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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-KSB/A
                                (Amendment No. 2)
                                   (Mark One)


                   [ ] ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                            For the Fiscal Year ended
--------------------------------------------------------------------------------
             [X] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

        For the transition period from June 1, 2003 to December 31, 2003

                         Commission File Number 0-30831

                          CAPITAL GROWTH SYSTEMS, INC.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

           Florida                                         65-0953505
------------------------------                   -------------------------------
 (State other Jurisdiction of                    (I.R.S. Employer Identification
Incorporation or Organization)                               Number)

              1100 East Woodfield Road, Schaumburg, Illinois 60173
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                  630-872-5800
--------------------------------------------------------------------------------
                (Issuer's telephone number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:

Title of each class: None

Name of each exchange on which registered:  None

Securities registered under Section 12(g) of the Exchange Act:

Title of class: common stock, $.0001 par value

      Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [ ] No
[X]

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-K 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. [X]

      State issuer's revenues for its most recent fiscal year: $0

      The issuer is unable to calculate the aggregate market value of voting
stock held by non-affiliates as of a recent date because the issuer is not aware
of any market for its shares of common stock.


      As of November 10, 2004, the issuer had outstanding 16,890,754 shares of
its $0.0001 par value common stock.


DOCUMENTS INCORPORATED BY REFERENCE

None

      Transitional Small Business Disclosure Format: Yes [ ] No [X]

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                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                                     PAGE
<S>                                                                                                                  <C>
Item 1.  Description of Business............................................................................           1

Item 2.  Description of Property............................................................................          11

Item 3.  Legal Proceedings..................................................................................          12

Item 4.  Submission of Matters to a Vote of Security Holders................................................          12

Item 5.  Market for Common Equity and Related Stockholder Matters...........................................          12

Item 6.  Management's Discussion and Analysis or Plan of Operation..........................................          14

Item 7.  Financial Statements...............................................................................          17

Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............          18

Item 8A. Controls and Procedures............................................................................          18

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act..................................................          19

Item 10. Executive Compensation.............................................................................          22

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.....          25

Item 12. Certain Relationships and Related Transactions.....................................................          27

Item 13. Exhibits and Reports on Form 8-K...................................................................          30

Item 14. Principal Accountant Fees and Services.............................................................          32
</TABLE>


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              CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

      This amended report on Form 10-KSB contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements are contained principally in the sections entitled
"Business" and "Management's Discussion and Analysis or Plan of Operation."
These statements involve known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or achievements to be
materially different from any future results, performances or achievements
expressed or implied by the forward-looking statements.

         In some cases, you can identify forward-looking statements by terms
such as "may," "should," "could," "would," "expects," "plans," "anticipates,"
"believes," "estimates," "projects," "predicts," "potential" and similar
expressions intended to identify forward-looking statements. These statements
reflect our current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. Given these uncertainties,
you should not place undue reliance on these forward-looking statements. We
discuss many of these risks in this report in greater detail under the heading
"Factors Affecting Future Performance." These forward-looking statements
represent our estimates and assumptions only as of the date of this report, and
we do not assume any obligation to update any of these statements.

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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

BACKGROUND

      Capital Growth Systems, Inc. was organized as a Florida corporation on
September 29, 1999. We are a developmental stage company and had no revenue
through December 31, 2003. From our inception through December 31, 2003, our
activities were limited to actions related to our organization and the
preparation of the documents necessary for us to be registered with the
Securities and Exchange Commission. During this period, we operated as a "shell"
company conducting virtually no business operations, other than our efforts to
seek a merger partner or acquisition candidate. Throughout this period we had no
full time employees and owned no real estate. We were created to effect a
merger, exchange of capital stock, asset acquisition or other similar business
combination with an operating or development stage business, which we will refer
to as a "target business," which desired to utilize our status as a reporting
company under the Securities Exchange Act of 1934.


      On January 28, 2004, we effectuated a business combination by entering
into an Agreement and Plan of Merger whereby we acquired 100% of the ownership
of Nexvu Technologies, LLC, a Delaware limited liability company, which we will
refer to as "Nexvu," by merging it in a reverse triangular merger with our
wholly-owned subsidiary, Nexvu MergerSub, LLC, a Delaware limited liability
company. Nexvu was originally formed on February 28, 2002 under the name of
Siegler Technology & Development, L.L.C. to develop and market software and
hardware products and solutions for communication networks. It changed its name
to "Nexvu, LLC" on January 29, 2003, and to "Nexvu Technologies, LLC" on October
22, 2003.



      Craig Siegler organized Siegler Technology & Development and therefore is
considered Nexvu's promoter. Siegler Partners, L.L.C., a company controlled by
Mr. Siegler, acted as the manager of Nexvu from its inception through June 2003.
See the information under the caption "Nexvu Technologies, LLC" in Item 12 of
this Form 10-K/A. Mr. Siegler's only current relationship with us is as the
beneficial owner of over 5% of our common stock. From July 2003 through June
2004, Mr. Siegler provided consulting services to Nexvu, which is now a
wholly-owned subsidiary of ours. See the information under the caption
"Beneficial Ownership" in Item 11 of this Form 10-K/A.


      As a result of the above merger, the owners of Nexvu became the majority
owners of our company and Nexvu became the surviving company for financial
statement purposes. We serve as Nexvu's holding company. Accordingly, references
in this report to "we, us or our" are to Capital Growth Systems, Inc. or Nexvu.
We will refer to Nexvu as a separate entity only where necessary, such as in the
discussion of the business combination below. Nexvu is engaged in the
development and sale of application performance management software to large and
mid-sized companies for use in connection with their computer network systems
and applications.

      The consummation of the business combination was simultaneous with our
closing on the proceeds of a private placement of our common stock, thereby
affording Nexvu ready access to in excess of $5,000,000 of capital, while
avoiding what it might deem to be the adverse

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consequences of undertaking a public offering itself, such as the time delays
and significant expenses incurred to comply with the various federal and state
securities laws governing initial public offerings.

      The address of our website is www.nexvu.com. The information in, or that
can be accessed through, our website is not part of this report.

BUSINESS COMBINATION

      The form of the business combination with Nexvu was a merger in which we
issued 8,558,500 shares of our common stock in exchange for 100% of the
membership interests in Nexvu. In addition, pursuant to a loan conversion
agreement, we issued:

      -     an additional number of shares of our common stock needed to convert
            the amount of new bridge loans funded by Nexvu members from November
            15, 2003 through the merger closing into shares of our common stock
            at a conversion price of approximately $0.95 per share, for a total
            of 577,500 shares; and

      -     warrants expiring December 31, 2006 to purchase our common stock at
            $1.35 per share based upon 50% warrant coverage with respect to all
            bridge loans funded, for a total of 288,750 warrants.

      The merger agreement also required a simultaneous closing of the issuance
of a private offering for our common stock of not less than $2,000,000, up to a
maximum of $7,000,000, subject to increase in our sole discretion, at $1.35 per
share, and the conversion of bridge loan principal amounts to equity so that we
would own 100% of Nexvu, which would be substantially debt free as of the merger
closing. We subsequently approved an increase in the maximum amount of the
private offering and raised a total of approximately $7,700,000 from the sale of
our common stock in the offering. The private offering closed on April 15, 2004.

      The merger agreement further provided that, on closing of the merger, at
least three designees of Nexvu, all of whom were Nexvu's principal officers,
would become members of our board of directors. These persons were elected to
the following positions: Scott Allen, CEO and CFO; Rory Herriman, Chief
Technology Officer; and Robert T. Geras, Chairman of the Board. We also entered
into an indemnification agreement at the closing of the merger in which we
agreed to indemnify and hold harmless all five of our directors against certain
liabilities for actions taken in good faith on our behalf or on behalf of Nexvu.

      The consideration for this transaction was arrived at arms-length
negotiations between Nexvu and us. In connection with the merger we changed our
fiscal year end from May 31 to December 31, which is the fiscal year end of
Nexvu.

INDUSTRY BACKGROUND


      We believe that there has been a shift in the way organizations view, use,
and purchase IT performance management tools that will have a long-term impact
on the overall competitive environment for these markets.


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      We believe there is an industry trend that will continue to place pressure
on organizations that rely on these technologies for revenue streams, with
increasing demand for products in a new, emerging market - that of application
performance management and monitoring.

      The International Standards Organization outlines the primary functions of
network management systems as being focused on the five conceptual areas, also
known as "FCAPS":

      1. Fault Management. Fault management encompasses the activities of
detection, isolation and correction of abnormal systems operation. Fault
management provides the means to receive and present fault indication, determine
the cause of a fault, isolate the fault and perform a corrective action if
required.

      2. Configuration Management. Configuration management activities include
the configuration, maintenance and updating of system components. Configuration
management also includes notification to network users of pending and performed
configuration changes.

      3. Accounting Management. The ability to track usage to detect inefficient
use and abuse of privileges or usage patterns is included in accounting
management - a key component for capacity planning.

      4. Performance Management. Performance management tools are used to
recognize current or impending performance issues that can cause problems for
users. Activities include the monitoring and maintenance of acceptable
performance and the collection and analysis of statistics critical to
performance.

      5. Security Management. Security management encompasses the activities of
controlling and monitoring access to the network and associated network
management information. This includes controlling passwords and user
authorization and collecting and analyzing security or access logs. The goal of
a network management system is to provide this functionality in a concise manner
that views the entire network as one homogeneous entity.


      A new component of the performance management segment is application
performance management. This market is focused on delivering solutions designed
to resolve performance issues for business applications and systems.


OUR PRODUCTS


      We have developed a suite of software application performance management
tools and products which address a chronic problem facing companies today: how
to measure and ensure that a company's business critical software applications
function as effectively and rapidly as intended. Organizations with highly
distributed operational environments, such as banks, retailers, health care
organizations and insurance companies, face the additional challenge of often
having to support these software applications remotely.



      We believe we have established a relatively low cost means of
significantly improving the ability to manage remote applications. Our principal
product is a hardware appliance loaded with our proprietary software, which is
installed in the computer equipment closet at a customer's location. The
appliance monitors up to 3,200 different applications over the


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customer's data network and sends an "alert" message every time the application
is not running within an acceptable level of performance. This enables the
customer to identify that a problem exists and to pinpoint the cause of the
problem, often before the "crash" of the application occurs.



      On June 30, 2003, we introduced our performance management solution, the
Nexvu Application Performance Management System 2.0, also known as the "Nexvu
Manager System." The system has since been renamed the "Nexvu Analyzer System."
We have worked with several companies functioning as beta testers throughout the
design phase of the product. They have been instrumental in providing input as
it relates to business problems, particularly industry-specific challenges that
need to be met today and in the future.






      The Nexvu Analyzer System has two major components - the Nexvu Analyzer
Appliance and the Nexvu Command Center Appliance. The Nexvu Analyzer Appliance
is considered the nerve center of the Nexvu Application Performance Management
System. Residing at the customer's remote location, the Nexvu Analyzer Appliance
collects performance management data by capturing and classifying information in
a passive, non-disruptive manner as it flows across the network. Once this
information is collected, the Nexvu Analyzer Appliance assesses the information
looking for performance trends and providing network operators with information
to avoid a negative impact on the user's business.



      The Nexvu Analyzer Appliance is engineered for highly distributed
environments and is designed to be easy to deploy and operate. Our software is
loaded directly into an appliance, which can be mounted onto a rack and
installed by non-technical personnel. Additionally, the Nexvu Manager Appliance
contains a series of restoration-based tools that provide network operators and
field personnel the ability to troubleshoot outages from remote locations and
restore an outage without dispatching technical resources to the site.
Specifically, these tools enable IT service personnel to access and communicate
with our appliance, whether there is a data network connection or not. Once
connected to our appliance, service personnel can utilize trouble-shooting
features included in the appliance to evaluate potential problems and take
action to resolve many problems remotely. The Network Analyzer appliance
includes a modem for remote dial-in and a terminal server for alternate
connection to the network in the event that the network is unavailable. It also
allows "packet capture," which allows IT personnel to understand what network
components and services are working in a troubled environment.



      Information is transmitted to users by the Nexvu Command Center Appliance,
which is responsible for managing all Nexvu Analyzer Appliances throughout the
customer's environment. This includes initialization, configuration, upgrading
and monitoring. The customer typically will have one Nexvu Command Center
Appliance for approximately every 500 Nexvu Analyzer Appliances. As a
self-contained appliance which can be mounted onto a rack, the Nexvu Command
Center Appliance can be easily installed in the data center or network
operations center without advanced technical support.






      In August of 2003, we received our first purchase order for the Nexvu
Analyzer System from our first paying customer, Bally's Total Fitness. This
initial order of five Nexvu Analyzer Appliances and one Nexvu Command Center
Appliance is the first of a larger rollout that we hope to deploy across Bally's
entire infrastructure of over 400 fitness centers. We have not


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signed any agreements to install any of our equipment in these Bally's
locations. Although we had only one order as of December 31, 2003, we do not
believe that our business model will result in our having significant reliance
on any individual customer in the future.



      In addition to seeking to make enhancements to the Nexvu Analyzer and
Command Center Appliances, we plan to extend the Nexvu Analyzer product line. We
may seek to develop products that assist information technology organizations in
monitoring Voice over Internet Protocol (VoIP) environments and products that
monitor business activity such as retail sales transactions, supply chain
delivery or call center activity. These products are in the planning stages
only, and there is no assurance that any of them will be developed.


PRODUCT FEATURES


      The Nexvu Analyzer System is designed to apply the critical functions of
application performance management at the increasingly important remote/branch
locations of a company. We believe that the following features will prove
beneficial to information technology departments:



      -     Comprehensive collections of data relating to business software
            performance, utilization and effectiveness;


      -     Real-time performance analysis at the site level, ensuring minimal
            impact to wide area network bandwidth;


      -     Support which is "pre-configured," so that no additional programming
            is required, for over 900 protocols and over 3200 applications,
            including voice/video over Internet Protocol, or "VoIP" and Internet
            protocol security, or "IPSEC," and Cisco ISL;



      -     Alerts to management to ensure minimal impact on business
            operations;






      -     Solutions which are easy to deploy and operate, to be readily
            installed at remote locations by non-technical personnel, yet
            centrally managed;


      -     Cost-effective solutions designed for deployment at thousands of
            remote locations where the risk and cost of downtime is increasingly
            high;

      -     New technology solutions integrating performance and fault
            management leveraging the data capture and trend analysis across
            each system;

      -     Architecture that supports the integration of third party tools to
            leverage existing technology investment;

      -     Built-in recovery tools accessible both in-band and out-of-band
            through dial-up; and

      -     System architecture designed for international deployment through
            the use of language catalogs.

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SALES AND MARKETING

      Target Markets. We have targeted Fortune 2000 companies with highly
distributed operating environments comprised of hundreds to thousands of remote
locations with thousands of application users. We intend to focus on a subset of
the Fortune 2000 market within the retail, call center, insurance, banking and
health care industries. Future product offerings are expected to address
vertical industry solutions that will more comprehensively meet the needs of
each company, resulting in additional sales and increased penetration targeted
for each segment. We believe that these industry segments offer the greatest
immediate opportunity based on direct feedback from customers and suppliers
relative to the challenges they face, with each location critical to the
business. It is imperative to ensure the application performance, availability
and usability in these locations based on their mission-critical business
activity, which includes the following:

      -     Customer transactions, such as in retail stores and branch banks,
            where customer revenue and customer satisfaction may be affected.

      -     Transaction processing locations, such as in insurance companies or
            call centers, where customer satisfaction and productivity may be
            affected.

      -     Communication transactions, such as for fire and police services,
            where safety/lives are affected.

      In addition, some of these industries are highly regulated. Regulatory
requirements often drive the need for technology solutions to mitigate business
risk. All of these industries are faced with the challenge of reducing expense,
particularly the high cost of human capital. The value of technology is, in
part, derived from the automation of tasks that are otherwise carried out by
technicians. Since companies in these industries have service level agreements
with their customers, failure to reach minimum service levels, due to
performance issues or outages, may result in monetary penalties.

      Sales Approach. We have determined that a two-tiered approach that focuses
on high-end enterprise businesses in one effort and mid-sized enterprises in
another effort will help allow us to penetrate our target market effectively. We
therefore intend to carry forward with this two-tiered approach in our attempt
to increase both short-term revenues and long-term sources of revenue. We will
focus on selling our product to the high-end enterprise business through a
direct sales force.


      We intend to utilize a channel approach to penetrate the mid-sized
businesses. The channel approach will allow value-added resellers, or "VARs" to
market and sell our product to end users. We anticipate that our VARs will be
businesses that focus only on high-end technology products and provide
integrated systems and networking products to mid-size companies and networks
across the nation. We currently have agreements with the following five VARs:
Continental Resources, Gee Communications, Meridian IT Solutions, Hartford
Computer Group and Next Step Technology. Under these agreements, the value-added
resellers agree to sell the Nexvu Command Center Appliance and Analyzer
Appliances and our software maintenance support services to end users of the
products or services. The agreements grant the


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resellers the right to purchase the Nexvu Command Center Appliance and Nexvu
Analyzer Appliance at a 30% discount to our list price, and an annual
maintenance and support license for each product at a 15% discount. These
discounts are based on a commitment by each reseller to sell $1.5 million worth
of products and services. If a reseller does not reach this level, we have the
right to change the discount granted to that reseller. If a reseller sells $1
million of our products and services in a nine-month period, they will be able
to purchase the Command Center and Analyzer appliances at a discount of 35% of
the list price. Under the agreements the resellers have the right to "co-brand"
our products, which means that the products could be sold under a name different
from the Nexvu name which is mutually agreed upon between us and the reseller,
followed by the Nexvu name in a phrase such as "powered by Nexvu." Each
agreement has a term of one-year, and will automatically renew for successive
one-year periods unless terminated by either party on thirty days' written
notice.


      Our revenues will be generated from three major sources:

      1.    Sales of licenses for our software and related cost of the hardware
            appliance;

      2.    Maintenance contracts for our software licensing agreements; and

      3.    Professional services for consulting on related information
            technology infrastructure issues.

      Additionally, we may develop a subscription-based product which may
include revenue from all three of the above sources for an ongoing monthly fee.

SUPPLIERS AND INSTALLATION

      We plan to outsource non-strategic elements of our operations to bring our
products to market quickly, maximize return on investment and minimize risks
from exposure to unrelated operations unrelated to our core business. We plan to
focus on developing strong products, selling them into the marketplace and
establishing partnerships with organizations that can help accelerate the
adoption of our solutions.

      Suppliers. We have no direct manufacturing requirements. Our software is
designed for installation on any Intel-based server. Although the hardware
server appliance can be any Intel based server, we are presently utilizing
Gateway as our primary appliance supplier and Hartford Computer Group as a
secondary supplier.

      Installation. We have designed our products so that they may be installed
by customers ensuring minimal disruption to the customer's business.
Installations can be done by non-technical personnel with minimal assistance.
However, we expect to establish partnerships with industry-leading professional
services firms to accommodate any unique customer requirements.

COMPETITION

      The market for our products and services is highly competitive. There are
a number of publicly-held companies in the application performance management
market with which we compete. There is no assurance that we will be able to
effectively compete in this market. Prospective competitors vary in size and in
the scope and breadth of the products and services offered. Many of our
potential competitors have a number of significant advantages, including a

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longer operating history, preferred vendor status with our potential customers,
more extensive name recognition and marketing power and significantly greater
financial, technical, marketing and other resources which would give them the
ability to respond more quickly to new or changing opportunities, technologies
and customer requirements. We may not be able to maintain or expand our revenue
base if competition increases and we are unable to respond effectively.

      There are several organizations and companies who have combined many
application performance management functions into products and solutions that
have traditionally operated profitably. Many of the following companies have
combined key elements of network performance management, fault management and/or
accounting management into their products:

      -        Network Associates             -        Apogee Networks

      -        Netscout                       -        Compuware

      -        Concord Communications         -        Micromuse

      -        Agilent                        -        Tavve Networks

      -        Acterna                        -        Niksun

      -        Wildpackets                    -        Candle Communications

      -        Network Instrument             -        Lucent

      Many of the application performance management products are developed,
marketed and sold by the following organizations:

      -        Mercury Interactive            -        Netiq

      -        Cisc-                          -        Concord Communications

      -        NetQOS                         -        Compuware

SEASONAL TRENDS

      Seasonal purchasing trends for technology capital spending may cause our
quarterly operating results to fluctuate. Typically, a disproportionate amount
of technology spending occurs during the fourth quarter of a calendar year, with
a significant drop-off in spending usually occurring in the first quarter of a
calendar year.

RESEARCH AND DEVELOPMENT


      During the fiscal years ended May 31, 2003 and May 31, 2002, and the
seven-month period ended December 31, 2003, we did not expend any funds on
research and development activities. During the fiscal years ended December 31,
2003 and December 31, 2002, Nexvu spent $1.9 million and $1.0 million,
respectively, on research and development activities. Research and development
costs include cost of developers and system engineers, as well as


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overhead costs during this developmental stage. These costs are not directly
borne by customers, but rather are inherently built into the pricing to our
customers.

PATENTS AND PROPRIETARY TECHNOLOGY


      We have proprietary technology and confidential software code. Virtually
all of the software used in our products has been developed by a product
development team of eight individuals as well as by our Chief Technology
Officer, Rory Herriman. None of the individuals involved in the development of
our software has any ownership interest in this technology. Two pieces of
network monitoring software used in one component of our products were developed
by a third party. On August 31, 2002, we entered into software licensing
agreements with this third party for each of the two pieces of software. Each
agreement grants us a non-exclusive license for the worldwide rights to market
and distribute the proprietary software. The license expressly grants us the
right to sell or license products incorporating the third party's software. We
have paid a total licensing fee of $300,000 for the two pieces of software and,
in addition, agreed to pay a total royalty of $50 for each device we sell that
includes the software. The agreements call for minimum royalty payments totaling
$500,000, covering both products, payable on a quarterly basis beginning at the
start of the quarter following our first customer shipment. The quarterly
payments range from $12,500 for the first year to $37,500 for the fifth year. We
made the first payment for the quarter ended March 31, 2004. Once we have paid a
total of $500,000 in royalty payments, either in connection with sales of our
products or through the minimum payments, the licenses for both pieces of
software will be considered fully paid. The agreements give us the option to
receive upgrades for each piece of software in consideration for a total annual
fee of $15,000, payable for as long as we desire upgrades. The agreements also
call for an annual maintenance fee of $15,000, also covering both pieces of
software. The first payment, which was mandatory, was made one year after the
delivery of the software. We are obligated to make further annual maintenance
payments only if we desire the maintenance services. We chose to retain
maintenance services and paid the annual maintenance fee. Each license agreement
has a term of five years with provision for annual renewals thereafter, and may
be terminated by either party in the event of a payment default or material
breach, except that the licensor may not terminate the agreement if we have made
total royalty payments of $500,000. We intend to make patent applications with
respect to the Nexvu Analyzer and Command Center Appliances, but have not yet
done so. There is not assurance that, if these patent applications are filed,
that they will be approved.


EMPLOYEES


      As of December 31, 2003, we had no full time employees. As of September
15, 2004, we have 20 full-time employees who are employed in the following
areas: product development, quality assurance, product marketing and management,
sales and sales support and customer support. None of our employees are covered
by a collective bargaining agreement. We believe all relations with our
employees are satisfactory.


FACTORS AFFECTING FUTURE PERFORMANCE

      The following are important factors which relate to our business:

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      Risk of Delayed Development of Application Performance Market. Our ability
to achieve significant revenues is dependent in large part on companies'
recognizing the need for and allocating portions of their technology budget to
application performance management products. It is possible that the application
performance management market will not grow appreciably, or that it will not
grow fast enough to allow us to recognize significant revenues. We depend on a
relatively rapid acceptance of application performance management products to a
greater extent than companies with greater resources, and if they are not
rapidly accepted our financial condition would likely deteriorate quickly.

      Risks of Product Obsolescence, Failure to Develop New Products and Size of
Business. We expect that the market for our products will be characterized by
rapidly changing technology and new product introductions. Our success will
depend, in part, upon our continued ability to provide products with the
advanced technological qualities desired by our customers, to enhance and expand
our existing product offerings and to develop in a timely manner new products
that achieve market acceptance. Any failure or delay in accomplishing these
goals could impair our ability to achieve our revenue goals and attain
profitability. In addition, current competitors or new market entrants may
develop new products with features that could adversely affect the competitive
position of our products.

      Competition in our industry is very intense, and it is expected that
existing and new competitors will seek to replicate much of the functionality of
our products. Although we are exploring the possibility of patenting certain of
our technology, there can be no assurances that patent protection can be
attained, that if attained it is enforceable or that there are not other ways to
engineer around our proprietary technology. Additionally, there can be no
assurances that we will be able to successfully develop the next generation of
products necessary to establish market leadership.

      Given the intense nature of the software business, once a product is
developed, competition has the ability to lower its pricing significantly to
gain market share, due to the minimal incremental cost to product production.
Additionally, certain aspects of the market may be lost to the extent over time
"free" software is developed to address such functionality.

      In the high technology business, one of the largest barriers to entry for
small and start-up companies is the concern by enterprise customers as to the
survivability of the company. Even if we are profitable, we may experience
significant resistance from certain prospective customers due to our relatively
small balance sheet. This could be exacerbated to the extent we fail to attain
break-even profitability quickly.

      Uncertainties Regarding Patents and Protection of Proprietary Technology.
We rely on a combination of confidentiality agreements, trade secrets, technical
expertise and continuing technological research and development to establish and
protect proprietary rights in our products. There can be no assurance that
competitors will not develop similar or functionally equivalent technology or
expertise.

      Third parties could allege that we have infringed on their patents and
proprietary rights. If infringement is alleged, there is no assurance that we
would prevail in any such challenge, or that if such challenge is successful,
that we will be able to obtain a license to use the technology

                                       10

<PAGE>

on acceptable terms. Similarly, competitors may seek to either design around or
willfully infringe our technology. We may lack the resources to enforce any
patents or other intellectual property rights we may have or a court may
subsequently determine that the scope of our intellectual property protection is
not as broad as presently envisioned. In any event, proprietary rights
litigation can be extremely protracted and expensive and we may lack the
resources to enforce our intellectual property.

      Dependence on Continued Growth in Use of the Internet. Rapid growth in use
of and interest in the Internet is a recent phenomenon and there can be no
assurance that acceptance and use of the Internet will continue to develop or
that a sufficient base of users will emerge to support our business. Our future
revenues may, in part, depend on the widespread acceptance and use of the
Internet as a source of multimedia information and entertainment and as a
vehicle for commerce in goods and services.

      The Internet could lose its viability as a commercial medium due to delays
in the development or adoption of new standards and protocols required to handle
increased levels of Internet activity, or due to increased government
regulation. Changes in or insufficient availability of telecommunications
services to support the Internet also could result in unacceptable response
times and could reduce Internet usage. If use of the Internet does not continue
to grow or grows more slowly than expected, or if the Internet infrastructure
does not effectively support the growth that may occur, the demand for our
products and our revenue may suffer.

      Need for Additional Capital. Over time, we may need to procure additional
financing, the amount and timing of which will depend on a number of factors
including the pace of expansion of our markets and customer base, services
offered and development efforts and the cash flow generated by our operations.
We cannot predict the extent to which we will require additional financing.
There can be no assurance regarding the availability or terms of additional
financing we may be able to procure over time. Any future debt financing or
issuance of preferred equity by us could be senior to the rights of
shareholders, and any future issuance of equity could result in the dilution of
the then existing owners' proportionate equity interests in us.

      Dependence on Nexvu Management. Our success depends to a significant
degree upon the continuing contributions of our key management: Scott Allen, our
CEO and CFO, Rory Herriman, our CTO, and Robert T. Geras, our Chairman. The loss
of any of these individuals could prevent us from being able to execute our
business plan.

ITEM 2.  DESCRIPTION OF PROPERTY.

      Through December 31, 2003, our principal office was located at 980 North
Michigan Avenue, Suite 1120, Chicago, Illinois 60611. We occupied this space
rent free at the principal office of one of our directors, Lee Wiskowski.

      As a result of the merger, our principal office has been relocated to 1100
East Woodfield Road, Suite 100, Schaumburg, Illinois 60173. In June 2003, we
entered a three-year lease with a two year option for our principal office at a
rate of $76,300 per annum. In addition, we also

                                       11

<PAGE>

lease a small office at 2009 Fox Drive Suite 2, Champaign, Illinois 61820, which
houses some of our product development staff. This lease was entered into in
January 2002, having an original one-year term, with annual options to renew.
The current rent for this facility is $38,800 per year.

ITEM 3. LEGAL PROCEEDINGS.

      None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION

      No public trading market presently exists for our common stock. We intend
to file a registration statement to register the shares of our common stock
issued by us in connection with the business combination, exclusive of those
shares issued to the former owners of Nexvu and upon the conversion of bridge
loans. We expect that once such registration statement is declared effective, a
trading market will develop for our common stock. However, there can be no
assurances that a trading market will develop.

HOLDERS

      As of July 31, 2004, there were approximately 202 holders of record of our
common stock.

DIVIDENDS

      We have not paid any cash dividends since our inception, and our board of
directors does not contemplate doing so in the near future. Any decisions as to
future payment of dividends will depend on our earnings and financial position
and such other factors, as our board of directors deems relevant.

RECENT SALES OF UNREGISTERED SECURITIES

Capital Growth Systems, Inc.

      On October 1, 2003, we entered into a Subscription Agreement with Grander,
LLC, d/b/a Capital Strategies Group, an Illinois limited liability company under
which Grander agreed to purchase 238,500 shares of our common stock in
consideration for Grander's funding of certain of our operational requirements.
The offering price of the shares purchased was $13,000, for a purchase price of
$0.054 per share of our common stock. Mr. Lee Wiskowski, a director of ours, is
the sole member of Grander. In connection with the issuance to Grander we relied
upon the exemption from registration available under Section 4(2) of the
Securities Act of 1933, as

                                       12

<PAGE>

amended. Mr. Wiskowski, as a director of ours, had complete access to
information regarding us.

      On January 28, 2004, we issued a total of 8,558,500 shares of our common
stock in connection with a merger between Nexvu Merger Technologies, L.L.C. into
our wholly-owned subsidiary, Nexvu Mergersub, L.L.C. These shares were issued in
consideration for the membership interests in Nexvu, which were considered to
have a value of approximately $11.5 million. These issuances were made in
reliance upon the exemption from registration available under Section 4(2) of
the Securities Act. Nexvu had a relatively small number of members, all of whom
had access to information about Nexvu and the merger.

      In addition, on January 28, 2004 under a loan conversion agreement, we
issued: 577,500 shares of common stock, the amount necessary for the conversion
of bridge loans funded by Nexvu members and outstanding prior to the merger,
into shares of our common stock at $0.9523809 per share, or approximately
$550,000 in total; and warrants expiring December 31, 2006 to purchase common
stock at $1.35 per share based upon 50% warrant coverage with respect to all
bridge loans funded, for a total of 288,750 warrants. Also on January 28, 2004,
we sold 26,250 shares to Robert Gold, an accredited investor, at the same price
at which the bridge loans were converted. This individual did not receive
warrants to purchase common stock. These issuances were made in reliance upon
the exemption from registration available under Section 4(2) of the Securities
Act. All of the investors receiving shares or warrants in these offerings were
members of Nexvu and therefore had access to information about Nexvu and the
merger.

      Between December 2003 and April 2004, we raised a total of $7,605,230 in
the private offering of 5,633,504 shares of our common stock. This offering was
made in reliance upon the exemption from registration available under Section
4(2) of the Securities Act and Rule 506 of Regulation D. All investors in the
offering were accredited as defined in Regulation D.

      No general solicitation or advertising was employed in connection with any
of the above sales of unregistered securities.

Nexvu Technologies, LLC


      On June 27, 2003, Nexvu issued a total of 2,837,950 Class A membership
interests to Craig Siegler, the promoter of Nexvu. The consideration for these
shares was $1,034,907, which had been advanced by Mr. Siegler to Nexvu during
the period from the inception of Nexvu on February 28, 2002 through June 27,
2003. The issuance of the shares eliminated our obligation to repay those
advances. Between June and September 2003, Nexvu issued a total of 5,619,375 of
Class B member interests for total consideration of $1,825,000. In September and
December 2003, Nexvu issued a total of $1,725,000 in convertible promissory
notes to accredited investors. The notes were convertible into a total of
5,311,465 Class B membership interests in Nexvu. Promissory notes having a
principal value of $1,175,000 were converted into Class B membership interests
on December 31, 2003. The total dollar amount of loans converted to membership
interests was $2,209,907, consisting of this $1,175,000 and the $1,034,907
advanced by Mr. Siegler through June 27, 2003. Promissory notes having a
principal value of $550,000 were converted into shares of our common stock in
the merger. Nexvu also issued


                                       13

<PAGE>

warrants to purchase a total of 638,889 membership interests to the purchasers
of the convertible notes.

         All of the above issuances of securities were made in reliance upon the
exemption from registration available under Section 4(2) of the Securities Act
and Rule 506 of Regulation D. All investors were accredited as defined in
Regulation D. No general solicitation or advertising was employed in connection
with any of the above sales of unregistered securities.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

BACKGROUND

      As of December 31, 2003, we were a development stage company that had
conducted virtually no business operations, other than our efforts to effect a
business combination. On January 28, 2004, we completed a merger under which
Nexvu became a subsidiary of ours. As a result of the merger, the owners of
Nexvu became the majority owners of our company, which resulted in the
transactions being deemed a reverse acquisition for accounting purposes. Under
this treatment, Nexvu became the surviving company for financial statement
purposes. Our net assets were recorded at fair value, with the net assets of
Nexvu reflected at historical costs. In addition, as we were a public shell
company acquiring a privately-held company, no goodwill was reported. In future
periods, the historical financial statements of Nexvu, the operating company,
will be the historical financial statements of the combined company, with our
accumulated deficit eliminated as of the merger date.

      As a result of this merger, this Management's Discussion and Plan of
Operation contains information on both us and Nexvu.

PLAN OF OPERATION - CAPITAL GROWTH SYSTEMS, INC.

      Through December 31, 2003, we were a development stage company conducting
virtually no business operations, other than our efforts to effect a business
combination with a target business which we considered to have significant
growth potential. As of December 31, 2003, we had neither engaged in any
operations nor generated any revenue or cash flow. As a result of the merger
with Nexvu, we intend to carry out our plan of business as discussed above in
Item 1 of this Form 10-KSB/A.

      We incurred expenses of professional fees of $8,870 during the transition
period ended December 31, 2003 and $21,361 during the fiscal year ended May 31,
2003. As of December 31, 2003, we were not in a position to meet our cash
requirements for the next fiscal year as we did not generate any cash revenue or
receive any type of cash flow through December 31, 2003. After the end of the
transition period, our capital resources increased as the result of our
completion of a private offering in April 2004. Assuming there is no significant
change in our business, we believe that our cash and cash equivalent balances as
of December 31, 2003, and the proceeds from our private offering in 2004 will be
sufficient to satisfy our anticipated cash needs for working capital and capital
expenditures for at least the next 12 months.

                                       14

<PAGE>

OVERVIEW - NEXVU TECHNOLOGIES, LLC

      The following discussion and analysis is based on the financial statements
of Nexvu alone, without giving effect to the merger which occurred on January
28, 2004, as of the dates and for the periods presented in the financial
statements. This discussion and analysis should be read in conjunction with the
financial statements and related notes for Nexvu included at the end of this
Form 10-KSB/A.

      Through December 31, 2003, Nexvu was a development stage company engaged
in the development and sale of application performance management software and
related services to large and mid-sized companies for use in connection with
their computer network systems and applications. Nexvu has been in existence
since February 28, 2002. To date, Nexvu's operations have been focused on
developing its proprietary software so that it can be marketed to the target
audience. From inception through December 31, 2003, total expenses incurred were
$3,823,577, with the majority of the expenses arising from salaries and related
tax benefits, consulting fees and occupancy costs. In late 2003, Nexvu closed
its first product sale in the amount of $59,027. This was the only revenue
generated by the company through December 31, 2003.

RESULTS OF OPERATIONS - NEXVU TECHNOLOGIES, LLC

Comparison of 12 months ended December 31, 2003 Compared to 10 months ended
December 31, 2002

      Nexvu's revenues for the twelve months ended December 31, 2003 of $59,027
represent the sale of the company's application performance management tool,
including the software and related appliance that the software runs on, to its
first customer. Nexvu's product was installed at a facility of a customer
utilizing it on a pilot basis. The customer subsequently made the decision to
purchase the product. Cost of goods sold represents the hardware appliance
portion of the product which was sold, as well as costs associated with
purchasing pilot appliances for the sales process. These pilot appliances
comprised the majority of the cost of goods sold and were purchased to
demonstrate the product to potential customers. Nexvu does not expect to require
additional pilot appliances in the future, because the existing appliances can
be re-used and installed at different customer locations.

      The following table sets forth Nexvu's operating expenses for the year
ended December 31, 2003 and ten months ended December 31, 2002. This data should
be read in conjunction with the financial statements included at the end of this
Form 10-KSB/A. The figures for 2002 cannot be directly compared to the 2003
figures because the 2002 figures represent only a ten month period.

<TABLE>
<CAPTION>
                                        12 MONTHS                     10 MONTHS
                                          ENDED        PERCENTAGE        ENDED       PERCENTAGE
                                        DECEMBER        OF TOTAL       DECEMBER       OF TOTAL
                                        31, 2003        EXPENSES       31, 2002       EXPENSES
<S>                                    <C>             <C>            <C>            <C>
OPERATING EXPENSES
Salaries, benefits and payroll taxes   $1,752,091         72.4%       $  882,003         78.3%
Marketing and advertising                   7,941          0.3%                -          0.0%
</TABLE>

                                       15

<PAGE>

<TABLE>
<CAPTION>
                                        12 MONTHS                     10 MONTHS
                                          ENDED        PERCENTAGE        ENDED       PERCENTAGE
                                        DECEMBER        OF TOTAL       DECEMBER       OF TOTAL
                                        31, 2003        EXPENSES       31, 2002       EXPENSES
<S>                                    <C>             <C>            <C>            <C>
Occupancy                                 120,508          5.0%           38,725          3.4%
Professional fees                         264,599         10.9%           67,121          6.0%
Depreciation and amortization              84,395          3.5%           39,075          3.5%
Telecommunications                         36,438          1.5%           18,421          1.6%
Travel and entertainment                   93,047          3.8%           27,294          2.4%
General expenses                           61,326          2.5%           54,278          4.8%
                                       ----------        -----        ----------        -----
TOTAL EXPENSES                         $2,420,345        100.0%       $1,126,917        100.0%
                                       ==========        =====        ==========        =====
</TABLE>

      The majority of Nexvu's expenses are derived from salaries, benefits and
payroll taxes. Accordingly, the increase in total expenses from the ten months
ended December 31, 2002 to the twelve months ended December 31, 2003 was
primarily due to the increase in the number of Nexvu's full-time employees. The
employees added were sales, marketing, customer support and management
personnel. Professional fees represent programmer consulting fees as well as
legal and accounting fees. The increase in professional expenses from the ten
months ended December 31, 2002 to the twelve months ended December 31, 2003
represents additional contract programmers and higher legal costs associated
with organizational strategies in the company. Occupancy costs rose to support
the corporate headquarters in Schaumburg, IL as well as office space utilized in
Champaign, IL, which houses the programmers. Depreciation and amortization
increased to reflect purchases made during 2003 and the annualized effect of
capital expenditures made in 2002.

LIQUIDITY AND CAPITAL RESOURCES - NEXVU TECHNOLOGIES, LLC

      Nexvu has historically met its liquidity needs through loans from
individuals and through member contributions. As of December 31, 2003, total
cash on hand was $616,880 compared to $0 as of December 31, 2002. Total debt as
of December 31, 2003 was $735,000. As a result of the January 28, 2004 merger
between Nexvu and us, Nexvu is now a wholly-owned subsidiary of ours.
Information on our liquidity and capital resources is included under the caption
"Plan of Operation - Capital Growth Systems, Inc." above.

         The following table summarizes Nexvu's future contractual obligations
as of December 31, 2003:

<TABLE>
<CAPTION>
                                        Total            2004             2005          2006 & beyond
                                      --------         --------         --------        -------------
<S>                                   <C>              <C>              <C>             <C>
Debt:                                 $735,000         $735,000(1)             -                  -
Operating Leases                      $154,485         $ 76,265         $ 78,220                  -
Minimum Royalty Payments              $500,000         $ 50,000         $ 75,000           $375,000
</TABLE>

                                       16

<PAGE>

      (1)   $185,000 of this balance was repaid, and the remaining $550,000
            balance converted to equity, during the 1st quarter of 2004.

CRITICAL ACCOUNTING POLICIES - NEXVU TECHNOLOGIES, LLC

      Revenue Recognition. Nexvu generates revenue from licensing its software,
selling hardware to run its software, and the provision of services. Nexvu
recognizes revenue in accordance with Generally Accepted Accounting Principles,
as set forth in Statement of Position ("SOP") 97-2, Software Revenue
Recognition, and SOP 98-9, Modification of SOP 97-2, Software Revenue
Recognition with respect to Certain Transactions, the Securities Exchange
Commission Staff Accounting Bulletin No. 104, Revenue Recognition, and other
related pronouncements. In accordance with these statements, Nexvu recognizes
revenue upon meeting each of the following criteria:

   -  Existence of persuasive evidence of an arrangement, generally consisting
      of a purchase order, license agreement or other contract.

   -  Delivery of the product and authorization keys, delivery is generally
      considered to have occurred when the customer is provided with Nexvu's
      software and hardware and the authorization keys needed to activate the
      software.

   -  Fee is fixed and determinable, which is considered to be the case when the
      fee is not subject to subsequent refund or adjustments.

   -  Collection is probable.

      Nexvu defers maintenance revenue and recognize it ratably over the
maintenance term. Nexvu defers consulting and training billings and recognize
them as those services are performed.

      Income Taxes. Nexvu is organized as a limited liability company. Through
December 31, 2003, all losses were the responsibility of the members. Neither
income taxes nor the benefits relating to net losses are reflected in the
accompanying financial statements.

                                       17

<PAGE>

ITEM 7. FINANCIAL STATEMENTS.




INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
CAPITAL GROWTH SYSTEMS, INC. CONSOLIDATED FINANCIAL STATEMENTS                                               PAGE
--------------------------------------------------------------                                               ----
<S>                                                                                                          <C>
Reports of Independent Certified Public Accountants                                                          F-2

Balance Sheet as of December 31, 2003 and May 31, 2003                                                       F-3

Statement of Operations for the transition period of June 1 through December 31, 2003, and,
the years ended May 31, 2003 and 2002 and from September 29, 1999 (Inception) to December 31, 2003           F-4

Statement of Changes in Stockholders' Equity from September 29, 1999 (Inception) to December 31, 2003        F-5

Statement of Cash Flows for the transition period of June 1 through December 31, 2003, and,
the years ended May 31, 2003 and 2002 and from September 29, 1999 (Inception) to December 31, 2003           F-6

Notes to Consolidated Financial Statements                                                                   F-7
</TABLE>


<TABLE>
<CAPTION>
NEXVU TECHNOLOGIES, LLC CONSOLIDATED FINANCIAL STATEMENTS                                                    PAGE
---------------------------------------------------------                                                    ----
<S>                                                                                                          <C>
Reports of Independent Certified Public Accountants                                                          F-13

Balance Sheet as of December 31, 2003 and December 31, 2002                                                  F-14

Statement of Operations for the year ended December 31, 2003, and the period ended December
31, 2002 and from February 28, 2002 (Inception) to December 31, 2003                                         F-15

Statement of Members' Equity (Deficit) for the years ended December 31, 2003 and December
31, 2002, and from February 28, 2002 (Inception) to December 31, 2003                                        F-16

Statement of Cash Flows for the years ended December 31, 2003, and the period ended December
31, 2002 and from February 28, 2002 (Inception) to December 31, 2003                                         F-17

Notes to Consolidated Financial Statements                                                                   F-19
</TABLE>


<PAGE>

                          CAPITAL GROWTH SYSTEMS, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 2003

                                      F-1

<PAGE>

                           INDEPENDENT AUDITORS REPORT

To the Board of Directors of:
Capital Growth Systems, Inc.

      We have audited the accompanying balance sheets of Capital Growth Systems,
Inc. (A Development Stage Company) as of December 31, 2003 and May 31, 2003, the
related statements of operations and cash flows for the period then ended
December 31, 2003, the years ended May 31, 2003 and May 31, 2002, and from
inception (September 29, 1999) to December 31, 2003, and the changes in
stockholders' equity from inception (September 29, 1999) to December 31, 2003.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion of these consolidated financial
statements based on our audits.

      We conduct our audits in accordance with auditing standards generally
accepted in the United States of America. These standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated 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 financial statements referred to above present fairly,
in all material respects, the financial position of Capital Growth Systems, Inc.
(A Development Stage Company) as of December 31, 2003 and May 31, 2003 and the
results of its operations and cash flows for the period then ended December 31,
2003, the years ended May 31, 2003 and May 31, 2002, and from inception
(September 29, 1999) to December 31, 2003 in conformity with accounting
principles generally accepted in the United States of America.

/s/ Russell & Atkins, PLC
-------------------------------
Russell & Atkins, PLC

April 28, 2004
Oklahoma City, Oklahoma

                                      F-2

<PAGE>

CAPITAL GROWTH SYSTEMS, INC.
(A Development Stage Company)
BALANCE SHEET

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                                     2003                   MAY 31, 2003
                                                                  ----------                ------------
<S>                                                               <C>                       <C>
ASSETS
Current Assets
Cash                                                              $        -                 $         -
Total Current Assets                                                       -                           -
Other Assets
Incorporation costs                                                        -                           -
Total Other Assets                                                         -                           -
TOTAL ASSETS                                                      $        -                           -
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                                                  $   13,059                 $    11,361
Advance from shareholder                                              10,231                      10,000
TOTAL CURRENT LIABILITIES                                             23,290                      21,361
Stockholders' Equity
Common stock, authorized 25,000,000 shares, par value             $      117                          93
..0001, issued and outstanding - 1,170,000 (May 31, 2003 -
931,500)
Additional paid in capital                                            19,678                       6,702
Deficit accumulated during the development stage                     (43,085)                    (28,156)
Total Stockholders' Equity                                           (23,290)                    (21,361)
                                                                  ----------                 -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $        -                 $         -
                                                                  ==========                 ===========
</TABLE>


The accompanying notes are an integral part of these financial Statements.

                                      F-3

<PAGE>

CAPITAL GROWTH SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                       PERIOD             YEAR              YEAR
                                       ENDED             ENDED             ENDED          From Inception
                                    DECEMBER 31,        MAY 31,           MAY 31,       (Sept 29, 1999) to
                                        2003              2003              2002        DECEMBER 31, 2003
                                  ---------------    --------------    --------------   ------------------
<S>                               <C>                <C>               <C>              <C>
INCOME                            $            --    $           --    $           --    $             --
                                  ===============    ==============    ==============    ================
OPERATING EXPENSES
Professional Fees                          14,929            21,361             2,504              41,860
Amortization Expenses                          --                --                --                  --
Administrative Expenses                        --                 1                60               1,225
                                  ---------------    --------------    --------------    ----------------

Total Operating Expenses                   14,929            21,362             2,564              43,085
                                  ---------------    --------------    --------------    ----------------

Net Loss from Operations          $       (14,929)   $      (21,362)   $       (2,564)   $        (43,085)
                                  ===============    ==============    ==============    ================

Weighted average number of
shares outstanding                      1,032,918           931,500           931,500             945,466
                                  ===============    ==============    ==============    ================

Net Loss Per Share                $          (.01)   $         (.02)   $        (.003)   $           (.05)
                                  ===============    ==============    ==============    ================
</TABLE>

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

                                      F-4

<PAGE>

CAPITAL GROWTH SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
From September 29, 1999 (Inception) to December 31, 2003

<TABLE>
<CAPTION>
                                                                                      Deficit
                                                                                    Accumulated
                                           Common Stock             Additional         During
                                     -------------------------        Paid In       Development
                                       Shares          Amount         Capital          Stage            Total
                                     ---------       ---------      ----------      -----------       ---------
<S>                                  <C>             <C>            <C>             <C>               <C>
Issuance of common stock               931,500       $      93       $   4,722       $      --        $   4,815

Net loss for period                         --              --              --          (1,659)          (1,659)
                                     ---------       ---------       ---------       ---------        ---------
Balance, May 31, 2000                  931,500              93           4,722          (1,659)           3,156
Net loss for year                           --              --              --          (2,571)          (2,571)
                                     ---------       ---------       ---------       ---------        ---------
Balance, May 31, 2001                  931,500       $      93       $   4,722       $  (4,230)       $     585
Additional capital contributed              --              --           1,980              --            1,980
Net loss for year                           --              --              --          (2,564)          (2,564)
                                     ---------       ---------       ---------       ---------        ---------
Balance, May 31, 2002                  931,500       $      93       $   6,702       $  (6,794)       $       1
Net loss for year                           --              --              --         (21,362)         (21,362)
                                     ---------       ---------       ---------       ---------        ---------
Balance, May 31, 2003                  931,500              93           6,702         (28,156)         (21,361)
Issuance of common stock               238,500              24          12,976              --           13,000
Net loss - Dec. 31, 2003                    --              --              --         (14,929)         (14,929)
                                     ---------       ---------       ---------       ---------        ---------
Balance - December 31, 2003          1,170,000       $     117       $  19,678       $ (43,085)       $ (23,290)
                                     =========       =========       =========       =========        =========
</TABLE>

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

                                      F-5

<PAGE>

CAPITAL GROWTH SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                             From
                                                        Period                                            Inception
                                                        Ended        Year Ended     Year Ended         (Sept. 29, 1999)
                                                     December 31,      May 31,        May 31,           to December 31,
                                                         2003           2003           2002                  2003
                                                     ------------   ------------    -----------        ----------------
<S>                                                  <C>            <C>             <C>                <C>
Cash Flows From Operating Activities
Net loss                                             $    (14,929)  $    (21,362)   $    (2,564)       $        (43,085)
                                                     ------------   ------------    -----------        ----------------
Adjustments to reconcile net loss to net
      cash used operating activities:
      Stock issued for services                                --             --             --                     --
Changes in assets and liabilities
Increase (decrease) in Accounts Payable                     1,698         11,361           (490)                 13,059
                                                     ------------   ------------    -----------        ----------------
                                                            1,698         11,361           (490)                 13,059
                                                     ------------   ------------    -----------        ----------------
Net Cash Used in Operating Activities                     (13,231)       (10,001)        (3,054)                (30,026)
                                                     ------------   ------------    -----------        ----------------
Cash Flow From Financing Activities
Issuance of common stock                                       --             --             --                  17,815
Increase in Advance from Shareholder                       13,000         10,000             --                  10,231
Contributed capital                                            --             --          1,980                   1,980
                                                     ------------   ------------    -----------        ----------------
Net Cash Provided by Financing Activities                     231         10,000          1,980                  30,026
                                                     ------------   ------------    -----------        ----------------
Increase (decrease) in Cash                                    --             (1)        (1,074)                     --
Cash and Cash Equivalents -
      Beginning of period                            $         --   $          1    $     1,075        $             --
                                                     ------------   ------------    -----------        ----------------
Cash and Cash Equivalents -
      End of period                                  $         --   $         --    $         1        $             --
                                                     ============   ============    ===========        ================
Supplemental Cash Flow Information
      Interest paid                                  $         --   $         --    $        --        $             --
                                                     ============   ============    ===========        ================
      Taxes paid                                     $         --   $         --    $        --        $             --
                                                     ============   ============    ===========        ================
</TABLE>

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

                                      F-6

<PAGE>

                          CAPITAL GROWTH SYSTEMS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                             AS AT DECEMBER 31, 2003

1. ORGANIZATION AND BASIS OF PRESENTATION

      CAPITAL GROWTH SYSTEMS, INC. (the "Company") was organized in the State of
Florida on September 29, 1999. The Company's intends to serve as a vehicle to
effect an asset acquisition, merger, exchange of capital stock or other business
combination with a domestic or foreign business of an undetermined nature at
this time.

DEVELOPMENT STAGE ENTERPRISE

      The Company has no revenues and has just commenced operations. The
Company's activities are accounted for as those of a "Development Stage
Enterprise" as set forth in Financial Accounting Standards Board Statement No. 7
("SFAS 7"). Among the disclosures required by SFAS 7 are that the Company's
financial statements be identified as those of a development stage company, and
that the statements of operations, stockholders' equity(deficit) and cash flows
disclose activity since the date of the Company's inception.

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING

      These financial statements are presented on the accrual method of
accounting in accordance with generally accepted accounting principles.
Significant accounting principles followed by the Company and the methods of
applying those principles, which materially affect the determination of
financial position and cash flows, are summarized below.

USE OF ESTIMATES

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results may differ from those estimates.

CASH AND CASH EQUIVALENTS

      The Company considers all highly liquid debt instruments and investments,
purchased with an original maturity date of three months or less, to be cash
equivalents.

INCOME TAXES

      The Company accounts for income taxes under SFAS No. 109, which requires
the asset and liability approach to accounting for income taxes. Under this
method, deferred assets and

                                      F-7

<PAGE>

liabilities are measured based on differences between financial reporting and
tax bases of assets and liabilities measured using enacted tax rates and laws
that are expected to be in effect when differences are expected to reverse.

NET EARNINGS (LOSS) PER SHARE

      Basic and diluted net loss per share information is presented under the
requirements of SFAS No. 128, Earnings per Share. Basic net loss per share is
computed by dividing net loss by the weighted average number of shares of common
stock outstanding for the period, less shares subject to repurchase. Diluted net
loss per share reflects the potential dilution of securities by adding other
common stock equivalents, including stock options, shares subject to repurchase,
warrants and convertible preferred stock, in the weighted-average number of
common shares outstanding for a period, if dilutive. All potentially dilutive
securities have been excluded from this computation, as their effect is
anti-dilutive.

FAIR VALUE OF FINANCIAL INSTRUMENTS

      The carrying amount of cash is considered to be representative of its fair
value because of the short-term nature of this financial instrument.

RECENTLY ISSUED ACCOUNTING STANDARDS

      On July 20, 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Intangible Assets." SFAS No. 141
is effective for all business combinations completed after June 30, 2001. SFAS
No. 142 is effective for fiscal years beginning after December 15, 2001;
however, certain provisions of this Statement apply to goodwill and other
intangible assets acquired between July 1, 2001, and the effective date of SFAS
No. 142. The implementation of SFAS No. 141 and SFAS No. 142 will not have a
material effect on the financial position or results of operations of the
Company.

      In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment of Disposal of Long-Lived Assets." SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001, and addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This statement supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the
accounting and reporting provisions of Accounting Principles Board Opinion No.
30, "Reporting the Results of Operations - Reporting the Effects of Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," for the disposal of a segment of a business.

      The Financial Accounting Standards Board has recently issued SFAS No. 133
as amended by SFAS 137 and 138, "Accounting for Derivative Instruments and
Hedging Activities" established accounting and reporting standards for
derivative instruments and related contracts and hedging activities. This
statement is effective for all fiscal quarters and fiscal years beginning after
June 15, 2000. The adoption of this pronouncement did not have a material effect
on the Company's position or results of operations.

                                      F-8

<PAGE>

      In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities", which addresses accounting for
restructuring and similar costs. SFAS NO. 146 supersedes previous accounting
guidance, principally Emerging Issues Task Force Issue No. 94-3. SFAS No 146
requires that the liability for costs associated with an exit or disposal
activity be recognized when the liability is incurred, SFAS No. 146 also
establishes that the liability should initially be measured and recorded at fair
value. Accordingly, SFAS No. 146 may affect the timing of recognizing future
restructuring costs as well as the amount recognized. SFAS NO. 146 is effective
for exit or disposal activities that are initiated after December 31, 2002.

      In November 2002, the FASB Interpretation No. 45 (FIN 45) "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." FIN 45 requires that a liability be
recorded in the guarantor's balance sheet upon issuance of certain guarantees.
FIN 45 also requires disclosure about certain guarantees that an entity has
issued. The Company has implemented the disclosure requirements required by FIN
45, which were effective for fiscal years ending after December 15, 2002. The
Company will apply the recognition provisions of FIN 45 prospectively to
guarantees issued after December 31, 2002.

      In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation-Transition and Disclosure - an amendment of FASB Statement No. 123"
(FAS 148). The statement amends SFAS 123 "Accounting for Stock Based
Compensation:" (FAS 123) to provide alternative methods of voluntarily
transition to the fair value based method of accounting for stock based employee
compensation. FAS 148 also amends the disclosure requirement of FAS 123 to
require disclosure of the method used to account for stock based employee
compensation and the effect of the method on reported results in both annual and
interim financial statements. The Company has no current intention to change its
policy of accounting for stock-based compensation.

      In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities, and Interpretation of ARB No.51."
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficial of the entity if the equity investors in the entity do not
have characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first interim
or annual period beginning on or after June 15, 2003.

      On April 30, 2003 the FASB issued Statement No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities." The Statement
amends and clarifies accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities
under Statement 133. The amendments set forth in Statement 149 improve financial
reporting by requiring that contracts with comparable characteristics be
accounted for similarly. In particular, this Statement clarifies under what
circumstances a contract with an initial net investment meets the characteristic
of a derivative as discussed in Statement 133. In addition, it clarifies when a
derivative contains a financing

                                      F-9

<PAGE>

component that warrants special reporting in the statement of cash flows. This
Statement is effective for contracts entered into or modified after June 30,
2003.

      On May 15, 2003 the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". The
Statement improves the accounting for certain financial instruments that, under
previous guidance, issuers could account for as equity. The new Statement
requires that those instruments be classified as liabilities in statements of
financial position. In addition to its requirements for the classification and
measurement of financial instruments in its scope, Statement 150 also requires
disclosures about alternative ways of settling the instruments and the capital
structure of entities, all of whose shares are mandatorily redeemable. Most of
the guidance in Statement 150 is effective for all financial instruments entered
into or modified after May 31, 2003.

      The Company believes that none of the recently issued accounting standards
will have a material impact on the financial statements.

3. GOING CONCERN

      The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. This basis of accounting contemplates
the recovery of the Company's assets and the satisfaction of its liabilities in
the normal course of business. Through December 31, 2003, the Company had
incurred cumulative losses of $43,085. The Company's successful transition from
a development stage company to attaining profitable operations is dependent upon
obtaining financing adequate to achieving a level of revenues adequate to
support the Company's cost structure. Subsequent to the date of these financial
statements the Company completed a merger with Nexvu Technologies, LLC and
raised in excess of $7,500,000 pursuant to a common stock private placement. The
resulting cash balances are expected to be more than sufficient to cover the
cost of operations for the Company for 2004. See Note 5, Subsequent Events.

4. INCOME TAXES

      There has been no provision for U.S. federal, state, or foreign income
taxes for any period because the Company has incurred losses in all periods and
for all jurisdictions. 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 deferred tax assets are as follows:

DEFERRED TAX ASSETS

<TABLE>
<S>                                                  <C>
   Net operating loss carry forwards                 $   43,085
   Valuation allowance for deferred tax assets          (43,085)
                                                     ----------
Net deferred tax assets                              $        0
                                                     ==========
</TABLE>

      Realization of deferred tax assets is dependent upon future earnings, if
any, the timing and amount of which are uncertain. Accordingly, the net deferred
tax assets have been fully offset by a valuation allowance. As of December 31,
2003 the Company had net operating loss

                                      F-10

<PAGE>

carry forwards of approximately $43,085 for federal and state income tax
purposes. These carry forwards, if not utilized to offset taxable income begin
to expire in 2016. Utilization of the net operating loss may be subject to
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code and similar state provisions. The annual limitation
could result in the expiration of the net operating loss before utilization.

5. ISSUANCE OF COMMON STOCK

      On October 1, 2003, the Company entered into a Subscription Agreement with
Grander, LLC, whereby Grander agreed to purchase 238,500 shares of our common
stock in consideration for Grander's funding of certain of the Company's
operational requirements. The offering price of the shares purchased was $0.0545
per share. Total proceeds of this issuance were $13,000.

6. SUBSEQUENT EVENTS

      On January 28, 2004, the Company merged with Nexvu Technologies, LLC
("Nexvu"), an operating business. The merger was contingent upon the Company
having raised a minimum of $2,000,000 of investor capital pursuant to a common
stock private placement at $1.35 per share. As of April 15, 2004 an aggregate of
$7,605,230 of gross proceeds from the private placement had been raised. In
addition, at the merger closing the $550,000 of bridge loans to Nexvu were
converted into additional common stock of the Company's common stock at
approximately $0.95 per share and one additional $25,000 subscription was
accepted shortly thereafter at such pricing. In connection with the merger, an
aggregate of 8,558,500 shares of common stock of the Company's common stock were
issued to the members of Nexvu and Nexvu became a wholly owned subsidiary
Capital Growth Systems, Inc. The Company's cash balances as of March 1, 2004 are
expected to be more than sufficient to cover the cost of operations of the
Company for 2004.

                                      F-11

<PAGE>

                             NEXVU TECHNOLOGIES, LLC
                        (A DEVELOPMENT STAGE ENTERPRISE)
                              FINANCIAL STATEMENTS
                                DECEMBER 31, 2003

                                      F-12

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Members of
Nexvu Technologies, LLC

      We have audited the accompanying balance sheets of Nexvu Technologies, LLC
(a Development Stage Enterprise) as of December 31, 2002 and 2003 and the
related statements of operations and stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial positions of Nexvu Technologies, LLC (a
Development Stage Enterprise) as of December 31, 2002 and 2003 and the results
of its operations, and its cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.

/s/ Russell & Atkins, PLC
-------------------------------
Russell & Atkins, PLC

May 3, 2004
Oklahoma City, Oklahoma

                                      F-13
<PAGE>

                             FINANCIAL STATEMENTS OF
                             NEXVU TECHNOLOGIES, LLC
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                 BALANCE SHEETS
                           DECEMBER 31, 2003 AND 2002


<TABLE>
<CAPTION>
                                                               DECEMBER 31,     DECEMBER 31,
                                                                  2003             2002
                                                               -----------      -----------
<S>                                                            <C>              <C>
ASSETS
CURRENT ASSETS
Cash                                                           $   616,880      $         -
Accounts receivable                                                 61,270            9,590
Prepaid expenses                                                    51,837                -
                                                               -----------      -----------
Total Current Assets                                               729,987            9,590
                                                               -----------      -----------
FIXED ASSETS - NET OF ACCUMULATED DEPRECIATION                     136,341          179,777
                                                               -----------      -----------
OTHER ASSETS
Software licensing fee                                             300,000          300,000
Organization costs - net of accumulated amortization                     -            3,371
                                                               -----------      -----------
Total Other Assets                                                 300,000          303,371
                                                               -----------      -----------
TOTAL ASSETS                                                   $ 1,166,328      $   492,738
                                                               -----------      -----------
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Accounts payable                                               $   120,567      $   186,869
Accrued expenses                                                    38,449           32,650
Deferred revenue                                                         -                -
Deferred rent                                                        1,955                -
                                                               -----------      -----------
Total Current Liabilities                                          160,971          219,519
                                                               -----------      -----------
LONG-TERM LIABILITIES
Loans payable                                                      735,000        1,400,136
                                                               -----------      -----------
Total Liabilities                                                  895,971        1,619,655
                                                               -----------      -----------
MEMBERS' EQUITY
 CLASS A MEMBER INTEREST, 2,837,950 AND 0 ISSUED AND
OUTSTANDING AS OF DECEMBER 31, 2003 AND 2002 RESPECTIVELY        1,034,907                -
                                                               -----------      -----------
CLASS B MEMBER INTEREST, 9,237,329 AND 0 ISSUED AND
OUTSTANDING AS OF DECEMBER 31, 2003 AND 2002 RESPECTIVELY        3,000,000                -
                                                               -----------      -----------
MANAGING MEMBER INTEREST,  3,320,268 AND 0 ISSUED AND
OUTSTANDING AS OF DECEMBER 31, 2003 AND 2002 RESPECTIVELY                -                -
                                                               -----------      -----------
MEMBERS RETAINED DEFICIT                                        (3,764,550)      (1,126,917)
                                                               -----------      -----------
MEMBERS' EQUITY (DEFICIT)                                          270,357       (1,126,917)
                                                               -----------      -----------
TOTAL LIABILITIES AND MEMBERS'  EQUITY                         $ 1,166,328      $   492,738
                                                               -----------      -----------
</TABLE>


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

                                      F-14
<PAGE>

                            NEXVU TECHNOLOGIES, LLC
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                                                        FROM
                                                                                                                     INCEPTION
                                                                                 12 MONTHS         10 MONTHS        FEBRUARY, 28,
                                                                                   ENDED             ENDED            2002 TO
                                                                                  DECEMBER          DECEMBER          DECEMBER
                                                                                  31, 2003          31, 2002          31, 2003
                                                                                ------------      ------------      ------------
<S>                                                                             <C>               <C>               <C>
REVENUE                                                                         $     59,027      $          -      $     59,027
                                                                                ------------      ------------      ------------
COST OF GOODS SOLD                                                                   129,806                 -           129,806
                                                                                ------------      ------------      ------------
GROSS MARGIN                                                                         (70,779)                -           (70,779)
OPERATING EXPENSES
Salaries and payroll taxes                                                         1,752,091           882,003         2,634,094
Marketing and advertising                                                              7,941                 -             7,941
Occupancy                                                                            120,508            38,725           159,233
Professional fees                                                                    264,599            67,121           331,720
Depreciation and amortization                                                         84,395            39,075           123,470
Telecommunications                                                                    36,438            18,421            54,859
Travel and entertainment                                                              93,047            27,294           120,341
General expenses                                                                      61,326            54,278           115,604
                                                                                ------------      ------------      ------------
TOTAL EXPENSES                                                                     2,420,345         1,126,917         3,547,262
                                                                                ------------      ------------      ------------
OPERATING INCOME                                                                  (2,491,124)       (1,126,917)       (3,618,041)
INTEREST EXPENSE                                                                     146,509                 -           146,509
                                                                                ------------      ------------      ------------
NET LOSS BEFORE INCOME TAXES                                                      (2,637,633)       (1,126,917)       (3,764,550)
INCOME TAXES                                                                               -                 -                 -
                                                                                ------------      ------------      ------------
NET LOSS                                                                        $ (2,637,633)     $ (1,126,917)     $ (3,764,550)
</TABLE>


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

                                      F-15
<PAGE>

                             NEXVU TECHNOLOGIES, LLC
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                                                   FROM
                                                                                                                INCEPTION
                                                                               12 MONTHS        10 MONTHS      FEBRUARY, 28,
                                                                                 ENDED            ENDED           2002 TO
                                                                               DECEMBER         DECEMBER         DECEMBER
                                                                               31, 2003         31, 2002         31, 2003
                                                                              -----------      -----------     ------------
<S>                                                                           <C>              <C>             <C>
CASH FLOW FROM OPERATING ACTIVITIES:
NET LOSS                                                                      $(2,637,633)     $(1,126,917)    $ (3,764,550)
Adjustments to reconcile net loss to net cash
 used in operating activities
Depreciation and amortization                                                      84,395           39,075          123,470
Write-off organizational costs                                                      3,371                -            3,371
Changes in assets and liabilities:
 Accounts receivable                                                              (51,680)          (9,590)         (61,270)
 Prepaid expenses                                                                 (51,837)               -          (51,837)
 Accounts payable                                                                 (66,302)         186,869          120,567
 Accrued expenses                                                                   5,799           32,650           38,449
 Deferred revenue                                                                       -                -                -
 Deferred rent                                                                      1,955                -            1,955
                                                                              -----------      -----------     ------------
                                                                                  (74,299)         249,004          174,705
                                                                              -----------      -----------     ------------
Net Cash Used in Operating Activities                                          (2,711,932)        (877,913)      (3,589,845)
                                                                              -----------      -----------     ------------
CASH FLOW FROM INVESTING ACTIVITIES:
 Purchase of fixed assets                                                         (40,959)        (218,852)        (259,811)
 Purchase of other assets                                                               -         (303,371)        (303,371)
                                                                              -----------      -----------     ------------
Net Cash Used In  Investing Activities                                            (40,959)        (522,223)        (563,182)
                                                                              -----------      -----------     ------------
CASH FLOW FROM FINANCING ACTIVITIES:
 Increase in loans payable                                                      2,899,263        1,400,136        4,299,399
 Decrease of loans payable                                                     (1,354,492)               -       (1,354,492)
                                                                              -----------      -----------     ------------
 Contributions by members - net of repayments                                   1,825,000                -        1,825,000
                                                                              -----------      -----------     ------------
Net Cash Provided By Financing Activities                                       3,369,771        1,400,136        4,769,907
                                                                              -----------      -----------     ------------
Increase in Cash                                                                  616,880                -          616,880
Cash and Cash Equivalents - Beginning of Period                                         -                -                -
Cash and Cash Equivalents - End of period                                     $   616,880      $         -     $    616,880
                                                                              -----------      -----------     ------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest                                                        $   108,060      $         -     $    108,060
                                                                              -----------      -----------     ------------
Cash paid for income taxes                                                              -                -                -
                                                                              -----------      -----------     ------------
NONCASH INVESTING AND FINANCING ACTIVITIES:
Contributions by members through conversions of loans                         $ 2,209,907      $         -     $  2,209,907
                                                                              -----------      -----------     ------------
</TABLE>


The accompanying notes are an integral part of these financial statements

                                      F-16
<PAGE>


NEXVU TECHNOLOGIES, LLC



(A DEVELOPMENT STAGE ENTERPRISE)



STATEMENTS OF MEMBERS' EQUITY (DEFICIT)
DECEMBER 31, 2003 AND 2002



<TABLE>
<CAPTION>


                                             Members' Interest                   $ Amount                                  Total
                                         --------------------------      -------------------------      Retained          Members'
                                           Class A         Class B         Class A        Class B        Deficit          Equity
                                          ---------       ---------      ----------     ----------     -----------      -----------
<S>                                       <C>             <C>            <C>            <C>            <C>              <C>
BALANCE FEBRUARY 28, 2002                         -               -      $        -     $        -     $         -      $         -
Net Loss                                                                                                (1,126,917)      (1,126,917)
                                          ---------       ---------      ----------     ----------     -----------      -----------
MEMBERS' EQUITY, END OF PERIOD                    -               -               0              0      (1,126,917)      (1,126,917)
                                          ---------       ---------      ----------     ----------     -----------      -----------
Issuance of Class A Member Interest,
   Loan Conversion                        2,837,950                       1,034,907                                       1,034,907
Issuance of Class A Member Interest,
   Cash Contributions                                     5,619,375                      1,825,000                        1,175,000
Issuance of Class A Member Interest,
   Loan Conversion                                        3,617,954                      1,175,000
Net Loss                                                                                                (2,637,633)      (2,637,633)
                                          ---------       ---------      ----------     ----------     -----------      -----------
MEMBERS' EQUITY, END OF PERIOD            2,837,950       9,237,329      $1,034,907     $3,000,000     $(3,764,550)     $(1,554,643)
                                          ---------       ---------      ----------     ----------     -----------      -----------
</TABLE>



The accompanying notes are an integral part of these financial statements


                                      F-17
<PAGE>


                             NEXVU TECHNOLOGIES, LLC
                         A DEVELOPMENT STAGE ENTERPRISE
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 and 2003


NOTE 1 - Organization and Basis of Presentation

Nexvu Technologies, LLC, (the "Company") was organized as a Delaware limited
liability company on February 28, 2002 under the name of Siegler Technology &
Development, L.L.C. The Company was formed to develop and market software and
hardware products and solutions for communication networks. The Company changed
its name to "Nexvu, LLC" on January 29, 2003, and to "Nexvu Technologies, LLC"
on October 22, 2003.

NOTE 2 - Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers those short-term, highly liquid investments with original
maturities of three months or less as cash and cash equivalents.

Property and Equipment

The Company capitalizes property and equipment in excess of $500. All property
and equipment are stated at cost. The cost of ordinary maintenance and repairs
is charged to operations while renewals and replacements are capitalized.
Depreciation is computed over the estimated useful lives of the assets generally
as follows:

      Computers, Equipment & Furniture            5 to 7 years

      Computer Software                           3 years

Software Licensing Fee

The Company accounts for its software license in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 142, effective October 1, 2001. The
Company also reviews its long-lived assets for impairments. Impairment losses on
long-lived assets are recognized when events or changes in circumstances
indicate that the undiscounted cash flows estimated to be generated by such
assets are less than their carrying value and, accordingly, all or a portion of
such carrying value may not be recoverable. Impairment losses are then measured
by comparing the fair value of assets to their carrying amounts. The Company
recognized no impairment loss at December 31, 2002 and 2003.

Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, prepaid expenses and accounts
payable are considered representative of their respective fair values because of
the short-term nature of these financial instruments.

                                      F-18
<PAGE>

Revenue Recognition

We will generate revenue from licensing our software, selling hardware to run
our software and through services. We recognize revenue in accordance with
Generally Accepted Accounting Principles, as set forth in Statement of Position
(SOP) 97-2, Software Revenue Recognition, and SOP 98-9, Modification of SOP
97-2, Software Revenue Recognition with respect to Certain Transactions, and the
Securities Exchange Commission Staff Accounting Bulletin No. 104, Revenue
Recognition, and other related pronouncements. In accordance with these
statements, we recognize revenue upon meeting each of the following criteria:

      -     Existence of persuasive evidence of an arrangement. Persuasive
            evidence generally is a purchase order, license agreement or other
            contract.

      -     Delivery of the product and authorization keys. Delivery has
            occurred when the customer is provided our software and hardware and
            the authorization keys needed to activate the software.

      -     Fee is fixed and determinable. A fee is deemed to be fixed or
            determinable when it is not subject to subsequent refund or
            adjustments.

      -     Collection is probable.

We defer maintenance revenue and recognize it ratably over the maintenance term.
We defer consulting and training billings and recognize them as those services
are performed.

Income Taxes

The Company is organized as a limited liability company. All profits or losses
or benefits derived are the responsibility of the members. Neither income taxes
nor the benefits relating to net losses are reflected in the accompanying
financial statements.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.

Recently Issued Accounting Pronouncements

SFAS No. 149 "Amendment of Statement 133 on derivative instruments and hedging
activities". This statement amends and clarifies financial accounting and
reporting for derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities under SFAS 133,
"Accounting for derivative instruments and hedging activities".

                                      F-19
<PAGE>

SFAS No. 150 "Accounting for certain financial instruments with characteristics
of both liabilities and equity". This statement establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity.

The Company believes that the above standards would not have a material impact
on its financial position, results of operations or cash flows.

NOTE 3 - Going Concern

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. This basis of accounting contemplates
the recovery of the Company's assets and the satisfaction of its liabilities in
the normal course of business. Through December 31, 2003, the Company had
incurred cumulative losses of $3,764,550. The Company's successful transition
from a development stage company to attaining profitable operations is dependent
upon obtaining financing adequate to achieving a level of revenues adequate to
support the Company's cost structure. Subsequent to the date of these financial
statements the Company has received a total of $7,611,980 in gross proceeds from
a private placement offering and an additional $550,000 in bridge loans have
been converted into common stock. See Note 9, Subsequent Events.

NOTE 4 - Software License Agreement

On August 31, 2003, the Company entered into a software licensing agreement with
a third party under which the Company acquired a non-exclusive license for the
worldwide rights to market and distribute the third party's proprietary
software. This software is being utilized as a component of the Company's own
proprietary software. The term of the agreement is for five years with provision
for annual renewals thereafter. The cost of the software licensing fee was
$300,000 with annual upgrade and maintenance charges of $30,000. The software
and licensing fees will be amortized over a 36 month period commencing in the
2004 calendar year. The agreement also calls for minimum annual royalty payments
totaling $500,000 over the first five year period following customer shipment,
payable quarterly as follows:

<TABLE>
<S>               <C>
Year 1            $  50,000
Year 2               75,000
Year 3              100,000
Year 4              125,000
Year 5              150,000
</TABLE>

The minimum annual royalty payments will be expensed quarterly, with any excess
royalties due expensed in the period earned. If in any year the calculation of
the royalty fee is greater than the minimum, this excess will reduce the final
amount due in the fifth year.

                                      F-20
<PAGE>

NOTE 5 - Commitments

In July, 2002, the Company entered into a three year operating lease agreement
for office space. Minimum rentals, on an annual basis, are as follows:

<TABLE>
<S>               <C>
2004              $76,265
2005               78,220
</TABLE>

NOTE 6 - Notes Payable


<TABLE>
<S>                                                           <C>
Notes payable to members, unsecured, interest at 8%,
convertible to equity according to the terms of the Loan
Conversion Agreement                                          $625,000

Note payable to bank, secured by certain personal assets
of a member and all assets of the Company, interest at 9%,
interest only due monthly, principal due March 31, 2004        110,000
                                                              --------
Total Notes Payable                                           $735,000
                                                              ========
</TABLE>



Of the $625,000 notes payable to members, $550,000 is convertible into Class B
membership interest at a rate of $0.324 per interest. The remaining $75,000 of
notes payable is convertible into Class B membership interest at a rate of $1.00
per interest.



NOTE 7 - Membership Interest



During the developmental stages of the company, Craig Siegler, the founder of
the company, made advances to the company in the form of loans. These loans
totaled $1,034,907 and were made from the period February 28, 2002 through June
27, 2003. On June 27, 2003, the company issued 2,837,950 of Class A membership
interest to convert these advances to equity.



During the period June through September of 2003, the company issued 5,619,375
of Class B membership interests for total cash consideration of $1,825,000.
During the period September through December of 2003, the company issued
$1,725,000 of promissory notes to accredited investors. These shares were
convertible into Class B membership interest in the company. In December, 2003
the company converted $1,175,000 of these notes into 3,617,954 Class B
membership interest, with the remaining $550,000 of notes outstanding as of
December 31, 2003. The remaining convertible notes are convertible into
1,693,511 of Class B membership interest.



Additionally, there were 3,320,268 of managing membership interest issued during
2003 (the company was a limited liability company at the time). Substantially
all of these interests were issued to employees at a par value of $0.0001 per
interest. The allocation of these interests


                                      F-21
<PAGE>


among the employees and others assisting the company was made in the discretion
of senior management. At the time of their issuance, the interests had no value
and represented an opportunity to share in a residual value of the company after
a return of the investment and preferred return to the other interest holders.



Each share of membership interest outstanding has equal voting rights regardless
of class of membership interest. In the event of a distribution of net cash flow
and proceeds from the sale of capital items, the distribution is as follows:



      1.    To the Class B membership interest equal to two times their
            aggregate Capital Contributions and Preferred Cumulative Returns.



      2.    To the Class A membership interest equal to the aggregate Capital
            Contributions and Preferred Cumulative Returns.



      3.    Any remaining distribution is based on a pro rata share of 60% to
            the Class B membership interest, 18.434% to the Class A membership
            interest and 21.566% among the managing members' interest.



NOTE 8 - Property and Equipment


Property and equipment at December 31, 2003 consists of the following:

<TABLE>
<S>                                         <C>
Furniture and fixtures                     $  89,375
Software                                      19,408
Computer equipment                           128,491
Office equipment                               3,629
Telephone equipment                           18,236
                                           ---------
                                             259,139
Less: Accumulated depreciation              (122,798)
                                           ---------
                                           $ 136,341
                                           =========
</TABLE>


NOTE 9 - Related Parties



On December 1, 2003, the Company entered into an agreement for business and
financial advisory services to be provided by an entity controlled by one of the
Company's directors. Fees for these services total $761,000. All of these fees
are related to the raise of future capital and will be paid and accounted for in
2004.



NOTE 10 - Subsequent Events



On January 28, 2004, the Company merged with a wholly owned subsidiary of
Capital Growth Systems, Inc. ("CGSI"), a Florida "shell" corporation formed for
the purpose of acquiring an operating business. The Company has become the sole
operating business of CGSI. The merger was contingent upon CGSI having raised a
minimum of $2,000,000 of investor capital pursuant to a common stock private
placement at $1.35 per share. As of April 15, 2004 an aggregate of


                                      F-22
<PAGE>

$7,605,230 of gross proceeds from the private placement had been raised. In
addition, at the merger closing the $550,000 of bridge loans to the Company were
converted into additional common stock of CGSI at approximately $0.95 per share
and one additional $25,000 subscription was accepted shortly thereafter at such
pricing. In connection with the merger, an aggregate of 8,558,500 shares of
common stock of CGSI were issued to the members of the Company and the Company
became a wholly owned subsidiary of CGSI, with CGSI serving as its sole manager.
Following the merger the Company will be treated as a disregarded entity for
state and federal income tax purposes. The cash balances of CGSI as of March 1,
2004 are expected to be more than sufficient to cover the cost of operations of
the Company for 2004.

                                      F-23

<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

      On November 27, 2001 the owners of 925,000 shares of our common stock,
which represented a 99.9% ownership interest, sold their shares to SMP Financial
Consultants, Inc. pursuant to an Agreement of Purchase and Sale of Shares for
total cash consideration of $64,600. In connection with this transaction, our
then board of directors, which was composed solely of Mr. James Caprio,
determined to no longer engage Salberg & Company, P.A., as our independent
public accountants and engaged Russell & Atkins, PLC to serve as our independent
public accountants for 2002 and 2003. However, we did not formally notify
Salberg & Company of the change in accountants at that time. We made this
notification on April 26, 2004.

      Salberg & Company's report on our financial statements as of May 31, 2001
and for each of the two years then ended and from September 29, 1999 (inception)
to May 31, 2001 did not contain an adverse opinion or disclaimer of opinion, nor
was it qualified or modified as to uncertainty, audit scope or accounting
principles, except that the report contained an explanatory paragraph expressing
substantial doubt about our ability to continue as a going concern. Salberg &
Company's report on our financial statements for 2001 containing this going
concern opinion was dated September 11, 2001 and was issued in conjunction with
the publication of our Annual Report to Shareholders and the filing of our
Annual Report on Form 10-KSB for the year ended May 31, 2001. Salberg & Company
did not perform an audit of our financial statements for any periods subsequent
to the year ended May 31, 2001.

      During 2001 and through April 26, 2004, there were no disagreements with
Salberg & Company on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
Salberg & Company's satisfaction, would have caused it to make reference to the
subject matter in connection with its report on our financial statements for
such year, and there were no reportable events, as listed in Item 304(a)(1)(v)
of Regulation S-K.

      We provided Salberg & Company, P.A. with a copy of the foregoing
disclosures and Salberg & Company, P.A. has agreed that these disclosures, as
they pertain to Salberg & Company, P.A., are accurate.

      During our two most recent fiscal years and through March 31, 2004, we did
not consult Russell & Atkins with respect to the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on our financial statements, or any
other matters or reportable events listed in Items 304(a)(2)(i) and (ii) of
Regulation S-K.

ITEM 8A. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURE

      Our CEO/CFO has evaluated our disclosure controls and procedures as of the
end of the fiscal year ended December 31, 2003, and has concluded that, as of
December 31, 2003, these controls and procedures have been effectively designed
to ensure that information required to be disclosed in reports that we file with
or submit to the Commission is recorded, processed,

                                       18
<PAGE>

summarized and reported within the time periods specified in the Commission's
rules and forms and is accumulated and communicated to management as appropriate
to allow timely decisions regarding this disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

      No changes in our internal control over financial reporting have come to
management's attention during our last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting. Review and evaluation of disclosure controls and
procedures is an ongoing process that we will continue to refine as we perform
quarterly evaluations.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT.

      As of December 31, 2003, we had only two officers and directors. As a
result of our merger with Nexvu on January 28, 2004, we have additional
directors and executive officers. We are listing both our officers and directors
as of December 31, 2003 and our current officers and directors in the
subsections that follow.

OFFICERS AND DIRECTORS AS OF DECEMBER 31, 2003

<TABLE>
<CAPTION>
NAME                                   AGE                                         POSITION
--------------                         ---                      --------------------------------------------
<S>                                    <C>                      <C>
Lee Wiskowski                          37                       Director, President, Chief Executive Officer
                                                                and Chief Financial Officer

Douglas Stukel                         34                       Director, Secretary and Treasurer
</TABLE>

CURRENT OFFICERS AND DIRECTORS

      The composition and biographies of our directors and officers as a result
of the completion of our merger with Nexvu on January 28, 2004 is as follows:

<TABLE>
<CAPTION>
NAME                                   AGE                                     POSITION
---------------                        ---             -----------------------------------------------------------
<S>                                    <C>             <C>
Robert T. Geras                        66              Chairman of the Board of Directors, Assistant Secretary and
                                                       Assistant Treasurer

Scott Allen                            41              Director, Chief Executive Officer and Chief Financial
                                                       Officer

Rory Herriman                          33              Director, Secretary, Treasurer and Chief Technology Officer

Douglas Stukel                         34              Director and Assistant Secretary
</TABLE>

                                       19
<PAGE>

<TABLE>
<CAPTION>
     NAME                     AGE                     POSITION
     ----                     ---                     --------
<S>                           <C>                     <C>
Lee Wiskowski                  37                     Director
</TABLE>

      Robert T. Geras. Mr. Geras has served as our Chairman of the Board since
the completion in January 2004 of our merger with Nexvu Technologies, LLC, which
is described under the caption "Business Combination with Nexvu Technologies,
LLC" in Item 1 of this Form 10-KSB/A. Mr. Geras served as the Chairman of Nexvu
Technologies from June 2003 through the date of the merger. Mr. Geras's sole
occupation for the last five years has been as a private investor. Among the
companies in which Mr. Geras has been an early-stage investor is Merge
Technologies, Inc., a public company included in the Nasdaq National Market
which provides eHealth connectivity products for medical imaging and other
clinical information. Mr. Geras is a director of Merge Technologies. Mr. Geras
has also served as a director and/or early-stage investor in VideoHomeTours, a
provider of visual content management and marketing services for large brokerage
firms; ShowingTime.com, a complete Internet scheduling and productivity tool for
real estate agents; Exadigm, Inc., a company engaged in the development and sale
of electronic payment processing equipment utilizing wifi technology; and 20/20
Technologies, LLC, a provider of bandwidth and connectivity to the high speed
data transmission industry.

      Scott Allen. Mr. Allen has served as a director and our Chief Executive
and Chief Financial Officer since the completion in January 2004 of our merger
with Nexvu Technologies, LLC. Mr. Allen also served as the Chief Executive
Officer and President of Nexvu Technologies from July 2003 through the date of
the merger. Between October 2001 and June 2003, Mr. Allen served as the Vice
President, Product Management for the Sniffer Technologies division of Network
Associates, Inc. a software company specializing in computer security. In this
position, Mr. Allen was responsible for formulating product direction and
strategy for network and protocol analysis products. From January 2000 to
October 2001, Mr. Allen served as the Director of World Wide System Engineers
and Professional Services, and in this position had responsibility for
engineering network and protocol analysis products and for consulting
engagements. From March 1998 to January 2000, Mr. Allen served as the System
Engineer Manager of the West region, where he had similar responsibilities
within a specific region.

      Rory Herriman. Mr. Herriman has served as a director and our Chief
Technology Officer since the completion of our merger in January 2004 with Nexvu
Technologies, LLC. Mr. Herriman served as the Chief Technology Officer of Nexvu
Technologies from May 2002 through the date of the merger. From December 1997
until May 2002, Mr. Herriman served as the Senior Director of Technology
Architecture and Engineering at Sears, Roebuck & Company, where he defined and
executed enterprise-wide technology strategies in the areas of
telecommunications, networking and computing.

      Douglas Stukel. Mr. Stukel has served as a director of ours since August
2003. Mr. Stukel, together with Mr. Wiskowski, led the investor group which
purchased the current majority stake in our company. In addition, Mr. Stukel is
a co-founder of Premier Holdings of Illinois, LLC, a distributor of medical
supplies based in Joliet, Illinois. Mr. Stukel served as the president of
Cendant Home Funding, a residential mortgage company based in Joliet, Illinois,
from 1997 until 2001. Mr. Stukel is also a co-founder of Momentum Capital, LLC,
a privately

                                       20

<PAGE>

held firm providing financial advisory services in connection with mergers and
acquisitions and analysis as to strategic alternatives. As a co-founder of
Momentum Capital, LLC, Mr. Stukel's responsibilities are related to the location
of potential clients, the negotiation of agreements with those clients and the
provision of advisory services related to the clients.

      Lee Wiskowski. Mr. Wiskowski has served as a director since the completion
of our merger with Nexvu Technologies, LLC. From August 2003 through the date of
the merger, Mr. Wiskowski served as our Chief Executive Officer, Chief Financial
Officer, President and as a director. Since December, 2002, Mr. Wiskowski has
been engaged in the advisory and consulting business through Grander, LLC, and
Momentum Capital, LLC, both privately held advisory and consulting firms. As a
co-founder of Grander, LLC and Momentum Capital, LLC, Mr. Wiskowski's
responsibilities are related to the location of potential clients, the
negotiation of agreements with those clients and the provision of advisory
services related to the clients. From May 1999 to May 2001, Mr. Wiskowski was
associated with Advanced Equities, Inc., a broker-dealer. Mr. Wiskowski acted as
the President of Advanced Equities from June 1999 through March 2001.

      All directors hold office until their successors have been elected and
qualified or until their earlier resignation or removal. Directors are elected
annually. Officers serve at the discretion of our board of directors.

CODE OF ETHICS

      On January 29, 2004, our board of directors adopted a Code of Ethics which
applies to our principal executive officer, principal financial officer,
principal accounting officer and controller and persons performing similar
functions. We will provide a copy of the Code of Ethics, without charge, to any
person who sends a written request addressed to Capital Growth Systems, Inc.,
1100 East Woodfield Road, Suite 100, Schaumburg, Illinois 60173. A copy of the
Code of Ethics has been filed as an exhibit to this report.

      We intend to disclose any waivers or amendments to our Code of Ethics in a
report on Form 8-K with the Securities and Exchange Commission rather than on
our website.

AUDIT COMMITTEE

      We have an Audit Committee and an Audit Committee Charter, a copy of which
is attached to this report. The Audit Committee is presently comprised of Robert
Geras, Lee Wiskowski and Doug Stukel. The Audit Committee is responsible for
selection and oversights of our independent auditors, reviewing with the
independent auditors the scope and results of the audit engagement, establishing
and monitoring our financial policies and control procedures, reviewing and
monitoring the provision of non-audit services by our independent auditors and
reviewing all potential conflict of interest situations. We presently do not
have a director who would qualify as an "audit committee financial expert" as
defined in Item 401(e) of Regulation S-B. Given our present situation, we feel
it would be overly costly, burdensome and unwarranted to retain an independent
director who would qualify as an "audit committee financial expert." We will
consider adding an audit committee financial expert if our business grows and
adding such a person would be less burdensome.

                                       21

<PAGE>

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

      Our executive officers, directors and shareholders beneficially owning
more than 10% of our common stock are required under the Exchange Act to file
reports of ownership of our common stock with the Securities and Exchange
Commission. Copies of those reports must also be furnished to us. Based solely
upon a review of the copies of reports furnished to us and written
representations that no other reports were required, we believe that during the
preceding year all filing requirements applicable to executive officers,
directors and shareholders beneficially owning more than 10% of our common stock
have been complied with.

ITEM 10. EXECUTIVE COMPENSATION.

CAPITAL GROWTH SYSTEMS, INC.

      Through December 31, 2003, neither of our directors or officers had
received any salary or other compensation of any kind, other than reimbursement
for out-of-pocket expenses incurred on our behalf, and we did not have any
employment agreements with them.

      As a result of the merger with Nexvu, we will compensate our directors and
officers for their services to us. The Agreements we have entered into to date
with our executive officers are discussed below. However, we presently have no
formal agreement or arrangements in place regarding compensation for our
directors or officers, except as described below.

      We have entered into employment agreements with each of Scott Allen and
Rory Herriman under which each is entitled to a base salary of $175,000 per
year. Under these agreements, each of Mr. Allen and Mr. Herriman may receive
bonuses in the discretion of the Board of Directors, with a target bonus of 50%
of base salary. Mr. Allen and Mr. Herriman are each entitled to receive under
their respective employment agreements, options to acquire 430,000 shares of our
common stock under our Long-Term Incentive Plan, vesting over a ten-year period
through January 2, 2007, with acceleration on a change in control. In addition,
each of Mr. Allen and Mr. Herriman is entitled to a bonus in the event of a
successful change in control, such as a merger or sale of our Company, equal to
the lesser of 299% of their base salary as of the date of the change in control,
or one percent of the amount by which the value of the transaction to our
shareholders exceeds the product of the highest prior price at which we sold our
shares, multiplied by the number of our outstanding shares of ours as of the
date the change of control occurs.

      Each employment agreement has a term ending at the end of the calendar
year and will automatically renew for additional one-year periods unless
terminated by us or the executive on written notice at least two months before
expiration of the current term. Under the agreements, if employment is
terminated without cause, or the agreement does not automatically renew, he is
entitled to receive severance of one year's pay, payable in regular monthly
increments. The agreements also provide for a lump sum payment of 90 days' pay
in the event of death or disability.

      In December 2003, our board of directors adopted the 2003 Long-Term
Incentive Plan for key employees and other persons providing assets or services
of value. The plan provides for the issuance of stock based awards to key
employees as part of their overall compensation. A

                                       22

<PAGE>

total of 2,285,000 restricted shares of our common stock, stock options or other
equity based compensation can be issued under the plan. It is expected that a
substantial portion of these options will be allocated to existing management
and other persons assisting us in our endeavors. Presently, we have issued
1,691,500 restricted shares under the plan.

NEXVU TECHNOLOGIES, LLC

      The following table sets forth information with respect to the total
annual compensation paid by Nexvu Technologies, LLC to its Chief Executive
Officer and each of its other executive officers whose total cash compensation
for the year ended December 31, 2003 exceeded $100,000:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                                 LONG-TERM COMPENSATION
                                                             ANNUAL COMPENSATION                 ----------------------
                                                           ------------------------                 NUMBER OF MANAGING
NAME AND PRINCIPAL POSITION                                YEAR              SALARY                  MEMBER INTERESTS
---------------------------                                ----              ------              ----------------------
<S>                                                        <C>               <C>                 <C>
Craig Siegler (1)                                          2003              $50,000

                                                           2002

Scott Allen                                                2003              135,000                      772,092(3)
Chief Executive and Chief Financial Officer (2)

Rory Herriman                                              2003              150,000                      901,953(6)
Chief Technology Officer (4)                               2002(5)            81,250
</TABLE>

(1) Mr. Siegler, who controlled the company that acted as the manager of Nexvu
Technologies from its inception in February 2002 through June 2003, effectively
acted as the company's chief executive officer during this time. Beginning in
July 2003, Mr. Siegler provided consulting services for a one-year period for a
fee of $50,000 per year.

(2) Mr. Allen was employed by Nexvu effective July 2003. Mr. Allen's employment
agreement with Nexvu Technologies called for various options to acquire Class B
interests upon achieving certain targets, which were not met. The employment
agreement was superseded by a new agreement with us in 2004.

(3) Consists of 212,093 managing member interests granted to Mr. Allen in
connection with the signing of his employment agreement, and 559,999 interests
granted to Mr. Allen in October 2003 as part of a discretionary award made by
the manager of Nexvu Technologies to various employees and service providers.
Holders of the managing member interests had no interest in the company other
than the right to share in its profits, if any, after the payment of preferred
returns to other holders. The managing member interests were deemed to have only
nominal value at the time of grant. The 772,092 interests owned by Mr. Allen
were converted into a total of 161,178 shares of our common stock in connection
with the merger between us and Nexvu Technologies which occurred on January 28,
2004.

(4) Mr. Herriman was employed by Nexvu effective May 2002.

(5) Nexvu Technologies, LLC was organized on February 28, 2002.

(6) Consists of managing member interests granted to Mr. Herriman in October
2003 as part of a discretionary award made by the manager of Nexvu Technologies
to various employees and service providers. Holders of the managing member
interests had no interest in the company other than the right to share in its
profits, if any, after the payment of preferred returns to other holders. The
managing member interests were deemed to have only nominal value at the time of
grant. The 901,953 interests owned by Mr. Herriman were converted into a total
of 188,871 shares of our common stock in connection with the merger between us
and Nexvu Technologies which occurred on January 28, 2004.

                                       23

<PAGE>

EMPLOYMENT AGREEMENT

      In July, 2003, Nexvu Technologies entered into an employment agreement
with Scott Allen, the company's Executive Vice President - Sales, under which
Mr. Allen was entitled to a base salary of $135,000 per year. Under the
agreement Mr. Allen received 212,093 managing member interests in Nexvu
Technologies, subject to downward adjustment if an offering of Nexvu
Technologies' planned at the time was smaller than anticipated. Half of the
managing member interests were to vest on July 1, 2004, and the remaining half
were to vest equally over the subsequent twelve months, except that all of the
interests were to vest in the event of a change in control. For the first year
of the agreement, Mr. Allen was entitled to a bonus of up to $200,000, based on
Nexvu Technologies' achieving various sales goals specified in the agreement.
Mr. Allen was also entitled to additional incentive compensation based on: the
first purchase order received by Nexvu Technologies, if Mr. Allen was the source
of the order; establishment of the company's first original equipment
manufacturer, or "OEM," relationship resulting in $5,000,000 of revenue in the
first year of Mr. Allen's employment; or the sale of rights to any products or
technology for $5,000,000 or more, or sale of 51% or more of the company based
on a valuation of the company in excess of $7,500,000. The incentive based on
the purchase order was payable in cash, and the incentives based on the OEM
relationship or sale of products, technology or all or part of the company were
payable in managing member interests.

      Mr. Allen's employment agreement had a one-year term, and was to
automatically renew for additional one-year periods unless terminated by Nexvu
Technologies or Mr. Allen on written notice at least two months before
expiration of the current term. Under the agreement, if Mr. Allen's employment
was terminated without cause, or the agreement did not automatically renew, he
was entitled to receive severance of 90 days' pay. The agreement also provided
for a lump sum payment of 90 days' pay in the event of death or disability. Mr.
Allen's employment agreement with Nexvu Technologies was superseded by an
agreement he entered into with us in April, 2004.

CHANGE OF CONTROL

      The employment agreement of Scott Allen, Nexvu Technologies' Executive
Vice President - Sales, provided that managing member interests granted to Mr.
Allen, which otherwise would have vested over a two-year period, vested
immediately in the event of a change of control. "Change of control" was defined
in Mr. Allen's employment agreement to include a sale of all or substantially
all of the assets of Nexvu Technologies or a transaction in which over 50% of
the company's beneficial ownership is transferred to a beneficial owner to
persons other than the owners of Nexvu Technologies, or holders of its debt, at
the time the employment agreement was signed.

                                       24

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS.

BENEFICIAL OWNERSHIP

      The following table sets forth, as of July 31, 2004, the names, addresses,
amount and nature of beneficial ownership and percent of such ownership of:

   -  each person known to our to be the beneficial owner of more than five
      percent of our common stock;

   -  each director; and

   -  all directors and executive officers, as a group.

      Except as otherwise indicated in the footnotes to the table, the persons
named below have sole voting and investment power with respect to the shares
beneficially owned by them. In general, a person is deemed to be a "beneficial
owner" of a security if that person has or shares the power to vote or direct
the voting of the security, or the power to dispose of or to direct the
disposition of the security. A person is also deemed to be a beneficial owner of
any securities of which the person has the right to acquire beneficial ownership
within 60 days. The beneficial ownership percentages are based on 15,965,754
shares outstanding as of July 30, 2004.

<TABLE>
<CAPTION>
                                                              AMOUNT AND NATURE OF
       NAME AND ADDRESS OF BENEFICIAL OWNER                  BENEFICIAL OWNERSHIP(1)            PERCENT OF CLASS
<S>                                                          <C>                                <C>
Robert T. Geras                                                   2,257,837(2)                       14.04%
Carl C. Greer Trust(3)                                            2,266,282(4)                       13.95%
Craig Siegler                                                     1,459,278(5)                        9.05%
David Lies                                                        1,304,375(6)                        8.11%
Balkin Family Limited Partnership(7)                              1,093,186(8)                        6.81%
Rory Herriman(9)                                                    618,871(10)                       3.77%
Scott Allen(9)                                                      591,678(11)                       3.61%
Douglas Stukel(12)                                                  434,482(13)                       2.68%
Lee Wiskowski(12)                                                   325,407(14)                       2.01%
All Directors and Executive Officers as a Group (5 persons)       4,228,275                          24.25%
</TABLE>

(1)   Except pursuant to applicable marital property laws or as indicated in the
      footnotes to this table, to our knowledge, each stockholder identified in
      the table possesses sole voting and investment power with respect to all
      common stock shown as beneficially owned by the stockholder.

                                       25

<PAGE>

(2)   Includes 111,111 shares issuable upon the exercise of warrants held by Mr.
      Geras. Mr. Geras' business address is 55 East Erie Street, Suite 2905,
      Chicago, Illinois 60611.

(3)   The Carl C. Greer Trust, of which Carl C. Greer is the sole trustee, is an
      estate planning trust established by Mr. Greer for the benefit of his
      family members. The business address of the trust is c/o Thomas Floyd,
      4501 West 127th Street, Suite D, Alsip, Illinois 60803.

(4)   Includes 277,778 shares issuable upon the exercise of warrants held by the
      Carl C. Greer Trust.

(5)   Includes 162,500 shares issuable upon the exercise of warrants held by Mr.
      Siegler. Mr. Siegler's business address is 388 Melford Road, Deerfield,
      Illinois 60035.

(6)   Includes 111,111 shares issuable upon the exercise of warrants held by Mr.
      Lies, 97,392 shares owned by Mr. Lies' wife, and 9,259 shares issuable
      upon the exercise of warrants held by Mr. Lies' wife. Mr. Lies disclaims
      beneficial ownership of shares held by his wife or issuable upon the
      exercise of warrants held by his wife. Mr. Lies' address is 1210 Sheridan
      Road, Wilmette, Illinois 60091.

(7)   The Balkin Family Limited Partnership, of which Michael Balkin is the sole
      general partner, is an estate planning partnership established by Mr.
      Balkin for the benefit of himself and his immediate family members. The
      address of the partnership is 1145 Green Bay Road, Glencoe, Illinois
      60022.

(8)   Includes 92,593 shares issuable upon the exercise of warrants held by the
      Balkin Family Limited Partnership.

(9)   The business address of Mr. Herriman and Mr. Allen is 1100 East Woodfield
      Road, Suite 100, Schaumburg, Illinois 60173.

(10)  Includes 430,000 shares issuable upon the exercise of options held by Mr.
      Herriman.

(11)  Includes 430,000 shares issuable upon the exercise of options held by Mr.
      Allen.

(12)  The business address of Mr. Wiskowski and Mr. Stukel is 875 N. Michigan
      Avenue, Suite 3335, Chicago, Illinois 60611.

(13)  Includes 250,000 shares issuable upon the exercise of a warrant held by
      Mr. Stukel.

(14)  Includes 72,407 shares owned by Grander, L.L.C., of which Mr. Wiskowski is
      the sole member, and 250,000 shares issuable upon the exercise of a
      warrant held by Mr. Wiskowski.

EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                                                                                              NUMBER OF SECURITIES
                                                                                                              REMAINING AVAILABLE
                                                             NUMBER OF SECURITIES                             FOR FUTURE ISSUANCE
                                                               TO BE ISSUED UPON       WEIGHTED AVERAGE          UNDER EQUITY
                                                                  EXERCISE OF          EXERCISE PRICE OF      COMPENSATION PLANS
                                                                  OUTSTANDING             OUTSTANDING        (EXCLUDING SECURITIES
                                                                   OPTIONS,                OPTIONS,              REFLECTED IN
                         PLAN CATEGORY                        WARRANTS AND RIGHTS     WARRANTS AND RIGHTS         COLUMN (a))
                         -------------                        -------------------     -------------------    ---------------------
<S>                                                           <C>                     <C>                    <C>
Equity Compensation Plans Approved by Security Holders                --                      --                          --
Equity Compensation Plans Not Approved by Security Holders             0                      --                   2,285,000*
                  Total                                                0                      --                   2,285,000
</TABLE>

                                       26

<PAGE>

*Consists of securities issuable under our 2003 Long-Term Incentive Plan for key
employees, which was approved by our board of directors on December 16, 2003.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

CAPITAL GROWTH SYSTEMS, INC.


      Allen Borowsky and Jeffrey Klein were considered our promoters. We
initially issued a total of 931,500 shares of our common stock to a total of 41
investors, including 450,000 issued to each of Mr. Borowsky and Mr. Klein, for
total consideration of $4,815. Other than the payment for their shares and
assistance with our formation, neither Mr. Borowsky nor Mr. Klein has provided
any assets or services to us. Neither individual has received any property from
us other than the purchased shares.


      On October 1, 2003, we entered into a Subscription Agreement with Grander,
LLC, whereby Grander agreed to purchase 238,500 shares of our common stock in
consideration for Grander's funding of certain of our operational requirements.
The offering price of the shares purchased was $0.0545 per share. Total proceeds
of this issuance were $13,000. Mr. Lee Wiskowski, a director of ours, is the
sole member of Grander.

      On December 1, 2003, we entered into a Business and Financial Advisory
Agreement with Grander, LLC. For its services, Grander and its designees have
been paid a fee of $765,000 for advising us in connection with the structuring
of our acquisition of Nexvu, establishment of commercial and strategic
partnerships and joint ventures, development of our marketing plans, financial
models, financial strategies and structuring of our private offering. The
agreement terminated upon the closing of our private offering on April 15, 2004.
The designees of Grander are Lee Wiskowski and Douglas Stukel, both of whom are
members of our Board of Directors and the individuals who helped provide
advisory services to us under the agreement.

      On March 31, 2004, we entered into Advisory Services Agreements with each
of Lee Wiskowski and Douglas Stukel to provide advisory services on a going
forward basis. Pursuant to the agreements, we may request Mr. Wiskowski and Mr.
Stukel to provide financial advisory services in connection with mergers and
acquisitions and provide analysis as to strategic alternatives. As consideration
for such services, Mr. Wiskowski and Mr. Stukel were each granted a three-year
warrant, exercisable at $1.35 per share, to purchase 250,000 shares of our
common stock on or before March 31, 2007. Nothing contained in the agreement
precludes us from engaging any other person or entity to provide us financial
advisory services, provided that during the term of the agreement and for a
period of six months thereafter, we are required to give Mr. Wiskowski and Mr.
Stukel the right of first refusal to act as our advisor with respect to
financial advisory services, so long as Mr. Wiskowski or Mr. Stukel, as the case
may be, offers such services on terms no less favorable than we can obtain
elsewhere.

      The warrants granted to Mr. Wiskowski and Mr. Stukel under the agreements
contain a cashless exercise provision which essentially provides that upon
exercise of the warrants, they have the right to either pay cash or receive
"credit," as if they had paid cash, for the cancellation of a portion of their
warrants with a value equal to the spread, if any, between the fair-market

                                       27

<PAGE>

value of our common stock at the date of exercise and the exercise price of
$1.35 per share, multiplied by the number of warrants being cancelled.

NEXVU TECHNOLOGIES, LLC

      Craig Siegler is considered its promoter of Nexvu Technologies, and owned
over 5% of the company's membership interests. Upon information of Nexvu
Technologies, Mr. Siegler received 90 of the company's original 100 membership
interests. Siegler Partners, L.L.C., a company controlled by Mr. Siegler, who
owned over 5% of Nexvu Technologies' membership interests, acted as the initial
manager of Nexvu Technologies. Under the amended and restated operating
agreement for Nexvu Technologies dated as of June 27, 2003, Mr. Siegler received
a one-time expense reimbursement of $15,000 from Nexvu Technologies,
representing reimbursement for expenses incurred by Mr. Siegler or his
affiliates from Nexvu Technologies' inception through the date of the agreement.
The agreement also provided that Mr. Siegler would receive compensation at an
annual rate of $50,000 for the one-year period from July 1, 2003 through June
30, 2004. Under the amended and restated operating agreement LaSalle Nexvu
Manager, L.L.C., a company controlled by Robert Geras, who held owned over 5% of
Nexvu Technologies' outstanding interests, became the manager of Nexvu
Technologies and received compensation of $5,000 per month beginning on July 1,
2003. LaSalle Nexvu Manager had the ability to increase this compensation to
$10,000 per month in its discretion if its time commitment increased
substantially.


      During the period from the inception of Nexvu Technologies on February 28,
2002 through the June 27, 2003 effective date of the amended and restated
operating agreement, Mr. Siegler advanced $1,034,907 to Nexvu Technologies.
There was no interest rate on this advance. This amount was converted into a
total of 2,837,950 Class A membership interests in Nexvu Technologies on June
27, 2003, and the original 90 membership interests issued to Mr. Siegler were
canceled. In mid-January 2003, Mr. Siegler received a $160,000 loan from a
private bank that was guaranteed by Nexvu Technologies, and then loaned this
$160,000 to Nexvu Technologies. The $160,000 note issued to Mr. Siegler had an
interest rate of 9%. This loan, including all accrued interest, was repaid by
Nexvu Technologies in February 2004.


      On May 20, 2003, Mr. Geras made a bridge loan to Nexvu Technologies in the
amount of $150,000. The note was payable on demand, and had an interest rate of
12%. Mr. Siegler personally guaranteed this note. Mr. Geras subsequently waived
the interest on the note and converted the principal amount of the note to Class
B membership interests in Nexvu Technologies at a price of approximately $0.324
per interest.

      Several members of Nexvu Technologies who held over 5% of its Class B
membership interests purchased convertible promissory notes from the company in
September and December 2003. Each note had a one-year term and an interest rate
of 8%. The notes provided that past due principal and interest would bear
interest at the lesser of the maximum permitted rate or 10%. Each note was
convertible into Class B membership interests of Nexvu Technologies at a rate of
approximately $0.324 in principal amount for each Class B membership, and each
note holder received a warrant to purchase Class B membership interests at a
price of $1.35 per interest. A $250,000 note purchased by the Carl Greer Trust
was automatically convertible if within 90 days of the date of the note the
company both entered into a distribution agreement

                                       28

<PAGE>

with a nationally recognized brand distributor of hardware products and received
new purchase orders for at least $50,000 of products. The remaining notes were
convertible at the option of the lender. The dates, purchasers and amounts of
these notes, along with the number of Class B interests underlying the warrants
granted to each purchaser, are summarized in the following table:

<TABLE>
<CAPTION>
                                                                                                              Class B Interests
  Date                        Holder                             Amount                                      underlying Warrants
  ----                        ------                             ------                                      -------------------
<S>            <C>                                             <C>                                           <C>
9-9-03         Carl Greer Trust(1)                             $  250,000                                            92,593
9-10-03        Robert Geras                                    $  300,000                                           111,111
9-9-03         Balkin Family Limited Partnership(2)            $  100,000                                            37,037
12-10-03       Balkin Family Limited Partnership(2)            $  150,000                                            55,556
12-1-03        David J. Lies                                   $  300,000                                           111,111
12-1-03        Linda Lies(3)                                   $   25,000                                             9,259
12-22-03       Carl Greer Trust(1)                             $  500,000                                           185,185
                                                               ----------                                           -------
TOTAL                                                          $1,625,000                                           601,852
                                                               ==========                                           =======
</TABLE>

(1)   The Carl C. Greer Trust, of which Carl C. Greer is the sole trustee, is an
      estate planning trust established by Mr. Greer for the benefit of his
      family members.

(2)   The Balkin Family Limited Partnership, of which Michael Balkin is the sole
      general partner, is an estate planning partnership established by Mr.
      Balkin for the benefit of himself and his immediate family members.

(3)   Ms. Lies is the wife of David Lies.

      All of the above warrants converted into warrants to purchase an identical
number of our shares upon the closing of our merger with Nexvu Technologies on
January 28, 2004. The note purchased by the Carl Greer Trust in September 2003
automatically converted into a total of 769,777 Class B membership interests on
December 30, 2003. Of the remaining $1,375,000 of notes, $862,289 was converted
into a total of 2,655,082 Class B membership interests of Nexvu Technologies,
and the remaining $512,711 was converted into a total of 538,347 of our shares
on January 28, 2004 in connection with the merger between us and Nexvu
Technologies.


      On January 28, 2004, Nexvu Technologies entered into an agreement with Mr.
Siegler in connection with a dispute relating to the issuance of membership
interests in Nexvu and a capital call by Nexvu in December 2003. Under the
agreement, among other things, Nexvu and Mr. Siegler each released the other and
his or its successors and assigns and, in the case of Nexvu Technologies, its
manager and officers, against any and all liabilities relating to us or Nexvu
Technologies. Under the agreement Nexvu Technologies agreed to cause us to grant
Mr. Siegler a warrant to purchase 162,500 shares of our common stock at a price
of $1.35 per share in consideration for Mr. Siegler's release and for his
employment with Nexvu Technologies. The warrants issued to Mr. Siegler had a
cashless exercise provision.


                                       29

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

      (a) Exhibits

<TABLE>
<CAPTION>
Exhibit Number                             Description of Document
--------------                             -----------------------
<S>                  <C>
      2.1            Agreement and Plan of Merger Agreement By and Among Capital Growth
                     Systems, Inc., Nexvu MergerSub, LLC, and Nexvu Technologies, L.L.C.
                     dated January 28, 2004. (1)

      3.1            Articles of Incorporation of Capital Growth Systems, Inc. (2)

      3.2            By-laws of Capital Growth Systems, Inc. (3)

      4.1            Registration Rights Agreement by and among Capital Growth Systems,
                     Inc. and certain shareholders of the Company dated as of December
                     16, 2003. (1)

      4.2            Form of Warrant to Purchase common stock of Capital Growth Systems,
                     Inc. for bridge lenders. (4)

      4.3            Form of Warrant to Purchase common stock of Capital Growth Systems,
                     Inc. for Advisory Service Agreements. (4)

      4.4            Form of Warrant to Purchase common stock of Capital Growth Systems,
                     Inc. for selling shareholder. (4)

      4.5            2003 Long-Term Incentive Plan. (4)

      10.1           Indemnification Agreement by and among Capital Growth Systems, Inc.,
                     Nexvu Technologies, L.L.C., Rory Herriman, Douglas Stukel and Lee
                     Wiskowski dated as of January 28, 2004. (1)

      10.2           Loan Conversion Agreement by and among Nexvu Technologies, L.L.C.,
                     Robert T. Geras, Balkin Family L.P, Carl Greer Trust, David J. Lies,
                     Linda M. Lies and Karen Jaimovich dated as of December 31, 2003. (1)

      10.3           Second Amended and Restated Operating Agreement of Nexvu
                     Technologies, LLC.(4)

      10.4           Advisory Services Agreement dated March 31, 2004 by and between
                     Capital Growth Systems, Inc. and Lee Wiskowski. (4)

      10.5           Advisory Services Agreement dated March 31, 2004 by and between
                     Capital Growth Systems, Inc. and Douglas Stukel. (4)

      10.6           Employment Agreement dated April 26, 2004 by and between Capital
                     Growth Systems, Inc. and Scott Allen. (4)
</TABLE>

                                       30

<PAGE>

<TABLE>
<S>            <C>
10.7           Employment Agreement dated April 26, 2004 by and between Capital
               Growth Systems, Inc. and Rory Herriman. (4)

10.8           Subscription Agreement dated October 1, 2003 by and between Capital
               Growth Systems, Inc. and Grander, LLC.

10.9           Software License Agreement dated as of August 31, 2002 by and
               between Hifn, Inc. and Siegler Technology & Development, L.L.C. for
               MeterFlow Software.

10.10          Software License Agreement dated as of August 31, 2002 by and
               between Hifn, Inc. and Siegler Technology & Development, L.L.C. for
               MeterWorks Software.

10.11          Form of Agreement between Capital Growth Systems, Inc. and
               Value-Added Resellers

14             Code of Ethics. (4)

16             Letter from Salberg & Co., P.A. regarding Change in Auditors. (5)

21             List of Subsidiaries. (4)

31.1           Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley
               Act of 2002.

31.2           Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley
               Act of 2002.

32             Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

-----------------------

(1)   Incorporated herein by reference to the Form 8-K filed with the Commission
      on February 11, 2004 (File No. 0-30831).

(2)   Incorporated herein by reference to the Form 10-SB filed with the
      Commission on June 20, 2000 (File No. 0-30831).

(3)   Incorporated herein by reference to the Form 10-SB filed with the
      Commission on June 20, 2000 (File No. 0-30831).

(4)   Incorporated herein by reference to the Form 10-KSB filed with the
      Commission on May 6, 2004 (File No. 0-30831).

(5)   Incorporated herein by reference to the Form 8-K filed with the Commission
      on May 3, 2004 (File No. 0-30831).

                                       31

<PAGE>

      (b) Reports on Form 8-K

      None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

      (a) Audit Fees.

      The aggregate fees billed by Russell & Atkins, PLC for the transition
period ending December 31, 2003 and for the fiscal years ended May 31, 2003 and
May 31, 2002 for professional services rendered for the audit of our financial
statements and the reviews of the financial statements included in our Form
10-Qs totaled $6,250, $5,750 and $4,500, respectively.

      (b) Audit-Related Fees.

      None.

      (c) Tax Fees

      None.

      (d) All Other Fees

      None.

      (e) Audit Committee Pre-Approval Policy

      As of December 31, 2003, we had not established a separately-designed
standing audit committee. As a result of the completion of our business
combination with Nexvu on January 28, 2004, we presently have a
separately-designed standing Audit Committee and an Audit Committee Charter. Our
Audit Committee intends to pre-approve all non-audit services provided by our
independent auditors.

                                       32

<PAGE>

                                   SIGNATURES

                  In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                          CAPITAL GROWTH SYSTEMS, INC.


                                  BY: /s/ Lee Wiskowski
                                      ------------------------------------------
                                      Lee Wiskowski, Co-Chief Executive Officer



                                      /s/ Douglas Stukel
                                      ------------------------------------------
                                      Douglas Stukel, Co-Chief Executive Officer



                                      /s/ Derry L. Behm
                                      ------------------------------------------
                                      Derry L. Behm, Chief Financial Officer



DATED:  NOVEMBER 10, 2004


                  In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:


<TABLE>
<CAPTION>
           SIGNATURE                                 TITLE                                  DATE
<S>                                 <C>                                               <C>
/s/ Douglas Stukel                  Director and Co-Chief Executive Officer           November 10, 2004
--------------------------------
Douglas Stukel

/s/ Lee Wiskowski                   Director and Co-Chief Executive Officer           November 10, 2004
--------------------------------
Lee Wiskowski

/s/ Robert T. Geras                 Director                                          November 10, 2004
--------------------------------
Robert T. Geras

/s/ Philip B. Kenny                 Director                                          November 10, 2004
--------------------------------
Philip B. Kenny

/s/ David A. Beamish                Director                                          November 10, 2004
--------------------------------
David A. Beamish

/s/ Derry L. Behm                   Chief Financial Officer                           November 10, 2004
--------------------------------
Derry L. Behm
</TABLE>