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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A

AMENDMENT NO. 1



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(Mark
One)



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

For the fiscal year ended December 31, 2006



| ̈ | 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 0-27560



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ACT Teleconferencing, Inc.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Colorado                                                       |  | 84-1132665                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
|                                                               | 
|1526 Cole Boulevard, Suite 300, Golden, CO                     |  | 80401                            
|(Address of principle executive offices)                       |  | (Zip Code)                       
|                                                               | 
|303-235-3500                                                   |  | 303-235-4399                     
|(Registrants telephone number)                                |  | (Registrants facsimile number)  

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



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|None                |  | None                                     



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

Common stock, no par value

(Title of Class)



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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ̈No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ̈No  x

Note: Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act from their obligations under those sections.

Indicate by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes  x    No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

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

Large accelerated
filer ̈Accelerated filer ̈Non-accelerated filer  x

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

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2006 was approximately $1 million based on the closing price of the Companys common stock on the pink
sheets of $.06 per share.

The number of shares outstanding of the Companys Common Stock, no par value was 17,055,325 shares as of
March 19, 2007.



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ACT Teleconferencing, Inc.

Table of Contents



|         |  |                                             |  |         
|-------- |  | ------------------------------------------- |  | --------
|         |  |                                             |  | Page No.
|         |  | Explanatory Note                            |  | 1       
|PART II. |  |                                             |  |         
|Item 8   |  | Financial Statements and Supplementary Data |  | F-1     
|PART IV. |  |                                             |  |         
|Item 15  |  | Exhibits and Financial Statement Schedules  |  |         



i



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EXPLANATORY NOTE

ACT Teleconferencing, Inc. is filing this Amendment No. 1 on Form 10-K/A to its Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, which was filed with the Securities and Exchange Commission on March 30, 2007, solely (i) to correct the city from which Rodefer Moss & Co, PLLC, ACT Teleconferencings
Independent Registered Public Accounting Firm, issued its report on ACT Teleconferencing, Inc.s audited financial statements and (ii) to file as Exhibit 23.2 the consent of Rodefer Moss & Co, PLLC (and to update the exhibit list and
exhibit index in respect thereof), which was inadvertently omitted from the original filing of the Annual Report on Form 10-K. No other changes are being effected by this filing; therefore, information not affected by this amendment is unchanged and
reflects the disclosures made at the time of the original filing.

As required, currently-dated certifications from our Principal Executive
and Principal Financial Officers have been included as exhibits to this amendment. The information contained in this amendment has not been updated to reflect events and circumstances occurring since its original filing. Such matters have been or
will be addressed in reports filed with the Commission (other than this amendment) subsequent to the date of the original filing. Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, ACT Teleconferencing, Inc. has restated
in its entirety each item of its originally filed annual report on Form 10-K affected by this amendment.

PART II



|Item 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------

The Financial Statements and Supplementary Data of ACT Teleconferencing, Inc. beginning on page F-1 hereto are incorporated herein by reference.

PART IV



|Item 15. | Exhibits and Financial Statement Schedules
|-------- | ------------------------------------------

(a)(1), (2) The Financial Statements and Schedule I Condensed Financial Information of Registrant
and Schedule II Valuation and Qualifying Accounts listed on the index on Page F-1 following are included herein by reference. All other schedules are omitted, either because they are not applicable or because the required information is shown
in the financial statements or the notes thereto.

(a) (3) Exhibits:

Index to Exhibits

All exhibits are filed electronically or incorporated by reference.



|            |  |                                                                                                                                                                                                                                                                                                                                                                                         
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                             
|3.1        |  | Amended and Restated Articles of Incorporation of ACT Teleconferencing, Inc.                                                                                                                                                                                                                                                                                                            
|            | 
|3.2         |  | Amended and Restated Bylaws of ACT Teleconferencing, Inc. (Incorporated by reference, attached as Exhibit 3.2.1 to our Form 10-Q for the quarter ended June 30, 2006, filed with the Securities
and Exchange Commission on August 14, 2006, File No. 0-27560).                                                                                                                          
|            | 
|4.1         |  | Form of specimen certificate for common stock of ACT Teleconferencing, Inc. (Incorporated by reference, attached as Exhibit 4.1 to our Registration Statement on Form SB-2, filed with the
Securities and Exchange Commission on October 10, 1995, and amendments to our Form SB-2, File No. 33-97908-D).                                                                               
|            | 
|10.1**      |  | Stock Option Plan of 1991, as amended, authorizing 400,000 shares of common stock for issuance under the plan (Incorporated by reference, attached as an Exhibit 10.1 to our Registration
Statement on Form SB-2, filed with the Securities and Exchange Commission on October 10, 1995, and amendments to our Form SB-2, File No. 33-97908-D).                                         
|            | 
|10.2**      |  | Form of Stock Option Agreement (Incorporated by reference, attached as Exhibit 10.2 to our Registration Statement on Form SB-2, filed with the Securities and Exchange Commission on October 10,
1995, and amendments to our Form SB-2, File No. 33-97908-D).                                                                                                                           
|            | 
|10.3**      |  | Stock Option Plan of 1996, as amended (Incorporated by reference, attached as Exhibit 4.6 to our Registration Statement on Form S-8, filed with the Securities and Exchange Commission on July 2,
1998, File 333-58403).                                                                                                                                                                
|            | 
|10.4**      |  | Stock Option Plan of 2000, as amended (Incorporated by reference, attached as Exhibit 10.28 to our Registration Statement on Form S-1, filed with the Securities and Exchange Commission on
December 3, 2001, File No. 333-74438).                                                                                                                                                      
|            | 
|10.5**      |  | 2004 Equity Incentive Plan, as amended (Incorporated by reference, attached as Appendix D to our definitive proxy statement on Schedule 14A, filed with the Securities and Exchange Commission on
November 3, 2006, File No. 000-27560).                                                                                                                                                
|            | 
|10.6**     |  | Form of Stock Option Agreement under 2004 Equity Incentive Plan, as amended                                                                                                                                                                                                                                                                                                             
|            | 
|10.7        |  | Agreement for Videoconferencing Equipment and Services among ACT Videoconferencing, Inc. and the GTE Telephone Operating Companies named therein, dated October 1, 1998 (Incorporated by
reference, attached as Exhibit 10.27 to our Form 10-QSB for the quarter ending September 30, 1998, filed with the Securities and Exchange Commission on November 16, 1998, File No. 000-27560).
|            | 
|10.8        |  | Service order attachment signed March 15, 2001, between ACT Teleconferencing Services, Inc. and AT&T Corporation for the supply of domestic voice/data services (Incorporated by reference,
attached as Exhibit 10.29 to our Registration Statement on Form S-1, filed with the Securities and Exchange Commission on December 3, 2001, File No. 333-74438).                            
|            | 
|10.9        |  | Videoconference Services Agreement between ACT Videoconferencing and Bristol Meyers Squibb Company (Incorporated by reference, attached as Exhibit 10.42 to our report on Form 10-Q filed with the
Securities and Exchange Commission on May 15, 2002, File No. 000-27560).                                                                                                             
|            | 
|10.10       |  | Loan and Security Agreement with Silicon Valley Bank of November 19, 2004 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K filed with the Securities and Exchange
Commission on November 19, 2004, File No. 000-27560).                                                                                                                                   



1



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|        |  |                                                                                                                                                                                                                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10.1 |  | Forbearance and Amendment to Loan and Security Agreement with Silicon Valley Bank dated May 31, 2005 (Incorporated by reference, attached as Exhibit 10.20.1 to our report on Form 10-K filed
with the Securities and Exchange commission on April 17, 2006, File No. 000-27560).                                                 
|        | 
|10.10.2 |  | Second Forbearance, Consent and Amendment to Loan and Security Agreement with Silicon Valley Bank dated July 22, 2005 (Incorporated by reference, attached as Exhibit 10.20.2 to our report on
Form 10-K filed with the Securities and Exchange commission on April 17, 2006, File No. 000-27560).                                
|        | 
|10.10.3 |  | Third Forbearance to Loan and Security Agreement with Silicon Valley Bank dated August 31, 2005 (Incorporated by reference, attached as Exhibit 10.20.3 to our report on Form 10-K filed with the
Securities and Exchange commission on April 17, 2006, File No. 000-27560).                                                      
|        | 
|10.10.4 |  | Fourth Forbearance and Amendment to Loan and Security Agreement with Silicon Valley Bank dated October 31, 2005 (Incorporated by reference, attached as Exhibit 10.7 to our report on Form 8-K
filed with the Securities and Exchange commission on November 3, 2005, File No. 000-27560).                                        
|        | 
|10.10.5 |  | Fifth Forbearance and Amendment to Loan and Security Agreement with Silicon Valley Bank dated December 29, 2005 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K
filed with the Securities and Exchange commission on January 20, 2006, File No. 000-27560).                                        
|        | 
|10.10.6 |  | Consent under Loan and Security Agreement with Silicon Valley Bank dated October 31, 2005 (Incorporated by reference, attached as Exhibit 10.20.4 to our report on Form 10-K filed with the
Securities and Exchange commission on April 17, 2006, File No. 000-27560).                                                            
|        | 
|10.10.7 |  | Waiver and Amendment to Loan and Security Agreement with Silicon Valley Bank dated June 12, 2006 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 10-Q filed with the
Securities and Exchange commission on August 14, 2006, File No. 000-27560).                                                       
|        | 
|10.11   |  | Loan Agreement dated June 30, 2006 with Dolphin Direct Equity Partners, LP (Incorporated by reference, attached as Exhibit 10.2 to our report on Form 10-Q filed with the Securities and Exchange
commission on August 14, 2006, File No. 000-27560).                                                                             
|        | 
|10.11.1 |  | Form of Term Promissory Note under the Loan Agreement with Dolphin Direct Equity Partners, LP (Incorporated by reference, attached as Exhibit 10.5 to our report on Form 10-Q filed with the
Securities and Exchange commission on August 14, 2006, File No. 000-27560).                                                          
|        | 
|10.12   |  | Security Agreement dated June 30, 2006, among ACT Teleconferencing, Inc. and its domestic operating subsidiaries and Dolphin Direct Equity Partners, LP (Incorporated by reference, attached as
Exhibit 10.3 to our report on Form 10-Q filed with the Securities and Exchange commission on August 14, 2006, File No. 000-27560).
|        | 
|10.13   |  | Pledge Agreement dated June 30, 2006 between ACT Teleconferencing, Inc. and Dolphin Direct Equity Partners, LP (Incorporated by reference, attached as Exhibit 10.4 to our report on Form 10-Q
filed with the Securities and Exchange commission on August 14, 2006, File No. 000-27560).                                         
|        | 
|10.14   |  | Subordination Agreement dated June 30, 2006, among ACT Teleconferencing, Inc., Dolphin Direct Equity Partners, LP, and Silicon Valley Bank (Incorporated by reference, attached as Exhibit 10.6 to
our report on Form 10Q filed with the Securities and Exchange commission on August 14, 2006, File No. 000-27560).              
|        | 
|10.15   |  | Securities Purchase Agreement between ACT Teleconferencing, Inc. and Dolphin Direct Equity Partners, LP dated June 30, 2005 (Incorporated by reference, attached as Exhibit 10.1 to our report on
Form 8-K filed with the Securities and Exchange Commission on July 8, 2005, File No. 000-27560).                                
|        | 
|10.16   |  | Investor Rights Agreement between ACT Teleconferencing, Inc. and Dolphin Direct Equity Partners, LP dated June 30, 2005 (Incorporated by reference, attached as Exhibit 10.3 to our report on Form
8-K filed with the Securities and Exchange Commission on August 24, 2005, File No. 000-27560).                                 
|        | 
|10.16.1 |  | Amendment to Investor Rights Agreement between ACT Teleconferencing, Inc. and Dolphin Direct Equity Partners, LP dated April 13, 2006 (Incorporated by reference, attached as Exhibit 10.23.1 to
our report on Form 10-K filed with the Securities and Exchange Commission on April 17, 2006, File No. 000-27560).                
|        | 
|10.17   |  | Management Services Agreement between ACT Teleconferencing, Inc. and Dolphin Advisors, LLC, dated June 30, 2005 (Incorporated by reference, attached as Exhibit 10.4 to our report on Form 8-K
filed with the Securities and Exchange Commission on August 24, 2005, File No. 000-27560).                                         
|        | 
|10.18** |  | Employment Agreement between ACT Teleconferencing, Inc. and Gene Warren dated August 19, 2005 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K filed with the
Securities and Exchange Commission on August 24, 2005, File No. 000-27560).                                                           



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|        |  |                                                                                                                                                                                                                                                                                        
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.19** |  | Form of Employment Agreement between ACT Teleconferencing, Inc. and executive officers, dated August 19, 2005 (Incorporated by reference, attached as Exhibit 10.2 to our report on Form 8-K filed
with the Securities and Exchange Commission on August 24, 2005, File No. 000-27560).
|        | 
|10.20** |  | Letter of Employment from ACT Teleconferencing, Inc. to Rick Fresia dated November 29, 2006 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K filed with the
Securities and Exchange Commission on December 4, 2006, File No. 000-27560).                 
|        | 
|10.21   |  | Form of Director Indemnification Agreement (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K filed with the Securities and Exchange Commission on November 12, 2006,
File No. 000-27560).                                                                 
|        | 
|21      |  | ACT Teleconferencing, Inc. subsidiaries (Incorporated by reference, attached as Exhibit 21 to our annual report on Form 10-K for the year ended December 31, 2002, filed with the Securities and
Exchange Commission on April 15, 2003, File No. 000-27560).                           
|        | 
|23.1   |  | Consent of Hein & Associates LLP                                                                                                                                                                                                                                                       
|        | 
|23.2    |  | Consent of Rodefer Moss & Co., PLLC                                                                                                                                                                                                                                                    
|        | 
|31.1    |  | Rule 13a-14(a) certification of Principal Executive Officer                                                                                                                                                                                                                            
|        | 
|31.2    |  | Rule 13a-14(a) certification of Principal Financial Officer                                                                                                                                                                                                                            
|        | 
|32.1    |  | Section 1350 certification of Principal Executive Officer                                                                                                                                                                                                                              
|        | 
|32.2    |  | Section 1350 certification of Principal Financial Officer                                                                                                                                                                                                                              

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|** | Management contract or compensatory arrangement.
|-- | ------------------------------------------------



| | Previously filed as an exhibit to the Companys originally filed Annual Report on Form 10-K for the fiscal year ended December 31, 2006.
|- | ----------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                    |  |  |  |                            |  |                 |  |                          
|------------------- |  |  |  | -------------------------- |  | --------------- |  | -------------------------
|                    |  |  |  | ACT TELECONFERENCING, INC.
|                    |  |  | 
|Date: April 2, 2007 |  |  |  | By:                        |  | /s/ Rick Fresia
|                    |  |  |  |                            |  |                 |  | Rick Fresia              
|                    |  |  |  |                            |  |                 |  | (Chief Financial Officer)



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##### Table of Contents

ACT Teleconferencing, Inc.



|Item 15A. | ACT Teleconferencing, Inc. Index to Consolidated Financial Statements
|--------- | ---------------------------------------------------------------------

Contents



|                                                          |  |     
|--------------------------------------------------------- |  | ----
|Report of Independent Registered Public Accounting Firm   |  | F-2 
|Consolidated Balance Sheets                               |  | F-4 
|Consolidated Statements of Operations                     |  | F-5 
|Consolidated Statements of Shareholders Equity (Deficit) |  | F-6 
|Consolidated Statements of Cash Flows                     |  | F-7 
|Notes to Consolidated Financial Statements                |  | F-8 
|Schedule ICondensed Financial Information of Registrant  |  | F-29
|Schedule IIValuation and Qualifying Accounts             |  | F-33



F-1



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ACT Teleconferencing, Inc.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

ACT Teleconferencing, Inc. and Subsidiaries

Golden, Colorado

We have audited the accompanying consolidated balance sheet of ACT Teleconferencing, Inc. and Subsidiaries as of December 31, 2006 and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to
perform, an audit of its internal controls over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion.An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of ACT Teleconferencing, Inc. and Subsidiaries as of December 31, 2006 and the results of their operations and cash flows for the year then ended in conformity with accounting principles generally accepted in
the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.
As discussed in Note 1 to the consolidated financial statements, the Company reported net losses for 2005 and 2004 and reported net income in 2006 for the first time since 2000 and its total liabilities exceed its total assets. This raises
substantial doubt about the Companys ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our audit was made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedules listed in the index of
consolidated financial statements are presented for purposes of complying with the Securities and Exchange Commissions rules and are not a part of the basic consolidated financial statements. These schedules, as of and for the year ended
December 31, 2006, have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein
in relation to the basic consolidated financial statements taken as a whole.



|                       
|-----------------------
|Rodefer Moss & Co, PLLC
|Brentwood, Tennessee   
|March 30, 2007         



F-2



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ACT Teleconferencing, Inc.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

ACT Teleconferencing, Inc.

Golden, Colorado

We have audited the accompanying consolidated balance sheets of ACT Teleconferencing, Inc. and Subsidiaries as of December 31, 2005 and the related consolidated
statements of operations, changes in shareholders equity (deficit), and cash flows for each of the two years in the period ended December 31, 2005. These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in
accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the
consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of ACT Teleconferencing, Inc. and Subsidiaries as of December 31, 2005 and the results of their operations and
their cash flows for each of the two years in the period ended December 31, 2005 in conformity with the U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, its total
liabilities exceed its total assets, and the Company is not in compliance with debt covenants on its senior line of credit. This raises substantial doubt about the Companys ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this uncertainty.

Our audits were made for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. The schedules listed in the index of consolidated financial statements are presented for purposes of complying with the Securities and Exchange Commissions rules and are not part of the
basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data
related to the years ended 2005 and 2004 required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.



|                     
|---------------------
|HEIN & ASSOCIATES LLP
|                     
|Denver, Colorado     
|March 31, 2006       



F-3



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##### Table of Contents

ACT Teleconferencing, Inc.

Consolidated Balance Sheets

December 31, 2006 and 2005



|                                                                                                                                                                                                                                                                                                |  |      |         |   |      |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|(In thousands, except shares)                                                                                                                                                                                                                                                                   |  | 2006 |         |   | 2005 |  
|Assets                                                                                                                                                                                                                                                                                          |  |      |         |   |      |   |         |  
|Current assets:                                                                                                                                                                                                                                                                                 |  |      |         |   |      |   |         |  
|Cash and cash equivalents                                                                                                                                                                                                                                                                       |  | $    | 2,283   |   |      | $ | 1,653   |  
|Accounts receivable (net of allowance for doubtful accounts of $501 and $435)                                                                                                                                                                                                                   |  |      | 9,864   |   |      |   | 8,931   |  
|Prepaid expenses and other current assets                                                                                                                                                                                                                                                       |  |      | 1,590   |   |      |   | 822     |  
|                                                                                                                                                                                                                                                                                                |  |      |         |   |      |   |         |  
|Total current assets                                                                                                                                                                                                                                                                            |  |      | 13,737  |   |      |   | 11,406  |  
|Equipment:                                                                                                                                                                                                                                                                                      |  |      |         |   |      |   |         |  
|Telecommunications equipment                                                                                                                                                                                                                                                                    |  |      | 24,044  |   |      |   | 20,574  |  
|Software                                                                                                                                                                                                                                                                                        |  |      | 8,321   |   |      |   | 7,329   |  
|Office equipment                                                                                                                                                                                                                                                                                |  |      | 11,674  |   |      |   | 10,550  |  
|Less: accumulated depreciation and impairment                                                                                                                                                                                                                                                   |  |      | (34,655 | ) |      |   | (29,515 | )
|                                                                                                                                                                                                                                                                                                |  |      |         |   |      |   |         |  
|Total equipmentnet                                                                                                                                                                                                                                                                             |  |      | 9,384   |   |      |   | 8,938   |  
|Other assets:                                                                                                                                                                                                                                                                                   |  |      |         |   |      |   |         |  
|Goodwill                                                                                                                                                                                                                                                                                        |  |      | 1,032   |   |      |   | 1,045   |  
|Other long term assets                                                                                                                                                                                                                                                                          |  |      | 397     |   |      |   | 423     |  
|                                                                                                                                                                                                                                                                                                |  |      |         |   |      |   |         |  
|Total assets                                                                                                                                                                                                                                                                                    |  | $    | 24,550  |   |      | $ | 21,812  |  
|                                                                                                                                                                                                                                                                                                |  |      |         |   |      |   |         |  
|Liabilities and shareholders deficit                                                                                                                                                                                                                                                           |  |      |         |   |      |   |         |  
|Current liabilities:                                                                                                                                                                                                                                                                            |  |      |         |   |      |   |         |  
|Accounts payable                                                                                                                                                                                                                                                                                |  | $    | 3,725   |   |      | $ | 3,712   |  
|Accrued liabilities                                                                                                                                                                                                                                                                             |  |      | 4,924   |   |      |   | 5,394   |  
|Current portion of debt                                                                                                                                                                                                                                                                         |  |      | 2,907   |   |      |   | 3,245   |  
|Current portion of debt to related party                                                                                                                                                                                                                                                        |  |      | 500     |   |      |   | 7,000   |  
|Capital lease obligations due in one year                                                                                                                                                                                                                                                       |  |      |        |   |      |   | 140     |  
|Income tax liability  current and deferred                                                                                                                                                                                                                                                     |  |      |        |   |      |   | 57      |  
|                                                                                                                                                                                                                                                                                                |  |      |         |   |      |   |         |  
|Total current liabilities                                                                                                                                                                                                                                                                       |  |      | 12,056  |   |      |   | 19,548  |  
|Long-term debt                                                                                                                                                                                                                                                                                  |  |      | 661     |   |      |   | 470     |  
|Capital lease obligations due after one year                                                                                                                                                                                                                                                    |  |      |        |   |      |   |        |  
|Deferred income taxes                                                                                                                                                                                                                                                                           |  |      | 365     |   |      |   | 321     |  
|Commitments and contingenciesNotes 1, 4,13 and 16                                                                                                                                                                                                                                              |  |      |         |   |      |   |         |  
|Convertible redeemable preferred stock and accrued preferred dividends; each share convertible into 100 shares of common stock; 169,000 shares
authorized; 160,000 and 80,400 shares issued and outstanding in 2006 and 2005, respectively, liquidation preference $24,093 at December 31, 2006 |  |      | 23,020  |   |      |   | 7,824   |  
|Shareholders deficit                                                                                                                                                                                                                                                                           |  |      |         |   |      |   |         |  
|Common stock, no par value; 250,000,000 and 50,000,000 shares authorized, 17,137,225 and 16,878,548 shares issued and 17,055,325 and
16,796,648 outstanding in 2006 and 2005, respectively                                                                                                      |  |      | 51,714  |   |      |   | 51,566  |  
|Treasury stock, at cost (81,900 shares)                                                                                                                                                                                                                                                         |  |      | (241    | ) |      |   | (241    | )
|Accumulated deficit                                                                                                                                                                                                                                                                             |  |      | (67,605 | ) |      |   | (62,141 | )
|Accumulated other comprehensive income                                                                                                                                                                                                                                                          |  |      | 4,580   |   |      |   | 4,465   |  
|                                                                                                                                                                                                                                                                                                |  |      |         |   |      |   |         |  
|Total shareholders deficit                                                                                                                                                                                                                                                                     |  |      | (11,552 | ) |      |   | (6,351  | )
|                                                                                                                                                                                                                                                                                                |  |      |         |   |      |   |         |  
|Total liabilities and shareholders deficit                                                                                                                                                                                                                                                     |  | $    | 24,550  |   |      | $ | 21,812  |  
|                                                                                                                                                                                                                                                                                                |  |      |         |   |      |   |         |  

See accompanying notes to consolidated financial statements.



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##### Table of Contents

ACT Teleconferencing, Inc.

Consolidated Statements of Operations

For the years ended December 31, 2006, 2005, and 2004



|                                                                |  |      |            |   |      |   |            |      |  |   |            |  
|--------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|(In thousands, except shares and per share data.)               |  | 2006 |            |   | 2005 |   |            | 2004 | 
|Net revenues                                                    |  | $    | 53,621     |   |      | $ | 50,964     |      |  | $ | 53,540     |  
|Cost of service                                                 |  |      | 33,586     |   |      |   | 32,103     |      |  |   | 33,313     |  
|                                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Gross profit                                                    |  |      | 20,035     |   |      |   | 18,861     |      |  |   | 20,227     |  
|Selling, general and administration expense                     |  |      | 18,561     |   |      |   | 20,498     |      |  |   | 22,219     |  
|Impairment of goodwill                                          |  |      |           |   |      |   | 7,091      |      |  |   | 13,600     |  
|Restructuring costs                                             |  |      |           |   |      |   | 2,210      |      |  |   | 1,761      |  
|Impairment of long-lived tangible assets                        |  |      |           |   |      |   | 4,542      |      |  |   | 1,081      |  
|Provision for loss on related party receivable                  |  |      |           |   |      |   | 467        |      |  |   |           |  
|                                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Operating income (loss)                                         |  |      | 1,474      |   |      |   | (15,947    | )    |  |   | (18,434    | )
|Interest expense, net                                           |  |      | (408       | ) |      |   | (2,929     | )    |  |   | (2,733     | )
|Foreign currency gain (loss)                                    |  |      | 145        |   |      |   | 28         |      |  |   | (170       | )
|Other income                                                    |  |      | 283        |   |      |   |           |      |  |   |           |  
|Gain on extinguishment of note payable                          |  |      |           |   |      |   | 943        |      |  |   | 261        |  
|                                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Income (loss) before income taxes                               |  |      | 1,494      |   |      |   | (17,905    | )    |  |   | (21,076    | )
|Benefit (provision) for income taxes                            |  |      | 303        |   |      |   | (248       | )    |  |   | (88        | )
|                                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Net income (loss)                                               |  |      | 1,797      |   |      |   | (18,153    | )    |  |   | (21,164    | )
|Preferred stock dividends:                                      |  |      |            |   |      |   |            |      |  |   |            |  
|Preferred dividend                                              |  |      | (6,941     | ) |      |   | (1,152     | )    |  |   |           |  
|Accretion to preferred shares                                   |  |      | (320       | ) |      |   | (100       | )    |  |   |           |  
|                                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Net loss available to common shareholders                       |  | $    | (5,464     | ) |      | $ | (19,405    | )    |  | $ | (21,164    | )
|                                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Weighted average number of shares outstandingbasic and diluted |  |      | 16,893,532 |   |      |   | 16,768,127 |      |  |   | 15,052,180 |  
|                                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Net loss per share                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Basic and Diluted                                               |  | $    | (0.32      | ) |      | $ | (1.16      | )    |  | $ | (1.41      | )
|                                                                |  |      |            |   |      |   |            |      |  |   |            |  

See accompanying notes to consolidated financial statements.



F-5



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##### Table of Contents

ACT Teleconferencing, Inc.

Consolidated Statements of Shareholders Equity (Deficit)

For the years ended December 31, 2006, 2005, and 2004



|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|----------------------------------------------------------------------------------------- |  | ------------ |  | ------ | -------------- | - |  | ------------------- | ---- | - | --------------------------------------------- | - | ------- | --------------------------- |  | - | ----- | - |  | - | ------- | - |  | - | --------- | -
|                                                                                          |  | Common Stock |  |        | Treasury Stock |   |  | Accumulated Deficit |      |   | Accumulated Other Comprehensive Income (Loss) |   |         | Comprehensive Income (Loss) |  |   | Total |  
|($ in thousands)                                                                          |  | Shares       |  | Amount |                |   |  |                     |      |  
|Balance at January 1, 2004                                                                |  | 11,022,043   |  | $      | 43,310         |   |  | $                   | (241 | ) |                                               | $ | (21,672 | )                           |  | $ | 712   |   |  | $ |         |   |  | $ | 22,109    |  
|Issuance of warrants in association with debt                                             |  |              |  |        | 137            |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   | 137       |  
|Exercise of options                                                                       |  | 61,516       |  |        | 80             |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   | 80        |  
|Value of stock issued to employees & consultants                                          |  | 297,103      |  |        | 635            |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   | 635       |  
|Shares issued in private placement                                                        |  | 5,280,900    |  |        | 6,887          |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   | 6,887     |  
|Comprehensive loss                                                                        |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Net loss                                                                                  |  |              |  |        |                |   |  |                     |      |   |                                               |   | (21,164 | )                           |  |   |       |   |  |   | (21,164 | ) |  |   | (21,164   | )
|Other comprehensive income, net of tax. Foreign currency translation                      |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   | 4,133 |   |  |   | 4,133   |   |  |   | 4,133     |  
|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Comprehensive loss                                                                        |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   | (17,031 | ) |  |   |           |  
|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Balance at December 31, 2004                                                              |  | 16,661,562   |  |        | 51,049         |   |  |                     | (241 | ) |                                               |   | (42,836 | )                           |  |   | 4,845 |   |  |   |         |   |  |   | 12,817    |  
|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Reserve against receivable from related party for capital stock purchases                 |  |              |  |        | 467            |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   | 467       |  
|Value of stock and warrants issued to employees, directors and consultants                |  | 135,086      |  |        | 150            |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   | 150       |  
|Preferred stock dividend and accretion to redemption value of convertible preferred stock |  |              |  |        | (100           | ) |  |                     |      |   |                                               |   | (1,152  | )                           |  |   |       |   |  |   |         |   |  |   | (1,252    | )
|Comprehensive loss                                                                        |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Net loss                                                                                  |  |              |  |        |                |   |  |                     |      |   |                                               |   | (18,153 | )                           |  |   |       |   |  |   | (18,153 | ) |  |   | (18,153   | )
|Other comprehensive loss, net of tax.                                                     |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Foreign currency translation                                                              |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   | (380  | ) |  |   | (380    | ) |  |   | (380      | )
|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Comprehensive loss                                                                        |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  | $ | (18,533 | ) |  |   |           |  
|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Balance at December 31, 2005                                                              |  | 16,796,648   |  |        | 51,566         |   |  |                     | (241 | ) |                                               |   | (62,141 | )                           |  |   | 4,465 |   |  |   |         |   |  |   | (6,351    | )
|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Value of stock issued to employees, directors and consultants                             |  | 90,591       |  |        | 3              |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   | 3         |  
|Anti-dilutive stock issued in connection with the Dolphin transaction                     |  | 168,086      |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Value of stock options issued to employees, directors and consultants                     |  |              |  |        | 145            |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   | 145       |  
|Preferred stock dividend and accretion to redemption value of convertible preferred stock |  |              |  |        |                |   |  |                     |      |   |                                               |   | (7,261  | )                           |  |   |       |   |  |   |         |   |  |   | (7,261    | )
|Comprehensive income                                                                      |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Net income                                                                                |  |              |  |        |                |   |  |                     |      |   |                                               |   | 1,797   |                             |  |   |       |   |  |   | 1,797   |   |  |   | 1,797     |  
|Other comprehensive loss, net of tax.                                                     |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Foreign currency translation                                                              |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   | 115   |   |  |   | 115     |   |  |   | 115       |  
|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Comprehensive loss                                                                        |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  | $ | 1,912   |   |  |   |           |  
|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  
|Balance at December 31, 2006                                                              |  | 17,055,325   |  | $      | 51,714         |   |  | $                   | (241 | ) |                                               | $ | (67,605 | )                           |  | $ | 4,580 |   |  |   |         |   |  |   | ($11,552) |  
|                                                                                          |  |              |  |        |                |   |  |                     |      |   |                                               |   |         |                             |  |   |       |   |  |   |         |   |  |   |           |  

See accompanying notes to consolidated financial statements.



F-6



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##### Table of Contents

ACT Teleconferencing, Inc.

Consolidated Statements of Cash Flows

For the years ended December 31, 2006, 2005, and 2004



|                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|(In thousands)                                                                             |  | 2006 |         |   | 2005 |   |         | 2004 | 
|Operating activities                                                                       |  |      |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                                                                          |  | $    | 1,797   |   |      | $ | (18,153 | )    |  | $ | (21,164 | )
|Adjustments to reconcile net loss to net cash provided by (used for) operating activities: |  |      |         |   |      |   |         |      |  |   |         |  
|Depreciation                                                                               |  |      | 3,274   |   |      |   | 4,184   |      |  |   | 5,152   |  
|Impairment and loss on disposal of assets                                                  |  |      | 19      |   |      |   | 4,660   |      |  |   | 2,053   |  
|Impairment of goodwill                                                                     |  |      |        |   |      |   | 7,091   |      |  |   | 13,600  |  
|Reserve for possible loss on related party note receivable                                 |  |      |        |   |      |   | 467     |      |  |   |        |  
|Bad debt expense                                                                           |  |      |        |   |      |   | 224     |      |  |   | 21      |  
|Foreign currency transaction (gain) loss                                                   |  |      | (145    | ) |      |   | (28     | )    |  |   | 170     |  
|Amortization of intangibles                                                                |  |      | 106     |   |      |   | 383     |      |  |   | 397     |  
|Amortization of debt costs                                                                 |  |      |        |   |      |   | 720     |      |  |   | 1,047   |  
|Deferred income taxes                                                                      |  |      | 38      |   |      |   | 78      |      |  |   | (305    | )
|Shares and options issued for consulting fees and employee service                         |  |      | 145     |   |      |   | 150     |      |  |   | 560     |  
|                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Cash flow before changes in operating assets and liabilities                               |  |      | 5,234   |   |      |   | (224    | )    |  |   | 1,531   |  
|Changes in operating assets and liabilities:                                               |  |      |         |   |      |   |         |      |  |   |         |  
|Accounts receivable                                                                        |  |      | (439    | ) |      |   | (1,142  | )    |  |   | 2,204   |  
|Prepaid expenses and other assets                                                          |  |      | (722    | ) |      |   | 623     |      |  |   | 52      |  
|Accounts payable                                                                           |  |      | (211    | ) |      |   | 44      |      |  |   | (2,464  | )
|Deferred income                                                                            |  |      |        |   |      |   | (80     | )    |  |   | (1,567  | )
|Accrued liabilities                                                                        |  |      | (811    | ) |      |   | 756     |      |  |   | (51     | )
|Income taxes payable                                                                       |  |      | 2       |   |      |   | (330    | )    |  |   | 341     |  
|                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash (used for) provided by operating activities                                       |  |      | 3,053   |   |      |   | (353    | )    |  |   | 46      |  
|Investing activities                                                                       |  |      |         |   |      |   |         |      |  |   |         |  
|Equipment purchases                                                                        |  |      | (3,188  | ) |      |   | (908    | )    |  |   | (1,935  | )
|                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash used for investing activities                                                     |  |      | (3,188  | ) |      |   | (908    | )    |  |   | (1,935  | )
|Financing activities                                                                       |  |      |         |   |      |   |         |      |  |   |         |  
|Net proceeds from the issuance of debt and warrants in association with debt               |  |      | 22,485  |   |      |   | 28,302  |      |  |   | 3,475   |  
|Repayments of debt and capital leases                                                      |  |      | (25,918 | ) |      |   | (34,645 | )    |  |   | (7,547  | )
|Exercise of options                                                                        |  |      |        |   |      |   |        |      |  |   | 250     |  
|Net proceeds from the issuance of common stock                                             |  |      |        |   |      |   |        |      |  |   | 6,792   |  
|Net proceeds from issuance of preferred stock                                              |  |      | 3,862   |   |      |   | 6,572   |      |  |   |        |  
|                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash provided by financing activities                                                  |  |      | 429     |   |      |   | 229     |      |  |   | 2,970   |  
|Effect of exchange rate changes on cash                                                    |  |      | 336     |   |      |   | (55     | )    |  |   | (67     | )
|                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Net (decrease) increase in cash and cash equivalents                                       |  |      | 630     |   |      |   | (1,087  | )    |  |   | 1,014   |  
|Cash and cash equivalents beginning of year                                                |  |      | 1,653   |   |      |   | 2,740   |      |  |   | 1,726   |  
|                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents end of year                                                      |  | $    | 2,283   |   |      | $ | 1,653   |      |  | $ | 2,740   |  
|                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Supplemental information                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Cash paid for                                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Interest                                                                                   |  | $    | 425     |   |      | $ | 1,325   |      |  | $ | 1,458   |  
|Income taxes                                                                               |  | $    | 96      |   |      | $ | 505     |      |  | $ | 289     |  
|Non-Cash transactions                                                                      |  |      |         |   |      |   |         |      |  |   |         |  
|Preferred stock dividend                                                                   |  | $    | 6,941   |   |      | $ | 1,152   |      |  | $ |        |  
|Accretion of preferred shares                                                              |  | $    | 320     |   |      | $ | 100     |      |  | $ |        |  
|Issuance of preferred stock                                                                |  | $    | 4,073   |   |      | $ |        |      |  | $ |        |  
|Repayment of debt                                                                          |  | $    | (4,073  | ) |      | $ |        |      |  | $ |        |  

See accompanying notes to consolidated financial statements.



F-7



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements

December 31, 2006 and 2005

1. Organization
and Significant Accounting Policies

Business

ACT
Teleconferencing, Inc. (the Company) is engaged in the business of providing high quality audio, video, data and web based conferencing products and services to business clients worldwide. The Company operates principally in the United
States, Canada, the United Kingdom, the Netherlands, Germany, France, Australia, Hong Kong and Singapore.

Basis of Presentation, Liquidity and
Continuing Operations

The consolidated financial statements include the accounts of ACT Teleconferencing, Inc, and its wholly-owned domestic and
worldwide subsidiaries. Significant intercompany accounts and transactions have been eliminated.

We have incurred recurring losses over the past several
years, and we have a stockholders deficit. Our financial statements do not include any adjustments that could be required if the Company were unable to continue as a going concern.

Management is taking the following actions to improve the Companys financial performance:



| |  |  | Improving the Companys sales effort by focusing on staff productivity.
| | - |  | -----------------------------------------------------------------------



| |  |  | Continuing growth under the AT&T audio outsourcing contract which runs through 2008.
| | - |  | ------------------------------------------------------------------------------------



| |  |  | Continuing the restructuring effort that began in late 2005 to move from a geographic to a functional management structure in order to drive revenue growth, obtain
operating efficiencies and achieve cost reductions. This restructuring included the consolidation of operating centers in both Europe and North America.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Enhancing a new reservationless video conferencing solution.
| | - |  | ------------------------------------------------------------



| |  |  | Upgrading its service delivery platform.
| | - |  | ----------------------------------------

However,
if substantial losses continue or if we are unable to raise sufficient additional capital through debt and equity offerings, liquidity problems will cause us to curtail operations, liquidate or sell assets or entities or pursue other actions that
could adversely affect future operations. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that could be required if we were unable to continue as a going
concern.

On June 30, 2005, we entered into an agreement with Dolphin Direct Equity Partners, LP (Dolphin) to sell up to 160,000 shares of
the Companys newly-created Series AA convertible preferred stock for an aggregate purchase price of $16.0 million. Our shareholders approved the transaction at a special shareholders meeting on August 15, 2005. This resulted in an
initial closing on August 19, 2005 at which we issued 80,400 shares of preferred stock for $7.9 million in proceeds.

On July 15, 2005, we
entered into a loan agreement with Dolphin for interim financing in the amount of $1.5 million with a 15% interest rate, which was used primarily for working capital purposes and was repaid out of the proceeds from the initial closing. Also, as of
October 31, 2005, we entered into a second loan agreement with Dolphin for interim financing in the amount of $7.0 million. The loan carried a 12% interest rate and matured on the date of the second closing on the Dolphin preferred stock
transaction in February 2006. Dolphin offset the amount outstanding on the loan at the time of the second closing against the purchase price owed to us by Dolphin for shares of preferred stock it purchased. The loan proceeds were used to satisfy the
remaining amounts owed to the subordinated debt holders, pay fees related to the Dolphin transaction, and for working capital.

In February 2006, we
completed the rights offering for the remaining 79,600 shares of preferred stock related to the Dolphin transaction, at which point there was a second closing on the remainder of the $16.0 million transaction. Although certain common shareholders
participated in the rights offering, the majority of the preferred shares available through the offering were purchased by Dolphin. Funds from the second closing were used principally to satisfy the $7.0 million bridge loan from Dolphin, including
accrued interest.



F-8



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

1. Organization and
Significant Accounting Policies (continued)



Revenue Recognition

Revenue is recognized upon completion of conferencing services. We generally do not charge up-front fees and bill our customers based on usage. Revenue for video and other equipment sales is recognized upon delivery and installation.

In 2002, we received unused audio conference ports as compensation for audio conferencing services rendered and to be rendered under an existing contract.
The fair market value of this equipment was recorded as deferred revenue and recognized over the remaining term of the supplier contract which ended December 31, 2004. $1.6 million of revenue related to this contract was recognized in 2004.

Use of Estimates

The preparation of the financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those
estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significant estimates include the life and
realization of our fixed assets and goodwill, the deferred tax valuation allowance, the allowance for doubtful accounts, and the fair value of stock options under SFAS 123. Due to our continued losses and restructuring efforts, it is reasonably
possible in the near term that these estimates could materially change.

Advertising Costs

We expense all advertising costs as they are incurred. Advertising costs were approximately $49,000, $96,000, and $194,000 for 2006, 2005 and 2004, respectively.

Equipment and Depreciation

Equipment is stated at
cost. Depreciation is calculated on a straight-line basis over the estimated useful lives of five years for software, and five to ten years for office furniture, video equipment and telecommunications equipment. Certain equipment obtained through
capital lease obligations is amortized over the life of the related lease. Improvements to leased property are amortized over the lesser of the life of the lease or the life of the improvement. Depreciation expense includes capital lease
amortization charges. Depreciation expense was approximately $3.3 million, $4.2 million, and $5.5 million for 2006, 2005, and 2004, respectively.

Internal Use Software

We capitalize costs of materials, consultants, and payroll and payroll-related costs which are incurred in developing
internal-use computer software, beginning once the application development stage is attained and continuing until the post-implementation/operation stage is achieved. Costs incurred prior and subsequent to the application development stage are
charged to general and administrative expenses. We capitalized internal use software development costs of approximately $668,000, $459,000, and $700,000 for the years ended December 31, 2006, 2005, and 2004, respectively.

Goodwill

Goodwill represents the excess of purchase price over
tangible and other intangible assets acquired less liabilities assumed arising from business combinations. SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), issued in June 2001, requires that goodwill
acquired in business combination after June 30, 2001 not be amortized but instead be periodically tested for impairment.

As required by SFAS 142, we
have ceased amortizing all goodwill. We test for impairment on an annual basis by comparing the estimated fair value of the operations to its carrying value. The fair value is derived using a discounted cash flow analysis with estimates for
projected growth and gross margins.



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

1. Organization and
Significant Accounting Policies (continued)



Our testing for 2004 indicated impairments in the values of our video and United Kingdom teleconferencing reporting
units. The impairment in the video unit was the result of a drop in the units revenue and profit, which mirrored industry performance. A resulting non-cash goodwill impairment charge of $9.9 million was made to operations for the video segment
of our business. A $3.7 impairment charge was made to our United Kingdom teleconferencing unit. The impairment in the teleconferencing unit was due to a drop in revenue due primarily to price erosion. The value of the reporting units was based on
the income approach. The assumptions used in the related cash flow analysis used discounted cash flow rates of 26% for the video unit and 21% for the audio unit and included estimates of future growth, gross margins, terminal value, and effective
tax rates.

Our testing in 2005 indicated impairments in the values of our video unit, and United Kingdom, Australia, and Hong Kong audio units. The
impairment in the video unit was the result of a drop in the units revenue and profit, which mirrored industry performance. A resulting non-cash goodwill impairment charge of $3.0 million was made to operations for the video segment of our
business. A $4.1 million impairment charge was made to our United Kingdom, Australia, and Hong Kong audioconferencing units. The impairments in the audioconferencing units were due to a drop in revenue due primarily to price erosion. The value of
the reporting units was based on the income approach. The assumptions used in the related cash flow analysis used discounted cash flow rates of 25% to 30% and included estimates of future growth, gross margins, terminal value, and effective tax
rates.

Our testing in 2006 indicated no impairments.

As of
December 31, 2006, we had a total of $1.0 million in net goodwill in the U.S.

Other Assets

Other long terms assets are deposits held for more than one year and restricted cash balances. Prior to December 31, 2006, other long term assets includes a 2001
non-compete agreement valued at $2.0 million that was amortized over five years. For the years ended 2006, 2005, and 2004, we amortized approximately $100,000, $400,000, and $400,000, respectively, related to intangible assets.

Foreign Currency Conversion and Translation

ACT Teleconferencing
Inc. and its US subsidiaries (ACT) use the U.S. dollar as its functional currency and its international subsidiaries use their local currencies as their respective functional currencies. Financial statements of foreign subsidiaries are
translated into U.S. dollars at current rates, except that revenues, costs and expenses are translated at average exchange rates effective during the year.

Intercompany transactions between ACT and its affiliates are billed at current monthly rates. Payments on intercompany accounts are settled using spot rates in effect at the date of settlement. Gains and losses resulting from these foreign
currency transactions are included in the consolidated statement of operations. The foreign exchange gains (losses) arising from such transactions were approximately $145,000, $28,000 and ($170,000) for the years ended 2006, 2005 and 2004
respectively.

The effect of translating all other accounts of ACTs foreign subsidiaries into U.S. dollars has been included in stockholders
equity as a cumulative foreign currency translation adjustment. Gains and losses due to foreign currency translation adjustments for the years ended December 31, 2006, 2005 and 2004 were $115,000, ($380,000), and $4.1 million, respectively.



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

1. Organization and
Significant Accounting Policies (continued)



Cash and Cash Equivalents

We consider all liquid investments not supporting letters of credit and with original maturities of 90 days or less when purchased to be cash equivalents.

Treasury Stock

We record treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as
treasury stock.

Accounts Receivable

Trade receivables
consist of uncollateralized customer obligations due under normal trade terms, generally requiring payment within 30 days of the invoice date. Periodically, management reviews the estimated recoverability of trade receivables and reduces their
carrying amount by utilizing a valuation allowance that reflects managements best estimate of the amount that may not be collectible.

Concentration of Credit Risk

We maintain cash, cash equivalents, and certificates of deposit, with various financial institutions. We limit
our concentration of these financial instruments with each institution, and periodically review the credit standings of these institutions. Although AT&T accounted for 25% of our 2006 revenues, we generally have a large diverse customer base
across various industries, thereby minimizing the credit risk of any one customer.

Earnings Per Share

Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of
common shares outstanding and all dilutive potential common shares outstanding. Because we have net losses for the periods presented, there is no dilutive effect and the basic and diluted loss per share are the same for all years presented. On
December 31, 2006 there were 3,301,453 common stock warrants and 6,699,691 options outstanding. There were also 9,000 Series AA preferred stock warrants outstanding. (See notes 5 and 6 to the consolidated financial statements.)

Long-Lived Tangible Assets

We evaluate the carrying amount of
long-lived assets (including property, plant and equipment, and intangible assets with determinable lives) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. We evaluate events or
changes in circumstances based on a number of factors including operating results, business plans and forecasts, general and industry trends and economic projections and anticipated cash flows. An impairment is assessed when the undiscounted
expected future cash flows derived from an asset are less than its carrying amount. Impairment losses are measured as the amount by which the carrying value of an asset exceeds its fair value and are recognized in earnings. We also evaluate the
estimated useful lives of our long-lived assets and revise such estimates based on current events if indicated.

In conjunction with the Dolphin
transaction, we evaluated the carrying amount of long-lived assets based on future estimated cash flows. In 2005, we determined that the useful lives of our bridging equipment were less than we had originally estimated. We also determined that due
to improvements in technology, the useful life we had assigned to the bridging equipment was no longer appropriate, and so we reduced the useful life. For 2005 impairment charges overall, approximately $3.5 million was charged to the audio segment
and $900,000 to the video segment. In 2006, there were no triggering events that led us to test recoverability of long-lived assets.



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

1. Organization and
Significant Accounting Policies (continued)



Stock Based Compensation

Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standard 123(R) Share-Based Payment (SFAS 123R) using the modified prospective
transition method. In addition, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 Share-Based Payment (SAB 107) in March, 2005, which provides supplemental SFAS 123R application
guidance based on the views of the SEC. Under the modified prospective transition method, compensation cost recognized in the period ended December 31, 2006 includes: (a) compensation cost for all share-based payments granted prior to, but
not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted beginning January 1,
2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. Expected pre-vesting forfeitures were estimated based on actual historical pre-vesting forfeitures over the most recent periods ending
December 31, 2006 for the expected option term. In accordance with the modified prospective transition method, results for prior periods have not been restated.

The adoption of SFAS 123R resulted in $145,000 in stock compensation expense for the period ended December 31, 2006. which was recorded as selling, general and administrative expenses. Unearned compensation for
performance-based options is shown as a reduction of shareholders equity in the consolidated balance sheet. This expense reduced basic and diluted earnings per share by $0.01 for the year, compared to reported basic and diluted loss per share
of $0.32. The Company did not recognize a tax benefit from the stock compensation expense because the Company considers it is more likely than not that the related deferred tax assets, which have been reduced by a full valuation allowance, will not
be realized.

The Black-Scholes option-pricing model was used to estimate the option fair values. The option-pricing model requires a number of
assumptions, of which the most significant are, expected stock price volatility, and the expected option term (the amount of time from the grant date until the options are exercised or expire). The expected option term was calculated using the
simplified method permitted by SAB 107.

The Black-Scholes valuation model was developed for use in estimating the fair value of traded options
and does not take into account vesting requirements or restrictions on transferability. In addition, the valuation model requires the input of highly subjective assumptions including the expected stock price volatility. Our employee stock options
have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate.

Prior to the adoption of SFAS 123R, the Company presented any tax benefits of deductions resulting from the exercise of stock options within operating cash flows in the consolidated statements of cash flow. SFAS 123R
requires tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified and reported as both an operating cash outflow and a financing cash inflow upon
adoption of SFAS 123R. As a result of the Companys net operating losses, the excess tax benefits that would otherwise be available to reduce income taxes payable have the effect of increasing the Companys net operating loss carry
forwards. Accordingly, because the Company is not able to realize these excess tax benefits, such benefits have not been recognized in the consolidated statement of cash flow for the year ended December 31, 2006.

For purposes of the pro forma disclosures below, the Company applied the intrinsic value method of accounting for stock options issued prior to January 1, 2006 as
prescribed by APB 25. Since all options granted during the period ended December 31, 2005 had an exercise price equal to the closing market price of the underlying common stock on the grant date, no compensation expense was recognized. If
compensation expense had been recognized based on the estimated fair value of each option granted in accordance with the provisions of SFAS 123 as amended by Statement of Financial Accounting Standard 148, our net loss and net loss per share would
have been reduced to the following pro-forma amounts:



|                                                                                                                |  |      |         |   |      |   |         |  
|--------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|In thousands except per share amounts                                                                           |  | 2005 |         |   | 2004 |  
|Net loss attributable to common shareholders, as reported                                                       |  | $    | (19,405 | ) |      | $ | (21,164 | )
|Deduct total stock-based employee compensation expense determined under fair value based method for all awards: |  |      | (488    | ) |      |   | (836    | )
|                                                                                                                |  |      |         |   |      |   |         |  
|Pro forma net loss attributable to common shareholders                                                          |  | $    | (19,893 | ) |      | $ | (22,000 | )
|                                                                                                                |  |      |         |   |      |   |         |  
|Loss per common share:                                                                                          |  |      |         |   |      |   |         |  
|Reported, basic and diluted                                                                                     |  | $    | (1.16   | ) |      | $ | (1.41   | )
|Pro forma, basic and diluted                                                                                    |  | $    | (1.19   | ) |      | $ | (1.46   | )



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

1. Organization and
Significant Accounting Policies (continued)



Pro forma compensation expense under SFAS 123, among other computational differences, does not consider potential
pre-vesting forfeitures. Because of these differences, the pro forma stock compensation expense presented above for the periods ended December 31, 2004 and 2005 under SFAS 123 and the stock compensation expense recognized during the year ended
December 31, 2006 under SFAS 123R are not directly comparable. In accordance with the modified prospective transition method of SFAS 123R, the prior comparative annual results have not been restated.

The effects of applying SFAS 123R in calculating pro forma loss attributable to common stockholders and pro forma loss per share may not necessarily be indicative of the
effects of applying SFAS 123R to future years earnings.

For stock options granted during 2006, 2005 and 2004, the estimated fair value of our stock
options and underlying assumptions are as follows:



|                                                                   |  |      |           |   |      |   |          |      |  |   |    
|------------------------------------------------------------------ |  | ---- | --------- | - | ---- | - | -------- | ---- |  | - | ---
|                                                                   |  | 2006 |           |   | 2005 |   |          | 2004
|Weighted average fair value of options granted during the period   |  | $    | 0.30      |   |      | $ | 1.32     |      |  | $ | N/A
|Assumptions:                                                       |  |      |           |   |      |   |          |      |  |   |    
|Risk free interest rate                                            |  |      | 3.0       | % |      |   | 3.0      | %    |  |   | N/A
|Expected dividend yield                                            |  |      | 0.0       | % |      |   | 0.0      | %    |  |   | N/A
|Volatility factor of the expected market price of our common stock |  |      | 0.97      |   |      |   | 0.97     |      |  |   | N/A
|Weighted average expected life of options                          |  |      | 4.4 years |   |      |   | 1.0 year |      |  |   | N/A

In 2006, 4,958,881 stock options were granted.

Income Taxes

Deferred tax liabilities or assets reflect temporary differences between amounts of assets and
liabilities for financial and tax reporting. Such amounts are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when temporary differences reverse. A valuation allowance has been established to offset any deferred
tax assets since it is likely that some or all of the deferred tax assets will not be realized.

Certain Risks and Concentrations

A significant customer concentration is represented by sales or accounts receivable equal to or greater than 10% of our sales or accounts receivable for the year.
AT&T, our largest customer accounted for 25%, 19%, and 16%, of consolidated revenues and our second largest customer accounted for 6%, 6%, and 5% of consolidated revenues for the years ended December 31, 2006, 2005, and 2004, respectively.

We purchase network services from a number of suppliers worldwide. Our major provider, AT&T Corporation, supplied services valued at $5.5 million,
$5.1 million, and $6.9 million in 2006, 2005 and 2004 respectively.

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Shared-Based Payment (SFAS 123R), which replaces SFAS No. 123, Accounting
for Stock-Based Compensation, (SFAS 123) and supersedes APB Opinion N0. 25, Accounting for Stock Issued to Employees which we adopted in 2006 using the prospective method of transition as described therein. SFAS 123R requires
all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values and requires a modified prospective application method of adoption. Under this method, the
provisions of SFAS 123R will be applied prospectively to new awards granted on or after the date of adoption. In addition, compensation cost is required to be recognized over the remaining vesting period for the unvested portion of outstanding
awards granted prior to the adoption date.



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

1. Organization and
Significant Accounting Policies (continued)



In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes
 an interpretation of FASB Statement 109 (FIN 48), which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return, including issues relating to financial statement recognition
and measurement. FIN 48 provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more-likely-than-not to be sustained if the position were to be challenged by a
taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged. If an uncertain tax position meets the
more-likely-than-not threshold, the largest amount of tax benefit that is more than 50 percent likely to be recognized upon ultimate settlement with the taxing authority, is recorded. The provisions of FIN 48 are effective for
fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. Consistent with the requirements of FIN 48, we adopted FIN 48 on
January 1, 2007. We are currently evaluating the impact of adopting FIN 48 and do not expect the interpretation will have a material impact on our results of operations or financial position.

In September 2006, the FASB issued Statement No. SFAS No. 157, Fair Value Measurements (SFAS 157), a standard that provides enhanced
guidance for using fair value to measure assets and liabilities. SFAS 157 also responds to investors requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to
measure fair value, and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. SFAS 157 does not expand the use of fair value in any new
circumstances. SFAS 157 establishes a fair value hierarchy that prioritizes the information used to develop fair value assumptions. SFAS 157 is effective for fiscal years and interim periods beginning after November 15, 2007. We have not yet
determined the impact on our financial statements of adopting SFAS 157 effective January 1, 2008.

In February 2007, the FASB issued Statement
No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  Including an amendment of FASB Statement No. 115 (SFAS 159). This standard amends SFAS No. 115, Accounting for Certain Investment
in Debt and Equity Securities with respect to accounting for a transfer to the trading category for all entities with available-for-sale and trading securities electing the fair value option. This standard allows companies to elect fair value
accounting for many financial instruments and other items that currently are not required to be accounted as such, allows different applications for electing the option for a single item or groups of times, and requires disclosures to facilitate
comparisons of similar assets and liabilities that are accounted for differently in relation to the fair value option. SFAS 159 is effective for fiscal years beginning after November 15,2007. If elected, the implementation of SFAS 159 is not
expected to have a material impact on the Companys consolidated financial statements.

In December 2006, the FASB issued FASB Staff Position No. EITF
00-19-2, Accounting for Registration Payment Arrangements, (FSP No. EITF 00-19-2), which addresses an issuers accounting for registration payment arrangements. FSP No. EITF 00-19-2 specifies that the contingent obligation to make
future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and
measured in accordance with FASB Statement No. 5, Accounting for Contingencies. The guidance in FSP No. EITF 00-19-2 amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 150, Accounting
for Certain Financial Instruments with Characteristics of both Liabilities and Equity, and FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others, to include scope exceptions for registration payment arrangements. FSP No. EITF 00-19-2 further clarifies that a financial instrument subject to a registration payment arrangement should be accounted for in accordance with other applicable
generally accepted accounting principles (GAAP) without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement. FSP No. EITF 00-19-2 shall be effective immediately for registration payment
arrangements and the financial instruments subject to those arrangements that are entered into or modified subsequent to the date of issuance of FSP No. EITF 00-19-2. For registration payment arrangements and financial instruments subject to those
arrangements that were entered into prior to the issuance of FSP No. EITF 00-19-2, this guidance shall be effective for financial statements issued for fiscal years beginning after December 15, 2006, and interim periods within those fiscal
years. We are currently evaluating the impact EITF 00-19-2 could have on our financial position, results of operations or cash flows.



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)



2. Restructuring and Other Charges

We began a major restructuring in late 2004 to obtain operating efficiencies and achieve cost reductions. It includes the consolidation of operating
centers in both Europe and North America. We recognized $2.2 million of operating costs related to restructuring in 2005 and $1.8 million in 2004. These charges are found in the Restructuring Costs line of the Consolidated Statements of Operations.
Approximately $800,000 of lease abandonment cost accrued in 2005 was paid out during 2006. The remaining $200,000 of lease abandonment charges will be paid during 2007. The unpaid portion of lease abandonment is included in Accrued liabilities on
the Consolidated Balance Sheet at December 31, 2006. Overall, approximately $2.0 million of restructuring charges have been incurred by our Audio segment, $1.2 million by our Video segment and $0.8 million by our corporate segment.

During 2005, we also recorded a $467,000 provision for a possible loss on a note receivable from a related party for a capital stock purchase (see Note 8.
Related Party Transactions).



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)



3. Long and Short Term Debt

The following debt instruments are owed by ACT Teleconferencing, Inc., unless otherwise noted.



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                  |        |   |      |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------ | - | ---- | - | ------- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | December 31,     |       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 2006             |        |   | 2005 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | ($ in thousands) |       
|Senior Debt:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                  |        |   |      |   |         |  
|ACT Teleconferencing Services, Inc., a U.S. company, has a bank line of credit collateralized by its tangible and intangible assets. The line
of credit carries an annual interest rate of prime plus 2.5% (10.75% at December 31, 2006) with a borrowing base restricted to qualified accounts receivable up to $3.5 million                                                                                                                                                                                                                  |  | $                | 869    |   |      | $ | 1,356   |  
|Note payable to an equipment vendor bearing interest at 7% annually. Term is 60 months with a maturity date of November 25, 2007. This
note is collateralized by telecommunications equipment                                                                                                                                                                                                                                                                                                                                                  |  |                  | 325    |   |      |   | 581     |  
|ACT Teleconferencing Canada, has a revolving bank line of credit which carries an interest rate of prime plus 2%. It is collateralized by
qualified accounts receivable and continues month-to-month until ended by either party                                                                                                                                                                                                                                                                                                               |  |                  | 98     |   |      |   |        |  
|ACT Teleconferencing Limited, a UK subsidiary, has a revolving bank line of credit which carries an interest rate of prime plus 2%. It is
collateralized by qualified accounts receivable and continues month-to-month until ended by either party                                                                                                                                                                                                                                                                                             |  |                  | 287    |   |      |   | 608     |  
|Notes payable and revolving lines of credit, through vendors and various banks, collateralized by accounts receivable and
equipment                                                                                                                                                                                                                                                                                                                                                                                                            |  |                  |       |   |      |   | 33      |  
|$1.8 million line of credit to equipment vendor bearing interest at 6% annually. Payments are due in monthly installments calculated on 8% of
the principal balance plus interest. This note is collateralized by telecommunications equipment                                                                                                                                                                                                                                                                                                 |  |                  | 1,519  |   |      |   | 667     |  
|Note payable to Dolphin for fixed and working capital needs extended to us in July 2006. The note carries an annual interest rate of 12% and
matures on June 30, 2007                                                                                                                                                                                                                                                                                                                                                                          |  |                  | 500    |   |      |   |        |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                 
|Subordinated Debt:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                  |        |   |      |   |         |  
|Note payable to Dolphin for a bridge loan extended to us in October 2005 in order to satisfy the remaining amounts due under the subordinated
debt, to pay certain transaction-related fees, and to provide working capital. The note carried an annual interest rate of 12% and was satisfied with proceeds from the second closing on the Dolphin transaction in February 2006                                                                                                                                                               |  |                  |       |   |      |   | 7,000   |  
|Subordinated note payable for $7.3 million bearing interest at 12% and recorded net of $847,000 of the unaccreted warrant value of
2.3 million warrants issued in conjunction therewith and secured by a second lien on our US tangible and intangible assets and is subordinated to the bank. Also included in the 2004 balance is a noninterest bearing royalty payment of $958,000.
We satisfied this debt in October 2005, and negotiated a reduced royalty amount of $470,000, which is due on December 31, 2006 and paid January 3, 2007 |  |                  | 470    |   |      |   | 470     |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                  |        |   |      |   |         |  
|Subtotal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                  | 4,068  |   |      |   | 10,715  |  
|Less, current portion of debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                  | (3,407 | ) |      |   | (10,245 | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                  |        |   |      |   |         |  
|Long term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | $                | 661    |   |      | $ | 470     |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                  |        |   |      |   |         |  

The aggregate minimum annual debt payments as of December 31, 2006 are as follows:



|                 |  |   |      
|---------------- |  | - | -----
|($ in Thousands) |  |  
|2007             |  | $ | 3,407
|2008             |  |   | 661  
|                 |  |   |      
|                 |  | $ | 4,068

On June 12, 2006, the Company entered into a Waiver and Amendment Agreement with Silicon Valley Bank
(SVB), its senior commercial lender, under a $3.5 million line of credit (the Amendment). Under the terms of the Amendment, among other things, SVB waived all existing defaults under the Companys existing Loan and
Security Agreement with SVB dated as of November 19, 2004, as amended to date (with respect to which SVB had previously agreed to forbear from exercising its rights as previously disclosed), relaxed lending limitations related to customer
concentration and foreign accounts receivable, and amended the financial covenants to provide for a trailing three month minimum EBITDA (as defined in the Amendment) of $750,000 requirement in lieu of the previous minimum cash income requirement.
The maturity date of the line of credit has been extended to June 12, 2007.



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

3. Long and Short Term Debt
(continued)



On June 30, 2006, the Company entered into a Loan Agreement with Dolphin Direct Equity Partners, LP
(Dolphin), which provides for draws in minimum amounts of $500,000 up to a maximum aggregate principal amount of $1,500,000. The Company borrowed $500,000 under the agreement on July 6, 2006 for fixed and working capital needs. The
principal amount of loans drawn under the agreement bear interest at a rate of 12% per annum (25% per annum following the occurrence of an event of default under the agreement) and mature on June 30, 2007. Any amounts that are repaid may
not be re-borrowed. The Company intends to repay any loans out of its cash flow from operations.

The agreement contains provisions limiting the
Companys ability to, among other things, incur additional indebtedness, create liens, make loans, investments or guarantees, engage in mergers or acquisitions, sell assets, pay dividends on its capital stock and engage in transactions with
affiliates. Pursuant to the terms of a Pledge Agreement between the Company and Dolphin and a Security Agreement among the Company, each of its U.S. operating subsidiaries and Dolphin, the loans will be secured by substantially all the assets of the
Company and the Companys U.S. operating subsidiaries, subject to the first priority security interest in such assets currently held by the Companys senior commercial lender. The Companys senior commercial lender and Dolphin have
entered into a Subordination Agreement dated as of June 30, 2006 which governs the rights of the Companys lenders with respect to the collateral securing their respective loans to the Company.

On July 15, 2005, we entered into a loan agreement with Dolphin for interim financing in the amount of $1.5 million with a 15% interest rate, which was used
primarily for working capital purposes and was repaid out of the proceeds from the initial closing. Also, as of October 31, 2005, we entered into a second loan agreement with Dolphin for interim financing in the amount of $7.0 million. The loan
carried a 12% interest rate and matured on the date of the second closing on the Dolphin preferred stock transaction in February 2006. Dolphin offset the amount outstanding on the loan at the time of the second closing against the purchase price
owed to us by Dolphin for shares of preferred stock it purchased. The loan proceeds were used to satisfy the remaining amounts owed to the subordinated debt holders, pay fees related to the Dolphin transaction, and for working capital.

In October 2005, Dolphin extended to us a $7.0 million bridge loan so that we may satisfy all of our subordinated debt. As a result, all of the subordinated debt was
satisfied in October 2005. Our senior line of credit lender has provided a forbearance and extension through June 12, 2006 on the outstanding balance of the $3.5 million line.

In 2003, a personal trust controlled by James F. Seifert, one of our directors, contributed $1.0 million to the senior subordinated debt financing. The trust purchased $1.0 million principal amount of the notes and
333,333 warrants. The note was paid in October 2005.

4. CommitmentsOperating and Capitalized Leases

Operating Leases

We lease office space and equipment under operating
leases that expire at various dates through October 2011. Total rent expense charged to operations was $3.2 million, $4.5 million and $3.8 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Capitalized Leases

We lease telecommunication equipment and office
equipment, including computers and furniture, under long-term leases classified as capital leases. For several of these leases, we have the option to purchase the equipment for a nominal cost at the termination of the lease.

The following property is pledged as collateral under capital leases (in thousands):



|                                                                 |  |              |   |      |   |       |  
|---------------------------------------------------------------- |  | ------------ | - | ---- | - | ----- | -
|                                                                 |  | December 31, |  
|                                                                 |  | 2006         |   | 2005 |  
|Telecommunications and office equipment, computers and furniture |  | $            |  |      | $ | 2,590 |  
|Less accumulated depreciation                                    |  |              |  |      |   | (603  | )
|Net carrying value of equipment pledged                          |  | $            |  |      | $ | 1,987 |  



F-17



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

4. CommitmentsOperating
and Capitalized Leases (continued)



We incurred no capital lease obligations in 2004, 2005 or 2006. In 2003, we incurred approximately $300,000 in
connection with capital lease agreements to acquire equipment. At December 31, 2006, none of this balance was outstanding.

The aggregate minimum
annual commitments for operating and capital leases as of December 31, 2006 are as follows:



|                             |  |                  |       |                |   |  
|---------------------------- |  | ---------------- | ----- | -------------- | - | -
|($ in thousands)             |  | Operating Leases |       | Capital Leases
|2007                         |  | $                | 2,694 |                | $ | 
|2008                         |  |                  | 1,137 |                |   | 
|2009                         |  |                  | 336   |                |   | 
|2010                         |  |                  | 273   |                |   | 
|2011 and thereafter          |  |                  | 117   |                |   | 
|                             |  |                  |       |                |   |  
|Total minimum lease payments |  | $                | 4,557 |                | $ | 
|                             |  |                  |       |                |   |  

5. Preferred Stock and Shareholders Equity (Deficit)

Our Articles of Incorporation authorize the issuance of up to 1,797,500 shares of non-voting preferred stock, no par value, with rights, preferences, and privileges as
determined by the Board of Directors. Although shareholder approval is not required in order for the Board to issue these undesignated shares of preferred stock, applicable stock exchange restrictions require shareholder approval in order for us to
issue shares of preferred stock convertible into more than 20% of our outstanding common stock. In addition, the agreement with Dolphin requires that the holders of Series AA preferred shares approve future issuances of common and preferred shares.

In addition, we can issue of up to 2,000 shares of Series A preferred stock, up to 200,000 shares of Series B preferred stock, and up to 500 shares of
Series C preferred stock. On October 19, 1999, we issued 2,000 shares of Series A preferred stock to one investor, which were liquidated on October 11, 2001. Series A stock has no par value, is non-voting, and is senior to Series B and C
preferred stock.

On December 10, 1999, we created Series B Junior Participating Preferred Shares in connection with our shareholder rights plan, and
increased the authorized number of Series B preferred shares to 200,000 on July 27, 2004. Each share of Series B preferred stock is entitled to receive a dividend when declared by the Board of Directors out of funds legally available, payable
at the rate of $1.00 per share. Series B preferred stock has priority in payment of dividends and distributions on dissolution of the Company, which is senior to holders of common stock, but junior to creditors and to holders of Series A or Series
AA preferred stock. No shares of Series B preferred stock have been issued.

On May 17, 2002, we issued 500 shares of 6.5% Series C Convertible
Preferred Stock. Series C preferred stock was convertible into shares of our common stock at a fixed price of $5.00 per share, and was subject to 15 mandatory monthly redemptions of approximately $333,000 commencing on August 17, 2002. We were
permitted to make redemption payments in cash or by delivering shares of our common stock based on a 10% discount to market price of the stock at the time of the redemption payment. No shares of Series C preferred stock remain outstanding.

On June 30, 2005, we entered into an agreement with Dolphin Direct Equity Partners, LP (Dolphin) to sell up to 160,000 shares of the
Companys newly-created Series AA convertible preferred stock for an aggregate purchase price of $16.0 million. Our shareholders approved the transaction at a special shareholders meeting on August 15, 2005. This resulted in an
initial closing on August 19, 2005 at which we issued 80,400 shares of preferred stock for $8.0 million in proceeds. Existing holders of the Companys common shares were allowed to participate in a registered rights offering for the
remaining 79,600 shares of preferred stock, which was completed in February 2006, at which point there was a second closing on the remainder of the $16.0 million Dolphin transaction. As a result of certain common shareholders participating in the
rights offering, the second closing and increases in the stated value of the Series AA convertible preferred shares, Dolphin currently owns 54.4% of the voting rights of the Company.



F-18



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

5. Preferred Stock and
Shareholders Equity (Deficit) (continued)



Each share of preferred stock is convertible at the election of the holder into shares of our common stock by
dividing the stated value of the preferred stock then outstanding by a conversion price. The initial stated value of each preferred share is $100 and the initial conversion price is $1.00. The conversion price will be adjusted to reflect
subdivisions or combinations of the Companys common stock such as stock splits, stock dividends, recapitalizations or reverse splits. The conversion price will also be adjusted in the event we issue shares of common stock or common stock
equivalents for per-share consideration less than the conversion price then in effect, subject to certain exceptions. We have considered the FASB issued SFAS 133, Accounting for Derivative Instruments and Hedging Activities and EITF 00-19,
Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Companys own stock, EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable
Features, and 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, in accounting for the conversion feature embedded within the preferred stock. Based on an analysis of this accounting literature, the Company
believes that the embedded conversion option would be a separately accounted for derivative liability from the preferred stock. However, the Company has determined the amount to be immaterial, and accordingly we have not recorded the amount on the
balance sheet. We will evaluate the value of the warrants annually, and will record a liability when the value of the warrants approaches or exceeds the exercise price.

The stated value of each share of preferred stock will, on a quarterly basis, increase at the rate of 9.55% over the stated value then in effect, based on (i) a one-time adjustment based on a function of
diminished net asset value, determined based on a variety of components, as of the initial closing date, and (ii) a 50 basis point increase in the event our common stock ceases to be listed on the Nasdaq National Market, provided that the
increase will only be 25 basis points if our common stock is listed on the Nasdaq Capital Market or the American Stock Exchange. On November 15, 2005, we received the decision of a Nasdaq Hearings Panel to delist our common stock effective
November 17, 2005. As a result of the diminished net asset value at the initial closing and the delisting of our common stock, the stated value increase rate for the preferred stock will be 9.55% quarterly, with the possibility of decreasing by
50 basis points if the Company becomes relisted on the Nasdaq National Market, or by 25 basis points if the Company becomes relisted on the Nasdaq Capital Market or American Stock Exchange.

In the event of a liquidation event, each preferred shareholder is entitled to receive cash in the amount of the stated value then in effect. A liquidation event is
defined as the voluntary or involuntary liquidation, dissolution or winding up of the Company or a Change of Control. The liquidation value of the preferred shares as of December 31, 2005 was $9.2 million.

Either the Company or Series AA shareholders may redeem 100%, but not less than 100%, of the outstanding preferred stock at any time after August 19, 2010 at a
price equal to the stated value. As a result of the Series AA shareholders future right of redemption, the preferred stock has not been included in the shareholders equity (deficit) section of the balance sheet.

The terms of our purchase agreement with Dolphin require that we maintain authorized but unissued common stock of at least 130% of the total common shares into which the
preferred stock can convert, prohibit us from issuing any further Series AA preferred stock or any other class of preferred stock, and any warrants, rights or options at an exercise price that is less than the conversion price of the preferred
stock.

Approval by a majority of the preferred stockholders must first be obtained before we are allowed to execute any of the following transactions:
increase or decrease the number of authorized preferred shares, create any new class of equity shares with rights, preferences or privileges at or above the Series AA Preferred stock, repurchase any common stock, enter into any agreement allowing a
person or entity to acquire 50% or more of the Company's voting power, pay dividends, obtain new debt financing in the aggregate by more than $100,000, or change the permitted number of directors allowed on the Board.

In connection with the initial closing, we also issued warrants to purchase up to 9,000 additional shares of preferred stock to Belle Haven Investments, LP, one of the
placement agents for the transactions. The warrants issued to Belle Haven are exercisable for up to 9,000 shares of preferred stock, at an exercise price of $100 per share of preferred stock. The warrants expire on August 18, 2010.



F-19



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

5. Preferred Stock and
Shareholders Equity (Deficit) (continued)



Common Stock

In
January, 2004, we issued 250,000 ten year warrants with an exercise price of $1.10 in conjunction with a debt restructuring.

During January, 2004, we also
issued 2.1 million shares of common stock at $1.05 per share in a private placement financing. This issuance triggered an antidilution clause related to warrants granted in connection with the 2002 preferred stock issuance. The exercise price
was decreased from $2.50 to $1.05 per share. All previous warrants were cancelled and 435,009 of new warrants exerciseable at $1.05 were issued. An additional 659, 681 warrants with an exercise price of $4.01 per share were also issued under the
terms of this warrant agreement.

In February, 2004, we sold 1.5 million shares at a purchase price of $2.20 per share in a private placement with an
institutional investor. The transaction also included the issuance of 340,000 three-year warrants at an exercise price of $2.20 per share. Antidilution provisions in these warrants later resulted in an increase to 389,583 warrants with a reduced
exercise price of $1.92 per share. 210,000 5 year warrants with an exercise price of $1.05 per share were issued to an agent for this placement.

In
September, 2004, we sold 1.7 million shares at a purchase price of $1.10 per share in a private placement. The transaction included the issuance of 336,178 warrants with an exercise price of $1.50 per share and 161,366 warrants with an exercise
price of $1.10 per share.

The above 2004 stock issuances triggered an antidilution clause related to warrants granted in 1999. The exercise price of these
warrants decreased from $4.88 to $3.78 and the number of related warrants increased by 153,851.

In 2006 the shareholders increased from 50,000,000 to
250,000,000 the number of shares of common stock we are authorized to issue. In August, 2006, employees purchased 90,591 shares at $0.051 per share under the Employee Stock Purchase Plan. (See Note 12 Employee Stock Purchase Plan.)

Warrants

The following table summarizes the various
common stock warrants outstanding on December 31, 2006.



|                                |  |                    |  |                |  |                                |  |                |     
|------------------------------- |  | ------------------ |  | -------------- |  | ------------------------------ |  | -------------- | ----
|Purpose                         |  | Number Outstanding |  | Issue Date     |  | Expiration Date                |  | Exercise Price
|Subordinated debt financing     |  | 200,825            |  | March 1998     |  | April 2007                     |  |                | 1.78
|Subordinated debt financing     |  | 27,585             |  | April 2002     |  | April 2007                     |  |                | 1.78
|Agent fees for preferred stock  |  | 50,000             |  | May 2002       |  | May 2007                       |  |                | 5.00
|Preferred stock issuance        |  | 435,009            |  | May 2002       |  | May 2007                       |  |                | 1.05
|Preferred stock issuance        |  | 659,681            |  | May 2004       |  | November 2009                  |  |                | 4.01
|Legal settlement                |  | 300,000            |  | September 2003 |  | September 2008                 |  |                | 2.50
|Subordinate debt refinancing    |  | 275,000            |  | January 2004   |  | January 2014                   |  |                | 1.00
|Institutional private placement |  | 389,583            |  | February 2004  |  | February 2007                  |  |                | 1.92
|Agent fees                      |  | 210,000            |  | March 2004     |  | March 2009                     |  |                | 1.05
|Institutional private placement |  | 504,267            |  | September 2004 |  | September 2009                 |  |                | 1.00
|Agent fees                      |  | 177,503            |  | September 2004 |  | September 2009                 |  |                | 1.00
|Consulting fees                 |  | 72,000             |  | Jan - Dec 2005 |  | January 2008                   |  |                | 1.50
|                                |  | 3,301,453          |  |                |  | WeightedAverageExercise Price: |  | $              | 1.98
|                                |  |                    |  |                |  |                                |  |                |     



F-20



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

5. Preferred Stock and
Shareholders Equity (Deficit) (continued)



We account for warrants issued for consulting services and in conjunction with debt instruments by determining the
fair value of the warrant and amortizing the expense over the consulting period or the maturity term of the debt. Warrants issued in association with equity instruments are not valued as the valuation would have no effect on the Companys
financial statements. In certain instances involving significant issuances, we have determined valuations of the fair value of warrants using accredited valuation specialists.

6. Stock Option Plan

Our various Stock Option Plans, as approved and amended by our shareholders, authorize the
grant of options to officers, key employees, and consultants for up to 9,100,000 shares of our common stock. This number includes 7,500,000 shares under the 2004 equity incentive plan approved by shareholders on May 20, 2004. Prior year options
granted under all plans generally have 10-year terms and vest 25% each year following the date of grant. All of the 120,000 options that were granted in 2005 had one-year terms and vested in January 2006. In 2006, 4,958,881 options were granted to
officers. Of these, 3,000,000 will vest in equal annual increments over five years beginning in December 2007. The remainder vested immediately.

Effective
January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standard 123(R) Share-Based Payment (SFAS 123R) using the modified prospective transition method. In
addition, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 Share-Based Payment (SAB 107) in March, 2005, which provides supplemental SFAS 123R application guidance based on the views
of the SEC. Under the modified prospective transition method, compensation cost recognized in the period ended September 30, 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of
January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted beginning January 1, 2006, based on the
grant date fair value estimated in accordance with the provisions of SFAS 123R. Expected pre-vesting forfeitures were estimated based on actual historical pre-vesting forfeitures over the most recent periods ending December 31, 2006 for the
expected option term. In accordance with the modified prospective transition method, results for prior periods have not been restated. Unearned compensation for performance-based options is shown as a reduction of shareholders equity in the
consolidated balance sheet.

A summary of our stock option activity, and related information for the years ended December 31 follows:



|                              |  |         |           |      |                              |      |         |  |   |                              |   |         |   |      |                              |   |           |   |  |   |     
|----------------------------- |  | ------- | --------- | ---- | ---------------------------- | ---- | ------- |  | - | ---------------------------- | - | ------- | - | ---- | ---------------------------- | - | --------- | - |  | - | ----
|                              |  | 2006    |           | 2005 |                              | 2004
|                              |  | Options |           |      | WeightedAverageExercisePrice |      | Options |  |   | WeightedAverageExercisePrice |   | Options |   |      | WeightedAverageExercisePrice
|Outstanding-beginning of year |  |         | 2,011,583 |      |                              | $    | 3.00    |  |   | 2,355,568                    |   |         | $ | 2.90 |                              |   | 1,445,161 |   |  | $ | 3.44
|Granted                       |  |         | 4,958,881 |      |                              |      | 0.30    |  |   | 120,000                      |   |         |   | 1.32 |                              |   | 1,035,884 |   |  |   | 2.02
|Exercised                     |  |         |          |      |                              |      |        |  |   |                             |   |         |   |     |                              |   | (61,516   | ) |  |   | 1.27
|Forfeited                     |  |         | (270,773  | )    |                              |      | 3.24    |  |   | (463,985                     | ) |         |   | 3.77 |                              |   | (63,961   | ) |  |   | 3.40
|                              |  |         |           |      |                              |      |         |  |   |                              |   |         |   |      |                              |   |           |   |  |   |     
|Outstanding-end of year       |  |         | 6,699,691 |      |                              | $    | 0.89    |  |   | 2,011,583                    |   |         | $ | 2.65 |                              |   | 2,355,568 |   |  | $ | 2.90
|                              |  |         |           |      |                              |      |         |  |   |                              |   |         |   |      |                              |   |           |   |  |   |     
|Exercisable at end of year    |  |         | 3,699,691 |      |                              | $    | 1.45    |  |   | 1,277,126                    |   |         | $ | 3.00 |                              |   | 1,271,872 |   |  | $ | 3.52
|                              |  |         |           |      |                              |      |         |  |   |                              |   |         |   |      |                              |   |           |   |  |   |     
|Aggregate intrinsic value     |  | $       | 0.00      |      |                              |      |         |  | $ | 0.00                         |   |         |   |      |                              | $ | 0.00      |   |  |   |     



F-21



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

6. Stock Option Plan
(continued)



The following table summarizes our stock options outstanding at December 31, 2006:



|                     |  |           |  |                                           |  |                                |     
|-------------------- |  | --------- |  | ----------------------------------------- |  | ------------------------------ | ----
|Exercise Price Range |  | Shares    |  | Weighted-Averageremainingcontractual life |  | Weighted-Averageexercise price
|$0.20-$1.50          |  | 5,728,338 |  | 5.81 years                                |  | $                              | 0.43
|$1.60-$2.50          |  | 498,000   |  | 7.44 years                                |  | $                              | 2.39
|$2.75-$3.03          |  | 140,300   |  | 5.50 years                                |  | $                              | 2.90
|$4.00-$5.00          |  | 183,265   |  | 3.42 years                                |  | $                              | 4.72
|$5.25-$6.50          |  | 78,850    |  | 2.42 years                                |  | $                              | 5.73
|$7.00-$9.00          |  | 70,938    |  | 2.24 years                                |  | $                              | 8.18
|                     |  |           |  |                                           |  |                                |     
|Total                |  | 6,699,691 |  |                                           |  |                                |     

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that
have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of subjective assumptions including the expected stock price volatility and appropriate adjustments for restrictions on exercising the
options. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements
opinion, this model does not necessarily provide a reliable single measure of the fair value of its employee stock options.

7. Income Taxes

Income tax expense and the related current and deferred tax liabilities for all periods presented relate primarily to the Companys U.K. and
Canadian operations.

For financial reporting purposes, loss before income taxes includes the following components (in thousands):



|                                                                                                              |  |      |       |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                              |  | 2006 |       |   | 2005 |   |         | 2004 | 
|Pretax income (loss):                                                                                         |  |      |       |   |      |   |         |      |  |   |         |  
|United States                                                                                                 |  | $    | 817   |   |      | $ | (10,185 | )    |  | $ | (7,406  | )
|Foreign                                                                                                       |  |      | 677   |   |      |   | (7,720  | )    |  |   | (13,670 | )
|                                                                                                              |  |      |       |   |      |   |         |      |  |   |         |  
|                                                                                                              |  | $    | 1,494 |   |      | $ | (17,905 | )    |  | $ | (21,076 | )
|                                                                                                              |  |      |       |   |      |   |         |      |  |   |         |  
|                                                                                                             
|The provision for income taxes for the years ended December 31, is comprised of the following (in thousands): | 
|                                                                                                              |  |      |      
|                                                                                                              |  | 2006 |       |   | 2005 |   |         | 2004 | 
|Current                                                                                                       |  | $    | (273  | ) |      | $ | 101     |      |  | $ | 351     |  
|Deferred                                                                                                      |  |      | (30   | ) |      |   | 147     |      |  |   | (263    | )
|                                                                                                              |  |      |       |   |      |   |         |      |  |   |         |  
|                                                                                                              |  | $    | (303  | ) |      | $ | 248     |      |  | $ | 88      |  
|                                                                                                              |  |      |       |   |      |   |         |      |  |   |         |  



F-22



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

7. Income Taxes (continued)



The reconciliation of income tax attributable to continuing operations computed at the U.S. federal statutory tax
rates to actual income tax expense is (in thousands):



|                                                                                                                                                                                                                                                                                                                                  |  |      |         |   |      |   |         |      |  |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                                                                                                                                                                                                                                                                                  |  | 2006 |         |   | 2005 |   |         | 2004 | 
|Expected rate at 35%                                                                                                                                                                                                                                                                                                              |  | $    | 523     |   |      | $ | (6,267  | )    |  | $ | (7,379 | )
|State Taxes                                                                                                                                                                                                                                                                                                                       |  |      | 21      |   |      |   | (306    | )    |  |   | (150   | )
|Effect of permanent difference                                                                                                                                                                                                                                                                                                    |  |      |         |   |      |   |         |      |  |   |        |  
|Foreign dividends                                                                                                                                                                                                                                                                                                                 |  |      |        |   |      |   |        |      |  |   | 384    |  
|Other                                                                                                                                                                                                                                                                                                                             |  |      | 68      |   |      |   | 72      |      |  |   | 51     |  
|Alternative minimum tax                                                                                                                                                                                                                                                                                                           |  |      | 34      |   |      |   |        |      |  |   |       |  
|Adjustment to carryforwards                                                                                                                                                                                                                                                                                                       |  |      | 28      |   |      |   | 424     |      |  |   |       |  
|Foreign Taxes                                                                                                                                                                                                                                                                                                                     |  |      | (433    | ) |      |   | 307     |      |  |   | 427    |  
|Valuation allowance                                                                                                                                                                                                                                                                                                               |  |      | (544    | ) |      |   | 5,980   |      |  |   | 6,778  |  
|Other                                                                                                                                                                                                                                                                                                                             |  |      |        |   |      |   | 38      |      |  |   | (23    | )
|                                                                                                                                                                                                                                                                                                                                  |  |      |         |   |      |   |         |      |  |   |        |  
|                                                                                                                                                                                                                                                                                                                                  |  | $    | (303    | ) |      | $ | 248     |      |  | $ | 88     |  
|                                                                                                                                                                                                                                                                                                                                 
|Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. Significant components of our deferred tax liabilities and assets as of December 31 are as follows ($ in 000s): | 
|                                                                                                                                                                                                                                                                                                                                  |  |      |        
|                                                                                                                                                                                                                                                                                                                                  |  | 2006 |         |   | 2005 |   |         | 2004 | 
|Deferred Tax Liabilities-Domestic                                                                                                                                                                                                                                                                                                 |  |      |         |   |      |   |         |      |  |   |        |  
|Tax depreciation in excess of book depreciation                                                                                                                                                                                                                                                                                   |  | $    | 966     |   |      | $ | 1,267   |      |  | $ | (2,263 | )
|Other                                                                                                                                                                                                                                                                                                                             |  |      |        |   |      |   |        |      |  |   |       |  
|                                                                                                                                                                                                                                                                                                                                  |  |      |         |   |      |   |         |      |  |   |        |  
|                                                                                                                                                                                                                                                                                                                                  |  |      | 966     |   |      |   | 1,267   |      |  |   | (2,263 | )
|Deferred Tax Assets-Domestic                                                                                                                                                                                                                                                                                                      |  |      |         |   |      |   |         |      |  |   |        |  
|Net operating loss carry-forward                                                                                                                                                                                                                                                                                                  |  |      | 8,500   |   |      |   | 9,007   |      |  |   | 7,746  |  
|Goodwill Impairment                                                                                                                                                                                                                                                                                                               |  |      |        |   |      |   |        |      |  |   | 1,224  |  
|Deferred Income                                                                                                                                                                                                                                                                                                                   |  |      | 137     |   |      |   |        |      |  |   | 8      |  
|Foreign currency translation                                                                                                                                                                                                                                                                                                      |  |      | 491     |   |      |   | 197     |      |  |   | 374    |  
|Reserves for doubtful accounts                                                                                                                                                                                                                                                                                                    |  |      | 113     |   |      |   | 100     |      |  |   | 83     |  
|Other                                                                                                                                                                                                                                                                                                                             |  |      | 332     |   |      |   | 248     |      |  |   | 41     |  
|                                                                                                                                                                                                                                                                                                                                  |  |      |         |   |      |   |         |      |  |   |        |  
|                                                                                                                                                                                                                                                                                                                                  |  |      | 9,573   |   |      |   | 9,552   |      |  |   | 9,476  |  
|Valuation allowance for deferred tax assets                                                                                                                                                                                                                                                                                       |  |      | (10,539 | ) |      |   | (10,819 | )    |  |   | (7,213 | )
|                                                                                                                                                                                                                                                                                                                                  |  |      |         |   |      |   |         |      |  |   |        |  
|Net deferred tax-Domestic                                                                                                                                                                                                                                                                                                         |  | $    |        |   |      | $ |        |      |  | $ |       |  
|                                                                                                                                                                                                                                                                                                                                  |  |      |         |   |      |   |         |      |  |   |        |  
|Deferred Tax Liabilities-International                                                                                                                                                                                                                                                                                            |  |      |         |   |      |   |         |      |  |   |        |  
|Tax depreciation in excess of book depreciation                                                                                                                                                                                                                                                                                   |  | $    | (395    | ) |      | $ | (321    | )    |  | $ | (248   | )
|Deferred Tax Assets-International                                                                                                                                                                                                                                                                                                 |  |      |         |   |      |   |         |      |  |   |        |  
|Net operating loss carry-forward                                                                                                                                                                                                                                                                                                  |  |      | 3,916   |   |      |   | 4,191   |      |  |   | 3,349  |  
|Goodwill Impairment                                                                                                                                                                                                                                                                                                               |  |      | 4,721   |   |      |   | 4,721   |      |  |   | 3,189  |  
|Valuation allowance for deferred tax assets                                                                                                                                                                                                                                                                                       |  |      | (8,607  | ) |      |   | (8,912  | )    |  |   | (6,538 | )
|                                                                                                                                                                                                                                                                                                                                  |  |      |         |   |      |   |         |      |  |   |        |  
|Net deferred tax liability-International                                                                                                                                                                                                                                                                                          |  | $    | (365    | ) |      | $ | (321    | )    |  | $ | (248   | )
|                                                                                                                                                                                                                                                                                                                                  |  |      |         |   |      |   |         |      |  |   |        |  

Taxes of $96,000, $505,000 and $289,000 were paid during 2006, 2005, and 2004, respectively. The domestic and
international net operating loss carry forwards of approximately $23.9 million and $12.9 million, respectively, will expire from the year 2010 through 2025. We have not provided for any taxes on undistributed foreign earnings as we intend to
permanently reinvest these earnings in the future growth of the business and there are no unremitted, cumulative foreign earnings.

Under the Internal
Revenue Code, the utilization of net operating losses are likely to be limited if there is a significant ownership change.



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)



8. Related Party Transactions

On June 30, 2005, we entered into an agreement with Dolphin to sell up to 160,000 shares of the Companys Series AA convertible preferred stock for an aggregate purchase price of $16.0 million. The initial
closing took place on August 19, 2005. As part of the agreement, we paid Dolphin $320,000 in fees out of the proceeds of the initial closing, and entered into a Management Services Agreement whereby we will pay Dolphin $80,000 quarterly. In
October 2005, we entered into a $7.0 million bridge loan with Dolphin which was repaid in February 2006 from funds received from the second closing on the preferred stock transaction.

In July 2001 and subsequently in July 2002, the board of directors authorized a loan, with recourse, to one of its officers for a total amount of $467,000. The purpose of this loan was to assist the officer in
exercising stock options. This loan is secured by a general pledge of personal assets of the officer, bears interest at 6%, and matures on November 1, 2006. The shares issued upon exercise of the stock options are recorded in shareholders
equity but this transaction had no financial effect on shareholders equity as the loan is offset by the amounts recorded to common stock resulting from the exercise of the options. In 2005, it was determined that the principal collateral of
common stock had a valuation significantly below the value of the receivable. Accordingly, a provision for the total amount of the loan was recorded for a possible loss on collection of the collateralized note receivable.

On January 6, 2003, we entered into a 120 day promissory note agreement for $500,000 at 12% with one of our directors. This note was repaid with the proceeds from a
$7.3 million subordinated debt financing.



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)



9. Business Segment Analysis

We offer a broad range of audio, video, and other teleconferencing services to corporate business clients and institutions, and these services are considered one line of business as they are integrated.

Our decisions on resource allocation and performance assessment are primarily based on the market potential of each regional operating location. Each of the locations
offers the same products and services, has similar customers and equipment, and is managed directly by our executives, allowing all locations to be aggregated under the guidelines of FASB Statement No. 131 resulting in one reportable line of
business to the extent that services are separately identifiable

The following summary provides financial data for our operating segments:

For the year ended December 31, 2006:



|                                      |  |                |        |   |       |   |        |          |  |   |           |   |  |       |        |   |  |   |         |  
|------------------------------------- |  | -------------- | ------ | - | ----- | - | ------ | -------- |  | - | --------- | - |  | ----- | ------ | - |  | - | ------- | -
|                                      |  | Audio          |        |   | Video |   |        | Subtotal |  |   | Corporate |   |  | Total |       
|                                      |  | (in thousands) |       
|Net Revenues                          |  | $              | 43,228 |   |       | $ | 10,393 |          |  | $ | 53,621    |   |  | $     |       |   |  | $ | 53,621  |  
|Income (loss) before tax              |  |                | 3,868  |   |       |   | 2,851  |          |  |   | 6,719     |   |  |       | (5,225 | ) |  |   | 1,494   |  
|Depreciation and amortization         |  |                | 2,415  |   |       |   | 450    |          |  |   | 2,865     |   |  |       | 446    |   |  |   | 3,311   |  
|Total assets                          |  | $              | 19,690 |   |       | $ | 3,591  |          |  | $ | 23,281    |   |  | $     | 1,269  |   |  | $ | 24,550  |  
|                                      |  |                |        |   |      
|For the year ended December 31, 2005: |  |                |        |   |       |   |        |          |  |   |           |   |  |       |        |   |  |   |         |  
|                                      | 
|                                      |  | (in thousands) |       
|Net Revenues                          |  | $              | 40,502 |   |       | $ | 10,462 |          |  | $ | 50,964    |   |  | $     |       |   |  | $ | 50,964  |  
|Loss before tax                       |  |                | (4,661 | ) |       |   | (5,084 | )        |  |   | (9,745    | ) |  |       | (8,160 | ) |  |   | (17,905 | )
|Depreciation and amortization         |  |                | 2,952  |   |       |   | 566    |          |  |   | 3,518     |   |  |       | 650    |   |  |   | 4,168   |  
|Total assets                          |  | $              | 17,224 |   |       | $ | 3,361  |          |  | $ | 20,585    |   |  | $     | 1,227  |   |  | $ | 21,812  |  
|                                      |  |                |        |   |      
|For the year ended December 31, 2004: |  |                |        |   |       |   |        |          |  |   |           |   |  |       |        |   |  |   |         |  
|                                      | 
|                                      |  | (in thousands) |       
|Net Revenues                          |  | $              | 39,123 |   |       | $ | 14,417 |          |  | $ | 53,540    |   |  | $     |       |   |  | $ | 53,540  |  
|Loss before tax                       |  |                | (3,799 | ) |       |   | (9,043 | )        |  |   | (12,842   | ) |  |       | (8,234 | ) |  |   | (21,076 | )
|Depreciation and amortization         |  |                | 3,666  |   |       |   | 1,001  |          |  |   | 4,667     |   |  |       | 882    |   |  |   | 5,549   |  
|Total assets                          |  | $              | 23,007 |   |       | $ | 13,229 |          |  | $ | 36,236    |   |  | $     | 2,282  |   |  | $ | 38,518  |  

The following summary provides financial data for significant geographic markets in which we operate:

For the year ended December 31, 2006:



|                  |  |                |        |        |   |             |  |       |       |  |   |       
|----------------- |  | -------------- | ------ | ------ | - | ----------- |  | ----- | ----- |  | - | ------
|                  |  | NorthAmerica   |        | Europe |   | AsiaPacific |  | Total
|                  |  | (in thousands)
|Net Revenues      |  | $              | 34,769 |        | $ | 13,638      |  | $     | 5,214 |  | $ | 53,621
|Long-Lived Assets |  |                | 7,070  |        |   | 2,427       |  |       | 956   |  |   | 10,453

For the year ended December 31, 2005:



|                  |  |   |        |  |   |        |  |   |       |  |   |       
|----------------- |  | - | ------ |  | - | ------ |  | - | ----- |  | - | ------
|Net Revenues      |  | $ | 31,013 |  | $ | 14,875 |  | $ | 5,076 |  | $ | 50,964
|Long-Lived Assets |  |   | 7,614  |  |   | 1,680  |  |   | 791   |  |   | 10,085

For the year ended December 31, 2004:



|                  |  |   |        |  |   |        |  |   |       |  |   |       
|----------------- |  | - | ------ |  | - | ------ |  | - | ----- |  | - | ------
|Net Revenues      |  | $ | 32,165 |  | $ | 15,096 |  | $ | 6,279 |  | $ | 53,540
|Long-Lived Assets |  |   | 14,930 |  |   | 7,581  |  |   | 2,841 |  |   | 23,352



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)

9. Business Segment Analysis
(continued):



In 2006, the United States comprised approximately 55% of total company revenue and 92% of total North American
revenue. The United Kingdom comprised approximately 25% of total company revenue and 86% of total European revenue. Canada comprised approximately 10% of total company revenue and 17% of North American revenue. Australia comprised approximately 7%
of total company revenue and 70% total Asia Pacific revenue.

10. Fair Value of Financial Instruments

Our financial instruments consist primarily of cash, temporary investments, certificates of deposit maturing in more than one year, accounts receivable, accounts payable,
long-term debt, and capitalized lease obligations.

Because accounts receivable and accounts payable are short-term instruments that are settled at face
value, we consider their carrying amounts to approximate fair value.

The fair value of long-term debt, consisting of notes and capitalized lease
obligations, is based on interest rates available to us and comparisons to market rates. We consider the carrying amounts to approximate fair value.

11. Defined Contribution Plan

We have a defined contribution 401(k) plan for our United States employees, which allows eligible employees
to contribute a percentage of their compensation and provides for certain discretionary employer matching contributions. We made no plan contributions in 2006, 2005 or 2004.

12. Employee Stock Purchase Plan

Our employee stock purchase plan became effective July 1, 1998. Pursuant to
the Employee Stock Purchase Plan of 1998, as amended and restated effective June 29, 2004 (the Plan), the Company is authorized to sell up to 500,000 shares of common stock to eligible employees. The Plan is intended to be an
"employee stock purchase plan" within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as amended, and is interpreted and administered in a manner consistent with such intent. The purchase price of each share of common stock
sold pursuant to this Plan is calculated on the lesser of 85% of the fair market value of the common stock on the first day of the purchase period or 85% of the fair market value of such share on the last day of the purchase period. During 2006, the
Company issued 90,591 shares of common stock to employees under the Plan, bringing the total number of common shares purchased under the plan to 438,064.

On September 8, 2006, the Board of Directors terminated the Plan, since the stock was no longer trading on NASDAQ. Under the terms of the Plan, the Board of Directors has the discretion to terminate it at any time, after 30 days
notice has been given to the participants. Upon termination of the Plan, all accrued common shares were issued and the remaining cash in the participants recordkeeping accounts was refunded to participants, as if the Plan was terminated at the
end of a purchase period.

13. Legal Proceedings

We
are engaged from time to time in minor legal proceedings such as debt collection and employee dispute and arbitration. These are in the normal course of business and are not considered material to the business.



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)



14. Quarterly Results of Operations - Unaudited

The following is a summary of the quarterly results of operations for the years ended December 31, 2006, 2005 and 2004:



|                                                                |  |          |        |   |         |   |        |              |  |   |             |   |  |   |         |  
|--------------------------------------------------------------- |  | -------- | ------ | - | ------- | - | ------ | ------------ |  | - | ----------- | - |  | - | ------- | -
|(in thousands except per share amounts)                         |  | March 31 |        |   | June 30 |   |        | September 30 |  |   | December 31 |  
|Year ended December 31, 2006                                    |  |          |        |   |         |   |        |              |  |   |             |   |  |   |         |  
|Net revenues                                                    |  | $        | 12,604 |   |         | $ | 13,740 |              |  | $ | 12,919      |   |  | $ | 14,358  |  
|Gross profit                                                    |  |          | 4,530  |   |         |   | 5,084  |              |  |   | 4,909       |   |  |   | 5,512   |  
|Goodwill Impairment                                             |  |          |       |   |         |   |       |              |  |   |            |   |  |   |        |  
|Impairment of long-lived tangible assets                        |  |          |       |   |         |   |       |              |  |   |            |   |  |   |        |  
|Restructuring costs                                             |  |          |       |   |         |   |       |              |  |   |            |   |  |   |        |  
|Operating income (loss)                                         |  |          | (263   | ) |         |   | 364    |              |  |   | 645         |   |  |   | 728     |  
|Net income (loss)                                               |  |          | (489   | ) |         |   | 227    |              |  |   | 699         |   |  |   | 1,360   |  
|Preferred Stock Dividend and accretion of preferred shares      |  |          | (1,253 | ) |         |   | (1,831 | )            |  |   | (1,997      | ) |  |   | (2,180  | )
|Net loss available to common shareholders                       |  |          | (1,742 | ) |         |   | (1,604 | )            |  |   | (1,298      | ) |  |   | (820    | )
|Weighted average number of shares outstanding Basic and diluted |  |          | 16,797 |   |         |   | 16,797 |              |  |   | 16,825      |   |  |   | 17,041  |  
|Net loss per sharebasic and diluted                            |  |          | (0.10  | ) |         |   | (0.10  | )            |  |   | (0.08       | ) |  |   | (0.04   | )
|Year ended December 31, 2005                                    |  |          |        |   |         |   |        |              |  |   |             |   |  |   |         |  
|Net revenues                                                    |  | $        | 13,031 |   |         | $ | 13,219 |              |  | $ | 12,259      |   |  | $ | 12,455  |  
|Gross profit                                                    |  |          | 4,679  |   |         |   | 5,180  |              |  |   | 4,326       |   |  |   | 4,676   |  
|Goodwill Impairment                                             |  |          |       |   |         |   |       |              |  |   | 7,091       |   |  |   |        |  
|Impairment of long-lived tangible assets                        |  |          |       |   |         |   |       |              |  |   | 1,308       |   |  |   | 3,234   |  
|Restructuring costs                                             |  |          | 831    |   |         |   | 904    |              |  |   | 332         |   |  |   | 143     |  
|Operating loss                                                  |  |          | (1,127 | ) |         |   | (894   | )            |  |   | (10,099     | ) |  |   | (3,827  | )
|Net loss                                                        |  |          | (2,019 | ) |         |   | (1,916 | )            |  |   | (10,578     | ) |  |   | (3,640  | )
|Preferred Stock Dividend and accretion of preferred shares      |  |          |       |   |         |   |       |              |  |   | 351         |   |  |   | 901     |  
|Net loss available to common shareholders                       |  |          | (2,019 | ) |         |   | (1,916 | )            |  |   | (10,929     | ) |  |   | (4,541  | )
|Weighted average number of shares outstanding Basic and diluted |  |          | 16,710 |   |         |   | 16,762 |              |  |   | 16,762      |   |  |   | 16,775  |  
|Net loss per sharebasic and diluted                            |  |          | (0.12  | ) |         |   | (0.11  | )            |  |   | (0.65       | ) |  |   | (0.27   | )
|Year ended December 31, 2004                                    |  |          |        |   |         |   |        |              |  |   |             |   |  |   |         |  
|Net revenues                                                    |  | $        | 13,996 |   |         | $ | 13,601 |              |  | $ | 12,686      |   |  | $ | 13,257  |  
|Gross profit                                                    |  |          | 5,514  |   |         |   | 4,959  |              |  |   | 4,867       |   |  |   | 4,887   |  
|Goodwill Impairment                                             |  |          |       |   |         |   |       |              |  |   |            |   |  |   | 13,600  |  
|Impairment of long-lived tangible assets                        |  |          |       |   |         |   |       |              |  |   |            |   |  |   | 1,761   |  
|Restructuring costs                                             |  |          |       |   |         |   |       |              |  |   |            |   |  |   | 1,081   |  
|Operating income/(loss )                                        |  |          | 87     |   |         |   | (1,045 | )            |  |   | (239        | ) |  |   | (17,237 | )
|Net loss                                                        |  |          | (402   | ) |         |   | (1,929 | )            |  |   | (789        | ) |  |   | (18,044 | )
|Preferred Stock Dividend                                        |  |          |       |   |         |   |       |              |  |   |            |   |  |   |        |  
|Net loss available to common shareholders                       |  |          | (402   | ) |         |   | (1,929 | )            |  |   | (789        | ) |  |   | (18,044 | )
|Weighted average number of shares outstanding Basic and diluted |  |          | 13,440 |   |         |   | 14,835 |              |  |   | 15,256      |   |  |   | 16,639  |  
|Net loss per sharebasic and diluted                            |  |          | (0.03  | ) |         |   | (0.13  | )            |  |   | (0.05       | ) |  |   | (1.08   | )



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##### Table of Contents

ACT Teleconferencing, Inc.

Notes to Consolidated Financial Statements  (Continued)



15. Acquisitions

On January 17, 2003, the earnout agreement established with certain Proximity shareholders upon the acquisition of Proximity, Inc. on January 2, 2002 was revised. Under the original agreement, 150,000 shares of our common stock
were placed into escrow and were deliverable to certain Proximity shareholders upon achieving certain earnout provisions. In exchange for modifications to the original provisions, 67,500 of the earnout shares held by the escrow agent were released
to the eligible Proximity shareholders and 10,000 options to purchase common stock for $1.19 a share and exercisable for a period of ten years were issued. An additional 71,250 shares were issued in 2003 under the terms of the agreement.

In association with this acquisition, we recorded approximately $3.9 million in goodwill. Proximity was acquired to compliment our video conferencing business.

16. Pending U.K. Tax Refund Claim

At
December 31, 2006 our UK subsidiaries have pending claims for refund of taxes paid in 2003 of approximately $300,000. Though these claims are based on the same positions we have taken in claims for refunds for tax years 2005 and 2004 where we
received the refunds, 2003 is a closed year under UK regulations. As a result, these claims were required to be filed with a different division of the UK tax authorities. We have been informed by our UK tax advisors that the division of the UK tax
authorities with which we were required to file our refund claims for 2003 is under no obligation to grant the opening of that year to review and rule on our claims. Accordingly, no amounts have been recorded in these consolidated financial
statements for any refunds which we may ultimately realize from these claims.

17. Other Income

The IRS has recently announced its intent to refund excise taxes paid on certain toll telephone services after February 28, 2003, Internal Revenue Bulletin 2006-50.
Due to early action on our part, we have been granted a refund for the entire first quarter of 2003 of approximately $30,000. We have evaluated our total potential recovery, and expect to claim an additional refund of approximately $319,000 for
excise taxes paid during 2003, 2004, 2005 and 2006 at the time the 2006 federal tax return is filed. To that end, other income in the amount of $283,000 has been recorded for excise tax paid pertaining to years before 2006, and $36,000 has been
credited to cost of services for the current period.

18. Subsequent Events

In January 2007, we extended our outsourcing contract with AT&T through December 31, 2008.

On March 19,
2007, the Company announced management changes in connection with its focus to grow the international client base for our renewed global platform. In connection with the management changes, Mr. Warren stepped down from his CEO and director
posts to become the Companys Head of Strategic Initiatives, relieving him of his managerial and administrative duties, so that he can dedicate himself entirely to developing new strategic partnerships.

Other management changes occurred at the same time. Mr. Kelly was promoted to Chief Operating Officer with responsibility for technology and operations.
Additionally, Ken Knopp, the companys former Vice President of Operations, left the Company to pursue other interests.



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##### Table of Contents

Schedule I  Condensed Financial Information of Registrant

ACT Teleconferencing, Inc.

Condensed Balance Sheets

December 31, 2006 and 2005



|                                                                                                                                                                                                                                                                                                   |  |      |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|($ in 000s)                                                                                                                                                                                                                                                                                        |  | 2006 |         |   | 2005 |  
|Assets                                                                                                                                                                                                                                                                                             |  |      |         |   |      |   |         |  
|Current assets                                                                                                                                                                                                                                                                                     |  | $    | 135     |   |      | $ | 201     |  
|Equipment and software (net of accumulated depreciation of $5,920 and $4,886)                                                                                                                                                                                                                      |  |      | 1,034   |   |      |   | 919     |  
|Other long term assets                                                                                                                                                                                                                                                                             |  |      | 100     |   |      |   | 107     |  
|Investment in and advances to subsidiaries                                                                                                                                                                                                                                                         |  |      | 13,838  |   |      |   | 10,338  |  
|                                                                                                                                                                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total assets                                                                                                                                                                                                                                                                                       |  |      | 15,107  |   |      |   | 11,565  |  
|                                                                                                                                                                                                                                                                                                   |  |      |         |   |      |   |         |  
|Liabilities and shareholders deficit                                                                                                                                                                                                                                                              |  |      |         |   |      |   |         |  
|Current liabilities:                                                                                                                                                                                                                                                                               |  |      |         |   |      |   |         |  
|Accounts payable and accrued liabilities                                                                                                                                                                                                                                                           |  | $    | 825     |   |      | $ | 1,373   |  
|Current portion of debt                                                                                                                                                                                                                                                                            |  |      | 2,153   |   |      |   | 8,249   |  
|                                                                                                                                                                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total current liabilities                                                                                                                                                                                                                                                                          |  |      | 2,978   |   |      |   | 9,622   |  
|Long-term debt                                                                                                                                                                                                                                                                                     |  |      | 661     |   |      |   | 470     |  
|Convertible redeemable preferred stock and accrued preferred dividends; each share convertible into 100 shares of common stock; 169,000 shares
authorized; 160,000 and 80,400 shares issued and outstanding in 2006 and 2005, respectively, liquidation preference of $24,093 at December 31, 2006 |  |      | 23,020  |   |      |   | 7,824   |  
|Shareholders equity (deficit):                                                                                                                                                                                                                                                                    |  |      |         |   |      |   |         |  
|Common stock, no par value; 250,000,000 shares authorized, 17,137,225 and 16,878,548 shares issued and 17,055,325 and 16,796,648 outstanding
in 2006 and 2005, respectively                                                                                                                        |  |      | 51,714  |   |      |   | 51,566  |  
|Treasury stock at cost (81,900 shares)                                                                                                                                                                                                                                                             |  |      | (241    | ) |      |   | (241    | )
|Accumulated deficit                                                                                                                                                                                                                                                                                |  |      | (67,605 | ) |      |   | (62,141 | )
|Accumulated other comprehensive income                                                                                                                                                                                                                                                             |  |      | 4,580   |   |      |   | 4,465   |  
|                                                                                                                                                                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total shareholders equity (deficit)                                                                                                                                                                                                                                                               |  |      | (11,552 | ) |      |   | (6,351  | )
|                                                                                                                                                                                                                                                                                                   |  |      |         |   |      |   |         |  
|Total liabilities and shareholders equity (deficit)                                                                                                                                                                                                                                               |  |      | 15,107  |   |      | $ | 11,565  |  
|                                                                                                                                                                                                                                                                                                   |  |      |         |   |      |   |         |  

See accompanying notes to condensed financial statements.



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##### Table of Contents

Schedule I  Condensed Financial Information of Registrant

ACT Teleconferencing, Inc.

Condensed Statement of Operations

For the years ended December 31, 2006, 2005, and 2004



|                                                          |  |      |        |   |      |   |         |      |  |   |         |  
|--------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------- | ---- |  | - | ------- | -
|($ In 000s)                                              |  | 2006 |        |   | 2005 |   |         | 2004 | 
|Equity in undistributed (losses) earnings of subsidiaries |  | $    | 6,975  |   |      | $ | (10,001 | )    |  | $ | (12,935 | )
|Selling, general and administration expense               |  |      | (4,898 | ) |      |   | (5,688  | )    |  |   | (5,234  | )
|Interest expense, net                                     |  |      | (288   | ) |      |   | (2,693  | )    |  |   | (2,524  | )
|Foreign currency gain (loss)                              |  |      | 8      |   |      |   | 229     |      |  |   | (471    | )
|                                                          |  |      |        |   |      |   |         |      |  |   |         |  
|Net income (loss)                                         |  |      | 1,797  |   |      |   | (18,153 | )    |  |   | (21,164 | )
|Preferred stock dividends:                                |  |      |        |   |      |   |         |      |  |   |         |  
|Preferred dividend                                        |  |      | (6,941 | ) |      |   | (1,152  | )    |  |   |        |  
|Accretion to preferred shares                             |  |      | (320   | ) |      |   | (100    | )    |  |   |        |  
|                                                          |  |      |        |   |      |   |         |      |  |   |         |  
|Net (loss) available to common shareholders               |  | $    | (5,464 | ) |      | $ | (19,405 | )    |  | $ | (21,164 | )
|                                                          |  |      |        |   |      |   |         |      |  |   |         |  

See accompanying notes to condensed financial statements.



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##### Table of Contents

Schedule I  Condensed Financial Information of Registrant

ACT Teleconferencing, Inc.

Condensed Statements of Cash Flows

For the years ended December 31, 2006, 2005, and 2004



|                                                                                      |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|($ In 000s)                                                                           |  | 2006 |         |   | 2005 |   |         | 2004 | 
|Operating activities                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Net loss                                                                              |  | $    | 1,797   |   |      | $ | (18,153 | )    |  | $ | (21,164 | )
|Adjustments to reconcile net loss to net cash used for operating activities:          |  |      |         |   |      |   |         |      |  |   |         |  
|Equity in undistributed loss of subsidiaries                                          |  |      | 6,975   |   |      |   | 10,001  |      |  |   | 12,935  |  
|Dividends received from subsidiary                                                    |  |      |        |   |      |   | 3       |      |  |   | 1,125   |  
|Depreciation & equipment transfers                                                    |  |      | 648     |   |      |   | 640     |      |  |   | 887     |  
|Reserve for possible loss on related party receivable                                 |  |      |        |   |      |   | 467     |      |  |   |        |  
|Shares issued for services                                                            |  |      | 145     |   |      |   | 150     |      |  |   | 560     |  
|Amortization of debt costs                                                            |  |      |        |   |      |   | 720     |      |  |   | 1,047   |  
|Foreign exchange (gain) loss                                                          |  |      | (8      | ) |      |   | (39     | )    |  |   | 471     |  
|Changes in operating assets and liabilities, net of effects of business combinations: |  |      |         |   |      |   |         |      |  |   |         |  
|Current assets                                                                        |  |      | 61      |   |      |   | 501     |      |  |   | (290    | )
|Other assets                                                                          |  |      |        |   |      |   | (100    | )    |  |   | 20      |  
|Accounts payable and accrued liabilities                                              |  |      | (548    | ) |      |   | 35      |      |  |   | 305     |  
|                                                                                      |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash used for operating activities                                                |  |      | 9,070   |   |      |   | (5,775  | )    |  |   | (4,104  | )
|Investing activities                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Equipment purchases                                                                   |  |      | (762    | ) |      |   | (226    | )    |  |   | (222    | )
|Investment in and advances from (to) subsidiaries                                     |  |      | (10,376 | ) |      |   | 3,619   |      |  |   | 2,947   |  
|                                                                                      |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash provided by (used for) investing activities                                  |  |      | (11,138 | ) |      |   | 3,393   |      |  |   | 2,725   |  
|Financing activities                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Net proceeds from issuance of debt                                                    |  |      | 22,485  |   |      |   | 7,000   |      |  |   | 245     |  
|Net repayments of debt                                                                |  |      | (24,291 | ) |      |   | (11,431 | )    |  |   | (5,977  | )
|Net proceeds from the issuance of common stock                                        |  |      |        |   |      |   |        |      |  |   | 7,042   |  
|Net proceeds from issuance of preferred stock                                         |  |      | 3,862   |   |      |   | 6,572   |      |  |   |        |  
|Repayment of preferred stock dividend and principal                                   |  |      |        |   |      |   |        |      |  |   |        |  
|Net proceeds from the issuance of warrants in association with debt                   |  |      |        |   |      |   |        |      |  |   | 137     |  
|                                                                                      |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash provided by financing activities                                             |  |      | 2,056   |   |      |   | 2,141   |      |  |   | 1,447   |  
|                                                                                      |  |      |         |   |      |   |         |      |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                                  |  |      | (12     | ) |      |   | (241    | )    |  |   | 68      |  
|Cash and cash equivalents beginning of year                                           |  |      | 14      |   |      |   | 255     |      |  |   | 187     |  
|                                                                                      |  |      |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents end of year                                                 |  | $    | 2       |   |      | $ | 14      |      |  | $ | 255     |  
|                                                                                      |  |      |         |   |      |   |         |      |  |   |         |  

See accompanying notes to condensed financial statements



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##### Table of Contents

Schedule I  Condensed Financial Information of Registrant

ACT Teleconferencing, Inc.

Notes to
Condensed Financial Statements

December 31, 2006 and 2005

1. Summary of Significant Accounting Policies

Principles of Consolidation

The financial statements of ACT Teleconferencing, Inc., (the Company) reflect the investments in their wholly owned subsidiaries under the equity method.

Consolidated Financial Statements

Reference is made to the
Consolidated Financial Statements and related Notes of ACT Teleconferencing, Inc. included elsewhere herein for additional information.

Debt and
Guarantees

Information on our debt is disclosed in Note 2 of the Notes to Consolidated Financial Statements of ACT Teleconferencing, Inc. included
elsewhere herein. A United Kingdom subsidiary of ours had guaranteed debt of $4.0 million that was satisfied in October, 2005 as a result of the transaction with Dolphin.



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##### Table of Contents

Schedule IIValuation and Qualifying Accounts

ACT Teleconferencing, Inc.

Allowance for Doubtful Accounts Receivable



|                                           |  |                              |     |                                        |     |            |      |   |                        |    
|------------------------------------------ |  | ---------------------------- | --- | -------------------------------------- | --- | ---------- | ---- | - | ---------------------- | ---
|                                           |  | Balance atBeginning ofPeriod |     | Additions/Charges to Costsand Expenses |     | Deductions |      |   | Balance atEnd ofPeriod
|For the year ended December 31, 2006:      |  |                              |     |                                        |     |            |      |   |                        |    
|Allowance for doubtful accounts receivable |  | $                            | 435 |                                        | 148 |            | (82  | ) |                        | 501
|                                           |  |                              |     |                                        |     |            |      |   |                        |    
|For the year ended December 31, 2005:      |  |                              |     |                                        |     |            |      |   |                        |    
|Allowance for doubtful accounts receivable |  | $                            | 413 |                                        | 224 |            | (202 | ) |                        | 435
|                                           |  |                              |     |                                        |     |            |      |   |                        |    
|For the year ended December 31, 2004:      |  |                              |     |                                        |     |            |      |   |                        |    
|Allowance for doubtful accounts receivable |  | $                            | 652 |                                        | 21  |            | (260 | ) |                        | 413
|                                           |  |                              |     |                                        |     |            |      |   |                        |    



F-33



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##### Table of Contents

Index to Exhibits

All exhibits are filed electronically or incorporated by reference.



|           |  |                                                                                                                                                                                                                                                                                                                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNo. |  | Description                                                                                                                                                                                                                                                                                                                                                                             
|           | 
|3.1       |  | Amended and Restated Articles of Incorporation of ACT Teleconferencing, Inc.                                                                                                                                                                                                                                                                                                            
|           | 
|3.2        |  | Amended and Restated Bylaws of ACT Teleconferencing, Inc. (Incorporated by reference, attached as Exhibit 3.2.1 to our Form 10-Q for the quarter ended June 30, 2006, filed with the Securities
and Exchange Commission on August 14, 2006, File No. 0-27560).                                                                                                                          
|           | 
|4.1        |  | Form of specimen certificate for common stock of ACT Teleconferencing, Inc. (Incorporated by reference, attached as Exhibit 4.1 to our Registration Statement on Form SB-2, filed with the
Securities and Exchange Commission on October 10, 1995, and amendments to our Form SB-2, File No. 33-97908-D).                                                                               
|           | 
|10.1**     |  | Stock Option Plan of 1991, as amended, authorizing 400,000 shares of common stock for issuance under the plan (Incorporated by reference, attached as an Exhibit 10.1 to our Registration
Statement on Form SB-2, filed with the Securities and Exchange Commission on October 10, 1995, and amendments to our Form SB-2, File No. 33-97908-D).                                         
|           | 
|10.2**     |  | Form of Stock Option Agreement (Incorporated by reference, attached as Exhibit 10.2 to our Registration Statement on Form SB-2, filed with the Securities and Exchange Commission on October 10,
1995, and amendments to our Form SB-2, File No. 33-97908-D).                                                                                                                           
|           | 
|10.3**     |  | Stock Option Plan of 1996, as amended (Incorporated by reference, attached as Exhibit 4.6 to our Registration Statement on Form S-8, filed with the Securities and Exchange Commission on July 2,
1998, File 333-58403).                                                                                                                                                                
|           | 
|10.4**     |  | Stock Option Plan of 2000, as amended (Incorporated by reference, attached as Exhibit 10.28 to our Registration Statement on Form S-1, filed with the Securities and Exchange Commission on
December 3, 2001, File No. 333-74438).                                                                                                                                                      
|           | 
|10.5**     |  | 2004 Equity Incentive Plan, as amended (Incorporated by reference, attached as Appendix D to our definitive proxy statement on Schedule 14A, filed with the Securities and Exchange Commission on
November 3, 2006, File No. 000-27560).                                                                                                                                                
|           | 
|10.6**    |  | Form of Stock Option Agreement under 2004 Equity Incentive Plan, as amended                                                                                                                                                                                                                                                                                                             
|           | 
|10.7       |  | Agreement for Videoconferencing Equipment and Services among ACT Videoconferencing, Inc. and the GTE Telephone Operating Companies named therein, dated October 1, 1998 (Incorporated by
reference, attached as Exhibit 10.27 to our Form 10-QSB for the quarter ending September 30, 1998, filed with the Securities and Exchange Commission on November 16, 1998, File No. 000-27560).
|           | 
|10.8       |  | Service order attachment signed March 15, 2001, between ACT Teleconferencing Services, Inc. and AT&T Corporation for the supply of domestic voice/data services (Incorporated by reference,
attached as Exhibit 10.29 to our Registration Statement on Form S-1, filed with the Securities and Exchange Commission on December 3, 2001, File No. 333-74438).                            
|           | 
|10.9       |  | Videoconference Services Agreement between ACT Videoconferencing and Bristol Meyers Squibb Company (Incorporated by reference, attached as Exhibit 10.42 to our report on Form 10-Q filed with the
Securities and Exchange Commission on May 15, 2002, File No. 000-27560).                                                                                                             
|           | 
|10.10      |  | Loan and Security Agreement with Silicon Valley Bank of November 19, 2004 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K filed with the Securities and Exchange
Commission on November 19, 2004, File No. 000-27560).                                                                                                                                   
|           | 
|10.10.1    |  | Forbearance and Amendment to Loan and Security Agreement with Silicon Valley Bank dated May 31, 2005 (Incorporated by reference, attached as Exhibit 10.20.1 to our report on Form 10-K filed with
the Securities and Exchange commission on April 17, 2006, File No. 000-27560).                                                                                                       
|           | 
|10.10.2    |  | Second Forbearance, Consent and Amendment to Loan and Security Agreement with Silicon Valley Bank dated July 22, 2005 (Incorporated by reference, attached as Exhibit 10.20.2 to our report on
Form 10-K filed with the Securities and Exchange commission on April 17, 2006, File No. 000-27560).                                                                                      
|           | 
|10.10.3    |  | Third Forbearance to Loan and Security Agreement with Silicon Valley Bank dated August 31, 2005 (Incorporated by reference, attached as Exhibit 10.20.3 to our report on Form 10-K filed with the
Securities and Exchange commission on April 17, 2006, File No. 000-27560).                                                                                                            
|10.10.4    |  | Fourth Forbearance and Amendment to Loan and Security Agreement with Silicon Valley Bank dated October 31, 2005 (Incorporated by reference, attached as Exhibit 10.7 to our report on Form
8-K filed with the Securities and Exchange commission on November 3, 2005, File No. 000-27560).                                                                                              



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|        |  |                                                                                                                                                                                                                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.10.5 |  | Fifth Forbearance and Amendment to Loan and Security Agreement with Silicon Valley Bank dated December 29, 2005 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K
filed with the Securities and Exchange commission on January 20, 2006, File No. 000-27560).                                        
|        | 
|10.10.6 |  | Consent under Loan and Security Agreement with Silicon Valley Bank dated October 31, 2005 (Incorporated by reference, attached as Exhibit 10.20.4 to our report on Form 10-K filed with the
Securities and Exchange commission on April 17, 2006, File No. 000-27560).                                                            
|        | 
|10.10.7 |  | Waiver and Amendment to Loan and Security Agreement with Silicon Valley Bank dated June 12, 2006 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 10-Q filed with the
Securities and Exchange commission on August 14, 2006, File No. 000-27560).                                                       
|        | 
|10.11   |  | Loan Agreement dated June 30, 2006 with Dolphin Direct Equity Partners, LP (Incorporated by reference, attached as Exhibit 10.2 to our report on Form 10-Q filed with the Securities and Exchange
commission on August 14, 2006, File No. 000-27560).                                                                             
|        | 
|10.11.1 |  | Form of Term Promissory Note under the Loan Agreement with Dolphin Direct Equity Partners, LP (Incorporated by reference, attached as Exhibit 10.5 to our report on Form 10-Q filed with the
Securities and Exchange commission on August 14, 2006, File No. 000-27560).                                                          
|        | 
|10.12   |  | Security Agreement dated June 30, 2006, among ACT Teleconferencing, Inc. and its domestic operating subsidiaries and Dolphin Direct Equity Partners, LP (Incorporated by reference, attached as
Exhibit 10.3 to our report on Form 10-Q filed with the Securities and Exchange commission on August 14, 2006, File No. 000-27560).
|        | 
|10.13   |  | Pledge Agreement dated June 30, 2006 between ACT Teleconferencing, Inc. and Dolphin Direct Equity Partners, LP (Incorporated by reference, attached as Exhibit 10.4 to our report on Form 10-Q
filed with the Securities and Exchange commission on August 14, 2006, File No. 000-27560).                                         
|        | 
|10.14   |  | Subordination Agreement dated June 30, 2006, among ACT Teleconferencing, Inc., Dolphin Direct Equity Partners, LP, and Silicon Valley Bank (Incorporated by reference, attached as Exhibit 10.6 to
our report on Form 10Q filed with the Securities and Exchange commission on August 14, 2006, File No. 000-27560).              
|        | 
|10.15   |  | Securities Purchase Agreement between ACT Teleconferencing, Inc. and Dolphin Direct Equity Partners, LP dated June 30, 2005 (Incorporated by reference, attached as Exhibit 10.1 to our report on
Form 8-K filed with the Securities and Exchange Commission on July 8, 2005, File No. 000-27560).                                
|        | 
|10.16   |  | Investor Rights Agreement between ACT Teleconferencing, Inc. and Dolphin Direct Equity Partners, LP dated June 30, 2005 (Incorporated by reference, attached as Exhibit 10.3 to our report on Form
8-K filed with the Securities and Exchange Commission on August 24, 2005, File No. 000-27560).                                 
|        | 
|10.16.1 |  | Amendment to Investor Rights Agreement between ACT Teleconferencing, Inc. and Dolphin Direct Equity Partners, LP dated April 13, 2006 (Incorporated by reference, attached as Exhibit 10.23.1 to
our report on Form 10-K filed with the Securities and Exchange Commission on April 17, 2006, File No. 000-27560).                
|        | 
|10.17   |  | Management Services Agreement between ACT Teleconferencing, Inc. and Dolphin Advisors, LLC, dated June 30, 2005 (Incorporated by reference, attached as Exhibit 10.4 to our report on Form 8-K
filed with the Securities and Exchange Commission on August 24, 2005, File No. 000-27560).                                         
|        | 
|10.18** |  | Employment Agreement between ACT Teleconferencing, Inc. and Gene Warren dated August 19, 2005 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K filed with the
Securities and Exchange Commission on August 24, 2005, File No. 000-27560).                                                           
|        | 
|10.19** |  | Form of Employment Agreement between ACT Teleconferencing, Inc. and executive officers, dated August 19, 2005 (Incorporated by reference, attached as Exhibit 10.2 to our report on Form 8-K filed
with the Securities and Exchange Commission on August 24, 2005, File No. 000-27560).                                           
|        | 
|10.20** |  | Letter of Employment from ACT Teleconferencing, Inc. to Rick Fresia dated November 29, 2006 (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K filed with the
Securities and Exchange Commission on December 4, 2006, File No. 000-27560).                                                            
|        | 
|10.21   |  | Form of Director Indemnification Agreement (Incorporated by reference, attached as Exhibit 10.1 to our report on Form 8-K filed with the Securities and Exchange Commission on November 12, 2006,
File No. 000-27560).                                                                                                            



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                                             
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|21    |  | ACT Teleconferencing, Inc. subsidiaries (Incorporated by reference, attached as Exhibit 21 to our annual report on Form 10-K for the year ended December 31, 2002, filed with the Securities
and Exchange Commission on April 15, 2003, File No. 000-27560).
|      | 
|23.1 |  | Consent of Hein & Associates LLP                                                                                                                                                                                                                            
|      | 
|23.2  |  | Consent of Rodefer Moss & Co., PLLC                                                                                                                                                                                                                         
|      | 
|31.1  |  | Rule 13a-14(a) certification of Principal Executive Officer                                                                                                                                                                                                 
|      | 
|31.2  |  | Rule 13a-14(a) certification of Principal Financial Officer                                                                                                                                                                                                 
|      | 
|32.1  |  | Section 1350 certification of Principal Executive Officer                                                                                                                                                                                                   
|      | 
|32.2  |  | Section 1350 certification of Principal Financial Officer                                                                                                                                                                                                   

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|** | Management contract or compensatory arrangement.
|-- | ------------------------------------------------



| | Previously filed as an exhibit to the Companys originally filed Annual Report on Form 10-K for the fiscal year ended December 31, 2006.
|- | ----------------------------------------------------------------------------------------------------------------------------------------