##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2008.

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to
.

Commission File Number: 001-33385





STREAM GLOBAL SERVICES, INC.

(Exact name of registrant as specified in its
charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 26-0420454                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



|                                                 |  |           
|------------------------------------------------ |  | ----------
|125 High Street, 30thFloor Boston, Massachusetts |  | 02110     
|(Address of Principal Executive Offices)         |  | (Zip Code)

(617) 517- 3252

(Registrants Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)





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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer
or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                                              |  |   |  |                           |  |  
|--------------------------------------------- |  | - |  | ------------------------- |  | -
|Large Accelerated Filer                       |  |  ̈ |  | Accelerated Filer         |  |  ̈
|                                              |  |   | 
|Non-accelerated Filer                         |  | x |  | Smaller reporting company |  |  ̈
|(Do not check if a smaller reporting company) |  |  

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

There were 9,470,675 shares of the Registrants common stock, $0.001 par value per share, issued and outstanding as of November 13, 2008.









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##### Table of Contents

TABLE OF CONTENTS



|                                           |  |                                                                                                                                                                                                  |  |     
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|                                           |  |                                                                                                                                                                                                  |  | Page
|                                           | 
|PART I. Consolidated Financial Information |  | 3                                                                                                                                                                                               
|                                           |  |                                                                                                                                                                                                 
|Item 1.                                    |  | Consolidated Condensed Financial Statements (unaudited)                                                                                                                                          |  | 3   
|                                           |  |                                                                                                                                                                                                 
|                                           |  | Consolidated Condensed Balance Sheets as of September 30, 2008 (unaudited), December 31, 2007 and Predecessor (SHC) at December 31, 2007                                                       |  | 3   
|                                           |  |                                                                                                                                                                                                 
|                                           |  | Consolidated Condensed Statements of Operations for the three months ended September 30, 2008 and 2007, and one month ended July 31, 2008 for Predecessor (SHC) (unaudited)                    |  | 4   
|                                           |  |                                                                                                                                                                                                 
|                                           |  | Consolidated Condensed Statements of Operations for the nine months ended September 30, 2008 and 2007, and seven months ended July 31, 2008 for Predecessor (SHC)
 (unaudited)                 |  | 5   
|                                           |  |                                                                                                                                                                                                 
|                                           |  | Consolidated Condensed Statements of Stockholders Equity for the nine months ended September 30, 2008 (unaudited)                                                                                |  | 6   
|                                           |  |                                                                                                                                                                                                 
|                                           |  | Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2008 and 2007, and for the nine months ended September 30, 2008 for the Predecessor (SHC)
 (unaudited) |  | 7   
|                                           |  |                                                                                                                                                                                                 
|                                           |  | Notes to Unaudited Consolidated Condensed Financial Statements                                                                                                                                   |  | 8   
|                                           |  |                                                                                                                                                                                                 
|Item 2.                                    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                            |  | 26  
|                                           |  |                                                                                                                                                                                                 
|Item 3.                                    |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                       |  | 36  
|                                           |  |                                                                                                                                                                                                 
|Item 4.                                    |  | Controls and Procedures                                                                                                                                                                          |  | 37  
|                                           | 
|PART II. OTHER INFORMATION                 |  | 37                                                                                                                                                                                              
|                                           |  |                                                                                                                                                                                                 
|Item 1A.                                   |  | Risk Factors                                                                                                                                                                                     |  | 37  
|                                           |  |                                                                                                                                                                                                 
|Item 2.                                    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                      |  | 46  
|                                           |  |                                                                                                                                                                                                 
|Item 4.                                    |  | Submission of Matters to a Vote of Security Holders                                                                                                                                              |  | 47  
|                                           |  |                                                                                                                                                                                                 
|Item 6.                                    |  | Exhibits                                                                                                                                                                                         |  | 48  
|                                           | 
|SIGNATURES                                 |  | 49                                                                                                                                                                                              

Stream and Stream International, Inc. are registered trademarks. Stream Global Services, Inc. is a
trademark.



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##### Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS

Stream Global Services, Inc.

Consolidated Condensed Balance Sheets

(In thousands, except per share amounts)



|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------------------ |  | - | ------- | -
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   | Predecessor(SHC) | 
|                                                                                                                                                                                                                                                   |  | September 30,2008 |         |   | December 31,2007 |   | December 31,2007   | 
|                                                                                                                                                                                                                                                   |  | (unaudited)       |         |   |                  |   |                    | 
|Assets                                                                                                                                                                                                                                             |  |                   |         |   |                  |   |                    |  |   |         |  
|Current assets:                                                                                                                                                                                                                                    |  |                   |         |   |                  |   |                    |  |   |         |  
|Cash and cash equivalents                                                                                                                                                                                                                          |  | $                 | 31,465  |   |                  | $ | 1,161              |  | $ | 12,577  |  
|Cash and cash equivalents held in trust account                                                                                                                                                                                                    |  |                   |        |   |                  |   | 246,300            |  |   |        |  
|Restricted cash                                                                                                                                                                                                                                    |  |                   | 125     |   |                  |   |                   |  |   | 4       |  
|Accrued interest held in trust account                                                                                                                                                                                                             |  |                   |        |   |                  |   | 913                |  |   |        |  
|Accounts receivable, net of allowance for bad debts of $96 and zero at September 30, 2008 and December 31, 2007, respectively, and
$33 at December 31, 2007 for SHC                                                                                |  |                   | 100,044 |   |                  |   |                   |  |   | 115,794 |  
|Income taxes receivable                                                                                                                                                                                                                            |  |                   | 870     |   |                  |   |                   |  |   | 1,518   |  
|Deferred income taxes                                                                                                                                                                                                                              |  |                   | 859     |   |                  |   |                   |  |   | 1,113   |  
|Prepaid expenses and other current assets                                                                                                                                                                                                          |  |                   | 8,365   |   |                  |   | 152                |  |   | 7,908   |  
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  
|Total current assets                                                                                                                                                                                                                               |  |                   | 141,728 |   |                  |   | 248,526            |  |   | 138,914 |  
|                                                                                                                                                                                                                                                   |  |                   |        
|Equipment and fixtures, net                                                                                                                                                                                                                        |  |                   | 39,596  |   |                  |   | 27                 |  |   | 36,656  |  
|Deferred income taxes                                                                                                                                                                                                                              |  |                   | 4,531   |   |                  |   |                   |  |   | 5,171   |  
|Goodwill                                                                                                                                                                                                                                           |  |                   | 54,513  |   |                  |   |                   |  |   | 8,066   |  
|Intangible assets, net of amortization                                                                                                                                                                                                             |  |                   | 83,934  |   |                  |   |                   |  |   |        |  
|Other assets                                                                                                                                                                                                                                       |  |                   | 6,269   |   |                  |   | 165                |  |   | 4,609   |  
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  
|Total assets                                                                                                                                                                                                                                       |  | $                 | 330,571 |   |                  | $ | 248,718            |  | $ | 193,416 |  
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  
|Liabilities and Stockholders Equity                                                                                                                                                                                                               |  |                   |         |   |                  |   |                    |  |   |         |  
|Current liabilities:                                                                                                                                                                                                                               |  |                   |         |   |                  |   |                    |  |   |         |  
|Accounts payable                                                                                                                                                                                                                                   |  | $                 | 11,822  |   |                  | $ | 74                 |  | $ | 6,843   |  
|Accrued employee compensation and benefits                                                                                                                                                                                                         |  |                   | 38,280  |   |                  |   |                   |  |   | 40,226  |  
|Other accrued expenses                                                                                                                                                                                                                             |  |                   | 14,560  |   |                  |   | 7,729              |  |   | 15,315  |  
|Income taxes payable                                                                                                                                                                                                                               |  |                   | 2,461   |   |                  |   | 760                |  |   | 3,150   |  
|Current portion of long-term debt                                                                                                                                                                                                                  |  |                   | 2,650   |   |                  |   |                   |  |   | 76,732  |  
|Current portion of capital lease obligations                                                                                                                                                                                                       |  |                   | 2,428   |   |                  |   |                   |  |   | 2,200   |  
|Other liabilities                                                                                                                                                                                                                                  |  |                   | 7,339   |   |                  |   |                   |  |   | 4,219   |  
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  
|Total current liabilities                                                                                                                                                                                                                          |  |                   | 79,540  |   |                  |   | 8,563              |  |   | 148,685 |  
|                                                                                                                                                                                                                                                   |  |                   |        
|Long-term debt, net of current portion                                                                                                                                                                                                             |  |                   | 66,189  |   |                  |   |                   |  |   | 22,294  |  
|Capital lease obligations, net of current portion                                                                                                                                                                                                  |  |                   | 5,674   |   |                  |   |                   |  |   | 6,398   |  
|Deferred income taxes                                                                                                                                                                                                                              |  |                   | 6,104   |   |                  |   |                   |  |   | 147     |  
|Other long-term liabilities                                                                                                                                                                                                                        |  |                   | 21,825  |   |                  |   |                   |  |   | 8,540   |  
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  
|Total liabilities                                                                                                                                                                                                                                  |  |                   | 179,332 |   |                  |   | 8,563              |  |   | 186,064 |  
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  
|Common stock subject to possible conversion (9,375 shares at conversion value)                                                                                                                                                                     |  |                   |        |   |                  |   | 73,875             |  |   |        |  
|Preferred Stock, par value $0.001 per share, 1,000 shares authorized; 150 and 0 shares issued and outstanding at September 30, 2008 and
December 31, 2007, respectively                                                                            |  |                   | 144,552 |   |                  |   |                   |  |   |        |  
|                                                                                                                                                                                                                                                   |  |                   |        
|Stockholders equity:                                                                                                                                                                                                                              |  |                   |         |   |                  |   |                    |  |   |         |  
|Preferred stock, par value $0.001 per share, shares authorized 1,000                                                                                                                                                                               |  |                   |        |   |                  |   |                   |  |   |        |  
|                                                                                                                                                                                                                                                   |  |                   |        
|Common stock, par value $0.001 per share, shares authorized149,000 shares issued and outstanding shares9,471 and 29,688 shares
(excluding 9,375 shares subject to possible conversion) at September 30, 2008 and December 31, 2007, respectively |  |                   | 9       |   |                  |   | 30                 |  |   | 84      |  
|Additional paid-in-capital                                                                                                                                                                                                                         |  |                   | 12,592  |   |                  |   | 165,133            |  |   | 5,337   |  
|Retained earnings (deficit)                                                                                                                                                                                                                        |  |                   | (1,253  | ) |                  |   | 1,117              |  |   | (5,723  | )
|Accumulated other comprehensive income (loss)                                                                                                                                                                                                      |  |                   | (4,661  | ) |                  |   |                   |  |   | 7,654   |  
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  
|Total stockholders equity                                                                                                                                                                                                                         |  |                   | 6,687   |   |                  |   | 166,280            |  |   | 7,352   |  
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  
|Total liabilities and stockholders equity                                                                                                                                                                                                         |  | $                 | 330,571 |   |                  | $ | 248,718            |  | $ | 193,416 |  
|                                                                                                                                                                                                                                                   |  |                   |         |   |                  |   |                    |  |   |         |  

See accompanying notes to consolidated condensed financial statements.



3



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##### Table of Contents

Stream Global Services, Inc.

Consolidated Condensed Statements of Operations

(Unaudited)

(In thousands, except per share amounts)



|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|---------------------------------------------------------------- |  | -------------------------------- | ------- | - | --------------------------------------------- | - | ----- | ------------------ |  | - | ------- | - |  | - | ------- | -
|                                                                 |  | Three Months Ended September 30, |         |   | One Monthended July 31,2008Predecessor(SHC) |  
|                                                                 |  |                                  |         |   |                                               |   |       | Predecessor(SHC) |  |  
|                                                                 |  | 2008                             |         |   | 2007                                          |   |       | 2007               |  |  
|Revenue                                                          |  | $                                | 81,537  |   |                                               | $ |      |                    |  | $ | 113,832 |   |  | $ | 42,999  |  
|Direct cost of revenue                                           |  |                                  | 50,529  |   |                                               |   |      |                    |  |   | 76,312  |   |  |   | 28,178  |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Gross profit                                                     |  |                                  | 31,008  |   |                                               |   |      |                    |  |   | 37,520  |   |  |   | 14,821  |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Operating expenses:                                              |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Selling, general and administrative expenses                     |  |                                  | 25,647  |   |                                               |   | 9     |                    |  |   | 34,844  |   |  |   | 13,999  |  
|Depreciation and amortization                                    |  |                                  | 3,990   |   |                                               |   |      |                    |  |   | 3,031   |   |  |   | 1,283   |  
|Transaction related costs                                        |  |                                  |        |   |                                               |   |      |                    |  |   |        |   |  |   | 16,581  |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Total operating expenses                                         |  |                                  | 29,637  |   |                                               |   | 9     |                    |  |   | 37,875  |   |  |   | 31,863  |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Income (loss) from operations                                    |  |                                  | 1,371   |   |                                               |   | (9    | )                  |  |   | (355    | ) |  |   | (17,042 | )
|                                                                 |  |                                  |         |  
|Other (income) expenses, net:                                    |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Foreign currency transaction loss (gain)                         |  |                                  | 401     |   |                                               |   |      |                    |  |   | (1,417  | ) |  |   | 248     |  
|Other (income) expense, net                                      |  |                                  | 68      |   |                                               |   |       |                    |  |   | 26      |   |  |   | (28     | )
|Interest expense, net                                            |  |                                  | 64      |   |                                               |   | 2     |                    |  |   | 2,897   |   |  |   | 1,183   |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Total other (income) expenses, net                               |  |                                  | 533     |   |                                               |   | 2     |                    |  |   | 1,506   |   |  |   | 1,403   |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Income (loss) before income taxes                                |  |                                  | 838     |   |                                               |   | (11   | )                  |  |   | (1,861  | ) |  |   | (18,445 | )
|                                                                 |  |                                  |         |  
|Provision (benefit) for income taxes                             |  |                                  | 1,757   |   |                                               |   |      |                    |  |   | 2,892   |   |  |   | 752     |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Net income (loss)                                                |  |                                  | (919    | ) |                                               |   | (11   | )                  |  |   | (4,753  | ) |  |   | (19,197 | )
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Series A preferred stock beneficial conversion feature           |  |                                  | 49,503  |   |                                               |   |      |                    |  |   |        |   |  |   |        |  
|Cumulative convertible preferred stock dividends                 |  |                                  | 665     |   |                                               |   |      |                    |  |   |        |   |  |   |        |  
|Preferred Stock accretion                                        |  |                                  | 133     |   |                                               |   |      |                    |  |   |        |   |  |   |        |  
|Warrant issuance costs                                           |  |                                  | 298     |   |                                               |   |      |                    |  |   |        |   |  |   |        |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Net income (loss) attributable to common shareholders            |  | $                                | (51,518 | ) |                                               | $ | (11   | )                  |  | $ | (4,753  | ) |  | $ | (19,197 | )
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Net income (loss) attributable to common shareholders per share: |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Basic                                                            |  | $                                | (2.12   | ) |                                               | $ | (0.00 | )                  |  |   | N/A     |   |  |   | N/A     |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Diluted                                                          |  | $                                | (2.12   | ) |                                               | $ | (0.00 | )                  |  |   | N/A     |   |  |   | N/A     |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Shares used in computing per share amounts:                      |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Basic                                                            |  |                                  | 24,347  |   |                                               |   | 8,203 |                    |  |   | N/A     |   |  |   | N/A     |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  
|Diluted                                                          |  |                                  | 24,347  |   |                                               |   | 8,203 |                    |  |   | N/A     |   |  |   | N/A     |  
|                                                                 |  |                                  |         |   |                                               |   |       |                    |  |   |         |   |  |   |         |  

See accompanying notes to consolidated condensed financial statements.



4



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##### Table of Contents

Stream Global Services, Inc.

Consolidated Condensed Statements of Operations

(Unaudited)

(In thousands, except per share amounts)



|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|---------------------------------------------------------------- |  | --------------------------------- | ------- | - | --------------------------------------------------------------------- | - | ----- | --------------------------------------------------- |  | - | ------------------------------------------------ | - |  | - | ------- | -
|                                                                 |  | Nine MonthsEndedSeptember 30,2008 |         |   | For the periodfromJune 26, 2007(date
ofinception) toSeptember 30,2007 |   |       | Nine MonthsEndedSeptember 30,2007Predecessor(SHC) |  |   | Seven MonthsEndedJuly 31, 2008Predecessor(SHC) |  
|Revenue                                                          |  | $                                 | 81,537  |   |                                                                       | $ |      |                                                     |  | $ | 345,645                                          |   |  | $ | 312,085 |  
|Direct cost of revenue                                           |  |                                   | 50,529  |   |                                                                       |   |      |                                                     |  |   | 229,017                                          |   |  |   | 202,676 |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Gross profit                                                     |  |                                   | 31,008  |   |                                                                       |   |      |                                                     |  |   | 116,628                                          |   |  |   | 109,409 |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|                                                                 |  |                                   |         |  
|Operating expenses:                                              |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Selling, general and administrative expenses                     |  |                                   | 26,194  |   |                                                                       |   | 15    |                                                     |  |   | 104,369                                          |   |  |   | 95,751  |  
|Depreciation and amortization                                    |  |                                   | 3,997   |   |                                                                       |   |      |                                                     |  |   | 8,506                                            |   |  |   | 8,810   |  
|Transaction related costs                                        |  |                                   |        |   |                                                                       |   |      |                                                     |  |   |                                                 |   |  |   | 19,515  |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Total operating expenses                                         |  |                                   | 30,191  |   |                                                                       |   | 15    |                                                     |  |   | 112,875                                          |   |  |   | 124,076 |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Income (loss) from operations                                    |  |                                   | 817     |   |                                                                       |   | (15   | )                                                   |  |   | 3,753                                            |   |  |   | (14,667 | )
|                                                                 |  |                                   |         |  
|Other (income) expenses, net:                                    |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Foreign currency transaction loss (gain)                         |  |                                   | 401     |   |                                                                       |   |      |                                                     |  |   | 441                                              |   |  |   | (1,517  | )
|Other (income) expense, net                                      |  |                                   | 68      |   |                                                                       |   |      |                                                     |  |   | (1,141                                           | ) |  |   | (87     | )
|Interest (income) expense, net                                   |  |                                   | (3,421  | ) |                                                                       |   | 3     |                                                     |  |   | 8,835                                            |   |  |   | 7,214   |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Total other (income) expenses, net                               |  |                                   | (2,952  | ) |                                                                       |   | 3     |                                                     |  |   | 8,135                                            |   |  |   | 5,610   |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Income (loss) before income taxes                                |  |                                   | 3,769   |   |                                                                       |   | (18   | )                                                   |  |   | (4,382                                           | ) |  |   | (20,277 | )
|                                                                 |  |                                   |         |  
|Provision (benefit) for income taxes                             |  |                                   | 2,827   |   |                                                                       |   |      |                                                     |  |   | 4,075                                            |   |  |   | 5,095   |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Net income (loss)                                                |  | $                                 | 942     |   |                                                                       | $ | (18   | )                                                   |  | $ | (8,457                                           | ) |  | $ | (25,372 | )
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Series A preferred stock beneficial conversion feature           |  |                                   | 49,503  |   |                                                                       |   |      |                                                     |  |   |                                                 |   |  |   |        |  
|Cumulative convertible preferred stock dividends                 |  |                                   | 665     |   |                                                                       |   |      |                                                     |  |   |                                                 |   |  |   |        |  
|Preferred Stock accretion                                        |  |                                   | 133     |   |                                                                       |   |      |                                                     |  |   |                                                 |   |  |   |        |  
|Warrant issuance costs                                           |  |                                   | 298     |   |                                                                       |   |      |                                                     |  |   |                                                 |   |  |   |        |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Net income (loss) attributable to common shareholders            |  | $                                 | (49,657 | ) |                                                                       | $ | (18   | )                                                   |  | $ | (8,457                                           | ) |  | $ | (25,372 | )
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Net income (loss) attributable to common shareholders per share: |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Basic                                                            |  | $                                 | (1.78   | ) |                                                                       | $ | (0.00 | )                                                   |  |   | N/A                                              |   |  |   | N/A     |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Diluted                                                          |  | $                                 | (1.78   | ) |                                                                       | $ | (0.00 | )                                                   |  |   | N/A                                              |   |  |   | N/A     |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|                                                                 |  |                                   |         |  
|Shares used in computing per share amounts:                      |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Basic                                                            |  |                                   | 27,907  |   |                                                                       |   | 7,780 |                                                     |  |   | N/A                                              |   |  |   | N/A     |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  
|Diluted                                                          |  |                                   | 27,907  |   |                                                                       |   | 7,780 |                                                     |  |   | N/A                                              |   |  |   | N/A     |  
|                                                                 |  |                                   |         |   |                                                                       |   |       |                                                     |  |   |                                                  |   |  |   |         |  

See accompanying notes to consolidated condensed financial statements.



5



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##### Table of Contents

Stream Global Services, Inc.

Consolidated Condensed Statements of Stockholders Equity

For the Nine Months Ended September 30, 2008

(Unaudited)

(In thousands)



|                                                              |  |              |   |  |                          |     |   |                           |   |          |                                            |  |   |        |   |  |   |        |   |  |   |          |  
|------------------------------------------------------------- |  | ------------ | - |  | ------------------------ | --- | - | ------------------------- | - | -------- | ------------------------------------------ |  | - | ------ | - |  | - | ------ | - |  | - | -------- | -
|                                                              |  | Common Stock |   |  | AdditionalPaid inCapital |     |   | RetainedEarnings(Deficit) |   |          | AccumulatedOtherComprehensiveIncome (Loss) |  |   | Total  |  
|                                                              |  | Shares       |   |  | ParValue                 |     |   |                           |   |         
|Balances at December 31, 2007                                 |  | 29,688       |   |  | $                        | 30  |   |                           | $ | 165,133  |                                            |  | $ | 1,117  |   |  | $ |       |   |  | $ | 166,280  |  
|Net income                                                    |  |             |   |  |                          |    |   |                           |   |         |                                            |  |   | 942    |   |  |   |       |   |  |   | 942      |  
|Currency translation adjustment                               |  |             |   |  |                          |    |   |                           |   |         |                                            |  |   |       |   |  |   | (3,656 | ) |  |   | (3,656   | )
|Unrealized loss on derivatives, net of tax of $0              |  |             |   |  |                          |    |   |                           |   |         |                                            |  |   |       |   |  |   | (1,005 | ) |  |   | (1,005   | )
|                                                              |  |              |   |  |                          |     |   |                           |   |          |                                            |  |   |        |   |  |   |        |   |  |   |          |  
|Comprehensive loss                                            |  |             |   |  |                          |    |   |                           |   |         |                                            |  |   |       |   |  |   |       |   |  |   | (3,719   | )
|Accretion of beneficial conversion premium on preferred stock |  |             |   |  |                          |    |   |                           |   | (46,191  | )                                          |  |   | (3,312 | ) |  |   |       |   |  |   | (49,503  | )
|Beneficial conversion premium on preferred stock              |  |             |   |  |                          |    |   |                           |   | 49,503   |                                            |  |   |       |   |  |   |       |   |  |   | 49,503   |  
|Cumulative dividends on preferred stock                       |  |             |   |  |                          |     |   |                           |   | (665     | )                                          |  |   |       |   |  |   |        |   |  |   | (665     | )
|Reduction in deferred IPO costs                               |  |             |   |  |                          |    |   |                           |   | 4,718    |                                            |  |   |       |   |  |   |       |   |  |   | 4,718    |  
|Common shares purchased from stockholders                     |  | (20,757      | ) |  |                          | (21 | ) |                           |   | (166,038 | )                                          |  |   |       |   |  |   |       |   |  |   | (166,059 | )
|Common shares issued under stock plans, net of cancellations  |  | 112          |   |  |                          |    |   |                           |   | 21       |                                            |  |   |       |   |  |   |       |   |  |   | 21       |  
|Stock-based compensation expense                              |  |              |   |  |                          |     |   |                           |   | 5        |                                            |  |   |       |   |  |   |        |   |  |   | 5        |  
|Warrant value associated with issue of preferred stock        |  |             |   |  |                          |    |   |                           |   | 3,253    |                                            |  |   |       |   |  |   |       |   |  |   | 3,253    |  
|Warrant issuance cost                                         |  |             |   |  |                          |    |   |                           |   | (298     | )                                          |  |   |       |   |  |   |       |   |  |   | (298     | )
|Common stock released from redemption restriction             |  | 428          |   |  |                          |    |   |                           |   | 3,572    |                                            |  |   |       |   |  |   |       |   |  |   | 3,572    |  
|Accretion of preferred stock discount                         |  |             |   |  |                          |    |   |                           |   | (133     | )                                          |  |   |       |   |  |   |       |   |  |   | (133     | )
|Accretion of in-trust account                                 |  |             |   |  |                          |    |   |                           |   | (288     | )                                          |  |   |       |   |  |   |       |   |  |   | (288     | )
|                                                              |  |              |   |  |                          |     |   |                           |   |          |                                            |  |   |        |   |  |   |        |   |  |   |          |  
|Balances at September 30, 2008                                |  | 9,471        |   |  | $                        | 9   |   |                           | $ | 12,592   |                                            |  | $ | (1,253 | ) |  | $ | (4,661 | ) |  | $ | 6,687    |  
|                                                              |  |              |   |  |                          |     |   |                           |   |          |                                            |  |   |        |   |  |   |        |   |  |   |          |  

See accompanying notes to consolidated condensed financial statements



6



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##### Table of Contents

Stream Global Services, Inc.

Consolidated Condensed Statements of Cash Flows

(Unaudited)

(In thousands)



|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | --------------------------------------------------------------------- | - | ---- | ----------------------------------- |  | - | ------- | -
|                                                                                                   |  | September 30,2008 |          |   | For theperiod fromJune 26, 2007(date ofinception) toSeptember 30,2007 |   |      | Predecessor(SHC)September 30,2007 | 
|Operating activities:                                                                              |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|                                                                                                   |  |                   |         
|Net income (loss)                                                                                  |  | $                 | 942      |   |                                                                       | $ | (18  | )                                   |  | $ | (8,457  | )
|                                                                                                   |  |                   |         
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Depreciation and amortization                                                                      |  |                   | 3,997    |   |                                                                       |   |     |                                     |  |   | 8,506   |  
|Amortization of debt issuance costs                                                                |  |                   | 75       |   |                                                                       |   |     |                                     |  |   | 935     |  
|Deferred taxes                                                                                     |  |                   | 30       |   |                                                                       |   |     |                                     |  |   | 74      |  
|Market lease reserve                                                                               |  |                   |         |   |                                                                       |   |     |                                     |  |   | (1,042  | )
|Noncash stock compensation                                                                         |  |                   | 26       |   |                                                                       |   |     |                                     |  |   | 312     |  
|Noncash interest expense                                                                           |  |                   |         |   |                                                                       |   |     |                                     |  |   | 615     |  
|Changes in operating assets and liabilities, net of the effect of acquisitions:                    |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Accounts receivable                                                                                |  |                   | (438     | ) |                                                                       |   |     |                                     |  |   | (14,435 | )
|Income taxes receivable                                                                            |  |                   | (194     | ) |                                                                       |   |     |                                     |  |   | (353    | )
|Prepaid expenses and other current assets                                                          |  |                   | (881     | ) |                                                                       |   | (5   | )                                   |  |   | (896    | )
|Other assets                                                                                       |  |                   | (2,498   | ) |                                                                       |   |     |                                     |  |   | (339    | )
|Accounts payable                                                                                   |  |                   | 6,816    |   |                                                                       |   |     |                                     |  |   | 2,390   |  
|Accrued expenses and other liabilities                                                             |  |                   | (15,710  | ) |                                                                       |   | 3    |                                     |  |   | 2,876   |  
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Net cash provided by (used in) operating activities                                                |  |                   | (7,835   | ) |                                                                       |   | (20  | )                                   |  |   | (9,814  | )
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|                                                                                                   |  |                   |         
|Investing activities:                                                                              |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|                                                                                                   |  |                   |         
|Decrease (increase) in restricted cash                                                             |  |                   | 246,280  |   |                                                                       |   |     |                                     |  |   | 437     |  
|Acquisition of businesses, net of cash acquired                                                    |  |                   | (106,809 | ) |                                                                       |   |     |                                     |  |   | (2,594  | )
|Additions to equipment and fixtures, net                                                           |  |                   | (1,557   | ) |                                                                       |   | (1   | )                                   |  |   | (8,994  | )
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Net cash provided by (used in) investing activities                                                |  |                   | 137,914  |   |                                                                       |   | (1   | )                                   |  |   | (11,151 | )
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|                                                                                                   |  |                   |         
|Financing activities:                                                                              |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|                                                                                                   |  |                   |         
|Net borrowings (repayments) on line of credit                                                      |  |                   | (6,319   | ) |                                                                       |   |     |                                     |  |   | 13,159  |  
|Proceeds from issuance of long-term debt                                                           |  |                   |         |   |                                                                       |   | 200  |                                     |  |   | 7,014   |  
|Offering related costs                                                                             |  |                   |         |   |                                                                       |   | (104 | )                                   |  |   |        |  
|Payments on long-term debt                                                                         |  |                   | (397     | ) |                                                                       |   |     |                                     |  |   | (890    | )
|Payment of capital lease obligations                                                               |  |                   | (575     | ) |                                                                       |   |     |                                     |  |   | (1,984  | )
|Proceeds from issuance of Preferred Stock                                                          |  |                   | 145,217  |   |                                                                       |   |     |                                     |  |   |        |  
|Proceeds from sale of common stock and exercise of stock options                                   |  |                   |         |   |                                                                       |   | 50   |                                     |  |   | 40      |  
|Repurchases of common stock                                                                        |  |                   | (236,648 | ) |                                                                       |   |     |                                     |  |   | (162    | )
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Net cash provided by (used in) financing activities                                                |  |                   | (98,722  | ) |                                                                       |   | 146  |                                     |  |   | 17,177  |  
|Effect of exchange rates on cash and cash equivalents                                              |  |                   | (1,053   | ) |                                                                       |   |     |                                     |  |   | 3,978   |  
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                                               |  |                   | 30,304   |   |                                                                       |   | 125  |                                     |  |   | 190     |  
|Cash and cash equivalents, beginning of period                                                     |  |                   | 1,161    |   |                                                                       |   |     |                                     |  |   | 6,150   |  
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Cash and cash equivalents, end of period                                                           |  | $                 | 31,465   |   |                                                                       | $ | 125  |                                     |  | $ | 6,340   |  
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Supplemental cash flow information                                                                 |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|                                                                                                   |  |                   |         
|Cash paid for interest                                                                             |  | $                 | 737      |   |                                                                       | $ |     |                                     |  | $ | 7,057   |  
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Cash paid for income taxes                                                                         |  | $                 | 2,989    |   |                                                                       | $ |     |                                     |  | $ | 2,124   |  
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Noncash financing activity:                                                                        |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  
|Capital lease financing                                                                            |  | $                 | 932      |   |                                                                       | $ |     |                                     |  | $ | 1,545   |  
|                                                                                                   |  |                   |          |   |                                                                       |   |      |                                     |  |   |         |  

See accompanying notes to consolidated condensed financial statements.



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##### Table of Contents

Stream Global Services, Inc.

Notes to Consolidated Condensed Financial Statements

September 30, 2008

(Unaudited)

(In thousands, except per share and per unit amounts)

Note 1 - Our History and Summary of
Various Transactions

Stream Global Services, Inc. (formerly Global BPO Services Corp.), referred to herein as we,
us or SGS, is a corporation organized under the laws of the State of Delaware and was incorporated on June 26, 2007. We were formed as a blank check company for the purpose of acquiring businesses in the business process
outsourcing industry.

On October 23, 2007, we consummated our initial public offering (IPO) from which we received total
gross proceeds of $250,000 and net proceeds of $246,300 which were deposited into a trust account, which included $7,500 of proceeds from the sale of 7,500 warrants purchased by certain of our founding stockholders. In connection with the IPO a
total of $7,500 of underwriters fees were deferred until the completion of our initial acquisition. In order to consummate an initial business combination, our certificate of incorporation provided that holders of no more than 29.9% of our common
stock, or 9,375 shares of common stock, vote against our initial business combination and seek conversion rights for their pro rata share of the funds held in trust.

We sold the units issued in our IPO, each unit consisting of one share of our common stock and a warrant to purchase one share of our common stock, to the underwriters at a price of $7.44 per unit (a discount of $0.56
per unit), resulting in an aggregate underwriting discount of $17,500. In connection with our IPO, we also sold to the underwriters, for $0.1, an option to purchase up to a total of 1,563 units (the Unit Purchase Option). Upon the
consummation of our acquisition of Stream Holdings Corporation (SHC), as described below, the underwriters sold the Unit Purchase Option to us for $0.1.

On July 31, 2008, we completed the acquisition of SHC pursuant to the amended and restated agreement and plan of merger, dated as of June 2, 2008, among SGS, River Acquisition Subsidiary Corp., a wholly
owned subsidiary of SGS, and SHC (the Amended Merger Agreement). The transaction was valued at $130,265 for accounting purposes (which reflected the $200,000 purchase price less assumed indebtedness, transaction fees, employee
transaction related bonuses, professional fees, stock option payments and payments for working capital).

On July 31, 2008, holders of
8,947 shares of our common stock exercised their conversion rights and we paid an aggregate of $70,590 to such holders. In connection with the consummation of the acquisition of SHC, our stockholders approved changing our name from Global BPO
Services Corp. to Stream Global Services, Inc. and our stockholders also approved an amendment to our certificate of incorporation to increase the authorized number of shares of common stock from 119,000 to 149,000.



|                                                                 |  |        |   |  |     |        |  
|---------------------------------------------------------------- |  | ------ | - |  | --- | ------ | -
|                                                                 |  | Shares |   |  | $s |       
|Common Stock subject to possible conversion at December 31, 2007 |  | 9,375  |   |  | $   | 73,874 |  
|Accretion of in-trust account                                    |  |        |   |  |     | 288    |  
|Common Stock released from redemption restriction                |  | (428   | ) |  |     | (3,572 | )
|                                                                 |  |        |   |  |     |        |  
|Dissenter shares repurchasedJuly 31, 2008                       |  | 8,947  |   |  | $   | 70,590 |  
|                                                                 |  |        |   |  |     |        |  

On August 7, 2008, we consummated a private placement pursuant to the terms of the preferred
stock purchase agreement, dated June 2, 2008, as amended, by and between SGS and Ares Corporate Opportunities Fund II, L.P., a Delaware limited liability partnership, or Ares (the Purchase Agreement), and we issued to Ares 150
shares of our Series A Convertible Preferred Stock, $0.001 par value per share (the Series A Preferred Stock), for an aggregate purchase price of $150,000. The Series A Preferred Stock is convertible at the option of Ares into shares of
our common stock at an initial conversion price of $6.00 per share, subject to adjustment for stock dividends, subdivisions, reclassifications combinations or similar type events. In addition, in a separate transaction on August 7, 2008,
certain of our founding stockholders sold warrants to purchase 7,500 shares of common stock that were purchased by them in a private placement immediately prior to our IPO to Ares for an aggregate purchase price of $7.5. For accounting purposes we
have valued these warrants at their estimated fair value at $.58 per warrant and have credited $3,253 to stockholders equity from the value of the Series A Preferred Stock on our balance sheet at September 30, 2008.

Also on August 7, 2008, we commenced a self-tender offer to purchase up to 20,757 shares of our common stock at a purchase price of $8.00 per share.
On September 5, 2008, we closed the self-tender. We accepted for purchase 20,757 shares of our common stock at a price of $8.00 per share, for a total cost of $166,056, excluding fees and expenses related to the offer. The proration factor for the
tender offer was approximately 99%.

Note 2 - Basis of Presentation

Our unaudited consolidated financial statements of SGS as of September 30, 2008, and for the three and nine months ended September 30, 2008 and 2007, respectively, include our accounts and those of our
wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included.
Operating results for the interim periods presented are not necessarily indicative of the results to be expected for a full fiscal year.



8



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##### Table of Contents

The accompanying consolidated condensed financial statements and accompanying notes have been prepared in
accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. These consolidated condensed financial statements should be read in
conjunction with the financial statements and accompanying notes, together with Managements Discussion and Analysis of Financial Condition and Results of Operations that were included in our prospectus filed with the Securities and Exchange
Commission on October 17, 2008 and our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission.

On July 31, 2008, SGS consummated its initial acquisition through the acquisition of SHC and emerged from a development stage corporation. Prior to July 31, 2008, SGS was a blank check company formed for the purpose
of acquiring an operating company. Accordingly, we had no revenues prior to July 31, 2008 because we were in the developmental stage. SHC is deemed to be our predecessor. As a result, the statement of operations and statement of cash
flows of SGS for the periods ended September 30, 2007 are presented for comparative purposes only. The accompanying unaudited consolidated statements of operations and cash flows of SGS present the results of operations and cash flows for
(i) the one month period ended July 31, 2008 preceding the acquisition of SHC on July 31, 2008, exclusive of SHC results of operations and cash flows and (ii) for the periods succeeding the acquisition, the consolidated results
of operations including SHC are included in these financial statements. The results of operations and cash flows on a consolidated basis subsequent to the acquisition of SHC are not comparative to the predecessor SHC results of operations and cash
flows because the basis for the acquired assets and liabilities of SHC have been adjusted to fair value pursuant to Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations (SFAS No. 141).

Note 3 - Our Business

We are a global
provider of customer relationship management (CRM) and other business process outsourcing (BPO) services to companies in the technology, software, consumer electronics and communications industries. Our CRM solutions
encompass a wide range of telephone, e-mail and internet based services and technical support programs designed to maximize the long-term value of the relationships between our clients and their customers, or end-users. Technical support programs
may involve technical troubleshooting, hardware, warranty support, hosted services, data management, telecommunications services and professional services. Customer service includes activities such as customer setup/activations, up-sell or
cross-sell programs, revenue generation, customer billing inquiries and customer retention or win back programs. We work closely with our clients to design and implement large-scale, tailored CRM programs that provide comprehensive solutions to
their specific business needs. We deliver services from our 32 service centers in 18 countries across the world. As of September 30, 2008, we had over 13,000 employees providing services to our clients customers and administrative
services in our business.

Pro Forma Results of Operations

Following are pro forma unaudited results of operations for the three months and nine months ended September 30, 2008 and September 30, 2007 assuming the acquisition of SHC occurred on January 1, 2008
and 2007, respectively:

Stream Global Services, Inc.

Pro Forma Consolidated Statements of Operations



|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|----------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                |  | 2008                            |         |   | 2007                           |   |         | 2008 |  |   | 2007    |  
|Revenue                                         |  | $                               | 124,536 |   |                                | $ | 113,832 |      |  | $ | 393,622 |   |  | $ | 345,645 |  
|Direct cost of revenue                          |  |                                 | 78,707  |   |                                |   | 76,312  |      |  |   | 253,205 |   |  |   | 229,017 |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Gross profit                                    |  |                                 | 45,829  |   |                                |   | 37,520  |      |  |   | 140,417 |   |  |   | 116,628 |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Operating expenses:                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Selling, general and administrative expenses    |  |                                 | 39,535  |   |                                |   | 34,619  |      |  |   | 121,323 |   |  |   | 103,639 |  
|Depreciation and amortization expense           |  |                                 | 5,938   |   |                                |   | 5,025   |      |  |   | 17,460  |   |  |   | 14,488  |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total operating expenses                        |  |                                 | 45,473  |   |                                |   | 39,644  |      |  |   | 138,783 |   |  |   | 118,127 |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) from operations                   |  |                                 | 356     |   |                                |   | (2,124  | )    |  |   | 1,634   |   |  |   | (1,499  | )
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Other (income) expenses, net:                   |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Foreign currency transaction loss (gain)        |  |                                 | 649     |   |                                |   | (1,417  | )    |  |   | (1,116  | ) |  |   | 441     |  
|Other (income) expense, net                     |  |                                 | (1,474  | ) |                                |   | 26      |      |  |   | 1,402   |   |  |   | (1,141  | )
|Interest expense, net                           |  |                                 | 1,379   |   |                                |   | 1,896   |      |  |   | 5,285   |   |  |   | 5,642   |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total other (income) expenses, net              |  |                                 | 554     |   |                                |   | 505     |      |  |   | 5,571   |   |  |   | 4,942   |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) before provision for income taxes |  |                                 | (198    | ) |                                |   | (2,629  | )    |  |   | (3,937  | ) |  |   | (6,441  | )
|Provision for income taxes                      |  |                                 | 2,528   |   |                                |   | 2,896   |      |  |   | 7,975   |   |  |   | 4,085   |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                               |  | $                               | (2,726  | ) |                                | $ | (5,525  | )    |  | $ | (11,912 | ) |  | $ | (10,526 | )
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  



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We derived the pro forma results of operations from (i) the unaudited consolidated financial
statements of SHC for the period from January 1, 2008 to July 31, 2008 (the date of the SHC acquisition) and the three months and nine months ended September 30, 2007 and (ii) our unaudited consolidated financial statements for the three
months and nine months ended September 30, 2008 and 2007. The pro forma results of operations are not necessarily indicative of results of operations that may have actually occurred had the merger taken place on the dates noted, or the future
financial position or operating results of SHC. The pro forma adjustment are based upon available information and assumptions that we believe are reasonable. The pro forma adjustments include adjustments for interest expense, reversal of interest
income for SGS, amortization of intangible assets, transaction costs, depreciation expense for assets written up and market lease amortization.

Note 4
- Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation.

Unaudited Interim Financial Information

The
accompanying consolidated condensed financial statements as of September 30, 2008 and for the three and nine months ended September 30, 2007 and 2008, are unaudited. The unaudited interim financial statements have been prepared on the same basis as
the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly our financial position and results of operations and cash flows. The results for
the nine months ended September 30, 2008 are not necessarily indicative of the results to be expected for the year ended December 31, 2008, or for any other interim period or for any other future year. In addition, the results of
operations for the three and nine months ended September 30, 2008 reflect two months of the results of SHC. If these financial statements had included the nine-months results of SHC these financial statements would have been materially
different as we were a blank check company prior to the acquisition of SHC on July 31, 2008 and had no operating activities.

Use of Estimates

The preparation of consolidated condensed financial statements in conformity with generally accepted accounting principles in the United
States requires the appropriate application of accounting policies, many of which require management to make estimates and assumptions about future events and their impact on amounts reported in our consolidated condensed financial statements and
related notes. Since future events and their impact cannot be determined with certainty, the actual results could differ from estimates. Such differences may be material to the consolidated condensed financial statements.



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Cash Equivalents

We consider all highly liquid investments with maturities at the date of purchase of three-months or less to be cash equivalents.

Accounts Receivable and Credit Risk

Financial instruments that potentially subject us to significant concentrations of
credit risk are principally accounts receivable. Services are provided to customers throughout the world and in various currencies. Accounts receivable include accrued revenues of $20,550 and zero at September 30, 2008 and December 31, 2007,
respectively that we expect to bill for services rendered but not yet invoiced, generally within thirty to forty-five days, and collect in the normal course of business.

We extend credit to our clients in the normal course of business. We do not require collateral from our clients. We evaluate the collectability of our accounts receivable based on a combination of factors that include
the payment history and financial stability of our clients, our clients future plans and various market conditions. In circumstances where we are aware of a specific customers inability to meet its financial obligations, we record a
specific reserve against amounts due. Historically, we have not experienced significant losses on uncollectible accounts receivable.

Equipment and
Fixtures

Equipment and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of
the assets. Furniture and fixtures are depreciated over a five-year life, software over a three- to five-year life and equipment generally over a three- to five-year life. Leasehold improvements are depreciated over the shorter of their estimated
useful life or the remaining term of the associated lease. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease.
Amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease and is recorded in depreciation and amortization expense. Repairs and maintenance costs
are expensed as incurred.

The carrying value of equipment and fixtures to be held and used is evaluated for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An asset is considered to be impaired when the sum of the
undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the
asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Occasionally, we redeploy equipment and fixtures from underutilized centers to other locations to improve capacity
utilization if it is determined that the related undiscounted future cash flows in the underutilized centers would not be sufficient to recover the carrying amount of these assets.

Goodwill and Other Intangible Assets

In accordance with SFAS No. 142, Goodwill and Other
Intangible Assets (SFAS No. 142), goodwill is reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired. Impairment occurs when the
carrying amount of goodwill exceeds its estimated fair value. The impairment, if any, is measured based on the estimated fair value of the reporting unit. Fair value is determined based on discounted cash flows. We operate in one reporting unit,
which is used for impairment testing and the allocation of acquired goodwill. SFAS No. 142 requires goodwill to be tested for impairment on an annual basis and between annual tests when events or circumstances indicate a potential impairment. We
test our goodwill for impairment annually during our fourth fiscal quarter.

Intangible assets with a finite life are recorded at cost and
amortized using the straight-line method over their estimated useful life. Intangible assets that are identified in connection with the acquisition of SHC are amortized over their estimated useful life. Client lists and relationships are amortized
ten years, market adjustments related to facility leases are amortized over the term of the respective lease and developed software is amortized over five years. Brands and trademarks are not amortized as their life is indefinite. We evaluate the
continuing value of brands and trademarks on a quarterly basis based upon their usage and value.



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Financial Information Regarding Segment Reporting

We have one reportable segment and, therefore, all segment-related financial information required by SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information, is included in the consolidated financial statements. The reportable segment reflects our operating and reporting structure.

Revenue Recognition

We recognize revenues after the related services are performed based on the
rates detailed in client agreements, such as hourly, monthly, per call or per participant. For each client arrangement, we determine whether evidence of an arrangement exists, delivery of the service has occurred, the fee is fixed or determinable
and collection is considered probable. If all criteria are met, revenue is recognized at the time services are performed. If any of those criteria are not met, revenue recognition is deferred until such time as all of the criteria are met.

Income Taxes

We account for income
taxes in accordance with SFAS No. 109, Accounting for Income Taxes, which requires recognition of deferred assets and liabilities for the future income tax consequence of transactions that have been included in the consolidated financial
statements or tax returns. Under this method deferred tax assets and liabilities are determined based on the difference between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax,
using the enacted tax rates for the year in which the differences are expected to reverse. We provide valuation allowances against deferred tax assets whenever we believe it is more likely than not, based on available evidence, that the deferred tax
asset will not be realized.

We adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting
for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48) at our inception. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the
impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. The adoption of FIN 48 did not have an effect on our consolidated financial position or
results of operations.

Contingencies

We consider the likelihood of various loss contingencies, including tax and legal contingencies arising in the ordinary course of business, and our ability to reasonably estimate the amount of loss in determining loss contingencies. An
estimated loss contingency is accrued in accordance with SFAS No. 5, Accounting for Contingencies, when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current
information available to determine whether such accruals should be adjusted.

Derivative Instruments

We use forward exchange contracts to manage our exposure to movements in foreign exchange rates between the United States and Canada, and between the
United States and India, and we recognize the foreign exchange contracts in the financial statements at fair value. Changes in fair value of derivative financial instruments are recognized either in income or in stockholders equity as a
component of accumulated other comprehensive income (loss), depending on whether the derivative financial instrument qualifies for hedge accounting. Unrealized changes in fair values of derivatives accounted for as hedges, to the extent they are
effective as hedges, are recorded in accumulated other comprehensive income (loss), net of deferred taxes. When we determine that a derivative is not, or has ceased to be, highly effective as a hedge, hedge accounting is discontinued.



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Our hedging program has been effective in all periods presented, and the amount of hedge ineffectiveness
has not been material. Hedge accounting is also discontinued prospectively when (1) the derivative is no longer effective in offsetting changes in cash flow of a hedged item; (2) the derivative expires or is sold, terminated, or exercised;
(3) it is no longer probable that the forecasted transaction will occur; (4) a hedged firm commitment no longer meets the definition of a firm commitment; or (5) the derivative as a hedging instrument is no longer effective.

Changes in fair value of derivatives not qualifying as hedges are reported in income. Upon settlement of the derivatives qualifying as
hedges, a gain or loss is reported in income.

Foreign Currency Translation

The assets and liabilities of SHCs foreign subsidiaries, whose functional currency is their local currency, are translated at the exchange rate in
effect on the reporting date, and income and expenses are translated at the average exchange rate during the period. The net effect of translation gains and losses is not included in determining net income (loss), but is reflected in accumulated
other comprehensive income (loss) as a separate component of stockholders equity. Foreign currency transaction gains and losses are included in determining net income (loss).

Fair Value of Financial Instruments

Effective January 1, 2008, we implemented SFAS
No. 157, Fair Value Measurement (SFAS 157), for our financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and
reported at fair value at least annually. In accordance with the provisions of FASB Staff Position (FSP) No. FAS 157-2, Effective Date of FASB Statement No. 157, we have elected to defer implementation of SFAS 157 as it
relates to our non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis until January 1, 2009. We are evaluating the impact, if any, this standard
will have on our non-financial assets and liabilities.

The following table presents information about our assets and liabilities that are
measured at fair value on a recurring basis as of September 30, 2008, and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize
quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by
Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability:



|                           |  |                   |        |                                         |   |                                            |  |                                  |       |  |   |  
|-------------------------- |  | ----------------- | ------ | --------------------------------------- | - | ------------------------------------------ |  | -------------------------------- | ----- |  | - | -
|                           |  | September 30,2008 |        | Quoted Prices inActive Markets(Level 1) |   | Significant OtherObservableInputs(Level 2) |  | SignificantUnobservable(Level 3)
|Description                |  |                   |        |                                         |   |                                            |  |                                  |       |  |   |  
|Cash equivalents           |  | $                 | 11,640 |                                         | $ | 11,640                                     |  | $                                |      |  | $ | 
|Forward exchange contracts |  |                   | 1,005  |                                         |   |                                           |  |                                  | 1,005 |  |   | 
|                           |  |                   |        |                                         |   |                                            |  |                                  |       |  |   |  
|Total                      |  | $                 | 12,645 |                                         | $ | 11,640                                     |  | $                                | 1,005 |  | $ | 
|                           |  |                   |        |                                         |   |                                            |  |                                  |       |  |   |  

The fair values of our cash equivalents and forward exchange contracts are determined through
market, observable and corroborated sources.

The carrying amounts reflected in the consolidated balance sheets for other current assets,
accounts payable, and accrued expenses approximate fair value due to their short-term maturities. To the extent we have any outstanding borrowings under our revolving credit facility, the fair value would approximate its reported value because the
interest rate is variable and reflects current market rates. We also believe that the fair value of our subordinated debt approximates the reported value of the debt instrument. The interest rate on this loan is reflective of current market rates
and is consistent with terms other similar companies would receive given the reduced priority and current capital market conditions.



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Net Income (Loss) Per Share

We calculated net income (loss) per share in accordance with SFAS No. 128, Earnings Per Share, as clarified by Emerging Issues Task Force (EITF) Issue No. 03-6, Participating Securities and the
Two-Class Method under FASB Statement No. 128, which clarifies the use of the two-class method of calculating earnings per share as originally prescribed in SFAS No. 128. EITF Issue No. 03-6 provides guidance on how to determine
whether a security should be considered a participating security for purposes of computing earnings per share and how earnings per share should be allocated to a participating security when using the two-class method for computing basic
earnings per share. We have determined that our Series A Preferred Stock represents a participating security and therefore have adopted the provisions of EITF Issue No. 03-6.

Under the two-class method, basic net income (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method. We allocated net income first to preferred
stockholders based on dividend rights under our certificate of incorporation and then to common and preferred stockholders based on ownership interests. Net losses are not allocated to preferred stockholders. Diluted net income (loss) per share
gives effect to all potentially dilutive securities.



|                                                       |  |                                      |   |  |                                     |  
|------------------------------------------------------ |  | ------------------------------------ | - |  | ----------------------------------- | -
|                                                       |  | Three Months EndedSeptember 30, 2008 |   |  | Nine Months EndedSeptember 30, 2008 |  
|Net income (loss)                                      |  | (919                                 | ) |  | 942                                 |  
|                                                       |  |                                      |   |  |                                     |  
|Net income (loss) post Preferred Stock issuance        |  | (1,097                               | ) |  | (1,097                              | )
|                                                       |  |                                      |   |  |                                     |  
|Series A Preferred Stock beneficial conversion feature |  | 49,503                               |   |  | 49,503                              |  
|Cumulative Convertible Preferred Stock dividends       |  | 665                                  |   |  | 665                                 |  
|Preferred Stock accretion                              |  | 133                                  |   |  | 133                                 |  
|Warrant issuance costs                                 |  | 298                                  |   |  | 298                                 |  
|                                                       |  |                                      |   |  |                                     |  
|Net income (loss) for common shareholders              |  | (51,696                              | ) |  | (51,696                             | )
|Net income (loss) pre Preferred Stock issuance         |  | 178                                  |   |  | 2,039                               |  
|                                                       |  |                                      |   |  |                                     |  
|Net income (loss) attributable for common shareholders |  | (51,518                              | ) |  | (49,657                             | )
|                                                       |  |                                      |   |  |                                     |  

The following common stock equivalents were excluded from computing diluted net loss per share
attributable to common stockholders because they had an anti-dilutive impact:



|                                                                                 |  |                                             
|-------------------------------------------------------------------------------- |  | --------------------------------------------
|                                                                                 |  | Three andNine Months EndedSeptember 30, 2008
|Options to purchase common stock                                                 |  | 2,640                                       
|Preferred stock convertible to common stock                                      |  | 25,000                                      
|Publicly held warrants                                                           |  | 31,250                                      
|Ares warrants to purchase common stock                                           |  | 7,500                                       
|Restricted stock units                                                           |  | 112                                         
|                                                                                 |  |                                             
|Total options, warrants and restricted stock units exercisable into common stock |  | 66,502                                      
|                                                                                 |  |                                             

Accumulated Other Comprehensive Loss

Accumulated other comprehensive income loss consists of the following:



|                                                     |  |                   |        |   |                  |   |  
|---------------------------------------------------- |  | ----------------- | ------ | - | ---------------- | - | -
|                                                     |  | September 30,2008 |        |   | December 31,2007
|Unrealized (loss) gain on forward exchange contracts |  | $                 | (1,005 | ) |                  | $ | 
|Cumulative Translation adjustment                    |  |                   | (3,656 | ) |                  |   | 
|                                                     |  |                   |        |   |                  |   |  
|                                                     |  | $                 | (4,661 | ) |                  | $ | 
|                                                     |  |                   |        |   |                  |   |  

Market Lease Reserve

We assumed facility leases in connection with the acquisition of SHC. Under SFAS No. 141, the operating leases are to be recorded at fair value at the date of acquisition. We determined that certain of the
facility lease contract rates were in excess of the market rates at the date of acquisition, resulting in an above market lease reserve. The above and below market lease values for the assumed facility leases were recorded based on the present value
(using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each operating lease and (ii) managements estimate of fair market lease
rates for each corresponding operating lease, measured over a period equal to the remaining term of the lease. The market lease reserves are amortized as a reduction of base rental expense over the remaining term of the respective leases. On
July 31, 2008, we recorded market lease adjustments of $16,217 of liabilities and $639 of assets. For the three and nine months ended September 30, 2008 and 2007, the amortization of the market lease reserve, including imputed interest,
was $666 and $0, respectively.

Stock-Based Compensation

At September 30, 2008, we had a stock-based compensation plan for employees and directors (see Note 15). We adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment. For
share-based payments, the fair value of each grant, including both the time-based grants and the performance-based grants, is estimated on the date of grant using the Black-Scholes-Merton option valuation model and assumes the performance goals will
be achieved. If such goals are not met, no compensation cost is recognized and any recognized cost is reversed. Stock compensation expense is recognized on a straight-line basis over the vesting term, net of an estimated future forfeiture rate. The
forfeiture rate assumption (19.5% as of September 30, 2008) is based on the predecessors historical experience.

Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
(SFAS No. 159). SFAS No. 159 amends SFAS No. 115 to permit entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The
FASBs objective in this statement is to provide reporting entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting
provisions. This statement is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We adopted SFAS No. 159 in the first quarter of fiscal year 2008. The adoption of SFAS No. 159
did not have an impact on our financial position, results of operations or cash flow as we did not elect this fair value option on any financial assets or liabilities.



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In December 2007, the FASB issued FAS No. 160, Non-Controlling Interest in Consolidated Financial
Statementsan Amendment of ARB No. 51 (FAS 160). FAS 160 requires that a non-controlling interest in a subsidiary be separately reported within equity and the amount of consolidated net income attributable to the
non-controlling interest be presented in the statement of operations. FAS 160 also calls for consistency in reporting changes in the parents ownership interest in a subsidiary and necessitates fair value measurement of any non-controlling
equity investment retained in a deconsolidation. FAS 160 is effective for fiscal periods beginning after December 15, 2008. Therefore, we are required to adopt FAS 160 on January 1, 2009. We are currently evaluating the requirements of FAS
160 and the potential impact on our financial position and results of operations.

In December 2007, the FASB issued FAS No. 141R,
Business Combinations (FAS 141R). FAS 141R replaces SFAS No. 141. FAS 141R retains the fundamental requirements in SFAS No. 141 that the purchase method of accounting be used for all business combinations, that an acquirer be
identified for each business combination and for goodwill to be recognized and measured as a residual. FAS 141R expands the definition of transactions and events that qualify as business combinations to all transactions and other events in which one
entity obtains control over one or more other businesses. FAS 141R broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations. FAS 141R also increases
the disclosure requirements for business combinations in the financial statements. FAS 141R is effective for fiscal periods beginning after December 15, 2008. Therefore, we are required to adopt FAS 141R on January 1, 2009. We are
evaluating the impact that the adoption of FAS 141R will have on our business combinations closed prior to its adoption.

In March 2008,
the FASB issued SFAS No. 161, Disclosures About Derivative Instruments and Hedging Activities (SFAS 161), which amends SFAS 133, Accounting for Derivative Instruments and Hedging Activities, by requiring increased
qualitative, quantitative, and credit-risk disclosures about an entitys derivative instruments and hedging activities. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. We are currently
evaluating the impact of this standard on our financial condition, results of operations and cash flows.

In April 2008, the FASB issued
FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets (FSP No. FAS 142-3). FSP No. FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under SFAS No. 142. The intent of FSP No. FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash
flows used to measure the fair value of the asset under FAS 141R and other U.S. generally accepted accounting principles. FSP No. FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. We are
currently evaluating the potential impact of FSP No. FAS 142-3 on our consolidated results of operations and financial conditions.

In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used
in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (the GAAP hierarchy). SFAS 162 will become effective 60 days following the
Securities and Exchange Commissions approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. We do not
currently expect the adoption of SFAS 162 to have a material effect on our consolidated results of operations and financial condition.

Note 5 -
SHC Acquisition

On July 31, 2008, we consummated the acquisition of SHC pursuant to the Amended Merger Agreement, pursuant to
which we acquired all of the outstanding shares of capital stock of SHC and SHC became a wholly-owned subsidiary of SGS.



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##### Table of Contents

The Amended Merger Agreement stated that the purchase price would be determined as $200,000 in cash less
assumed indebtedness, transaction costs and payments for stock options and bonuses.



|                                                      |  |   |         |  
|----------------------------------------------------- |  | - | ------- | -
|Purchase price                                        |  | $ | 200,000 |  
|Purchase adjustments                                  |  |   | 15,446  |  
|                                                      |  |   |         |  
|Purchase price before liabilities                     |  |   | 215,446 |  
|Assumed debt                                          |  |   | (89,221 | )
|                                                      |  |   |         |  
|Net cash paid at closing                              |  |   | 126,225 |  
|                                                      |  |   |         |  
|GBPO transaction-related costs                        |  |   | 8,052   |  
|Transaction bonuses paid to certain Stream executives |  |   | (4,012  | )
|                                                      |  |   |         |  
|Total allocable purchase price                        |  | $ | 130,265 |  
|                                                      |  |   |         |  

The acquisition was accounted for in accordance with the provisions of SFAS No. 141. The
transaction was valued for accounting purposes at $130,265. Included in the GBPO transaction related costs are costs associated with investment banker fees, severance, and professional services.

The acquisition of SHC was accounted for as a business combination in accordance with SFAS No. 141. Under the purchase method of accounting, the
assets and liabilities of SHC acquired are recorded as of the acquisition date at their respective fair values, and added to those ours. The excess purchase price over those values is recorded as goodwill. The following table summarizes the
estimated fair value of assets acquired and the liabilities assumed and related deferred income taxes at the date of the acquisition.



|                                   |  |   |         |  
|---------------------------------- |  | - | ------- | -
|Current assets                     |  | $ | 131,310 |  
|Property and equipment             |  |   | 40,961  |  
|Goodwill                           |  |   | 54,513  |  
|Trade names                        |  |   | 16,100  |  
|Customer relationships             |  |   | 67,200  |  
|Technology-based intangible assets |  |   | 1,870   |  
|Other non-current assets           |  |   | 5,824   |  
|                                   |  |   |         |  
|Total assets acquired              |  |   | 317,778 |  
|                                   |  |   |         |  
|                                   | 
|Current liabilities                |  |   | (75,373 | )
|Bank indebtedness                  |  |   | (75,555 | )
|Obligations under capital lease    |  |   | (7,745  | )
|Lease valuation reserve            |  |   | (3,750  | )
|Other liabilities                  |  |   | (25,090 | )
|                                   |  |   |         |  
|Total liabilities assumed          |  |   | 187,513 |  
|                                   |  |   |         |  
|Allocated purchase price           |  | $ | 130,265 |  
|                                   |  |   |         |  

The purchased intangibles and goodwill are not deductible for income tax purposes. However, for
accounting purposes deferred income tax liabilities on purchased intangibles (other than goodwill) are reflected as a tax benefit and will be charged to our future consolidated condensed statements of operations in proportion to and over the
amortization period of related intangible assets.

We have not identified any material unrecorded pre-acquisition contingencies where the
related asset, liability, or impairment is probable and the amount can be reasonably estimated. Prior to the end of the one-year purchase price allocation period, if information becomes available that would indicate it is probable that such events
had occurred and the amounts can be reasonably estimated, such items will be included in the final purchase price allocation and may adjust goodwill. The adoption of FAS 141R may impact how these adjustments would be reported.

The income statement presentation reflects the results of SHC for the two months ended September 30, 2008 combined with SGSs results for the three
months ended September 30, 2008.



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Note 6 - Series A Preferred Stock

On August 7, 2008, pursuant to the terms of the Purchase Agreement, we issued to Ares 150 shares of our Series A Preferred Stock for an aggregate purchase price of $150,000. As of September 30, 2008, Ares
beneficially owned approximately 72.5% of the issued and outstanding shares of our common stock (assuming conversion of the outstanding Series A Preferred Stock and no exercise of any of the 38,750 outstanding warrants to purchase our common stock
as of September 30, 2008). The Series A Preferred Stock is convertible at the option of Ares into shares of common stock at an initial conversion price of $6.00 per share into 25,000 shares of our common stock, subject to adjustment for stock
dividends, subdivisions, reclassifications, combinations or similar type events; bears an annual dividend rate of 3% calculated semi-annually (payable in additional stated value of Series A Preferred Stock or cash at our option); is redeemable at
the holders option after seven years; and will have the same voting rights as our common stock. During the three months ended September 30, 2008 we accrued dividends of $665 relating to the Series A Preferred Stock.

On the issuance of the Series A Preferred Stock, we calculated the value of the beneficial conversion feature of our Series A Preferred Stock to be
$49,503 and the value of warrants to be $3,253 and allocated the value of the discount on our Series A Preferred Stock between the beneficial conversion feature and the related warrants. The beneficial conversion of Series A Preferred Stock was
charged to retained earnings to the extent that retained earnings were available. The amount of the increase in excess of retained earnings was charged to additional paid-in capital. The amount allocated to the warrants will be accreted over 7
years.

Note 7 - Tender Offer

On
August 7, 2008, we commenced a self-tender offer to purchase up to 20,757 shares of our common stock at a purchase price of $8.00 per share. We accepted for purchase 20,757 shares of our common stock at a price of $8.00 per share for a total
cost of $166,056, excluding fees and expenses related to the offer. The proration factor for the tender offer was approximately 99%. The shares accepted for purchase have been reflected as a reduction in stockholders equity at
September 30, 2008.

Note 8 - Equipment and Fixtures, Net

Equipment and fixtures, net consists of the following:



|                                                 |  |                   |        |   |                  |   |    |  
|------------------------------------------------ |  | ----------------- | ------ | - | ---------------- | - | -- | -
|                                                 |  | September 30,2008 |        |   | December 31,2007 |  
|Furniture and fixtures                           |  | $                 | 5,635  |   |                  | $ | 29 |  
|Building improvements                            |  |                   | 10,318 |   |                  |   |   |  
|Computer equipment                               |  |                   | 9,433  |   |                  |   |   |  
|Software                                         |  |                   | 1,740  |   |                  |   |   |  
|Telecom and other equipment                      |  |                   | 14,536 |   |                  |   |   |  
|Equipment and fixtures not yet placed in service |  |                   | 622    |   |                  |   |   |  
|                                                 |  |                   |        |   |                  |   |    |  
|                                                 |  |                   | 42,284 |   |                  |   | 29 |  
|Less accumulated depreciation                    |  |                   | (2,688 | ) |                  |   | (2 | )
|                                                 |  |                   |        |   |                  |   |    |  
|                                                 |  | $                 | 39,596 |   |                  | $ | 27 |  
|                                                 |  |                   |        |   |                  |   |    |  

Depreciation and amortization expense consist of the following:



|                                    |  |                                 |       |                                |   |      |  |      |       |  |   |  
|----------------------------------- |  | ------------------------------- | ----- | ------------------------------ | - | ---- |  | ---- | ----- |  | - | -
|                                    |  | Three Months EndedSeptember 30, |       | Nine Months EndedSeptember 30,
|                                    |  | 2008                            |       | 2007                           |   | 2008 |  | 2007
|Depreciation                        |  | $                               | 2,741 |                                | $ |     |  | $    | 2,748 |  | $ | 
|Amortization                        |  |                                 | 1,249 |                                |   |     |  |      | 1,249 |  |   | 
|                                    |  |                                 |       |                                |   |      |  |      |       |  |   |  
|Total depreciation and amortization |  | $                               | 3,990 |                                | $ |     |  | $    | 3,997 |  | $ | 
|                                    |  |                                 |       |                                |   |      |  |      |       |  |   |  

Note 9 - Accrued Employee Compensation and Benefits

Accrued employee compensation and benefits consist of the following:



|                                  |  |                   |        |                  |   |  
|--------------------------------- |  | ----------------- | ------ | ---------------- | - | -
|                                  |  | September 30,2008 |        | December 31,2007
|Compensation related amounts      |  | $                 | 17,020 |                  | $ | 
|Vacation liabilities              |  |                   | 10,360 |                  |   | 
|Medical and dental liabilities    |  |                   | 669    |                  |   | 
|Employer taxes                    |  |                   | 1,251  |                  |   | 
|Retirement plans                  |  |                   | 6,305  |                  |   | 
|Other benefit related liabilities |  |                   | 2,675  |                  |   | 
|                                  |  |                   |        |                  |   |  
|                                  |  | $                 | 38,280 |                  | $ | 
|                                  |  |                   |        |                  |   |  



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Note 10 - Other Accrued Expenses and Other Liabilities

Other accrued expenses consist of the following:



|                                  |  |                   |        |                  |   |      
|--------------------------------- |  | ----------------- | ------ | ---------------- | - | -----
|                                  |  | September 30,2008 |        | December 31,2007
|Liabilities for government grants |  | $                 | 352    |                  | $ |     
|Value-added and sales taxes       |  |                   | 744    |                  |   |     
|Deferred underwriting fees        |  |                   |       |                  |   | 7,500
|Professional fees                 |  |                   | 4,157  |                  |   | 229  
|Accrued interest                  |  |                   | 364    |                  |   |     
|Forward exchange contracts        |  |                   | 1,201  |                  |   |     
|Occupancy expense                 |  |                   | 1,766  |                  |   |     
|Technology expense                |  |                   | 1,964  |                  |   |     
|Other accrued expenses            |  |                   | 4,012  |                  |   |     
|                                  |  |                   |        |                  |   |      
|                                  |  | $                 | 14,560 |                  | $ | 7,729
|                                  |  |                   |        |                  |   |      

Other liabilities consist of the following:



|                            |  |                   |        |                  |   |  
|--------------------------- |  | ----------------- | ------ | ---------------- | - | -
|                            |  | September 30,2008 |        | December 31,2007
|Lease exit reserve          |  | $                 | 1,093  |                  | $ | 
|Deferred revenue            |  |                   | 1,715  |                  |   | 
|Market value lease reserves |  |                   | 3,422  |                  |   | 
|Other                       |  |                   | 1,109  |                  |   | 
|                            |  |                   |        |                  |   |  
|Total current               |  | $                 | 7,339  |                  | $ | 
|                            |  |                   |        |                  |   |  
|                            |  |                  
|Deferred revenue            |  | $                 | 1,370  |                  | $ | 
|Deferred rent               |  |                   | 2,733  |                  |   | 
|Income tax reserves         |  |                   | 6,611  |                  |   | 
|Market value lease reserves |  |                   | 9,740  |                  |   | 
|Other long term             |  |                   | 1,371  |                  |   | 
|                            |  |                   |        |                  |   |  
|Total long term             |  | $                 | 21,825 |                  | $ | 
|                            |  |                   |        |                  |   |  

Note 11 - Long-Term Debt and Revolving Credit Facility

On July 31, 2008, we, as guarantor, entered into the Fourth Amended and Restated Revolving Credit Term Loan and Security Agreement (the Credit
Agreement) with PNC Bank, National Association (PNC, as Lender and as Agent), PNC Capital Markets LLC (as Lead Arranger), SHC (as Borrowing Agent), and the other Loan Parties signatory thereto (as Loan Parties). The Credit
Agreement amended and restated SHCs credit facility with PNC, providing for an increase in the revolving credit from $86,000 to $100,000, extending the maturity date by five years to 2013 and providing for SGS as a guarantor. The Credit
Agreement included a $10,000 collateral reserve. The Credit Agreement did not otherwise materially change the terms of SHCs credit facility. This financing is comprised of a $100,000 senior secured revolving credit facility under which
borrowing availability is based on, among other things, the Borrowers (as defined in the Credit Agreement) eligible billed and unbilled accounts receivable. The balance of the financing consists of a senior secured domestic term loan of
approximately $5,067, and a senior secured foreign term loan of approximately $2,369. The financing facilities have a five-year term. Outstanding balances under the revolving credit facility bears interest at either LIBOR plus a margin ranging from
200 to 250 basis points or at the base rate plus a margin ranging from 0 to 25



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basis points. The term loans bear interest at LIBOR plus a margin ranging from 275 to 325 basis points or at the base rate plus a margin ranging from 25 to
75 basis points, in each case based on the combined fixed charge coverage ratio of SHC. The interest rate is subject to change under additional circumstances. The balance outstanding under the prior credit facility and term loans continued as part
of the new revolving credit and term debt facility. The facility also requires compliance with certain financial covenants. On November 14, 2008, we amended the Credit Agreement to require delivery of an audited opening balance sheet of the
borrowers by April 1, 2009. The obligations of the Borrowers under the facility are secured by certain assets of the Borrowers and by certain assets of SHC. In connection with the financing we paid a fee of $2,156 to PNC. This amount is
being amortized over the life of the facility of five years. The guarantee provided by us is unsecured.

PNC is in the process of
syndicating the facility and in the event that market conditions do not allow it to syndicate under existing terms, PNC can reasonably seek to modify the pricing and terms of the facility. Such future terms, pricing and structure may be less
favorable than those that currently exist.

Our outstanding long-term borrowings consist of the following:



|                         |  |                   |        |   |                  |   |  
|------------------------ |  | ----------------- | ------ | - | ---------------- | - | -
|                         |  | September 30,2008 |        |   | December 31,2007
|Revolving line of credit |  | $                 | 61,342 |   |                  | $ | 
|Term loans               |  |                   | 7,437  |   |                  |   | 
|Other                    |  |                   | 60     |   |                  |   | 
|                         |  |                   |        |   |                  |   |  
|                         |  |                   | 68,839 |   |                  |   | 
|Less current portion     |  |                   | (2,650 | ) |                  |   | 
|                         |  |                   |        |   |                  |   |  
|Long-term debt           |  | $                 | 66,189 |   |                  | $ | 
|                         |  |                   |        |   |                  |   |  

Minimum principal payments on long-term debt subsequent to September 30, 2008, are as
follows:



|                                  |  |       |       
|--------------------------------- |  | ----- | ------
|Twelve months ended September 30, |  | Total
|2009                              |  | $     | 2,650 
|2010                              |  |       | 2,590 
|2011                              |  |       | 2,009 
|2012                              |  |       | 61,590
|                                  |  |       |       
|Total                             |  | $     | 68,839
|                                  |  |       |       

PNCs alternate base rate (5.0% at September 30, 2008) is the higher of the PNCs
base commercial lending rate or the Federal Funds Open Rate plus 0.5%. Interest is payable monthly on U.S. advances. Interest is payable on Eurodollar advances at the end of their one, two, three or six-month terms. For unused portions of the
revolving line of credit, we pay a facility fee equal to 0.5% of the unused borrowing base.

Revolving credit advances are limited to the
borrowing base. The borrowing base is 85% of eligible accounts receivable (foreign and domestic subject to certain limitations) and eligible unbilled revenues less the outstanding amount of letters of credit (approximately $10,000 at
September 30, 2008), various other reserves, and any outstanding advances under the revolving line of credit.

The credit facility
also places limits on the amounts of annual capital expenditures and incremental operating lease obligations which can be entered into in any year, establishes dividend restrictions and limits payments to affiliates, as defined. At
September 30, 2008, we had drawn the maximum amount available under the credit facility.

Note 12 - Defined Contribution Benefit Plans

We have defined contribution plans in various countries. The plans cover all full-time employees other than excluded employees as
defined in the plans. The participants may make pretax contributions to the plans, and we can make both matching and discretionary contributions. In the three and nine month periods ended September 30, 2008, we recorded $423 in matching
contributions to the plans.



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##### Table of Contents

Note 13 - Derivatives

We use forward exchange contracts, generally purchased with a maturity of 90 days or less, to manage our exposure to movements in foreign exchange rates between the United States and between Canada and the United
States and India. We recognize the foreign exchange contracts in the financial statements at fair value. We hedge these exposures considering current market conditions, future operating activities and the cost of hedging exposure in relation to the
perceived risk of loss. The fair value of the derivatives is determined by reference to market data related to the selected currency forward and spot rates. As of September 30, 2008 and December 31, 2007, we had approximately $25,785 and
$0, respectively, of foreign exchange risk hedged using forward exchange contracts. As of September 30, 2008 and December 31, 2007, the fair market value of these derivative instruments was a loss of $1,005 and $0, respectively, which is
reflected in accumulated other comprehensive income (loss).

Note 14 - Income Taxes

The change in valuation allowances is net of the effect of foreign currency translation adjustments included in accumulated other comprehensive income
(loss).

Deferred income taxes consist of the following:



|                                    |  |                   |        |   |                  |   |  
|----------------------------------- |  | ----------------- | ------ | - | ---------------- | - | -
|                                    |  | September 30,2008 |        |   | December 31,2007
|Deferred tax assets:                |  |                   |        |   |                  |   |  
|Accruals, allowances, and reserves  |  | $                 | 8,200  |   |                  | $ | 
|Loss carry forwards                 |  |                   | 19,658 |   |                  |   | 
|Market lease reserve                |  |                   | 3,548  |   |                  |   | 
|Tangible assets                     |  |                   | 4,247  |   |                  |   |  
|Payables                            |  |                   | 16,736 |   |                  |   |  
|Credits                             |  |                   | 757    |   |                  |   |  
|Other                               |  |                   | 116    |   |                  |   | 
|                                    |  |                   |        |   |                  |   |  
|                                    |  |                   | 53,262 |   |                  |   | 
|Valuation allowance                 |  |                   | (9,653 | ) |                  |   | 
|                                    |  |                   |        |   |                  |   |  
|Total deferred tax assets           |  |                   | 43,609 |   |                  |   | 
|                                    |  |                   |        |   |                  |   |  
|Deferred tax liabilities:           |  |                   |        |   |                  |   |  
|Tangible assets                     |  |                   | 1,384  |   |                  |   | 
|Intangible assets                   |  |                   | 24,302 |   |                  |   | 
|Intangible assets  indefinite life |  |                   | 5,771  |   |                  |   |  
|Other liabilities                   |  |                   | 12,239 |   |                  |   |  
|Other                               |  |                   | 627    |   |                  |   | 
|                                    |  |                   |        |   |                  |   |  
|Total deferred tax liabilities      |  |                   | 44,323 |   |                  |   | 
|                                    |  |                   |        |   |                  |   |  
|Net deferred tax assets             |  | $                 | (714   | ) |                  | $ | 
|                                    |  |                   |        |   |                  |   |  



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Details of the total income tax provision are as follows:



|                                 |  |                                 |       |                                |      |   |      |  |   |       |   |  |   |  
|-------------------------------- |  | ------------------------------- | ----- | ------------------------------ | ---- | - | ---- |  | - | ----- | - |  | - | -
|                                 |  | Three Months EndedSeptember 30, |       | Nine Months EndedSeptember 30,
|                                 |  | 2008                            |       |                                | 2007 |   | 2008 |  |   | 2007 
|Current                          |  |                                 |       |                                |      |   |      |  |   |       |   |  |   |  
|Federal                          |  |                                 | 268   |                                |      |   |     |  |   | 1,296 |   |  |   | 
|State                            |  |                                 | (63   | )                              |      |   |     |  |   | (21   | ) |  |   | 
|Foreign                          |  |                                 | 1,330 |                                |      |   |     |  |   | 1,330 |   |  |   | 
|                                 |  |                                 |       |                                |      |   |      |  |   |       |   |  |   |  
|Total Current                    |  |                                 | 1,535 |                                |      |   |     |  |   | 2,605 |   |  |   | 
|Deferred                         |  |                                 |       |                                |      |   |      |  |   |       |   |  |   |  
|Federal                          |  |                                 |      |                                |      |   |     |  |   |      |   |  |   | 
|State                            |  |                                 |      |                                |      |   |     |  |   |      |   |  |   | 
|Foreign                          |  |                                 | 222   |                                |      |   |     |  |   | 222   |   |  |   | 
|                                 |  |                                 |       |                                |      |   |      |  |   |       |   |  |   |  
|Total Deferred                   |  |                                 | 222   |                                |      |   |     |  |   | 222   |   |  |   | 
|                                 |  |                                 |       |                                |      |   |      |  |   |       |   |  |   |  
|Total Provision for income taxes |  | $                               | 1,757 |                                |      | $ |     |  | $ | 2,827 |   |  | $ | 
|                                 |  |                                 |       |                                |      |   |      |  |   |       |   |  |   |  

Following the merger on July 31, 2008 we recognized certain deferred tax assets and
liabilities associated with the estimated fair value of assets acquired and the liabilities assumed. The most significant items were the deferred tax liabilities associated with the intangible and tangible assets in the U.S., and the deferred tax
assets attributed to the market lease reserve in both the U.S. and foreign jurisdictions. As a result of the increase in the deferred tax liabilities associated with the amortizable intangible assets the valuation allowance for the U.S. deferred tax
assets was reduced.

At September 30, 2008 and December 31, 2007, we had $46,048 and zero, respectively, of U.S. federal net
operating losses, which will expire between 2024 and 2027, and had $9,619 and zero, respectively, of foreign-generated net operating losses, which will expire over various periods through 2015. The net operating losses are evaluated for each foreign
jurisdiction and a full valuation allowance established where we believe that it is more likely than not based on available evidence that the asset will not be realized.

As a result of the change of control, we anticipate that there will be an annual limitation of the amount of the U.S. net operating losses that could be utilized in the future. The annual limitation has been estimated
to be $4.3 million per year. In certain foreign jurisdictions the change of control has also resulted in a limitation of offset of existing net operating losses against future taxable and the foreign net operating losses have been reduced by $1,000.

We have recorded a valuation allowance of $9,653 and zero at September 30, 2008 and December 31, 2007, respectively, against net
operating losses and deferred tax assets for which realization of any future benefit is uncertain due to taxable income limitations.



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We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Currently,
we are not under audit for any open year in any U.S. jurisdictions. We operate in a number of international tax jurisdictions and are subject to audits of our income tax returns by tax authorities in those jurisdictions. We have open audit periods
after 2002 in India, Canada and Europe, including France, Italy, Ireland and the Netherlands.

We have not provided taxes related to the
potential repatriation of foreign subsidiary earnings because we believe they will be indefinitely reinvested outside of the United States. If future events necessitate that these earnings should be repatriated to the United States, an additional
tax provision and related liability would be required.

We adopted the provisions of FIN 48 at our inception. Pursuant to the adoption of
FIN 48, we recorded a reserve for unrecognized tax benefits of zero.

We recognize accrued interest and penalties associated with uncertain
tax positions as part of the tax provision. As of January 1, 2008, we had reserved zero of accrued interest and penalties, which had increased to $1,917 as at September 30, 2008.

It is possible that within the next 12 months certain U.S. state and foreign examinations will be resolved, which could result in a estimated decrease in
unrecognized tax benefits and interest and penalties of up to zero and $917, respectively.

Note 15 - Stock Options

The 2008 Stock Incentive Plan (the Plan) provides for the grant of incentive and nonqualified stock options. The Plan initially authorized
grants of up to 5,000 shares of common stock at an exercise price not less than 100% of the fair value of the common stock at the date of grant. The Plan provides that the options shall be outstanding for a period not to exceed ten years from the
grant date.

During the three and nine months ended September 30, 2008, we granted options to purchase 2,640 shares of common stock
with an exercise price of $6.00 per share, representing a premium to the fair value of the underlying common stock at the date of grant. Options vest over a five year period, however, acceleration of vesting in 2009 is possible if we achieve certain
earnings performance targets during the 2009 fiscal year that would accelerate between six and twelve months vesting. At September 30, 2008, none of the 2008 grants were vested, none had been exercised, and zero had been forfeited or cancelled.

The per share fair value of options granted was determined using the Black-Scholes-Merton model.

The following assumptions were used for the option grants in the three and nine months ended September 30, 2008:



|                                                          |  |                                      |       |   |                                     |   |       |  
|--------------------------------------------------------- |  | ------------------------------------ | ----- | - | ----------------------------------- | - | ----- | -
|                                                          |  | Three Months EndedSeptember 30, 2008 |       |   | Nine Months EndedSeptember 30, 2008 |  
|Option term (years)                                       |  |                                      | 6.375 |   |                                     |   | 6.375 |  
|Volatility                                                |  |                                      | 43    | % |                                     |   | 43    | %
|Risk-free interest rate                                   |  |                                      | 3.27  | % |                                     |   | 3.27  | %
|Dividend yield                                            |  |                                      | 0     | % |                                     |   | 0     | %
|Weighted-average grant date fair value per option granted |  | $                                    | 0.86  |   |                                     | $ | 0.86  |  



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The expected volatility assumption for each year indicated below was based upon the historical volatility
of comparable companies from a representative peer group selected based on industry and market capitalization. The risk-free interest rate assumption was based upon the implied yields from the U.S. Treasury zero-coupon yield curve with a remaining
term equal to the expected term in options. The expected term of employee stock options granted was based on our estimated life of the options at the grant date.

Stock options under the Plan during nine months ended September 30, 2008 were as follows:



|                                  |  |                  |  |                              |      |                          |   |                                                |  |    
|--------------------------------- |  | ---------------- |  | ---------------------------- | ---- | ------------------------ | - | ---------------------------------------------- |  | ---
|                                  |  | Numberof options |  | WeightedAverageExercisePrice |      | WeightedAverageFairValue |   | WeightedAverageRemainingContractualTerm(Years)
|Outstanding at December 31, 2007  |  |                 |  | $                            |     |                          | $ |                                               |  |   
|Granted                           |  | 2,640            |  |                              | 6.00 |                          |   | 0.50                                           |  |   
|Exercised                         |  |                 |  |                              |     |                          |   |                                               |  |   
|Forfeited                         |  |                 |  |                              |     |                          |   |                                               |  |   
|                                  |  |                  |  |                              |      |                          |   |                                                |  |    
|Outstanding at September 30, 2008 |  | 2,640            |  | $                            | 6.00 |                          | $ | 0.50                                           |  | 6.3
|                                  |  |                  |  |                              |      |                          |   |                                                |  |    

For the three and nine months ended September 30, 2008 and 2007, we recognized net stock
compensation expense of $5 and none, respectively, for the stock options in the table above.

For the nine months ended September 30,
2008, no options vested were exercised or forfeited. The weighted-average remaining contractual term of exercisable options at September 30, 2008 and 2007 was 6.3 years and zero years, respectively.

As of September 30, 2008, the aggregate intrinsic value (i.e., the difference in the estimated fair value of our common stock and the exercise price
to be paid by the option holder) of stock options outstanding, excluding the effects of expected forfeitures, was zero. The aggregate intrinsic value of the shares of exercisable stock at that time was zero. The intrinsic value of options exercised
for the three and nine months ended September 30, 2008 and 2007, was zero.

As of September 30, 2008 and December 31, 2007,
there was $1.3 and none, respectively, of unrecognized compensation cost related to the unvested portion of time-based arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of five years from
issue date.

Restricted stock award activity during the nine months ended September 30, 2008 was as follows:



|                               |  |                           |  |                           |     
|------------------------------ |  | ------------------------- |  | ------------------------- | ----
|                               |  | Number ofShares(unvested) |  | WeightedaverageGrant-Date
|Outstanding December 31, 2007  |  |                          |  | $                         |    
|Granted                        |  | 112                       |  |                           | 7.85
|Vested                         |  |                          |  |                           |    
|Forfeited                      |  |                          |  |                           |    
|                               |  |                           |  |                           |     
|Outstanding September 30, 2008 |  | 112                       |  | $                         | 7.85
|                               |  |                           |  |                           |     

Restricted stock awards vest quarterly over four years. No restricted shares vested during the
three and nine months ended September 30, 2008.



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Note 16 - Commitments and Contingencies

Leases

We lease our operating facilities and equipment under non-cancelable operating leases, which
expire at various dates through 2014, and we have a capital lease obligation related to one facility. In addition, we have capital leases for furniture, computer and telephone equipment. The assets under capital lease are as follows:



|                              |  |                   |       |   |                  |   |   
|----------------------------- |  | ----------------- | ----- | - | ---------------- | - | --
|                              |  | September 30,2008 |       |   | December 31,2007
|Furniture and fixtures        |  | $                 | 235   |   |                  | $ |  
|Building improvements         |  |                   | 3,117 |   |                  |   |  
|Computer equipment            |  |                   | 687   |   |                  |   | 27
|Telecom and other equipment   |  |                   | 4,320 |   |                  |   |  
|                              |  |                   |       |   |                  |   |   
|                              |  |                   | 8,359 |   |                  |   | 27
|Less accumulated depreciation |  |                   | (522  | ) |                  |   |  
|                              |  |                   |       |   |                  |   |   
|                              |  | $                 | 7,837 |   |                  | $ | 27
|                              |  |                   |       |   |                  |   |   

Future minimum payments under capital and operating leases consist of the following at
September 30, 2008:



|                                    |  |               |        |   |                 |   |       
|----------------------------------- |  | ------------- | ------ | - | --------------- | - | ------
|                                    |  | CapitalLeases |        |   | OperatingLeases
|2009                                |  | $             | 2,728  |   |                 | $ | 23,868
|2010                                |  |               | 1,799  |   |                 |   | 20,519
|2011                                |  |               | 1,602  |   |                 |   | 14,655
|2012                                |  |               | 1,216  |   |                 |   | 8,483 
|2013                                |  |               | 1,216  |   |                 |   | 4,644 
|Thereafter                          |  |               | 719    |   |                 |   | 1,634 
|                                    |  |               |        |   |                 |   |       
|Total future minimum lease payments |  |               | 9,280  |   |                 | $ | 73,803
|                                    |  |               |        |   |                 |   |       
|Less amount representing interest   |  |               | (1,178 | ) |                 |   |       
|                                    |  |               |        |   |                 |   |       
|                                    |  |               | 8,102  |   |                 |   |       
|Less current portion                |  |               | (2,428 | ) |                 |   |       
|                                    |  |               |        |   |                 |   |       
|                                    |  | $             | 5,674  |   |                 |   |       
|                                    |  |               |        |   |                 |   |       

Rent expense for the three and nine months ended September 30, 2008 and 2007 totaled $3,838
and zero, respectively, net of market lease reserve amortization of $732 and zero, respectively. Rent expense is included in the accompanying consolidated statements of operations in selling, general and administrative expenses.

Contingencies

We are self-insured with respect to
medical and dental claims by our employees located in the United States, subject to an annual insured stop-loss limit on per-claim payments of $125 and an overall insured stop-loss limit of $1.875 per covered participant. We believe that our
self-insurance reserves of $666 at September 30, 2008 and zero at December 31, 2007 will be adequate to provide for future payments required related to claims prior to that date.

We are subject to various lawsuits and other claims in the normal course of business. In addition, from time to time, we receive communications from
government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which we operate. We establish reserves for specific liabilities in connection with regulatory and legal actions
that we deem to be probable and estimable. There were no material claims that required accrual at September 30, 2008 and 2007, respectively.



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Note 17 - Geographic Operations and Concentrations

We operate in one operating segment, but provide services primarily in four regions. The following table presents geographic information regarding our
operations:



|                               |  |                                 |        |                                |   |      |  |      |        |  |   |  
|------------------------------ |  | ------------------------------- | ------ | ------------------------------ | - | ---- |  | ---- | ------ |  | - | -
|                               |  | Three Months EndedSeptember 30, |        | Nine Months EndedSeptember 30,
|                               |  | 2008                            |        | 2007                           |   | 2008 |  | 2007
|Revenues                       |  |                                 |        |                                |   |      |  |      |        |  |   |  
|North America                  |  | $                               | 34,488 |                                | $ |     |  | $    | 34,488 |  | $ | 
|Europe, Middle East and Africa |  |                                 | 36,831 |                                |   |     |  |      | 36,831 |  |   | 
|Latin America                  |  |                                 | 7,442  |                                |   |     |  |      | 7,442  |  |   | 
|Asia Pacific                   |  |                                 | 2,776  |                                |   |     |  |      | 2,776  |  |   | 
|                               |  |                                 |        |                                |   |      |  |      |        |  |   |  
|                               |  | $                               | 81,537 |                                | $ |     |  | $    | 81,537 |  | $ | 
|                               |  |                                 |        |                                |   |      |  |      |        |  |   |  



|                               |  |                   |         |                  |   |        
|------------------------------ |  | ----------------- | ------- | ---------------- | - | -------
|                               |  | September 30,2008 |         | December 31,2007
|Total assets:                  |  |                   |         |                  |   |        
|North America                  |  | $                 | 245,245 |                  | $ | 248,718
|Europe, Middle East and Africa |  |                   | 72,218  |                  |   |       
|Latin America                  |  |                   | 4,464   |                  |   |       
|Asia Pacific                   |  |                   | 8,644   |                  |   |       
|                               |  |                   |         |                  |   |        
|                               |  | $                 | 330,571 |                  | $ | 248,718
|                               |  |                   |         |                  |   |        

We derive significant revenues from three significant clients. At September 30, 2008, two of
our largest clients were Dell, Inc. and Hewlett-Packard Company, both global computer companies, and the other client was British Telecommunications plc, a managed services provider company. Revenues from these three clients comprised 15%, 19% and
12%, respectively, of the total revenues for the three and nine months ended September 30, 2008 (includes two months of SHCs results). Related accounts receivable from these three clients were 21%, 16% and 11%, respectively, of our total
accounts receivable at September 30, 2008.



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are
subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may, should, could, would, expect,
plan, anticipate, believe, estimate, continue, or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not
limited to, those described in our other Securities and Exchange Commission filings.

Overview

Stream Global Services, Inc. (we, us or SGS) is a corporation organized under the laws of the State of Delaware and
was incorporated on June 26, 2007. We were formed as a blank check company for the purpose of acquiring, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination
with one or more domestic or international operating businesses.

On October 23, 2007, we consummated our initial public offering, or
IPO, from which we received total gross proceeds of $250.0 million and net proceeds of $246.3 million which were deposited into a trust account, which included $7.5 million of proceeds from the sale of 7,500,000 warrants purchased by certain
founding stockholders. In connection with the IPO, a total of $7.5 million of underwriters fees were deferred until the completion of our initial acquisition. In order to consummate an initial business combination, our certificate of incorporation
provided that holders of no more than 29.9% of our common stock or 9,374,999 shares of common stock vote against our initial business combination and seek conversion rights for their pro rata share of the funds held in trust.

We sold units issued in our IPO, each unit consisting of one share of our common stock and a warrant to purchase one share of our common stock, to the
underwriters at a price of $7.44 per unit (a discount of $0.56 per unit), resulting in an aggregate underwriting discount of $17.5 million. In connection with our IPO, we also sold to the underwriters, for $100, an option to purchase up to a total
of 1,562,500 units, or the Unit Purchase Option. Upon the consummation of our acquisition of Stream Holdings Corporation, or SHC, as described below, the underwriters sold the Unit Purchase Option to us for $100.

On July 31, 2008, we consummated the acquisition of SHC pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of June 2,
2008, among SGS, River Acquisition Subsidiary Corp., a wholly owned subsidiary of SGS, and SHC. The transaction was valued at $130.3 million for accounting purposes (which reflected the $200.0 million purchase price less assumed indebtedness,
transaction fees, employee transaction related bonuses, professional fees, stock option payments and payments for working capital). On July 31, 2008, holders of 8,946,779 shares of our common stock exercised their conversion rights and we paid
an aggregate of $70.59 million to such holders. In connection with the consummation of the acquisition of SHC, our stockholders approved changing our name from Global BPO Services Corp. to Stream Global Services, Inc. and our stockholders also
approved an amendment to our certificate of incorporation to increase the authorized number of shares of common stock from 119,000,000 to 149,000,000.

On August 7, 2008, we consummated a private placement pursuant to the terms of the preferred stock purchase agreement, dated June 2, 2008, as amended, or the Preferred Stock Purchase Agreement, by and
between SGS and Ares Corporate Opportunities Fund II, L.P., a Delaware limited liability partnership, or Ares, we issued to Ares 150,000 shares of our Series A Convertible Preferred Stock, $0.001 par value per share, or the Series A Preferred Stock,
for an aggregate purchase price of $150.0 million. The Series A Preferred Stock is convertible at the option of Ares into shares of our common stock at an initial conversion price of $6.00 per share, subject to adjustment for stock dividends,
subdivisions, reclassifications combinations or similar type events. In addition, in a separate transaction on August 7, 2008, certain of our founding stockholders sold 7,500,000 warrants that were purchased by them in a private placement
immediately prior to our IPO to Ares for an aggregate purchase price of $7,500. For accounting purposes we have valued these warrants at their estimated fair value for accounting at $.58 per warrant and have credited $4.35 million to
stockholders equity from the value of the Series A Preferred Stock on our balance sheet at September 30, 2008.

Also on
August 7, 2008, we commenced a self-tender offer to purchase up to 20,757,046 shares of our common stock at a purchase price of $8.00 per share. On September 5, 2008, we closed the self-tender. We accepted for purchase 20,757,046 shares of our
common stock at a price of $8.00 per share, for a total cost of $166.0 million, excluding fees and expenses related to the offer. The proration factor for the tender offer was approximately 99%.



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We are a global provider of customer relationship management, or CRM, and other business process
outsourcing, or BPO, services to companies in the technology, software, consumer electronics and communications industries. Our CRM solutions encompass a wide range of telephone, e-mail and Internet based services and technical support programs
designed to maximize the long-term value of the relationships between our clients and their customers, or end-users. Technical support programs may involve technical troubleshooting, hardware, warranty support and game support, hosted services, data
management, telecommunications services and professional services. Customer service includes activities such as customer setup/activations, up-sell or cross-sell programs, revenue generation, customer billing inquiries and customer retention or win
back programs. We work closely with our clients to design and implement large-scale, tailored CRM programs that provide comprehensive solutions to their specific business needs. We deliver services from our 32 service centers in 18 countries. As of
September 30, 2008 we had over 13,000 employees worldwide.

We are subject to quarterly fluctuations in our revenues and earnings,
based on the timing of new and expiring client programs and seasonality in certain client programs. From time to time clients seek to shift their CRM programs to lower cost providers, which may interrupt or decrease our results of operations as we
seek to shift personnel and other resources to the CRM and other BPO services provided to our higher margin clients.

Critical Accounting Policies

Use of Estimates

The preparation of
consolidated condensed financial statements in conformity with generally accepted accounting principles in the United States requires the appropriate application of accounting policies, many of which require management to make estimates and
assumptions about future events and their impact on amounts reported in our consolidated condensed financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results may differ from
estimates. Such differences may be material to the consolidated condensed financial statements.



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Equipment and Fixtures

Equipment and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures are depreciated over a five-year life, software over a
three- to five-year life and equipment generally over a three- to five-year life. Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the associated lease. Assets held under capital leases
are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of the estimated
useful lives of the assets or the period of the related lease and is recorded in depreciation and amortization expense. Repair and maintenance costs are expensed as incurred.

The carrying value of equipment and fixtures to be held and used is evaluated for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable in accordance with Statement of Financial Accounting Standards, or SFAS, No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An asset is considered to be impaired when the
sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying
value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets. Occasionally, we redeploys equipment and fixtures from underutilized centers to other locations to improve
capacity utilization if it is determined that the related undiscounted future cash flows in the underutilized centers would not be sufficient to recover the carrying amount of these assets.

Goodwill and Other Intangible Assets

In accordance
with SFAS No. 142, Goodwill and Other Intangible Assets, or SFAS No. 142, goodwill is reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be
impaired. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value. The impairment, if any, is measured based on the estimated fair value of the reporting unit. Fair value is determined based on discounted cash flows.
We operate in one reporting unit, which is used for impairment testing and the allocation of acquired goodwill. Intangible assets that are identified in connection with the acquisition of SHC are amortized over their estimated useful life.
Intangible assets with a finite life are recorded at cost and amortized using the straight-line method over their estimated useful life. Client lists and relationships are amortized ten years, market adjustments related to facility leases are
amortized over the term of the respective lease and developed software is amortized over five years. Brands and trademarks are not amortized as their life is indefinite. We evaluate the continuing value of brands and trademarks on a quarterly basis
based upon their usage and value.

Stock-Based Compensation

At September 30, 2008, we had a stock-based compensation plan for employees and directors.

We adopted
the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment (SFAS 123(R)) at our inception. For share-based payments, the fair value of each grant, including both the time-based grants and the performance-based grants,
is estimated on the date of grant using the Black-Scholes-Merton option valuation model and assumes the performance goals will be achieved. If such goals are not met, no compensation cost is recognized and any previously recognized cost is reversed.
Stock compensation expense is recognized on a straight-line basis over the vesting term, net of an estimated future forfeiture rate. The forfeiture rate assumption (19.5% as of September 30, 2008) is based on the predecessors historical
experience.

Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, or SFAS No. 159. SFAS No. 159 amends SFAS No. 115 to permit entities to choose to measure many
financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The FASBs objective in this statement is to provide reporting entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This statement is effective for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. We adopted SFAS No. 159 in the first quarter of fiscal year 2008. The adoption of SFAS No. 159 did not have an impact on our financial position, results of operations or cash flow, as we did not elect this fair
value option on any financial assets or liabilities.

In December 2007, the Financial Accounting Standards Board, or FASB, issued FAS
No. 141R, Business Combinations, or FAS 141R. FAS 141R replaces FASB Statement No. 141, Business Combinations (FAS 141). FAS 141R retains the fundamental requirements in FAS 141 that the purchase method of accounting be used for all
business combinations, that an acquirer be identified for each business combination and for goodwill to be recognized and measured as a residual. FAS 141R expands the definition of transactions and events that qualify as business combinations to all
transactions and other events in which one entity obtains control over one or more other businesses. FAS 141R broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of
business combinations. FAS 141R also increases the disclosure requirements for business combinations in the financial statements. FAS 141R is effective for fiscal periods beginning after



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December 15, 2008. Therefore, we are required to adopt FAS 141R on January 1, 2009. Adoption of FAS 141R will not impact our accounting for
business combinations closed prior to its adoption, but given the nature of the changes noted above, we expect our accounting for business combinations occurring subsequent to adoption will be significantly different than that applied following
current accounting literature.

In December 2007, the FASB issued FAS No. 160, Non-Controlling Interest in Consolidated Financial
Statementsan Amendment of ARB No. 51, or FAS 160. FAS 160 requires that a non-controlling interest in a subsidiary be separately reported within equity and the amount of consolidated net income attributable to the non-controlling
interest be presented in the statement of operations. FAS 160 also calls for consistency in reporting changes in the parents ownership interest in a subsidiary and necessitates fair value measurement of any non-controlling equity investment
retained in a deconsolidation. FAS 160 is effective for fiscal periods beginning after December 15, 2008. Therefore, we are required to adopt FAS 160 on January 1, 2009. We are currently evaluating the requirements of FAS 160 and the
potential impact on our financial position and results of operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures
About Derivative Instruments and Hedging Activities,or SFAS 161, which amends SFAS 133, Accounting for Derivative Instruments and Hedging Activities, by requiring increased qualitative, quantitative, and credit-risk disclosures about an
entitys derivative instruments and hedging activities. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. We are currently evaluating the impact of this standard on our financial condition,
results of operations and cash flows.

In April 2008, the FASB issued FASB Staff Position FSP No. FAS 142-3, Determination of the Useful
Life of Intangible Assets, or FSP No. FAS 142-3. FSP No. FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS
No. 142. The intent of FSP No. FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under
FAS No. 141R, and other U.S. generally accepted accounting principles. FSP No. FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. We are currently evaluating the potential impact
of FSP No. FAS 142-3 on our consolidated results of operations and financial conditions.

In May 2008, the FASB issued SFAS
No. 162, The Hierarchy of Generally Accepted Accounting Principles, or SFAS 162. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial
statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (the GAAP hierarchy). SFAS 162 will become effective 60 days following the Securities and Exchange Commissions
approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. We do not currently expect the adoption of
SFAS 162 to have a material effect on our consolidated results of operations and financial condition.

Pro Forma and Adjusted Pro Forma Financial
Information

The acquisition of SHC is our first business combination and accordingly we do not believe a comparison of the results
of operations and cash flows for the three and nine months ended September 30, 2008 compared to September 30, 2007 is very beneficial to our stockholders. In order to assist investors in better understanding the changes in our business
between the three and nine months ended September 30, 2008 and 2007 we are presenting in managements discussion and analysis section below in the pro forma results of operations for SGS and SHC for the three and nine months ended
September 30, 2008 and 2007 as if the acquisition of



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SHC occurred on January 1, 2008 and 2007, respectively. We derived the pro forma results of operations from (i) the unaudited consolidated
financial statements of SHC for the period from January 1, 2008 to July 31, 2008 (the date of the SHC acquisition) and the three months and nine months ended September 30, 2007, and (ii) our unaudited consolidated financial
statements for the three and nine months ended September 30, 2008 and 2007. We are presenting the pro forma information in order to provide a more meaningful comparison of our operating results with prior periods.

The following are pro forma unaudited results of operations for the three months and nine months ended September 30, 2008 and 2007 assuming the
acquisition of SHC occurred on January 1, 2008 and 2007, respectively:

Stream Global Services, Inc.

Pro Forma Consolidated Statements of Operations

(unaudited)



|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|----------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                |  | 2008                            |         |   | 2007                           |   |         | 2008 |  |   | 2007    |  
|Revenue                                         |  | $                               | 124,536 |   |                                | $ | 113,832 |      |  | $ | 393,622 |   |  | $ | 345,645 |  
|Direct cost of revenue                          |  |                                 | 78,707  |   |                                |   | 76,312  |      |  |   | 253,205 |   |  |   | 229,017 |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Gross profit                                    |  |                                 | 45,829  |   |                                |   | 37,520  |      |  |   | 140,417 |   |  |   | 116,628 |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Operating expenses:                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Selling, general and administrative expenses    |  |                                 | 39,535  |   |                                |   | 34,619  |      |  |   | 121,323 |   |  |   | 103,639 |  
|Depreciation and amortization expense           |  |                                 | 5,938   |   |                                |   | 5,025   |      |  |   | 17,460  |   |  |   | 14,488  |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total operating expenses                        |  |                                 | 45,473  |   |                                |   | 39,644  |      |  |   | 138,783 |   |  |   | 118,127 |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) from operations                   |  |                                 | 356     |   |                                |   | (2,124  | )    |  |   | 1,634   |   |  |   | (1,499  | )
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Other (income) expenses, net:                   |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Foreign currency transaction loss (gain)        |  |                                 | 649     |   |                                |   | (1,417  | )    |  |   | (1,116  | ) |  |   | 441     |  
|Other (income) expense, net                     |  |                                 | (1,474  | ) |                                |   | 26      |      |  |   | 1,402   |   |  |   | (1,141  | )
|Interest expense, net                           |  |                                 | 1,379   |   |                                |   | 1,896   |      |  |   | 5,285   |   |  |   | 5,642   |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total other (income) expenses, net              |  |                                 | 554     |   |                                |   | 505     |      |  |   | 5,571   |   |  |   | 4,942   |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) before provision for income taxes |  |                                 | (198    | ) |                                |   | (2,629  | )    |  |   | (3,937  | ) |  |   | (6,441  | )
|Provision for Income taxes                      |  |                                 | 2,528   |   |                                |   | 2,896   |      |  |   | 7,975   |   |  |   | 4,085   |  
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                               |  | $                               | (2,726  | ) |                                | $ | (5,525  | )    |  | $ | (11,912 | ) |  | $ | (10,526 | )
|                                                |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  



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Amounts as a percentage of revenue



|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   
|----------------------------------------------- |  | ------------------------------- | -- |  | ------------------------------ | -- |  | ----- | -- |  | ----- | --
|                                                |  | Three Months EndedSeptember 30, |    |  | Nine Months EndedSeptember 30, |   
|                                                |  | 2008                            |    |  | 2007                           |    |  | 2008  |    |  | 2007  |   
|Revenue                                         |  | 100.0                           | %  |  | 100.0                          | %  |  | 100.0 | %  |  | 100.0 | % 
|Direct cost of revenue                          |  | 63.2                            |    |  | 67.0                           |    |  | 64.3  |    |  | 66.3  |   
|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Gross profit                                    |  | 36.8                            |    |  | 33.0                           |    |  | 35.7  |    |  | 33.7  |   
|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Operating expenses:                             |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Selling, general and administrative expenses    |  | 31.7                            |    |  | 30.4                           |    |  | 30.8  |    |  | 30.0  |   
|Depreciation and amortization expense           |  | 4.8                             |    |  | 4.5                            |    |  | 4.5   |    |  | 4.1   |   
|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Total operating expenses                        |  | 36.5                            |    |  | 34.9                           |    |  | 35.3  |    |  | 34.1  |   
|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Income (loss) from operations                   |  | 0.3                             |    |  | (1.9                           | )  |  | 0.4   |    |  | (0.4  | ) 
|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Other (income) expenses, net:                   |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Foreign currency transaction loss (gain)        |  | 0.5                             |    |  | (1.3                           | )  |  | (0.3  | )  |  | 0.1   |   
|Other (income) expense, net                     |  | (1.2                            | )  |  | 0.0                            |    |  | 0.4   |    |  | (0.3  | ) 
|Interest expense, net                           |  | 1.2                             |    |  | 1.7                            |    |  | 1.3   |    |  | 1.6   |   
|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Total other (income) expenses, net              |  | 0.5                             |    |  | 0.4                            |    |  | 1.4   |    |  | 1.4   |   
|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Income (loss) before provision for income taxes |  | (0.2                            | )  |  | (2.3                           | )  |  | (1.0  | )  |  | (1.8  | ) 
|Provision for Income taxes                      |  | 2.0                             |    |  | 2.6                            |    |  | 2.0   |    |  | 1.2   |   
|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   
|Net income (loss)                               |  | (2.2                            | )% |  | (4.9                           | )% |  | (3.0  | )% |  | (3.0  | )%
|                                                |  |                                 |    |  |                                |    |  |       |    |  |       |   

We derived the pro forma results of operations from (i) the unaudited consolidated financial
statements of SHC from January 1, 2008 to July 31, 2008 (the date of the SHC acquisition) and the three months and nine months ended September 30, 2007, and (ii) the unaudited consolidated financial statements for the three
months and nine months ended September 30, 2008 and 2007. The pro forma results of operations are not necessarily indicative of results of operations that may have actually occurred had the merger taken place on the dates noted, or the future
financial position or operating results of SHC.

Revenues

We derive our revenues by providing technical support, warranty support and game support, hosted services, data management, telecommunication services, professional services and customer care services. Our services
are typically bundled together to include our technical support provided by our service professionals, our hosted technology, our data management and reporting and other professional services. We bill for our services in a variety of manners,
including per minute, per contact, per hour and per full-time equivalent. Revenues also include reimbursement of certain expenses including telecom, training and miscellaneous costs for certain customers.

Direct Cost of Revenue (exclusive of depreciation and amortization)

We record the costs specifically associated with client programs as direct cost of revenues. These costs include direct labor wages and benefits of service professionals as well as reimbursable expenses such as
telecommunication charges. The most significant portion of our direct cost of revenue is attributable to compensation, benefits and payroll taxes. These costs are expensed as they are incurred. Direct costs are affected by prevailing wage rates in
the countries in which they are incurred.



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Operating Expenses

Our operating expenses consist of all expenses of operations other than direct costs of revenue, such as information technology, telecommunication sales and marketing costs, finance, human resource management and
other functions and service center operational expenses such as facility, operations and training and depreciation and amortization. Sales and marketing costs consist principally of compensation expense related to business development, proposal
preparation and delivery, solution development, collateral materials, commissions and negotiation of new client contracts.

Other Expenses, Net

Other expenses, net consists of the foreign currency transaction gains or losses, other income, interest income and interest expense.
Interest expense includes interest expense and amortization of debt issuance costs associated with our indebtedness under our credit lines, term loans, and capitalized lease obligations.

We generate revenue and incur expenses in several different currencies. We do not operate in any countries subject to hyper-inflationary accounting
treatment. Our most common transaction currencies are the U.S. Dollar, the Euro, the Canadian Dollar, the British Pound, and the Indian Rupee. Our customers are most commonly billed in the U.S. Dollar or the Euro. We report our operating
results using the average actual exchange rates in effect during the accounting period.

Income Taxes

We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes, which requires recognition of deferred assets and
liabilities for the future income tax consequence of transactions that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax, using the enacted tax rates for the year in which the differences are expected to reverse. We provide valuation allowances against
deferred tax assets whenever we believe it is more likely than not, based on available evidence, that the deferred tax asset will not be realized.

We adopted FASB No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, or FIN 48, at our inception. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in
financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. The adoption of FIN 48 did not have an effect on our
consolidated financial position or results of operations.

Results of Operations

Three months ended September 30, 2008 compared with three months ended September 30, 2007

Revenues. Revenues increased $10.7 million, or 9.4%, to $124.5 million for the three months ended September 30, 2008, compared to $113.8 million for the three months ended September 30, 2007. The increase is primarily
attributable to a $10.4 million growth in revenue with our ten largest clients from both existing and new services provided to those clients in 2008.

Revenues for services performed in our U.S. and Canada service centers decreased $5.8 million, or 10.0%, for the three months ended September 30, 2008, as a result of an ISP client contract which ended in the
last half of 2007. Revenues for services performed in European service centers increased $12.2 million, or 30.0%. The majority of this increase is attributable to increased volumes from both new and existing clients, coupled with additional revenue
due to a strengthened Euro relative to the U.S. dollar. Revenues for services performed in offshore service centers in India, Costa Rica, the Dominican Republic and Tunisia increased $4.3 million, or 28.3%, due to additional volume from existing and
new clients. Revenues in our offshore locations represented 15.7% of consolidated revenues for the three months ended September 30, 2008, compared to 13.4% in the same period in 2007.

Direct Cost of Revenue (exclusive of depreciation and amortization). Direct cost of revenue (exclusive of depreciation and amortization) increased
$2.4 million, or 3.1%, to $78.7 million for the three months ended September 30, 2008, compared to $76.3 million for the three months ended September 30, 2007. This increase is primarily attributable to incremental labor cost required to
support revenue growth. After excluding the $2.5 million Canadian and Euro currency exchange impact, direct labor costs decreased from $73.1 million to $72.3 million, or 1.0%.

Gross Profit. Gross profit increased $8.3 million, or 22.1%, to $45.8 million for the three months ended September 30, 2008 compared to $37.5
million for the three months ended September 30, 2007. Gross profit as a percentage



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of revenue increased from 33.0% to 36.8%. Gross margin percentage increased for services performed in our service centers due to higher margin contracts
implemented in 2007 and better management of our operating expenses in our service centers, particularly in Europe.

Operating
Expenses. Operating expenses increased $5.8 million, or 14.7%, to $45.5 million for the three months ended September 30, 2008, compared to $39.6 million for the three months ended September 30, 2007, primarily due to an increase in
sales, general and administrative expense, which grew from $34.6 million to $39.5 million, or 14.2%. After excluding the $1.5 million Canadian and Euro currency exchange impact, the increase in sales, general and administrative expense was due to
(i) a $1.1 million increase in labor costs due to incremental management, operations and administrative staff required to support our revenue growth, and (ii) an occupancy expense increase of $0.5 million primarily attributable to new
service center openings after the first half of 2007. Depreciation and amortization represented $0.9 million of the increase in operating expenses attributable to additions to equipment and fixtures totaling $19.0 million including capital leases
during the twelve months ended September 30, 2008. The additions to equipment and fixtures were to support new business, open new service centers and maintain and upgrade our technology infrastructure. Operating expenses as a percentage of
revenues increased to 36.5% for the three months ended September 30, 2008 compared to 34.9% for the three months ended September 30, 2007 due to higher fixed occupancy cost related to the added site location capacity in late 2007.

Other (Income) Expenses, Net. Other (income) expenses, net increased $0.1 million, or 9.7%, to $0.6 million for the three months
ended September 30, 2008, compared to $0.5 million for the three months ended September 30, 2007. Foreign exchange gains and losses are primarily the result of intercompany activity and related hedging.

Income Taxes. Income taxes decreased $0.4 million, or 12.7%, to $2.5 million for the three months ended September 30, 2008, compared to $2.9
million for the three months ended September 30, 2007. Foreign tax expense was $1.7 million in the three months ended September 30, 2008 and 2007 and the effective foreign tax rate remained the same at 37.8%. Stream operates in a number of
countries outside the U.S. that are generally taxed at lower rates and this can have a significant impact on the effective tax rate. During the three months ended September 30, 2008 there was a tax expense of $0.2 million related to amounts
required to be recorded under the uncertain tax positions under FIN 48.

Net Income (Loss). Net loss decreased by $2.8 million, or
50.7%, to $2.7 million for the three months ended September 30, 2008, compared to $5.5 million for the three months ended September 30, 2007. This decrease is primarily due to increased revenue, margin, and a decrease in provision for
income taxes, caused by the factors discussed above.

Nine months ended September 30, 2008 compared with nine months ended September 30,
2007

Revenues. Revenues increased $48.0 million, or 13.9%, to $393.6 million for the nine months ended September 30,
2008, compared to $345.6 million for the nine months ended September 30, 2007. The increase is primarily attributable to a $72.2 million growth in revenue with our ten largest clients from both existing and new services provided to those
clients in 2008.

Revenues for services performed in our U.S. and Canada service centers decreased $18.7 million, or 9.9%, for the nine
months ended September 30, 2008, as a result of large volumes from a seasonal client in the nine months ended September 30, 2007, coupled with an ISP client contract which ended in the last half of 2007. Revenues for services performed in
European service centers increased $53.1 million, or 46.8%. The majority of this increase is attributable to increased volumes from both new and existing clients, coupled with additional revenue due to a strengthened Euro relative to the U.S.
dollar. Revenues for services performed in offshore service centers in India, Costa Rica, the Dominican Republic and Tunisia increased $13.6 million, or 32.1%, due to additional volume from existing and new clients. Revenues in our offshore service
centers represented 14.2% of consolidated revenues for the nine months ended September 30, 2008, compared to 12.2% in the same period in 2007.

Direct Cost of Revenue (exclusive of depreciation and amortization). Direct cost of revenue (exclusive of depreciation and amortization) increased $24.2 million, or 10.6%, to $253.2 million for the nine months ended
September 30, 2008, compared to $229.0 million for the nine months ended September 30, 2007. This increase is primarily attributable to incremental labor cost required to support revenue growth. After excluding the $15.2 million Canadian
and Euro currency exchange impact, direct labor costs increased from $219.3 million to $226.3 million, or 3.2%.



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Gross Profit. Gross profit increased $23.8 million, or 20.4%, to $140.4 million for the nine
months ended September 30, 2008 from $116.6 million for the nine months ended September 30, 2007. Gross profit as a percentage of revenue increased from 33.7% to 35.7%. Gross margin percentage increased for services performed in European
service centers due to higher margin contracts implemented in 2007 and better management of our costs.

Operating Expenses.
Operating expenses increased $20.7 million, or 17.5%, to $138.8 million for the nine months ended September 30, 2008, compared to $118.1 million for the nine months ended September 30, 2007, primarily due to an increase in sales, general
and administrative expense, which grew from $103.6 million to $121.3 million, or 17.1%. After excluding the $4.6 million Canadian and Euro currency exchange impact, the increase in sales, general and administrative expense was due to (i) a $5.3
million increase in labor costs due to incremental management, operations and administrative staff required to support our revenue growth, and (ii) an occupancy expense increase of $5.2 million primarily attributable to new service center
openings after the first half of 2007. Depreciation and amortization represented $2.9 million of the increase in operating expenses attributable to additions to equipment and fixtures totaling $19.0 million including capital leases during the twelve
months ended September 30, 2008. The additions to equipment and fixtures were to support new business, open new service centers and maintain and upgrade our technology infrastructure. Operating expenses as a percentage of revenues increased to
35.3% for the nine months ended September 30, 2008 compared to 34.1% for the nine months ended September 30, 2007 due to higher fixed occupancy cost related to the added site location capacity in 2007.

Other (Income) Expenses, Net. Other (income) expenses, net increased $0.6 million, or 12.7%, to $5.6 million for the nine months ended
September 30, 2008, compared to $4.9 million for the nine months ended September 30, 2007. This increase consisted of a foreign exchange gain for the nine months ended September 30, 2008 of $1.1 million, compared to a foreign exchange
loss of $0.4 million for the nine months ended September 30, 2007. Foreign exchange gains and losses are primarily the result of intercompany activity and related hedging.

Income Taxes. Income taxes increased $3.9 million, or 95.2%, to $8.0 million for the nine months ended September 30, 2008, compared to $4.1
million for the nine months ended September 30, 2007. Foreign tax expense comprised $6.5 million in the first nine months of 2008 and $4.1 million for the same period in 2007 and the effective foreign tax rate decreased from 34.9% to 27.5%. The
increase in expense was driven by a $1.5 million charge in respect of FIN 48, higher income in foreign jurisdictions offset by the decrease in the effective rate reflecting changes in the mix of operations. We operate in a number of countries
outside the U.S. that are generally taxed at lower rates and this can have a significant impact on the effective tax rate.

Net Income
(Loss). Net loss increased by $1.4 million, or 13.2%, to $11.9 million for the nine months ended September 30, 2008, compared to $10.5 million for the nine months ended September 30, 2007. This increase is primarily due to income tax
expenses caused by the factors discussed above.

Liquidity and Capital Resources

Our primary liquidity needs are for financing working capital associated with the expenses we incur in performing services under our client contracts and
capital expenditures for the opening of new service centers, including the purchase of computers and related equipment. We have in place a credit facility that includes term loans and a revolving line of credit that allow us to manage our cash
flows. Our ability to make payments on the credit facility, to replace our indebtedness, and to fund working capital and planned capital expenditures will depend on our ability to generate cash in the future. We have secured our working capital
facility through our accounts receivable and therefore, our ability to continue servicing debt is dependant upon the timely collection of those receivables.

We made capital expenditures of $9.2 in the nine months ended September 30, 2008. We continue to make capital expenditures to build new service centers, meet new contract requirements and maintain and upgrade our
technology.

Working Capital and Term Loan Facilities. On July 31, 2008, we as guarantor, entered into a Fourth Amended and
Restated Revolving Credit Term Loan and Security Agreement, or the Credit Agreement, with PNC Bank, National Association, or PNC, as Lender and as Agent), PNC Capital Markets LLC (as Lead Arranger), SHC (as Borrowing Agent), and the other Loan
Parties signatory thereto (as Loan Parties). The Credit Agreement amended and restated SHCs credit facility with PNC, providing for an increase in the revolving credit from $86.0 million to $100.0 million, extending the maturity date by five
years to 2013 and providing SGS as a guarantor. The



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Credit Agreement included a $10.0 million collateral reserve. The Credit Agreement did not otherwise materially change the terms of SHCs credit
facility. The facility is comprised of a $100.0 million senior secured revolving credit facility under which borrowing availability is based on, among other things, the Borrowers (as defined in the Credit Agreement) eligible billed and
unbilled accounts receivable. The balance of the financing consists of a senior secured domestic term loan of approximately $5.067 million and a senior secured foreign term loan of approximately $2.369 million. The financing facilities have a
five-year term. Outstanding balances under the revolving credit facility bears interest at either LIBOR plus a margin ranging from 200 to 250 basis points or at the base rate plus a margin ranging from 0 to 25 basis points. The term loans bear
interest at LIBOR plus a margin ranging from 275 to 325 basis points or at the base rate plus a margin ranging from 25 to 75 basis points, in each case based on the combined fixed charge coverage ratio of SHC. The interest rate is subject to change
under additional circumstances. The balance outstanding under the prior credit facility and term loans continued as part of the new revolving credit and term debt facility. The facility also requires compliance with certain financial covenants. On
November 14, 2008, we amended the Credit Agreement to require delivery of an audited opening balance sheet of the borrowers by April 1, 2009. The obligations of the Borrowers under the facility are secured by certain assets of the
Borrowers and by certain assets of SHC. The guarantee provided by SGS is unsecured. PNC is in the process of syndicating the facility and in the event that market conditions do not allow it to syndicate under existing terms PNC can reasonably
seek to modify the pricing and terms of the facility. Such future terms, pricing and structure may be less favorable than those that currently exist.

Letters of Credit. We have certain standby letters of credit for the benefit of landlords of certain sites in the United States and Canada. As of September 30, 2008, we had approximately $10 million of
these letters of credit in place under our working capital facility.

Contractual Obligations. We have various contractual
obligations that will affect our liquidity. The following table sets forth our contractual obligations as of September 30, 2008:



|                            |  |                        |         |                 |   |           |  |           |        |                  |   |        |  |   |      
|--------------------------- |  | ---------------------- | ------- | --------------- | - | --------- |  | --------- | ------ | ---------------- | - | ------ |  | - | -----
|                            |  | Payments Due by Period
|                            |  | Total                  |         | Less than1 year |   | 1-3 years |  | 3-5 years |        | More than5 years
|                            |  | (in thousands)        
|Long-term debt obligations  |  | $                      | 68,839  |                 | $ | 2,650     |  | $         | 4,599  |                  | $ | 61,590 |  | $ |     
|Operating lease obligations |  |                        | 73,803  |                 |   | 23,868    |  |           | 35,174 |                  |   | 13,127 |  |   | 1,634
|Capital lease obligations   |  |                        | 9,280   |                 |   | 2,728     |  |           | 3,401  |                  |   | 2,432  |  |   | 719  
|                            |  |                        |         |                 |   |           |  |           |        |                  |   |        |  |   |      
|Total                       |  | $                      | 151,922 |                 | $ | 29,246    |  | $         | 43,174 |                  | $ | 77,149 |  | $ | 2,353
|                            |  |                        |         |                 |   |           |  |           |        |                  |   |        |  |   |      

Certain leases are backed by letters of credit totaling approximately $10.0 million at
September 30, 2008. The obligations under the letters of credit reduce annually as the underlying obligations are satisfied.

Nine Months Ended
September 30, 2008 Compared with Nine Months Ended September 30, 2007

As of September 30, 2008, we had $31.5 million in
unrestricted cash and cash equivalents, and working capital (measured by current assets less current liabilities) of $62.2 million, due to the classification of our existing credit facilities that expired on July 31, 2008.

Net cash used in operating activities totaled $7.8 million for the nine months ended September 30, 2008, a $7.8 million increase from the $0.0
million used in the nine months ended September 30, 2007. Net income increased $1.0 million and non-cash charges were $4.1 million greater in the nine months ended September 30, 2008 than those generated in the nine months ended
September 30, 2007 primarily as a result of the $4.0 million increase for the depreciation and amortization of acquired assets. The increase of $12.9 million in cash used in operating activities is due primarily to the increase of $15.7 million
in cash used for accrued liabilities and other liabilities.

Net cash provided by investing activities totaled $137.9 million for the nine
months ended September 30, 2008, a $137.9 million increase from the $0.0 million used in the nine months ended September 30, 2007. This is primarily attributable to the release of restrictive cash from the initial public offering that
was used to acquire SHC offset by the cash used to acquire SHC.



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Net cash used in financing activities totaled $98.7 million for the nine months ended September 30,
2008, a $98.6 million increase from the $0.0 million of cash provided by financing activities for the nine months ended September 30, 2007. The increase is due to proceeds from issuance of the Series A Preferred Stock offset by cash used
to purchase shares of common stock in our self-tender offer.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality

We are exposed to seasonality in our revenues because of the nature of certain consumer-based clients. We may
experience approximately 10% increased volume associated with the peak processing needs in the fourth quarter coinciding with the holiday period and a somewhat seasonal overflow into the first quarter of the following year.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. Our risk
management strategy includes the use of derivative instruments to reduce the effects on our operating results and cash flows from fluctuations caused by volatility in currency exchange and interest rates. In using derivative financial instruments to
hedge exposures to changes in exchange rates we exposes ourselves to counterparty credit risk.

Interest Rate Risk

We are exposed to interest rate risk primarily through our debt facilities since some of those instruments bear interest at variable rates, including
capital leases. At September 30, 2008, we had outstanding borrowings under variable debt agreements that totaled approximately $68.8 million. A hypothetical 1.0% increase in the interest rate would have increased interest expense by
approximately $0.4 million and would have decreased annual cash flow by a comparable amount. The carrying amount of our borrowings reflects fair value due to their short-term and variable interest rate features.

There were no outstanding interest rate swaps covering interest rate exposure at September 30, 2008.

Foreign Currency Exchange Rate Risk

We serve many of
our U.S.-based clients using our service centers in Canada, India, the Dominican Republic and Costa Rica. Although the contracts with these clients are typically priced in U.S. dollars, a substantial portion of the costs incurred to render services
under these contracts are denominated in the local currency of the country in which the contracts are serviced which creates foreign exchange exposure. Given the significance of our foreign operations and the potential volatility of the Canadian
dollar and Indian rupee versus the U.S. dollar, we use forward purchases of Canadian dollars and Indian rupees to minimize the impact of currency fluctuations. As of September 30, 2008, we had entered into forward contracts with two financial
institutions to acquire a total of 24.5 million in Canadian dollars at prices ranging from .9991 to 1.0369 USD/CAD and 128.7 million in Indian rupees at prices ranging from 43.13 to 44.21 USD/INR.

Market Risk

Market risk is the sensitivity of income
to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices.

Changes in
market rates may impact the banks LIBOR rate or prime rate. For instance, if either the LIBOR or prime rate were to increase or decrease by one percentage point (1.0%), our annual interest expense would change by approximately $10,800 based
upon our total credit facility.



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|ITEM 4T. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Our management, with the
participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2008. The term disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act
is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the companys management, including its principal executive and principal financial
officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2008, our chief executive
officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 30, 2008 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION



|ITEM 1A. | RISK FACTORS
|-------- | ------------

Our business is subject to
numerous risks. We caution you that the following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the Securities and
Exchange Commission, press releases, communications with investors and oral statements. Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q and in any other public statements we make may turn out to be wrong. They may
be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be
guaranteed. Actual future results may vary materially from those anticipated in forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You
are advised, however, to consult any further disclosure we make in our reports filed with the Securities and Exchange Commission.

Risks Related to SGS

Our outstanding warrants may be exercised in the future, which would increase the number of shares eligible for
future resale in the public market and result in dilution to our stockholders.

Outstanding redeemable warrants to purchase an
aggregate of 31,250,000 shares of common stock issued in our IPO became exercisable on October 17, 2008. In addition, non-redeemable warrants to purchase an aggregate of 7,500,000 shares of common stock held by Ares are also outstanding and
became exercisable on October 17, 2008. All of these outstanding warrants have an exercise price of $6.00 per share. As of November 14, 2008, the closing price of our shares traded on the American Stock Exchange, or AMEX, was $1.33 per share.
In addition, when these warrants are exercised, sales of the underlying shares in the public market could adversely affect the market price of our common stock.

The completion of the merger could result in disruptions in business, loss of clients or contracts or other adverse effects.

Our recently completed merger with SHC may cause disruptions, including potential loss of clients and other business partners, in our business, which could have material adverse effects on our business and operations. Although we believe
that our business relationships are and will remain stable following this merger, our clients and other business partners, in response to the completion of the merger, may adversely change or terminate their relationships with us, which could have a
material adverse effect on our business.



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We must comply with Section 404 of the Sarbanes-Oxley Act of 2002.

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to document and test the effectiveness of our internal controls over financial reporting in
accordance with an established control framework and to report on our managements conclusion as to the effectiveness of these internal controls over financial reporting beginning with the fiscal year ending December 31, 2009. As a result
of our request and the Securities and Exchange Commissions concurrence, we will not be required to complete an assessment of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act and the rules
thereunder for the year ended December 31, 2008. The requested accommodation was granted by the Securities and Exchange Commission on October 22, 2008. We will also be required to have an independent registered public accounting firm test the
internal controls over financial reporting and report on the effectiveness of such controls for the fiscal year ending December 31, 2009 and subsequent years. Any delays or difficulty in satisfying these requirements could adversely affect
future results of operations and our stock price.

We are likely to incur significant costs to comply with these requirements. We may in
the future discover areas of internal controls over financial reporting that need improvement, particularly with respect to any businesses acquired in the future. There can be no assurance that remedial measures will result in adequate internal
controls over financial reporting in the future. Any failure to implement the required new or improved controls, or difficulties encountered in their implementation, could materially adversely affect our results of operations or could cause us to
fail to meet our reporting obligations. If we are unable to conclude that we have effective internal controls over financial reporting, or if our auditors are unable to provide an unqualified report regarding the effectiveness of internal controls
over financial reporting as required by Section 404, investors may lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our securities. In addition, failure to comply with
Section 404 could potentially subject us to sanctions or investigation by the Securities and Exchange Commission or other regulatory authorities.

The loss of key executives could adversely affect our ability to integrate SHC and operate our business.

The success of our
integration of SHC, and the success of our ongoing business, will be dependent upon the continued service of a relatively small group of our key executives. The loss of one or more of these key employees or failure to recruit, hire, train and retain
other highly qualified personnel could have a material adverse effect on our business, results of operations and financial condition.

There can be no
assurance that AMEX will continue to list our securities on its exchange, and any delisting could limit investors ability to make transactions in our securities and subject us to additional trading restrictions.

Our units, common stock and warrants are listed on AMEX, a national securities exchange. We cannot assure you that our securities will continue to be
listed on AMEX in the future. If AMEX delists our securities from trading on its exchange and we are unable to list our securities on another exchange, our securities could be quoted on the OTC Bulletin Board, or pink sheets. As a
result, we could face significant adverse consequences, including but not limited to the following:



| |  |  | a limited availability of market quotations for our securities;
| | - |  | ---------------------------------------------------------------



| |  |  | a determination that our common stock is a penny stock which will require brokers trading in our common stock to adhere to more stringent rules and
possibly resulting in a reduced level of trading activity in the secondary trading market for our securities;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a more limited amount of news coverage for us;
| | - |  | ----------------------------------------------



| |  |  | a reduced liquidity for our securities;
| | - |  | ---------------------------------------



| |  |  | a limited amount of financial analyst coverage for us;
| | - |  | ------------------------------------------------------



| |  |  | a decreased ability to obtain new financing or issue new securities on favorable terms in the future;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | a decreased ability to issue additional securities or obtain additional financing in the future; and
| | - |  | ----------------------------------------------------------------------------------------------------



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| |  |  | a decreased ability of our security holders to sell their securities in certain states.
| | - |  | ---------------------------------------------------------------------------------------

Stockholders interests in us will be diluted significantly by the conversion of our Series A Preferred Stock, which could affect the market price of our common
stock.

The Series A Preferred Stock is convertible into shares of our common stock at a conversion price of $6.00 per share. The
aggregate stated value of the Series A Preferred Stock is $150.0 million, and all such Series A Preferred Stock may be converted into an aggregate of 25,000,000 shares of our common stock. The Series A Preferred Stock has an annual dividend rate of
3%, calculated semi-annually. Accrued dividends may be paid, at our option, by increasing the stated value of the Series A Preferred Stock by an equal amount, which amount shall be convertible into shares of our common stock at the conversion price
of $6.00. To the extent the Series A Preferred Stock is converted into shares of our common stock, the issuance of substantial numbers of shares of common stock would increase the number of outstanding shares of our common stock and could have an
adverse effect on the market price for our securities and on our ability to obtain future public or private financing.

The Series A Preferred Stock
ranks senior to our common stock with respect to distributions upon our liquidation.

The Series A Preferred Stock ranks senior to our
common stock for purposes of any liquidation event. Accordingly, as long as Series A Preferred Stock is outstanding, no distributions upon liquidation may be made to the holders of our common stock unless the holders of our Series A Preferred Stock
have received distributions equal to their liquidation preference, which is the greater of the stated value, initially $1,000 per share, plus accrued dividends, and the amount payable to such holders had all of the Series A Preferred Stock been
converted into our common stock. As a result, it is possible that, upon liquidation, all of the amounts available for distribution to our equity holders would be paid to the holders of the Series A Preferred Stock and our other stockholders would
not receive any payment.

Ares is our largest stockholder and has significant influence and control over our management and affairs.

Ares owns approximately 72.5% of our common stock on an as converted basis, based on our outstanding shares as of October 31, 2008 and assuming
(i) conversion of all of the Series A Preferred Stock and (ii) no exercise of any of our 38,750,000 outstanding warrants. Ares is entitled to appoint to our board of directors a number of directors proportional to its ownership percentage.
As a result, Ares has significant influence and control over our management and affairs.

Ares could make it more difficult or even impossible for a
third party to acquire us without its consent.

For so long as 30% or more of the number of shares of Series A Preferred Stock first
issued to Ares remain outstanding, or for so long as the outstanding shares of Series A Preferred Stock represent, in the aggregate, 20% or more of our equity on an as-converted basis, the holders of the Series A Preferred Stock have the right to
approve mergers, consolidations, acquisitions by a third party and substantial asset sale transactions involving us if the consideration payable with respect to each share of Series A Preferred Stock is other than an amount in cash which is more
than 150% of the conversion price of the Series A Preferred Stock.

Holders of Series A Preferred Stock have registration rights, and the exercise of
such rights could adversely affect the market price of our common stock.

The holders of the Series A Preferred Stock have registration
rights, subject to certain conditions, to require us to file registration statements under the Securities Act on up to four occasions to register shares of common stock issued upon the conversion of the Series A Preferred Stock and upon exercise of
the certain warrants held by Ares to acquire up to 7,500,000 shares of our common stock. Any sale of a significant number of shares of common stock by holders of the Series A Preferred Stock could cause the market price of our common stock to
decline.

Risks Related to Our Business and Industry

We have a history of losses and there can be no assurance that we will become or remain profitable or that losses will not continue to occur.

SHC had net losses of $25.4 million, $11.3 million and $5.3 million for the seven months ended September 30, 2008 and for the fiscal years ended
December 31, 2007 and 2006, respectively. As successor to SHCs business,



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we may continue to incur reported losses. To support growth, we increased our expense levels and our investments in facilities and capital equipment. As a
result, we will need to significantly increase revenues or profit margins to maintain profitability. If our revenues or gross margins do not increase to support the higher levels of operating expenses and if new service offerings are not successful,
our business, results of operations and financial condition will be materially and adversely affected.

A substantial portion of our revenue is
generated from a limited number of clients, and the loss of one or more of these clients would materially reduce our revenue and cash flow and adversely affect our business.

We have derived and believe that we will continue to derive in the near term most of our revenue from a few major clients. Our three largest clients,
Hewlett-Packard Company, British Telecom, and Dell Inc., accounted for approximately 17.0%, 14.1% and 13.3%, respectively, of SHCs revenues for the nine months ended September 30, 2008 and 13.3%, 8.8% and 15.8%, respectively, for the year
ended December 31, 2007. There can be no assurance that we will be able to retain these major clients or that, if we were to lose one or more of our major clients, we would be able to replace such clients with clients that generate a comparable
amount of revenues. A number of factors could cause us to lose business or revenue from a client, and some of these factors are not predictable and are beyond our control. For example, a client may demand price reductions, change its outsourcing
strategy, move work in-house or reduce previously forecasted demand. In addition, the volume of work we perform for specific clients may vary from year to year. In most cases, if a client terminates its contract with us or does not meet its
forecasted demand, we have no contractual recourse even if we have hired and trained service professionals to provide services to the client. Thus, a major client in one year may not provide the same level of revenue in any subsequent year.
Consequently, the loss of one or more of our major clients, or the inability to generate anticipated revenues from them, would have a material adverse effect on our business, results of operations and financial condition. Our operating results for
the foreseeable future will continue to depend on our ability to effect sales to a small number of clients and any revenue growth will depend on our success selling additional services to our large clients and expanding our client base.

Our revenue is highly dependent on a few industries and any decrease in demand for outsourced business processes in these industries could reduce our revenue and
seriously harm our business.

Most of our clients are concentrated in the technology, consumer electronics and communications
industries. The success of our business largely depends on continued demand for our services from clients in these industries, as well as on trends in these industries to outsource business processes. A downturn in any of our targeted industries, a
slowdown or reversal of the trend to outsource business processes in any of these industries or the introduction of regulations that restrict or discourage companies from outsourcing could result in a decrease in the demand for our services, which
in turn could harm our business, results of operations and financial condition.

Other developments may also lead to a decline in the
demand for our services in these industries. For example, the industries we primarily serve, particularly the communications industry, have experienced a significant level of consolidation in recent years. Consolidation in any of these industries or
acquisitions, particularly involving our clients, may decrease the potential number of buyers of our services. Any significant reduction in, or the elimination of, the use of the services we provide within any of these industries would reduce our
revenue and cause our profitability to decline. Our clients may experience rapid changes in their prospects, substantial price competition and pressure on their results of operations. This may result in increasing pressure on us from clients in
these key industries to lower our prices, which could negatively affect our business, results of operations and financial condition.

We may not be able
to manage our growth effectively, which could adversely affect our results of operations.

SHC experienced rapid growth over the past
several years and we anticipate future expansion and may not be able to continue to effectively manage our operations. Management of a rapidly growing business depends on a number of factors, including our ability to (i) initiate, develop and
maintain client relationships and marketing operations, (ii) recruit, motivate and retain qualified management and hourly personnel, (iii) rapidly identify, acquire or lease suitable service center facilities on acceptable terms and
complete build-outs of such facilities in a timely and economic fashion, (iv) maintain the quality of the services and products that we provide to our clients, and (v) deploy appropriate technology. Rapid growth can be expected to continue
to place a significant strain on our management, operations, employees and resources. There can be no assurance that we will be able to effectively manage our expanding operations or achieve planned growth on a timely or profitable basis. If we were
unable to manage our business effectively, our business, results of operations and financial condition would be materially adversely affected.



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Our operating results are subject to fluctuation because our contracts are primarily short term and subject to early
termination by our clients.

We enter into one to five year contracts, most of which are typically one-year contracts renewable on an
annual basis. Although many of such contracts require the client to pay a contractually agreed amount based on a minimum level of expected volume, the contracts do not assure us a specific level of revenues and they generally do not designate us as
the clients exclusive service provider. There can be no assurance that we can renew or extend our contracts with our clients. Although many of such contracts require the client to pay a contractually agreed upon amount in the event of early
termination, there can be no assurance that we will be able to collect such amount or that such amount, if received, will sufficiently compensate us for the significant investment often times we have made to support the cancelled program or for the
revenues we may lose as a result of the early termination.

We may be unable to cost-effectively attract and retain qualified personnel, which could
materially increase our costs.

Our business will also be dependent on our ability to recruit, hire, train and retain highly qualified
technical and managerial personnel, including individuals with significant experience in the industries targeted by us. The CRM industry is labor intensive and is characterized by high personnel turnover. Any increase in our employee turnover rate
would increase our recruiting and training costs, decrease operating effectiveness and productivity and delay or deter us from taking on additional business. Also, the introduction of significant new clients or the implementation of new large-scale
programs may require us to recruit, hire and train personnel at an accelerated rate. In addition, certain of our facilities are located in geographic areas with relatively low unemployment rates, thus potentially making it more difficult and costly
to attract and retain qualified personnel. There can be no assurance that we will be able to continue to hire, train and retain sufficient qualified personnel to adequately staff our business.

A decline in end-user acceptance of our clients products will decrease demand for our services and could have a material adverse effect on our business.

We charge our clients based on the number of inbound calls that we provide, or the amount of time our service professionals spend with
end-users relating to our clients products. To the extent there is a decline in spending for our clients products, whether as a result of a decline in product acceptance, the technology, consumer electronics or communications industries,
or the economy in general, our business will be adversely affected. There are a number of factors relating to discretionary consumer and business spending, including economic conditions affecting disposable income (such as employment, business
conditions, taxation and interest rates) and the ability of our clients to sell their products, most of which are outside of our control. There can be no assurance that spending for our clients products will not be affected by adverse economic
conditions, thereby affecting our business, results of operations and financial condition.

We may engage in future acquisitions that could disrupt our
business, cause dilution to our stockholders and harm our financial position and operating results.

We intend to pursue acquisitions
of companies or assets in order to enhance our market position and/or expand the types of BPO services that we offer to customers. We may not be able to find suitable acquisition candidates and we may not be able to consummate such acquisitions on
favorable terms, if at all. If we do complete acquisitions, we cannot be sure that they will ultimately strengthen our competitive position or that clients, security analysts or investors will not view them negatively. Acquisitions may disrupt our
ongoing operations, divert management from day-to-day responsibilities, increase our expenses and harm our operating results or financial condition. Future acquisitions may reduce our cash available for operations and other uses and could result in
an increase in amortization expense, potentially dilutive issuances of equity securities or the incurrence of debt, which could harm our business, financial condition and operating results.

We may not be able to achieve incremental revenue growth or increased profitability.

Our strategy calls for us to achieve incremental revenue growth and increased profitability through initiatives, such as opening new off-shore service locations in places like China, the Philippines, Eastern Europe,
South America, Latin America, Malaysia and Singapore, the addition or expansion of services, such as supply chain management, warranty services, credit and collection services, human resource and claims management, and language translation and
interpretation services, the introduction of front-end technology-driven service solutions for self-help, home-shoring of agents and other technical assistance, and operational improvements



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in areas such as employee attrition, site capacity, transfer of certain administrative services to off-shore locations, utilization rates, use of technology
and other operating metrics. However, there can be no assurance that we will not encounter difficulties or delays in implementing these initiatives, and any such difficulties or delays would adversely affect our future operating results.

A system failure could cause delays or interruptions of service, which could cause us to lose clients.

Our operations are dependent upon our ability to protect our service centers, computer and telecommunications equipment and software systems against
damage from fire, power loss, telecommunications interruption or failure, natural disaster and other similar events. In the event we experience a temporary or permanent interruption at one or more of our service centers and/or datacenters, through
casualty, operating malfunction or otherwise, our business could be materially adversely affected and we may be required to pay contractual damages to some clients or allow some clients to terminate or renegotiate their contracts with us. While we
maintain property and business interruption insurance, such insurance may not adequately compensate us for all losses that we may incur.

To be successful, we will need to continue to provide our clients with reliable service. Some of the events that could adversely affect our ability to deliver reliable service include: physical damage to our network operations centers;
disruptions beyond our control; sabotage or terrorist attacks; power surges or outages; and software defects.

Although we maintain general
liability insurance, including coverage for errors and omissions, there can be no assurance that our existing coverage will continue to be available on reasonable terms or will be available in amounts sufficient to cover one or more large claims, or
that the insurer will not disclaim coverage as to any future claim. The occurrence of errors could result in a loss of data to us or our clients, which could cause a loss of revenues, failure to achieve product acceptance, increased insurance costs,
product returns, legal claims, including product liability claims, against us, delays in payment to us by clients, increased service and warranty expenses or financial concessions, diversion of resources, injury to our reputation, or damages to our
efforts to build brand awareness, any of which could have a material adverse effect on our market share and, in turn, our business, results of operations and financial condition.

We depend on third-party technology, which if it should become unavailable, contain defects, or infringe on another partys intellectual property rights, could result in increased costs or delays in the
production and improvement of our products or result in liability claims.

We license critical third-party software that we incorporate
into our services on a non-exclusive basis. If our relations with any of these third-party software providers are impaired or the third-party software infringes upon another partys intellectual property rights, our business could be harmed.
The operation of our business would also be impaired if errors occur in the third-party software that it utilizes. It may be more difficult for us to correct any defects in third-party software because the software is not within our control.
Accordingly, our business could be adversely affected in the event of any errors in this software. There can be no assurance that these third parties will continue to invest the appropriate levels of resources in their products and services to
maintain and enhance the capabilities of their software. If the cost of licensing any of these third-party software products increases, our gross margin levels could significantly decrease.

We may not be able to compete effectively against competitors with greater resources or capabilities and may lose business if clients decide to reduce the amount of
services outsourced.

The market in which we compete is highly competitive and fragmented. We expect competition to persist and
intensify in the future. Our competitors include small firms offering specific applications, divisions of large entities, large independent firms and, most significantly, the in-house operations of clients or potential clients. A number of
competitors have greater financial, technological and other capabilities and resources than we do. Moreover, there can be no assurance that additional competitors with greater resources will not enter the market.

Because we compete with the in-house operations of existing or potential clients, our business, results of operations and financial condition could be
adversely affected if our existing clients decide to provide in-house CRM and other BPO solutions that currently are outsourced or if potential clients retain or increase their in-house customer service and product support capabilities. In addition,
competitive pressures from current or future competitors or in-house operations could cause our services to lose market acceptance or result in significant price erosion, which would have a material adverse effect upon our business, results of
operations and financial condition. Certain of our customers may in the future seek to consolidate services provided by us, which may in turn reduce the amount of work we perform for them.



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Some of these existing and future competitors have greater financial, human and other resources, longer
operating histories, greater technological expertise, more recognizable brand names and more established relationships than we do in the industries that we currently serve or may serve in the future. Some of our competitors may enter into merger,
strategic or commercial relationships among themselves or with larger, more established companies in order to increase their ability to address client needs. Increased competition, pricing pressure or loss of market share could reduce our operating
margin, which could harm our business, results of operations and financial condition.

Our success may be affected by our ability to complete and
integrate new service centers on a timely and cost effective basis.

We intend to continue to pursue a growth strategy of opening new
service centers. We expect that some of these new service centers will be located off-shore and some may be in jurisdictions like South America, the Middle East, China and the Philippines where we have not done business in the past. The rate of new
service center openings is subject to various contingencies, many of which are beyond our control. These contingencies include, among others, our ability to secure suitable sites on a timely basis and on satisfactory terms, our ability to hire,
train and retain qualified personnel, the availability of adequate capital resources and the successful integration of new service centers into existing operations and local regulatory matters and customs. A new service center involves significant
capital expenditures for both the acquisition and improvement of the site. Each service center must ramp up in utilization to become profitable, which can typically take 6-12 months to achieve. There can be no assurance that we can open new service
centers on a timely or cost effective basis or that once opened, the service centers will be profitable.

Our international operations and sales subject
us to risks associated with unexpected events.

We conduct business various countries outside of the United States, including Canada,
the Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, Bulgaria, India, the Philippines, El Salvador, Tunisia, the Dominican Republic and Costa Rica. Our international operations accounted for approximately
56.5% of SHCs revenues for the nine months ended September 30, 2008 and 74.2% for the year ended December 31, 2007. A key component of our growth strategy is our continued international expansion, especially in lower-cost labor
markets, such as China, India, the Philippines, Eastern Europe, the Middle East, South America, Latin America, Malaysia and Singapore. There can be no assurance that we will be able to successfully market, sell and deliver our services in
international markets, or that we will be able to successfully expand international operations. The international reach of our business could cause us to be subject to unexpected, uncontrollable and rapidly changing events and circumstances. The
following factors, among others, could adversely affect our business and earnings:



| |  |  | failure to properly comply with foreign laws and regulations applicable to our foreign activities including, without limitation, employment law requirements;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | compliance with multiple and potentially conflicting regulations in the countries where we operate, including employment laws, and intellectual property
requirements;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties in managing foreign operations and appropriate levels of staffing;
| | - |  | -------------------------------------------------------------------------------



| |  |  | longer collection cycles;
| | - |  | -------------------------



| |  |  | seasonal reductions in business activities, particularly throughout Europe;
| | - |  | ---------------------------------------------------------------------------



| |  |  | proper compliance with local tax laws which can be complex and may result in unintended adverse tax consequences;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | anti-American sentiment due to the war in Iraq and other American policies that may be unpopular in certain countries;
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties in enforcing agreements through foreign legal systems;
| | - |  | -------------------------------------------------------------------



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| |  |  | fluctuations in exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars of services provided by us in foreign markets
where payment for our products and services is made in the local currency and revenues are earned in U.S. dollars or other currency;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in general economic and political conditions in countries where we operate;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | restrictions on downsizing operations in Europe and other jurisdictions (i.e. regulatory or union restrictions) and expenses and delays associated with any such
activities; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes to or elimination of the international tax holiday for companies doing business in India.
| | - |  | -------------------------------------------------------------------------------------------------

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and
other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our international operations and reduce our international sales, adversely affecting our business.

Our business may not develop in ways that we currently anticipate due to negative public reaction to off-shore outsourcing and recently proposed legislation.

We have based our growth strategy on certain assumptions regarding our industry, services and future demand in the market for our
services. However, the trend to outsource business processes may not continue and could reverse. Off-shore outsourcing is a politically sensitive topic in the U.S. and elsewhere. For example, many organizations and public figures in the U.S. have
publicly expressed concern about a perceived association between off-shore outsourcing providers and the loss of jobs in the U.S.

There
has been recent publicity about some negative experiences that organizations have had with off-shore outsourcing, such as theft and misappropriation of sensitive client data. Current or prospective clients may elect to perform such services
themselves or may be discouraged from transferring these services from onshore to off-shore providers to avoid negative perceptions that may be associated with using an off-shore provider. Any slowdown or reversal of existing industry trends towards
off-shore outsourcing would seriously harm our ability to compete effectively with competitors that operate solely out of facilities located in the U.S.

A variety of U.S. federal and state legislation has been proposed that, if enacted, could restrict or discourage U.S. companies from outsourcing services outside the U.S. For example, legislation has been proposed
that would require off-shore providers of services requiring direct interaction with clients customers to identify to clients customers where the off-shore provider is located. Because substantially all of our clients are located in the
U.S., any expansion of existing laws or the enactment of new legislation restricting off-shore outsourcing could harm our business, results of operations and financial condition. It is possible that legislation could be adopted that would restrict
U.S. private sector companies that have federal or state government contracts from outsourcing their services to off-shore service providers. This would also affect our ability to attract or retain clients that have these contracts.

Our financial results may be impacted by significant fluctuations in foreign currency exchange rates.

A substantial amount of our operating costs is incurred in foreign currencies. In recent periods, the U.S. dollar has dropped in value relative to other
currencies and therefore our cost of providing services has increased accordingly. Any continued significant fluctuations in the currency exchange rates between the U.S. dollar and the currencies of countries in which we operate may affect our
business, results of operations and financial condition. With the exception of certain hedging relating to the Canadian dollar and the Indian rupee, we are not currently engaged in other currency hedging transactions.

Our revenues and costs are subject to quarterly variations that may adversely affect quarterly financial results.

We have experienced, and in the future could experience, quarterly variations in revenues as a result of a variety of factors, many of which are outside
our control, including:



| |  |  | the timing of new client contracts;
| | - |  | -----------------------------------



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| |  |  | the timing of new service offerings or modifications in client strategies;
| | - |  | --------------------------------------------------------------------------



| |  |  | our ability to attract and retain and increase sales to existing customers;
| | - |  | ---------------------------------------------------------------------------



| |  |  | the timing of acquisitions of businesses and products by us and our competitors;
| | - |  | --------------------------------------------------------------------------------



| |  |  | our ability to effectively ramp new solution centers;
| | - |  | -----------------------------------------------------



| |  |  | product and price competition;
| | - |  | ------------------------------



| |  |  | changes in our operating expenses;
| | - |  | ----------------------------------



| |  |  | software defects or other product quality problems;
| | - |  | ---------------------------------------------------



| |  |  | the ability to implement new technologies on a timely basis;
| | - |  | ------------------------------------------------------------



| |  |  | the expiration or termination of existing contracts;
| | - |  | ----------------------------------------------------



| |  |  | the timing of increased expenses incurred to obtain and support new business;
| | - |  | -----------------------------------------------------------------------------



| |  |  | currency fluctuations; and
| | - |  | --------------------------



| |  |  | changes in our revenue mix among our various service offerings.
| | - |  | ---------------------------------------------------------------

In addition, our planned staffing levels, investments and other operating expenditures are based on revenue forecasts provided by our clients. If revenues were below expectations in any given quarter, our business,
results of operations and financial condition would likely be materially adversely affected for that quarter.

Our financial results may be adversely
affected by increases in labor-related costs.

Because a significant portion of our operating costs relate to labor costs, an increase
in U.S. or foreign wages, costs of employee benefits or taxes could have a material adverse effect on our business, results of operations and financial condition. For example, over the past several years, healthcare costs have increased at a rate
much greater than that of general cost or price indices. In addition, we fund payroll and payroll related expenses in local currencies, many of which have recently increased in value relative to the U.S. dollar. Increases in our pricing may not
fully compensate us for increases in labor and other costs incurred in providing services. Other of our facilities are located in jurisdictions, such as France, Italy and Germany, where the labor laws make it difficult or expensive to temporarily or
permanently lay off hourly workers. Such laws will make it more expensive for us to respond to adverse economic conditions. There can be no assurance that we will be able to increase our pricing or reduce our workforce to fully compensate for the
increases in the costs to provide services.

Our profitability will be adversely affected if we do not maintain sufficient capacity utilization.

Our profitability is influenced significantly by our capacity utilization of our service centers. Because our business consists of inbound
contacts from end-users, we have no control of when or how many contacts are made. Moreover, we have significantly higher utilization during peak (weekday) periods than during off-peak (night and weekend) periods and therefore we need to reserve
capacity at our service centers to anticipate peak periods. In the future, we may consolidate or close under-performing service centers in order to maintain or improve targeted utilization and margins. In the event we close service centers in the
future, we may be required to record restructuring or impairment charges, which could adversely impact our business, results of operations and financial condition. There can be no assurance that we will be able to achieve or maintain optimal service
center capacity utilization.



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|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (amounts in thousands except per share amounts)
|------- | -----------------------------------------------------------------------------------------------------------

On August 7, 2008, pursuant to the terms of the Preferred Stock Purchase Agreement, we issued to Ares 150 shares of our Series A Preferred Stock for
an aggregate purchase price of $150,000. As of October 31, 2008, Ares beneficially owned 72.5% of the issued and outstanding shares of our common stock (assuming conversion of the outstanding Series A Preferred Stock and no exercise of our
warrants to purchase common stock). The Series A Preferred Stock is convertible at the option of Ares into shares of common stock of we at an initial conversion price of $6.00 per share, subject to adjustment for stock dividends, subdivisions,
reclassifications, combinations or similar type events; bears an annual dividend rate of 3% calculated semi-annually (payable in additional stated value or cash at SGSs option); is redeemable at the holders option after seven years; and
will have the same voting rights as SGSs common stock.

Use of Proceeds

On October 23, 2007, we consummated our IPO of 31,250 units. Each unit consists of one share of our common stock and one warrant entitling the
holder to purchase from us one share of our common stock at an exercise price of $6.00. The units were sold at an offering price of $8.00 per unit, generating total gross proceeds of $250,000, or approximately $231,245 in net proceeds after
deducting approximately $18,505 in underwriting fees and offering expenses (such as legal, regulator, printing and accounting fees) and $250 in working capital. Deutsche Bank Securities Inc. acted as representative of the underwriters. The
securities sold in the IPO were registered under the Securities Act of 1933, as amended, on a registration statement on Form S-1 (No. 333-144447) that was declared effective on October 17, 2007.

Net proceeds of $246,300 from the private placement of our founder warrants and the IPO were deposited into a trust account at Banc of America LLC,
maintained by Continental Stock Transfer & Trust Company, as trustee, which amount included $7,500 of underwriters deferred discount. Up to $3,250 of the interest earned on the trust account (net of taxes payable on all interest
income earned on the trust account) has been released to us to cover working capital requirements. None of the remaining net proceeds were paid, directly or indirectly, to directors, officers, persons owning 10% or more of our equity securities, or
any of our other affiliates.

We incurred actual costs in connection with our IPO approximately as follows:



|                                       |  |   |      
|-------------------------------------- |  | - | -----
|Initial Trustees and escrow agent fee |  | $ | 13   
|Legal fees and expenses                |  |   | 594  
|Printing and engraving expenses        |  |   | 94   
|Accounting fees and expenses           |  |   | 74   
|SEC registration fee                   |  |   | 16   
|FINRA filing fee                       |  |   | 53   
|AMEX listing fees and expenses         |  |   | 70   
|Miscellaneous                          |  |   | 91   
|                                       |  |   |      
|Total                                  |  | $ | 1,005
|                                       |  |   |      

From October 17, 2007 through September 30, 2008, we incurred additional expenses of
$739, which consisted of director and officer insurance and other insurance, legal and accounting fees unrelated to our IPO, and general and administrative costs (including travel and costs related to searching for an acquisition target). We also
incurred $113 of expenses paid to Trillium, for our office space and administrative services through September 30, 2008. We incurred expenses of $203 for repayment of the notes payable and related interest to R. Scott Murray, Lloyd Linnell,
Kevin T. OLeary and Paul Joubert (certain of our founding stockholders), which loans were repaid in full, with interest, and cancelled. We also incurred expenses of $54 for the purchase of equipment and $2,564 related to deferred transaction
costs for due diligence work and professional fees for our acquisition of SHC and the issue of the Convertible Preferred Stock. We also accrued an income tax provision of $1,830 for the period from October 17, 2007 to September 30, 2008 of
which $840 has been paid.



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Payments of expenses were to persons other than our directors or officers (or their associates), persons
owning 10% or more of our equity securities, or our affiliates, except with respect to the repayment of the promissory notes on October 31, 2007.



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

We held our
annual meeting of stockholders on July 29, 2008. At the meeting, our stockholders:



| |  |  | Adopted the Agreement and Plan of Merger, dated as of January 27, 2008, as amended and restated on June 2, 2008, pursuant to which we acquired SHC.
Holders of 27,670,888 shares of our common stock voted in favor of this proposal. Holders of 9,247,954 shares voted against this proposal. No holders abstained from voting on this matter.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Approved the issuance of 150,000 shares of our Series A Convertible Preferred Stock in a private placement financing. Holders of 29,705,163 shares of our common
stock voted in favor of this proposal. Holders of 4,713,679 shares voted against this proposal. Holders of 2,500,000 shares abstained from voting on this matter.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Approved the increase the number of our authorized shares of capital stock from 120,000,000 to 150,000,000. Holders of 28,542,163 shares of our common stock voted
in favor of this proposal. The holders of 4,626,679 shares voted against this proposal. Holders of 3,750,000 shares abstained from voting on this matter.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Approved the charter amendment to, among other things, change our name from Global BPO Services Corp. to Stream Global Services, Inc. Holders of 28,455,163 shares
of our common stock voted in favor of this proposal. Holders of 4,713,679 shares voted against this proposal. Holders of 3,750,000 shares abstained from voting on this matter.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Adopted of the 2008 stock incentive plan. Holders of 28,542,163 shares of our common stock voted in favor of this proposal. Holders of 4,626,679 shares voted
against this proposal. Holders of 3,750,000 shares abstained from voting on this matter.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Elected Paul G. Joubert and Stephen D.R. Moore as Class I directors. Holders of 32,105,652 shares of our common stock voted in favor of Mr. Jouberts
election. Holders of 5,112,083 shares withheld their votes for the election of Mr. Joubert. Holders of 32,105,652 shares of our common stock voted in favor of Mr. Moores election. Holders of 5,112,083 shares withheld their votes for
the election of Mr. Moore. The terms of the following directors continued after the annual meeting: R. Scott Murray, Kevin T. OLeary and G. Drew Conway.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|ITEM 6. | EXHIBITS
|------- | --------



|            |  |                                                                                                                                                                          
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                              
|14          |  | Code of Business Conduct and Ethics (incorporated by reference to our Current Report on Form 8-K filed on September 26, 2008 with the Securities and Exchange Commission)
|            | 
|31.1*       |  | Principal Executive Officer  Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                    
|            | 
|31.2*       |  | Principal Financial Officer  Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                    
|            | 
|32.1*       |  | Principal Executive Officer  Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                    
|            | 
|32.2*       |  | Principal Financial Officer  Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                    



|* | Filed herewith.
|- | ---------------



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.



|                  |  |                              |  |                                                                                                  
|----------------- |  | ---------------------------- |  | -------------------------------------------------------------------------------------------------
|                  |  | STREAM GLOBAL SERVICES, INC.
|                  |  |                             
|November 19, 2008 |  | By:                          |  | /s/ R. Scott Murray                                                                              
|                  |  |                              |  | R. Scott Murray                                                                                  
|                  |  |                              |  | Chairman and Chief Executive Officer (Principal
Executive Officer)                               
|                  |  |                             
|November 19, 2008 |  | By:                          |  | /s/ Stephen C. Farrell                                                                           
|                  |  |                              |  | Stephen C. Farrell                                                                               
|                  |  |                              |  | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)



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##### Table of Contents

Exhibit Index



|            |  |                                                                                                                                                                          
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                              
|14          |  | Code of Business Conduct and Ethics (incorporated by reference to our Current Report on Form 8-K filed on September 26, 2008 with the Securities and Exchange Commission)
|            | 
|31.1*       |  | Principal Executive Officer  Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                    
|            | 
|31.2*       |  | Principal Financial Officer  Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                    
|            | 
|32.1*       |  | Principal Executive Officer  Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                    
|            | 
|32.2*       |  | Principal Financial Officer  Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                    



|* | Filed herewith.
|- | ---------------



50