##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 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 0-52702
 BROOKSIDE TECHNOLOGY HOLDINGS CORP.
  Florida
    
    20-3634227State or other jurisdiction of 
incorporation or organization
    
    (I.R.S. Employer
Identification No.)
 
  þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



Index
 ITEMPART I  FINANCIAL INFORMATIONItem 1. Unaudited Condensed Consolidated Financial StatementsItem 2. Managements Discussion and Analysis Financial Condition and Results of Operation
    
    
    28Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    35Item 4(T) Controls and Procedures
    
    
    35PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    38Item 1A. Risk Factors
    
    
    39Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3. Defaults Upon Senior Securities
    
    
    39Item 4. Submission of Matters to a Vote of Securities Holders
    
    
    39Item 5. Other Information
    
    
    39Item 6. Exhibits
    
    
    39EX-31.1EX-31.2EX-32.1EX-32.2
  2




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3




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BROOKSIDE TECHNOLOGY HOLDINGS CORP  CONSOLIDATED BALANCE SHEETS
As of March 31, 2010 and December 31, 2009
 March 31,
    
    
    December 31,2010 (Unaudited)
    
    
    2009ASSETSCurrent assetsCash and cash equivalents
    
    $
    95,090
    
    
    $
    196,424Cash collateral account
    
    
    361,097
    
    
    
    361,097Accounts receivable, net
    
    
    2,228,717
    
    
    
    2,908,056Inventory
    
    
    2,309,874
    
    
    
    2,011,052Deferred contract costs
    
    
    25,946
    
    
    
    7,937Deferred finance charges, net of amortization
    
    
    290,674
    
    
    
    339,756Prepaid expenses
    
    
    43,272
    
    
    
    69,541Total current assets
    
    
    5,354,670
    
    
    
    5,893,863Property and equipmentOffice equipment
    
    
    628,566
    
    
    
    645,506Furniture, fixtures and leasehold improvements
    
    
    169,365
    
    
    
    169,364797,931
    
    
    
    814,870Less: accumulated depreciation
    
    
    (482,507
    )
    
    
    (459,059
    )Property and equipment, net
    
    
    315,424
    
    
    
    355,811Goodwill
    
    
    11,659,254
    
    
    
    11,659,254Intangible assets, net
    
    
    
    
    
    
    Deposits and other assets
    
    
    28,267
    
    
    
    28,267TOTAL ASSETS
    
    $
    17,357,615
    
    
    $
    17,937,195LIABILITIES AND STOCKHOLDERS DEFICITLiabilitiesCurrent liabilitiesAccounts payable and accrued expenses
    
    $
    3,221,588
    
    
    $
    2,728,404Billings in excess of revenues
    
    
    2,252,255
    
    
    
    2,350,065Payroll liabilities
    
    
    544,821
    
    
    
    443,945Current portion of long term debt
    
    
    2,599,345
    
    
    
    8,413,200Income taxes payable
    
    
    96,700
    
    
    
    96,700Other current liabilities
    
    
    288,725
    
    
    
    288,724Total current liabilities
    
    
    9,003,434
    
    
    
    14,321,038Long term debt, less current portion
    
    
    6,179,289
    
    
    
    17,392Derivative financial instruments at fair value
    
    
    6,269,909
    
    
    
    6,437,547Total liabilities
    
    
    21,452,632
    
    
    
    20,775,977Stockholders deficitSeries A convertible preferred stock, 15,000,000 authorized,
13,106,716 issued and outstanding at
March 31, 2010 and December 31, 2009, at 8% dividend yield.
Liquidation preference of $15,000,115 and $14,738,181 at
March 31, 2010 and December 31, 2009, respectively.
    
    
    8,002,320
    
    
    
    7,740,386Common stock, $.01 par value, 10,000,000,000 shares
authorized, 182,579,405 and 178,079,405 shares issued and
outstanding at March 31, 2010 and December 31, 2008,
respectively
    
    
    182,580
    
    
    
    178,080Additional paid-in capital
    
    
    11,991,804
    
    
    
    11,943,670Accumulated deficit
    
    
    (24,271,721
    )
    
    
    (22,700,918
    )Total stockholders deficit
    
    
    (4,095,017
    )
    
    
    (2,838,782
    )TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
    
    $
    17,357,615
    
    
    $
    17,937,195
  4




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BROOKSIDE TECHNOLOGY HOLDINGS CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2010 and 2009
Unaudited
 March 31,2010
    
    
    2009REVENUESInstallation and other services
    
    $
    2,090,145
    
    
    $
    1,573,177Equipment sales
    
    
    1,581,930
    
    
    
    3,428,122Total revenues
    
    
    3,672,075
    
    
    
    5,001,299COST OF SALES
    
    
    1,560,663
    
    
    
    2,276,180GROSS PROFIT
    
    
    2,111,412
    
    
    
    2,725,119OPERATING EXPENSESGeneral and administrative
    
    
    2,844,914
    
    
    
    3,110,097Depreciation expense
    
    
    28,545
    
    
    
    35,132Total operating expenses
    
    
    2,873,459
    
    
    
    3,145,229OTHER INCOME (EXPENSE)Interest expense
    
    
    (442,981
    )
    
    
    (432,809
    )Amortization expense of loan discount and intangibles
    
    
    (243,338
    )
    
    
    (476,674
    )Gain on change in fair value of derivative financial
instruments
    
    
    167,639
    
    
    
    677,902Other income (expense), net
    
    
    (10,275
    )
    
    
    1,615Total other income (expense)
    
    
    (528,955
    )
    
    
    (229,966
    )LOSS BEFORE INCOME TAXES
    
    
    (1,291,002
    )
    
    
    (650,076
    )Provision for income taxes
    
    
    (22,214
    )
    
    
    NET LOSS
    
    $
    (1,313,216
    )
    
    $
    (650,076
    )Preferred Stock Dividends
    
    
    (261,934
    )
    
    
    (244,334
    )Net loss attributable to common shareholders
    
    $
    (1,575,150
    )
    
    $
    (894,410
    )Loss per share- basic and fully diluted
    
    $
    (0.009
    )
    
    $
    (0.006
    )Weighted average shares outstanding
    
    
    174,667,048
    
    
    
    140,228,340
  5




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BROOKSIDE TECHNOLOGY HOLDINGS CORP
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2010 and 2009
Unaudited
 2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (1,313,216
    )
    
    $
    (650,076
    )Adjustments to reconcile net loss to net
cash used in operating activities:Depreciation
    
    
    28,545
    
    
    
    35,132Amortization of loan discounts and intangibles
    
    
    243,338
    
    
    
    476,674Non-cash interest expense
    
    
    50,865
    
    
    
    130,254Gain on change in fair value of derivative financial instruments
    
    
    (167,639
    )
    
    
    (677,902
    )Gain on disposal of asset
    
    
    11,848
    
    
    
    Bad debt expense
    
    
    116,465
    
    
    
    26,450Stock based compensation
    
    
    22,357
    
    
    
    16,944(Increase) decrease in:Accounts receivable
    
    
    562,875
    
    
    
    829,394Inventory
    
    
    (298,822
    )
    
    
    49,170Deferred contract costs
    
    
    (18,009
    )
    
    
    94,366Prepaid expenses
    
    
    26,269
    
    
    
    (122,608
    )Deposits and other assets
    
    
    
    
    
    
    271Increase (decrease) in:Accounts payable and accrued expenses
    
    
    493,184
    
    
    
    (71,585
    )Accrued payroll liabilities
    
    
    100,876
    
    
    
    (140,548
    )Billings in excess of revenues
    
    
    (97,810
    )
    
    
    (98,019
    )Income taxes payable
    
    
    
    
    
    
    (1,300
    )Other current liabilities
    
    
    
    
    
    
    43,9661,074,342
    
    
    
    590,659NET CASH USED IN OPERATING ACTIVITIES
    
    
    (238,874
    )
    
    
    (59,417
    )CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of equipment
    
    
    
    
    
    
    (53,064
    )Cash used for restricted cash
    
    
    
    
    
    
    (233,334
    )Cash provided by restricted cash
    
    
    
    
    
    
    750,000Acquisition of US Voice & Data, LLC (USVD) additional EBITDA Earnout
    
    
    
    
    
    
    (61,634
    )NET CASH PROVIDED BY INVESTING ACTIVITIES
    
    
    
    
    
    
    401,968CASH FLOWS FROM FINANCING ACTIVITIESProceeds from long term debt
    
    
    151,900
    
    
    
    285,253Repayment of long term debt
    
    
    (14,360
    )
    
    
    (798,854
    )NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    137,540
    
    
    
    (513,601
    )NET DECREASE IN CASH
    
    
    (101,334
    )
    
    
    (171,050
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    196,424
    
    
    
    1,204,191CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    95,090
    
    
    $
    1,033,141SUPPLEMENTAL DISCLOSUREIncome taxes paid
    
    $
    22,214
    
    
    $
    Interest paid
    
    $
    493,846
    
    
    $
    302,555Non-cash financing and investing activitiesAccretion of preferred stock dividend
    
    $
    261,934
    
    
    
    244,334Accrued interest added to note payable balance
    
    $
    75,302
    
    
    $
    35,253Conversion of note payable and accrued interest to common stock
    
    
    30,277
    
    
    
    
  6




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 1  Basis of Presentation and Nature of Business
 Basis of Presentation
  Operations
  nd
 Background/Name Change/Redomestication
  7




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 1  Nature of Business (continued)
 Redomestication
   US Voice & Data, LLC
  Standard Tel Networks, LLC
  Note 2  Liquidity and Capital Resources
   8




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 2  Liquidity and Capital Resources (continued)
    Note 3  Significant Accounting Policies
  Principles of Consolidation
  Use of Estimates
  9




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 3  Significant Accounting Policies (continued)
 Financial Instruments
  Redeemable Securities
  Convertible Securities With Beneficial Conversion Features
  Derivative Financial Instruments at Fair Value.
   o

    
    The Company effecting a merger or consolidation with another entityo

    
    The Company sells all or substantially all of the Companys assetso

    
    The Companys shareholders approve a tender or exchange offer, oro

    
    The Companys holders of the common stock exchange their shares for securities or cash
  10




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 3  Significant Accounting Policies (continued)
 Warrants
 Derivatives and Hedging
Activities
 Goodwill and Intangibles
   11




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 3  Significant Accounting Policies (continued)
 Reclassifications
  Income taxes
    Earnings Per Common Share
   12




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 3  Significant Accounting Policies (continued)
 Stock Based Compensation
  Recent Accounting Pronouncements
 Fair Value Measures
  Accounting Guidance Not Yet Effective
     13




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 3  Significant Accounting Policies (continued)
  Note 4 Billings in Excess of Revenues
  March 31,
    
    
    December 31,2010
    
    
    2009Customer deposits and deferred income on installation contracts
    
    $
    213,196
    
    
    $
    247,682Deferred revenue on maintenance contracts
    
    
    2,039,059
    
    
    
    2,102,383$
    2,252,255
    
    
    $
    2,350,065
 Note 5 Accounts Payable and Accrued Expenses
  March 31,
    
    
    December 31,2010
    
    
    2009Accounts payable, trade
    
    $
    2,626,982
    
    
    $
    2,175,376Accrued interest
    
    
    319,182
    
    
    
    306,954Accrued warranty liability
    
    
    154,231
    
    
    
    154,231Other accrued expenses
    
    
    121,193
    
    
    
    91,843Total
    
    $
    3,221,588
    
    
    $
    2,728,404
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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 6 Long Term Debt
  March 31,
    
    
    December 31,2010
    
    
    2009Note payable to an individual,
unsecured, accruing interest at 2%
per annum, with monthly payments of
$5,215 due May 1, 2010.
    
    $
    82,869
    
    
    $
    82,869Note payable to USVD Sellers,
unsecured, accruing interest at 0%
per annum, due in installments over
3 years with a maturity date of
September 26, 2009. Currently in
litigation. Please see Note 7 
Commitments and Contingencies 
Litigation.
    
    
    850,000
    
    
    
    850,000Notes payable to an individual,
unsecured, accruing interest at 7%
per annum, with monthly payments of
$1,130 due May 1, 2011. On March 15,
2010, the Company converted this
note payable, which had a balance of
$28,143 plus accrued interest of
$2,134, to 4,500,000 in common
stock.
    
    
    
    
    
    
    28,143Note payable to executive officer
and shareholders, unsecured,
accruing interest at 7% per annum,
with monthly payments of $968, due
September 1, 2010.
    
    
    16,945
    
    
    
    16,945Notes payable to shareholder,
unsecured, accruing interest at 7%
per annum, with monthly payments of
$6,432 due June 1, 2010. Balance
paid in full in April 2010. Please
see Note 17  Subsequent Events.
    
    
    97,982
    
    
    
    97,982Subordinated Note Payable to Vicis
Capital Master Fund, accruing
interest at 10%, maturing April 15,
2010, subordinated to the Chatham
senior note. Net of discount of $0
and $1,784, respectively. (STN
acquisition.) Balance converted to
Series A Stock in April 2010.
Please see note 17  Subsequent
Events.
    
    
    1,500,000
    
    
    
    1,498,216Senior note payable, Chatham
Investment Fund III, LLC and Chatham
Investment Fund III QP, LLC,
accruing interest at the LIBOR rate
plus 9.00%, monthly principal
payments of $83,333 beginning March
2011, with the balance due on the
third anniversary of the closing
date of September 23, 2012, net of
unamortized discount of $1,441,361
and $1,684,699, respectively. (STN
acquisition)
    
    
    6,139,148
    
    
    
    5,820,507Secured notes payable to Enterprise
Fleet Services, accruing interest at
5% per annum, with monthly payments
of $4,941, with various maturities
ranging from August 2010 through May
2012. Notes are secured by
vehicles.
    
    
    62,097
    
    
    
    11,446Secured notes payable to NEC
Financial Services, accruing
interest at 11.25% with monthly
payments of $1,128, with a maturity
date of February 25, 2011. Note is
secured by testing equipment.
    
    
    29,593
    
    
    
    24,484Total long term debt
    
    
    8,778,634
    
    
    
    8,430,592Less current portion
    
    
    (2,599,345
    )
    
    
    (8,413,200
    )Long term portion
    
    $
    6,179,289
    
    
    $
    17,392
  Years Ending December 31,
    
    Gross2010
    
    $
    2,599,3452011
    
    
    866,6902012
    
    
    6,753,9602013
    
    
    2014
    
    
    10,219,995Less: Unamortized discounts
    
    
    (1,441,361
    )Net of Discounts
    
    $
    8,778,634
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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 6 Long Term Debt (Continued)
 Change in unamortized discount and loan costs of the Note 
  Note 7  Commitments and Contingencies
 Leases
  2010 (remainder)
    
    $
    304,4782011
    
    
    311,1942012
    
    
    282,7942013
    
    
    135,5242014
    
    
    46,766
  Liquidated Damages Under Registration Payment Arrangements
  16




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 7  Commitments and Contingencies (continued)
 Litigation
        17




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 7  Commitments and Contingencies (continued)
   Risk Management
  Note 8  Related Party Transactions
 Litigation
 18




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 9  Series A 8% Convertible Preferred Stock
       19




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 9  Series A 8% Convertible Preferred Stock (continued)
  Note 10  Cost of Sales
  March 31,2010
    
    
    2009Equipment costs
    
    $
    903,040
    
    
    $
    1,759,211Contract labor
    
    
    2,600
    
    
    
    5,615Direct labor
    
    
    503,641
    
    
    
    334,939Sales commissions and selling costs
    
    
    122,069
    
    
    
    128,394Lite warranty costs
    
    
    23,429
    
    
    
    30,919Other costs
    
    
    5,884
    
    
    
    17,102$
    1,560,663
    
    
    $
    2,276,180
 Note 11  Employee Benefit Plan
    20




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 12  Stock-Based Compensation
  Stock options.
  2007 Stock Incentive Plan
     WeightedAverageOptions
    
    
    Exercise PriceOutstanding at December 31, 2009
    
    
    21,200,000
    
    
    $
    0.03Granted during 2010
    
    
    10,560,000
    
    
    $
    0.01Forfeited or expired
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Outstanding at March 31, 2010
    
    
    31,760,000
    
    
    $
    0.02Vested and exercisable at March 31, 2010
    
    
    18,266,667
    
    
    $
    0.03
 21




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##### Table of Contents



Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 12  Stock-Based Compensation (continued)
  Number of Shares
    
    Year Vested2,633,333
    
    2010 (Remainder)3,820,000
    
    
    20113,520,000
    
    
    20123,520,000
    
    
    2013
 Valuation Assumptions
   Three Months EndedMarch 31,2010
    
    2009Employee stock options:Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Volatility factor
    
    
    181.0
    %
    
    
    176.1
    %Risk-free interest rate
    
    
    2.38
    %
    
    
    4.70
    %Expected term (years)
    
    
    10
    
    
    
    10Weighted-average fair value
of options granted during the
periods
    
    $
    0.01
    
    
    $
    0.01
  22




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Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 12  Stock-Based Compensation (continued)
  Three Months Ended March 31,2010
    
    
    2009Stock-based compensation expense by caption:Cost of sales
    
    $
    
    
    
    $
    Selling, general and administrative
    
    
    22,357
    
    
    
    16,944Total stock-based compensation expense
    
    $
    22,357
    
    
    $
    16,944
  Note 13  Warrants
 Warrants
  Outstanding
    
    
    Exercise PriceSeries A *
    
    
    69,583,968
    
    
    $
    0.01Series B
    
    
    77,081,260
    
    
    $
    0.01Series C
    
    
    13,662,105
    
    
    $
    0.01Series D **
    
    
    25,080,000
    
    
    $
    0.01Series E
    
    
    61,273,835
    
    
    $
    0.01Series F
    
    
    350,000,000
    
    
    $
    0.01Chatham
    
    
    140,930,835
    
    
    $
    0.01Total warrants
    
    
    737,612,003
 
 *
    
    Includes 2,628,917 penalty warrants**
    
    Includes 1,080,000 penalty warrants.  Note 14  Goodwill and Purchased Intangible Assets
 (a) Goodwill
  Balance at
    
    
    
    
    
    
    Balance atDec. 31, 2009
    
    
    Impairment
    
    
    March 31, 2010USVD
    
    $
    8,204,318
    
    
    $
    
    
    
    $
    8,204,318STN
    
    
    3,454,936
    
    
    
    
    
    
    
    3,454,936Total
    
    $
    11,659,254
    
    
    $
    
    
    
    $
    11,659,254
 23




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##### Table of Contents



Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 14  Goodwill and Purchased Intangible Assets (continued)
 (b) Purchased Intangible Assets
   Note 15  Derivative Financial Instruments at Fair Value
  2007 Original
    
    
    
    
    
    
    
    
    
    
    2009Series A
    
    
    
    
    
    
    2008 Vicis
    
    
    VicisShareholders
    
    
    Hilco
    
    
    Financing
    
    
    FinancingFinancing
    
    $
    1,280,237
    
    
    $
    6,000,000
    
    
    $
    5,500,000
    
    
    $
    1,000,000Total number of warrants
    
    
    475,478,304
    
    
    
    61,273,872
    
    
    
    250,000,000
    
    
    
    100,000,000Exercise Price
    
    $
    .01
    
    
    $
    0.137
    
    
    $
    0.03
    
    
    $
    0.01Term of warrants (years)
    
    
    3-5
    
    
    
    5
    
    
    
    5
    
    
    
    5Debt issuance costs
    
    $
    554,996
    
    
    $
    1,659,773
    
    
    $
    
    
    
    $
    Face value of debt/equity
    
    $
    2,141,990
    
    
    $
    4,340,227
    
    
    $
    5,500,000
    
    
    $
    1,000,000Fair value of derivative at
Inception
    
    $
    2,886,233
    
    
    $
    18,008,466
    
    
    $
    9,656,069
    
    
    $
    1,925,571Financing expense recorded
    
    $
    2,886,233
    
    
    $
    12,348,466
    
    
    $
    4,156,069
    
    
    $
    925,571
 24




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##### Table of Contents



Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 15  Derivative Financial Instruments at Fair Value (continued)
  20093/31/09
    
    6/30/09
    
    9/30/09
    
    12/31/09Derivative
financial
instrument at
opening balance
sheet date
    
    $
    12,016,463
    
    
    $
    11,338,561
    
    
    $
    7,512,529
    
    
    
    3,619,902Fair value of new
derivative During
the period
    
    
    
    
    
    
    1,925,571
    
    
    
    
    
    
    
    2,886,233Change in estimated
fair market Value
of derivative
financial
Instrument
    
    
    (677,902
    )
    
    
    (5,751,603
    )
    
    
    (3,892,627
    )
    
    
    (68,588
    )Derivative
financial
instrument at
closing balance
sheet date
    
    $
    11,338,561
    
    
    $
    7,512,529
    
    
    $
    3,619,902
    
    
    $
    6,437,547
 3/31/10Derivative financial instrument at
opening balance sheet date
    
    $
    6,437,547Fair value of new derivative during the
Period
    
    
    Change in estimated fair market
Value of derivative financial instrument
    
    
    (167,639
    )Derivative financial instrument at
Closing balance sheet date
    
    $
    6,269,909
  25




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##### Table of Contents



Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 16  Segment Information
     Three months ended March 31, 2010:
 Income (loss)
    
    
    Net FixedRevenue
    
    
    before income taxes
    
    
    AssetsSTN
    
    $
    1,483
    
    
    $
    (316
    )
    
    $
    67USVD
    
    
    1,975
    
    
    
    40
    
    
    
    188BTP/BKSD
    
    
    214
    
    
    
    (1,015
    )
    
    
    61$
    3,672
    
    
    $
    (1,291
    )
    
    $
    316
 Three months ended March 31, 2009:
 Income (loss)
    
    
    FixedRevenue
    
    
    before income taxes
    
    
    AssetsSTN
    
    $
    2,186
    
    
    $
    151
    
    
    $
    123USVD
    
    
    2,609
    
    
    
    60
    
    
    
    254BTP/BKSD
    
    
    206
    
    
    
    (861
    )
    
    
    85$
    5,001
    
    
    $
    (650
    )
    
    $
    462
 Other Segment Information
  26




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##### Table of Contents



Brookside Technology Holdings Corp.
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 17  Subsequent Events
   Vicis Purchase of 3,000,000 Shares of Series A Stock
  Chatham Default Waiver
   27




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Item 2. Managements Discussion and Analysis or Plan of Operations
 The information presented in this section should be read in conjunction with our audited
consolidated financial statements and related notes for the periods ended December 31, 2009 and
2008 included in our Form 10-K, as filed with the Securities and Exchange Commission, as well as
the information contained in the consolidated financial statements, including the notes thereto,
appearing in this report. This discussion contains forward-looking statements reflecting our
current expectations that involve risks and uncertainties. Actual results and the timing of events
may differ materially from those contained in these forward-looking statements due to a number of
factors, including those discussed in the section entitled Risk Factors of our Form 10-K for the
year ended December 31, 2009, and elsewhere in this report.
 General
 DESCRIPTION OF BROOKSIDE TECHNOLOGY HOLDINGS CORP.S BUSINESS
 Operations
  nd
 Background/Name Change/Redomestication
    28




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##### Table of Contents



Acquisition of USVD
  Increase in Authorized Shares
  Vicis Equity Infusion
     Acquisition of Standard Tel Networks, LLC
  29




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##### Table of Contents



RECENT DEVELOPMENTS
 Recent Financings
   Results of Operations
  Revenues, Cost of Sales and Gross Margins
    30




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##### Table of Contents



General and Administrative Expenses
   Amortization Expense
  Interest Expense
  Gain on Change in Fair Value of Derivative Financial Instruments
  Loss on Impairment of Goodwill
   Income Taxes
   31




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##### Table of Contents



Net (Income) Loss
  Liquidity and Capital Resources
 Additional Capital
      Three Months  Ended March 31Category
    
    2010
    
    
    2009Net cash used in operating activities
    
    $
    (238,874
    )
    
    
    (59,417
    )Net cash provided by investing activities
    
    
    
    
    
    
    401,968Net cash provided by (used in) financing activities
    
    
    137,540
    
    
    
    (513,601
    )Net increase (decrease) in cash
    
    $
    (101,334
    )
    
    $
    (171,050
    )
  32




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##### Table of Contents



Net Cash Used in Operations
  Net Cash Used in Investing Activities
  Net Cash Provided by Financing Activities
  Cash and Cash Equivalents
   33




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Critical Accounting Policies
  Revenue Recognition
    Stock-Based Compensation.
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##### Table of Contents



Valuation of Long-Lived Assets Including Acquired Intangibles.
  Impairment of Excess of Purchase Price Over Net Assets Acquired.
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4T. Controls and Procedures
 Disclosure Controls and Procedures
    35




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Managements Annual Report on Internal Control Over Financial Reporting
        36




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Changes in Internal Control Over Financial Reporting
  37




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
         38




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##### Table of Contents



Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. EXHIBITS
 Exhibit 31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934.Exhibit 31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934.Exhibit 32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Exhibit 32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 39




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SIGNATURES
  Brookside Technology Holdings CorpBy:
    /s/ Bryan McGuireBryan McGuire, Chief Financial Officer(Principal Financial Officer) Dated: May 14, 2010
 40