services designs, deploys and maintains wire-line and wireless broadband
      networks for both the government and private sectors.  Projects
      include county-wide mobile broadband systems for public safety, transit,
      transportation, municipal Wi-Fi deployment, enterprise wireless networks and
      fiber optic deployments for the telecom industry.





***Method
      IQ, Inc.***





Method
      IQ, Inc. is a customer interaction solutions provider, helping organizations
      of
      all sizes build more effective customer relationships by streamlining business
      processes, leveraging and implementing emerging and sophisticated technologies
      and increasing the efficiency of critical business
      interactions.  Method IQ is headquartered in Alpharetta, Georgia, with
      offices throughout the southeastern United States.





Method
      IQ’s clients include Fortune 500 companies where it supports a range of leading
      technology products coupled with proven service
      offerings.  Assignments range from top-level strategic assessments to
      implementing and operating world-class contact centers.





Method
      IQ
      is also a provider of customer interaction solutions for companies in the
      financial, healthcare and other industries which help organizations more
      effectively manage touch points with customers, improve revenue generation
      opportunities and increase productivity in contact centers.





**Material
      Acquisitions**





The
      details of the acquisition of our various material subsidiaries are as
      follows:





10
 ***Table
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***Crochet
      & Borel Services, Inc.***





We
      acquired Crochet & Borel Services, Inc. from Troy D. Crochet pursuant to a
      stock purchase agreement dated as of May 3, 2006, and amended on January 12,
      2007, for a total consideration of 8,008,000 shares of our common stock (which
      have registration rights) valued at $100.1 million and $78,932,514 composed
      of
      $1,000,000 paid in cash at closing, and a promissory note in the original
      principal amount of $77,932,514 bearing interest at the rate of 4.74% per
      annum.





We
      paid
      $31.1 million against the balance promissory note as of April 13,
      2007.  The remaining balance of this promissory note as of April 30,
      2007 is $47,169,383, which is due and payable on January 31, 2009.





The
      promissory note is secured by a security agreement pursuant to which we and
      our
      wholly-owned subsidiaries, Crochet & Borel Services, Inc. and Ayin Holding
      Company Inc. (now known as Cotton Telecom, Inc.), granted Mr. Crochet a security
      interest in certain assets, subject to liens on any collateral existing on
      the
      date of the security agreement.





***The
      Cotton Companies***





We
      acquired Cotton Holding 1, Inc., Cotton Commercial USA, L.P. and Cotton
      Restoration of Central Texas, LP (the “Cotton Companies”) pursuant to a stock
      and limited partnership purchase agreement dated as of September 1, 2006, and
      amended on October 6, October 19, October 31, December 8, 2006 and February
      23,
      2007, for total consideration of 1,955,532 shares of our common stock (which
      have registration rights) and $49,204,406 (composed of $39,204,406 paid in
      cash
      and a promissory note in the original principal amount of
      $10,000,000 secured by 400,000 shares of Charys common
      stock  bearing interest at the rate of 9% per annum).





We
      amended and restated the promissory note on February 23 and June 25, 2007,
      by
      which the outstanding principal balance of the note $5,482,816 is payable in
      36
      equal monthly installments of $175,942 each, beginning on September 1, 2007
      and
      continuing on the first day of each month thereafter until August 1, 2010,
      when
      the entire amount shall be due and payable in full. The payment due September
      1,
      2007 has not been paid.





We
      have
      the right to prepay the promissory note, in full or in part, at any time,
      without penalty, fee or charge.  Pursuant to the promissory note, we
      will make a principal payment of $2,000,000 if the subsidiaries in our Disaster
      and Remediation Group collect gross revenues of $20,000,000 between June 25,
      2007 and the maturity date and another principal payment of $1,000,000 if the
      subsidiaries in our Disaster and Remediation Group collect gross revenues of
      an
      additional $10,000,000 between June 25, 2007 and the maturity date.





The
      promissory note is secured by a Guaranty Agreement and a Security Agreement
      executed by Crochet & Borel, Inc.  The payees under the promissory
      note also received shares of our common stock, which they hold as additional
      collateral.





***Complete
      Tower Sources Inc.***





Our
      wholly-owned subsidiary, Cotton Telecom, Inc. (formerly Ayin Holding Company,
      Inc.), acquired Complete Tower Sources Inc. from Lori H. Mitchell, pursuant
      to
      stock purchase agreement dated as of June 20, 2006, and amended on August 15,
      October 27 and December 14, 2006, for an aggregate purchase price of $76,000,000
      (excluding consideration paid to the seller for a non-competition agreement,
      and
      extension options, as described below), subject to adjustment as provided in
      the
      stock purchase agreement.  The consideration was paid as
      follows:





·
            A
                total of $38,420,390 paid to Lori H. Mitchell on August 15, 2006
                and
                February 21, 2007;





·
            A
                9% promissory note dated October 20, 2006 in the original principal
                amount
                of $14,200,000 payable to Lori H. Mitchell in two annual installments
                within a 120 day period following December 18, 2007 and December
                18, 2008,
                subject to Complete Tower Sources achieving certain EBITDA
                targets.  Failure to achieve the EBITDA targets could reduce the
                payments due under the promissory note by as much as
                50%;





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·
            An
                8.75% Senior Convertible Note payable to Lori H. Mitchell in the
                original
                principal amount of $5,790,476 dated February 16, 2007 and due February
                16, 2012 with interest payable quarterly in arrears. and guaranteed
                by
                Charys; and





·
            A
                sum of $17,589,134 in cash paid to certain employees of Complete
                Tower
                Sources on February 21, 2007.





In
      addition to the foregoing, we issued 583,516 shares of our common stock to
      the
      seller in consideration for the seller entering into a three year
      non-competition agreement.  The shares have registration rights. We
      also paid the seller a non-refundable extension payment of $1,450,000 on October
      27, 2006 for her agreement to extend the closing.





Carroll
      Castille, the former senior vice president and managing director of Complete
      Tower Sources, entered into an employment agreement with Complete Tower Sources
      to serve as its president on February 21, 2007.  Under that agreement,
      Mr. Castille receives no base salary, but is entitled to a bonus of between
      $250,000, and $1,000,000, to be determined based upon the year-end audited
      financial results of Complete Tower Sources compared to its projected financial
      performance for the year.  Mr. Castille also delivered a three year
      non-competition agreement on February 21, 2007.





***Mitchell
      Site Acq, Inc.***





Our
      wholly-owned subsidiary, Cotton Telecom, acquired Mitchell Site Acq, Inc. from
      Matthew B. Mitchell pursuant to stock purchase agreement dated June 20, 2006,
      and amended on August 15, October 27 and December 14, 2006, for an aggregate
      purchase price of $29,000,000 (excluding consideration paid to the seller for
      a
      non-competition agreement, and extension options, as described below), subject
      to adjustment as provided in the stock purchase agreement.  The
      consideration was paid as follows:





·
            A
                total of $20,602,976 paid to the seller on August 15, 2006 and February
                21, 2007;





·
            A
                9% Stock Purchase Agreement Promissory Note dated October 20, 2006
                in the
                original principal amount of $2,700,000 payable to Matthew B.
                Mitchell  in two annual installments within a 120 day period
                following December 10, 2007 and December 10, 2008, subject to Mitchell
                Site achieving certain EBITDA targets. Failure to achieve the EBITDA
                targets could reduce the payments due under the promissory note by
                as much
                as 50%;





·
            A
                9% Goodwill Purchase Agreement Promissory Note dated October 20,
                2006 in
                the original principal amount of $2,700,000 payable to Matthew B.
                Mitchell
                in two annual installments within a 120 day period following the
                Closing
                Date of February 27, 2007 subject to Mitchell Site achieving certain
                EBITDA targets.  Failure to achieve the EBITDA targets could
                reduce the payments due under the promissory note by as much as
                50%;





·
            An
                8.75% Senior Convertible Note payable to Mathew B. Mitchell in the
                original principal amount of $2,209,523 dated February 16, 2007 and
                due
                February 16, 2012 with interest payable quarterly in arrears. and
                guaranteed by Charys; and





·
            A
                sum of $787,500 paid to certain contractors of Mitchell Site on February
                21, 2007.





In
      addition to the foregoing, we issued 72,939 shares of our common stock to the
      seller in consideration for the seller entering into a three year
      non-competition agreement.  The shares have registration
      rights.  We also paid the seller a non-refundable extension payment of
      $550,000 on October 27, 2006 for his agreement to extend the
      closing.





On
      February 21, 2007, both the seller and Lori H. Mitchell entered into employment
      agreements with Mitchell Site.  Pursuant to these employment
      agreements, the seller is serving as Mitchell Site’s president and Mrs. Mitchell
      is serving as its vice-president.  Under the terms of these
      agreements, neither the seller nor Mrs. Mitchell receives a base salary, but
      both are entitled to a bonus of between $250,000, and $1,000,000, to be
      determined based on Mitchell Site’s year-end audited financial results compared
      to its projected financial performance for the year.





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On
      February 27, 2007 (a) the 8.75% Senior Convertible Note payable to Lori H.
      Mitchell in the original principal amount of $5,790,476 dated February 16,
      2007
      and due February 16, 2012 with interest payable quarterly in arrears and (b)
      the
      8.75% Senior Convertible Note payable to Mathew B. Mitchell in the original
      principal amount of $2,209,523 dated February 16, 2007 and due February 16,
      2012
      with interest payable quarterly in arrears and guaranteed by Charys were
      cancelled and new notes with the same payment terms were issued as
      follows:





·
            An
                8.75% Senior Convertible Note payable to Mathew B. Mitchell in the
                original principal amount of
                $2,590,476;





·
            An
                8.75% Senior Convertible Note payable to Lori H. Mitchell in the
                original
                principal amount of $2,569,524;





·
            An
                8.75% Senior Convertible Note payable to Carroll Castille in the
                original
                principal amount of $2,840,000.





***LFC,
      Inc.***





Effective
      April 30, 2006, LFC Acquisition Company, Inc, an indirect wholly owned
      subsidiary of Charys Holding Company, Inc merged with LFC, Inc. All LFC common
      stock and other equity security was cancelled and retired. The initial
      consideration LFC shareholders received was cash of $2.0 million and 562,840
      shares of Charys common stock, valued at $2.64 per share, which was the closing
      price on the acquisition date. In connection with this acquisition, During
      fiscal year 2007, Charys issued an additional 1,254,180 common shares at a
      total
      market value of $3.3 million.





Charys
      also recorded $4.2 million in acquisition related acquisition costs including
      the cost of common shares to consultants required under an agreement dated
      April
      24, 2006.





The
      final
      consideration for LFC’s professional service business will be equal to the
      product of 4.5 times the service business’ earnings before interest, taxes,
      depreciation and amortization for the three year period commencing on May 1,
      2006 and ending on April 30, 2009 (the “Adjustment Period”).  At the
      end of Adjustment Period, the service business consideration will be adjusted
      as
      follows:





·
            If
                the professional service consideration is greater than $11,206,152,
                Charys
                will pay to the sellers the difference by: (i) issuing to each seller
                his
                pro rata share of the number of shares determined by multiplying
                the
                surplus amount by 65% and dividing the resulting product by $2.64;
                and
                (ii) paying each seller his pro rata share of an amount in cash equal
                to
                the surplus amount multiplied by 35%, but only if such cash payment
                is
                permitted under loan agreements, if any, to which Charys and LFC,
                Inc. are
                parties.





·
            If
                the professional service consideration is less than the $11,206,152,
                the
                sellers shall pay to Charys the difference by forfeiting each seller’s pro
                rata share of the number of shares determined by dividing the deficit
                amount by the applicable share price (as defined in the merger
                agreement).  If the value of this forfeited amount is greater
                than $7,833,999, then the sellers shall forfeit their right to receive
                all
                or a portion of the $1,120,615 that was held back by Charys, and
                such
                forfeited amount shall be delivered to
                Charys.





At
      closing, Charys paid approximately $2 million in cash to the LFC stockholders,
      after giving effect to all pre-closing credits and deductions attributable
      to
      the service business. We estimate that we will issue up to an aggregate of an
      additional 1,963,500 shares of our common stock in satisfaction of the stock
      portion of the consideration payable in connection with this
      transaction.





In
      addition to the adjustments outlined above, the sellers have the right to
      receive contingent performance payments based upon LFC’s earnings before
      interest, taxes, depreciation and amortization and other financial targets
      during the fourth and fifth years after closing as set forth in the merger
      agreement.  Such payments, if earned, will be due and payable within
      120 days following the end of each twelve-month period.  Any
      contingent performance installment due to the sellers will be paid in cash
      or
      our common stock, in the sellers’ discretion, provided that in the event the
      sellers opt for cash, such cash payments shall be subject to the terms and
      conditions of any loan agreements to which Charys or LFC are
      parties.





13
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We
      also
      agreed to file a registration statement covering the resale of our common stock
      to be issued to the sellers under the definitive merger agreement.





***Viasys
      Companies***





Effective
      November 1, 2005, the
      Company acquired all outstanding common stock of Viasys  Network
      Services, Inc and Viasys Services, Inc. As initial consideration, the
      Viasys shareholders received cash and an 8% subordinated secured promissory
      note
      for $3.5 million. Under the Stock Purchase Agreement, the Company placed common
      stock with a market value of $500,000 on the closing date in escrow pursuant
      to
      the Escrow Agreement which, among other matters, provides for the release of
      the
      Charys shares upon payment of the final installment of principal and interest
      on
      the promissory note. The final installment on the note is due fifteen months
      after the closing date. In connection with this acquisition, Charys also issued
      4,879,967 common shares to consultants required under an agreement dated
      November 17, 2005.





Effective
      September 29, 2006, Charys and Viasys entered into a Mutual Release and
      Settlement Agreement (the “Viasys Settlement Agreement”) with New Viasys
      Holdings LLC (“New Viasys”). Pursuant to the Viasys Settlement Agreement, the
      parties agreed to waive and release one another from certain closing conditions,
      payment obligations and indemnification claims under the Stock Purchase
      Agreement of November 1, 2005.  Furthermore, New Viasys agreed to
      cancel a $3.5 million subordinated secured note and related security agreement,
      to extend the deadlines until December 31, 2006 for Charys to secure a standby
      letter of credit and release of surety bond as required in the Viasys Purchase
      Agreement, and to release Charys from the indemnification claim arising out
      of
      the settlement reached by Charys with Lumbermen’s Mutual Casualty Company in May
      2006 (the “Lumbermen’s Settlement”).  In consideration for New Viasys’
release of the foregoing obligations, Charys agreed to release to New Viasys
      500,000 escrowed shares of the Company’s unregistered common stock, and to issue
      to New Viasys an additional 225,000 shares of its unregistered common stock.
      These shares were issued in the names of Mel Harris and Steven Posner, two
      of
      the owners of New Viasys. Messrs. Harris and Posner were given the right during
      the 90-day period beginning on the first anniversary of the Viasys Settlement
      Agreement closing (“Closing”) to require Charys to repurchase, at a price of
      $6.50 per share, any number of these shares they may specify. Charys also agreed
      to issue to Messrs. Harris and Posner at Closing convertible promissory notes
      in
      the amounts of $473,849 and $242,151, respectively. In addition, Charys agreed
      to pay to New Viasys at Closing, in immediately available funds, the sum of
      $372,424 and to pay within 60 days after Closing the amount of $426,333,
      including $93,000 in interest. The Company also agreed to release New Viasys
      from the indemnification claim that may arise out of the Lumbermen’s
      Settlement.





In
      addition, we agreed to replace the seller’s standby letter of credit in the
      amount of $1,350,000 which secured obligations under certain insurance policies
      and was secured by cash collateral of the seller in the amount of
      $1,039,000.  Pursuant to the May 2007 settlement agreement, we paid
      $600,000 to the seller, which the seller applied to our obligation to replace
      the letter of credit.  In addition, the seller extended our obligation
      to replace the letter of credit for 30 days, which obligation is currently
      in
      default.





***CCI
      Telecom, Inc**.*





On
      March
      4, 2005, Charys Acquisition Company, Inc., merged with Aeon Technologies Group,
      Inc. (formerly Contemporary Constructors Inc., a subsidiary of CCI Telecom,
      Inc.).  As a result of the merger, we issued a total of 795,342 shares
      of our common stock, adjusted for fractional shares, to Aeon Technologies’
stockholders, each of whom also received registration rights with respect to
      all
      of the shares of our common stock received in the merger.  For
      purposes of the calculation of the number of shares of our common stock to
      be
      issued in the merger, the parties assumed a value of $4.00 per share, or an
      aggregate value of $3,181,368.





***Method
      IQ, Inc.***





We
      acquired Method IQ, Inc. from Rock Creek Equity Holdings, LLC and J. Alan Shaw
      pursuant to a stock purchase agreement on December 22, 2005, as amended on
      May
      1, 2006, for an aggregate purchase price of $10,500,000, paid as
      follows:





·
            A
                secured promissory note with an original principal balance of $5,250,000,
                which has been paid.





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            of Contents***





·
            1,315,000
                shares of our common stock shares, which were issued on June 5,
                2006.





In
      addition to the foregoing consideration, we contributed $500,000 to the capital
      of Method IQ.





The
      aggregate $10,500,000 purchase price was subject to a one-time adjustment based
      upon our financial performance during the year following December 22, 2005;
      however, no adjustment was required.





On
      May
      29, 2007 we entered into a Separation Agreement and Mutual General Release
      with
      Rock Creek Equity Holdings and its principals pursuant to which we issued
      507,316 shares of our common stock; the Separation and Mutual General Release
      releases all parties from any and all outstanding obligations under the stock
      purchase agreement.





We
      also
      agreed to register all shares of our common stock issued and issuable to Rock
      Creek Equity Holdings and Mr. Shaw pursuant to the stock purchase
      agreement.





**Financing
      Transactions**





The
      following table summarizes our financing transactions in which we engaged or
      some activity occurred during the fiscal year ended April 30, 2007 and up to
      the
      date of this Annual Report, which are described in further detail
      below.








**Transaction**
            **Lender/Investor**
            **Borrower/Obligor**
            **Description**
            **Amount**Private
                Offering of Securities
            McMahan
                Securities Co. L.P., as Initial Purchaser
            Charys
                Holding Company, Inc.
            Private
                Offering of Units, Consisting of 8.75% Senior Convertible Notes and
                Warrants
            $201,250,000Crochet
                & Borel/New Stream Revolving Credit Facility
            New
                Stream Commercial Finance, LLC
            Crochet
                & Borel Services, Inc.
            Revolving
                Credit Facility
            $35,000,000
                (1)Ayin
                Tower Management/New Stream Revolving Credit Facility
            New
                Stream Commercial Finance, LLC
            Ayin
                Tower Management Services, Inc.
            Revolving
                Credit Facility
            $14,000,000
                (1)Complete
                Tower Sources/New Stream Revolving Credit Facility
            New
                Stream Commercial Finance, LLC
            Complete
                Tower Sources Inc.
            Revolving
                Credit Facility
            $10,000,000
                (1)Vision
                Financing
            Purchasers
                lead by Vision Opportunity Master Fund, Ltd.
            Charys
                Holding Company, Inc.
            Note
                and Warrant Purchase Agreement
            $14,500,000Aeon
                Technologies/CAPCO Financing
            CAPCO
                Financial Company
            Aeon
                Technologies Group, Inc.
            Revolving
                Credit Facility
            $3,000,000
                (1)Digital
                Communications Services/Wachovia Credit Facility
            Wachovia
                National Bank
            Digital
                Communications Services, Inc.
            Revolving
                Credit Facility
            $1,000,000
                (2)Method
                IQ/CAPCO Financing
            CAPCO
                Financial Company
            Method
                IQ, Inc.
            Revolving
                Credit Facility
            $2,000,000
                (1)Series
                D Preferred Stock Financing
            Various
                Investors
            Charys
                Holding Company, Inc.
            Securities
                Purchase Agreement
            $13,000,000Securities
                Exchange Agreement with respect to Series D Preferred
                Stock
            Institutional
                Investors lead by Gottbetter Capital Master, Ltd.
            Charys
                Holding Company, Inc.
            Subordinated
                Unsecured Convertible Notes
            $15,037,278Amendment
                Agreement with respect certain Securities Purchase
            Institutional
                Investors led by Imperium Master Fund, Ltd.
            Charys
                Holding Company, Inc.
            Senior
                Secured Convertible Notes  to refinance existing
                debt
            $4,719,200HarPos
                Promissory Note
            HarPos
                Funding, LLC
            Charys
                Holding Company, Inc.
            15%
                Promissory Note and Warrants
            $984,200Note
                Purchase Agreement
            Imperium
                Master Fund, Ltd.
            Charys
                Holding Company, Inc.
            Senior
                Secured Note
            $690,000Note
                Purchase Agreement
            Imperium
                Master Fund, Ltd.
            The
                Cotton Companies, guaranteed by Charys Holding Company,
                Inc.
            Senior
                Secured Note
            $3,040,000Sean
                Posner Note
            Sean
                Posner
            Charys
                Holding Company, Inc.
            15%
                Promissory Note
            $367,954Steven
                Posner Note
            Steven
                Posner
            Charys
                Holding Company, Inc.
            15%
                Promissory Note
            $367,954Mel
                Harris Note
            Mel
                Harris
            Charys
                Holding Company, Inc.
            15%
                Promissory Note
            $368,064





_____


(1)
            Revolving
                credit facilities maximum amounts available to the companies subject
                to
                borrowing base calculation
                restrictions.


(2)
            Maximum
                available and outstanding.





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***Private
      Offering of Securities***





On
      February 16, 2007, we completed a $175 million private offering of securities
      to
      qualified institutional buyers pursuant to Rule 144A under the Securities Act
      of
      1933.  On March 6, 2007, the buyer exercised its option to purchase an
      additional $26.25 million of the securities. The securities were sold by McMahan
      Securities Co., L.P. (collectively, sometime hereafter referred to as the
“McMahan Securities”) to qualified institutional buyers in separable Units, each
      consisting of $1,000 principal amount of our 8.75% Senior Convertible Notes
      due
      February 16, 2012, and our warrants to purchase 333.333 shares of our common
      stock at $4 per share and our warrants to purchase 333.333 shares of our common
      stock at $5 per share, in each case, subject to adjustment under certain
      circumstances.  The warrants expire on February 16,
      2012.  The notes are initially convertible into 444.444 shares of our
      common stock per $1,000 principal amount ($2.25 per share), and are
      provisionally redeemable by Charys after two years if our common stock reaches
      certain specified stock prices.  A cash reserve covering the first two
      quarters of interest due under the notes was set aside out of the net proceeds
      of the offering.  On April 30, 2007, we filed a registration statement
      covering the resale of the notes, the warrants and the underlying common
      shares.  The notes and warrants trade on the PORTAL Market, or
      directly between qualified buyers and are guaranteed by each of our material
      subsidiaries.  We used the aggregate net proceeds of the offering of
      approximately $189.9 million toward certain of the payments due under the
      purchase agreements for Cotton Holdings 1, Inc., Cotton Commercial USA, L.P.,
      Cotton Restoration of Central Texas, LP, Complete Tower Sources Inc., Mitchell
      Site Acq, Inc. and Crochet & Borel Services, Inc., to refinance and/or pay
      off other indebtedness and for working capital and other general corporate
      purposes.





***Crochet
      & Borel/New Stream Revolving Credit Facility***





On
      August
      28, 2006, Crochet & Borel Services, Inc. entered into a loan and security
      agreement with New Stream Commercial Finance, LLC to provide for a revolving
      credit facility of up to $35 million for Crochet & Borel.  This
      senior credit facility, which has a one-year term, is secured by substantially
      all of Crochet & Borel’s assets and a pledge of all of our stock ownership
      in that subsidiary.





In
      connection with this financing, New Stream received warrants to purchase
      2,000,000 shares of our common stock at a price of $4.80 per
      share.  New Stream was also granted registration rights with respect
      to the shares of common stock underlying these warrants.





According
      to this New Stream loan agreement, as amended to date, Crochet & Borel is
      subject to the following minimum earnings before interest, taxes, depreciation
      and amortization and minimum tangible net worth financial
      covenants:





16
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**Fiscal
                Quarter Ending**
            **Minimum**
              **Earnings
                Before Interest, Taxes, Depreciation and
                Amortization**
            **Minimum
                Tangible**
              **Net
                Worth**October 31,
                2006
            $15,000,000
            $ 1,000,000January 31,
                2007
            $30,000,000
            $38,000,000April 30,
                2007
            $45,000,000
            $40,000,000July 31,
                2007
            $60,000,000
            $45,000,000








In
      addition, Crochet & Borel is also subject to certain negative covenants that
      prevent it from conducting certain activities without New Stream’s
      consent.  Such restricted activities include, among others, providing
      financing to any party, cancellation of indebtedness owed Crochet & Borel,
      acquisitions and other material corporate restructuring, related party
      transactions exceeding $100,000, creation of new liens on Crochet & Borel’s
      assets, transfers of assets not in the ordinary course of business and making
      certain restricted payments.





As
      of
      September 30, 2007, the outstanding balance due under this New Stream loan
      agreement is approximately $1.6 million, which is due and payable by August
      28,
      2007.  Currently Crochet & Borel is not in compliance with certain
      financial covenants. Charys is working with New Stream to restructure the
      current credit facility.





***Gottbetter
      Capital Subordinated Convertible Debt***





On
      August
      31, 2006, we closed a $20,000,000 financing, which was followed approximately
      two months later by a $1,000,000 tag-along financing, in the form of
      subordinated convertible notes.  The aggregate principal amount of
      these notes issued was $22,105,263, reflecting a 5% original issuance
      discount.  These notes were issued by us to a group of investors led
      by Gottbetter Capital Master, Ltd. and carried a 10% coupon rate and a 24-month
      term.  These notes were convertible into our common stock at a
      conversion price of $2.25 per share, which resulted in approximately 9,824,561
      shares issuable upon conversion of all of the notes.  Further, in
      connection with our Vision financing, described below, we entered into a side
      letter agreement with the Gottbetter investors dated November 8, 2006, pursuant
      to which the investors waived certain preemptive rights and consented to the
      Vision financing, and pursuant to which we issued warrants to the Gottbetter
      investors to acquire approximately 11,030,614 shares of our common stock with
      an
      exercise price of $2.25 per share.  We also granted registration
      rights with respect to the conversion shares and warrant shares that may be
      received by the Gottbetter investors upon conversion of their notes or exercise
      of their warrants.





The
      Gottbetter investors received a senior security interest, which was subordinate
      only to existing security interests granted to banks and our other senior debt
      lenders, in substantially all of our assets and the assets of our
      subsidiaries.  We were required to make interest payments for the
      first nine months due on the Gottbetter notes, after which payments of principal
      and interest were scheduled to begin.





Beginning
      on February 22, 2007, and using proceeds from the sale of the McMahan Securities
      described elsewhere in this Annual Report, we redeemed all of the Gottbetter
      notes with the exception of certain of these notes in the aggregate principal
      amount of approximately $4.5 million.  However, pursuant to an
      Amendment Agreement dated as of April 5, 2007, between Charys and various
      investors, the investors purchased the remaining Gottbetter notes for then
      current balance in the amount of $4,719,200, and in the process extended their
      maturity date and made certain other modifications to the notes.  We
      have not made any of the payments due on the amended notes.  However,
      as of the date of this Annual Report, none of the holders of the amended notes
      has indicated an intention to institute any action against Charys.





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In
      addition, Charys and the investors amended and restated the Registration Rights
      Agreement dated August 30, 2006 in order to, among other things, extend the
      filing and effectiveness deadlines for the registration of the Conversion Shares
      and the shares of our common stock into which the Warrants (as defined in the
      Securities Purchase Agreement dated August 30, 2006) are
      exercisable.





***Ayin
      Tower Management/New Stream Revolving Credit Facility***





On
      November 8, 2006, Ayin Tower Management Services, Inc. entered into a loan
      and
      security agreement with New Stream providing for up to $14,000,000 in revolving
      credit to Ayin Tower Management, which expires on November 8,
      2008.  The actual amount of credit available under this New Stream
      loan agreement will be subject to quarterly adjustments based upon Ayin Tower
      Management’s earnings before interest, taxes, depreciation and amortization for
      specified periods.  Proceeds of this New Stream loan agreement may be
      used by Ayin Tower Management to refinance its existing indebtedness, for
      transaction expenses, for working capital and for other general corporate
      purposes.  This loan is secured by a pledge of all of the issued and
      outstanding capital stock of Ayin Tower Management.  In addition, we
      issued to New Stream a five-year warrant to purchase 600,000 shares of our
      common stock at an exercise price of $4.00 per share.  The shares of
      our common stock to be issued to New Stream upon the exercise of the warrant
      have registration rights.





As
      of
      September 30, 2007, the outstanding balance due under this New Stream loan
      agreement is approximately $6.5 million, which is due and payable by November
      8,
      2008.





***Complete
      Tower Sources/New Stream Revolving Credit Facility***





On
      March
      6, 2007, Complete Tower Sources Inc. entered into a loan and security agreement
      with New Stream providing for a revolving credit facility of up to $10
      million.  The actual amount of credit available under this New Stream
      loan agreement will be subject to adjustment primarily based upon the value
      of
      Complete Tower Sources’ receivables.  Proceeds of this New Stream loan
      agreement may be used by Complete Tower Sources to refinance existing
      indebtedness, for transaction expenses, for working capital, and for other
      general corporate purposes, and for certain other specified
      purposes.  Payment obligations under this New Stream loan agreement
      are secured by all of Complete Tower Sources’ property and assets, whether real
      or personal, tangible or intangible, and whether now owned or hereafter
      acquired.  In connection with and as a condition precedent to the
      closing of this New Stream loan agreement, we and Ayin Tower Management
      Services, Inc., a subsidiary of our subsidiary Cotton Telecom, Inc., delivered
      guarantees pursuant to which we agreed to guarantee payment and performance
      of
      Complete Tower Sources’ obligations under its New Stream loan
      agreement.





Under
      this New Stream loan agreement, Complete Tower Sources is subject to certain
      limitations, including limitations on its ability to incur additional debt
      or
      sell assets, to make certain investments and acquisitions, to grant liens,
      and
      to pay dividends and distributions.  Complete Tower Sources is also
      subject to financial covenants that include a minimum interest coverage ratio
      and a minimum net borrowing availability.





As
      of
      September 30, 2007, the outstanding balance due under this New Stream loan
      agreement is approximately $1.2 million, which is due and payable by August
      31,
      2007.





***Vision
      Financing***





In
      order
      to finance the acquisition of the initial 40% interest in each of Cotton
      Holdings 1, Inc., Cotton Commercial USA, L.P. and Cotton Restoration of Central
      Texas, LP, as of December 4, 2006, we entered into a note and warrant purchase
      agreement with various purchasers led by Vision Opportunity Master Fund, Ltd.
      and issued notes for $14.5 million.  The subordinated convertible
      promissory notes sold in this financing bear interest at a rate of 8% per annum
      and are convertible into shares of our common stock based on an initial
      conversion price of $2.25 per share.  For no additional consideration,
      each of the purchasers was also issued:





·
            Series
                A Warrants expiring on December 4, 2011 to purchase at an exercise
                price
                of $4.00 per share the number of shares of our common stock equal
                to 75%
                of the number of conversion shares (as defined in the Vision note
                and
                warrant purchase agreement) issuable upon conversion of the notes
                purchased by each purchaser;





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·
            Series
                B Warrants expiring on December 4, 2011 to purchase at an exercise
                price
                of $5.00 per share the number of shares of our common stock equal
                to 75%
                of the number of conversion shares issuable upon conversion of the
                notes
                purchased by each purchaser;





·
            Series
                J Warrants expiring on September 7, 2007 to purchase at an exercise
                price
                of $3.25 per share the number of shares of our common stock equal
                to 100%
                of the number of conversion shares issuable upon conversion of the
                notes
                purchased by each purchaser;





·
            Series
                C Warrants expiring on December 4, 2011 to purchase at an exercise
                price
                of $4.00 per share the number of shares of our common stock equal
                to 75%
                of the number of conversion shares issuable upon conversion of the
                notes
                purchased by each purchaser; and





·
            Series
                D Warrants expiring on December 4, 2011 to purchase at an exercise
                price
                of $5.00 per share the number of shares of our common stock equal
                to 75%
                of the number of conversion shares issuable upon conversion of the
                notes
                purchased by each purchaser.





However,
      each of the purchasers was only issued Series J Warrants, Series C Warrants
      and
      Series D Warrants, if such purchaser’s aggregate investment in Charys was equal
      to or greater than $10,000,000 (including only such purchaser’s investment in
      the Vision financing plus such purchaser’s investment in the Gottbetter
      financing described below).  Further, a holder of Series C Warrants
      and Series D Warrants may not exercise such warrants unless such purchaser
      has
      first exercised its Series J Warrants.  A holder’s Series C Warrants
      and Series D Warrants will become exercisable as to a number of shares of our
      common stock equal to 75 percent of the number of shares of our common stock
      acquired by that holder through the exercise of its Series J
      Warrants.





Prior
      to
      February 28, 2007, the outstanding balance under the Vision note and warrant
      purchase agreement was approximately $14,450,000, which was due and payable
      by
      December 4, 2009.  On February 28, 2007 and March 1, 2007, Charys
      prepaid a total of $13,500,000 of the outstanding balance due Vision Opportunity
      Master Fund, Fort Mason Master, LP and Fort Mason Partners LP, using proceeds
      from the private offering of the McMahan Securities described in this Annual
      Report.  Upon the occurrence of such prepayments the following changes
      were made to the warrants held by Vision Opportunity Master Fund and the Fort
      Mason entities:





·
            Their
                Series B Warrants were cancelled;





·
            Their
                Series A Warrants were amended to reduce the exercise price of such
                warrants to $2.50 per share; and





·
            Their
                Series J Warrants were amended to reduce the exercise price of such
                warrants to $2.40 per share.





The
      following changes were also made to the warrants held by Opal Limited, which
      only held Series A Warrants and Series B Warrants and did not receive Series
      J
      Warrants, Series C Warrants or Series D Warrants:





·
            Its
                Series B Warrants were cancelled;
                and





·
            Its
                Series A Warrants were amended to reduce the exercise price of such
                warrants to $2.50 per share.





None
      of
      the other warrants issued pursuant to the Vision note and warrant purchase
      agreement were affected in connection with this prepayment to Vision Opportunity
      Master Fund and the Fort Mason entities.  Any shares issuable upon
      exercise of the warrants have registration rights.





Of
      the
      $13,500,000 prepaid by Charys on February 28, 2007 and March 1, 2007, Vision
      Opportunity Master Fund received $10,000,000 and the two other investor entities
      together received $3,500,000.  Vision Opportunity Master Fund and the
      other investor entities no longer hold any of the promissory notes issued
      pursuant to the Vision note and warrant purchase agreement.  Each of
      the foregoing entities used the amounts prepaid to them to acquire units sold
      in
      the private offering of the McMahan Securities described in this Annual
      Report.





The
      remaining two investors in this financing each hold our Subordinated Convertible
      Promissory Note in the amount of $450,000 due December 7, 2009 which provides
      for quarterly interest payments to commence on March 1, 2007 which have not
      been
      paid.  In June, 2007, we settled the payment due on one of the notes
      by issuing 293,381 shares of our common stock to the holder.





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***Aeon
      Technologies Group/CAPCO Financing***





On
      July
      18, 2005, we arranged and guaranteed a financing for Aeon Technologies Group,
      Inc., with CAPCO Financial Company, a division of Greater Bay Bank N.A., to
      provide for an asset-based credit facility of up to $3,000,000, at prime plus
      six percent secured by personal property, including accounts receivable,
      contract rights, documents, instruments, deposit accounts, investment property,
      general intangibles and inventory, and a negative covenant with respect to
      any
      additional financing.





As
      of
      September 30, 2007, the outstanding balance due under this credit facility
      is
      approximately $0.8 million, which is due and payable by August 29,
      2007.





In
      connection with this financing, on August 1, 2005, Venture Banking Group, an
      affiliate of CAPCO, received a warrant to purchase up to 862,069 shares of
      our
      common stock at $0.35 per share.  The warrant expires on July 31,
      2012.  Venture Banking Group may from time to time convert this
      warrant, in whole or in part, into a number of shares of our common stock
      determined by dividing the aggregate fair market value of the shares minus
      the
      aggregate warrant price of such shares by the fair market value of one
      share.  The fair market value of the shares will be the closing price
      of the shares reported for the business day immediately before Venture Banking
      Group delivers its notice of exercise to us.  The shares of our common
      stock that may be received upon exercise of the warrant are entitled to
      registration rights.





On
      August
      10, 2006, a portion of the warrant was exercised on a cashless basis, as a
      result of which 662,069 shares underlying the warrant were converted into
      630,499 shares of our common stock.  The rights to purchase the
      remaining 200,000 shares under the warrant were transferred to and are currently
      held by Venture Banking Group’s parent corporation, Greater Bay Bancorp, and by
      an affiliate of these entities, Greater Bay Bancorp Foundation.





***Digital
      Communications Services Credit Facility***





Our
      wholly-owned subsidiary, Digital Communications Services, Inc., has a line
      of
      credit with a bank that provides for an asset-based credit facility of up to
      $1,000,000.  This line of credit accrues interest at a rate of prime
      plus 0.5%.  As of September 30, 2007, the outstanding balance due
      under this facility is approximately $999,999.





This
      line
      of credit is secured by all of Digital Communications Services’ accounts
      receivable and equipment and a personal guarantee by one of the Digital
      Communications Services’ former shareholders.





***Method
      IQ/CAPCO Financing***





On
      March
      13, 2006, we arranged a financing for Method IQ, Inc. with CAPCO Financial
      Company to provide for an asset-based credit facility of up to $2,000,000.
      As of
      September 30, 2007, the outstanding balance under this facility is approximately
      $0.3 million, which is due and payable by March 13, 2008.  Interest
      accrues at a rate of prime plus 5.5%.





Method
      IQ’s obligations under its CAPCO financing agreement are secured by a security
      interest in all of Method IQ’s personal property, including accounts receivable,
      contract rights, documents, instruments, deposit accounts, investment property,
      general intangibles and inventory.  In addition, Method IQ may not
      execute any financing statements pledging accounts receivable, inventory or
      work
      in process in favor of any entity other than CAPCO.  Further, we
      guarantee all payments of Method IQ’s indebtedness under this
      facility.





In
      connection with this financing, on March 13, 2006, Venture Banking Group, an
      affiliate of CAPCO, received a seven year warrant to purchase up to 28,400
      shares of our common stock at $1.69 per share.  The shares of our
      common stock that may be received upon exercise of the warrant are entitled
      to
      registration rights.





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***Harris/Posner
      Financing***





In
      order
      to complete the purchase of Method IQ, we arranged financing with Mel Harris
      and
      Steven Posner.  On December 22, 2005, Charys and Billy V. Ray, Jr.,
      our chief executive officer, executed a securities purchase agreement with
      Messrs. Harris and Posner pursuant to which they provided funding of $1,000,000
      to Charys.  In consideration for this funding, we issued to
      them:





·
            A
                $1,000,000 secured convertible debenture, which was converted into
                1,565,000 shares of our common stock on May 26, 2006;
                and





·
            Warrants
                to purchase an aggregate of 250,000 shares of our common
                stock.  The warrants provide for an exercise period of three
                years, expiring on December 22, 2008, with an exercise price equal
                to the
                lower of:  (i) $0.80 per share of the common stock; (ii) 120
                percent of the average closing bid price for the five trading days
                immediately preceding December 22, 2005; or (iii) 80 percent of the
                lowest
                closing bid price for the five trading days immediately preceding
                the date
                of exercise.





We
      also
      agreed to file a registration statement with respect to the resale of the
      1,565,000 shares issued upon the conversion of the secured debenture and the
      250,000 shares underlying the warrants.  In addition, we agreed to use
      our best efforts to have the registration statement declared effective by the
      Securities and Exchange Commission by May 15, 2006, but in no event later than
      June 13, 2006.  Since we have not fulfilled this obligation by the
      required deadline, we are in default under the registration rights
      agreement.  As of the date of this Annual Report, we have not received
      any claim or notice of default under the registration rights
      agreement.





***Series
      D Preferred Stock Financing***





On
      May
      19, 2006, we executed a securities purchase agreement with various investors
      whereby the investors purchased 1,300 shares of our newly created Series D
      Preferred Stock, having an aggregate stated value of $13,000,000, for a total
      consideration of $12,200,000, reflecting an issuance discount in the aggregate
      amount of $800,000.  The shares of Series D Preferred Stock were
      convertible into an aggregate of 5,777,778 shares of our common stock at a
      conversion price of $2.25 per share.





In
      addition, the investors were issued warrants to purchase 4,333,332 shares of
      our
      common stock.  Each warrant has an expiration date of five years from
      the date of issue and was initially exercisable at a price of $6.24, subject
      to
      adjustments.  However, pursuant to the forbearance letter discussed
      below, the number of shares issuable upon exercise of the warrants was increased
      to 12,017,774, and the exercise price was reduced to $2.25 per share, subject
      to
      adjustment.





The
      Series D Preferred Stock accrued special payments representing amortization
      of
      principal at the rate of $416.67 per month per share, beginning on November
      6,
      2006, the first of which was due on December 1, 2006.  Pursuant to the
      forbearance letter discussed below, the date for the initial payment was
      extended until January 5, 2007.  However, no special payments were
      made.  Shares of Series D Preferred Stock also accrued a quarterly
      cash dividend on their stated value of $10,000 per share at a rate of 8% per
      annum.





The
      holders of Series D Preferred Stock were granted registration rights with
      respect to the shares of common stock underlying the preferred stock and
      warrants, which required us to file a registration statement under the
      Securities Act of 1933 within 90 days of May 19, 2006, and to have it declared
      effective within 90 days thereafter.  We defaulted on our obligation
      to file a registration statement and, on November 8, 2006, delivered a
      forbearance letter to the holders of the Series D Preferred Stock, which sets
      forth the terms of a mutual understanding that was reached between us and the
      holders of the Series D Preferred Stock.





Pursuant
      to the terms of the forbearance letter, the holders of the Series D Preferred
      Stock agreed to forbear from exercising their rights and remedies with respect
      to our failure to file timely and have declared effective a registration
      statement.  Specifically, the holders of the Series D Preferred Stock
      agreed to refrain from declaring an event of default, triggering event,
      redemption, other default or acceleration, or otherwise demand payment of any
      liquidated damages payable under our certificate of designation for the Series
      D
      Preferred Stock and the related registration rights agreement, securities
      purchase agreement, warrants and other documents dated May 19, 2006 and entered
      into in connection with the Series D Preferred Stock financing until January
      5,
      2007.





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We
      used
      $5,236,543 of the net proceeds of sale of our securities in connection with
      the
      Unit Purchase Agreement with McMahan Securities Co. L.P. described elsewhere
      in
      this Annual Report to purchase and retire 400 shares of our Series D Preferred
      Stock valued at $4,000,000, plus $1,236,543 in accrued interest and redemption
      premiums.





Pursuant
      to a Securities Exchange Agreement dated as of April 30, 2007, we issued to
      three investors our subordinated unsecured convertible notes in an aggregate
      amount of $15,037,278, which amount represented the then value of our Series
      D
      Preferred Stock, including accrued interest and redemption premiums, in exchange
      for the remaining 900 shares of our Series D Preferred Stock.  Each
      holder of such convertible notes is entitled to convert any portion of its
      outstanding and unpaid note into fully paid and nonassessable shares of our
      common stock.  The number of shares to be issued shall be determined
      by dividing the amount of the note to be converted by $2.25, subject to
      adjustment as provided in the note.  We were late in the payment due
      on July 13, 2007 to one investor,  have not made the August 3, 2007
      payment due on the note payable to one of the investors, and have not made
      the
      payments due September 3, 2007 or October 3, 2007 to any  investor.
      Pursuant to the terms of the notes, a default under one note is a default under
      all three notes, even if the all of the payments were timely made with respect
      to the other two notes.  However, as of the date of this Annual
      Report, none of the investors have indicated an intention to institute any
      action against the Company.





In
      addition, and without limitation of any other rights and remedies under the
      foregoing notes, upon the first occurrence of a default under the Note, without
      regard to any cure period thereunder, and upon the expiration of each additional
      30 day thereafter during which the event of default continues, in whole or
      in
      part (such late payment, the “Delinquent Payment Amount”), the Company shall
      issue a Warrant to the Holder for such number of shares of Common Stock of
      the
      Company equal to the Delinquent Payment Amount at such time divided by the
      Conversion Price.  Upon the second occurrence of an Event of Default,
      without regard to any cure period thereunder, the Company shall issue a Warrant
      to the Holder for such number of shares of Common Stock of the Company equal
      to
      the outstanding principal balance of the Note at such time divided by the
      Conversion Price.  As a result of our default, the investors have a
      right to 3,689,648 Default Warrant Shares at an exercise price of $5.00 per
      share.





Contemporaneously
      with the execution and delivery of the Securities Exchange Agreement, Charys
      and
      the investors executed a Registration Rights Agreement, pursuant to which Charys
      agreed to provide certain registration rights with respect to the shares of
      our
      common stock issued upon conversion of the notes.





At
      the
      closing of the Securities Exchange Agreement, that certain Escrow Shares Escrow
      Agreement pursuant to which Charys issued and delivered to Gottbetter &
Partners, LLP 8,666,666 shares of our common stock as described above was
      terminated.





Those
      certain warrants issued to the original purchasers of our Series D Preferred
      Stock on May 19, 2006 remain outstanding.





***HarPos
      Bridge Financing***





On
      January 24, 2007, we closed on a bridge loan for $800,000 with HarPos Funding,
      LLC (“HarPos Financing”) pursuant to which the principal and accrued interest of
      $184,200 were due on the earlier of April 8, 2007 or upon Charys obtaining
      permanent financing.  In connection with this note, we issued warrants
      for 250,000 common shares at a purchase price of $2.25 per share, expiring
      January 8, 2011.  In addition, we executed consulting agreements with
      Mel Harris and Steven Posner, members of HarPos Funding LLC, for which they
      each
      received 100,000 restricted common shares.  The HarPos Financing was
      refinanced on May 3, 2007 pursuant to which the note shall be due and payable
      in
      18 equal monthly installments of $61,399.11 (or more) each, including interest,
      the first of such installments shall be due and payable on June 3, 2007, and
      a
      like installment shall be due and payable on the same day of each succeeding
      month thereafter until fully paid.  Interest accrues at the rate of
      15% per annum.  The refinanced note was personally guaranteed by our
      chief executive officer, Billy V. Ray, Jr. and Troy Crochet, the president
      of
      Crochet & Borel, Inc.  We have not made the August 3, 2007, the
      September 3, 2007, or the October 3, 2007 payment due on the
      note.  However, as of the date of this Annual Report, HarPos has not
      indicated an intention to institute any action against Charys.





22
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***Sean
      Posner Note***





On
      May 3,
      2007, we issued a note to Sean Posner in the amount of $367,954 to settle
      amounts due pursuant to a loan agreement dated May 1, 2006.  The Sean
      Posner Note is due and payable in 18 equal monthly installments of $20,907.29
      (or more) each, including interest, the first of such installments shall be
      due
      and payable on June 3, 2007, and a like installment shall be due and payable
      on
      the same day of each succeeding month thereafter until fully
      paid.  Interest accrues at the rate of 15% per annum.  The
      amended note was personally guaranteed by our chief executive officer, Billy
      V.
      Ray, Jr. and Troy Crochet, the president of Crochet & Borel,
      Inc.  We have not made the August 3, 2007, the September 3, 2007, or
      the October 3, 2007 payment due on the note.  However, as of the date
      of this Annual Report, Sean Posner has not indicated an intention to institute
      any action against Charys.





***Steven
      Posner Note***





On
      May 3,
      2007, we issued a note to Steven Posner in the amount of $367,954 to settle
      amounts due pursuant to a loan agreement dated May 1, 2006.  The
      Steven Posner Note is due and payable in 18 equal monthly installments of
      $20,907.29 (or more) each, including interest, the first of such installments
      shall be due and payable on June 3, 2007, and a like installment shall be due
      and payable on the same day of each succeeding month thereafter until fully
      paid.  Interest accrues at the rate of 15% per annum.  The
      amended note was personally guaranteed by our chief executive officer, Billy
      V.
      Ray, Jr. and Troy Crochet, the president of Crochet & Borel,
      Inc.  We have not made the August 3, 2007, the September 3, 2007, or
      the October 3, 2007 payment due on the note.  However, as of the date
      of this Annual Report, Steven Posner has not indicated an intention to institute
      any action against Charys.





***Mel
      Harris Note***





On
      May 3,
      2007, we issued a note to Mel Harris in the amount of $368,064 to settle amounts
      due pursuant to a loan agreement dated May 1, 2006.  The Mel Harris
      Note is due and payable in 18 equal monthly installments of $20,913.54 (or
      more)
      each, including interest, the first of such installments shall be due and
      payable on June 3, 2007, and a like installment shall be due and payable on
      the
      same day of each succeeding month thereafter until fully
      paid.  Interest accrues at the rate of 15% per annum.  The
      amended note was personally guaranteed by our chief executive officer, Billy
      V.
      Ray, Jr. and Troy Crochet, the president of Crochet & Borel,
      Inc.  We have not made the August 3, 2007, the September 3, 2007, or
      the October 3, 2007 payment due on the note.  However, as of the date
      of this Annual Report, Mel Harris has not indicated an intention to institute
      any action against Charys.





***Mike
      Thomas***





On
      May
      15, 2007, Crochet & Borel Inc. issued a promissory note to Mike Thomas in
      the amount of $1,600,000 payable $100,000 down and the balance in 60 equal
      monthly installments of principal and accrued interest of $28,999.20 commencing
      June 1, 2007.  This note represents payment in full of amounts due for
      services rendered pursuant to a Consulting Agreement dated May 1,
      2005.





***Imperium
      Master Fund, Ltd.***





On
      May
      18, 2007, Charys executed a Note Purchase Agreement with Imperium Master Fund,
      Ltd.  Pursuant to the agreement we issued our Senior Secured Note in
      the principal amount of $690,000.  The note is due May 18, 2008 and
      bears interest at the rate of 12% per annum.  The note ranks senior to
      all outstanding and future indebtedness of Charys except as otherwise set forth
      in the agreement.  The note is guaranteed by each of our subsidiaries
      and secured pursuant to the terms of a Security Agreement.  The
      purpose of the loan was to provide the company working capital.





***Cotton
      Companies Bridge Loan***





On
      June
      29, 2007, Cotton Commercial USA, L.P. executed a Note Purchase Agreement with
      Imperium Master Fund, Ltd.  Pursuant to the agreement, the Cotton
      Commercial USA, L.P. issued its Senior Secured Note in the principal amount
      of
      $3,040,000.  The note is due August 13, 2007 and bears interest at the
      rate of 8.25% per annum.  The note is guaranteed by Charys and each of
      the Cotton Companies and secured pursuant to the terms of a Security Agreement
      executed by the Cotton Companies.  The purpose of the loan was to
      provide the company working capital. We have not made the August 13, 2007
      payment due on the note which included the entire principal balance and all
      accrued interest.





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**Financing
      Transactions before April 30, 2007**





In
      addition to the financing transactions described above, we have one transaction
      entered into before the beginning of fiscal year covered by this Annual Report,
      in which certain activity occurred during the fiscal year covered by this Annual
      Report.





***Highgate
      House Financing***





In
      order
      to fund the purchase of Viasys Network Services, Inc. and Viasys Services,
      Inc.,
      on November 17, 2005, we arranged for $4,000,000 of financing with Highgate
      House Funds, Ltd.  In connection with this financing, we issued to
      Highgate House:





·
            A
                $4,000,000 secured debenture, which was convertible into shares of
                our
                common stock unless redeemed by us before March 17, 2006.  On
                April 20, 2006, Highgate House converted $600,000 of the debenture
                into
                750,000 shares of our common stock.  We repaid approximately
                $3.3 million of this debenture and Highgate House converted the remaining
                $173,096 of the debenture into 216,370 shares of our common stock
                on May
                19, 2006.  Accordingly, the Highgate House convertible debenture
                was terminated.





·
            Warrants
                to purchase an aggregate of 1,000,000 shares of our common stock,
                which
                warrants initially had exercise prices of (i) $0.25 for 200,000 shares,
                (ii) $0.50 for 400,000 shares, (iii) $0.75 for 200,000 shares, and
                (iv)
                $1.00 for 200,000 shares.  Each of the exercise prices was
                reduced to $0.01 per share, except for the 400,000 shares exercisable
                at
                $0.50 per share, when the secured debenture was not redeemed in full
                before March 17, 2006.  The warrants expire on November 16, 2008
                and may be exercised at any time until their expiration, in whole
                or in
                part.





Pursuant
      to the securities purchase agreement with Highgate House and to further ensure
      our obligation to issue shares of our common stock upon conversion of the
      debenture or exercise of the warrants, we issued and escrowed 20,000,000 shares
      of our common stock with an escrow agent.  The number of escrowed
      shares was reduced to 1,000,000 shares following the termination of the Highgate
      House debenture.





We
      also
      entered into an investor registration rights agreement with Highgate House,
      obligating us to register all of the shares issued or to be issued to Highgate
      House.  We were required to file a registration statement by February
      13, 2006 and have the registration statement declared effective within 90 days
      thereafter.  We are in default under both of these
      requirements.  The agreement provides for monthly liquidated damages
      in the amount of 2% per month of the outstanding principal amount of the
      debentures for each month we are in default.  Although there is
      currently no principal amount of debentures outstanding, on June 20, 2007
      Highgate House submitted a claim in the amount of $228,000 for liquidated
      damages based on our default under the registration rights
      agreement.





**RISK
      FACTORS**





**Risks
      Relating to Our Business**





**We
      were required to restate our financial statements, which may cause some concern
      to potential investors and pose an impediment to our future funding
      efforts.**





On
      December 6, 2005, we filed with the Securities and Exchange Commission Amendment
      No. 3 to our Annual Report on Form 10-KSB/A for the annual period ended April
      30, 2005.  The amendment was filed to reflect the restatement of our
      financial statements for the year ended April 30, 2005, involving the accounting
      for the following two transactions occurring during that period:





·
            Our
                accounting for the purchase of Aeon Technologies Group, Inc. did
                not
                comply with Statement of Financial Accounting Standards No. 141,
“Business
                Combinations.”  The purchase agreement contains an “earn-out”
                feature in which the sellers would be paid additional consideration
                should
                Aeon Technologies Group, Inc. achieve performance targets as defined
                in
                the agreement.  We recorded additional goodwill and a contingent
                acquisition liability in connection with the purchase transaction
                based on
                our estimate of the consideration that would likely be paid under
                the
                earn-out provision.  Statement of Financial Accounting Standards
                No. 141 provides that contingent consideration should be recorded
                when the
                contingency is resolved, rather than as an estimated liability at
                the
                purchase date.





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·
            Our
                accounting for the purchase of real estate from CCI Associates, Ltd.
                did
                not comply with Emerging Issues Task Force 97-15, “Accounting for
                Contingency Arrangements Based on Security Prices in a Purchase
                Combination.”  The purchase agreement provides for a
                “make-whole” provision in which the sellers are guaranteed additional
                consideration should the market price of our common stock fail to
                achieve
                a target level as defined in the agreement.  In recording the
                purchase, we did not account for the difference in the current market
                price versus the make-whole target price of our common stock in
                determining the total consideration for the purchase.  Emerging
                Issues Task Force 97-15 indicates that this difference should be
                included
                as consideration.  By doing so, we have determined that the
                consideration paid for this purchase should have been $905,000 more
                than
                what we had recorded as basis in the real estate.  Thus, our
                subsequent sale of this real estate should have resulted in a loss
                of
                $34,753, rather than a gain of $870,247 as we had
                reported.





Although
      our management concluded that these restatements resulted from inadvertent
      errors and are not indicative of weakness in our internal controls over
      financial reporting and disclosure, these restatements could still cause an
      adverse reaction in the financial marketplace due to a loss of investor
      confidence in the reliability of our financial statements, which could
      negatively impact the market price of our shares as well as our ability to
      raise
      additional funds on terms acceptable to us.





**Our
      independent auditors have included an explanatory paragraph in their opinion
      concerning our ability to continue as a going concern.**





It
      should
      be noted that our independent auditors have included a going concern opinion
      and
      related discussion in the notes to our financial statements.  The
      auditors have included the going concern provision because we have incurred
      significant and recurring losses and have a large working capital deficit that
      the auditors believe raises substantial doubt about our ability to continue
      as a
      going concern.  We have incurred losses of $798,598, $1,429,165, and
      $309,125,469 for the fiscal years ended April 30, 2005, April 30, 2006, and
      April 30, 2007, respectively.  Our working capital deficit as of April
      30, 2007 is $126,067,217.  Our financial statements do not include any
      adjustment that might result from the outcome of this
      uncertainty.  Our continuation as a going concern is dependent upon
      our ability to generate sufficient cash flow to meet our obligations on a timely
      basis, to obtain additional financing as required, and, ultimately, to attain
      profitability.  Should any of these events not occur, we may not be
      able to implement our business plan and may be forced to curtail or cease our
      business operation.





**We
      are a newly combined business with a limited operating history and are not
      likely to succeed unless we can overcome the many obstacles we
      face.**





Our
      business strategy was initially to acquire various businesses and assets and
      to
      grow rapidly.  We later narrowed our acquisition focus to two primary
      business lines:





·
            Remediation
                and reconstruction, and





·
            Wireless
                communications and data
                infrastructure.





Since
      2004, we have acquired Aeon Technologies Group, Inc. (formerly CCI Telecom,
      Inc.), Viasys Network Services, Inc., Viasys Services, Inc., Method IQ, Inc.,
      LFC, Inc., Crochet & Borel Services, Inc., Complete Tower Sources Inc.,
      Mitchell Site Acq, Inc., Cotton Holdings 1, Inc., Cotton Commercial USA, L.P.
      and Cotton Restoration of Central Texas, LP and a number of other smaller
      entities.  Our strategy now is to manage these acquired businesses and
      assets efficiently and integrate their operations.





We
      have a
      limited history operating and integrating the businesses we have
      acquired.  We have only relatively recently engaged in active business
      operations.  To date, our efforts have been devoted primarily to the
      following:





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·
            Organizational
                activities;





·
            Developing
                a business plan for our business;





·
            Making
                acquisitions;





·
            Obtaining
                funding; and





·
            Managing
                our acquired subsidiaries.





Our
      limited operating history in our targeted businesses makes it difficult for
      investors to evaluate our business and future operating results.  You
      should be aware of the difficulties, delays and expenses normally encountered
      by
      a newly-formed enterprise, many of which are beyond our control, including
      unanticipated expenses, employment costs and administrative
      expenses.  Our proposed business plans as described in this Annual
      Report may not materialize or prove successful, and we may never be able to
      finalize development of our services or operate profitably.  If we
      cannot operate profitably, you could lose your entire investment.





**Some
      of our entities have a history of losses and large accumulated
      deficits.**





In
      our
      consolidated form, for the fiscal years ended April 30, 2007, 2006, and 2005,
      we
      incurred net losses of $309,125,469, $1,429,165, and $798,598, respectively
      However, our ability to generate profits is dependent upon the successful
      integration of these businesses with our other operations as well as other
      factors (including weather), many of which are beyond our
      control.  Accordingly, there can be no assurance that we will be able
      to generate profits in the near future, or at all.





**Unless
      we generate substantial revenue, our business may fail.**





We
      will
      need to generate substantial revenue in order to satisfy our current obligations
      related to completed acquisitions and for the development and marketing of
      our
      services through strategic partnerships and other arrangements with investment
      partners.  In the event that we are not able to generate sufficient
      revenue to support our operations our business may fail.





**Our
      disaster restoration operations are affected by weather conditions and
      seasonality and, therefore, are highly volatile and unpredictable, which could
      result in substantial variations in, and uncertainties regarding, the levels
      of
      our financial results from period to period.**





Given
      the
      nature of our disaster restoration services, the demand for our services is
      highly influenced by the occurrence of weather conditions that cause residential
      or commercial property damage.  The unpredictable nature of weather
      conditions will cause the level of our disaster restoration revenue to fluctuate
      from period to period.  In addition, extended periods of rain, cold
      weather or other inclement weather conditions may result in delays in commencing
      or completing projects, in whole or in part.  Any such delays may
      adversely affect our operations and financial results and may adversely affect
      the performance of other projects due to scheduling and staffing
      conflicts.





**We
      may not hire sufficient specialized personnel.**





We
      are
      substantially dependent on the addition of specialized key personnel to assist
      us in the execution of our business model.  It is possible that we
      will not be able to locate and hire such specialized personnel on acceptable
      terms.





**We
      may have difficulty in attracting and retaining management and outside
      independent members to our board of directors as a result of their concerns
      relating to their increased personal exposure to lawsuits and stockholder claims
      by virtue of holding these positions in a publicly-held
      company.**





The
      directors and management of publicly traded corporations are increasingly
      concerned with the extent of their personal exposure to lawsuits and stockholder
      claims, as well as governmental and creditor claims that may be made against
      them, particularly in view of recent changes in securities laws imposing
      additional duties, obligations and liabilities on management and
      directors.  Due to these perceived risks, directors and management are
      also becoming increasingly concerned with the availability of directors’ and
      officers’ liability insurance coverage and other indemnification
      arrangements.  We currently carry limited directors’ and officers’
liability insurance.  Directors’ and officers’ liability insurance has
      recently become much more expensive and difficult to obtain.  If we
      are unable to continue or provide directors’ and officers’ liability insurance
      at affordable rates or at all, it may become increasingly more difficult to
      attract and retain qualified outside directors to serve on our board of
      directors.





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We
      may
      lose potential independent board members and management candidates to other
      companies that have greater directors’ and officers’ liability insurance
      coverage or to companies that have revenues or have received greater funding
      to
      date that can offer greater compensation packages.  The fees of
      directors are also rising in response to their increased duties, obligations
      and
      liabilities as well as increased exposure to such risks.  As a company
      with a limited operating history and limited resources, we will have a more
      difficult time attracting and retaining management and outside independent
      directors than a more established company due to these enhanced duties,
      obligations and liabilities.





**Intense
      competition in the engineering and construction industry could reduce our market
      share and profits.**





We
      serve
      markets that are highly competitive and in which a large number of local and
      regional companies compete. In particular, the telecommunication engineering
      and
      construction markets are highly competitive and require substantial resources
      and capital investment in equipment, technology and skilled
      personnel.  Competition also places downward pressure on our contract
      prices and profit margins.  Intense competition is expected to
      continue in these markets, presenting us with significant challenges to our
      ability to achieve strong growth rates and acceptable profit
      margins.  If we are unable to meet these competitive challenges, we
      could lose market share to our competitors and experience an overall decline
      in
      our business.





**Subsidiaries
      in our wireless communications and data infrastructure business line have a
      concentration of customers.**





We
      have
      large customers who purchase services from several of our subsidiaries,
      according to subsidiary specialty and geographic
      requirements.  Concentration with a single or a few customers may
      expose us to the risk of substantial losses if a single dominant customer stops
      conducting business with our subsidiaries.  Moreover, we may be
      subject to the risks faced by these major customers to the extent that such
      risks impede such customers’ ability to stay in business and make timely
      payments.





**Certain
      of our subsidiaries do a significant amount of business with the Federal
      Emergency Management Agency and insurance providers, which affects adversely
      their ability to receive payments timely.**





A
      significant amount of the work done by our remediation and reconstructive
      subsidiaries involve payments that are ultimately funded by the Federal
      Emergency Management Agency and various insurance providers.  The
      involvement of these government and insurance entities can result in the delay
      of payments due our subsidiaries for services performed.





**Our
      projects expose us to potential professional liability, product liability,
      warranty and other claims.**





We
      engineer and construct towers in which system failure could be
      disastrous.  Notwithstanding the fact that we generally will not
      accept liability for consequential damages in our contracts, any catastrophic
      occurrence in excess of insurance limits at projects where we have constructed
      towers could result in significant professional liability, product liability
      or
      warranty or other claims against us.  Such liabilities could
      potentially exceed our current insurance coverage and the fees we derive from
      those products and services.  A partially or completely uninsured
      claim, if successfully upheld and of a significant magnitude, could potentially
      result in substantial losses.





**Terrorism.**





Terrorist
      acts or acts of war may cause damage or disruption to our business or business
      strategy, which could adversely impact revenue and financial
      condition.  In particular, our cell towers might prove to be an
      attractive target for terrorists who desire to disrupt communications that
      rely
      on the towers.  Our cell tower business is a significant segment of
      our current operations and our plans going forward.  If our cell
      towers are perceived to be at risk, we might not be able to attract the
      investors and the financing needed for continued growth in this
      sector.





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**Legislative
      actions and potential new accounting pronouncements are likely to impact our
      future financial position and results of operations.**





There
      have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and
      there may potentially be new accounting pronouncements or additional regulatory
      rulings that will have an impact on our future financial position and results
      of
      operations.  The Sarbanes-Oxley Act of 2002 and other rule changes as
      well as proposed legislative initiatives have increased our general and
      administrative costs as we have incurred increased legal and accounting fees
      to
      comply with such rule changes.  These and other potential changes
      could materially increase the expenses we report under U.S. generally accepted
      accounting principles, and adversely affect our operating results.





**Risks
      Relating to Our Current Financing Arrangements**





**There
      are a large number of shares underlying our convertible preferred stock,
      debentures and warrants that may be available for future sale, and the sale
      of
      these shares may depress the market price of our common
      stock.**





As
      of
      June 30, 2007, we have reserved 292,633,974 shares of our common stock for
      issuance upon the exercise or conversion of all of our common stock warrants,
      convertible preferred stock and convertible notes.  The sale of these
      shares or the perception that these sales could occur may adversely affect
      the
      market price of our common stock.





In
      the
      event that our stock price does not achieve the required levels as called for
      in
      some of our agreements, we will be obligated to issue additional shares,
      resulting in substantial dilution to our existing stockholders.





We
      have
      entered into several agreements in connection with our acquisition and financing
      transactions whereby we agreed to issue additional shares of common stock or
      make cash payments should the market price of our common stock fail to reach
      specified target prices within a certain period of time.  We refer to
      such agreements as “make-whole provisions.”  A summary of the
      outstanding make-whole provisions can be found in “Management’s Discussion and
      Analysis or Plan of Operation — Commitments and Contractual Obligations” in this
      Annual Report.  If our stock fails to meet the applicable price levels
      to the extent of 50% below the applicable target prices, the maximum number
      of
      additional shares we may be required to issue is approximately
      10,619,988.  The issuance of such shares will dilute the ownership
      interest of our existing stockholders.  See, “Management’s Discussion
      and Analysis or Plan of Operation — Commitments and Contractual Obligations —
Make-Whole Provisions.”





**We
      are in default of our obligations to various investors.**





We
      are in
      default on the payments due on the refinancing of the Gottbetter Capital
      Subordinated Convertible Debt, the HarPos, Sean Posner, Steven Posner, and
      Mel
      Harris notes, the Vision Capital financing, the notes issued in exchange for
      our
      Series D Preferred Stock, the amended note to the Cotton sellers. We are also
      in
      default of covenants in our 8.75% Notes in the amount of $201.3 million which
      require us to timely file our Form 10K for the year ended April 30, 2007, and
      maintain our listing on certain principal trading markets. We may not be able
      to
      make the payments on the foregoing indebtedness if a demand is
      made.  If we cannot, our business may fail.  In addition our
      obligation to replace a standby-letter of credit securing obligations under
      certain insurance policies in the amount of $1,350,000 is in
      default





In
      addition, See “Description of Business — Financing Transactions.”





**We
      are technically in default of certain of our registration rights
      obligations.**





In
      connection with certain of our acquisitions and financing transactions, we
      have
      granted registration rights to sellers or lenders involved.  As of the
      date of this Annual Report, we are technically in default of a number of these
      registration rights obligations.  None of the holders of these
      registration rights have made any claims against us based on our defaults under
      their respective registration rights agreements.  However, should any
      such claims be made against us, we could be required to incur legal fees, pay
      damages or make certain other payments.  See “Description of Business
— Material Acquisitions” and “ — Financing Transactions.”





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**If
      we are required for any reason to repay our outstanding secured obligations,
      we
      would be required to deplete our working capital, if available, or raise
      additional funds.  Our failure to repay the obligations, if required,
      could result in legal action against us, which could result in foreclosure
      on
      our assets.**





We
      have
      several outstanding obligations that are secured by security interests in our
      assets.  If we are required for any reason to repay our outstanding
      obligations prior to maturity, we would be required to deplete our working
      capital, if available, or raise additional funds.  Our failure to
      repay the obligations could lead to the loss of these collateral assets, which
      would be detrimental to, and could even require us to cease, our
      operations.





We
      currently have the following material secured obligations:





·
            *Crochet
                & Borel/New Stream Secured Revolving Credit
                Facility.*  On August 28, 2006, we entered into a senior
                secured revolving credit facility with New Stream Commercial Finance,
                LLC
                to provide up to $35 million in financing to Crochet & Borel Services,
                Inc., one of our wholly-owned subsidiaries.  This senior credit
                facility is secured by substantially all of the assets of Crochet
&
                Borel Services, Inc. and all of our stock ownership in that
                subsidiary.  As of September 30, 2007, the outstanding balance
                on this credit facility, which is due and payable on August 28, 2007,
                is
                approximately $1.6 million.





·
            *Ayin
                Tower Management Services/New Stream Secured Revolving Credit
                Facility.*  On November 8, 2006, one of our wholly-owned
                subsidiaries, Ayin Tower Management Services, Inc., entered into
                a senior
                secured revolving credit facility with New Stream Commercial Finance,
                LLC
                to provide up to $14 million in financing to that
                subsidiary.  This senior secured credit facility is secured by a
                pledge of all of the issued and outstanding capital stock of Ayin
                Tower
                Management Services, Inc.  As of September 30, 2007, the
                outstanding balance on this credit facility, which is due and payable
                on
                November 8, 2008, is approximately $6.5
                million.





·
            *Complete
                Tower Sources/New Stream Secured Revolving Credit
                Facility.*  On March 6, 2006, we entered into a senior
                secured revolving credit facility with New Stream Commercial Finance,
                LLC
                to provide up to $9 million in financing to Complete Tower Sources
                Inc.,
                one of our wholly-owned subsidiaries.  Payment obligations under
                this senior credit facility are secured by substantially all of the
                assets
                of Complete Tower Sources Inc. and are guaranteed by us and Ayin
                Tower
                Management Services, Inc.  As of September 30, 2007, the
                outstanding balance on this credit facility, which is due and payable
                on
                August 31, 2007, is approximately $1.2
                million.





·
            *Troy
                D. Crochet.*  As part of the purchase price for Crochet
                & Borel Services, Inc., we executed a secured promissory note in favor
                of Troy D. Crochet.  This note, which has an outstanding balance
                of $47,169,383 as of June 30, 2007, is due and payable on January
                31, 2009
                and is secured by certain of our assets and the assets of Crochet
&
                Borel Services, Inc. and another of our
                subsidiaries..





·
            *Amendment
                Agreement*, dated as of April 5, 2007, between Charys and various
                investors with respect to the refinancing of the unpaid portion of
                the
                debt created pursuant to that certain Securities Purchase Agreement
                dated
                August 30, 2006, whereby we issued certain senior secured convertible
                notes in the aggregate amount of $4,719,200 due April 5, 2009, as
                may be
                extended at the option of the
                holder.





·
            *Cotton
                Companies Bridge Financing.*On June 29, 2007, Cotton Commercial USA,
                L.P. executed a Note Purchase Agreement with Imperium Master Fund,
                Ltd.  Pursuant to the agreement, the Cotton Commercial USA, L.P.
                issued its Senior Secured Note in the principal amount of
                $3,040,000.  The note which is due August 13, 2007 and bears
                interest at the rate of 8.25% per annum has not been paid.  The
                note is guaranteed by Charys and each of the Cotton Companies and
                secured
                pursuant to the terms of a Security Agreement executed by the Cotton
                Companies.  The purpose of the loan was to provide the company
                working capital.





·
            *Amendment
                to Cotton Companies Acquisition Note.*  We acquired Cotton
                Holding 1, Inc., Cotton Commercial USA, L.P. and Cotton Restoration
                of
                Central Texas, LP (the “Cotton Companies”), pursuant to a stock and
                limited partnership purchase agreement dated as of September 1, 2006,
                and
                amended on October 6, October 19, October 31, December 8, 2006 and

                February 21, 2007, for total consideration of 1,955,532 shares of
                our
                common stock (which have registration rights) and  $49,204,406
                (composed of $39,204,406 paid in cash and a promissory note in the
                original principal amount of $10,000,000 bearing interest at the
                rate of
                9% per annum). We amended and restated the promissory note on February
                23
                and June 25, 2007, and reduced the outstanding principal balance
                of the
                note to $5,184,931, which will be payable in 36 equal monthly installments
                of $175,943 each, beginning on September 1, 2007 and continuing on
                the
                first day of each month thereafter until August 1, 2010, when the
                entire
                amount shall be due and payable in full.  The foregoing note is
                secured by a security agreement of even date and the payment due
                beginning
                September 1, 2007 has not been
                paid.





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See
      “Description of Business — Material Acquisitions” and “ — Financing
      Transactions” for information concerning certain other secured
      obligations.





**We
      have significant debt obligations, and we may be unable to meet the associated
      debt covenants over time.**





At
      April
      30, 2007 we have indebtedness of approximately $315.1
      million.  Certain of our debt obligations contain various financial
      covenants and other restrictions, including requirements on minimum income
      and
      cash flow, debt service coverage, tangible net worth and working capital
      requirements.  Furthermore, many of these debts or credit facilities
      also contain negative covenants that limit our ability to engage in certain
      investment and financing activities.  We may not be able continuously
      to meet these financial and negative covenants in the future.  If we
      fail to meet any of these financial covenants, our lenders could call their
      loans immediately.  In addition, many of these debt instruments also
      contain cross default provisions, and a default under one debt obligation may
      put us in immediate default under other payment obligations.  In the
      event we fail to repay the obligations upon demand, our lenders may file legal
      actions against us and foreclose on our assets, which may significantly disrupt,
      or even cause us to cease, our business.





**Risks
      Relating to Our Stock**





**We
      do not have sufficient authorized shares of our common stock to cover our
      commitments to issue shares.**





We
      currently do not have enough shares of our common stock authorized to cover
      all
      of our commitments to issue shares.  At some point we will have to
      amend our certificate of incorporation to provide for additional
      shares.  In order to do so, we are required to seek stockholder
      approval.  Since Mr. and Mrs. Ray have sufficient shares to ensure
      approval of such an amendment, we do not expect any difficulty in increasing
      our
      authorized shares of common stock.





**Our
      common stock is thinly traded on the “pink sheets.”**





Our
      common stock has historically been sporadically or thinly traded on the Over
      the
      Counter Bulletin Board, meaning that the number of persons interested in
      purchasing our common stock at or near ask prices at any given time may be
      relatively small or none.  As of July 31, 2007, our average trading
      volume per day for the past three months was approximately 213,258 shares a
      day
      with a high of 884,700 shares traded and a low of 21,400 shares
      traded.  This situation is attributable to a number of factors,
      including the fact that we are a small company that is relatively unknown to
      stock analysts, stock brokers, institutional investors and others in the
      investment community that generate or influence sales volume, and that, even
      if
      we came to the attention of such persons, they tend to be risk-averse and would
      be reluctant to follow an unproven company such as ours or purchase or recommend
      the purchase of our shares until such time as we became more seasoned and
      viable.





However,
      on August 23, 2007, we announced that we had received an OTCBB Ineligibility
      Notification letter dated August 15, 2007 indicating that Charys has failed
      to
      comply with the OTCBB filing requirements under NASD Rule 6530e with respect
      to
      Charys’ Annual Report on Form 10-KSB discussed more fully below, and that
      Charys’ securities are, therefore, subject to removal from quotation on the
      OTCBB effective at the open of business on August 24,
      2007.  Therefore, as of August 24, 2007, Charys’ common stock has been
      quoted on the “pink sheets” under the symbol CHYS.PK.





“Pink
      sheets” is an electronic system, published by Pink Sheets LLC, to display bid
      and ask quotation prices of securities.  The name “pink sheets’ stems
      itself from an earlier paper-based system, which was printed on pink
      paper.  It is mainly used by stock brokers trading over the counter
      securities in the United States.





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Pink
      Sheets LLC is neither an NASD broker-dealer, nor registered with the U.S.
      Securities and Exchange Commission and it is not a stock exchange.





The
      SEC
      sees companies listed on the “pink sheets” as “among the most risky investments”
and advises potential investors to heavily research the companies in which
      they
      plan to invest.





As
      a
      consequence, there may be periods of several days or more when trading activity
      in our shares is minimal or non-existent, as compared to a seasoned issuer
      that
      has a large and steady volume of trading activity that will generally support
      continuous sales without an adverse effect on share price.  It is
      possible that a broader or more active public trading market for our common
      stock will not develop or be sustained, or that current trading levels will
      not
      be sustained.





**The
      market price for our common stock is particularly
      volatile.**





The
      market for our common stock is characterized by significant price volatility
      when compared to seasoned issuers, and we expect that our share price will
      continue to be more volatile than a seasoned issuer for the indefinite
      future.  During the 52 week period ended July 31, 2007, the high and
      low closing prices of a share of our common stock were $2.58 and $1.20,
      respectively.  The volatility in our share price is attributable to a
      number of factors.  First, as noted above, the shares of our common
      stock are sporadically and thinly traded.  As a consequence of this
      lack of liquidity, the trading of relatively small quantities of shares by
      our
      stockholders may disproportionately influence the price of our shares in either
      direction.  Our stock price could, for example, decline precipitously
      in the event that a large number of shares of our common stock are sold on
      the
      market without commensurate demand, as compared to a seasoned issuer that could
      better absorb those sales without adverse impact on its share
      price.





Secondly,
      we are a speculative or risky investment due to our limited operating history,
      limited profits to date, and uncertainty of future market acceptance for our
      services.  As a consequence of this enhanced risk, more risk-averse
      investors, under the fear of losing all or most of their investment in the
      event
      of negative news or lack of progress, may be inclined to sell their shares
      on
      the market more quickly and at greater discounts than would be the case with
      the
      stock of a seasoned issuer.





The
      following factors may add to the volatility in the price of our common
      stock:  actual or anticipated variations in our quarterly or annual
      operating results; government regulations; announcements of significant
      acquisitions, strategic partnerships or joint ventures; our capital commitments;
      additions or departures of our key personnel; and the occurrence or
      non-occurrence of weather conditions that cause residential or commercial
      property damage.  Many of these factors are beyond our control and may
      decrease the market price of our common stock, regardless of our operating
      performance.  We cannot make any predictions or projections as to what
      the prevailing market price for our common stock will be at any time, including
      as to whether our common stock will sustain its current market price, or as
      to
      what effect the sale of shares or the availability of common stock for sale
      at
      any time will have on the prevailing market price.





**Volatility
      in our common stock price may subject us to securities
      litigation.**





In
      the
      past, plaintiffs have often initiated securities class action litigation against
      a company following periods of volatility in the market price of its
      securities.  We may in the future be the target of similar
      litigation.  Securities litigation could result in substantial costs
      and liabilities and could divert management’s attention and
      resources.





Our
      chief
      executive officer, Billy V. Ray, Jr., and his wife, Melissa Shoaf Ray, possess
      substantial voting control over our company.  Among other things, this
      could discourage or prevent a potential takeover of us that might otherwise
      result in stockholders receiving a premium over the market price for their
      shares.





Mr.
      and
      Mrs. Ray, as joint tenants with right of survivorship, own 3,948,350 shares
      of
      our common stock, which represents 7.6% of our issued and outstanding common
      stock as of June 30, 2007, and have the right to acquire an additional 487,222
      shares of our common stock at $0.40 per share.  In addition, Mr. and
      Mrs. Ray own 1,000,000 shares of our Series A Preferred Stock, which has the
      equivalent voting power of 250 million shares of our common
      stock.  Consequently, Mr. and Mrs. Ray currently hold shares with
      voting rights equivalent to 253,948,350 shares of our common stock, which
      represents approximately 84.2% of the current combined voting power of our
      outstanding capital stock.  After considering the issuance of all of
      the shares potentially issuable upon conversion or exercise of all outstanding
      debentures, notes, warrants and options described in this Annual Report, the
      voting power of Mr. and Mrs. Ray represents more than 42.0% of the total
      combined voting power of our capital stock.  As a result, Mr. and Mrs.
      Ray may have the ability to exert effective control over matters submitted
      to
      our stockholders for approval and to control our management and affairs,
      including extraordinary transactions such as mergers and other changes of
      corporate control, and going private transactions.  Additionally, this
      concentration of voting power could discourage or prevent a potential takeover
      of our company that might otherwise result in stockholders receiving a premium
      over the market price for their shares.





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**Our
      issuance of additional common stock, or options or warrants to purchase those
      shares, would dilute your proportionate ownership and voting rights and could
      have a negative impact on the market price of our common
      stock.**





We
      are
      entitled, under our certificate of incorporation, to issue up to 300,000,000
      shares of common stock. Our board may generally issue shares of common stock,
      or
      options or warrants to purchase those shares, without further approval by our
      stockholders based upon such factors as our board of directors may deem relevant
      at that time.  We may issue a large amount of additional securities to
      raise capital to further our development.  We may also issue a large
      amount of additional securities to directors, officers, employees and
      consultants as compensatory grants in connection with their services, both
      in
      the form of stand-alone grants or under our stock plans.  Over the
      past four years ended April 30, 2007, we issued a total of 5,481,369 shares
      to
      reduce our debt obligations, and we issued a total of 16,836,028 shares in
      payment for services.  Such issuances of our equity securities in the
      future may dilute your proportionate ownership and, should you convert any
      of
      the notes or exercise any of the warrants, your voting rights as a
      stockholder.





**Our
      directors have the right to authorize the issuance of additional shares of
      our
      preferred stock.**





Our
      directors, within the limitations and restrictions contained in our certificate
      of incorporation and without further action by our stockholders, have the
      authority to issue shares of preferred stock from time to time in one or more
      series and to fix the number of shares and the relative rights, conversion
      rights, voting rights, and terms of redemption, liquidation preferences and
      any
      other preferences, special rights and qualifications of any such
      series.  We have no intention of issuing additional shares of
      preferred stock at the present time.  Any issuance of additional
      shares of preferred stock could adversely affect the rights of holders of our
      common stock.





**The
      elimination of monetary liability against our directors under our certificate
      of
      incorporation and the existence of indemnification rights to our directors,
      officers and employees may result in substantial expenditures and may discourage
      lawsuits against our directors, officers and employees.**





Our
      certificate of incorporation contains provisions that eliminate the liability
      of
      our directors for monetary damages to Charys and our
      stockholders.  Our bylaws also require us to indemnify our officers
      and directors.  We may also have contractual indemnification
      obligations under our agreements with our directors, officers and
      employees.  The foregoing indemnification obligations could result in
      Charys incurring substantial expenditures to cover the cost of settlement or
      damage awards against directors, officers and employees, which we may be unable
      to recoup.  These provisions and resultant costs may also discourage
      Charys from bringing a lawsuit against directors, officers and employees for
      breaches of their fiduciary duties, and may similarly discourage the filing
      of
      derivative litigation by our stockholders against our directors, officers and
      employees, even though such actions, if successful, might otherwise benefit
      us
      and our stockholders.





**Members
      of our board are elected on a staggered basis, which can serve to entrench
      existing management and preclude takeover bids.**





Members
      of our board are elected on a three-year staggered basis.  Although
      staggered or classified boards can provide continuity of management, they may
      also serve to entrench existing management and effectively preclude most
      takeover bids or proxy contests.  Board classification forces
      dissidents and would-be acquirers to negotiate with the incumbent board, which
      has the authority to decide on offers without a stockholder vote.  In
      addition, it is difficult to remove individual members of a staggered board
      for
      poor attendance or poor performance.





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**Anti-takeover
      provisions may impede our acquisition.**





Certain
      provisions of the Delaware General Corporation Law have anti-takeover effects
      and may inhibit a non-negotiated merger or other business
      combination.  These provisions are intended to encourage any person
      interested in acquiring us to negotiate with, and to obtain the approval of,
      our
      board of directors in connection with such a transaction.  As a
      result, certain of these provisions may discourage our future acquisition,
      including an acquisition in which the stockholders might otherwise receive
      a
      premium for their shares.





**Since
      we have failed to remain current in our reporting requirements, we have been
      removed from the Over the Counter Bulletin Board, which could limit the ability
      of broker-dealers to sell our securities and the ability of stockholders to
      sell
      their securities in the secondary market.**





Companies
      like Charys whose securities trade on the Over the Counter Bulletin Board must
      be reporting issuers under Section 12 of the Securities Exchange Act of 1934,
      as
      amended, and must be current in their reports under Section 13 of the Securities
      Exchange Act of 1934, in order to maintain price quotation privileges on the
      Over the Counter Bulletin Board.  Since we have failed to remain
      current in our reporting requirements, our common stock has been removed from
      trading on the Over the Counter Bulletin Board.  As a result, the
      market liquidity for our securities could be severely and adversely affected
      by
      limiting the ability of broker-dealers to sell our securities and the ability
      of
      stockholders to sell their securities in the secondary market.





We
      were
      late on the filings of our Forms 10-KSB for our 2005, 2006 and 2007 fiscal
      years
      and our Forms 10-QSB for our fiscal quarters ended July 31, 2004, January 31,
      2005, July 31, 2005, January 31, 2006, July 31, 2006 and January 31,
      2007.  We filed a Form 12b-25 to request an extension for each of the
      above filings and with the exception of the Form 10-KSB for the 2006 fiscal
      year
      and the Form 10-QSB for the fiscal quarter ended January 31, 2006, we have
      made
      the filings within the permitted extension periods.  As a result of
      our late filing of the Form 10-QSB for the fiscal quarter ended January 31,
      2006
      and the late filing of our Form 10-KSB for the fiscal years ended April 30,
      2006
      and April 30, 2007, an “E” was placed upon our trading symbol.





We
      were
      also late in filing the financial statements on amendments to Form 8-K in
      connection with our acquisitions of Viasys Network Services, Inc., Viasys
      Services, Inc., Method IQ, Inc. and Crochet & Borel Services,
      Inc.  The amendments to Form 8-K containing the required financial
      information were later filed on April 13, 2006 for Viasys Network Services,
      Inc.
      and Viasys Services, Inc., April 20, 2006 for Method IQ, Inc., and August 29,
      2006 for Crochet & Borel Services, Inc.  We were late in filing
      the above amendments due to the failure of the seller of Viasys Network
      Services, Inc. and Viasys Services, Inc. to furnish the required financial
      information on a timely basis.  Without that financial information, we
      could not prepare the financial information required in connection with the
      subsequent acquisitions.  In addition to the impact on our Forms 8-K
      relating to the acquisition of Viasys Network Services, Inc. and Viasys
      Services, Inc., the failure to receive the required financial information also
      caused us to be late in filing our Form 10-QSB for the period ended January
      31,
      2006.





Pursuant
      to NASD Rule 6530(e), a member firm of the NASD shall not be permitted to quote
      a security if while quoted on the OTCBB, the issuer of the security has failed
      to file a complete required annual or quarterly report by the due date for
      such
      report (including, if applicable, any extensions permitted by SEC Rule 12b-25)
      three times in the prior two-year period, or the security has been removed
      from
      the OTCBB due to the issuer's failure to satisfy paragraph 6530(a)(2), (3)
      or
      (4), above, two times in the prior two-year period.  If an issuer’s
      security becomes ineligible for quotation on the OTCBB pursuant to paragraph
      6530(e)(1) above, the security will be removed from quotation on the OTCBB
      without the benefit of any grace period for the third delinquency, except that
      NASD will provide seven calendar days from the date notification is mailed
      to
      the issuer pursuant to paragraph 6530(f)(1) to permit an aggrieved party to
      request a review of the determination by a hearing panel.  Following
      the removal of an issuer’s security, such security shall not be eligible for
      quotation until the issuer has timely filed in a complete form all required
      annual and quarterly reports due in a one-year period.





As
      discussed above, we have been late on our filings at least three times within
      the last two years.  We do not when or if we will be eligible to
      resume quotation on the OTCBB.





**Our
      common stock is subject to the “penny stock” rules of the Securities and
      Exchange Commission, and the trading market in our common stock is limited,
      which makes transactions in our stock cumbersome and may reduce the investment
      value of our stock.**





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Our
      shares of common stock are “penny stocks” because they trade on the “pink
      sheets” and are not registered on a national securities exchange or listed on an
      automated quotation system sponsored by a registered national securities
      association, pursuant to Rule 3a51-1(a) under the Exchange Act.  For
      any transaction involving a penny stock, unless exempt, the rules
      require:





·
            That
                a broker or dealer approves a person’s account for transactions in penny
                stocks; and





·
            That
                the broker or dealer receives from the investor a written agreement
                to the
                transaction, setting forth the identity and quantity of the penny
                stock to
                be purchased.





The
      broker or dealer must also deliver, prior to any transaction in a penny stock,
      a
      disclosure schedule prescribed by the Securities and Exchange Commission
      relating to the penny stock market, which, in highlight form:





·
            Sets
                forth the basis on which the broker or dealer made the suitability
                determination; and





·
            That
                the broker or dealer received a signed, written agreement from the
                investor prior to the transaction.





Generally,
      brokers may be less willing to execute transactions in securities subject to
      the
“penny stock” rules.  This may make it more difficult for investors to
      dispose of our common stock and cause a decline in the market value of our
      stock.





Disclosure
      also has to be made about the risks of investing in penny stocks in both public
      offerings and in secondary trading and about the commissions payable to both
      the
      broker-dealer and the registered representative, current quotations for the
      securities and the rights and remedies available to an investor in cases of
      fraud in penny stock transactions.  Finally, monthly statements have
      to be sent disclosing recent price information for the penny stock held in
      the
      account and information on the limited market in penny stocks.





Stockholders
      should be aware that, according to Securities and Exchange Commission Release
      No. 34-29093, the market for penny stocks has suffered in recent years from
      patterns of fraud and abuse.  Such patterns include:





·
            Control
                of the market for the security by one or a few broker-dealers that
                are
                often related to the promoter or
                issuer;





·
            Manipulation
                of prices through prearranged matching of purchases and sales and
                false
                and misleading press releases;





·
            Boiler
                room practices involving high-pressure sales tactics and unrealistic
                price
                projections by inexperienced sales
                persons;





·
            Excessive
                and undisclosed bid-ask differential and markups by selling
                broker-dealers; and





·
            The
                wholesale dumping of the same securities by promoters and broker-dealers
                after prices have been manipulated to a desired level, along with
                the
                resulting inevitable collapse of those prices and with consequential
                investor losses.





The
      occurrence of these patterns or practices could increase the volatility of
      our
      share price.  Although we do not expect to be in a position to dictate
      the behavior of the market or broker-dealers who participate in the market,
      management will strive within the confines of practical limitations to prevent
      the described patterns from being established with respect to our
      stock.





**Risks
      Related to the Notes and Warrants**





**We
      may not be able to generate enough cash to service our
      debt.**





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Our
      ability to make payments on the McMahan Securities described in this Annual
      Report and any other debt existing or which we may incur, and to fund planned
      capital expenditures, will depend on our ability to generate
      cash.  Our ability to generate cash is subject to many factors that
      are beyond our control, including the weather and general economic, financial,
      competitive, legislative and regulatory factors.  While we expect that
      we will generate sufficient revenue from the various acquisitions we have made
      to meet our obligations, we cannot assure you that our business will generate
      sufficient cash flows from operations to enable us to pay the principal of
      and
      the interest on the notes and any other indebtedness or to fund our other
      liquidity needs





**An
      active trading market for McMahan Securities may not
      develop.**





The
      McMahan Securities are new issues of securities with no established trading
      market.  If such a market were to develop, the McMahan Securities
      could trade at prices that may be higher or lower than their offering price
      depending upon many factors, including prevailing interest rates, our operating
      results and the markets for similar securities.  The future market for
      the McMahan Securities may be subject to volatility.  Accordingly, no
      assurance can be given as to the liquidity of McMahan Securities.





**We
      may be unable to purchase all of our notes upon a change in control or other
      repurchase event.**





If
      a
      change in control or other repurchase event occurs, we may not have sufficient
      funds to pay the repurchase price for all of our notes tendered by the holders
      thereof or we may not be permitted to repurchase the notes tendered under our
      then existing credit arrangements.





**The
      price of our common stock may fluctuate significantly, which may make it
      difficult for you to sell the common stock issuable upon conversion of the
      notes
      or exercise of the warrants when you want to or at prices you find
      attractive.**





The
      price
      of our common stock on the “pink sheets” constantly changes.  We
      expect that the market price of our common stock will continue to
      fluctuate.  Holders who receive common stock upon conversion of their
      note or the warrants will be subject to the risk of volatility and depressed
      prices for our common stock.





**Conversion
      of the McMahan Securities or exercise of the warrants will dilute the ownership
      interest of existing stockholders.**





The
      conversion of some or all of the notes or the exercise of the warrants will
      dilute the ownership interests of existing stockholders.  Without
      taking into account any other issuance of common stock by us in the future,
      or
      the conversion of any other notes or the exercise of other warrants, the number
      of shares of common stock issuable upon conversion of all of the McMahan
      Securities represents approximately 433% of our currently issued and outstanding
      shares; or 223,610,978 shares Any sales in the public market of the common
      stock
      issuable upon such conversion or exercise could adversely affect prevailing
      market prices of our common stock.  In addition, the existence of the
      notes or warrants may encourage short selling by market participants because
      the
      conversion of the notes or warrants could depress the price of our common
      stock.





**The
      McMahan Notes are unsecured and, therefore, are effectively subordinated to
      any
      of our secured debt.**





The
      notes
      issued in connection with the offering of the McMahan Securities (the “McMahan
      Notes”) are our direct, unsecured and unsubordinated obligations and rank
*pari passu* with all of our existing and future unsecured and
      unsubordinated indebtedness, senior in right of payment to any future
      indebtedness that is expressly made subordinate to the McMahan Notes and junior
      to our existing secured indebtedness (including our guarantees of certain
      obligations of certain of our subsidiaries that are secured by our interests
      in
      those subsidiaries and certain other assets) and to any permitted future secured
      indebtedness as to the property and assets securing said
      indebtedness.  In any liquidation, dissolution, bankruptcy or other
      similar proceeding, the holders of our secured debt may assert rights against
      the secured assets in order to receive full payment of their debt before the
      assets may be used to pay the holders of the McMahan Notes.  The
      McMahan Notes are also structurally subordinate to any indebtedness incurred
      by
      any of our subsidiaries (other than the subsidiaries that guarantee our
      obligations under the McMahan Notes), which means that holders of such debt,
      even if unsecured, have a prior claim against the assets of the subsidiary
      *vis-à-vis* our creditors (including holders of the McMahan
      Notes).





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**While
      certain of our subsidiaries have guaranteed our obligations under the McMahan
      Notes, those subsidiaries’ obligations under those guarantees may be
      limited.  Moreover, there are other material subsidiaries that have
      not guaranteed our obligations under the McMahan Notes.**





Our
      obligations under the McMahan Notes are guaranteed by Crochet & Borel
      Services, Inc., Cotton Holdings 1, Inc., Cotton Commercial USA, L.P., Cotton
      Restoration of Central Texas, LP, Cotton Telecom, Inc., Ayin Tower Management
      Services, Inc., Complete Tower Sources Inc., Mitchell Site Acq, Inc., LFC,
      Inc.,
      Viasys Network Services, Inc. and Viasys Services, Inc.  These
      guarantees are unsecured obligations, meaning that they rank pari passu with
      all
      other existing and future unsecured and unsubordinated indebtedness of the
      guarantor and junior to existing and future secured indebtedness of the
      guarantor as to the property and assets securing that
      indebtedness.  It is possible in certain circumstances that a court
      could hold obligations of a guarantor subordinate to the direct obligations
      of
      such guarantor.  Moreover, if a guarantee is challenged by creditors
      of a guarantor, it is possible that the amount for which such guarantor is
      liable under its guarantee would be limited (or the rights under the guarantee
      could be subject to avoidance or subordination) by application of fraudulent
      conveyance and equitable subordination principles.





**The
      McMahan Notes may not be rated or may receive a lower rating than anticipated
      by
      investors, which could cause a decline in the liquidity or market price of
      the
      McMahan Notes.**





We
      do not
      intend to seek a rating on the McMahan Notes.  However, if one or more
      rating agencies rates the McMahan Notes and assigns them a rating lower than
      the
      rating expected by investors, or reduces their rating in the future, the market
      price of the McMahan Notes and of our common stock may be adversely
      affected.





**We
      are currently in default of several of our obligations under the McMahan Notes,
      which may cause the entire McMahan indebtedness to become due.  If we
      are unable to resolve the default with the McMahan Noteholders, our business
      could fail.**





**OTHER
      MATTERS**





**Competition**





*Remediation
      and Reconstruction.*  We compete with many other companies in the
      sale of our disaster restoration and remediation services.  The
      principal methods of competition in our remediation and reconstruction
      businesses include quality of service, name recognition, pricing, customer
      satisfaction and reputation.  Competition in all of our geographic
      markets is strong.  Historically, our competition in the market for
      disaster restoration and cleaning services comes mainly from local,
      independently owned firms such as South Pro and Blackman-Mooring, and a few
      national companies such as Belfor and Service Master.





*Wireless
      Communications and Data Infrastructure.*  The telecommunications
      engineering services, construction, installation and maintenance services,
      premise wiring services, tower and infrastructure services industries in which
      we operate are highly competitive, fragmented and include numerous service
      providers.  Our competitors fall into three broad
      categories:





·
            Independent
                service companies, such as Wireless Facilities, Inc., which provide
                a full
                range of wireless network services, and a large number of other companies
                that provide limited wireless
                services;





·
            Construction
                and project management companies, such as Bechtel Group Inc. and
                General
                Dynamics, for the deployment of wireless networks;
                and





·
            Information
                technology and consulting companies, such as Bearing Point, Inc.,
                Logica
                and others, which have developed capabilities to deliver network
                consulting services to wireless service
                providers.





Although
      the services provided by many of these competitors are comparable to the
      services we provide, there are areas where certain competitors may have an
      advantage over us.  For example, telecommunications equipment vendors
      presumably know the relative strengths and weaknesses of their products better
      than the service providers who have no product offerings; construction companies
      have more hands-on capabilities with respect to the construction aspects of
      a
      deployment project; and equipment vendors, construction companies and tower
      ownership and management companies have greater financial resources that allow
      them to offer financing and deferred payment arrangements.  In
      addition, many of our competitors have significantly greater marketing
      resources, larger work forces and greater name recognition than we
      possess.





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We
      believe our ability to compete depends on a number of additional factors, which
      are outside of our control, including the willingness of competitors to finance
      customers’ projects on favorable terms; the ability and willingness of customers
      to rely on their internal staffs to perform services themselves; and the
      customer’s desire to bundle equipment and services.





In
      our
      opinion, the principal competitive factors in our market include expertise
      in
      new and evolving technologies, industry experience, ability to deliver
      end-to-end services, ability to provide technology independent solutions,
      ability to deliver results within budget and on time, depth of resources,
      reputation and competitive pricing.  In particular, we believe that
      the breadth of our service offerings, the efficiencies of our processes, our
      ability to integrate new technologies and equipment from multiple vendors will
      make it possible for us to compete.





The
      competitors of Method IQ, Inc. in the technology implementation and integration
      services industry in which we operate tend to fall into one of two
      categories.





·
            Organizations
                selling customer premise equipment to telecommunications managers
                within
                client companies.  These companies view the systems they are
                selling as a technology product sold on the merits of its features
                versus
                the competitors’ products.  These companies tend to sell systems
                to the telecommunications departments within a company and generally
                do
                not develop relationships with senior management of their
                customers.  Examples of these companies would be BellSouth,
                Avaya or Southeastern Telecom.





·
            Consulting
                organizations that have some level of expertise within the contact
                center
                environment.  The consultants are usually focused on running the
                request for proposal process for a product selection, or on the sale
                of a
                consulting engagement focused upon the business processes used within
                the
                contact center.  There is rarely a time when the focus of the
                engagement is upon the entire set of needs of the company.  An
                example of this type of competitor would be Alltel or
                EDS.





**Key
      Personnel**





Our
      future financial success depends to a large degree upon the personal efforts
      of
      our key personnel.  In our formative period as a newly amalgamated
      enterprise, our current officers and directors have played the major roles
      in
      developing our business strategy.  The loss of the services of any of
      these persons could have an adverse effect on our business and our chances
      for
      profitable operations.





While
      we
      intend to employ additional management personnel in order to minimize the
      critical dependency upon any one person, it is possible that we will not be
      successful in attracting and retaining the persons needed.  If we do
      not succeed in retaining and motivating our current employees and attracting
      new
      high quality employees, our business could be adversely affected.





**Our
      Financial Results May Be Affected by Factors Outside of Our
      Control**





Our
      future operating results may vary significantly from quarter to quarter due
      to a
      variety of factors, many of which are outside our control.  Our
      anticipated expense levels are based, in part, on our estimates of future
      revenues and may vary from our projections.  We may be unable to
      adjust spending rapidly enough to compensate for any unexpected revenues
      shortfall.  Accordingly, any significant shortfall in revenues in
      relation to our planned expenditures would materially adversely affect our
      business, operating results, and financial condition.





We
      cannot
      predict with certainty our revenues and operating results.  Further,
      we believe that period-to-period comparisons of our operating results are not
      necessarily a meaningful indication of future performance.





37
 ***Table
            of Contents***





**Sales
      and Markets**





All
      of
      our operating companies sell and market our services and capabilities through
      a
      collaborative effort of their individual sales force, senior management and
      in
      some instances through brokers or related groups.





**Government
      Regulations**





Substantially
      all of our business activities are subject to federal, state, and local laws
      and
      regulations.  These regulations are administered by various federal,
      state and local health and safety and environmental agencies and authorities,
      including the Occupational Safety and Health Administration.  The
      expenditures relating to such regulations are made in the normal course of
      business and are neither material nor place us at any disadvantage.





Although
      Aeon Technologies is not directly subject to any FCC or similar government
      regulations, the wireless construction and related services are subject to
      various FCC regulations in the United States.  These regulations
      require that these wireless networks meet certain radio frequency emissions
      standards, and not cause interference to other services.  These
      wireless networks are also subject to government regulations and requirements
      of
      local standards.





**Employees**





As
      of
      April 30, 2007, we employed approximately 869 full-time employees and 89
      part-time employees, between the holding company and our various
      subsidiaries.  None of these employees are currently represented by a
      labor union or are covered under a collective bargaining
      agreement.  As we grow, we will need to attract an unknown number of
      additional qualified employees.  Although we have experienced no work
      stoppages and believe our relationships with our employees are good, we could
      be
      unsuccessful in attracting and retaining the persons needed.  We do
      not expect that we will have any difficulty in locating additional employees
      to
      support our growth.





**Item
                2.**
            **Description
                of Property.**





As
      of
      April 30, 2007, Charys and our subsidiaries have leases covering the properties
      as described below.





Charys
      leases 7,781 square feet of office space at 1117 Perimeter Center West, Suite
      N-415, Atlanta, Georgia.  The lease provides for current monthly
      rental payments of $12,607 and will increase to $12,983 on April 1, 2008,
      $13,818 on April 1, 2009, and then three percent per annum over the term of
      the
      lease.  The lease is scheduled to expire on October 31,
      2011





Aeon
      Technologies leases the following office and other facilities:





·
            33,500
                square feet of office space at 2100 Couch Drive, Suite A, McKinney,
                Texas.  The lease provides for monthly rental payments of $8,375
                for the first year with a 3% rent escalation each year
                following.  The lease is scheduled to expire on December 31,
                2011.





·
            12,180
                square feet of office space at 5555 Northwest Parkway, San Antonio,
                Texas.  The lease provides for monthly rental payments of
                $19,333.  The lease is scheduled to expire on April 30,
                2015.





·
            5,094
                square feet of office space at 74 North Street, Suite 302, Pittsfield,
                Massachusetts.  The lease provides for fixed monthly rental
                payments of $3,066 per month over the term of the lease.  The
                lease is scheduled to expire on August 30,
                2007.





Viasys
      leases 8,100 square feet of office space at 2944 Drane Field Road, Lakeland,
      Florida.  The lease provides for monthly rental payments of $6,313
      over the term of the lease.  The lease is scheduled to expire on
      November 30, 2010.





Viasys
      also leases certain office and other facilities at nine
      locations.  The minimum payments for the operating leases remaining
      with non-cancelable lease terms in excess of one year for 2008, 2009 and 2010
      are $245,374, $123,339 and $75,756 respectively.





38
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            of Contents***





Method
      IQ
      leases 10,847 square feet of office space at 1750 Founders Parkway, Suite 180,
      Alpharetta, Georgia.  The lease provides for monthly rental payments
      of $9,039 which will increase to $10,745 over the term of the
      lease.  The lease is scheduled to expire on April 10,
      2012.





LFC,
      Inc.
      leases 9,307 square feet of office space at 17314 SH 249, Houston,
      Texas.  The lease provides for monthly rental payments of $13,612 over
      the term of the lease.  The lease is scheduled to expire on August 1,
      2009.





LFC,
      Inc.
      also leases 3,110 square feet of office space at 8825 Solon Road, Suite F5
      and
      F6, Houston, Texas.  The lease provides for monthly rental payments of
      $2,481.  The lease is scheduled to expire on January 1,
      2008.





The
      Cotton Companies leases 91,161 square feet of office space at 2944 14345 NW
      Freeway, Houston, Texas.  The lease provides for monthly rental
      payments of $47,480 over the term of the lease.  The lease is
      scheduled to expire on July 15, 2010.





The
      Cotton Companies also leases certain office and other facilities at nine
      locations.  The minimum payments for the operating leases with
      remaining non-cancelable lease terms in excess of one year for 2008, 2009 and
      2010 are $1,328,599, $1,312,047 and $1,099,420 respectively.





Crochet
      and Borel leases 20,475 square feet of office space at 2200 Denton Drive, Suite
      106, Austin IS Texas.  The lease provides for monthly rental payments
      of $8,673 over the term of the lease. The lease expires August 31,
      2007.  Complete Tower Sources Inc. leases 25,000 square feet of office
      space at 715 Vatican Road, Carencro, Louisiana.  The month to month
      lease provides for rental payments of $7,500.





Mitchell
      Site Acq, Inc leases 3,000 square feet of office space at 119 Veterinarian
      Road,
      Lafayette, Louisiana.  The lease provides for monthly rental payments
      of $3,000 over the term of the lease.  The lease is scheduled to
      expire on September 30, 2008.





We
      believe that all of our facilities are adequate for our current
      operations.  We expect that we could locate other suitable facilities
      at comparable rates, should we need more space.





**Item
                3.**
            **Legal
                Proceedings.**





*Holcomb
      and Acosta Matters.*  We are engaged in protracted litigation with
      our former president, Benjamin F. Holcomb, and our former vice president of
      business development, Edward K. Acosta, which is currently pending in the
      Superior Court of Fulton County, Georgia.  The Holcomb complaint
      described below was filed in September 2005 and the Acosta Complaint described
      below was filed in November 2005.  Messrs. Holcomb and Acosta were
      terminated by us in July 2005 and have filed a series of lawsuits seeking,
      among
      other things, damages for breach of their employment contracts and/or damages
      for alleged misstatements in our filings with the Securities and Exchange
      Commission.  In addition, Messrs. Holcomb and Acosta have sought to
      encumber shares of our preferred stock through the appointment of a receiver
      of
      such shares currently held by our chief executive officer, Billy V. Ray, Jr.,
      and/or to assert a derivative action purportedly in our name against our board
      of directors, several officers and certain third parties.  Messrs.
      Holcomb and Acosta are represented by the same legal counsel in all such
      litigation.  We believe that these matters are without merit and
      intend to defend them vigorously.  These matters are described in more
      detail below.





Benjamin
      F. Holcomb v. Charys Holding Company, Inc., Civil Action File No. 2005CV105803,
      pending in the Superior Court of Fulton County, State of Georgia.  In
      June 2004, we entered into an employment contract with our former president,
      Benjamin F. Holcomb.  In July 2005, we terminated that employment
      contract.  On September 1, 2005, Mr. Holcomb filed suit seeking
      damages in excess of $100,000 arising out of what Mr. Holcomb claims to be
      a
      breach of his employment contract arising from our alleged failure to pay him
      compensation to which he claims he was entitled.  We believe Mr.
      Holcomb’s claims are without merit, and we intend to defend this litigation
      vigorously.  This litigation is currently in discovery.  As
      of the date of this Annual Report, no trial date has been set.





Edward
      Acosta v. Charys Holding Company, Inc., Civil Action File No. 2005CV108667,
      pending in the Superior Court of Fulton County, State of Georgia.  In
      July 2004, we entered into an employment contract with our former vice president
      of business development, Edward K. Acosta.  In July 2005, we
      terminated the employment contract.  On November 10, 2005, Mr. Acosta
      filed suit against us, Billy V. Ray, Jr., our chairman and chief executive
      officer, the law firm of Glast, Phillips & Murray, and Norman Reynolds, an
      attorney at Glast, Phillips (Mr. Reynolds and Glast, Phillips represent us
      in
      various matters) seeking damages in excess of $480,000 arising out of what
      Mr.
      Acosta claims to be a breach of his employment contract arising from our alleged
      failure to pay compensation to which he claims he was entitled and statements
      in
      our documents filed with the Securities and Exchange Commission, which Mr.
      Acosta claims to have been false and on which he allegedly relied in agreeing
      to
      become employed by us.  This litigation is currently in
      discovery.  We believe Mr. Acosta’s claims are without merit, and we
      intend to defend this litigation vigorously.  As of the date of this
      Annual Report, no trial date has been set.





39
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            of Contents***





*Holcomb
      and Acosta “Derivative” Claims.*  In November 2005, Messrs.
      Holcomb and Acosta sent identical letters to our chief executive officer, Mr.
      Ray, with copies to each member of our board of directors.  These
      letters purported to be stockholder demand letters requiring us to take remedial
      action with regard to five allegedly improper transactions in 2004 and
      2005:





·
            Certain
                real property was sold by us to an entity allegedly controlled by
                insiders
                resulting in an improper gain to the insiders, who include certain
                of our
                directors and our chief executive
                officer;





·
            Issuance
                of common shares worth $430,000 on Form S-8 to a
                consultant;





·
            Acceptance
                of $140,000 as a loan from a
                consultant;





·
            Improper
                issuance of shares to consultants;
                and





·
            Improper
                accruing for $446,000 in payroll tax penalties owing from one of
                our
                subsidiaries.





Our
      board
      of directors met on November 10, 2005 and again on February 21, 2006 to discuss
      these allegations.  Documents that the board might wish to review in
      evaluating and responding to those allegations were gathered by certain officers
      and directors and distributed prior to the February meeting, and a discussion
      was held.  The board appointed a special committee of certain
      directors to conduct further investigation and evaluation of the
      allegations.  The special committee was empowered to review the
      matters set forth in the allegations, and to have access to all of our records
      and all officers and directors they deem necessary to make a fully-informed
      evaluation of and response to the allegations, and whether any corrective action
      should be taken in light of them.  The special committee met on
      numerous occasions and finalized its recommendations on April 5,
      2006.  Specifically, the special committee found that no remedial
      action demanded by Messrs. Holcomb and Acosta was necessary.  On April
      6, 2006, the special committee made its recommendation to the full board, and
      the board adopted the recommendation by unanimous vote.





*Holcomb
      “Receivership” Litigation.*  On February 13, 2006, Mr. Holcomb
      filed suit against our chief executive officer, Mr. Ray, in the Superior Court
      of Fulton County Georgia seeking the appointment of a receiver to take
      possession of 1,000,000 shares of our Series A Preferred Stock currently held
      by
      Mr. Ray and his wife, which the suit alleges Mr. Ray pledged in connection
      with
      certain of our transactions without the consent of Mr. Holcomb.  Also
      named in the suit are Method IQ,  Inc., Mel Harris, Steven Posner,
      Glast Phillips & Murray PC, Rock Creek Equity Holding LLC, J. Alan Shaw, and
      SunTrust Banks, Inc.  The basis for the suit is Mr. Holcomb’s
      allegation that, on or about April 19, 2004, Mr. Ray, Alec McLarty (one of
      our
      directors) and Mr. Holcomb formed BRG Holdings, LLC for the purpose of owning
      the shares of the Series A Preferred Stock, and that certain transactions in
      connection with which Mr. Ray pledged the shares of the Series A Preferred
      Stock
      (specifically, a pledge of 50,000 the Series A shares in connection with our
      acquisition of Method IQ and a pledge of 950,000 Series A shares in connection
      with the Harris-Posner transaction) were entered into without Mr. Holcomb’s
      consent.  Although Mr. Ray had not yet been served with the complaint,
      Mr. Holcomb moved for the appointment of a receiver over Mr. Ray’s Series A
      shares, and a motion was heard by the court on February 21, 2006.  Mr.
      Ray argued to the court that, notwithstanding the formation of BRG Holdings,
      there was never an agreement to transfer Mr. Ray’s Series A shares to that
      company, nor any consideration received therefore from BRG Holdings, and that
      none of the transactions complained of required Mr. Holcomb’s
      consent.  The court summarily denied Mr. Holcomb’s motion on February
      28, 2006, following which the complaint in the action was served on Mr.
      Ray.  Mr. Ray believes that the allegations in Mr. Holcomb’s lawsuit
      are without merit, and he intends to defend this lawsuit
      vigorously.





40
 ***Table
            of Contents***





*Acosta
      “Derivative” Litigation.*  Shortly after the denial of Mr.
      Holcomb’s appointment for a receiver over Mr. Ray’s Series A Preferred Stock
      discussed above, on March 10, 2006, Mr. Acosta filed a derivative lawsuit in
      the
      U.S. District Court of the Northern District of Georgia, Atlanta Division,
      purportedly on our behalf against all of the members of our board of directors,
      as well as our chief financial officer, Raymond J. Smith, an advisor to the
      our
      board of directors, Marvin Rosen, Tony Gentile, IFG Private Equity, LLC, Janet
      Risher, the wife of Richard Mangiarelli, one of our former directors, Richard
      Schmidt, Paul Ferandell, Bruce Caldwell, Jimmy Villalobos, Ash Mascarenhas
      and
      Francis Zubrowski.  The complaint is premised on the same allegations
      forming the basis of Messrs. Holcomb and Acosta’s prior stockholder demands, and
      seeks unquantified monetary damages, a judgment declaring that certain
      defendants have breached their fiduciary duties to us, an injunction against
      further violations, and attorneys’ fees.  The complaint has not been
      validly served on any defendant.  In light of the special committee
      and full board rejection of the claims, among other reasons, we believe Mr.
      Acosta’s lawsuit is without legal merit, and we intend to defend it
      vigorously.





*Certified/LVI
      Environmental
      Services, Inc., Certified/LVI Environmental Services of New Orleans, Inc.,
      LVI
      Environmental Services, Inc. (a Florida corporation), LVI Environmental
      Services, Inc. (an Oklahoma corporation) vs. Crochet & Borel Services, Inc.
      and Charys.*  On September 19, 2006, we were served with a demand
      for arbitration arising out of the following.  In 2005, Plaintiffs
      entered into subcontracts with our subsidiary, Crochet & Borel, for
      restoration, debris removal and abatement work for damages caused by hurricanes
      Katrina, Rita and Wilma in Texas, Mississippi, Louisiana and
      Florida.  Plaintiffs claim they are owed a net balance of
      $10,587,719.04 for work done pursuant to those subcontracts, and also claim
      we
      guaranteed payment of that amount.  An American Arbitration
      Association (“AAA”) arbitration is pending (Case No. 70 110 J 00760 06), and a
      hearing has been scheduled for the first week of December of
      2007.  Plaintiffs also filed suit in the 60th Judicial District Court
      of Jefferson County Texas, Cause No. B-I 77,721, Certified/LVI Environmental
      Services, Inc., Certified/LVI Environmental Services of New Orleans, Inc.,
      LVI
      Environmental Services, Inc. (a Florida corporation), LVI Environmental
      Services, Inc. (an Oklahoma corporation) vs. Crochet & Borel Services, Inc.
      d/b/a Crochet & Borel Services, Inc. and Charys Holding Company, Inc.,
      asserting those same claims.  We challenged jurisdiction in
      Texas.  We dispute that Plaintiffs have any claim against us directly,
      including the alleged guaranty.  Plaintiffs have dismissed their
      claims against us in the Texas action, but have threatened to reassert similar
      and related claims in Georgia, in an effort to collect the aforementioned amount
      from us directly.  Plaintiffs contend payment is due
      now.  The agreements between Crochet & Borel and Plaintiffs
      provide that Crochet & Borel is not obligated to pay Plaintiffs until ten
      days after Crochet & Borel receives payment for Plaintiffs
      work.  Although the outcome of litigation cannot be predicted with any
      degree of certainly, Crochet & Borel expects to prevail on its contention
      that payment to Plaintiffs is not yet due.  Further, because Crochet
& Borel anticipates that the amount ultimately owed will correspond to the
      amount Crochet & Borel collects from property owners, insurers and/or the
      Federal Emergency Management Agency for work done by LVI, the net financial
      impact of this litigation on us is not expected to be material.





**Item
                4.**
            **Submission
                ofMatters to a Vote of Security
                Holders.**





None.





**PART
      II**





**Item
                5.**
            **Market
                for Common Equityand Related Stockholder
                Matters.**





Since
      July 20, 2004, our common stock has been quoted on the Over the Counter Bulletin
      Board under the symbol “CHYS.OB.”  However, since August 24, 2007, our
      shares of common stock have been quoted on the “pink sheets” under the symbol
“CHYS.PK.”  The following table shows the quarterly high and low bid
      prices for our common stock over the last two completed fiscal years, as
      reported on the OTC Bulletin Board.  The prices represent quotations
      by dealers without adjustments for retail mark-ups, mark-downs or commission
      and
      may not represent actual transactions.








**Fiscal
                2006 Quarter Ended:**
            
            **High**
            
            
            **Low**July
                31, 2005
            
            $
            0.45
            
            
            $
            0.22October
                31, 2005
            
            $
            1.60
            
            
            $
            0.21January
                31, 2006
            
            $
            1.50
            
            
            $
            0.72April
                30, 2006
            
            $
            4.85
            
            
            $
            1.08**Fiscal
                2007 Quarter Ended:**July
                31, 2006
            
            $
            10.75
            
            
            $
            4.48October
                31, 2006
            
            $
            7.65
            
            
            $
            2.92January
                31, 2007
            
            $
            3.18
            
            
            $
            1.60April
                30, 2007
            
            $
            2.40
            
            
            $
            1.31**Fiscal
                2008 Quarter Ended:**July
                31, 2007
            
            $
            2.58
            
            
            $
            1.20




41
 ***Table
            of Contents***





As
      of
      July 31, 2007, we had 53,496,003 shares of our common stock
      outstanding.  Our shares of common stock are held by approximately 590
      stockholders of record.  The number of record holders was determined
      from the records of our transfer agent and does not include beneficial owners
      of
      our common stock whose shares are held in the names of various securities
      brokers, dealers and registered clearing agencies.  There is no
      trading market for the shares of our preferred stock.





**Dividend
      Policy**





We
      have
      never declared or paid any cash dividends on our common stock.  We do
      not anticipate paying any cash dividends to stockholders in the foreseeable
      future.  In addition, any future determination to pay cash dividends
      will be at the discretion of our board of directors and will be dependent upon
      our financial condition, results of operations, capital requirements and such
      other factors as our board deems relevant.  However, we have entered
      into agreements that restrict our ability to pay dividends on our common stock
      until such time as our obligations under the McMahan Securities and certain
      of
      other obligations described in this Annual Report have been
      satisfied.





**Securities
      Authorized for Issuance under Equity Compensation Plans**





**Plan
                Category**
            
            **Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights**
            
            
            **Weighted-average
                exercise price of outstanding options, warrants and
                rights**
            
            
            **Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))****(a)**
            
            
            **(b)**
            
            
            **(c)****Equity
                compensation plans approved by security holders**
            
            
            11,641,133
            
            
            
            -
            
            
            
            5,358,867**Equity
                compensation plans not approved by security
                holders**
            
            
            -0-
            
            
            
            -
            
            
            
            -0-**Total**
            
            
            11,641,133
            
            
            
            -
            
            
            
            5,358,867








**Recent
      Sales of Unregistered Securities**





There
      were no sales of Charys’ securities during the fiscal year covered by this
      Annual Report that were not registered under the Securities Act, to the extent
      not reported on a Form 10-QSB or Form 8-K for the period covered by this Annual
      Report.





**Purchases
      of Equity Securities by the Registrant and Affiliated
      Purchasers**





There
      were no purchases of our equity securities by Charys or any affiliated
      purchasers during any month within the fourth quarter of the fiscal year covered
      by this Annual Report.





42
 ***Table
            of Contents***





**Item
                6.**
            **Management’s
                Discussion and Analysis or Plan of
                Operation.**





Statements
      included in this Management’s Discussion and Analysis and Plan of Operation, and
      in future filings by us with the Securities and Exchange Commission, in our
      press releases and in oral statements made with the approval of an authorized
      executive officer which are not historical or current facts are “forward-looking
      statements” and are subject to certain risks and uncertainties that could cause
      actual results to differ materially from historical earnings and those presently
      anticipated or projected.  We wish to caution readers not to place
      undue reliance on any such forward-looking statements, which speak only as
      of
      the date made.  The following important factors, among others, in some
      cases have affected and in the future could affect our actual results and could
      cause our actual financial performance to differ materially from that expressed
      in any forward-looking statement:





·
            The
                extremely competitive conditions that currently exist in the market
                for
                companies similar to Charys; and





·
            Lack
                of resources to maintain our good standing status and requisite filings
                with the Securities and Exchange
                Commission.





The
      foregoing list should not be construed as exhaustive and we disclaim any
      obligation subsequently to revise any forward-looking statements to reflect
      events or circumstances after the date of such statements or to reflect the
      occurrence of anticipated or unanticipated events.





**Overview**





We
      operate as a holding company with operating subsidiaries in the following two
      primary business lines:





·
            Remediation
                and reconstruction; and





·
            Wireless
                communications and data
                infrastructure.





Our
      business is more fully described in “Description of Business” in this Annual
      Report.





Beginning
      with the fiscal quarter ended July 31, 2006, we have classified our business
      and
      operating subsidiaries into the following two business lines for financial
      reporting purposes:





·
            Disaster
                restoration and remediation services, including Crochet & Borel
                Services, Inc. and Cotton Companies;
                and





·
            Wireless
                communications and data infrastructure, which covers the following
                four
                business lines:





1.
            Data
                and communication infrastructure services, including Aeon Technologies
                Group, Inc., Digital Communications Services, Inc., Viasys Network
                Services, Inc. and Viasys Services,
                Inc.;





2.
            Tower
                and infrastructure services, including LFC,
                Inc.;





3.
            Technology
                implementation and integration services, including Method IQ, Inc.;
                and





4.
            Professional
                administrative services, including Professional Resources Group of
                Georgia, Inc.





*Plan
      of Operations.*  Our proposed plan of operations for the next 12
      months is to further develop our business plan in order to achieve profitability
      and improve the availability of working capital.  We have identified
      the following steps in order to accomplish the plan:





·
            First,
                we must integrate the businesses we have acquired within our two
                primary
                business lines.





·
            Second,
                we must identify and take advantage of synergies that exist within
                and
                across our two primary business
                lines.





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 ***Table
            of Contents***





·
            Third,
                we must increase revenue in all operating subsidiaries, while at
                the same
                time maintaining or improving gross
                margins.





·
            Fourth,
                we must control, and in some cases reduce, general and administrative
                expenses while growing our
                business.





*Need
      for Additional Employees.*  If our operations continue to grow as
      expected:





·
            We
                need to continue to develop our management team;
                and





·
            At
                certain points in our development we will need to hire additional
                employees at various levels of
                responsibility.





Otherwise,
      we do not expect any significant change in the number of our
      employees.





*Profitability.*  Profitability
      is directly dependent upon our ability to manage the companies we have acquired
      consistently with our business strategy, which is described in “Description of
      Business — Business Strategy” in this Annual Report.





**Results
      of Operations**





***Comparison
      of consolidated results of operations for the years ended April 30, 2007 with
      April 30, 2006***


2007
            
            
            2006
            
            
            $
                Change
            
            
            %
                ChangeRevenues
            
            $
            77,274,624
            
            
            
            100.0
            %
            
            $
            48,570,912
            
            
            
            100.0
            %
            
            $
            28,703,712
            
            
            
            59.1
            %Gross
                profit
            
            
            13,826,206
            
            
            
            17.9
            %
            
            
            9,962,701
            
            
            
            20.5
            %
            
            
            3,863,505
            
            
            
            38.8
            %Operating
                expenses
            
            
            49,508,659
            
            
            
            64.1
            %
            
            
            11,092,586
            
            
            
            22.8
            %
            
            
            38,416,073
            
            
            
            346.3
            %Other
                income (expense)
            
            
            (273,443,016
            )
            
            
            (353.9
            )%
            
            
            (299,280
            )
            
            
            (0.6
            )%
            
            
            (273,143,736
            )
            
            
            (91267.0
            )%Net
                loss
            
            $
            (309,125,469
            )
            
            
            (400.0
            )%
            
            $
            (1,429,165
            )
            
            
            (2.9
            )%
            
            $
            (307,696,304
            )
            
            
            (21529.8
            )%Net
                loss per share:
            
            $
            (9.33
            )
            
            
            
            
            
            $
            (0.13
            )





*Revenues.*Consolidated revenues increased by $28,703,712 or 59.1% to $77,274,624
      in
      fiscal 2007, as compared to the same period in the prior year.  The
      acquisition of Complete Tower Sources Inc, Mitchell Site Acq, Inc., Crochet
      & Borel, the Cotton Companies, LFC, Inc., and Digital Communications
      Services, Inc. during this period increased Charys’ consolidated revenues by
      $28,486,682.  The following table presents our revenues by segment of
      the years ended April 30, 2007 and 2006.


2007
            
            
            2006
            
            
            $
                Change
            
            
            %
                ChangeDisaster
                Restoration and Remediation Services
            
            $
            13,742,125
            
            
            
            17.8
            %
            
            $
            -
            
            
            
            0.0
            %
            
            $
            13,742,125
            
            
            N/ATechnology
                Implementation and Integration Services
            
            
            8,825,835
            
            
            
            11.4
            %
            
            
            6,147,454
            
            
            
            12.7
            %
            
            
            2,678,381
            
            
            
            43.6
            %Data
                and Communication Services
            
            
            43,978,643
            
            
            
            56.9
            %
            
            
            38,773,892
            
            
            
            79.8
            %
            
            
            5,204,751
            
            
            
            13.4
            %Tower
                and Infrastructure Services
            
            
            10,728,021
            
            
            
            13.9
            %
            
            
            -
            
            
            
            0.0
            %
            
            
            10,728,021
            
            
            N/AProfessional
                Administrative Services
            
            
            -
            
            
            
            0.0
            %
            
            
            3,649,566
            
            
            
            7.5
            %
            
            
            (3,649,566
            )
            
            
            (100.0
            )%Total
            
            $
            77,274,624
            
            
            
            100.0
            %
            
            $
            48,570,912
            
            
            
            100.0
            %
            
            $
            28,703,712
            
            
            
            59.1
            %




44
 ***Table
            of Contents***





Disaster
      Restoration and Remediation Services include the revenues of Crochet & Borel
      and the Cotton Companies for fiscal 2007. Crochet & Borel was acquired
      effective May 1, 2006.  Consequently, we did not report any revenues
      for the prior year. Cotton Companies was acquired effective December 8, 2006,
      consequently we did not report any revenues for the prior year.





Technology
      Implementation and Integration Services revenues, which includes Method IQ,
      Inc.
      increased by $2,678,381 or 43.6%, to $8,825,835. During the twelve month period
      ended April 30, 2006. Method IQ, Inc. recognized revenues related to a $1.5
      million sale of software and hardware.





Data
      and
      Communication Services revenues for fiscal 2007 are from Aeon Technologies
      Group, Inc., Digital Communications Services, Inc., Complete Tower Sources
      Inc
      and Viasys.  The Digital Communications Services, Inc. acquisition was
      effective June 9, 2006 and the Complete Tower Sources Inc. acquisition was
      effective February 21, 2007.  Consequently, we did not report any
      revenues for the prior year.  Aeon Technologies Group, Inc., formerly
      CCI Telecom, Inc., and Viasys collectively reported a $453,219 or 1.2% increase
      in revenues during fiscal 2007 as compared to the same period in the prior
      year.





Tower
      and
      Infrastructure Services revenues include LFC, Inc., Mitchell Site Acq, Inc.
      and
      Ayin for fiscal 2007.  LFC, Inc. was acquired effective April 30,
      2006, Ayin’s tower asset purchase was effective July 11, 2006 and Mitchell Site
      Acq. Inc was acquired effective February 21, 2007.  Consequently, we
      did not report any revenues for the prior year.





Professional
      Administrative Services revenues, which include Personnel Resources of Georgia,
      Inc., are $0 for fiscal 2007 as we discontinued operations in fiscal year
      2007.





*Cost
      of Revenues.*Consolidated Cost of revenues increased by
      $24,840,207 or 64.3% to $63,448,418 in fiscal 2007, as compared to the same
      period in the prior year.




2007
            
            
            2006
            
            
            $
                Change
            
            
            %
                ChangeDisaster
                Restoration andRemediation Services
            
            $
            9,250,029
            
            
            
            14.6
            %
            
            $
            -
            
            
            
            0.0
            %
            
            $
            9,250,029
            
            
            N/ATechnology
                Implementation and Integration Services
            
            
            6,180,226
            
            
            
            9.7
            %
            
            
            4,109,233
            
            
            
            10.6
            %
            
            
            2,070,993
            
            
            
            50.4
            %Data
                and Communication Services
            
            
            42,473,458
            
            
            
            66.9
            %
            
            
            31,757,603
            
            
            
            82.3
            %
            
            
            10,715,855
            
            
            
            33.7
            %Tower
                and Infrastructure Services
            
            
            5,544,705
            
            
            
            8.8
            %
            
            
            -
            
            
            
            0.0
            %
            
            
            5,544,705
            
            
            N/AProfessional
                Administrative Services
            
            
            -
            
            
            
            0.0
            %
            
            
            2,741,375
            
            
            
            7.1
            %
            
            
            (2,741,375
            )
            
            
            (100.0
            )%Total
            
            $
            63,448,418
            
            
            
            100.0
            %
            
            $
            38,608,211
            
            
            
            100.0
            %
            
            $
            24,840,207
            
            
            
            64.3
            %




The
      Disaster Restoration and Remediation Services and Tower and Infrastructure
      Services business were all acquired during the current fiscal year as previously
      described in the above section.  Consequently we reported no operating
      cost and/or expenses during the fiscal 2006.





Technology
      Implementation and Integration Services cost of revenues, which includes Method
      IQ, Inc. increased by $2,070,993 or 50.4%, to $6,180,226.  The
      decrease is due to non-reoccurring cost of revenues related to the installation
      of software and hardware recognized during the three month period ended January
      31, 2006.





Data
      and
      Communication Services cost of revenues for fiscal 2007 are from Aeon
      Technologies Group, Inc., Digital Communications Services, Inc., Complete Towers
      Sources, Inc. and Viasys.  The Digital Communications Services, Inc.
      acquisition was effective June 9, 2006.  Consequently, we did not
      report any cost of revenues for the prior year.  Aeon Technologies
      Group, Inc. and Viasys collectively reported a $7,532,110 or 23.7% increase
      in
      cost of revenues during fiscal 2007 as compared to the same period in the prior
      year.





45
 ***Table
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Professional
      Administrative Services cost of revenues, which includes Personnel Resources
      of
      Georgia, Inc., are $0 for fiscal 2007 as we discontinued operations in fiscal
      year 2007.





*Gross
      Profit*.  Consolidated gross profit increased by $3,863,505 or
      38.8% to $13,826,206 in fiscal 2007. The acquisition of Complete Tower Sources
      Inc, Mitchell Site Acq, Inc., Crochet & Borel, the Cotton Companies, LFC,
      Inc., and Digital Communications Services, Inc. during fiscal 2007 increased
      the
      Company’s consolidated gross profit by $10,697,944 and partially off set a
      decline of $6,834,439 in the existing business gross profit. The factors
      directly affecting this decline are the factors described previously in the
      Revenues section.





*Operating
      Expenses.*  Consolidated operating expenses increased by
      $38,416,073 or 346.3% to $49,508,659 in fiscal 2007.  The following
      table presents our operating expenses for the years ended April 30, 2007 and
      2006.




2007
            
            
            2006
            
            
            $
                Change
            
            
            %
                ChangeGeneral
                and administrative
            
            $
            38,007,012
            
            
            
            76.8
            %
            
            $
            9,389,448
            
            
            
            84.6
            %
            
            $
            28,617,564
            
            
            
            304.8
            %Depreciation
                and amortization
            
            
            11,501,647
            
            
            
            23.2
            %
            
            
            1,703,138
            
            
            
            15.4
            %
            
            
            9,798,509
            
            
            
            575.3
            %Total
            
            $
            49,508,659
            
            
            
            100.0
            %
            
            $
            11,092,586
            
            
            
            100.0
            %
            
            $
            38,416,073
            
            
            
            346.3
            %








General
      and administrative expenses increased by $28,617,564 or 304.8% to $38,007,012
      in
      fiscal 2007.  The increase in expenses is a result of the
      following:





·
            Increased
                expenses of $13,966,809 or 578.9% at the holding company
                level.  These increased expenses are a result of the increase in
                corporate activities specifically related to acquisitions and financing
                undertaken during fiscal 2007 as compared to fiscal
                2006.





·
            The
                increased expenses are a direct result of the recent acquired companies
                Complete Tower Sources Inc, Mitchell Site Acq, Inc., LFC, Inc., Digital
                Communications Services, Inc., the Cotton Companies and Crochet &
                Borel. General and administrative expenses generated by these companies
                totaled $10,856,335 or 37.9% of the periods reported
                expense.





Depreciation
      and amortization increased by $9,798,509 or 575.3% to $11,501,647 in fiscal
      2007.  The increased expenses are a direct result of the Complete
      Tower Sources Inc, Mitchell Site Acq, Inc., LFC, Inc., Digital Communications
      Services, Inc., the Cotton Companies and Crochet & Borel
      acquisitions.  Depreciation and amortization expense generated by
      these recent acquired companies totaled $7,540,040 or 77.0% of the periods
      reported expense.





*Other
      Net Expense.*Consolidated other net expense increased by
      $273,143,736 to $273,443,016 in fiscal 2007 as compared to net expense of
      $299,280 in fiscal 2006.  The following table presents other income
      (expense) for the years ended April 30, 2007 and 2006:




2007
            
            
            2006
            
            
            $
                Change
            
            
            %
                ChangeGain
                on debt retirement
            
            $
            -
            
            
            
            0.0
            %
            
            $
            1,596,355
            
            
            
            (533.4
            )%
            
            $
            (1,596,355
            )
            
            
            (100.0
            )%Loss
                on Impairment of goodwill
            
            
            (202,540,512
            )
            
            
            74.1
            %
            
            
            -
            
            
            
            0.0
            %
            
            
            (202,540,512
            )
            
            N/AGain
                on sale of discontinued operations
            
            
            (78,899
            )
            
            
            0.0
            %
            
            
            197,778
            
            
            
            -66.1
            %
            
            
            (276,677
            )
            
            
            (139.9
            )%Interest
                expense
            
            
            (71,826,881
            )
            
            
            26.3
            %
            
            
            (1,900,823
            )
            
            
            635.1
            %
            
            
            (69,926,058
            )
            
            
            3678.7
            %Gain
                on sale of property
            
            
            1,254,352
            
            
            
            (0.5
            )%
            
            
            108,651
            
            
            
            (36.3
            )%
            
            
            1,145,701
            
            
            
            1054.5
            %Other
                income, net
            
            
            (251,076
            )
            
            
            0.1
            %
            
            
            (301,241
            )
            
            
            100.7
            %
            
            
            50,165
            
            
            
            (16.7
            )%Total
            
            $
            (273,443,016
            )
            
            
            100.0
            %
            
            $
            (299,280
            )
            
            
            100.0
            %
            
            $
            (273,143,736
            )
            
            
            91267.0
            %




46
 ***Table
            of Contents***





Gain
      on
      debt retirement in the amount of $1,596,355 in fiscal 2006 was a result of
      a
      transaction on April 26, 2005 whereby we entered into an agreement with Frost
      Bank relating to the restructuring of the credit facilities and the cancellation
      of a term note provided by Frost Bank to Aeon Technologies Group, Inc., formerly
      CCI Telecom, Inc.  Pursuant to the agreement to restructure CCI
      Telecom’s obligation to Frost Bank, we issued to Frost Bank 400,000 shares of
      our Series B preferred stock and 500,000 shares of our Series C preferred
      stock.  All common stock warrants previously issued by Aeon
      Technologies to Frost Bank were terminated.  Also, Frost Bank extended
      the final maturity of the existing credit line for a period of six months from
      February 1, 2005.  The transaction is described more fully in the
“Description of Business – Our Various Acquisitions and Related Transactions” in
      this Annual Report.





We
      are
      required by SFAS No. 142 to review the recorded values of our goodwill for
      impairment on an annual basis. Goodwill arises from the purchase price exceeding
      the assigned value of net assets of acquired businesses, and represents the
      value attributable to unidentifiable intangible elements being acquired. The
      evaluation methodology for potential impairment is inherently complex, and
      involves significant management judgment in the use of estimates and
      assumptions.  We completed our annual evaluation during the second and
      fourth quarters of fiscal year 2007 and recorded an impairment charge of
      $202,540,512 in order to reduce the carrying value of goodwill to it’s
      respective fair market value.  The impairment charge consists of an
      impairment in the amount of $20,122,369 for Viasys, an impairment in the amount
      of $5,526,439 for Method IQ, Inc., an impairment in the amount of $5,695,719
      for
      Aeon Technologies Group, Inc., formerly CCI Telecom, Inc., an impairment in
      the
      amount of $3,559,570 for LFC, Inc., an impairment in the amount of $1,362,669
      for Digital Communication Services, Inc. and an impairment in the amount of
      $166,273,746 for Crochet & Borel. All impairments include post-closing
      adjustments to goodwill.





Interest
      expense increased by $69,926,058 or 3678.7% to $71,826,881 in fiscal 2007 as
      compared to the same period in the prior year.  The increased expenses
      are as a result of several factors:





·
            Interest
                expense accrued and paid for the period increased 805.7% to $17,215,605
                as
                compared to the previous year.





·
            Also
                included in interest expense are redemption premiums totaling $11,431,133
                paid to two lenders at the date the indebtedness was redeemed as
                provided
                for in the Security Purchase
                Agreements.





·
            Also
                included in interest expense is the amortization of the recorded
                value of
                the common stock warrants issued to certain lenders totaling
                $36,553,549.  The valuation of the common stock warrants is more
                fully described in Note 11 to the financial statements included in
                this
                filing.





·
            Also
                included in interest expense is the amortization of financing costs
                totaling $5,722,907.





·
            Also
                included in interest expense is the cost of accrued dividends related
                to
                the Series D preferred stock in the amount of
                $903,667.





*Net
      Loss*.  As a result of the factors described above, the net loss
      for fiscal 2007 was $309,125,469 as compared to a net loss of $1,429,165 in
      fiscal 2006.  Net Loss per weighted average common share of
      33.1million basic and diluted shares was $9.33, as compared to a fiscal 2006
      net
      loss per common share on 11.0 million basic and diluted shares of
      $0.13.





47
 ***Table
            of Contents***





**Liquidity
      and Capital Resources**





The
      independent auditors’ report on our April 30, 2007 financial statements states
      that our recurring losses raise substantial doubt about our ability to continue
      as a going concern.  Our revenues are currently insufficient to cover
      our operating costs and expenses.  To the extent our revenue shortfall
      exceeds our expectations more rapidly than anticipated; we will be required
      to
      raise additional capital from outside investors and/or banks or mezzanine
      lenders.  If financing is not available on satisfactory terms, we may
      be unable to continue, develop or expand our operations.  There is no
      assurance that we will be successful in raising the funds
      required.  In the meantime, we may issue shares of our common stock
      from time to time in the future to acquire certain services, satisfy
      indebtedness and/or make acquisitions.  Equity financing could result
      in additional dilution to our existing stockholders.





We
      continue to evaluate opportunities for corporate development.  Subject
      to our ability to obtain adequate financing at the applicable time, we may
      enter
      into definitive agreements on one or more of those opportunities.





At
      April
      30, 2007, our liquid working capital (cash, accounts receivable, costs in excess
      of billings, less current liabilities) was a deficiency of $134,531,753 as
      compared to a deficiency of $31,137,683 at April 30, 2006.  The
      increased working capital deficiency of $103,394,070 is a direct result of
      the
      increase in debt related to acquisitions which is more fully described in “Our
      Various Acquisitions and Related Transactions” section of this Annual Report and
      the $201.3 million private offering of securities to qualified institutional
      buyers, which we currently are in default on.





At
      April
      30, 2007 the Companies total debt was $208,445,370, as compared to $26,099,733
      at April 30, 2006.  The increase in debt is a direct result of the
      following:





·
            The
                net increase in debt is a result of the acquisition of Cotton Companies,
                Complete Tower Sources Inc, Mitchell Site Acq, Inc., Crochet & Borel
                and Digital Communications Services, Inc. which increased total debt
                at
                the end of the period by
                $81,598,921,





·
            A
                $201.3 million private offering of securities to qualified institutional
                buyers, which has been recorded on the Company’s general ledger at a net
                amount of $101,031,624, and





·
            A
                net reduction of $284,908 by all other subsidiaries at the end of
                the
                period.





***Net
      Cash Used by Operating Activities****.*  Net cash
      provided by operating activities was $54,464,380 for fiscal 2007 as compared
      to
      net cash used by operating activities of $954,947 for the same period in the
      prior year.





Net
      loss
      of $309,125,469 for fiscal 2007 was positively adjusted for the impact of non
      cash items including:  stock option expenses of $4,223,492, stock
      issued for services of $4,923,257, a net $85,847,564 change in working capital,
      adjusted for $11,533,270 in amortization and depreciation expenses, the
      amortization of financing costs to interest of $55,824,452 and the loss on
      the
      impairment of goodwill of $202,540,512; offset by a gain on the sale of property
      of $1,254,352 and a gain on disposal of discontinued operations of
      $48,346.





***Net
      Cash Provided by Investing Activities****.*  Net
      cash used in investing activities was $172,593,476 in fiscal 2007 as compared
      to
      net cash used during the same period in the prior year was
      $601,054.





The
      net
      use of cash was impacted by the cash paid principally in the acquisitions of
      Cotton Companies, Crochet & Borel, Complete Tower Sources, Inc. and Mitchell
      Site Acq., Inc. for $165,736,671, the increase to capitalized cost of $6,274,705
      and the purchase of property and equipment for $6,724,784; offset by the net
      sale of property and equipment in the amount of $1,292,541, the cash acquired
      in
      acquisitions of $4,201,699 and the decrease on non-current assets in the amount
      of $648,444.





***Net
      Cash Provided by Financing Activities****.*  Net
      cash provided by financing activities was $130,515,043 during fiscal 2007 as
      compared to net cash provided of $1,825,083 during the same period during the
      prior year.





48
 ***Table
            of Contents***





The
      net
      use of cash was impacted by the net proceeds of $134,802,600 in borrowings
      offset by a net reduction in financing costs of $12,792,228, the sale of
      preferred stock in the net amount of $11,916,860, the proceeds from the exercise
      of common stock options of $94,887 and the proceeds from the exercise of common
      stock warrants in the amount of $492,924.





**Commitments
      and Contractual Obligations**





The
      following table summarizes our contractual obligations as of April 30,
      2007:





**Payment
                due by period****Total**
            
            
            **1
                year**
            
            
            **2-3
                years**
            
            
            **4-5
                years**
            
            
            **5+
                years**Capital
                Leases
            
            $
            1,317,591
            
            
            $
            559,418
            
            
            $
            640,586
            
            
            $
            117,587
            
            
            
            -Operating
                Lease
            
            
            12,308,749
            
            
            
            3,247,361
            
            
            
            5,167,639
            
            
            
            2,994,827
            
            
            
            898,922Debt
            
            
            315,077,953
            
            
            
            242,559,170
            
            
            
            64,219,470
            
            
            
            8,299,313
            
            
            
            -Total
                Obligations
            
            $
            328,704,293
            
            
            $
            246,365,949
            
            
            $
            70,027,695
            
            
            $
            11,411,727
            
            
            $
            898,922








*Earn-Out
      Provisions.*We have entered into certain earn-out agreements as
      part of the consideration for certain acquisitions.  As of April 30,
      2007, the maximum aggregate earn-out payable should each of the companies
      achieve the maximum results as provided for in the earn-out agreements is $82
      million payable over the next three years.  The terms of the purchase
      agreements relating to the acquisitions of Aeon Technologies Group, Inc., LFC,
      Inc, Complete Tower Sources Inc, Mitchell Site Acq. Inc and the combined C&B
      / Cotton Companies provide for additional earn-out consideration in cash or
      our
      common stock to the selling stockholders of these companies based on the
      companies achieving future financial performance targets as specified in the
      agreements.





·
            Under
                the Aeon Technologies Group, Inc., formerly CCI Telecom, Inc. purchase
                agreement formula no additional consideration was earned during fiscal
                2006, or fiscal 2007.





·
            Under
                the LFC, Inc. purchase agreement formula, the maximum amount of earn-out
                liability is $11.2 million during fiscal years 2007 to
                2009.





·
            Under
                the Complete Tower Sources Inc. purchase agreement formula, the maximum
                amount of earn-out liability is $7.1 million during fiscal years
                2008 and
                2009.





·
            Under
                the Mitchell Site Acq. Inc purchase agreement formula, the maximum
                amount
                of earn-out liability is $2.7 million during fiscal years 2008 and
                2009.





·
            Under
                the amended Crochet &
                Borel /Cotton Companies purchase agreement formulas, the maximum
                amount of
                earn-out liability is $61.0 million during fiscal years 2007 to
                2009.





Under
      generally accepted accounting principles, additional consideration resulting
      in
      future periods from these earn-out contingencies, if any, will be recorded
      to
      goodwill at the time the contingency is resolved.  Accordingly, our
      consolidated financial statements do not include any potential effects of these
      contingencies, which could be material.





*Make-Whole
      Provisions*.  We have entered into make-whole agreements as part
      of the stock consideration for certain acquisitions.  As with the
      earn-out provisions, our obligations under these provisions are also subject
      to
      the companies achieving future financial performance targets as set forth in
      the
      agreements.  The make-whole adjustment typically is effective when our
      common stock issued as part of a transaction trades at a price less than the
      targeted price level at a specific point of time or for a specific
      period.  At such time additional shares and/or cash, at our sole
      discretion, will be delivered to the holder of the shares.





The
      following summarizes the make-whole provisions with respect to our acquisitions
      as well as the numbers of shares we might be required to issue (assuming the
      companies have achieved the specified performance targets) if our stock price
      is
      25%, 50% and 75% below the applicable target price (all terms used in the table
      are as defined in the applicable purchase agreement).





49
 ***Table
            of Contents***





**Targeted**
            
            
            
            **Determination**
            
            **Estimated
                Maximum Number of Shares**
              **that
                may be issued****Acquisition**
            
            **Per
                Share**
              **Price**
            
            **Description**
            
            **Period/Make-**
              **Whole
                Date**
            
            **25%
                below**
              **target**
            
            **50%
                below**
              **target**
            
            **75%
                below**
              **target**Crochet
                & Borel Services, Inc. (1)
            
            $8.18
            
            Seller
                shall receive additional shares equal to the difference between $8.18
                per
                share and the average price during the Determination Period, multiplied
                by
                the 8,008,000 shares and then divided by the market price of our
                common
                stock at the end of Determination Period.
            
            30
                days after the filing of our Form 10-KSB or Form 10-K, as the case
                may be,
                for our fiscal year ended April 30, 2008.
            
            2,660,638
            
            8,008,000
            
            23,945,873Cotton
                Holdings 1, Inc. (1)$8.18
            
            Sellers
                shall receive additional shares equal to the difference between $8.18
                per
                share and the average price during the Determination Period, multiplied
                by
                the 1,955,532 shares and then divided by the market price of our
                common
                stock at the end of Determination Period.
            
            30
                days after the filing of our Form 10-KSB or Form 10-K, as the case
                may be,
                for our fiscal year ended April 30, 2008.
            
            649,721
            
            1,955,532
            
            5,847,518Mitchell
                Site Acq, Inc.$6.85
            
            Seller
                shall receive additional shares equal to the difference between the
                number
                of shares initially issued and the quotient of 500,000 divided by
                the
                average closing price during the Determination Period.
            
            90
                calendar days following the effectiveness of the first filed registration
                statement providing for the registration of the shares issued to
                the
                seller.
            
            24,314
            
            72,940
            
            218,819Complete
                Tower Sources Inc.$6.85
            
            Seller
                shall receive additional shares equal to the difference between the
                number
                of shares initially issued and the quotient of 4,000,000 divided
                by the
                average closing price during the Determination Period.
            
            90
                calendar days following the effectiveness of the first filed registration
                statement providing for the registration of the shares issued to
                the
                seller.
            
            194,505
            
            583,516
            
            1,750,548


__________


(1)
            The
                Crochet & Borel Services, Inc. and Cotton Holdings 1, Inc. make-whole
                payments can be paid in cash or shares of our common stock at our
                option,
                subject to certain restrictions.  Our obligation to make these
                payments is subject to the combined companies’ achieving their
                consolidated earn-out target for the fiscal year ended April 30,
                2008,
                subject to adjustment on the same basis as the earn-out
                payments.





*Capital
      Expenditures Commitments.*As of the date of this Annual Report,
      Charys does not have any material capital expenditures commitments.





**Going
      Concern**





As
      of
      April 30, 2007, we had a $126,067,217 working capital deficit.  That
      condition created uncertainty as to our ability to continue as a going concern
      in the absence of additional capital and/or financing, particularly in light
      of
      the historic (pre acquisition) operating losses of certain acquired
      companies.  We have been making the following efforts to improve our
      overall financial condition:





·
            Increasing
                revenue in all operating subsidiaries, while maintaining or improving
                gross margins in the process;





·
            Controlling,
                and in some cases reducing, general and administrative expenses that
                will
                not impede growth; and





·
            Seeking
                additional sources of working capital to fund daily
                operations.





Once
      the
      private offering of our separable units described in this Annual Report has
      been
      consummated and the net proceeds applied, although there can be no assurance,
      we
      do not expect to have a working capital deficit or any uncertainty as to our
      ability to continue as a going concern in the absence of additional capital
      and/or financing.





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**Quantitative
      and Qualitative Disclosure About Market Risk**





We
      believe that we do not have any material exposure to interest or commodity
      risks.  We are exposed to certain economic and political changes in
      international markets where we compete, such as inflation rates, recession,
      foreign ownership restrictions and trade policies and other external factors
      over which we have no control.





Our
      financial results are quantified in U.S. dollars and a majority of our
      obligations and expenditures with respect to our operations are incurred in
      U.S.
      dollars.  Although we do not believe we currently have any materially
      significant market risks relating to our operations resulting from foreign
      exchange rates, if we enter into financing or other business arrangements
      denominated in currency other than the U.S. dollars, variations in the exchange
      rate may give rise to foreign exchange gains or losses that may be
      significant.





We
      do not
      use financial instruments for trading purposes and we are not a party to any
      leverage derivatives.





As
      discussed by our accountants in the audited financial statements included
      elsewhere in this Annual Report, our revenue is currently insufficient to cover
      our costs and expenses.  Our independent certified public accountants
      have stated in their report included elsewhere in this Annual Report that we
      have incurred operating losses in the last two years, and that we are dependent
      upon management’s ability to develop profitable operations.  These
      factors, among others, may raise substantial doubt about our ability to continue
      as a going concern.  However, once the private offering of our
      separable units described in this Annual Report has been consummated and the
      net
      proceeds applied, we do not expect to have a working capital deficit or any
      uncertainty as to our ability to continue as a going concern in the absence
      of
      additional capital and/or financing.





**Significant
      Accounting Policies**





***Revenue
      Recognition***





*Construction
      Activities*.  Income from construction contracts is recognized on
      the percentage-of-completion method, whereby recognition of earnings on
      contracts in progress is calculated based on the ratio of cost incurred to
      date
      to total expected cost to be incurred on each contract (“cost-to-cost”
method).  Contract costs include all direct material, labor,
      subcontract, travel, equipment costs, and related payroll taxes and insurance
      expense.  Changes in job performance, job conditions, estimated
      profitability and warranty work, including those arising from contract penalty
      provisions and final contract settlements, may result in revisions to costs
      and
      income and are recognized in the period in which the revisions are
      determined.  Contract losses are recognized fully when they are
      determined.  Change orders are recorded when approved by the
      customer.





*Service
      Activities*.  Revenue and related costs associated with service
      agreements are recognized at the time the work is completed and accepted by
      the
      customer, and if the agreement provides for no continuing obligation by
      us.  Progress billings, which may be allowed under an agreement, are
      recorded as deferred revenue until such time the work is completed and accepted
      by the customer.





***Use
      of Estimates and Significant Risks***





The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States 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 consolidated financial statements, and the reported amounts of revenue
      and
      expenses during the reporting periods.  Actual results could differ
      from those estimates.





Revenue
      and costs relating to construction contracts and service agreements are
      particularly affected by management’s estimates.  Contracts awarded
      are normally the result of competitive bidding, and many of our significant
      contracts are based on a fixed price, rather than cost-plus or time and
      materials.  Initial cost estimates supporting our bids are necessarily
      based on facts and circumstances known at the time the estimates are
      made.  Estimates of projected contract costs must be continuously
      updated over the period of contract performance.  Unpredictable events
      can and do occur during contract performance, which can increase costs and
      erode
      the anticipated contract profit.  Change orders to recover additional
      costs from the customer may not be approved, or could be subject to protracted
      negotiations and concessions by us.  Considerable judgment must be
      applied to reasonably evaluate the potential outcomes of issues that arise
      during the contract performance period and the effect their resolution will
      have
      on the ultimate margins or losses that may be realized by
      us.  Consequently, the estimates that support our revenue recognition
      and cost accrual decisions have a very significant impact on the results of
      operations reported by us.





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***Cash
      and Cash Equivalents and Restricted Cash***





The
      Company considers all highly liquid investments with the original maturities
      of
      three months or less to be cash equivalents. The Company’s subsidiaries have
      cash in depository accounts which exceed the level insured by the Federal
      Deposit Insurance Corporation. This uninsured risk is mitigated by maintaining
      depository accounts with high quality financial institutions.





Proceeds
      from the McMahan financing (see Note 8 to the financial statements included
      in
      this filing) of $8.8 million were placed in escrow with the Bank of New York
      as
      required by the financing agreement to fund the first two quarterly interest
      payments relating to this financing, due May 16, 2007 and August 16, 2007.
      Accordingly, this cash was not available for general working capital needs
      as of
      April 30, 2007 and is presented as restricted cash in the accompanying 2007
      consolidated balance sheet.





***Accounts
      Receivable***





The
      allowance for doubtful accounts is established as losses are estimated to have
      occurred through a provision for bad debt charged to earnings.  Losses
      are charged against the allowance when management believes the uncollectibility
      of a receivable is probable.  Subsequent recoveries, if any, are
      credited to the allowance.  The allowance for doubtful accounts is
      evaluated on a regular basis by management and is based on historical experience
      and specifically identified questionable receivables.  The evaluation
      is inherently subjective, as it requires estimates that are susceptible to
      significant revision as more information becomes available.  Allowance
      for doubtful accounts was $17,433,290 and $2,567,731 at April 30, 2007 and
      2006.





***Property
      and Equipment***





Property
      and equipment are stated at cost.  Depreciation and amortization are
      calculated on the straight-line and accelerated methods based on estimated
      useful lives which generally range from five to seven years for equipment,
      10
      years for leasehold improvements and 29 years for buildings.





***Intangible
      Asset Valuation***





Goodwill
      represents the excess of acquisition cost over the assigned fair value of the
      assets acquired, less liabilities assumed.  SFAS No. 142, “Goodwill
      and Other Intangible Assets,” addresses financial accounting and reporting for
      acquired goodwill and other intangible assets.  For purposes of
      goodwill impairment measurement, we are required to compare the fair value
      of
      the reporting unit with its carrying amount (net equity), including
      goodwill.  If the fair value of the reporting unit exceeds its
      carrying amount, goodwill of the reporting unit is considered not
      impaired.  The evaluation methodology for potential impairment is
      inherently complex, and involves significant management judgment in the use
      of
      estimates and assumptions.  We completed our annual evaluation during
      the second and fourth quarters of fiscal year 2007 and recorded an impairment
      charge of $202,540,512 in order to reduce the carrying value of goodwill to
      it’s
      respective fair market value.  The impairment charge consists of an
      impairment in the amount of $20,122,369 for Viasys, an impairment in the amount
      of $5,526,439 for Method IQ, Inc., an impairment in the amount of $5,695,711
      for
      Aeon Technologies Group, Inc., formerly CCI Telecom, Inc., an impairment in
      the
      amount of $3,559,570 for LFC, Inc., an impairment in the amount of $1,362,669
      for Digital Communication Services, Inc. and an impairment in the amount of
      $166,273,746 for Crochet & Borel. All impairments include post-closing
      adjustments to goodwill.





***Accounting
      for Debt with Detachable Warrants***





During
      the year ended April 30, 2007, a total of $252.8 million in debt was issued
      by
      the Company with detachable warrants for the purchase of up to 191,354,225
      shares of common stock at a prices ranging from $.2.25 to $5.00 per share and
      expiring at various dates during 2008 through 2012. On the commitment dates,
      the
      Company allocated the proceeds between the debt issuances and the related
      warrants as required by APB 14, “Accounting for Convertible Debt and Debt Issued
      with Stock Purchase Warrants”. As a result, the Company recorded a debt discount
      arising from the fair value allocation to the warrants in the total amount
      of
      $140 million, which is amortized as interest expense over the terms of the
      loans
      using the interest method. Of this debt, $39.6 million of principal pay-offs
      were made as a result of a major financing obtained in February 2007. At that
      time, the Company charged the unamortized discount associated with these
      principal pay-offs to interest expense.





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Issuance
      costs allocated to the debt, in the amount of $15.3 million were recorded as
      financing costs and are amortized to interest expense over the life of the
      related loans.





***Earnings
      Per Share***





Basic
      earnings or loss per common share is computed by dividing income available
      to
      common stockholders by the weighted average number of common stock outstanding
      for the period.  Diluted earnings per common share, in addition to the
      weighted average determined for basic earnings per share, includes potential
      dilution that could occur if securities or other contracts to issue common
      stock
      were exercised or converted into common stock.





***Income
      Taxes***





We
      account for income taxes using an asset and liability approach that requires
      the
      recognition of deferred tax assets and liabilities for the expected future
      tax
      consequences of events that have been recognized in our consolidated financial
      statements or tax returns.  In estimating future tax consequences, we
      consider all expected future events other than enactment of or changes in the
      tax law or rates.  We file consolidated federal income tax
      returns.





***Accounting
      for Acquisitions***





Charys
      acquired all outstanding shares of Personnel Resources of Georgia from Billy
      V.
      Ray, Jr., our controlling stockholder and chief executive
      officer.  Due to the common control and absence of non-controlling
      minority interests in Personnel Resources of Georgia, Inc., the transaction
      was
      characterized as a transfer of assets, or potentially an exchange of shares,
      in
      accordance with SFAS No. 141 “Business Combinations,” and not as a
      purchase.  Under SFAS No. 141, a transfer of net assets or exchange of
      shares between entities under common control is accounted for by the receiving
      entity Charys recognizing the assets and liabilities transferred at their
      carrying amounts in the accounts of the transferring entity Personnel Resources
      of Georgia, Inc., and not at fair value in the case where the purchase method
      of
      accounting applies.  As required by SFAS No.141, the accompanying
      financial statements are presented as if the transfer had occurred at the
      beginning of all periods.





***Stock-Based
      Compensation***





We
      have
      adopted Statement of Financial Accounting Standards No. 123, “Accounting for
      Stock Based Compensation,” and Statement of Financial Accounting Standards No.
      148, as amended, and elected to use the intrinsic value method in accounting
      for
      our stock option plan.  Accordingly, no compensation cost has been
      recognized in the consolidated financial statements for this plan.





**Off-Balance
      Sheet Arrangements**





We
      have
      not entered into any off-balance sheet arrangements that have or are reasonably
      likely to have a current or future effect on our financial condition, changes
      in
      financial condition, revenue or expenses, results of operations, liquidity,
      capital expenditures or capital resources and would be considered material
      to
      investors.





**Other
      Information**





Our
      consolidated earnings before interest, taxes, depreciation and amortization
      (“EBITDA”) for the fiscal years ended April 30, 2007 and April 30,
      2006******are presented in the table below and
      reconciled to our net earnings (loss).  EBITDA is presented, because
      it is a widely accepted financial performance indicator.  It is also
      the bases on which certain of our compensation plans are
      based.  EBITDA is not a term that has a specific meaning in accordance
      with GAAP and may be calculated differently by others.  EBITDA should
      not be considered in isolation, as a substitute for earnings from operations
      or
      cash flow data calculated in accordance with GAAP, or as a measure of a
      company’s profitability or liquidity.





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            of Contents***





2007
            
            
            2006
            
            
            $
                Change
            
            
            %
                ChangeNet
                loss
            
            $
            (309,125,469
            )
            
            $
            (1,429,165
            )
            
            $
            (307,696,304
            )
            
            
            21529.8
            %Interest
                expense
            
            
            71,826,881
            
            
            
            1,900,823
            
            
            
            69,926,058
            
            
            
            3678.7
            %Non
                cash consulting expenses
            
            
            3,420,500
            
            
            
            231,441
            
            
            
            3,189,059
            
            
            
            1377.9
            %Loss
                on impairment of goodwill
            
            
            202,540,512
            
            
            
            -
            
            
            
            202,540,512
            
            
            N/ADepreciation
                and amortization
            
            
            11,501,647
            
            
            
            1,703,138
            
            
            
            9,798,509
            
            
            
            575.3
            %EBITDA
            
            $
            (19,835,929
            )
            
            $
            2,406,237
            
            
            $
            (22,242,166
            )
            
            
            (924.4
            )%








**Recent
      Developments**




Since
      the
      end of our fiscal year ended April 30, 2007, we have had the following
      developments:





·
            On
                January 24, 2007, we closed on a bridge loan for $800,000 with HarPos
                Funding, LLC (“HarPos Financing”) pursuant to which the principal and
                accrued interest of $184,200 were due on the earlier of April 8,
                2007 or
                upon Charys obtaining permanent financing.  In connection with
                this note we issued warrants for 250,000 common shares at a purchase
                price
                of $2.25 per share, expiring January 8, 2011.  In addition, we
                executed consulting agreements with Mel Harris and Steven Posner,
                members
                of HarPos Financing, for which they each received 100,000 restricted
                common shares.  The HarPos Financing was refinanced on May 3,
                2007 pursuant to which the note shall be due and payable in 18 equal
                monthly installments of $61,399.11 (or more) each, including interest,
                the
                first of such installments shall be due and payable on June 3, 2007,
                and a
                like installment shall be due and payable on the same day of each
                succeeding month thereafter until fully paid.  Interest accrues
                at the rate of 15% per annum.  The refinanced note was
                personally guaranteed by our chief executive officer, Billy V. Ray,
                Jr.
                and Troy Crochet, the president of Crochet & Borel, Inc.  We
                have not made either the August 1, 2007 payment due on the note or
                any
                subsequent monthly payments. On October 16, 2007 the Company received
                a notice of default declaring the entire principal amount due and
                payable no later than October 22, 2007. As of this date we have not
                made
                this payment.





·
            On
                May 3, 2007, we issued a note to Sean Posner in the amount of $367,954
                to
                settle amounts due pursuant to a loan agreement dated May 1,
                2006.  The Sean Posner Note is due and payable in 18 equal
                monthly installments of $20,907 (or more) each, including interest,
                the
                first of such installments shall be due and payable on June 3, 2007,
                and a
                like installment shall be due and payable on the same day of each
                succeeding month thereafter until fully paid.  Interest accrues
                at the rate of 15% per annum.  The amended note was personally
                guaranteed by our chief executive officer, Billy V. Ray, Jr. and
                Troy
                Crochet, the president of Crochet & Borel Services, Inc.  We
                have not made the August 1, 2007 payment due on the note or any subsequent
                payments. On October 16, 2007 the Company received a notice of
                default declaring the entire principal amount due and payable no
                later
                than October 22, 2007. As of this date we have not made this
                payment.





·
            On
                May 3, 2007, we issued a note to Steven Posner in the amount of $367,954
                to settle amounts due pursuant to a loan agreement dated May 1,
                2006.   The Steven Posner note is due and payable in 18
                equal monthly installments of $20,907 (or more) each, including interest,
                the first of such installments shall be due and payable on June 3,
                2007,
                and a like installment shall be due and payable on the same day of
                each
                succeeding month thereafter until fully paid.  Interest accrues
                at the rate of 15% per annum.  The amended note was personally
                guaranteed by our chief executive officer, Billy V. Ray, Jr. and
                Troy
                Crochet, the president of Crochet & Borel Services, Inc.  We
                have not made the August 1, 2007 payment due on the note or any subsequent
                payments. On October 16, 2007 the Company received a notice of
                default declaring the entire principal amount due and payable no
                later
                than October 22, 2007. As of this date we have not made this
                payment.





·
            On
                May 3, 2007, we issued a note to Mel Harris in the amount of $368,064
                to
                settle amounts due pursuant to a loan agreement dated May 1,
                2006.   The Mel Harris note is due and payable in 18 equal
                monthly installments of $20,913 (or more) each, including interest,
                the
                first of such installments shall be due and payable on June 3, 2007,
                and a
                like installment shall be due and payable on the same day of each
                succeeding month thereafter until fully paid.  Interest accrues
                at the rate of 15% per annum.  The amended note was personally
                guaranteed by our chief executive officer, Billy V. Ray, Jr. and
                Troy
                Crochet, the president of Crochet & Borel Services, Inc.  We
                have not made the August 1, 2007 payment due on the note or any subsequent
                payments. On October 16, 2007 the Company received a notice of
                default declaring the entire principal amount due and payable no
                later
                than October 22, 2007. As of this date we have not made this
                payment.





54
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·
            On
                May 15, 2007, Crochet & Borel Services, Inc. issued a promissory note
                to Mike Thomas in the amount of $1,600.000 payable $100,000 down
                and the
                balance in 60 equal monthly installments of principal and accrued
                interest
                of $28,999 commencing June 15, 2007.  This note represents
                payment in full of amounts due for services rendered pursuant to
                a
                Consulting Agreement dated May 1, 2005. Crocchet & Borel Services,
                Inc. has not made the payment due July 1, 2007 or any subsequent
                payments.





·
            On
                May 18, 2007, Charys executed a Note Purchase Agreement with Imperium
                Master Fund, Ltd.  Pursuant to the agreement we issued our
                Senior Secured Note in the principal amount of $690,000.  The
                note is due May 18, 2008 and bears interest at the rate of 12% per
                annum.  The note ranks senior to all outstanding and future
                indebtedness of Charys except as otherwise set forth in the
                agreement.  The note is guaranteed by each of our subsidiaries
                and secured pursuant to the terms of a Security Agreement.  The
                purpose of the loan was for working
                capital.





·
            On
                June 4, 2007, we filed an application with the American Stock Exchange
                to
                list the shares of our common stock for trading on the
                exchange.  As of the date of this Annual Report, we have not
                received a notification that our shares have been accepted for
                trading.





·
            On
                June 29, 2007, Cotton Commercial USA, L.P. executed a Note Purchase
                Agreement with Imperium Master Fund, Ltd.  Pursuant to the
                agreement, the Cotton Commercial USA, L.P. issued its Senior Secured
                Note
                in the principal amount of $3,040,000.  The note is due August
                13, 2007 and bears interest at the rate of 8.25% per annum and is
                guaranteed by Charys and each of the Cotton Companies and secured
                pursuant
                to the terms of a Security Agreement executed by the Cotton
                Companies.  The purpose of the loan was for working capital. We
                have not made the August 15, 2007 payment due on the note on which
                date
                the principal amount and all accrued interest was
                due.





·
            On
                July 10, 2007, we received Consents from the holders of the McMahan
                Securities with respect to the adoption of a proposed amendment to
                the
                Indenture and a consent to a refinancing of “Existing Secured
                Indebtedness” as defined in the Indenture as described in that certain
                Consent and Amendment to Indenture sent to the holders.  The
                purpose of the solicitation of the Consents was to amend the Indenture
                to
                enable Charys to re-allocate the $35,000,000 of “Existing Secured
                Indebtedness” currently available to our Crochet & Borel subsidiary
                among our other subsidiaries in order to implement the reorganization
                of
                our business into two distinct business operations, disaster/remediation,
                and telecommunications and construction activities related
                thereto.  In order to permit the requested ability to allocate
                “Existing Secured Indebtedness” it was necessary to amend the definition
                of “Existing Secured Indebtedness” as described in the Consent and
                Amendment.





·
            In
                addition, Charys has refinanced its Series D preferred stock in exchange
                for Subordinated Unsecured Convertible Notes in an aggregate amount
                of
                $15,037,278, pursuant to that certain Securities Exchange Agreement
                dated
                as of April 30, 2007, by and among Charys and the investors listed
                on the
                Schedule of Investors attached thereto, all more fully described
                in a Form
                8-K filed by Charys with the Securities and Exchange Commission on
                May 24,
                2007 (the “Series D Transaction”).  The Series D preferred stock
                provided for certain payments and other obligations by
                Charys.  We felt it was in our best interests to incorporate all
                of these obligations into Subordinated Unsecured Convertible Notes
                and
                cancel the Series D preferred stock.  We desired for the holders
                of the McMahan Notes to consent to the refinancing and exchange.
                We have
                not made the August 3, 2007 payment due on the note payable to one
                of the
                investors and we were late in the payment due on July 13, 2007 to
                that
                investor and subsequently have made no futher payments to any of
                the
                investors. On October 23, 2007 one of the investors made a demand
                for
                redemption of the note to that investor in the original
                principal amount of 8,354,043.





·
            We
                acquired Cotton Holding 1, Inc., Cotton Commercial USA, L.P. and
                Cotton
                Restoration of Central Texas, LP (the “Cotton Companies”) pursuant to a
                stock and limited partnership purchase agreement dated as of September
                1,
                2006, and amended on October 6, October 19, October 31, December
                8, 2006
                and February 23, 2007, for total consideration of 1,955,532 shares
                of our
                common stock (which have registration rights) and $49,204,406 (composed
                of
                $39,204,406 paid in cash and a promissory note in the original principal
                amount of $10,000,000 bearing interest at the rate of 9% per annum).
                We
                amended and restated the promissory note on February 23 and June
                25, 2007,
                and reduced the outstanding principal balance of the note to $5,482,816,
                which will be payable in 36 equal monthly installments of $175,943
                each,
                beginning on September 1, 2007 and continuing on the first day of
                each
                month thereafter until August 1, 2010, when the entire amount shall
                be due
                and payable in full. We have not made the September 1, 2007 or the
                October
                1, 2007 payment due on the note.





55
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·
            On
                August 24, 2007, our shares of common stock began trading on the
“pink
                sheets” due to our failure to meet the quotation standards for the Over
                the Counter Bulletin Board.





·
            We
                are in default of certain provisions of the Company’s 8.75% Senior
                Convertible Notes Due 2012 (the “Notes”) that were issued pursuant to the
                that certain Indenture, dated as of February 16, 2007 (as amended,
                modified, supplemented or amended and restated from time to time,
                the
                “Indenture”). The defaults include the Company’s failure to deliver the
                Company’s annual financial statements and the Company’s failure to deliver
                a Right of Repurchase Notice and Notice of Default in connection
                therewith.




●
            We
                  are in default of the convertible promissory notes in the amounts
                  of
                  $473,849 and $242,151 issued in connection with the Viasys acquisitions
                  to
                  Mel Harris and Steven Posner respectively, which were due September
                  29,
                  2007. Mel Harris has filed suit in connection with the
                  matter.




**Item
                7.**
            **Financial
                Statements.**





The
      financial statements and related notes are included as part of this Annual
      Report as indexed in the appendix on page F/S-1 through F/S-50.





**Item
                8.**
            **Changes
                Inand Disagreements with Accountants on
                Accounting and Financial
                Disclosure.**





None.





**Item
                8A.**
            **Controls
                and
                Procedures.**





The
      term
      disclosure controls and procedures means controls and other procedures of an
      issuer that are designed to ensure that information required to be disclosed
      by
      the issuer in the reports that it files or submits under the Exchange Act (15
      U.S.C. 78a, *et seq.*) is recorded, processed, summarized and reported,
      within the time periods specified in the Commission’s rules and
      forms.  Disclosure controls and procedures include, without
      limitation, controls and procedures designed to ensure that information required
      to be disclosed by an issuer in the reports that it files or submits under
      the
      Exchange Act is accumulated and communicated to the issuer’s management,
      including its principal executive and principal financial officers, or persons
      performing similar functions, as appropriate to allow timely decisions regarding
      required disclosure.





The
      term
      internal control over financial reporting is defined as a process designed
      by,
      or under the supervision of, the issuer’s principal executive and principal
      financial officers, or persons performing similar functions, and effected by
      the
      issuer’s board of directors, management and other personnel, 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 and includes those policies and
      procedures that:





·
            Pertain
                to the maintenance of records that in reasonable detail accurately
                and
                fairly reflect the transactions and dispositions of the assets of
                the
                issuer;





·
            Provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with generally
                accepted
                accounting principles, and that receipts and expenditures of the
                issuer
                are being made only in accordance with authorizations of management
                and
                directors of the issuer; and





·
            Provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use or disposition of the issuer’s assets that
                could have a material effect on the financial
                statements.





56
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Our
      management, including our chief executive officer and chief financial officer,
      does not expect that our disclosure controls and procedures or our internal
      controls over financial reporting will prevent all error and all
      fraud.  A control system, no matter how well conceived and operated,
      can provide only reasonable, not absolute, assurance that the objectives of
      the
      control system are met.  Further, the design of a control system must
      reflect the fact that there are resource constraints, and the benefits of
      controls must be considered relative to their costs.  Because of
      inherent limitations in all control systems, internal control over financial
      reporting may not prevent or detect misstatements, and no evaluation of controls
      can provide absolute assurance that all control issues and instances of fraud,
      if any, within Charys have been detected.  Also, projections of any
      evaluation of effectiveness to future periods are subject to the risk that
      controls may become inadequate because of changes in conditions, or that the
      degree of compliance with the policies or procedures may
      deteriorate.





*Evaluation
      of Disclosure and 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 Exchange
      Act.  Our internal control over financial reporting is a process
      designed to provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external purposes
      in
      accordance with accounting principles generally accepted in the United
      States.  We carried out an evaluation, under the supervision and with
      the participation of our management, including our chief executive officer
      and
      chief financial officer, of the effectiveness of the design and operation of
      our
      disclosure controls and procedures as of the end of the period covered by this
      report.  The evaluation was undertaken in consultation with our
      accounting personnel. Based on that evaluation, our chief executive officer
      and
      chief financial officer concluded that our disclosure controls and procedures
      are currently effective to ensure that information required to be disclosed
      by
      us in the reports that we file or submit under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms.  As we develop new business or if we engage in
      an extraordinary transaction, we will review our disclosure controls and
      procedures and make sure that they remain adequate.





*Changes
      in Internal Controls Over Financial Reporting.*  There were no
      changes in the internal controls over our financial reporting that occurred
      during the period covered by this report that have materially affected, or
      are
      reasonably likely to materially affect, our internal control over financial
      reporting.





**Item
                8B.**
            **Other
                Information.**





None





**PART
      III**





**Item
      9.                 Directors, Executive Officers, Promoters and Control
      Persons and
      Corporate Governance; Compliance with Section 16(a) of the Exchange
      Act.**





Information
      concerning directors and the nominees for director of Charys Holding Company,
      Inc. will be included under the caption “Election of Directors,” “Information as
      to Nominees and Other Directors,” “Information Regarding Meetings and Committees
      of the Board” and “Section 16(a) Beneficial Ownership Reporting Compliance” in
      our 2007 Proxy Statement and is incorporated herein by reference.





The
      following table sets forth information concerning the executive officers of
      Charys as of the date of this Annual Report:




**Name**
            
            **Age**
            
            **Position**
            
            **Class**
            
            **Director
                Since**Billy
                V. Ray, Jr
            
            49
            
            Chairman,
                Chief Executive Officer,and
                Director
            
            C
            
            2004Raymond
                J. Smith
            
            55
            
            Vice
                President, Chief Financial Officer,and
                Secretary
            
            N/A
            
            N/AMichael
                Oyster
            
            50
            
            Executive
                Vice President and Director
            
            A
            
            2004




57
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____________


(1)
            Billy
                V. Ray, Jr. served as our president from December 2003 until June
                25, 2004
                when he was elected chairman of the board.  Mr. Ray was elected
                as chief executive officer on April 28,
                2004.


(2)
            Raymond
                J. Smith was a financial consultant from 2000 until his election
                as our
                chief financial officer on June 25, 2004.  He was elected as a
                vice president and secretary on April 28,
                2004.


(3)
            Michael
                Oyster was elected a vice president on February 1,
                2006.





There
      are
      no family relationships among the officers of Charys.





We
      may
      employ additional management personnel, as our board of directors deems
      necessary.  Charys has not identified or reached an agreement or
      understanding with any other individuals to serve in management positions,
      but
      does not anticipate any problem in employing qualified staff.





All
      officers serve until their successors are chosen and may be removed at any
      time
      by the board of directors.  The directors elect officers
      annually.





**Item
                10.**
            **Executive
                Compensation.**





Information
      concerning executive compensation will be included under the captions “Executive
      Compensation and Other Information,” “Compensation Committee Interlocks and
      Insider Participation,” and “Compensation Committee Report” in our 2007 Proxy
      Statement and is incorporated herein by reference.





**Item
                11.**
            **Security
                Ownershipof Certain Beneficial Owners and
                Management and Related Stockholder
                Matters.**





Information
      concerning security ownership of certain beneficial owners and management and
      related stockholder matters will be included under the captions “Security
      Ownership” and “Equity Compensation Plan Information” in our 2007 Proxy
      Statement and is incorporated herein by reference.





**Item
                12.**
            **Certain
                Relationships and Related
                Transactions.**





Information
      concerning certain relationships and related transactions will be included
      under
      the caption “Certain Relationships and Related Transactions” in our 2007 Proxy
      Statement and is incorporated herein by reference.





58
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            of Contents***





**Item
                13.**
            **Exhibits.**




Exhibit
                No.
            Identification
                of Exhibit2.1*
            Plan
                and Agreement of Merger between Spiderboy International, Inc. and
                Charys
                Holding Company, Inc. dated June 25, 2005 (Incorporated by reference
                to Exhibit C of the Company’s Definitive Proxy Statement (File No.
                000-18292), filed on June 11, 2004).2.2*
            Amended
                and Restated Stock Purchase Agreement by and between Janet Risher,
                Richard
                Schmidt, and Billy V. Ray, Jr., dated May 25, 2004 (Incorporated by
                reference to Exhibit 2.2 of the Company’s Form 8-K/A (File No.
                000-18292), filed on June 1, 2004).3.1*
            Articles
                of Incorporation of Rogers Hardware and Lumber Company filed on
                February 11, 1959 with the State of Minnesota (Incorporated by
                reference to Exhibit 3.1 to Form 10-KSB (Commission File No.
                000-18292), filed on May 4, 2006).3.2*
            Certificate
                of Restated Articles of Incorporation of Rogers Hardware and Lumber
                Company filed on December 10, 1968 with the State of Minnesota,
                changing the corporate name to Component Systems, Inc. (Incorporated
                by
                reference to Exhibit 3.2 to Form 10-KSB (Commission File No.
                000-18292), filed on May 4, 2006).3.3*
            Certificate
                of Restatement of Articles of Incorporation of Component Systems,
                Inc.
                filed on May 21, 1987 with the State of Minnesota, changing the
                corporate name to Prestine, Inc. (Incorporated by reference to
                Exhibit 3.3 to Form 10-KSB (Commission File No. 000-18292), filed on
                May 4, 2006).3.4*
            Modification
                of Statutory Requirements or Amendments of Articles of Incorporation
                of
                Prestine, Inc. filed on April 23, 1968 with the State of Minnesota,
                changing the corporate name to High Country Ventures, Inc. (Incorporated
                by reference to Exhibit 3.4 to Form 10-KSB (Commission File No.
                000-18292), filed on May 4, 2006).3.5*
            Amendment
                of Articles of Incorporation of High Country Ventures, Inc. filed
                on
                October 13, 2000 with the State of Minnesota, changing the corporate
                name to Spiderboy International, Inc. (Incorporated by reference
                to
                Exhibit 99.1 to Form 8-K/A (Commission File No. 000-18292), filed
                on
                March 7, 2001).3.6*
            Certificate
                of Designation, Preferences and Rights of Series A preferred stock
                of
                Spiderboy International, Inc. filed on February 24, 2004 with the
                State of Minnesota (Incorporated by reference to Attachment D to
                the
                amended Preliminary Proxy Statement (Commission File No. 000-18292),
                filed
                on May 7, 2004).3.7*
            Certificate
                of Incorporation of Charys Holding Company, Inc. filed on April 16,
                2004 with the State of Delaware (Incorporated by reference to
                Exhibit A to the amended Preliminary Proxy Statement (Commission File
                No. 000-18292), filed on May 7, 2004).3.8
            Certificate
                of Amendment of Certificate of Incorporation of Charys Holding Company,
                Inc. filed on May 21, 2004 with the State of Delaware (Incorporated
                by reference to Attachment C to the Definitive Proxy Statement
                (Commission File No. 000-18292), dated June 11,
                2004).3.9*
            Certificate
                of Designation, Preferences and Rights of Series A preferred stock
                of
                Charys Holding Company, Inc. filed on May 5, 2004 with the State of
                Delaware (Incorporated by reference to Attachment D to the Definitive
                Proxy Statement (Commission File No. 000-18292), dated June 11,
                2004).3.10*
            Bylaws
                of Spiderboy.com, Inc., adopted April 28, 2004 (Incorporated by
                reference to Exhibit B to the amended Preliminary Proxy Statement
                (Commission File No. 000-18292), dated May 7,
                2004).3.11*
            Certificate
                of Exchange filed on October 13, 2000 with the State of Minnesota
                whereby Spiderboy.com, Inc. became a wholly-owned subsidiary of High
                Country Ventures, Inc. (Incorporated by reference to Exhibit 3.11 to
                Form 10-KSB (Commission File No. 000-18292), filed on May 4,
                2006).3.12*
            Articles
                of Merger filed with the Delaware Secretary of State on June 30, 2004
                (Incorporated by reference to Exhibit 2.2 to Form 8-K (Commission
                File No. 000-18292), filed on July 22, 2004).3.13*
            Articles
                of Merger filed with the Minnesota Secretary of State on July 1, 2004
                (Incorporated by reference to Exhibit 2.1 to Form 8-K
                (Commission File No. 000-18292), filed on July 22,
                2004).4.1*
            Certificate
                of Designation for Series B Preferred Stock, filed with the Secretary
                of
                State of Delaware on May 3, 2005 (Incorporated by reference to
                Exhibit 4.1 to Form 8-K (Commission File No. 000-18292), filed on
                May 25, 2005).4.2*
            Certificate
                of Designation for Series C Preferred Stock, filed with the Secretary
                of
                State of Delaware on May 3, 2005 (Incorporated by reference to
                Exhibit 4.2 to Form 8-K (Commission File No. 000-18292), filed on
                May 25, 2005).4.3*
            Certificate
                of Amendment to the Certificate of Designation for Series B Preferred
                Stock, filed with the Secretary of State of Delaware effective
                July 25, 2005 (Incorporated by reference to Exhibit 4.1 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).4.4*
            Certificate
                of Amendment to the Certificate of Designation for Series C Preferred
                Stock, filed with the Secretary of State of Delaware effective
                July 25, 2005 (Incorporated by reference to Exhibit 4.2 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).





59
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5.1**
            Legal
                Opinion of Morris Manning & Martin LLP.10.1*
            Stock
                Purchase Agreement between Mark N. Pardo and Richard Mangiarelli and
                Richard Schmidt dated December 5, 2003 (Incorporated by reference to
                Exhibit 2.1 to Form 8-K (Commission File No. 000-18292), filed on
                December 12, 2003).10.2*
            Promissory
                Note in the amount of $160,000 dated December 5, 2003, executed by
                Richard Mangiarelli, Richard Schmidt and Spiderboy International,
                Inc.,
                payable to the order of Mark N. Pardo (Incorporated by reference to
                Exhibit 10.1 to Form 8-K (Commission File No. 000-18292), filed on
                December 12, 2003).10.3*
            Stock
                Purchase Agreement between Janet Risher, Richard Schmidt, Spiderboy
                International, Inc. and Billy V. Ray, Jr., dated February 27,
                2004 (Incorporated by reference to Exhibit 2.1 to Form 8-K
                (Commission File No. 000-18292), filed on March 10,
                2004).10.4*
            Amended
                and Restated Stock Purchase Agreement between Janet Risher, Richard
                Schmidt, Spiderboy International, Inc. and Billy V. Ray, Jr., dated
                May 25, 2004 (Incorporated by reference to Exhibit 2.2 to Form
                8-K/A (Commission File No. 000-18292), filed on June 1,
                2004).10.5*
            Charys
                Holding Company, Inc. Employee Stock Incentive Plan for the Year
                2004,
                dated April 28, 2004 (Incorporated by reference to Attachment F to
                the Definitive Proxy Statement (Commission File No. 000-18292), filed
                on
                June 11, 2004).10.6*
            Charys
                Holding Company, Inc. Non-Employee Directors and Consultants Retainer
                Stock Plan for the Year 2004, dated April 28, 2004 (Incorporated by
                reference to Attachment G to the Definitive Proxy Statement
                (Commission File No. 000-18292), filed on June 11,
                2004).10.7*
            Consulting
                Agreement Between Charys Holding Company, Inc.’s, predecessor, Spiderboy
                International, Inc. and Janet Risher, dated February 27, 2004
                (Incorporated by reference to Exhibit 10.7 to a Preliminary Proxy
                Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.8*
            Consulting
                Agreement Between Charys Holding Company, Inc.’s, predecessor, Spiderboy
                International, Inc., and Richard Schmidt dated February 27, 2004
                (Incorporated by reference to Exhibit 10.8 to a Preliminary Proxy
                Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.9*
            Consulting
                Agreement Between Charys Holding Company, Inc.’s, predecessor, Spiderboy
                International, Inc. and Paul Ferandell, dated February 27, 2004
                (Incorporated by reference to Exhibit 10.9 to a Preliminary Proxy
                Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.10*
            Consulting
                Agreement Between Charys Holding Company, Inc.’s, predecessor, Spiderboy
                International, Inc. and John Jordan dated February 27, 2004
                (Incorporated by reference to Exhibit 10.10 to a Preliminary Proxy
                Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.11*
            Consulting
                Agreement Between Charys Holding Company, Inc.’s, predecessor, Spiderboy
                International, Inc. and Bruce Caldwell dated February 27, 2004
                (Incorporated by reference to Exhibit 10.11 to a Preliminary Proxy
                Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.12*
            Consulting
                Agreement Between Charys Holding Company, Inc.’s, predecessor, Spiderboy
                International, Inc. and Jimmy Villalobos dated February 27, 2004
                (Incorporated by reference to Exhibit 10.12 to a Preliminary Proxy
                Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.13*
            Consulting
                Agreement Between Charys Holding Company, Inc.’s, predecessor, Spiderboy
                International, Inc. and Ash Mascarenhas, dated February 27, 2004
                (Incorporated by reference to Exhibit 10.13 to a Preliminary Proxy
                Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.14*
            Consulting
                Agreement Between Charys Holding Company, Inc.’s, predecessor, Spiderboy
                International, Inc. and Francis Zubrowski, dated February 27, 2004
                (Incorporated by reference to Exhibit 10.14 to a Preliminary Proxy
                Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.15*
            Registration
                Rights Agreement Between Charys Holding Company, Inc.’s, predecessor,
                Spiderboy International, Inc. and Janet Risher, dated February 27,
                2004 (Incorporated by reference to Exhibit 10.15 to a Preliminary
                Proxy Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.16*
            Registration
                Rights Agreement Between Charys Holding Company, Inc.’s, predecessor,
                Spiderboy International, Inc. and Richard Schmidt, dated February 27,
                2004 (Incorporated by reference to Exhibit 10.16 to a
                Preliminary Proxy Statement (Commission File No. 000-18292), filed
                on
                May 17, 2004).10.17*
            Registration
                Rights Agreement Between Charys Holding Company, Inc.’s, predecessor,
                Spiderboy International, Inc. and Paul Ferandell, dated February 27,
                2004 (Incorporated by reference to Exhibit 10.17 to a
                Preliminary Proxy Statement (Commission File No. 000-18292), filed
                on
                May 17, 2004).10.18*
            Registration
                Rights Agreement Between Charys Holding Company, Inc.’s, predecessor,
                Spiderboy International, Inc. and John Jordan dated February 27, 2004
                (Incorporated by reference to Exhibit 10.18 to a Preliminary Proxy
                Statement (Commission File No. 000-18292), filed on May 17,
                2004).





60
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10.19*
            Registration
                Rights Agreement Between Charys Holding Company, Inc.’s, predecessor,
                Spiderboy International, Inc. and Bruce Caldwell, dated February 27,
                2004 (Incorporated by reference to Exhibit 10.19 to a Preliminary
                Proxy Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.20*
            Registration
                Rights Agreement Between Charys Holding Company, Inc.’s, predecessor,
                Spiderboy International, Inc. and Jimmy Villalobos dated February 27,
                2004 (Incorporated by reference to Exhibit 10.20 to a Preliminary
                Proxy Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.21*
            Registration
                Rights Agreement Between Charys Holding Company, Inc.’s, predecessor,
                Spiderboy International, Inc. and Ash Mascarenhas, dated February 27,
                2004 (Incorporated by reference to Exhibit 10.21 to a Preliminary
                Proxy Statement (Commission File No. 000-18292), filed on May 17,
                2004).10.22*
            Registration
                Rights Agreement Between Charys Holding Company, Inc.’s, predecessor,
                Spiderboy International, Inc. and Francis Zubrowski, dated
                February 27, 2004 (Incorporated by reference to
                Exhibit 10.22 to a Preliminary Proxy Statement (Commission File No.
                000-18292), filed on May 17, 2004).10.23*
            Stock
                Purchase Agreement Between Charys Holding Company, Inc., Robert G.
                Barrow, Jr.  and Mark D. Andrizzi, dated April 21,
                2004 (Incorporated by reference to Exhibit 2.1 to Form 8-K
                (Commission File No. 000-18292), filed on July 6,
                2004).10.24*
            Charter
                of Compensation Committee, dated April 28, 2004 (Incorporated by
                reference to Exhibit 10.25 to Form 10-KSB (Commission File No.
                000-18292), filed on August 17, 2004).10.25*
            Charter
                of Audit Committee, dated April 28, 2004 (Incorporated by reference
                to Exhibit 10.26 to Form 10-KSB (Commission File No. 000-18292),
                filed on August 17, 2004).10.26*
            Employment
                Agreement, dated June 15, 2004 between Charys Holding Company, Inc.
                and Billy V.  Ray (Incorporated by reference to
                Exhibit 10.28 to Form 10-KSB (Commission File No. 000-18292),
                filed on August 17, 2004).10.27*
            Employment
                Agreement, dated June 15, 2004 between Charys Holding Company, Inc.
                and Ben Holcomb (Incorporated by reference to Exhibit 10.29 to
                Form 10-KSB (Commission File No. 000-18292), filed on August 17,
                2004).10.28*
            Employment
                Agreement, dated June 15, 2004 between Charys Holding Company, Inc.
                and Raymond J. Smith (Incorporated by reference to Exhibit 10.30
                to Form 10-KSB (Commission File No. 000-18292), filed on
                August 17, 2004).10.29
                *
            Joint
                Venture Agreement between Ruby Belle, LLC, Ted C. Russell and Charys
                Holding Company, Inc. (Incorporated by reference to Exhibit 10.31 to
                Form 10-KSB (Commission File No. 000-18292), filed on
                August 17, 2004).10.30*
            Option
                to Purchase Stock Agreement, dated May 18, 2004 between J. F.
                Carter & Co., Inc., Joe F. Carter and Carol F. Carter and
                Charys Holding Company, Inc. (Incorporated by reference to
                Exhibit 10.32 to Form 10-KSB (Commission File No. 000-18292),
                filed on August 17, 2004).10.31*
            Ground
                Lease, dated May 26, 2004 between Realm Insurance Company and Charys
                Holding Company, Inc. (Incorporated by reference to Exhibit 10.34 to
                Form 10-KSB (Commission File No. 000-18292), filed on
                August 17, 2004).10.32*
            Charys
                Holding Company, Inc. Non-Employee Directors and Consultants Retainer
                Stock Plan for the Year 2004, dated July 19, 2004 (Incorporated by
                reference to Exhibit 4.1 to Form S-8 (Commission File No.
                333-117749), filed on July 29, 2004).10.33*
            Agreement
                and Contract for Sale, dated April 29, 2005, between Aeon
                Technologies Group, Inc. and CCI Associates, Inc. (Incorporated by
                reference to Exhibit 10.1 to Form 8-K (Commission File
                No. 000-18292), filed on May 25, 2005).10.34*
            Agreement,
                dated April 25, 2005, between Frost Bank, Contemporary Constructors,
                Inc., Aeon Technologies Group, Inc., CCI Integrated Solutions, Inc.,
                Berkshire Wireless, Inc., Michael J. Novak and Charys Holding
                Company, Inc. (Incorporated by reference to Exhibit 10.2 to
                Form 8-K (Commission File No. 000-18292), filed on May 25,
                2005).10.35*
            Real
                Estate Contract of Sale, dated April 29, 2005, between Gur Parsaad,
                Aeon Technologies Group, Inc. and Charys Holding Company, Inc.
                (Incorporated by reference to Exhibit 10.3 to Form 8-K
                (Commission File No. 000-18292), filed on May 25,
                2005).10.36*
            Lease
                Contract, dated May 1, 2005, between Gur Parsaad, Aeon Technologies
                Group, Inc. and Charys Holding Company, Inc. (Incorporated by reference
                to
                Exhibit 10.4 to Form 8-K (Commission File No. 000-18292), filed
                on May 25, 2005).





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10.37*
            Frost
                Registration Rights Agreement No. 1, dated April 25, 2005,
                between The Frost National Bank and Charys Holding Company, Inc.
                (Incorporated by reference to Exhibit 10.5 to Form 8-K
                (Commission File No. 000-18292), filed on May 25,
                2005).10.38*
            Third
                Modification, Renewal and Extension Agreement between The Frost National
                Bank and Contemporary Constructors with respect to $2,177,083.45,
                dated
                January 1, 2005 (Incorporated by reference to Exhibit 10.6 to
                Form 8-K (Commission File No. 000-18292), filed on May 25,
                2005).10.39*
            Third
                Modification, Renewal and Extension Agreement between The Frost National
                Bank and Contemporary Constructors with respect to $6,500,000.00,
                dated
                February 1, 2005 (Incorporated by reference to Exhibit 10.7 to
                Form 8-K (Commission File No. 000-18292), filed on May 25,
                2005).10.40*
            Sixth
                Amendment to Business Loan Agreement between Contemporary Constructors
                and
                The Frost National Bank, dated February 1, 2005 (Incorporated by
                reference to Exhibit 10.8 to Form 8-K (Commission File No.
                000-18292), filed on May 25, 2005).10.41*
            Arbitration
                and Notice of Final Agreement between The Frost National Bank and
                Charys
                Holding Company, Inc., dated May 2, 2005, and filed as
                Exhibit 10.9 to Form 8-K on May 25, 2005, Commission file
                number 000-18292.10.42*
            Guaranty
                Agreement between Frost Bank and Contemporary Constructors, Inc.,
                dated
                July 28, 2005 (Incorporated by reference to Exhibit 10.1 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).10.43*
            Guaranty
                Agreement between Charys Holding Company, Inc., CCI and CAPCO, dated
                July 27, 2005 (Incorporated by reference to Exhibit 10.2 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).10.44*
            Guaranty
                Agreement between Frost Bank and Aeon Technologies Group, Inc., dated
                July 28, 2005 (Incorporated by reference to Exhibit 10.3 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).10.45*
            Guaranty
                Agreement between Frost Bank and Berkshire Wireless, Inc., dated
                July 28, 2005 (Incorporated by reference to Exhibit 10.4 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).10.46*
            Guaranty
                Agreement between Frost Bank and CCI Integrated Solutions, Inc.,
                dated
                July 28, 2005 (Incorporated by reference to Exhibit 10.5 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).10.47*
            Guaranty
                Agreement between Frost Bank and Michael J. Novak, dated
                July 28, 2005 (Incorporated by reference to Exhibit 10.6 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).10.48*
            Contract
                for Sale and Security Agreement between Aeon Technologies Group,
                Inc. and
                CAPCO, dated July 18, 2005 (Incorporated by reference to
                Exhibit 10.7 to Form 8-K (Commission File No. 000-18292), filed
                on August 12, 2005).10.49*
            Amendment
                No. 1 to the Contract for Sale and Security Agreement between Aeon
                Technologies Group, Inc. and CAPCO, dated July 26, 2005 (Incorporated
                by reference to Exhibit 10.8 to Form 8-K (Commission File No.
                000-18292), filed on August 12, 2005).10.50*
            Amendment
                No. 2 to the Contract for Sale and Security Agreement between Aeon
                Technologies Group, Inc. and CAPCO, dated July 27, 2005 (Incorporated
                by reference to Exhibit 10.9 to Form 8-K (Commission File No.
                000-18292), filed on August 12, 2005).10.51*
            Promissory
                Note between Frost Bank and Charys Holding Company, Inc., dated
                July 28, 2005 (Incorporated by reference to Exhibit 10.10 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).10.52*
            Put
                Agreement between Michael J. Novak and Frost Bank, dated
                July 28, 2005 (Incorporated by reference to Exhibit 10.11 to
                Form 8-K (Commission File No. 000-18292), filed on August 12,
                2005).10.53*
            Arbitration
                and Notice of Final Agreement between Frost Bank and Charys Holding
                Company, Inc., dated July 28, 2005 (Incorporated by reference to
                Exhibit 10.12 to Form 8-K (Commission File No. 000-18292), filed
                on August 12, 2005).10.54*
            Securities
                Purchase Agreement, dated as of November 16, 2005, by and among
                Charys Holding Company, Inc. and Highgate House Funds, Ltd. (Incorporated
                by reference to Exhibit 10.1 to Form 8-K (Commission File No.
                000-18292), filed on November 23, 2005).10.55*
            Stock
                Purchase Agreement, effective date of November 1, 2005, by and
                between Charys Holding Company, Inc. and New Viasys Holdings, LLC
                (Incorporated by reference to Exhibit 10.1 to Form 8-K
                (Commission File No. 000-18292), filed on November 18,
                2005).10.56*
            Second
                Amended Stock Purchase Agreement between Janet Risher, Richard F.
                Schmidt and Billy V. Ray, Jr., dated August 16, 2005
                (Incorporated by reference to Exhibit 10.1 to Form 8-K/A
                (Commission File No. 000-18292), filed on November 23,
                2005).





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10.57*
            Second
                Amended Promissory Note, dated August 16, 2005, by Billy V. Ray,
                Jr., as the Maker, and Janet Risher and Richard F. Schmidt, as
                the Payee (Incorporated by reference to Exhibit 10.2 to
                Form 8-K/A (Commission File No. 000-18292), filed on
                November 23, 2005).10.58*
            Amended
                and Restated Stock Pledge Agreement, dated August 16, 2005, by
                Billy V. Ray, Jr., as the Debtor, and Janet Risher and
                Richard F. Schmidt, as the Secured Party (Incorporated by reference
                to Exhibit 10.3 to Form 8-K (Commission File No. 000-18292),
                filed on November 23, 2005).10.59*
            Stock
                Purchase Agreement, between Charys Holding Company, Inc., Rock Creek
                Equity Holdings, LLC, J.  Alan Shaw, Method IQ, Inc. and
                Billy V. Ray, Jr.  (Incorporated by reference to
                Exhibit 10.1 to Form 8-K (Commission File No. 000-18292), filed
                on December 12, 2005).10.60*
            Securities
                Purchase Agreement dated as of December 22, 2005, by and among Charys
                Holding Company Inc., Billy V. Ray, Jr., and Mel Harris and Steven
                Posner, or their designees (Incorporated by reference to Exhibit 10.1
                to Form 8-K/A (Commission File No. 000-18292), filed on
                December 28, 2005).10.61*
            Business
                Consultant Agreement between Aeon Technologies Group, Inc. and
                Michael J. Novak, dated July 1, 2006.10.62*
            Separation
                Agreement and General Release between Aeon Technologies Group, Inc.
                and
                Michael J. Novak, dated July 1, 2006.10.63*
            Consultant
                Agreement between Aeon Technologies Group, Inc. and Strategic Transitions
                LLC—Dale Ponder—President, dated July 1, 2006.10.64*
            Employment
                Agreement between Aeon Technologies Group, Inc. and Roger J. Benavides,
                dated March 4, 2005 (Incorporated by reference to Attachment E to
                Exhibit 2.1 to Form 8-K (Commission File No. 000-18292), filed
                on March 10, 2005).10.65*
            Employment
                Contract between Method IQ, Inc. and Jerry Harrison, dated
                December 22, 2005 (Incorporated by reference to Exhibit 10.61 to
                Form 10-KSB (Commission File No. 000-18292), filed on May 4,
                2006).10.66*
            Employment
                Contract between Method IQ, Inc. and Gregory Buchholz, dated
                December 22, 2005 (Incorporated by reference to Exhibit 10.62 to
                Form 10-KSB (Commission File No. 000-18292), filed on May 4,
                2006).10.67*
            Agreement
                and Plan of Merger by and between Charys Holding Company, Inc.
                LFC Acquisition Company, Inc., LFC, Inc., L. Ford Clark, Melysa
                B. Austin and James E. Clark, Jr., dated April 24, 2006 (Incorporated
                by reference to Exhibit 10.67 to Form 10-KSB (Commission File
                No. 000-18292), filed on August 23, 2006).10.68*
            Securities
                Purchase Agreement by and between Charys Holding Company, Inc., and
                Gottbetter Capital Master, Ltd., Enable Growth Partners LP, Enable
                Opportunity Partners LP, Pierce Diversified Strategy Master Fund
                LLC,
                Casterligg Master Investments Ltd. and UBS O’Connor LLC F/B/O O’Connor
                Pipes Corporate Strategies Master Ltd., dated May 19, 2006
                (Incorporated by reference to Exhibit 10.68 to Form 10-KSB
                (Commission File No. 000-18292), filed on August 23,
                2006).10.69*
            Securities
                Purchase Agreement by and among Charys Holding Company, Inc., Crochet
                & Borel Services, Inc. and Tony Crochet, effective May 1, 2006
                (Incorporated by reference to Exhibit 10.1 to Form 8-K
                (Commission File No. 000-18292), filed on June 8,
                2006).10.70*
            Stock
                Purchase Agreement by and among Digital Communications Services,
                Inc.,
                Billy B. Caudill and Daniel L. Osborne and Charys Holding
                Company, Inc., dated June 9, 2006 (Incorporated by reference to
                Exhibit 10.70 to Form 10-KSB (Commission File No. 000-18292),
                filed on August 23, 2006).10.71*
            Employment
                Agreement between M. Ralph DeLucia and Charys Holding Company, Inc.
                (Incorporated by reference to Exhibit 10.71 to Form 10-KSB
                (Commission File No. 000-18292), filed on August 23,
                2006).10.72*
            Settlement
                Agreement and Mutual Release dated June 5, 2006 by and between
                Lumbermens Mutual Casualty Company, Able Telecommunications & Power,
                Inc., Transportation Safety Contractors, Inc., Georgia Electric Company
                (Able, TSC and GEC which are now known as Viasys Services, Inc.)
                and the
                parent company of Able, TSC and GEC, Charys Holding Company, Inc
                (Incorporated by reference to Exhibit 10.1 to Form 8-K
                (Commission File No. 000-18292), filed on June 14,
                2006).10.73*
            Registration
                Rights Agreement, dated June 5, 2006 by and between the registrant
                and Lumbermens Mutual Casualty Company pursuant to that certain Settlement
                Agreement and Mutual Release by and among the registrant, Lumbermens,
                Able
                Telecommunications & Power, Inc., Transportation Safety Controllers,
                Inc. and Georgia Electric Company (Incorporated by reference to
                Exhibit 10.2 to Form 8-K (Commission File No. 000-18292), filed
                on June 13, 2006).10.74*
            Certificate
                of Designation for Series D Convertible Preferred Stock filed May 19,
                2006 with the Secretary of State of Delaware (Incorporated by reference
                to
                Exhibit 2.1 to Form 8-K (Commission File No. 000-18292), filed
                on May 23, 2006).





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10.75*
            Press
                Release issued May 22, 2006 announcing that a notice of redemption
                was delivered to the holders of the registrant’s 8% Secured Convertible
                Debenture issued on November 17, 2005 and that the registrant had
                redeemed the aggregate principal amount of the debenture outstanding,
                plus
                accrued and unpaid interest up to and including May 19, 2006
                (Incorporated by reference to Exhibit 99.1 to Form 8-K
                (Commission File No. 000-18292), filed on May 23,
                2006).10.76*
            Press
                Release issued May 23, 2006 announcing details regarding the
                Redemption of the $4 Million Convertible Debenture issued
                November 2005 and the associated new sale of $13 million of its
                Series D Convertible Preferred Stock (Incorporated by reference to
                Exhibit 99.2 to Form 8-K (Commission File No. 000-18292), filed
                on May 23, 2006).10.77*
            Amended
                Press Release dated May 12, 2006 announcing satisfaction of
                “make-whole” provisions under agreements with Aeon Technologies Group,
                Inc., CCI Associates, Ltd., and Method IQ, Inc. (Incorporated by
                reference
                to Exhibit 99.1 to Form 8-K (Commission File No.
                000 18292), filed on May 12, 2006).10.78*
            Initial
                press release dated May 11, 2006 announcing satisfaction of
                “make-whole” provisions under agreements with Aeon Technologies Group,
                Inc., CCI Associates, Ltd., and Method IQ, Inc. (Incorporated by
                reference
                to Exhibit 99.2 to Form 8-K (Commission File No. 000-18292),
                filed on May 12, 2006).10.79*
            Employee
                Stock Incentive Plan for the Year 2006 (Incorporated by reference
                to
                Exhibit 4.1 to Form S-8 (Commission File No. 333-134091), filed
                on May 12, 2006).10.80*
            Non-Employee
                Consultants Retainer Stock Plan for the Year 2006 (Incorporated by
                reference to Exhibit 4.1 to Form S-8 (Commission File No.
                333-134091), filed on May 12, 2006).10.81*
            Quitclaim
                Deed, between Viasys Services, Inc. and VSI Real Estate Holding,
                Inc.,
                dated February 15, 2006 (Incorporated by reference to
                Exhibit 10.63 to Form 10-KSB/A (Commission File No. 000-18292),
                filed on May 4, 2006).10.82*
            Asset
                Purchase Agreement by and among Aeon Technologies, Ltd. and Contemporary
                Constructors Nevada, Inc., dated April 9, 2006 (Incorporated by
                reference to Exhibit 10.64 to Form 10-KSB/A (Commission File No.
                000-18292), filed on May 4,
                2006).


10.83*
            Office
                Lease by and between VSI Real Estate Holding, Inc., and Viasys Services,
                Inc., dated February 15, 2006 (Incorporated by reference to
                Exhibit 10.65 to Form 10-KSB/A (Commission File No. 000-18292),
                filed on May 4, 2006).10.84*
            Secured
                Debenture of Charys Holding Company Inc. due December 22, 2006
                (Incorporated by reference to Exhibit 10.2 to Form 8-K/A
                (Commission File No. 000-18292), filed on December 27,
                2005).10.85*
            Warrant
                to Purchase Common Stock of Charys Holding Company Inc. due
                December 22, 2008 (Incorporated by reference to Exhibit 10.3 to
                Form 8-K/A (Commission File No. 000-18292), filed on
                December 27, 2005).10.86*
            Non-Employee
                Directors and Consultants Retainer Stock Plan for the Year 2005
                (Incorporated by reference to Exhibit 4.1 to Form S-8
                (Commission File No. 333-130455), filed on December 19,
                2005).10.87*
            Warrant
                to Purchase Stock issued to Greater Bay Bank, N.A., dated August 1,
                2005 (Incorporated by reference to Exhibit 10.1 to Form 8-K
                (Commission File No. 000-18292), filed on October 17,
                2005).10.88*
            Amendment
                to Ground Lease dated November 30, 2004 between Realm Insurance
                Company, and Charys Holding Company, Inc. (Incorporated by reference
                to
                Exhibit 10.36 to Form 10-QSB (Commission File No. 000-18292),
                filed on March 22, 2005).10.89*
            Letter
                Agreement Between Charys Holding Company, Inc. and CCI Associates,
                LTD.  dated March 4, 2005 (Incorporated by reference to
                Exhibit 10.38 to Form 10-QSB (Commission File
                No. 000-18292), filed on March 22, 2005).10.90*
            Plan
                and Agreement of Triangular Between Charys Holding Company, Inc.,
                Charys
                Acquisition Company, Inc. and Aeon Technologies Group, Inc. (Incorporated
                by reference to Exhibit 2.1 to Form 8-K (Commission File No.
                000-18292), filed on March 10, 2005).10.91*
            Deed
                of Trust Note between Viasys Services, Inc. and Comcorps, Inc, dated
                December 29, 2005 (Incorporated by reference to Exhibit 10.91 to
                Form 10-KSB (Commission File No. 000-18292), filed on August 23,
                2006).10.92*
            Stock
                Purchase Agreement, dated June 20, 2006, between Ayin Holding Company
                Inc., a subsidiary of Charys Holding Company, Inc., Mitchell Site
                Acq,
                Inc. and Matthew B. Mitchell (Incorporated by reference to
                Exhibit 10.1 to Form 8-K (Commission File No. 000-18292), filed
                on June 27, 2006).10.93*
            Stock
                Purchase Agreement, dated June 20, 2006 between Ayin Holding Company
                Inc., a subsidiary of Charys Holding Company, Inc., Complete Tower
                Sources, Inc. and Lori H Mitchell, (Incorporated by reference to
                Exhibit 10.2 to Form 8-K (Commission File No. 000-18292), filed
                on June 27, 2006).





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10.94*
            Tower
                Asset Purchase Agreement and Tower Asset Exclusive Option Agreement,
                both
                dated June 20, 2006 between Ayin Holding Company Inc., a subsidiary
                of Charys Holding Company, Inc., The Tower Company of Louisiana,
                LLC and
                Lester Boheim (Incorporated by reference to Exhibit 10.3 to
                Form 8-K (Commission File No. 000-18292), filed on June 27,
                2006).10.95*
            Employment
                Agreement between Michael F. Oyster and Charys Holding Company, Inc.,
                dated March 7, 2006 (Incorporated by reference to Exhibit 10.95
                to Form 10-KSB (Commission File No. 000-18292), filed on
                August 23, 2006).10.96*
            Charter
                of the Executive Committee of the Board of Directors of Charys Holding
                Company, Inc. (Incorporated by reference to Exhibit 10.96 to
                Form 10-KSB/A (Commission File No. 000-18292), filed on
                August 28, 2006).10.97*
            Amended
                Charter of the Compensation Committee of Charys Holding Company,
                Inc.
                (Incorporated by reference to Exhibit 10.97 to Form 10-KSB/A
                (Commission File No. 000-18292), filed on August 28,
                2006).10.98*
            Amended
                Charter of the Nominating and Corporate Governance Committee of Charys
                Holding Company, Inc. (Incorporated by reference to Exhibit 10.98 to
                Form 10-KSB/A (Commission File No. 000-18292), filed on
                August 28, 2006).10.99*
            Amended
                Charter of the Audit Committee of Charys Holding Company, Inc.
                (Incorporated by reference to Exhibit 10.99 to Form 10-KSB/A
                (Commission File No. 000-18292), filed on August 28,
                2006).10.100*
            Amended
                Charter of the Finance Committee of the Board of Directors of Charys
                Holding Company, Inc. (Incorporated by reference to Exhibit 10.100 to
                Form 10-KSB/A (Commission File No. 000-18292), filed on
                August 28, 2006).10.101*
            Securities
                Purchase Agreement made and entered into as of August 30, 2006, by
                and among Charys Holding Company, Inc. and various investors (Incorporated
                by reference to Exhibit 10.1 to Form 8-K (Commission File No.
                000-18292), filed on September 6, 2006).10.102*
            Registration
                Rights Agreement dated as of August 30, 2006, by and among Charys
                Holding Company, Inc. and various investors (Incorporated by reference
                to
                Exhibit 10.2 to Form 8-K (Commission File No. 000-18292), filed
                on September 6, 2006).10.103*
            Form of
                Senior Secured Convertible Note between Charys Holding Company, Inc.
                and
                Gottbetter Capital Finance, LLC, dated August 31, 2006 (Incorporated
                by reference to Exhibit 10.3 to Form 8-K (Commission File No.
                000-18292), filed on September 6, 2006).10.104*
            Form of
                Security Agreement between Charys Holding Company, Inc. and Gottbetter
                Capital Finance, LLC, dated August 30, 2006 (Incorporated by
                reference to Exhibit 10.4 to Form 8-K (Commission File No.
                000-18292), filed on September 6, 2006).10.105*
            Warrant
                to Purchase Common Stock of Charys Holding Company, Inc., dated
                August 30, 2006 (Incorporated by reference to Exhibit 10.5 to
                Form 8-K (Commission File No. 000-18292), filed on September 6,
                2006).10.106*
            Irrevocable
                Transfer Agent Instructions, dated August 30, 2006 (Incorporated by
                reference to Exhibit 10.6 to Form 8-K (Commission File No.
                000-18292), filed on September 6, 2006).10.107*
            Loan
                and Security Agreement dated as of August 28, 2006 between Crochet
                & Borel Services, Inc. and New Stream Commercial Finance, LLC
                (Incorporated by reference to Exhibit 10.1 to Form 8-K
                (Commission File No. 000-18292), filed on September 8,
                2006).10.108*
            Pledge
                Agreement, dated as of August 28, 2006 between Charys Holding
                Company, Inc. and New Stream Commercial Finance, LLC (Incorporated
                by
                reference to Exhibit 10.2 to Form 8-K (Commission File No.
                000-18292), filed on September 8, 2006).10.109*
            Intercreditor
                Agreement dated as of August 30, 2006 between New Stream Commercial
                Finance, LLC and Gottbetter Capital Finance, LLC, in its capacity
                as agent
                pursuant to the Noteholder Documents for the Noteholders (in such
                capacity, together with its successors and assigns, in such capacity,
                the
                “Noteholder Agent”) (Incorporated by reference to Exhibit 10.3 to
                Form 8-K (Commission File No. 000-18292), filed on September 8,
                2006).10.110*
            Charys
                Holding Company, Inc. Stock Purchase Warrant issued August 28, 2006
                granting to New Stream Commercial Finance the right to purchase 2,000,000
                shares of the Registrant’s common stock (Incorporated by reference to
                Exhibit 10.4 to Form 8-K (Commission File No. 000-18292), filed
                on September 8, 2006).10.111*
            Power
                of Attorney executed by Crochet & Borel Services, Inc. to New Stream
                Commercial Finance, LLC, dated August 28, 2006 (Incorporated by
                reference to Exhibit 10.5 to Form 8-K (Commission File No.
                000-18292), filed on September 8, 2006).10.112*
            Letter
                to The Tower Company of Louisiana, LLC from Ayin Holding Company
                Inc.,
                dated July 11, 2006 (Incorporated by reference to Exhibit 10.1
                to Form 8-K/A (Commission File No. 000-18292), filed on
                September 11, 2006).





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10.113*
            Letter
                to Complete Tower Sources, Inc. and Mitchell Site Acq, Inc. from
                Ayin
                Holding Company, Inc. and Charys Holding Company, Inc, as Parent,
                dated
                August 15, 2006 (Incorporated by reference to Exhibit 10.2 to
                Form 8-K/A (Commission File No. 000-18292), filed on
                September 11, 2006).10.114*
            Charys
                Holding Company, Inc. and Ayin Holding Company, Inc. Promissory Note
                issued to Matthew B. Mitchell, in the amount of $13,412,500, dated
                August 15, 2006 (Incorporated by reference to Exhibit 10.3 to
                Form 8-K/A (Commission File No. 000-18292), filed on
                September 11, 2006).10.115*
            Charys
                Holding Company, Inc. and Ayin Holding Company, Inc. Promissory Note
                issued to Lori H. Mitchell, in the amount of $23,755,852, dated
                August 15, 2006 (Incorporated by reference to Exhibit 10.4 to
                Form 8-K/A (Commission File No. 000-18292), filed on
                September 11, 2006).10.116*
            Ayin
                Holding Company, Inc. Promissory Note issued to Lori Mitchell, in
                the
                amount of $28,400,000, dated August 15, 2006 (Incorporated by
                reference to Exhibit 10.5 to Form 8-K/A (Commission File No.
                000-18292), filed on September 11, 2006).10.117*
            Ayin
                Holding Company, Inc. Stock Purchase Agreement Promissory Note, in
                the
                amount of $5,400,000, dated August 15, 2006 (Incorporated by
                reference to Exhibit 10.6 to Form 8-K/A (Commission File No.
                000-18292), filed on September 11, 2006).10.118*
            Ayin
                Holding Company, Inc. Goodwill Purchase Agreement Promissory Note,
                in the
                amount of $5,400,000, dated August 15, 2006 (Incorporated by
                reference to Exhibit 10.7 to Form 8-K/A (Commission File No.
                000-18292), filed on September 11, 2006).10.119*
            Goodwill
                Purchase Agreement between Ayin Holding Company, Inc. and Matthew
                B.  Mitchell, dated August 15, 2006 (Incorporated by
                reference to Exhibit 10.8 to Form 8-K/A (Commission File No.
                000-18292), filed on September 11, 2006).10.120*
            Employment
                Agreement between Mitchell Site Acq, Inc. and Matthew B. Mitchell,
                dated August 15, 2006 (Incorporated by reference to Exhibit 10.9
                to Form 8-K/A (Commission File No. 000-18292), filed on
                September 11, 2006).10.121*
            Employment
                Agreement between Mitchell Site Acq, Inc. and Lori H. Mitchell, dated
                August 15, 2006 (Incorporated by reference to Exhibit 10.10 to
                Form 8-K/A (Commission File No. 000-18292), filed on
                September 11, 2006).10.122
                *
            Employment
                Agreement between Complete Tower Sources, Inc. and Carrol Castille,
                dated
                August 15, 2006 (Incorporated by reference to Exhibit 10.11 to
                Form 8-K/A (Commission File No. 000-18292), filed on
                September 11, 2006).10.123*
            Non-Competition
                Agreement by and among Matthew B. Mitchell and Ayin Holding Company
                Inc., dated August 15, 2006 (Incorporated by reference to
                Exhibit 10.12 to Form 8-K/A (Commission File No. 000-18292),
                filed on September 11, 2006).10.124*
            Non-Competition
                Agreement by and among Lori H. Mitchell and Ayin Holding Company
                Inc., dated August 15, 2006 (Incorporated by reference to
                Exhibit 10.13 to Form 8-K/A (Commission File No. 000-18292),
                filed on September 11, 2006).10.125*
            Pledge
                Agreement by and between Charys Holding Company, Inc., Ayin Holding
                Company Inc. and Lori H. Mitchell, dated August 15, 2006
                (Incorporated by reference to Exhibit 10.14 to Form 8-K/A
                (Commission File No. 000-18292), filed on September 11,
                2006).10.126*
            Pledge
                Agreement by and between Charys Holding Company, Inc., Ayin Holding
                Company Inc. and Matthew B. Mitchell, dated August 15, 2006
                (Incorporated by reference to Exhibit 10.15 to Form 8-K/A
                (Commission File No. 000-18292), filed on September 11,
                2006).10.127*
            Stock
                and Limited Partnership Interest Purchase Agreement made and entered
                into
                as of September 1, 2006, by and among Charys Holding Company, Inc.,
                Cotton Holdings 1, Inc., Cotton Commercial USA, LP, Cotton Restoration
                of
                Central Texas, LP, Bryan Michalsky, James Scaife, Randall Thompson,
                Daryn
                Ebrecht, Pete Bell, Chad Weigman, Blake Stansell, Johnny Slaughter,
                and
                Russell White (Incorporated by reference to Exhibit 10.1 to
                Form 8-K (Commission File No. 000-18292), filed on September 15,
                2006).10.128*
            Stock
                Purchase Warrant dated November 8, 2006, to purchase 600,000 shares
                of
                common stock (Incorporated by reference to Exhibit 4.1 to
                Form 8-K (Commission File No. 000-18292), filed on November 17,
                2006).10.129*
            Loan
                and Security Agreement, dated November 8, 2006, by and between New
                Stream
                Commercial Finance, LLC, and Ayin Tower Management Services, Inc.
                (Incorporated by reference to Exhibit 10.1 to Form 8-K (Commission
                File No. 000-18292), filed on November 17, 2006).10.130*
            Stock
                Pledge, Hypothecation and Security Agreement, dated November 8, 2006,
                by
                and between Ayin Holding Company, Inc. and New Stream Commercial
                Finance,
                LLC (Incorporated by reference to Exhibit 10.2 to Form 8-K
                (Commission File No. 000-18292), filed on November 17,
                2006).10.131*
            $14,000,000
                Revolving Credit Note, dated November 8, 2006, by and between Ayin
                Tower
                Management Services, Inc. and New Stream Commercial Finance, LLC
                (Incorporated by reference to Exhibit 10.3 to Form 8-K
                (Commission File No. 000-18292), filed on November 17,
                2006).





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10.132*
            Press
                Release dated November 17, 2006 (Incorporated by reference to
                Exhibit 99.1 to Form 8-K (Commission File No. 000-18292), filed
                on November 17, 2006).10.133*
            Letter
                Agreement, dated October 27, 2006, by and among Ayin Holding Company,
                Inc., Charys Holding Company, Mitchell Site Acq., Inc., Complete
                Tower
                Sources, Inc. and the Mitchells (Incorporated by reference to
                Exhibit 10.1 to Form 8-K/A (Commission File No. 000-18292),
                filed on November 17, 2006).10.134*
            $42,955,852
                Promissory Note issued to Lori H. Mitchell, dated October 20, 2006
                (Incorporated by reference to Exhibit 10.2 to Form 8-K/A
                (Commission File No. 000-18292), filed on November 17,
                2006).10.135*
            $14,200,000
                Promissory Note issued to Lori H. Mitchell, dated October 20, 2006
                (Incorporated by reference to Exhibit 10.3 to Form 8-K/A
                (Commission File No. 000-18292), filed on November 17,
                2006).10.136*
            $20,812,500
                Closing Promissory Note issued to Matthew B. Mitchell, dated October
                20,
                2006 (Incorporated by reference to Exhibit 10.4 to Form 8-K/A
                (Commission File No. 000-18292), filed on November 17,
                2006).10.137*
            Stock
                Purchase Agreement Promissory Note issued to Matthew B. Mitchell,
                in the
                amount of $2,700,000, dated October 20, 2006 (Incorporated by reference
                to
                Exhibit 10.5 to Form 8-K/A (Commission File No. 000-18292),
                filed on November 17, 2006).10.138*
            Goodwill
                Purchase Agreement Promissory Note issued to Matthew B. Mitchell,
                in the
                amount of $2,700,000, dated October 20, 2006 (Incorporated by reference
                to
                Exhibit 10.6 to Form 8-K/A (Commission File No. 000-18292),
                filed on November 17, 2006).10.139*
            Mutual
                Release and Settlement Agreement, dated as of September 29, 2006,
                between
                Charys Holding Company, Inc., Viasys Network Services, Inc. and Viasys
                Services, Inc. and New Viasys Holdings LLC (Incorporated by reference
                to
                Exhibit 10.1 to Form 8-K (Commission File No. 000-18292), filed
                on November 29, 2006).10.140*
            Letter
                Agreement, dated November 24, 2006, by and among Ayin Holding Company
                Inc., Charys Holding Company, Inc., Complete Tower Sources, Inc.,
                Mitchell
                Site Acq., Inc., Lori H. Mitchell and Matthew B. Mitchell, and the
                Whitney
                National Bank, as escrow agent (Incorporated by reference to
                Exhibit 10.1 to Form 8-K/A (Commission File No. 000-18292),
                filed on December 7, 2006).10.141*
            Letter
                Agreement, dated December 1, 2006, by and among Ayin Holding Company
                Inc.,
                Charys Holding Company, Inc., Complete Tower Sources, Inc., Mitchell
                Site
                Acq., Inc., Lori H. Mitchell and Matthew B. Mitchell, and the Whitney
                National Bank, as escrow agent (Incorporated by reference to
                Exhibit 10.2 to Form 8-K/A (Commission File No. 000-18292),
                filed on December 7, 2006).10.142*
            Amended
                and Restated Stock and Limited Partnership Interest Purchase Agreement
                made and entered into as of December 8, 2006, by and among Charys
                Holding
                Company, Inc., Cotton Holdings 1, Inc., Cotton Commercial USA, LP,
                Cotton
                Restoration of Central Texas, LP, Bryan Michalsky, James Scaife,
                Randall
                Thompson, Daryn Ebrecht and Peter Bell, Blake Stansell and Chad Weigman
                and Johnny Slaughter and Russell White (Incorporated by reference
                to
                Exhibit 10.1 to Form 8-K/A (Commission File No. 000-18292),
                filed on December 14, 2006).10.143*
            Note
                and Warrant Purchase Agreement dated as of December 4, 2006 by and
                among
                Charys Holding Company, Inc. and each of the purchasers of the
                subordinated convertible promissory notes of the Registrant whose
                names
                are set forth on Exhibit A attached to the Note and Warrant Purchase
                Agreement (Incorporated by reference to Exhibit 10.2 to
                Form 8-K/A (Commission File No. 000-18292), filed on December 14,
                2006).10.144*
            Intercreditor
                Letter Agreement between New Stream Commercial Finance, LLC and Gottbetter
                Capital Finance, LLC, dated December 8, 2006 (Incorporated by reference
                to
                Exhibit 10.3 to Form 8-K/A (Commission File No. 000-18292),
                filed on December 14, 2006).10.145*
            Press
                Release dated December 11, 2006, announcing the First Closing of
                the
                Purchase Agreement relating to Cotton Holdings 1, Inc., Cotton Commercial
                USA, LP, and Cotton Restoration of Central Texas, LP (Incorporated
                by
                reference to Exhibit 99.1 to Form 8-K/A (Commission File No.
                000-18292), filed on December 14, 2006).10.146*
            Letter
                Agreement dated August 17, 2006 between Charys Holding Company, Inc.,
                Crochet & Borel Services, Inc., and Troy Crochet with respect to
                extension of the due date on the Seller Note and the due date on
                the
                payment of the Adjusted Balance of the Purchase Price (Incorporated
                by
                reference to Exhibit 10.1 to Form 8-K/A (Commission File No.
                000-18292), filed on January 17, 2007).10.147*
            Letter
                Agreement dated October 31, 2006 between Charys Holding Company,
                Inc.,
                Crochet & Borel Services, Inc., and Troy Crochet with respect to the
                timing of payments and the Final Statement of Net Worth (Incorporated
                by
                reference to Exhibit 10.2 to Form 8-K/A (Commission File No.
                000-18292), filed on January 17,
                2007).





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10.148*
            Amendment
                to Purchase Agreement made and entered into as of November 30, 2006,
                by
                and among Charys Holding Company, Inc., Crochet & Borel Services,
                Inc., and Troy Crochet (Incorporated by reference to Exhibit 10.3 to
                Form 8-K/A (Commission File No. 000-18292), filed on January 17,
                2007).10.149*
            Renewal
                Promissory Note, dated November 30, 2006, whereby Charys Holding
                Company,
                Inc. promises to pay to the order of Troy D. Crochet an amount equal
                to
                $77,932,514.15 (Incorporated by reference to Exhibit 10.4 to
                Form 8-K/A (Commission File No. 000-18292), filed on January 17,
                2007).10.150*
            Security
                Agreement, dated January 12, 2007, made by Charys Holding Company,
                Inc.,
                Crochet & Borel Holdings, Inc., Crochet & Borel Services, Inc.,
                and Ayin Holding Company, Inc., in favor of Troy D. Crochet
                (Incorporated by reference to Exhibit 10.5 to Form 8-K/A
                (Commission File No. 000-18292), filed on January 17,
                2007).10.151*
            Resignation
                Letter Agreement, effective December 31, 2006, from Catherine B.
                McKee to
                Billy V. Ray, Jr. and H. Alec McLarty of Charys Holding Company,
                Inc.
                (Incorporated by reference to Exhibit 99.1 to Form 8-K
                (Commission File No. 000-18292), filed on February 6,
                2007).10.152*
            Unit
                Purchase Agreement dated February 14, 2006, between Charys Holding
                Company, Inc. and the Initial Purchaser (Incorporated by reference
                to
                Exhibit 10.1 to Form 8-K (Commission File No. 000-18292), filed
                on March 1, 2007).10.153*
            Indenture
                dated February 16, 2007, between Charys Holding Company, Inc., the
                guarantors signatory thereto and The Bank of New York Corporate Trust
                Company, N.A., as trustee (Incorporated by reference to Exhibit 10.2
                to Form 8-K (Commission File No. 000-18292), filed on March 1,
                2007).10.154*
            8.75%
                Senior Convertible Note dated February 16, 2007, in the principal
                amount
                of $175,000,000, payable by Charys Holding Company, Inc. to Cede
& Co.
                or registered assigns (Incorporated by reference to Exhibit 10.3 to
                Form 8-K (Commission File No. 000-18292), filed on March 1,
                2007).10.155*
            Warrant
                Agent Agreement dated February 16, 2007, between Charys Holding Company,
                Inc. and The Bank of New York Corporate Trust Company, N.A., as warrant
                agent (Incorporated by reference to Exhibit 10.4 to Form 8-K
                (Commission File No. 000-18292), filed on March 1,
                2007).10.156*
            Registration
                Rights Agreement dated February 16, 2007, between Charys Holding
                Company,
                Inc. and the Initial Purchaser, accepting for the benefit of the
                holders
                of the registrable securities (Incorporated by reference to
                Exhibit 10.5 to Form 8-K (Commission File No. 000-18292), filed
                on March 1, 2007).10.157*
            Press
                Release dated February 15, 2007 (Incorporated by reference to
                Exhibit 99.1 to Form 8-K (Commission File No. 000-18292), filed
                on March 1, 2007).10.158*
            Press
                Release dated February 20, 2007 (Incorporated by reference to
                Exhibit 99.2 to Form 8-K (Commission File No. 000-18292), filed
                on March 1, 2007).10.159*
            Amendment
                Number Four to Letter Agreement of October 27th, 2006 (Incorporated
                by
                reference to Exhibit 10.1 to Form 8-K/A (Commission File No.
                000-18292), filed on March 6, 2007).10.160*
            Amendment
                Number One to Non-Competition Agreement of Lori H. Mitchell (Incorporated
                by reference to Exhibit 10.2 to Form 8-K/A (Commission File No.
                000-18292), filed on March 6, 2007).10.161*
            Amendment
                Number One to Non-Competition Agreement of Matthew B. Mitchell
                (Incorporated by reference to Exhibit 10.3 to Form 8-K/A
                (Commission File No. 000-18292), filed on March 6,
                2007).10.162*
            8.75%
                Senior Convertible Note Due February 16, 2012 in the Principal Amount
                of
                $5,790,476.19 Payable to Lori H. Mitchell (Incorporated by reference
                to
                Exhibit 10.4 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 6, 2007).10.163*
            8.75%
                Senior Convertible Note Due February 16, 2012 in the Principal Amount
                of
                $2,209,523.81 Payable to Matthew B. Mitchell (Incorporated by reference
                to
                Exhibit 10.5 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 6, 2007).10.164*
            Press
                Release dated February 27, 2007 (Incorporated by reference to
                Exhibit 99.1 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 6, 2007).10.165*
            Press
                Release dated March 2, 2007 (Incorporated by reference to
                Exhibit 99.2 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 6, 2007).10.166*
            Joint
                Amendment to Amended and Restated Stock and Limited Partnership Interest
                Purchase Agreement and Stock Purchase Agreement made and entered
                into as
                of February 8, 2007, by and among Charys Holding Company, Inc., Cotton
                Holdings 1, Inc., Cotton Commercial USA, LP, Cotton Restoration of
                Central
                Texas, LP, Bryan Michalsky, James Scaife, Randall Thompson, Daryn
                Ebrecht
                and Peter Bell, Blake Stansell and Chad Weigman, and Johnny Slaughter
                and
                Russell White, joined therein by Crochet & Borel/Cotton Holdings,
                Inc., and Crochet & Borel Services, Inc. (Incorporated by reference to
                Exhibit 10.1 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 8, 2007).





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10.167*
            Second
                Amendment to Amended and Restated Stock and Limited Partnership Interest
                Purchase Agreement made and entered into as of February 23, 2007,
                by and
                among Charys Holding Company, Inc., Cotton Holdings 1, Inc., Cotton
                Commercial USA, LP, Cotton Restoration of Central Texas, LP, Bryan
                Michalsky, James Scaife, Randall Thompson, Daryn Ebrecht and Peter
                Bell,
                Blake Stansell and Chad Weigman, and Johnny Slaughter and Russell
                White,
                joined therein by Crochet & Borel/Cotton Holdings, Inc., and Crochet
                & Borel Services, Inc., both of which are wholly owned subsidiaries
                of
                the Purchaser (Incorporated by reference to Exhibit 10.2 to
                Form 8-K/A (Commission File No. 000-18292), filed on March 8,
                2007).10.168*
            Press
                Release issued March 1, 2007 (Incorporated by reference to
                Exhibit 99.1 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 8, 2007).10.169*
            Initial
                Purchaser’s Notice of Exercise of Purchase Option, dated March 5, 2007 and
                delivered on March 6, 2007 (Incorporated by reference to Exhibit 99.1
                to Form 8-K/A (Commission File No. 000-18292), filed on March 13,
                2007).10.170*
            Press
                Release, dated March 6, 2007 (Incorporated by reference to
                Exhibit 99.2 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 13, 2007).10.171*
            Press
                Release dated February 27, 2007 (Incorporated by reference to
                Exhibit 99.1 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 20, 2007).10.172*
            Press
                Release dated March 5, 2007 (Incorporated by reference to
                Exhibit 99.1 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 20, 2007).10.173*
            Press
                Release dated March 6, 2007 (Incorporated by reference to
                Exhibit 99.2 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 20, 2007).10.174*
            Loan
                and Security Agreement, dated March 6, 2007, between New Stream Commercial
                Finance, LLC and Complete Tower Sources Inc. (Incorporated by reference
                to
                Exhibit 10.1 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 22, 2007).10.175*
            Guarantee,
                dated March 6, 2007, by Charys Holding Company, Inc. in favor of
                New
                Stream Commercial Finance, LLC (Incorporated by reference to
                Exhibit 10.2 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 22, 2007).10.176*
            Guarantee,
                dated March 6, 2007, by Ayin Tower Management Services, Inc. in favor
                of
                New Stream Commercial Finance, LLC (Incorporated by reference to
                Exhibit 10.3 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 22, 2007).10.177*
            $10,000,000
                Revolving Credit Note, dated March 6, 2007, by Complete Tower Sources
                Inc.
                payable to New Stream Commercial Finance, LLC (Incorporated by reference
                to Exhibit 10.4 to Form 8-K/A (Commission File No. 000-18292),
                filed on March 22, 2007).10.178*
            Press
                Release, dated March 26, 2007, announcing that Michael D. Brown,
                former
                Under Secretary of U.S. Homeland Security, agreed to join the Board
                of
                Directors of Charys Holding Company, Inc. (Incorporated by reference
                to
                Exhibit 99.1 to Form 8-K (Commission File No. 000-18292), filed
                on March 30, 2007).10.179*
            Press
                Release, dated March 27, 2007 (Incorporated by reference to
                Exhibit 99.1 to Form 8-K (Commission File No. 000-18292), filed
                on April 2, 2007).10.180*
            Consulting
                Agreement, effective as of April 1, 2007, between Michael D. Brown
                and
                Cotton Commercial USA LP (Incorporated by reference to Exhibit 10.1
                to Form 8-K (Commission File No. 000-18292), filed on April 5,
                2007).10.181*
            Securities
                Exchange Agreement executed on May 18, 2007, but effective as of
                April 30,
                2007, by and among Charys Holding Registrant, Inc. and the investors
                listed on the Schedule of Investors attached thereto (Incorporated
                by
                reference to Exhibit 10.1 to Form 8-K (Commission File No.
                000-18292), filed on May 24, 2007).10.182*
            Subordinated
                Unsecured Convertible Note executed on May 18, 2007, but effective
                as of
                April 30, 2007, by Charys Holding Company, Inc. payable to Gottbetter
                Capital Master, Ltd. in the amount of $8,354,043.00 (Incorporated
                by
                reference to Exhibit 10.2 to Form 8-K (Commission File No.
                000-18292), filed on May 24, 2007).10.183*
            Subordinated
                Unsecured Convertible Note executed on May 18, 2007, but effective
                as of
                April 30, 2007, by Charys Holding Company, Inc. payable to Castlerigg
                Master Investments, Ltd. in the amount of $5,012,426.00 (Incorporated
                by
                reference to Exhibit 10.3 to Form 8-K (Commission File No.
                000-18292), filed on May 24, 2007).10.184*
            Subordinated
                Unsecured Convertible Note executed on May 18, 2007, but effective
                as of
                April 30, 2007, by Charys Holding Company, Inc. payable to UBS O'Connor
                LLC F/B/O/ O'Connor Pipes Corporate Strategies Master Ltd. in the
                amount
                of $1,670,809.00 (Incorporated by reference to Exhibit 10.4 to
                Form 8-K (Commission File No. 000-18292), filed on May 24,
                2007).10.185*
            Registration
                Rights Agreement executed on May 18, 2007, but effective as of April
                30,
                2007, by and among Charys Holding Company, Inc., the Investors set
                forth
                on Schedule I attached thereto (Incorporated by reference to
                Exhibit 10.5 to Form 8-K (Commission File No. 000-18292), filed
                on May 24, 2007).





69
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10.186*
            Termination
                Of Escrow Shares Escrow Agreement executed on May 18, 2007, but effective
                as of April 30, 2007, by and among Charys Holding Company, Inc.,
                the
                Investors set forth on Schedule I attached thereto, and Gottbetter
&
                Partners, LLP, as escrow agent (Incorporated by reference to
                Exhibit 10.6 to Form 8-K (Commission File No. 000-18292), filed
                on May 24, 2007).10.187**
            Amendment
                Agreement dated as of April 5, 2007, executed by and between Charys
                Holding Company, Inc. and those certain Subsidiaries of the Registrant
                described in the documents attached thereto, and the Holders set
                forth on
                the Schedule of Holders attached thereto.10.188**
            Amended
                and Restated Senior Secured Convertible Note dated April 5, 2007,
                payable
                to Imperium Master Fund, Ltd. in the amount of
                $3,666,568.35.10.189**
            Amended
                and Restated Senior Secured Convertible Note dated April 5, 2007,
                payable
                to John Michaelson in the amount of $526,315.79.10.190**
            Amended
                and Restated Senior Secured Convertible Note dated April 5, 2007,
                payable
                to JED Family Trust in the amount of $526,315.79.10.191**
            Amended
                and Restated Registration Rights Agreement dated as of April 5, 2007
                by
                and among Charys Holding Company, Inc. and the Holders set forth
                thereto.10.192**
            Guarantee
                dated as of April 5, 2007 made by each of the Guarantors assigned
                thereto,
                in favor of the Holders of Senior Secured Convertible Notes of Charys
                Holding Company, Inc., which Notes have been amended and restated
                as of
                the date thereof.10.193**
            Amended
                and Restated Security Agreement dated as of April 5, 2007 made by
                Charys
                Holding Company, Inc. and its Subsidiaries, in favor of Imperium
                Advisors,
                LLC, in its capacity as collateral agent for the benefit of the Holders
                as
                set forth thereto.10.194**
            Amendment
                #4 to Amended and Restated Senior Secured Convertible Note dated
                as of
                July 28, 2007, payable to Imperium Master Fund, Ltd. in the amount
                of
                $3,666,568.35.14.1*
            Code
                of Ethics (Incorporated by reference to Exhibit 14 to
                Form 10-KSB (Commission File No. 000-18292), filed on August 17,
                2004).14.2*
            Code
                of Business Conduct (Incorporated by reference to Exhibit 14.2 to
                Form 10-KSB/A (Commission File No. 000-18292), filed on August 28,
                2006).14.3**
            Amended
                Code Of Ethics For Senior Executive Officers And Senior Financial
                Officers.21.1**
            Subsidiaries
                of the registrant.23.1**
            Consent
                of Independent Certified Public Accountants.31.1**
            Certification
                of Billy V. Ray, Jr., Chief Executive Officer of Charys Holding Company,
                Inc., pursuant to18
                U.S.C. Sec.1350, as adopted pursuant to Sec. 302 of the Sarbanes-Oxley
                Act
                of 2002.31.2**
            Certification
                of Raymond J. Smith, Chief Financial Officer of Charys Holding Company,
                Inc., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.
                302 of
                the Sarbanes-Oxley Act of 2002.32.1**
            Certification
                of Billy V. Ray, Jr., Chief Executive Officer of Charys Holding Company,
                Inc., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.
                906 of
                the Sarbanes-Oxley Act of 2002.32.2**
            Certification
                of Raymond J. Smith, Chief Financial Officer of Charys Holding Company,
                Inc., pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.
                906 of
                the Sarbanes-Oxley Act of 2002.





*
            Previously
                filed


**
            Filed
                herewith





70
 ***Table
            of Contents***





**Item
                14.**
            **Principal
                Accountant Fees and
                Services.**





Information
      concerning principal accountant fees and services will be included under the
      caption “Principal Accountant Fees and Services” in our 2007 Proxy Statement and
      is incorporated herein by reference.





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      as
      amended, the registrant has duly caused this Annual Report to be signed on
      its
      behalf by the undersigned, thereunto duly authorized.





CHARYS
                HOLDING COMPANY, INC.Date
                November 2, 2007By
            /s/
                Billy V. Ray, Jr.Billy
                V, Ray, Jr.Chief
                Executive OfficerBy
            /s/
                Raymond J. SmithRaymond
                J. SmithChief
                Financial Officer




71
 ***Table
            of Contents***





As
      required under the Securities Exchange Act of 1934, as amended, this Annual
      Report has been signed below by the following persons in the capacities and
      on
      the dates indicated:








Signature
            
            Title
            
            Date/s/
                Billy V. Ray
            
            Chairman,
                Chief Executive Officer,BILLY
                V. RAY
            
            and
                Director
            
            November
                2, 2007/s/
                Raymond J. Smith
            
            Vice
                President, Secretary and ChiefRAYMOND
                J. SMITH
            
            Financial
                Officer
            
            November
                  2, 2007/s/
                Michael OysterMICHAEL
                OYSTER
            
            Vice
                President and Director
            
            November
                  2, 2007/s/
                John JordanJOHN
                JORDAN
            
            Director
            
            November
                  2, 2007/s/
                David GergaczDAVID
                GERGACZ
            
            Director
            
            November
                  2, 2007/s/
                Gisle LarsenGISLE
                LARSEN
            
            Director
            
            November
                  2, 2007/s/
                Dennis C. HayesDENNIS
                C. HAYES
            
            Director
            
            November
                  2, 2007/s/
                Michael D. BrownMICHAEL
                D. BROWN
            
            Director
            
            November
                  2, 2007/s/
                Alec McLartyALEC
                MCLARTY
            
            Director
            
            November
                  2, 2007




72
 ***Table
            of Contents***





**SECURITIES
      AND EXCHANGE COMMISSION**





**WASHINGTON,
      D.C. 20549**








**FINANCIAL
      STATEMENTS AND SCHEDULES**








**FORMING
      A PART OF ANNUAL REPORT**





**PURSUANT
      TO THE SECURITIES EXCHANGE ACT OF 1934**





F-1
 ***Table
            of Contents***





**CHARYS
      HOLDING COMPANY, INC.**


**Index
      to Financial Statements**










**April
                30, 2007 and 2006**Report
                of Independent Registered Public Accounting Firm
            F-3Consolidated
                Balance Sheets
            F-4Consolidated
                Statements of Operations
            F-6Consolidated
                Statements of Changes in Shareholders’ Equity
            F-7Consolidated
                Statements of Cash Flows
            F-9Notes
                to Consolidated Financial Statements
            F-11




F-2
 ***Table
            of Contents***





**Report
      of Independent Registered Public Accounting Firm**








To
      the
      Board of Directors and Stockholders


Charys
      Holding Company, Inc.


(f/k/a
      Spiderboy International, Inc.)





We
      have
      audited the consolidated balance sheets of Charys Holding Company, Inc. and
      subsidiaries (f/k/a Spiderboy International, Inc.), a Delaware corporation,
      as
      of April 30, 2007 and 2006, and the related consolidated statements of
      operations, changes in shareholders’ equity, and cash flows for each of the
      years in the two-year period ended April 30, 2007.  The Company's
      management is responsible for these consolidated financial statements. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States).  Those standards require
      that we plan and perform the audit to obtain reasonable assurance about whether
      the financial statements are free of material misstatement. The
      Company is not required to have, nor were we engaged to perform, an audit of
      its
      internal controls over financial reporting. Our audit includes consideration
      of
      the internal controls 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
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the financial statements.  An audit also includes
      assessing the accounting principles used and significant estimates made by
      management, as well as evaluating the overall financial statement
      presentation.  We believe that our audits provide a reasonable basis
      for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Charys Holding Company,
      Inc.
      and subsidiaries (f/k/a Spiderboy International, Inc.) as April 30, 2007 and
      2006, and the results of its operations and its cash flows for each of the
      years
      in the two-year period ended April 30, 2007 in conformity with accounting
      principles generally accepted in the United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern.  As discussed in
      Note 4 to the financial statements, the Company has suffered recurring
      losses from operations and has a net capital deficiency, which raise substantial
      doubt about its ability to continue as a going concern.  Management’s
      plans regarding those matters are also described in Note 4.  The
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.





//s//
                MILLER RAY HOUSER & STEWART LLP





Atlanta,
      Georgia


October
      19, 2007





F-3
 ***Table
            of Contents***




**CHARYS
      HOLDING COMPANY, INC.**


**CONSOLIDATED
      BALANCE SHEETS**








As
                of April 30,2007
            
            
            2006ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            4,891,499
            
            
            $
            1,355,146Restricted
                cash
            
            
            8,849,580
            
            
            
            -Accounts
                receivables, net of allowance for doubtful accounts
            
            
            50,699,359
            
            
            
            10,282,560Costs
                and estimated earnings in excess of billings on uncompleted contracts,
                net
                of contract loss provision
            
            
            4,884,263
            
            
            
            1,677,591Prepaid
                expenses
            
            
            4,602,532
            
            
            
            2,869,642Other
                current assets
            
            
            3,862,004
            
            
            
            1,681,357Total
                current assets
            
            
            77,789,237
            
            
            
            17,866,296Property
                and equipment:Land
                and buildings
            
            
            9,827,741
            
            
            
            1,623,080Equipment
                and vehicles
            
            
            14,480,480
            
            
            
            8,008,370Furniture
                and fixtures
            
            
            942,222
            
            
            
            784,157Leasehold
                improvements
            
            
            -
            
            
            
            142,130Less
                accumulated depreciation and amortization
            
            
            (3,896,643
            )
            
            
            (1,147,553
            )Property
                and equipment, net
            
            
            21,353,800
            
            
            
            9,410,184Other
                assets:Goodwill
            
            
            162,787,431
            
            
            
            20,061,917Amortizable
                intangible assets, net of accumulated amortization
            
            
            8,730,606
            
            
            
            6,772,259Financing
                costs, net of accumulation amortization
            
            
            18,959,987
            
            
            
            1,821,094Other
                non-current assets
            
            
            1,199,485
            
            
            
            2,769,047Total
                other assets
            
            
            191,677,509
            
            
            
            31,424,317Total
                assets
            
            $
            290,820,546
            
            
            $
            58,700,797








See
      Report of Independent Registered Public Accounting Firm and notes to
      consolidated financial statements.





F-4
 ***Table
            of Contents***




**CHARYS
      HOLDING COMPANY, INC.**


**CONSOLIDATED
      BALANCE SHEETS**





As
                of April 30,2007
            
            
            2006LIABILITIES
                AND SHAREHOLDERS' EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            32,164,352
            
            
            $
            10,681,114Accrued
                expenses
            
            
            26,449,177
            
            
            
            7,605,535Accrued
                acquisition costs
            
            
            3,553,709
            
            
            
            3,441,820Billings
                in excess of costs and estimated earnings on uncompleted
                contracts
            
            
            3,929,695
            
            
            
            786,153Deferred
                revenue
            
            
            1,832,929
            
            
            
            1,824,428Short-term
                borrowings:Unrelated
                parties
            
            
            19,240,979
            
            
            
            11,022,544Related
                parties
            
            
            5,817,898
            
            
            
            7,296,171Current
                portion of long-term debt:Unrelated
                parties
            
            
            105,552,431
            
            
            
            1,287,823Related
                parties
            
            
            5,315,284
            
            
            
            507,392Total
                current liabilities
            
            
            203,856,454
            
            
            
            44,452,980Long-term
                debt:Unrelated
                parties
            
            
            12,241,753
            
            
            
            5,670,518Related
                parties
            
            
            60,277,026
            
            
            
            315,285Total
                liabilities
            
            
            276,375,237
            
            
            
            50,438,783Shareholders’
                equity:Preferred
                stock; $0.001 par value; 5,000,000 shares authorized,1,500,000 and 1,900,000
                shares
                issued and outstanding for 2007 and 2006,
                respectively.Series
                A
            
            
            1,000
            
            
            
            1,000Series
                B
            
            
            -
            
            
            
            400Series
                C
            
            
            500
            
            
            
            500Common
                stock; $0.001 par value;
                300,000,000 shares authorized,44,112,634 and 17,069,804 shares issued
                and
                outstanding for for 2007 and 2006, respectively.
            
            
            45,113
            
            
            
            17,070Additional
                paid-in capital
            
            
            329,759,145
            
            
            
            14,478,024Accumulated
                deficit
            
            
            (315,360,449
            )
            
            
            (6,234,980
            )Total
                shareholders' equity
            
            
            14,445,309
            
            
            
            8,262,014Total
                liabilities and shareholders' equity
            
            $
            290,820,546
            
            
            $
            58,700,797





See
      Report of Independent Registered Public Accounting Firm and notes to
      consolidated financial statements.





F-5
 ***Table
            of Contents***




**CHARYS
      HOLDING COMPANY, INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**




Years
                Ended2007
            
            
            2006Net
                revenues
            
            $
            77,274,624
            
            
            $
            48,570,912Cost
                of revenues
            
            
            63,448,418
            
            
            
            38,608,211Gross
                profit
            
            
            13,826,206
            
            
            
            9,962,701Operating
                expenses:General
                and administrative
            
            
            38,007,012
            
            
            
            9,389,448Depreciation
                and amortization
            
            
            11,501,647
            
            
            
            1,703,138Total
                operating expenses
            
            
            49,508,659
            
            
            
            11,092,586Loss
                from operations
            
            
            (35,682,453
            )
            
            
            (1,129,885
            )Other
                income (expense):Loss
                on impairment of goodwill and amortizable intangible
                assets
            
            
            (202,540,512
            )
            
            
            -Interest
                expense – non-related parties
            
            
            (70,212,328
            )
            
            
            (1,834,003
            )Interest
                expense – related parties
            
            
            (1,614,553
            )
            
            
            (66,820
            )Gain
                on debt retirement
            
            
            -
            
            
            
            1,596,355Gain
                on sale of property and equipment, net
            
            
            1,254,352
            
            
            
            108,651Other
                income (expense), net
            
            
            (251,076
            )
            
            
            (301,241
            )Total
                other income (expense)
            
            
            (273,364,117
            )
            
            
            (497,058
            )Net
                loss from continuing operations, before income taxes
            
            
            (309,046,570
            )
            
            
            (1,626,943
            )Income
                tax expense (benefit)
            
            
            -
            
            
            
            -Loss
                from continuing operations
            
            
            (309,046,570
            )
            
            
            (1,626,943
            )Discontinued
                operations:Loss
                from discontinued operations
            
            
            (127,245
            )
            
            
            (31,266
            )Gain
                on disposal of discontinued operations
            
            
            48,346
            
            
            
            229,044Income
                (loss) from discontinued operations, net of income taxes
            
            
            (78,899
            )
            
            
            197,778Net
                loss
            
            $
            (309,125,469
            )
            
            $
            (1,429,165
            )Per
                share data - basic:Net
                loss
            
            $
            (9.33
            )
            
            $
            (0.13
            )Weighted
                average common shares outstanding
            
            
            33,149,313
            
            
            
            11,034,626Per
                share data - diluted:Net
                loss
            
            $
            (9.33
            )
            
            $
            (0.13
            )Weighted
                average common shares outstanding
            
            
            33,149,313
            
            
            
            11,034,626Per
                share data -  discontinued operations :Income
                (loss) from discontinued operations
            
            $
            (0.00
            )
            
            $
            0.02Weighted
                average common shares outstanding
            
            
            33,149,313
            
            
            
            11,034,626





See
      Report of Independent Registered Public Accounting Firm and notes to
      consolidated financial statements.





F-6
 ***Table
            of Contents***




**Charys
                Holding Company, Inc.****Consolidated
                Statements of Changes in Shareholders' Equity**Preferred
                Stock -
              Series
                A
            
            
            Preferred
                Stock -
              Series
                B
            
            
            Preferred
                Stock -
              Series
                C
            
            
            Common
                StockShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            AmountBalance
                at April 30, 2005
            
            
            1,000,000
            
            
            $
            1,000
            
            
            
            400,000
            
            
            $
            400
            
            
            
            -
            
            
            $
            -
            
            
            
            7,968,649
            
            
            $
            7,969Shares
                issues for debt retirement
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            500,000
            
            
            
            500Restricted
                stock sales
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,362,302
            
            
            
            1,362Exercise
                of stock options
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            685,996
            
            
            
            686Shares
                issued for sale of subsidiary
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            40,000
            
            
            
            40Shares
                issued for services
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            847,500
            
            
            
            848Shares
                issued for acquisitions
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,015,357
            
            
            
            5,015Shares
                issued for interest payments on debt
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            160,000
            
            
            
            160Shares
                issued for conversion of debt
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            990,000
            
            
            
            990Issue
                of common stock warrants for financingNet
                lossBalance
                at April 30, 2006
            
            
            1,000,000
            
            
            $
            1,000
            
            
            
            400,000
            
            
            $
            400
            
            
            
            500,000
            
            
            $
            500
            
            
            
            17,069,804
            
            
            $
            17,070Exercise
                of stock options
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            192,722
            
            
            
            193Exercise
                of warrants
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,038,382
            
            
            
            1,038Conversion
                of Series B preferred stock to common stock
            
            
            
            
            
            
            
            
            
            
            (400,000
            )
            
            
            (400
            )
            
            
            
            
            
            
            
            
            
            
            400,000
            
            
            
            400Shares
                issued for services
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,541,545
            
            
            
            2,542Shares
                issued for acquisitions
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            21,838,857
            
            
            
            21,839Shares
                issued for conversion of debt
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,031,370
            
            
            
            2,031Options
                issued for employee compensationIssue
                of common stock warrants for financingNet
                lossBalance
                at April 30, 2007
            
            
            1,000,000
            
            
            $
            1,000
            
            
            
            -
            
            
            $
            -
            
            
            
            500,000
            
            
            $
            500
            
            
            
            45,112,680
            
            
            $
            45,113




F-7
 ***Table
            of Contents***




Additional
                Paid-In Capital
            
            
            Accumulated
                Deficit
            
            
            TotalBalance
                at April 30, 2005
            
            $
            5,508,446
            
            
            $
            (4,805,815
            )
            
            $
            712,000Shares
                issues for debt retirement
            
            
            109,500
            
            
            
            
            
            
            
            110,000Restricted
                stock sales
            
            
            863,058
            
            
            
            
            
            
            
            864,420Exercise
                of stock options
            
            
            76,343
            
            
            
            
            
            
            
            77,029Shares
                issued for sale of subsidiary
            
            
            9,160
            
            
            
            
            
            
            
            9,200Shares
                issued for services
            
            
            932,027
            
            
            
            
            
            
            
            932,875Shares
                issued for acquisitions
            
            
            4,655,449
            
            
            
            
            
            
            
            4,660,464Shares
                issued for interest payments on debt
            
            
            31,840
            
            
            
            
            
            
            
            32,000Shares
                issued for conversion of debt
            
            
            649,010
            
            
            
            
            
            
            
            650,000Issue
                of common stock warrants for financing
            
            
            1,643,191
            
            
            
            
            
            
            
            1,643,191Net
                loss
            
            
            
            
            
            
            (1,429,165
            )
            
            
            (1,429,165
            )Balance
                at April 30, 2006
            
            $
            14,478,024
            
            
            $
            (6,234,980
            )
            
            $
            8,262,014Exercise
                of stock options
            
            
            94,681
            
            
            
            
            
            
            
            94,874Exercise
                of warrants
            
            
            491,885
            
            
            
            
            
            
            
            492,923Conversion
                of Series B preferred stock to common stock
            
            
            
            
            
            
            
            
            
            
            -Shares
                issued for services
            
            
            4,920,715
            
            
            
            
            
            
            
            4,923,251Shares
                issued for acquisitions
            
            
            168,009,643
            
            
            
            
            
            
            
            168,031,527Shares
                issued for conversion of debt
            
            
            2,303,061
            
            
            
            
            
            
            
            2,305,092Stock
                compensation expense
            
            
            4,223,492
            
            
            
            
            
            
            
            4,223,492Issue
                of common stock warrants for financing
            
            
            135,237,644
            
            
            
            
            
            
            
            135,237,644Net
                loss
            
            
            
            
            
            
            (309,125,469
            )
            
            
            (309,125,469
            )Balance
                at April 30, 2007
            
            $
            329,759,145
            
            
            $
            (315,360,449
            )
            
            $
            14,445,309





See
      Report of Independent Registered Public Accounting Firm and notes to
      consolidated financial statements.





F-8
 ***Table
            of Contents***




**CHARYS
                HOLDING COMPANY, INC.****CONSOLIDATED
                STATEMENTS OF CASH FLOWS**12
                Months Ended April 30,2007
            
            
            2006Cash
                Flows From Operating Activities:Net
                loss
            
            $
            (309,125,469
            )
            
            $
            (1,429,165
            )Adjustments:Shares
                options expense
            
            
            4,223,492
            
            
            
            -Shares
                issued for services
            
            
            4,923,257
            
            
            
            932,875Shares
                issued for note interest
            
            
            -
            
            
            
            32,000Income
                from debt retirement
            
            
            -
            
            
            
            (1,596,355
            )Loss
                on impairment of goodwill and amortizable intangible
                assets
            
            
            202,540,512
            
            
            
            -Amortization
                of financing costs to interest
            
            
            55,824,452
            
            
            
            -(Gain)
                loss on sale of property and equipment
            
            
            (1,254,352
            )
            
            
            (108,651
            )(Gain)
                on sale of discontinued operation
            
            
            (48,346
            )
            
            
            (229,044
            )Depreciation
                and amortization expense
            
            
            11,533,270
            
            
            
            1,703,138Net
                change in current assets and liabilities:Accounts
                receivable
            
            
            133,182,294
            
            
            
            2,710,207Costs
                and estimated earnings in excess of billings on uncompleted
                contracts
            
            
            (2,568,977
            )
            
            
            364,321Prepaid
                expenses
            
            
            (1,491,324
            )
            
            
            (1,489,008
            )Other
                current assets
            
            
            5,875,774
            
            
            
            (1,007,375
            )Accounts
                payable and accrued expenses
            
            
            (52,015,196
            )
            
            
            (2,030,135
            )Billings
                in excess of costs and estimated earnings on uncompleted
                contracts
            
            
            2,856,492
            
            
            
            438,293Deferred
                revenue
            
            
            8,501
            
            
            
            753,952Net
                cash provided by (used in) operating activities
            
            
            54,464,380
            
            
            
            (954,947
            )Cash
                Flows From Investing Activities:Purchase
                of property and equipment
            
            
            (6,724,784
            )
            
            
            (401,104
            )Proceeds
                from sale of property and equipment
            
            
            1,292,541
            
            
            
            1,416,184Cash
                paid for acquisitions
            
            
            (165,736,671
            )
            
            
            -Increase
                to capitalized acquisition costs
            
            
            (6,274,705
            )
            
            
            -Cash
                acquired in acquisitions
            
            
            4,201,699
            
            
            
            673,780(Increase)
                decrease in other non-current assets
            
            
            648,444
            
            
            
            (2,289,914
            )Net
                cash used in investing activities
            
            
            (172,593,476
            )
            
            
            (601,054
            )Cash
                Flows From Financing Activities:Proceeds
                from exercise of common stock options
            
            
            94,887
            
            
            
            77,029Proceeds
                from sale of restricted common stock
            
            
            -
            
            
            
            864,420Cash
                received from exercise of common stock warrants
            
            
            492,924
            
            
            
            -Proceeds
                from issuance of detachable common stock warrants
            
            
            140,007,076Cash
                paid for financing costs
            
            
            (12,792,228
            )
            
            
            (342,676
            )Mandatory
                redeemable preferred stock:Proceeds
                from sale
            
            
            11,916,860
            
            
            
            -Partial
                  redemption of principal balance
            
            
            (4,000,000
            )
            
            
            -Net
                proceeds (repayments) on short-term borrowings:Unrelated
                parties
            
            
            (20,189,794
            )
            
            
            2,498,335Related
                parties
            
            
            (22,729,651
            )
            
            
            (476,000
            )Net
                proceeds (repayments) on long-term debt:Unrelated
                parties
            
            
            36,406,475
            
            
            
            (884,837
            )Related
                parties
            
            
            1,308,494
            
            
            
            88,812Net
                cash provided by financing activities
            
            
            130,515,029
            
            
            
            1,825,083Net
                increase in cash
            
            
            12,385,933
            
            
            
            269,082Cash
                and cash equivalents, beginning of year
            
            
            1,355,146
            
            
            
            1,086,064Cash
                and cash equivalents, end of year
            
            $
            4,891,499
            
            
            $
            1,355,146Restricted
                cash, end of year
            
            $
            8,849,580
            
            
            $
            -$
            13,741,079
            
            
            $
            1,355,146




See
      Report of Independent Registered Public Accounting Firm and notes to
      consolidated financial statements.





F-9
 ***Table
            of Contents***





**Charys
      Holding Company, Inc.**


**Notes
      to Consolidated Financial Statements**





**Years
      Ended April 30, 2007 and 2006**








**1.
      Nature of Business**





Charys
      Holding Company, Inc. (“Charys” or “Company”), a Delaware corporation, is a
      telecommunications infrastructure and general business service provider
      incorporated on April 16, 2004. The Company is headquartered in Atlanta, Georgia
      with operations through its subsidiaries across the United States.





The
      Company’s wholly owned subsidiaries and their principal lines of business are as
      follows:




·
            LFC,
                Inc. (“LFC”) provides support services to the wireless communication
                industry, in addition to constructing, operating and leasing cellular
                towers for cellular telecommunication transmissions. LFC is headquartered
                in Houston, Texas, and was acquired by Charys effective April 30,
                2006
                (see Note 7).





·
            Viasys
                Services, Inc./Viasys Network Services, Inc. (collectively “Viasys”)
                designs, installs and maintains wired and wireless communication
                networks
                and infrastructure, installs intelligent transportation systems,
                provides
                industrial maintenance services, and provides underground utility
                construction services to government, telecommunications and industrial
                customers. Viasys is headquartered in Lakeland, Florida, and was
                acquired
                by Charys effective November 1, 2005 (see Note
                7).





·
            Method
                IQ, Inc. (“MIQ”) provides technical support, hardware/software sales and
                professional services to telecommunications companies. MIQ is
                headquartered in Alpharetta, Georgia, and was acquired by Charys
                effective
                November 1, 2005 (see Note 7).





·
            Digital
                Communication Services, Inc (“DCS”) maintains telecommunications
                infrastructure for customers that include major communication companies
                and is headquartered in Delray Beach, Florida. DCS was
                acquired  by Charys effective  June 1, 2006 (see Note
                7).





·
            Aeon
                Technologies, Ltd. (“Aeon”), a wholly-owned subsidiary of Charys, was
                acquired on April 9, 2006 (see Note 7). Headquartered in Addison,
                Texas,
                the company provides construction and project management services
                to the
                telecommunications industry, including construction of cell site
                towers
                and installation and testing of complex communications
                networks.





·
            Personnel
                Resources of Georgia, Inc. (“PRG”) is a Professional Employer Organization
                providing leased employee and turn-key human resource services for
                companies with operations in the Southeast United States. It is
                headquartered in Greenville, South Carolina, and was acquired by
                Charys
                effective July 1, 2004. PRG ceased operating as a Charys subsidiary
                effective December 31, 2006 (see Note
                18).





·
            Crochet
                and Borel Services, Inc., (“C&B”), acquired effective May 1, 2006,
                provides property owners with restoration and maintenance services
                in
                residential, commercial, industrial, marine and institutional markets
                during times of distress. C&B is headquartered in Austin, Texas.
                C&B provides fire and water restoration, content and structural
                cleaning (see Note 7).





·
            The
                Cotton Companies ("Cotton Companies", "Cotton", or "CTN"), acquired
                on
                December 8, 2006 Charys acquired a 40% interest and effective March
                1,
                2007 we acquired the remaining 60%. The Cotton companies are disaster
                recovery firms specializing in fire and water restoration services
                ranging
                from initial project assessment and planning through catastrophe
                management, reconstruction, restoration and environmental remediation
                (see
                Note 7).





F-10
 ***Table
            of Contents***





·
            Complete
                Tower Sources Inc. (“CTSI”) acquired effective February 28, 2007, is
                engaged in the construction and installation of communication towers,
                principally in Louisiana and Mississippi. Headquartered in Lafayette,
                Louisiana, CTSI is a tower construction company, providing full service,
                in-house tower construction, installation and maintenance services
                to the
                wireless industry in the gulf coast region (see Note
                7).





·
            Mitchell
                Site Acq. Inc. (“MSAI”) acquired effective February 28, 2007, is engaged
                in site acquisition, zoning, permitting and project management for
                cell
                tower sites, primarily in Louisiana and Mississippi. The company
                is
                headquartered in Lafayette, Louisiana (see Note
                7).








**2.  Summary
      of Significant Accounting Policies**





*Principles
      of Consolidation*





The
      accompanying consolidated financial statements include the accounts of Charys
      and its subsidiaries. All material intercompany accounts and transactions have
      been eliminated in consolidation. Revenues and expenses of acquired subsidiaries
      in a purchase transaction, are included since the date of acquisition, as listed
      above.





*Revenue
      and Cost Recognition*





*Construction
      Activities*.  Income from construction contracts is recognized on
      the percentage-of-completion method, whereby recognition of earnings on
      contracts in progress is calculated based on the ratio of cost incurred to
      date
      to total expected cost to be incurred on each contract (“cost-to-cost”
method).  Contract costs include all direct material, labor,
      subcontract, travel, equipment costs, and related payroll taxes and insurance
      expense.  Changes in job performance, job conditions, estimated
      profitability and warranty work, including those arising from contract penalty
      provisions and final contract settlements, may result in revisions to costs
      and
      income and are recognized in the period in which the revisions are
      determined.  Contract losses are recognized fully when they are
      determined.  Change orders are recorded when approved by the
      customer.





*Service
      Activities*.  Revenue and related costs associated with service
      agreements are recognized at the time the work is completed and accepted by
      the
      customer, and if the agreement provides for no continuing obligation by
      us.  Progress billings, which may be allowed under an agreement, are
      recorded as deferred revenue until such time the work is completed and accepted
      by the customer.





*Staff
      Leasing Services.* The Company accounts for the revenues of PRG, its staff
      leasing subsidiary, in accordance with Emerging Issues Task Force (“EITF”) No.
      99-19, “Reporting Revenues Gross as a Principal Versus Net as an Agent”. PRG’s
      revenues are derived from its gross billings, which are based upon the payroll
      cost of its worksite employees and a markup computed as a percentage of the
      payroll cost. The gross billings are invoiced concurrently with each periodic
      payroll of its worksite employees. Revenues are recognized ratably over the
      payroll period as worksite employees perform their service at the client
      worksite. Because PRG is generally not responsible for the output and quality
      of
      work performed by the worksite employees, revenues in the accompanying
      consolidated statements of operations are presented net of worksite employee
      payroll costs (i.e. the “net method”). PRG actively manages all other services
      provided to its customers, such as employee benefits and workers’ compensation
      insurance. PRG determines the service specifications, selects service providers
      and products, acts as primary obligor on benefit and insurance contracts, and
      is
      exposed to loss  should its fees charged to customers for these
      services be insufficient to cover the related costs. Accordingly, billings
      for
      these services are reported at gross in accordance with EITF 99-19.





In
      determining the pricing markup component of the gross billings, PRG takes into
      consideration its estimates of the costs directly associated with its worksite
      employees, including payroll taxes, benefits and workers’ compensation insurance
      costs, plus an acceptable gross profit margin. As a result, PRG’s operating
      results are significantly impacted by its ability to accurately estimate,
      control and manage its direct costs relative to the revenues derived from the
      markup component of its gross billings.





F-11
 ***Table
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Consistent
      with its revenue recognition policy, PRG’s direct costs do not include the
      payroll cost of its worksite employees. PRG’s direct costs associated with its
      revenue generating activities are comprised of all other costs related to its
      worksite employees, such as the employer portion of payroll-related taxes,
      employee benefit plan premiums and workers’ compensation insurance
      premiums.





*Use
      of Estimates and Significant Risks*


The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States 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 consolidated financial statements, and the reported amounts of revenues
      and
      expenses during the reporting periods. Actual results could differ from those
      estimates.





Revenues
      and costs relating to construction contracts and service agreements are
      particularly affected by management’s estimates. Contracts awarded are normally
      the result of competitive bidding, and many of the Company's significant
      contracts are based on a fixed price, rather than cost-plus or time and
      materials. Initial cost estimates supporting the Company's bids are necessarily
      based on facts and circumstances known at the time the estimates are made.
      Estimates of projected contract costs must be continuously updated over the
      period of contract performance. Unpredictable events can and do occur during
      contract performance, which can increase costs and erode the anticipated
      contract profit. Change orders to recover additional costs from the customer
      may
      not be approved, or could be subject to protracted negotiations and concessions
      by the Company. Considerable judgment must be applied to reasonably evaluate
      the
      potential outcomes of issues that arise during the contract performance period
      and the effect their resolution will have on the ultimate margins or losses
      that
      may be realized by the Company. Consequently, the estimates that support the
      Company's revenue recognition and cost accrual decisions have a very significant
      impact on the results of operations reported by the Company.





*Cash
      and Cash Equivalents and Restricted Cash*


The
      Company considers all highly liquid investments with the original maturities
      of
      three months or less to be cash equivalents. The Company’s subsidiaries have
      cash in depository accounts which exceed the level insured by the Federal
      Deposit Insurance Corporation. This uninsured risk is mitigated by maintaining
      depository accounts with high quality financial institutions.





Proceeds
      from the McMahan financing (see Note 9) of $8.8 million were placed in escrow
      with the Bank of New York as required by the financing agreement to fund the
      first two quarterly interest payments relating to this financing, due May 16,
      2007 and August 16, 2007. Accordingly, this cash was not available for general
      working capital needs as of April 30, 2007 and is presented as restricted cash
      in the accompanying 2007 consolidated balance sheet.





*Accounts
      Receivable*


We
      have
      large customers who purchase services from several of our subsidiaries,
      according to subsidiary specialty and geographic requirements. As of April
      30,
      2007, there is a gross receivable balance from one customer that makes up
      approximately 13% of accounts receivable. For the year ended April 30, 2007,
      there was no concentration of revenue from any individual
      customers. Concentration with a single or a few customers may expose us to
      the risk of substantial losses if a single dominant customer stops conducting
      business with our subsidiaries.  Moreover, we may be subject to the
      risks faced by these major customers to the extent that such risks impede such
      customers’ ability to stay in business and make timely payments.





The
      allowance for doubtful accounts is established as losses are estimated to have
      occurred through a provision for bad debt charged to earnings. Losses are
      charged against the allowance when management believes the uncollectibility
      of a
      receivable is probable. Subsequent recoveries, if any, are credited to the
      allowance. The allowance for doubtful accounts is evaluated on a regular basis
      by management and is based on historical experience and specifically identified
      questionable receivables. The evaluation is inherently subjective, as it
      requires estimates that are susceptible to significant revision as more
      information becomes available. Allowance for doubtful accounts was $17,433,290
      and $2,567,731 at April 30, 2007 and 2006, respectively.





*Property
      and Equipment*


Property
      and equipment are stated at cost. Depreciation and amortization are calculated
      on the straight-line and accelerated methods based on estimated useful lives
      which generally range from five to seven years for equipment, 10 years for
      leasehold improvements, and 29 years for buildings. Depreciation expense for
      fiscal years 2007 and 2006 was $6,131,431 and $1,209,398,
      respectively.





F-12
 ***Table
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*Intangible
      Asset Valuation*


Goodwill
      represents the excess of acquisition cost over the assigned fair value of the
      assets acquired, less liabilities assumed.  Statement of Financial
      Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,”
addresses financial accounting and reporting for acquired goodwill and other
      intangible assets.  For purposes of goodwill impairment measurement,
      we are required to compare the fair value of the reporting unit with its
      carrying amount (net equity), including goodwill.  If the fair value
      of the reporting unit exceeds its carrying amount, goodwill of the reporting
      unit is considered not impaired.  The evaluation methodology for
      potential impairment is inherently complex, and involves significant management
      judgment in the use of estimates and assumptions. We completed our annual
      evaluation during the second and fourth quarters of fiscal year 2007 and
      recorded an impairment charge of $202,540,512 in order to reduce the carrying
      value of goodwill to its respective fair market value.  The impairment
      charge consists of an impairment in the amount of $20,122,369 for Viasys, an
      impairment in the amount of $5,526,439 for MIQ., an impairment in the amount
      of
      $5,695,711 for Aeon Technologies Group, Inc., formerly CCI, an impairment
      in the amount of $3,559,570 for LFC, an impairment in the amount of $1,362,669
      for DCS, and an impairment in the amount of $166,273,746 for C&B. All
      impairments include post-closing adjustments to goodwill.





*Earnings
      Per Share*


Basic
      earnings or loss per common share is computed by dividing income available
      to
      common stockholders by the weighted-average number of common stock outstanding
      for the period. Diluted earnings per common share, in addition to the weighted
      average determined for basic earnings per shares, includes potential dilution
      that could occur if securities or other contracts to issue common stock were
      exercised or converted into common stock.





*Income
      Taxes*


The
      Company accounts for income taxes using an asset and liability approach that
      requires the recognition of deferred tax assets and liabilities for the expected
      future tax consequences of events that have been recognized in the Company's
      consolidated financial statements or tax returns. In estimating future tax
      consequences, the Company considers all expected future events other than
      enactment of or changes in the tax law or rates. The Company files consolidated
      federal income tax returns.





*Acquisition*
      Costs


Consideration
      paid to prospective sellers and incurred acquisition-related service costs
      for
      uncompleted acquisitions are capitalized as acquisition costs. The accumulated
      costs for completed acquisitions are pushed down to the new subsidiary through
      purchase accounting at the time the acquisition closes. Management regularly
      reviews capitalized acquisition costs, and expenses costs related to activities
      which are unlikely to result in a completed acquisition.





**3.  Recent
      Accounting Pronouncements**





In
      July  2006, the FASB issued FASB Interpretation No. 48 –
*Accounting for Uncertainty in Income Taxes*– an interpretation of FASB
      Statement No. 109.  FIN 48 prescribes a recognition threshold and
      measurement attribute for the financial statement recognition and measurement
      of
      a tax position taken or expected to be taken in a tax return.  FIN 48
      also provides guidance on accounting for de-recognition, interest, penalties,
      accounting in interim periods, disclosure and classification of matters related
      to uncertainty in income taxes, and transitional requirements upon adoption
      of
      FIN 48.  FIN 48 is effective for fiscal years beginning after December
      15, 2006. The Company is in the process of evaluating the impact of FIN 48
      on its Condensed Consolidated Financial Statements.


In
      February 2007, the FASB issued SFAS No. 159, *“The Fair Value Option for
      Financial Assets and Financial Liabilities – including an amendment of FASB
      Statement No. 115.*SFAS No. 159 permits entities to choose to
      measure many financial instruments and certain other items at fair value that
      are not currently required to be measured at fair value, with unrealized gains
      and losses related to these financial instruments reported in earnings at each
      subsequent reporting date.  This Statement is effective as of the
      beginning of an entity’s first fiscal year that begins after November 15,
      2007.  The Company is in the process of evaluating the impact of SFAS
      No. 159 on its Condensed Consolidated Financial Statements.





In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin (SAB) No. 108, Financial Statements — *Considering the Effects of
      Prior Year Misstatements when Quantifying Misstatements in Current Year
      Financial Statements*. SAB No. 108 provides interpretive guidance on how the
      effects of prior-year uncorrected misstatements should be considered when
      quantifying misstatements in the current year financial statements. SAB No.
      108
      requires registrants to quantify misstatements using both the income statement
      and balance sheet approach and evaluate whether either approach results in
      a
      misstatement that, when all relevant quantitative and qualitative factors are
      considered, is material. SAB No. 108 is effective for years ending after
      November 15, 2006, and the impact of adoption had no effect on the Company’s
      consolidated financial statements.





F-13
 ***Table
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**4.  Going
      Concern**





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. The Company has incurred losses
      from operations of $35.7 million and $1.1 million and net losses of $309.1
      million and $1.4 million for the years ended April 30, 2007 and 2006,
      respectively. As of April 30, 2007, the Company has a $126.1 million working
      capital deficit with a limited borrowing capacity. The present condition
      continues to create uncertainty as to the Company’s ability to continue as a
      going concern in the absence of additional capital and/or financing,
      particularly in light of the historic (pre-acquisition) operating losses of
      acquired companies. Management’s plan to improve its overall financial condition
      includes the following:





·
            Increasing
                revenues at all operating subsidiaries, while maintaining or improving
                gross margins in the process.





·
            Control,
                and in some cases reduce, general and administrative expenses that
                will
                not impede growth.





·
            Seek
                additional sources of working capital through both debt and equity
                transactions to fund daily operations, as well as needed
                acquisitions.





·
            Acquire
                companies that fit the Company’s business
                strategy.**





Specifically,
      Charys believes its access and expertise in the capital markets will result
      in
      additional working capital that will enable its present and future subsidiaries
      to increase revenue-generating activities, access and expertise which is
      typically constrained as individual private companies. It also believes
      continued strategic acquisitions of companies providing heretofore fragmented
      telecommunications construction and infrastructure services will provide the
      necessary integration to attain contracts of greater revenue volume and scope
      of
      services. Contract management operations of acquired companies will be reviewed
      and management replaced if necessary to improve gross profit performance to
      acceptable levels. In most cases, Charys intends to retain selling owners of
      acquired companies as senior management, who will receive a large majority
      of
      the purchase consideration by achieving specific revenue, gross profit and
      net
      income targets.





The
      accompanying consolidated financial statements do not include any adjustments
      that might be necessary if the Company is unable to continue as a going
      concern.





**5.  Fair
      Value of Financial Instruments**





The
      carrying amounts of cash and cash equivalents, accounts receivable (generally
      unsecured), accounts payable and notes payable approximate fair value due to
      the
      short maturity of the instruments and the provision for what management believes
      to be adequate reserves for potential losses. Substantially all assets are
      pledged as collateral for borrowings. The fair values of lines-of-credit and
      long-term debt approximate their carrying amount since the currently effective
      rates reflect market rates for debt of similar credit quality.





**6.  Costs
      and Estimated Earnings on Contracts/Contract Backlog**





Costs
      and
      estimated earnings on all contracts and backlog information as of April 30,
      2007
      and 2006, and for the years then ended, are as follows:





2007
            
            
            2006Costs
                incurred on uncompleted contracts
            
            
            84,661,985
            
            
            $
            72,059,721Estimated
                earnings
            
            
            285,945
            
            
            
            1,947,783Less
                allowance for uncompleted contract losses
            
            
            -
            
            
            
            (1,433,854
            )Net
                contract revenues recognized to date on uncompleted
                contracts
            
            
            84,947,929
            
            
            
            72,573,650Less
                billings to date
            
            
            (83,993,360
            )
            
            
            (71,682,212
            )Net
                revenues recognized over billings
            
            
            954,569
            
            
            $
            891,438Included
                in the accompanying 2007 and 2006 consolidated balance sheets under
                the
                following captions:Costs
                and estimated earnings in excess of billings on uncompleted contracts,
                net
            
            $
            4,884,263
            
            
            $
            1,677,591Billings
                in excess of costs and estimated earnings on uncompleted
                contracts
            
            
            (3,929,694
            )
            
            
            (786,153
            )Excess
                of costs and estimated earnings over billings
            
            
            954,569
            
            
            $
            891,438Total
                amended contracts value
            
            $
            97,683,813
            
            
            $
            80,426,637Revenue
                recognized to date, net of contract loss allowance
            
            
            (84,947,929
            )
            
            
            (72,573,650
            )Unearned
                contracts value backlog
            
            
            12,735,884
            
            
            $
            7,852,987




F-14
 ***Table
            of Contents***





**7.  Acquisitions**





*Method
      IQ, Inc.*


Effective
      November 1, 2005, Charys acquired all outstanding common stock of Method IQ,
      Inc. MIQ shareholders received at closing a 5% secured promissory note for
      $5.25 million and 525,000 shares of Charys common stock (“Initial Stock
      Tranche”), valued at $0.94 per share. The stock consideration also included
      397,750 shares of Charys common stock (“Second Stock Tranche”), due 180 days
      after the effective date, with a make-whole value of $4.00 per share on the
      last
      trading day before such issuance, and 397,750 shares of Charys common stock
      (“Third Stock Tranche”), due 365 days after the effective date with a make-whole
      value of $4.00 per share on the last trading day before such issuance. A
      make-whole provision exists for the Initial Stock Tranche of $4.50 average
      market price for at lease three consecutive trading days prior to or including
      the date which is six months from the effective date.  The make-whole
      provision requires, at Charys’ option, that additional stock be issued in
      accordance with the agreement or additional cash on the date of the Third Stock
      Tranche. The purchase agreement also provides for potential additional
      consideration to be paid, either in cash or Charys common stock, based on both
      the future stock performance of Charys and future earnings performance of MIQ
      (see Note 10 – *Acquisition “Make-Whole” Contingencies*). As of May 11,
      2006, the conditions for the potential additional stock-based consideration
      were
      satisfied and this contingent obligation was canceled.





The
      Company determined the total initial cost of the acquisition at $5.6 million
      with $1.2 million in net liabilities assumed, resulting in an excess of
      consideration over value received of $6.8 million as of the acquisition date.
      The Company engaged an independent consultant to assess the excess consideration
      for potential amortizable intangible assets and to determine a value for such
      assets that may be identified. The intangible asset identified as having value
      was the acquired customer relationships, which was valued at $4.7 million.
      Accordingly, this value was recorded in the purchase accounting as an
      amortizable intangible asset, with the remainder of the excess consideration
      of
      $2.1 million recorded as goodwill as of the acquisition date. The customer
      relationships intangible asset is being amortized at a rate which approximates
      the remaining life of the underlying relationships, determined by the valuation
      to be eleven years.





During
      fiscal year 2007, Charys issued a total of 790,000 common shares, representing
      the Second and Third Stock Tranches, to the sellers of MIQ at a total market
      value of $3.1 million and incurred further acquisition costs of $278,000, all
      of
      which was recorded to goodwill. These transactions increased the total MIQ
      purchase price to $9.0 million, with total goodwill of $5.5 million. During
      fiscal year 2007, Charys determined goodwill to be impaired by $5.5 million
      and
      charged this amount to earnings, resulting in no remaining goodwill attributable
      to the MIQ acquisition as of April 30, 2007 (see Note 8).





F-15
 ***Table
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*Viasys  Network
      Services, Inc. and Viasys Services, Inc. (collectively
“Viasys”)*


Effective
      November 1, 2005, the Company acquired all outstanding common stock of
      Viasys  Network Services, Inc and Viasys Services, Inc. As
      initial consideration, the Viasys shareholders received cash and an 8%
      subordinated secured promissory note for $3.5 million. Under the Stock Purchase
      Agreement, the Company placed common stock with a market value of $500,000
      on
      the closing date in escrow pursuant to the Escrow Agreement which, among other
      matters, provides for the release of the Charys shares upon payment of the
      final
      installment of principal and interest on the promissory note. The final
      installment on the note is due fifteen months after the closing date. In
      connection with this acquisition, Charys also issued 4,879,967 common shares
      to
      consultants required under an agreement dated November 17, 2005.





The
      Company determined the initial total cost of the acquisition at $11.4 million,
      with $1.6 million in net liabilities acquired, resulting in an excess of
      consideration over value received of $13.0 million as of the acquisition date.
      The Company engaged an independent consultant to assess the excess consideration
      for potential amortizable intangible assets and to determine a value for such
      assets that may be identified. The intangible asset identified as having value
      was the acquired customer relationships, which was valued at $2.1 million.
      Accordingly, this value was recorded in the purchase accounting as an
      amortizable intangible asset, with the remainder of the excess consideration
      of
      $10.9 million recorded as goodwill as of the acquisition date. The customer
      relationship intangible asset is being amortized at a rate which approximates
      the remaining life of the underlying relationships, determined by the valuation
      to be seven years.





Effective
      September 29, 2006, Charys and Viasys entered into a Mutual Release and
      Settlement Agreement (the “Viasys Settlement Agreement”) with New Viasys
      Holdings LLC (“New Viasys”). Pursuant to the Viasys Settlement Agreement, the
      parties agreed to waive and release one another from certain closing conditions,
      payment obligations and indemnification claims under the Stock Purchase
      Agreement of November 1, 2005.  Furthermore, New Viasys agreed to
      cancel a $3.5 million subordinated secured note and related security agreement,
      to extend the deadlines until December 31, 2006 for Charys to secure a standby
      letter of credit and release of surety bond as required in the Viasys Purchase
      Agreement, and to release Charys from the indemnification claim arising out
      of
      the settlement reached by Charys with Lumbermen’s Mutual Casualty Company in May
      2006 (the “Lumbermen’s Settlement”).  In consideration for New Viasys’
release of the foregoing obligations, Charys agreed to release to New Viasys
      500,000 escrowed shares of the Company’s unregistered common stock, and to issue
      to New Viasys an additional 225,000 shares of its unregistered common stock.
      These shares were issued in the names of Mel Harris and Steven Posner, two
      of
      the owners of New Viasys. Messrs. Harris and Posner were given the right during
      the 90-day period beginning on the first anniversary of the Viasys Settlement
      Agreement closing (“Closing”) to require Charys to repurchase, at a price of
      $6.50 per share, any number of these shares they may specify. Charys also agreed
      to issue to Messrs. Harris and Posner at Closing convertible promissory notes
      in
      the amounts of $473,849 and $242,151, respectively. In addition, Charys agreed
      to pay to New Viasys at Closing, in immediately available funds, the sum of
      $372,424 and to pay within 60 days after Closing the amount of $426,333,
      including $93,000 in interest. The Company also agreed to release New Viasys
      from the indemnification claim that may arise out of the Lumbermen’s
      Settlement.





The
      Company determined that the net settlement amount excluding the interest,
      resulted in an increase in goodwill of $2.3 million. In addition, settlement
      of
      acquisition contingencies and post-acquisition costs incurred of $6.9 million
      during fiscal year 2007, including $3.0 million relating to the Lumbermen’s
      Settlement (see Note 10 – *Lumbermen’s Mutual Casualty Company*), all of
      which was recorded to goodwill, resulted in a total in adjustment to the total
      Viasys purchase price to $20.6 million, of which a total of $20.1 million was
      recorded to goodwill. During FY07, Charys determined goodwill to be impaired
      by
      $20.1 million and charged this amount to earnings, resulting in no remaining
      goodwill attributable to the Viasys acquisition as of April 30, 2007 (see Note
      8).





*Aeon
      Technologies, Ltd.*


Effective
      April 9, 2006, a wholly-owned subsidiary of CCI acquired 100% of the net
      assets of Aeon. The Aeon partners received at closing a $226,000 note payable
      30
      days after closing, an 8% subordinated secured promissory note for $472,927,
      and
      227,516 shares of Charys common stock valued at $4.00 per share. The secured
      promissory note is due in three payments of $157,642 on the anniversary of
      the
      closing date.





The
      Company determined the initial total cost of the acquisition at $1.6 million
      with $593,303 in net assets acquired, resulting in an excess of consideration
      over value received of $1.0 million as of the acquisition date. Based on an
      internal assessment, the Company determined than none of this excess value
      was
      attributable to amortizable intangible assets, and recorded the $1.0 million
      to
      goodwill.





F-16
 ***Table
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During
      fiscal year 2007, Charys issued an additional 82,251 common shares to the
      sellers of Aeon at a total market value of $329,005 and incurred further
      acquisition costs of $188,244, all of which was recorded to goodwill. These
      transactions increased the total Aeon purchase price to $2.1 million, with
      total
      goodwill of $1.5 million. During fiscal year 2007, Charys determined goodwill
      to
      be impaired by $5.7 million, and charged this amount to earnings, resulting
      in
      no remaining goodwill attributable to the Aeon acquisition as of April 30,
      2007
      (see Note 8).





*LFC,
      Inc.*


Effective
      April 30, 2006, LFC Acquisition Company, Inc, an indirect wholly owned
      subsidiary of Charys Holding Company, Inc merged with LFC, Inc. All LFC common
      stock and other equity security was cancelled and retired. The initial
      consideration LFC shareholders received was cash of $2.0 million and 562,840
      shares of Charys common stock, valued at $2.64 per share, which was the closing
      price on the acquisition date. In connection with this acquisition, Charys
      also
      recorded $2.0 million in accrued acquisition costs for 250,000 unissued common
      shares to consultants required under an agreement dated April 24,
      2006.





The
      Company determined the initial total cost of the acquisition at $5.7 million
      with $3.4 million in net assets acquired, resulting in an excess of
      consideration over value received of $2.3 million as of the acquisition date.
      The Company engaged an independent consultant to assess the excess consideration
      for potential amortizable intangible assets and to determine a value for such
      assets that may be identified. The intangible asset identified as having value
      was the acquired customer relationships, which was valued at $307,000.
      Accordingly, this value was recorded in the purchase accounting as an
      amortizable intangible asset, with the remainder of the excess consideration
      of
      $2.0 million recorded as goodwill as of the acquisition date. The customer
      relationships intangible asset is being amortized at a rate which approximates
      the remaining life of the underlying relationships, determined by the valuation
      to be twenty two years.





During
      fiscal year 2007, Charys issued an additional 1,254,180 common shares at a
      total
      market value of $3.3 million. This additional $4.9 million consideration plus
      further acquisition costs incurred of $380,000 increased the cost of acquisition
      by $5.3 million, to a total of $11.0 million. Of the $5.3 million in additional
      acquisition costs, Charys recorded $3.7 million to customer relationships
      intangible asset and $1.6 million to goodwill. In the fourth quarter of fiscal
      year 2007, Charys determined goodwill to be impaired by $3.6 million, and
      charged this amount to earnings which resulted in no remaining goodwill
      attributable to the LFC acquisition as of April 30, 2007 (see Note
      8).





*Crochet
      & Borel Services, Inc.*


Effective
      May 1, 2006, the Company acquired all outstanding capital stock (the “C&B
      Shares”) of Crochet & Borel, Inc. (“C&B”) from Troy D. Crochet,
      pursuant to a stock purchase agreement (the “C&B Purchase Agreement”). Mr.
      Crochet initially received cash of $1.0 million, a 4.74% short-term unsecured
      promissory note for $19 million (“Seller Note”), a contractual obligation for
      $57.6 million (“Additional Cash Consideration”), and 7,258,000 shares of Charys
      common stock valued at a make-whole value of $12.50 per share (see Note 10).
      $17.5 million of the Additional Cash Consideration obligation was to be paid
      contingent upon collection by C&B of certain accounts receivable, and
      therefore was excluded by Charys in recording the initial effects of the
      acquisition. Charys is also required to issue Mr. Crochet up to 750,000 in
      additional common shares, contingent upon future events occurring as defined
      in
      the C&B Purchase Agreement and was also excluded from the initial purchase
      accounting. In addition to the initial consideration, Charys incurred
      acquisition costs of $9.3 million substantially consisting of Charys common
      shares issued to consultants at market value.





The
      Company determined the initial total cost of the acquisition at $170.1 million,
      with $38.7 million in net assets acquired, resulting in an excess of purchase
      price over value received of $131.4 million. The Company engaged an independent
      consultant to assess the excess purchase price for potential amortizable
      intangible assets and to determine a value for such assets that may be
      identified. The intangible assets identified as having value was a non-compete
      agreement valued at $3.5 million and acquired customer relationships valued
      at
      $500,000. Accordingly, these values were recorded in the purchase accounting
      as
      amortizable intangible assets, with the remainder of the excess consideration
      of
      $127.4 million recorded as goodwill as of the acquisition date. The non-compete
      agreement intangible asset is being amortized at a rate which approximates
      the
      remaining life of the underlying intangible asset, determined by the valuation
      to be one year. Customer relationships are being amortized over one year. The
      shares of Charys common stock issued and to be issued to Mr. Crochet have
      registration rights.





F-17
 ***Table
            of Contents***





During
      fiscal year 2007, the contingency regarding the $17.5 million referred to above
      was resolved. In addition, a total of $1.3 million of further consideration
      to
      be paid was agreed to by Charys and Mr. Crochet, increasing the Additional
      Cash
      Consideration obligation to $58.9 million. Charys incurred a further $12.8
      million in post-acquisition costs, substantially consisting of Charys common
      stock issued to various consultants and financing institutions at market value.
      The total of $31.6 million arising from these transactions was recorded to
      goodwill, increasing goodwill to $159 million. As of April 30, 2007, Charys
      determined goodwill to be impaired by $159 million and charged this amount
      to
      earnings, resulting in no remaining goodwill attributable to the C&B
      acquisition (see Note 8).





On
      January 12, 2007, the C&B Purchase Agreement was amended to combine the
      $19.0 million Seller Note and the $58.9 million Additional Cash Consideration
      obligation into a single promissory note (“C&B Note”) in the amount of $77.9
      million bearing interest at the rate of 4.74% per annum and payable as provided
      under the terms of the note agreement. The C&B Note is secured by a security
      agreement pursuant to which Charys and its wholly-owned subsidiaries, C&B
      and Ayin Holdings (collectively, the “Grantors”), granted Mr. Crochet a security
      interest in certain assets subject to all liens on any collateral of any Grantor
      existing on the date of the security agreement.





*Digital
      Communications Services, Inc.*


Effective
      June 1, 2006, the Company acquired all outstanding common stock of Digital
      Communications Services, Inc. (“DCS”). As a result of the purchase, the Company
      incurred a contractual obligation to pay the DCS shareholders $640,000 and
      to
      issue $200,000 worth of shares of Charys common stock, based on the market
      price
      at closing. The Company determined the total cost of the acquisition at
      $840,000, with $412,369 in net liabilities assumed, resulting in an excess
      of
      consideration over value received of $1.3 million.





During
      fiscal year 2007, Charys incurred post-closing acquisition costs of $110,000,
      all of which was recorded to goodwill. These transactions increased the total
      DCS purchase price to $950,000, with total goodwill of $1.4 million. In the
      fourth quarter of fiscal year 2007, Charys determined goodwill to be impaired
      by
      $1.4 million, and charged this amount to earnings which resulted in no remaining
      goodwill attributable to the DCS acquisition as of April 30, 2007 (see Note
      8).





*Complete
      Tower Sources, Inc.*


On
      June
      20, 2006, Charys and Ayin Holding Company, Inc. (“Ayin”), a wholly-owned
      subsidiary of Charys, entered into a stock purchase agreement (“CTSI Stock
      Purchase Agreement”) with Complete Tower Sources, Inc. (“CTSI”), a Louisiana
      corporation, and its sole shareholder, Lori H. Mitchell, whereby Ayin would
      purchase all of the issued and outstanding capital stock of CTSI for the
      aggregate purchase price of $71 million, subject to adjustment as provided
      in
      the CTSI Stock Purchase Agreement. The CTSI Stock Purchase Agreement was subject
      to Charys having obtained third-party financing, on commercially reasonable
      terms, sufficient to pay the purchase price and consummate the acquisition
      transaction.





The
      CSTI
      Stock Purchase Agreement was executed on August 15, 2006. At that time Charys
      became liable to pay Ms. Mitchell $5 million in cash, which was paid on
      September 1, 2006. Charys issued Ms. Mitchell a $23.8 million short-term
      promissory note (“CTSI Closing Note”) due on September 30, 2006 and a $28.4
      million long-term promissory note (“CTSI Stock Purchase Note”) payable in three
      equal annual installments. Under the terms of the CSTI Stock Purchase Agreement,
      at that time Charys also became liable for payment of $13.8 million to certain
      CTSI employees. At this closing, Ms. Mitchell entered into an employment
      agreement with MSAI to serve as MSAI’s vice-president. Under the terms of the
      agreement, Ms. Mitchell will not receive a base salary, but will be entitled
      to
      a bonus based on CTSI’s year-end audited financial results compared to its
      projected financial performance for the year. The bonus payable each year will
      be split between Ms. Mitchell and Matthew B. Mitchell, president of MSAI,
      and will be no less than $250,000, but no more than $1 million (in the
      aggregate).





On
      October 27, 2006, Charys and Ayin executed a letter agreement (“First Letter
      Agreement”) with Ms. Mitchell amending certain terms of the CSTI Stock Purchase
      Agreement. Pursuant to the First Letter Agreement, the total sale price for
      CTSI
      was increased by $5 million to $76 million, to be paid as follows: (i) a newly
      issued CTSI Closing Note dated October 20, 2006 to Ms. Mitchell in the amount
      of
      $43 million on December 18, 2006; (ii) a newly issued CTSI Stock Purchase Note
      dated October 20, 2006 to Ms. Mitchell in the amount of $14.2 million payable
      in
      two annual installments commencing December 10, 2007; (iii) the amount of $5
      million was paid to Ms. Mitchell on September 1, 2006 and (iv) a sum of $13.8
      million to be paid to certain employees of CTSI within 5 days following December
      18, 2006. Both promissory notes issued at the original closing on August 15,
      2006 were cancelled and replaced with the notes newly issued under the First
      Letter Agreement. With respect to the cancellation and replacement of the CTSI
      Closing Note due on September 30, 2006, Charys paid Ms. Mitchell a
      non-refundable extension payment of $1.5 million on October 27, 2006 for her
      agreement to extend the payment date of that note to December 18, 2006. In
      addition, pursuant to the First Letter Agreement, Ayin agreed by November 24,
      2006 to (i) to pay off CTSI’s line of credit obligation to the Whitney
      National Bank in an amount up to $2.4 million and any obligations under any
      credit cards belonging to CTSI, and (ii) to cause all personal guarantees
      of Ms. Mitchell for these obligations to be cancelled.





F-18
 ***Table
            of Contents***





In
      a
      series of subsequent letter agreements, Charys, Ayin and Ms. Mitchell agreed
      to
      multiple extensions of all obligations specified in the First Letter Agreement
      ultimately to February 21, 2007. Other than these extensions, these letter
      agreements did not significantly amend the terms agreed to in the First Letter
      Agreement, except that Charys agreed to pay a certain portion of the CTSI
      Closing Note to Ms. Mitchell in the form of a senior convertible promissory
      note
      and that Ms. Mitchell extend the duration of her non-competition
      agreement.





Upon
      closing the McMahan financing (see Note 9), on February 21, 2007 we closed
      the
      CTSI acquisition effective February 28, 2007 (“Final Closing”).  At
      the Final Closing, Charys paid $37.2 million of the CTSI Closing Note obligation
      and the $13.8 million CTSI employee obligation in cash. $5.8 million of the
      CTSI
      Closing Note was converted to a 8.75% senior convertible promissory due to
      Ms.
      Mitchell on February 10, 2012 with interest payable quarterly in arrears. The
      terms of the $14.2 million CTSI Stock 9% Purchase Note were amended to provide
      for two equal installment payments due within a 120 day period following
      December 18, 2007 and December 18, 2008. This note is subject to CTSI achieving
      certain EBITDA targets.  Failure to achieve the EBITDA targets could
      reduce the payments due under the promissory note by as much as
      50%.  Due to this contingency, the Company recorded a $7.1 million
      liability. In addition, at the Final Closing Charys issued 326,769 common shares
      to Ms. Mitchell at a market value of $670,000.





The
      consideration paid by Charys for the CTSI acquisition totaled $74.5 million,
      including the $6.5 million in cash paid to Ms. Mitchell prior to the Final
      Closing as previously described. Charys incurred total acquisition costs of
      $1.6
      million, consisting substantially of Charys common shares issued to consultants
      and Charys employees under consulting and employment agreements, resulting
      in a
      total purchase price of $76.1 million.  $15.3 million in net assets
      were acquired from CTSI, resulting in an excess of purchase price over value
      received of $60.8 million as of the acquisition date. Charys has initially
      recorded this excess purchase price to goodwill. As of April 30, 2007,
      management has not assessed the excess purchase price for potential amortizable
      intangible assets and to determine a value for such assets that may be
      identified, and intends to make this assessment in fiscal year
      2008.





Due
      to
      the negotiations occurring subsequent to the initial August 15, 2006 closing
      which resulted in significant changes to the original terms of the CSTI Stock
      Purchase Agreement and additions of material actions to be performed by Charys
      to complete the acquisition, Charys did not record the acquisition of CTSI
      until
      the effective date of February 28, 2007, and accordingly did not include the
      results of operations of CTSI the accompanying 2007 consolidated financial
      statements until after that date.





At
      the
      Final Closing, Carroll Castille, the current senior vice president and managing
      director of CTSI, entered into an employment agreement to serve as CTSI’s
      president. Under the terms of the employment agreement, Mr. Castille will
      receive no base salary, but will be entitled to a bonus of at least $250,000,
      but no more than $1 million, based upon CTSI’s year-end audited financial
      results compared to its projected financial performance for the year.
      Mr. Castille also entered into a three year non-competition
      agreement.





*Mitchell
      Site Acq., Inc.*


On
      June
      20, 2006, Charys and Ayin Holding Company, Inc. (“Ayin”), a wholly-owned
      subsidiary of Charys, entered into a stock purchase agreement (“MSAI Stock
      Purchase Agreement”) with Mitchell Site Acq., Inc. (“MSAI”), a Louisiana
      corporation, and its sole shareholder, Matthew B. Mitchell, whereby Ayin would
      purchase all of the issued and outstanding capital stock of MSAI for the
      aggregate purchase price of $27 million, subject to adjustment as provided
      in
      the MSAI Stock Purchase Agreement. The MSAI Stock Purchase Agreement was subject
      to Charys having obtained third party financing, on commercially reasonable
      terms, sufficient to pay the purchase price and consummate the acquisition
      transaction.





F-19
 ***Table
            of Contents***





The
      MSAI
      Stock Purchase Agreement was executed on August 15, 2006. At that time Charys
      became liable to pay Mr. Mitchell $2 million in cash, which was paid on
      September 1, 2006. Charys issued Mr. Mitchell a $13.4 million short-term
      promissory note (“MSAI Closing Note”) due on September 30, 2006, a $5.4 million
      long-term promissory note (“MSAI Stock Purchase Note”) payable in three equal
      annual installments, and a $5.4 million long-term promissory note (“MSAI
      Goodwill Note”) payable in three equal annual installments. Under the terms of
      the MSAI Stock Purchase Agreement, at that time Charys also became liable for
      payment of $787,500 to certain MSAI contractors. Mr. Mitchell entered into
      an
      employment agreement with MSAI at this closing to serve as MSAI’s president.
      Under the terms of the agreement, Mr. Mitchell will not receive a base salary,
      but will be entitled to a bonus based on MSAI’s year-end audited financial
      results compared to its projected financial performance for the year. The bonus
      payable each year will be split between Mr. Mitchell and Lori H. Mitchell,
      vice-president of MSAI, and will be no less than $250,000, but no more than
      $1
      million (in the aggregate).





On
      October 27, 2006, Charys and Ayin executed a letter agreement (“First Letter
      Agreement”) with Mr. Mitchell amending certain terms of the MSAI Stock Purchase
      Agreement. Pursuant to the First Letter Agreement, the total sale price for
      MSAI
      was increased by $2 million to $29 million, to be paid as follows: (i) a newly
      issued MSAI Closing Note dated October 20, 2006 to Mr. Mitchell in the amount
      of
      $20.8 million on December 18, 2006; (ii) a newly issued MSAI Stock Purchase
      Note
      dated October 20, 2006 to Mr. Mitchell in the amount of $2.7 million payable
      in
      two annual installments commencing December 10, 2007; (iii) a newly issued
      MSAI
      Goodwill Note dated October 20, 2006 to Mr. Mitchell in the amount of $2.7
      million payable in two annual installments commencing December 10, 2007; (iv)
      the amount of $2 million was paid to Mr. Mitchell on September 1, 2006 and
      (v) a
      sum of $787,500 to be paid to certain contractors of MSAI within 5 days
      following December 18, 2006. All promissory notes issued at the original closing
      on August 15, 2006 were cancelled and replaced with the notes newly issued
      under
      the First Letter Agreement. With respect to the cancellation and replacement
      of
      the MSAI Closing Note due on September 30, 2006, Charys paid Mr. Mitchell a
      non-refundable extension payment of $550,000 on October 27, 2006 for his
      agreement to extend the payment date of that note to December 18,
      2006.





In
      a
      series of subsequent letter agreements, Charys, Ayin and Mr. Mitchell agreed
      to
      multiple extensions of all obligations specified in the First Letter Agreement
      ultimately to February 21, 2007. Other than these extensions, these letter
      agreements did not significantly amend the terms agreed to in the First Letter
      Agreement, except that Charys agreed to pay a certain portion of the MSAI
      Closing Note to Mr. Mitchell in the form of a senior convertible promissory
      note
      and that Mr. Mitchell extend the duration of his non-competition
      agreement.





Upon
      closing the McMahan financing (see Note 9), on February 21, 2007 closed the
      MSAI
      acquisition effective February 28, 2007 (“Final Closing”).  At the
      Final Closing, Charys paid $18.6 million of the MSAI Closing Note obligation
      and
      the $787,500 MSAI contractor obligation in cash. $2.2 million of the MSAI
      Closing Note was converted to a 8.75% senior convertible promissory due to
      Mr.
      Mitchell on February 10, 2012 interest payable quarterly in arrears.. The terms
      of the $2.7 million MSAI Stock Purchase Note and MSAI Goodwill Note were amended
      to provide for two equal installment payments within a 120 day period following
      the Closing which occurred on February 27, 2007. These two $2.7 million notes
      due to Mr. Mitchell are subject to MSAI achieving certain EBITDA
      targets.  Failure to achieve the EBITDA targets could reduce the
      payments due under these promissory notes by as much as 50%.  Due to
      this contingency, the Company recorded a $2.7 million liability. In addition,
      at
      the Final Closing Charys issued 72,939 common shares to Mr. Mitchell at a market
      value of $150,000.





The
      consideration paid by Charys for the MSAI acquisition totaled $30.0 million,
      including the $2.6 million in cash paid to Mr. Mitchell prior to the Final
      Closing as previously described. Charys incurred total acquisition costs of
      $1.4
      million, consisting substantially of Charys common shares issued to consultants
      and Charys employees under consulting and employment agreements, resulting
      in a
      total purchase price of $31.4 million.  $5.4 million in net assets
      were acquired from MSAI, resulting in an excess of purchase price over value
      received of $26.0 million as of the acquisition date. Charys has initially
      recorded this excess purchase price to goodwill. As of April 30, 2007,
      management has not assessed the excess purchase price for potential amortizable
      intangible assets and to determine a value for such assets that may be
      identified, and intends to make this assessment in fiscal year
      2008.





F-20
 ***Table
            of Contents***





Due
      to
      the negotiations occurring subsequent to the initial August 15, 2006 closing
      which resulted in significant changes to the original terms of the MSAI Stock
      Purchase Agreement and additions of material actions to be performed by Charys
      to complete the acquisition, Charys did not record the acquisition of MSAI
      until
      the effective date of February 28, 2007, and accordingly did not include the
      results of operations of MSAI the accompanying 2007 consolidated financial
      statements until after that date.





On
      February 27, 2007 (a) the 8.75% Senior Convertible Note payable to Lori H.
      Mitchell in the original principal amount of $5,790,476 dated February 16,
      2007
      and due February 16, 2012 with interest payable quarterly in arrears and (b)
      the
      8.75% Senior Convertible Note payable to Mathew B. Mitchell in the original
      principal amount of $2,209,523 dated February 16, 2007 and due February 16,
      2012
      with interest payable quarterly in arrears. and guaranteed by Charys were
      cancelled and new notes  with the same payment terms were issued as
      follows:





·
            An
                8.75% Senior Convertible Note payable to Mathew B. Mitchell in the
                original principal amount of
                $2,590,476;





·
            An
                8.75% Senior Convertible Note payable to Lori H. Mitchell in the
                original
                principal amount of $2,569,524;





·
            An
                8.75% Senior Convertible Note
                payable to Carroll Castille  in the original principal amount of
                $2,840,000





*The
      Cotton Companies*


On
      September 8, 2006, Charys originally executed an agreement to acquire 100%
      of the interests in Cotton Holdings 1, Inc., its subsidiaries and certain
      affiliated partnerships (“Cotton Companies” or “Cotton”) for $75 million,
      payable in the form of cash, promissory notes and shares of Charys common stock,
      with allowances for various adjustments. The original closing date for the
      purchase was to be September 22, 2006.  However, by mutual
      agreement, the original purchase agreement was amended and restated whereby,
      on
      December 8, 2006, Charys acquired a 40% interest in each of the Cotton
      Companies.





The
      consideration for the 40% interests was $16.5 million in cash, a secured
      promissory note (“Cotton Seller Note”) in the amount of $10 million due on
      March 8, 2007 (or earlier if permanent financing is obtained by Charys),
      1,955,532 shares of Charys common stock valued at $29.3 million, representing
      a
      $15.00 per share guaranteed make-whole value guaranteed by Charys under the
      Stock Purchase Agreement. The shares received by the sellers of the Cotton
      Companies carry piggyback registration rights. Charys incurred total acquisition
      costs of $6.8 million, consisting substantially of Charys common shares issued
      to consultants. The remaining 60% interest in each of the Cotton Companies
      was
      to be purchased by Charys by March 8, 2007 for $32.7 million in
      cash.





Charys
      accounted for its 40% investment in the Cotton Companies under the equity method
      of accounting. Total consideration and costs incurred for this acquisition
      was
      $45.8 million. Charys 40% interest in the carrying value of Cotton’s net assets
      was $3.3 million, resulting in an excess of purchase price over net assets
      of
      $42.5 million. Charys did not attribute any excess purchase price to underlying
      equity in the net assets, as it believed the carrying value of the net assets
      to
      represent fair value. Accordingly, the $42.6 million excess purchase price
      was recorded to goodwill in its entirety.





Effective
      March 1, 2007, Charys acquired the remaining 60% interest in Cotton for $22.8
      million in cash, and in satisfaction of the Cotton Seller Note, paid $5 million
      in cash and reissued a new secured promissory note (“Revised Cotton Seller Note)
      in the amount of $5.2 million secured by 400,000 shares of Charys common stock
      due March 8, 2007.





The
      acquisition of 100% interest of the Cotton Companies resulted in a total
      purchase price of $85.5 million. Net assets of $9.5 million were acquired,
      resulting in an excess of purchase price over net assets acquired of $76
      million, all of which was recorded to goodwill. As of April 30, 2007, management
      has not assessed the excess purchase price for potential amortizable intangible
      assets and to determine a value for such assets that may be identified, and
      intends to make this assessment in fiscal year 2008.





F-21
 ***Table
            of Contents***





On
      June
      25, 2007, Charys and sellers of the Cotton Companies executed a Second Renewal,
      Extension and Modification Agreement whereby the parties agreed  that,
      as of June 25, 2007, the total outstanding balance on the note payable by
      Charys, including accrued interest, was $5.5 million which will be
      payable  in 36 equal monthly installments of $175,943 each, beginning
      on September 1, 2007 and continuing on the first day of each month thereafter
      until August 1, 2010, when the entire amount shall be due and payable in
      full.  Shares of Charys common stock previously received by the payees
      under the Revised Cotton Seller Note shall continue to be held as additional
      collateral. The Revised Cotton Seller Note is secured by a Guaranty Agreement
      and a Security Agreement. The Revised Cotton Seller Note further provides that
      upon the collection by subsidiaries in Charys’ Disaster and Remediation Group of
      revenues in the amount of $20 million during the period beginning on June 25,
      2007, $2 million from such collections shall be paid towards amount due on
      the
      Revised Cotton Seller Note and thereafter, upon the collection by subsidiaries
      in Charys’ Disaster and Remediation Group of the next $10 million, $1 million
      from such collections shall be paid towards the amount due on the Revised Cotton
      Seller Note .





*Summary
      of Assets Acquired/Liabilities Assumed*


The
      following summary presents the estimated fair values of the assets acquired
      and
      liabilities assumed of the acquired companies as of the effective date of
      acquisitions. The total purchase price for each fiscal year 2006 acquisition
      reflects the effects of all post-closing adjustments as of April 30,
      2007.








Fiscal
                Year 2007 AcquisitionsCrochet
                & Borel
              Services,
                Inc.
            
            
            Digital
                Communication
              Services,
                Inc.
            
            
            Complete
                Tower
              Sources,
                Inc.
            
            
            Mitchell
                Site
              Acq.
                Inc
            
            
            Cotton
              CompaniesCurrent
                assets
            
            $
            153,204,698
            
            
            $
            1,445,833
            
            
            $
            15,507,333
            
            
            $
            5,564,377
            
            
            $
            12,157,184Property
                and equipment
            
            
            2,290,833
            
            
            
            108,784
            
            
            
            2,424,065
            
            
            
            111,543
            
            
            
            3,716,880Other
                non-current assets
            
            
            61,286
            
            
            
            -
            
            
            
            175
            
            
            
            -
            
            
            
            -Total
                assets acquired
            
            
            155,556,817
            
            
            
            1,554,617
            
            
            
            17,931,573
            
            
            
            5,675,920
            
            
            
            15,874,064Current
                liabilities (other than debt obligations)
            
            
            84,889,189
            
            
            
            1,953,957
            
            
            
            2,247,437
            
            
            
            156,697
            
            
            
            4,510,170Debt
                obligations – current portion
            
            
            31,580,107
            
            
            
            13,030
            
            
            
            -
            
            
            
            25,164
            
            
            
            617,319Debt
                obligations - non-current portion
            
            
            379,494
            
            
            
            -
            
            
            
            385,221
            
            
            
            57,700
            
            
            
            1,238,549Total
                liabilities assumed
            
            
            116,848,790
            
            
            
            1,966,986
            
            
            
            2,632,657
            
            
            
            239,561
            
            
            
            6,366,038Net
                assets acquired (liabilities assumed)
            
            $
            38,708,027
            
            
            $
            (412,369
            )
            
            $
            15,298,916
            
            
            $
            5,436,359
            
            
            $
            9,508,026Total
                purchase price
            
            
            201,591,155
            
            
            
            950,300
            
            
            
            76,087,995
            
            
            
            31,398,620
            
            
            
            85,544,117Excess
                of purchase price over net assets acquired (liabilities
                assumed)
            
            
            162,883,128
            
            
            
            1,362,669
            
            
            
            60,789,079
            
            
            
            25,962,261
            
            
            
            76,036,091Less:  excess
                purchase price allocated to amortizable intangible assets
            
            
            4,010,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Goodwill
            
            $
            158,873,128
            
            
            $
            1,362,669
            
            
            $
            60,789,079
            
            
            $
            25,962,261
            
            
            $
            76,036,091





Fiscal
                Year 2006 Acquisitions with Post-Closing AdjustmentsMethod,
                IQ
            
            
            Viasys
            
            
            Aeon
            
            
            LFC,
                Inc.Current
                assets
            
            $
            2,554,790
            
            
            $
            7,096,418
            
            
            $
            897,794
            
            
            $
            1,544,295Property
                and equipment
            
            
            615,460
            
            
            
            5,999,792
            
            
            
            191,034
            
            
            
            4,028,213Other
                non-current assets
            
            
            32,732
            
            
            
            102,684
            
            
            
            -
            
            
            
            7,130Total
                assets acquired
            
            
            3,202,982
            
            
            
            13,198,894
            
            
            
            1,088,828
            
            
            
            5,579,638Current
                liabilities (other than debt obligations)
            
            
            3,262,261
            
            
            
            9,470,353
            
            
            
            238,431
            
            
            
            935,446Debt
                obligations - current portion
            
            
            978,484
            
            
            
            4,361,330
            
            
            
            121,177
            
            
            
            211,048Debt
                obligations - non-current portion
            
            
            147,062
            
            
            
            1,012,893
            
            
            
            135,917
            
            
            
            1,010,811Total
                liabilities assumed
            
            
            4,387,807
            
            
            
            14,844,576
            
            
            
            495,525
            
            
            
            2,157,305Net
                assets acquired (liabilities assumed)
            
            $
            (1,184,825
            )
            
            $
            (1,645,682
            )
            
            $
            593,303
            
            
            $
            3,422,333Total
                purchase price
            
            
            9,081,615
            
            
            
            20,566,687
            
            
            
            2,131,488
            
            
            
            10,984,780Excess
                of purchase price over net assets acquired (liabilities
                assumed)
            
            
            10,266,440
            
            
            
            22,212,369
            
            
            
            1,538,185
            
            
            
            7,533,557Less:  excess
                purchase price allocated to amortizable intangible assets
            
            
            4,740,000
            
            
            
            2,090,000
            
            
            
            -
            
            
            
            3,973,987Goodwill
            
            $
            5,526,440
            
            
            $
            20,122,369
            
            
            $
            1,538,185
            
            
            $
            3,559,570




F-22
 ***Table
            of Contents***





*Pro
      Forma Information*


Unaudited
      pro forma information for the Company is presented below as if all acquisitions
      had taken place as of May 1st for each
      of the
      fiscal years presented.  This pro forma information does not purport
      to be indicative of the results of operations which would have resulted had
      the
      acquisitions been consummated at the dates assumed. Amounts are stated in
      thousands, except for the per share data.





Years
                Ended April 30,2007
            
            
            2006(Unaudited)
            
            
            (Unaudited)Revenues
            
            $
            146,041
            
            
            $
            174,950Net
                loss
            
            $
            (302,514
            )
            
            $
            (17,463
            )Basic
                and diluted per share loss
            
            $
            (4.54
            )
            
            $
            (1.09
            )





*Tower
      Asset Purchase*


In
      addition to the business acquisitions described above, Ayin Holding Company
      Inc,
      a wholly-owned subsidiary of the Company entered into a Tower Asset Purchase
      Agreement and a Tower Asset Exclusive Option Agreement on June 20, 2006 to
      purchase 53 cell towers and related tower assets from The Tower Company of
      Louisiana, LLC for an aggregate purchase price of $17.2 million in cash,
      reflecting a price of $325,000 per cell tower.  On July 11, 2006, the
      parties agreed to effect a partial closing on 19 of the 53 cell towers to be
      purchased under an agreement under the same terms and conditions of the Tower
      Asset Purchase Agreement.  The aggregate purchase price for the 19
      towers was $6.1 million, all of which was recorded to the cost of the towers,
      as
      the Company believes the price paid reflects the fair value of the towers
      purchased.





**8.
      Goodwill and****other****Intangible
      Assets**





Goodwill
      represents the excess purchase price over the fair value of the net tangible
      and
      other intangible assets acquired.  In accordance with SFAS 142, the
      Goodwill and indefinite-lived balances are not amortized, but instead are
      subject to an annual assessment of impairment by applying a fair-value based
      test.  Other intangible assets are amortized over their useful lives,
      as applicable.  The changes in the carrying value of goodwill are as
      follows





Balance,
                April 30, 2005
            
            $
            3,974,834Acquisitions:Goodwill
                acquired through Viasys acquisition
            
            
            10,942,617Goodwill
                acquired through CCI acquisition
            
            
            91,791Goodwill
                acquired through Method IQ acquisition
            
            
            2,088,823Goodwill
                acquired through LFC merger
            
            
            1,942,913Goodwill
                acquired through AEON acquisition
            
            
            1,020,939April
                30, 2006 Balance,
            
            $
            20,061,917Acquisitions:Goodwill
                acquired through Method IQ acquisition
            
            
            3,437,617Goodwill
                acquired through Viasys acquisition
            
            
            9,179,749Goodwill
                acquired through Aeon acquisition
            
            
            517,249Goodwill
                acquired through CCI acquisition
            
            
            90,900Goodwill
                acquired through LFC merger
            
            
            1,616,657Goodwill
                acquired through Crochet & Borel acquisition
            
            
            158,873,128Goodwill
                Crochet & Borel: post-closing adjustments
            
            
            7,400,618Goodwill
                acquired through DCS acquisition
            
            
            1,362,669Goodwill
                acquired through CTSI acquisition
            
            
            60,789,079Goodwill
                acquired through MSAI acquisition
            
            
            25,962,271Goodwill
                acquired through CTN acquisition
            
            
            76,036,081Adjustments:Goodwill
                impairment through Method IQ
            
            
            (5,526,439
            )Goodwill
                impairment through Viasys
            
            
            (20,122,369
            )Goodwill
                impairment through Aeon
            
            
            (1,538,186
            )Goodwill
                impairment through CCI
            
            
            (4,157,525
            )Goodwill
                impairment through LFC
            
            
            (3,559,570
            )Goodwill
                impairment through Crochet & Borel
            
            
            (158,873,128
            )Goodwill
                impairment through Crochet & Borel: post-closing
                adjustments
            
            
            (7,400,618
            )Goodwill
                impairment through DCS
            
            
            (1,362,669
            )April
                30, 2007 Balance,
            
            $
            162,787,431




F-23
 ***Table
            of Contents***





Amortizable
      intangible assets are summarized as follows:





Year
                Ended April 30, 2006Useful
                lives
            
            Gross
                Carrying Value
            
            
            Accumulated
                AmortizationDEFINITE
                LIFE INTANGIBLE ASSETSCustomer
                relationships
            6
                to 22 years
            
            $
            7,137,000
            
            
            $
            364,741Contract
                backlog
            1
                year
            
            
            172,000
            
            
            
            172,000TOTAL
                DEFINITE LIFE INTANGIBLE ASSETS
            
            
            $
            7,309,000
            
            
            $
            536,741Year
                Ended April 30, 2007Useful
                lives
            
            Gross
                Carrying Value
            
            
            Accumulated
                AmortizationDEFINITE
                LIFE INTANGIBLE ASSETSCustomer
                relationships
            1 to
                22 years
            
            $
            11,368,542
            
            
            $
            2,656,957Contract
                backlog
            1
                year
            
            
            3,250,020
            
            
            
            3,250,000Trade
                name
            Infinite
                life
            
            $
            19,000
            
            
            $
            -TOTAL
                DEFINITE LIFE INTANGIBLE ASSETS
            
            
            $
            14,637,562
            
            
            $
            5,906,957





In
      the
      second quarter of fiscal year 2007, Fair Value Advisors, an outside valuation
      firm, performed a FASB 142 valuation to determine whether or not an adjustment
      to the carrying value for the intangible assets for Viasys Services was
      warranted. The outcome of the valuation resulted in a write-down of goodwill
      and
      a further adjustment to amortizable intangible assets in connection with the
      loss of the M&M Mars contract. Consequently, the remaining carrying value of
      $1,604,762 was directly related to the customer relationship with Cooper Tire.
      Since that time, Viasys experienced a loss of the entire maintenance portion
      of
      this contract, but retained the entire construction portion of the relationship.
      The percentage of relationship and corresponding revenues associated with the
      maintenance agreement is approximately 70% of the total. Consequently, an
      impairment charge of $1,203,572 was recorded at April 30, 2007 to more closely
      represent the carrying value associated with the Cooper Tire customer
      relationship.





F-24
 ***Table
            of Contents***





Aggregate
      amortization of intangible assets was $5,370,216 and $493,740, for the years
      ended April 30, 2007 and 2006, respectively. Estimated amortization expense
      is
      as follows:





Years
                ending April 30,2008
            
            $
            1,737,1962009
            
            
            814,4592010
            
            
            767,9122011
            
            
            767,9122012
            
            
            767,912Thereafter
            
            
            3,875,214$
            8,730,605





**9.  Debt**





*Short-Term
      Borrowings.*


Borrowings
      due on demand or with stated maturities of less than one year are as follows
      at
      April 30, 2007 and 2006:





2007
            
            
            2006Unrelated
                parties:Libor
                plus 6%, Asset backed Notes, due on demand
            
            $
            -
            
            
            $
            2,105,8408%
                Note, due through February 2007, secured by Charys Stock
            
            
            -
            
            
            
            3,469,9528%
                - 20% Individual Investor Notes, due through February 2007, secured
                by
                real property
            
            
            -
            
            
            
            1,426,24112%
                Convertible Debenture, due December 2006, secured by Charys
                Stock
            
            
            -
            
            
            
            1,000,00012%
                Mortgage Loan, due March 2007, secured by real property
            
            
            -
            
            
            
            800,00012%
                Bank Note, due August 2006, unsecured
            
            
            -
            
            
            
            300,000Convertible
                notes, interest rates of 4% to 10%, maturing through May
                2008
            
            
            19,982,137
            
            
            
            -Lines
                of credit, interest rates of Prime Rate + 5.5% to 6%, Libor Rate
                + 3%, or
                fixed rates of 6.83% to 8.25%, expiring between June 2007 and April
                2008
            
            
            3,713,704
            
            
            
            1,920,511Notes
                payable, interest rate of 9.5%, maturing through May 2007
            
            
            1,115,213
            
            
            
            -Total
                short-term borrowings - unrelated parties
            
            
            24,811,054
            
            
            
            11,022,544Less
                unamortized discount
            
            
            5,570,075
            
            
            
            -Net
                carrying value of short-term borrowing – unrelated parties
            
            $
            19,240,979
            
            
            $
            11,022,544Related
                parties:5%
                Notes, due through September 2006, secured by MIQ Stock
            
            $
            -
            
            
            $
            5,000,0005%
                Notes, due through September 2006
            
            
            -
            
            
            
            2,148,850Acquisition
                promissory notes, interest rates of 9% to 10%, maturing through May
                2007
            
            
            5,624,932
            
            
            
            -Notes
                payable, interest rates of 6% to 8%, maturing through April
                2007
            
            
            192,966
            
            
            
            147,321Total
                short-term borrowings - related parties
            
            $
            5,817,898
            
            
            $
            7,296,171








The
      convertible debenture is convertible into shares of common stock at the option
      of the holder.





F-25
 ***Table
            of Contents***





The
      related party notes of $5,000,000 is due to Rock Creek Equity Holdings, LLC
      and
      the $2,148,850 is due to L.Ford Clark, Melysa and J. Clark and resulted due
      to
      the acquisition of MIQ and the merger with LFC, Inc
      respectively.  Refer to the acquisitions footnote for further
      information regarding the transactions.





*Long-Term
      Debt.*


Borrowings
      with stated maturities of greater than one year are as follows at April 30,
      2007
      and 2006:





2007
            
            
            2006Unrelated
                parties:8%
                Convertible Debenture due November 2008, secured by contract rights
                and
                assets
            
            $
            -
            
            
            $
            3,400,000Construction
                Notes, interest rate based on prime plus 0.50% - 2%, due throughApril
                2012, secured by equipment
            
            
            -
            
            
            
            1,221,859Convertible
                notes, interest rates of 8% to 8.75%, maturing from December 2009through
                February 2012
            
            
            202,383,530
            
            
            
            -Lines
                of credit, interest rates of Prime Rate + 2.75% and Libor Rate +
                4.85%,
                expiring from June 2008 to November 2008
            
            
            9,652,362
            
            
            
            -Promissory
                notes, interest rates of 6% to 15%, maturing from May 2007 through
                May
                2012
            
            
            2,963,132
            
            
            
            -Truck
                and vehicle loans, interest rates of 1.9% to 10.85%, due through
                July
                2012
            
            
            2,485,918
            
            
            
            -Capital
                leases on various equipment, interest rates of 1.94% to 36.04%, due
                July
                2011through
            
            
            1,371,745
            
            
            
            2,336,483Total
                long-term debt - unrelated parties
            
            
            218,856,687
            
            
            
            6,958,342Current
                portion – unrelated parties
            
            
            206,614,934
            
            
            
            1,287,823Less
                unamortized discount
            
            
            101,062,503
            
            
            
            -Net
                carrying value of current portion of long-term debt - unrelated
                parties
            
            
            105,552,431
            
            
            
            1,287,823Non-current
                portion – unrelated parties
            
            $
            12,241,753
            
            
            $
            5,670,519Related
                parties:6%
                - 8% Notes, due through April 2009
            
            $
            -
            
            
            $
            822,677Acquisition
                promissory notes, interest rates of 4.74% to 9%, maturing from October
                2008 through April 2009
            
            
            57,592,310
            
            
            
            -Acquisition
                promissory notes, interest rate of 8.75%, maturing February
                2012
            
            
            8,000,000
            
            
            
            -Total
                long-term debt – related parties
            
            
            65,592,310
            
            
            
            822,677Current
                portion – related parties
            
            
            5,315,284
            
            
            
            507,392Non-current
                portion - related parties
            
            $
            60,277,026
            
            
            $
            315,285








Aggregate
      maturities required on all long-term debt at April 30, 2007 are as
      follows:





Years
                ending April 30,2008
            
            $
            242,559,1702009
            
            
            63,225,1822010
            
            
            994,2882011
            
            
            280,8702012
            
            
            8,018,439Thereafter
            
            
            -315,077,949Less
                unamortized debt discount
            
            
            106,632,578Net
                carrying value of debt at 4/30/2007
            
            $
            208,445,371




F-26
 ***Table
            of Contents***




During
      the year ended April 30, 2007, a total of $252.8 million in debt was issued
      by
      the Company with detachable warrants for the purchase of up to 191,354,225
      shares of common stock at a prices ranging from $2.25 to $5.00 per share and
      expiring at various dates during 2008 through 2012. On the commitment dates,
      the
      Company allocated the proceeds between the debt issuances and the related
      warrants as required by APB 14, “Accounting for Convertible Debt and Debt Issued
      with Stock Purchase Warrants”. As a result, the Company recorded a debt discount
      arising from the fair value allocation to the warrants in the total amount
      of
      $140 million, which is amortized as interest expense over the terms of the
      loans
      using the interest method. Of this debt, $39.6 million of principal pay-offs
      were made as a result of a major financing obtained in February 2007. At that
      time, the Company charged the unamortized discount associated with these
      principal pay-offs to interest expense.





Issuance
      costs allocated to the debt, in the amount of $15.3 million were recorded as
      financing costs and are amortized to interest expense over the life of the
      related loans.





The
      convertible debenture is convertible at the option of the holder until payment
      in full of the principal and accrued interest, all or any part of the principal
      amount of the debenture, accrued and unpaid interest, into common shares of
      the
      company.





The
      Company’s Senior Convertible Notes contain a conversion option and other
      features that may be considered embedded derivatives.  If these
      features were determined to be derivative instruments, they would be considered
      separately from the debt and accounted for separately.  The Company is
      evaluating the transaction to determine if these features are embedded
      derivatives, if they have significant value, and their resulting impact on
      the
      Company’s financial position, results of operations and cash flows.





The
      related party notes are with various officers or related parties of officers
      of
      the company or its subsidiaries that arose due to the acquisitions.




Also
      included in interest expense is the amortization of financing
      costs.




The
      company has pledged substantially all of its assets as collateral for
      outstanding financing transaction balances.




See
      Note
      20  for disclosure of defaults on financing, including technical defaults
      and past due payments.





*Private
      Offering of Securities*





On
      February 16, 2007, we completed a $175 million private offering of securities
      to
      qualified institutional buyers pursuant to Rule 144A under the Securities Act
      of
      1933.  On March 6, 2007, the buyer exercised its option to purchase an
      additional $26.25 million of the securities. The securities were sold by McMahan
      Securities Co., L.P. (collectively, sometime hereafter referred to as the
“McMahan Securities”) to qualified institutional buyers in separable Units, each
      consisting of $1,000 principal amount of our 8.75% Senior Convertible Notes
      due
      February 16, 2012, and our warrants to purchase 333.333 shares of our common
      stock at $4 per share and our warrants to purchase 333.333 shares of our common
      stock at $5 per share, in each case, subject to adjustment under certain
      circumstances.  The warrants expire on February 16,
      2012.  The notes are initially convertible into 444.444 shares of our
      common stock per $1,000 principal amount ($2.25 per share), and are
      provisionally redeemable by Charys after two years if our common stock reaches
      certain specified stock prices.  As the Company allocated the proceeds
      between the debt issuances and the related warrants as required by APB 14,
      “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”,
      the imputed interest rate calculated on the resulting discount of
      the notes was 14.6% which combined with the stated rate results in an
      effective interest rate of the 23.4% on this debt. A cash reserve covering
      the
      first two quarters of interest due under the notes was set aside out of the
      net
      proceeds of the offering.  On April 30, 2007, we filed a registration
      statement covering the resale of the notes, the warrants and the underlying
      common shares.  The notes and warrants trade on the PORTAL Market, or
      directly between qualified buyers and are guaranteed by each of our material
      subsidiaries.  We used the aggregate net proceeds of the offering of
      approximately $189.9 million toward certain of the payments due under the
      purchase agreements for Cotton Holdings 1, Inc., Cotton Commercial USA, L.P.,
      Cotton Restoration of Central Texas, LP, Complete Tower Sources Inc., Mitchell
      Site Acq, Inc. and Crochet & Borel Services, Inc., to refinance and/or pay
      off other indebtedness and for working capital and other general corporate
      purposes.





*Gottbetter
      Capital Subordinated Convertible Debt*





On
      August
      31, 2006, we closed a $20,000,000 financing, which was followed approximately
      two months later by a $1,000,000 tag-along financing, in the form of
      subordinated convertible notes.  The aggregate principal amount of
      these notes issued was $21,052,637, reflecting a 5% original issuance
      discount.  These notes were issued by us to a group of investors led
      by Gottbetter Capital Master, Ltd. and carried a 10% coupon rate and a 24-month
      term.  These notes were convertible into our common stock at a
      conversion price of $2.25 per share, which resulted in approximately 9,824,561
      shares issuable upon conversion of all of the notes.  Further, in
      connection with our Vision financing, described below, we entered into a side
      letter agreement with the Gottbetter investors dated November 8, 2006, pursuant
      to which the investors waived certain preemptive rights and consented to the
      Vision financing, and pursuant to which we issued warrants to the Gottbetter
      investors to acquire approximately 11,030,614 shares of our common stock with
      an
      exercise price of $2.25 per share.  We also granted registration
      rights with respect to the conversion shares and warrant shares that may be
      received by the Gottbetter investors upon conversion of their notes or exercise
      of their warrants. As the Company allocated the proceeds between the debt
      issuances and the related warrants as required by APB 14, “Accounting for
      Convertible Debt and Debt Issued with Stock Purchase Warrants”, the imputed
      interest rate calculated on the resulting discount of the notes was 59.8%,
      which
      combined with the stated rate results in an effective interest rate of the
      69.8%
      on the debt.





F-27
 ***Table
            of Contents***





The
      Gottbetter investors received a senior security interest, which was subordinate
      only to existing security interests granted to banks and our other senior debt
      lenders, in substantially all of our assets and the assets of our
      subsidiaries.  We were required to make interest payments for the
      first nine months due on the Gottbetter notes, after which payments of principal
      and interest were scheduled to begin.





Beginning
      on February 22, 2007, and using proceeds from the sale of the McMahan Securities
      described elsewhere in this Annual Report, we redeemed all of the Gottbetter
      notes with the exception of certain of these notes in the aggregate principal
      amount of approximately $4.5 million.  However, pursuant to an
      Amendment Agreement dated as of April 5, 2007, between Charys and various
      investors, the investors purchased the remaining Gottbetter notes for then
      current balance in the amount of $4,719,200, and in the process extended their
      maturity date and made certain other modifications to the notes.  We
      have not made any of the payments due on the amended notes.  However,
      as of the date of this Annual Report, none of the holders of the amended notes
      has indicated an intention to institute any action against Charys.





In
      addition, Charys and the investors amended and restated the Registration Rights
      Agreement dated August 30, 2006 in order to, among other things, extend the
      filing and effectiveness deadlines for the registration of the Conversion Shares
      and the shares of our common stock into which the Warrants (as defined in the
      Securities Purchase Agreement dated August 30, 2006) are
      exercisable.





*Vision
      Financing*





In
      order
      to finance the acquisition of the initial 40% interest in each of Cotton
      Holdings 1, Inc., Cotton Commercial USA, L.P. and Cotton Restoration of Central
      Texas, LP, as of December 4, 2006, we entered into a note and warrant purchase
      agreement with various purchasers led by Vision Opportunity Master Fund, Ltd.
      and issued notes for $14.5 million.  The subordinated convertible
      promissory notes sold in this financing bear interest at a rate of 8% per annum
      and are convertible into shares of our common stock based on an initial
      conversion price of $2.25 per share. As the Company allocated the proceeds
      between the debt issuances and the related warrants as required by APB 14,
      “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”,
      the imputed interest rate calculated on the resulting discount of the
      notes was 54.2% which combined with the stated rate results in an effective
      interest rate of the 62.2% on the debt. For no additional consideration, each
      of
      the purchasers was also issued:





·
            Series
                A Warrants expiring on December 4, 2011 to purchase at an exercise
                price
                of $4.00 per share the number of shares of our common stock equal
                to 75%
                of the number of conversion shares (as defined in the Vision note
                and
                warrant purchase agreement) issuable upon conversion of the notes
                purchased by each purchaser;





·
            Series
                B Warrants expiring on December 4, 2011 to purchase at an exercise
                price
                of $5.00 per share the number of shares of our common stock equal
                to 75%
                of the number of conversion shares issuable upon conversion of the
                notes
                purchased by each purchaser;





·
            Series
                J Warrants expiring on September 7, 2007 to purchase at an exercise
                price
                of $3.25 per share the number of shares of our common stock equal
                to 100%
                of the number of conversion shares issuable upon conversion of the
                notes
                purchased by each purchaser;





F-28
 ***Table
            of Contents***





·
            Series
                C Warrants expiring on December 4, 2011 to purchase at an exercise
                price
                of $4.00 per share the number of shares of our common stock equal
                to 75%
                of the number of conversion shares issuable upon conversion of the
                notes
                purchased by each purchaser; and





·
            Series
                D Warrants expiring on December 4, 2011 to purchase at an exercise
                price
                of $5.00 per share the number of shares of our common stock equal
                to 75%
                of the number of conversion shares issuable upon conversion of the
                notes
                purchased by each purchaser.





However,
      each of the purchasers was only issued Series J Warrants, Series C Warrants
      and
      Series D Warrants, if such purchaser’s aggregate investment in Charys was equal
      to or greater than $10,000,000 (including only such purchaser’s investment in
      the Vision financing plus such purchaser’s investment in the Gottbetter
      financing described below).  Further, a holder of Series C Warrants
      and Series D Warrants may not exercise such warrants unless such purchaser
      has
      first exercised its Series J Warrants.  A holder’s Series C Warrants
      and Series D Warrants will become exercisable as to a number of shares of our
      common stock equal to 75 percent of the number of shares of our common stock
      acquired by that holder through the exercise of its Series J
      Warrants.





Prior
      to
      February 28, 2007, the outstanding balance under the Vision note and warrant
      purchase agreement was approximately $14,450,000, which was due and payable
      by
      December 4, 2009.  On February 28, 2007 and March 1, 2007, Charys
      prepaid a total of $13,500,000 of the outstanding balance due Vision Opportunity
      Master Fund, Fort Mason Master, LP and Fort Mason Partners LP, using proceeds
      from the private offering of the McMahan Securities described in this Annual
      Report.  Upon the occurrence of such prepayments the following changes
      were made to the warrants held by Vision Opportunity Master Fund and the Fort
      Mason entities:





·
            Their
                Series B Warrants were cancelled;





·
            Their
                Series A Warrants were amended to reduce the exercise price of such
                warrants to $2.50 per share; and





·
            Their
                Series J Warrants were amended to reduce the exercise price of such
                warrants to $2.40 per share.





The
      following changes were also made to the warrants held by Opal Limited, which
      only held Series A Warrants and Series B Warrants and did not receive Series
      J
      Warrants, Series C Warrants or Series D Warrants:





·
            Its
                Series B Warrants were cancelled;
                and





·
            Its
                Series A Warrants were amended to reduce the exercise price of such
                warrants to $2.50 per share.





None
      of
      the other warrants issued pursuant to the Vision note and warrant purchase
      agreement were affected in connection with this prepayment to Vision Opportunity
      Master Fund and the Fort Mason entities.  Any shares issuable upon
      exercise of the warrants have registration rights.





Of
      the
      $13,500,000 prepaid by Charys on February 28, 2007 and March 1, 2007, Vision
      Opportunity Master Fund received $10,000,000 and the two other investor entities
      together received $3,500,000.  Vision Opportunity Master Fund and the
      other investor entities no longer hold any of the promissory notes issued
      pursuant to the Vision note and warrant purchase agreement.  Each of
      the foregoing entities used the amounts prepaid to them to acquire units sold
      in
      the private offering of the McMahan Securities described in this Annual
      Report.





The
      remaining two investors in this financing each hold our Subordinated Convertible
      Promissory Note in the amount of $450,000 due December 7, 2009 which provides
      for quarterly interest payments to commence on March 1, 2007 which have not
      been
      paid.  In June, 2007, we settled the payment due on one of the notes
      by issuing 293,381 shares of our common stock to the holder.




*HarPos
          Bridge Financing*
 On
          January 24, 2007, we closed on a bridge loan for $800,000 with HarPos Funding,
          LLC ("HarPos Financing") pursuant to which the principal and accrued interest
          of
          $184,200 were due on the earlier of April 8, 2007 or upon Charys obtaining
          permanent financing. In connection with this note, we issued warrants for
          250,000 common shares at a purchase price of $2.25 per share, expiring
          January
          8, 2011. In addition, we executed consulting agreements with Mel Harris
          and
          Steven Posner, members of HarPos Funding LLC, for which they each received
          100,000 restricted common shares. The HarPos Financing was refinanced on
          May 3,
          2007 pursuant to which the note shall be due and payable in 18 equal monthly
          installments of $61,399.11 (or more) each, including interest, the first
          of such
          installments shall be due and payable on June 3, 2007, and a like installment
          shall be due and payable on the same day of each succeeding month thereafter
          until fully paid. Interest accrues at the rate of 15% per annum. The refinanced
          note was personally guaranteed by our chief executive officer, Billy V.
          Ray, Jr.
          and Troy Crochet, the president of Crochet & Borel, Inc. We have not made
          the August 3, 2007, the September 3, 2007, or the October 3, 2007 payment
          due on
          the note. However, as of the date of this Annual Report, HarPos has not
          indicated an intention to institute any action against Charys. As the Company
          allocated the proceeds between the debt issuances and the related warrants
          as
          required by APB 14, "Accounting for Convertible Debt and Debt Issued with
          Stock
          Purchase Warrants", the imputed interest rate calculated on the resulting
          discount of the note was 6.2%, which combined with the stated rate results
          in an
          effective interest rate of 21.2% on this debt.
 *Posner,
          Posner and Harris Notes*
 On
        May 3,
        2007, we issued separate notes to three individuals in the collective amount
        of
        $1.1 million on substantially identical terms to settle amounts due pursuant
        to
        loan agreements dated May 1, 2006. These notes are due and payable in 18
        equal
        monthly installments totaling $62,728 (or more), including interest, the
        first
        of such installments shall be due and payable on June 3, 2007, and a like
        installment shall be due and payable on the same day of each succeeding month
        thereafter until fully paid. Interest accrues at the rate of 15% per annum.
        The
        amended notes were personally guaranteed by our chief executive officer,
        Billy
        V. Ray, Jr. and Troy Crochet, the president of Crochet *&,*Borel,
        Inc. We have not made the August 3, 2007, the September 3, 2007, or the October
        3, 2007 payment due on these notes. However, as of the date of this Annual
        Report, the note holders have not indicated an intention to institute any
        action
        against Charys. As the Company allocated the proceeds between the debt issuances
        and the related warrants as required by APB 14, "Accounting for Convertible
        Debt
        and Debt Issued with Stock Purchase Warrants", the imputed interest rate
        calculated on the resulting discount of the notes was 26.8%, which combined
        with
        the stated rate results in an effective interest rate of 41.8% on this
        debt


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*Series
      D Preferred Stock Financing*





On
      May
      19, 2006, we executed a securities purchase agreement with various investors
      whereby the investors purchased 1,300 shares of our newly created Series D
      Preferred Stock, having an aggregate stated value of $13,000,000, for a total
      consideration of $12,200,000, reflecting an issuance discount in the aggregate
      amount of $800,000.  The shares of Series D Preferred Stock were
      convertible into an aggregate of 5,777,778 shares of our common stock at a
      conversion price of $2.25 per share.





In
      addition, the investors were issued warrants to purchase 4,333,332 shares of
      our
      common stock.  Each warrant has an expiration date of five years from
      the date of issue and was initially exercisable at a price of $6.24, subject
      to
      adjustments.  However, pursuant to the forbearance letter discussed
      below, the number of shares issuable upon exercise of the warrants was increased
      to 12,017,774, and the exercise price was reduced to $2.25 per share, subject
      to
      adjustment. As the Company allocated the proceeds between the debt issuances
      and
      the related warrants as required by APB 14, “Accounting for Convertible Debt and
      Debt Issued with Stock Purchase Warrants”, the imputed interest rate calculated
      on the resulting discount of the notes was 66.8%, which combined with the 0%
      stated rate results in an effective interest rate of 66.8%.





The
      Series D Preferred Stock accrued special payments representing amortization
      of
      principal at the rate of $416.67 per month per share, beginning on November
      6,
      2006, the first of which was due on December 1, 2006.  Pursuant to the
      forbearance letter discussed below, the date for the initial payment was
      extended until January 5, 2007.  However, no special payments were
      made.  Shares of Series D Preferred Stock also accrued a quarterly
      cash dividend on their stated value of $10,000 per share at a rate of 8% per
      annum.





The
      holders of Series D Preferred Stock were granted registration rights with
      respect to the shares of common stock underlying the preferred stock and
      warrants, which required us to file a registration statement under the
      Securities Act of 1933 within 90 days of May 19, 2006, and to have it declared
      effective within 90 days thereafter.  We defaulted on our obligation
      to file a registration statement and, on November 8, 2006, delivered a
      forbearance letter to the holders of the Series D Preferred Stock, which sets
      forth the terms of a mutual understanding that was reached between us and the
      holders of the Series D Preferred Stock.





Pursuant
      to the terms of the forbearance letter, the holders of the Series D Preferred
      Stock agreed to forbear from exercising their rights and remedies with respect
      to our failure to file timely and have declared effective a registration
      statement.  Specifically, the holders of the Series D Preferred Stock
      agreed to refrain from declaring an event of default, triggering event,
      redemption, other default or acceleration, or otherwise demand payment of any
      liquidated damages payable under our certificate of designation for the Series
      D
      Preferred Stock and the related registration rights agreement, securities
      purchase agreement, warrants and other documents dated May 19, 2006 and entered
      into in connection with the Series D Preferred Stock financing until January
      5,
      2007.





We
      used
      $5,236,543 of the net proceeds of sale of our securities in connection with
      the
      Unit Purchase Agreement with McMahan Securities Co. L.P. described elsewhere
      in
      this Annual Report to purchase and retire 400 shares of our Series D Preferred
      Stock valued at $4,000,000, plus $1,236,543 in accrued interest and redemption
      premiums.





Pursuant
      to a Securities Exchange Agreement dated as of April 30, 2007, we issued to
      three investors our subordinated unsecured convertible notes in an aggregate
      amount of $15,037,278, which amount represented the then value of our Series
      D
      Preferred Stock, including accrued interest and redemption premiums, in exchange
      for the remaining 900 shares of our Series D Preferred Stock.  Each
      holder of such convertible notes is entitled to convert any portion of its
      outstanding and unpaid note into fully paid and nonassessable shares of our
      common stock.  The number of shares to be issued shall be determined
      by dividing the amount of the note to be converted by $2.25, subject to
      adjustment as provided in the note.  We were late in the payment due
      on July 13, 2007 to one investor,  have not made the August 3, 2007
      payment due on the note payable to one of the investors, and have not made
      the
      payments due September 3, 2007 or October 3, 2007 to any  investor.
      Pursuant to the terms of the notes, a default under one note is a default under
      all three notes, even if the all of the payments were timely made with respect
      to the other two notes.  However, as of the date of this Annual
      Report, none of the investors have indicated an intention to institute any
      action against the Company.





In
      addition, and without limitation of any other rights and remedies under the
      foregoing notes, upon the first occurrence of a default under the Note, without
      regard to any cure period thereunder, and upon the expiration of each additional
      30 day thereafter during which the event of default continues, in whole or
      in
      part (such late payment, the “Delinquent Payment Amount”), the Company shall
      issue a Warrant to the Holder for such number of shares of Common Stock of
      the
      Company equal to the Delinquent Payment Amount at such time divided by the
      Conversion Price.  Upon the second occurrence of an Event of Default,
      without regard to any cure period thereunder, the Company shall issue a Warrant
      to the Holder for such number of shares of Common Stock of the Company equal
      to
      the outstanding principal balance of the Note at such time divided by the
      Conversion Price.  As a result of our default, the investors have a
      right to 3,689,648 Default Warrant Shares at an exercise price of $5.00 per
      share.





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Contemporaneously
      with the execution and delivery of the Securities Exchange Agreement, Charys
      and
      the investors executed a Registration Rights Agreement, pursuant to which Charys
      agreed to provide certain registration rights with respect to the shares of
      our
      common stock issued upon conversion of the notes.





At
      the
      closing of the Securities Exchange Agreement, that certain Escrow Shares Escrow
      Agreement pursuant to which Charys issued and delivered to Gottbetter &
Partners, LLP 8,666,666 shares of our common stock as described above was
      terminated.





Those
      certain warrants issued to the original purchasers of our Series D Preferred
      Stock on May 19, 2006 remain outstanding.





*CCI
      Debt Restructuring*


As
      of the
      CCI acquisition on March 4, 2005, the credit facilities assumed by the Company
      and their status were as follows:





·
            Revolving
                line of credit with The Frost National Bank (“Frost Bank”) with a
                borrowing base at the lesser of $5 million or 80% of eligible accounts
                receivable and 50% of net costs and estimated earnings in excess
                of
                billings on uncompleted contracts. Interest on the outstanding borrowings
                was based on the prime rate plus 3% and borrowings were collateralized
                by
                all assets of CCI. At the acquisition date, CCI’s outstanding borrowings
                under the line of credit totaled $4.55 million. The line of credit
                was
                under an extension agreement dated February 1, 2005, which reduced
                the
                maximum borrowings to $4.55 million and required CCI to pay monthly
                interest-only payments at the prime rate plus 3% until August 1,
                2005, at
                which time the outstanding principal would be due in
                full.





·
            Term
                loan with Frost Bank, the outstanding principal balance of which
                was $1.71
                million at the acquisition date. The loan was under an extension
                agreement
                dated February 1, 2005, in which CCI would pay monthly interest-only
                payments at the prime rate plus 3% until September 20, 2005, at which
                time
                the outstanding principal would be due in
                full.





·
            Effective
                April 25, 2005, Charys entered into an agreement (the “Agreement”) with
                Frost Bank relating to the retirement of these credit facilities.
                Pursuant
                to the terms of the Agreement, Frost Bank unconditionally canceled
                the
                outstanding obligation due under the term loan, the balance at that
                time
                of which was $1.67 million. The terms under which Charys satisfied
                CCI's
                obligation to Frost Bank for the term loan were as
                follows:





·
            Charys
                issued Frost Bank 400,000 shares of the Company’s Series B preferred stock
                (see Note 12). Each share of the preferred stock is convertible into
                one
                share of Charys’ common stock. The shares are non-voting and are not under
                any mandatory redemption
                requirements.





·
            Frost
                Bank extended the final maturity of the existing credit line for
                a period
                of six months from February 1, 2005 until August 1, 2005 (the "Forbearance
                Period"). The line of credit was renewed at $4.55 million, which
                were the
                outstanding borrowings under the credit line at April 25,
                2005.





Upon
      execution of the Agreement on April 25, 2005, the Company recorded the
      cancellation of the outstanding balance of the Frost Bank term loan. The Company
      also recorded costs associated with the debt retirement, including a fair value
      of $160,000 for the preferred stock issued and $59,371 for accrued professional
      and consultant fees, resulting in a net gain on the term loan retirement of
      $1.45 million for the year ended April 30, 2005.





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To
      complete the restructuring of CCI’s debt, the Agreement also provided for Frost
      Bank to release of all debt security interests and liens relating to the credit
      line in consideration for it receiving the following during the Forbearance
      Period:





·
            Delivery
                to Frost Bank of a one-time cash payment of $2.5 million, reduced
                by any
                net pay-down during the Forbearance
                Period.





·
            Execution
                by Charys of a $300,000 promissory note in favor of Frost Bank at
                12%
                interest,
                maturing  13  months  after  issuance.





·
            Issuance
                by Charys of 500,000 shares Series C preferred stock to Frost Bank,
                with
                each share to be non-voting, convertible into one share of Charys’ common
                stock, and not under mandatory redemption requirements. The shares
                issued
                are restrictive as to their disposition by Frost Bank. However, Charys
                agreed to file a registration statement with the SEC to cover the
                common
                stock issuable upon the conversion of the preferred
                stock.





On
      July
      29, 2005 and prior to the expiration of the Forbearance Period, Charys, through
      its subsidiary CCI, closed on a new $5 million asset based credit facility
      with
      CAPCO Financial Company (“CAPCO”). The finance agreement provides for CAPCO to
      make cash advances to CCI based on 85% of accounts receivablesthat are 90
      days or less from invoice date. The initial term of this agreement is 12 months
      from the closing date. Interest is payable on outstanding borrowings at the
      prime rate plus 6%. CAPCO will also receive a seven-year warrant to purchase
      up
      to 862,069 shares of Charys common stock at $0.29 per share. The facility is
      secured by a first lien position on the assets of CCI. The initial draw-down
      of
      the facility was approximately $2.6 million, of which $2.5 million, combined
      with a $300,000 unsecured note and the issuance of 500,000 shares of Series
      C
      preferred stock,  was used to pay-off the existing Frost Bank line of
      credit obligation of $4.55 million under the terms of the Agreement, which
      also
      occurred on July 29, 2005.





**10.  Commitments
      and Contingencies**





Commitments
      and contingencies not otherwise disclosed in these notes to the consolidated
      financial statements are as follows:





*Operating
      Leases*


The
      Company and its subsidiaries lease office space, equipment, automobiles, and
      office equipment under long-term, non-cancelable operating leases expiring
      in
      various years through 2015. Total rent expense for all leases for the years
      ended April 30, 2007 and 2006 was $2,503,493 and $1,086,976. Future minimum
      lease payments under non-cancelable operating leases at April 30, 2007 are
      as
      follows:





Years
                ending April 30,2008
            
            $
            3,247,3612009
            
            
            2,903,3882010
            
            
            2,264,2512011
            
            
            1,956,6412012
            
            
            1,038,186Thereafter
            
            
            898,922$
            12,308,748








*Litigation
      and Claims*





*Holcomb
      and Acosta Matters.*  We are engaged in protracted litigation with
      our former president, Benjamin F. Holcomb, and our former vice president of
      business development, Edward K. Acosta, which is currently pending in the
      Superior Court of Fulton County, Georgia.  The Holcomb complaint
      described below was filed in September 2005 and the Acosta Complaint described
      below was filed in November 2005.  Messrs. Holcomb and Acosta were
      terminated by us in July 2005 and have filed a series of lawsuits seeking,
      among
      other things, damages for breach of their employment contracts and/or damages
      for alleged misstatements in our filings with the Securities and Exchange
      Commission.  In addition, Messrs. Holcomb and Acosta have sought to
      encumber shares of our preferred stock through the appointment of a receiver
      of
      such shares currently held by our chief executive officer, Billy V. Ray, Jr.,
      and/or to assert a derivative action purportedly in our name against our board
      of directors, several officers and certain third parties.  Messrs.
      Holcomb and Acosta are represented by the same legal counsel in all such
      litigation.  We believe that these matters are without merit and
      intend to defend them vigorously.  These matters are described in more
      detail below.





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Benjamin
      F. Holcomb v. Charys Holding Company, Inc., Civil Action File No. 2005CV105803,
      pending in the Superior Court of Fulton County, State of Georgia.  In
      June 2004, we entered into an employment contract with our former president,
      Benjamin F. Holcomb.  In July 2005, we terminated that employment
      contract.  On September 1, 2005, Mr. Holcomb filed suit seeking
      damages in excess of $100,000 arising out of what Mr. Holcomb claims to be
      a
      breach of his employment contract arising from our alleged failure to pay him
      compensation to which he claims he was entitled.  We believe Mr.
      Holcomb’s claims are without merit, and we intend to defend this litigation
      vigorously.  This litigation is currently in discovery.  As
      of the date of this Annual Report, no trial date has been set.





Edward
      Acosta v. Charys Holding Company, Inc., Civil Action File No. 2005CV108667,
      pending in the Superior Court of Fulton County, State of Georgia.  In
      July 2004, we entered into an employment contract with our former vice president
      of business development, Edward K. Acosta.  In July 2005, we
      terminated the employment contract.  On November 10, 2005, Mr. Acosta
      filed suit against us, Billy V. Ray, Jr., our chairman and chief executive
      officer, the law firm of Glast, Phillips & Murray, and Norman Reynolds, an
      attorney at Glast, Phillips (Mr. Reynolds and Glast, Phillips represent us
      in
      various matters) seeking damages in excess of $480,000 arising out of what
      Mr.
      Acosta claims to be a breach of his employment contract arising from our alleged
      failure to pay compensation to which he claims he was entitled and statements
      in
      our documents filed with the Securities and Exchange Commission, which Mr.
      Acosta claims to have been false and on which he allegedly relied in agreeing
      to
      become employed by us.  This litigation is currently in
      discovery.  We believe Mr. Acosta’s claims are without merit, and we
      intend to defend this litigation vigorously.  As of the date of this
      Annual Report, no trial date has been set.





*Holcomb
      and Acosta “Derivative” Claims.*  In November 2005, Messrs.
      Holcomb and Acosta sent identical letters to our chief executive officer, Mr.
      Ray, with copies to each member of our board of directors.  These
      letters purported to be stockholder demand letters requiring us to take remedial
      action with regard to five allegedly improper transactions in 2004 and
      2005:





·
            Certain
                real property was sold by us to an entity allegedly controlled by
                insiders
                resulting in an improper gain to the insiders, who include certain
                of our
                directors and our chief executive
                officer;





·
            Issuance
                of common shares worth $430,000 on Form S-8 to a
                consultant;





·
            Acceptance
                of $140,000 as a loan from a
                consultant;





·
            Improper
                issuance of shares to consultants;
                and





·
            Improper
                accruing for $446,000 in payroll tax penalties owing from one of
                our
                subsidiaries.





Our
      board
      of directors met on November 10, 2005 and again on February 21, 2006 to discuss
      these allegations.  Documents that the board might wish to review in
      evaluating and responding to those allegations were gathered by certain officers
      and directors and distributed prior to the February meeting, and a discussion
      was held.  The board appointed a special committee of certain
      directors to conduct further investigation and evaluation of the
      allegations.  The special committee was empowered to review the
      matters set forth in the allegations, and to have access to all of our records
      and all officers and directors they deem necessary to make a fully-informed
      evaluation of and response to the allegations, and whether any corrective action
      should be taken in light of them.  The special committee met on
      numerous occasions and finalized its recommendations on April 5,
      2006.  Specifically, the special committee found that no remedial
      action demanded by Messrs. Holcomb and Acosta was necessary.  On April
      6, 2006, the special committee made its recommendation to the full board, and
      the board adopted the recommendation by unanimous vote.





F-33
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*Holcomb
      “Receivership” Litigation.*  On February 13, 2006, Mr. Holcomb
      filed suit against our chief executive officer, Mr. Ray, in the Superior Court
      of Fulton County Georgia seeking the appointment of a receiver to take
      possession of 1,000,000 shares of our Series A Preferred Stock currently held
      by
      Mr. Ray and his wife, which the suit alleges Mr. Ray pledged in connection
      with
      certain of our transactions without the consent of Mr. Holcomb.  Also
      named in the suit are Method IQ, Inc., Mel Harris, Steven Posner, Glast Phillips
      & Murray PC, Rock Creek Equity Holding LLC, J. Alan Shaw, and SunTrust
      Banks, Inc.  The basis for the suit is Mr. Holcomb’s allegation that,
      on or about April 19, 2004, Mr. Ray, Alec McLarty (one of our directors) and
      Mr.
      Holcomb formed BRG Holdings, LLC for the purpose of owning the shares of the
      Series A Preferred Stock, and that certain transactions in connection with
      which
      Mr. Ray pledged the shares of the Series A Preferred Stock (specifically, a
      pledge of 50,000 the Series A shares in connection with our acquisition of
      Method IQ and a pledge of 950,000 Series A shares in connection with the
      Harris-Posner transaction) were entered into without Mr. Holcomb’s
      consent.  Although Mr. Ray had not yet been served with the complaint,
      Mr. Holcomb moved for the appointment of a receiver over Mr. Ray’s Series A
      shares, and a motion was heard by the court on February 21, 2006.  Mr.
      Ray argued to the court that, notwithstanding the formation of BRG Holdings,
      there was never an agreement to transfer Mr. Ray’s Series A shares to that
      company, nor any consideration received therefore from BRG Holdings, and that
      none of the transactions complained of required Mr. Holcomb’s
      consent.  The court summarily denied Mr. Holcomb’s motion on February
      28, 2006, following which the complaint in the action was served on Mr.
      Ray.  Mr. Ray believes that the allegations in Mr. Holcomb’s lawsuit
      are without merit, and he intends to defend this lawsuit
      vigorously.





*Acosta
      “Derivative” Litigation.*  Shortly after the denial of Mr.
      Holcomb’s appointment for a receiver over Mr. Ray’s Series A Preferred Stock
      discussed above, on March 10, 2006, Mr. Acosta filed a derivative lawsuit in
      the
      U.S. District Court of the Northern District of Georgia, Atlanta Division,
      purportedly on our behalf against all of the members of our board of directors,
      as well as our chief financial officer, Raymond J. Smith, an advisor to the
      our
      board of directors, Marvin Rosen, Tony Gentile, IFG Private Equity, LLC, Janet
      Risher, the wife of Richard Mangiarelli, one of our former directors, Richard
      Schmidt, Paul Ferandell, Bruce Caldwell, Jimmy Villalobos, Ash Mascarenhas
      and
      Francis Zubrowski.  The complaint is premised on the same allegations
      forming the basis of Messrs. Holcomb and Acosta’s prior stockholder demands, and
      seeks unquantified monetary damages, a judgment declaring that certain
      defendants have breached their fiduciary duties to us, an injunction against
      further violations, and attorneys’ fees.  The complaint has not been
      validly served on any defendant.  In light of the special committee
      and full board rejection of the claims, among other reasons, we believe Mr.
      Acosta’s lawsuit is without legal merit, and we intend to defend it
      vigorously.





*Certified/LVI
      Environmental Services, Inc., Certified/LVI Environmental Services of New
      Orleans, Inc., LVI Environmental Services, Inc. (a Florida corporation), LVI
      Environmental Services, Inc. (an Oklahoma corporation) vs. Crochet & Borel
      Services, Inc. and Charys.*  On September 19, 2006, we were served
      with a demand for arbitration arising out of the following.  In 2005,
      Plaintiffs entered into subcontracts with our subsidiary, Crochet & Borel,
      for restoration, debris removal and abatement work for damages caused by
      hurricanes Katrina, Rita and Wilma in Texas, Mississippi, Louisiana and
      Florida.  Plaintiffs claim they are owed a net balance of
      $10,587,719.04 for work done pursuant to those subcontracts, and also claim
      we
      guaranteed payment of that amount.  An American Arbitration
      Association arbitration is pending (Case No. 70 110 J 00760 06), and a hearing
      has been scheduled for the first week of December of 2007.  Plaintiffs
      also filed suit in the 60th Judicial District Court of Jefferson County Texas,
      Cause No. B-I 77,721, Certified/LVI Environmental Services, Inc., Certified/LVI
      Environmental Services of New Orleans, Inc., LVI Environmental Services, Inc.
      (a
      Florida corporation), LVI Environmental Services, Inc. (an Oklahoma corporation)
      vs. Crochet & Borel Services, Inc. d/b/a Crochet & Borel Services, Inc.
      and Charys Holding Company, Inc., asserting those same claims.  We
      challenged jurisdiction in Texas.  We dispute that Plaintiffs have any
      claim against us directly, including the alleged guaranty.  Plaintiffs
      have dismissed their claims against us in the Texas action, but have threatened
      to reassert similar and related claims in Georgia, in an effort to collect
      the
      aforementioned amount from us directly.  Plaintiffs contend payment is
      due now.  The agreements between Crochet & Borel and Plaintiffs
      provide that Crochet & Borel is not obligated to pay Plaintiffs until ten
      days after Crochet & Borel receives payment for Plaintiffs
      work.  Although the outcome of litigation cannot be predicted with any
      degree of certainly, Crochet & Borel expects to prevail on its contention
      that payment to Plaintiffs is not yet due.  Further, because Crochet
& Borel anticipates that the amount ultimately owed will correspond to the
      amount Crochet & Borel collects from property owners, insurers and/or the
      Federal Emergency Management Agency for work done by LVI, the net financial
      impact of this litigation on us is not expected to be material.





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            of Contents***





*Other
      Contingencies*





*IRS
      Penalty Assessment*


The
      tax
      penalty contingency of PRG referred to in Note 6 relates to IRS penalty
      assessments associated with the timing and method used by PRG to pay payroll
      taxes, primarily relating to fiscal year 2004 before its acquisition by Charys.
      PRG had been notified of penalty assessments of approximately $375,000 relating
      to an erroneous method PRG had used to pay the taxes, which were included in
      accrued expenses in the 2005 consolidated balance sheet. The Company
      believed the amount of this assessment to be egregious in light of the
      circumstances that caused it. The IRS abated this penalty in its entirety during
      fiscal year 2006.





*Contingent
      Acquisition Liabilities*


The
      terms
      of the purchase agreements relating to the acquisition of CCI, LFC, CTSI and
      MSAI provide for additional (“earn-out”) consideration in cash or Charys common
      stock to the selling stockholders of these companies based on the companies
      achieving future financial performance targets as specified in the agreements.
      Under the CCI purchase agreement formula, the maximum amount of this earn-out
      liability is $5.4 million over fiscal years 2006 and 2007, and no additional
      consideration was earned during 2006 or 2007. Earn-out liability for LFC is
      $11.2 million over fiscal years 2007 through 2009. Under the CTSI purchase
      agreement, the promissory note dated October 20, 2006 in the original principal
      amount of $14,200,000 payable to Lori H. Mitchell in two annual installments
      within a 120 day period following December 18, 2007 and December 18, 2008 is
      subject to CTSI achieving certain EBITDA targets.  Failure to achieve
      the EBITDA targets could reduce the payments due under the promissory note
      by as
      much as 50% Due to this contingency, the Company recorded a $7.1 million
      liability. Under the MSAI purchase agreement, the two $2.7 million notes due
      to
      Mr. Mitchell are subject to MSAI achieving certain EBITDA
      targets.  Failure to achieve the EBITDA targets could reduce the
      payments due under these promissory notes by as much as 50%.  Due to
      this contingency, the Company recorded a $2.7 million liability. Under
      generally-accepted accounting principles, additional consideration resulting
      in
      future periods from these earn-out contingencies, if any, will be recorded
      to
      goodwill at the time the contingency is resolved. Accordingly, the accompanying
      consolidated financial statements do not include any potential effects of these
      contingencies, which could be material.





*Acquisition
      “Make-Whole” Contingencies*


The
      purchase agreements for the acquisition of CCI, MIQ, and the purchase of real
      estate from CCI Associates contain “make-whole” provisions, whereby Charys was
      committed to issuing additional common shares or paying cash to the sellers
      if
      the future market price of the Company’s stock failed to achieve certain levels
      defined in the respective purchase agreements. The maximum additional
      consideration which could have been paid under the make-whole provisions
      relating to the CCI and MIQ acquisitions was $8.15 million. The maximum effect
      of the make-whole provision relating to the real estate purchase agreement
      was
      $905,000. The make-whole contingencies for MIQ and CCI had not been recorded,
      as
      they were also subject to the companies achieving future performance targets
      defined in the purchase agreements. The $905,000 make-whole contingency for
      CCI
      Associates real estate purchase was reflected in equity in the accompanying
      fiscal year 2005 consolidated financial statements, as required by generally
      accepted accounting principles. As of May 11, 2006, Charys’ common stock price
      had achieved the value required under these purchase agreements and was relieved
      of any potential obligations for these make-whole contingencies.





*Lumbermen’s
      Mutual Casualty Company*


Effective
      November 1, 2005 Charys closed upon a contract with certain parties (“Sellers”)
      to acquire the outstanding stock of Viasys Network Services Inc. and Viasys
      Services Inc. (collectively “Viasys”) as discussed in detail in a Current Report
      on Form 8-K as filed with the Securities and Exchange Commission (the
“Acquisition Agreement”).  At the time of closing this transaction,
      numerous lawsuits were pending against Viasys. The Acquisition Agreement
      requires Sellers to indemnify Charys for all losses that exceed an aggregate
      of
      $1 million which may be incurred in connection with one particular lawsuit
      that
      was pending at the time of the closing of the Acquisition Agreement,
*Lumbermen’s Mutual Casualty Company (“Plaintiff”) v. Able Telecommunications
& Power, Inc. (“ATP”), Transportation Safety Contractors, Inc. (“TSC”) and
      Georgia Electric Company (“GEC”)* filed in September 2003 in the United
      States District Court, Northern District of Georgia, Atlanta Division. ATP,
      GEC
      and TSC are predecessors of Viasys and are hereinafter referred to as
      Defendants. In the lawsuit, Plaintiff seeks to recover approximately $4.5
      million under a General Indemnity Agreement executed on March 6, 2000 between
      Plaintiff and Able Telecom Holding Corporation (“Able”), the former parent of
      Defendants.  Plaintiff issued bonds on behalf of a subsidiary of Able,
      from the period of approximately April 2000 through August 2001. Plaintiff
      allegedly incurred various losses due to the subsidiaries’ failure and inability
      to pay its subcontractors and suppliers on various jobs across the country
      and
      made various payments to bond claimants.





F-35
 ***Table
            of Contents***





In
      May
      2006 the parties entered into a settlement agreement which provided for a
      payment of $200,000 cash to the Plaintiff and the issuance of 400,000 shares
      of
      Charys common stock with registration rights, and with the obligation to issue
      up to an additional 100,000 shares of common stock if the market price of the
      stock is less than $4.83 per share as of the close of business on the date
      of
      the first day the shares can be publicly sold without restriction. The shares
      were valued at a current market price of $7.45, for a total value of $2.98
      million. The $3.18 million settlement of this acquisition contingency was
      recorded by Charys as an adjustment of its purchase accounting for Viasys,
      and
      thus recorded to goodwill in its entirety.





**11.  Reserves
      for Contract Losses**





The
      Company recorded a $500,000 reserve in the purchase accounting for the
      acquisition of CCI to reflect what the Company believed to be the net billable
      value for costs and estimated earnings on uncompleted contracts as of the March
      4, 2005 acquisition date. Subsequent to the acquisition, CCI has utilized the
      reserve for contract losses only on those jobs specifically identified as
      uncompleted contracts at the date of acquisition. During the period March 4,
      2005 to April 30, 2005, $150,000 of this reserve was utilized. The remaining
      reserve of $350,000 was utilized during the twelve months ended April 30, 2006
      upon completion of the jobs related to the reserve.





The
      Company recorded a $750,000 reserve in the purchase accounting for the
      acquisition of Viasys to reflect what the Company believed to be the net
      billable value for costs and estimated earnings on uncompleted contracts as
      of
      the November 1, 2005 acquisition date. Subsequent to the acquisition, Viasys
      determined that the net billable value for costs and estimated earnings on
      uncompleted contracts as of November 1, 2005 acquisition date required and
      additional reserve of $2,156,000.  The company recorded in the fourth
      quarter of fiscal 2006 an additional reserve in the purchase accounting of
      $2,156,000.  During the twelve months ended April 30, 2006, Viasys
      utilized $1,472,000 of the reserve for contract losses only on those jobs
      specifically identified as uncompleted contracts at the date of acquisition.
      During the twelve months ended April 30, 2007, Viasys utilized $1,434,000 of
      the
      reserve for contract losses only on those jobs specifically identified as
      uncompleted contracts at the date of acquisition.





**12.           Stockholders’
      Equity**





*Preferred
      Stock*


*Series
      A.* On December 16, 2003, Charys issued 1,000,000 shares of Series A
      preferred stock. The Series A preferred stock is not entitled to receive any
      dividends and is not convertible into shares of Charys’ common stock. A holder
      of the Series A preferred stock is entitled to 250 votes per share. The shares
      are not under any mandatory redemption requirements.





*Series
      B*. On April 25, 2005, Charys issued Frost Bank 400,000 shares of Series
      B
      preferred stock (see Note 9). The shares are non-voting, and each share is
      convertible into one share of Charys’ common stock. The shares are not under any
      mandatory redemption requirements.  On June 8, 2006, the 400,000
      Series B shares were converted to 400,000 shares of common stock.





*Series
      C*. On July 29, 2005, Charys issued Frost Bank 500,000 shares of Series
      C
      preferred stock in as partial consideration for the retirement of CCI debt
      (see
      Note 9). The shares were valued at the $0.22 per share market price of the
      Company’s common stock as of that date, for a total value of $110,000. The
      shares are non-voting, and each share is convertible into one share of Charys’
common stock. The shares are not under any mandatory redemption
      requirements.





*Common
      Shares Issued under Consulting and Purchase Agreements*


Charys
      signed a Consulting Agreement on February 27, 2004, with seven individuals.
      These consulting agreements grant up to 4,300,000 shares of Charys' common
      stock
      to the consultants in full consideration for general business consulting
      services to be provided, including business planning, acquisitions, and capital
      development. Shares to be issued under these agreements are to be:





F-36
 ***Table
            of Contents***





·
            One-third
                registered securities pursuant to a registration statement on Form
                S-8


·
            One-third
                restricted shares under Rule 144, but possessing piggyback registration
                rights, and


·
            Remaining
                one-third restricted shares under Rule 144 with no registration
                rights.





At
      April
      30, 2007, the Company had a recorded liability of $3.4 million for 2,225,336
      issuable shares included in accrued expenses in the accompanying 2007
      consolidated balance sheet, which represents the market price of the stock
      at
      the various times these shares were earned. At April 30, 2007, all shares
      available under this Consulting Agreement have either been issued or included
      in
      accrued expenses.





At
      April
      30, 2006, the Company had a recorded liability of $2.5 million for 1,871,327
      issuable shares included in accrued expenses in the accompanying 2006
      consolidated balance sheet, which represents the market price of the stock
      at
      the various times these shares were earned. At April 30, 2006, a contingent
      liability has been recorded for the remaining shares available for issue under
      the Consulting Agreement.





As
      presented in the accompanying 2007 and 2006 consolidated statement of changes
      in
      shareholders’ equity, a total of 24,380,402 and 5,862,857 shares common stock
      were issued in accordance with various agreements for  consultant
      services, and for acquisition transactions described elsewhere in these notes.
      The Company assigned the current market price to these shares as of the time
      at
      which the parties became entitled to the shares, as management believes this
      provides the best indicator of value received.





*Stock-Based
      Compensation*


The
      Company has five incentive stock option plans under which, in combination,
      provide for compensatory grants of common stock options to employees, directors
      and independent consultants, and an option agreement with the Chief Executive
      Officer. Option grants are subject to forfeiture if employment terminates prior
      to vesting.  Grants vest over a straight-line period of three
      years.  The length of the option period under each plan is not to
      exceed ten years, and the exercise price must be at least 85% of the market
      price of the Company’s common stock at the date of the grant. Options to
      purchase 19,500,000 shares are available under these plans and Chief Executive
      Officer agreement.  Transactions under the plan and agreement are
      summarized below:








Shares
            
            
            Weighted
                Average Exercise PriceOutstanding
                at April 30, 2005
            
            
            4,427,222
            
            
            
            0.40Granted
            
            
            1,080,000
            
            
            
            1.15Exercised
            
            
            (230,996
            )
            
            
            0.36Forfeited
            
            
            (794,169
            )
            
            
            0.40Outstanding
                at April 30, 2006
            
            
            4,482,057
            
            
            
            0.58Granted
            
            
            4,621,366
            
            
            
            3.50Exercised
            
            
            (192,722
            )
            
            
            0.40Forfeited
            
            
            (534,268
            )
            
            
            0.40Outstanding
                at April 30, 2007
            
            
            8,376,432
            
            
            
            1.22Exercisable
                at April 30, 2005
            
            
            4,427,222
            
            
            
            0.40Exercisable
                at April 30, 2006
            
            
            4,482,057
            
            
            
            0.58Exercisable
                at April 30, 2007
            
            
            8,376,433
            
            
            
            1.22Remaining
                reserved for grant at April 30, 2007
            
            
            3,123,567




F-37
 ***Table
            of Contents***





Stock
      option expense was $4,223,492 for fiscal year 2007. Expenses associated with
      the
      issuance of stock for services was $4,923,215 for fiscal year 2007 as compared
      to $932,875 for fiscal year 2006.





Effective
      February 1, 2006, the company adopted SFAS 123R on a modified prospective basis.
      Under this method, the Company records compensation cost, on a prospective
      basis, for the portion of outstanding awards for which the requisite service
      has
      not yet been rendered as of February 1, 2006 based upon the grant-date fair
      value of those awards.





In
      calculating the impact for options granted during the year ended April 30,
      2007,
      the fair market value of the options at the date of the grant was estimated
      using a Black-Scholes option pricing model. Assumptions utilized in the model
      are evaluated and revised, as necessary, to reflect, market conditions and
      experience. Expected volatility has been calculated based on the historical
      volatility of the company’s stock prior to the grant date.  The
      expected term represents the option exercise period. The risk-free rate is
      equivalent to the U.S Treasury yield in effect at the time of grant for the
      estimated life of the option grant.  The option valuation variables
      for options granted in the year ended April 30, 2007 are expected volatility
      of
      124%, expected term of three years, and risk free interest rate of
      4.88%.





Prior
      to
      February 1, 2006 the Company accounted for stock-based compensation to employees
      and directors in accordance with SFAS No. 123, “Accounting for Stock Based
      Compensation”, which allowed the continued use of the intrinsic value method
      provided under Accounting Principles Board Opinion No. 25, “Accounting for Stock
      Issued to Employees” in lieu of a fair value measurement. The intrinsic method
      provided for the recognition of stock option expense at the value in which
      the
      market price exceeds that of the exercise price at the time the options are
      exercisable. Had compensation cost for the plan been determined on the fair
      value of the options on the grant date, the Company’s net income and earnings
      per share would have been as follows:








2006Net
                loss, as reported
            
            $
            (1,429,165
            )Deduct:  Total
                stock-based employee compensation expense determined under fair
                value-based method for all awards, net of related tax
                effects
            
            
            (100,000
            )Pro
                forma net loss
            
            $
            (1,529,165
            )Loss
                per share:Basic
                and diluted - as reported
            
            $
            (0.13
            )Basic
                and diluted - pro forma
            
            $
            (0.14
            )





There
      were no options granted during the year ended April 30, 2006 subsequent to
      the
      adoption of SFAS 123R. In calculating the impact for options granted prior
      to
      the effective date of SFAS 123 R, the fair market value of the options at the
      date of the grant was estimated using a Black-Scholes option pricing model.
      Assumptions utilized in the model are evaluated and revised, as necessary,
      to
      reflect, market conditions and experience. Expected volatility has been
      calculated based on the historical volatility of the company’s stock prior to
      the grant date.  The expected term represents the option exercise
      period of ten years. The risk-free rate is equivalent to the U.S Treasury yield
      in effect at the time of grant for the estimated life of the option grant.
      Variables used under this model were as follows:




2006Expected
                dividends
            
            
            -0-Risk-free
                interest rate
            
            
            4.43
            %Volatility
            
            
            45
            %




F-38
 ***Table
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*Common
      Stock Warrants*


During
      the years ended April 30, 2007 and 2006, the Company issued warrants totaling
      194,638,775 and 3,390,469 shares of common stock to various financing
      institutions and private parties in connection with financing and acquisition
      activities. The Company used the Black-Scholes options pricing model for
      measuring the fair value of these warrants, resulting in a total fair value
      of
      $375.6 million and $1.6 million for the years ended April 30, 2007 and 2006,
      respectively.  The warrants issued in 2007 were recorded at $155.7
      million as a result of APB 14 (see Note 9).  The difference between
      the fair value and recorded value is $219.9 million which represents the
      allocation of proceeds between the related financings and its detachable
      warrants. The $155.7 recorded value is further decreased due to the
      allocation of other financing costs including other warrants issued and
      cash paid to the warrant value. The net recorded value of $135.2
      million and $1.7 million is reflected in the accompanying 2007 and 2006
      consolidated statement of changes in shareholders’ equity.  A summary
      of these warrants and valuation variables used is as follows:





2007
            
            
            2006Expiration
                years
            
            
            2008-2017
            
            
            
            2008-2013Expected
                dividends
            
            
            -0-
            
            
            
            -0-Risk-free
                interest rate
            
            
            4.42%-5.21
            %
            
            
            4.09%-4.81
            %Volatility
            
            
            66%-124
            %
            
            
            29%-49
            %





The
      common stock warrants outstanding at April 30, 2007 are as follows:





Number
                of Shares
            
            Expiration
                Date
            
            Exercise
                PricePrivate
                Offering of Securities - McMahan
            
            
            67,083,227
            
            2/16/2012
            
            $
            4.00Private
                Offering of Securities - McMahan
            
            
            67,083,227
            
            2/16/2012
            
            $
            5.00McMahan
                Securities Co., L.P.
            
            
            4,271,111
            
            2/16/2010
            
            $
            2.25Alan
                Streiter
            
            
            2,562,667
            
            2/16/2010
            
            $
            2.25Seth
                Appel
            
            
            1,708,445
            
            2/16/2010
            
            $
            2.25Harris/Posner
                Financing
            
            
            250,000
            
            1/23/2012
            
            $
            2.25Vision
                Financing: Series A
            
            
            4,816,666
            
            12/7/2011
            
            $
            2.50Vision
                Financing: Series C
            
            
            4,499,999
            
            12/7/2011
            
            $
            2.40Vision
                Financing: Series D
            
            
            4,499,999
            
            12/7/2011
            
            $
            5.00Vision
                Financing: Series J
            
            
            5,999,999
            
            9/7/2011
            
            $
            2.40Imperium
                Master Fund, LTD
            
            
            551,531
            
            8/30/2011
            
            $
            2.25New
                Stream Commercial Finance – C&B credit facility
            
            
            2,000,000
            
            8/27/2011
            
            $
            4.80New
                Stream Commercial Finance – credit facility
            
            
            600,000
            
            11/8/2011
            
            $
            4.00Gottbetter
                Capital Subordinated Convertible Debt
            
            
            11,030,614
            
            8/30/2011
            
            $
            2.25Securities
                Exchange Agreement with respect to Series D Preferred
                Stock
            
            
            12,017,774
            
            5/18/2011
            
            $
            2.25Greater
                Bay Bank N.A.
            
            
            28,400
            
            3/12/2013
            
            $
            1.69Gunn
                Allen Financial, Inc.
            
            
            350,000
            
            11/1/2008
            
            $
            2.00Gunn
                Allen Financial, Inc.
            
            
            196,850
            
            8/31/2011
            
            $
            4.44Highgate
                House Financing
            
            
            600,000
            
            11/17/2008
            
            $
            0.01Highgate
                House Financing
            
            
            400,000
            
            11/17/2008
            
            $
            0.50M.
                Harris & S. Posner
            
            
            250,000
            
            12/22/2008
            
            $
            0.80M.
                Schwartz
            
            
            250,000
            
            2/1/2011
            
            $
            1.10Whonor,
                Inc.
            
            
            100,000
            
            7/31/2012
            
            $
            3.85Sam
                Del Presto
            
            
            400,000
            
            3/15/2011
            
            $
            1.50Harris,
                Posner & Posner Promissory Note
            
            
            100,000
            
            4/30/2011
            
            $
            5.00191,650,509




F-39
 ***Table
            of Contents***





*Earnings
      Per Share*


The
      computation of basic and diluted earnings per share is as follows for the years
      ended April 30, 2007 and 2006.





2007
            
            
            2006NUMERATOR:Net
                loss
            
            $
            (309,125,469
            )
            
            $
            (1,429,165
            )DENOMINATOR:Weighted
                average shares outstanding - basic
            
            
            33,149,313
            
            
            
            11,034,626Effect
                of dilutive securities - common stock options, warrants, convertible
                Series B and C preferred stock
            
            
            261,141,553
            
            
            
            7,845,276Weighted
                average shares outstanding - diluted
            
            
            294,290,866
            
            
            
            18,879,903NET
                LOSS PER SHARE OF COMMON STOCK:Basic
            
            $
            (9.33
            )
            
            $
            (0.13
            )





**13.  Segment
      Reporting**





We
      classify our operations into two main business lines: (1) remediation and
      reconstruction, and (2) wireless communications and data infrastructure. This
      segmentation best describes our business activities and how we assess our
      performance. Information about the nature of these segment services, geographic
      operating areas and customers is described in the Company’s 2006 Annual Report.
      Summarized financial information by business segment for fiscal years 2007
      and
      2006 is presented below. All segment revenues were derived from external
      customers. No segment information for 2006 is depicted for Disaster Restoration
      and Remediation Services and Tower Services and Infrastructure Services. As
      more
      fully disclosed in the Company’s fiscal year 2006 Annual Report, we had no
      operations in these business segments until our acquisitions of Complete Tower
      Sources, Inc on February 21, 2007 (Technology Implementation and Integrations),
      LFC, Inc. (Tower Services and Infrastructure Services) on April 30, 2006,
      Mitchell Site Acq., Inc. (Tower Services and Infrastructure Services) on
      February 21, 2007, Cotton Companies, Inc. (Disaster Restoration and Remediation
      Services) which the Company acquired a minority interest of 40% on December
      8,
      2006 and completed the acquisition of the remaining 60% effective March 1,
      2007,
      C&B (Disaster Restoration and Remediation Services) on May 1, 2006 and Ayin
      Tower Management, Inc. (Tower Services and Infrastructure Services) created
      on
      July 11, 2006. Viasys (included in Data and Communication Infrastructure),
      MIQ
      (Technology Implementation and Integration) were acquired effective November
      1,
      2005 (amounts are stated in thousands).





Years
                Ended April 30,2007
            
            
            2006Net
                revenues:Disaster
                Restoration and Remediation
            
            $
            13,742
            
            
            $
            -Data
                and Communication Infrastructure
            
            
            43,979
            
            
            
            38,774Tower
                Services and Infrastructure Services
            
            
            10,728
            
            
            
            -Technology
                Implementation and Integration
            
            
            8,826
            
            
            
            6,147Professional
                Administration Services
            
            
            -
            
            
            
            3,650$
            77,275
            
            
            $
            48,571Depreciation
                and amortization:Disaster
                Restoration and Remediation
            
            $
            6,860
            
            
            $
            -Data
                and Communication Infrastructure
            
            
            3,092
            
            
            
            1,345Tower
                Services and Infrastructure Services
            
            
            900
            
            
            
            -Technology
                Implementation and Integration
            
            
            640
            
            
            
            318Professional
                Administration Services
            
            
            -
            
            
            
            39$
            11,492
            
            
            $
            1,702Income
                (Loss) from operations:Disaster
                Restoration and Remediation
            
            $
            (9,124
            )
            
            $
            -Data
                and Communication Infrastructure
            
            
            (9,929
            )
            
            
            1,303Tower
                Services and Infrastructure Services
            
            
            1,073
            
            
            
            -Technology
                Implementation and Integration
            
            
            (1,313
            )
            
            
            382Professional
                Administration Services
            
            
            -
            
            
            
            (433
            )$
            (19,293
            )
            
            $
            1,252Interest
                expense:Disaster
                Restoration and Remediation
            
            $
            2,555
            
            
            $
            -Data
                and Communication Infrastructure
            
            
            1,264
            
            
            
            913Tower
                Services and Infrastructure Services
            
            
            872
            
            
            
            -Technology
                Implementation and Integration
            
            
            207
            
            
            
            152Professional
                Administration Services
            
            
            -
            
            
            
            21$
            4,898
            
            
            $
            1,086Segment
                assets:Disaster
                Restoration and Remediation
            
            $
            116,360
            
            
            $
            -Data
                and Communication Infrastructure
            
            
            93,195
            
            
            
            44,613Tower
                Services and Infrastructure Services
            
            
            45,247
            
            
            
            -Technology
                Implementation and Integration
            
            
            5,895
            
            
            
            9,815Professional
                Administration Services
            
            
            251
            
            
            
            329$
            260,948
            
            
            $
            54,757Goodwill:Disaster
                Restoration and Remediation
            
            $
            76,036
            
            
            $
            -Data
                and Communication Infrastructure
            
            
            60,789
            
            
            
            16,030Tower
                Services and Infrastructure Services
            
            
            25,962
            
            
            
            1,943Technology
                Implementation and Integration
            
            
            -
            
            
            
            2,089Professional
                Administration Services
            
            
            -
            
            
            
            -$
            162,787
            
            
            $
            20,062




F-40
 ***Table
            of Contents***




The
      following are reconciliations of reportable segment revenues, results of
      operations, assets and other significant items to the Company’s consolidated
      totals (amounts stated in thousands):





Years
                Ended April 30,2007
            
            
            2006Net
                revenues:Total
                for reportable segments
            
            $
            77,275
            
            
            $
            48,573Corporate
            
            
            -
            
            
            
            -$
            77,275
            
            
            $
            48,573Depreciation
                and amortization:Total
                for reportable segments
            
            $
            11,492
            
            
            $
            1,702Corporate
            
            
            10
            
            
            
            1$
            11,502
            
            
            $
            1,703Income
                (loss) from operations:Total
                for reportable segments
            
            $
            (19,293
            )
            
            $
            1,252Corporate
            
            
            (16,389
            )
            
            
            (2,413
            )$
            (35,682
            )
            
            $
            (1,161
            )Interest
                expense:Total
                for reportable segments
            
            $
            4,898
            
            
            $
            1,086Corporate
            
            
            66,929
            
            
            
            815$
            71,827
            
            
            $
            1,901Segment
                assets:Total
                for reportable segments
            
            $
            260,948
            
            
            $
            54,757Corporate
            
            
            29,873
            
            
            
            3,944$
            290,821
            
            
            $
            58,701Goodwill:Total
                for reportable segments
            
            $
            162,787
            
            
            $
            20,062Corporate
            
            
            -
            
            
            
            -$
            162,787
            
            
            $
            20,062




F-41
 ***Table
            of Contents***





Corporate
      costs are allocated to business segments where management has determined the
      costs represent jointly used assets or are otherwise relevant to segment
      operations. Unallocated costs substantially represent general corporate
      development and acquisition activities.





**14.  Income
      Taxes**





The
      Company files a consolidated federal income tax return with its
      subsidiaries.  There was no current or deferred federal tax provision
      or benefit recorded for the years ended April 30, 2007 and 2006 due to the
      recording of the valuation allowance.




As
      of
      April 30, 2007, the Company has federal net operating loss carryforwards of
      approximately $122.3 million which will be available to offset future taxable
      income.  If not used, these federal carryforwards will expire between
      2013 and 2027.  Several subsidiaries have various state net operating
      losses available to offset future income in several jurisdictions.





F-42
 ***Table
            of Contents***





The
      Company’s income tax provision was computed based on the federal statutory rate
      and the average state statutory rates, net of the related federal
      benefit.  The Company's effective rate is 38%. The following is a
      reconciliation from the expected federal statutory income tax to the Company’s
      actual income tax for the years ended April 30, 2007 and 2006:








2007
            
            
            2006Income
                tax at statutory rate
            
            
            (117,467,679
            )
            
            
            (543,083
            )Permanent
                items
            
            
            77,087,686
            
            
            
            464,014State
                taxes, net of federal benefit
            
            
            9,737
            
            
            
            -Change
                in valuation allowance
            
            
            42,952,972
            
            
            
            4,168,067Prior
                year provision to return adjustment
            
            
            (2,553,702
            )
            
            
            (3,889,366
            )Other
            
            
            (29,014
            )
            
            
            (199,632
            )Total
                income tax provision(benefit)
            
            
            -
            
            
            
            -





Deferred
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes.





Significant
      components of the Company’s deferred tax assets and liabilities are as
      follows:





2007
            
            
            2006Deferred
                tax assets:Net
                operating losses
            
            
            46,232,247
            
            
            
            5,204,799Allowance
                for doubtful accounts
            
            
            5,010,198
            
            
            
            1,170,378Other
            
            
            40,509
            
            
            
            10,08751,282,954
            
            
            
            6,385,264Deferred
                tax liabilitiesProperty
                and equipment
            
            
            199,489
            
            
            
            95,163Intangible
                assets
            
            
            1,736,918
            
            
            
            -Section
                481 adjustments
            
            
            103,474
            
            
            
            -2,039,881
            
            
            
            95,163Subtotal
            
            
            49,243,073
            
            
            
            6,290,101Less
                valuation allowance
            
            
            (49,243,073
            )
            
            
            (6,290,101
            )Net
                deferred tax asset
            
            
            -
            
            
            
            -





The
      valuation allowance for deferred tax assets increased by $42.9 and $4.2 million
      during the years ended April 30, 2007 and 2006.  The increase in this
      allowance was primarily due to the large net operating losses generated by
      operating activities during the current period.  Since the Company is
      uncertain as to whether there will be taxable income in the immediate future
      to
      utilize the deferred benefits of the net operating losses, a valuation allowance
      had been placed against the entire balance of the net deferred tax assets as
      of
      April 30, 2007 and 2006.





**15.  Related
      Party Transactions**





Transactions
      with related parties were as follows:





·
            PRG
                has a month-to-month operating lease for its office space with a
                PRG
                officer-employee, who was an owner of a predecessor company of PRG.
                Rent
                expense under the lease was $10,400 and $14,300 during the years
                ended April 30, 2007 and 2006,





·
            An
                ICS officer made advances to ICS to fund operating expenses totaling
                $0
                and $33,766 during the years ended April 30, 2007 and 2006. This
                company was sold to its president effective August 1,
                2005.





F-43
 ***Table
            of Contents***





·
            Principal
                payments of $98,700 and $151,300 were made during the years ended
                April
                30, 2007 and 2006 relating to the PRG acquisition note payable to
                Charys’
                Chief Executive Officer.





·
            The
                Company received $1.1 million in cash from a company owned by the
                president of Viasys in exchange for a promissory
                note.





·
            Cotton
                companies has four operating leases for its office space and warehouse
                space with two Cotton Companies officer-employees, both of whom were
                owners of a predecessor company of the Cotton Companies.  Rent
                expense under the leases was $218,167 for the year ended April 30,
                2007.





·
            C&B
                has a month-to-month operating lease for its office space with a
                C&B
                officer-employee, who was an owner of a predecessor company of
                C&B.  Rent expense under the leases was $66,000 for the year
                ended April 30, 2007.





·
            C&B
                has a recorded payable to a company owned by an employee of the Cotton
                Companies. The balance of this payable as of April 30, 2007 was $371,362.
                Payments in the amount of $421,200 were made towards this payable
                during
                fiscal year 2007.





·
            In
                the acquisition of C&B, we entered into a promissory note with a
                C&B officer-employee, who was an owner of a predecessor company of
                C&B, in the original principal amount of $77,932,514 bearing interest
                at the rate of 4.74% per annum. We paid $31,775,344 of the principal
                balance promissory note as of April 6, 2007.  The remaining
                balance of this promissory note as of June 30, 2007 is $47,169,383,
                which
                is due and payable on January 31,
                2009.





·
            On
                October 10, 2006, we entered into a secured note agreement with JED
                Family
                Trust c/o Imperium Partner Group in the amount of $500,000. The secured
                note was executed and guaranteed by Charys’s Chief Executive Officer. This
                note was paid off in fiscal year
                2007.





·
            The
                Company recorded debt of $700,000 to entities owned by the president
                of
                CCI for the asset purchase of Aeon during the year ended April 30,
                2006.
                During fiscal year 2007, the Company made payments of $157, 642 towards
                this debt.





·
            A
                promissory note in the amount of $6,572,103, payable to the seller
                solely
                from proceeds relating to the Viasys Companies’ contract with the
                Commonwealth of Virginia Department of Transportation and secured
                by a
                security interest in certain collateral related to that
                contract.





·
            An
                advance in the amount of $152,322 was made between DCS and an officer
                of
                DCS prior to the acquisition by the Company. Currently there are
                no terms
                of repayment at this time.





·
            During
                fiscal year 2007, the Company acquired all outstanding common stock
                of
                DCS. As a result of the purchase, the Company incurred a contractual
                obligation to pay the DCS shareholders $640,000 . As of April 30,
                2007,
                the total obligation outstanding was
                $440,000.





·
            The
                Company received $1.1 million in cash from a company owned by the
                president of Viasys in exchange for a promissory note during the
                year
                ended April 30, 2006.





·
            During
                the year ended April 30, 2006, the Company issued a $5.25 million
                promissory note to a company owned by the officers of MIQ in exchange
                for
                all outstanding common stock of MIQ. $250,000 of this note was paid
                by the
                Company in 2006. The remaining balance of the note was paid in fiscal
                year
                2007.





·
            During
                the year ended April 30, 2006, the Company recorded debt of $2.1
                million
                owed to the seller and current president of LFC in exchange for all
                outstanding common stock of LFC. This amount was paid during fiscal
                year
                2007.





·
            The
                Company provided an advance of $72,142 to Rock Creek, which is owned
                by
                officers of MIQ in fiscal year
                2006.




·
              During
                  fiscal year 2007, an advance was made to the Company by an employee
                  of
                  Aeon Management in the amount of $120,950, which is still outstanding
                  as
                  of April 30, 2007
 
 ·
              In
                  the acquisition of Cotton, we entered into a promissory note with
                  a Cotton
                  officer-employee in the principal amount of $5,184,932. The full
                  amount of
                  the note is still outstanding as of April 30,
                  2007.


·
                    In
                        the acquisition of CTSI, we entered into a promissory note
                        with a CTSI
                        officer-employee in the original principal amount of $14,200,000
                        bearing
                        interest at the rate of 9.00% per annum. The full amount
                        of the note is
                        still outstanding as of April 30, 2007. This principle amount
                        was recorded
                        at $7,100,000 due to a 50% EBITDA contingency. We also entered into
                        an 8.75% Senior Convertible Note with the same officer-employee
                        in the
                        original principle amount of $5,790,476. The full amount
                        of the note is
                        still outstanding as of April 30,
                        2007.
 ·
                    In
                        the acquisition of MSAI, we entered into two promissory notes
                        with a MSAI
                        officer-employee in the original principal amounts of $2,700,000
                        each,
                        bearing interest at the rate of 9.00% per annum. The full
                        amount of these
                        notes are still outstanding as of April 30, 2007. These principle
                        amounts
                        were recorded at $2,700,000 due to a 50% EBITDA contingency. We also
                        entered into three 8.75% Senior Convertible Notes in the
                        principle amounts
                        of $2,590,476, $2,569,524 and $2,840,000. The full amounts
                        of these notes
                        are still outstanding as of April 30,
                        2007.


F-44
 ***Table
            of Contents***





**16.  Employee
      Benefit Plans**





The
      Company’s operating subsidiaries sponsor contributory defined contribution
      retirement plans which cover substantially all of their employees over age
      21
      that have completed one year of service consisting of at least 1,000 hours
      of
      service. The plans are administered by third-party administrators. The
      sponsoring subsidiaries may elect to make matching contributions based upon
      a
      percentage of the participant’s deferred salary contributions They may also
      elect to make additional contributions, the amount and timing of which is at
      the
      discretion of each sponsor’s board of directors. Total amounts contributed to
      these plans were less than $100,000 for each of the years ended April 30, 2007
      and 2006.





**17. Supplemental
      Cash Flow Information**





*Non-Cash
      Financing and Investing Activities – 2007*





·
            As
                further described in Note 7, the acquisitions of C&B, DCS, CTSI, MSAI,
                and Cotton resulted in a total purchase price of $395.6 million for
                $68.5
                million of net assets acquired, generating goodwill of $323.0 million
                and
                amortizable intangible assets of $4 million. Of the total purchase
                price,
                $165.8 million was paid in cash. Non-cash portions of the purchase
                price
                paid included issuances of Charys common stock valued at $145.7 million
                and promissory notes totaling $79.6
                million.





·
            Common
                stock warrants were granted relating to the private offering of
                securities, the Series D redeemable preferred stock, a new C&B
                revolving credit facility, and the McMahan acquisition financing.
                (see
                Note 12 - Common Stock Warrants). An estimated fair value of $135.2
                million was allocated to the warrants issued and recorded as an increase
                to additional paid-in capital. $140.0 million was determined by the
                Company to be allocable to the financing proceeds received and thus
                recorded as a non-cash discount to the initial carrying value of
                the
                financing instruments in accordance with APB 14 (see Note 9). $21.0
                million was allocated and recorded as an increase to amortizable
                financing
                costs.





·
            Goodwill
                increased $14.8 million from settlements of various post-acquisition
                costs
                and contingencies for the CCI, MIQ, Viasys, Aeon and LFC acquisitions.
                This amount was paid by issuances of $13.7 million in Charys common
                stock
                and $1.1 million in promissory
                notes.





·
            $1.4
                million in promissory notes were exchanged for common stock valued
                at $1.4
                million.





·
            Common
                stock valued at $3.3 million was issued to various consultants relating
                to
                financing activities, and was capitalized to financing
                costs





·
            $9
                million of Series D Redeemable Preferred Stock was converted to a
                long-term promissory note.





*Non-Cash
      Financing and Investing Activities – 2006*





·
            A
                total of $310,224 in costs related to the new CAPCO credit facility
                were
                capitalized, which included accrued expenses of $182,490 and a common
                stock warrant valued at $45,027 (see Note 9). The cash portion of
                this
                transaction was $82,707, and is included in the accompanying statement
                of
                cash flows for the twelve months ended April 30,
                2006.





·
            $2.05
                million in bank debt was retired in exchange for a $300,000 promissory
                note, preferred stock valued at $110,000, and $9,367 in accrued expenses
                relating to the retirement transaction (see Note 9). The cash portion
                of
                this transaction was $34,278, and is included in the accompanying
                statement of cash flows for the twelve months ended April 30,
                2006.





·
            Accrued
                expenses of $100,000 were restructured into a short-term promissory
                note
                (see Note 9).





·
            A
                $50,000 short-term loan was exchanged for common
                stock.





F-45
 ***Table
            of Contents***





·
            Equipment
                valued at $9,971was purchased via a capital lease
                obligation.





·
            The
                Company sold the common stock of ICS, issuing 40,000 shares of its
                common
                stock valued at $9,200 in exchange for transferring the net liabilities
                ICS to the buyer in the amount of $238,044 (see Note
                18).




·
              $600,000
                  of short-term convertible debt was converted into common
                  stock.
  ·
              The
                  acquisitions of MIQ, Viasys, LFC and Aeon during fiscal year 2006
                  were
                  non-cash transactions other than the nominal amount of cash acquired
                  presented in the 2006 consolidated statements of cash flows. As
                  disclosed
                  in Note 7, the Company acquired a total of $23.1 million in assets
                  and
                  assumed $21.9 million in current liabilities and debt in exchange
                  for
                  common stock and seller notes.
  ·
              Common
                  stock warrants with a total value of $1.7 million were granted
                  in
                  connection with acquisition and financing activities. $1.6 million
                  of
                  these warrants were capitalized as financing costs, included as
                  other
                  non-current assets in the accompanying 2006 balance sheet, and
                  are being
                  amortized over the life of the related debt
                  instrument.
  ·
              As
                  disclosed in Note 12 (Common Shares Issued under Consulting and
                  Purchase
                  Agreements), the Company was liable to issue $2.5 million of common
                  stock
                  at April 30, 2006 to consultants as a result of acquisitions and
                  financing
                  activities in 2006. Of this amount, $1.4 million was included in
                  the
                  purchase price of the acquisitions, and was recorded as accrued
                  acquisition cost in the accompanying 2006 consolidated balance
                  sheet. $1.1
                  million of this liability was recorded to accrued
                  expenses.


*Cash
      Paid for Interest/Income Taxes*





Cash
      paid
      for interest was $1,567,346 and $732,832 for the years ended April 30, 2007
      and
      2006. Cash paid for income taxes was $1,866 and $28,331 for the years ended
      April 30, 2007 and 2006.





**18. Discontinued
      Operations**




Effective
        August 1, 2005, the Company sold all outstanding common shares of ICS, a
        wholly-owned development stage subsidiary, to an officer of ICS. The Company
        issued the buyer 40,000 shares of Charys’ common stock with a fair value of
        $9,200 in exchange for the buyer assuming net liabilities of ICS of $238,244,
        resulting in the Company realizing a gain on the sale of $229,044 as reflected
        in the accompanying 2006 consolidated statement of
        operations.





Effective
      January 1, 2007 the Company transferred certain assets of PRG, a wholly-owned
      subsidiary, for future payments based on PRG’s sales to certain existing
      customers.





**19.  Selected
      Quarterly Consolidated Financial Data (Un-audited)**





First
                Quarter 2007As
                Previously Reported
            
            
            Adjustments
                (1)
            
            
            RestatedFiscal
                Year Ended April 30, 2007Net
                revenues
            
            $
            25,045,404
            
            
            
            ---
            
            
            $
            25,045,404Gross
                profit
            
            $
            7,408,891
            
            
            
            ---
            
            
            $
            7,408,891Income
                (loss) from operations
            
            $
            (119,301
            )
            
            
            ---
            
            
            $
            (119,301
            )Net
                earnings (loss)
            
            $
            (3,550,538
            )
            
            $
            1,329,002
            
            
            $
            (2,221,536
            )Net
                earnings (loss) per share – basic
            
            $
            (0.15
            )
            
            $
            0.06
            
            
            $
            (0.09
            )Net
                earnings (loss) per share – diluted
            
            $
            (0.15
            )
            
            $
            0.06
            
            
            $
            (0.09
            )





Second
                Quarter 2007As
                Previously Reported
            
            
            Adjustments
                (1)
            
            
            RestatedFiscal
                Year Ended April 30, 2007Net
                revenues
            
            $
            16,805,656
            
            
            
            ---
            
            
            $
            16,805,656Gross
                profit
            
            $
            1,851,840
            
            
            
            ---
            
            
            $
            1,851,840Income
                (loss) from operations
            
            $
            (6,898,500
            )
            
            
            ---
            
            
            $
            (6,898,500
            )Net
                earnings (loss)
            
            $
            (31,518,995
            )
            
            $
            4,721,038
            
            
            $
            (26,797,957
            )Net
                earnings (loss) per share – basic
            
            $
            (1.02
            )
            
            $
            0.15
            
            
            $
            (0.87
            )Net
                earnings (loss) per share – diluted
            
            $
            (1.02
            )
            
            $
            0.15
            
            
            $
            (0.87
            )





Third
                Quarter 2007As
                Previously Reported
            
            
            Adjustments
                (1)
            
            
            RestatedFiscal
                Year Ended April 30, 2007Net
                revenues
            
            $
            15,047,705
            
            
            
            ---
            
            
            $
            15,047,705Gross
                profit
            
            $
            1,763,297
            
            
            
            ---
            
            
            $
            1,763,297Income
                (loss) from operations
            
            $
            (6,825,122
            )
            
            
            ---
            
            
            $
            (6,825,122
            )Net
                earnings (loss)
            
            $
            (32,635,616
            )
            
            $
            16,507,876
            
            
            $
            (16,127,740
            )Net
                earnings (loss) per share – basic
            
            $
            (0.87
            )
            
            $
            0.44
            
            
            $
            (0.43
            )Net
                earnings (loss) per share – diluted
            
            $
            (0.87
            )
            
            $
            0.44
            
            
            $
            (0.43
            )Fourth
                 Quarter 2007Fiscal
                Year Ended April 30, 2007Net
                revenues
            
            $
            22,767,465Gross
                profit
            
            $
            3,599,101Income
                (loss) from operations
            
            $
            (22,060,259
            )Net
                earnings (loss)
            
            $
            (241,513,345
            )Net
                earnings (loss) per share – basic
            
            $
            (7,29
            )Net
                earnings (loss) per share – diluted
            
            $
            (7,29
            )




F-46
 ***Table
            of Contents***





(1)  Interest
      Expense was restated to correct the accounting for detachable stock purchase
      warrants issued in connection with certain financing
      transactions.  The Company recorded the fair value of the warrants as
      financings costs and amortized those costs to interest expense.  In
      accordance with Accounting Principles Board Opinion 14, the proceeds for the
      financings should have been allocated between the warrants and debt securities
      based on their relative fair values at the time of issuance.  The
      resulting discounts on the debt securities should have been amortized to
      interest expense.  Interest expense was reduced from previously
      reported amounts.





**20.
      Subsequent Events**





Since
      the
      end of our fiscal year ended April 30, 2007, we have had the following
      developments:





On
      January 24, 2007, we closed on a bridge loan for $800,000 with HarPos Funding,
      LLC (“HarPos Financing”) pursuant to which the principal and accrued interest of
      $184,200 were due on the earlier of April 8, 2007 or upon Charys obtaining
      permanent financing.  In connection with this note we issued warrants
      for 250,000 common shares at a purchase price of $2.25 per share, expiring
      January 8, 2011.  In addition, we executed consulting agreements with
      Mel Harris and Steven Posner, members of HarPos Financing, for which they each
      received 100,000 restricted common shares.  The HarPos Financing was
      refinanced on May 3, 2007 pursuant to which the note shall be due and payable
      in
      18 equal monthly installments of $61,399.11 (or more) each, including interest,
      the first of such installments shall be due and payable on June 3, 2007, and
      a
      like installment shall be due and payable on the same day of each succeeding
      month thereafter until fully paid.  Interest accrues at the rate of
      15% per annum.  The refinanced note was personally guaranteed by our
      chief executive officer, Billy V. Ray, Jr. and Troy Crochet, the president
      of
      Crochet & Borel, Inc.  We have not made either the August 1, 2007
      payment due on the note or any subsequent monthly payments. On October 16,
      2007
      the Company received a notice of default declaring the entire principal amount
      due and payable no later than October 22, 2007. As of this date, we have not
      made this payment.





On
      May 3,
      2007, we issued a note to Sean Posner in the amount of $367,954 to settle
      amounts due pursuant to a loan agreement dated May 1, 2006.  The Sean
      Posner note is due and payable in 18 equal monthly installments of $20,907
      (or
      more) each, including interest, the first of such installments shall be due
      and
      payable on June 3, 2007, and a like installment shall be due and payable on
      the
      same day of each succeeding month thereafter until fully
      paid.  Interest accrues at the rate of 15% per annum.  The
      amended note was personally guaranteed by our chief executive officer, Billy
      V.
      Ray, Jr. and Troy Crochet, the president of Crochet & Borel,
      Inc.  We have not made the August 3, 2007 payment due on the note or
      any subsequent payments. On October 16, 2007 the Company received a notice
      of
      default declaring the entire principal amount due and payable no later than
      October 22, 2007. As of this date, we have not made this payment.





On
      May 3,
      2007, we issued a note to Steven Posner in the amount of $367,954 to settle
      amounts due pursuant to a loan agreement dated May 1, 2006.  The
      Steven Posner note is due and payable in 18 equal monthly installments of
      $20,907 (or more) each, including interest, the first of such installments
      shall
      be due and payable on June 3, 2007, and a like installment shall be due and
      payable on the same day of each succeeding month thereafter until fully
      paid.  Interest accrues at the rate of 15% per annum.  The
      amended note was personally guaranteed by our chief executive officer, Billy
      V.
      Ray, Jr. and Troy Crochet, the president of Crochet & Borel,
      Inc.  We have not made the August 3, 2007 payment due on the note or
      any subsequent payments. On October 16, 2007 the Company received a notice
      of
      default declaring the entire principal amount due and payable no later than
      October 22, 2007. As of this date, we have not made this payment.





F-47
 ***Table
            of Contents***





On
      May 3,
      2007, we issued a note to Mel Harris in the amount of $368,064 to settle amounts
      due pursuant to a loan agreement dated May 1, 2006.   The Mel
      Harris note was  is due and payable in 18 equal monthly installments
      of $20,913. (or more) each, including interest, the first of such installments
      shall be due and payable on June 3, 2007, and a like installment shall be due
      and payable on the same day of each succeeding month thereafter until fully
      paid.  Interest accrues at the rate of 15% per annum.  The
      amended note was personally guaranteed by our chief executive officer, Billy
      V.
      Ray, Jr. and Troy Crochet, the president of Crochet & Borel,
      Inc.  We have not made the August 3, 2007 payment due on the note or
      any subsequent payments. On October 16, 2007 the Company received a notice
      of
      default declaring the entire principal amount due and payable no later than
      October 22, 2007. As of this date, we have not made this payment.





On
      May
      15, 2007, Crochet & Borel Inc. issued a promissory note to Mike Thomas in
      the amount of $1.6 million payable $100,000 down and the balance in 60 equal
      monthly installments of principal and accrued interest of $28,999 commencing
      June 15, 2007.  This note represents payment in full of amounts due
      for services rendered pursuant to a Consulting Agreement dated May 1, 2005.
      Crocchet & Borel Services, Inc. has not made the payment due July 1,
      2007 or any subsequent payments.





On
      May
      18, 2007, Charys executed a Note Purchase Agreement with Imperium Master Fund,
      Ltd.  Pursuant to the agreement we issued our Senior Secured Note in
      the principal amount of $690,000.  The note is due May 18, 2008 and
      bears interest at the rate of 12% per annum.  The note ranks senior to
      all outstanding and future indebtedness of Charys except as otherwise set forth
      in the agreement.  The note is guaranteed by each of our subsidiaries
      and secured pursuant to the terms of a Security Agreement.  The
      purpose of the loan was for working capital.





On
      June
      4, 2007, we filed an application with the American Stock Exchange to list the
      shares of our common stock for trading on the exchange.  As of the
      date of this Annual Report, we have not received a notification that our shares
      have been accepted for trading.





On
      June
      29, 2007, Cotton Commercial USA, L.P. executed a Note Purchase Agreement with
      Imperium Master Fund, Ltd.  Pursuant to the agreement, the Cotton
      Commercial USA, L.P. issued its Senior Secured Note in the principal amount
      of
      $3,040,000.  The note is due August 13, 2007 and bears interest at the
      rate of 8.25% per annum and is guaranteed by Charys and each of the Cotton
      Companies and secured pursuant to the terms of a Security Agreement executed
      by
      the Cotton Companies.  The purpose of the loan was for working
      capital. We have not made the August 15, 2007 payment due on the note on which
      date the principal amount and all accrued interest was due.





On
      July
      10, 2007, we received Consents from the holders of the McMahan Securities with
      respect to the adoption of a proposed amendment to the Indenture and a consent
      to a refinancing of “Existing Secured Indebtedness” as defined in the Indenture
      as described in that certain Consent and Amendment to Indenture sent to the
      holders.  The purpose of the solicitation of the Consents was to amend
      the Indenture to enable Charys to re-allocate the $35.0 million of “Existing
      Secured Indebtedness” currently available to our Crochet & Borel subsidiary
      among our other subsidiaries in order to implement the reorganization of our
      business into two distinct business operations, disaster/remediation, and
      telecommunications and construction activities related thereto.  In
      order to permit the requested ability to allocate “Existing Secured
      Indebtedness” it was necessary to amend the definition of “Existing Secured
      Indebtedness” as described in the Consent and Amendment.





In
      addition, Charys has refinanced its Series D preferred stock in exchange for
      Subordinated Unsecured Convertible Notes in an aggregate amount of $15,037,278,
      pursuant to that certain Securities Exchange Agreement dated as of April 30,
      2007, by and among Charys and the investors listed on the Schedule of Investors
      attached thereto, all more fully described in a Form 8-K filed by Charys with
      the Securities and Exchange Commission on May 24, 2007 (the “Series D
      Transaction”).  The Series D preferred stock provided for certain
      payments and other obligations by Charys.  We felt it was in our best
      interests to incorporate all of these obligations into Subordinated Unsecured
      Convertible Notes and cancel the Series D preferred stock.  We desired
      for the holders of the McMahan Notes to consent to the refinancing and exchange.
      We have not made the August 3, 2007 payment due on the note payable to one
      of
      the investors and we were late in the payment due on July 13, 2007 to that
      investor and subsequently have made no futher payments to any of the
      investors.On October 23, 2007 one of the investors made a demand for redemption
      of the note to that investor in the orginal principal amount of
      $8,354,043.





We
      acquired Cotton Holding 1, Inc., Cotton Commercial USA, L.P. and Cotton
      Restoration of Central Texas, LP (the “Cotton Companies”) pursuant to a stock
      and limited partnership purchase agreement dated as of September 1, 2006, and
      amended on October 6, October 19, October 31, December 8, 2006 and February
      23,
      2007, for total consideration of 1,555,532 shares of our common stock (which
      have registration rights) and $46,754,406 (composed of $36,754,406 paid in
      cash
      and a promissory note in the original principal amount of $10,000,000 bearing
      interest at the rate of 9% per annum). We amended and restated the promissory
      note on February 23 and June 25, 2007, and reduced the outstanding principal
      balance of the note to $5,482,816, which will be payable in 36 equal monthly
      installments of $175,943 each, beginning on September 1, 2007 and continuing
      on
      the first day of each month thereafter until August 1, 2010, when the entire
      amount shall be due and payable in full. We have not made the September 1,
      2007
      or the October 1, 2007 payment due on the note.





F-48
 ***Table
            of Contents***





On
      August
      24, 2007, our shares of common stock began trading on the “pink sheets” due to
      our failure to meet the quotation standards for the Over the Counter Bulletin
      Board.





We
      are in
      default of certain provisions of the Company’s 8.75% Senior Convertible Notes
      Due 2012 (the “Notes”) that were issued pursuant to the that certain Indenture,
      dated as of February 16, 2007 (as amended, modified, supplemented or amended
      and
      restated from time to time, the “Indenture”). The defaults include the Company’s
      failure to deliver the Company’s annual financial statements and the Company’s
      failure to deliver a Right of Repurchase Notice and Notice of Default in
      connection therewith.




We
        are in
        default of the convertible promissory notes in the amounts of $473,849 and
        $242,151 issued in connection with the Viasys acquisitions to Mel Harris
        and
        Steven Posner respectively, which were due September 29, 2007. Mel Harris
        has
        filed suit in connection with the matter.
  **21.
        Financial Statement Presentation**


Certain
      reclassifications have been made to be 2006 financial statements to conform
      to
      the 2007 presentation.




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