UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-KSB





(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, 2007




OR





o 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: 0-23532





SANSWIRE
      CORP.


(formerly
      Globetel Communications Corp.)





(Name
      of
      small business issuer in its charter)





Delaware
            
            88-0292161(State
                or other jurisdiction of incorporation)
            
            (I.R.S.
                Employer Identification No.)




101
      NE
      3 rd Ave,
      Suite 1500, Fort Lauderdale, Florida 33301


(Address
      of Principal Executive Offices) (Zip Code)





Issuer's
      telephone number: (954) 332-3759





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





Title
                of each class
            Name
                of exchange on which registered





Securities
      registered pursuant to Section 12 (g) of the Exchange Act: Common Stock Par
      Value $.00001 per share




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
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes. o No:  x





Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will
      not be contained, to the best of registrant's knowledge, in definite 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 shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No: x





State
      issuer's revenues for its most recent fiscal year ended December 31, 2007:
      $53,754.





As
      of
      September 23, 2008, there were 158,753,208 shares of the issuer's common stock
      issued and outstanding. Affiliates of the issuer own 1,851,111 shares of the
      issuer's issued and outstanding common stock and the remaining 156,902,097
      shares are held by non-affiliates. The aggregate market value of the shares
      held
      by non-affiliates at September 23, 2008 was $10,041,734.





DOCUMENTS
      INCORPORATED BY REFERENCE:




There
      are
      documents incorporated by reference in this Annual Report on Form 10-KSB, which
      are identified in Part III, Item 13.





Transitional
      Small Business Disclosure Format (Check one): Yes o No x





(*)
      Affiliates for the purposes of this Annual Report refer to the officers,
      directors of the issuer and subsidiaries and/or persons or firms owning 5%
      or
      more of issuer's common stock, both of record and beneficially.





**TABLE
      OF CONTENTS**




PART
                IItem
                1. Description of Business
            
            5Item
                2. Description of Property
            
            10Item
                3. Legal Proceedings
            
            11Item
                4. Submission of Matters to a Vote of Security Holders
            
            13PART
                IIItem
                5. Market for Common Equity and Related Stockholder
                Matters
            
            14Item
                6. Management's Discussion and Analysis or Plan of
                Operation
            
            16Item
                7. Financial Statements
            
            22Item
                8. Changes In and Disagreements With Accountants on Accounting and
                Financial Disclosure
            
            53Item
                8a. Controls and Procedures
            
            54Item
                8b. Other Information
            
            55PART
                IIIItem
                9. Directors and Executive Officers, Promoters and Control
                Persons
            
            57Item
                10. Executive Compensation
            
            59Item
                11. Security Ownership of Certain Beneficial Owners and Management
                and
                Related Stockholder Matters
            
            61Item
                12. Certain Relationships and Related Transactions
            
            62Item
                13. Exhibits
            
            62Item
                14. Principal Accountant Fees and Services
            
            63




3


**PART
      I**





**Forward-Looking
      Statements and Risk Factors**





Certain
      information included in this Form 10-KSB and other materials filed or to be
      filed by Sanswire Corp. ("Sanswire," "GlobeTel," the “Company”, "we", "us" or
      "our") with the Securities and Exchange Commission (as well as information
      included in oral or written statements made from time to time by us, may contain
      forward-looking statements about our current and expected performance trends,
      business plans, goals and objectives, expectations, intentions, assumptions
      and
      statements concerning other matters that are not historical facts. These
      statements may be contained in our filings with the Securities and Exchange
      Commission, in our press releases, in other written communications, and in
      oral
      statements made by or with the approval of one of our authorized officers.
      Words
      or phrases such as "believe", "plan", "will likely result", "expect", "intend",
      "will continue", "is anticipated", "estimate", "project", "may", "could",
      "would", "should" and similar expressions are intended to identify
      forward-looking statements. These statements, and any other statements that
      are
      not historical facts, are forward-looking statements.





Those
      statements include statements regarding our intent, belief or current
      expectations, and those of our officers and directors and the officers and
      directors of our subsidiaries as well as the assumptions on which such
      statements are based. Prospective investors are cautioned that any such
      forward-looking statements are not guarantees of future performance and involve
      risks and uncertainties, and that actual results and the timing of certain
      events may differ materially from those contemplated by such forward-looking
      statements.





We
      are
      filing the following summary to identify important factors, risks and
      uncertainties that could cause our actual results to differ materially from
      those projected in forward-looking statements made by us, or on our behalf.
      These cautionary statements are to be used as a reference in connection with
      any
      forward-looking statements. The factors, risks and uncertainties identified
      in
      these cautionary statements are in addition to those contained in any other
      cautionary statements, written or oral, which may be made or otherwise addressed
      in connection with a forward-looking statement or contained in any of our
      subsequent filings with the Securities and Exchange Commission. Because of
      these
      factors, risks and uncertainties, we caution against placing undue reliance
      on
      forward-looking statements. Although we believe that the assumptions underlying
      forward-looking statements are reasonable, any of the assumptions could be
      incorrect, and there can be no assurance that forward-looking statements will
      prove to be accurate. Forward-looking statements speak only as of the date
      on
      which they are made. We do not undertake any obligation to modify or revise
      any
      forward-looking statement to take into account or otherwise reflect subsequent
      events, or circumstances arising after the date that the forward-looking
      statement was made.





The
      following risk factors may affect our operating results and the environment
      within which we conduct our business. If our projections and estimates regarding
      these factors differ materially from what actually occurs, our actual results
      could vary significantly from any results expressed or implied by
      forward-looking statements. These risk factors include, but are not limited
      to,
      changes in general economic, demographic, geopolitical or public safety
      conditions which affect consumer behavior and spending, including the armed
      conflict in Iraq or other potential countries; various factors which increase
      the cost to develop airships, including factors under the influence and control
      of government agencies and others; fluctuations in the availability and/or
      cost
      of helium, carbon fiber or other resources necessary to successfully assemble
      our airships; our Company's ability to raise prices sufficiently to offset
      cost
      increases, including increased costs for resources; the feasibility and
      commercial viability of our Stratellite project; related contemplated funding
      from third parties to finance the project, and necessary cooperation with
      various military and non-military agencies of the United States government,
      and
      similar agencies of foreign governments; depth of management and technical
      expertise and source of intellectual and technological resources; adverse
      publicity about us and our airships; relations between our Company and its
      employees and partners; legal claims and litigation against the Company;
      including the recently commenced SEC lawsuit; the availability, amount, type,
      and cost of capital for the Company and the deployment of such capital,
      including the amounts of planned capital expenditures; changes in, or any
      failure to comply with, governmental regulations; the amount of, and any changes
      to, tax rates and the success of various initiatives to minimize taxes; and
      other risks and uncertainties referenced in this Annual Report on Form 10-K.
      This statement, and any other statements that are not historical facts, are
      forward-looking statements.





This
      annual report also contains certain estimates and plans related to the airship
      industry. The estimates and plans assume that certain events, trends and
      activities will occur, of which there can be no assurance. In particular, we
      do
      not know what level of growth will exist, if any, in the market for lighter
      than
      air unmanned aerial vehicles,. Our growth will be dependent upon our ability
      to
      compete with larger, well-established companies. If our assumptions are wrong
      about any events, trends and activities, then our estimates for the future
      growth of Sanswire and our consolidated business operations may also be wrong.
      There can be no assurance that any of our estimates as to our business growth
      will be achieved.


4


**ITEM
      1. DESCRIPTION OF BUSINESS**





**General**





Sanswire
      Corp. ("Sanswire," "Globetel", “we”, “us”, “our”, or the “Company”), is engaged
      in the business of developing high-altitude airships called Stratellites that
      will be used to provide wireless voice, video, and data services. The airships
      are designed to provide intelligence, surveillance and reconnaissance
      capabilities in a military context.





From
      2002
      to 2007 Sanswire was involved in the following business sectors: stored value
      card services; wholesale telecommunications services; voice over IP; wireless
      broadband; and high altitude airships. These business units operated through
      various subsidiaries. The Company has discontinued operations in all but the
      high altitude airship sector.





Beginning
      in 2007, Sanswire began focusing exclusively on opportunities through its
      wholly-owned subsidiary Sanswire Networks. The opportunities associated with
      Sanswire are related to the Lighter Than Air (LTA) Unmanned Aerial Vehicle
      (UAV)
      market. Sanswire seeks to build and run a UAV business that includes low-,
      mid-
      and high-altitude, lighter-than-air vehicles. Sanswire intends to provide
      customers advanced seamless wireless broadband capabilities and surveillance
      sensor suites utilizing its High Altitude Airship technology.





Sanswire’s
      main products are airships, which provide a platform to transmit wireless
      capabilities from air to ground.





The
      High
      Altitude class of prospective airships are generally referred to as HAAs
      (High Altitude Airships) but have also been called HAPs and HALEs (High Altitude
      Platforms, High Altitude Long Endurance). They are being designed to be able
      to
      keep a station in one location in the Stratosphere, at approximately 65,000
      ft
      for durations of 30 days or more.





**Reverse
      Stock Split**





Sanswire
      is authorized to issue up to 250,000,000 shares of Common Stock, par value
      $0.00001 per share, (subsequent to a 15-for-1 reverse stock split on May 23,
      2005 and subsequent to an increase in the authorized shares from 150,000,000
      to
      250,000,000 at the shareholder meeting on June 21, 2006) and 10,000,000 shares
      of Preferred Stock, par value $0.001. The post split share calculation will
      be
      used throughout this report, unless noted. 760,000 shares of Preferred Stock
      has
      been allocated into different series of issuance and the remaining 9,240,000
      shares is a so-called "blank check" preferred, meaning that its terms such
      as
      dividends, liquidation and other preferences, are to be fixed by our Board
      of
      Directors at the time of issuance. The dividends, liquidation rights and other
      preferences for each class of Preferred Stock are explained in Item 7, Financial
      Statements, Note 12.





**Recent
      Developments**





On
      October 5, 2007, Sanswire received a "Wells Notice" from the Securities and
      Exchange Commission (the "SEC") in connection with the SEC’s ongoing
      investigation of the Company. The Wells Notice provides notification that the
      staff of the SEC intends to recommend to the Commission that it bring a civil
      action against the Company for possible violations of the securities laws
      including violations of Sections 5 and 17(a) of the Securities Act of 1933;
      Sections 10(b), 13(a), and 13(b)(2)(A) & (B) of the Securities Exchange Act
      of 1934 (“Exchange Act”) and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13
      thereunder; and seeking as relief a permanent injunction, civil penalties,
      and
      disgorgement with prejudgment interest. The staff is also considering
      recommending that the SEC authorize and institute proceedings to revoke the
      registration of the Company’s securities pursuant to Section 12(j) of the
      Exchange Act.





On
      November 26, 2007 the SEC announced that it had filed a civil lawsuit against
      two former employees of Sanswire alleging that Joseph J. Monterosso, former
      Chief Operating Officer of Sanswire and former president of the Company’s
      Centerline Communications Subsidiary, and Luis Vargas, an employee of
      Centerline, engaged in a scheme to create $119 million in revenue that was
      subsequently reported in the Company’s financial statements as filed with the
      Commission. Securities and Exchange Commission v. Joseph J. Monterosso and
      Luis
      E. Vargas , Civil Action No. 07-61693 (S.D. Fla., filed on November 21,
      2007).




5


On
      May 1,
      2008 the SEC filed a lawsuit (the “complaint”) against Sanswire and three of the
      Company's former officers (Securities and Exchange Commission v. GlobeTel
      Communications Corp., Timothy J. Huff, Thomas Y. Jimenez and Lawrence E. Lynch,
      Case No. 08-CV-60647 (S.D. Fla., filed May 1, 2008). The complaint filed
      represents decisions and actions taken by Sanswire's management team during
      the
      Company's operations covering 2004-2006. Specifically the complaint concerns
      former CEO Timothy Huff, former COO and CFO Larry Lynch, and former CFO Thomas
      Jimenez. The complaint reiterates that former officer Joseph Monterosso and
      former employee Louis Vargas conspired to and carried out a scheme to
      fraudulently cause the Company to report 119 million dollars in nonexistent
      revenue. The Company no longer has any relationship with those individuals.
      As a
      result of the alleged schemes and actions of the previous management mentioned
      in the complaint, the Company is diligently working to come into compliance
      with
      all relevant regulations. The Company has formally exited all businesses
      associated with the alleged schemes and continues to operate under new
      management with the goal of completing the restructuring of the Company and
      focusing all its efforts on new opportunities in the aerospace
      sector.





On
      September 22, 2008 we filed a Certificate of Merger with the Secretary of State
      of the State of Delaware pursuant to which our wholly owned subsidiary, Sanswire
      Corp., a Delaware corporation, was merged into us. As a result of the filing
      of
      the Certificate of Merger, our corporate name was changed from GlobeTel
      Communications Corp. to Sanswire Corp.




**Background**





We
      were
      previously a wholly-owned subsidiary of American Diversified Group, Inc.
      (“ADGI”). At a special meeting of stockholders of ADGI held on July 24, 2002,
      the stockholders of ADGI approved a plan (the "Plan") for the exchange of all
      outstanding shares of ADGI for an equal number of shares of
      Sanswire.





ADGI
      was
      incorporated under the laws of the State of Nevada as Terra West Homes, Inc.
      on
      January 16, 1979. On March 15, 1995, its name was changed to "American
      Diversified Group, Inc." During the period ended July 24, 2002, ADGI's business
      activities included (i) sale of telecommunication services primarily involving
      Internet telephony using VoIP through its Global Transmedia Communications
      Corporation subsidiary ("Global"), and (ii) wide area network and local area
      network services provided through its NCI Telecom, Inc. subsidiary
      ("NCI").




Global
      was acquired by ADGI on February 19, 2000, and NCI was acquired on June 29,
      2000. During 2002, Global and NCI were merged with and into ADGI, with ADGI
      as
      the surviving corporation.





When
      ADGI
      exchanged all of its outstanding shares of common stock for Sanswire common
      stock, ADGI became a wholly-owned subsidiary of Sanswire and Sanswire began
      conducting the business formerly conducted by ADGI.





In
      2004,
      we formed wholly-owned subsidiaries: Sanswire Networks, LLC (“Sanswire-FL”) for
      our Stratellite project; and Centerline Communications, LLC, (“Centerline” or
“CLC”) and its wholly-owned subsidiaries, EQ8, LLC, G Link Solutions, LLC, Volta
      Communications, LLC, and Lonestar Communications, LLC for the purpose of the
      recording and managing the sale of wholesale minutes and related network
      management functions. We have since closed Centerline and its
      subsidiaries.




In
      2004,
      we acquired a 73.15% interest in Consolidated Global Investments, Ltd. (“CGI”),
      formerly known as Advantage Telecommunications, Ltd. (“ATC”), an Australian
      company. CGI was to be utilized in the carrier sales sector of our business
      and
      was later to be a licensee of the Sanswire Networks, LLC in Australia. However,
      we have since sold our shares in CGI back to the Company and no longer have
      any
      interest in CGI. Certain shares of Sanswire acquired by CGI were sold by CGI.
      The Securities and Exchange Commission has questioned the validity of the
      exemption used for the sale of such shares as more fully discussed below in
      Item
      3 “Legal Proceedings.”




6


In
      2008
      we incorporated Sanswire Corp., a Florida corporation and wholly-owned
      subsidiary, to deal directly with airship opportunities based upon our agreement
      with TAO Technologies, GmbH. We also incorporated Sanswire-TAO Corp., a Florida
      corporation that is a 50/50 joint venture with TAO Technologies. The agreements
      with TAO are discussed below.




On
      September 22, 2008 we filed a Certificate of Merger with the Secretary of State
      of the State of Delaware pursuant to which our wholly owned subsidiary, Sanswire
      Corp., a Delaware corporation, was merged into us. As a result of the filing
      of
      the Certificate of Merger, our corporate name was changed from GlobeTEl
      Communications Corp. to Sanswire Corp.




**Business
      of Sanswire**




Sanswire
      Corp. has sharply refined its operating model ─ focusing exclusively on
      opportunities in Lighter Than Air (LTA) Unmanned Aerial Vehicles (UAV). We
      seek
      to build and run a UAV business that includes low-, mid- and high-altitude,
      lighter-than-air vehicles; adding value to their security, surveillance and
      broadcasting abilities through the integration of wireless technologies with
      a
      wide array of customer payloads. Our
      long-term objective is to provide commercial and government customers advanced
      seamless wireless broadband capabilities and surveillance sensor suites
      utilizing a state of the art High Altitude Airship technology.  Building
      upon this high altitude technology, Our near term goal is to penetrate the
      military/government use market for low to mid altitude unmanned airships




Our
      main
      products are airships, which provide a platform to transmit wireless
      capabilities from air to ground.




The
      High
      Altitude class of prospective airships are generally referred to as HAAs
      (High Altitude Airships) but have also been called HAPs and HALEs (High Altitude
      Platforms, High Altitude Long Endurance). They are being designed to be able
      to
      keep a station in one location in the Stratosphere, at approximately 65,000
      ft
      for durations of 30 days or more. 65,000 ft is the sweet spot in the
      stratosphere for optimal wind conditions to keep station using the least amount
      of power.




**STRATELLITETM**




Our
      HAA
      is the STRATELLITETM, so named because they offer the functionality of a
      satellite in the stratosphere. This class of airship will consist of several
      models to suit various purposes. STRATELLITESTM were conceived to help solve
      infrastructure issues that plague many parts of the world, including the so
      called "last mile" (building expensive ground based infrastructure for very
      low
      density areas) issues.  The STRATELLITETM can bring a full range of
      telecommunications or broadcasting capabilities to any area of the world,
      accessible to people with customer premise equipment that is inexpensive and
      available.




The
      StratelliteTM is a high altitude long endurance airship intended to populate
“near space” with telecommunications capability. A presence in near space with
      high tech sensors and communications suites offers enormous potential for both
      commercial and government applications. Whether hovering at 65,000 feet or
      flying a variety of mission profiles, the Stratellite offers many of the
      features of satellites with cost savings, refurbishment ability, and opportunity
      for regular system upgrades.





There
      is
      a great need for information-transmission in the future performed by High
      Altitude Platforms in various fields;





·
            mobile
                broadband communications


7


·
            emergencies,
                use in disaster areas


·
            marine
                radio service


·
            new
                traffic engineering systems


·
            weather
                observation


·
            water
                surveillance (pollution)


·
            ozone
                and smog monitoring


·
            radiation
                monitoring (UV and radioactive)


·
            astronomic
                and terrestrial observation


·
            documentation
                of conditions in the upper
                atmosphere


·
            border
                control, coast surveillance


·
            private
                communication services like e.g. cellular
                phones


·
            transmission
                of radio- and television programmers
                etc.





**SANSWIRE-TAO**




Sanswire
      first entered into an agreement with TAO Technologies in 2005. At that time,
      TAO
      provided engineering support to the efforts of Sanswire Networks, LLC then
      working out of facilities in California. In September 2007, Sanswire entered
      into a letter of intent with TAO Technologies GmbH, a German company
      specializing in the design of remotely operated airships. Sanswire had been
      working with TAO since 2005. Pursuant to the letter of intent Sanswire will
      purchase 50% of TAO, and TAO will be renamed Sanswire-TAO GmbH. The Company
      will
      be focused on the design, development and production of unmanned aerial
      vehicles. It is expected that Sanswire-TAO will be based chiefly in Stuttgart.
      The acquisition of 50% of TAO follows the October 2005 development agreement
      between Sanswire and TAO that resulted in the construction and testing of the
      Sanswire 2A.





The
      letter of intent calls for TAO and Sanswire to share sales and marketing rights
      of various aerial vehicles developed and currently owned by TAO. Additionally,
      upon closing of definitive agreements, TAO will grant to Sanswire-TAO the
      respective patents and intellectual property rights covering the products,
      including the AirChain segmented airship.





In
      November 2007, the Company entered into a Licensing and Technical Cooperation
      Agreement with TAO. TAO granted to Sanswire an exclusive license for the
      territories of the US, Canada, Mexico and Chile for the marketing and
      distribution of airships based upon the technologies patented and developed
      by
      TAO. TAO will also provide testing and engineering support for the development
      of airships to meet the criteria required by Sanswire customers. Sanswire is
      obligated to provide TAO with engineering orders of at least $1,000,000 per
      year
      and certain cash and stock payments on a quarterly basis.





On
      June
      3, 2008 Sanswire and TAO entered into an agreement to form a 50/50 US based
      joint venture to place, among other things, the rights to the TAO intellectual
      property in US, Canada, and Mexico into the US based JV company to be called
      Sanswire-TAO.  This integration of Sanswire and Stuttgart, Germany-based
      TAO Technologies Gmbh took place to create various strategic advantages for
      both
      companies. Each group entered the relationship with synergistic, yet very
      distinct core competencies. Sanswire’s business development, its inroads into
      the U.S. Government review process as well as inroads into overseas markets
      and
      other marketing resources complement TAO’s vast airship product research and
      development ability.





The
      Sanswire-TAO research and development efforts are centered in Stuttgart, taking
      advantage of the relationship between TAO and the University of Stuttgart.
      This
      relationship provides cost-effective access to aerospace testing facilities
      including wind tunnels, environmental test chambers, structural testing devices,
      computer aided design and a legion of aerospace and physics professionals along
      with their more than 10 years of solar powered airship experience. The
      Sanswire-TAO joint venture provides the following:





(1)
            Multiple
                Airship Platforms – Ranging from short range low altitude platforms to
                Stratospheric solutions.


(2)
            Access
                to Resources – Through contractual relationships with world-renowned
                universities, including their hometown University of
                Stuttgart.


8


(3)
            Research
                and Development – More than a decade of knowledge and experience resulting
                from significant data gathered from vital airship
                testing.


(4)
            Proprietary
                Systems – Custom developed systems from the design and modeling of
                airships to specialized flight control systems.


(5)
            Intellectual
                Property – Patented designs and concepts providing worldwide
                protection.


(6)
            Constructed
                Airships – Several platforms built for demonstrations


(7)
            Testing
                Facilities – Including aerospace laboratories, assembly and storage
                hangars, wind tunnels, certified launch and flight facilities, and
                certified manufacturing and production facilities.





**Competitive
      Business Conditions**





We
      are
      aware of other companies that are also developing high altitude platforms
      similar in nature to our Stratellite project. Our competitors, though, may
      have
      more resources available to develop their respective products. Furthermore,
      since the airship projects are currently in the development stage, there can
      be
      no assurance that the project will successfully complete the development stage
      and result in a commercially viable product. Even if a properly functioning,
      commercially viable product is established there can be no assurance that
      revenues will be achieved from the sales of Stratellites or other airships
      or
      that the costs to produce such revenues will not exceed the revenues or that
      the
      project will otherwise be profitable. There can be no assurance that we will
      be
      able to successfully achieve the results we anticipate with this
      project.





**Sources
      and Availability of Hardware and Software**





Equipment
      for the Stratellite, SAS-51 and the prototypes thereof are custom made for
      those
      products and are dependent upon either single or limited number of suppliers
      for
      certain goods. Failure of a supplier could cause significant delays in delivery
      of the airships if another supplier cannot be promptly found.





**Sources
      and Availability of Technical Knowledge and Component
      Parts**





The
      Sanswire project requires a high level of technological knowledge and adequately
      functioning component parts and sub-assemblies to continue the project and
      achieve commercial viability. We have current and contemplated arrangements
      for
      supply of both internal and external technical knowledge to provide the
      intellectual capital to continue with this project. Specifically, there is
      a
      high level of interest and anticipated cooperation from technical experts within
      the government, military, and commercial sectors. Similarly, we have current
      and
      contemplated arrangements for supply required component parts, both internally
      developed, as well as, outsourced from specialty contractors to provide
      component parts to continue with this project in the near term.





**Dependence
      on a Few Customers**





As
      discussed below in Item 6, Management Discussion and Analysis and Plan of
      Operation, we are currently dependent on a limited number of customers. As
      we
      expand our products, services, and markets, we expect to substantially broaden
      our customer base and reduce our dependence upon just a few customers. However,
      there is no guarantee that we will be able to broaden our customer
      base.





**Trademarks**





We
      have
      filed for registration of the names "Stratellite" and "Sanswire" under the
      Madrid Protocol (that includes the United States) and in many non-Madrid
      Protocol countries





We
      intend
      to file for patents covering unique design and intellectual property covering
      the design and engineering of the Stratellite, but will wait until these are
      finalized. We have additionally entered into an agreement with TAO Technologies
      GmbH, with whom Sanswire has collaborated since 2005. This agreement provides
      exclusive licensing and patent rights for TAO’s airship technologies and allows
      Sanswire to register the TAO patents in the United States.




9


**Regulatory
      Matters**





The
      export of the Stratellite or SkySat may be subject to United States State
      Department restrictions on the transfer of technology. We are currently
      investigating whether or not the export of the Sanswire products would require
      export licenses and how the production of these vehicles in Germany through
      our
      agreement with TAO Technologies, GmbH would impact this.





During
      2007, Sanswire and its subsidiaries incurred payroll tax liability during the
      normal course of business at each payroll cycle. The Company submitted certain
      withholding tax payments during the first quarter through a payroll processor,
      ADP. Subsequent thereto, the Company no longer processed its payroll through
      ADP. During this time, the Company did not file the appropriate tax forms or
      deposit the appropriate withholding amounts. The Company has recognized this
      issue and contacted the IRS accordingly to bring its filings up-to-date and
      pay
      any taxes due. The Company may be subject to penalties and interest from the
      IRS.





**Number
      of Total Employees and Number of Full-Time Employees**





As
      of
      September 1, 2008 we have 6 full-time employees, including our executive
      officers and employees of our subsidiaries. We do not believe that we will
      have
      difficulty in hiring and retaining qualified individuals for our general
      operations and any technical personnel required for the aerospace projects
      will
      primarily be hired overseas to work with the existing TAO
      personnel.





**ITEM
      2. DESCRIPTION OF PROPERTY**


Sanswire ’s
        corporate offices are now located at 101 NE 3 rd Ave.,
        Suite 1500, Fort Lauderdale, FL 33301. Base rent is $1,486 per month plus
        the
        cost of services used by Sanswire .
        The
        lease is for a period of 6 months.




The
      Company previously leased office facilities at 9050 Pines Blvd., Suite 110,
      Pembroke Pines, Florida 33024, as of April 1, 2004. This lease will expire
      in
      June 2009, and had a initial monthly rent of $5,462. In November 2004, the
      Company leased additional adjacent space at the Pembroke Pines, Florida location
      under the same terms and period as the existing lease, bringing the
      total monthly rent to $9,186.





In
      June
      2005, we negotiated with the landlord to lease an additional 5,000 square feet
      office on the second floor of our prior facility, 9050 Pines Blvd., Pembroke
      Pines, Florida 33024. The Company began occupancy of this office in April 2006
      and the lease expires in June 2009 with a monthly rent of $9,186 (including
      sales tax). The Company vacated the premises in March 2006, having turned over
      the space as part of the sale of the Stored Value assets. However, there was
      unpaid rent due on both the first and second floor suites. In August 2007,
      the
      landlord received a judgment in the amount of $206,730.





Until
      September 2007, the Company leased a 66,000 square foot space hanger in
      Palmdale, California. The initial lease, between Sanswire Networks, LLC and
      the
      City of Los Angeles World Airports, was for a term of three months, ended July
      22, 2005 with a monthly rent of $19,990. On June 8, 2005 the lease term was
      amended for fifteen months, commencing June 8, 2005 through September 7, 2006,
      with two one-year options. Concurrently with the signing of the amended lease,
      the parties entered into a reimbursement agreement to share the cost of certain
      improvements.





As
      of
      October 2007, Sanswire no longer occupies a hangar at Palmdale Regional Airport,
      the monthly cost of this space was $20,847. This facility was adjacent to the
      United States Air Force’s Plant 42 and Edwards Air Force Base. Sanswire
      constructed and tested Stratellite and Sky Sat prototypes at the facility.
      The
      hangar also included administrative office space. Sanswire is indebted to Los
      Angeles World Airports, the lessor of the hangar, in the amount of
      $161,761.


10


**ITEM
      3. LEGAL PROCEEDINGS**





Securities
      and Exchange Commission





On
      September 28, 2006, the Company received a formal order of investigation from
      the SEC. The formal order only named the Company and was not specific to any
      particular allegations. Through the use of subpoenas, the SEC has requested
      documentation from certain officers and directors of the Company. In subsequent
      subpoenas, the SEC has asked for additional documents and information.





On
      October 5, 2007, Sanswire received a "Wells Notice" from the SEC in connection
      with the SEC’s ongoing investigation of the Company. The Wells Notice provides
      notification that the staff of the SEC intends to recommend to the Commission
      that it bring a civil action against the Company for possible violations of
      the
      securities laws including violations of Sections 5 and 17(a) of the Securities
      Act of 1933; Sections 10(b), 13(a), and 13(b)(2)(A) & (B) of the Securities
      Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5, 12b-20, 13a-1, 13a-11,
      and 13a-13 thereunder; and seeking as relief a permanent injunction, civil
      penalties, and disgorgement with prejudgment interest. The staff is also
      considering recommending that the SEC authorize and institute proceedings to
      revoke the registration of Company’s securities pursuant to Section 12(j) of the
      Exchange Act.





On
      May 2,
      2008, the Securities and Exchange Commission (“SEC”) filed a lawsuit in the
      United States District Court for the Southern District of Florida against
      Sanswire Corp. (the “Company”) and three former officers of the Company, Timothy
      J. Huff, Thomas Y. Jimenez and Lawrence E. Lynch. The SEC alleges, among other
      things, that the Company recorded $119 million in revenue on the basis of
      fraudulent invoices created by Joseph Monterosso and Luis Vargas, two
      individuals formerly employed by the Company who were in charge of its wholesale
      telecommunications business.





The
      SEC
      alleges that the Company violated Sections 5(a), 5(c), and 17(a) of the
      Securities Act of 1933, as amended, Sections 10(b), 13(a), 13(b)(2)(A) and
      13(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”), and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 under the Exchange Act.
      The SEC seeks as relief a permanent injunction, civil penalties, and
      disgorgement with prejudgment interest. In response to the Complaint, the
      Company has filed a motion to dismiss, which motion is still pending before
      the
      Court. The Company intends to vigorously defend itself in this
      action.





Joseph
      Monterosso





In
      October 2007 the Company filed a lawsuit in the Circuit Court for Broward
      County, Florida against Joseph J. Monterosso alleging Libel, Slander and
      Defamation, Tortuous Interference, Violations of FS § 836.05 (Threats
      Extortion)  and violations of FS §517 (Securities Fraud). Mr.
      Monterosso has not yet been served with the complaint.





Wachovia
      v. GlobeTel





In
      connection with the operations of Globetel
      Wireless Europe GmbH and the
      acquisition of Altvater GmbH, the Company guaranteed a letter of credit in
      the
      amount of $600,000. Upon Globetel
      Wireless Europe GmbH ceasing
      operations, the letter of credit was drawn upon. The letter of credit was not
      collateralized. In September 2007, Wachovia filed a lawsuit in Broward County
      in
      an attempt to recover the amount through arbitration with the American
      Arbitration Association. On June 2, 2008, the American Arbitration Association
      awarded Wachovia $762,902.





Richard
      Stevens v. GlobeTel





The
      Company and its directors were sued in the case RICHARD STEVENS vs. GLOBETEL
      COMMUNICATIONS CORP., et al. Case No.: 06-cv 21071. The original allegations
      of
      the complaint were that the Company’s proposed transaction to build wireless
      networks in Russia was a sham. The amended complaint alleged that the
      transaction was not a sham, but that the Company refused to accept payment
      of
      $300 million. Recently, the officers and directors with the exception of Timothy
      Huff have been dismissed from the case.




11


In
      February 2008, the Company and the Plaintiff reached a settlement in principle
      that has been filed with the Court for approval. Under the terms of the proposed
      settlement agreement in the class action, the Company’s D&O insurance
      carrier will make a cash payment to the class of $2,300,000, less up to $100,000
      for potential counsel fees and expenses. All claims in the class action will
      be
      dismissed with prejudice. The US District Court for the Southern District of
      Florida has approved the settlements reached in its pending securities class
      action and a shareholder derivative action on February 4, 2008.





Derivative
      Action





On
      July
      10, 2006 a derivative action was filed against the officers and directors of
      Sanswire alleging that they have not acted in the best interest of the Company
      or the shareholders and alleged that the transaction to install wireless
      networks in Russia was a sham. The lawsuit is pending in the Federal District
      Court for the Southern District of Florida (Civil Case No. 06-60923). The
      Company believes that the suits are without merit and will vigorously defend
      against it. The Company has hired outside counsel to defend it in this action.
      The Company and the Plaintiff have reached an agreement in principle to settle
      this action and have submitted such settlement with the Court for its approval.
      Under the terms of the settlement, Company’s D&O insurance carrier will pay
      $60,000 in attorneys’ fees to plaintiff’s counsel, the Company will implement or
      maintain certain corporate governance changes, and all claims will be dismissed
      with prejudice.





Mitchell
      Siegel v. Globetel





On
      February 2, 2007, Sanswire was sued in the Circuit Court for Broward County,
      Florida entitled Mitchell Siegel v. Globetel Communications Corp. , Case no.
      0702456 (“the Siegel Lawsuit”). In this action, Siegel sued Sanswire for breach
      of contract in regards to a Key Executive Employment Agreement. On February
      15,
      2008, both parties entered into a settlement agreement whereas Mr. Siegel would
      receive $175,000 worth of stock, payable over 12 months, and 50% of the gross
      proceeds, up to a total amount of $300,000, received from an October 2006
      agreement.





Former
      Consultants





The
      Company is a defendant in two lawsuits filed by Matthew Milo and Joseph
      Quattrocchi, two former consultants, filed in the Supreme Court of the State
      of
      New York (Richmond County, Case no. 12119/00 and 12118/00). These matters were
      subsequently consolidated as a result of an Order of the court and now bear
      the
      singular index number 12118/00. The original lawsuits were for breach of
      contract. The complaint demands the delivery of 10,000,000 pre split shares
      of
      ADGI stock to Milo and 10,000,000 to Quattrocchi. Sanswire was entered into
      the
      action as ADGI was the predecessor of the Company. The suit also requests an
      accounting for the sales generated by the consultants and attorneys fees and
      costs for the action.





The
      lawsuits relate to consulting services that were provided by Mr. Milo and Mr.
      Quattrocchi and a $50,000 loan advanced by these individuals, dated May 14,
      1997, of which $35,000 has been repaid.





The
      Company entered into an agreement with Mr. Milo and Mr. Quattrocchi as
      consultants on June 25, 1998. The agreement was amended on August 15, 1998.
      On
      November 30, 1998, both Mr. Milo and Mr. Quattrocchi resigned from their
      positions as consultants to the Company without fulfilling all of their
      obligations under their consulting agreement. The Company issued 3 million
      pre
      split shares each to Mr. Milo and Mr. Quattrocchi as consideration under the
      consulting agreement. The Company has taken the position that Mr. Milo and
      Mr.
      Quattrocchi received compensation in excess of the value of the services that
      they provided and the amounts that they advanced as loans.





Mr.
      Milo
      and Mr. Quattrocchi disagreed with the Company’s position and commenced action
      against us that is pending in the Supreme Court of the State of New York. Mr.
      Milo and Mr. Quattrocchi claim that they are entitled to an additional
      24,526,000 pre split shares of common stock as damages under the consulting
      agreement and to the repayment of the loan balance. The Company believes that
      it
      has meritorious defenses to the Milo and Quattrocchi action, and the Company
      has
      counterclaims against Mr. Milo and Mr. Quattrocchi.




12


With
      regard to the issues related to original index number 12119/00, as a result
      of a
      summary judgment motion, the plaintiffs were granted a judgment in the sum
      of
      $15,000. The rest of the plaintiff's motion was denied. The court did not order
      the delivery of 24,526,000 pre split shares of ADGI common stock as the decision
      on that would be reserved to time of trial.





An
      Answer
      and Counterclaim had been interposed on both of these actions. The Answer denies
      many of the allegations in the complaint and is comprised of eleven affirmative
      defenses and five counterclaims alleging damages in the sum of $1,000,000.
      The
      counterclaims in various forms involve breach of contract and breach of
      fiduciary duty by the plaintiffs.





For
      the
      most part, the summary judgment motions that plaintiffs brought clearly stated
      their theories of recovery and the documents that they will rely on in
      prosecuting the action. The case was assigned to a judicial hearing officer
      and
      there was one week of trial. The trial has been since adjourned with no further
      trial dates having been set.





It
      is
      still difficult to evaluate the likelihood of an unfavorable outcome at this
      time in light of the fact that there has been no testimony with regard to the
      actions. However, the plaintiffs have prevailed with regard to their claim
      of
      $15,000 as a result of the lawsuit bearing the original index Number
      12119/00.





This
      case
      went before a Judicial Hearing Officer on July 6 and 7, 2006. No resolution
      occurred during the July hearing and the Judicial Hearing Officer has asked
      for
      written statements of facts and law. The outcome cannot be projected with any
      certainty.  However, the Company does not believe that it will be
      materially adversely affected by the outcome of the proceeding. The Company
      has
      not been informed of any further developments since the hearing.





Trimax
      Wireless





On
      July
      3, 2007 Sanswire filed suit against its former employee Ulrich Altvater and
      his
      company Trimax Wireless seeking the return of certain equipment held at the
      former GlobeTel Wireless offices and for the return of $175,000 lent to Altvater
      by the Company. The replevin action against Trimax was dismissed on the basis
      of
      venue and the Company intends to refile the suit with regard to Trimax in
      Collier County, Florida.




On
      July
      12, 2007, the Company terminated its agreement with Mr. Altvater and his
      company, Trimax Wireless, Inc.




In
      August
      2007, Altvater and Trimax filed suit against Sanswire alleging, defamation,
      conversion, breach of contract and seeking injunctive relief. Sanswire
      successfully moved to have the two cases consolidated and has filed a Motion
      to
      Dismiss this suit. The Company intends to vigorously defend this suit, but
      no
      assurance can be given about the outcome of the litigation.




American
      Express





American
      Express Travel Related Services Company, Inc. has filed a lawsuit against
      Sanswire and Sanswire Networks LLC (CASE NO: CACE 08-013239, Broward County
      Florida), seeking to recover a total of $394,919 for unpaid charges on the
      Companies’ corporate purchasing account. The Company intends to vigorously
      defend itself in this action.





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




There
      were no matters brought to a vote of security holders in
      2007.




13


**PART
      II**





**ITEM
      5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS.**





(a)
      MARKET PRICE


In
        October 2006, our stock was delisted from the American Stock Exchange and
        began
        trading on the Pink Sheets under the symbol “GTEM”. From October 2006 to October
        2008 our shares of common stock have been quoted on the Pink Sheets quotation
        system under the symbol “GTEM." Effective October 8, 2008 our shares of common
        stock have been quoted on the Pink Sheets quotation system under the symbol
        “SNSR."





The
      following information sets forth the high and low bid price of our common stock
      during fiscal 2006, and 2007 and was obtained from the National Quotation
      Bureau. The quotations reflect inter-dealer prices, without retail mark-up,
      mark-down or commission and may not represent actual transactions.




HIGH
            
            LOWCALENDAR
                2006Quarter
                Ended March 31
            
            $
            3.92
            
            $
            2.48Quarter
                Ended June 30
            
            $
            2.30
            
            $
            1.07Quarter
                Ended September 30
            
            $
            1.21
            
            $
            0.41Quarter
                Ended December 31
            
            $
            0.62
            
            $
            0.25CALENDAR
                2007Quarter
                Ended March 31
            
            $
            0.52
            
            $
            0.24Quarter
                Ended June 30
            
            $
            0.32
            
            $
            0.18Quarter
                Ended September 30
            
            $
            0.26
            
            $
            0.08Quarter
                Ended December 31
            
            $
            0.04
            
            $
            0.16





(b)
      HOLDERS





As
      of the
      date of this report, there were approximately 600 registered holders of our
      common stock.





(c)
      DIVIDENDS





The
      Company has never paid a dividend and does not anticipate that any dividends
      will be paid in the foreseeable future.





(d)
      SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS





The
      following table sets forth the information indicated with respect to our
      compensation plans as of December 31, 2007, under which our common stock is
      authorized for issuance.




14


**Number of Securities to be**
              **issued**
              **upon exercise of outstanding**
              **options, warrants and rights**
              **(a)**
            
            **Weighted average**
              **exercise price of**
              **outstanding options,**
              **warrants and rights**
              **(b)**
            
            **Number of securities**
              **remaining available for**
              **future issuance under**
              **equity compensation plans**
              **(excluding securities**
              **reflected in column (a))**
              **(c)**Equity
                compensation plans approved by security holders
            
            
            28,705,170
            
            $
            0.60
            
            
            —Equity
                compensation plans not approved by security holders
            
            
            —
            
            
            —
            
            
            —Total
            
            
            28,705,170
            
            $
            0.60
            
            
            —




In
      December 2004, we established our 2004 Stock Option Bonus Plan, wherein the
      board of directors authorized the issuance of stock options totaling 1,765,833
      shares to the officers and employees of the Company as payment of accrued
      bonuses through December 31, 2004. The stock options are exercisable at the
      lower of $.675 per share or 50% of the closing market price at the date of
      exercise.





In
      December 2004, the board of directors authorized the issuance of stock options
      totaling 247,886 shares to the directors of the Company as payment of accrued
      board members' stipends through December 31, 2004. The stock options are
      exercisable at the lower of $.5865 per share or 50% of the closing market price
      on date of exercise.





In
      January 2005, the option holders exercised their rights to convert a portion
      of
      the stock options pursuant to the Officers Stock Grant Plan, the 2004 Stock
      Option Bonus Plan, and the options for accrued directors' stipends into common
      stock at $.675, and, as a result, we issued 2,000,000 shares of common stock
      in
      January 2005, in accordance with the stock option agreements.





In
      November 2005, the Company established its 2005 Stock Option Bonus Plan, wherein
      the board of directors authorized the issuance of stock options for restricted
      shares totaling 1,509,180 shares to the officers and employees of the Company
      as
      payment of accrued bonuses through December 31, 2005. The stock options are
      exercisable at $2.12, based on the closing market price of the Company's
      free-trading shares on the date the options were granted. Through the date
      of
      this report, none of these options have been exercised.





During
      2005, the board of directors authorized the issuance of stock options for
      restricted shares totaling 199,490 shares to the directors of the Company as
      board members’ compensation for services through December 31, 2005. The stock
      options are exercisable at various amounts, ranging from $1.99 to $4.35 per
      share, based on the closing market price of the Company's free-trading shares
      on
      the date the options were granted, except for a now former director who was
      issued 37,500 and 30,000 options shares at $1.49 and $0.99, respectively.
      Through the date of this report, none of these options have been
      exercised.




During
      2006, the board of directors authorized the issuance of stock options for
      restricted shares totaling 2,003,215 shares to the directors of the Company
      as
      board members’ compensation for services through December 31, 2006. The stock
      options are exercisable at various amounts, ranging from $1.21 to $2.30 per
      share, based on the closing market price of the Company's free-trading shares
      on
      the date the options were granted.


15


In
      addition to the above parties, the Corporate Secretary / General Counsel and
      the
      Senior Vice-President were awarded .75% and 2%, respectively, of the total
      shares outstanding, at the fair market value of the Company's stock on the
      date
      the options were granted. Also, a board member, Randolph Dumas, was awarded
      2.5%
      of the total shares outstanding, exercisable at $1.79 per share. A total of
      13,992,374 and 6,654, options shares were granted for 2005.





2004
      STOCK OPTIONS EXERCISED IN 2005





During
      2005, a total of 1,785,490 of stock options shares were exercised and issued
      (net of shares used to pay for "cashless" options"), with payment in cash and
      common stock subscriptions receivable totaling $92,906, pursuant to the 2004
      Stock Option Bonus Plan, the Officers' Stock Option Grant Plan, and for accrued
      board members' stipends, and, furthermore, these shares were registered by
      the
      Company's filing a Form S-8 registration statement. The number of shares
      registered were allocated to the individuals exercising the options based a
      ratio of the number of options held by each individual to the total number
      of
      options held by all individuals.





In
      addition, certain employees, vendors, professionals and consultants were paid
      with common stock (see Note 10 to financial statements) and with stock options
      (see Note 11 to financial statements) and certain investment banking and
      broker's fees were paid with preferred stock (see Note 12 to financial
      statements) in lieu of cash compensation.





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





GENERAL





Twelve
      months ended December 31, 2007 ("Fiscal 2007" or "2007" or "the current year")
      compared to twelve months ended December 31, 2006 ("Fiscal 2006" or "2006"
      or
      "the prior year").





RESULTS
      OF OPERATIONS





REVENUES.
      During fiscal 2007, our gross sales were $53,754, representing a increase of
      42.2% over the prior year when our gross sales were $37,808. Our revenues
      increased primarily due to an increase in revenues from network management
      fees.





COST
      OF
      SALES. Our cost of sales consists primarily of the wholesale cost network
      bandwidth. During fiscal 2007, we had cost of sales of $15,529 representing
      a
      decrease of 83.9% from $96,168 for fiscal 2006.





GROSS
      MARGIN (LOSS). Our gross margin was $38,225 or 71.1% for fiscal 2007, compared
      to our gross loss of $58,360 or 254% for fiscal 2006, an increase of $96,585
      or
      165.5%. The increase is primarily due to the higher margin achieved for the
      network management revenue due to diminishing bandwidth costs.


OPERATING
        EXPENSES. Our operating expenses consist primarily of payroll and related
        taxes,
        professional and consulting services, expenses for executive and administrative
        personnel and insurance, bad debts, investment banking and financing fees,
        investor and public relations, research and development, sales commissions,
        telephone and communications, facilities expenses, travel and related expenses,
        and other general corporate expenses. Our operating expenses for fiscal 2007
        were $7,496,801 compared to fiscal year 2006 operating expenses of $13,158,474
        an decrease of $5,661,673 or 43%.





The
      decrease is primarily due to a decrease in officers' and directors' compensation
      to $696,790 (including non-cash compensation), from $1,931,774 in the prior
      year.





In
      addition, employee payroll and related taxes for fiscal 2007 were $3,611,596
      compared to $3,916,409, a decrease of $304,813 or 7.8%. This decrease was due
      to
      a reduction of our operations, facilities and workforce during
      2007.




16


During
      2007, Sanswire and its subsidiaries incurred payroll tax liability during the
      normal course of business at each payroll cycle. The Company submitted certain
      withholding tax payments during the first and second quarters through a payroll
      processor, ADP. Subsequent thereto, the Company no longer processed its payroll
      through ADP. The Company did not file the appropriate tax forms until 2008
      and
      has failed to deposit the appropriate withholding amounts. The Company has
      recognized this issue and contacted the IRS accordingly to make arrangement
      to
      pay any taxes due, which is currently estimated to be at least $150,000. The
      Company may be subject to penalties and interest from the IRS.





We
      incurred $1,635,303 of consulting fees, an increase of $1,012,084 or 162.4%
      for
      2007 compared to $623,219 in 2006. This increase is primarily related to
      additional services required to develop and expand our geographical and product
      markets and projects in Mexico that was $550,000 in stock compensation, as
      well
      as increased professional fees in maintaining and expanding a public company,
      which included the fees related to the accounting department.




We
      received a $14,856 of research and development refund for our Sanswire project
      during 2007, compared to $1,573,150 during 2006, a decrease of $1,588,006 or
      100.9%. During 2007, there were no direct expenses for development and building
      of the airship, as compared to $1,573,150 of direct expenses during 2006. This
      is due mainly to the fact that Company had no capital available to further
      the
      development. The Company believes that further development will increase during
      2008 and thus associated expenses are expected to increase for
      2008.


During
        2007, we incurred $1,567,968 of general and administrative expenses as compared
        to $4,730,437 during 2006. The $3,162,469 decrease was due to a reduction
        expenses related to our operations, facilities and workforce during
        2007.
 
 During
        2007, we incurred no depreciation expenses as compared to $289,914 during
        2006.
        All the companies assets were impaired, sold or written down during 2006
        leaving
        no assets to be depreciated.
 
 LOSS
        FROM
        OPERATIONS. We had an operating loss of ($7,458,576) for fiscal year 2007
        as
        compared to an operating loss of ($13,216,834) for fiscal 2006, primarily
        due to
        decreased operating expenses as described above, including lower operating
        costs
        and reductions of our various programs.
 
 OTHER
        INCOME (EXPENSE). We had net other expenses totaling ($2,228,096) during
        fiscal
        year 2007 compared to ($6,484,551) during fiscal 2006. This variance was
        due
        primarily to the impairment of assets related to the Stored Value assets
        of
        ($5,222,066) and the write-off of other assets of ($682,695) in 2006.
 
 Interest
        expense for fiscal year 2007 was $ 2,482,296 compared
        to $579,790 for the prior year. Interest expense increase was primarily due
        to
        noncash financing charges associated with the Company’s convertible debentures
        as well as the accrual of interest associated with its unsecured
        notes.
 
 LOSS
        FROM
        DISCONTINUED OPERATIONS. During 2007 we had a loss of ($1,918,806) related
        to
        our discontinued operations compared to ($7,566,882) during fiscal year 2006.
        See note 2 in the financial statements for more information regarding the
        discontinued operations.
 
 NET
        LOSS.
        We had a net loss of ($11,605,478) in fiscal year 2007 compared to a net
        loss of
        ($27,268,267) in fiscal 2006. The decrease in net loss is primarily attributable
        to the decrease in the operating expenses as discussed above.




LIQUIDITY
      AND CAPITAL RESOURCES





ASSETS.
      At December 31, 2007, we had total assets of $441,956 compared to total assets
      of $508,905 as of December 31, 2006.





The
      current assets at December 31, 2007, were $50,956 compared to $454,525 at
      December 31, 2006. As of December 31, 2007, we had $32,278 of cash and cash
      equivalents compared to $4,243 at December 31, 2006.




17


The
      Company had deposits of $391,000 as of December 31, 2007 compared to $72,987
      as
      of December 31, 2006. The $391,000 relates to payments toward an agreement
      reached in May 2008 for the intellectual property of TAO Technologies. During
      2007, a rental deposit for Los Angeles World Airport related to the Palmdale
      Hanger occupied by Sanswire Networks, LLC in the amount of $72,000 was used
      to
      pay rent obligations on the Palmdale Hangar that is no longer occupied by
      Sanswire.





During
      2007 our accounts receivable, which consisted of a reimbursement check from
      our
      insurance provider, of $271,262 as of December 31, 2006 was received leaving
      no
      accounts receivable as of December 31, 2007.





We
      had
      $18,678 of current assets from discontinued operations as of December 31, 2007
      as compared to $106,033 at December 31, 2006. We also had no other assets from
      discontinued operations as of December 31, 2006 as compared to $54,380 at
      December 31, 2005. See note 3 in the financial statements for more information
      regarding the discontinued operations.


LIABILITIES.
        At December 31, 2007, we had total liabilities of $13,666,678 compared to
        total
        liabilities of $14,694,994 as of December 31, 2006.
 
 The
        current liabilities at December 31, 2007 were $13,666,678 compared to
        $10,096,661 at December 31, 2006, an increase of $2,807,115. The increase
        is
        principally due to the current portion of payments due on the notes payable
        for
        $6,262,598 (see note 6 of the financial statements), the increase in accounts
        payable of $692,117, and the increase in accrued salaries and payroll taxes
        of
        $607,258.
  The
        Company had no long-term liabilities as of December 31, 2007 compared to
        $4,598,333 in 2006 due to stock being issued in 2007 as contemplated for
        the
        long term portion of the due to a related party - Hotzone Wireless as well
        as
        for the debt owed to its former employee.
 
 CASH
        FLOWS. Our cash used in operating activities was $2,286,113 compared to
        $14,140,328 for the prior year. The decrease was primarily due to the decreased
        level of operations and operating activities and changes in our current assets
        and liabilities.
 
 During
        2007 there was $372,500 used in investing activities of which $130,000 was
        used
        as a deposit for the Sanswire-Tao joint venture and $242,500 from its
        discontinued operations compared to $255,182 in the prior year which was
        mainly
        attributed to cash payments made towards the purchase additional
        equipment.
  Net
        cash
        provided by financing activities was $2,686,648 principally from the exercise
        of
        warrants and the conversion of notes and loan payables totaling $2,701,312,
        as
        compared to $13,333,803 in the prior year.
 
 In
        April
        2007, we received approximately $750,000 from the exercise of warrants by
        certain investors. With this funding, we will still require additional capital
        resources to fund our operations and capital requirements as presently planned
        over the next twelve months.





Throughout
      2007 and continuing into 2008, the Company has been dependent upon monthly
      funding from its existing debt holders. Funding decisions have typically not
      extended beyond thirty days at any given time, and the Company does not
      currently have a defined funding source. Funding delays and uncertainties have
      seriously damaged vendor relationships, new product development and revenues.
      In
      the absence of continued monthly funding by its current debt holders, the
      Company would have insufficient funds to continue operations. There is no
      assurance that additional funding from the current debt holders will be
      available or available on terms and conditions acceptable to the
      Company.




18


During
      2008, the Company has
      subsequentlyraised approximately $690,000 from investors; however this
      is not adequate funding to cover the estimated working capital deficit of
      approximately $8 million or the net loss for 2007 of approximately $11
      million.


As
        reflected in the accompanying financial statements, during the year ended
        December 31, 2007 we had a net loss of ($11,605,478) compared to a net loss
        of
        ($27,268,267) during 2006. Consequently, there is an accumulated deficit
        of
        ($120,395,726) at December 31, 2007 compared to ($108,790,248) at December
        31,
        2006.


CRITICAL
      ACCOUNTING POLICIES





ACCOUNTS
      RECEIVABLE





Trade
      and
      other accounts receivable are reported at face value less any provisions for
      uncollectible accounts considered necessary. As of December 31, 2006, the
      accounts receivable consists of a reimbursement from the Company’s Directors and
      Officers insurance for legal and accounting expenses that were paid above the
      Company’s deductible which was received in August 2007.




REGISTRATION
      RIGHTS




In
      connection with the sale of debt or equity instruments, we may enter into
      Registration Rights Agreements. Generally, these Agreements require us to file
      registration statements with the Securities and Exchange Commission to register
      common shares that may be issued on conversion of debt or preferred stock,
      to
      permit re-sale of common shares previously sold under an exemption from
      registration or to register common shares that may be issued on exercise of
      outstanding options or warrants.




These
      Agreements usually require us to pay penalties for any time delay in filing
      the
      required registration statements, or in the registration statements becoming
      effective, beyond dates specified in the Agreement. These penalties are usually
      expressed as a fixed percentage, per month, of the original amount we received
      on issuance of the debt or preferred stock, common shares, options or warrants.
      We account for these penalties as a contingent liability and not as a derivative
      instrument.




REVENUE
      RECOGNITION





Revenues
      for voice, data, and other services to end-users are recognized in the month
      in
      which the service is provided. Amounts invoiced and collected in advance of
      services provided are recorded as deferred revenue. Revenues for carrier
      interconnection and access are recognized in the month in which the service
      is
      provided.





Sales
      of
      telecommunications networks are recognized when the networks are delivered
      and
      accepted by the customer. Sales of computer hardware, equipment, and
      installation are recognized when products are shipped to customers. Provisions
      for estimated returns and allowances are provided for in the same period the
      related sales are recorded. Revenues on service contracts are recognized ratably
      over applicable contract periods. Amounts billed and collected before services
      are performed are included in deferred revenues.





USE
      OF
      ESTIMATES





The
      process of preparing financial statements in conformity with generally accepted
      accounting principles in the United States requires the use of estimates and
      assumptions regarding certain types of assets, liabilities, revenues, and
      expenses. Such estimates primarily relate to unsettled transactions and events
      as of the date of the financial statements. Accordingly, upon settlement, actual
      results may differ from estimated amounts.




19


STOCK-BASED
      COMPENSATION




On
      January 1, 2006, the Company adopted SFAS No. 123(R), *Share-Based
      Payment* ,
      which
      requires the measurement and recognition of compensation expense for all
      stock-based awards made to employees and directors based on estimated fair
      values. SFAS No. 123(R) supersedes the Company’s previous accounting under
      Accounting Principles Board Opinion (“APB”) No. 25, *Accounting
      for Stock Issued to Employees* .
      In
      March 2005, the Securities and Exchange Commission issued SAB No. 107, *Share-Based
      Payment* ,
      relating to SFAS No. 123(R). The Company has applied applicable
      provisions of SAB No. 107 in its adoption of SFAS No. 123(R).




The
      Company adopted SFAS No. 123(R) using the prospective transition method,
      which requires the application of the accounting standard as of January 1,
      2006, the first day of its year ended December 31, 2006. In accordance with
      this transition method, the Company’s consolidated financial statements for
      prior periods have not been restated to reflect, and do not include the impact
      of, SFAS No. 123(R). The Company’s consolidated financial statements for
      the year ended December 31, 2007 and 2006 reflect the impact of SFAS
      No. 123(R). Upon adopting SFAS No. 123(R), for awards with service
      conditions and graded-vesting, a one-time election was made to recognize
      stock-based compensation expense on a straight-line basis over the requisite
      service period for the entire award.




Stock-based
      compensation expense recognized under SFAS No. 123(R) for the years ended
      December 31, 2007 and 2006 were $1,667,107 and $321,729, respectively. **





The
      Company’s determination of fair value of share-based payment awards to employees
      and directors on the date of grant uses the Black-Scholes model, which is
      affected by the Company’s stock price as well as assumptions regarding a number
      of highly complex and subjective variables. These variables include, but are
      not
      limited to our expected stock price volatility over the term of the awards,
      and
      actual and projected employee stock option exercise
      behaviors.  Forfeitures are recognized as incurred.





The
      Company accounts for stock option and warrant grants issued to non-employees
      for
      goods and services using the guidance of SFAS No. 123 and Emerging Issues
      Task Force (“EITF”) No. 96-18: “Accounting for Equity Instruments that are
      Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
      Goods or Services,” whereby the fair value of such option and warrant grants is
      determined using the Black-Scholes option pricing model at the earlier of the
      date at which the non-employee’s performance is completed or a performance
      commitment is reached.





RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS




***SFAS
      No. 157, Fair Value Measurements (SFAS No. 157)***




In
      September 2006, the FASB issued SFAS No. 157. This Statement defines fair value
      as used in numerous accounting pronouncements, establishes a framework for
      measuring fair value in GAAP and expands disclosure related to the use of fair
      value measures in financial statements. SFAS No. 157 does not expand the use
      of
      fair value measures in financial statements, but standardizes its definition
      and
      guidance in GAAP. The Standard emphasizes that fair value is a market-based
      measurement and not an entity-specific measurement based on an exchange
      transaction in which the entity sells an asset or transfers a liability (exit
      price). SFAS No. 157 establishes a fair value hierarchy from observable market
      data as the highest level to fair value based on an entity’s own fair value
      assumptions as the lowest level. SFAS No. 157 is to be effective for its
      financial statements issued in 2008. The Company believes that SFAS No. 157
      will
      not have a material impact on its consolidated financial
      statements.





***SFAS
      No. 159,*** ** **The
      Fair Value Option of Financial Assets and Financial Liabilities (SFAS
      No. 159)**




In
      February 2007, the FASB issued SFAS No. 159. *The
      Fair Value Option of Financial Assets and Financial Liabilities* (“SFAS
      No. 159”). SFAS No. 159 provides an option to report selected
      financial assets and financial liabilities using fair value. The standard
      establishes required presentation and disclosures to facilitate comparisons
      with
      companies that use different measurements for similar assets and liabilities.
      SFAS No. 159 is effective for fiscal years beginning after
      November 15, 2007, with early adoption allowed if SFAS No. 157 is also
      adopted. The Company is currently evaluating the impact of adopting SFAS
      No. 159 on its consolidated financial statements.




20


**SFAS
      No. 141 (R),** ***Business Combinations (SFAS No. 141R)*** **and SFAS No. 160,**  ***Non-controlling
      Interests in Consolidated Financial Statements (SFAS No.
      160)***




In
      December 2007, the FASB issued SFAS No. 141R, Business Combinations, and SFAS
      No. 160, Non-controlling Interests in Consolidated Financial Statements.
      SFAS No. 141R requires an acquirer to measure the identifiable assets acquired,
      the liabilities assumed, and any non-controlling interest in the acquiree at
      their fair values on the acquisition date, with goodwill being the excess value
      over the net identifiable assets acquired. SFAS No. 160 clarifies that a
      non-controlling interest in a subsidiary should be reported as equity in the
      consolidated financial statement. The calculation of earnings per share will
      continue to be based on income amounts attributable to the parent. SFAS
      No. 141R and SFAS No. 160 are effective for financial statements
      issued for fiscal years beginning after December 15, 2008. Early adoption is
      prohibited. The Company has not yet determined the effect on our financial
      statements, if any, upon adoption of SFAS No. 141R or SFAS No.
      160.





**SFAS
      No. 161,** ***Disclosures about Derivative Instruments and Hedging Activities (SFAS No.
      161)***





In
      March
      2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative
      Instruments and Hedging Activities”. The new standard is intended to improve
      financial reporting about derivative instruments and hedging activities by
      requiring enhanced disclosures to enable investors to better understand their
      effects on an entity’s financial position, financial performance, and cash
      flows. FAS 161 is effective for the Company in fiscal 2010.





Management
      does not believe that there are any recently-issued, but not yet effective
      accounting pronouncements, which could have a material effect on the
      accompanying condensed consolidated financial statements


21





**ITEM
      7. FINANCIAL STATEMENTS**


22


**Report
      of Independent Registered Public Accounting Firm**





To
        the
        Board of Directors and Stockholders of:
 Sanswire
        Corp. (formerly known as Globetel Communications Corp.) and
        Subsidiaries
 
 We
        have
        audited the accompanying consolidated balance sheets of Sanswire Corp. (formerly
        known as Globetel Communications Corp.) and Subsidiaries (the “Company”), as of
        December 31, 2007 and 2006, and the related consolidated statements of
        operations, stockholders' deficits, and cash flows for the years then ended.
        The
        consolidated financial statements are the responsibility of the Company's
        management. Our responsibility is to express an opinion on the 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
        consolidated financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the consolidated financial statements. An audit also includes
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall financial statement presentation.
        We believe that our audits provide a reasonable basis for our
        opinion.
 
 We
        were
        not engaged to examine management’s assertion about the effectiveness of
        Sanswire Corp. (formerly known as Globetel Communications Corp.) and
        Subsidiaries’ internal control over financial reporting as of December 31, 2007
        and 2006 included in the Company’s Item 8A “Controls and Procedures” in the
        Annual Report on Form 10-KSB and, accordingly, we do not express an opinion
        thereon.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of Sanswire
        Corp.
        (formerly known as Globetel Communications Corp.) and Subsidiaries as of
        December 31, 2007 and 2006 and the consolidated results of their operations
        and
        their cash flows for the years 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 has experienced net losses and
      negative cash flows from operations and expects such losses to continue. These
      conditions raise substantial doubt about the Company’s ability to continue as a
      going concern. Management’s plans in regard to these matters are also described
      in Note 1. The consolidated financial statements do not include any adjustments
      that might result from the outcome of this uncertainty.





As
      discussed in Note 1, on May 2, 2008, the Securities and Exchange Commission
      (“SEC”) filed a lawsuit in the United States District Court for the Southern
      District of Florida against GlobeTel Communications Corp. (the “Company”) and
      three former officers of the Company, Timothy J. Huff, Thomas Y. Jimenez and
      Lawrence E. Lynch. The SEC alleges, among other things, that the Company
      recorded $119 million in revenue on the basis of fraudulent invoices created
      by
      Joseph Monterosso and Luis Vargas, two individuals formerly employed by the
      Company who were in charge of its wholesale telecommunications business. The
      SEC
      alleges that the Company violated Sections 5(a), 5(c), and 17(a) of the
      Securities Act of 1933, as amended, Sections 10(b), 13(a), 13(b)(2)(A) and
      13(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”), and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 under the Exchange Act.
      The SEC seeks as relief a permanent injunction, civil penalties, and
      disgorgement with prejudgment interest. The Company has advised that it intends
      to vigorously defend itself in this action. The SEC lawsuit states that the
      staff is also considering recommending that the SEC authorize and institute
      proceedings to revoke the registration of Company’s securities pursuant to
      Section 12(j) of the Exchange Act. The consolidated financial statements do
      not
      include any adjustments that might result from the outcome of this
      uncertainty.





Weinberg
      & Company, P.A.





Boca
      Raton, Florida


September
      18, 2008


23





**SANSWIRE
      CORP. (FORMERLY GLOBETEL COMMUNICATIONS CORP.)AND
      SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


DECEMBER
                  31, 2007
              
              DECEMBER
                  31, 2006ASSETSCURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              32,278
              
              $
              4,243Accounts
                  receivable
              
              
              —
              
              
              271,262Deposits
              
              
              —
              
              
              72,987Current
                  assets from discontinued operations
              
              
              18,678
              
              
              106,033TOTAL
                  CURRENT ASSETS
              
              
              50,956
              
              
              454,525Deposits
              
              
              391,000
              
              
              —Other
                  assets from discontinued operations
              
              
              —
              
              
              54,380TOTAL
                  NONCURRENT ASSETS
              
              
              391,000
              
              
              54,380TOTAL
                  ASSETS
              
              $
              441,956
              
              $
              508,905LIABILITIES
                  AND STOCKHOLDERS’ DEFICITLIABILITIESCURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              3,155,722
              
              $
              2,463,605Notes
                  and convertible notes payable, net of discount of $1,257,364 and
                  $882,128
              
              
              8,056,220
              
              
              6,262,598Bank
                  Overdraft
              
              
              —
              
              
              14,664Accrued
                  expenses and other liabilities
              
              
              1,067,355
              
              
              460,097Current
                  liabilities from discontinued operations
              
              
              1,387,381
              
              
              895,697TOTAL
                  CURRENT LIABILITIES
              
              
              13,666,678
              
              
              10,096,661LONG-TERM
                  LIABILITIESDue
                  to related party payable in stock
              
              
              —
              
              
              4,598,333TOTAL
                  LONG-TERM LIABILITIES
              
              
              —
              
              
              4,598,333TOTAL
                  LIABILITIES
              
              
              13,666,678
              
              
              14,694,994COMMITMENTS
                  AND CONTINGENCIESSTOCKHOLDERS'
                  DEFICITSeries
                  A Preferred stock, $.001 par value, 250,000 shares
                  authorized;no
                  shares issued and outstanding:
              
              
              —
              
              
              —Series
                  B Preferred stock, $.001 par value, 500,000 shares
                  authorized;no
                  shares issued and outstanding:
              
              
              —
              
              
              —Series
                  C Preferred stock, $.001 par value, 5,000 shares
                  authorized;no
                  shares issued and outstanding:
              
              
              —
              
              
              —Series
                  D Preferred stock, $.001 par value, 5,000 shares
                  authorized;no
                  shares issued and outstanding:
              
              
              —
              
              
              —Common
                  stock, $.00001 par value, 250,000,000 shares authorized;129,756,897
                  and 109,470,803 shares issued and outstanding
              
              
              1,299
              
              
              1,095Additional
                  paid-in capital
              
              
              107,169,705
              
              
              94,733,346Stock
                  subscriptions receivable - Common Stock
              
              
              —
              
              
              (130,282
              )Accumulated
                  deficit
              
              
              (120,395,726
              )
              
              (108,790,248
              )TOTAL
                  STOCKHOLDERS' DEFICIT
              
              
              (13,224,722
              )
              
              (14,186,089
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              441,956
              
              $
              508,905


**See
        accompanying notes to consolidated financial
        statements**




24


**SANSWIRE
        CORP. (FORMERLY GLOBETEL COMMUNICATIONS CORP.) AND
        SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **FOR
        THE YEARS ENDED DECEMBER 31,**
  2007
                
                
                2006REVENUES
                
                $
                53,754
                
                $
                37,808COST
                    OF REVENUES
                
                
                15,529
                
                
                96,168GROSS
                    MARGIN (LOSS)
                
                
                38,225
                
                
                (58,360
                )EXPENSESPayroll
                    and related taxes
                
                
                3,611,596
                
                
                3,916,409Consulting
                    fees
                
                
                1,635,303
                
                
                623,219Officers'
                    and directors' compensation
                
                
                696,790
                
                
                1,931,774Bad
                    debts
                
                
                —
                
                
                93,571Research
                    and development
                
                
                (14,856
                )
                
                1,573,150General
                    and administrative
                
                
                1,567,968
                
                
                4,730,437Depreciation
                    and amortization
                
                
                —
                
                
                289,914TOTAL
                    EXPENSES
                
                
                7,496,801
                
                
                13,158,474LOSS
                    FROM OPERATIONS
                
                
                (7,458,576
                )
                
                (13,216,834
                )OTHER
                    INCOME (EXPENSE)Gain
                    on extinguishment of debt
                
                
                254,200
                
                
                —Loss
                    on disposition of equipment
                
                
                —
                
                
                (682,695
                )Loss
                    on impairment of equipment
                
                
                —
                
                
                (5,222,066
                )Interest
                    expense, net
                
                
                (2,482,296
                )
                
                (579,790
                )NET
                    OTHER EXPENSE
                
                
                (2,228,096
                )
                
                (6,484,551
                )LOSS
                    FROM CONTINUING OPERATIONS
                
                
                (9,686,672
                )
                
                (19,701,385
                )LOSS
                    FROM DISCONTINUED OPERATIONS
                
                
                (1,918,806
                )
                
                (7,566,882
                )NET
                    LOSS
                
                $
                (11,605,478
                )
                $
                (27,268,267
                )WEIGHTED
                    AVERAGE NUMBER OF COMMON SHARES OUTSTANDINGBASIC
                    and DILUTED
                
                
                121,171,392
                
                
                105,643,655LOSS
                    PER SHARE FROM CONTINUING OPERATIONSBASIC
                    and DILUTED
                
                
                ($
                    0.08
                )
                
                ($
                    0.19
                )LOSS
                    PER SHARE FROM DISCONTINUED OPERATIONSBASIC
                    and DILUTED
                
                
                ($
                    0.02
                )
                
                ($
                    0.07
                )NET
                    LOSS PER SHAREBASIC
                    and DILUTED
                
                
                ($
                    010
                )
                
                ($
                    0.26
                )
 **See
          accompanying notes to consolidated financial
          statements**




25


**SANSWIRE
        CORP. (FORMERLY GLOBETEL COMMUNICATIONS CORP.) AND
        SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS' DEFICIT**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
  COMMON STOCKADDITIONAL
                
                STOCKPAID-IN
                
                SUBSCRIPTIONSDescription
                
                SHARES
                
                AMOUNT
                
                CAPITAL
                
                RECEIVABLEBALANCE,
                    DECEMBER 31, 2005 (restated)
                
                
                98,192,102
                
                $
                982
                
                $
                81,570,082
                
                $
                (44,494
                )Shares
                    issued for options exercised
                
                
                1,953,830
                
                
                20
                
                
                446,517
                
                
                (85,788
                )Shares
                    issued for services
                
                
                520,965
                
                
                5
                
                
                321,724
                
                
                —Shares
                    issued for settlement of debt obligations
                
                
                909,967
                
                
                9
                
                
                3,214,826
                
                
                —Shares
                    issued for cash
                
                
                5,727,272
                
                
                57
                
                
                6,341,091
                
                
                —Shares
                    issued for conversion of Preferred Series D shares
                
                
                1,166,667
                
                
                12
                
                
                499,988
                
                
                —Shares
                    issued for Preferred Series C shares
                
                
                1,000,000
                
                
                10
                
                
                (10
                )
                
                —Options
                    issued for board member stipends
                
                
                —
                
                
                —
                
                
                586,995
                
                
                —Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                472,133
                
                
                —Warrants
                    issued with convertible notes
                
                
                —
                
                
                —
                
                
                655,131
                
                
                —Beneficial
                    conversion feature withconvertible
                    notes
                
                
                —
                
                
                —
                
                
                624,869
                
                
                —Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —BALANCE,
                    DECEMBER 31, 2006
                
                
                109,470,803
                
                $
                1,095
                
                $
                94,733,346
                
                $
                (130,282
                )Shares
                    issued for cash
                
                
                3,750,000
                
                
                38
                
                
                749,962
                
                
                —Shares
                    issued for services
                
                
                6,824,920
                
                
                68
                
                
                1,667,039
                
                
                —Shares
                    issued for settlement of debt obligations
                
                
                1,333,333
                
                
                13
                
                
                4,598,320
                
                
                —Shares
                    issued related to discontinued operations
                
                
                4,001,599
                
                
                41
                
                
                1,056,438
                
                
                —Shares
                    issued for interest and financing costs
                
                
                1,572,951
                
                
                16
                
                
                557,616
                
                
                —Shares
                    issued for conversion of notes
                
                
                939,005
                
                
                9
                
                
                98,556
                
                
                —Shares
                    issued for deposit
                
                
                1,864,286
                
                
                19
                
                
                260,981
                
                
                —Writedown
                    of receivable related to options
                
                
                —
                
                
                —
                
                
                (130,282
                )
                
                130,282Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                1,922,992
                
                
                —Change
                    of fair value of warrants
                
                
                —
                
                
                —
                
                
                421,737
                
                
                —Warrants
                    issued for and beneficial conversion feature for convertible
                    notes
                
                
                —
                
                
                —
                
                
                1,233,000
                
                
                —Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —BALANCE,
                    DECEMBER 31, 2007
                
                
                129,756,897
                
                $
                1,299
                
                $
                107,169,705
                
                $
                —


**See
        accompanying notes to consolidated financial
        statements**




26
 
 SERIES AADDITIONAL
                
                STOCKPAID-IN
                
                SUBSCRIPTIONSDescription
                
                SHARES
                
                AMOUNT
                
                CAPITAL
                
                RECEIVABLEBALANCE,
                    DECEMBER 31, 2005 (restated)
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —Shares
                    issued for options exercised
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for services
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for settlement of debt obligations
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for cash
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for conversion of Preferred Series D shares
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for Preferred Series C shares
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for board member stipends
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                —
                
                
                —Warrants
                    issued with convertible notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Beneficial
                    conversion feature withconvertible
                    notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —BALANCE,
                    DECEMBER 31, 2006
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —Shares
                    issued for cash
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for services
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for settlement of debt obligations
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued related to discontinued operations
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for interest and financing costs
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for conversion of notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for deposit
                
                
                —
                
                
                —
                
                
                —
                
                
                —Writedown
                    of receivable related to options
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                —
                
                
                —Change
                    of fair value of warrants
                
                
                —
                
                
                —
                
                
                —
                
                
                —Warrants
                    issued for and beneficial conversion feature for convertible
                    notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —BALANCE,
                    DECEMBER 31, 2007
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —
  See
        accompanying notes to consolidated financial
        statements




27
 
 SERIES BADDITIONAL
                
                STOCKPAID-IN
                
                SUBSCRIPTIONSDescription
                
                SHARES
                
                AMOUNT
                
                CAPITAL
                
                RECEIVABLE
  BALANCE,
                    DECEMBER 31, 2005 (restated)
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —
  Shares
                    issued for options exercised
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for services
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for settlement of debt obligations
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for cash
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for conversion of Preferred Series D shares
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for Preferred Series C shares
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for board member stipends
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                —
                
                
                —Warrants
                    issued with convertible notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Beneficial
                    conversion feature withconvertible
                    notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
  BALANCE,
                    DECEMBER 31, 2006
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —Shares
                    issued for cash
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for services
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for settlement of debt obligations
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued related to discontinued operations
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for interest and financing costs
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for conversion of notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for deposit
                
                
                —
                
                
                —
                
                
                —
                
                
                —Writedown
                    of receivable related to options
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                —
                
                
                —Change
                    of fair value of warrants
                
                
                —
                
                
                —
                
                
                —
                
                
                —Warrants
                    issued for and beneficial conversion feature for convertible
                    notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —BALANCE,
                    DECEMBER 31, 2007
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —


**See
        accompanying notes to consolidated financial
        statements**




28
 
 SERIES CADDITIONAL
                
                STOCKPAID-IN
                
                SUBSCRIPTIONSDescription
                
                SHARES
                
                AMOUNT
                
                CAPITAL
                
                RECEIVABLEBALANCE,
                    DECEMBER 31, 2005 (restated)
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —
  Shares
                    issued for options exercised
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for services
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for settlement of debt obligations
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for cash
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for conversion of Preferred Series D shares
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for Preferred Series C shares
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for board member stipends
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                —
                
                
                —Warrants
                    issued with convertible notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Beneficial
                    conversion feature withconvertible
                    notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —BALANCE,
                    DECEMBER 31, 2006
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —Shares
                    issued for cash
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for services
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for settlement of debt obligations
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued related to discontinued operations
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for interest and financing costs
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for conversion of notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Shares
                    issued for deposit
                
                
                —
                
                
                —
                
                
                —
                
                
                —Writedown
                    of receivable related to options
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                —
                
                
                —Change
                    of fair value of warrants
                
                
                —
                
                
                —
                
                
                —
                
                
                —Warrants
                    issued for and beneficial conversion feature for convertible
                    notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —BALANCE,
                    DECEMBER 31, 2007
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —
 **See
          accompanying notes to consolidated financial
          statements**




29
 
  SERIES DADDITIONAL
                
                STOCK
                
                
                
                TOTALPAID-IN
                
                SUBSCRIPTIONS
                
                ACCUMULATED
                
                STOCKHOLDERS'Description
                
                SHARES
                
                AMOUNT
                
                CAPITAL
                
                RECEIVABLE
                
                DEFICIT
                
                EQUITYBALANCE,
                    DECEMBER 31, 2005 (restated)
                
                
                1,000
                
                $
                1
                
                $
                999,999
                
                $
                (500,000
                )
                $
                (81,521,981
                )
                $
                504,589Shares
                    issued for options exercised
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                360,749Shares
                    issued for services
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                321,729Shares
                    issued for settlement of debt obligations
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                3,214,835Shares
                    issued for cash
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                6,341,148Shares
                    issued for conversion of Preferred Series D shares
                
                
                (1,000
                )
                
                (1
                )
                
                (999,999
                )
                
                500,000
                
                
                —
                
                
                —Shares
                    issued for Preferred Series C shares
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for board member stipends
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                586,995Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                472,133Warrants
                    issued with convertible notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                655,131Beneficial
                    conversion feature withconvertible
                    notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                624,869Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (27,268,267
                )
                
                (27,268,267
                )BALANCE,
                    DECEMBER 31, 2006
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                (108,790,248
                )
                $
                (14,186,089
                )Shares
                    issued for cash
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                750,000Shares
                    issued for services
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                1,667,107Shares
                    issued for settlement of debt obligations
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                4,598,333Shares
                    issued related to discontinued operations
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                1,056,479Shares
                    issued for interest and financing costs
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                557,632Shares
                    issued for conversion of notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                98,565Shares
                    issued for deposit
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                261,000Writedown
                    of receivable related to options
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —Options
                    issued for executive compensation
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                1,922,992Change
                    of fair value of warrants
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                421,737Warrants
                    issued for and beneficial conversion feature for convertible
                    notes
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                1,233,000Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (11,605,478
                )
                
                (11,605,478
                )BALANCE,
                    DECEMBER 31, 2007
                
                
                —
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                (120,395,726
                )
                $
                (13,224,722
                )
 **See
          accompanying notes to consolidated financial
          statements**




30


**SANSWIRE
        CORP. (FORMERLY GLOBETEL COMMUNICATIONS CORP.) AND
        SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **FOR
        THE YEARS ENDED DECEMBER 31,**
  2007
                
                2006CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    loss
                
                $
                (11,605,478
                )
                $
                (27,268,267
                )Adjustments
                    to reconcile net loss to net cash used by operating
                    activities:Depreciation
                
                
                —
                
                
                289,914Amortization
                    of debt discount
                
                
                1,111,963
                
                
                (397,872
                )Gain
                    on extinguishment of debt
                
                
                (254,200
                )
                
                —Loss
                    on disposition of assets
                
                
                —
                
                
                682,695Loss
                    on impairment of assets
                
                
                —
                
                
                5,279,567Bad
                    debt expense
                
                
                —
                
                
                93,571Stock
                    based compensation
                
                
                1,667,107
                
                
                321,729Fair
                    value of vested options
                
                
                1,922,992
                
                
                1,059,128Fair
                    value of warrants for investment
                
                
                421,737
                
                
                —Increase
                    in accrued interest expense
                
                
                558,612
                
                
                201,181Common
                    stock exchanged for interest and financing costs
                
                
                557,632
                
                
                —Noncash
                    activity from discontinued operations
                
                
                1,056,479
                
                
                1,681,645(Increase)
                    decrease in assets:Accounts
                    receivable
                
                
                271,262
                
                
                (193,357
                )Loans
                    to employees
                
                
                —
                
                
                46,068Prepaid
                    expenses
                
                
                —
                
                
                67,060Prepaid
                    expenses - related party
                
                
                —
                
                
                185,960Deposits
                
                
                72,987
                
                
                1,139,934Decrease
                    in assets relating to discontinued operations
                
                
                141,735
                
                
                1,598,251Increase
                    (decrease) in liabilities:Accounts
                    payable
                
                
                692,117
                
                
                1,761,553Due
                    to former employee with stock
                
                
                —
                
                
                (237,600
                )Accrued
                    officers' salaries and bonuses
                
                
                —
                
                
                (97,382
                )Accrued
                    expenses and other liabilities
                
                
                607,258
                
                
                569Related
                    party payable
                
                
                —
                
                
                (57,500
                )Increase
                    in liabilities relating to discontinued operations
                
                
                491,684
                
                
                (297,173
                )NET
                    CASH USED BY OPERATING ACTIVITIES
                
                
                (2,286,113
                )
                
                (14,140,328
                )CASH
                    FLOWS FROM INVESTING ACTIVITIESAcquisition
                    of property and equipment
                
                
                —
                
                
                (255,182
                )Deposit
                    in future joint venture
                
                
                (130,000
                )
                
                —Investing
                    activities from discontinued operations
                
                
                (242,500
                )
                
                —NET
                    CASH USED BY INVESTING ACTIVITIES
                
                
                (372,500
                )
                
                (255,182
                )CASH
                    FLOWS FROM FINANCING ACTIVITIESIssuance
                    of common stock - exercises of warrants
                
                
                750,000
                
                
                6,341,148Sale
                    of common stock - exercises of options
                
                
                —
                
                
                34,446Proceeds
                    from notes and loans payable
                
                
                1,951,312
                
                
                6,943,545Bank
                    overdraft
                
                
                (14,664
                )
                
                14,664NET
                    CASH PROVIDED BY FINANCING ACTIVITIES
                
                
                2,686,648
                
                
                13,333,803NET
                    (DECREASE) INCREASE IN CASH AND EQUIVALENTS
                
                
                28,035
                
                
                (1,061,709
                )CASH
                    AND EQUIVALENTS - BEGINNING OF PERIOD
                
                
                4,243
                
                
                1,065,952CASH
                    AND EQUIVALENTS - ENDING OF PERIOD
                
                $
                32,278
                
                $
                4,243




31
 
 SUPPLEMENTAL
                    DISCLOSURES
                
                2007
                
                2006Cash
                    paid during the period for:Interest
                
                $
                25,083
                
                $
                26,310Income
                    taxes
                
                
                —
                
                
                —NON-CASH
                    INVESTING AND FINANCING ACTIVITIES:Shares
                    issued for debts
                
                
                4,598,333
                
                
                2,386,667Shares
                    issued for debts
                
                
                242,500
                
                
                —Shares
                    issued for future joint venture
                
                
                261,000
                
                
                —Conversion
                    of Series D preferred stock to common stock
                
                
                —
                
                
                1,000,000Cashless
                    issuance for exercise of options
                
                
                —
                
                
                360,749Non
                    cash receipt for services
                
                
                —
                
                
                590,568Non
                    cash disbursement for debt
                
                
                —
                
                
                590,568Conversion
                    of notes payable to common stock
                
                
                98,565
                
                
                —Non-cash
                    equity-warrant valuation and intrinsic value of beneficialconversion
                    associated with convertible notes
                
                
                1,233,000
                
                
                1,280,000


**See
        accompanying notes to consolidated financial
        statements**




32


**SANSWIRE
        CORP. (FORMERLY GLOBETEL COMMUNICATIONS CORP.) AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED DECEMBER 31, 2007 AND 2006**


**NOTE
      1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES**





NATURE
      OF
      OPERATIONS


From
        2002
        to 2007 Sanswire
        Corp. (formerly known as Globetel Communications Corp.) ("Sanswire")
        (the “Company”) was involved in the following business sectors: stored value
        card services; wholesale telecommunications services; voice over IP; wireless
        broadband; and high altitude airships. These business units operated through
        various subsidiaries. The Company has discontinued operations in all but
        the
        high altitude airship sector.


On
      September 22, 2008 we filed a Certificate of Merger with the Secretary of State
      of the State of Delaware pursuant to which our wholly owned subsidiary, Sanswire
      Corp., a Delaware corporation, was merged into us. As a result of the filing
      of
      the Certificate of Merger, our corporate name was changed from GlobeTel
      Communications Corp. to Sanswire Corp. The opportunities associated with
      Sanswire are related to the Lighter Than Air (LTA) Unmanned Aerial Vehicle
      (UAV)
      market. Sanswire seeks to build and run a UAV business that includes low-,
      mid-
      and high-altitude, lighter-than-air vehicles. Sanswire intends to provide
      customers advanced seamless wireless broadband capabilities and surveillance
      sensor suites utilizing its High Altitude Airship technology.





Sanswire’s
      main products are airships, which provide a platform to transmit wireless
      capabilities from air to ground.





The
      High
      Altitude class of prospective airships are generally referred to as HAAs
      (High Altitude Airships) but have also been called HAPs and HALEs (High Altitude
      Platforms, High Altitude Long Endurance). They are being designed to be able
      to
      keep a station in one location in the Stratosphere, at approximately 65,000
      ft
      for durations of 30 days or more.





ORGANIZATION
      AND CAPITALIZATION


The
        Company was organized in July 2002, under the laws of the State of Delaware.
        Upon its incorporation, Sanswire was a wholly-owned subsidiary of American
        Diversified Group, Inc. (ADGI). ADGI was organized January 16, 1979, under
        the
        laws of the State of Nevada. ADGI had two other wholly-owned subsidiaries,
        Global Transmedia Communications Corporation (Global), a Delaware corporation,
        and NCI Telecom, Inc. (NCI), a Missouri corporation.
 
 On
        July
        1, 2002, both Global and NCI were merged into ADGI. On July 24, 2002, ADGI
        stockholders approved a plan of reincorporation for the exchange of all
        outstanding shares of ADGI for an equal number of shares of the Company.
        Subsequently, ADGI was merged into the Company, which is now conducting the
        business formerly conducted by ADGI and its subsidiaries, and all references
        to
        ADGI in these financial statements now apply to Sanswire
        interchangeably.
 
 In
        July
        2002, pursuant to the reincorporation, the Company authorized the issuance
        of up
        to 1,500,000,000 (pre-split) shares of common stock, par value of $0.00001
        per
        share and up to 10,000,000 shares of preferred stock, par value of $0.001
        per
        share.
 
 In
        May
        2005, the Company approved a reverse split of shares of common stock on a
        one
        for fifteen (1:15) basis and changed the number of shares authorized to
        100,000,000. In the Company's annual shareholders meeting on August 1, 2005,
        the
        shareholders voted to increase the shares authorized from 100,000,000 to
        150,000,000.





All
      common stock amounts in this report have been retroactively restated to account
      for the reverse stock split, unless otherwise noted.




33




In
      the
      Company's annual shareholders meeting on June 21, 2006, the shareholders voted
      to increase the shares authorized from 150,000,000 to 250,000,000.





BASIS
      OF
      PRESENTATION


The
        financial statements include the accounts of Sanswire Corp. ("Sanswire,"
        the “Company”) and
        its
        wholly-owned subsidiaries: Sanswire Networks, LLC(“Sanswire Networks”); GlobeTel
        Wireless Corp.; GlobeTel Wireless Europe GmbH, a German corporation, and
        Centerline Communications, LLC, and its wholly-owned subsidiaries, EQ8, LLC,
        EnRoute Telecom, LLC, G Link Solutions, LLC, Volta Communications, LLC, and
        Lonestar Communications, LLC; High Valley Property Ltd., a British Virgin
        Islands corporation; as well as the accounts GTCC de Mexico, S.A. de C.V,
        which
        GlobeTel owns 99%.





Inter-company
      balances and transactions were eliminated in the consolidation.





GOING
      CONCERN


The
        accompanying financial statements have been prepared on a going concern basis,
        which contemplates the realization of assets and the settlement of liabilities
        and commitments in the normal course of business. As reflected in the
        accompanying financial statements, the Company had a net loss of $11,605,478
        and
        a negative cash flow from operations of $2,286,113 for the year ended December
        31, 2007, and had a working capital deficiency of $12,833,722 and a
        stockholders’ deficit of $13,224,722 at December 31, 2007.  These
        factors raise substantial doubt about the Company’s ability to continue as a
        going concern. The ability of the Company to continue as a going concern
        is
        dependent upon the Company’s ability to raise additional funds and implement its
        business plan. The financial statements do not include any adjustments that
        might be necessary if the Company is unable to continue as a going
        concern.


Additional
      cash will still be needed to support operations. Management believes it can
      continue to raise capital from various funding sources, which when added to
      budgeted sales and current working capital,  will
      be
      sufficient to sustain operations at its current level through December 31,
      2008.  However,
      if budgeted sales levels are not achieved and/or if significant unanticipated
      expenditures occur, or if it is unable to obtain the necessary funding, the
      Company may have to modify its business plan, reduce or discontinue some of
      its
      operations or seek a buyer for all or part of its assets to continue as a going
      concern. As
      of the date of this report the Company has continued to raise capital to sustain
      its current operations which have been reduced since January 1, 2008.  The
      Company will need to periodically seek investment to provide cash for operations
      until such time that operations provide sufficient cash flow to cover
      expenditures. (see also next paragraph)





On
      May 2,
      2008, the Securities and Exchange Commission (“SEC”) filed a lawsuit in the
      United States District Court for the Southern District of Florida against
      GlobeTel Communications Corp. (the “Company”) and three former officers of the
      Company, Timothy J. Huff, Thomas Y. Jimenez and Lawrence E. Lynch. The SEC
      alleges, among other things, that the Company recorded $119 million in revenue
      on the basis of fraudulent invoices created by Joseph Monterosso and Luis
      Vargas, two individuals formerly employed by the Company who were in charge
      of
      its wholesale telecommunications business. The SEC alleges that the Company
      violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, as
      amended, Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”), and Rules 10b-5, 12b-20,
      13a-1, 13a-11 and 13a-13 under the Exchange Act. The SEC seeks as relief a
      permanent injunction, civil penalties, and disgorgement with prejudgment
      interest. The Company intends to vigorously defend itself in this action. The
      staff is also considering recommending that the SEC authorize and institute
      proceedings to revoke the registration of Company’s securities pursuant to
      Section 12(j) of the Exchange Act. (also see Note 9)




CASH
      AND
      CASH EQUIVALENTS





The
      Company considers all highly liquid debt instruments with an original maturity
      of three months or less at the date of purchase to be cash equivalents.




34




BANK
      OVERDRAFT





The
      Company records any negative balances in its bank accounts as a bank
      overdraft.





ACCOUNTS
      RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS





Trade
      and
      other accounts receivable are reported at face value less any provisions for
      uncollectible accounts considered necessary. As of December 31, 2006, the
      accounts receivable consists of a reimbursement from the Company’s Directors and
      Officers insurance for legal and accounting expenses that were paid above the
      Company’s deductible which was received in August 2007.





REGISTRATION
      RIGHTS




In
      connection with the sale of debt or equity instruments, we may enter into
      Registration Rights Agreements. Generally, these Agreements require us to file
      registration statements with the Securities and Exchange Commission to register
      common shares that may be issued on conversion of debt or preferred stock,
      to
      permit re-sale of common shares previously sold under an exemption from
      registration or to register common shares that may be issued on exercise of
      outstanding options or warrants.




These
      Agreements usually require us to pay penalties for any time delay in filing
      the
      required registration statements, or in the registration statements becoming
      effective, beyond dates specified in the Agreement. These penalties are usually
      expressed as a fixed percentage, per month, of the original amount we received
      on issuance of the debt or preferred stock, common shares, options or warrants.
      We account for these penalties as a contingent liability and not as a derivative
      instrument.




REVENUE
      RECOGNITION





Revenues
      for voice, data, and other services to end-users are recognized in the month
      in
      which the service is provided. Amounts invoiced and collected in advance of
      services provided are recorded as deferred revenue. Revenues for carrier
      interconnection and access are recognized in the month in which the service
      is
      provided.





Sales
      of
      telecommunications networks are recognized when the networks are delivered
      and
      accepted by the customer. Sales of computer hardware, equipment, and
      installation are recognized when products are shipped to customers. Provisions
      for estimated returns and allowances are provided for in the same period the
      related sales are recorded. Revenues on service contracts are recognized ratably
      over applicable contract periods. Amounts billed and collected before services
      are performed are included in deferred revenues.





INCOME
      TAXES





Income
      taxes are computed under the provisions of the Financial Accounting Standards
      Board (FASB) Statement No. 109 (SFAS 109), Accounting for Income Taxes. SFAS
      109
      is an asset and liability approach that requires the recognition of deferred
      tax
      assets and liabilities for the expected future tax consequences of the
      difference in events that have been recognized in the Company's financial
      statements compared to the tax returns.





ADVERTISING
      AND MARKETING COSTS





Advertising
      and marketing costs are charged to operations in the period incurred.
      Advertising and marketing expense for the years ended December 31, 2007 and
      2006, were $24,087 and $230,329, respectively, and are included in "General
      and
      Administrative" in the consolidated statements of income (loss).




35




FAIR
      VALUE OF FINANCIAL INSTRUMENTS





Financial
      instruments, including cash, receivables, securities, accounts payable, and
      notes payable are carried at amounts which reasonably approximate their fair
      value due to the short-term nature of these amounts or due to variable rates
      of
      interest which are consistent with market rates.





CONCENTRATIONS
      OF CREDIT RISK AND ECONOMIC DEPENDENCE





Financial
      instruments, which potentially subject the Company to a concentration of credit
      risk, are cash and cash equivalents and accounts receivable. The Company had
      cash balances of $32,278 and $4,243 as of December 31, 2007 and 2006. As of
      December 31, 2007, the Company had no balances in excess of federally insured
      limits.




The
      Company operates worldwide. Consequently, the Company's ability to collect
      the
      amounts due from customers may be affected by economic fluctuations in each
      of
      the geographical locations in which the Company provides its
      services.




USE
      OF
      ESTIMATES





The
      process of preparing financial statements in conformity with generally accepted
      accounting principles in the United States requires the use of estimates and
      assumptions regarding certain types of assets, liabilities, revenues, and
      expenses. Such estimates primarily relate to unsettled transactions and events
      as of the date of the financial statements. Accordingly, upon settlement, actual
      results may differ from estimated amounts.


BASIC
        AND
        DILUTED NET INCOME (LOSS) PER COMMON SHARE
 
 Basic
        and
        diluted net loss per common share has been computed based upon the weighted
        average number of shares of common stock outstanding during each period.
        The
        basic and diluted net loss is computed by dividing the net loss by the weighted
        average number of common shares outstanding during each period. In periods
        where
        losses are reported, the weighted average number of common shares outstanding
        excludes common stock equivalents because their inclusion would be
        anti-dilutive. If all outstanding options, warrants and convertible shares
        were
        to be converted or exercised as of December 31, 2007, the shares outstanding
        would be 178,910,697.


IMPAIRMENT
      OF LONG-LIVED ASSETS





The
      Company follows FASB Statement No. 144 (SFAS 144), "Accounting for the
      Impairment of Long-Lived Assets." SFAS 144 requires that long-lived assets
      to be
      held and used are reviewed for impairment whenever events or changes in
      circumstances indicate that the related carrying amount may not be recoverable.
      When required, impairment losses on assets to be held and used are recognized
      based on the fair value of the asset. Long-lived assets to be disposed of,
      if
      any, are reported at the lower of carrying amount or fair value less cost to
      sell.




STOCK-BASED
      COMPENSATION




On
      January 1, 2006, the Company adopted SFAS No. 123(R), *Share-Based
      Payment* ,
      which
      requires the measurement and recognition of compensation expense for all
      stock-based awards made to employees and directors based on estimated fair
      values. SFAS No. 123(R) supersedes the Company’s previous accounting under
      Accounting Principles Board Opinion (“APB”) No. 25, *Accounting
      for Stock Issued to Employees* .
      In
      March 2005, the Securities and Exchange Commission issued SAB No. 107, *Share-Based
      Payment* ,
      relating to SFAS No. 123(R). The Company has applied applicable
      provisions of SAB No. 107 in its adoption of SFAS No. 123(R).




36




The
      Company adopted SFAS No. 123(R) using the prospective transition method,
      which requires the application of the accounting standard as of January 1,
      2006, the first day of its year ended December 31, 2006. In accordance with
      this transition method, the Company’s consolidated financial statements for
      prior periods have not been restated to reflect, and do not include the impact
      of, SFAS No. 123(R). The Company’s consolidated financial statements for
      the year ended December 31, 2007 and 2006 reflect the impact of SFAS
      No. 123(R). Upon adopting SFAS No. 123(R), for awards with service
      conditions and graded-vesting, a one-time election was made to recognize
      stock-based compensation expense on a straight-line basis over the requisite
      service period for the entire award.




Stock-based
      compensation expense recognized under SFAS No. 123(R) for the years ended
      December 31, 2007 and 2006 were $1,667,107 and $321,729, respectively. **





The
      Company’s determination of fair value of share-based payment awards to employees
      and directors on the date of grant uses the Black-Scholes model, which is
      affected by the Company’s stock price as well as assumptions regarding a number
      of highly complex and subjective variables. These variables include, but are
      not
      limited to our expected stock price volatility over the term of the awards,
      and
      actual and projected employee stock option exercise
      behaviors.  Forfeitures are recognized as incurred.





The
      Company accounts for stock option and warrant grants issued to non-employees
      for
      goods and services using the guidance of SFAS No. 123 and Emerging Issues
      Task Force (“EITF”) No. 96-18: “Accounting for Equity Instruments that are
      Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
      Goods or Services,” whereby the fair value of such option and warrant grants is
      determined using the Black-Scholes option pricing model at the earlier of the
      date at which the non-employee’s performance is completed or a performance
      commitment is reached.





RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS





***SFAS
      No. 157, Fair Value Measurements (SFAS No. 157)***




In
      September 2006, the FASB issued SFAS No. 157. This Statement defines fair value
      as used in numerous accounting pronouncements, establishes a framework for
      measuring fair value in GAAP and expands disclosure related to the use of fair
      value measures in financial statements. SFAS No. 157 does not expand the use
      of
      fair value measures in financial statements, but standardizes its definition
      and
      guidance in GAAP. The Standard emphasizes that fair value is a market-based
      measurement and not an entity-specific measurement based on an exchange
      transaction in which the entity sells an asset or transfers a liability (exit
      price). SFAS No. 157 establishes a fair value hierarchy from observable market
      data as the highest level to fair value based on an entity’s own fair value
      assumptions as the lowest level. SFAS No. 157 is to be effective for its
      financial statements issued in 2008. The Company believes that SFAS No. 157
      will
      not have a material impact on its consolidated financial statements.




***SFAS
      No. 159,*** ** **The
      Fair Value Option of Financial Assets and Financial Liabilities (SFAS
      No. 159)**




In
      February 2007, the FASB issued SFAS No. 159. *The
      Fair Value Option of Financial Assets and Financial Liabilities* (“SFAS
      No. 159”). SFAS No. 159 provides an option to report selected
      financial assets and financial liabilities using fair value. The standard
      establishes required presentation and disclosures to facilitate comparisons
      with
      companies that use different measurements for similar assets and liabilities.
      SFAS No. 159 is effective for fiscal years beginning after
      November 15, 2007, with early adoption allowed if SFAS No. 157 is also
      adopted. The Company is currently evaluating the impact of adopting SFAS
      No. 159 on its consolidated financial statements.





**SFAS
      No. 141 (R),** ***Business
      Combinations (SFAS No. 141R)*** **and SFAS No. 160,**  ***Non-controlling
      Interests in Consolidated Financial Statements (SFAS No.
      160)***




In
      December 2007, the FASB issued SFAS No. 141R, Business Combinations, and SFAS
      No. 160, Non-controlling Interests in Consolidated Financial Statements.
      SFAS No. 141R requires an acquirer to measure the identifiable assets acquired,
      the liabilities assumed, and any non-controlling interest in the acquiree at
      their fair values on the acquisition date, with goodwill being the excess value
      over the net identifiable assets acquired. SFAS No. 160 clarifies that a
      non-controlling interest in a subsidiary should be reported as equity in the
      consolidated financial statement. The calculation of earnings per share will
      continue to be based on income amounts attributable to the parent. SFAS
      No. 141R and SFAS No. 160 are effective for financial statements
      issued for fiscal years beginning after December 15, 2008. Early adoption is
      prohibited. The Company has not yet determined the effect on our financial
      statements, if any, upon adoption of SFAS No. 141R or SFAS No.
      160.




37




**SFAS
      No. 161,** ***Disclosures
      about Derivative Instruments and Hedging Activities*** ***(SFAS No. 161)***





In
      March
      2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative
      Instruments and Hedging Activities”. The new standard is intended to improve
      financial reporting about derivative instruments and hedging activities by
      requiring enhanced disclosures to enable investors to better understand their
      effects on an entity’s financial position, financial performance, and cash
      flows. FAS 161 is effective for the Company in fiscal 2010.





Management
      does not believe that there are any recently-issued, but not yet effective
      accounting pronouncements, which could have a material effect on the
      accompanying condensed consolidated financial statements





**NOTE
      2. DISCONTINUED OPERATIONS**





The
      Company has decided to close several of its operations and has presented certain
      activities as discontinued operations as of and for the years ended December
      31,
      2007 and 2006.





Telecom





The
      Company decided to wind down its telecom operations, including those of its
      subsisdiary, Centerline Communications LLC. It did not have sufficient working
      capital to make its telecom operations profitable. The Company decided that
      any
      capital should be directed towards the Company’s other programs and that it
      should collect Centerline’s outstanding receivables and sell its
      assets





GlobeTel
      Wireless Corp.


During
        the first quarter of 2007, the president of GlobeTel Wireless, Ulrich Altvater,
        became a consultant to the Company to provide many of the services that were
        provided under the auspices of GlobeTel Wireless. The Company believed at
        the
        time that this would be a more cost efficient manner of running the business.
        However, in May of 2007 the Company terminated the contract with Altvater.
        In
        the second quarter of 2007, the Company decided to shut down the subsidiary
        and
        concentrate its efforts solely on the development and sale of Lighter than
        Air
        Unmanned Aerial Vehicles (LTA UAV’s).
 
 In
        March
        2007, the Company received $242,500 in exchange for a note payable that was
        secured by common stock of the Company. The proceeds were used by Globetel
        Wireless as a further investment in a joint venture that was abandoned in
        2007.
        The Company received a Notice of Acquisition of Collateral which allowed
        the
        note holder to satisfy the note payable with the pledged common
        shares.
 
 During
        2007, the Company disposed of two components of its business which constituted
        discontinued operations - Telecom and Globetel Wireless Corp. The loss on
        the
        Company’s consolidated statements of operations for the years ended December 31,
        2007 and 2006 is summarized as follows:
 **Telecom**
                
                **2007**
                
                **2006**Loss
                    from discontinued operations
                
                $
                (781,455
                )
                $
                (3,306,547
                )**Globetel
                    Wireless**Loss
                    from discontinued operations
                
                
                (1,137,351
                )
                
                (4,260,335
                )Total
                    loss from discontinued operations
                
                $
                (1,918,806
                )
                $
                (7,566,882
                )




38




The
      Company incurred the following losses from discontinued operations for the
      years
      ended December 31, 2007 and 2006:


**2007**
              
              **Telecom**
              
              **Globetel
                  Wireless**
              
              **Total**Revenue
              
              $
              4,849
              
              $
              —
              
              $
              4,849Cost
                  of sales
              
              
              (11,676
              )
              
              —
              
              
              (11,676
              )**Gross
                  margin (loss)**
              
              
              (6,827
              )
              
              —
              
              
              (6,827
              )Payroll
                  and related taxes
              
              
              (18,935
              )
              
              (91,865
              )
              
              (110,800
              )General
                  and administrative
              
              
              (84,385
              )
              
              (798,736
              )
              
              (883,121
              )Deprecation
                  and amortization
              
              
              (654,672
              )
              
              —
              
              
              (654,672
              )Consulting
                  and professional fees
              
              
              (16,636
              )
              
              —
              
              
              (16,636
              )Loss
                  on investment
              
              
              —
              
              
              (246,750
              )
              
              (246,750
              )Loss
                  from discontinued operations
              
              $
              (781,455
              )
              $
              (1,137,351
              )
              $
              (1,918,806
              )




**2006**
              
              **Telecom**
              
              **Globetel
                  Wireless**
              
              **Total**Revenue
              
              $
              7,478,250
              
              $
              260,058
              
              $
              7,738,308Cost
                  of sales
              
              
              (7,297,515
              )
              
              (207,884
              )
              
              (7,505,399
              )**Gross
                  margin**
              
              
              180,735
              
              
              52,174
              
              
              232,909Payroll
                  and related taxes
              
              
              (627,403
              )
              
              (617,916
              )
              
              (1,245,319
              )General
                  and administrative
              
              
              (628,102
              )
              
              (2,855,053
              )
              
              (3,483,155
              )Deprecation
                  and amortization
              
              
              (274,451
              )
              
              (118,258
              )
              
              (392,709
              )Loss
                  on disposition of assets
              
              
              (891,692
              )
              
              (692,582
              )
              
              (1,584,274
              )Bad
                  debt expense
              
              
              (1,065,634
              )
              
              (28,700
              )
              
              (1,094,334
              )Loss
                  from discontinued operations
              
              $
              (3,306,547
              )
              $
              (4,260,335
              )
              $
              (7,566,882
              )




The
      Company had the following assets and liabilities from its discontinued
      operations on its consolidated balance sheet for the years ended December 31,
      2007 and 2006:


**2007**
              
              **Telecom**
              
              **Globetel
                  Wireless**
              
              **Total**Cash
              
              $
              6,942
              
              $
              —
              
              $
              6,942Accounts
                  receivable
              
              
              11,736
              
              
              —
              
              
              11,736**Total
                  assets**
              
              
              18,678
              
              
              —
              
              
              18,678Accounts
                  payable
              
              
              140,091
              
              
              1,216,208
              
              
              1,356,299Accrued
                  liabilities
              
              
              9,605
              
              
              21,477
              
              
              31,082**Total
                  current liabilities**
              
              
              149,696
              
              
              1,237,685
              
              
              1,387,381**Net
                  liabilities of discontinued operations**
              
              $
              131,018
              
              $
              1,237,685
              
              $
              1,368,703




**2006**
              
              **Telecom**
              
              **Globetel
                  Wireless**
              
              **Total**Cash
              
              $
              9,011
              
              $
              10,903
              
              $
              19,914Accounts
                  receivable
              
              
              16,761
              
              
              —
              
              
              16,761Prepaid
                  expense
              
              
              1,607
              
              
              —
              
              
              1,607Deposits
              
              
              65,551
              
              
              2,200
              
              
              67,751**Total
                  current assets**
              
              
              92,930
              
              
              13,103
              
              
              106,033Other
                  assets
              
              
              54,380
              
              
              —
              
              
              54,380**Total
                  assets**
              
              
              147,310
              
              
              13,103
              
              
              160,413Accounts
                  payable
              
              
              202,963
              
              
              458,584
              
              
              661,547Accrued
                  liabilities
              
              
              44,651
              
              
              28,280
              
              
              72,931Deferred
                  revenue
              
              
              6,412
              
              
              —
              
              
              6,412Due
                  to related party
              
              
              154,807
              
              
              —
              
              
              154,807**Total
                  current liabilities**
              
              
              408,833
              
              
              486,864
              
              
              895,697**Net
                  liabilities of discontinued operations**
              
              $
              261,523
              
              $
              473,761
              
              $
              735,284




39




**NOTE
      3. ACCOUNTS RECEIVABLE**





As
      of
      December 31, 2006 accounts receivable consists of a reimbursement of $271,262
      from the Company’s Directors and Officers insurance for legal and accounting
      expenses that were paid above the Company’s deductible which was received in
      August 2007.





**NOTE
      4. DEPOSITS**





Deposits
      as of December 31, 2006 of $72,987 include a rental deposit for Los Angeles
      World Airport related to the Palmdale Hanger occupied by Sanswire Networks,
      LLC
      in the amount of $72,000. During 2006, Los Angeles World Airports has drawn
      against the rental deposit and applied it to outstanding invoices. The balance
      of $987 was returned upon the closing of a utility account.


During
        2007, the Company made payments totaling $391,000, consisting of $130,000
        in
        cash and 1.86 million shares valued at $261,000 as part of its November 2007
        agreement with TAO Technologies GmbH and Professor Bernd Kroplin. These payments
        were initially part of the Technical Cooperation and License Agreements wherein
        the Company acquired the exclusive license rights to certain TAO remote airship
        technologies and patents. However in June 2008 the Company restructured its
        November 2007 agreement with TAO Technologies GmbH and Professor Bernd Kroplin.
        The new agreement called for the establishment of a new US-based joint venture
        company to be called Sanswire-TAO that was to be owned equally by TAO and
        Sanswire Corp. Additionally, Sanswire-TAO would register the patents and
        intellectual property of TAO Technologies and Kroplin in the United States
        for
        the exclusive use of Sanswire-TAO.  Further, the $391,000 paid during 2007
        was applied as payment towards the new agreement and thus the Company has
        classified these payments as a long term deposit as it should result in a
        long
        term investment.


**NOTE
      5. ACCRUED EXPENSES AND OTHER LIABILITIES**





Accrued
      expenses and other liabilities consisted of the following:


2007
              
              2006Payroll
                  Liabilities
              
              $
              813,787
              
              $
              206,529Professional
                  Fees
              
              
              253,568
              
              
              253,568ACCRUED
                  EXPENSES AND OTHER LIABILITIES
              
              $
              1,067,355
              
              $
              460,097





**NOTE
      6. NOTES AND CONVERTIBLE NOTES PAYABLE**


2007
              
              2006(A)
                  NOTES PAYABLE
              
              $
              6,139,357
              
              $
              5,457,545(B)
                  CONVERTIBLE NOTES PAYABLE, net of unamortized discount of $454,531
                  and
                  $882,128
              
              
              825,469
              
              
              397,872(C)
                  CONVERTIBLE PROMISSORY NOTES, net of unamortized discount of $802,833
                  and
                  $0
              
              
              336,036
              
              
              206,000Total
              
              
              7,300,862
              
              
              6,061,417ACCRUED
                  INTEREST
              
              
              755,358
              
              
              201,181Total
              
              $
              8,056,220
              
              $
              6,262,598




40




(A)
      NOTES
      PAYABLE





From
      April to June 2006, the Company received a total of $4,307,645 through an
      unsecured promissory note with no formal terms of repayment.  From February
      to October 2007, the Company received a total of $641,812. The Company has
      accrued interest at a rate of 7% per annum, which totals $491,024 as of December
      31, 2007.





From
      October to December 2006, the Company received a total of $1,149,900 through an
      unsecured promissory note with no formal terms of repayment.  The Company
      has accrued interest at a rate of 7% per annum, which totals $80,492 as of
      December 31, 2007. In 2008, the note holder converted $150,000 of the loans
      to
      1,428,571 shares of common stock.


As
        of
        December 31, 2007 and 2006, the aggregate amounts outstanding under these
        independent notes were $6,139,357 and $5,457,545.





(B)
      CONVERTIBLE NOTES PAYABLE





September
      2006 Notes


On
      September 6, 2006, the Company entered into subscription agreements with several
      investors whereby these investors bought a total $1,280,000 in two year, 7%
      convertible notes and were issued Class A and Class B Warrants (valued at
      $337,395 and $317,736, respectively as described below). Net proceeds of
      $1,124,080 were received, after deducting costs and expenses related to the
      transaction.  The
      notes are convertible into 3,602,221 shares of the Company’s common stock
      ranging from $.33 to $.39 per share. The common shares underlying the notes
      and
      the warrants carry with them registration rights that obligated the Company
      to
      register such shares within 30 days.





The
      Notes
      were convertible into common stock ranging from $.33 to $.39 per share. Prior
      to
      any notice of conversion the Company had the right, under certain circumstances,
      to redeem the notes at a premium for cash, subject to a right to convert by
      the
      investor. The investors received one Class A Warrant to purchase one share
      of
      common stock for every two shares that the notes were convertible into on the
      closing date as well as one Class B Warrant to purchase the identical number
      of
      shares.





The
      Class
      A Warrants are exercisable for a purchase price equal to 150% of the market
      price on the day prior to closing and the Class B Warrants are exercisable
      for a
      purchase price equal to 200% of the market price on the day prior to closing
      which calculates to 3,602,190 warrants ranging from $.66 to $1.26. The Warrants
      have a 5 year term. The Placement Agent for the transaction, Westor Capital
      Group, has the right to raise up to $3 million for the Company.





The
      Company determined that the fair value of the conversion feature was $624,869
      and the fair value of the warrants was $655,131 based upon the relative value
      of
      the Black Scholes valuation of the warrants and the underlying debt amount.
      For
      the Black Scholes calculation, the Company assumed no dividend yield, a risk
      free interest rate of 4.5%, expected volatility of 99.63% and an expected term
      of the warrants of 5 years. The initial calculated fair value of warrants and
      the beneficial conversion of the notes of $1,280,000 was reflected by the
      Company as a valuation discount and offset to the carrying value of the Notes,
      and is being amortized by the effective interest method over the term of the
      Notes. For the year ended December 31, 2007, the Company amortized $397,872
      of
      the valuation discount, which is reflected as financing costs in the Company’s
      consolidated statements of operations.




41




In
      January 2007, the Company executed several Certificates of Adjustments for
      the
      previously issued Notes. The Notes previously had Exercise Prices ranging from
      $0.33 to $.39 and with the execution of the adjustments; the Exercise Prices
      were then modified to $0.196. The aforementioned substantial modification of
      debt is accounted for under EITF 96-19, however EITF 06-6 deemed the
      modification an extinguishment of debt, with a resultant gain of $254,200
      recorded upon execution.  On May
      1, 2007, the Company executed several Certificates of Adjustments for the
      previously issued Warrants. The Warrants previously had Exercise Prices ranging
      from $0.75 to $1.00 and with the execution of the adjustments; the Exercise
      Prices were then modified to $0.196. The Company recognized a $140,487 loss
      from
      the increase in fair value from the modification of warrants. In January 2008, the Company issued certificates
      of
      adjustment for certain convertible debentures and warrants issued pursuant
      to
      the 2006 financing to $.105 per share. The Company anticipates that there will
      be additional charges due to these modifications and such charges will be
      recorded during the year ended December 31, 2008.





Additionally,
      as the Company was unable to register the shares underlying the debentures
      and
      warrants due to it restating its financial statements, the Company had to pay
      liquidated damages to the debenture holders. In 2007, the Company agreed to
      and
      issued 662,951 shares valued at $104,400 to pay liquidated damages through
      March 31, 2007.





Also
      in
      December 2007, the Company separately entered into a forbearance agreement
      with
      some of the debt holders. This agreement changed their conversion to the lesser
      of $.20 or 70% of the volume weighted average price for the 10 days prior
      to conversion. The agreement also limits some of the investors from engaging
      in
      short sales on the stock and places a volume limitation on sales.  The
      agreement becomes effective January 16, 2008, and as such, the Company reviewed
      the transaction for possible derivative accounting requirements pursuant to
      EITF
      00-19. The
      Company used the Black-Scholes option pricing model to evaluate the fair value
      of the embedded derivative. On January 16, 2008, the Company allocated the
      fair
      value of the embedded derivative to derivatives expense in the aggregate amount
      of $184,081. The embedded derivative will then be recorded at fair market value
      at each period ending date, and the change recorded to derivatives income
      (expense). As of the date of this report, the outstanding balance of these
      notes
      is convertible into approximately 4.24 million shares based on a conversion
      rate
      of $.0441.





From
      January 18 to September 11, 2008 ,
      $896,911 of principal was converted into approximately 11.1 million shares
      of
      Company common stock.





(C)
      CONVERTIBLE PROMISSORY NOTES





2006
      Convertible Promissory Notes


In
      December 2006, the Company entered into financing agreements for convertible
      promissory notes payable totaling $250,000. As of December 31, 2006, the Company
      received $206,000 with the balance of $44,000 being received in January 2007.
      Upon receipt of the full 250,000, the notes become convertible into common
      stock
      of the Company at $.196 per share. The note, which is due two years from
      inception, accrues interest at a rate of 7% per annum and were issued Class
      A
      and Class B warrants (valued at $103,610 and $60,528, respectively as described
      below). The Class A and B warrants are exercisable for a purchase price of
      $.21
      and $.315, respectively. The warrants have a 2 year term.





The
      Company entered into additional financing agreements on the same terms and
      conditions as set forth above in March 2007 for a total of $400,000; in June
      for
      $100,000; in June for $125,000 and in September for $175,000. They were also
      issued Class A warrants (valued at $175,727, $33,706, $42,255 and $16,520,
      respectively as described below) and Class B warrants (valued at $103,805,
      $18,995, $23,771 and $5,899, respectively as described below).





The
      Company determined that the total fair value of the conversion features was
      $595,140 and the total fair value of the warrants was $617,860 based upon the
      relative value of the Black Scholes valuation of the warrants and the underlying
      debt amount. For the Black Scholes calculation, the Company assumed no dividend
      yield, a risk free interest rate of 4.5%, expected volatility ranging from
      58.68% to 105.47% and an expected term of the warrants of 5 years. The initial
      calculated fair value of warrants and the beneficial conversion of total of
      the
      notes of $1,138,869 was reflected by the Company as a valuation discount and
      offset to the carrying value of the Notes, and is being amortized by the
      effective interest method over the term of the Notes. For the year ended
      December 31, 2007, the Company amortized $429,333 of the valuation discount,
      which is reflected as financing costs in the Company’s consolidated statements
      of operations.




42




In
      November 2007, the Company entered into securities purchase agreements to sell
      shares at $.105 per share for a total of $315,000, only a portion of which
      was
      payable at the time of subscription with the remainder payable upon the
      happening of certain corporate events with $163,000 received as of December
      31,
      2007. This had the effect of resetting the conversion provisions on the
      previously issued convertible notes to $.105 per share. The agreements were
      revised in the first quarter of 2008 to allow a larger percentage of the
      subscribed funds to become available to the Company. Thus, a portion of the
      subscription amount was received in the first quarter of 2008. The
      Company has not completed its review of the transaction; however, there may
      be
      additional charges in 2008 from these modifications.





During
      2007, $94,130 of principal was converted into 896,480 shares of Company common
      stock. During 2008, $11,000 of principal was converted into 104,762 shares
      of
      Company common stock.





2007
      Convertible Promissory Note


In
      December 2007, the Company entered into a financing agreement for a convertible
      promissory note payable totaling $20,000. The note is convertible into common
      stock of the Company at $.196 per share. The note, which is due two years from
      inception, accrues interest at a rate of 7% per annum and was issued Class
      A and
      Class B warrants (valued at $7,916 and $3,921, respectively as described below).
      The Class A and B warrants are exercisable for a purchase price of $.21 and
      $.315, respectively. The warrants have a 2 year term.





The
      Company determined that the fair value of the conversion features was $8,163
      and
      the fair value of the warrants was $11,837 based upon the relative value of
      the
      Black Scholes valuation of the warrants and the underlying debt amount. For
      the
      Black Scholes calculation, the Company assumed no dividend yield, a risk free
      interest rate of 4.5%, expected volatility of 58.68% and an expected term of
      the
      warrants of 5 years. The initial calculated fair value of warrants and the
      beneficial conversion of the notes of $20,000 was reflected by the Company
      as a
      valuation discount and offset to the carrying value of the Note, and is being
      amortized by the effective interest method over the term of the Note. For the
      year ended December 31, 2007, the Company amortized $833 of the valuation
      discount, which is reflected as financing costs in the Company’s consolidated
      statements of operations.





**NOTE
      7. AGREEMENTS**





COOPERATIVE
      TECHNOLOGIES AGREEMENT - UNIVERSITY OF STUTTGART, GERMANY


On
        October 12, 2005, the Company signed an agreement with TAO-Technologies in
        cooperation with the University of Stuttgart in Germany. The agreement states
        that TAO-Technologies, in cooperation with the University of Stuttgart, will
        design several next-generation airships intended for multiple uses. In November
        2007, the Company and TAO entered into a Technical Cooperation and License
        Agreement wherein the Company acquired the exclusive license rights to certain
        TAO remote airship technologies and patents. In June 2008, the Company
        restructured its November 2007 agreement (See Note 3).





Future
      minimum payments required under the original agreement, referenced above,
      subsequent to the year ended December 31, 2007 are as follows:


2008
              
              $
              1,000,0002009
                  and thereafter
              
              
              11,000,000$
              12,000,000




OTHER
      AGREEMENTS





Several
      other agreements, letters of intent, and memorandums of understanding regarding
      stored value cards and other telecommunications programs, as well as the
      Sanswire project, were entered into during 2007 and through the date of this
      report, none of which require the recording of any assets, liabilities, revenues
      or expenses.




43




**NOTE
      8. COMMITMENTS AND CONTINGENCIES**





Securities
      and Exchange Commission





On
      September 28, 2006, the Company received a formal order of investigation from
      the SEC. The formal order only named the Company and was not specific to any
      particular allegations. Through the use of subpoenas, the SEC has requested
      documentation from certain officers and directors of the Company. In subsequent
      subpoenas, the SEC has asked for additional documents and information.





On
      October 5, 2007, the Company received a "Wells Notice" from the SEC in
      connection with the SEC’s ongoing investigation of the Company. The Wells Notice
      provides notification that the staff of the SEC intends to recommend to the
      Commission that it bring a civil action against the Company for possible
      violations of the securities laws including violations of Sections 5 and 17(a)
      of the Securities Act of 1933; Sections 10(b), 13(a), and 13(b)(2)(A) & (B)
      of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5, 12b-20,
      13a-1, 13a-11, and 13a-13 thereunder; and seeking as relief a permanent
      injunction, civil penalties, and disgorgement with prejudgment interest. The
      staff is also considering recommending that the SEC authorize and institute
      proceedings to revoke the registration of Company’s securities pursuant to
      Section 12(j) of the Exchange Act.





On
      May 2,
      2008, the Securities and Exchange Commission (“SEC”) filed a lawsuit in the
      United States District Court for the Southern District of Florida against
      GlobeTel Communications Corp. (the “Company”) and three former officers of the
      Company, Timothy J. Huff, Thomas Y. Jimenez and Lawrence E. Lynch. The SEC
      alleges, among other things, that the Company recorded $119 million in revenue
      on the basis of fraudulent invoices created by Joseph Monterosso and Luis
      Vargas, two individuals formerly employed by the Company who were in charge
      of
      its wholesale telecommunications business.





The
      SEC
      alleges that the Company violated Sections 5(a), 5(c), and 17(a) of the
      Securities Act of 1933, as amended, Sections 10(b), 13(a), 13(b)(2)(A) and
      13(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”), and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 under the Exchange Act.
      The SEC seeks as relief a permanent injunction, civil penalties, and
      disgorgement with prejudgment interest. In response to the Complaint, the
      Company has filed a motion to dismiss, which motion is still pending with the
      Court. The Company intends to vigorously defend itself in this
      action.





Joseph
      Monterosso





In
      October 2007 the Company filed a lawsuit in the Circuit Court for Broward
      County, Florida against Joseph J. Monterosso alleging Libel, Slander and
      Defamation, Tortuous Interference, Violations of FS § 836.05 (Threats
      Extortion)  and violations of FS §517 (Securities Fraud). Mr.
      Monterosso has not yet been served with the complaint.





Wachovia
      v. GlobeTel





In
      connection with the operations of Globetel Wireless Europe GmbH and the
      acquisition of Altvater GmbH, the Company guaranteed a letter of credit in
      the
      amount of $600,000. Upon Globetel Wireless Europe GmbH ceasing operations,
      the
      letter of credit was drawn upon. The letter of credit was not collateralized.
      In
      September 2007, Wachovia filed a lawsuit in Broward County in an attempt to
      recover the amount through arbitration with the American Arbitration
      Association. On June 2, 2008, the American Arbitration Association awarded
      Wachovia $762,902.





Richard
      Stevens v. GlobeTel





The
      Company and its directors were sued in the case RICHARD STEVENS vs. GLOBETEL
      COMMUNICATIONS CORP., et al. Case No.: 06-cv 21071. The original allegations
      of
      the complaint were that the Company’s proposed transaction to build wireless
      networks in Russia was a sham. The amended complaint alleged that the
      transaction was not a sham, but that the Company refused to accept payment
      of
      $300 million. Recently, the officers and directors with the exception of Timothy
      Huff have been dismissed from the case.




44


In
        February 2008, the Company and the Plaintiff reached a settlement in principle
        that has been filed with the Court for approval. Under the terms of the proposed
        settlement agreement in the class action, the Company’s D&O insurance
        carrier will make a cash payment to the class of $2,300,000, less up to $100,000
        for potential counsel fees and expenses. All claims in the class action will
        be
        dismissed with prejudice. The US District Court for the Southern District
        of
        Florida has approved the settlements reached in its pending securities class
        action and a shareholder derivative action on February 4, 2008.
 
 Derivative
        Action
 
 On
        July
        10, 2006 a derivative action was filed against the officers and directors
        of the
        Company alleging that they have not acted in the best interest of the Company
        or
        the shareholders and alleged that the transaction to install wireless networks
        in Russia was a sham. The lawsuit is pending in the Federal District Court
        for
        the Southern District of Florida (Civil Case No. 06-60923). The Company believes
        that the suits are without merit and will vigorously defend against it. The
        Company has hired outside counsel to defend it in this action. The Company
        and
        the Plaintiff have reached an agreement in principle to settle this action
        and
        have submitted such settlement with the Court for its approval. Under the
        terms
        of the settlement, Company’s D&O insurance carrier will pay $60,000 in
        attorneys’ fees to plaintiff’s counsel, the Company will implement or maintain
        certain corporate governance changes, and all claims will be dismissed with
        prejudice.
 
 Mitchell
        Siegel v. Globetel
 
 On
        February 2, 2007, GlobeTel was sued in the Circuit Court for Broward County,
        Florida entitled Mitchell Siegel v. Globetel Communications Corp. , Case
        no.
        0702456 (“the Siegel Lawsuit”). In this action, Siegel sued the Company for
        breach of contract in regards to a Key Executive Employment Agreement. On
        February 15, 2008, both parties entered into a settlement agreement whereas
        Mr.
        Siegel would receive $175,000 worth of stock, payable over 12 months, and
        50% of
        the gross proceeds, up to a total amount of $300,000, received from an October
        2006 agreement.
 
 Former
        Consultants
 
 The
        Company is a defendant in two lawsuits filed by Matthew Milo and Joseph
        Quattrocchi, two former consultants, filed in the Supreme Court of the State
        of
        New York (Richmond County, Case no. 12119/00 and 12118/00). These matters
        were
        subsequently consolidated as a result of an Order of the court and now bear
        the
        singular index number 12118/00. The original lawsuits were for breach of
        contract. The complaint demands the delivery of 10,000,000 pre split shares
        of
        ADGI stock to Milo and 10,000,000 to Quattrocchi. The Company was entered
        into
        the action as ADGI was the predecessor of the Company. The suit also requests
        an
        accounting for the sales generated by the consultants and attorneys fees
        and
        costs for the action.
 
 The
        lawsuits relate to consulting services that were provided by Mr. Milo and
        Mr.
        Quattrocchi and a $50,000 loan advanced by these individuals, dated May 14,
        1997, of which $35,000 has been repaid.
 
 The
        Company entered into an agreement with Mr. Milo and Mr. Quattrocchi as
        consultants on June 25, 1998. The agreement was amended on August 15, 1998.
        On
        November 30, 1998, both Mr. Milo and Mr. Quattrocchi resigned from their
        positions as consultants to the Company without fulfilling all of their
        obligations under their consulting agreement. The Company issued 3 million
        pre
        split shares each to Mr. Milo and Mr. Quattrocchi as consideration under
        the
        consulting agreement. The Company has taken the position that Mr. Milo and
        Mr.
        Quattrocchi received compensation in excess of the value of the services
        that
        they provided and the amounts that they advanced as loans.
 
 Mr.
        Milo
        and Mr. Quattrocchi disagreed with the Company’s position and commenced action
        against us that is pending in the Supreme Court of the State of New York.
        Mr.
        Milo and Mr. Quattrocchi claim that they are entitled to an additional
        24,526,000 pre split shares of common stock as damages under the consulting
        agreement and to the repayment of the loan balance. The Company believes
        that it
        has meritorious defenses to the Milo and Quattrocchi action, and the Company
        has
        counterclaims against Mr. Milo and Mr. Quattrocchi.
  45
  With
        regard to the issues related to original index number 12119/00, as a result
        of a
        summary judgment motion, the plaintiffs were granted a judgment in the sum
        of
        $15,000. The rest of the plaintiff's motion was denied. The court did not
        order
        the delivery of 24,526,000 pre split shares of ADGI common stock as the decision
        on that would be reserved to time of trial.
 
 An
        Answer
        and Counterclaim had been interposed on both of these actions. The Answer
        denies
        many of the allegations in the complaint and is comprised of eleven affirmative
        defenses and five counterclaims alleging damages in the sum of $1,000,000.
        The
        counterclaims in various forms involve breach of contract and breach of
        fiduciary duty by the plaintiffs.
 
 For
        the
        most part, the summary judgment motions that plaintiffs brought clearly stated
        that their theories of recovery and the documents that they will rely on
        in
        prosecuting the action. The case was assigned to a judicial hearing officer
        and
        there was one week of trial. The trial has been since adjourned with no further
        trial dates having been set.
 
 It
        is
        still difficult to evaluate the likelihood of an unfavorable outcome at this
        time in light of the fact that there has been no testimony with regard to
        the
        actions. However, the plaintiffs have prevailed with regard to their claim
        of
        $15,000 as a result of the lawsuit bearing the original index Number
        12119/00.
 
 This
        case
        went before a Judicial Hearing Officer on July 6 and 7, 2006. No resolution
        occurred during the July hearing and the Judicial Hearing Officer has asked
        for
        written statements of facts and law. The outcome cannot be projected with
        any
        certainty.  However, the Company does not believe that it will be
        materially adversely affected by the outcome of the proceeding. The Company
        has
        not been informed of any further developments since the hearing.
 
 Trimax
        Wireless
 
 On
        July
        3, 2007 the Company filed suit against its former employee Ulrich Altvater
        and
        his company Trimax Wireless seeking the return of certain equipment held
        at the
        former GlobeTel Wireless offices and for the return of $175,000 lent to Altvater
        by the Company. The replevin action against Trimax was dismissed on the basis
        of
        venue and the Company intends to refile the suit with regard to Trimax in
        Collier County, Florida.
  On
        July
        12, 2007, the Company terminated its agreement with Mr. Altvater and his
        company, Trimax Wireless, Inc.
  In
        August
        2007, Altvater and Trimax filed suit against the Company alleging, defamation,
        conversion, breach of contract and seeking injunctive relief. The Company
        successfully moved to have the two cases consolidated and has filed a Motion
        to
        Dismiss this suit. The Company intends to vigorously defend this suit, but
        no
        assurance can be given about the outcome of the litigation.
  American
        Express
 
 American
        Express Travel Related Services Company, Inc. has filed a lawsuit against
        the
        Company and Sanswire Networks LLC (CASE NO: CACE 08-013239, Broward County
        Florida), seeking to recover a total of $394,919 for unpaid charges on the
        Companies’ corporate purchasing account. The Company intends to vigorously
        defend itself in this action.
  46
 
 LEASES
        AND RENTS
  Sanswire's
        corporate offices are now located at 101 NE 3 rd Ave.,
        Suite 1500, Fort Lauderdale, FL 33301. Base rent is $1,476 per month plus
        the
        cost of services used by Sanswire. The lease is for a period of 6
        months.
 
 The
        Company previously leased office facilities at 9050 Pines Blvd., Suite 110,
        Pembroke Pines, Florida 33024, as of April 1, 2004. This lease will expire
        in
        June 2009, and had an initial monthly rent of $5,462.
  In
        November 2004, the Company leased additional adjacent space at the Pembroke
        Pines, Florida location under the same terms and period as the existing lease,
        bringing the total monthly rent to $9,186.
  In
        June
        2005, the Company negotiated with the landlord to lease an additional 5,000
        square feet at 9050 Pines Blvd., Pembroke Pines, Florida 33024. The Company
        began occupancy of this office in April 2006 and the lease expires in June
        2009
        with a monthly rent of $9,186 (including sales tax). The Company vacated
        the
        premises in March 2006, having turned over the space to Gotham Financial
        as part
        of the sale of the Stored Value assets to Gotham. However, there was unpaid
        rent
        due on both the first and second floor suites. In August 2007, the landlord
        received a judgment in the amount of $206,730 of which $115,693 was accrued
        for
        in 2006 as it relates to 2006 expenses. The balance was accrued in
        2007.
  Until
        September 2007, the Company leased a 66,000 square foot space hanger in
        Palmdale, California. The initial lease, between Sanswire Networks, LLC and
        the
        City of Los Angeles World Airports, was for a term of three months, ended
        July
        22, 2005 with a monthly rent of $19,990. On June 8, 2005 the lease term was
        amended for fifteen months, commencing June 8, 2005 through September 7,
        2006,
        with two one-year options. Concurrently with the signing of the amended lease,
        the parties entered into a reimbursement agreement to share the cost of certain
        improvements.
 
 As
        of
        October 2007, Sanswire no longer occupies a hangar at Palmdale Regional Airport,
        the monthly cost of this space was $20,847. This facility was adjacent to
        the
        United States Air Force’s Plant 42 and Edwards Air Force Base. Sanswire
        constructed and tested Stratellite and Sky Sat prototypes at the facility.
        The
        hangar also included administrative office space. Sanswire is indebted to
        Los
        Angeles World Airports, the lessor of the hangar, in the amount of
        $161,761.
 
 Future
        minimum rental payments required under the above operating leases are as
        follows:
 
 2008
              
              $
              33,3282009
                  and thereafter
              
              
              2,952$
              36,280
  Rent
        expense for 2007 and 2006 were $285,033 and $658,522,
        respectively.
 
 **NOTE
        9. INCOME TAXES**
 
 Deferred
        income taxes and benefits for 2007 and 2006 are provided for certain income
        and
        expenses, which are recognized in different periods for tax and financial
        reporting purposes. The tax effects (computed at 15%) of these temporary
        differences and carry-forwards that give rise to significant portions of
        deferred tax assets and liabilities consist of the following:
 **2006**
                
                **Current**
                  **Period**
                  **Changes**
                
                **2007**Deferred
                    tax assets:Net
                    operating loss carryforwards
                
                $
                13,108,573
                
                $
                1,740,822
                
                $
                14,849,39513,108,573
                
                
                1,740,822
                
                
                14,849,395Valuation
                    allowance
                
                
                (13,108,573
                )
                
                (1,740,822
                )
                
                (14,849,395
                )Net
                    deferred tax asset
                
                $
                —
                
                $
                —
                
                $
                —
   47
 
 A
        reconciliation of income benefit provided at the federal statutory rate of
        15%
        to income tax benefit is as follows:
 **2007**
                
                **2006**Income
                    tax benefit computed at federal statutory rate
                
                $
                (1,740,822
                )
                $
                (3,196,029
                )Depreciation
                
                
                —
                
                
                289,914Losses
                    not benefited
                
                
                1,740,822
                
                
                2,906,115$
                —
                
                $
                —
  
 The
        Company has accumulated net operating losses, which can be used to offset
        future
        earnings. Accordingly, no provision for income taxes is recorded in the
        financial statements. A deferred tax asset for the future benefits of net
        operating losses and other differences is offset by a 100% valuation allowance
        due to the uncertainty of the Company's ability to utilize the losses. These
        net
        operating losses begin to expire in the year 2021.
 
 At
        the
        end of 2006, the Company had net operating loss carry-forwards (including
        those
        of its successor due to accounting for the reincorporation as an "F"
        reorganization under the Internal Revenue Code) of approximately $81,429,083,
        which expire at various dates through 2021.
  **NOTE
        10. COMMON STOCK TRANSACTIONS**
 
 During
        the year ended December 31, 2007, the Company issued the following shares
        of
        Common stock:
 **SHARES**
                
                **CONSIDERATION**
                
                **VALUATION**5,584,932
                
                
                Settlement
                    of Debts
                
                $
                5,955,565770,870
                
                
                Services
                    - Performance Bonus
                
                
                300,6393,750,000
                
                
                Exercised
                    Warrants
                
                
                750,0002,521,037
                
                
                Services
                    - Performance Bonus
                
                
                614,592177,910
                
                
                Stock
                    for Brokers Fees
                
                
                16,0122,475,000
                
                
                Consulting
                    Services
                
                
                640,0002,261,956
                
                
                Converted
                    Notes Payable and Accrued Interest
                
                
                355,4441,864,286
                
                
                Deposit
                    for Joint Venture
                
                
                261,000880,103
                
                
                Stock
                    for Directors Fees
                
                
                95,864
 
 During
        the year ended December 31, 2006, the Company issued the following shares
        of
        Common stock:
 **SHARES**
                
                **CONSIDERATION**
                
                **VALUATION**38,472
                
                
                Settlement
                    of Debt
                
                $
                150,8101,953,830
                
                
                Exercised
                    Stock Options
                
                
                *2,727,272
                
                
                Exercised
                    Warrants for Cash
                
                
                6,341,1481,000,000
                
                
                Converted
                    Preferred Series C
                
                
                *10,325
                
                
                Consulting
                    Services
                
                
                23,7503,000,000
                
                
                Converted
                    Notes Payable and Accrued Interest
                
                
                *666,667
                
                
                Stock
                    for Debt
                
                
                2,386,660500,000
                
                
                Services
                    - Performance Bonus
                
                
                295,000204,828
                
                
                Settlement
                    of Debt
                
                
                86,7901,166,667
                
                
                Converted
                    Preferred Series D
                
                
                *10,640
                
                
                Services
                    - Performance Bonus
                
                
                2,979
  48
 
 *
        The
        valuation amounts of the above common stock transactions are based on the
        amounts that common stock and related additional paid-capital were increased
        (decreased) upon recording of each transaction. For exercises of stock options,
        no values are indicated, whereas the options were valued and the additional
        paid-in capital account was increased upon the original issuance (grant)
        of the
        options and no additional charges were recorded upon exercise of the options.
        For conversions of preferred stock, the valuation indicated is the recorded
        amount of the preferred stock upon original issuance of the preferred shares,
        which amount was reclassified to common stock and related additional paid-in
        capital upon conversion. Where preferred stock was originally issued for
        broker's fees (instead of cash) and, accordingly, no monetary compensation
        was
        received or recorded by the Company for the preferred shares issued, the
        listed
        common stock valuation is also zero.
  For
        other
        issuances of shares during the periods described above, the Company-issued
        restricted shares (Rule 144) of its common stock to consultants and officers
        for
        services to the Company. Through December 31, 2004, issuance of restricted
        shares (Rule 144) were valued, due to limitations in current marketability,
        by
        the Company based upon half of the average bid and asked price of the Company's
        shares on the date of issuance, unless the services provided were valued
        at
        another amount as agreed upon between the parties.
  Effective
        January 1, 2005, the Company adopted the policy of valuing all shares of
        common
        stock issued in consideration for services at the closing price of the shares
        on
        the date of issuance or date of Board approval or agreement, if earlier,
        regardless of whether the shares are issued or restricted or free-trading,
        except for instances where the closing price is based on contractual
        agreements.
 
 **NOTE
        11. STOCK OPTIONS AND WARRANTS**
 
 During
        the year ended December 31, 2007, the Company issued the following options
        to
        acquire Common stock:
 
 Date
                  Issued
              
              Shares
              
              Consideration
              
              Valuation
              
              Relationship3/19/2007
              
              
              500,000
              
              Employee
                Bonus
              
              $
              130,753
              
              Non
                Executive Employee3/28/2007
              
              
              2,000,000
              
              Officer
                Stock Option Grant
              
              $
              352,093
              
              Chief
                Operating Officer4/12/2007
              
              
              2,000,000
              
              Officer
                Stock Option Grant
              
              $
              347,676
              
              Chief
                Operating Officer4/13/2007
              
              
              958,000
              
              Employees
                Bonus
              
              $
              167,670
              
              Non
                Executive Employees5/22/2007
              
              
              4,078,945
              
              Employees
                Bonus
              
              $
              504,470
              
              Executive
                Employees6/15/2007
              
              
              1,500,000
              
              Officer
                Severance/Bonus
              
              $
              266,296
              
              Chief
                Operating Officer8/20/2007
              
              
              55,555
              
              Employees
                Bonus
              
              $
              5,408
              
              Non
                Executive Employee8/30/2007
              
              
              1,833,333
              
              Officer
                Severance/Bonus
              
              $
              116,236
              
              Former
                Chief Executive Officer10/18/2007
              
              
              750,000
              
              Employees
                Bonus
              
              $
              32,389
              
              Non
                Executive Employee
 
 During
        the year ended December 31, 2006, the Company issued the following options to
        acquire Common stock:
 
 Date
                  Issued
              
              Shares
              
              Consideration
              
              Valuation
              
              Relationship4/6/2006
              
              
              159,793
              
              Director
                Bonus
              
              $
              212,660
              
              Former
                Directors7/4/2006
              
              
              133,967
              
              Director
                Bonus
              
              $
              97,595
              
              Former
                Directors10/4/2006
              
              
              123,967
              
              Director
                Bonus
              
              $
              32,274
              
              Former
                Director10/10/2006
              
              
              1,585,488
              
              Director
                Severance/Bonus
              
              $
              219,200
              
              Former
                Director12/29/2006
              
              
              2,109,260
              
              Employees
                Bonus
              
              $
              497,399
              
              Non
                Executive Employees
  49
 
 See
        below
        for more information regarding vesting term and exercise prices.
 
 All
        options were fully vested and thus there was no deferred
        compensation.
 
 The
        above
        scheduled stock options were recorded at fair market value under SFAS 123R
        (see
        Note 1 above). The fair value of the options at the time of issuance was
        determined using the Black-Scholes option-pricing model with the following
        assumptions:
 
 Risk
                  free interest rate
              
              
              4.50
              %Expected
                  life
              
              
              3
                  yearsExpected
                  volatility
              
              
              65-112
              %Expected
                  dividend yield
              
              
              0
              %
 
 STOCK
        OPTION BONUS PLANS
 
 In
        November 2005, the Company established its 2005 Stock Option Bonus Plan,
        wherein
        the board of directors authorized the issuance of stock options for restricted
        shares totaling 1,509,180 shares to the officers and employees of the Company
        as
        payment of accrued bonuses through December 31, 2005. The stock options are
        exercisable at $2.12, based on the closing market price of the Company's
        free-trading shares on the date the options were granted. Through the date
        of
        this report, none of these options have been exercised.
 
 During
        2005, the board of directors authorized the issuance of stock options for
        restricted shares totaling 199,490 shares to the directors of the Company
        as
        board members' compensation for services through December 31, 2005. The stock
        options are exercisable at various amounts, ranging from $1.99 to $4.35 per
        share, based on the closing market price of the Company's free-trading shares
        on
        the date the options were granted, except for a now former director who was
        issued 37,500 and 30,000 options shares at $1.49 and $0.99, respectively.
        Through the date of this report, none of these options have been
        exercised.
 
 All
        of
        the options granted during 2007 and 2006, unless otherwise discounted as
        noted
        above, were exercisable based on the closing market price of the Company's
        free-trading shares.
 
 2004
        STOCK OPTIONS EXERCISED IN 2006
 
 During
        2006, a total of 1,953,830 of the above options shares were exercised and
        issued
        (net of shares used to pay for "cashless" options"), with payment in cash
        and
        common stock subscriptions receivable totaling $85,788 pursuant to the 2004
        Stock Option Bonus Plan, the Officers' Stock Option Grant Plan, and for accrued
        board members' stipends, and, furthermore, these shares were registered by
        the
        Company's filing a Form S-8 registration statement. The number of shares
        registered were allocated to the individuals exercising the options based
        a
        ratio of the number of options held by each individual to the total number
        of
        options held by all individuals. Employee options vest according to the terms
        of
        the specific grant and expire from 3 to 5 years from date of grant. As of
        December 31, 2007, all options issued and outstanding have fully vested and
        thus
        there was no deferred compensation, Stock option activity for the years ended
        December 31, 2007 and 2006 was as follows:
 
 Number of Options
                (in shares)
              
              Weighted Average
                Exercise
                  PriceOutstanding
                  at December 31, 2005
              
              
              21,652,867
              
              $
              1.114Options
                  Granted
              
              
              4,112,475
              
              
              .822Options
                  Exercised
              
              
              (1,953,830
              )
              
              .675Options
                  Cancelled
              
              
              (28,643
              )
              
              .675Options
                  Forfeited
              
              
              (3,609,267
              )
              
              2.253Outstanding
                  at December 31, 2006
              
              
              20,173,602
              
              $
              .894Options
                  Granted
              
              
              13,675,833
              
              
              .265Options
                  Forfeited
              
              
              (5,144,265
              )
              
              .864Outstanding
                  at December 31, 2007
              
              
              28,705,170
              
              $
              .600
  50
 
 As
        of
        December 31, 2007, the exercise price of all options outstanding exceeds
        the
        market price of the Company’s stock, and therefore there was no intrinsic
        value.
 
 WARRANTS
 
 On
        September 6, 2006, the Company entered into subscription agreements with
        several
        investors whereby these investors were issued Class A and Class B Warrants.
        The
        investors received one Class A Warrant to purchase one share of common stock
        for
        every two shares that the notes were convertible into on the closing date
        as
        well as one Class B Warrant to purchase the identical number of
        shares.
 
 The
        Class
        A Warrants are exercisable for a purchase price equal to 150% of the market
        price on the day prior to closing and the Class B Warrants are exercisable
        for a
        purchase price equal to 200% of the market price on the day prior to closing
        which calculates to 3,602,190 warrants ranging from $.66 to $1.26. The Warrants
        have a 5 year term.
 
 On
        April
        13, 2007, the Company agreed to reprice the exercise price of warrants
        previously packaged with a previous Convertible Note financing from 2006
        to $.20
        per share, and increased the number of shares issuable upon exercise of such
        warrants 1.5 times the original amount of warrants issued. In consideration
        of
        the aforementioned one of the investors exercised their warrants which resulted
        in the issuance of 2,250,000 additional warrants.
 
 On
        May 1,
        2007, the Company executed several Certificates of Adjustments for the
        previously issued Warrants. The Warrants previously had Exercise Prices ranging
        from $0.75 to $1.00 and with the execution of the adjustments; the Exercise
        Prices were then modified to $0.196. The Company recognized a $140,487 loss
        from
        the increase in fair value from the modification of warrants. In January
        2008,
        the Company issued certificates of adjustment for certain convertible debentures
        and warrants issued pursuant to the 2006 financing to $.105 per share. The
        Company does not anticipate any additional charge related to this modification
        due to the new price being above market price at the time of the
        modification.
 
 In
        December 2006, the Company entered into financing agreements for convertible
        promissory notes payable whereby these investors were issued Class A and
        Class B
        warrants. The Class A and B warrants are exercisable for a purchase price
        of
        $.21 and $.315, respectively. The warrants have a 2 year term.
 
 In
        December 2007, the Company entered into financing agreements for convertible
        promissory notes payable whereby these investors were issued Class A and
        Class B
        warrants. The Class A and B warrants are exercisable for a purchase price
        of
        $.21 and $.315, respectively. The warrants have a 2 year term.
 
 The
        following table summarizes certain information about the Company’s stock
        warrants.
 
 Warrants
                Class A
              
              Warrants
                Class B
              
              Weighted Average
                Exercise PriceOutstanding
                  at December 31, 2005
              
              
              2,727,272
              
              
              —
              
              $
              2.500Warrants
                  Granted
              
              
              3,736,701
              
              
              1,801,095
              
              
              1.994Warrants
                  Exercised
              
              
              (2,727,272
              )
              
              —
              
              
              2.500Outstanding
                  at December 31, 2006
              
              
              3,736,701
              
              
              1,801,095
              
              
              1.994Warrants
                  Granted
              
              
              8,121,428
              
              
              3,914,285
              
              
              0.242Warrants
                  Exercised
              
              
              (3,750,000
              )
              
              —
              
              
              0.200Outstanding
                  at December 31, 2007
              
              
              8,108,129
              
              
              5,715,380
              
              $
              0.330
 
 The
        fair
        value of the warrants issued during 2007 was determined using the Black-Scholes
        option-pricing model with the following assumptions:
  51
 
 Risk
                  free interest rate
              
              
              4.50
              %Expected
                  life
              
              
              2-5
                  yearsExpected
                  volatility
              
              
              58-112
              %Expected
                  dividend yield
              
              
              0
              %
 
 **NOTE
        12. PREFERRED STOCK**
 
 SERIES
        D
 
 On
        July
        28, 2004, the Company agreed to sell 1,000 shares of Series D Preferred Stock
        of
        the Company to Mitchell A. Siegel, former Chief Operating Officer and Vice
        President and Director of the Company. The Company used $1 million of this
        investment for working capital and purchase of equipment necessary to expand
        the
        Company's stored value card programs.
 
 Mitchell
        A. Siegel agreed to advance $1 million to the Company in four (4) quarterly
        installments beginning August 2004. The agreement was subsequently modified
        for
        the installment period to be semi-annual and to begin in October 2004. Mr.
        Siegel had remitted the initial $250,000, and in June 2005, remitted the
        second
        $250,000. The Company does not expect to receive the remaining
        $500,000 in stock subscriptions receivable from Mr. Siegel. Mr. Siegel converted
        his shares in October 2006.
 
 As
        of the
        date of this report the Company has no preferred shares issued and/or
        outstanding.
 
 **NOTE
        13. SUBSEQUENT EVENTS**
 
 Corporate
        Name Change
  On
        September 22, 2008 we filed a Certificate of Merger with the Secretary of
        State
        of the State of Delaware pursuant to which our wholly owned subsidiary, Sanswire
        Corp., a Delaware corporation, was merged into us. As a result of the filing
        of
        the Certificate of Merger, our corporate name was changed from GlobeTel
        Communications Corp. to Sanswire Corp.
 Agreement
          with TAO Technologies GmbH
 
 In
          June
          2008 the Company restructured its November 2007 agreement with TAO Technologies
          GmbH and Professor Bernd Kroplin. The new agreement called for the establishment
          of a new US-based joint venture company to be called Sanswire-TAO that
          was to be
          owned equally by TAO and Sanswire Corp. Additionally, Sanswire-TAO would
          register the patents and intellectual property of TAO Technologies and
          Kroplin
          in the United States for the exclusive use of Sanswire-TAO. The agreement
          also
          covered Canada and Mexico.  Further, the compensation for the assets was
          reduced from $12 million in cash and stock to $3.5 million in cash and
          stock.
          With the $391,000 paid during 2007, the remaining balance of $3,109,000
          is
          payable in cash over the next three years. During 2008, the Company has
          paid an additional $418,000, consisting of $150,000 in cash and 2.68
          million shares valued at $268,000.
 
 Future
          minimum payments required under the new agreement, referenced above, subsequent
          to the year ended December 31, 2007 are as follows:
 2008
              
              $
              870,0002009
                  and thereafter
              
              
              2,239,000$
              3,109,000
  52
  **ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE.**
 
 Dismissal
        of Dohan & Co. PA
 
 On
        January 4, 2007, the Audit Committee of the Board of Directors dismissed
        Dohan
& Co., CPAs PA as the Company's certifying accountant.
 
 During
        the two years ended December 31, 2005 and the subsequent interim periods
        until
        the change, there were no disagreements with Dohan & Co. on any matter of
        accounting principles or practices, financial statement disclosure, or auditing
        scope or procedure, which disagreements, if not resolved to the satisfaction
        of
        Dohan & Co. would have caused them to make reference in connection with
        their report to the subject matter of the disagreement, and Dohan & Co. has
        not advised the Company of any reportable events as defined in Item 304(a)(1)(v)
        of Regulation S-K.
 The
          report of independent registered public accounting firm of Dohan & Co. as of
          and for the two years ended December 31, 2005, as restated, did not contain
          any
          adverse opinion or disclaimer of opinion, nor was it qualified or modified
          as to
          audit scope or accounting principle.
 Appointment
        of Weinberg, PA
 
 The
        Board
        of Directors of the Company appointed Weinberg & Company, P.A. of Boca
        Raton, Florida as the Company's new independent registered public accounting
        firm to audit and certify our financial statements for fiscal year ended
        December 31, 2006. Weinberg & Company has accepted this appointment and has
        been engaged by the Company. During the most recent fiscal year and through
        April 13, 2007, neither the Company nor any one on behalf of the Company
        has
        consulted with Weinberg & Company, P.A. regarding the application of
        accounting principles to a specified transaction, either completed or proposed,
        or the type of audit opinion that might be rendered on the Registrant's
        financial statements, or any other matters or reportable events required
        to be
        disclosed under Items 304 (a) (2) (i) and (ii) of Regulation
        S-K.
  53
 
 **ITEM
        8A. CONTROLS AND PROCEDURES**
 
 **Evaluation
        of Disclosure Controls and Procedures**
 
 As
        required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended
        (the "Exchange Act"), the Company carried out an evaluation under the
        supervision and with the participation of Jonathan Leinward, the Company’s Chief
        Executive Officer and Principal Financial Officer (the “Reviewing Officer”), of
        the effectiveness of the Company's disclosure controls and procedures as
        of
        December 31, 2007. In designing and evaluating the Company's disclosure controls
        and procedures, the Company and its management recognize that there are inherent
        limitations to the effectiveness of any system of disclosure controls and
        procedures, including the possibility of human error and the circumvention
        or
        overriding of the controls and procedures. Accordingly, even effective
        disclosure controls and procedures can only provide reasonable assurance
        of
        achieving their desired control objectives. Additionally, in evaluating and
        implementing possible controls and procedures, the Company's management was
        required to apply its reasonable judgment. Furthermore, in the course of
        this
        evaluation, management considered certain internal control areas, including
        those discussed below, in which we have made and are continuing to make changes
        to improve and enhance controls. Based upon the required evaluation, the
        Reviewing Officer concluded that as of December 31, 2007, the Company's
        disclosure controls and procedures were not effective to ensure that information
        required to be disclosed by the Company in the reports it files or submits
        under
        the Exchange Act is recorded, processed, summarized and reported within the
        time
        periods specified in the Securities and Exchange Commission's rules and
        forms.
 
 For
        the
        year ended December 31, 2003, the Company's independent auditors, Dohan and
        Company, CPA's, P.A. ("Dohan") advised management and the Board of Directors
        by
        a letter dated March 30, 2004, that in connection with its audit of the
        Company's consolidated financial statements for the year ended December 31,
        2003, it noted certain matters involving internal control and its operation
        that
        it considered to be a material weakness under standards established by the
        American Institute of Certified Public Accountants. Reportable conditions
        are
        matters coming to an independent auditors' attention that, in their judgment,
        relate to significant deficiencies in the design or operation of internal
        control and could adversely affect the organization's ability to record,
        process, summarize, and report financial data consistent with the assertions
        of
        management in the financial statements. Further, a material weakness is a
        reportable condition in which the design or operation of one or more internal
        control components does not reduce to a relatively low level the risk that
        errors or fraud in amounts that would be material in relation to the financial
        statements being audited may occur and not be detected within a timely period
        by
        employees in the normal course of performing their assigned functions. Dohan
        advised management and the Board of Directors that it considered the following
        to constitute material weaknesses in internal control and operations: (i)
        the
        Company's failure to adequately staff its finance group to effectively control
        the increased level of transaction activity, address the complex accounting
        matters and manage the increased financial reporting complexities and (ii)
        the
        Company's current monthly close process does not mitigate the risk that material
        errors could occur in the books, records and financial statements, and does
        not
        ensure that those errors would be detected in a timely manner by the Company's
        employees in the normal course of performing their assigned functions. Dohan
        noted that these matters were considered by them during its audit and did
        not
        modify the opinion expressed in its independent auditor's report dated March
        30,
        2004.
 
 In
        light
        of the letter from Dohan, we identified deficiencies in our internal controls
        and disclosure controls related to our accounting and audit procedures.
        Specifically, the identified deficiencies involved the ineffective controls
        over
        (i) revenue reporting, (ii) audit preparation procedures and (iii) financial
        reporting procedures.
 
 Remediation
        of Material Weaknesses
 We
          have
          formulated a program to remedy the material weaknesses identified above.
          In the
          first phase of the program, already completed as of September 30, 2007,
          we have
          hired outside accountants and consultants to review our financial statements
          and
          prepare the restatement of our financial statements.
  54
 
 Additionally
        we determined that the Company had ineffective controls over revenue
        recognition. Our remediation measures relating to revenue recognition include
        a
        review by management of revenue items other than normal sales and also the
        discontinuation of the operations of our Centerline Communications LLC
        subsidiary for which we have restated revenue.
 
 In
        the
        second phase of the program, commencing with the filing of our restated
        financial statements, we will be implementing certain new policies and
        procedures such as:
 
 a.
 
        Seeking to recruit board members independent of management;
 
 b.
 
        Granting Board committees standing authority to retain counsel and special
        or
        expert advisors of their own choice;
 
 c.
 
        Seeking outside review of acquisition transactions
  **Changes
        in Internal Control Over Financial Reporting**
 
 Except
        as
        set forth above, there have been no changes in our internal control over
        financial reporting that occurred during the year ended December 31, 2007
        that
        have materially affected or are reasonably likely to materially affect our
        internal control over financial reporting.
 
 **Management’s
        Report on Internal Control over Financial Reporting**
 
 We
        are
        responsible for establishing and maintaining adequate internal control over
        financial reporting in accordance with Exchange Act Rule 13a-15. With the
        participation of our chief executive officer and chief financial officer,
        our
        management conducted an evaluation of the effectiveness of our internal control
        over financial reporting as of December 31, 2007 based on the criteria
        established in Internal Control-Integrated Framework issued by the Committee
        of
        Sponsoring Organizations of the Treadway Commission. Based on this evaluation,
        management concluded that our internal control over financial reporting was
        effective as of December 31, 2007, based on those criteria. A control system,
        no
        matter how well conceived and operated, can provide only reasonable, not
        absolute, assurance that the objectives of the control system are met. Because
        of the inherent limitations in all control systems, no evaluation of controls
        can provide absolute assurance that all control issues and instances of fraud,
        if any, within the Company have been detected.
 
 This
        annual report does not include an attestation report of the Company’s registered
        accounting firm regarding internal control over financial reporting.
        Management’s report was not subject to attestation by the Company’s registered
        public accounting firm pursuant to temporary rules of the Securities and
        Exchange Commission.
 
 **ITEM
        8B. OTHER INFORMATION**
 
 BOARD
        APPOINTMENTS AND RESIGNATIONS
 
 On
        January 5, 2006, the Company announced the appointment of Michael P. Castellano
        to the Board of Directors. As an independent director, Mr. Castellano will
        fulfill the role as Chairman of Sanswire’s Audit Committee as a qualified
        financial expert under Sarbanes-Oxley. He will also serve on Sanswire’s
        Compensation and Nominating Committees.
 
 On
        January 11, 2006, the Company announced the appointment of Dorian B. Klein
        to
        its Board of Directors. Mr. Klein also serves on Sanswire 's Audit, Compensation
        and Nominating Committees.
  55
 
 On
        February 17, 2006, the Company announced that Sir Christopher Meyer, its
        Non-Executive Chairman, had requested a change in his status, effective March
        19, 2006, to that of an Independent Director. As a result of his current
        professional obligations and commitments in the U.K., Sir Christopher had
        advised the Board that he felt unable to commit the time to the Chairmanship
        of
        Sanswire that the Company's shareholders had the right to expect.
 
 On
        March
        20, 2006, Sir Christopher Meyer elected to step down completely from Sanswire’s
        Board, after further considering the time that he had available to devote
        to the
        Company.
 
 On
        March
        23, 2006, the Company announced that J. Randolph Dumas, Vice Chairman, has
        been
        elected Chairman of the Board of Directors, succeeding Sir Christopher Meyer,
        who remained with the Company as Chairman of the GlobeTel International Advisory
        Board.
 
 On
        October 7, 2006, J. Randolph Dumas, Dorian Klein, Amb. Amb. Ferdinando Salleo,
        and Timothy Huff resigned as directors of the Company (Mr. Huff also resigned
        as
        CEO) and Przemyslaw Kostro and Peter Khoury were appointed as directors.
        Mr.
        Khoury was also appointed as CEO.
 
 On
        March
        14, 2007, Michael Castellano and Patrick Heyn resigned as directors of the
        Company. Mr. Castellano also served as chairman of the Audit
        Committee.
 
 On
        September 7, 2007, Peter Khoury resigned as director of the Company. Mr.
        Khoury
        also resigned as CEO.
  56




**PART
      III**





**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS**




**Name**
            
            **Age**
            
            **Position
                with Company**Jonathan
                Leinwand
            
            38
            
            Chief
                Executive Officer, DirectorPrzemyslaw
                Kostro
            
            45
            
            Chairman
                of the Board





All
      directors hold office until the next annual meeting of our stockholders and
      until their successors have been elected and shall qualify. Officers serve
      at
      the discretion of our Board of Directors.




**Name**
            
            **Age**
            
            **Position
                with Company**Przemyslaw
                Kostro
            
            45
            
            ChairmanMichael
                Castellano (a)
            
            __
            
            DirectorPatrick
                Heyn (b)
            
            __
            
            DirectorPeter
                Khoury (c)
            
            __
            
            Director,
                CEOJonathan
                Leinwand
            
            38
            
            Director,
                CEO




(a)
            Resigned
                March 14, 2007(b)
            Resigned
                March 14, 2007(c)
            Resigned
                September 7, 2007




**Jonathan
      Leinwand**





Jonathan
      Leinwand, Chief Executive Officer and Director, joined Sanswire as General
      Counsel in June 2005 and became a director in August 2005. He was appointed
      CEO
      in September 2007. Prior to joining Sanswire, he was in private practice since
      1996 concentrating in the areas of corporate and securities law, representing
      a
      number of public companies. As part of his practice, Mr. Leinwand also served
      as
      a deal-maker for several US and foreign corporations arranging strategic
      alliances and funding both in the US and abroad. Mr. Leinwand graduated from
      the
      University of Miami with honors degrees in Political Science and Communications
      and graduated cum laude from the University of Miami School Of Law.





**Przemyslaw
      L. Kostro**




Przemyslaw
      L. Kostro, Chairman, was first elected to the Board of Directors in November
      2001. From November 2001 to April 2002, Mr. Kostro also served as the CEO of
      Sanswire before relinquishing the position to Timothy Huff. Over the past five
      years, Mr. Kostro has been an attorney engaged in international law, and has
      been providing professional and consulting services to several large and
      mid-sized entities in Europe.  Mr. Kostro resigned as a Director in October
      2005 and was reappointed as Director and Chairman of the Board in October
      2006.




**Michael
      P. Castellano**





Michael
      P. Castellano is a certified public accountant with more than 40 years of
      experience in the financial sector. His distinguished career includes executive
      positions in corporate accounting, finance, and administration at renowned
      companies such as Avis, Inc., E.F. Hutton, Inc., and Fidelity Investments.
      At
      Fidelity, he held the positions of Vice President and Corporate Controller
      and
      was later appointed Senior Vice President and Chief Accounting Officer of the
      Fidelity Institutional Group. He was also a director and head of the Audit
      Committee for Puradyn Filter Technologies from 2001 through 2005 and ResortQuest
      International, a New York Stock Exchange listed property management company,
      from 2002 until November 2003 when it was acquired by Gaylord Entertainment.
      Mr.
      Castellano currently serves as a director and chairman of the Audit Committees
      of Sona Mobile and Sun Capital Advisers Trust. Mr. Castellano resigned as a
      Director on March 14, 2007.




57


**Patrick
      Heyn**





Mr.
      Heyn
      is a Partner in the Audit and Accounting department of Daszkal Bolton LLP where
      he is responsible for ensuring the quality and technical accuracy of all
      auditing services performed for public and private companies. Mr. Heyn obtained
      his Bachelor in Business Administration degree in Accounting from Columbus
      State
      University and his Master in Professional Accountancy degree from Georgia State
      University in Atlanta. He is a member of the American Institute of Certified
      Public Accountants and the Florida Institute of Certified Public Accountants.
      Mr. Heyn is certified as a CPA in both Florida and Georgia. Mr. Heyn resigned
      as
      a Director on March 14, 2007.





**Peter
      Khoury**





Mr.
      Khoury is the founding partner and former CEO of International Consulting
      Services, a global telecommunications practice focused on assisting companies
      with entering and effectively competing in an aggressive communications market.
      Mr. Khoury oversaw ICS's global operations and its business development
      practices. After graduating from the University of Sydney with an Honours degree
      in Chemical Engineering, Mr. Khoury obtained additional degrees in Computer
      Science and Business Administration. His career began as a Systems Engineer
      at
      IBM. He later joined companies Andersen Consulting and Digital Equipment, where
      he managed key assignments in the telecommunications, finance and insurance
      sectors in Singapore, Hong Kong, Japan, Australia and New Zealand. Mr. Khoury
      resigned as a Director on September 7, 2007.





(B)
      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT




Section
      16(a) of the Securities Exchange Act of 1934 requires that our officers and
      directors, and persons who own more that ten percent of a registered class
      of
      our equity securities, to file reports of ownership and changes in ownership
      with the Securities and Exchange Commission and with any exchange on which
      the
      Company's securities are traded. Officers, directors and persons owning more
      than ten percent of such securities are required by Commission regulation to
      file with the Commission and furnish the Company with copies of all reports
      required under Section 16(a) of the Exchange Act. Based solely upon our review,
      we did not disclose any failures to file reports under Section 16(a) of the
      Exchange Act.





**Code
      of Ethics**





We
      have
      not adopted a code of ethics.





**Audit
      Committee Financial Expert**





We
      do not
      have an audit committee financial expert because the Company has been unable
      to
      appoint such a qualified person during the period when the Company has been
      restating its financial statements and becoming current with its financial
      statements. At such time as the Company has become up-to-date with its filings,
      it believes it will be in a position to appoint a qualified individual to act
      as
      the audit committee financial expert.


58


**ITEM
      10. EXECUTIVE COMPENSATION.**





Name & Principal
              Position
            
            Year
            
            Salary ($)
            
            Bonus
              ($)
            
            Stock
              Awards
              ($)
            
            Option
              Awards ($)
            
            Non-EquityIncentivePlanCompensation($)
            
            Change in PensionValue and Non-Qualified DeferredCompensationEarnings ($)
            
            All Other
              Compensation
              ($)
            
            Total ($)Timothy Huff, CEO
            
            
            2006
            
            
            176,014
            (a)
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            176,014Mitchell
                Siegel, COO
            
            
            2006
            
            
            103,825
            (a)
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            103,825Thomas
                Jimenez, CFO
            
            
            2006
            
            
            146,067
            (a)
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            146,067Stephen
                King, Sr. VP
            
            
            2006
            
            
            75,903
            (a)
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            75,903Lawrence
                Lynch, CFO
            
            
            2006
            
            
            109,271
            (a)
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            109,271Joseph
                Seroussi, CTO
            
            
            2006
            
            
            101,520
            (a)
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            101,520Jonathan
                Leinwand, CEO, Director
            
            
            2007
            
            
            46,153
            
            
            —
            
            
            240,000
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            286,153Jonathan
                Leinwand, Secretary
            
            
            2006
            
            
            120,008
            
            
            —
            
            
            2,979
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            122,987Peter
                Khoury, CEO
            
            
            2006
            
            
            62,500
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            62,500




a)
      Effective January 1, 2002, Sanswire entered into a three-year employment
      agreements with its key management. Effective 2005, the agreements were renewed
      automatically on a year-to-year basis.




In
      2005,
      the agreements provided a base compensation remained at $200,000 for its Chief
      Executive Officer (CEO). The Chief Financial Officer (CFO), Chief Operating
      Officer (COO), Chief Technology Officer CTO and General Counsel all had base
      compensation of $175,000. The Company also entered into employment contracts
      with the Executive Vice Chairman (EVC) and Senior Vice President (SVP) of
      Finance. The EVC agreement called for annual salaries of $250,000 plus signing
      bonuses equal to 2.5% of the outstanding shares of the Company as of December
      31, 2005. The EVC is also entitled to stock salary in stock options totaling
      $750,000 per year for three years at $1.21 per share. The SVP Finance agreement
      calls for annual salaries of $195,000 plus bonuses amounting to 2% of the
      outstanding shares of the Company's stock at the end of the year, payable in
      the
      form of stock options.


59


**OUTSTANDING
      EQUITY AWARDS**


**Option Awards**
              
              **Stock Awards**Name
              
              Number
                of
                Securities
                Underlying
                Unexercised
                Options (#)
                Exercisable
              
              Number
                of
                Securities
                Underlying
                Unexercised
                Options (#)
                Unexercisable
              
              Equity
                Incentive
                Plan Awards:
                Number of
                Securities
                Underlying
                Unexercised
                Unearned
                Options (#)
              
              Option
                Exercise
                Price
                ($)
              
              Option
                Expiration
                Date
              
              Number
                of
                Shares
                or Units
                of Stock
                That
                Have
                Not
                Vested
                (#)
              
              Market
                Value of
                Shares
                or
                Units of
                Stock
                That
                Have
                Not
                Vested
                ($)
              
              Equity
                Incentive
                Plan
                Awards:
                Number of
                Unearned
                Shares,
                Units or
                Other Rights
                That Have
                Not Vested
                (#)
              
              Equity
                Incentive
                Plan
                Awards:
                Market or
                Payout
                Value of
                Unearned
                Shares,
                Units or
                Other Rights
                That Have
                Not Vested
                ($)Timothy
                  Huff
              
              
              1,647,442
              
              
              —
              
              
              —
              
              
              0.675
              
              
              December 31, 2007
              
              
              —
              
              
              —
              
              
              —
              
              
              —116,527
              
              
              —
              
              
              —
              
              
              0.675
              
              
              April
                  1, 2007
              
              
              —
              
              
              —
              
              
              —
              
              
              —Thomas
                  Jimenez
              
              
              877,810
              
              
              —
              
              
              —
              
              
              0.675
              
              
              December
                  31, 2007
              
              
              —
              
              
              —
              
              
              —
              
              
              —Jerrold
                  Hinton
              
              
              569,416
              
              
              —
              
              
              —
              
              
              0.675
              
              
              December
                  31, 2007
              
              
              —
              
              
              —
              
              
              —
              
              
              —Mitchell
                  Siegel
              
              
              1,093,113
              
              
              —
              
              
              —
              
              
              0.675
              
              
              December
                  31, 2007
              
              
              —
              
              
              —
              
              
              —
              
              
              —Jonathan
                  Leinwand
              
              
              921,052
              
              
              —
              
              
              —
              
              
              0.190
              
              
              May
                  22, 2010
              
              
              —
              
              
              —
              
              
              —
              
              
              —1,400,000
              
              
              —
              
              
              —
              
              
              0.105
              
              
              October
                  18, 2010
              
              
              —
              
              
              —
              
              
              —
              
              
              —2,916,667
              
              
              —
              
              
              —
              
              
              0.090
              
              
              January
                  10, 2011
              
              
              —
              
              
              —
              
              
              —
              
              
              —Leigh
                  Coleman
              
              
              574,438
              
              
              —
              
              
              —
              
              
              0.675
              
              
              December
                  31, 2007
              
              
              —
              
              
              —
              
              
              —
              
              
              —


60




**COMPENSATION
      OF DIRECTORS**




The
      following table summarizes the compensation for our non-employee board of
      directors for the fiscal year ended December 31, 2007:





Name
            
            Fees
              Earned or
              Paid in
              Cash
              ($)
            
            Stock Awards
              ($)
            
            Option
              Awards ($)
            
            Non-Equity
              Incentive
              Plan
              Compensation
              ($)
            
            Non-Qualified
              Deferred
              Compensation
              Earnings
              ($)
            
            All
              Other
              Compensation ($)
            
            Total ($)(a)
            
            (b)
            
            (c)
            
            (d)
            
            
            
            (f)
            
            (g)
            
            (j)Przemyslaw
                Kostro, Chairman (2007)
            
            
            —
            
            
            —
            
            
            18,750
            
            
            —
            
            
            —
            
            
            —
            
            
            18,750Patrick
                Heyn (2007)
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Michael
                Castellano (2007
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Peter
                Khoury (2007)
            
            
            103,332
            
            
            76,099
            
            
            278,968
            
            
            —
            
            
            —
            
            
            —
            
            
            458,399




Compensation
      paid to Directors who are also officers of the Company is reflected in Item
      10.
      Executive Compensation.  We
      maintain a policy of compensating our directors using cash and stock options.
      Currently, the Company determines Board compensation on an individual basis.
      Employee members of the Board do not receive additional compensation for their
      service on the Board.





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


**Common
      Stock**





As
      of
      September 23, 2008, there were 158,753,208 common shares issued and outstanding.
      The table below sets forth the share ownership of our executive officers and
      directors, individually and as a group. No other person is the beneficial owner
      of more than 5% of our issued and outstanding common shares


Title of Class
              
              Name & Address of
                Beneficial
              
              Amount and
                Beneficial
              
              Nature of
                Ownership
              
              Percentage
                of Class (1)Common
                  Stock
              
              Przemyslaw
                L. Kostro Chairman101
                NE 3rdAve, Suite 1500,Fort
                Lauderdale, Florida 33301
              
              
              —
              
              
              —
              
              
              0.00
              %Common
                  Stock
              
              Jonathan Leinwand, CEO Since October 2007and
                Director Since August 2005101
                NE 3rdAve, Suite 1500,Fort
                Lauderdale, Florida 33301
              
              
              1,851,111
              
              
              Direct
              
              
              1.17
              %Total
                of all Officers and Directors as a Group
              
              
              1,851,111
              
              
              
              
              
              1.17
              %




(1)
      Based
      on 158,753,208 shares issued and outstanding on September 23, 2008.





61


**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE**





**Certain
      Relationships and Related Transactions**





See
      Item
      7, Notes 10 and 11 Common Stock Transactions and Stock Option, respectively,
      to
      the Notes to Consolidated Financial Statements.





**Director
      Independence**





Mr.
      Kostro is independent as that term in defined under section 301 of the
      Sarbanes-Oxley Act of 2002 .




**ITEM
      13. EXHIBITS**


EXHIBIT NO.
              
              DESCRIPTION3.1
              
              Articles
                  of Incorporation (filed as Exhibits 3.1, 3.2 and 3.3 to the Company's
                  Registration Statement on Form 10-SB and incorporated herein by
                  reference)3.2
              
              Certificate
                  of Merger (incorporated by reference to Form 8-K filed September
                  25,
                  2008).3.3
              
              Bylaws
                  (filed as Exhibit 3.4 to the Company's Registration Statement on
                  Form
                  10-SB and incorporated Herein by reference)10.1
              
              Material
                  Contracts-Consulting Agreements and Employment Agreements (filed
                  as
                  Exhibits to Registration Statements on Form S-8 and post-effective
                  amendments thereto and incorporated herein by
                  reference)10.2
              
              Asset
                  Purchase Agreement between the Company and Sanswire, Inc.(incorporated
                  by
                  reference)10.3
              
              Asset
                  Purchase Agreement between the Company and Stratodyne,Inc. (incorporated
                  by reference)10.4
              
              Subscriptions
                  Agreements between the Company and Preferred Series A,B,C, and
                  D
                  shareholders (incorporated by reference)21
              
              Subsidiaries
                  (incorporated by reference to Form 10-KSB for year ended December
                  31,
                  2006)31.1
              
              Certification
                  of Chief Executive Officer and Principal Financial Officer required
                  by
                  Rule 13a-14(a)/15d-14(a)32.1
              
              Certification
                  of Chief Executive Officer and Principal Financial Officer Pursuant
                  to 18
                  U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.




62


**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





AUDIT
      FEES





The
      following table summarizes the fees charged by Weinberg & Company for
      services rendered to the Company during 2007 and 2006.


**Amount****Type
                  of Fee**
              
              **Fiscal**
                **Year
                  2007**
              
              **Fiscal**
                **Year
                  2006**Audit(1)
              
              $
              50,858
              
              $
              —Audit
                  Related(2)
              
              
              —
              
              
              —Taxes
                  (3)
              
              
              —
              
              
              —All
                  Other (4)
              
              
              —
              
              
              —Total
              
              $
              50,858
              
              $
              —




The
      following table summarizes the fees charged by Dohan & Company for
      services rendered to the Company during 2007 and 2006.


**Amount****Type
                  of Fee**
              
              **Fiscal**
                **Year
                  2007**
              
              **Fiscal**
                **Year
                  2006**Audit(1)
              
              $
              63,870
              
              $
              58,430Audit
                  Related(2)
              
              
              —
              
              
              —Taxes
                  (3)
              
              
              —
              
              
              —All
                  Other (4)
              
              
              —
              
              
              —Total
              
              $
              63,870
              
              $
              58,430




(1)
            This
                category consists of fees for the audit of our annual financial statements
                included in the Company’s annual report on Form 10-KSB and review of
                the financial statements included in the Company’s quarterly reports on
                Form 10-QSB. This category also includes advice on audit and
                accounting matters that arose during, or as a result of, the audit
                or the
                review of interim financial statements, statutory audits required
                by
                non-U.S. jurisdictions and the preparation of an annual “management
                letter” on internal control matters.(2)
            Represents
                services that are normally provided by the independent auditors in
                connection with statutory and regulatory filings or engagements for
                those
                fiscal years, aggregate fees charged for assurance and related services
                that are reasonably related to the performance of the audit and are
                not
                reported as audit fees. These services include consultations regarding
                Sarbanes-Oxley Act requirements, various SEC filings and the
                implementation of new accounting requirements.(3)
            Represents
                aggregate fees charged for professional services for tax compliance
                and
                preparation, tax consulting and advice, and tax
                planning.(4)
            Represents
                aggregate fees charged for products and services other than those
                services
                previously reported.




63




Dohan
      and
      Company CPAs billed approximately $66,303 for professional services rendered
      for
      the audit of our annual financial statements for fiscal year 2005. This also
      included reviews of the financial statements included in our Forms 10-Q for
      the
      fiscal year and assistance in filing various proxy statements. Dohan &
Company has estimated the fees associated with their review of the restated
      financial statements will be $10,000.





The
      above
      fees were pre-approved by the audit committee based on estimated budgets
      presented to the audit committee.


64


**SIGNATURES**





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


**SANSWIRE
                  CORP.**By:
              /s/
                  Jonathan LeinwandName:
                  Jonathan Leinwand ,Title:
                  Chief Executive Officer (Principal Executive Officer)Dated
                  October 8, 2008




In
      accordance with the requirements of the Exchange Act, the registrant has caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.


SIGNATURE
              
              TITLE
              
              DATE/s/
                  Jonathan Leinwand
              
              Chief
                  Executive Officer, Principal Financial
              
              October
                  8, 2008Jonathan
                  Leinwand
              
              Officer
                  and Director/s/
                  Przemyslaw Kostro
              
              Chairman
                  of the Board
              
              October
                  8, 2008Przemyslaw
                  Kostro




65