UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549




FORM
      10-KSB/A


Amendment
      No. 1





(Mark
      One)





x ANNUAL
      REPORT UNDER SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934





For
      the
      Fiscal Year ended December 31, 2006





o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934





For
      the
      transition period from ______________ to ________________





Commission
      File Number 0-30831





CAPITAL
                GROWTH SYSTEMS, INC.(Name
                of small business issuer in its charter)Florida
            
            65-0953505(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification Number)125
                South Wacker Drive, Suite 300  Chicago, Illinois
                60606(Address
                of principal executive offices)(312)
                673-2400(Issuer's
                telephone number)




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




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 x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o




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




**EXPLANATORY
      NOTE**





This
      Amendment No. 1 to Annual Report on Form 10-KSB/A (this "Amendment") is being
      filed by Capital Growth Systems, Inc. (the "Company") in order to amend and
      restate certain items of its Annual Report on Form 10-KSB for the fiscal year
      ended December 31, 2006 filed with the SEC on April 20, 2007 (the "Form
      10-KSB").





This
      Amendment is being filed primarily in order to include Part III, Items 10 and
      11
      as we will not file our definitive proxy statement for the 2007 Annual Meeting
      of Stockholders within 120 days after the close of the 2006 year. Further,
      this
      Amendment also provides additional information required by Part III, Item 9
      which was not included in our Form 10-KSB filing. This amendment also supersedes
      and replaces the information contained in Part III, Item 12 of our Form 10-KSB
      filing.









**PART
      III**





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




Our
      directors and executive officers and their ages as of the date of this
      Memorandum are as follows:




Name
            
            Age
            
            PositionThomas
                G. Hudson
            
            60
            
            Chief
                Executive Officer/DirectorPatrick
                C. Shutt
            
            39
            
            President/DirectorGeorge
                A. King
            
            47
            
            President-Global
                Operations and Development/DirectorRobert
                A. Pollan
            
            46
            
            Chief
                Information and Strategy OfficerDerry
                L. Behm
            
            47
            
            Chief
                Financial OfficerLee
                Wiskowski
            
            40
            
            Executive
                Vice President/DirectorDouglas
                J. Stukel
            
            36
            
            Executive
                Vice President/DirectorRobert
                T. Geras
            
            69
            
            Chairman
                of the Board of DirectorsPhilip
                B. Kenny
            
            52
            
            DirectorDavid
                A. Beamish
            
            42
            
            Director





*Thomas
      Hudson, CEO and Director.* Mr. Hudson, age 60, has served as our CEO and director since June, 2006. He
      has played a key leadership role in innovation technology businesses for over
      three decades. He was most recently chairman and chief executive officer of
      Computer Network Technology Corporation (“CNT”), whose shares traded on Nasdaq
      before being acquired by McDATA Corporation in June 2005, when he also joined
      McDATA’s board of directors (and also joined the board of directors of 20/20 as
      its chairman). During his tenure at CNT, Mr. Hudson: (i) grew the business
      revenue profitability from $65 million to $360 million in wide area storage
      networking; and (ii) in 2004 launched a VNO at CNT in collaboration with 20/20,
      which achieved $40 million of contracted revenue associated with connectivity
      for storage area networks over a period of 18 months. Prior to his tenure from
      1996 through 2005 at CNT, he was a senior vice president of corporate
      development for McGraw Hill Companies from 1993 to 1996. Mr. Hudson began his
      professional business career in 1968 at IBM, where he served in various
      executive management capacities, including heading an over $1 billion division.
      He received his B.S. in electronic engineering from the University of Notre
      Dame
      and his M.B.A. from New York University. He has served on several public company
      boards including Ciprico, McDATA and Lawson. He currently serves on the public
      boards of Intentia and Plato Learning.




*Patrick
      C. Shutt, President and COO* .
      Mr.
      Shutt, age 39, is also a member of the Board of Directors. He has more than
      seventeen years of experience in information services and telecommunications
      industry including being a co-founder, Director and Chief Executive Officer
      of
      20/20 Technologies, Inc. and a Director and the CEO of Magenta net-Logic, Ltd.,
      a global information services and consulting company focusing on the
      telecommunications industry co-headquartered in the United States and the United
      Kingdom. Magenta was acquired by 20/20 in 2004 and 20/20 was acquired by Capital
      Growth in September, 2006. Also Mr. Shutt co-founded and served as a Director,
      Chairman, Chief Executive Officer and President at Universal Access from October
      1997 to November 2002. Under Mr. Shutt’s leadership, Universal Access grew
      revenues by over 17,000% and received numerous awards for its growth. Mr. Shutt
      also led the company through its IPO in March of 2000 which was underwritten
      by
      Goldman Sachs and had an initial market capitalization over $3 billion.




2




Mr.
      Shutt
      began his career from 1989 to 1992 with the Sprint Communications and the global
      telecommunications company Cable and Wireless PLC from 1992 to 1994. Mr. Shutt
      then moved to Teleport Communications Group (TCG) from 1994 to 1996. In late
      1996 Mr. Shutt operated a TCG master agency start up organization named Arista
      Communication until September of 1997. Mr. Shutt serves as the Board of Director
      President for Volunteers of America Illinois a non-for-profit organization.
      Mr.
      Shutt serves on the Alumni Board at Wagner College. Mr. Shutt serves on the
      advisory Board for the Business School at the University of New Haven and Mr.
      Shutt holds a B.A. and an M.B.A. from Wagner College in New York.




*George
      A. King, President of Global Operations and Development* .
      Mr.
      King, age 47, will also be nominated to our board of directors at the next
      annual meeting of shareholders. Mr. King previously was the co-founder, Director
      and President of 20/20 Technologies, Inc. and a Director and President Magenta
      net-Logic, Ltd., a global information services and consulting company focusing
      on the telecommunications industry and co-headquartered in the United States
      and
      the United Kingdom. Magenta was acquired by 20/20 in 2004 and 20/20 was acquired
      by Capital Growth in September, 2006. He has more than twenty years of
      experience in law, finance and telecommunications, including serving as a
      Director, Chief Development Officer and in several President operating roles
      at
      Universal Access from 1997 to 2002. He began his career from 1984 to 1995 with
      the Wall Street law firm of Mudge Rose Guthrie Alexander & Ferdon and the
      global investment banking firm of Credit Suisse First Boston. He was a
      co-founder of an investment banking spin-off from CSFB, Cambridge Partners,
      LLC,
      in 1995 and operated his own corporate finance advisory firm from December
      1996
      until August 1999 when he joined Universal Access on a full time basis. Mr.
      King’s board experience includes serving as a Section 16 Officer of a US public
      company, as well as Director or Trustee of two public companies, five private
      companies and two universities. Mr. King holds an A.B. (cum laude) from Colgate
      University and a J.D. from Fordham University School of Law.




*Robert
      A. Pollan, Chief Information and Strategy Officer* ,
      Mr.
      Pollan age 46, will also be nominated to our board of directors at the next
      annual meeting of shareholders. Mr Pollan brings a combination of large-company
      experience and an entrepreneurial background in Europe and the United States.
      He
      is an experienced operating executive and senior board member in both technology
      and non-technology enterprises. Working at General Electric, Mr. Pollan
      completed a multi-year General Electric management development program rotation
      focused on industrial automation businesses. He variously served at GE Capital
      Corp subsidiaries as CEO, CTO and VP of business development. He spent several
      years in Central Europe in the early 1990s, where he led the largest successful
      Central European industrial organizational and financial restructuring, and
      subsequently privatized the Szczecin Shipyard in Poland. His achievements became
      the subject of a 1995 Harvard Business Review article citing it as a model
      of
      post-communism management. Mr. Pollan was one of the four initial managing
      directors of Internet Capital Group, a leading, publicly held B2B holding
      company. While at ICGE, he was the founding chairman of ICG Commerce, a leading
      online procurement services provider. On leaving Internet Capital Group at
      the
      end of 2000, Mr. Pollan served in key operating roles at Universal Access and
      Mobility Technologies, now Traffic.com, both publicly held companies that were
      part of the ICGE network. He set up cutting-edge systems for the delivery of
      information, critical in the value proposition of both companies. Mr. Pollan
      also was recruited to lead the turn around and be chairman of the board of
      Energy Solutions International, a world leader in pipeline management software
      for the oil and gas industry. Mr. Pollan is a graduate of the Harvard Business
      School with a MBA with distinction. Prior to Harvard, he graduated from the
      University of Pennsylvania's Management and Technology Program (Wharton and
      Moore Schools), with the dual degrees of BS Electrical Engineering and BS
      Economics, with honors.




*Derry
      L Behm, Chief Financial Officer.* Mr.
      Behm,
      age 47, has served as our chief financial officer since 2004. Mr. Behm served
      as
      the chief financial officer of Spiegel Catalog, Inc. from 2000 to 2003 and
      as
      the chief financial officer of Harrods Online, Inc. from 1999 to 2000. Prior
      to
      1999, Mr. Behm was the corporate controller of The Spiegel Group.




*Lee
      Wiskowski, Director* .
      Mr. Wiskowski, age 39, has served as a director of ours since the
      completion of our merger with Nexvu. Mr. Wiskowski served as our co-chief
      executive officer from August 30, 2004 until our hiring of Mr. Hudson. In 1994,
      Mr. Wiskowski was the co-founder of Madison Securities and early in 1999 was
      a
      co-founder of Advanced Equities, both NASD licensed broker-dealers focusing
      on
      emerging growth companies. During his tenure with these two companies, Mr.
      Wiskowski had significant responsibility for private and public placements,
      primarily of high technology companies. Mr. Wiskowski sold his interest to
      the
      other principals of Advanced Equities approximately five years ago. Since
      December 2002, Mr. Wiskowski has been engaged in the business of providing
      financial and advisory services to emerging growth companies through Grander,
      LLC and Momentum Capital, LLC, both privately held advisory and consulting
      firms. As the sole owner of Grander, LLC and co-founder of 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. Mr. Wiskowski also serves as an
      officer and director of Health Partnership Inc. and Mountains West Exploration,
      Inc.




3




*Douglas
      J. Stukel, Director* .
      Mr. Stukel, age 36, has served as a director since August 2003. Mr. Stukel
      served as our co-chief executive officer from August 30, 2004 until our hiring
      of Mr. Hudson. 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 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. Mr. Stukel also serves as an officer and
      director of Health Partnership Inc., a publicly reporting company that owns
      and
      operates health clubs and Mountains West Exploration, Inc., a publicly reporting
      company seeking to acquire an operating business.




*Robert
      T. Geras, Chairman of the Board of Directors.* Mr. Geras,
      age 67, has served as our Chairman of the Board since the completion of our
      merger with Nexvu in January 2004. Mr. Geras served as the Chairman of
      Nexvu from June 2003 through the date of the merger. Mr. Geras’ sole occupation
      for the last twenty two 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 has also served as a director and/or early
      stage investor in VideoHome Tours, a provider of visual content management
      and
      marketing services for large brokerage firms since 2001; Advanced Diamond
      Technologies, Inc., a developer of synthetic diamonds for the nano-industry
      since 2005; ShowTime.com, a complete Internet scheduling and productivity tool
      for real estate agents since 1999; Exadigm, Inc., a company engaged in the
      development and sale of electronic payment processing equipment utilizing wi-fi
      technology since 2003; Bias Power Technology, Inc. a developer of patented
      low
      watt DC-to-DC power supplies since January 2005; and 20/20 Technologies, Inc,
      a
      provider of bandwidth and connectivity to the high speed data transmission
      industry since 2004.




*Philip
      B. Kenny, Director.* Mr.
      Kenny, age 52, has served as a director since August 2004. He is, and has been
      for over the last five years, an owner of and partner in Kenny Industries,
      a
      holding company for Kenny Construction Company, Seven K Construction, Northgate
      Investments, Casino Queen and Clinton Industries. Mr. Kenny serves as president
      of Seven K Construction and Northgate Investments. In addition, Mr. Kenny
      recently served as CEO of K-2 Industrial, a $140 million service company, with
      over 1,000 corporate clients across the United States. In addition, he serves
      on
      the executive committee of Sports Publishing, a Champaign, IL publisher that
      produces and distributes 120 sports publications on an annual basis. Mr. Kenny
      also serves on the boards of Umbrella Entertainment, the largest production
      manager of air shows in the United States, Fifth Media, a technology company
      in
      Libertyville, IL, and Insight Productions, a designer and importer of custom
      products based in Naperville, IL. He serves on the business advisory board
      at
      Miami University in Oxford, OH, the board at Northern Illinois University School
      of Engineering and Technology, and Loyola Academy, the largest Jesuit High
      School in the United States. Mr. Kenny is a graduate of the Business School
      at
      Arizona State University.




4


*David
      A. Beamish, Director* .
      Mr.
      Beamish, age 42, has served as a director since August 2004. He has been in
      sales and marketing for over 19 years. Mr. Beamish began his career in the
      medical sales area, where he worked for Medline Industries for five years.
      He
      successfully managed and built a four state territory to over $35 million in
      sales. In 1987, he left Medline Industries to co-found Premier Medical
      Industries Inc., which he and a partner built to $32 million in sales business
      over a period of eight years. After Premier Medical Industries, Mr. Beamish
      successfully formed, built and sold five local businesses: Premier Sales Inc.
      (a
      linen and textile distributor), Premier Tax and Accounting LLC (an accounting
      and tax firm), Premier Construction LLC (a small construction firm), Premier
      Technologies (a computer distributor and Internet firm), and Premier Products
      LLC (a nursing home supply company). Today, Mr. Beamish owns and operates
      Premier Laundry Technologies LLC, the largest independently owned COG Healthcare
      Laundry in the Midwest. PLT has three plants and employs over 150 people.




All
      directors hold office until their successors have been elected and qualified
      or
      until their earlier resignation or removal. Directors are elected annually.
      None
      of the directors are involved in certain legal proceedings are covered under
      Item 401(d) of Regulation S-B. Officers serve at the discretion of our board
      of
      directors. Our board of directors has determined that Messrs. Geras, Beamish
      and
      Kenny are independent within the meaning of Rule 4200 of the Nasdaq Stock
      Market.





**Section
      16(a) Beneficial Ownership Reporting Compliance**





Our
      executive officers, directors and shareholders beneficially owning more than
      10%
      of our Common Stock are required, under the Securities Exchange Act of 1934,
      as
      amended (the “Exchange Act”), to file reports of ownership of our Common Stock
      with the Securities and Exchange Commission. Based solely upon a review of
      the
      copies of
      reports furnished to us, we believe that our executive officers, directors
      and
      stockholders beneficially owning more than 10% of our Common Stock, have
      complied with the requirements during the year ended December 31, 2006,
      with the exception of the following transactions which have not been timely
      filed: issuance of capital stock to Messrs Geras and Shutt in connection with
      the merger of 20/20 Technologies, Inc. into a subsidiary of the Company (as
      part
      of the merger consideration for their shares of 20/20 Technologies, Inc.) and
      issuance of warrants to Messrs. Hudson, Stukel and Geras to purchase convertible
      preferred stock of the Company in connection with the funding of bridge loans
      to
      the Company.





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




**COMPENSATION
      DISCUSSION AND ANALYSIS**





We
      have
      prepared the following Compensation Discussion and Analysis, or CD&A, to
      provide you with information that we believe is necessary to understand our
      executive compensation policies and decisions as they relate to the compensation
      of our named executive officers (each, an “NEO”) as identified in our Summary
      Compensation Table.





**The
      Compensation Program**





The
      Company’s philosophy with respect to compensation is straightforward: to
      attract, retain and motivate qualified employees. The Company endeavors to
      offer
      prospective employees a salary that is competitive in the marketplace and also
      commensurate with their peers internally. Another objective of the compensation
      program is to motivate employees by aligning their interests with shareholders
      with equity incentives, thereby giving them a stake in the growth and prosperity
      of the Company and encouraging the continuance of their services with the
      Company or subsidiaries or affiliated companies. Given the relative size of
      the
      Company, it has determined to take a simple, straightforward approach to
      compensating its NEOs and to avoid other forms of compensation, such as awards
      under non-equity incentive plans, non-qualified defined benefit plans and
      pension plans.





The
      Company’s compensation program is designed to reward performance, both
      individual performance and the performance of the Company as a whole. The
      Company has implemented a practice of using specific quantitative metrics in
      determining compensation both cash and stock option incentive compensation.
      The
      Company’s Telecom Logistics business model is based around building a profitable
      monthly recurring revenue stream and is the basis for rewarding its NEOs. The
      Company strongly believes that this approach affords more flexibility in
      rewarding the performance of individuals in light of the Company’s current
      financial standing.


5





The
      Company has employment agreements with its Chief Executive Officer, Chief
      Operating Officer
      and its
      President - Global Operations and Development .
      Each
      employment agreement provides for a base compensation, along with both cash
      and
      equity incentive compensation. The cash incentive compensation is determined
      by
      the board of directors and the equity compensation is defined within each of
      the
      NEOs employment agreements. Those
      NEOs that do not have an employment agreement are also provided a base salary,
      bonus and equity incentives as determined by the board of directors and are
      employed “at will” with the Company.





**Our
      Compensation Philosophy**





The
      compensation paid to our NEOs is a reflection of the Company’s overall
      compensation philosophy as the Company’s desire to retain and motivate its
      employees manifests itself in how compensation is allocated to the NEOs. Cash
      bonuses, which are a meaningful percentage of each individual’s total annual
      compensation, are paid to NEOs on an annual basis at year-end to help ensure
      that these individuals remain focused in any given year. In addition, the stock
      grants awarded to the NEOs contain both time and incentive based provisions
      to
      facilitate motivation and retention of the Company’s NEOs.





We
      believe that the Company’s approach to compensation has allowed it to attract
      and retain highly talented telecommunication veterans, which is challenging
      in
      today’s strong labor market. The cash component of the compensation program has
      adequately compensated the NEOs for services rendered, while the equity
      issuances have given them a stake in the growth and prosperity of the Company.
      This equity stake has provided further incentive to the NEOs to continue working
      with and for the Company.





**Elements
      of Compensation**





The
      Company has employment agreements with its Chief Executive Officer, Chief
      Operating Officer and President. The Company provides compensation to its NEOs
      in the form of both cash and equity. Cash compensation is paid in two forms:
      base salary and annual incentive bonuses. The criteria to earn the incentive
      bonuses are determined by the board of directors.





The
      amount of this incentive is determined at the discretion of the Compensation
      Committee, which analyzes both the performance of the individual and the Company
      as a whole. The incentive bonus, if any, is paid after the end of the Company’s
      fiscal year. The Company also compensates and provides incentives to its NEOs
      through the issuance of equity in the Company. The Company has to date only
      issued stock options and warrants to its NEOs.





Shutt
      Employment and Option Agreements





Effective
      on September 8, 2006, the Company entered into an employment agreement, a stock
      option agreement and a performance option agreement with Patrick C. Shutt,
      upon
      Mr. Shutt's appointment as the Company's President and a member of the Board
      of
      Directors ("Board"). Each agreement was approved by the Company's
      Board.





Mr.
      Shutt's appointment as President was pursuant to an employment agreement (“Shutt
      Employment Agreement”), the material terms of which are briefly summarized here.
      Mr. Shutt has been appointed to the position of President and Chief Operating
      Officer of the Company, subject to the power of the CEO and Board to limit
      such
      duties, responsibilities and authority. The term of the Shutt Employment
      Agreement is for a period of two (2) years, subject to either party terminating
      it prior to the expiration of such two (2) year term. The term shall continue
      for additional one (1) year terms if neither party terminates the Shutt
      Employment Agreement prior to the expiration of the original two (2) year term
      and each subsequent extension. Mr. Shutt's annual base salary shall be equal
      to
      $200,000 with the possibility of an annual performance bonus as determined
      by
      the Board. Mr. Shutt will also be entitled to participate in all other benefits,
      perquisites, vacation days, benefit plans or programs of the Company which
      are
      available generally to other Company executives. In addition, the Company
      granted Mr. Shutt an option to acquire up to 1,500,000 shares of Common Stock
      of
      the Company at a strike price of $.70 per share (the “Employee Options”). In
      accordance with the option agreement (i) 25% of the Employee Options vested
      upon
      approval by the Board, and (ii) 25% shall thereafter vest on each
      anniversary of the Agreement over the next three (3) years. The Employee
      Options are governed by an option agreement between Mr. Shutt and the Company,
      reflecting such terms.




6




Mr.
      Shutt's Employment Agreement also includes a grant of an option to acquire
      up
      to 1,000,000 shares of the Company's Common Stock (the “Performance
      Options”) for a strike price equal to $.70, as an incentive to attain certain
      revenue objectives. The Performance Options shall vest on the following
      basis:  upon each realization by the Company of an incremental $20 million
      of third party service and/or maintenance revenue from new or existing
      customers, with gross margins in excess of 30%, pursuant to an agreement of
      one
      year or more, Mr. Shutt shall vest in 50% of the Performance Options; the
      remaining options vest upon realization by the Company of a second $20 million
      of third party service and/or maintenance revenue from new or existing
      customers, with gross margins in excess of 30%. The Performance Options are
      governed by an option agreement between Mr. Shutt and the Company, reflecting
      such terms.





The
      Shutt
      Employment Agreement provides for customary severance and an acceleration of
      unvested Employee Options and Performance Options in the event the Company
      terminates Mr. Shutt's employment without cause or if Mr. Shutt terminates
      for
“good reason.” Additionally, the Employee Options and Performance Options
      immediately vest and become exercisable in the event of a “change of control” as
      follows: (i) 50% will vest immediately if at any time after the occurrence
      of a
      change in control or the announcement of a change in control the Company's
      per
      share Common Stock price equals or exceeds $1.80; and (ii) 100% will vest
      immediately if at any time after the occurrence of a change in control or the
      announcement of a change in control the Company's per share Common Stock price
      equals or exceeds $2.35, in the event the unvested options are not substituted
      or continued by the acquirer. Finally, the Shutt Employment Agreement provides
      for additional payments to Mr. Shutt in the event of a change of control or
      if
      some of the compensation payable to Mr. Shutt upon a change of control exceeds
      certain limitations contained in the Internal Revenue Code of 1986, as
      amended.





King
      Employment and Option Agreements





Effective
      on September 8, 2006, the Company entered into an employment agreement, a stock
      option agreement and a performance option agreement with George A. King, upon
      appointment of Mr. King as the Company's President Global Operations and
      Development. Each agreement was approved by the Company's Board.





Mr.
      King's appointment as President Global Operations and Development was pursuant
      to an employment agreement (“King Employment Agreement”), the material terms of
      which are briefly summarized here. Mr. King has been appointed to the position
      of President Global Operations and Development, responsible for knowledge
      database, carrier and channel partnerships and corporate business development,
      subject to the power of the CEO and Board to limit such duties, responsibilities
      and authority. The term of Mr. King's Agreement shall be for a period of two
      (2)
      years, subject to either party terminating it prior to the expiration of such
      two (2) year term. The term shall continue for additional one (1) year term
      if
      neither party terminates the Agreement prior to the expiration of the original
      two (2) year term and each subsequent extension. Mr. King's annual base salary
      shall be equal to $200,000 with the possibility of an annual performance bonus
      as determined by the Board. Mr. King will also be entitled to participate in
      all
      other benefits, perquisites, vacation days, benefit plans or programs of the
      Company which are available generally to other Company executives. In addition,
      the Company granted Mr. King an option to acquire up to 1,500,000 shares of
      Common Stock of the Company at a strike price equal to $.70 per share (“Employee
      Options”). In accordance with the option agreement (i) 25% of the Employee
      Options vested upon approval of the option agreement by the Board, and (ii)
      25%
      shall thereafter vest on each yearly anniversary of Mr. King's Agreement over
      the next three (3) years. The Employee Options are governed by an option
      agreement between Mr. King and the Company, reflecting such terms.




Mr.
      King's Employment Agreement also includes a grant of an option to acquire up
      to
      1,000,000 shares of the Company's Common Stock (the “Performance Options”) for a
      strike price equal to $0.70 per share. The Performance Options shall vest upon
      the realization by the Company of achieving a “Target MRR”, which means the sum
      of the Base Amount plus $3.5 million of monthly recurring revenue for a period
      of at least 90 days on or before April 1, 2009. For purposes of defining the
      Base Amount, this is equal to monthly recurring revenue with respect to the
      maintenance contracts and the installed circuits for Frontrunner Networks
      Systems Corporation and for Global Capacity Group, respectively.




7




The
      King
      Employment Agreement provides for customary severance and an acceleration of
      unvested Employee Options and Performance Options in the event the Company
      terminates Mr. King's employment without cause or if Mr. King terminates for
      “good reason.” Additionally, the Employee Options and Performance Options
      immediately vest and become exercisable in the event of a “change of control” as
      follows: (i) 50% will vest immediately if at any time after the occurrence
      of a
      change in control or the announcement of a change in control the Company's
      per
      share Common Stock price equals or exceeds $1.80; and (ii) 100% will vest
      immediately if at any time after the occurrence of a change in control or the
      announcement of a change in control the Company's per share Common Stock price
      equals or exceeds $2.35, in the event the unvested options are not substituted
      or continued by the acquirer in the event the unvested options are not
      substituted or continued by the acquirer. Finally, the King Employment Agreement
      provides for additional payments to Mr. King in the event of a change in control
      or if some of the compensation payable to Mr. King upon a change of control
      exceeds certain limitations contained in the Internal Revenue Code of 1986,
      as
      amended.





Hudson
      Employment and Option Agreements





Mr.
      Hudson's appointment as CEO was pursuant to an employment agreement
      (“Agreement”), the major terms of which are briefly summarized here. Mr. Hudson
      has been appointed to the position of CEO and shall have the normal duties,
      responsibilities and authority of the position of CEO, subject to the power
      of
      the Board to limit such duties, responsibilities and authority. The term of
      the
      Agreement shall be for a period of two (2) years, subject to either party
      terminating it prior to the expiration of such two (2) year term. The term
      shall
      continue for additional one (1) year term if neither party terminates the
      Agreement prior to the expiration of the original two (2) year term and each
      subsequent extension. Mr. Hudson's annual base salary shall be equal to $240,000
      with the possibility of an annual performance bonus of up to 200% of Mr.
      Hudson's annual salary as determined by the Board. Mr. Hudson will also be
      entitled to participate in all other benefits, perquisites, vacation days,
      benefit plans or programs of the Company which are available generally to other
      Company executives. In addition, the Company granted Mr. Hudson the option
      to
      acquire shares of Common Stock of the Company equal to 1,496,993 at a strike
      price equal to the closing price of the Company's Common Stock as of June 27,
      2006 ($.70 per share) (“Employee Options”). In accordance with the option
      agreement (i) 25% of the Employee Options vested upon execution of the
      Agreement, and (ii) 25% shall thereafter vest on the yearly anniversary of
      the
      Agreement over the next three (3) years. Further, the Employee Options are
      governed by an option agreement between Mr. Hudson and the Company.





Mr.
      Hudson's Agreement also includes a grant of an option to acquire 2,993,985
      shares of the Company's Common Stock for a strike price equal to per share
      Common Stock price of the Next Equity Financing (as defined below); provided
      that if such Next Equity Financing does not occur on or prior to June 27, 2007,
      such exercise price shall be equal to $.70 as an incentive to attain certain
      revenue objectives. The Performance Options shall vest on the following
      basis:  upon each realization by the Company of an incremental $2.0 million
      of third party service and/or maintenance revenue from new customers, with
      gross
      margins in excess of 35%, pursuant to an agreement of one year or more, Mr.
      Hudson shall vest, incrementally, in 199,599 option shares of the total number
      of Performance Options, up to a total of such available Performance
      Options.  Notwithstanding, Mr. Hudson shall have authority, subject to the
      Board approval, to direct the allocation of such Performance Options to other
      Company executives.





The
      Agreement provides for customary severance and an acceleration of unvested
      Employee Options and Performance Options in the event the Company terminates
      Mr.
      Hudson's employment without cause or if Mr. Hudson terminates for “good
      reason.” Additionally, the Employees Options and Performance Options
      immediately vest and become exercisable in the event of a “change of control” of
      the Company in the event the unvested options are not substituted or continued
      by the acquirer. Finally, the Agreement provides for additional payments to
      Mr.
      Hudson in the event some of the compensation payable to Mr. Hudson upon a change
      of control exceeds certain limitations contained in the Internal Revenue Code
      of
      1986, as amended.




8




Mr.
      Hudson has agreed to defer any current payment of his base salary and forgo
      any
      coverage and/or benefits under any and all medical insurance, life insurance,
      and pension plans of the Company until the earlier of: (A) the closing of a
      capital raise by the Company in a minimum aggregate gross proceeds of $6.0
      million (the “Next Equity Financing”); and (B) September 30, 2006; provided,
      that such base salary would accrue and be payable upon the earlier to occur.
      It
      further provided that if the Next Equity Financing was not successfully
      completed by September 30, 2006, the Agreement then either party could terminate
      the Agreement.





Amendment
      to Hudson Employment Agreement and Option Agreements





Effective
      on September 8, 2006, the Company entered into an amendment of the employment
      agreement, a stock option agreement and a performance option agreement with
      Thomas G. Hudson, the Company's CEO. Each agreement and amendment was approved
      by the Company's Board.





Pursuant
      to the terms of the amendment to the employment agreement (the “Amendment”), Mr.
      Hudson surrendered 1,993,985 of his previously-granted 2,993,985 performance
      options (the “Performance Options”) so that the Company could use such options
      to attract additional highly-qualified executives. Mr. Hudson retained the
      right
      to purchase 1,000,000 Performance Options pursuant to an amended option
      agreement whereby Mr. Hudson's right was adjusted to the right to acquire up
      to
      1,000,000 shares of the Company's Common Stock at a strike price equal to $0.70
      per share. The Performance Options shall vest on the following basis:  upon
      each realization by the Company of an incremental $20 million of third party
      service and/or maintenance revenue from new or existing customers, with gross
      margins in excess of 30%, pursuant to an agreement of one year or more, Mr.
      Hudson shall vest in 50% of the Performance Option Shares; the remaining options
      vest upon realization by the Company of a second $20 million of third party
      service and/or maintenance revenue from new or existing customers, with gross
      margins in excess of 30%.





In
      addition, the Company granted Mr. Hudson an additional option to acquire up
      to
      303,307 additional shares of the Company's Common Stock, bringing the options
      under this agreement as amended to purchase up to an aggregate of 1,800,000
      shares at a strike price equal $.70 per share (“Employee Options”). In
      accordance with the option agreement (i) 25% of the Employee Options vest
      immediately, and (ii) 25% shall thereafter vest on each anniversary of the
      Amendment over the next three (3) years. Further, the Employee Options are
      governed by an option agreement between Mr. Hudson and the Company, reflecting
      such terms.





The
      terms
      of the Amendment provide for vesting of options in the event of a “change of
      control” of the Company (as defined in Mr. Hudson's Employment Agreement, as
      amended). The Employee Options will vest immediately and become exercisable
      in
      the event of a change of control if the unvested Employee Options are not
      substituted or continued by the acquirer. Additionally, in the event of a change
      of control of the Company, the Performance Options will vest as follows: (i)
      50%
      will vest immediately if at any time after the occurrence of a change in control
      or the announcement of a change in control the Company's per share Common Stock
      price equals or exceeds $1.80; and (ii) 100% will vest immediately if at any
      time after the occurrence of a change in control or the announcement of a change
      in control the Company's per share Common Stock price equals or exceeds $2.35,
      in the event the unvested options are not substituted or continued by the
      acquirer in the event the unvested options are not substituted or continued
      by
      the acquirer. Upon the completion of a change in control, all remaining unvested
      Performance Options will expire.





Effective
      June 28, 2006, Lee Wiskowski and Douglas Stukel tendered their resignations
      as
      current Co-Chief Executive Officers of the Company. Concurrent with the
      resignations, the Board appointed Mr. Wiskowski Executive as Vice President
      of
      Corporate Finance and Mr. Stukel as Executive Vice President of Corporate
      Development. Neither is party to an employment agreement with the Company.
      In
      addition to an annual base salary of $87,500, Messrs. Wiskowski and Stukel
      each
      received other cash compensation totaling $211,500 related to various financing
      activities the Company completed during 2006. In connection with their
      resignation as Executive Vice Presidents of the Company, both Messrs. Wiskowski
      and Stukel were each provided a severance payment of $50,000.




9





Derry
      Behm was provided an annual salary of $160,000 during 2006. The board of
      directors also approved an annual bonus for 2006 in the amount of $80,000 and
      was granted 150,000 stock warrants at an exercise price of $0.70 per share.





The
      Company has determined that the elements of its compensation program are
      reasonable and justified in light of its corporate goals and expectations and
      the norms that exist today in the telecommunications industry. A base salary
      and
      merit bonus is fairly standard in business today. The Company also compensates
      its NEOs with equity, thereby giving them a stake in the growth and prosperity
      of the Company and encouraging the continuance of their services with the
      Company or subsidiaries or affiliated companies.





The
      Company determines the amount of each element of compensation by employing
      a
      number of different factors. First, the Company uses the particular NEO’s
      current salary as a benchmark to begin its analysis. Then, the Company reviews
      market trends in business generally, and in the telecommunications industry
      in
      particular, to help determine the appropriate compensation level to satisfy
      its
      corporate compensation goals. The Company also reviews the individual’s proposed
      compensation relative to his peers at the Company. The Company has not employed
      the services of compensation consultants to obtain an expert opinion in these
      matters, and to date has relied on an internal analysis for determining
      compensation packages for its NEOs.





**Determination
      of Awards**





The
      Company has not engaged in regularized grants of equity to its employees. In
      2006, the Company issued stock award grants were to Messrs. Hudson, Shutt and
      King in connection with their employment agreements. The total number of stock
      awards granted to these individuals was 7,800,000. The Company also issued
      stock
      warrants to Messrs. Behm, Wiskowski and Stukel related to the various activities
      completed by the Company during 2006, which includes the acquisition of 20/20
      Technologies, CentrePath, Inc. and Global Capacity Group, Inc. In addition,
      the
      Company completed numerous financing activities during 2006, which both Messrs.
      Wiskowski and Stukel were instrumental in closing.





The
      Compensation Committee is the administrator of the Company’s stock option plan
      and other non-qualified issuances of stock options and, as such, controls the
      timing and amount of the awards. The Company has not employed the services
      of
      compensation consultants to obtain an expert opinion in these matters, but
      rather has relied on their own expertise in determining the number of stock
      options and warrant awards provided to the NEOs and employees. The Company
      has
      issued the strike price of all stock option awards based on the 10-day trailing
      closing market price on date of grant. All stock warrants issued were based
      the
      closing market price on the date of grant.




**CAPITAL
      GROWTH SYSTEMS, INC.**


**2006
      10-KSB**


**TABLES
      FOR COMPENSATION DISCUSSION AND ANALYSIS**





The
      following table sets forth for each of the named executive officers: (1) the
      dollar value of base salary and bonus earned during the year ended December
      31,
      2006 and 2005; (2) the aggregate grant date fair value of stock and option
      awards granted during the year, computed in accordance with FAS 123R; (3) the
      dollar value of earnings for services pursuant to awards granted during the
      year
      under non-equity incentive plans; (4) the change in pension value and
      non-qualified deferred compensation earnings during the year; (5) all other
      compensation for the year; and (6) the dollar value of total compensation for
      the year.


10





**Name
                and Principal Position**
            
            
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Option
                Awards (1)**
              **($)**
            
            **All
                Other Compensation**
              **($)**
            
            **Total**
              **($)**Thomas
                Hudson,
            
            
            2006
            
            
            120,000
            
            
            
            
            
            1,505,623
            
            
            
            
            
            1,625,623Chief
                Executive Officer (3)Lee
                Wiskowski,
            
            
            2006
            
            
            87,500
            
            
            
            
            
            353,636
            (4)
            
            211,500
            (2)
            
            652,636Vice
                President
            
            
            2005
            
            
            87,500
            
            
            
            
            
            
            
            
            
            
            
            87,500Douglas
                Stukel,
            
            
            2006
            
            
            87,500
            
            
            
            
            
            431,068
            (4)
            
            211,500
            (2)
            
            730,068Vice
                President
            
            
            2005
            
            
            87,500
            
            
            
            
            
            
            
            
            
            
            
            87,500Patrick
                Shutt,
            
            
            2006
            
            
            62,500
            
            
            
            
            
            1,341,711
            
            
            
            
            
            1,404,211Chief
                Operating OfficerGeorge
                King,
            
            
            2006
            
            
            62,500
            
            
            
            
            
            1,341,711
            
            
            
            
            
            1,404,211PresidentDerry
                Behm,
            
            
            2006
            
            
            160,000
            
            
            80,000
            
            
            68,535
            
            
            
            
            
            308,535Chief
                Financial Officer
            
            
            2005
            
            
            160,000
            
            
            
            
            
            
            
            
            
            
            
            160,000





(1)
            See
                Note 2 to our Consolidated Financial Statements reported in our Form
                10-KSB for our fiscal year ended December 31, 2006 for details as
                to the
                assumptions used to determine the fair value of the options awards
                and
                warrants. The
                expected lives of the warrants were equal to the contractual
                life.


(2)
            Messrs.
                Wiskowski and Stukel were each provided $211,500 for various financing
                activities completed by the Company during 2006. Additionally, both
                Messrs. Wiskowski and Stukel were each paid $50,000 as part of a
                employment separation agreement in
                2007.


(3)
            Does
                not include warrants to purchase: (i) 675.00675shares of Series AA
                Preferred Stock  exercisable at $1000 per share (with an effective as
                converted to Common Stock amount of 1,500,000 shares exercisable at
                $0.45 per share) on or before December 31, 2009 issued in connection
                with
                the funding of $1,000,000,all
                of which was at risk prior to the commitment of the
                remaining$6,850,000
                bridge financing in November, 2006 to purchase Centrepath, Inc.;
                (ii)
                225.00225 shares of Series AA Preferred Stock exercisable at $1000
                per
                share (with an effective as converted to Common Stock amount of 500,000
                shares exercisable at $0.45 per share) on or before December 31,
                2009
                issued in connection with the funding of $500,000 as part of the
                $4,700,000 bridge financing in December, 2006 to purchase Global
                Capacity
                Group, Inc.; and (iii) 33.8016 shares of Series A Preferred Stock
                (with an
                effective as converted to Common Stock amount of 33,557 shares exercisable
                at $0.45 per share) on or before December 31, 2011. Also, not included
                is
                the Series AA Preferred Stock and warrants issued in 2007 see Item
                12.
                Certain Relationships and Related Transactions included herein.


(4)
            Does
                not include 15,000 warrants issued for a $100,000 unsecured note
                payable
                from Momentum Capital, LLC, whose principals are Messrs. Wiskowski
                and
                Stukel. See Item 12. Certain Relationships and Related Transactions
                included herein. The fair value of these warrants totaled $7,653.
                See Note
                2 to our Consolidated Financial Statements reported in our Form 10-KSB
                for
                our fiscal year ended December 31, 2006 for details as to the assumptions
                used to determine the fair value of the warrants. The
                expected lives of the warrants were equal to the contractual
                life.





11




**GRANTS
      OF PLAN-BASED AWARDS**





The
      following table sets forth information regarding all incentive plan awards
      that
      were made to the named executive officers during 2006, including incentive
      plan
      awards (equity-based and non-equity based) and other planned-based awards.
      Disclosure on a separate line item is provided for each grant of an award made
      to a named executive officer during the year. The information supplements the
      dollar value disclosure of stock, option and non-stock awards in the Summary
      Compensation Table by providing additional details about these awards. Equity
      incentive-based awards are subject to a performance condition or a market
      condition as those terms are defined by FAS 123R. Non-equity incentive plan
      awards are awards that are not subject to FAS 123R and are intended to serve
      as
      an incentive for performance to occur over a specified period.





**GRANTS
                OF PLAN-BASED AWARDS****Estimated
                Future Payouts Under Equity Incentive Plan Awards**
            
            **Exercise
                or Base Price of Option**
            
            **Grant
                Date Fair Value of Stock and****Grant**
            
            **Approval**
            
            **Threshold**
            
            **Target**
            
            **Maximum**
            
            **Awards**
            
            **Option****Name**
            
            **Date**
            
            **Date**
            
            **(#)**
            
            **(#)**
            
            **(#)**
            
            **($/Sh)**
            
            **Awards**Thomas
                Hudson
            
            6/29/2006
            
            6/29/2006
            
            
            
            1,496,993
            (1)
            
            
            $
            0.70
            
            $
            0.549/8/2006
            
            9/8/2006
            
            
            
            303,007
            (1)
            
            
            $
            0.70
            
            $
            0.549/8/2006
            
            9/8/2006
            
            
            
            1,000,000
            (2)
            
            
            $
            0.70
            
            $
            0.54Lee
                Wiskowski
            
            9/14/2006
            
            9/14/2006
            
            
            
            715,000
            (4)
            
            
            $
            0.70
            
            $
            0.4611/30/2006
            
            11/30/2006
            
            
            
            50,000
            (4)
            
            
            $
            0.45
            
            $
            0.3312/11/2006
            
            12/11/2006
            
            
            
            25,000
            (4)
            
            
            $
            0.45
            
            $
            0.42Douglas
                Stukel
            
            7/8/2006
            
            7/8/2006
            
            
            
            150,000
            (4)
            
            
            $
            0.50
            
            $
            0.439/8/2006
            
            9/8/2006
            
            
            
            25,700
            (4)
            
            
            $
            0.70
            
            $
            0.519/14/2006
            
            9/14/2006
            
            
            
            715,000
            (4)
            
            
            $
            0.70
            
            $
            0.4611/30/2006
            
            11/30/2006
            
            
            
            50,000
            (4)
            
            
            $
            0.45
            
            $
            0.3312/11/2006
            
            12/11/2006
            
            
            
            25,000
            (4)
            
            
            $
            0.45
            
            $
            0.42Patrick
                Shutt
            
            9/8/2006
            
            9/8/2006
            
            
            
            1,500,000
            (1)
            
            
            $
            0.70
            
            $
            0.549/8/2006
            
            9/8/2006
            
            
            
            1,000,000
            (2)
            
            
            $
            0.70
            
            $
            0.54George
                King
            
            9/8/2006
            
            9/8/2006
            
            
            
            1,500,000
            (1)
            
            
            $
            0.70
            
            $
            0.549/8/2006
            
            9/8/2006
            
            
            
            1,000,000
            (3)
            
            
            $
            0.70
            
            $
            0.54Derry
                Behm
            
            9/14/2006
            
            9/14/2006
            
            
            
            150,000
            (4)
            
            
            $
            0.70
            
            $
            0.46





(1)
            25%
                of the stock options vest immediately and 25% each subsequent anniversary
                year of employment.


(2)
            The
                Performance Options shall vest on the following basis:  upon each
                realization by the Company of an incremental $20 million of third
                party
                service and/or maintenance revenue from new or existing customers,
                with
                gross margins in excess of 30%, pursuant to an agreement of one year
                or
                more, Messrs. Hudson and Patrick shall vest in 50% of the Performance
                Options; the remaining options vest upon realization by the Company
                of a
                second $20 million of third party service and/or maintenance revenue
                from
                new or existing customers, with gross margins in excess of
                30%.


(3)
            The
                Performance Options shall immediately vest upon realization by the
                Company
                of the “Target MRR” equal to the Base amount plus $3.5 million of monthly
                recurring revenue from November 1, 2006, the amended date of Mr.
                King’s
                employment agreement through April 1, 2009.


(4)
            All
                warrants vested 100% upon date of grant to Messrs. Wiskowski, Stukel
                and
                Behm.





12




**OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-END**




The
      following table sets forth information on outstanding option and stock awards
      held by the named executive officers at December 31, 2006, including the number
      of shares underlying both exercisable and unexercisable portions of each stock
      option as well as the exercise price and expiration date of each outstanding
      option.





**OUTSTANDING
                EQUITY AWARDS AT FISCAL YEAR-END****Option
                Awards**
            
            **Stock
                Awards****A**
            
            **B**
            
            **C**
            
            **D**
            
            **E**
            
            **F**
            
            **G**
            
            **H**
            
            **I**
            
            **J****Name**
            
            **Number
                Of Securities Underlying Unexercised Options**
              **(#)
                Exercisable**
            
            **Number
                Of Securities Underlying Unexercised Options**
              **(#)
                Unexercisable**
            
            **Equity
                Incentive Plan Awards: Number Of Securities Underlying Unexercised
                Unearned Options**
              **(#)**
            
            **Option
                Exercise Price ($)**
            
            **Option
                Expiration Date**
            
            **Number
                Of Shares Of Stock That Have Not Vested (#)**
            
            **Market
                Value Of Shares Of Stock That Have Not Vested (#)**
            
            **Equity
                Incentive Plan Awards: Number Of Unearned Shares Or Other Rights
                That Have
                Not Vested**
              **(#)**
            
            **Equity
                Incentive Plan Awards: Market Or Payout Value Of Unearned Shares
                Or Other
                Rights That Have Not Vested**
              **($)**Thomas
                Hudson
            
            
            374,248
            
            
            
            
            
            1,122,745
            
            $
            0.70
            
            
            6/29/201675,751
            
            
            
            
            
            1,227,256
            (6)
            $
            0.70
            
            
            9/8/2016Lee
                Wiskowski (1)
            
            
            250,000
            (2)
            
            
            
            
            
            
            $
            1.35
            
            
            3/31/2007475,000
            (3)
            
            
            
            
            
            
            $
            0.70
            
            
            9/14/2011240,000
            (4)
            
            
            
            
            
            
            $
            0.70
            
            
            9/14/201150,000
            (4)
            
            
            
            
            
            
            $
            0.45
            
            
            12/31/200925,000
            (4)
            
            
            
            
            
            
            $
            0.45
            
            
            12/31/2009Douglas
                Stukel (1)
            
            
            150,000
            (5)
            
            
            
            
            
            
            $
            0.50
            
            
            7/28/201125,700
            (5)
            
            
            
            
            
            
            $
            0.70
            
            
            12/31/2011250,000
            (2)
            
            
            
            
            
            
            $
            1.35
            
            
            3/31/2007475,000
            (3)
            
            
            
            
            
            
            $
            0.70
            
            
            9/14/2011240,000
            (4)
            
            
            
            
            
            
            $
            0.70
            
            
            9/14/201150,000
            (4)
            
            
            
            
            
            
            $
            0.45
            
            
            12/31/200925,000
            (4)
            
            
            
            
            
            
            $
            0.45
            
            
            12/31/2009Patrick
                Shutt
            
            
            375,000
            
            
            
            
            
            2,125,000
            (6)
            $
            0.70
            
            
            9/8/2016George
                King
            
            
            375,000
            
            
            
            
            
            2,125,000
            (6)
            $
            0.70
            
            
            9/8/2016Derry
                Behm
            
            
            150,000
            
            
            
            
            
            
            
            $
            0.70
            
            
            9/14/201118,750
            
            
            
            
            
            6,250
            
            $
            1.35
            
            
            10/1/2014131,250
            
            
            
            
            
            43,750
            
            $
            1.35
            
            
            4/26/2014




(1)
            Does
                not include 15,000 warrants issued for a $100,000 unsecured notes
                payable
                from Momentum Capital, LLC, whose principals are Messrs. Wiskowski
                and
                Stukelsee
                Item 12. Certain Relationships and Related Transactions included
                herein.





(2)
            Represents
                warrants issued to Messrs. Wiskowski and Stukel for transactions
                completed
                by the Company in 2004.





(3)
            Represents
                warrants issued to Messrs. Wiskowski and Stukel for serving as the
                Company’sco-CEO
                for two years and three years of serving on our board of
                directors.





(4)
            Represents
                warrants issued to Messrs. Wiskowski and Stukel for transactions
                completed
                by the Company in 2006.





(5)
            Represents
                warrants issued to Mr. Stukel for providing numerous short-term bridge
                financing during 2006.


(6)
            Includes
                1,000,000 each of Performance Based Stock Options of which none have
                vested.




None
      of
      the named executive officers exercised options to purchase shares of our Common
      Stock during the year ended December 31, 2006. Also, the Company does not offer
      any type of pension plan or nonqualified deferred compensation plan to these
      named officers.





13




**POTENTIAL
      PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL**





We
      have
      entered into employment agreements with the NEOs, each of which provides that
      we
      must potentially pay each executive if terminated under certain circumstances.
      The material aspects of these provisions in each employment agreement are
      described above. The following table quantifies these provisions in each
      employment agreement assuming that the termination occurred on December 29,
      2006
      (the last business day of our fiscal year ended December 31, 2006).




**Name**
            
            **Executive
                Benefits and Payments upon Termination**
            
            **Death
                or Total Disability (1)**
            
            **For-Cause
                by Company or Voluntarily by Executive (2)**
            
            **Without
                Cause by Company (3)**
            
            **Change
                in Control (4)**
            
            **By
                Executive for Good Reason (other than Change in Control)
                (5)**Thomas
                Hudson
            
            
            
            
            
            
            
            
            -
            
            $
            240,000
            
            
            
            
            $
            240,000Patrick
                Shutt
            
            
            
            
            
            
            
            
            -
            
            $
            200,000
            
            
            (A
            )
            $
            200,000George
                King
            
            
            
            
            
            
            
            
            -
            
            $
            200,000
            
            
            (A
            )
            $
            200,000




(A)  Upon a
      Change in Control Messrs. Shutt and King are entitled to a payment of 3 times
      the average compensation and incentive for the prior 3 years or less, if
      terminated within six months for Good Reason. The payment is 1.5 times the
      average compensation and incentive paid for the prior 3 years or less, if
      terminated within six months without Good Reason. Both Change in Control and
      Good Reason are defined in their Employment Agreements filed in our Current
      Report on Form 8-K dated September 14, 2006.




14





**DIRECTOR
      COMPENSATION**





The
      following table sets forth all fees paid to our non-employee directors during
      the fiscal year ended December 31, 2006.




**DIRECTOR
                COMPENSATION**





**Name**
            
            **Fees
                Earned or Paid in Cash**
              **($)**
            
            **Stock
                Awards**
              **($)**
            
            **Option
                Awards**
              **($)**
            
            **Non-Equity
                Incentive Plan Compensation**
              **($)**
            
            **Change
                in Pension Value and Nonqualified Deferred
                Compensation**
              **($)**
            
            **All
                Other Compensation**
              **($)**
            
            **Total**
              **($)**Robert
                Geras (1)
            
            
            
            
            
            
            
            
            205,605
            (2)
            
            
            
            
            
            
            
            280,000
            (4)Phil
                Kenny
            
            
            
            
            
            
            
            
            68,535
            (3)David
                Beamish
            
            
            
            
            
            
            
            
            68,535
            (3)





(1)
            Does
                not include warrants to purchase: (i)  464.62965  shares of
                Series AA Preferred Stock  exercisable at $1000 per share (with an
                effective as converted to Common Stock amount of 
                1,032,500  shares exercisable at $0.45 per share) on or before
                December 31, 2010 issued in connection with the funding of
                $ 2,4250,000  as part of the $7,850,000 bridge financing in
                November, 2006 to purchase Centrepath, Inc.; and
                (ii)  89.9487  shares of Series A Preferred Stock (with an
                effective as converted to Common Stock amount of  99,942 
                shares exercisable at $0.45 per share) on or before December 31,
                2012.


(2)
            Three
                years of serving on our board of directors and 3 years on a
                Committee.


(3)
            Two
                years of serving on our board of
                directors.


(4)
            Cash
                compensation to Mr. Geras for providing a personal guarantee and
                pledging
                his own assets as collateral to secure bridge loans in the amount
                of $3.7
                million. These loans were accomplished on very short notice, and
                therefore
                without Mr. Geras providing his personal guarantees and the pledging
                of
                his own assets, it is likely that both the CentrePath and Global
                Capacity
                acquisitions would have been in jeopardy. See Item 12. Certain
                Relationships and Related Transactions included herein.




15




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





The
      following tables set forth, as of April 30, 2007, the names, addresses, amount
      and nature of beneficial ownership and percent of such ownership
      of:




·
            each
                person known to be the beneficial owner of more than five percent
                (5%) of
                each class of our capital;




·
            each
                director and executive officer; 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 21,710,880 shares  of
      Common
      Stock. It should be noted that the Company engaged in a series of financings
      commencing in September, 2006 at a time in which it lacked sufficient Common
      Stock to fund all of the financings. It therefore authorized the issuance of
      Series AA Preferred Stock , Series A Preferred Stock and Series B Preferred
      Stock, which by their terms were issued at a price of $1,000 per share, and
      which vote together with the Common Stock on an as converted to Common Stock
      basis and which by their terms automatically convert to Common Stock upon
      subsequent authorization of specified minimum amounts of additional Common
      Stock
      (namely authorization of 200 million shares of Common Stock for mandatory
      conversion of the Series AA Preferred Stock and authorization of 50 million
      shares of Common Stock for mandatory conversion of the Series A and B Preferred
      Stock). Therefore, in reviewing the capital structure of the Company it is
      important to understand that these three classes of Preferred Stock have been
      issued on an interim measure, with the expectation that the amendment to the
      Company’s articles of incorporation will be effected, at which time all of the
      shares subject to such classes of Preferred Stock would become Common Stock.
      The
      separate tables set forth below should therefore be considered based upon their
      impact to the cumulative capitalization of the Company. To that end, the
      Preferred Stock ownership as of April 30, 2007 is comprised of 20,634.53220
      shares of Series AA Preferred Stock (convertible into 45,854,057 shares of
      Common Stock based upon current conversion ratio of 2222.2 shares of Common
      Stock for each share of Series AA Preferred Stock), 2,516.09694 shares of Series
      B Preferred Stock (convertible into 3,700,147 shares of Common Stock based
      upon
      current conversion ratio) and 0 shares of Series A Preferred Stock (however
      as
      noted below there are outstanding warrants to purchase 2020.756 shares of Series
      A Preferred Stock, which are convertible into 1111.1 shares of Common Stock
      for
      each issued and outstanding share of Series A Preferred Stock or 2,245,262
      shares of Common Stock on an as converted basis). Assuming conversion to Common
      Stock of all outstanding shares of Preferred Stock as of April 30, 2007, this
      would represent, together with currently outstanding shares of Common Stock,
      an
      aggregate of 71,265,110 shares of Common Stock on an as converted basis. All
      share
      references are to shares of our Common Stock, $.0001 par value.





Set
      forth
      below is the beneficial ownership of the shares of Common Stock of the Company,
      without giving effect to the beneficial ownership of the Series A, AA and B
      Preferred Stock of the Company.


16




Robert
                T. Geras
            
            4,880,863
            (2)
            21.82
            %Carl
                C. Greer Trust
            
            1,710,726
            (3)
            7.88
            %David
                Lies
            
            1,834,005
            (4)
            8.20
            %Balkin
                Family Limited Partnership
            
            1,676,293
            (5)
            7.49
            %Philip
                B. Kenny
            
            275,000
            (6)
            1.26
            %David
                A. Beamish
            
            611,367
            (7)
            2.79
            %Derry
                L. Behm
            
            300,000
            (8)
            1.36
            %Douglas
                Stukel(9)
            
            1,325,182
            (10)
            5.80
            %Lee
                Wiskowski(9)
            
            1,057,907
            (11)
            4.66
            %Robert
                Pollan
            
            125,000
            (12)
            0.57
            %Thomas
                Hudson
            
            1,308,070
            (13)
            5.68
            %Patrick
                Shutt
            
            589,121
            (14)
            2.64
            %George
                King
            
            500,000
            (15)
            2.25
            %All
                Current Directors and Executive Officers as a Group (10
                persons)
            
            10,972,510
            
            39.70
            %




(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.




(2)
            Mr.
                Geras is the chairman of the board. Includes 4,218,983 shares of
                Common
                Stock and warrants to purchase 661,880 shares of Common Stock, 111,111
                of
                which are exercisable at $1.35 per share, 450,000 at $0.70 per share
                and
                211,880 at $0.45 per share.




(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.




(4)
            Includes
                966,243 shares of Common Stock and warrants to purchase 650,000 shares
                at
                $0.45 per share held by Mr. Lies; it also includes 97,392 shares
                owned 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.




(5)
            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.
                Includes 1,000,593 shares of Common Stock and warrants to purchase
                25,700
                shares at $0.70 per share and warrants to purchase 650,000 shares
                at $0.45
                per share




(6)
            Mr.
                Kenny is a director. Includes 125,000 shares of Common Stock and
                warrants
                to purchase 150,000 shares at $0.70 per share.




17




(7)
            Mr.
                Beamish is a director. Includes 435,667 shares of Common Stock and
                warrants to purchase 175,700 shares at $0.70 per share.




(8)
            Mr.
                Behm is the chief financial and accounting officer. Mr. Behm holds
                options
                to purchase 300,000 shares of Common Stock, which vest over a period
                of
                four years exercisable at $1.35 per share. Of the options granted,
                150,000
                have vested. Mr. Behm also holds warrants to purchase 150,000 shares
                at
                $0.70 per share




(9)
            Messrs.
                Wiskowski and Stukel currently serve as directors of the Company.




(10)
            Includes
                184,482 shares of Common Stock, warrants to purchase 250,000 shares
                at
                $1.35 per share, warrants to purchase 740,700 shares at $0.70 per
                share,
                and warrants to purchase 150,000 shares at $0.50 per
                share.




(11)
            Includes
                59,907 shares of Common Stock owned by Grander, L.L.C. of which Mr.
                Wiskowski is the sole member, 15,000 shares owned by Mr. Wiskowski’s
                spouse, 3,000 shares owned by Mr. Wiskowski, individually, and also
                includes warrants to purchase 250,000 shares at $1.35 per share and
                warrants to purchase 730,000 shares at $0.70 per share, held by Mr.
                Wiskowski.




(12)
            Mr.
                Pollan is the chief information & strategy officer. Mr. Pollan holds
                options to purchase 1,000,000 shares of Common Stock exercisable
                at $0.98
                per share of which 125,000 have
                vested.




(13)
            Mr.
                Hudson is our chief executive officer and a director of the Company.
                Includes options to purchase 2,800,000 shares at $0.70 per share
                of which
                1,200,000 have or will vest within the next 60 days, warrants to
                purchase
                37,557 shares at $0.70 per share and warrants to purchase 70,513
                shares,
                41,667 of which are exercisable at $0.45 per share and 28,846 of
                which are
                exercisable at $0.65 per share.




(14)
            Mr.
                Shutt is our president and a director. Includes 70,009 shares of
                Common
                Stock, vested options to purchase 500,000 shares at $0.70 per share
                (out
                of a total of 2,500,000 options) and warrants to purchase 89,121
                shares at
                $0.70 per share.




(15)
            Mr.
                King is our president of global operations and development and a
                director.
                Includes vested options to purchase 500,000 shares at $0.70 per share
                (out
                of a total of 2,500,000 options).




18




The
      following table sets forth the beneficial ownership of Series A Preferred Stock.
      Inasmuch as there are no shares of Series A Preferred Stock outstanding, but
      simply outstanding warrants to purchase Series A Preferred Stock (warrants
      for a
      cumulative 2020.756 shares of Series A Preferred Stock at $1,000 per share,
      which due to anti-dilution ratchet is purchasable at $500 per share and is
      convertible into 2,245,262 shares of Common Stock), the percentages shown below
      are based upon those persons owning 5% or more of the outstanding warrants,
      each
      of which if exercised would constitute 100% of the outstanding class of Series
      B
      Preferred Stock.




**Mellon
                Enterprises**
            
            ***759.3781***
            ***(2)***
            ***37.58***
            ***%***Michael
                Balkin
            
            ***135.0014***
            (3)
            ***6.68***
            ***%***David
                Lies
            
            ***135.0014***
            (3)
            ***6.68***
            ***%***Jerry
                Rozek
            
            ***135.0014***
            (3)
            ***6.68***
            ***%***Scott
                Mitchell
            
            ***118.5150***
            (4)
            ***5.86***
            ***%***Norm
                Siegel
            
            ***101.2510***
            (5)
            ***5.01***
            ***%***Robert
                Geras
            
            ***89.9487***
            (6)
            ***4.45***
            ***%***Thomas
                Hudson
            
            ***33.8016***
            (7)
            ***1.67***
            ***%*****All
                Current Directors and Executive Officers as a Group (2
                persons)**
            
            ***123.7503***
            
            ***6.12***
            ***%***




(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
                Series A Preferred Stock shown as beneficially owned by the
                stockholder.




(2)
            Series
                A Preferred Stock owned by Mellon Enterprises totaled 759.3781 or
                843,745
                shares of the Company’s Common Stock on an as converted
                basis.




(3)
            Series
                A Preferred Stock owned by Messrs. Balkin, Lies and Rozek each totaled
                135.0014 or 150,000 shares of the Company’s Common Stock on an as
                converted basis.




(4)
            Series
                A Preferred Stock owned by Mr. Mitchell totaled 118.5150 or 131,682
                shares
                of the Company’s Common Stock on an as converted basis.




(5)
            Series
                A Preferred Stock owned by Mr. Siegel totaled 101.2510 or 112,500
                shares
                of the Company’s Common Stock on an as converted
                basis.




(6)
            Series
                A Preferred Stock owned by Mr. Geras, chairman of the Company’s board of
                directors, totaled 89.9487 or 99,942 shares of the Company’s Common Stock
                on an as converted basis.




(7)
            Series
                A Preferred Stock owned by Mr. Hudson, the Company’s chief executive
                officer, totaled 33.8016 or 37,567 shares of the Company’s Common Stock on
                an as converted basis.




19





The
      following table sets forth the beneficial ownership of Series B Preferred Stock.
      This stock was issued as part of the consideration provided to the former
      holders of preferred stock of 20/20 Technologies, Inc. in connection with the
      merger of said corporation with a wholly owned subsidiary of the Company and
      which resulted in the cancellation of their preferred stock holdings of 20/20
      Technologies, Inc. There are 2,516.09694 shares of Series B Preferred Stock
      outstanding, which by their terms upon the amendment of the Company’s articles
      of incorporation to authorize the issuance of at least 50,000,000 shares of
      Common Stock, shall automatically convert into 3,700,147 shares of Common Stock.
      There are no outstanding warrants or options to acquire Series B Preferred
      Stock.




Robert
                Geras
            
            668.5800
            (2)
            26.57
            %Brocade
                Communication Systems, Inc.
            
            402.6656
            (3)
            16.00
            %Wanxiang
                International Investment Corporation
            
            338.8076
            (4)
            13.47
            %Michael
                McGowan
            
            271.0456
            (5)
            10.77
            %Patrick
                Shutt
            
            22.5869
            (6)
            0.90
            %All
                Current Directors and Executive Officers as a Group (2
                persons)
            
            691.1668
            
            27.47
            %





(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
                Series B Preferred Stock shown as beneficially owned by the
                stockholder.




(2)
            Series
                B Preferred Stock owned by Mr. Geras, chairman of the Company’s board of
                directors, totaled 668.5800 or 983,207 shares of the Company’s Common
                Stock on an as converted basis.




(3)
            Series
                B owned by Brocade Communication Systems, Inc. totaled 402.6656 or
                592,156
                shares of the Company’s Common Stock on an as converted
                basis.




(4)
            Series
                B owned by Wanxiang International Investment Corporation totaled
                338.8076
                or 498,247 shares of the Company’s Common Stock on an as converted
                basis.




(5)
            Series
                B owned by Mr. McGowan totaled 271.0456 or 398,597 shares of the
                Company’s
                Common Stock on an as converted
                basis.




(6)
            Series
                B owned by Mr. Shutt, the Company’s chief operating officer, totaled
                22.5869 or 33,216 shares of the Company’s Common Stock on an as converted
                basis.




20




The
      following table sets forth the beneficial ownership of Series AA Preferred
      Stock. There are presently 20,634.53221 shares of Series AA Preferred Stock
      outstanding, which based upon the current conversion ratio of 2,222.2 shares
      of
      Common Stock per share, are convertible into 46,474,845 shares of Common Stock
      (rounded). The conversion ratio is subject to a full ratchet adjustment to
      the
      extent that prior to the conversion of the Series AA Preferred Stock to Common
      Stock the Company issues equity securities at an as converted to Common Stock
      value of below $0.45 per share.




Thomas
                Hudson
            
            2,927.1468
            (2)
            12.98
            %George
                King
            
            522.5056
            (3)
            2.50
            %Douglas
                Stukel
            
            515.5309
            (4)
            2.45
            %Bob
                Geras
            
            464.6297
            (5)
            2.20
            %Lee
                Wiskowski
            
            374.4550
            (6)
            1.78
            %All
                Current Directors and Executive Officers as a Group (5
                persons)
            
            4,804.2679
            
            17.42
            %




(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
                Series AA Preferred Stock shown as beneficially owned by the
                stockholder.




(2)
            Mr.
                Hudson is the Company’s chief executive officer. Includes 1,012.6268
                shares of Series AA Preferred Stock or 2,250,259 shares of Common
                Stock on
                an as converted basis and warrants to purchase 1,914.52000 shares
                of
                Series AA Preferred Stock or 4,254,446 shares of Common Stock on
                an as
                converted basis.




(3)
            Mr.
                King is the Company’s President - Global Operations and Development.
                Includes 250.0070 shares of Series AA Preferred Stock or 555,556
                shares of
                Common Stock on an as converted basis and warrants to purchase 272.5029
                shares of Series AA Preferred Stock or 605,556 shares of Common Stock
                on
                an as converted basis.




(4)
            Mr.
                Stukel is on the Company’s board of directors. Includes 67.5000 shares of
                Series AA Preferred Stock or 149,999 shares of Common Stock on an
                as
                converted basis and warrants to purchase 448.03090 shares of Series
                AA
                Preferred Stock or 995,614 shares of Common Stock on an as converted
                basis.




(5)
            Mr.
                Geras is the Company’s chairman of the board of directors.Represents
                warrants to purchase 464.6297 shares of Series AA Preferred Stock
                or
                1,032,500 shares of Common Stock on an as converted basis.




(6)
            Mr.
                Wiskowski is on the Company’s board of directors. Represents warrants to
                purchase 374.4550 shares of Series AA Preferred Stock or 832,114
                shares of
                Common Stock on an as converted basis.




21





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




As
      of
      December 31, 2006, we were in default on an unsecured note payable totaling
      $85,143 to Jel-Ken, LLC. Mr. Phil Kenny, who is on our board of directors,
      is a
      principal of this entity. We continue to be in default of this loan
      agreement.




During
      2006, we had a $100,000 unsecured notes payable to Momentum Capital, LLC, whose
      principals include Mr. Lee Wiskowski and Mr. Douglas Stukel. Both Messrs.
      Wiskowski and Stukel, were our co-CEO's up through the first six months of
      2006 and senior executive officers of our Company through January 2007. Mr.
      Stukel provided an additional $30,000 demand note to us on June 14, 2006. As
      part of the terms of the note payable, we issued a total of 15,000 warrants
      to
      Momentum Capital and 25,700 stock warrants to Mr. Stukel during 2006 at an
      exercise price of $0.70 per share in conjunction with these loans. We had repaid
      the notes payable as of December 31, 2006.





Additionally,
      Mr. Douglas Stukel provided numerous short term bridge notes during 2006 to
      our
      Company. Each of these notes was repaid as of December 31, 2006. As part of
      the
      terms of the notes, we issued Mr. Stukel a total of 150,000 warrants during
      2006
      at an exercise price of $0.50 per share.




As
      part
      of our acquisition of 20/20, Mr. Bob Geras, the Chairman of our board of
      directors and Mr. Patrick Shutt, an executive officer and member of our board
      of
      directors, had preferred stock of 20/20 converted into the equivalent of
      2,019,335 and 68,221, respectively, of our Common Stock.




Mr.
      Bob
      Geras, Mr. Thomas Hudson and Mr. Patrick Shutt, all board members of our Company
      and Mr. Hudson and Mr. Shutt, who are also senior officers of the Company,
      have
      lent a total of $417,630, plus accrued interest to our Company as part of the
      short term secured financing completed by us during 2006. These balances were
      transferred from secured debt of 20/20 at the time of acquisition to the secured
      short term note payables of our Company. The loans bore interest at a rate
      of
      18% and matured on January 6, 2007. Additionally, as part of the secured loan
      agreement, these individuals were issued stock warrants to ultimately purchase
      Series A Preferred Stock convertible into 156,611 shares of our Common Stock
      at
      an exercise price of $0.50 per share on an as converted basis. These warrants
      expire on August 24, 2009. Additionally, Mr. Bob Geras, who is chairman of
      our
      board of directors, had a total of $468,000 of principal secured debt with
      20/20
      prior to the acquisition. As part of the acquisition of 20/20 a portion of
      this
      secured debt was paid to him totaling $231,100 of principal balance and $28,888
      of accrued interest. On January 19, 2007, Messrs. Geras, Hudson and Shutt (to
      his designee) were all repaid the principal and interest amounts owed totaling
      $283,993, $106,722 and $54,307.





Mr.
      Tom
      Hudson, who is on our board of directors and is Chief Executive Officer of
      our
      Company, had a $150,000 unsecured note payable with 20/20, bearing interest
      at a
      rate of 8%. This debt was assumed as part of the acquisition of 20/20 and was
      subsequently repaid with accrued interest totaling $15,682 in 2007.





During
      2006, the board issued a total of 2,330,000 of warrants to purchase Common
      Stock
      at an exercise price of $0.70 per share to board members and several members
      of
      the senior management in conjunction with past services to our Company. These
      warrants all have a five year life and expire on September 14, 2011. The
      following is a list of those warrants issued and the services they relate
      to:




Name
            
            Role
            
            Description
                of service
              performed
                (1)
            
            Total
                # of
              Warrants
                IssuedMr.
                Bob Geras
            
            Chairman
                of our board of directors
            
            Three
                years of serving on our board of directors and 3 years on a
                Committee
            
            450,000Mr.
                Phil Kenny
            
            Member
                of our board of directors
            
            Two
                years of serving on our board of directors
            
            150,000Mr.
                David Beamish
            
            Member
                of our board of directors
            
            Two
                years of serving on our board of directors
            
            150,000Mr.
                Lee Wiskowski
            
            Member
                of our board of directors and former Co-CEO
            
            Two
                years as co-CEO and three years of serving on our board of
                directors
            
            475,000Mr.
                Douglas Stukel
            
            Member
                of our board of directors and former Co-CEO
            
            Two
                years as co-CEO and three years of serving on our board of
                directors
            
            475,000Mr.
                Lee Wiskowski
            
            Member
                of our board of directors and former Co-CEO
            
            For
                securing a convertible short-term notes payable
            
            240,000Mr.
                Douglas Stukel
            
            Member
                of our board of directors and former Co-CEO
            
            For
                securing a convertible short-term notes payable
            
            240,000Mr.
                Derry Behm
            
            Chief
                Financial and Principal Accounting Officer
            
            For
                serving as the Company's Chief Financial Officer
            
            150,000Total
                Warrants Issued
            
            2,330,000




(1)
            Our
                board of directors authorized 75,000 warrants for each year of service
                on
                our board and 25,000 for serving as a committee member. The board
                authorized 125,000 for each year of service as co-CEO of our
                Company.




22




In
      connection with our acquisition
      of 20/20, Mr. Bob Geras and Mr. Hudson were issued warrants to purchase 89.9487
      shares of Series A Preferred Stock and
      33.8016 shares of Series A Preferred Stock, respectively  (representing
      99,942 shares and
      33,557 shares of
      common
      stock ,
      respectively, on an as
      converted basis) exercisable at $1,000 per share ($0.90 per share on an as
      converted to Common Stock basis) in conjunction with inducements to convert
      portions of the 20/20 secured debt into secured debt of our Company. These
      warrants expire on December
      31, 2011.





As
      part
      of a short term bridge financing during 2006, Mr. David Beamish, who is a member
      of our board of directors, was issued 25,700 stock warrants with an exercise
      price of $0.70 per share and expire on December 31, 2011. The note payable
      was
      repaid as of December 31, 2006.





In
      connection with the acquisition of CentrePath and Global Capacity, we issued
      two
      short term bridge notes which totaled $12.6 million bearing interest at a rate
      of 8%. Of this amount, our Chief Executive Officer, Mr. Thomas Hudson and our
      chairman of our board of directors, Mr. Bob Geras lent $2.0 million and $1.8
      million, respectively. As part of the terms of the notes payable, Mr. Hudson
      and
      Mr. Geras received stock warrants to purchase 1125.00112 Series AA Preferred
      Shares (2,000,000 common shares on an as converted basis) and 464.62965 Series
      AA Preferred Shares (1,032,500 common shares on an as converted
      basis)respectively. Mr. Hudson received an additional warrant to purchase
      450.0045 Series AA Preferred Shares (1,000,000 common shares on an as converted
      basis) for putting his $1.0 million at risk in connection with the completion
      of
      our acquisition of CentrePath at a time when the remaining financing for the
      acquisition of CentrePath had not been committed. Mr. Hudson was not paid any
      cash compensation related to his investment into our Company. The above
      mentioned stock warrants have an exercise price of $1,000 per Series AA
      Preferred Share ($0.45 per share of Common Stock on an as converted basis)
      expiring on December 31, 2009. In addition, Mr. Geras was also paid $280,000
      for
      providing personal guarantees and pledging his own collateral to secure bridge
      loans in the amount of $3.7 million. These loans were accomplished on very
      short
      notice, and therefore without Mr. Geras providing his personal guarantees and
      the pledge of his own assets, it is likely that both of the CentrePath and
      Global Capacity acquisitions would have been in jeopardy. On January 19, 2007,
      Mr. Hudson converted approximately $1.0 million of the notes payable under
      the
      equity funding terms described in Note 16 - Subsequent Events. Mr. Hudson was
      repaid approximately $0.5 million on this date and elected to place the
      remaining $0.5 million into the Junior Secured Facility also described in Note
      16 - Subsequent Events. Mr. Geras was repaid the entire principal and interest
      totaling $1.9 million upon the completion of our initial equity funding on
      January 19, 2007.


23





In
      securing various short term bridge financing during 2006, Mr. Lee Wiskowski
      and
      Mr. Douglas Stukel each received cash compensation totaling $211,500 during
      2006. In addition to these fees, Messrs. Wiskowski and Stukel were paid annual
      salaries of $87,500 for serving as our co-CEOs and/or Vice-Presidents in 2006.
      During 2006 we entered into a severance agreement with Messrs. Wiskowski and
      Stukel. As part of this agreement, our board of directors agreed to pay each
      of
      them cash compensation of $50,000 upon their termination as executive officers,
      which we accrued in 2006 and paid in 2007.




Three
      senior executives, Thomas G. Hudson, Patrick C. Shutt and George King, entered
      into employment agreements with us. The terms of each agreement are for two
      years and provide for base salaries of $240,000 to Mr. Hudson and $200,000
      to
      each of Mr. Shutt and Mr. King. Additionally Mr. Hudson's contract provides
      for
      the opportunity to attain an annual performance bonus of up to 200% of Mr.
      Hudson's salary as determined by the Board. Mr. Hudson has been granted
      1,800,000 executive stock options and 1,000,000 performance stock options under
      his employment contract and related option agreements, allowing him to purchase
      our Common Stock of the Company at $.70 per share. The agreement provides
      for customary severance and an acceleration of unvested Executive and
      Performance options in the event that we terminate Mr. Hudson's employment
      without cause or if Mr. Hudson terminates for “good reason.” The contracts of
      Mr. Shutt and Mr. King are similar to Mr. Hudson's except that 1,500,000
      executive stock options were granted to each individual to purchase
      our Common Stock at $.70 per share. Additionally each of the individuals
      will also have the possibility of an annual performance bonus as determined
      by
      the Board.





In
      2007,
      Mr. Lee Wiskowski and Mr. Douglas Stukel each received cash payments totaling
      $319,000 in connection with all the transactions completed by the Company in
      2006 and 2007. In addition, Messrs. Wiskowski and Stukel were each issued
      warrants to purchase 370.85594 shares of Series AA Preferred Stock (representing
      in the aggregate 824,117 shares of Common Stock on an as converted basis) ,
      with
      one half at an exercise price of $1,000 per share ($0.45 per share on an as
      converted to Common Stock basis) expiring on December 31, 2008 and the other
      half at an exercise price of $1,444.44 per share ($0.65 per share on an as
      converted to Common Stock basis) expiring on December 31, 2009. Also, as part
      of
      securing the various short terms notes, we issued warrants to purchase 33.75034
      shares of Series AA Preferred Stock (75,000 shares of Common Stock on an as
      converted basis) each to both Mr. Lee Wiskowski and Mr. Douglas Stukel. The
      stock warrants have an exercise price of $1,000 per Series AA Preferred Share
      ($0.45 per share of Common Stock on an as converted basis) expiring on December
      31, 2009.




No
      cash
      compensation was paid to Mr. Thomas Hudson in connection with completing any
      of
      the transactions in 2006 or 2007.


24





**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/ Thomas
                G. HudsonThomas
                G. Hudson, Chief Executive Officer





/s/ Derry
                L. BehmDerry
                L. Behm, Chief Financial and Accounting
                Officer




**Dated:
      April 30, 2007**




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:




**SIGNATURE**
            
            **TITLE**
            
            **DATE**/s/
                Douglas Stukel
            
            Director
            
            April
                30, 2007Douglas
                Stukel/s/
                Lee Wiskowski
            
            Director
            
            April
                30, 2007Lee
                Wiskowski/s/
                David A. Beamish
            
            Director
            
            April
                30, 2007David
                A. Beamish/s/
                Philip B. Kenny
            
            Director
            
            April
                30, 2007Philip
                B. Kenny/s/
                Patrick C. Shutt
            
            Director
            
            April
                30, 2007Patrick
                C. Shutt/s/
                Robert T. Geras
            
            Chairman
                of the Board
            
            April
                30, 2007Robert
                T. Geras/s/
                Thomas G. Hudson
            
            Chief
                Executive Officer
            
            April
                30, 2007Thomas
                G. Hudson/s/
                Derry L. Behm
            
            Chief
                Financial and Accounting Officer
            
            April
                30, 2007Derry
                L. Behm




25