<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-KSB/A

                                   (Mark One)

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

                            For the Fiscal Year ended

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

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

                         Commission File Number 0-30831

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

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


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

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


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

<Table>
<S>                                                                     <C>
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
</Table>

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

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

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

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

         As of July 15, 2004, the issuer had outstanding 15,965,754 shares of
its $0.0001 par value common stock.

DOCUMENTS INCORPORATED BY REFERENCE


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None

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




                                       2
<PAGE>



                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                   PAGE
                                                                                                   ----
<S>                                                                                                <C>
Item 1.  Description of Business ..............................................................       5

Item 2.  Description of Property ..............................................................      15

Item 3.  Legal Proceedings ....................................................................      15

Item 4.  Submission of Matters to a Vote of Security Holders ..................................      15

Item 5.  Market for Common Equity and Related Stockholder Matters .............................      15

Item 6.  Management's Discussion and Analysis or Plan of Operation ............................      17

Item 7.  Financial Statements .................................................................      21

Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial
         Disclosure ...........................................................................      21

Item 8A. Controls and Procedures ..............................................................      22

Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance with
         Section 16(a) of the Exchange Act ....................................................      22

Item 10. Executive Compensation ...............................................................      25

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related
         Stockholder Matters ..................................................................      28

Item 12. Certain Relationships and Related Transactions .......................................      30

Item 13. Exhibits and Reports on Form 8-K .....................................................      32

Item 14. Principal Accountant Fees and Services ...............................................      35
</Table>



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<PAGE>



                    CAUTIONARY NOTE REGARDING FORWARD LOOKING
                                   STATEMENTS

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

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




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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

BACKGROUND

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

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

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

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

         The consummation of the business combination was simultaneous with our
closing on the proceeds of a private placement of our common stock, thereby
affording Nexvu ready access to in excess of $5,000,000 of capital, while
avoiding what it might deem to be the adverse consequences of undertaking a
public offering itself, such as the time delays and significant


                                       5
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expenses incurred to comply with the various federal and state securities laws
governing initial public offerings.

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

BUSINESS COMBINATION

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

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

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

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

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

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

INDUSTRY BACKGROUND

         We believe that there has been a shift in the way organizations view,
use, and purchase IT performance management tools that will have a long-term
impact on the overall competitive environment for these markets. Technologies
providing fault identification, fault isolation and network management are
examples of these tools.



                                       6
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         We believe there is an industry trend that will continue to place
pressure on organizations that rely on these technologies for revenue streams,
with increasing demand for products in a new, emerging market - that of
application performance management and monitoring.

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

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

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

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

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

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

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

OUR PRODUCTS

         We have developed a suite of software application performance
management tools and products which address a chronic problem facing companies
today: how to measure and ensure that a company's hardware, software and
telecommunications equipment provide the intended functionality and speed. As
businesses continue to increase their delivery of information along their
networks, between their core data centers, their diverse branch locations,
commonly known as the "edge" of the network, and among the multiple computers
residing at the "edge," the performance of the equipment and software programs
running the equipment is often impaired, causing frequent and sometimes severe
interruptions in the way business is transacted.

         We believe we have established a relatively low cost means of
significantly improving the ability to transact business at the "edge." Our
principal product is a small box loaded with



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our proprietary software, which is installed in the telephone equipment closet
at a customer's location, as well as its core data centers. The box monitors up
to 3,200 different applications over the customer's network and sends an "alert"
message every time the application is not running within an acceptable level of
performance. This enables the customer to identify that a problem exists and to
pinpoint the cause of the problem, often before the "crash" of the application
occurs.

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

         In August of 2003, we received our first purchase order for the Nexvu
Manager System from our first paying customer, Bally's Total Fitness. This
initial order of five Nexvu appliances and one Nexvu command center appliance is
the first of a larger rollout that we hope to deploy across Bally's entire
infrastructure of over 400 fitness centers. We have not signed any agreements to
install any of our equipment in these Bally's locations. Although we had only
one order as of December 31, 2003, we do not believe that our business model
will result in our having significant reliance on any individual customer in the
future.

         The Nexvu Manager System has two major components - the Nexvu Manager
Appliance and the Nexvu Command Center Appliance. The Nexvu Manager Appliance is
considered the nerve center of the Nexvu Application Performance Management
System. Residing at the customer's remote location, the Nexvu Manager Appliance
collects management data by capturing and classifying information in a passive,
non-disruptive manner as it flows across the network. Once this information is
collected, the Nexvu Manager Appliance assesses the information looking for
performance trends, or in the case of an outage, deducing the root cause of the
outage and providing network operators with information that can be acted upon.

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

         Information is transmitted to users by the Nexvu Command Center
Appliance, which is responsible for managing all Nexvu Manager Appliances
throughout the customer's environment. This includes initialization,
configuration, upgrading and monitoring. The



                                       8
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customer typically will have one Nexvu Command Center Appliance for
approximately every 500 Nexvu Manager Appliances. As a self-contained two
rack-unit appliance, the Nexvu Command Center Appliance can be easily installed
in the data center or network operations center without advanced technical
support.

         We plan to introduce a set of products that are complementary to the
Nexvu Management System that provide customers with deeper insight into their
operating environment.

PRODUCT FEATURES

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

         o        Comprehensive application-level data collection;

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

         o        Out-of-the-box support for over 800 protocols, such as SAP and
                  Oracle and over 3200 applications, including voice/video over
                  IP, IPSEC and Cisco ISL;

         o        Performance notification to management to ensure minimal
                  impact on business operations;

         o        Advanced security framework to reduce the risk of security
                  breaches;

         o        "Turn-key solutions," which are easy to deploy and operate, to
                  be readily installed at remote locations by non-technical
                  personnel, yet centrally managed;

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

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

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

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

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



                                       9
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SALES AND MARKETING

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

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

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

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

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

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

         We intend to utilize a channel approach to penetrate the mid-sized
businesses. The channel approach will allow value-added resellers, or "VARs" to
market and sell our product to end users. VARs will receive a discount of up to
30% on the cost of our product. We anticipate that our VARs will be businesses
that focus only on high-end technology products and provide integrated systems
and networking products to mid-size companies and networks across the nation. We
currently have agreements with the following five VARs: Continental Resources,
Gee Communications, Meridian IT Solutions, Hartford Computer Group and Next Step
Technology.



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         Our revenues will be generated from three major sources:

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

         2.       Maintenance contracts for our software licensing agreements;
                  and

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

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

SUPPLIERS AND INSTALLATION

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

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

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

COMPETITION

         The market for our products and services is highly competitive. There
are a number of publicly-held companies in the application performance
management market with which we compete. There is no assurance that we will be
able to effectively compete in this market. Prospective competitors vary in size
and in the scope and breadth of the products and services offered. Many of our
potential competitors have a number of significant advantages, including a
longer operating history, preferred vendor status with our potential customers,
more extensive name recognition and marketing power and significantly greater
financial, technical, marketing and other resources which would give them the
ability to respond more quickly to new or changing opportunities, technologies
and customer requirements. We may not be able to maintain or expand our revenue
base if competition increases and we are unable to respond effectively.

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



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         o     Network Associates               o     Apogee Networks

         o     Netscout                         o     Compuware

         o     Concord Communications           o     Micromuse

         o     Agilent                          o     Tavve Networks

         o     Acterna                          o     Niksun

         o     Wildpackets                      o     Candle Communications

         o     Network Instrument               o     Lucent


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

         o     Mercury Interactive              o     Netiq

         o     Cisco                            o     Concord Communications

         o     NetQOS                           o     Compuware

SEASONAL TRENDS

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

RESEARCH AND DEVELOPMENT

         During the fiscal years ended May 31, 2003 and May 31, 2002, and the
seven-month period ended December 31, 2003, we did not expend any funds on
research and development activities. During the fiscal years ended December 31,
2003 and December 31, 2002, Nexvu spent $2.4 million and $1.1 million,
respectively, on research and development activities. Research and development
costs include cost of developers and system engineers, as well as marketing,
administration and overhead costs during this developmental stage. These costs
are not directly borne by customers, but rather are inherently built into the
pricing to our customers.

PATENTS AND PROPRIETARY TECHNOLOGY

         We have proprietary technology and confidential software code. All of
the software used in our products has been developed by a product development
team of eight individuals as well as by our Chief Technology Officer, Rory
Herriman, except for the software in one component, which was developed by a
third party. With respect to this software, we have entered into a software
licensing agreement with this third party under which we acquired a
non-exclusive license for the worldwide rights to market and distribute the
proprietary software. The term of



                                       12
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the agreement is for five years with provision for annual renewals thereafter.
As of the date of this Form 10-KSB, we have yet to file any patent applications
for our product.

EMPLOYEES

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

FACTORS AFFECTING FUTURE PERFORMANCE

         The following are important factors which relate to our business:

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

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

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

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



                                       13
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         In the high technology business, one of the largest barriers to entry
for small and start-up companies is the concern by enterprise customers as to
the survivability of the company. Even if we are profitable, we may experience
significant resistance from certain prospective customers due to our relatively
small balance sheet. This could be exacerbated to the extent we fail to attain
break-even profitability quickly.

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

         Third parties could allege that we have infringed on their patents and
proprietary rights. If infringement is alleged, there is no assurance that we
would prevail in any such challenge, or that if such challenge is successful,
that we will be able to obtain a license to use the technology on acceptable
terms. Similarly, competitors may seek to either design around or willfully
infringe our technology. We may lack the resources to enforce any patents or
other intellectual property rights we may have or a court may subsequently
determine that the scope of our intellectual property protection is not as broad
as presently envisioned. In any event, proprietary rights litigation can be
extremely protracted and expensive and we may lack the resources to enforce our
intellectual property.

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

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

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



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<PAGE>



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

ITEM 2. DESCRIPTION OF PROPERTY.

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

         As a result of the merger, our principal office has been relocated to
1100 East Woodfield Road, Suite 100, Schaumburg, Illinois 60173. In June 2003,
we entered a three-year lease with a two year option for our principal office at
a rate of $76,300 per annum. In addition, we also lease a small office at 2009
Fox Drive Suite 2, Champaign, Illinois 61820, which houses some of our product
development staff. This lease was entered into in January 2002, having an
original one-year term, with annual options to renew. The current rent for this
facility is $38,800 per year.

ITEM 3. LEGAL PROCEEDINGS.

         None.

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

         None.

                                     PART II

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

MARKET INFORMATION

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

HOLDERS

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



                                       15
<PAGE>



DIVIDENDS

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

RECENT SALES OF UNREGISTERED SECURITIES

Capital Growth Systems, Inc.

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

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

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

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



                                       16
<PAGE>



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

Nexvu Technologies, LLC

         On June 27, 2003, Nexvu issued a total of 2,837,950 Class A membership
interests to Craig Siegler, the promoter of Nexvu, in consideration for advances
totaling $1,028,401 made by Mr. Siegler to Nexvu during the period from the
inception of Nexvu on February 28, 2002 through June 27, 2003. Between June and
September 2003, Nexvu issued a total of 5,619,375 of Class B member interests
for total consideration of $1,825,000. In September and December 2003, Nexvu
issued a total of $1,725,000 in convertible promissory notes to accredited
investors. The notes were convertible into a total of 5,311,465 Class B
membership interests in Nexvu. Promissory notes having a principal value of
$1,175,000 were converted into Class B membership interests shortly before our
merger with Nexvu. Promissory notes having a principal value of $550,000 were
converted into shares of our common stock in the merger. Nexvu also issued
warrants to purchase a total of 638,889 membership interests to the purchasers
of the convertible notes.

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

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

BACKGROUND

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

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

PLAN OF OPERATION - CAPITAL GROWTH SYSTEMS, INC.

         Through December 31, 2003, we were a development stage company
conducting virtually no business operations, other than our efforts to effect a
business combination with a target business which we considered to have
significant growth potential. As of December 31, 2003, we had neither engaged in
any operations nor generated any revenue or cash flow. As a



                                       17
<PAGE>



result of the merger with Nexvu, we intend to carry out our plan of business as
discussed above in Item 1 of this Form 10-KSB/A.

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

OVERVIEW - NEXVU TECHNOLOGIES, LLC

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

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

RESULTS OF OPERATIONS - NEXVU TECHNOLOGIES, LLC

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

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



                                       18
<PAGE>



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

<Table>
<Caption>
                                            12 MONTHS                             10 MONTHS
                                               ENDED           PERCENTAGE            ENDED          PERCENTAGE
                                              DECEMBER          OF TOTAL           DECEMBER          OF TOTAL
                                              31, 2003          EXPENSES            31, 2002         EXPENSES
                                           ---------------   ---------------    ---------------   ---------------
<S>                                        <C>               <C>                <C>               <C>
OPERATING EXPENSES

Salaries, benefits and payroll taxes       $     1,752,091              72.4%   $       882,003              78.3%

Marketing and advertising                            7,941               0.3%                 -               0.0%

Occupancy                                          120,508               5.0%            38,725               3.4%

Professional fees                                  264,599              10.9%            67,121               6.0%

Depreciation and amortization                       84,395               3.5%            39,075               3.5%

Telecommunications                                  36,438               1.5%            18,421               1.6%

Travel and entertainment                            93,047               3.8%            27,294               2.4%

General expenses                                    61,326               2.5%            54,278               4.8%
                                           ---------------             ------   ---------------             ------

TOTAL EXPENSES                             $     2,420,345             100.0%   $     1,126,917             100.0%
                                           ---------------             ------   ---------------             ------
</Table>

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



                                       19
<PAGE>



LIQUIDITY AND CAPITAL RESOURCES - NEXVU TECHNOLOGIES, LLC

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

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

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

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


CRITICAL ACCOUNTING POLICIES - NEXVU TECHNOLOGIES, LLC

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

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

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

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

   o     Collection is probable.

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



                                       20
<PAGE>



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

ITEM 7. FINANCIAL STATEMENTS.

         Our financial statements are included after the signature pages of this
report.

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

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

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

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

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

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


                                       21
<PAGE>


ITEM 8A. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURE

         Our CEO/CFO has evaluated our disclosure controls and procedures as of
the end of the fiscal year ended December 31, 2003, and has concluded that, as
of December 31, 2003, these controls and procedures have been effectively
designed to ensure that information required to be disclosed in reports that we
file with or submit to the Commission is recorded, processed, summarized and
reported within the time periods specified in the Commission's rules and forms
and is accumulated and communicated to management as appropriate to allow timely
decisions regarding this disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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

                                    PART III

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

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

OFFICERS AND DIRECTORS AS OF DECEMBER 31, 2003

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

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



                                       22
<PAGE>


CURRENT OFFICERS AND DIRECTORS

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

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

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

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

Douglas Stukel         34       Director and Assistant Secretary

Lee Wiskowski          37       Director
</Table>

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

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

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



                                       23
<PAGE>



         Douglas Stukel. Mr. Stukel has served as a director of ours since
August 2003. Mr. Stukel, together with Mr. Wiskowski, led the investor group
which purchased the current majority stake in our company. In addition, Mr.
Stukel is a co-founder of Premier Holdings of Illinois, LLC, a distributor of
medical supplies based in Joliet, Illinois. Mr. Stukel served as the president
of Cendant Home Funding, a residential mortgage company based in Joliet,
Illinois, from 1997 until 2001. Mr. Stukel is also a co-founder of Momentum
Capital, LLC, a privately held firm providing financial advisory services in
connection with mergers and acquisitions and analysis as to strategic
alternatives. As a co-founder of Momentum Capital, LLC, Mr. Stukel's
responsibilities are related to the location of potential clients, the
negotiation of agreements with those clients and the provision of advisory
services related to the clients.

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

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

CODE OF ETHICS

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

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

AUDIT COMMITTEE

         We have an Audit Committee and an Audit Committee Charter, a copy of
which is attached to this report. The Audit Committee is presently comprised of
Robert Geras, Lee Wiskowski and Doug Stukel. The Audit Committee is responsible
for selection and oversights of our independent auditors, reviewing with the
independent auditors the scope and results of the audit engagement, establishing
and monitoring our financial policies and control procedures, reviewing and
monitoring the provision of non-audit services by our independent auditors and



                                       24
<PAGE>



reviewing all potential conflict of interest situations. We presently do not
have a director who would qualify as an "audit committee financial expert" as
defined in Item 401(e) of Regulation S-B. Given our present situation, we feel
it would be overly costly, burdensome and unwarranted to retain an independent
director who would qualify as an "audit committee financial expert." We will
consider adding an audit committee financial expert if our business grows and
adding such a person would be less burdensome.

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

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

ITEM 10. EXECUTIVE COMPENSATION.

CAPITAL GROWTH SYSTEMS, INC.

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

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

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

         Each employment agreement has a term ending at the end of the calendar
year and will automatically renew for additional one-year periods unless
terminated by us or the executive on written notice at least two months before
expiration of the current term. Under the agreements, if employment is
terminated without cause, or the agreement does not automatically renew, he is



                                       25
<PAGE>
entitled to receive severance of one year's pay, payable in regular monthly
increments. The agreements also provide for a lump sum payment of 90 days' pay
in the event of death or disability.

      In December 2003, our board of directors adopted the 2003 Long-Term
Incentive Plan for key employees and other persons providing assets or services
of value. The plan provides for the issuance of stock based awards to key
employees as part of their overall compensation. A total of 2,285,000 restricted
shares of our common stock, stock options or other equity based compensation can
be issued under the plan. It is expected that a substantial portion of these
options will be allocated to existing management and other persons assisting us
in our endeavors. Presently, we have issued 1,691,500 restricted shares under
the plan.

NEXVU TECHNOLOGIES, LLC

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

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

                                   2002

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

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

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

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

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

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

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

(6) Consists of managing member interests granted to Mr. Herriman in October
2003 as part of a discretionary award made by the manager of Nexvu Technologies
to various employees and service providers. Holders of the



                                       26
<PAGE>



managing member interests had no interest in the company other than the right to
share in its profits, if any, after the payment of preferred returns to other
holders. The managing member interests were deemed to have only nominal value at
the time of grant. The 901,953 interests owned by Mr. Herriman were converted
into a total of 188,871 shares of our common stock in connection with the merger
between us and Nexvu Technologies which occurred on January 28, 2004.

EMPLOYMENT AGREEMENT

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

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

CHANGE OF CONTROL

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




                                       27
<PAGE>



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

BENEFICIAL OWNERSHIP

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

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

   o     each director; and

   o     all directors and executive officers, as a group.

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

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

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



                                       28
<PAGE>



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

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

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

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

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

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

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

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

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

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

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

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

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

EQUITY COMPENSATION PLAN INFORMATION

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

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



                                       29
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

CAPITAL GROWTH SYSTEMS, INC.

         Allen Borowsky and Jeffrey Klein were considered our promoters. We
initially issued a total of 931,500 shares of our common stock to a total of 41
investors, including 450,000 issued to each of Mr. Borowsky and Mr. Klein, for
total consideration of $4,815.

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

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

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

         The warrants granted to Mr. Wiskowski and Mr. Stukel under the
agreements contain a cashless exercise provision which essentially provides that
upon exercise of the warrants, they have the right to either pay cash or receive
"credit," as if they had paid cash, for the cancellation of a portion of their
warrants with a value equal to the spread, if any, between the fair-market value
of our common stock at the date of exercise and the exercise price of $1.35 per
share, multiplied by the number of warrants being cancelled.



                                       30
<PAGE>



NEXVU TECHNOLOGIES, LLC

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

         During the period from the inception of Nexvu Technologies on February
28, 2002 through the June 27, 2003 effective date of the amended and restated
operating agreement, Mr. Siegler advanced $1,028,401 to Nexvu Technologies. This
amount was converted into a total of 2,837,950 Class A membership interests in
Nexvu Technologies on June 27, 2003, and the original 90 membership interests
issued to Mr. Siegler were canceled. In mid-January 2003, Mr. Siegler received a
$160,000 loan from a private bank that was guaranteed by Nexvu Technologies, and
then loaned this $160,000 to Nexvu Technologies. This $160,000 loan was repaid
by Nexvu Technologies in February 2004.

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

         Several members of Nexvu Technologies who held over 5% of its Class B
membership interests purchased convertible promissory notes from the company in
September and December 2003. Each note had a one-year term and an interest rate
of 8%. The notes provided that past due principal and interest would bear
interest at the lesser of the maximum permitted rate or 10%. Each note was
convertible into Class B membership interests of Nexvu Technologies at a rate of
approximately $0.324 in principal amount for each Class B membership, and each
note holder received a warrant to purchase Class B membership interests at a
price of $1.35 per interest. A $250,000 note purchased by the Carl Greer Trust
was automatically convertible if within 90 days of the date of the note the
company both entered into a distribution agreement with a nationally recognized
brand distributor of hardware products and received new purchase orders for at
least $50,000 of products.



                                       31
<PAGE>


The remaining notes were convertible at the option of the lender. The dates,
purchasers and amounts of these notes, along with the number of Class B
interests underlying the warrants granted to each purchaser, are summarized in
the following table:

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

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

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

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


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

         On January 28, 2004, Nexvu Technologies entered into an agreement with
Mr. Siegler under which, among other things, Nexvu and Mr. Siegler executed
mutual releases and Nexvu Technologies agreed to cause us to grant Mr. Siegler a
warrant to purchase 162,500 shares of our common stock at a price of $1.35 per
share in consideration for Mr. Siegler's release and for his employment with
Nexvu Technologies. The warrants issued to Mr. Siegler had a cashless exercise
provision.



                                       32
<PAGE>



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

         (a) Exhibits

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

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

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

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

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

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

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

          4.5              2003 Long-Term Incentive Plan. (4)

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

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

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

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

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

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

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



                                       33
<PAGE>



<Table>
<S>                        <C>
          10.8             Subscription Agreement dated October 1, 2003 by and
                           between Capital Growth Systems, Inc. and Grander,
                           LLC.

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

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

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

           14              Code of Ethics. (4)

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

           21              List of Subsidiaries. (4)

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

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

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

----------

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

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

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

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

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


     (b) Reports on Form 8-K



                                       34
<PAGE>



          None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

         (a) Audit Fees.

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

         (b) Audit-Related Fees.

         None.

         (c) Tax Fees

         None.

         (d) All Other Fees

         None.

         (e) Audit Committee Pre-Approval Policy

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



                                       35
<PAGE>



                                   SIGNATURES

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

                          CAPITAL GROWTH SYSTEMS, INC.

                                      BY: /s/ Scott Allen
                                          -------------------------------------
                                              Scott Allen, Chief Executive
                                          Officer and Chief Financial Officer

DATED: AUGUST 25, 2004

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

<Table>
<Caption>
                 SIGNATURE                                         TITLE                                      DATE
---------------------------------------      ------------------------------------------------------     ----------------
<S>                                          <C>                                                        <C>
/s/ Scott Allen                              Director, Chief Executive Officer, And Chief Financial
---------------------------------------      Officer                                                     August 25, 2004
Scott Allen

/s/ Robert T. Geras
---------------------------------------      Chairman Of The Board Of Directors                          August 25, 2004
Robert T. Geras

/s/ Rory Herriman
---------------------------------------      Director And Chief Technology Officer                       August 25, 2004
Rory Herriman

/s/ Douglas Stukel
---------------------------------------      Director                                                    August 25, 2004
Douglas Stukel

/s/ Lee Wiskowski
---------------------------------------      Director                                                    August 25, 2004
Lee Wiskowski
</Table>



                                       36
<PAGE>



INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
CAPITAL GROWTH SYSTEMS, INC. CONSOLIDATED FINANCIAL STATEMENTS                                                PAGE
--------------------------------------------------------------                                                ----
<S>                                                                                                           <C>
Reports of Independent Certified Public Accountants                                                           F-2
Balance Sheet as of December 31, 2003 and May 31, 2003                                                        F-3
Statement of Operations for the transition period of June 1 through December 31, 2003, and, the years ended
May 31, 2003 and 2002 and from September 29, 1999 (Inception) to December 31, 2003                            F-4
Statement of Changes in Stockholders' Equity from September 29, 1999 (Inception) to December 31, 2003         F-5
Statement of Cash Flows for the transition period of June 1 through December 31, 2003, and, the years ended
May 31, 2003 and 2002 and from September 29, 1999 (Inception) to December 31, 2003                            F-6
Notes to Consolidated Financial Statements                                                                    F-7

<Caption>
NEXVU TECHNOLOGIES, LLC CONSOLIDATED FINANCIAL STATEMENTS                                                     PAGE
---------------------------------------------------------                                                     ----
<S>                                                                                                           <C>
Reports of Independent Certified Public Accountants                                                           F-13
Balance Sheet as of December 31, 2003 and December 31, 2002                                                   F-14
Statement of Operations for the year ended December 31, 2003, and the period ended December 31, 2002 and
from February 28, 2002 (Inception) to December 31, 2003                                                       F-15
Statement of Cash Flows for the years ended December 31, 2003, and the period ended December 31, 2002 and
from February 28, 2002 (Inception) to December 31, 2003                                                       F-16
Notes to Consolidated Financial Statements                                                                    F-17
</Table>


<PAGE>


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

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 2003




                                      F-1
<PAGE>



                           INDEPENDENT AUDITORS REPORT


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


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

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Capital Growth
Systems, Inc. (A Development Stage Company) as of December 31, 2003 and May 31,
2003 and the results of its operations and cash flows for the period then ended
December 31, 2003, the years ended May 31, 2003 and May 31, 2002, and from
inception (September 29, 1999) to December 31, 2003 in conformity with
accounting principles generally accepted in the United States of America.

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

April 28, 2004
Oklahoma City, Oklahoma



                                      F-2
<PAGE>



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

<Table>
<Caption>
                                                                 DECEMBER 31, 2003        MAY 31, 2003
                                                                 ------------------    ------------------
<S>                                                              <C>                   <C>
ASSETS

Current Assets
Cash                                                             $               --    $               --
                                                                 ------------------    ------------------
Total Current Assets                                                             --                    --
                                                                 ------------------    ------------------

Other Assets
Incorporation costs                                                              --                    --
                                                                 ------------------    ------------------
Total Other Assets                                                               --                    --
                                                                 ------------------    ------------------
TOTAL ASSETS                                                     $               --                    --
                                                                 ------------------    ------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable                                                 $           13,059    $           11,361
Advance from shareholder                                                     10,231                10,000
                                                                 ------------------    ------------------

TOTAL CURRENT LIABILITIES                                                    23,290                21,361
                                                                 ------------------    ------------------

Stockholders' Equity
Common stock, authorized 25,000,000 shares, par value $ .0001,
issued and outstanding - 1,170,000 (May 31, 2003 - 931,500)                     117                    93

Additional paid in capital                                                   19,678                 6,702
Deficit accumulated during the development stage                            (43,085)              (28,156)
                                                                 ------------------    ------------------

Total Stockholders' Equity                                                  (23,290)              (21,361)
                                                                 ------------------    ------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $               --    $               --
                                                                 ==================    ==================
</Table>

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



                                      F-3
<PAGE>
CAPITAL GROWTH SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS


<Table>
<Caption>
                                                                                           From
                                                                                           Inception
                                   PERIOD              YEAR              YEAR              (Sept 29,
                                   ENDED              ENDED              ENDED              1999) To
                                DECEMBER 31,          MAY 31,            MAY 31,         DECEMBER 31,
                                    2003               2003               2002               2003
                               ---------------    ---------------    ---------------    ---------------
<S>                            <C>                <C>                <C>                <C>
INCOME                         $            --    $            --    $            --    $            --
                               ---------------    ---------------    ---------------    ---------------

OPERATING EXPENSES
Professional Fees                       14,929             21,361              2,504             41,860
Amortization Expenses                       --                 --                 --                 --
Administrative Expenses                     --                  1                 60              1,225
                               ---------------    ---------------    ---------------    ---------------

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

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

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

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


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


                                      F-4
<PAGE>



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


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

Net loss for period                                   --                --               --          (1,659)         (1,659)
                                                 -------      ------------        ---------       ---------        --------
Balance, May 31, 2000                            931,500                93            4,722          (1,659)          3,156

Net loss for year                                     --                --               --          (2,571)         (2,571)
                                                 -------      ------------        ---------       ---------        --------

Balance, May 31, 2001                            931,500      $         93        $   4,722       $  (4,230)       $    585

Additional capital contributed                        --                --            1,980              --           1,980

Net loss for year                                     --                --               --          (2,564)         (2,564)
                                                 -------      ------------        ---------       ---------        --------
Balance, May 31, 2002                            931,500      $         93        $   6,702       $  (6,794)       $      1

Net loss for year                                     --                --               --         (21,362)        (21,362)
                                                 -------      ------------        ---------       ---------        --------
Balance, May 31, 2003                            931,500      $         93            6,702         (28,156)        (21,361)

Issuance of common stock                         238,500                24           12,976              --          13,000

Net loss - December 31, 2003                          --                --               --         (14,929)        (14,929)
                                               ---------      ------------        ---------       ---------        --------
Balance - December 31, 2003                    1,170,000               117        $  19,678       $ (43,085)        (23,290)
                                               =========       ===========        =========       =========        ========
</Table>


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



                                      F-5
<PAGE>



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

<Table>
<Caption>
                                                       From                                                       From
                                                      Period               YEAR                YEAR             Inception
                                                       Ended               ENDED               ENDED         (Sept 29,1999)
                                                     December 31,          MAY 31,            MAY 31,        to December 31,
                                                         2003               2003               2002               2003
                                                    ---------------    ---------------    ---------------    ---------------
<S>                                                <C>                 <C>                <C>                <C>
Cash Flows From Operating
 Activities
Net loss                                            $       (14,929)   $       (21,362)   $        (2,564)   $       (43,085)
Adjustments to reconcile net
 loss to net cash used
 operating activities:
 Stock issued for services                                       --                 --                 --                 --
Changes in assets and
 liabilities
 Increase(decrease) in
 Accounts payable                                             1,698             11,361               (490)            13,059
                                                    ---------------    ---------------    ---------------    ---------------
                                                              1,698             11,361               (490)            13,059
                                                    ---------------    ---------------    ---------------    ---------------

Net Cash Used in Operating
 Activities                                                 (13,231)           (10,001)            (3,054)           (30,026)
                                                    ---------------    ---------------    ---------------    ---------------

Cash Flow From Financing
 Activities
Issuance of common stock                                         --                 --                 --             17,815
Increase in Advance from
 Shareholder                                                 13,000             10,000                 --             10,231
Contributed capital                                              --                 --              1,980              1,980
                                                    ---------------    ---------------    ---------------    ---------------

Net Cash Provided By Financing
 Activities                                                     231             10,000              1,980             30,026
                                                    ---------------    ---------------    ---------------    ---------------

Increase(decrease) in Cash                                       --                 (1)            (1,074)                --

Cash and Cash Equivalents -
 Beginning of period                                             --                  1              1,075                 --
                                                    ---------------    ---------------    ---------------    ---------------

Cash and Cash Equivalents -
 End of period                                      $            --    $            --    $             1    $            --
                                                    ===============    ===============    ===============    ===============

Supplemental Cash Flow
 Information
 Interest paid                                      $            --    $            --    $            --    $            --
                                                    ===============    ===============    ===============    ===============

 Taxes paid                                         $            --    $            --    $            --    $            --
                                                    ===============    ===============    ===============    ===============

</Table>


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




                                      F-6
<PAGE>




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


1. ORGANIZATION AND BASIS OF PRESENTATION

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

DEVELOPMENT STAGE ENTERPRISE

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

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING

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

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

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

INCOME TAXES

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



                                      F-7
<PAGE>



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

NET EARNINGS (LOSS) PER SHARE

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

RECENTLY ISSUED ACCOUNTING STANDARDS

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

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

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



                                      F-8
<PAGE>



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

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

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

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

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



                                      F-9
<PAGE>



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

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

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

3. GOING CONCERN

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

4. INCOME TAXES

         There has been no provision for U.S. federal, state, or foreign income
taxes for any period because the Company has incurred losses in all periods and
for all jurisdictions. Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of deferred tax assets are as follows:

DEFERRED TAX ASSETS

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

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



                                      F-10
<PAGE>



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

5. ISSUANCE OF COMMON STOCK

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

6. SUBSEQUENT EVENTS

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



                                      F-11
<PAGE>


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



                                      F-12
<PAGE>



INDEPENDENT AUDITORS' REPORT

To the Board of Members of
Nexvu Technologies, LLC

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

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

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

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

May 3, 2004
Oklahoma City, Oklahoma



                                      F-13
<PAGE>



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

<Table>
<Caption>
                                                                     DECEMBER 31,      DECEMBER 31,
                                                                         2003              2002
                                                                    ---------------   ---------------
<S>                                                                 <C>               <C>
        ASSETS

        CURRENT ASSETS

        Cash                                                        $       616,880   $            --

        Accounts receivable                                                  61,270             9,590

        Prepaid expenses                                                     51,837                --
                                                                    ---------------   ---------------

        Total Current Assets                                                729,987             9,590
                                                                    ---------------   ---------------

        FIXED ASSETS - NET OF ACCUMULATED DEPRECIATION                      136,341           179,777
                                                                    ---------------   ---------------
        OTHER ASSETS

        Software licensing fee                                              300,000           300,000

        Organization costs - net of accumulated amortization                     --             3,371
                                                                    ---------------   ---------------


        Total Other Assets                                                  300,000           303,371
                                                                    ---------------   ---------------
        TOTAL ASSETS                                                $     1,166,328   $       492,738
                                                                    ---------------   ---------------

        LIABILITIES AND MEMBERS' EQUITY

        CURRENT LIABILITIES

        Accounts payable                                            $       120,567   $       186,869

        Accrued expenses                                                     38,449            32,650

        Deferred revenue                                                         --                --

        Deferred rent                                                         1,955                --
                                                                    ---------------   ---------------
        Total Current Liabilities
                                                                            160,971           219,519
                                                                    ---------------   ---------------
        LONG-TERM LIABILITIES

        Loans payable                                                       735,000         1,400,136
                                                                    ---------------   ---------------
        Total Liabilities                                                   895,971         1,619,655
                                                                    ---------------   ---------------

        MEMBERS' EQUITY (DEFICIT)                                           270,357        (1,126,917)
                                                                    ---------------   ---------------
        TOTAL LIABILITIES AND MEMBERS'  EQUITY                      $     1,166,328   $       492,738
                                                                    ---------------   ---------------
</Table>

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



                                      F-14
<PAGE>




                             NEXVU TECHNOLOGIES, LLC
                        (A DEVELOPMENT STAGE ENTERPRISE)
             STATEMENTS OF OPERATIONS AND MEMBERS' EQUITY (DEFICIT)


<Table>
<Caption>
                                                                                        FROM
                                                                                      INCEPTION
                                             12 MONTHS            10 MONTHS          FEBRUARY, 28,
                                               ENDED                ENDED              2002 TO
                                              DECEMBER             DECEMBER            DECEMBER
                                              31, 2003             31, 2002            31, 2003
                                           ----------------    ----------------    ----------------
<S>                                        <C>                 <C>                 <C>
REVENUE                                    $         59,027    $             --    $         59,027
                                           ----------------    ----------------    ----------------
COST OF GOODS SOLD                                  129,806                  --             129,806
                                           ----------------    ----------------    ----------------
GROSS MARGIN                                        (70,779)                 --             (70,779)

OPERATING EXPENSES

Salaries and payroll taxes                        1,752,091             882,003           2,634,094

Marketing and advertising                             7,941                  --               7,941

Occupancy                                           120,508              38,725             159,233

Professional fees                                   264,599              67,121             331,720

Depreciation and amortization                        84,395              39,075             123,470

Telecommunications                                   36,438              18,421              54,859

Travel and entertainment                             93,047              27,294             120,341

General expenses                                     61,326              54,278             115,604
                                           ----------------    ----------------    ----------------

TOTAL EXPENSES                                    2,420,345           1,126,917           3,547,262
                                           ----------------    ----------------    ----------------
OPERATING INCOME                                 (2,491,124)         (1,126,917)         (3,618,041)

INTEREST EXPENSE                                    146,509                  --             146,509
                                           ----------------    ----------------    ----------------
NET LOSS BEFORE INCOME TAXES                     (2,637,633)         (1,126,917)         (3,764,550)

INCOME TAXES                                             --                  --                  --
                                           ----------------    ----------------    ----------------
NET LOSS                                   $     (2,637,633)   $     (1,126,917)   $     (3,764,550)


MEMBERS' EQUITY BEGINNING OF PERIOD              (1,126,917)                 --                  --

CASH CONTRIBUTIONS                                1,825,000                               1,825,000

CONTRIBUTIONS - LOAN CONVERSIONS                  2,209,907                  --           2,209,907
                                           ----------------    ----------------    ----------------
MEMBERS' EQUITY, END OF PERIOD                      270,357          (1,126,917)            270,357
                                           ----------------    ----------------    ----------------
</Table>

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



                                      F-15
<PAGE>
                             NEXVU TECHNOLOGIES, LLC
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                                              FROM INCEPTION
                                                            12 MONTHS         10 MONTHS        FEBRUARY, 28,
                                                              ENDED             ENDED             2002 TO
                                                             DECEMBER          DECEMBER          DECEMBER
                                                             31, 2003          31, 2002          31, 2003
                                                          --------------    --------------    --------------
<S>                                                       <C>               <C>               <C>
CASH FLOW FROM OPERATING ACTIVITIES:

NET LOSS                                                  $   (2,637,633)   $   (1,126,917)   $   (3,764,550)

Adjustments to reconcile net loss to net cash
 used in operating activities

Depreciation and amortization                                     84,395            39,075           123,470

Write-off organizational costs                                     3,371                --             3,371
Changes in assets and liabilities:
 Accounts receivable                                             (51,680)           (9,590)          (61,270)
 Prepaid expenses                                                (51,837)               --           (51,837)
 Accounts payable                                                (66,302)          186,869           120,567
 Accrued expenses                                                  5,799            32,650            38,449
 Deferred revenue                                                     --                --                --
 Deferred rent                                                     1,955                --             1,955
                                                          --------------    --------------    --------------
                                                                 (74,299)          249,004           174,705
                                                          --------------    --------------    --------------

Net Cash Used in Operating Activities                         (2,711,932)         (877,913)       (3,589,845)
                                                          --------------    --------------    --------------

CASH FLOW FROM INVESTING ACTIVITIES:

 Purchase of fixed assets                                        (40,959)         (218,852)         (259,811)
 Purchase of other assets                                             --          (303,371)         (303,371)
                                                          --------------    --------------    --------------

Net Cash Used In  Investing Activities                           (40,959)         (522,223)         (563,182)
                                                          --------------    --------------    --------------

CASH FLOW FROM FINANCING ACTIVITIES:
 Loans payable - net                                           1,544,771         1,400,136         2,944,907
 Contributions by members - net of repayments                  1,825,000                --         1,825,000
                                                          --------------    --------------    --------------

Net Cash Provided By Financing Activities                      3,369,771         1,400,136         4,769,907
                                                          --------------    --------------    --------------
Increase in Cash                                                 616,880                --           616,880

Cash and Cash Equivalents - Beginning of Period                       --                --                --
                                                          --------------    --------------    --------------

Cash and Cash Equivalents - End of period                 $      616,880    $           --    $      616,880
                                                          --------------    --------------    --------------
SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest                                    $      108,060    $           --    $      108,060
                                                          --------------    --------------    --------------
Cash paid for income taxes                                            --                --                --
                                                          --------------    --------------    --------------
NONCASH INVESTING AND FINANCING ACTIVITIES:

Contributions by members through conversions of loans     $    2,209,907    $           --    $    2,209,907
                                                          --------------    --------------    --------------
</Table>


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



                                      F-16
<PAGE>



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

NOTE 1 - Organization and Basis of Presentation

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

NOTE  2 - Summary of Significant Accounting Policies

Cash and Cash Equivalents

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

Property and Equipment

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

<Table>
<S>                                                                     <C>
                     Computers, Equipment & Furniture                   5 to 7 years

                     Computer Software                                  3 years
</Table>

Software Licensing Fee

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

Fair Value of Financial Instruments

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



                                      F-17
<PAGE>



Revenue Recognition

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

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

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

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

         o        Collection is probable.

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

Income Taxes

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

Use of Estimates

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

Recently Issued Accounting Pronouncements

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



                                      F-18
<PAGE>



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

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

NOTE 3 - Going Concern

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

NOTE 4 - Software License Agreement

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

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

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

NOTE 5 - Commitments

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

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



                                      F-19
<PAGE>



NOTE 6 - Notes Payable

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

Note payable to bank, secured by certain personal assets of a member    110,000
and all assets of the Company, interest at 9%, interest only due       --------
monthly, principal due March 31, 2004

Total Notes Payable                                                    $735,000
                                                                       ========
</Table>

NOTE 7 - Property and Equipment

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

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

NOTE 8 - Related Parties

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

NOTE 9 - Subsequent Events

On January 28, 2004, the Company merged with a wholly owned subsidiary of
Capital Growth Systems, Inc. ("CGSI"), a Florida "shell" corporation formed for
the purpose of acquiring an operating business. The Company has become the sole
operating business of CGSI. The merger was contingent upon CGSI having raised a
minimum of $2,000,000 of investor capital pursuant to a common stock private
placement at $1.35 per share. As of April 15, 2004 an aggregate of $7,605,230 of
gross proceeds from the private placement had been raised. In addition, at the
merger closing the $550,000 of bridge loans to the Company were converted into
additional common stock of CGSI at approximately $0.95 per share and one
additional $25,000



                                      F-20
<PAGE>



subscription was accepted shortly thereafter at such pricing. In connection with
the merger, an aggregate of 8,558,500 shares of common stock of CGSI were issued
to the members of the Company and the Company became a wholly owned subsidiary
of CGSI, with CGSI serving as its sole manager. Following the merger the Company
will be treated as a disregarded entity for state and federal income tax
purposes. The cash balances of CGSI as of March 1, 2004 are expected to be more
than sufficient to cover the cost of operations of the Company for 2004.




                                      F-21