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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-K





ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009

Commission File No. 0-51805





ELANDIA
INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 71-0861848                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                               | 
|8200 NW 52nd Terrace, Suite 102, Miami, FL                     |  | 33166                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(305) 415-8830

(Registrants telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.00001 per share





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

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

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  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

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

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filed, a non-accelerated filer or a smaller reporting company as defined in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  | x

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2009, was approximately
$3.8 million as computed by reference to the average bid and ask price of the common stock as quoted on the OTC Bulletin Board on such date.

As of April 15, 2010, the number of outstanding shares of common stock, $0.00001 par value per share, of the registrant was
27,630,220.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive information statement of eLandia International Inc. relating to the 2010 annual election of directors to be
filed with the Securities and Exchange Commission no later than 120 days after the end of the registrants 2009 fiscal year are incorporated by reference into Part III of this Form 10-K.









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ELANDIA INTERNATIONAL INC.

FORM 10-K

Fiscal Year Ended December 31, 2009

TABLE OF CONTENTS



|                         |  |                                                                                                              |  |     
|------------------------ |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|Item Number in
Form 10-K |  |                                                                                                              |  | Page
|                         |  | PART I                                                                                                       |  |     
|                         |  |                                                                                                             
|ITEM 1.                  |  | BUSINESS                                                                                                     |  | 2   
|                         |  |                                                                                                             
|ITEM 1A.                 |  | RISK FACTORS                                                                                                 |  | 10  
|                         |  |                                                                                                             
|ITEM 1B.                 |  | UNRESOLVED STAFF COMMENTS                                                                                    |  | 20  
|                         |  |                                                                                                             
|ITEM 2.                  |  | PROPERTIES                                                                                                   |  | 20  
|                         |  |                                                                                                             
|ITEM 3.                  |  | LEGAL PROCEEDINGS                                                                                            |  | 20  
|                         |  |                                                                                                             
|ITEM 4.                  |  | RESERVED                                                                                                     |  | 22  
|                         |  |                                                                                                             
|                         |  | PART II                                                                                                      |  |     
|                         |  |                                                                                                             
|ITEM 5.                  |  | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |  | 22  
|                         |  |                                                                                                             
|ITEM 6.                  |  | SELECTED FINANCIAL DATA                                                                                      |  | 23  
|                         |  |                                                                                                             
|ITEM 7.                  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        |  | 23  
|                         |  |                                                                                                             
|ITEM 7A.                 |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |  | 37  
|                         |  |                                                                                                             
|ITEM 8.                  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  |  | 38  
|                         |  |                                                                                                             
|ITEM 9.                  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                         |  | 89  
|                         |  |                                                                                                             
|ITEM 9A(T).              |  | CONTROLS AND PROCEDURES                                                                                      |  | 89  
|                         |  |                                                                                                             
|ITEM 9B.                 |  | OTHER INFORMATION                                                                                            |  | 91  
|                         |  |                                                                                                             
|                         |  | PART III                                                                                                     |  |     
|                         |  |                                                                                                             
|ITEM 10.                 |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       |  | 91  
|                         |  |                                                                                                             
|ITEM 11.                 |  | EXECUTIVE COMPENSATION                                                                                       |  | 91  
|                         |  |                                                                                                             
|ITEM 12.                 |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS               |  | 91  
|                         |  |                                                                                                             
|ITEM 13.                 |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE                                     |  | 91  
|                         |  |                                                                                                             
|ITEM 14.                 |  | PRINCIPAL ACCOUNTING FEES AND SERVICES                                                                       |  | 92  
|                         |  |                                                                                                             
|                         |  | PART IV                                                                                                      |  |     
|                         |  |                                                                                                             
|ITEM 15.                 |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   |  | 92  



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This Annual Report on Form 10-K contains forward-looking statements within the meaning of
the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, and are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those
expressed or implied in such forward-looking statements. See Item 1A. Risk Factors. Unless otherwise indicated in this Annual Report or the context otherwise requires, all references in this Current Report to eLandia, the
Company, us, our or we are to eLandia International Inc.

PART I



|ITEM 1. | BUSINESS
|------- | --------

eLandia is a
provider of Information and Communications Technology (ICT) products and services to small, medium-sized and large businesses as well as government entities and service providers, primarily in Latin America. We have presence in over 17
countries, including Argentina, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Trinidad & Tobago, Venezuela and the United States. eLandia also operates in the South Pacific region through our
wholly-owned subsidiary, AST Telecom, LLC (AST) which offers mobile communications, Internet services and cable TV services (Moana TV) in American Samoa under the Bluesky Communications brand. In addition, we also own 66 2/3% of the
American Samoa Hawaii Cable, LLC (ASH Cable) in partnership with the American Samoa Government, providing high-speed networking connections between the territory of American Samoa and the rest of the world.

We provide innovative technology solutions that help customers increase efficiency, improve business agility, decrease costs, and
maximize their existing ICT investments in order to achieve competitive advantages. Our service portfolio currently consists of three core business offerings: Network Integration, Managed Services and Business Transformation Solutions, all of which
assist our customers compete effectively in the global economy. We also hold more than 38 certifications and specializations from leading technology companies, including Cisco Systems, Inc. (Cisco), Microsoft Corporation
(Microsoft) and others.

eLandia corporate headquarters are located at 8200 NW 52 Terrace Doral, Florida 33166.
The telephone number is (305) 415-8830.

Company background

Our current operations began in 2006 when eLandia acquired Datec and AST (also known as Bluesky Communications). AST represents our
operations in American Samoa. In 2007, we expanded by completing the acquisition of a 70% majority interest in eLandia/Desca Holdings, LLC (Desca), a network integration company with operations in Latin America. On July 1, 2008, we
acquired Transistemas S.A., an Argentine network integration services provider, through Desca. On October 15, 2008, we acquired Center of Technology Transfer Corporation (CTT), a leading Latin American IT education company. On
March 27, 2009, we acquired the assets of Pacific Island Cable, a cable TV operator located in American Samoa, through American Samoa Entertainment, Inc.

Recent Events

Modification of Financing Arrangements with Stanford International Bank Ltd. and Restructuring of Capital.

In the latter half of 2008 and the beginning of 2009, without any advance warning, we were advised by Stanford International Bank Ltd.
(SIBL), our then principal stockholder, that due to the deteriorating global economic conditions it would not be able to extend the full amount of its $40 million loan commitment to us under a Credit Agreement, dated July 21, 2008
(the Credit Agreement). As a result of these developments, on February 6, 2009, as part of a modification to our capital structure, we entered into a Modification Agreement (the Modification Agreement) with SIBL.
Pursuant to the Modification Agreement, our financing arrangement with SIBL was substantially revised. Specifically, under the terms of the Modification Agreement:



| |  |  | we agreed to further amend the Credit Agreement (Fourth Amendment) to terminate SIBLs obligation to fund the balance of $28 million
committed by SIBL under the Credit Agreement;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in partial consideration of our agreement to terminate the Credit Agreement, SIBL agreed to convert the $12 million outstanding principal amount under
the Credit Agreement into 1,777,778 shares of our Series B Convertible Preferred Stock (Series B Preferred Stock) and the accrued interest was cancelled;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | as a result of the Fourth Amendment and the termination of the Credit Agreement, all related loan, security and collateral documents were also released
and terminated. This included the release of guarantees granted by our subsidiaries, eLandia South Pacific Holdings, Inc. and eLandia Technologies, Inc. (the Guarantors), for the benefit of SIBL. In addition, pursuant to the Fourth
Amendment, all security interests and other liens granted to SIBL under securities pledge agreements executed by us and each of the Guarantors were satisfied and discharged and all collateral pledged was released;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBL agreed to surrender for cancellation 16,148,612 shares of our common stock thereby reducing to 49.9% SIBLs ownership of our outstanding
common stock;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | we granted SIBL an option, exercisable through March 31, 2009, to purchase an additional 592,593 shares of our Series B Preferred Stock for an
aggregate purchase price of $4 million (the Option). This Option has expired unexercised;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBL agreed to modify the Series B Preferred Stock as follows:
| | - |  | --------------------------------------------------------------



| |  |  | setting the initial conversion rate (the Conversion Rate) for the shares of the Series B Preferred Stock at a rate of seven shares of our
common stock for each eight shares of Series B Preferred Stock;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | providing for an adjusted Conversion Rate of 3.5 shares of common stock for every eight shares of Series B Preferred Stock in the event that SIBL
did not exercise the Option;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | providing that the shares of Series B Preferred Stock would be automatically converted into shares of our common stock at the then effective Conversion
Rate to the extent necessary for SIBL to maintain ownership of 49.9% of the then total amount of issued and outstanding shares of our common stock;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | removing all voting rights of the Series B Preferred Stock;
| | - |  | -----------------------------------------------------------



| |  |  | providing that the shares of Series B Preferred Stock would have no more rights than our common stock, other than a liquidation preference; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | adding certain protective provisions providing that the following actions cannot be taken without prior approval of the holders of the majority of the
Series B Preferred Stock outstanding: (a) any change to the rights, preferences or privileges of the Series B Preferred Stock; or (b) the creation of a new class or series of stock superior to the Series B Preferred Stock.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBL agreed to place all of its shares of our common stock and Series B Preferred Stock in a voting trust pursuant to a voting trust agreement;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | all registration rights agreements between us and SIBL were terminated with no further obligation on our part to file any registration statement for
the benefit of SIBL;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we agreed to amend the Executive Employment Agreement of Pete R. Pizarro, our Chief Executive Officer, who would have otherwise been entitled to
terminate his employment for Good Reason; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBL agreed to the transfer by February 28, 2009 to us of $2.35 million of indebtedness of our subsidiary, Desca, due to an affiliate of SIBL in
exchange for 344,444 shares of Series B Preferred Stock, or, if such transfer did not occur, a further cancellation of 1,801,740 shares of our common stock held under the voting trust agreement. Such transfer and exchange was not made by SIBL,
however, the Voting Trustee has not surrendered the 1,801,740 shares of common stock for cancellation pending relief from the February 16, 2009 court order described below.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In connection with the termination of the Credit Agreement, pursuant to a certain Voting Trust Agreement, dated February 6, 2009, by
and among the Company, Mr. Pizarro, and SIBL (the Voting Trust Agreement), SIBL agreed to deposit 12,364,377 shares of our common stock and 4,118,263 shares of Series B Preferred Stock, representing all shares of our capital stock
then owned by SIBL, into a voting trust (the Voting Trust). Pursuant to the Voting Trust Agreement, SIBL appointed Mr. Pizarro to act as the trustee. With certain limited exceptions, Mr. Pizarro was granted discretionary voting
power with respect to all shares of stock placed in the Voting Trust by SIBL, except that Mr. Pizarro is required to vote the shares in accordance with and in the same proportion as the holders of the remaining outstanding shares of our common
stock voting on any of the following matters (which will be determined by a vote of the shares other than those represented by the voting trust certificates): (i) the sale of the Company whether by merger, consolidation, sale of all or
substantially all the assets or other similar transaction; and (ii) if the Company desires to increase the amount of shares of our common stock issuable pursuant to any stock option or other equity plan in an amount exceeding the greater of
9,500,000 shares of our common stock or 15% of the total amount of outstanding common stock. Additionally, SIBL retained its right to vote with respect to certain issues pertaining to the Series B Preferred Stock including any change to the rights,
preferences or privileges of the Series B Preferred Stock or the creation of a new class or series of stock superior to the Series B Preferred Stock.

As part of the arrangements with SIBL, effective February 6, 2009, we amended our Certificate of Incorporation with the filing of an
Amended and Restated Certificate of Designations, Rights and Preferences of Series B Preferred Stock (Amended and Restated Certificate of Designation). Under the Amended and Restated Certificate of Designation, all voting rights of the
Series B Preferred Stock were removed. As a result of the Amended and Restated Certificate of Designation, the Series B Preferred Stock has the following protective provisions:



| |  |  | a liquidation preference; and
| | - |  | -----------------------------



| |  |  | at all times that shares of Series B Preferred Stock remain outstanding, we may not, without prior approval of the holders of the majority of the
Series B Preferred Stock outstanding:
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | change the rights, preferences or privileges of the Series B Preferred Stock; or
| | - |  | --------------------------------------------------------------------------------



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| |  |  | create a new class or series of stock having a preference over or otherwise being superior to the Series B Preferred Stock.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------

In addition, the Conversion Ratio for the Series B Preferred Stock, previously one share of our common
stock for each share of Series B Preferred Stock, was modified such that the shares of Series B Preferred Stock are now convertible into common stock based on a ratio of 3.5 shares of common stock for every eight shares of Series B Preferred Stock.

Modification to Mr. Pizarros Employment Agreement

On February 6, 2009, we entered into an amendment with Pete R. Pizarro, our Chief Executive Officer (Mr. Pizarro),
to his Executive Employment Agreement (the Amendment). Under the Amendment, Mr. Pizarro waived any breach by us by reason of our entry into the Modification Agreement and released us of any liabilities resulting from such breach. In
consideration of Mr. Pizarro agreeing to enter into the Amendment, we agreed to provide certain additional compensatory benefits to Mr. Pizarro as follows:



| |  |  | The exercise price with respect to options to purchase 3,122,000 shares of our common stock previously granted pursuant to Mr. Pizarros
Executive Employment Agreement was reduced to $0.45 per share;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mr. Pizarro was granted options to purchase an additional 1,000,000 shares of our common stock at an exercise price of $0.45 per share, which
options vest equally on a monthly basis over a three-year period beginning February 2009, if and only if Mr. Pizarro remains continuously employed by us until each vesting date, subject to other terms and conditions;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All unvested shares of our common stock granted pursuant to Mr. Pizarro as part of a 750,000 share restricted stock award pursuant to
Mr. Pizarros Executive Employment Agreement immediately vested, and all contractual restrictions with respect to such shares were terminated; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mr. Pizarros full bonus for 2008 in the amount of $375,000, as provided in his Executive Employment Agreement, was paid promptly following
the execution of the Amendment.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, Mr. Pizarros Executive Employment Agreement was
further amended to provide as follows:



| |  |  | during 2009, Mr. Pizarro was paid a guaranteed bonus of $375,000, payable in equal bi-monthly installments commencing in February 2009;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we amended our Policy Governing Insider Trading (the Policy), to permit, with our approval, (a) the adoption of written plans for
trading our securities in accordance with SEC Rule 10b5-1(c) (a Trading Plan), and (b) transactions exempt from the Policy made pursuant to approved Trading Plans;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | following the amendment to the Policy described above, we agreed to approve a Trading Plan for Mr. Pizarro for certain shares of our common stock
owned by Mr. Pizarro; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we agreed to adopt a written Senior Management Incentive Compensation Plan applicable to years 2010 and beyond.
| | - |  | ---------------------------------------------------------------------------------------------------------------

Financial Collapse of SIBL and its Affiliates

On or about February 16, 2009, pursuant to an action brought by the SEC against SIBL and certain of its affiliates, including its
owner Robert Allen Stanford, alleging, among other things, securities law fraud under both the Securities Act of 1933 and the Securities Exchange Act of 1934, the United States District Court for the Northern District of Texas, Dallas Division,
issued an order appointing a Receiver for all the assets and records (the Receivership Estate) of SIBL, Stanford Group Company, Stanford Capital Management, LLC, R. Allen Stanford, James M. Davis and Laura Pendergest-Holt and of all
entities they own or control. The order directs the Receiver to take control and possession of and to operate the Receivership Estate, and to perform all acts necessary to conserve, hold, manage and preserve the value of the Receivership Estate.
Subsequent to the issuance of the court order, and in accordance with such order, the Voting Trustee has not (i) surrendered for cancellation any shares of our common stock, or (ii) converted any shares of our Series B Preferred Stock into
common stock. On or about February 17, 2009, the SEC formally charged Mr. Stanford and three of his companies, including SIBL, alleging a fraudulent, multi-billion dollar investment scheme. The SEC also charged SIBL chief financial officer
James Davis and Stanford Financial Group chief investment officer Laura Pendergest-Holt in the enforcement action.

In
addition, on February 19, 2009, the Antiguan Financial Services Regulatory Commission appointed two joint-receivers for all of the undertaking, property and assets of SIBL and Stanford Trust Corporation, Ltd. (STCL) and said
appointment was subsequently ratified by the Eastern Caribbean Supreme Court in the High Court of Justice of Antigua and Barbuda on February 26, 2009. The order directs (i) the joint-receivers to take into their custody and control all the
property, undertakings and other assets of SIBL and STCL, and (ii) SIBL and STCL to restrain from disposing of or otherwise dealing with any of their assets, entering into any agreements or arrangement to sell, transfer or otherwise dispose of
any of their assets, or carrying on of transacting business of any kind whatsoever under the license granted by the Antiguan Financial Services Regulatory Commission without the consent, management and supervision of the Financial Services
Regulatory Commission.



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On May 15, 2009, the district court in Dallas ruled that the Antiguan liquidators for
SIBL are entitled to seek Chapter 15 bankruptcy protection for SIBL under U.S. law. A Chapter 15 filing assists in resolving cases involving debtors, assets and claimants in multiple countries. The Antiguan liquidators for SIBL are seeking the
authority to file for bankruptcy as a means of safeguarding SIBLs assets. The potential impact on us from such a bankruptcy filing is uncertain.

On June 2, 2009, we received a letter from the U.S. receiver clarifying that the assets and business operations of eLandia and our
subsidiaries are not part of the Stanford Financial Group Receivership Estate. The receivers letter did state that the voting trust certificates issued to SIBL, representing SIBLs interest in the shares of our capital stock deposited in
the Voting Trust, did constitute part of the Stanford Financial Group Receivership Estate.

On June 19, 2009, a federal
criminal indictment was issued against Mr. Stanford and several other executives and officers of SIBL, including the former chief investment officer, former chief accounting officer and former global controller. The indictment charges these
individuals with fraud, obstruction and other crimes related to SIBL and other Stanford Financial companies.

On July 16,
2009, the receiver requested approval from the court to engage a private equity advisor to assist the receiver to properly manage the investments in the Receivership Estate, assess their value and identify potential buyers, thereby maximizing the
value to the Receivership Estate. These investments include the voting trust certificates issued to SIBL representing SIBLs interest in the shares of our capital stock deposited in the voting trust.

Sale of South Pacific Subsidiary

Through April 17, 2009, we held a 50% interest in Datec PNG, Ltd. (Datec PNG). On April 17, 2009 we sold our 50%
ownership interest in Datec PNG to Steamships Ltd. As a result of the sale of Datec PNG, we re-measured the value of the net assets to be sold at the lower of the carrying amount or fair value less selling costs. We determined that the sale price of
$5,610,000 in cash, less selling costs of $22,427, was the best indicator of the fair value of the assets to be sold. Accordingly, we recorded an impairment charge related to the goodwill and intangible assets of $10,827,252 during the three months
ended March 31, 2009 and a loss upon the closing of the sale, including the results of operations for the 17 day period ending April 17, 2009, of $198,960. The write off of the goodwill and the loss resulted in a net loss on the sale of
Datec PNG of $11,026,212, which is included in discontinued operations.

Term Loan Agreement

On June 8, 2009, we entered into a Loan Agreement (Term Loan Agreement) with ANZ Finance American Samoa, Inc. and ANZ
Amerika Samoa Bank (jointly, ANZ) whereby ANZ provided $16,672,000 in the form of a term loan to our subsidiaries, American Samoa Hawaii Cable, LLC (ASHC) and Samoa American Samoa Cable, LLC (SAS). ASHC and SAS
are the borrowers under the facility and eLandia and our subsidiary, American Samoa Hawaii Undeployed Cable, LLC (ASHUC) are the guarantors. The loan is principally secured by substantially all of the assets and operations of ASHC, SAS
and ASHUC. The loan bears interest at the U.S. prime rate plus 2% and is due on June 3, 2016. The proceeds of the loan were used to fund the construction, installation and delivery to customers of a fully operational undersea fiber optic cable
linking American Samoa and Samoa to Hawaii and providing improved long distance telecommunication and data services. In connection with the Term Loan Agreement, we executed a guaranty in favor of ANZ (the Guaranty). Pursuant to the
Guaranty, we have unconditionally guaranteed the repayment and other obligations of ASHC and SAS under the Term Loan Agreement.

Purchase of Remaining Portion of Desca

On July 17, 2009 we consummated a purchase and sale transaction under a Securities Purchase Agreement effective July 1, 2009
(the 30% Purchase Agreement) with Jorge Enrique Alvarado Amado (Alvarado). Pursuant to the 30% Purchase Agreement, we purchased 3,000,000 Common Units (30% Units) of Desca for an aggregate purchase price of $1.9
million, as described below. As a result of our purchase under the 30% Purchase Agreement, effective July 1, 2009, Desca became our wholly-owned subsidiary.

Under the terms of the 30% Purchase Agreement we have: (i) made a payment to Alvarado of $500,000 in cash, (ii) executed and
delivered to Alvarado a $500,000 promissory note payable on July 1, 2010, and (iii) issued to Alvarado 2,500,000 shares of our common stock, valued at $0.9 million, of which (A) one-half of such shares were deposited with an escrow
agent to be held and released in accordance with the terms of an escrow agreement, and (B) one-half of such shares were delivered to Alvarado. The promissory note provides for interest to accrue at 6% per annum and all payments of
principal and accrued interest to be paid on the maturity date of July 1, 2010. The 30% Purchase Agreement provides that the purchase price will be reduced to the extent that the value of Descas net assets at closing is determined to be
less as compared to June 30, 2010. Alvarado will be responsible to pay us an amount equal to 30% of any deficiency and such amount will be deemed a claim for indemnification under the 30% Purchase Agreement.



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In addition to the purchase price described above, we agreed to pay to Alvarado contingent
consideration (the Contingent Consideration) in the event Desca achieved certain financial performance targets for 2009 identified in the 30% Purchase Agreement. The aggregate amount of the Contingent Consideration was, at
Alvarados option, payable as follows: (i) up to an additional maximum amount of 5,000,000 restricted shares of our common stock, (ii) payment of up to a maximum amount of $8,000,000 in cash to be evidenced by an additional
non-interest bearing promissory note payable on December 31, 2013, or (iii) up to an additional maximum amount of 2,500,000 restricted shares of our common stock and payment of up to an additional maximum amount of $4,000,000 in cash to be
evidenced by an additional non-interest bearing promissory note payable on December 31, 2013. However, pursuant to the terms of the Purchase Agreement and as a result of Descas financial performance targets for 2009, we were not required
to pay the Contingent Consideration.

At the closing of the 30% Purchase Agreement, Alvarado also entered into a two-year
amended and restated employment agreement pursuant to which he will serve as chief executive officer of our Networking Group. Alvarado also executed a non-compete agreement containing customary non-compete, non-solicitation, non-disclosure and
non-disparagement covenants. Finally, eLandia and Alvarado executed a termination and release agreement pursuant to which each of the parties agreed to terminate certain prior agreements and to release any claims the parties may have had against one
another arising prior to the date of the 30% Purchase Agreement.

Transistemas Put/Call Agreement

On July 1, 2009, the former owners of Transistemas S.A. (Transistemas Sellers) exercised their option under the Put/Call
Agreement entered into concurrently with the closing of our investment in Transistemas S.A. (Transistemas) effective July 1, 2008. We had a dispute with the Transistemas Seller when they exercised their Put right. On August 27,
2009, we entered in to a Settlement Agreement with the Transistemas Sellers in full and final settlement of the Put/Call Agreement. Pursuant to the terms of the Settlement Agreement, we agreed to pay the Transistemas Sellers $2.6 million as follows:
(i) $260,000 in cash payable on the date of the Settlement Agreement, and (ii) $2,340,000 payable in the form of a non-interest bearing promissory note due on July 15, 2011. In addition, as an inducement to settle the Put obligation
and execute the promissory note, we agreed to issue to the Transistemas Sellers 433,333 shares of our common stock, valued at an aggregate of $156,000.

CTT Purchase Price Adjustment

On October 16, 2008, eLandia and the former owners of Center of Technology Transfer Corporation (CTT Sellers) entered
into a Stock Purchase Agreement (the Purchase Agreement) and Escrow Agreement. Pursuant to the Purchase Agreement and Escrow Agreement, $600,000 of the purchase price was deposited with an escrow agent to satisfy our indemnification
rights pursuant to the Purchase Agreement.

On September 30, 2009, we agreed to settle certain claims relating to the Net
Asset Value of Center of Technology Transfer Corporation (CTT) (as defined in the Purchase Agreement). Pursuant to the terms of the settlement, the CTT Sellers agreed to release the $600,000 escrow amount to us in exchange for the
issuance of 350,000 shares of our common stock to the CTT Sellers, valued at an aggregate of $105,000.

American Samoa

On September 29, 2009, a major earthquake in the South Pacific created a tsunami that sent a surge of water of up to 15
feet into parts of American Samoa. This resulted in power outages and major damage to parts of the island, including portions of our service territory. Our cellular network experienced service delivery issues in the highly affected areas and
our cable TV network was completely destroyed in some areas. Our undersea cable was operational and sustained some minor damage. The financial impact on our operations in American Samoa and as a whole net of insurance reimbursements was
immaterial. While we did have customers that were negatively impacted as a result of issues caused by the tsunami, we do not expect any material long-term negative impact on our operations.

One of the major tuna canneries in the territory has recently shut down its operations. Tuna canneries represent a substantial part of
the economic activity in American Samoa. The closing of a principal cannery has resulted in an increase in unemployed workers in the territory. However, stimulus dollars recently allocated to American Samoa have helped mitigate some of the negative
impact in the short term due to the closings.

Venezuela Currency Remeasurement and Devaluation

In recent years Venezuela has experienced political challenges, difficult economic conditions, relatively high levels of inflation, and
foreign exchange and price controls. The President of Venezuela has the authority to legislate certain areas by decree, and the government has nationalized or announced plans to nationalize certain industries and to expropriate certain companies and
property. These factors may have a negative impact on our business and our financial condition.



Since 2003, Venezuela imposed currency controls and created the Commission of Administration of Foreign Currency (CADIVI)
with the task of establishing detailed rules and regulations and generally administering the exchange control regime. These controls fix the exchange rate between the Bolivar and the U.S. dollar, and restrict the ability to exchange Bolivars for
dollars and vice versa. The near-term effect has been to restrict our ability to repatriate funds from Venezuela in order to meet our cash requirements. In particular, the currency controls in Venezuela have restricted our ability to make payments
to certain vendors in U.S. dollars, causing us to borrow money to meet these obligations and to be subject to credit holds, which have caused delays in the delivery of customer orders thus delaying or causing the loss of sales.



6



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In addition, as of December 31, 2009, we owed approximately $6 million to vendors for
which we are awaiting CADIVI approval to make payments. While these vendors are aware of the challenges involved with transferring money out of Venezuela and have historically extended terms to accommodate these difficulties, there can be no
assurance that they will continue to do so in the future. If these vendors demand payment prior to our obtaining approval to transfer money out of Venezuela from CADIVI, we may be required to utilize cash and other resources from other parts of our
operations, which may, in turn require us to scale back current operations or postpone our plans for expansion.

Historically,
we have utilized the official rate for the remeasurement of our Venezuelan subsidiarys operations from the Bolivar to the U.S. dollar. However, due to the delays in obtaining governmental approvals, starting in January 2009 we began using a
legal indirect parallel market of foreign currency exchange through which companies may obtain foreign currency without requesting it from the government to settle certain of our U.S. dollar-denominated liabilities. In December 2009, we
considered our past and continued intent to use the parallel rate to settle our U.S. dollar-denominated liabilities and the fact that we do not expect to be able to remit dividends at the official rate. In view of these facts and circumstances
existing at the end of 2009, we determined that effective December 31, 2009, we would use the parallel rate to translate the operations of our Venezuelan subsidiary. As a result of this decision, we recorded a pretax loss of $4.4 million. On
January 8, 2010, the Venezuelan government announced the devaluation of the Venezuelan Bolivar. The official rate increased from 2.15 Venezuelan Bolivars to the U.S. dollar to 4.30 for non-essential goods (which is deemed to include
telecommunications services). This change did not have an impact on our consolidated financial statements for 2009 or our decision to use the parallel rate for translation purposes. However, there can be no assurance that the devaluation will not
adversely affect our future operations in Venezuela.

Market

Information and Communications Technology (ICT) is widely recognized as a catalyst in the transformation of businesses and
economies. The current global economic environment is driving businesses around the world to seek new ways to reduce costs and improve efficiency while retaining  or improving  their competitive advantages. Even in difficult times,
businesses continue to invest in technology because they must continue to secure their assets, improve efficiency, work effectively with partners, and increase employee productivity. Businesses in emerging markets have a slight advantage over those
in developed nations because they are often able to leapfrog technology  gaining the advantages of innovation without the encumbrances of extensive legacy installations.

Today, most businesses rely on their ICT infrastructures to compete more effectively. However, with increasing technology complexity and
a shortage of skilled ICT talent, they seek outside technical expertise to manage, enhance, augment, or completely replace in-house ICT organizations. This creates growing demand for ICT companies that can provide a varied portfolio of products and
services that help businesses align their technology architectures with their business strategies. Governments and businesses that want to drive innovation to achieve leadership positions often find that technology innovation and deployment outpace
available talent and skills. Therefore, there is also a significant market opportunity for educating ICT professionals.

Latin
America, where most of eLandias business is focused, emerged from the recession and entered recovery in the third quarter of 2009, when most of the regions main economies grew over the previous quarter. According to the Economic
Commission for Latin America and the Caribbean, Latin American gross domestic product is expected to grow by approximately 4.0% in 2010. Moreover, according to BNamericas, broadband access in Latin America will grow nearly 20% in 2010 with wireless
infrastructure investments reaching nearly $4 billion during the same year. In addition, according to Ciscos Visual Networking Index, for 2008-2013 Latin America will be the worlds fastest growing region in terms of mobile data traffic
at 166% compound annual growth rate creating opportunities for value added services in the region.

eLandia is also present in
American Samoa, a South Pacific territory with a population of approximately 65,000 inhabitants. Based on our market penetration in the cellular communications business and the demographics of American Samoa, we consider the wireless services, data
delivery, long distance and equipment service market to be mature. We believe that future revenue in American Samoa will increase proportionally with economic improvements and, as such, we plan to expand our products and offerings and differentiate
our business by further enhancing our customer service, extending our network and expanding into complementary businesses. In addition, the deployment of the American Samoa Hawaii Cable System (ASH Cable) was completed in 2009 and we expect will
provide additional business opportunities in 2010. In 2009 we completed the acquisition of Pacific Island Cable which offers TV and entertainment services to American Samoa.

Business Strategy

Our strategy is to become the leading technology enabler in Latin America. We are focused on the transformation of people, businesses and
communities by enabling them to compete in the global economy. In todays world, enterprises of all sizes rely on Information and Communication Technologies, and most enterprises rely on strategic solutions partners like eLandia to help them
implement the technology solutions they need. This is a role eLandia has filled for a growing number of companies and government entities in Latin America and the Pacific Rim since our company was founded in 1998. In the recent past we have
witnessed radical changes in our customers challenges and expectations as they build their voice, video and data communications infrastructure. Our organization has also matured and attracted new talent and diverse capabilities to keep pace
with the growing need for complex technological solutions.



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In order to execute our mission and take advantage of the substantial market opportunities
represented by the markets where we operate, our company has created a strategy of becoming the Leading Technology Enabler by focusing on 4 key success drivers:

Extensive regional presence: Our extensive regional footprint in seventeen countries uniquely positions eLandia as a trusted
partner for multinational companies seeking to deploy technology solutions across their operations. Additionally, it also enables us to establish a competitive edge in the marketplace by leveraging the skills and capabilities of our distributed
workforce. We have also become an important asset for our partners and strategic allies to ensure an optimal regional sales and service coverage.

Local Presence: Our regional presence is balanced with strong on the ground capabilities in all our markets in Latin
America, the Caribbean, and the Pacific Rim. We now have 20 offices in 17 countries staffed by more than 700 employees serving thousands of customers. Today we service some of the largest companies and government entities in each market where we
operate.

Strong partnerships with many of the worlds leading technology suppliers: Our solutions and partnership
portfolio has been assembled with the clear objective of enabling our customers to use ICT as a means to transform and grow their business. The eLandia Group family of companies has developed a number of long-term, strategic relationships with
leading technology providers including Cisco, Tandberg, Panduit Microsoft, Google, VM Ware and many others. These strategic relationships expand the breadth and depth of the technologies we can supply to our customers and, accordingly, increase our
value proposition in the marketplace. They also provide us with the opportunity to gain access to advanced technology, new markets, and enhanced access to training and support. Our goal is to continue to expand the reach of these relationships and
develop new, productive partnerships as our footprint in emerging markets continues to grow.

Company and Engineering
Certifications:We are committed to developing and maintaining the highest levels of employee and company certifications as a key differentiator. This commitment provides us with the best access to the most skilled talent pool in our markets.
This has always been and will continue to be one of our most important assets. Our organization values the positive impact that individual technical certifications, company specializations and accreditations provide to the quality of our offerings
and services. In addition to obtaining these qualifications, our company has also been awarded a number of national and international recognitions from companies such as Cisco, Microsoft, Tandberg and others. We are a Cisco Gold certified partner
and have earned more than 38 Cisco certifications including Multinational Master Specialization in Latin America. These acknowledgements validate our commitment to providing our customers and partners with comprehensive capabilities and competencies
in serving their business needs.

We believe these success factors, built within our comprehensive security and best practices
philosophy, provide the solid foundation on which we continue to develop our solutions along three core competencies: network integration, managed services, and business transformation solutions.

Network Integration: At the core of our offerings to our customers, we create tailored ICT solutions integrating products
supplied by our strategic partners. Our solutions empower our customers to effectively increase their employees productivity, enhance customer service, optimize operational costs and lay the foundation for improved bottom line results. Central
to our offerings is our capability to plan, prepare, deploy, implement, operate and optimize secure network ICT solutions for corporations, governments and service providers alike. This capability becomes the foundation for the delivery of our
portfolio of solutions which includes:



| |  |  | unified communications and collaboration services
| | - |  | -------------------------------------------------



| |  |  | visual communications
| | - |  | ---------------------



| |  |  | next-generation data center
| | - |  | ---------------------------



| |  |  | mobility
| | - |  | --------



| |  |  | security
| | - |  | --------

Our Next Generation Network solutions encompass multiple infrastructure and service layers that empower wireline, wireless, cable
operators, over the top operators, broadcast and satellite providers to offer innovative services to their subscribers.

Managed Services: By providing a complete array of services based on our technology solutions, we support our customers in
achieving optimal operations and minimum costs, lower risks and continuous technology refresh. Most importantly, we enable our customers to focus on their own core competencies and less on the challenges of building and maintaining a technology
infrastructure. Our portfolio of Strategic ICT Services includes:



| |  |  | outsourcing
| | - |  | -----------



| |  |  | infrastructure support
| | - |  | ----------------------



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| |  |  | network support
| | - |  | ---------------



| |  |  | managed security
| | - |  | ----------------



| |  |  | managed IP telephony
| | - |  | --------------------



| |  |  | managed TelePresence
| | - |  | --------------------



| |  |  | hosted call centers
| | - |  | -------------------

Our broad experience in deploying large and complex projects has demonstrated that these services require a very robust technology
infrastructure on our end which enables customers to access advanced technology services without a significant capital expense or the need to build internal resources and capabilities.

Business Transformation Solutions: The most impactful component of our strategy focuses on our goal of assisting customers
transform their enterprises using technology. More and more enterprises are recognizing that technology is not just a set of tools to support their operation and management, but also a powerful source of competitive advantage, generating new
opportunities for growth and profitability. In order to help our customers transform their businesses, we develop partnerships with them so that we understand their capabilities, strategies, and markets and deploy technology-based solutions that
lead to fundamental change. Our skills and capabilities enable us to facilitate our customers transformational process in achieving new levels of growth. We achieve this through our focus on three key components of our business transformation
implementation model:



| |  |  | education and talent development
| | - |  | --------------------------------



| |  |  | communications-enabled business applications
| | - |  | --------------------------------------------



| |  |  | technology transformation
| | - |  | -------------------------

We believe that broadening our solution sets and capabilities will help us build deeper relationships with customers and serve them more
efficiently and effectively. Our holistic approach to ICT, coupled with our ability to identify strategic opportunities to apply and integrate technology, should make us a better partner for our customers throughout the markets we serve
and help them achieve substantial value from their ICT investments. Our end-to-end offerings, which combine our three core competencies (network integration, managed services, and business transformation solutions), provide a variety of ways to
engage with our customers at multiple levels, thus generating multiple sources of revenue and long term partnerships with our customers.

Customers

We service more than 20,000 subscribers in American Samoa and in excess of 3,000 enterprise customers throughout Latin America. Our
customers include many of the leading financial services, telecommunication, government, education, manufacturing, and media organizations in the countries in which we operate. In addition, we also provide services to globally recognized companies
in helping them meet their integration, education, and services needs throughout Latin America as a regionally integrated provider.

Competition

The market for ICT services is highly competitive, regionally fragmented, and rapidly changing. We believe that customers evaluate a
potential ICT service partner on the following attributes:



| |  |  | Ability to deliver products and services on a regional basis;
| | - |  | -------------------------------------------------------------



| |  |  | Quality, reliability and scope of services;
| | - |  | -------------------------------------------



| |  |  | Certifications and specializations held by employees and organizations;
| | - |  | -----------------------------------------------------------------------



| |  |  | Ability to attract and retain skilled professionals;
| | - |  | ----------------------------------------------------



| |  |  | Financial discipline;
| | - |  | ---------------------



| |  |  | Premium relationships with vendors for service and pricing; and
| | - |  | ---------------------------------------------------------------



| |  |  | Efficient and effective business processes and operations.
| | - |  | ----------------------------------------------------------

We believe that our success to date is principally attributable to our ability to meet these requirements, as well as our local
leadership, our ability to cultivate customer loyalty, and expertise in our target markets. We believe that few of our competitors have the combination of regional presence, product quality, and service consistency in the markets that we serve.
However, we anticipate competition to increase, both from existing competitors and from new companies entering our markets.

Given the range of technology products and services we provide, we believe there is no single competitor that matches our product,
service, geographic, or expertise breadth and depth. Competitors exist in specific regions and for specific technologies and may include IT services companies such as Getronics, Micronet, Microsistemas Gerenciales S.A. de C.V., NextiraOne LLC,
Openlink Software, Inc., Boyra S.A., and Softnet Technology, Corp., as well as global IT providers such as IBM and Hewlett Packard. In the South Pacific region, our main competitors are companies such as, Daltron, Datanets, Global Technologies,
Telikom and the American Samoa Telecommunications Authority.



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Competition has resulted in, and will continue to result in, declining prices for the
services that we currently and expect to provide. We believe that the markets in which we operate, and those we intend to expand into, have historically been underserved and that there is strong potential for growth. We also believe that in order to
be competitive in these markets, participants must grow rapidly and achieve a significant presence. Many of our competitors have longer operating histories, greater name recognition, or larger customer bases in some key markets. They also have
substantially greater financial, distribution, and technical resources. As a result, these competitors may be able to offer prospective customers discounts or benefits that are substantially greater than we could offer. These competitors may be able
to adapt more quickly to new or emerging technologies and changes in customer requirements. Competitors may develop technologies that more effectively address our markets with services that offer enhanced features or lower costs. Increased
competition could result in pricing pressures, decreased gross margins, and loss of market share and may materially and adversely affect our business, financial condition and results of operations.

In addition, due to the circumstances surrounding SIBL, our association with SIBL has become a significant detriment to our operations
and prospects. As a result of the SIBL receiverships, and the uncertainty caused by them, certain of our competitors have attempted to confuse our customers about our association with SIBL, suggesting that we are assets now owned by SIBL and are
subject to liquidation by SIBLs receivers. Because of the highly competitive nature of our businesses, these tactics are difficult to monitor and combat effectively. To the extent that our competitive position is weakened by the tactics used
by our competitors and the delays in payment that we are experiencing from our customers, we may not be able to maintain the necessary liquidity to cover any shortfall from our budgeted sales activities. Also, the uncertainty caused by the possible
impact of our association with SIBL has also inhibited our ability to obtain third party financing and has caused us to expend significant amounts of working capital that were not budgeted or anticipated. These factors could materially and adversely
affect our competitive position, particularly in the Latin American markets we serve.

Employees

As of March 1, 2010, we had approximately 905 full time employees, of which, approximately 723 were in Latin America, 168 were in the
South Pacific and 14 were at our corporate headquarters. Our employees are not represented by a labor union and are not covered by a collective bargaining agreement. We believe that our relations with our employees are good.

Properties

We lease approximately 4,500 square feet for our corporate headquarters located at 8200 NW
52ndTerrace, Miami, Florida. The lease expires on
September 30, 2010 and requires lease payments of $9,385 per month. In addition, we lease space in each of the geographic regions in which we have a presence for operations, sales, marketing and customer support, and general and administrative
purposes. The amount of space leased for each purpose in each geographic operating segment varies depending on our current needs in each market. In aggregate, we lease approximately 157,000 square feet in Latin America, which is predominantly office
space used for sales, marketing and customer support, and general and administrative purposes. In aggregate, we lease approximately 109,000 square feet in the South Pacific, of which approximately 23,000 square feet is for operations and
approximately 86,000 square feet is office space for sales, marketing and customer support, and general and administrative purposes.

We believe that our existing facilities are suitable and adequate and that we have sufficient capacity to meet our current anticipated
needs. None of these facilities are critical to our operations because suitable alternative premises are available in substantially all of the locations where we conduct business. We continuously review our anticipated requirements for facilities
and, on the basis of that review, may from time to time acquire or lease additional facilities and dispose of existing facilities.



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

An
investment in eLandia involves significant risks. You should carefully consider the risks described below, together with all of the other information in this Annual Report. The risks and uncertainties described below are not the only risks that may
have a material adverse effect on us. Additional risks and uncertainties also could adversely affect our business and our results. If any of the following risks actually occur, our business, financial condition or results of operations could be
negatively affected and the market price for our shares could decline. Further, to the extent that any of the information contained in this Annual Report constitutes forward-looking statements, the risk factors set forth below also are cautionary
statements identifying important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of us.

Risks Related to Our Industry and Company

We have incurred substantial losses in the past and may continue to incur additional losses in the future.

For the years ended December 31, 2009 and 2008, we incurred net losses of $69.6 million and $45.1 million, respectively. Additional
factors such as acquisition and integration costs, the interest expense associated with debt financing, our inventory levels and the cash flow of our subsidiaries, may also negatively impact our ability to achieve and sustain profitability. There
can be no assurance that we will not continue to incur losses or become profitable. Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may not be able to sustain or increase
profitability on a quarterly or annual basis.



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We do not anticipate that we will be able to generate sufficient cash from operations
to fund our planned capital expenditures, to fulfill our payment obligations and to execute our expansion plans.

Our
capital expenditures, together with ongoing operating expenses and obligations to service our debts, will likely decrease our available cash balances during the next fiscal year. We believe that our current level of working capital will be
sufficient to sustain our current operations and service our debt obligations through at least January 1, 2011, however, as a result of the termination of the SIBL funding discussed below, we do not have sufficient capital to fund our current
expansion plans. We will need to raise capital through offerings of debt or equity. Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our
control, and on our financial performance. Additional debt or equity financing may not be available when needed or, if available, may not be available on satisfactory terms. Further, in the case of equity financings, dilution to our stockholders
could result, and in any case such securities may have rights, preferences and privileges that are senior to our currently outstanding securities. Our inability to obtain needed debt and/or equity financing when needed or to generate sufficient cash
from operations may require us to revise, or to scale back our planned growth and expansion activities, abandon projects and/or curtail capital expenditures. If we cannot obtain adequate capital on favorable terms or at all, our business, financial
condition or results of operations could be materially adversely affected.

In addition, our indebtedness requires us to
dedicate a portion of our cash flows from operating activities to principal and interest payments on our indebtedness, which could prevent or limit our ability to implement growth plans, proceed with operational improvement initiatives, or pay
dividends. If we are unable to generate sufficient cash flow from operations to repay our loans, we may need to seek new capital from other sources. We may also need to fund additional capital expenditures to keep pace with competitive developments.
Due to macroeconomic conditions, such as continued or increased volatility or disruption in the credit markets, borrowing costs for future long-term debt or short-term borrowing facilities may increase and our financing options, including our access
to the unsecured borrowing market, will be more limited. We may also be subject to additional restrictive covenants that would reduce our flexibility. This will mean more risks for the Company as it could reduce our competitive ability and our
ability to respond to changes in the external environment. More cash flow from operations will be required to settle our debt obligations and consequently will reduce funds for other purposes. Accordingly, our liquidity, financial condition, and
results of operations could be adversely affected.

The inability of Stanford International Bank, Ltd. to honor its
financing agreements under our Credit Agreement has had, and will likely continue to have, a materially adverse impact on the execution of our business plan, and liquidity.

Due to the inability of SIBL to extend the full amount of its $40 million loan commitment to us under the Credit Agreement
(Stanford Funding), we have lost up to $28 million of additional liquidity that was to be used to finance our operations and to implement our business plan for the next 12 months.

In the latter half of 2008 and the beginning of 2009, without any advance warning, SIBL advised us that due to the deteriorating global
economic conditions it would not able to provide the Stanford Funding to us. As a result of these developments, we negotiated and entered into the Modification Agreement, pursuant to which we attempted to mitigate the adverse consequences of
SIBLs breach of its agreements with us. Among other things, under the terms of the Modification Agreement we agreed to the termination of SIBLs obligation to fund the balance of $28 million committed by it under the Credit Agreement in
exchange for:



| |  |  | the conversion of the $12 million outstanding principal amount under the Credit Agreement into 1,777,778 shares of our Series B Preferred Stock and the
accrued interest was cancelled;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBLs surrender of 16,148,612 shares of our common stock to us for cancellation which reduced SIBLs ownership to 49.9% of our outstanding
common stock;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a grant of the Option to SIBL, exercisable through March 31, 2009, to purchase an additional 592,593 shares of our Series B Preferred Stock for an
aggregate purchase price of $4 million. This Option expired unexercised;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | modification of the terms of the Series B Preferred Stock to provide (a) for an initial conversion rate for the shares of the Series B Preferred
Stock whereby eight shares of Series B Preferred Stock would be convertible into seven shares of our common stock, (b) the Conversion Rate would be further adjusted in the event that SIBL did not fully exercise the Option, and (c) the
automatic conversion of the Series B Preferred Stock under certain circumstances to the extent necessary for SIBL to maintain ownership of 49.9% of the then total amount of issued and outstanding shares of our common stock;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBLs deposit of all of its shares of our common stock and Series B Preferred Stock in the Voting Trust pursuant to the Voting Trust Agreement
pursuant to which Mr. Pizarro serves as the trustee and is vested with the power to vote all shares held therein; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the agreement of SIBL to the transfer to us by February 28, 2009, $2.35 million of indebtedness of Desca, due to an affiliate of SIBL in exchange
for 344,444 shares of Series B Preferred Stock, or, if such transfer does not occur, a further cancellation of 1,801,740 shares of our common stock held under the voting trust agreement (the Desca Debt Adjustment). Such transfer and
exchange was not made by SIBL but the Voting Trustee has not surrendered the 1,801,740 shares of common stock for cancellation pending relief from the February 16, 2009 court order.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Under the modified terms of the Series B Preferred Stock, certain protective provisions were
added which requires the prior approval of the holders of the majority of the Series B Preferred Stock outstanding in order to: (a) change to the rights, preferences or privileges of the Series B Preferred Stock; or (b) create a new class
or series of stock superior to the Series B Preferred Stock. The foregoing is not an exhaustive list of the agreements contained in the Modification Agreement.

Although we have taken the steps described above in an effort to mitigate the adverse impact of the unanticipated loss of the Stanford
Funding, such mitigation efforts have only reduced the amounts owed by us to SIBL and its affiliates under various lending arrangements. Such efforts have not replaced the approximately $28 million of financing and liquidity that had been available
under the Stanford Funding. Accordingly, if we are unable to identify and obtain additional sources of funds on acceptable terms, we may need to curtail certain operations or revise our business and growth plans.

The recent financial collapse of SIBL and the placement of its assets into receivership has had, and will likely continue to have,
a material adverse impact on our business, results of operations, liquidity, and financial condition.

Prior to the
execution of the Modification Agreement and the subsequent financial collapse of SIBL resulting in SIBL being placed into receivership, SIBL had served as the principal source of financing and liquidity to us and was recognized as such by our
investors, vendors, and customers. Not only did these adverse events relating to SIBL eliminate a material source of financing and liquidity for us, but our association with SIBL has had, and may continue to have, other adverse effects on our
business, results of operations, liquidity, and financial condition, including, among other things:



| |  |  | Because of uncertainties stemming from the appointment of receivers for Stanford, several of our banks in Latin America have restricted access to
revolving credit facilities. We believe that these types of actions are due to the failure to understand the court orders related to the receiverships for the assets of Stanford and whether we are covered by those orders;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Similarly, certain of our vendors that provide us with trade credit have insisted on more punctual payment and have required additional deposits or
security requirements;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Customers are inquiring as to the impact that the SIBL receiverships have had on us and are delaying their payments to us. An increase in the aging of
our account receivables will adversely affect our cash flow and liquidity;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Certain competitors have attempted to confuse our customers about our association with SIBL, suggesting that we are assets now owned by SIBL and are
subject to liquidation by SIBLs receivers. Because of the highly competitive nature of our businesses, these tactics are difficult to monitor and combat effectively;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Due to the seasonal nature of our business which often requires us to use our working capital during the first three quarters, to the extent that our
competitive position is weakened by the tactics used by our competitors and the delays in payment that we are experiencing from our customers, we may not be able to maintain the necessary liquidity to cover any shortfall from our budgeted sales
activities;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have had a material proposed acquisition halted due to the uncertainty surrounding actions that may in the future be taken by the receivers; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Due to the significant legal issues and other matters relating to the SIBL receiverships and our association with SIBL, we have experienced and expect
to continue to experience substantial increased professional and legal expense.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The collective impact of
the uncertainties surrounding possible future actions of the SIBL receivers is that our cash flow position is being materially adversely affected, our ability to compete is facing substantial challenges, and our ability to draw on existing credit
lines or obtain other sources of financing are being materially and adversely limited as a result of the perceived uncertainly as to how our association with SIBL impacts our ability to continue our business and to repay our debts. Several banks in
Latin America have restricted our access to revolving credit lines. Our lines of credit with certain vendors have also been tightened with additional deposit or security requirements being added. The uncertainty caused by the possible impact of our
association with SIBL has also inhibited our ability to obtain third party financing and has caused us to expend significant amounts of working capital that were not budgeted or anticipated. If we are unable to resolve these issues to the
satisfaction of our customers, vendors, employees, creditors, and lenders, we may be unable to satisfy our cash requirements and may need to curtail certain operations or revise our business and growth plans.

To the extent SIBL were to file for relief under U.S. bankruptcy or other insolvency laws, further uncertainties regarding the impact on
us could arise.



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We may need to obtain additional sources of capital or financings to fund our working
capital requirements, as well as our business and growth plans, and there is no assurance that such financing will be available or, if available, on terms acceptable to us.

Our operating revenues and cash flows may be insufficient to cover our working capital requirements and to fund our current business plan
and anticipated growth. If we are unable to raise additional capital or obtain additional financing from other sources on acceptable terms when needed, we may be forced to reduce or delay product development, expansion, growth, and other capital
expenditures, turn down customer orders, sell assets, restructure or refinance our existing debt, or seek additional equity capital. There can be no assurance, however, that additional financing will be available and, if available, can be obtained
on terms favorable to the Company. Further, our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and on our financial performance.
We cannot assure you that such capital will be available to us on acceptable terms or at all.

Current and future
litigation against us could be costly and time consuming to defend.

From time to time we are subject to legal
proceedings and claims that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes, employment claims made by current or former employees, and claims brought by third parties alleging
infringement on their intellectual property rights. On or about February 24, 2009, Kelton Investments and Datec Group Ltd. (Datec), as plaintiffs, filed in the High Court of Fiji at Suva an Ex Parte Notice of Motion for Interim
Injunction bearing Civil Action No. 72 of 2009 (the Motion). The Motion named as defendants Generic Technology Limited (Generic), Datec Pacific Holdings Ltd., eLandia, the Receivers for Stanford, and the Registrar of
Companies. In the Motion, Kelton Investments and Datec sought an injunction preventing certain defendants from, among other things, appointing new directors or removing existing directors from the board of directors of Generic and its subsidiaries,
including Datec PNG Pty Ltd. and Datec Fiji Ltd. and preventing certain defendants from disposing of Generics shares in any of its subsidiaries. On February 27, 2009, the High Court of Fiji at Suva entered an order granting this relief.
We intend to vigorously defend this action; however, given the early stage of this action, we cannot predict the ultimate outcome of this matter at this time.

On March 9, 2009, we filed an action in the United States District Court for the Southern District of Florida, Miami Division (the
Court), against Sir James Ah Koy (Ah Koy), Michael Ah Koy, Kelton Investments, and Datec. In essence, we alleged that Ah Koy, his son, Kelton Investments, and Datec had unilaterally and improperly acted to preclude the sale
of the shares of the Generic subsidiaries in breach of various contractual and tort duties to us. We asserted claims for a declaration of rights concerning the release in a Share Purchase Agreement and a similar agreement executed by Michael Ah Koy,
breach of the implied covenant of good faith and fair dealing, breach of contract by Michael Ah Koy as it relates to his directorship with certain of our subsidiaries, including Generic, and tortious interference with a business relationship. On
March 17, 2009, we filed an Amended Complaint with the Court to add allegations of breach of fiduciary duty against Ah Koy, and aiding and abetting and conspiracy to breach fiduciary duties against Michael Ah Koy, Kelton Investments, and Datec.
We are currently in settlement negotiations; however the timing and outcome of this matter remain uncertain at this time.

In
addition, there is the possibility that legal actions may be threatened or brought against us due to our association with Stanford. We intend to vigorously defend any such legal actions. However, such litigation may result in substantial costs and
may divert our attention and resources. An unfavorable judgment against us in any legal proceeding or claim, including those described above, could require us to pay monetary damages. Also, an unfavorable judgment in which the counterparty is
awarded equitable relief, such as an injunction, could harm our business, consolidated results of operations and consolidated financial condition.

We have made, and may continue to make, acquisitions which pose integration and other risks that could harm our business.

We have in the past made several acquisitions and we intend to continue to expand our business in scope, in size, and
geographically, through the acquisition of companies, technologies, products and services. We will only achieve the benefits that are expected to result from these acquisitions if we can successfully integrate administrative, finance, operations,
sales and marketing functions from these organizations, and implement appropriate systems and controls. The success of the acquisitions and integration into our operations will involve a number of risks, including:



| |  |  | difficulty integrating acquired technologies, products, services, operations and personnel with the existing businesses and the potential inability to
achieve expected operating efficiencies, growth and profitability expectations;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | diversion of managements time and attention from our core operations to engage in both negotiating the acquisitions and integrating the business;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | adverse short-term effects on operating results;
| | - |  | ------------------------------------------------



| |  |  | the potential inability to successfully pursue or realize some or all of the anticipated revenue opportunities associated with the acquisition;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | inability to retain, train and motivate management and key personnel of the acquired businesses;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | unanticipated costs and delays and the exposure to unforeseen liabilities of acquired companies;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | risks associated with unanticipated problems or legal liabilities, as well as potential tax and accounting issues;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | the need to incur additional debt or use cash; and
| | - |  | --------------------------------------------------



| |  |  | the potential strain on our infrastructure, staff, internal controls and management.
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In addition to the need to successfully integrate newly acquired companies, technologies,
products and services, our success also will be dependent on our ability to profitably manage our growth which, in turn, will depend on our ability to maintain cost controls and increase revenues and achieve synergies from our acquisitions. As a
result of these and other potential problems and risks, businesses we acquire may not produce the revenues, earnings or business synergies that we anticipated, and acquired products, services or technologies may not perform as we expected. We may
incur higher costs and realize lower revenues than we had anticipated. We cannot assure you that we will be successful in overcoming these risks or any other problems encountered in connection with our expansion and growth strategy. Failure to
effectively manage our growth through acquisitions could adversely affect our growth prospects, business, results of operations and financial condition. Further, although we expect such acquisition activities to provide long-term growth and
profitability, our growth strategy and our new market focus could have an adverse impact in any event on our profitability in the short term due to the operating and other expenses associated with growth and the build out of the infrastructure
necessary to implement our strategic initiative.

If the downturn in economic conditions continues for a long period of
time or worsens, it will likely have an adverse impact on our business.

If the downturn in economic conditions
continues or worsens, it will likely have an impact on overall demand for systems, software and services changes. Delays or reductions in IT spending could have a material adverse effect on demand for our products and services and consequently our
results of operations, prospects and stock price. We may experience increased competitive pricing pressures, significant operating losses, elevated levels of obsolete inventory, inventory write-downs and larger bad debt losses. In addition, we may
not be able to adequately adjust our cost structure in a timely fashion to remain competitive, which may cause our profitability to suffer. Economic downturns may also lead to restructuring actions and associated expenses, including the impairment
of goodwill or other intangible assets.

We are substantially dependent upon external financing from several different
sources to fund our operations, including trade credit from our principal suppliers. Termination of all or some of these facilities will lead to disruptions in our business and may result in an inability to execute our business plan.

We rely on financing from our principal suppliers, including Cisco Systems, Inc. and banks located in certain of the
countries in which our subsidiaries are located. These arrangements are subject to a number of conditions and, in some cases, financing is in the sole discretion of each supplier or bank. We cannot assure you that we will continue to meet the
financing conditions of these third parties and/or that these institutions will not terminate these funding arrangements. Several of our suppliers, including our largest supplier, extend trade credits to us in amounts based on various factors,
including the amounts of our purchases and their internal credit criteria. In addition, as previously discussed, due to the uncertainties surrounding the financial collapse of SIBL, several banks in Latin America have limited our access to revolving
credit lines and some of our vendors have restricted our lines of credit or instituted credit holds. The loss of, or reduction in, our revolving credit lines, or trade credit from our principal suppliers could reduce our liquidity, increase our
working capital needs and/or limit our ability to purchase products which could adversely affect our financial condition or results of operations.

We transact business in Venezuela. A decline in the economic and political situation in Venezuela may pose risks that could harm
our business.

In recent years Venezuela has experienced political challenges, difficult economic conditions,
relatively high levels of inflation, and foreign exchange and price controls. The President of Venezuela has the authority to legislate certain areas by decree, and the government has nationalized or announced plans to nationalize certain industries
and to expropriate certain companies and property. These factors may have a negative impact on our business and our financial condition.

Since 2003, Venezuela imposed currency controls and created the Commission of Administration of Foreign Currency (CADIVI)
with the task of establishing detailed rules and regulations and generally administering the exchange control regime. These controls fix the exchange rate between the Bolivar and the U.S. dollar, and restrict the ability to exchange Bolivars
for dollars and vice versa. The near-term effect has been to restrict our ability to repatriate funds from Venezuela in order to meet our cash requirements. In particular, the currency controls in Venezuela have restricted our ability to make
payments to certain vendors in U.S. dollars, causing us to borrow money to meet these obligations and to be subject to credit holds, which have caused delays in the delivery of customer orders thus delaying or causing the loss of sales.

In addition, as of December 31, 2009, we owed approximately $6 million to vendors for which we are awaiting CADIVI approval to make
payments. While these vendors are aware of the challenges involved with transferring money out of Venezuela and have historically extended terms to accommodate these difficulties, there can be no assurance that they will continue to do so in the
future. If these vendors demand payment prior to our obtaining approval to transfer money out of Venezuela from CADIVI, we may be required to utilize cash and other resources from other parts of our operations, which may, in turn require us to scale
back current operations or postpone our plans for expansion.



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Historically, we have utilized the official rate for the remeasurement of our Venezuelan
subsidiarys operations from the Bolivar to the U.S. dollar. However, due to the delays in obtaining governmental approvals, starting in January 2009 we began using a legal indirect parallel market of foreign currency exchange
through which companies may obtain foreign currency without requesting it from the government to settle certain of our U.S. dollar-denominated liabilities. In December 2009, we considered our past and continued intent to use the parallel rate to
settle our U.S. dollar-denominated liabilities and the fact that we do not expect to be able to remit dividends at the official rate. In view of these facts and circumstances existing at the end of 2009, we determined that effective
December 31, 2009, we would use the parallel rate to translate the operations of our Venezuelan subsidiary. As a result of this decision, we recorded a pretax loss of $4.4 million. On January 8, 2010, the Venezuelan government announced
the devaluation of the Venezuelan Bolivar. The official rate increased from 2.15 Venezuelan Bolivars to the U.S. dollar to 4.30 for non-essential goods (which is deemed to include telecommunications services). This change did not have an impact on
our consolidated financial statements for 2009 or our decision to use the parallel rate for translation purposes. However, there can be no assurance that the devaluation will not adversely affect our future operations in Venezuela.

We are heavily dependent on a few suppliers, particularly Cisco Systems, Inc., to provide us with products that we distribute. Our
contracts with these suppliers, including Cisco, are non-exclusive and may be terminated on short notice.

We purchase
a significant portion of our products from Cisco pursuant to a systems integrator agreement and several supporting agreements. These agreements are non-exclusive and may be terminated by Cisco for any reason on 45-days written notice. In addition,
Cisco may immediately terminate these agreements on certain conditions. Any termination by Cisco of one or more of our agreements or any significant deterioration in our relationship with Cisco could significantly reduce the availability to us of
the products that we offer for sale and would have a material adverse effect on our results of operations, business and prospects.

We are also dependent on a few other suppliers for our product purchases. These agreements are also non-exclusive and may be terminated
on relatively short notice. Any termination of these agreements could reduce the availability of certain products to us and may result in delays and additional expense as we attempt to replace these suppliers.

We may have difficulty managing our growth, which may divert resources and limit our ability to successfully expand our operations.

Our growth and implementation of a strategic initiative focusing on new market opportunities may place significant
demands on our operations and management. Our future success will depend on the ability of our officers and other key employees to continue to implement and improve our operational, credit, financial, management and other internal risk controls and
processes, along with our reporting systems and procedures, as the number and geographical scope of our client and vendor relationships continue to expand. We may not successfully implement improvements to our management information and control
systems and control procedures and processes in an efficient or timely manner and we may discover deficiencies in existing systems and controls. In particular, our controls and procedures must be able to accommodate an expected increase in revenue
and the infrastructure that comes with new service centers and new product lines. Our growth strategy may require us to incur additional expenditures to expand our administrative and operational infrastructure. If we are unable to manage future
expansion in our operations, we may experience compliance and operational problems, have to slow the pace of growth or have to incur additional expenditures beyond current projections to support such growth, any one of which could adversely affect
our business. We cannot assure you that we will continue to be successful in increasing the volume of sales at acceptable risk levels, expanding our asset base and managing the costs and implementation risks associated with our growth strategy. We
also cannot provide you with any assurance that our further expansion will be profitable, that we will be able to maintain any specific level of growth, if any, that we will be able to maintain capital sufficient to support our continued growth or
that we will be able to adequately and profitably manage that growth.

Any failure of our service level agreements or
services could lead to significant costs and disruptions that could reduce our revenue and harm our business reputation and financial results.

Our business depends on providing customers with highly reliable service, as more specifically described in service level agreements that
we enter into with our major customers. Our service level agreements may require that we guarantee our customers a level of availability for equipment residing at the customers premises or third party facilities. Furthermore, we are dependent
upon Internet service providers, telecommunications carriers and other website operators in the U.S., Latin America and elsewhere, some of which have experienced significant system failures and electrical outages in the past. Users of our services
may in the future experience difficulties due to system failures unrelated to our systems and services. Problems, whether or not within our control, could result in service interruptions or significant equipment damage. As a result, service
interruptions or significant equipment damage could result in difficulty maintaining service level commitments to these customers and potential claims related to such failures.

If we incur significant financial obligations to our customers in connection with a loss of power or our failure to meet other service
level commitment obligations, our liability insurance may not be adequate. In addition, any loss of service, equipment damage or inability to meet our service level commitment obligations could reduce the confidence of our customers and could
consequently impair our ability to obtain and retain customers, which would adversely affect both our ability to generate revenues and our operating results.



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We expect our operating results to fluctuate.

Our customer activity is influenced by seasonal effects related to budget cycles and other factors specific to our target customer base.
Sales in the first three quarters are seasonally weak and they are generally highest in the fourth quarter. As a result, we rely heavily on our fourth quarter revenues to support our overall results of operations. In addition, we have experienced
fluctuations in our results of operations on a quarterly and annual basis. We expect to experience significant fluctuations in our operating results in the foreseeable future due to a variety of factors, including, but not limited to:



| |  |  | changes in general economic conditions, such as the current economic downturn, and specific market conditions in the telecommunications and Internet
industries, both of which may have an impact on our customer base;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the mix of current and proposed products and services and the gross margins associated with our products and services;
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | conditions related to international operations;
| | - |  | -----------------------------------------------



| |  |  | availability of working capital to allow us to accept customer orders;
| | - |  | ----------------------------------------------------------------------



| |  |  | the timing and magnitude of other operating expenses, including taxes, capital expenditures and expenses related to the expansion of sales, marketing,
operations and acquisitions, if any, of complementary businesses and assets; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | mandatory expensing of employee stock-based compensation.
| | - |  | ---------------------------------------------------------

Any of the foregoing factors, or other factors discussed elsewhere in this report, could have a material adverse effect on our business,
results of operations and financial condition.

Although we have experienced growth in revenues in recent quarters, this
growth rate is not necessarily indicative of future operating results. We have generated net losses every fiscal year since inception. It is possible that we may not be able to generate positive net income in the future.

In addition, our operating results in one or more future quarters may fail to meet the expectations of securities analysts or investors.
If this occurs, we could experience an immediate and significant decline in the trading price of our stock.

We may not
be able to run our businesses without the continuing efforts of our senior executives and we do not maintain key man life insurance on any of them.

Our future success may be dependent on Pete R. Pizarro, Chief Executive Officer and President, and Harley L. Rollins, III, Chief
Financial Officer. In addition, the success of our principal Latin America subsidiaries are dependent upon Jorge Alvarado (principal executive officer of Desca) and Hermann Gomez (principal executive officer of CTT). We do not maintain key
man life insurance covering any of our key personnel. Our success will depend to a significant extent upon the retention of these executives, their successful performance, and the ability of all personnel to work effectively as a team. Our
success in retaining key employees is an important factor in our ability to remain competitive. As is common in our industry, our employees are typically compensated through grants of equity awards in addition to their regular salaries. In addition
to granting equity awards to selected new hires, we periodically grant new equity awards to certain employees as an incentive to remain with us. To the extent we are unable to offer competitive compensation packages to our employees and adequately
maintain equity incentives due to equity expensing or otherwise, and should employees decide to leave us, this may be disruptive to our business and may adversely affect our business, financial condition and results of operations.

Potential liabilities under the Foreign Corrupt Practices Act (whether currently existing or subsequently discovered) could have a
material adverse effect on our business.

We are subject to the Foreign Corrupt Practice Act, or FCPA, which prohibits
people or companies subject to United States jurisdiction and their intermediaries from engaging in bribery or other prohibited payments to foreign officials for the purposes of obtaining or retaining business or gaining an unfair business
advantage. It also requires proper record keeping and characterization of such payments in reports filed with the SEC. To the extent that any of our employees, supplies, distributors, consultants, subcontractors, or others engage in conduct that
subjects us to exposure under the FCPA, or other anti-corruption legislation, we could suffer financial penalties, debarment from government contracts and other consequences that may have a material adverse effect on our business, financial
condition or results of operations.

On September 14, 2007, following its acquisition, we engaged in a review of Latin
Nodes internal controls and legal compliance procedures within its finance and accounting departments as part of our acquisition and integration of Latin Node. As a result of this review, certain past payments made to third parties prior to
our acquisition of Latin Node on June 28, 2007 were identified as having been made in the absence of adequate records and controls for a U.S. public company. We conducted an internal investigation to determine whether any direct or indirect
payments by employees of Latin Node or consultants used by Latin Node prior and subsequent to its acquisition by us were made in violation of the FCPA. The internal investigation of the FCPA matter was conducted by a Special Committee of our Board
of Directors. The Special Committee retained independent legal counsel to assist in the investigation of the FCPA matter.



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The internal investigation preliminarily revealed that certain payments from Latin Node
prior to our acquisition of Latin Node may have been made in violation of the FCPA. We voluntarily and proactively reported these potential violations to the SEC, the United States Department of Justice, and the Federal Bureau of Investigation and
cooperated fully with these agencies regarding this matter. Following settlement discussions with the Department of Justice, Latin Node agreed to enter into a plea agreement to resolve the matter by the payment of a monetary penalty of $2 million
for the actions that occurred prior to Latin Nodes acquisition by us. On March 23, 2009, the Department of Justice filed charges in the United States District Court for the Southern District of Florida against Latin Node for actions taken
by Latin Node prior to the time that we made our investment in Latin Node. On April 3, 2009, the matter was resolved and the court approved the plea agreement reached with the Department of Justice. In accordance with the terms of the
settlement agreement, we paid $500,000 promptly following the settlement date, and the remaining $1,500,000 will be paid in three equal installments of $500,000 each by January 31, 2010, January 31, 2011 and January 31, 2012,
respectively. On March 22, 2010, the court approved a modified payment schedule such that the $500,000 payment originally due on January 31, 2010 will now be paid in the following manner: $50,000 on March 31, 2010, $125,000 on
May 15, 2010, $125,000 on July 15, 2010, $125,000 on October 15, 2010 and $75,000 on December 15, 2010. The remaining payments of $500,000 each due on January 31, 2011 and January 31, 2012 remain unchanged.

Rapid changes in technology and our target markets could require substantial expenditure of financial and other resources in excess
of contemplated levels, and any inability to respond to those changes could render our inventory obsolete and reduce our market share.

The technology industry is experiencing significant changes and our ability to execute our business plans and compete depends upon our
ability to develop and deploy new products and services. The development and deployment of new products and services could require substantial expenditure of financial and other resources, in excess of currently contemplated levels. If we are not
able to develop new products and services to keep pace with technological advances and if those products and services are not widely accepted by customers, our ability to compete could be adversely affected and our market share could decline.

We rely heavily on third parties to provide specialized services. Failure by such parties to provide the agreed
services at an acceptable level could limit our ability to provide services and/or cause customer dissatisfaction, either of which could result in reduced revenue.

We depend heavily on suppliers and contractors with specialized expertise in order for us to efficiently operate our business. In the
past, our suppliers, contractors and third-party retailers have not always performed at the levels we expect or at the levels required by their contracts. If key suppliers, contractors or third-party retailers fail to comply with their contracts,
fail to meet our performance expectations or refuse to supply us in the future, our business could be severely disrupted. Generally, there are multiple sources for the products we purchase; however, some suppliers are our exclusive sources for
specific products. In particular, in connection with our telecommunications and data communications businesses, we are materially dependent on satellite companies to provide long distance connections. Our business could be substantially disrupted if
we were required to replace the products or services of one or more major, specialized suppliers with products or services from another source, especially if the replacement became necessary on short notice.

Regulation by government agencies may increase our costs of providing service or require us to change our services.

Our operations in the South Pacific are subject to varying degrees of regulation by the Federal Communications
Commission (FCC), local regulatory agencies and legislative bodies and comparable regulatory agencies in the markets that we serve and may in the future be subject to regulation by environmental agencies. Adverse decisions or regulations
of these regulatory bodies could limit our ability to conduct business or increase our costs of doing business. Governmental regulations and orders can significantly increase our costs and affect our competitive position compared to other
telecommunications providers. We are unable to predict the scope, pace, or financial impact of regulations and other policy changes that could be adopted by the various governmental entities that oversee portions of our business.

If we cannot effectively manage our international operations, our business and results of operations will be harmed.

At the present time, most of our operations are conducted outside of North America. We anticipate that, for the
foreseeable future, most of our revenue will be derived from sources outside of North America. Our international operations are subject to a number of additional risks, the occurrence of which may have a material adverse effect on our business,
financial condition or results of operations, including, without limitation:



| |  |  | trade protection laws, tariffs, export license requirements and other business practices favoring our competitors;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | political and economic instability;
| | - |  | -----------------------------------



| |  |  | the ability to obtain, transfer, or maintain licenses required by governmental entities with respect to the combined business;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | compliance with evolving governmental regulation;
| | - |  | -------------------------------------------------



| |  |  | natural disasters in a specific country or region;
| | - |  | --------------------------------------------------



| |  |  | greater difficulty or delay in accounts receivable collection;
| | - |  | --------------------------------------------------------------



| |  |  | difficulties in staffing and managing foreign operations;
| | - |  | ---------------------------------------------------------



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| |  |  | compliance with tax laws in various jurisdictions around the world; and
| | - |  | -----------------------------------------------------------------------



| |  |  | changes in the value of the U.S. dollar versus the local currency in which the products are sold and goods and services are purchased, including
devaluation and revaluation of local currencies.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our future operating results may be subject to
volatility as a result of exposure to foreign exchange risks.

We will be exposed to foreign exchange risks. Foreign
currency fluctuations may affect both our revenues and our costs and expenses and significantly affect our operating results. The majority of our revenue and costs from international operations have been denominated in the currencies of Latin
American countries such as Venezuela (the Bolivar Fuertes), Colombia (the Peso), Mexico (the Peso), Argentina (the Peso), and Costa Rica (the Colon) and South Pacific islands such as Papua New Guinea (the Kina). As a result, we may experience gains
and losses resulting from fluctuations in foreign currency exchange rates and we bear the risk that the rate of inflation in one or more these countries will exceed the rate of the devaluation of that countrys currency in relation to the U.S.
dollar, which would increase our costs. We have not undertaken foreign exchange hedging transactions and are completely exposed to foreign currency transaction risk for all of our operations.

As previously discussed, on January 8, 2010, the Venezuelan government announced the devaluation of the Venezuelan Bolivar. The
official rate increased from 2.15 Venezuelan Bolivars to the U.S. dollar to 4.30 for non-essential goods (which is deemed to include telecommunications services). This change did not have an impact on our consolidated financial statements for 2009
or our decision to use the parallel rate for translation purposes. However, there can be no assurance that the devaluation will not adversely affect our future operations in Venezuela.

Our networks and IT systems may be vulnerable to unauthorized persons accessing our systems, which could disrupt our operations and
result in the theft of our proprietary information.

A party who is able to breach the security measures on our
networks could misappropriate either our proprietary information or the personal information of our customers, or cause interruptions or malfunctions in our operations. We may be required to expend significant capital and resources to protect
against such threats or to alleviate problems caused by breaches in security, which could have a material adverse effect on our financial performance and operating results.

We may not be able to compete successfully against current and future competitors.

Our products and services must be able to differentiate themselves from those of other providers with similar products and services. With
respect to our other products and services, including consulting services, network integration services, managed infrastructure services and communication services, we must compete with more established providers of similar services. Most of these
companies have longer operating histories and significantly greater financial, technical, marketing and other resources than us. Because of their greater financial resources, some of our competitors have the ability to adopt aggressive pricing
policies. As a result, in the future, we may suffer from pricing pressure that would adversely affect our ability to generate revenues and adversely affect our operating results. Some of these competitors may also provide our target customers with
additional benefits, including bundled communication services, and may do so in a manner that is more attractive to our potential customers. If these competitors were able to adopt aggressive pricing policies together with offering collocation
space, our ability to generate revenues would be materially adversely affected.

In addition, due to the recent circumstances
surrounding SIBL, our association with SIBL has become a significant detriment to our operations and prospects. As a result of the SIBL receiverships, and the uncertainty caused by them, certain of our competitors have attempted to confuse our
customers about our association with SIBL, suggesting that we are assets now owned by SIBL and are subject to liquidation by SIBLs receivers. Because of the highly competitive nature of our businesses, these tactics are difficult to monitor
and combat effectively. To the extent that our competitive position is weakened by the tactics used by our competitors and the delays in payment that we are experiencing from our customers, we may not be able to maintain the necessary liquidity to
cover any shortfall from our budgeted sales activities. Also, the uncertainty caused by the possible impact of our association with SIBL has also inhibited our ability to obtain third party financing and has caused us to expend significant amounts
of working capital that were not budgeted or anticipated. These factors could materially adverse affect our competitive position, particularly in the Latin American markets we serve.

Risks Related to Ownership of Our Common Stock

The market for shares of our common stock is thinly traded and you may find it difficult to dispose of your shares of our stock,
which could cause you to lose all or a portion of your investment in our company.

Although our common stock is listed
for trading on the OTC Bulletin Board, only limited and sporadic trading in our common stock has developed and we expect to have only a limited trading market in the foreseeable future. As a result, you may find it difficult to dispose of shares of
our common stock and you may suffer a loss of all or a substantial portion of your investment in our common stock.



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The market price of our common shares may be subject to significant fluctuation.

The market price of our common stock could be subject to wide fluctuations, including fluctuations in response to
quarterly variations in our operating results, changes in earnings estimates by analysts, material announcements by us or our competitors, governmental or regulatory actions, acquisitions, the liquidity of the market of our common stock, changes in
general economic and market conditions, changes in the securities markets, war and other conflicts, acts of terrorism, and other events, many of which are beyond our control. The stock market has experienced extreme price and volume fluctuations,
which have affected market prices of smaller capitalization companies and have often been unrelated to the operating performance of such companies. In addition, if our operating results fall below the expectations of securities analysts and
investors, the price of our common stock would likely decline, perhaps substantially.

We do not plan to pay cash
dividends on our common stock in the foreseeable future.

We do not expect to pay cash dividends on our common stock
in the foreseeable future. Instead we intend to retain any future earnings for reinvestment into our company and our operations. The payment of cash dividends is subject to the discretion of our board of directors and its determination to declare
such dividends, which will depend upon a number of factors, including our results of operations, financial condition, future prospects and cash and capital requirements, tax considerations, and general business and economic conditions. Further,
under the terms of our current loan agreements with various lenders, we are prohibited from paying cash dividends or making other distributions on our common stock without their prior consent.

Future issuances of additional securities could result in dilution of your ownership.

We may determine from time to time to issue additional securities to raise additional capital, support growth, or to make acquisitions.
Further, we may issue stock options or other stock grants to retain and motivate our employees. These issuances of our securities will dilute the ownership interests of the investors in this offering. New investors also may have rights, preferences
and privileges senior to our current stockholders, which may adversely impact our current stockholders.

The interests
of the voting trustee could conflict with those of our other stockholders resulting in the approval of corporate actions that are not necessarily in the best interest of the other stockholders.

The shares of our common stock owned by SIBL, which represent approximately 49.9% of our outstanding common stock as of February 6,
2009, were placed into the Voting Trust. SIBL appointed Pete R. Pizarro, our Chief Executive Officer, to act as the trustee of the Voting Trust. With certain limited exceptions, Mr. Pizarro was granted discretionary voting power with respect to
all shares of stock placed in the voting trust by SIBL. As a result, Mr. Pizarro, as trustee of the Voting Trust, is able to exert significant influence over the outcome of stockholder votes, including votes concerning amendments to our charter
and bylaws, the election of directors and the approval of most significant corporate transactions. His interests may conflict with the interests of other holders of common stock and he may take actions affecting us with which you may disagree.
However, Mr. Pizarro is required to vote the shares in accordance with and in the same proportion as the holders of the remaining outstanding shares of our common stock voting on any of the following matters: (i) the sale of the Company
whether by merger, consolidation, sale of all or substantially all the assets or other similar transaction; and (ii) if the Company desires to increase the amount of shares of our common stock issuable pursuant to any stock option or other
equity plan in an amount exceeding the greater of 9,500,000 shares of our common stock or 15% of the total amount of outstanding common stock. Additionally, SIBL retained its right to vote with respect to certain issues pertaining to the Series B
Preferred Stock including any change to the rights, preferences or privileges of the Series B Preferred Stock or the creation of a new class or series of stock superior to the Series B Preferred Stock.

A NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report (including the exhibits) contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act), such as statements relating to our financial condition, results
of operations, plans, objectives, future performance or expectations, and business operations. These statements relate to expectations concerning matters that are not historical fact. Accordingly, statements that are based on managements
projections, estimates, assumptions, and judgments constitute forward-looking statements. These forward-looking statements are typically identified by words or phrases such as believe, expect, anticipate,
plan, estimate, approximately, intend, objective, goal, project, and other similar words and expressions, or future or conditional verbs such as will,
should, would, could, and may. These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates,
judgments and projections about our business and our industry, and such statements involve inherent risks and uncertainties. Although we believe our expectations are based on reasonable estimates and assumptions, they are not guarantees of
performance and there are a number of known and unknown risks, uncertainties, contingencies, and other factors (many of which are outside our control) that could cause actual results to differ materially from those expressed or implied by such
forward-looking statements. Some factors include, but are not limited to, those described under the Risk Factors, in this Item 1A of our Annual Report.

All written or oral forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this
cautionary notice. Such forward-looking statements speak only to the date that such statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement
is made or to reflect the occurrence of unanticipated events. We do not promise to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect these statements other than material changes
to such information.



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|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

Not required for non-accelerated filers.



|ITEM 2. | PROPERTIES
|------- | ----------

We lease approximately 4,500 square feet for our corporate headquarters located at 8200 NW
52ndTerrace, Miami, Florida. The lease expires on
September 30, 2010 and requires lease payments of $9,385 per month. In addition, we lease space in each of the geographic regions in which we have a presence for operations, sales, marketing and customer support, and general and administrative
purposes. The amount of space leased for each purpose in each geographic operating segment varies depending on our current needs in each market. In aggregate, we lease approximately 157,000 square feet in Latin America, which is predominantly office
space used for sales, marketing and customer support, and general and administrative purposes. In aggregate, we lease approximately 109,000 square feet in the South Pacific, of which approximately 23,000 square feet is for operations and
approximately 86,000 square feet is office space for sales, marketing and customer support, and general and administrative purposes.

We believe that our existing facilities are suitable and adequate and that we have sufficient capacity to meet our current anticipated
needs. None of these facilities are critical to our operations because suitable alternative actions are available in substantially all of the locations where we conduct business. We continuously review our anticipated requirements for facilities
and, on the basis of that review, may from time to time acquire or lease additional facilities and dispose of existing facilities.



|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

On
September 14, 2007, following its acquisition, we engaged in a review of Latin Nodes internal controls and legal compliance procedures within its finance and accounting departments as part of our acquisition and integration of Latin Node.
As a result of this review, certain past payments made to third parties prior to our acquisition of Latin Node on June 28, 2007 were identified as having been made in the absence of adequate records and controls for a U.S. public company. We
conducted an internal investigation to determine whether any direct or indirect payments by employees of Latin Node or consultants used by Latin Node prior and subsequent to its acquisition by us were made in violation of the FCPA. The internal
investigation of the FCPA matter was conducted by a Special Committee of our Board of Directors. The Special Committee retained independent legal counsel to assist in the investigation of the FCPA matter.

The internal investigation preliminarily revealed that certain payments from Latin Node prior to our acquisition of Latin Node may have
been made in violation of the FCPA. We voluntarily and proactively reported these potential violations to the SEC, the United States Department of Justice, and the Federal Bureau of Investigation and cooperated fully with these agencies regarding
this matter. Following settlement discussions with the Department of Justice, Latin Node agreed to enter into a plea agreement to resolve the matter by the payment of a monetary penalty of $2 million for the actions that occurred prior to Latin
Nodes acquisition by us. On March 23, 2009, the Department of Justice filed charges in the United States District Court for the Southern District of Florida against Latin Node for actions taken by Latin Node prior to the time that we made
our investment in Latin Node. On April 3, 2009, the matter was resolved and the court approved the plea agreement reached with the Department of Justice. In accordance with the terms of the settlement agreement, we agreed to pay $500,000
promptly following the settlement date, and the remaining $1,500,000 in three equal installments of $500,000 each by January 31, 2010, January 31, 2011 and January 31, 2012, respectively. On March 22, 2010, the court
approved a modified payment schedule such that the $500,000 payment originally due on January 31, 2010 will now be paid in the following manner: $50,000 on March 31, 2010, $125,000 on May 15, 2010, $125,000 on July 15, 2010,
$125,000 on October 15, 2010 and $75,000 on December 15, 2010. The remaining payments of $500,000 each due on January 31, 2011 and January 31, 2012 remain unchanged.

On January 22, 2008, Latin Node was named as a defendant in a third party complaint filed in the 11th Judicial Circuit of the State
of Florida in and for Miami-Dade County, Florida, bearing case number 08-922-CA-01 (06) by Juan Pablo Vasquez, Olivia de la Salas and Gloria Vasquez, former employees of Latin Node, Inc. The Plaintiffs were terminated with cause by
Latin Node and brought an action for breach of contract. The Plaintiffs sought damages (including but not limited to severance pay and compensation for accrued but unused vacation pay), together with attorneys fees. On June 26, 2009, the
court entered a notice of lack of prosecution in this case and directed the parties to appear on September 18, 2009 for a hearing on the courts motion of dismissal for lack of prosecution in the case. On September 21, 2009, the court
issued an order dismissing the action for lack of prosecution.

On June 12, 2008, Latin Node filed for an assignment for
benefit of creditors in the 11th Judicial Circuit in and for Miami-Dade County, Florida (case no. 08-33495 CA11). As part of this proceeding, all of the assets of Latin Node were transferred to Michael Phelan, assignee. On July 17, 2008, all of
these assets were sold to the highest bidder, Business Telecommunications Services, Inc. (BTS). Since we were the principal creditor of Latin Node, we had the right to receive all of the proceeds from such sale after the payment of the
costs of administration. The immediate proceeds from the sale of these assets were used to pay these administrative costs. A final court order approving the disposition of the proceeds from the sale of all other assets was scheduled for May 21,
2009. However, on May 20, 2009, Empresa Hondureña de Telecomunicaciones filed a Motion for Continuance or in the alternative Motion to Stay the Assignees Motion to Approve Final Report and Fees to Assignee, Assignees Counsel
and Assignors Counsel, Disburse Remaining Funds to Priority and Unsecured Creditors, Discharge Assignee and Close Case. At a hearing held on August 28, 2009 on said motions, the court ordered the parties to select a forensic examiner to
conduct an examination and determine whether the claims made by Hondutel are valid. On September 17, 2009, the court appointed a forensic examiner, whose report was issued on February 16, 2010. The forensic examiner appointed by the court
determined that Latin Node and/or eLandia did not act improperly in this matter which cast doubt on Hondutels ability to further delay the final adjudication of the case.



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On June 27, 2008, we filed an action against Jorge Granados, individually and Retail
Americas VoIP, LLC, a Delaware limited liability company (RAV) in the 11th Judicial Circuit in and for Miami-Dade County, Florida (Case No. 08-37352 CA20). The action asserted claims for contractual indemnification, breach of
contract, breach of the obligation of good faith and fair dealing, fraud, fraudulent inducement, unjust enrichment, and specific performance against the escrow agent. These claims arose from the transaction where we purchased 80% of the equity of
Latin Node for $20 million pursuant to a preferred stock purchase agreement. The gravamen of the action was that Jorge Granados and RAV failed to disclose as part of the preferred stock purchase agreement that Latin Node had made payments to various
third parties in violation of the Foreign Corrupt Practices Act and one of Latin Nodes vendors claimed that it was owed $4.4 million. On February 12, 2009, we entered into a Settlement Agreement with Jorge Granados and RAV pursuant to
which (i) the 375,000 shares of our common stock issued to RAV in connection with the transaction were returned to us by the escrow agent, (ii) we exchanged mutual general releases with Jorge Granados and RAV, (iii) Jorge Granados
resigned as a director of Latin Node and a manager of RAV, and (iv) Jorge Granados agreed to be subject to certain non-competition, non-solicitation and non-disclosure covenants. The action was dismissed on March 13, 2009.

On February 24, 2009, Kelton Investments Ltd. (Kelton) and Datec Group Ltd. (Datec), as plaintiffs, filed in
the High Court of Fiji at Suva (the Fiji Court) an Ex Parte Notice of Motion for Interim Injunction (the Motion). The Motion named as defendants Generic Technology Limited (Generic), Datec Pacific Holdings Ltd.,
eLandia, the Receiver for Stanford, and the Registrar of Companies. The Motion sought an interim injunction preventing certain defendants from, among other things, appointing new directors or removing existing directors from the board of directors
of Generic and other entities and also preventing certain defendants from disposing of shares in Generic or its subsidiaries. On February 27, 2009, the Fiji Court entered an order granting this relief on an ex parte basis.

On March 31, 2009, Kelton and Datec filed a Statement of Claim in the Fiji Action. In essence, the Statement of Claim alleged that
the Amended and Restated Arrangement Agreement dated August 8, 2005 (Arrangement Agreement) pursuant to which eLandia acquired the subsidiaries of Datec was induced by untrue representations related to the capital to be devoted to
those subsidiaries and alleged investigations of Stanford. It asserted claims for fraudulent misrepresentation, proper construction and enforceability of certain Stock Purchase Agreements in which claims against eLandia were released, breach of
Stock Purchase Agreements, breach of the Arrangement Agreement, and equitable estoppel. As relief, it sought, among other things, rescission of the Arrangement Agreement and Stock Purchase Agreements, a declaration as to the scope of the Stock
Purchase Agreements, injunctive relief, and damages. We are currently requesting details and particulars of the claims made ahead of the next appearance in the Fiji Court.

A hearing to review the order granting the interim injunction was scheduled for April 20, 2009. That hearing was cancelled due to
the closure of the Fiji courts by the military led Fiji government. The hearing has been rescheduled a number of times and we are currently awaiting a new date.

On March 9, 2009, we filed an action in the United States District Court for the Southern District of Florida, Miami Division (the
Court), against Sir James Ah Koy, Michael Ah Koy, Kelton, and Datec. On March 17, 2009 we filed an Amended Complaint in that suit. In essence, we alleged that Sir James Ah Koy and his son, Michael Ah Koy, Kelton, and Datec
improperly acted to preclude the sale of our interests in the South Pacific. We asserted that the defendants improperly employed claims and complaints about the Arrangement Agreement that they have released to favor their own interests at our
expense. We assert claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, conspiracy to breach fiduciary duty, declaratory judgment under various agreements, breach of the implied covenant of good faith and fair dealing,
breach of contract, and tortious interference with business relations. We seek a declaratory judgment, an injunction, compensatory damages (which we view as including all damage defendants have caused, including loss of sales proceeds and other
costs), punitive damages, attorneys fees, and costs. We are currently in settlement negotiations; however the timing and outcome of this matter remain uncertain at this time.

On April 15, 2009, we filed a motion seeking a preliminary injunction to preclude defendants from prosecuting the Fiji Action or
causing that action to be prosecuted. On April 17, 2009, the defendants filed a motion to dismiss for lack of personal jurisdiction and a memorandum in opposition to our motion for a preliminary injunction on grounds of personal jurisdiction
with the court and we, in turn, filed, among others, our opposition to said motion on May 4, 2009. A hearing was held on July 7, 2009, on the personal jurisdiction issue and preliminary injunction. On August 22, 2009, the Court issued
a Scheduling Order setting forth a timeline for this case. On August 24, 2009, the Court entered a Report and Recommendation on Motion to Dismiss recommending that the defendants motion for lack of personal jurisdiction be dismissed and
an Order stating that our preliminary injunction motion would not be adjudicated at that stage and denied the same without prejudice. On September 11, 2009, the defendants filed objections to the Courts Report and Recommendation and on
October 5, 2009 we filed our response to said objections. On September 8, 2009, we filed a Second Amended Complaint to which the defendants filed an Answer and Affirmative Defenses on October 9, 2009. On October 9, 2009, the
defendants also filed a Motion for Summary Judgment based on our alleged lack of standing. In February 2010, the Report and Recommendation was issued by the Court on the Defendants Motion for Summary Judgment. It was denied in all aspects
except the claim for tortious interference, which the court recommended granting.



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In addition to the above, from time to time, we are periodically a party to or otherwise
involved in legal proceedings arising in the normal and ordinary course of business. Other than as described above, as of the date of this Annual Report, management does not believe that there is any proceeding threatened or pending against us
which, if determined adversely, would have a material effect on our business, results of operations, cash flows or financial position.



|ITEM 4. | RESERVED
|------- | --------

PART II



|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ------------------------------------------------------------------------------------------------------------

Market Information

Effective November 17, 2007, our shares of common stock commenced trading on the OTC Bulletin Board and currently trade under the
symbol ELAN.OB. Prior to that date, there was no active market for our common stock and since that date, there have only been limited or sporadic quotations and only a very limited public trading market for our securities. At the close
of business on March 31, 2010, there were approximately 27,630,211 shares of our common stock issued and outstanding which were held by approximately 428 stockholders of record. The following table sets forth the high and low closing sales
prices for our common stock as quoted by OTC Bulletin Board for the periods indicated:



|                                          |  |               |      |         |   |              |  |             |      |  |   |     
|----------------------------------------- |  | ------------- | ---- | ------- | - | ------------ |  | ----------- | ---- |  | - | ----
|                                          |  | Quarter Ended
|                                          |  | March 31      |      | June 30 |   | September 30 |  | December 31
|Common stock price per share during 2009: |  |               |      |         |   |              |  |             |      |  |   |     
|High                                      |  | $             | 1.30 |         | $ | 0.75         |  | $           | 0.73 |  | $ | 0.45
|Low                                       |  | $             | 0.40 |         | $ | 0.30         |  | $           | 0.21 |  | $ | 0.16
|                                          |  |               |      |        
|Common stock price per share during 2008: |  |               |      |         |   |              |  |             |      |  |   |     
|High                                      |  | $             | 1.01 |         | $ | 3.45         |  | $           | 3.00 |  | $ | 2.00
|Low                                       |  | $             | 0.26 |         | $ | 0.62         |  | $           | 1.99 |  | $ | 1.00

The quotations in the
above table reflect inter-dealer prices, without retail markups, markdowns or commissions and may not necessarily represent actual transactions. On March 31, 2010, the last reported bid price of our common stock reported on the OTC Bulletin
Board was $0.27 per share.

Dividend Policy

Holders of our common stock are entitled to receive dividends when and if declared by our Board of Directors out of funds legally
available. We, however, have never paid any cash dividends and do not anticipate paying any cash dividends in the foreseeable future. Instead we intend to retain any future earnings to support the development and growth of our business. We may
consider payment of dividends at some point in the future, but the declaration of dividends is at the discretion of the Board of Directors, and there is no assurance that dividends will be paid at any time. Our Board of Directors will make any such
future determination as to the payment of dividends at its discretion, and its determination will depend upon our operating results, financial condition and capital requirements, general business conditions and such other factors that the Board of
Directors considers relevant. In addition, our loan agreements with various lenders prohibit us from paying cash dividends or making other distributions on our common stock without prior consent.

Issuer Purchases of Equity Security

On October 9, 2008, we announced that our Board of Directors approved a plan to repurchase up to approximately 1,200,000 shares, or
approximately 3%, of our outstanding common stock. Under the common stock repurchase plan, we may purchase shares of our common stock from time to time in the open market at prevailing prices. Repurchased shares will be held in treasury and may be
used in connection with employee benefits and other general corporate purposes. The purchases under the stock repurchase plan will commence at managements discretion, however as of the date of this filing, we have not repurchased any of our
common stock.



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|ITEM 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

Not required for smaller reporting companies.



|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Introduction

The following discussion should be read in conjunction with the information contained in our audited consolidated financial statements and
the related notes thereto, appearing elsewhere herein.

Overview

We are a provider of ICT products and services to small, medium-sized and large businesses as well as government entities and service
providers, primarily in Latin America. We have presence in over 17 countries, including Argentina, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Trinidad & Tobago, Venezuela and the United
States. We also operate in the South Pacific region through our wholly-owned subsidiary, AST Telecom, LLC (AST) which offers mobile communications, Internet services and cable TV services (Moana TV) in American Samoa under the Bluesky
Communications brand. In addition we also own 66 2/3% of the American Samoa Hawaii Cable, LLC (ASH Cable) in partnership with the American Samoa Government, providing high-speed networking connections between the territory of American Samoa and the
rest of the world.

We provide innovative technology solutions that help customers increase efficiency, improve business
agility, decrease costs, and maximize their existing ICT investments in order to achieve competitive advantages. Our service portfolio currently consists of three core business offerings: Network Integration, Managed Services and Business
Transformation Solutions, all of which assist our customers compete effectively in the global economy. We also hold more than 38 certifications and specializations from leading technology companies, including Cisco Systems, Inc. (Cisco),
Microsoft Corporation (Microsoft) and others.

Discontinued Operations

Our discontinued operations are comprised of (i) our investment in Latin Node, Inc. (Latin Node), which filed an
assignment for the benefit of creditors in June 2008, the investment in which is recorded under the equity method of accounting because of a loss in control; (ii) our 50% interest in Datec PNG, over which we had management influence and
guaranteed a portion of Datec PNGs debt; and (iii) certain eLandia predecessor companies that no longer conduct any operations.

On January 28, 2008, we formally committed to a definitive plan to dispose of our Latin Node, Inc. (Latin Node)
operations and began a search for potential buyers. On June 12, 2008 Latin Node filed for an assignment for benefit of creditors in the 11th Judicial Circuit in and for Miami-Dade County, Florida (ABC). Latin Nodes operations
were identifiable components of our company, as their operations and cash flows could be clearly distinguished, operationally and for financial reporting purposes, from the rest of our business. The assets, liabilities and results of operations of
Latin Node were classified as discontinued operations under the consolidation method of accounting because we were deemed to be the principal secured creditor under the ABC and, as such, were entitled to receive all of the proceeds from any asset
sales after the payment of the costs of administration. On November 18, 2008, we reached a settlement agreement regarding Latin Nodes final remaining assets. Once our control over Latin Node was effectively lost, we deconsolidated Latin
Node and began using the equity method of accounting for the investment.

Through April 17, 2009, we held a 50% interest
in Datec PNG. Due to our management influence, we consolidated Datec PNG within our consolidated financial statements. Datec PNG provides technology products, Internet access services and IT services to large corporate organizations. On
April 17, 2009 we sold our 50% ownership interest in Datec PNG to Steamships Ltd.

Critical Accounting Policies and
Estimates

On July 1, 2009, the Financial Accounting Standards Board (FASB) issued The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, which establishes the FASB Accounting Standards Codification (ASC) as the source of authoritative principles recognized by the FASB to
be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). Rules and interpretive releases of the Securities and Exchange Commission
(SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. This standard is effective for financial statements issued for interim and annual periods ending after September 15, 2009.
References to authoritative accounting literature contained in our consolidated financial statements will be made in accordance with the ASC.

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to exercise its judgment. We exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities,
our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the financial statements.



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On an ongoing basis, we evaluate our estimates and judgments. Areas in which we exercise
significant judgment include, but are not necessarily limited to, the amount of uncollectible accounts receivable, the valuation of value added tax (VAT) receivable, deferred taxes and related valuation allowances, the valuation of
noncontrolling interest purchase price obligations, the amount to be paid for the settlement of liabilities of discontinued operations, accrued expenses, the amount allocated to contract rights, customer lists, trade names and goodwill in connection
with acquisitions, along with the estimated useful lives for amortizable intangible assets and property, plant and equipment, warrants granted in connection with various financing transactions, share-based payment arrangements, and the percentage of
completion with respect to production contacts in circumstances where the use of that accounting method is deemed to be appropriate.

We base our estimates and judgments on a variety of factors including our historical experience, knowledge of our business and industry,
current and expected economic conditions, the attributes of our services and products and the regulatory environment. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when
circumstances indicate that modifications are necessary.

While we believe that the factors we evaluate provide us with a
meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from
such estimates.

A description of significant accounting policies that require us to make estimates and assumptions in the
preparation of our consolidated financial statements are as follows:

Revenue Recognition

We generate revenue from product sales and services. The products and services that we offer in each of the geographic areas we serve vary
depending on the infrastructure, existing telecommunication systems and the needs of the region. All revenue is recognized net of discounts, returns and allowances.

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and
collectability is probable. We enter into certain arrangements where we are obligated to deliver multiple products and/or services (multiple elements). In these arrangements, we generally allocate the total revenue among the elements based on the
sales price of each element when sold separately (vendor specific objective evidence).

Revenue recognized in advance of
amounts billable pursuant to contract terms, based on work performed and/or services provided to date, are recorded as unbilled receivables. Unbilled receivables are billable upon various events, including the attainment of performance milestones,
delivery of equipment and/or services or completion of the contract.

Products

Revenue generated from the sale of products is recorded when the products are delivered.

Revenue from sales of technology products includes, among other things, personal computers, servers, routers, switching systems,
networking equipment and communications equipment. Revenue from sales of telecommunications products includes hardware and other products supporting telecommunications services.

Revenue from software license sales is recognized once delivery has occurred, evidence of an arrangement exists, the fee is fixed and
determined and collection of the fee is probable, provided there are no significant vendor obligations remaining. For multiple element arrangements, where Vendor Specific Objective Evidence (VSOE) of fair value is available for all
elements, the contract value is allocated to each element proportionately based upon relative VSOE of fair value and revenue is recognized separately for each element. Where VSOE of fair value is available for all undelivered elements, the residual
method is used to value the delivered elements. Where VSOE of fair value is not available for all undeliverable elements all revenue for the arrangement is deferred until the earlier of the point at which VSOE does exist or all elements of the
arrangement have been delivered.

Information Technology Services

Professional IT services revenue includes professional consulting services pertaining to the planning, design, implementation, operation
and optimization of our technology and telecommunications solutions as well as implementation of customized solutions such as application development, systems integration, training, maintenance and support. Revenue generated from professional
consulting services is generally recognized as the services are performed.

Revenue generated from professional IT services
under periodic contracts such as maintenance and support services is generally recognized ratably over the term of the contract.



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Telecommunications Services

Revenue generated from the provision of telecommunications services is generally recognized as the minutes we sell are used by our
customers. Revenues generated from providing access to and usage of our undersea cable and cable television services consist of fixed monthly or quarterly recurring charges. We recognize revenue for services charged at fixed amounts ratably over the
service period. Revenues generated for the installation of equipment is recognized in the period when the equipment is installed and ready for the customers use. We record payments received from customers in advance of usage as deferred
revenue or customer deposits at the time payment is received.

Education Services

Revenue from education services is generated through the provision of talent development and technical certification courses. Revenue
generated from education services is generally recognized as the courses are completed and the certified testing services are rendered.

Production Type Contracts

From time to time, we enter into contracts that are accounted for using the percentage of completion method. Revenue is recognized on
contracts in process based upon estimated contract revenue and related total cost of the project at completion. The extent of progress toward completion is generally measured based on the ratio of actual cost incurred to total estimated cost at
completion. Labor hours incurred is used as the measure of progress towards completion, and management believes its estimates to completion are reasonably dependable. Management regularly reviews underlying estimates of project profitability.
Revisions to estimates are reflected in the statement of operations in the period in which the facts that give rise to the revision become known. Provisions for anticipated losses are made in the period in which they become determinable.

Vendor Rebates

We have arrangements to receive cash or consideration from certain of our vendors, including rebates. The amounts received or credited
from our vendors are recorded as a reduction of the prices paid for these products and, therefore, such amounts are reflected as a reduction of the cost of revenue. Vendor rebates are typically dependent upon reaching minimum sales thresholds. We
evaluate the likelihood of reaching sales thresholds using past experience and current forecasts and, when rebates can be reasonably estimated, we record a portion of the rebate as progress is made toward the sales threshold.

Vendor rebates for which we have a contractual right of offset are recorded net of accounts payable.

Accounts Receivable

Trade accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts and sales returns.
Estimates for cash discounts and sales returns are based on contractual terms, historical trends and expectations regarding the utilization rates for these programs.

Our policy is to reserve for uncollectible accounts based on our best estimate of the amount of probable credit losses in our existing
accounts receivable. We periodically review our accounts receivable to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account
may be in doubt. Other factors that we consider include our existing contractual obligations, historical payment patterns of our customers and individual customer circumstances, an analysis of days sales outstanding by customer and geographic
region, and a review of the local economic environment and its potential impact on the realizability of accounts receivable. Account balances deemed to be uncollectible are charged to the allowance for doubtful accounts after all means of collection
have been exhausted and the potential for recovery is considered remote.

Inventory

Inventory consists predominantly of technology equipment, products and accessories. Inventory is carried at the lower of cost or net
realizable value. Cost is based on a weighted average or first-in-first-out method. All expenditures incurred in acquiring inventory including transportation and custom duties are included in inventory. Reserves for obsolete inventory are provided
based on historical experience of a variety of factors including sales volume, product life, and levels of inventory at the end of the period.

Value Added Tax

Certain of our operations are subject to Value Added Tax, or VAT, which is usually applied to goods and services purchased in the
respective countries. We account for VAT imposed on our goods and services on a net basis. We are required to remit the VAT we collect to the tax authorities, but may deduct the VAT we have paid on eligible purchases. The VAT return is filed
offsetting the payables against the receivables. The collection of the VAT receivable may extend over a period of up to two years. We review our VAT receivable for impairment whenever events or changes in circumstances indicate the carrying amount
might not be recoverable.



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Goodwill and Other Intangible Assets

Intangible assets consist of customer lists, contract rights and trade names, which are amortized on a straight-line basis over the
estimated useful lives of the assets. We review the carrying value of intangibles and other long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. With respect to the valuation of our goodwill, we considered a variety of factors including the business climate, legal factors, operating performance indicators, competition or sale or disposition of a significant portion of a
reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of
the fair value of each reporting unit. The fair value of each reporting unit is estimated using a discounted cash flow methodology. This requires significant judgments including estimation of future cash flows, which is dependent on internal
forecasts, estimation of long-term rate of growth for our business, the useful life over which cash flows will occur, and determination of our weighted average cost of capital. Changes in those estimates and assumptions could materially affect the
determination of fair value and/or goodwill impairment for each reporting unit. We allocate goodwill to reporting units based on the reporting unit expected to benefit from the combination. We evaluate our reporting units on an annual basis and, if
necessary, reassign goodwill using a relative fair value allocation approach.

As a result of the weakened economic
environment, we undertook a review of the carrying amount of our intangible assets and goodwill as of December 31, 2009. The results of our quantitative analysis indicated that no impairment existed in our intangible assets and goodwill in
Latin America; however, we also considered qualitative factors in our assessment. Specifically, we noted that the weakened economic environment continues to have a negative impact on our operations at Transistemas as evidenced by the significant
operating losses experienced from our operations in Argentina. In addition, we noted the significant country risk that exists in Venezuela (and to a lesser extent in Ecuador) and that the inherent political uncertainty which exists makes any
long-term estimates as to future cash flows derived from that business extremely volatile. Although the weakened economic environment has affected our subsidiaries in other parts of Latin America, the effects have been felt to a much lesser extent.
While the quantitative analysis supports the current carrying value of the intangible assets and goodwill in our other Latin America subsidiaries, we believe that an impairment exists from a qualitative standpoint given the uncertainty and
instability of the future economic environment in certain countries of Latin America and the political risk in some of our markets. Accordingly, at December 31, 2009, we recorded a $15 million impairment charge in the consolidated statement of
operations during the year ended December 31, 2009.

As a result of litigation in Fiji as well as Fijis current
economic instability and uncertain business climate, we undertook a review of the carrying amount of our goodwill as of March 31, 2009 and determined that the value of our goodwill related to Fiji had been impaired. Accordingly, we recorded a
goodwill impairment charge of $1,025,717 during the year ended December 31, 2009.

Income Taxes

We are required to determine the aggregate amount of income tax expense or loss based upon tax statutes in jurisdictions in which we
conduct business. In making these estimates, we adjust our results determined in accordance with generally accepted accounting principles for items that are treated differently by the applicable taxing authorities. Deferred tax assets and
liabilities, as a result of these differences, are reflected on our consolidated balance sheet for temporary differences in loss and credit carry forwards that will reverse in subsequent years. We also establish a valuation allowance against
deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized. Valuation allowances are based, in part, on predictions that management must make as to our results in future periods. The outcome
of events could differ over time which would require that we make changes in our valuation allowance.

Share Based Payments
and Other Equity Transactions

Share-based payment (SBP) awards, including shares issued under employee stock
purchase plans, stock options, restricted stock and stock appreciation rights, result in a cost that is measured at fair value on the awards grant date, based on the estimated number of awards that are expected to vest. Under this method of
accounting, we are required to estimate the fair value of share based payment that we make to our employees by developing assumptions regarding expected holding terms of stock options, volatility rates, and expectation of forfeitures and future
vesting that can significantly impact the amount of compensation cost that we recognize in each reporting period.

We are also
required to apply complex accounting principles with respect to accounting for financing transactions that we have consummated in order to finance the growth of our business. These transactions, which generally consist of convertible debt and equity
instruments, require us to use significant judgment in order to assess the fair values of these instruments at their dates of issuance, which is critical to making a reasonable presentation of our financing costs and how we finance our business.

Formulating estimates in any of the above areas requires us to exercise significant judgment. It is at least reasonably
possible that the estimates of the effect on the financial statements of a condition, situation, or set of circumstances that existed at the date of the financial statements that we considered in formulating our estimates could change in the near
term due to one or more future confirming events. Accordingly, the actual results regarding estimates of any of the above items as they are presented in the financial statements could differ materially from our estimates.



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Recently Issued Accounting Pronouncements

In September 2009, the FASB issued ASU No. 2009-13, Revenue Recognition (Topic 605)  Multiple-Deliverable Revenue
Arrangements (ASU No. 2009-13). ASU No. 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a
combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, Revenue Recognition-Multiple-Element Arrangements, of the Codification for separating consideration in multiple-deliverable arrangements. A selling price
hierarchy is established for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of
allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. Additional disclosures related to a vendors multiple-deliverable revenue
arrangements are also required by this update. ASU No. 2009-13 is effective prospectively for revenue arrangements entered into, or materially modified, in fiscal years beginning on or after June 15, 2010 with early adoption permitted. The
adoption of this pronouncement is not expected to have a material impact on our consolidated financial position or results of operations.

In September 2009, the FASB issued ASU No. 2009-14, Software (Topic 985)  Certain Revenue Arrangements That Include
Software Elements (ASU No. 2009-14). ASU No. 2009-14 changes the accounting model for revenue arrangements that include both tangible products and software elements to allow for alternatives when vendor-specific objective
evidence does not exist. Under this guidance, tangible products containing software components and non-software components that function together to deliver the tangible products essential functionality and hardware components of a tangible
product containing software components are excluded from the software revenue guidance in Subtopic 985-605, Software-Revenue Recognition; thus, these arrangements are excluded from this update. ASU No. 2009-14 is effective
prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 with early adoption permitted. The adoption of this pronouncement is not expected to have a material impact on our
consolidated financial position or results of operations.

In January 2010, the FASB issued ASU No. 2010-06, Fair
Value Measurements and Disclosures (Topic 820)  Improving Disclosures about Fair Value Measurements (ASU No. 2010-06). ASU No. 2010-06 requires more robust disclosures about (1) the different classes of assets
and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2, and 3. The new disclosures and clarifications of
existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value
measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this pronouncement is not expected to have a material impact on our
consolidated financial position or results of operations.

Other accounting standards that have been issued or proposed by the
FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

Results of Operations  Overview

Our business and operating results have been and will continue to be affected by worldwide economic conditions. Our sales are dependent on
certain end markets that are impacted by consumer and infrastructure spending, and our operating results can be adversely affected by reduced demand in those markets. Despite the deterioration in the global macroeconomic market, in the third quarter
of 2009, certain of our customers indicated to us that they had begun to notice some signs of economic stability. We experienced a 3% growth in revenues for the year ending December 31, 2009 compared with the same period in 2008, most notably
with an increase in revenues during the third and fourth quarters of 2009, as compared to our first and second quarters of 2009, primarily as a result of revenues from a single customer project in Ecuador which is expected to be completed in mid
2010.

Sales in a particular period may be significantly impacted by several factors related to revenue recognition, including
large and sporadic purchases by customers; the complexity of transactions such as multiple element arrangements; and final acceptance of the product, system, or solution, among other factors. We are monitoring the current environment and its
potential effects on our customers and on the markets we serve. Additionally, we continue to closely manage our costs in order to respond to changing conditions. We are also managing our capital resources and monitoring capital availability to
ensure that we have sufficient resources to fund our capital needs.

Net loss increased by $24.5 million, or 54%, during the
year ended December 31, 2009, compared with the same period in 2008. The increase in our net loss results primarily from the $16 million charge we recorded in connection with the impairment of our intangible assets and goodwill in our Latin
America and Fiji segment. Additionally, the weakened economic environment, as well as the costs incurred in connection with our initiatives to expand our market presence and related offerings of products and services in early 2009 impacted our loss
from continuing operations. Higher losses on foreign currency swap and foreign exchange loss during the year ended December 31, 2009 compared with the same period in 2008 also contributed to the increase in net loss. The increase in our net
loss was partially offset by a lower net loss from discontinued operations. Net loss per share increased by 62% as of December 31, 2009 compared with December 31, 2008.



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Results of Operations  Latin America

In addition to various lines of traditional and advanced information technology products, we currently offer a broad range of technology
services and solutions built within our comprehensive security and best practices philosophy, providing the solid foundation on which we continue to develop our solutions along three core competencies:



| |  |  | Network Integration: we create tailored ICT solutions integrating products supplied by our strategic partners. Our solutions empower our
customers to effectively increase their employees productivity, enhance customer service, optimize operational costs and lay the basis for improved bottom line results. Central to our offerings is our capability to plan, prepare, deploy,
implement, operate and optimize secure network ICT solutions for corporations, governments and service providers alike. Our Next Generation Network solutions encompass multiple infrastructure and service layers that empower wireline, wireless, cable
operators, over the top operators, broadcast and satellite providers to offer innovative services to their subscribers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Managed Services: By providing a complete array of services based on our technology solutions, we support our customers in achieving
optimal operations and minimum costs, lower risks and continuous technology refresh. Most importantly, we enable our customers to focus on their own core competencies and less on the challenges of building and maintaining a technology
infrastructure. Our broad experience in deploying large and complex projects has demonstrated that these services require a very robust technology infrastructure on our end which enables customers to access advanced technology services without a
significant capital expense or the need to build internal resources and capabilities.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Business Transformation Solutions: In order to help our customers transform their businesses, we develop partnerships with them so that
we understand their capabilities, strategies, and markets and deploy technology-based solutions that lead to fundamental change. Our skills and capabilities enable us to facilitate our customers transformational process in achieving new levels
of growth.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In support of our broad range of offerings we currently hold more than 38 certifications and
specializations from leading technology companies, including Cisco and Microsoft and others. The products and services we offer in each of our markets vary depending on the infrastructure, existing data communications systems and the needs of the
local economy.

Venezuela

We are subject to some limitations on the ability of our Venezuelan operations to expatriate cash and may be subject to similar
restrictions elsewhere in the future. The Venezuelan government has instituted controls that fix the exchange rate between the Bolivar and the U.S. dollar and require approval of all exchanges at this official rate. Prior to 2010, this official rate
has remained steady over the last few years despite significant inflation. The exemptions provided by Venezuelas Criminal Exchange Law for transactions in certain securities has resulted in the establishment of a legal indirect
parallel market of foreign currency exchange, through which companies may obtain foreign currency without requesting it from the government. The exchange rate in the parallel market (parallel rate) is variable and was about 65 percent
less favorable in 2009 when compared with the official rate. The acquisition of foreign currency by Venezuelan companies to honor foreign debt, pay dividends or otherwise expatriate capital is subject to registration and subject to a process of
application and approval by CADIVI and to the availability of foreign currency within the guidelines set forth by the National Executive Power for the allocation of foreign currency. Such approvals have become less forthcoming over time, resulting
in a significant increase in our exchange rate and exchange control risks. We cannot predict if and when we will obtain CADIVI approval to honor foreign debt, distribute dividends or otherwise expatriate capital using the official Venezuelan
exchange rate or the timing of receipt of such approval. For the year ended December 31, 2009, we submitted approximately $27 million for CADIVI approval, of which approximately $21 million had been approved and released to us as of
December 31, 2009. An additional $2 million was approved and released subsequent to December 31, 2009. In light of the ongoing currency exchange control limitations in Venezuela and the increasing cash balance in the Companys
Venezuelan subsidiary, starting in January 2009 the Company began to settle certain of its U.S. dollar-denominated liabilities with dollars obtained through the parallel market at an exchange rate less favorable than the official rate. In 2009, the
Company recorded a $1.9 million net pretax loss on foreign currency to convert Venezuelan Bolivars generated by its business to U.S. dollars at this parallel rate. It is the Companys expectation to continue to settle these U.S.
dollar-denominated liabilities through the parallel market in order to access the cash generated by the business.

Historically, we have utilized the official rate for the remeasurement of our Venezuelan subsidiarys operations from the Bolivar to
the U.S. dollar. In December 2009, we considered our past and continued intent to use the parallel rate to settle our U.S. dollar- denominated liabilities and the fact that we do not expect to be able to remit dividends at the official rate. In view
of these facts and circumstances existing at the end of 2009, we determined that effective December 31, 2009, we would use the parallel rate to translate the operations of our Venezuelan subsidiary. As a result of this decision, we recorded a
pretax loss of $4.4 million. On January 8, 2010, the Venezuelan government announced the devaluation of the Venezuelan Bolivar. The official rate increased from 2.15 Venezuelan Bolivars to the U.S. dollar to 4.30 for non-essential goods (which
is deemed to include telecommunications services). This change did not have an impact on the consolidated financial statements for 2009 or our decision to use the parallel rate for translation purposes.



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As of December 31, 2009, approximately $25,000 (valued at the fixed official rate) of
our cash and cash equivalents were held in Venezuelan Bolivars. For 2009, our Venezuelan subsidiary generated approximately $60.4 million of our consolidated revenue and $4,000 of our consolidated loss from continuing operations at the fixed
official rate. As of December 31, 2009, our Venezuelan subsidiary had $23.8 million of total assets. The official exchange rate was 2.15 Bolivars to the U.S. dollar at December 31, 2009. The estimated exchange rate on the parallel market
was between 5.82 and 5.97 Bolivars to the U.S. dollar at December 31, 2009.

Latin America

Our operations in Latin America were established, and have grown primarily, through acquisition. Excluding discontinued operations, our
first acquisition in the Latin America segment was in November 2007 (Desca, a network integration company with operations in Latin America), followed by additional acquisitions in July 2008 (Transistemas, S.A., a network and system integrator
operating in Argentina) and October 2008 (CTT, an education services integrator in information and communications technologies, business skills and best practices in Latin America). During the year ended December 31, 2009, we made two
additional acquisitions that were immaterial both individually and in aggregate. We used the purchase method of accounting in connection with each of these acquisitions and accordingly, our consolidated financial statements include the results of
operations from the dates of acquisition onward. Actual results of continuing operations for our Latin American segment are as follows:



|                                                               |  |                                 |             |   |      |   |             |  
|-------------------------------------------------------------- |  | ------------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                               |  | For the Year Ended December 31, |            
|                                                               |  | 2009                            |             |   | 2008 |  
|Revenue                                                        |  |                                 |             |   |      |   |             |  
|Product Sales                                                  |  | $                               | 110,639,219 |   |      | $ | 114,837,429 |  
|Services                                                       |  |                                 | 50,081,648  |   |      |   | 38,215,793  |  
|                                                               |  |                                 |             |   |      |   |             |  
|Total Revenue                                                  |  |                                 | 160,720,867 |   |      |   | 153,053,222 |  
|Cost of Revenue                                                |  |                                 |             |   |      |   |             |  
|Product Sales                                                  |  |                                 | 88,051,132  |   |      |   | 93,071,067  |  
|Services                                                       |  |                                 | 32,457,159  |   |      |   | 23,048,757  |  
|                                                               |  |                                 |             |   |      |   |             |  
|Total Cost of Revenue                                          |  |                                 | 120,508,291 |   |      |   | 116,119,824 |  
|                                                               |  |                                 |             |   |      |   |             |  
|Gross Profit                                                   |  |                                 | 40,212,576  |   |      |   | 36,933,398  |  
|                                                               |  |                                 | 25.0        | % |      |   | 24.1        | %
|Expenses                                                       |  |                                 |             |   |      |   |             |  
|Sales, Marketing and Customer Support                          |  |                                 | 26,305,265  |   |      |   | 25,206,827  |  
|General and Administrative                                     |  |                                 | 26,544,876  |   |      |   | 19,865,308  |  
|Impairment of Intangible Assets and Goodwill                   |  |                                 | 15,000,000  |   |      |   |            |  
|Depreciation and Amortization                                  |  |                                 | 2,662,635   |   |      |   | 1,818,008   |  
|Amortization  Intangible Assets                               |  |                                 | 3,481,546   |   |      |   | 2,745,185   |  
|                                                               |  |                                 |             |   |      |   |             |  
|Total Expenses                                                 |  |                                 | 73,994,322  |   |      |   | 49,635,328  |  
|                                                               |  |                                 |             |   |      |   |             |  
|Operating Loss                                                 |  |                                 | (33,781,746 | ) |      |   | (12,701,930 | )
|Interest Expense, Net                                          |  |                                 | (3,639,880  | ) |      |   | (2,904,042  | )
|Change in Value of Noncontrolling Interest Purchase Obligation |  |                                 | 814,127     |   |      |   | 670,000     |  
|Other Income (Expense)                                         |  |                                 | (7,689,271  | ) |      |   | (23,179     | )
|                                                               |  |                                 |             |   |      |   |             |  
|Net Loss Attributable to eLandia                               |  | $                               | (44,296,770 | ) |      | $ | (14,959,151 | )
|                                                               |  |                                 |             |   |      |   |             |  

To provide a more meaningful discussion regarding the comparison of the results of operations from 2009 to
2008, we have provided the following supplemental pro forma information. The discussion below includes the results of operations on a pro-forma basis as if the acquisitions mentioned above had all been completed on January 1, 2008. This
information is not necessarily indicative of the financial results had the acquisitions actually occurred on January 1, 2008 or the financial results of our company as they may be in the future.



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Comparison of the Year Ended December 31, 2009 to the Year Ended
December 31, 2008

The following table sets forth, for the periods indicated, pro forma consolidated statements
of operations information for our continuing operations in Latin America.



|                                                                     |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|-------------------------------------------------------------------- |  | ------------------------------- | ----------- | - | ---- | - | ----------- | -------- |  | - | ----------- | - |  | ------- | --
|                                                                     |  | For the Year Ended December 31, |            
|                                                                     |  | 2009                            |             |   | 2008 |   |             | Change $ |  |   | Change %    |  
|Revenue                                                              |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|Product Sales                                                        |  | $                               | 110,639,219 |   |      | $ | 122,787,059 |          |  | $ | (12,147,840 | ) |  | (9.9    | )%
|Services                                                             |  |                                 | 50,081,648  |   |      |   | 45,605,007  |          |  |   | 4,476,641   |   |  | 9.8     | % 
|                                                                     |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|Total Revenue                                                        |  |                                 | 160,720,867 |   |      |   | 168,392,066 |          |  |   | (7,671,199  | ) |  | (4.6    | )%
|Cost of Revenue                                                      |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|Product Sales                                                        |  |                                 | 88,051,132  |   |      |   | 99,469,410  |          |  |   | (11,418,278 | ) |  | (11.5   | )%
|Services                                                             |  |                                 | 32,457,159  |   |      |   | 26,714,138  |          |  |   | 5,743,021   |   |  | 21.5    | % 
|                                                                     |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|Total Cost of Revenue                                                |  |                                 | 120,508,291 |   |      |   | 126,183,548 |          |  |   | (5,675,257  | ) |  | (4.5    | )%
|                                                                     |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|Gross Profit                                                         |  |                                 | 40,212,576  |   |      |   | 42,208,518  |          |  |   | (1,995,942  | ) |  | (4.7    | )%
|                                                                     |  |                                 | 25.0        | % |      |   | 25.1        | %        |  |   |             |   |  | (0.0    | )%
|Expenses                                                             |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|Sales, Marketing and Customer Support                                |  |                                 | 26,305,265  |   |      |   | 25,247,658  |          |  |   | 1,057,607   |   |  | 4.2     | % 
|General and Administrative                                           |  |                                 | 26,544,876  |   |      |   | 26,441,610  |          |  |   | 103,266     |   |  | 0.4     | % 
|Impairment of Intangible Assets and Goodwill                         |  |                                 | 15,000,000  |   |      |   |            |          |  |   | 15,000,000  |   |  | 100.0   | % 
|Depreciation and Amortization                                        |  |                                 | 2,662,635   |   |      |   | 2,076,018   |          |  |   | 586,617     |   |  | 28.3    | % 
|Amortization  Intangible Assets                                     |  |                                 | 3,481,546   |   |      |   | 3,481,546   |          |  |   |            |   |  | 0.0     | % 
|                                                                     |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|Total Expenses                                                       |  |                                 | 73,994,322  |   |      |   | 57,246,832  |          |  |   | 16,747,490  |   |  | 29.3    | % 
|                                                                     |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|Operating Loss                                                       |  |                                 | (33,781,746 | ) |      |   | (15,038,314 | )        |  |   | (18,743,432 | ) |  | 124.6   | % 
|Interest Expense, Net                                                |  |                                 | (3,639,880  | ) |      |   | (2,957,743  | )        |  |   | (682,137    | ) |  | 23.1    | % 
|Change in Value of Noncontrolling Interest Purchase Price Obligation |  |                                 | 814,127     |   |      |   | 670,000     |          |  |   | 144,127     |   |  | 21.5    | % 
|Other Income (Expense)                                               |  |                                 | (7,689,271  | ) |      |   | 208,135     |          |  |   | (7,897,406  | ) |  | (3794.4 | )%
|                                                                     |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   
|Net Loss                                                             |  | $                               | (44,296,770 | ) |      | $ | (17,117,922 | )        |  | $ | (27,178,848 | ) |  | 158.8   | % 
|                                                                     |  |                                 |             |   |      |   |             |          |  |   |             |   |  |         |   

Product Sales

Revenue from product sales decreased for the year ended December 31, 2009, compared to the same period in 2008, primarily due to a
slowing economy in several Latin American markets resulting from the global financial crises, combined with significant inflation in countries such as Venezuela, Colombia and Argentina. The slower economy and the rise in inflation have made it more
challenging for our customers to maintain their capital spending and, if necessary, obtain credit to fund their purchases. In addition, our association with SIBL has made it more difficult to obtain new customers. Revenue in Colombia in particular
was considerably lower in 2009 compared with the same period in 2008 as several large customers in 2008 made fewer purchases in 2009. Compounding the problem in Colombia, the difficulties that our customers are encountering in terms of obtaining
financing resulted in the termination or postponement of several contracts, including one that resulted in a charge to revenue of approximately $1 million. Also contributing to the lower 2009 revenue is a decline in our Argentinean operations, which
we acquired during the third quarter of 2008, as a result of the softer economic conditions and our conversion of the operations from sales and service of Sun Microsystems equipment to Cisco equipment.

Product gross margin for the year ended December 31, 2009 increased compared to the same period in 2008, primarily due to higher
margins achieved in Argentina after the conversion to Cisco equipment referred to above, as our consolidated purchasing power helps to secure volume pricing through Ciscos rebate program. In addition, significant sales in Venezuela and
Ecuador, with higher than normal profitability, were delivered during the three months ended March 31, 2009 and December 31, 2009, respectively. The resulting effective increase in gross margin was partially offset by lower margins
realized on several specially priced contracts in Colombia and the $1 million reduction in revenue in Colombia during 2009, as discussed above.

During the quarter ended December 31, 2009, we accepted an order aggregating approximately $32 million from a major customer in
Ecuador. As of December 31, 2009, we recognized approximately $12.5 million in product revenues related to this project. We expect to recognize an additional $8.3 million in products and services during the three months ended March 31,
2010 and expect to recognize a substantial portion of the remaining $11.2 million during the balance of 2010.

Services

Revenue from the provision of professional IT services increased for the year ended December 31, 2009, compared with
the same period in 2008. Increases resulting from several new maintenance agreements entered into during 2009, such as multiple service contracts in Venezuela, some of which are expected to generate as much as $0.5 million per quarter in revenue,
offset declines experienced in product sales during 2009 as compared to 2008.



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Service gross margin for the year ended December 31, 2009 decreased compared to the
same period in 2008. The decrease is, primarily a result of lower margins for both maintenance and installation and professional services, and also due to the mix of service revenue. Gross margin was impacted by the costs incurred in reorganizing
and rebuilding our professional IT support team during 2009 as we have made investments in our personnel and market exposure to develop our services portfolio. Offsetting the decrease in gross margin were the efficiencies achieved from the
consolidation of costs among the markets we serve which enabled us to control our costs, while increasing revenues.

Our
service gross margin normally experiences some fluctuations due to various factors such as timing of maintenance service contract initiations and renewals, our strategic expenditures on headcount, and resources to support this business. Other
factors include the mix of service offerings, as the gross margin from our installation and professional services is typically lower than the gross margin from maintenance service agreements. Our continued focus on providing comprehensive support to
our customers networking devices, applications, and infrastructures, may cause installation and professional services to increase to a higher proportion of total service revenue.

Expenses

Sales, marketing and customer support costs include costs associated with advertising and promoting our products and services as well as
supporting the customer after the sale is complete. Sales, marketing and customer support expenses were higher for the year ended December 31, 2009 than for the same period in 2008 primarily as a result of significant investments made to expand
our sales teams in multiple markets and roll out several marketing campaigns supporting our entry into new markets such as Brazil, Peru, El Salvador, Guatemala and Nicaragua.

General and administrative expenses include back office expenses such as executive and support staff costs as well as professional fees
for accounting, legal and other services associated with our Latin America operations. General and administrative expenses for the year ended December 31, 2009 were consistent with the same period in 2008. Lower costs resulting from the
efficiencies from the optimization of our back-office infrastructure, such as the combination of support functions, and the realization of savings from cost control programs, such as the limitation of travel expenses, implemented over the last
several quarters were offset by higher costs during the first quarter of 2009, including certain non-recurring costs such as market research, legal fees and other professional fees required to establish a local presence and obtain licenses and
permits in connection with our entrance into new markets such as Brazil, Peru, El Salvador, Guatemala and Nicaragua. General and administrative expenses were cut by approximately $6 million on an annual basis, mostly through the reduction in
headcount, salaries, office expenses and office-related expenses, in addition to the reduction in headcount by approximately 300 people. We expect to begin realizing the benefits of our cost-cutting measures during 2010.

As a result of the weakened economic environment, we undertook a review of the carrying amount of our intangible assets and goodwill as
of December 31, 2009. The results of our quantitative analysis indicated that no impairment existed in our intangible assets and goodwill in Latin America; however, we also considered qualitative factors in our assessment. Specifically, we
noted that the weakened economic environment in Argentina continues to have a negative impact on our operations at Transistemas as evidenced by the significant operating losses experienced from our operations in Argentina. In addition, we noted the
significant country risk that exists in Venezuela (and to a lesser extent in Ecuador) and that the inherent political uncertainty which exists makes any long-term estimates as to future cash flows derived from that business extremely volatile.
Although the weakened economic environment has affected our subsidiaries in other parts of Latin America, the effects have been felt to a much lesser extent. While the quantitative analysis supports the current carrying value of the intangible
assets and goodwill in our other Latin America subsidiaries, we believe that an impairment exists from a qualitative standpoint given the uncertainty and instability of the future economic environment in certain countries of Latin America and the
political risk in some of our markets. Accordingly, at December 31, 2009, we recorded a $15 million impairment charge related to intangible assets and goodwill in our Latin American segment in the consolidated statement of operations during the
year ended December 31, 2009.

Depreciation and amortization expense represents the straight line expense recognition of
the costs of our property and equipment over their individual estimated useful lives. The expense increased for the year ended December 31, 2009, compared to the same period in 2008, primarily as a result of our investments in the capital
infrastructure required to support our business in current markets as well as our expansion into new markets.

Interest
expense is the cost associated with our outstanding debt obligations in Latin America including lines of credit, loans from financial institutions and capital leases. Interest expense increased for the year ended December 31, 2009, compared to
2008, primarily a result of higher average outstanding debt obligations during the year ended December 31, 2009.

On
July 17, 2009, we consummated a purchase and sale transaction under the 30% Purchase Agreement effective as of July 1, 2009 with Jorge Alvarado. Pursuant to the 30% Purchase Agreement, we purchased the 30% Units of Desca for an aggregate
purchase price of $1.9 million. As a result of our purchase under the 30% Purchase Agreement, effective July 1, 2009, we settled the noncontrolling interest purchase price obligation with Alvarado and Desca became our wholly-owned subsidiary.
For the year ended December 31, 2009, the change in fair value of the noncontrolling interest purchase price obligation of $814,127 was recorded in the statement of operations. The settlement of the noncontrolling interest purchase price
obligation in the amount of $6,134,711 was recorded as a credit to additional paid in capital as of December 31, 2009. For the year ended December 31, 2008, the gain pertaining to the change in fair value of the noncontrolling interest
purchase price obligation represents the decrease in our estimated purchase price for the remaining portion of Desca that we did not own as of December 31, 2008.



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Other income and expense is comprised of non-operating items. The expense for the year ended
December 31, 2009, compared with the expense in 2008, is predominantly a result of losses on the foreign currency swap and changes in foreign currency valuation, offset by income attributable to noncontrolling interests.

Results of Operations  South Pacific

We offer mobile communications, Internet services and cable TV services (Moana TV) in American Samoa under the Bluesky Communications
brand. In addition, we also own 66 2/3% of the American Samoa Hawaii Cable, LLC (ASH Cable) in partnership with the American Samoa Government, providing high-speed networking connections between the territory of American Samoa and the rest of the
world. The products and services we offer in each of these markets vary depending on the infrastructure, existing telecommunication and data communications systems and the needs of the local economy. Our services revenue includes support provided to
our clients by our hardware engineers, software analysts, architects, developers and staff for new or existing software, hardware, systems, or applications as well as ISP and data network infrastructure and telecommunications services. Sales of
related products include computer hardware, communications hardware and commercial off-the-shelf software sold through retail locations or by our direct sales force.

During the third quarter of 2008, we began restructuring our South Pacific operations by consolidating our presence in American Samoa,
Fiji and Papua New Guinea. Further, in April 2009, we sold our operations in Papua New Guinea and, as a result, have classified the results of operations for our Papua New Guinea operations as discontinued operations for all periods presented in our
consolidated financial statements. The reorganization of our South Pacific operations is expected to save us approximately $1 million in operating costs on an annual basis.

Comparison of the Year Ended December 31, 2009 to the Year Ended December 31, 2008

The following table sets forth, for the periods indicated consolidated statements of operations information for our operations in the
South Pacific.



|                                             |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|-------------------------------------------- |  | ------------------------------- | ---------- | - | ---- | - | ---------- | -------- |  | - | ---------- | - |  | ------ | --
|                                             |  | For the Year Ended December 31, |           
|                                             |  | 2009                            |            |   | 2008 |   |            | Change $ |  |   | Change %   |  
|Revenue                                      |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|Product Sales                                |  | $                               | 3,968,565  |   |      | $ | 6,788,301  |          |  | $ | (2,819,736 | ) |  | (41.5  | )%
|Services                                     |  |                                 | 15,092,901 |   |      |   | 13,942,772 |          |  |   | 1,150,129  |   |  | 8.2    | % 
|                                             |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|Total Revenue                                |  |                                 | 19,061,466 |   |      |   | 20,731,073 |          |  |   | (1,669,607 | ) |  | (8.1   | )%
|Cost of Revenue                              |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|Product Sales                                |  |                                 | 3,511,971  |   |      |   | 5,685,587  |          |  |   | (2,173,616 | ) |  | (38.2  | )%
|Services                                     |  |                                 | 5,074,113  |   |      |   | 4,386,970  |          |  |   | 687,143    |   |  | 15.7   | % 
|                                             |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|Total Cost of Revenue                        |  |                                 | 8,586,084  |   |      |   | 10,072,557 |          |  |   | (1,486,473 | ) |  | (14.8  | )%
|                                             |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|Gross Profit                                 |  |                                 | 10,475,382 |   |      |   | 10,658,516 |          |  |   | (183,134   | ) |  | (1.7   | )%
|                                             |  |                                 | 55.0       | % |      |   | 51.4       | %        |  |   |            |   |  | 3.5    | % 
|Expenses                                     |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|Sales, Marketing and Customer Support        |  |                                 | 2,866,439  |   |      |   | 3,154,408  |          |  |   | (287,969   | ) |  | (9.1   | )%
|General and Administrative                   |  |                                 | 4,340,881  |   |      |   | 4,397,872  |          |  |   | (56,991    | ) |  | (1.3   | )%
|Impairment of Intangible Assets and Goodwill |  |                                 | 1,025,717  |   |      |   | 630,802    |          |  |   | 394,915    |   |  | 62.6   | % 
|Depreciation and Amortization                |  |                                 | 3,013,556  |   |      |   | 1,451,562  |          |  |   | 1,561,994  |   |  | 107.6  | % 
|Amortization  Intangible Assets             |  |                                 | 979,365    |   |      |   | 784,278    |          |  |   | 195,087    |   |  | 24.9   | % 
|                                             |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|Total Expenses                               |  |                                 | 12,225,958 |   |      |   | 10,418,922 |          |  |   | 1,807,036  |   |  | 17.3   | % 
|                                             |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|Operating Loss                               |  |                                 | (1,750,576 | ) |      |   | 239,594    |          |  |   | (1,990,170 | ) |  | (830.6 | )%
|Interest Expense, Net                        |  |                                 | (982,378   | ) |      |   | (585,109   | )        |  |   | (397,269   | ) |  | 67.9   | % 
|Other Income (Expense)                       |  |                                 | 589,310    |   |      |   | (282,010   | )        |  |   | 871,320    |   |  | (309.0 | )%
|                                             |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   
|Net Loss                                     |  | $                               | (2,143,644 | ) |      | $ | (627,525   | )        |  | $ | (1,516,119 | ) |  | 241.6  | % 
|                                             |  |                                 |            |   |      |   |            |          |  |   |            |   |  |        |   

Product Sales

Revenue from product sales decreased for the year ended December 31, 2009, as compared to the same period in 2008, primarily as a result
of extremely aggressive pricing programs pursued by some of our competitors on sales of servers, PCs and peripherals, slower sales of telecommunications products such as handsets and accessories and a large corporate communication system sale in
Fiji that occurred during the first quarter of 2008 was not repeated in 2009. Additionally, in April 2009, the Reserve Bank of Fiji announced that Fijis currency had been devalued by 20% effective immediately and the President of Fiji annulled
the countrys constitution, terminated all the judges in the country and declared himself the head of state. As a result of these actions, there has been concern over the future business environment in Fiji which has resulted in slower sales of
more costly technology equipment. In connection with the restructuring and sales of operations in certain markets mentioned above, we have intentionally decreased our sales volume of low margin PC and peripheral products and have continued to seek
ways to focus our future business on the provision of professional IT and other services such as communication services via our undersea cable operations and the delivery of cable television services through our acquisition of Pacific Island Cable
on American Samoa.



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As a result of the factors discussed above and the uncertainty caused by such factors, our
Board of Directors approved managements proposal to cease or dispose of our operations in Fiji. As of December 31, 2009, our operations in Fiji were not being actively marketed for sale and management had not begun an active program to
locate a buyer. Accordingly, our operations in Fiji did not qualify for classification as discontinued operations as of December 31, 2009. At December 31, 2009, assets at Fiji amounted to approximately $2.4 million and liabilities amounted
to approximately $1.1 million.

The cost of revenue from product sales decreased at a slower rate than the corresponding
revenue due to changes in the sales mix in 2009 as compared with 2008, which reflects our shift away from lower margin servers, PCs and peripherals.

Services

Overall, revenue from the provision of services for the year ended December 31, 2009 increased as compared with the same period in
2008 primarily as a result of the provision of communication services through our undersea cable operations, as well as revenues generated from our cable television operations, both of which began generating revenues during the second quarter of
2009. Additionally, during the fourth quarter of 2009, we provided services for many Federal Disaster Recovery agencies in the wake of the September 2009 earthquake and tsunami that struck American Samoa.

The cost of revenue from the provision of services for the year ended December 31, 2009 increased over the same period in 2008
mainly as a result of short-term cost overlaps required to transition the provision of certain of our communication services from satellite based networks to the new undersea fiber optic cable. In addition, our new cable television service offerings
carry a lower overall margin than some of our other services.

Expenses

Sales, marketing and customer support expenses were lower for the year ended December 31, 2009 than for the same period in 2008. This
reduction resulted primarily from the benefits of the regional reorganization, such as operating in fewer markets and scaled back advertising and marketing in certain other markets. In addition, we have evaluated staffing levels along our various
geographic locations and lines of business and have made adjustments, where possible, to reduce our costs.

The 2009
impairment of goodwill represents non-cash charges incurred during the first quarter of 2009. As mentioned above, in April 2009, the Reserve Bank of Fiji announced that Fijis currency had been devalued by 20% effective immediately. Also, in
April 2009, the President of Fiji annulled the countrys constitution, terminated all the judges in the country and declared himself the head of state. As a result of these actions, the Ah Koy litigation discussed in the Legal
Proceedings section below and Fijis current economic instability and uncertain business climate, we undertook a review of the carrying value of our goodwill related to our operations in Fiji during the first quarter of 2009. Based on
this review, we determined that the value of our goodwill related to our operations in Fiji had been impaired and, accordingly, during the first quarter of 2009 we recorded an impairment charge of $1,025,717. During the year ended December 31,
2008, we made the decision to restructure the operations in certain specific South Pacific Island nations (other than Fiji, Papua New Guinea and American Samoa). As a result of this decision, we undertook a review of the carrying amount of our
goodwill as of December 31, 2008 and determined that the value of our goodwill related to certain specific South Pacific Island nations had been impaired. Accordingly, during the year ended December 31, 2008 we recorded an impairment
charge of $630,802.

Expenses related to the depreciation of property, plant and equipment for year ended December 31,
2009 were higher than for the same period in 2008 mainly due to the installation of new network equipment to support the undersea cable operations.

Expenses related to the amortization of intangible assets for the year ended December 31, 2009 increased from the same period in
2008 primarily due to the write off of contract rights associated with the activation of the undersea cable operations, partially offset by the ending of the estimated useful life, and hence the amortization period, of certain intangible assets
acquired in connection with acquisitions made during the three months ended March 31, 2006.

Interest expense, net of
interest income, for the year ended December 31, 2009 increased as compared to the same period in 2008 as a result of new debt associated with the undersea cable operations that was obtained in the late first quarter of 2009 and into the second
quarter of 2009, including the $16.7 million Term Loan Agreement described above under Recent Events.

The
increase in other income, net for the year ended December 31, 2009, as compared to other expense, net for the year ended December 31, 2008 is mainly a result of higher income associated with the noncontrolling interest and recognition of
income due to the settlement of previously recorded obligations.



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##### Table of Contents

Results of Operations  Corporate and Discontinued Operations

Comparison of the Year Ended December 31, 2009 to the Year Ended December 31, 2008

Our corporate headquarters primarily performs administrative services, and as such, does not generate revenue. The discontinued
operations pertain predominantly to our investments in Latin Node and our Papua New Guinea Operations, as discussed below.

The following table sets forth, for the periods indicated, consolidated statements of operations information for our corporate office and
our discontinued operations.



|                                  |  |                                 |             |   |      |   |             |          |  |   |            |   |  |        |   
|--------------------------------- |  | ------------------------------- | ----------- | - | ---- | - | ----------- | -------- |  | - | ---------- | - |  | ------ | --
|                                  |  | For the Year Ended December 31, |            
|                                  |  | 2009                            |             |   | 2008 |   |             | Change $ |  |   | Change %   |  
|Expenses                          |  |                                 |             |   |      |   |             |          |  |   |            |   |  |        |   
|General and Administrative        |  | $                               | 11,465,007  |   |      | $ | 14,854,994  |          |  | $ | (3,389,987 | ) |  | (22.8  | )%
|Depreciation and Amortization     |  |                                 | 80,353      |   |      |   | 29,950      |          |  |   | 50,403     |   |  | 168.3  | % 
|                                  |  |                                 |             |   |      |   |             |          |  |   |            |   |  |        |   
|Total Expenses                    |  |                                 | 11,545,360  |   |      |   | 14,884,944  |          |  |   | (3,339,584 | ) |  | (22.4  | )%
|                                  |  |                                 |             |   |      |   |             |          |  |   |            |   |  |        |   
|Operating Income (Loss)           |  |                                 | (11,545,360 | ) |      |   | (14,884,944 | )        |  |   | 3,339,584  |   |  | (22.4  | )%
|Interest Expense, Net             |  |                                 | 17,680      |   |      |   | (1,697,791  | )        |  |   | 1,715,471  |   |  | (101.0 | )%
|Other Income (Expense)            |  |                                 | (321,857    | ) |      |   | (1,435,103  | )        |  |   | 1,113,246  |   |  | (77.6  | )%
|Loss from Discontinued Operations |  |                                 | (10,468,954 | ) |      |   | (12,774,259 | )        |  |   | 2,305,305  |   |  | (18.0  | )%
|                                  |  |                                 |             |   |      |   |             |          |  |   |            |   |  |        |   
|Net Loss                          |  | $                               | (22,318,491 | ) |      | $ | (30,792,097 | )        |  | $ | 8,473,606  |   |  | (27.5  | )%
|                                  |  |                                 |             |   |      |   |             |          |  |   |            |   |  |        |   

General and administrative expenses are predominantly corporate overhead expenses including executive costs
and fees for professional services. During the year ended December 31, 2009, we have been able to cut general and administrative expenses by approximately $3.4 million, mostly through the reduction in headcount, compensation and related
expenses, as well as the reduction of accounting and professional fees. We expect to continue realizing the benefits of our cost-cutting measures during 2010.

Interest expense, net is a factor of our average outstanding debt and/or excess cash position during the period. At January 1, 2009,
we had $12.0 million outstanding under a bridge loan agreement with SIBL which incurred interest at 6%. This obligation was converted into shares of our Series B Preferred Stock on February 6, 2009. The expense incurred on this obligation was
offset by interest earned on short term investments of excess cash on hand with financial institutions ranging from overnight agreements to nine month certificates of deposit. During the year ended December 31, 2008, we had a $30.3 million
convertible long-term debt obligation outstanding with SIBL, which incurred interest at 10%. In addition, the associated deferred financing costs and note discount were being amortized into interest expense over the term of the note. This obligation
was converted to Series A Preferred Stock and, ultimately common stock on June 30, 2008.

The decrease in other expense
during the year ended December 31, 2009 is primarily the result of lower income attributable to noncontrolling interest as well as a decrease in the value of our liability regarding certain warrants to purchase our common stock, resulting in
income for the current period.

The loss from discontinued operations pertains primarily to our investment in Latin Node and
the sale of our operations in Papua New Guinea. Latin Node was classified as a discontinued operation on January 28, 2008 and, on June 12, 2008 filed for an assignment for benefit of creditors, whereby all of the assets of Latin Node were
transferred to an assignee. We continued to reflect the assets, liabilities and results of operations of Latin Node under the consolidation method of accounting because we were deemed to be the principal secured creditor under the assignment for
benefit of creditors and, as such, were entitled to receive all of the proceeds from any asset sales after the payment of the costs of administration. On November 18, 2008, we reached a settlement agreement regarding Latin Nodes final
assets. Once our control over Latin Node was effectively lost on November 18, 2008, we deconsolidated Latin Node and began using the equity method of accounting for the investment. The results during the year ended December 31, 2008
reflect the losses sustained during the final months of Latin Nodes operations as well as expenses incurred in connection with legal and other costs pertaining to the FCPA investigation and subsequent discontinuance of Latin Node. During the
first quarter of 2009, we received and subsequently cancelled, 375,000 shares of our common stock as a result of a litigation settlement stemming from the purchase of Latin Node, resulting in a gain of approximately $0.5 million. In April 2009, we
sold our operations in Papua New Guinea and, as a result, have classified the results of operations for our Papua New Guinea operations as discontinued operations for all periods presented in our consolidated financial statements.

Liquidity and Capital Resources

Modification of Financing Arrangements with Stanford International Bank Ltd. and Recent Financial Collapse

Prior to 2009, our principal source of liquidity has been the issuances of equity and debt securities, including preferred stock and
convertible promissory notes, to SIBL.



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As noted above in Item 1, Recent Events, on July 21, 2008, we entered
into a Credit Agreement with SIBL, pursuant to which SIBL agreed to provide a loan to us in the principal amount of up to $40 million. On February 6, 2009, as part of a modification to our capital structure, we entered into a Modification
Agreement and a Fourth Amendment with SIBL, the terms and provisions of which are more fully described above in Recent Events.

As a result of the SIBL receiverships, and the uncertainty caused by them, we have lost access to our primary source of financing which
will negatively impact our ability to obtain additional capital which we would need to fund our expansion plans and service our debt obligations. Also, due to the recent circumstances surrounding SIBL, our association with SIBL has become a
significant detriment to our operations and prospects. Several banks in Latin America have restricted our access to revolving credit lines or have prevented additional draws on open credit lines requiring us to use cash reserves to remain current
with our vendors. Our lines of credit with certain vendors have also been tightened with additional deposit or security requirements being added. The uncertainty caused by the possible impact of our association with SIBL has also inhibited our
ability to obtain third party financing and has caused us to expend significant amounts of working capital that were not budgeted or anticipated. However, we do not believe that these factors will have a material adverse effect on our business,
financial condition or results of operations.

In addition, our association with SIBL along with any legal proceedings that
may arise from such association could adversely impact our liquidity, capital resources and operations. Any such legal actions may result in substantial costs and are expected to divert our managements attention and resources. An unfavorable
judgment against us in any legal proceeding or claim could require us to pay monetary damages. Also, an unfavorable judgment in which the counterparty is awarded equitable relief, such as an injunction, could harm our business, consolidated results
of operations and consolidated financial condition.

In addition, local credit markets in Latin America have tightened and
local bank lending policies have become more stringent than in the past. Desca has had local lines of credit expire unrenewed as a result and we have had to supply cash to Desca to replace that liquidity.

There can be no assurance that the plans and actions proposed by management will be successful or that circumstances will not require us
to seek additional funding sources in the future or effectuate plans to conserve liquidity. In addition, there can be no assurance that in the event additional sources of funds are needed they will be available on acceptable terms, if at all.

Overall Cash Inflows and Outflows

We incurred a $59.2 million loss from continuing operations and used $18.5 million of cash in continuing operations for the year ended
December 31, 2009. As of December 31, 2009, we have a $170.3 million accumulated deficit and working capital of $2.2 million.

Operating Activities. We used $18.5 million to fund operations during the year ended December 31, 2009. For the year ended
December 31, 2009, our loss from continuing operations amounted to $59.2 million, which included net non-cash expenses of $33.2 million. Changes in operating assets and liabilities provided $7.4 million in cash.

Investing Activities. We used $0.2 million to fund investing activities during the year ended December 31, 2009. We received
approximately $8.2 million from the redemption of certificates of deposit and $5.6 million from the sale of one of our subsidiaries. We paid approximately $3.6 million for the acquisitions of entities and approximately $15.4 million for investments
in capital assets.

Financing Activities. We received approximately $6.8 million in cash from financing activities
during the year ended December 31, 2009. During the year ended December 31, 2009, we received $3.4 million in net proceeds from lines of credit, notes payable and long-term debt and $6.0 million of proceeds from subscriptions receivable
from the year ended December 31, 2009.

On June 8, 2009, we entered into a Term Loan Agreement in the amount of
$16,672,000 with ANZ, whereby the proceeds of the term loan were used to fund the construction, installation and delivery to customers of a fully operational undersea fiber optic cable linking American Samoa and Samoa to Hawaii and providing
improved long distance telecommunication and data services.

The successful management of our working capital needs is a key
driver of our growth and cash flow generation of our operations in Latin America. One measurement we use to monitor working capital is days sales outstanding (DSO), which measures the number of days we take to collect revenue after a
sale is made. Our consolidated DSO increased from 111 days as of December 31, 2008 to 127 days as of December 31, 2009. Our DSO as of December 31, 2008 is on a pro forma basis to give effect to our 2008 acquisitions, as if these
transactions occurred on January 1, 2008, and the classification of Datec PNG as discontinued operations. The increase in our DSO is mainly attributable to lower sales during the year ended December 31, 2009, compared to the year ended
December 31, 2008, as a result of the weakened economic environment. Also contributing to the increase in our DSO is a higher average accounts receivable balance impacted by slower collection periods and aged accounts receivable balances.

Since 2003, Venezuela has imposed currency controls and created the CADIVI process with the task of establishing detailed
rules and regulations and generally administering the exchange control regime. These controls fix the exchange rate between the Bolivar and the U.S. dollar, and restrict the ability to exchange Bolivars for dollars and vice versa. The near-term
effect has been to restrict our ability to repatriate funds from Venezuela in order to meet our cash requirements. To the extent that we move money in or out of Venezuela, either for cash flow purposes or working capital needs, we are subject to
exchange gains or losses because Venezuela is operating on a fixed exchange rate, whereas the actual market is operating on a variable exchange rate.



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In particular, the currency controls in Venezuela have restricted our ability to make
payments to vendors in U.S. dollars, causing us to borrow money to meet these obligations and to be subject to credit holds, and therefore delaying the delivery of customer orders which, in turn, has delayed or caused the loss of sales.

In order to address and mitigate these issues, we either (i) enter into short-term financing arrangements with our vendors which
extends the date when payment is due, (ii) obtain short-term financing from local banks in country, or (iii) we may deploy working capital from eLandia. Additionally, we continue to successfully decrease our working capital debt and
related interest expense in Latin America and have been able to refinance our long-term needs with long-term debt, which historically was not possible.

We continue to make appropriate applications through the Venezuelan government and CADIVI for approval to obtain U.S. dollars at the
official exchange rate. However, in recent periods, we have experienced difficulties in obtaining such approvals on a timely basis and we have not been given any assurances as to when the approval process would be completed. Due to these delays, we
have used available local currency paid by customers to reduce our debt obligations denominated in that local currency. As a result, when approvals from CADIVI have been obtained we have had to promptly acquire Bolivars using a legal parallel
exchange process in order to obtain U.S. dollars at the official exchange rate which can then be repatriated and used to meet our working capital needs. If previously obtained approvals do not ultimately result in currency conversions at the
official exchange rate or if there is a delay in approvals being honored by CADIVI, we would be required to obtain U.S. dollars at a substantially less favorable exchange rate which would negatively impact our financial results and financial
position. From time to time, we may have to recognize charges to operating income in connection with the exchange of Bolivars to U.S. dollars at rates which were unfavorable to the official exchange rate. During the fourth quarter of 2009, we
received a large amount of approvals from CADIVI which we expect to substantially reduce the risk on our payables and debt obligations.

We believe that we have sufficient working capital on a consolidated basis in order to satisfy any subsidiary needs to the extent that
such fundings are in our best interest as a whole. However, to the extent that we must rely on short-term financing from vendors or local banks, these financing arrangements may involve high interest rates or payment terms which could be unfavorable
to us.

While we have begun to see the beginnings of economic stability and recovery in the markets we currently serve, the
recent global economic crisis has caused a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets. In addition, our
association with SIBL, and the related ongoing uncertainties have made our efforts to raise additional capital more difficult. These conditions not only limit our access to capital, but also make it difficult for our customers, our vendors and us to
accurately forecast and plan future business activities, and could cause U.S. and foreign businesses to slow spending on our products and services, which would delay and lengthen sales cycles. Furthermore, during challenging economic times our
customers may face issues including:



| |  |  | the inability to obtain credit to finance purchases of our products;
| | - |  | --------------------------------------------------------------------



| |  |  | customer insolvencies;
| | - |  | ----------------------



| |  |  | decreased customer confidence to make purchasing decisions;
| | - |  | -----------------------------------------------------------



| |  |  | decreased customer demand; and
| | - |  | ------------------------------



| |  |  | decreased customer ability to pay their trade obligations.
| | - |  | ----------------------------------------------------------

In addition, the recent economic crisis could adversely impact our suppliers ability to provide us with materials and components,
either of which may negatively impact our business, financial condition and results of operations.

Our anticipated growth and
expansion in Latin America has required significant use of our working capital, as well as the use of vendor financings and other forms of borrowings. Along with these investments, we have incurred significant expenses to fund our anticipated
growth. Our customer activity is influenced by seasonal effects related to budget cycles and other factors specific to our target customer base. As such, revenues are generally higher in the fourth quarter. In addition, as our customers continue to
show signs of economic recovery, we believe we will experience revenue growth or expansion during the first and second quarters of 2010. As a result of the anticipated growth, we will need access and availability to our existing vendor financings
and credit facilities and/or will need to obtain additional financing and capital resources. We have also begun utilizing our cash resources to reduce our short-term debt and purchase additional inventory.



36



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##### Table of Contents

Our capital expenditures, together with ongoing operating expenses and obligations to
service our debts, will likely decrease our available cash balances during the next fiscal year. We believe that our current level of working capital will be sufficient to sustain our current operations and service our debt obligations through at
least January 1, 2011. However, there can be no assurance that the plans and actions proposed by management will be successful or that unforeseen circumstances will not require us to seek additional funding sources in the future or effectuate
plans to conserve liquidity in the event additional sources of funds are needed or may not be available on acceptable terms, if at all. Although the overall economy is showing signs of recovery, in particular in the markets we serve, the current
macro-economic conditions create risk and our ability to measure and react to these issues, as well as any issues that may arise as a result of the SIBL matter, will ultimately factor into our future success and ability to meet our business
objectives and fulfill our business plan. In addition, if we are not able to sell our assets or our sources of revenue do not generate sufficient capital to fund operations, we will need to identify other sources of capital and/or we may be required
to modify our business plan. Our inability to obtain needed debt and/or equity financing when needed or to generate sufficient cash from operations may require us to scale back our business plan and limit our planned growth and expansion activities,
abandon projects and/or curtail capital expenditures. The current challenging economic conditions and the unusual events that have affected global financial markets may impair our ability to identify and secure other sources of capital. At this
time, we cannot provide any assurance that other sources of capital will be available.

As discussed above, since
January 1, 2009 our cash position has been declining. We must therefore collect outstanding receivables more rapidly and are dependent on the ability and willingness of our customers to pay the invoiced amounts more rapidly than in the recent
past. If we cannot strengthen our overall financial position, we may experience restrictions on our vendor credit. Such events would have a material adverse impact on our results of operations and financial condition.

Off-Balance Sheet Arrangements

We lease space for operations; sales, marketing and customer support; and general and administrative purposes as well as machinery,
vehicles, and network equipment under lease agreements that expire at various dates through December 2029. Certain leases have renewal options at reduced rates and provisions requiring us to pay maintenance, property taxes and insurance. Generally,
all rental payments are fixed. For the years ended December 31, 2009 and 2008, the aggregate rent expense for all operating leases was $4,187,187 and $3,293,806, respectively. Future minimum commitments on the above agreements are as follows:



|                                |  |   |           
|------------------------------- |  | - | ----------
|For the Year Ended December 31, |  |  
|2010                            |  | $ | 3,068,071 
|2011                            |  |   | 2,728,005 
|2012                            |  |   | 2,510,408 
|2013                            |  |   | 2,303,272 
|2014                            |  |   | 2,195,669 
|Thereafter                      |  |   | 6,714,205 
|                                |  |   |           
|                                |  | $ | 19,519,629
|                                |  |   |           

Impact of Inflation and Changing Prices

We prepared the consolidated financial statements and related financial data presented herein in accordance with U.S. GAAP,
which require the measurement of financial position and operating results in terms of historical dollars. A portion of our business is conducted in countries in which inflation can have a material effect on the relative purchasing power of money
over time. In addition, changes in foreign exchange rates relative to the U.S. dollar can affect the value of non-U.S. dollar net assets, revenues and expenses. As the majority of our revenue and cost of revenue is conducted in U.S. dollar
denominations (or the then current foreign currency equivalent), we currently do not employ any strategies designed to reduce the impact of these fluctuations on our financial performance. The primary impact of inflation on our consolidated results
of operations is increased sales, marketing and customer support costs as well as increased general and administrative costs. We do not believe this impact is material.



|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

Not required for smaller reporting companies.



37



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##### Table of Contents

|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

Index to Consolidated Financial Statements



|                                                                                               |  |     
|---------------------------------------------------------------------------------------------- |  | ----
|                                                                                               |  | Page
|                                                                                               | 
|Report of Independent Registered Public Accounting Firm                                        |  | 39  
|                                                                                               | 
|Consolidated Balance Sheets at December 31, 2009 and 2008                                      |  | 40  
|                                                                                               | 
|Consolidated Statements of Operations for the years ended December 31, 2009 and
2008           |  | 42  
|                                                                                               | 
|Consolidated Statements of Stockholders Equity for the years ended December 31, 2009 and
2008 |  | 43  
|                                                                                               | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2009 and
2008           |  | 44  
|                                                                                               | 
|Notes to Consolidated Financial Statements                                                     |  | 46  



38



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of the

Board of Directors and Shareholders

of eLandia
International Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of eLandia International Inc. and
Subsidiaries (the Company) as of December 31, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders equity and cash flows for each of the years in the two-year period ended December
31,2009. The Companys management is responsible for these financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of eLandia International Inc. and Subsidiaries, as of December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2009, in conformity with
accounting principles generally accepted in the United States of America.

/s/ Morrison, Brown, Argiz & Farra, LLP

Morrison, Brown, Argiz & Farra LLP

Miami, Florida

April 15, 2010



39



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##### Table of Contents

eLandia International Inc. and Subsidiaries

Consolidated Balance Sheets



|                                           |  |                   |             |                   |   |            
|------------------------------------------ |  | ----------------- | ----------- | ----------------- | - | -----------
|                                           |  | December 31, 2009 |             | December 31, 2008
|                                           |  |                  
|ASSETS                                     |  |                   |             |                   |   |            
|Current Assets                             |  |                   |             |                   |   |            
|Cash and Cash Equivalents                  |  | $                 | 18,115,650  |                   | $ | 37,368,768 
|Short-Term Investments                     |  |                   |            |                   |   | 8,157,104  
|Restricted Cash                            |  |                   | 1,875,220   |                   |   | 6,277,374  
|Accounts Receivable, Net                   |  |                   | 53,997,519  |                   |   | 69,806,170 
|Inventories, Net                           |  |                   | 14,812,151  |                   |   | 13,863,542 
|Prepaid Expenses and Other Current Assets  |  |                   | 6,401,914   |                   |   | 7,169,541  
|Deposits with Suppliers and Subcontractors |  |                   | 6,840,478   |                   |   | 2,321,540  
|VAT Receivable, Net                        |  |                   | 4,263,590   |                   |   |           
|Assets Held for Sale                       |  |                   |            |                   |   | 7,421,078  
|                                           |  |                   |             |                   |   |            
|Total Current Assets                       |  |                   | 106,306,522 |                   |   | 152,385,117
|                                           |  |                  
|Property, Plant and Equipment, Net         |  |                   | 36,369,332  |                   |   | 21,450,156 
|Telecommunications Licenses and Agreements |  |                   | 858,743     |                   |   | 858,743    
|Customer Lists, Net                        |  |                   | 1,203,317   |                   |   | 1,371,532  
|Contract Rights, Net                       |  |                   | 78,470      |                   |   | 2,680,845  
|Trade Names, Net                           |  |                   |            |                   |   | 8,151,122  
|Goodwill                                   |  |                   | 10,870,959  |                   |   | 19,145,772 
|Assets Held for Sale - Long-Term           |  |                   |            |                   |   | 16,890,030 
|VAT Receivable, Net                        |  |                   |            |                   |   | 4,350,738  
|Other Assets                               |  |                   | 4,010,149   |                   |   | 5,770,357  
|                                           |  |                   |             |                   |   |            
|TOTAL ASSETS                               |  | $                 | 159,697,492 |                   | $ | 233,054,412
|                                           |  |                   |             |                   |   |            

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



40



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##### Table of Contents

eLandia International Inc. and Subsidiaries

Consolidated Balance Sheets(Continued)





|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------------ | - | ----------------- | - | ------------ | -
|                                                                                                                                                                                                                                                                                             |  | December 31, 2009 |              |   | December 31, 2008 |  
|                                                                                                                                                                                                                                                                                             |  |                  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                                                         |  |                   |              |   |                   |   |              |  
|Current Liabilities                                                                                                                                                                                                                                                                          |  |                   |              |   |                   |   |              |  
|Accounts Payable                                                                                                                                                                                                                                                                             |  | $                 | 39,073,697   |   |                   | $ | 52,267,986   |  
|Accrued Expenses                                                                                                                                                                                                                                                                             |  |                   | 12,982,690   |   |                   |   | 12,549,213   |  
|Lines of Credit                                                                                                                                                                                                                                                                              |  |                   | 11,451,140   |   |                   |   | 27,359,321   |  
|Notes Payable                                                                                                                                                                                                                                                                                |  |                   | 17,850,287   |   |                   |   | 14,501,645   |  
|Long-Term Debt - Current Portion                                                                                                                                                                                                                                                             |  |                   | 4,196,428    |   |                   |   | 6,700,044    |  
|Long-Term Debt - Related Party - Current Portion                                                                                                                                                                                                                                             |  |                   | 513,644      |   |                   |   |             |  
|Capital Lease Obligations - Current Portion                                                                                                                                                                                                                                                  |  |                   | 1,257,416    |   |                   |   | 562,318      |  
|Customer Deposits                                                                                                                                                                                                                                                                            |  |                   | 11,562,218   |   |                   |   | 5,510,050    |  
|Deferred Revenue                                                                                                                                                                                                                                                                             |  |                   | 3,641,348    |   |                   |   | 3,289,152    |  
|Liabilities of Discontinued Operations                                                                                                                                                                                                                                                       |  |                   | 642,562      |   |                   |   | 6,039,739    |  
|Other Current Liabilities                                                                                                                                                                                                                                                                    |  |                   | 970,751      |   |                   |   | 1,433,863    |  
|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  
|Total Current Liabilities                                                                                                                                                                                                                                                                    |  |                   | 104,142,181  |   |                   |   | 130,213,331  |  
|                                                                                                                                                                                                                                                                                             |  |                  
|Long-Term Liabilities                                                                                                                                                                                                                                                                        |  |                   |              |   |                   |   |              |  
|Long-Term Debt, Net of Current Portion                                                                                                                                                                                                                                                       |  |                   | 21,746,594   |   |                   |   | 1,071,157    |  
|Long-Term Debt - Related Party, Net of Current Portion                                                                                                                                                                                                                                       |  |                   |             |   |                   |   | 12,000,000   |  
|Capital Lease Obligations, Net of Current Portion                                                                                                                                                                                                                                            |  |                   | 2,944,489    |   |                   |   | 1,375,425    |  
|Liabilities of Discontinued Operations                                                                                                                                                                                                                                                       |  |                   | 1,000,000    |   |                   |   | 1,564,349    |  
|Other Long-Term Liabilities                                                                                                                                                                                                                                                                  |  |                   | 1,090,732    |   |                   |   | 636,834      |  
|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  
|Total Long-Term Liabilities                                                                                                                                                                                                                                                                  |  |                   | 26,781,815   |   |                   |   | 16,647,765   |  
|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  
|Total Liabilities                                                                                                                                                                                                                                                                            |  |                   | 130,923,996  |   |                   |   | 146,861,096  |  
|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  
|                                                                                                                                                                                                                                                                                             |  |                  
|Commitments and Contingencies                                                                                                                                                                                                                                                                |  |                   |              |   |                   |   |              |  
|                                                                                                                                                                                                                                                                                             |  |                  
|Noncontrolling Interest Purchase Price Obligation                                                                                                                                                                                                                                            |  |                   |             |   |                   |   | 8,798,838    |  
|Common Stock, Subject to Possible Redemption, 433,333 shares at Redemption Value                                                                                                                                                                                                             |  |                   |             |   |                   |   | 2,599,998    |  
|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  
|                                                                                                                                                                                                                                                                                             |  |                   |             |   |                   |   | 11,398,836   |  
|                                                                                                                                                                                                                                                                                             |  |                  
|Stockholders Equity                                                                                                                                                                                                                                                                         |  |                   |              |   |                   |   |              |  
|eLandia International Inc. Stockholders Equity                                                                                                                                                                                                                                              |  |                   |              |   |                   |   |              |  
|Preferred Stock, $0.00001 Par Value; 35,000,000 Shares Authorized; 4,118,263 and 2,340,485 Shares Issued and Outstanding at
December 31, 2009 and 2008, Respectively                                                                                                                         |  |                   |              |   |                   |   |              |  
|                                                                                                                                                                                                                                                                                             |  |                  
|Series A Convertible Preferred Stock, $0.00001 Par Value; 6,500,000 Shares Authorized; -0- Shares Issued and Outstanding at
December 31, 2009 and 2008                                                                                                                                       |  |                   |             |   |                   |   |             |  
|                                                                                                                                                                                                                                                                                             |  |                  
|Series B Convertible Preferred Stock, $0.00001 Par Value; 14,074,074 Shares Authorized; 4,118,263 and 2,340,485 Shares Issued and
Outstanding at December 31, 2009 and 2008, Respectively. Liquidation preference of $27,798,275 and $15,798,273 at December 31, 2009 and 2008, Respectively |  |                   | 16,679,962   |   |                   |   | 15,785,517   |  
|                                                                                                                                                                                                                                                                                             |  |                  
|Common Stock, $0.00001 par value; 200,000,000 Shares Authorized; 27,630,220 and 41,301,932 Shares Issued and 27,630,220 and
40,739,432 Shares Outstanding at December 31, 2009 and 2008, Respectively (Less 433,333 Shares Subject to Possible Redemption at December 31, 2008)              |  |                   | 275          |   |                   |   | 402          |  
|Additional Paid-In Capital                                                                                                                                                                                                                                                                   |  |                   | 171,278,627  |   |                   |   | 151,963,772  |  
|Accumulated Deficit                                                                                                                                                                                                                                                                          |  |                   | (170,321,386 | ) |                   |   | (101,562,481 | )
|Accumulated Other Comprehensive Income                                                                                                                                                                                                                                                       |  |                   | 3,108,194    |   |                   |   | 3,460,633    |  
|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  
|Total eLandia International Inc. Stockholders Equity                                                                                                                                                                                                                                        |  |                   | 20,745,672   |   |                   |   | 69,647,843   |  
|Noncontrolling Interests                                                                                                                                                                                                                                                                     |  |                   | 8,027,824    |   |                   |   | 5,146,637    |  
|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  
|Total Stockholders Equity                                                                                                                                                                                                                                                                   |  |                   | 28,773,496   |   |                   |   | 74,794,480   |  
|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                                                   |  | $                 | 159,697,492  |   |                   | $ | 233,054,412  |  
|                                                                                                                                                                                                                                                                                             |  |                   |              |   |                   |   |              |  

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



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eLandia International Inc. and Subsidiaries

Consolidated Statements of Operations



|                                                                                        |  |                                 |             |   |      |   |             |  
|--------------------------------------------------------------------------------------- |  | ------------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                                        |  | For the Year Ended December 31, |            
|                                                                                        |  | 2009                            |             |   | 2008 |  
|REVENUE                                                                                 |  |                                 |             |   |      |   |             |  
|Product Sales                                                                           |  | $                               | 114,607,784 |   |      | $ | 121,625,730 |  
|Services                                                                                |  |                                 | 65,174,549  |   |      |   | 52,158,565  |  
|                                                                                        |  |                                 |             |   |      |   |             |  
|Total Revenue                                                                           |  |                                 | 179,782,333 |   |      |   | 173,784,295 |  
|                                                                                        |  |                                
|COSTS AND EXPENSES                                                                      |  |                                 |             |   |      |   |             |  
|Cost of Revenue  Product Sales                                                         |  |                                 | 91,563,103  |   |      |   | 98,756,654  |  
|Cost of Revenue  Services                                                              |  |                                 | 37,531,272  |   |      |   | 27,435,727  |  
|Sales, Marketing and Customer Support                                                   |  |                                 | 29,171,704  |   |      |   | 28,361,235  |  
|General and Administrative                                                              |  |                                 | 42,350,764  |   |      |   | 39,118,174  |  
|Impairment of Intangible Assets and Goodwill                                            |  |                                 | 16,025,717  |   |      |   | 630,802     |  
|Depreciation and Amortization                                                           |  |                                 | 5,756,544   |   |      |   | 3,299,520   |  
|Amortization  Intangible Assets                                                        |  |                                 | 4,460,911   |   |      |   | 3,529,463   |  
|                                                                                        |  |                                 |             |   |      |   |             |  
|Total Operating Expenses                                                                |  |                                 | 226,860,015 |   |      |   | 201,131,575 |  
|                                                                                        |  |                                 |             |   |      |   |             |  
|LOSS FROM CONTINUING OPERATIONS                                                         |  |                                 | (47,077,682 | ) |      |   | (27,347,280 | )
|OTHER (EXPENSE) INCOME                                                                  |  |                                 |             |   |      |   |             |  
|Interest Expense and Other Financing Costs                                              |  |                                 | (5,163,634  | ) |      |   | (6,239,709  | )
|Interest Income                                                                         |  |                                 | 559,056     |   |      |   | 1,052,767   |  
|Other Income (Expense)                                                                  |  |                                 | (1,481,910  | ) |      |   | (801,613    | )
|Gain on Sale Leaseback - Related Party                                                  |  |                                 |            |   |      |   | 19,830      |  
|(Loss) Gain on Swap                                                                     |  |                                 | (1,940,308  | ) |      |   | 2,562,938   |  
|Change in Value of Noncontrolling Interest Purchase Price Obligation                    |  |                                 | 814,127     |   |      |   | 670,000     |  
|Foreign Exchange Loss                                                                   |  |                                 | (4,852,187  | ) |      |   | (1,205,080  | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|Total Other Expense                                                                     |  |                                 | (12,064,856 | ) |      |   | (3,940,867  | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE                               |  |                                 | (59,142,538 | ) |      |   | (31,288,147 | )
|Income Tax Expense                                                                      |  |                                 | (26,209     | ) |      |   | (1,028,964  | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|LOSS FROM CONTINUING OPERATIONS, NET OF INCOME TAX EXPENSE                              |  |                                 | (59,168,747 | ) |      |   | (32,317,111 | )
|LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX EXPENSE                            |  |                                 | (10,468,954 | ) |      |   | (12,774,259 | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|NET LOSS                                                                                |  | $                               | (69,637,701 | ) |      | $ | (45,091,370 | )
|Less: Loss (Income) Attributable to Noncontrolling Interests                            |  |                                 | 878,796     |   |      |   | (1,287,403  | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|NET LOSS ATTRIBUTABLE TO ELANDIA INTERNATIONAL INC.                                     |  | $                               | (68,758,905 | ) |      | $ | (46,378,773 | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|                                                                                        |  |                                
|AMOUNTS ATTRIBUTABLE TO ELANDIA INTERNATIONAL INC.                                      |  |                                 |             |   |      |   |             |  
|Loss from Continuing Operations                                                         |  | $                               | (58,289,951 | ) |      | $ | (33,604,514 | )
|Loss from Discontinued Operations                                                       |  |                                 | (10,468,954 | ) |      |   | (12,774,259 | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|NET LOSS ATTRIBUTABLE TO ELANDIA INTERNATIONAL INC.                                     |  | $                               | (68,758,905 | ) |      | $ | (46,378,773 | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|                                                                                        |  |                                
|NET LOSS PER COMMON SHARE ATTRIBUTABLE TO ELANDIA INTERNATIONAL INC., BASIC AND DILUTED |  |                                 |             |   |      |   |             |  
|Continuing Operations                                                                   |  | $                               | (2.12       | ) |      | $ | (1.12       | )
|Discontinued Operations                                                                 |  |                                 | (0.38       | ) |      |   | (0.42       | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|Net Loss per Common Share                                                               |  | $                               | (2.50       | ) |      | $ | (1.54       | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|                                                                                        |  |                                
|Weighted Average Number of Common Shares Outstanding, Basic and Diluted                 |  |                                 | 27,502,286  |   |      |   | 30,136,993  |  
|                                                                                        |  |                                 |             |   |      |   |             |  
|                                                                                        |  |                                
|OTHER COMPREHENSIVE LOSS, NET OF TAX                                                    |  |                                 |             |   |      |   |             |  
|Net Loss                                                                                |  | $                               | (69,637,701 | ) |      | $ | (45,091,370 | )
|Foreign Currency Translation Adjustment                                                 |  |                                 | (352,439    | ) |      |   | 3,487,639   |  
|                                                                                        |  |                                 |             |   |      |   |             |  
|Comprehensive Loss                                                                      |  |                                 | (69,990,140 | ) |      |   | (41,603,731 | )
|Comprehensive Loss (Income) Attributable to Noncontrolling Interest                     |  |                                 | 878,796     |   |      |   | (872,140    | )
|                                                                                        |  |                                 |             |   |      |   |             |  
|COMPREHENSIVE LOSS ATTRIBUTABLE TO ELANDIA INTERNATIONAL INC.                           |  | $                               | (69,111,344 | ) |      | $ | (42,475,871 | )
|                                                                                        |  |                                 |             |   |      |   |             |  

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



42



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##### Table of Contents

eLandia International Inc. and Subsidiaries

Consolidated Statement of Changes in Stockholders Equity



|                                                                                                                                                           |  |                                             |   |  |                                              |     |   |                                |             |   |                    |   |             |             |  |             |                               |  |   |                |   |  |                    |             |   |        |   |              |          |  |   |           |   |  |   |            |   |  |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------- | - |  | -------------------------------------------- | --- | - | ------------------------------ | ----------- | - | ------------------ | - | ----------- | ----------- |  | ----------- | ----------------------------- |  | - | -------------- | - |  | ------------------ | ----------- | - | ------ | - | ------------ | -------- |  | - | --------- | - |  | - | ---------- | - |  | - | ----------- | -
|                                                                                                                                                           |  | Preferred Stock -Series A $0.00001Par Value |   |  | Preferred Stock - Series B$0.00001 Par Value |     |   | Common Stock$0.00001 Par Value |             |   | AdditionalPaid- In |   |             | Accumulated |  |             | AccumulatedOtherComprehensive |  |   | Noncontrolling |   |  | TotalStockholders |            
|                                                                                                                                                           |  | Shares                                      |   |  | Amount                                       |     |   | Shares                         |             |   | Amount             |   |             | Shares      |  |             | Amount                        |  |   | Capital        |   |  | Deficit            |             |   | Income |   |              | Interest |  |   | Equity    |  
|BALANCES  January 1, 2008                                                                                                                                 |  |                                            |   |  | $                                            |    |   |                                | 4,740,741   |   |                    | $ | 29,316,769  |             |  | 17,029,315  |                               |  | $ | 169            |   |  | $                  | 48,668,422  |   |        | $ | (61,148,459  | )        |  | $ | (27,006   | ) |  | $ | 1,339,647  |   |  | $ | 18,149,542  |  
|Issuance of Common Stock Upon Exercise of Warrants                                                                                                         |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  | 5,897,875   |                               |  |   | 59             |   |  |                    | 5,839       |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 5,898       |  
|Issuance of Series B Convertible Preferred Stock                                                                                                           |  |                                            |   |  |                                              |    |   |                                | 8,710,855   |   |                    |   | 58,237,320  |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 58,237,320  |  
|Conversion of Series B Convertible Preferred Stock to Common Stock                                                                                         |  |                                            |   |  |                                              |    |   |                                | (11,111,111 | ) |                    |   | (71,768,572 | )           |  | 11,111,111  |                               |  |   | 111            |   |  |                    | 71,768,461  |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   |            |  
|Accrued Interest Contributed to Capital by Majority Stockholder Upon Conversion of Long-Term Debt                                                          |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    | 4,109,775   |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 4,109,775   |  
|Conversion of Long-Term Debt-Convertible-Related Party to Series A Preferred Stock                                                                         |  | 6,060,000                                   |   |  |                                              | 61  |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    | 30,299,939  |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 30,300,000  |  
|Unamortized Financing Costs and Note Discount Related to Long-Term Debt - Convertible - Related Party Charged to Capital Upon
Conversion of Long-Term Debt |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    | (4,726,451  | ) |        |   |             |          |  |   |          |   |  |   |           |   |  |   | (4,726,451  | )
|Conversion of Series A Convertible Preferred Stock to Common Stock                                                                                         |  | (6,060,000                                  | ) |  |                                              | (61 | ) |                                |            |   |                    |   |            |             |  | 6,060,000   |                               |  |   | 61             |   |  |                    |            |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   |            |  
|Issuance of Restricted Common Stock to Executive                                                                                                           |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  | 187,500     |                               |  |   | 2              |   |  |                    | (2          | ) |        |   |             |          |  |   |          |   |  |   |           |   |  |   |            |  
|Effect of Deconsolidation of Subsidiary                                                                                                                    |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   | 5,964,751    |          |  |   |          |   |  |   |           |   |  |   | 5,964,751   |  
|Purchase of Subsidiary Shares by Noncontrolling Interest                                                                                                   |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   |             |          |  |   |          |   |  |   | 3,466,658  |   |  |   | 3,466,658   |  
|Dividends Paid to Noncontrolling Interest                                                                                                                  |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   |             |          |  |   |          |   |  |   | (531,808   | ) |  |   | (531,808    | )
|Foreign Currency Translation Adjustment                                                                                                                    |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   |             |          |  |   | 3,487,639 |   |  |   | (415,263   | ) |  |   | 3,072,376   |  
|Common Stock Granted to Directors                                                                                                                          |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  | 20,298      |                               |  |   |               |   |  |                    | 65,763      |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 65,763      |  
|Stock-Based Compensation                                                                                                                                   |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    | 1,772,026   |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 1,772,026   |  
|Net (Loss) Income                                                                                                                                          |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   | (46,378,773  | )        |  |   |          |   |  |   | 1,287,403  |   |  |   | (45,091,370 | )
|                                                                                                                                                           |  |                                             |   |  |                                              |     |   |                                |             |   |                    |   |             |             |  |             |                               |  |   |                |   |  |                    |             |   |        |   |              |          |  |   |           |   |  |   |            |   |  |   |             |  
|BALANCES  December 31, 2008                                                                                                                               |  |                                            |   |  | $                                            |    |   |                                | 2,340,485   |   |                    | $ | 15,785,517  |             |  | 40,306,099  |                               |  | $ | 402            |   |  | $                  | 151,963,772 |   |        | $ | (101,562,481 | )        |  | $ | 3,460,633 |   |  | $ | 5,146,637  |   |  | $ | 74,794,480  |  
|Shares Received and Cancelled from Litigation Settlement                                                                                                   |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  | (375,000    | )                             |  |   | (4             | ) |  |                    | (449,996    | ) |        |   |             |          |  |   |          |   |  |   |           |   |  |   | (450,000    | )
|Conversion of Promissory Note - Related Party to Series B Preferred Stock                                                                                  |  |                                            |   |  |                                              |    |   |                                | 1,777,778   |   |                    |   | 894,445     |             |  | (16,148,612 | )                             |  |   | (162           | ) |  |                    | 11,078,506  |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 11,972,789  |  
|Issuance of Restricted Common Stock to Executive                                                                                                           |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  | 562,500     |                               |  |   | 6              |   |  |                    | (6          | ) |        |   |             |          |  |   |          |   |  |   |           |   |  |   |            |  
|Issuance of Common Stock                                                                                                                                   |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  | 1,900       |                               |  |   |               |   |  |                    | 3,134       |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 3,134       |  
|Purchase of Subsidiary Shares by Noncontrolling Interest                                                                                                   |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   |             |          |  |   |          |   |  |   | 6,000,000  |   |  |   | 6,000,000   |  
|Sale of Subsidiary Shares to Noncontrolling Interest                                                                                                       |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   |             |          |  |   |          |   |  |   | (2,240,017 | ) |  |   | (2,240,017  | )
|Effect of Change in Warrant Liability Classification                                                                                                       |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    | (269,629    | ) |        |   |             |          |  |   |          |   |  |   |           |   |  |   | (269,629    | )
|Settlement of Noncontrolling Interest Purchase Price Obligation                                                                                            |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    | 6,134,711   |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 6,134,711   |  
|Issuance of Common Stock in Connection with Purchase of Remaining 30% Interest in Desca                                                                    |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  | 2,500,000   |                               |  |   | 25             |   |  |                    | 849,975     |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 850,000     |  
|Issuance of Common Stock in Settlement of CTT Purchase Price                                                                                               |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  | 350,000     |                               |  |   | 4              |   |  |                    | 104,996     |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 105,000     |  
|Issuance of Common Stock in Settlement of Put/Call Agreement and Issuance of Promissory Note - Related Party                                               |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  | 433,333     |                               |  |   | 4              |   |  |                    | 146,246     |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 146,250     |  
|Foreign Currency Translation Adjustment                                                                                                                    |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   |             |          |  |   | (352,439  | ) |  |   |           |   |  |   | (352,439    | )
|Share-based Compensation                                                                                                                                   |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    | 1,716,918   |   |        |   |             |          |  |   |          |   |  |   |           |   |  |   | 1,716,918   |  
|Net (Loss) Income                                                                                                                                          |  |                                            |   |  |                                              |    |   |                                |            |   |                    |   |            |             |  |            |                               |  |   |               |   |  |                    |            |   |        |   | (68,758,905  | )        |  |   |          |   |  |   | (878,796   | ) |  |   | (69,637,701 | )
|                                                                                                                                                           |  |                                             |   |  |                                              |     |   |                                |             |   |                    |   |             |             |  |             |                               |  |   |                |   |  |                    |             |   |        |   |              |          |  |   |           |   |  |   |            |   |  |   |             |  
|BALANCES  December 31, 2009                                                                                                                               |  |                                            |   |  | $                                            |    |   |                                | 4,118,263   |   |                    | $ | 16,679,962  |             |  | 27,630,220  |                               |  | $ | 275            |   |  | $                  | 171,278,627 |   |        | $ | (170,321,386 | )        |  | $ | 3,108,194 |   |  | $ | 8,027,824  |   |  | $ | 28,773,496  |  
|                                                                                                                                                           |  |                                             |   |  |                                              |     |   |                                |             |   |                    |   |             |             |  |             |                               |  |   |                |   |  |                    |             |   |        |   |              |          |  |   |           |   |  |   |            |   |  |   |             |  

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



43



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eLandia International Inc. and Subsidiaries

Consolidated Statements of Cash Flows



|                                                                                                                            |  |                                 |             |   |      |   |             |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                            |  | For the Year Ended December 31, |            
|                                                                                                                            |  | 2009                            |             |   | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                        |  |                                 |             |   |      |   |             |  
|Net Loss from Continuing Operations                                                                                         |  | $                               | (59,168,747 | ) |      | $ | (32,317,111 | )
|Adjustments to Reconcile Net Loss from Continuing Operations to Net Cash and Cash Equivalents Used in Operating
Activities: |  |                                 |             |   |      |   |             |  
|Provision for Doubtful Accounts                                                                                             |  |                                 | 219,843     |   |      |   | 259,752     |  
|(Recovery) Provision for Non-Collectible VAT Receivable                                                                     |  |                                 | (666,772    | ) |      |   | 277,676     |  
|Impairment of Intangible Assets and Goodwill                                                                                |  |                                 | 16,025,717  |   |      |   | 630,802     |  
|Share-Based Compensation                                                                                                    |  |                                 | 1,716,918   |   |      |   | 1,837,789   |  
|Depreciation and Amortization                                                                                               |  |                                 | 5,756,544   |   |      |   | 3,299,520   |  
|Amortization  Intangible Assets                                                                                            |  |                                 | 4,460,911   |   |      |   | 3,529,463   |  
|Amortization of Deferred Financing Costs and Discount on Long-Term Debt                                                     |  |                                 | 81,803      |   |      |   | 887,547     |  
|Issuance of Common Stock for Marketing Services                                                                             |  |                                 | 3,134       |   |      |   |            |  
|Change in Value of Warrant                                                                                                  |  |                                 | (269,629    | ) |      |   |            |  
|Gain on Sale Leaseback  Related Party                                                                                      |  |                                 |            |   |      |   | (19,830     | )
|Change in Value of Noncontrolling Interest Purchase Price Obligation                                                        |  |                                 | (814,127    | ) |      |   | (670,000    | )
|Foreign Currency Loss                                                                                                       |  |                                 | 4,852,187   |   |      |   | 1,205,080   |  
|Loss (Gain) on Swap                                                                                                         |  |                                 | 1,940,308   |   |      |   | (2,562,938  | )
|Deferred Income Taxes                                                                                                       |  |                                 | (89,869     | ) |      |   | 230,957     |  
|Accrued Interest on Long-Term Debt  Related Party                                                                          |  |                                 | 13,644      |   |      |   |            |  
|Accrued Interest on Convertible Promissory Note  Related Party                                                             |  |                                 |            |   |      |   | 1,515,000   |  
|Changes in Operating Assets and Liabilities:                                                                                |  |                                 |             |   |      |   |             |  
|Accounts Receivable                                                                                                         |  |                                 | 15,588,808  |   |      |   | (33,131,500 | )
|Inventories                                                                                                                 |  |                                 | (948,609    | ) |      |   | 702,901     |  
|Prepaid Expenses and Other Current Assets                                                                                   |  |                                 | 999,733     |   |      |   | (3,346,219  | )
|Deposits with Suppliers and Subcontractors                                                                                  |  |                                 | (4,518,938  | ) |      |   | 747,149     |  
|VAT Receivable                                                                                                              |  |                                 | 753,920     |   |      |   | (569,714    | )
|Other Assets                                                                                                                |  |                                 | 1,838,566   |   |      |   | (3,667,429  | )
|Accounts Payable                                                                                                            |  |                                 | (13,194,289 | ) |      |   | 17,692,266  |  
|Accrued Expenses                                                                                                            |  |                                 | 516,873     |   |      |   | (2,508,677  | )
|Customer Deposits                                                                                                           |  |                                 | 5,989,119   |   |      |   | 349,776     |  
|Deferred Revenue                                                                                                            |  |                                 | 352,196     |   |      |   | 1,231,243   |  
|Other Liabilities                                                                                                           |  |                                 | 33,712      |   |      |   | 824,001     |  
|                                                                                                                            |  |                                 |             |   |      |   |             |  
|TOTAL ADJUSTMENTS                                                                                                           |  |                                 | 40,641,703  |   |      |   | (11,255,385 | )
|                                                                                                                            |  |                                 |             |   |      |   |             |  
|CASH AND CASH EQUIVALENTS USED IN OPERATING ACTIVITIES                                                                      |  |                                 | (18,527,044 | ) |      |   | (43,572,496 | )
|                                                                                                                            |  |                                 |             |   |      |   |             |  
|                                                                                                                            |  |                                
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                                        |  |                                 |             |   |      |   |             |  
|Cash Acquired in Business Acquisitions                                                                                      |  |                                 |            |   |      |   | 852,234     |  
|Cash Paid for Acquisitions                                                                                                  |  |                                 | (3,564,534  | ) |      |   | (7,161,365  | )
|Proceeds from the Sale of Subsidiary                                                                                        |  |                                 | 5,587,573   |   |      |   |            |  
|Settlement of CTT Purchase Price                                                                                            |  |                                 | 600,000     |   |      |   |            |  
|Purchases of Property and Equipment                                                                                         |  |                                 | (15,351,294 | ) |      |   | (6,202,278  | )
|Redemption of Certificates of Deposits                                                                                      |  |                                 | 8,157,104   |   |      |   | (8,157,104  | )
|Restricted Cash                                                                                                             |  |                                 | 4,402,154   |   |      |   | (6,277,374  | )
|Acquisition of Telecommunications License                                                                                   |  |                                 |            |   |      |   | (69,000     | )
|                                                                                                                            |  |                                 |             |   |      |   |             |  
|CASH AND CASH EQUIVALENTS USED IN INVESTING ACTIVITIES                                                                      |  |                                 | (168,997    | ) |      |   | (27,014,887 | )
|                                                                                                                            |  |                                 |             |   |      |   |             |  

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



44



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eLandia International Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Continued)



|                                                                                                              |  |                                 |             |   |      |   |            |  
|------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ----------- | - | ---- | - | ---------- | -
|                                                                                                              |  | For the Year Ended December 31, |            
|                                                                                                              |  | 2009                            |             |   | 2008 |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                          |  |                                 |             |   |      |   |            |  
|(Payments) Proceeds from Lines of Credit, Net                                                                 |  |                                 | (15,908,181 | ) |      |   | 15,268,206 |  
|Proceeds from Notes Payable, Net                                                                              |  |                                 | 3,348,642   |   |      |   |           |  
|Proceeds from Long-Term Debt, Net                                                                             |  |                                 | 15,939,982  |   |      |   | 7,618,812  |  
|Principal Payments on Capital Leases                                                                          |  |                                 | (1,260,265  | ) |      |   | (613,747   | )
|Proceeds from Sale of Series B Preferred Stock, Net of Issuance Costs                                         |  |                                 |            |   |      |   | 58,237,320 |  
|Financing Costs Paid  Series B Preferred Stock                                                               |  |                                 |            |   |      |   | (24,496    | )
|Proceeds from Convertible Promissory Note - Related Party                                                     |  |                                 |            |   |      |   | 12,000,000 |  
|Transaction Costs Paid  Conversion of Promissory Note                                                        |  |                                 | (226,829    | ) |      |   |           |  
|Proceeds from Exercise of Warrants                                                                            |  |                                 |            |   |      |   | 5,898      |  
|Proceeds from Noncontrolling Interest Subscription Receivable                                                 |  |                                 | 6,000,000   |   |      |   | 2,500,000  |  
|Payment to Noncontrolling Interest for Settlement of Purchase Price Obligation                                |  |                                 | (500,000    | ) |      |   |           |  
|Dividends Paid to Noncontrolling Interest                                                                     |  |                                 |            |   |      |   | (531,808   | )
|Payment for Settlement of Put/Call Agreement                                                                  |  |                                 | (259,998    | ) |      |   |           |  
|Financing Costs Paid  Long-Term Debt                                                                         |  |                                 | (307,235    | ) |      |   |           |  
|                                                                                                              |  |                                 |             |   |      |   |            |  
|CASH AND CASH EQUIVALENTS PROVIDED BY FINANCING ACTIVITIES                                                    |  |                                 | 6,826,116   |   |      |   | 94,460,185 |  
|                                                                                                              |  |                                 |             |   |      |   |            |  
|                                                                                                              |  |                                
|CASH FLOWS FROM DISCONTINUED OPERATIONS                                                                       |  |                                 |             |   |      |   |            |  
|Operating Cash Flows                                                                                          |  |                                 | 732,730     |   |      |   | 1,429,200  |  
|Investing Cash Flows                                                                                          |  |                                 |            |   |      |   | (2,152,385 | )
|Financing Cash Flows                                                                                          |  |                                 | (1,129,692  | ) |      |   | (8,123,349 | )
|                                                                                                              |  |                                 |             |   |      |   |            |  
|NET CASH AND CASH EQUIVALENTS USED IN DISCONTINUED OPERATIONS                                                 |  |                                 | (396,962    | ) |      |   | (8,846,534 | )
|                                                                                                              |  |                                 |             |   |      |   |            |  
|Effect of Exchange Rate Changes on Cash and Cash Equivalents                                                  |  |                                 | (6,986,231  | ) |      |   | 2,451,504  |  
|                                                                                                              |  |                                 |             |   |      |   |            |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                          |  |                                 | (19,253,118 | ) |      |   | 17,477,772 |  
|CASH AND CASH EQUIVALENTS Beginning                                                                          |  |                                 | 37,368,768  |   |      |   | 19,890,996 |  
|                                                                                                              |  |                                 |             |   |      |   |            |  
|CASH AND CASH EQUIVALENTS Ending                                                                             |  | $                               | 18,115,650  |   |      | $ | 37,368,768 |  
|                                                                                                              |  |                                 |             |   |      |   |            |  
|                                                                                                              |  |                                
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                             |  |                                 |             |   |      |   |            |  
|Cash Paid During the Periods For:                                                                             |  |                                 |             |   |      |   |            |  
|Interest                                                                                                      |  | $                               | 3,378,129   |   |      | $ | 3,104,021  |  
|Taxes                                                                                                         |  | $                               | 3,876,711   |   |      | $ | 1,097,104  |  
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                                                  |  |                                 |             |   |      |   |            |  
|Conversion of Promissory Notes - Related Party to Series B Convertible Preferred Stock                        |  | $                               | 12,000,000  |   |      | $ |           |  
|Accrued Interest Contributed to Capital Upon Conversion of Promissory Note - Related Party                    |  | $                               | 199,618     |   |      | $ |           |  
|Cancellation of Common Stock Upon Conversion of Promissory Note - Related Party                               |  | $                               | 162         |   |      | $ |           |  
|Sale of Subsidiary Shares to Noncontrolling Interest                                                          |  | $                               | 2,240,017   |   |      | $ |           |  
|Acquisition of Equipment with Issuance of Capital Leases                                                      |  | $                               | 3,524,427   |   |      | $ |           |  
|Issuance of Common Stock in Connection with Settlement of CTT Purchase Price                                  |  | $                               | 105,000     |   |      | $ |           |  
|Issuance of Promissory Note - Related Party in Connection with Settlement of Put/Call Agreement               |  | $                               | 2,340,000   |   |      | $ |           |  
|Value of Common Stock Issued in Connection with Promissory Note                                               |  | $                               | 146,250     |   |      | $ |           |  
|Issuance of Promissory Note - Related Party in Connection with Settlement of Noncontrolling Interest Purchase |  |                                 |             |   |      |   |            |  
|Price Obligation                                                                                              |  | $                               | 500,000     |   |      | $ |           |  
|Settlement of Noncontrolling Interest Purchase Price Obligation                                               |  | $                               | 6,134,711   |   |      | $ |           |  
|Issuance of Common Stock in Connection with Purchase of 30% Interest in Desca                                 |  | $                               | 850,000     |   |      | $ |           |  
|Issuance of Common Stock                                                                                      |  | $                               | 6           |   |      | $ | 1          |  
|Conversion of Convertible Promissory Notes - Related Party to Series A Convertible Preferred Stock            |  | $                               |            |   |      | $ | 30,300,000 |  
|Forgiveness of Accrued Interest on Convertible Promissory Notes                                               |  | $                               |            |   |      | $ | 4,109,775  |  
|Deferred Financing Fees and Debt Discounts Converted to Capital                                               |  | $                               |            |   |      | $ | 4,726,451  |  
|Conversion of Series A Convertible Preferred Stock to Common Stock                                            |  | $                               |            |   |      | $ | 30,300,000 |  
|Conversion of Series B Convertible Preferred Stock to Common Stock                                            |  | $                               |            |   |      | $ | 71,768,572 |  
|Redeemable Common Stock Issued for Acquisition of Transistemas                                                |  | $                               |            |   |      | $ | 2,599,998  |  
|Conversion of Amounts Payable into Promissory Notes                                                           |  | $                               |            |   |      | $ | 4,000,000  |  
|Effect of Deconsolidation of Subsidiary                                                                       |  | $                               |            |   |      | $ | 5,964,751  |  
|Adjustment to Goodwill Based on Allocation of Purchase Price of Desca                                         |  | $                               |            |   |      | $ | 4,652,801  |  

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



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eLandia International Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 1  Organization and Business

eLandia International Inc. (eLandia, Company, we, us, and/or our), through its
subsidiaries, sells information and communications technology (ICT) products and provides professional IT services including technology integration, managed services and education services, and offers telecommunications products and
services in emerging markets, including Latin America and the South Pacific. The products and services we offer in each of these markets vary depending on the infrastructure, existing telecommunication and data communications systems and the needs
of the local economy.

NOTE 2  Liquidity, Financial Condition and Managements Plans

We incurred a $59.2 million loss from continuing operations and used $18.5 of cash in continuing operations for the year ended
December 31, 2009. As of December 31, 2009, we have a $170.3 million accumulated deficit and working capital of $2.2 million. In addition, our net loss for the year ended December 31, 2009, amounting to $69.6 million, includes a loss
of $10.5 million from discontinued operations.

Our net loss includes an aggregate of $33.2 of non-cash charges principally
consisting of $16.0 million for the impairment of intangible assets and goodwill, $10.3 million of depreciation and amortization, $6.8 million for foreign currency loss and loss on swap, $1.7 million of stock based compensation, and a non-cash gain
of $0.8 million for the change in the value of the noncontrolling interest purchase price obligation.

Prior to 2009, our
principal source of liquidity has been the issuances of equity and debt securities, including preferred stock and convertible promissory notes, to Stanford International Bank Ltd. (SIBL) (and its related entities), our former principal
stockholder. However, as discussed in Note 19, due to the collective impact of the uncertainties surrounding SIBL they are no longer a source of funding. Other sources of funds include cash from external financing arrangements, including a term loan
in the amount of $16.7 million and a revolving line of credit facility of up to $5 million from ANZ Finance American Samoa, Inc., various lines of credit with multiple local banks in South and Central America and trade payables financing provided by
our principal supplier.

On June 8, 2009, we entered into a Loan Agreement (Term Loan Agreement) in the amount
of $16,672,000 with ANZ Finance American Samoa, Inc. and ANZ Amerika Samoa Bank (jointly, ANZ). The term loan bears interest at a rate of 2% above the U.S. prime rate and is due on June 3, 2016. The proceeds of the term loan were
used to fund the construction, installation and delivery to customers of a fully operational undersea fiber optic cable linking American Samoa and Samoa to Hawaii and providing improved long distance telecommunication and data services (see Note
17).

On April 17, 2009, we sold our 50% ownership in Datec PNG, Ltd. (Datec PNG) for an aggregate sales price
of $5,610,000 in cash, less selling costs of $22,427 (see Note 7).

On February 6, 2009, SIBL converted $12.0 million of
outstanding debt under a bridge loan agreement into our Series B Preferred Stock (see Note 17).

On July 17, 2009, we
entered into a Securities Purchase Agreement, effective as of July 1, 2009, (the 30% Purchase Agreement) with Jorge Enrique Alvarado Amado (Alvarado). Pursuant to the 30% Purchase Agreement, we purchased 3,000,000 Common
Units (30% Units) of Desca Holding, LLC (Desca) for an aggregate purchase price of $1.9 million, consisting of (i) $500,000 in cash, (ii) a $500,000 promissory note payable on July 1, 2010, and
(iii) 2,500,000 shares of our common stock, valued at $0.9 million. As a result of our purchase of the 30% Units under the 30% Purchase Agreement, effective July 1, 2009, Desca became a wholly-owned subsidiary (see Note 5).

On July 1, 2009, the former owners of Transistemas S.A. (Transistemas Sellers) exercised their option under the Put/Call
Agreement entered into concurrently with the closing of our investment in Transistemas S.A. (Transistemas) effective July 1, 2008. We had a dispute with the Transistemas Sellers when they exercised their Put right. On
August 27, 2009, we entered into a Settlement Agreement with the Transistemas Sellers in full and final settlement of the Put/Call Agreement. Pursuant to the terms of the Settlement Agreement, we agreed to pay the Transistemas Sellers $2.6
million as follows: (i) $260,000 in cash payable on the date of the Settlement Agreement, and (ii) $2,340,000 payable in the form of a non-interest bearing promissory note due on July 15, 2011. In addition, as an inducement to settle
the Put obligation and execute the promissory note, we agreed to issue to the Sellers 433,333 shares of our common stock, valued at $156,000 (see Note 20).

On October 16, 2008, eLandia and the former owners of Center of Technology Transfer Corporation (CTT Sellers) entered
into a Stock Purchase Agreement (the Purchase Agreement) and Escrow Agreement. Pursuant to the Purchase Agreement and Escrow Agreement, $600,000 of the purchase price was deposited with an escrow agent to satisfy our indemnification
rights pursuant to the Purchase Agreement. On September 30, 2009, we agreed to settle certain claims relating to the Net Asset Value (as defined in the Purchase Agreement) of Center of Technology Transfer Corporation (CTT). Pursuant
to the terms of the settlement, the CTT Sellers agreed to release the $600,000 escrow amount to us in exchange for the issuance of 350,000 shares of our common stock to the CTT Sellers, valued at $105,000 (see Note 11).



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eLandia International Inc. and Subsidiaries

Notes to Consolidated Financial Statements(Continued)



Management believes that our current level of working capital at December 31, 2009
will be sufficient to sustain operations through at least January 1, 2011. However, there can be no assurance that the plans and actions proposed by management will be successful or that unforeseen circumstances will not require us to seek
additional funding sources in the future or effectuate plans to conserve liquidity. In addition, there can be no assurance that in the event additional sources of funds are needed they will be available on acceptable terms, if at all.

NOTE 3  Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of eLandia and all of its wholly-owned and majority owned subsidiaries.
We have classified as discontinued operations for all periods presented (i) Latin Node, Inc., the investment in which is recorded under the equity method of accounting because of a loss in control, and which has filed an assignment for the
benefit of creditors, and (ii) the accounts of Datec PNG, which was sold on April 17, 2009. All significant intercompany balances and transactions have been eliminated in consolidation.

The consolidated financial statements are presented in United States dollars. The financial statements of our foreign operations are
stated in foreign currencies, referred to as the functional currency except for Desca, where the functional currency is the U.S. dollar. Functional currency assets and liabilities are translated into the reporting currency, U.S. dollars, using
period end rates of exchange and the related translation adjustments are recorded as a separate component of accumulated other comprehensive income. Functional statements of operations amounts expressed in functional currencies are translated using
average exchange rates for the respective periods. Remeasurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the consolidated statement of operations.

FASB Accounting Standards Codification

On July 1, 2009, the Financial Accounting Standards Board (FASB) issued The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles, which establishes the FASB Accounting Standards Codification (ASC) as the source of authoritative principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for SEC registrants. This standard is effective for financial statements issued for interim and annual periods ending after September 15, 2009. References to authoritative
accounting literature contained in our consolidated financial statements will be made in accordance with the ASC.

Reclassification

We have reclassified certain prior year amounts to conform to the current years presentation. These reclassifications have no effect
on the financial position or results of operations reported as of and for the year ended December 31, 2008.

Use of
Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: the amount of uncollectible accounts receivable, the
valuation of value added tax (VAT) receivable, deferred taxes and related valuation allowances, the valuation of noncontrolling interest purchase price obligations, the amount to be paid for the settlement of liabilities of discontinued
operations, accrued expenses, the amount allocated to contract rights, customer lists, trade names and goodwill in connection with acquisitions, along with the estimated useful lives for amortizable intangible assets and property, plant and
equipment, warrants granted in connection with various financing transactions, share-based payment arrangements, and the percentage of completion with respect to production contracts in circumstances where the use of that accounting method is deemed
to be appropriate.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible
that the estimate of the effect on the consolidated financial statements of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate
could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ from our estimates.



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eLandia International Inc. and Subsidiaries

Notes to Consolidated Financial Statements(Continued)



Revenue Recognition

We generate revenue from product sales and services. The products and services that we offer in each of the geographic areas we serve vary
depending on the infrastructure, existing telecommunication systems and the needs of the region. All revenue is recognized net of discounts, returns and allowances.

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and
collectability is probable. We enter into certain arrangements where we are obligated to deliver multiple products and/or services (multiple elements). In these arrangements, we generally allocate the total revenue among the elements based on the
sales price of each element when sold separately (vendor specific objective evidence).

Revenues recognized in advance of
amounts billable pursuant to contracts terms, based on work performed and/or services provided to date, are recorded as unbilled receivables in the accompanying consolidated balance sheet. Unbilled receivables are billable upon various events,
including the attainment of performance milestones, delivery of equipment and/or services, or completion of the contract.

Products

Revenue generated from the sale of products is recorded when the products are delivered.

Revenue from sales of technology products includes, among other things, personal computers, servers, routers, switching systems,
networking equipment and communications equipment. Revenue from sales of telecommunications products includes hardware and other products supporting telecommunications services.

We are also a licensed reseller of various hardware and software products including products from Cisco Systems, Nortel Networks, Nokia
and Microsoft.

Revenue from software license sales is recognized once delivery has occurred, evidence of an arrangement
exists, the fee is fixed and determined and collection of the fee is probable, provided there are no significant vendor obligations remaining. For multiple element arrangements, where Vendor Specific Objective Evidence (VSOE) of fair
value is available for all elements, the contract value is allocated to each element proportionately based upon relative VSOE of fair value and revenue is recognized separately for each element. Where VSOE of fair value is available for all
undelivered elements, the residual method is used to value the delivered elements. Where VSOE of fair value is not available for all undeliverable elements all revenue for the arrangement is deferred until the earlier of the point at which VSOE does
exist or all elements of the arrangement have been delivered.

Information Technology Services

Professional IT services revenue includes professional consulting services pertaining to the planning, design, implementation, operation
and optimization of our technology and telecommunications solutions as well as implementation of customized solutions such as application development, systems integration, training, maintenance and support. Revenue generated from professional
consulting services is generally recognized as the services are rendered.

Revenue generated from professional IT services
under periodic contracts such as maintenance and support services is generally recognized ratably over the term of the contract.

Telecommunications Services

Revenue generated from the provision of telecommunication services is recognized as the minutes we sell are used by our customers.
Revenues generated from providing access to and usage of our undersea cable and cable television services consist of fixed monthly or quarterly recurring charges. We recognize revenue for services charged at fixed amounts ratably over the service
period. Revenues generated for the installation of equipment is recognized in the period when the equipment is installed and ready for the customers use. We record payments received from customers in advance of usage as deferred revenue or
customer deposits at the time payment is received.

Education Services

Revenue from education services is generated through the provision of talent development and technical certification. Revenue generated
from education services is generally recognized as the courses are completed and the certified testing services are rendered.

Production Type Contracts

From time to time, we enter into contracts that are accounted for using the percentage of completion method. Revenue recognized on
contracts in process is based upon estimated contract revenue and related total cost of the project at completion. The extent of progress toward completion is generally measured based on the ratio of actual cost incurred to total estimated cost at
completion. Labor hours incurred is used as the measure of progress towards completion. Revisions to cost estimates as contracts progress have the effect of increasing or decreasing profits each period. Provisions for anticipated losses are made in
the period in which they become determinable.



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eLandia International Inc. and Subsidiaries

Notes to Consolidated Financial Statements(Continued)



We did not have any significant production contracts in effect during the years ended
December 31, 2009 and 2008.

Vendor Rebates

We have arrangements to receive cash or consideration from certain of our vendors, including rebates. The amounts received or credited
from our vendors are recorded as a reduction of the prices paid for these products and, therefore, such amounts are reflected as a reduction of the cost of revenue. Vendor rebates are typically dependent upon reaching minimum sales thresholds. We
evaluate the likelihood of reaching sales thresholds using past experience and current forecasts and, when rebates can be reasonably estimated, we record a portion of the rebate as progress is made toward the sales threshold.

We accrued approximately $923,000 and $1,493,000 of rebates due from a single vendor that is being accounted for as a reduction of
accounts payable in the accompanying consolidated balance sheets at December 31, 2009 and 2008, respectively.

Cash
and Cash Equivalents

All highly liquid investments with an original maturity of 90 days or less when purchased are
considered to be cash equivalents. Cash equivalents are stated at cost, which approximates market value. Cash equivalents generally consist of certificates of deposit.

Concentration of Credit Risk

Financial instruments that potentially expose us to credit risk include cash and cash equivalents and short-term investments. These
amounts are being held for use for working capital needs and/or future acquisitions. At times, our cash and cash equivalents and/or short-term investments may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation
(FDIC) insurance limit.

Short-Term Investments

All highly liquid investments that have an original maturity of greater than 90 days but less than one year at the date of purchase are
classified as short-term investments. The carrying value of these instruments approximates their fair value. As of December 31, 2009, we did not have any short-term investments.

Restricted Cash

As of December 31, 2009, we had approximately $1.9 million of restricted cash, which was used to collateralize other debts and
obligations.

Accounts Receivable

Trade accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts, and sales returns.
Estimates for cash discounts and sales returns are based on contractual terms, historical trends and expectations regarding the utilization rates for these programs.

Our policy is to reserve for uncollectible accounts based on our best estimate of the amount of probable credit losses in our existing
accounts receivable. We periodically review our accounts receivable to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account
may be in doubt. Other factors that we consider include our existing contractual obligations, historical payment patterns of our customers and individual customer circumstances, an analysis of days sales outstanding by customer and geographic
region, and a review of the local economic environment and its potential impact on the realizability of accounts receivable. Account balances deemed to be uncollectible are charged to the allowance for doubtful accounts after all means of collection
have been exhausted and the potential for recovery is considered remote.

Inventory

Inventory consists predominantly of finished goods inventory, inclusive of technology equipment, products and accessories. Inventory is
carried at the lower of cost or net realizable value. Cost is based on a weighted average or first-in-first-out method. All expenditures incurred in acquiring inventory including transportation and custom duties are included in inventory. Reserves
for obsolete inventory are provided based on historical experience of a variety of factors including sales volume, product life, and levels of inventory at the end of the period. Our reserve for obsolete inventory at December 31, 2009 and 2008
amounted to approximately $1,387,000 and $313,000, respectively.



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eLandia International Inc. and Subsidiaries

Notes to Consolidated Financial Statements(Continued)



Deposits with Suppliers and Subcontractors

Deposits with suppliers and subcontractors mainly represent advance payments for the following:



| |  |  | Payments for installation work to be performed on specific projects. The remaining work to be performed on these projects, as well as any future
payments to be made under these obligations do not represent material commitments or future obligations on our behalf;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Deposits required by suppliers due to our credit rating; and
| | - |  | ------------------------------------------------------------



| |  |  | Union Temporal Entity (UTE) deposits representing expenses incurred as a result of joint bids for Latin American projects. The bidding
process generally ranges from six months to one year.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Value Added Tax

Certain of our operations are subject to Value Added Tax, or VAT, which is usually applied to goods and services purchased in the
respective countries. We account for VAT imposed on our goods and services on a net basis in the consolidated statements of operations. We are required to remit the VAT we collect to the tax authorities, but may deduct the VAT we have paid on
eligible purchases. The VAT return is filed offsetting the payables against the receivables. At December 31, 2009 and 2008, the gross VAT receivable amounted to $4,882,593 and $5,636,513, respectively. The collection of the VAT receivable may
extend over a period of up to two years. We review our VAT receivable for impairment whenever events or changes in circumstances indicate the carrying amount might not be recoverable. As of December 31, 2009 and 2008, we determined that a
portion of the VAT receivable balance may not be recoverable and therefore we recorded a reserve of $619,003 and $1,285,775, respectively, which reduced the net VAT receivable to $4,263,590 and $4,350,738, respectively.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and depreciation is calculated using the straight line method over the estimated useful
lives of the related assets as follows:



|                                                              |  |              
|------------------------------------------------------------- |  | -------------
|Leasehold Improvements (shorter of useful life or lease term) |  | 3 to 7 years 
|Building                                                      |  | 50 years     
|Furniture and Fixtures                                        |  | 5 to 10 years
|Network Equipment                                             |  | 5 to 10 years
|Office Equipment and Software                                 |  | 3 to 10 years
|Vehicles                                                      |  | 5 to 10 years

When
property, plant and equipment are retired, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and the resulting gain or loss is credited or charged to operations. Maintenance and repairs are
expensed as incurred, while replacements and betterments that extend estimated useful lives are capitalized.

Long Lived
Assets

We periodically review the carrying values of our long lived assets when events or changes in circumstances
would indicate that it is more likely than not that their carrying values may exceed their realizable values, and record impairment charges when considered necessary.

When circumstances indicate that impairment may have occurred, we test such assets for recoverability by comparing the estimated
undiscounted future cash flows expected to result from the use of such assets and their eventual disposition to their carrying amounts. In estimating these future cash flows, assets and liabilities are grouped at the lowest level for which there are
identifiable cash flows that are largely independent of the cash flows generated by other such groups. If the undiscounted future cash flows are less than the carrying amount of the asset, an impairment loss, measured as the excess of the carrying
value of the asset over its estimated fair value, is recognized.

Goodwill

We are required to test goodwill for impairment at the reporting unit level (operating segment or one level below an operating segment) on
an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change
in the business climate, legal factors, operating performance indicators, competition or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test requires judgment, including the identification of
reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated using a discounted
cash flow methodology. This requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, the useful life over which cash flows will
occur, and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. We allocate goodwill to
reporting units based on the reporting unit expected to benefit from the combination. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach.



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eLandia International Inc. and Subsidiaries

Notes to Consolidated Financial Statements(Continued)



As more fully discussed in Note 11 and 12, we undertook a review of the carrying amount
of our goodwill and intangible assets as of December 31, 2009 and determined that the value of our goodwill and intangible assets related to our operations in Latin America and Fiji had been impaired. Accordingly, we recorded an impairment
charge of $16,025,717 in the accompanying consolidated statement of operations during the year ended December 31, 2009.

Effective June 30, 2008, management made the decision and began to restructure the operations in certain specific South Pacific
island nations (other than Fiji, Papua New Guinea and American Samoa). As a result of this decision, we undertook a review of the carrying amount of our goodwill as of June 30, 2008 and determined that the value of our goodwill related to
certain specific South Pacific island nations had been impaired. Accordingly, we recorded an impairment charge of $630,802 in the accompanying consolidated statement of operations during the year ended December 31, 2008.

We will continue to evaluate goodwill and intangible assets for impairment, at least annually. Other than as set forth above, during the
years ended December 31, 2009 and 2008, we did not identify any indication of goodwill or intangible asset impairment in our other reporting units.

Deferred Financing Costs

Direct costs incurred in connection with issuing debt securities or entering into line of credit arrangements are recorded as deferred
financing costs and are amortized as interest expense over the term of the related debt instruments or credit facility. Deferred financing costs include cash and the fair value of common stock purchase warrants issued to placement agents and others
as fees for providing advisory services and facilitating debt financing transactions.

Convertible Instruments

We review all of our convertible instruments for the existence of an embedded conversion feature which may require bifurcation
if certain criteria are met. The criteria, if met, require companies to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments. These three criteria include circumstances in
which:



| | (a) | the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host
contract,
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally
accepted accounting principles with changes in fair value reported in earnings as they occur, and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to certain requirements (except for
when the host instrument is deemed to be conventional).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

When we have determined that the embedded conversion
options should not be bifurcated from their host instruments, we record discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying
common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of
redemption. Also when necessary, we record deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of
the financing transaction and the effective conversion price embedded in the preferred shares.

We evaluated the conversion
options embedded in our convertible instruments during each of the reporting periods presented.

The characteristics of common
stock that were issuable upon a holders exercise of conversion options embedded in its preferred shares are considered clearly and closely related to the characteristics of the preferred shares. Accordingly, we determined that the conversion
options embedded in our preferred shares did not require bifurcation and are therefore being accounted for as embedded derivatives. Additionally, if a conversion feature is reset upon the occurrence of a future event based upon a contractual
provision existing at the commitment date of the financing transaction, the conversion option should be evaluated on the date of the reset and measured using the commitment date fair value of the stock as the basis for computing intrinsic value at
the date of the reset. The convertible preferred shares feature anti-dilution provisions to adjust the number of shares issuable upon conversion in the event of a stock split, stock dividend or similar recapitalization event but do not
require the Company to adjust the exercise price of the conversion option in the event of a subsequent sale of equity securities or convertible instruments at a price or conversion prices more favorable than those in effect in the outstanding
preferred shares.



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eLandia International Inc. and Subsidiaries

Notes to Consolidated Financial Statements(Continued)



The conversion option included in our convertible notes, which were convertible into
Series A Convertible Preferred Stock, was considered a conventional instrument. Accordingly, we accounted for these conversion options as embedded derivatives.

Preferred Stock

Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. We
classify conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely
within the Companys control, as temporary equity. At all other times, we classify our preferred stock in stockholders equity.

Our preferred shares do not feature any redemption rights within the holders control or conditional redemption features not solely
within our control as of December 31, 2009. Accordingly, all issuances of preferred stock are presented as a component of stockholders equity.

Common Stock Purchase Warrants and Derivative Financial Instruments

We classify as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives us a choice of
net-cash settlement or settlement in our own shares (physical settlement or net-share settlement). We classify as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract
if an event occurs and if that event is outside our control) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess classification of our common stock
purchase warrants and other freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.

Our freestanding derivatives consist of warrants to purchase common stock that we issued in connection with various financing
transactions. We evaluated these freestanding derivatives to assess their proper classification in the consolidated balance sheet as of December 31, 2009 and 2008. Financial instruments which do not have fixed settlement provisions are
deemed to be derivative instruments. The common stock warrants issued to Stanford Group Company (SGC) in connection with our November 2007 $35 million Preferred Stock Purchase Agreement do not have fixed settlement provisions because
their exercise prices may be lowered if we issue securities at lower prices in the future. Accordingly, the warrants were recognized as a derivative instrument and have been re-characterized as derivative liabilities. We are required to re-measure
the fair value of these liabilities at the end of every reporting period with the change in value reported in the statement of operations. Effective January 1, 2009, we reclassified the fair value of these common stock purchase warrants from
equity to liability as if these warrants were treated as a derivative liability since their date of issue. The fair value of the derivative liability was not considered to be material as of December 31, 2009 and January 1, 2009.

We determined that our remaining outstanding common stock purchase warrants satisfied the criteria for classification as
equity instruments at December 31, 2009 and 2008.

Advertising Costs

Advertising costs are expensed as they are incurred and are included in general and administrative expenses. Advertising costs for the
years ended December 31, 2009 and 2008 amounted to approximately $814,000 and $1,825,000, respectively.

Acquisition-Related Costs

Effective January 1, 2009, acquisition-related costs incurred to effect a business combination, including finders fees,
advisory, legal, accounting, valuation, and other professional or consulting fees, are accounted for as expenses in the periods in which the costs are incurred and the services are received. As of December 31, 2008, we elected to expense all
acquisition-related costs in connection with acquisitions that were in process, but had not yet closed. Such expense amounted to $139,513 for the year ended December 31, 2008 and is included in general and administrative expenses in the
accompanying consolidated statements of operations. Acquisition-related costs relating to acquisitions completed by December 31, 2008 are included in the cost of the acquired entity.



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Notes to Consolidated Financial Statements(Continued)



Share Based Payment Arrangements

Share-based payment awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock
appreciation rights, are measured at their fair value on the awards grant date, based on the estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are
recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded in general and administrative expense in
the accompanying consolidated statements of operations.

Income Taxes

Current income taxes are based on the respective periods taxable income for federal and state income tax reporting purposes.
Deferred tax liabilities and assets are determined based on the difference between the financial statement and income tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to
reverse. A valuation allowance is required if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. For United States income tax purposes, management
concluded a full valuation allowance was appropriate at December 31, 2009 and 2008 due to operating losses incurred.

Highly certain tax positions are determined based upon the likelihood of the positions sustained upon examination by the taxing
authorities. The benefit of a tax position is recognized in the financial statements in the period during which management believes it is more likely than not that the position will be sustained. Tax positions taken are not offset or aggregated with
other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The
portion of the benefits associated with tax positions taken that exceeds the amount measured is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets. Interest associated with unrecognized tax
benefits is classified as interest expense and penalties that would be payable to the taxing authorities upon examination are classified in income tax expenses, if any, in the consolidated statements of operations.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss per share attributable to eLandia by the weighted average number of common
shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive
securities into common stock using the treasury stock and/or if converted methods as applicable. The computation of basic and diluted net loss per share for the years ended December 31, 2009 and 2008 includes 28,125
warrants, with an exercise price of $.001 per share.

The computation of basic net loss per share for the years ended
December 31, 2009 and 2008 excludes the following potentially dilutive securities because their inclusion would be anti-dilutive.



|                               |  |                                 |  |           
|------------------------------ |  | ------------------------------- |  | ----------
|                               |  | For the Year Ended December 31,
|                               |  | 2009                            |  | 2008      
|Convertible Preferred Stock    |  | 4,118,263                       |  | 2,340,485 
|Common Stock Purchase Warrants |  | 1,409,259                       |  | 1,409,259 
|Stock Options                  |  | 7,622,875                       |  | 6,232,250 
|Non-Vested Restricted Stock    |  |                                |  | 562,500   
|                               |  |                                 |  |           
|                               |  | 13,150,397                      |  | 10,544,494
|                               |  |                                 |  |           

Foreign Currency Translation and Remeasurement

The consolidated financial statements are presented in United States dollars. The financial statements of our foreign
operations are stated in foreign currencies, referred to as the functional currency except for Desca Holding, LLC, where the functional currency is the U.S. dollar. Functional currency assets and liabilities are translated into the reporting
currency, U.S. dollars, using period end rates of exchange and the related translation adjustments are recorded as a separate component of accumulated other comprehensive income. Functional statements of operations amounts expressed in functional
currencies are translated using average exchange rates for the respective periods. Remeasurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the consolidated
statement of operations.

Comprehensive Loss

Other comprehensive loss includes all changes in stockholders equity during a period from non-owner sources and is reported in the
consolidated statement of stockholders equity. To date, other comprehensive loss consists of changes in accumulated foreign currency translation adjustments during the years.



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Notes to Consolidated Financial Statements(Continued)



Recently Adopted Accounting Pronouncements

In December 2007, the FASB issued authoritative guidance to affirm that the acquisition method of accounting (previously referred to as
the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. The guidance defines the acquirer as the entity that obtains control of one or more businesses in the business combination
and establishes the acquisition date as the date that the acquirer achieves control instead of the date that the consideration is transferred. The guidance also requires an acquirer in a business combination, including business combinations achieved
in stages (step acquisition), to recognize the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. It also requires
the recognition of assets acquired and liabilities assumed arising from certain contractual contingencies as of the acquisition date, measured at their acquisition-date fair values. Additionally, the guidance requires acquisition-related costs to be
expensed in the period in which the costs are incurred and the services are received instead of including such costs as part of the acquisition price. The adoption of this guidance did not have a significant impact on our consolidated financial
statements, as the acquisitions made during the year ended December 31, 2009 were not material.

In December 2007, the
FASB issued authoritative guidance which established accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance defines a noncontrolling interest, previously called a
minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. The guidance requires, among other items, that a noncontrolling interest be included in the consolidated statement of financial
position within equity separate from the parents equity; consolidated net income to be reported at amounts inclusive of both the parents and noncontrolling interests shares and, separately, the amounts of consolidated net income
attributable to the parent and noncontrolling interest all on the consolidated statement of operations; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a
gain or loss be recognized in net income based on such fair value. The presentation and disclosure requirements of the guidance were applied retrospectively. The change in fair value of the noncontrolling interest purchase price obligation is
recorded in the statement of operations.

In February 2008, the FASB issued authoritative guidance as it relates to
non-financial assets and non-financial liabilities that are not recognized or disclosed at fair value in the consolidated financial statements on at least an annual basis. The guidance defines fair value, establishes a framework for measuring fair
value in GAAP, and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited
exceptions. The adoption of this guidance, as it relates to non-financial assets and non-financial liabilities had no impact on our consolidated financial statements. The provisions of this guidance will be applied at such time a fair value
measurement of a non-financial asset or non-financial liability is required, which may result in a fair value that is materially different than would have been calculated prior to the adoption of this guidance (Note 4).

In April 2009, the FASB issued authoritative guidance requiring that assets acquired and liabilities assumed in a business combination
that arise from contingencies be recognized at fair value if fair value can be reasonably determined. If the fair value of such assets or liabilities cannot be reasonably determined, then they would generally be recognized in accordance with
certain other pre-existing accounting standards. This guidance also amends the subsequent accounting for assets and liabilities arising from contingencies in a business combination and certain other disclosure requirements. The adoption of
this guidance did not have a significant impact on our consolidated financial statements.

Recently Issued Accounting
Pronouncements

In September 2009, the FASB issued ASU No. 2009-13, Revenue Recognition (Topic 605) 
Multiple-Deliverable Revenue Arrangements (ASU No. 2009-13). ASU No. 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables)
separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, Revenue Recognition-Multiple-Element Arrangements, of the Codification for separating consideration in multiple-deliverable
arrangements. A selling price hierarchy is established for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also
eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. Additional disclosures related to a vendors
multiple-deliverable revenue arrangements are also required by this update. ASU No. 2009-13 is effective prospectively for revenue arrangements entered into, or materially modified, in fiscal years beginning on or after June 15, 2010 with
early adoption permitted. The adoption of this pronouncement is not expected to have a material impact on our consolidated financial position or results of operations.

In September 2009, the FASB issued ASU No. 2009-14, Software (Topic 985)  Certain Revenue Arrangements That Include
Software Elements (ASU No. 2009-14). ASU No. 2009-14 changes the accounting model for revenue arrangements that include both tangible products and software elements to allow for alternatives when vendor-specific objective
evidence does not exist. Under this guidance, tangible products containing software components and non-software components that function together to deliver the tangible products essential functionality and hardware components of a tangible
product containing software components are excluded from the software revenue guidance in Subtopic 985-605, Software-Revenue Recognition; thus, these arrangements are excluded from this update. ASU No. 2009-14 is effective
prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 with early adoption permitted. The adoption of this pronouncement is not expected to have a material impact on our
consolidated financial position or results of operations.



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Notes to Consolidated Financial Statements(Continued)



In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and
Disclosures (Topic 820)  Improving Disclosures about Fair Value Measurements (ASU No. 2010-06). ASU No. 2010-06 requires more robust disclosures about (1) the different classes of assets and liabilities
measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2, and 3. The new disclosures and clarifications of existing
disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value
measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this pronouncement is not expected to have a material impact on our
consolidated financial position or results of operations.

Other accounting standards that have been issued or proposed by the
FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

NOTE 4  Fair Value

We have determined the estimated fair value amounts presented in these consolidated financial statements using available market
information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in the consolidated financial statements are not necessarily indicative
of the amounts that we could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. We have based these fair value estimates on
pertinent information available as of December 31, 2009 and 2008. As of December 31, 2009 and 2008, the carrying value of all financial instruments approximates fair value.

We have categorized our assets and liabilities recorded at fair value based upon the following fair value hierarchy:



| |  |  | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2 inputs utilize other-than-quoted prices that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar
assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3 inputs are unobservable and are typically based on our own assumptions, including situations where there is little, if any, market activity.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, we categorize such financial asset or liability based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value
measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Both observable and
unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category presented in the tables below may
include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in historical company data) inputs.



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Notes to Consolidated Financial Statements(Continued)



The following are the major categories of assets measured at fair value on a
nonrecurring basis during the years ended December 31, 2009 and 2008, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs
(Level 3):



|                  |  |                                                          |     |                                          |   |                                       |  |                          |            |                                                  |   |            |  |   |           
|----------------- |  | -------------------------------------------------------- | --- | ---------------------------------------- | - | ------------------------------------- |  | ------------------------ | ---------- | ------------------------------------------------ | - | ---------- |  | - | ----------
|                  |  | December 31, 2009                                       
|                  |  | Level 1:Quoted Pricesin ActiveMarkets forIdenticalAssets |     | Level 2:SignificantOtherObservableInputs |   | Level 3:SignificantUnobservableInputs |  | Total atDecember 31,2009 |            | TotalImpairmentfor the YearEndedDecember 31,2009
|Goodwill          |  | $                                                        | -0- |                                          | $ | -0-                                   |  | $                        | 10,870,959 |                                                  | $ | 10,870,959 |  | $ | 8,689,817 
|Intangible Assets |  |                                                          | -0- |                                          |   | -0-                                   |  |                          | 2,140,530  |                                                  |   | 2,140,530  |  |   | 7,335,900 
|                  |  |                                                          |     |                                          |   |                                       |  |                          |            |                                                  |   |            |  |   |           
|Total             |  | $                                                        | -0- |                                          | $ | -0-                                   |  | $                        | 13,011,489 |                                                  | $ | 13,011,489 |  | $ | 16,025,717
|                  |  |                                                          |     |                                          |   |                                       |  |                          |            |                                                  |   |            |  |   |           
|                  | 
|                  |  | December 31, 2008                                       
|                  |  | Level 1:Quoted Pricesin ActiveMarkets forIdenticalAssets |     | Level 2:SignificantOtherObservableInputs |   | Level 3:SignificantUnobservableInputs |  | Total atDecember 31,2009 |            | TotalImpairmentfor the YearEndedDecember 31,2009
|Goodwill          |  | $                                                        | -0- |                                          | $ | -0-                                   |  | $                        | 19,145,772 |                                                  | $ | 19,145,772 |  | $ | 630,802   
|Intangible Assets |  |                                                          | -0- |                                          |   | -0-                                   |  |                          | 13,062,242 |                                                  |   | 13,062,242 |  |   | -0-       
|                  |  |                                                          |     |                                          |   |                                       |  |                          |            |                                                  |   |            |  |   |           
|Total             |  | $                                                        | -0- |                                          | $ | -0-                                   |  | $                        | 32,208,014 |                                                  | $ | 32,208,014 |  | $ | 630,802   
|                  |  |                                                          |     |                                          |   |                                       |  |                          |            |                                                  |   |            |  |   |           

We recorded an intangible asset and goodwill
impairment charge of $16,025,717 and $630,802 during the years ended December 31, 2009 and 2008, respectively, to write down intangible assets and goodwill to their implied fair values (Notes 11 and 12).

NOTE 5  Acquisitions

Transistemas S. A.

On May 23, 2008, we entered into a Sale and Purchase Agreement with Jaime Wray and Martin Enrico Wray pursuant to which we agreed to
purchase 100% of all of the common stock of Transistemas for an aggregate purchase price of $5,293,146.

Transistemas operates
in Argentina as a network and system integrator, under a similar business model as Desca. We acquired Transistemas to further our expansion plans in Latin America and increase shareholder value.

As more fully described in Note 20, concurrent with the closing of our investment in Transistemas, we entered into a Put/Call Agreement
with the former owners of Transistemas.

The aggregate purchase price, including $395,800 of direct acquisition costs paid in
cash, amounted to $5,688,946. The total amount allocated to goodwill, none of which is deductible for tax purposes, was $1,536,570. The allocation of the purchase price is summarized as follows:



|                                                                             |  |   |            |  
|---------------------------------------------------------------------------- |  | - | ---------- | -
|Consideration Paid:                                                          |  |   |            |  
|Cash Paid                                                                    |  | $ | 2,693,148  |  
|Fair Value of Common Stock (433,333 shares)                                  |  |   | 2,599,998  |  
|Transaction Expenses                                                         |  |   | 395,800    |  
|                                                                             |  |   |            |  
|Total Consideration                                                          |  | $ | 5,688,946  |  
|                                                                             |  |   |            |  
|                                                                             | 
|Allocated To:                                                                |  |   |            |  
|Total Current Assets                                                         |  | $ | 6,344,393  |  
|Property, Plant and Equipment                                                |  |   | 383,851    |  
|Other Assets                                                                 |  |   | 218,853    |  
|Current Liabilities                                                          |  |   | (7,762,899 | )
|                                                                             |  |   |            |  
|Net Liabilities Assumed                                                      |  |   | (815,802   | )
|                                                                             | 
|Value of Excess of Purchase Price Over Net Liabilities Assumed Allocated To: |  |   |            |  
|Customer Base                                                                |  |   | 373,251    |  
|Contract Rights                                                              |  |   | 851,323    |  
|Trade Names                                                                  |  |   | 3,743,604  |  
|Goodwill                                                                     |  |   | 1,536,570  |  
|                                                                             |  |   |            |  
|                                                                             |  | $ | 5,688,946  |  
|                                                                             |  |   |            |  



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Notes to Consolidated Financial Statements(Continued)



The acquisition of Transistemas was accounted for under the purchase method of
accounting. Accordingly, the consolidated financial statements include the results of operations of Transistemas from the effective date of acquisition of July 1, 2008 through December 31, 2009.

Other Acquisitions

We made two acquisitions during 2008:



| |  |  | Center of Technology Transfer Corporation (CTT), an education services integrator in information and communications technologies, business
skills and best practices in Latin America; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The acquisition of an additional 40% membership interest in Pac-Rim Redeployment, LLC (PRR), and an additional 26 2/3% membership interest
in American Samoa Hawaii Cable, LLC (ASHC), which were formed for the redeployment and operation of an undersea fiber optic cable system providing telecommunications and internet services to American Samoa.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The total aggregate consideration was $2,787,742, net of cash acquired. In addition, we acquired the remaining minority interest of one of
our Desca subsidiaries in Latin America for $449,252 in cash.

The above acquisitions were accounted for using the purchase
method of accounting. Accordingly, the net assets were recorded at their estimated fair values on the effective date of their respective acquisitions. The consolidated statements of operations include the results of operations from the effective
date of their respective acquisitions.

The following unaudited consolidated pro forma information gives effect to the
acquisitions of Transistemas, CTT, PRR and ASHC as if these transactions had occurred on January 1, 2008. The following pro-forma information is presented for illustration purposes only and is not necessarily indicative of the results that
would have been attained had the acquisition of these businesses been completed on January 1, 2008, nor are they indicative of results that may occur in any future periods.



|                                                            |  |      |             |  
|----------------------------------------------------------- |  | ---- | ----------- | -
|                                                            |  | 2008 |            
|Revenues                                                    |  | $    | 189,128,139 |  
|Loss from Operations                                        |  | $    | (27,005,388 | )
|Net Loss from Continuing Operations                         |  | $    | (35,647,947 | )
|                                                            | 
|Basic and Diluted Loss from Continuing Operations per Share |  | $    | (1.17       | )
|Weighted Average Shares Outstanding - Basic and Diluted     |  |      | 30,353,660  |  

In addition, we made
two acquisitions during 2009: (1) Center of Technology Transfer Corporation  Peru and (2) American Samoa Entertainment, Inc. The total aggregate consideration for these acquisitions was $3,564,534.

On April 29, 2009, we acquired an additional 20% interest in PRR, increasing our ownership to 100%, and an additional 13.33% interest
in ASHC, increasing our ownership interest to 66.67%. The total consideration paid for the acquisition of these interests was nominal.

On July 17, 2009, we consummated a purchase and sale transaction under a Securities Purchase Agreement effective as of July 1,
2009 (the 30% Purchase Agreement) with Alvarado. Pursuant to the 30% Purchase Agreement, we purchased 3,000,000 Common Units (30% Units) of Desca for an aggregate purchase price of $1.9 million, as described below. As a
result of our purchase under the 30% Purchase Agreement, effective July 1, 2009, we settled the noncontrolling interest purchase price obligation with Alvarado and Desca became our wholly-owned subsidiary. For the year ended December 31,
2009, the change in fair value of the noncontrolling interest purchase price obligation of $814,127 was recorded in the statement of operations. The settlement of the noncontrolling interest purchase price obligation in the amount of $6,134,711 was
recorded as a credit to additional paid in capital as of December 31, 2009.

Under the terms of the 30% Purchase Agreement
we have:



| | (i) | made a payment to Alvarado of $500,000 in cash,
| | --- | -----------------------------------------------



| | (ii) | executed and delivered to Alvarado a $500,000 promissory note payable on July 1, 2010, and
| | ---- | ------------------------------------------------------------------------------------------



| | (iii) | issued to Alvarado 2,500,000 shares of our common stock, valued at $0.9 million based on the closing stock price of $0.34 on July 17, 2009, of which
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | a. | one-half of such shares were deposited with an escrow agent to be held and released in accordance with the terms of an escrow agreement, as described below, and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | one-half of such shares were delivered to Alvarado.
| | -- | ---------------------------------------------------



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Notes to Consolidated Financial Statements(Continued)



The promissory note provides for interest to accrue at 6% per annum and all
payments of principal and accrued interest to be paid on the maturity date of July 1, 2010. The 30% Purchase Agreement provides that the purchase price will be reduced to the extent that the value of Descas net assets at closing is
determined to be less as compared to June 30, 2010. Alvarado will be responsible to pay us an amount equal to 30% of any deficiency and such amount will be deemed a claim for indemnification under the 30% Purchase Agreement.

In addition to the purchase price described above, we agreed to pay to Alvarado contingent consideration (the Contingent
Consideration) in the event Desca achieved certain financial performance targets for 2009 identified in the 30% Purchase Agreement. The aggregate amount of the Contingent Consideration was, at Alvarados option, payable as follows:
(i) up to an additional maximum amount of 5,000,000 restricted shares of our common stock, (ii) payment of up to a maximum amount of $8,000,000 in cash to be evidenced by an additional non-interest bearing promissory note payable on
December 31, 2013, or (iii) up to an additional maximum amount of 2,500,000 restricted shares of our common stock and payment of up to an additional maximum amount of $4,000,000 in cash to be evidenced by an additional non-interest bearing
promissory note payable on December 31, 2013. However, pursuant to the terms of the Purchase Agreement and as a result of Descas financial performance targets for 2009, we were not required to pay the Contingent Consideration.

All but 1,250,000 shares of our common stock constituting part of the purchase price, as well as any additional shares of our common stock
constituting amounts of Contingent Consideration, were deposited with an escrow agent to be held and released over a 4-year period, as described below. All shares of our common stock held in escrow are available to satisfy any claim by us for
indemnification under the 30% Purchase Agreement. All shares of our common stock constituting part of the purchase price will be held in escrow for a period of two years following the closing; however, if such shares become eligible for resale by
Alvarado pursuant to Rule 144 under the Securities Act of 1933, such shares may be sold by Alvarado, but only so long as Alvarado makes arrangements acceptable to us for the immediate deposit of the net cash proceeds into escrow to be held in
accordance with the terms thereof. All promissory notes issued by us in connection with the 30% Purchase Agreement, are subject to setoff to satisfy any indemnification claims we may have against Alvarado.

At the closing of the 30% Purchase Agreement, Alvarado also entered into a two-year amended and restated employment agreement pursuant to
which he will serve as chief executive officer of our Networking Group. Alvarado also executed a non-compete agreement containing customary non-compete, non-solicitation, non-disclosure and non-disparagement covenants. Finally, eLandia and Alvarado
executed a termination and release agreement pursuant to which each of the parties agreed to terminate certain prior agreements and to release any claims the parties may have had against one another arising prior to the date of the 30% Purchase
Agreement.

NOTE 6  Desca Capital Call

On September 30, 2008, Desca requested a capital call from its members in the aggregate amount of $10 million. The proceeds from the
capital call were used to fund Descas working capital needs. Pursuant to the capital call, as the 70% owner of Desca, we contributed $7 million in the form of $4,705,500 in cash and $2,294,500 evidenced by capital contributions from previous
advances and loans made to Desca. Alvarado, as the 30% owner of Desca, contributed 1,150,000 stock appreciation rights (SARs) in eLandia valued at $3 million. Desca subsequently sold these SARs to eLandia in exchange for a $3 million
promissory note, bearing interest at an annual rate of 10% and maturing on September 30, 2011.

We also issued to Alvarado
warrants to purchase an aggregate of 1,150,000 shares of our common stock at an exercise price of $3.08 per share. The warrants are exercisable on the earlier of (i) receipt of a put consideration from Alvarado, (ii) receipt of a call from
eLandia or (iii) December 31, 2012. If the warrants are exercised pursuant to (i) or (ii) above, the exercise price for the warrants due to the Company will be deducted from the balance of the put or call consideration required
to be paid pursuant to the Limited Liability Company Agreement of Desca. The fair value of the warrants issued to Alvarado amounted to $883,200

NOTE 7  Deconsolidation of Subsidiary and Discontinued Operations

Our discontinued operations are comprised of (i) our investment in Latin Node, Inc. (Latin Node), which filed an
assignment for the benefit of creditors in June 2008, the investment in which is recorded under the equity method of accounting because of a loss in control; (ii) our 50% interest in Datec PNG, over which we had management influence and
guaranteed a portion of Datec PNGs debt; and (iii) certain eLandia predecessor companies that no longer conduct any operations.

On January 28, 2008, we formally committed to a definitive plan to dispose of our Latin Node operations and began a search for
potential buyers. Accordingly, as of that date, the assets, liabilities and results of operations were classified as discontinued operations in our consolidated financial statements.



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Notes to Consolidated Financial Statements(Continued)



As more fully described in Note 19, on June 12, 2008, Latin Node filed for an
assignment for the benefit of creditors in the 11th Judicial Circuit in and for Miami-Dade County, Florida, whereby all of the assets of Latin Node were transferred to an assignee. We continued to reflect the assets, liabilities and results of
operations of Latin Node under the consolidation method of accounting because we were deemed to be the principal secured creditor under the assignment for the benefit of creditors and, as such, were entitled to receive all of the proceeds from any
asset sales after the payment of the costs of administration. On November 18, 2008, we reached a settlement agreement regarding Latin Nodes final assets. Once our control over Latin Node was effectively lost on November 18, 2008, we
deconsolidated Latin Node and began using the equity method of accounting for the investment. As such, under the equity method of accounting, we recognized our proportionate share of losses in our investment in Latin Node through the date of change
in control in the amount of $14,236,647. In addition, we recorded $5,964,751 for the effect of the deconsolidation of Latin Node as a decrease in accumulated deficit.

As of December 31, 2008, Latin Node had zero remaining assets and had $21.1 million of remaining liabilities, consisting of $16.2
million due to us and trade accounts payable totaling $4.9 million. The following table contains the results of operations for Latin Node for the period from January 1, 2008 through November 18, 2008 (there was no activity between
November 18, 2008 and December 31, 2008):



|                                      |  |                                                            |             |  
|------------------------------------- |  | ---------------------------------------------------------- | ----------- | -
|                                      |  | For the Period fromJanuary 1, 2008throughNovember 18,
2008 |            
|Revenue                               |  | $                                                          | 30,837,576  |  
|Cost of Revenue                       |  |                                                            | (30,058,140 | )
|Sales, Marketing and Customer Support |  |                                                            | (354,109    | )
|General and Administrative Expenses   |  |                                                            | (10,280,974 | )
|Depreciation and Amortization         |  |                                                            | (1,256,531  | )
|Interest Expense, net                 |  |                                                            | (802,659    | )
|Other (Loss) Income                   |  |                                                            | (2,321,810  | )
|                                      |  |                                                            |             |  
|Loss from Discontinued Operations     |  | $                                                          | (14,236,647 | )
|                                      |  |                                                            |             |  

Also as more fully described in Note 19, on June 27, 2008, we filed an action against Jorge Granados,
former Chief Executive Officer of Latin Node, individually and Retail Americas VoIP, LLC, as amended. The final count of the Amended Complaint is for specific performance with respect to our demand of the escrow agent to return the 375,000 shares of
our common stock issued in connection with our acquisition of Latin Node, valued at $4.17 on the date of acquisition. These shares were returned to us on January 6, 2009 and were cancelled on that date.

Through April 17, 2009, we held a 50% interest in Datec PNG, which represented our operations in Papua New Guinea. Due to our
management influence, we consolidated Datec PNG within our consolidated financial statements. Datec PNG provides technology products, Internet access services and IT services to large corporate organizations. Datec PNG had an overdraft facility
account with a maximum borrowing limit of approximately $1.9 million. This overdraft facility account was secured by the assets of Datec PNG. On April 17, 2009 we sold our 50% ownership interest in Datec PNG to Steamships Ltd. As a result of
the sale of Datec PNG, we re-measured the value of the net assets to be sold at the lower of the carrying amount or fair value less selling costs. We determined that the sale price of $5,610,000 in cash, less selling costs of $22,427, was the best
indicator of the fair value of the assets to be sold. Accordingly, we recorded an impairment charge related to the goodwill and intangible assets of $10,827,252 during the three months ended March 31, 2009 and a loss upon the closing of the
sale, including the results of operations for the 17 day period ending April 17, 2009, of $198,960. The write off of the goodwill and the loss resulted in a net loss on the sale of Datec PNG of $11,026,212, which is included in discontinued
operations.



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Notes to Consolidated Financial Statements(Continued)



A summary of our assets and liabilities from discontinued operations as of
December 31, 2009 and 2008 and our results of discontinued operations for the years ended December 31, 2009 and 2008 is as follows:

Assets and Liabilities of Discontinued Operations



|                                                        |  |                    |           |      |   |           
|------------------------------------------------------- |  | ------------------ | --------- | ---- | - | ----------
|                                                        |  | As of December 31,
|                                                        |  | 2009               |           | 2008
|Cash                                                    |  | $                  |          |      | $ | 623,116   
|Accounts Receivable, Net                                |  |                    |          |      |   | 2,231,117 
|Inventory, Net                                          |  |                    |          |      |   | 2,806,027 
|Prepaid Expenses and Other Current Assets               |  |                    |          |      |   | 678,300   
|Deposits with Suppliers and Subcontractors              |  |                    |          |      |   | 26,988    
|Deferred Tax Asset - Current                            |  |                    |          |      |   | 1,055,530 
|                                                        |  |                    |           |      |   |           
|Assets Held for Sale - Current                          |  | $                  |          |      | $ | 7,421,078 
|                                                        |  |                    |           |      |   |           
|                                                        |  |                   
|Property, Plant and Equipment, net                      |  | $                  |          |      | $ | 3,266,629 
|Customer Lists, Net                                     |  |                    |          |      |   | 1,465,425 
|Contract Rights, Net                                    |  |                    |          |      |   | 483,727   
|Goodwill                                                |  |                    |          |      |   | 11,356,388
|Other Assets                                            |  |                    |          |      |   | 317,861   
|                                                        |  |                    |           |      |   |           
|Assets Held for Sale - Long-Term                        |  | $                  |          |      | $ | 16,890,030
|                                                        |  |                    |           |      |   |           
|                                                        |  |                   
|Accounts Payable                                        |  | $                  |          |      | $ | 1,757,501 
|Accrued Expenses                                        |  |                    | 132,562   |      |   | 1,061,927 
|Deferred Gain on Sale Leaseback - Current               |  |                    |          |      |   | 257,397   
|Accrued FCPA Penalty                                    |  |                    | 500,000   |      |   | 500,000   
|Long-Term Debt                                          |  |                    |          |      |   | 1,129,692 
|Capital Lease Obligations                               |  |                    | 10,000    |      |   | 10,000    
|Deferred Revenue                                        |  |                    |          |      |   | 1,323,222 
|                                                        |  |                    |           |      |   |           
|Liabilities from Discontinued Operations - Current      |  | $                  | 642,562   |      | $ | 6,039,739 
|                                                        |  |                    |           |      |   |           
|                                                        |  |                   
|Deferred Gain on Sale Leaseback, Net of Current Portion |  | $                  |          |      | $ | 64,349    
|Accrued FCPA Penalty                                    |  |                    | 1,000,000 |      |   | 1,500,000 
|                                                        |  |                    |           |      |   |           
|Liabilities from Discontinued Operations - Long Term    |  | $                  | 1,000,000 |      | $ | 1,564,349 
|                                                        |  |                    |           |      |   |           

Results of Discontinued Operations



|                                             |  |                                 |             |   |      |   |             |  
|-------------------------------------------- |  | ------------------------------- | ----------- | - | ---- | - | ----------- | -
|                                             |  | For the Year Ended December 31, |            
|                                             |  | 2009                            |             |   | 2008 |  
|Revenue                                      |  | $                               | 9,819,365   |   |      | $ | 36,839,060  |  
|Cost of Revenue                              |  |                                 | (5,851,239  | ) |      |   | (23,541,824 | )
|Sales, Marketing and Customer Support        |  |                                 | (1,573,803  | ) |      |   | (6,609,124  | )
|General and Administrative                   |  |                                 | (1,175,352  | ) |      |   | (3,127,925  | )
|Loss from Investment in Latin Node           |  |                                 |            |   |      |   | (14,236,647 | )
|Impairment of Goodwill and Intangible Assets |  |                                 | (10,827,252 | ) |      |   |            |  
|Depreciation and Amortization                |  |                                 | (435,232    | ) |      |   | (1,464,230  | )
|Amortization  Intangible Assets             |  |                                 | (263,639    | ) |      |   | (1,259,953  | )
|Interest Expense, net                        |  |                                 | (324        | ) |      |   | (190,238    | )
|Other (Expense) Income                       |  |                                 | (161,478    | ) |      |   | 816,622     |  
|                                             |  |                                 |             |   |      |   |             |  
|Net Loss from Discontinued Operations        |  | $                               | (10,468,954 | ) |      | $ | (12,774,259 | )
|                                             |  |                                 |             |   |      |   |             |  



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Notes to Consolidated Financial Statements(Continued)



Indebtedness of Discontinued Operations

Latin Node entered into a $13 million debt financing transaction with Laurus Master Fund, Ltd. (Laurus) pursuant to the terms
of a Security Agreement and various related loan documents, each dated June 29, 2007, by and among Laurus, eLandia, Latin Node, and various subsidiaries of Latin Node. Pursuant to the terms of an Assignment Agreement dated February 29,
2008, Laurus assigned to us all of its rights in the Security Agreement, the promissory notes, guaranty, equity pledge agreements and other loan and security documents executed in connection with the Latin Node loan. In connection with the
Assignment Agreement, Laurus also agreed to the cancellation of a warrant to purchase 533,158 shares of Latin Nodes common stock and an associated registration rights agreement, each issued in connection with the Latin Node loan. In
consideration for the assignment of the documents evidencing the Latin Node loan, we paid Laurus an aggregate amount of $6,965,456 representing the sum of (a) the unpaid principal balance of, and accrued interest on, the Latin Node loan in the
total amount of $6,247,017 and (b) unpaid fees due to Laurus pursuant to the loan documents of $718,439.

In May 2008, we
purchased the stock of Latin Node Europe, one of Latin Nodes subsidiaries, for an aggregate purchase price of $590,000. The purchase price was based on the fair value of the assets of Latin Node Europe and was paid for by a reduction of the $8
million secured loan that we have with Latin Node as a result of the our purchase of the security interest held in Latin Node by Laurus.

NOTE 8  American Samoa Undersea Cable Transaction

On May 22, 2008, eLandia Technologies, Inc., our wholly-owned subsidiary (ETI), entered into two limited liability
company agreements relating to the redeployment and operation of an undersea fiber optic cable system to provide telecommunications and internet services to American Samoa.

ETI initially owned 40% of the equity interests in PRR, which was formed to acquire a portion of the Pac-Rim East undersea fiber optic
cable that runs between New Zealand and Hawaii (the PRE Cable) and to redeploy a portion of the PRE Cable from Pago Pago, American Samoa to Keawaula, Oahu, Hawaii (the ASH Cable) and to redeploy, subject to business
justification, a portion of the PRE Cable from Pago Pago, American Samoa to Apia, Independent State of Samoa (the ISS Cable). ETI also initially owned 26 2/3% of the equity interests in ASHC, which was formed to acquire, maintain and
operate the PRE Cable and ASH Cable. The cost of the acquisition, construction and related costs of the project were estimated at $24 million.

The acquisition of the PRE Cable and its redeployment was funded by third party financing and contributions by the American Samoa
Government (ASG), which is a 33% member of ASHC. ASG committed to contribute $9 million for their investment in ASHC. As of December 31, 2008, ASG had contributed $3 million. In February and June 2009, ASG contributed an additional
$3 million as a result of obtaining third party financing. Operation and maintenance of the ASH Cable will be funded primarily through telecommunications and internet services contracts. AST has contractually committed to utilizing a portion of the
fiber optic cable capacity to be provided by the ASH Cable.

Additionally, on May 22, 2008, PRR and ASHC entered into a
Purchase and Sale Agreement for the ASH Cable, which provides for the purchase of the redeployed and fully operational ASH Cable by ASHC during 2009. ASHC purchased the ASH Cable from PRR in June 2009 for a total consideration of $25.4 million using
the proceeds from the Term Loan Agreement with ANZ (see Note 17) and the final capital contribution from ASG.

On May 30,
2008, PRR entered into a Purchase and Sale Agreement, whereby PRR acquired the PRE Cable for an aggregate purchase price of $4 million. In addition, PRR also committed to pay $2 million as a development fee for the PRE Cable. The amounts were due to
be paid on or before June 30, 2009, with provisions allowing for accelerated timing and payment amounts. These amounts were paid in June 2009 using the proceeds from the Term Loan Agreement.

For the period from May 22, 2008 through August 7, 2008, PRR and ASHC did not have substantial operations and, accordingly,
there was no allocation of income or loss from these investments.

On August 8, 2008, ETI purchased the 40% membership
interests of another partner in PRR and the 26 2/3% membership interests from the same partner in ASHC for an aggregate cash consideration of $681,114.

On April 29, 2009, ETI acquired an additional 20% interest in PRR, increasing our ownership to 100%, and an additional 13.33%
interest in ASHC, increasing our ownership interest to 66.67%. The total consideration paid for the acquisition of these interests was nominal.

NOTE 9  Restructuring of the South Pacific

Effective June 30, 2008, management made the decision and began to restructure the operations in certain specific South Pacific
island nations (other than Fiji, Papua New Guinea and American Samoa). As a result of this decision, in July 2008, we sold our operations located in Queensland, Australia for proceeds of approximately $1.2 million, resulting in a gain of
approximately $364,000. The gain is included in other income in the accompanying consolidated statements of operations for the year ended December 31, 2008.



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Notes to Consolidated Financial Statements(Continued)



Further, in April 2009, we sold our operations in Papua New Guinea and, as a result,
have classified the results of operations for our Papua New Guinea operations as discontinued operations for all periods presented in our consolidated financial statements (see Note 7).

In April 2009, the Reserve Bank of Fiji announced that Fijis currency had been devalued by 20% effective April 16, 2009, the
President of Fiji annulled the countrys constitution, terminated all the judges in the country and declared himself the head of state. This triggered an impairment charge to our goodwill in Fiji due to the anticipated economic instability and
an uncertain business climate. These political events and any subsequent developments may have a negative impact on our business. As a result of these factors and the uncertainty caused by such factors, in December 2009 our Board of Directors
approved managements proposal to dispose of our operations in Fiji) (see Note 26). As of December 31, 2009, our operations in Fiji were not being actively marketed for sale and management had not begun an active program to locate a buyer.
Accordingly, our operations in Fiji did not qualify for classification as discontinued operations as of December 31, 2009. At December 31, 2009, assets at Fiji amounted to approximately $2.4 million and liabilities amounted to
approximately $1.1 million.

NOTE 10  Accounts Receivable

Accounts receivable at December 31, 2009 and 2008 is comprised of:



|                                |  |      |            |   |      |   |            |  
|------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                |  | 2009 |            |   | 2008 |  
|Accounts Receivable             |  | $    | 54,907,810 |   |      | $ | 72,021,160 |  
|Allowance for Doubtful Accounts |  |      | (910,291   | ) |      |   | (2,214,990 | )
|                                |  |      |            |   |      |   |            |  
|                                |  | $    | 53,997,519 |   |      | $ | 69,806,170 |  
|                                |  |      |            |   |      |   |            |  

The change in allowances for doubtful accounts for the years ended December 31, 2009 and 2008 is as
follows:



|                                                                |  |      |            |   |      |   |           |  
|--------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|                                                                |  | 2009 |            |   | 2008 |  
|Balance of allowance for doubtful accounts at beginning of year |  | $    | 2,214,990  |   |      | $ | 1,978,002 |  
|Provision for bad debt for the years then ended                 |  |      | 219,843    |   |      |   | 259,752   |  
|Amounts written off during the years then ended                 |  |      | (1,524,542 | ) |      |   | (22,764   | )
|                                                                |  |      |            |   |      |   |           |  
|Balance of allowance for doubtful accounts at end of year       |  | $    | 910,291    |   |      | $ | 2,214,990 |  
|                                                                |  |      |            |   |      |   |           |  

Included in accounts receivable is $14,819,924 and $13,647,677 of unbilled receivables at December 31,
2009 and 2008, respectively. We utilize substantially all of our accounts receivable to collateralize certain debt.

NOTE 11 
Goodwill

Goodwill represents the excess purchase price paid over the cost of net assets acquired in business combinations
accounted for under the purchase method of accounting. Changes in the carrying amount of goodwill for the years ended December 31, 2009 and 2008 were as follows:



|                                         |  |              |            |   |              |   |            |       |  |   |            |  
|---------------------------------------- |  | ------------ | ---------- | - | ------------ | - | ---------- | ----- |  | - | ---------- | -
|                                         |  | LatinAmerica |            |   | SouthPacific |   |            | Total | 
|Balance at January 1, 2008               |  | $            |           |   |              | $ | 3,606,063  |       |  | $ | 3,606,063  |  
|Acquisitions in 2008                     |  |              | 6,599,079  |   |              |   |           |       |  |   | 6,599,079  |  
|Allocation of acquisition purchase price |  |              | 9,489,708  |   |              |   |           |       |  |   | 9,489,708  |  
|Impairment charge                        |  |              |           |   |              |   | (630,802   | )     |  |   | (630,802   | )
|Foreign currency translation effect      |  |              |           |   |              |   | 81,724     |       |  |   | 81,724     |  
|                                         |  |              |            |   |              |   |            |       |  |   |            |  
|Balance at December 31, 2008             |  |              | 16,088,787 |   |              |   | 3,056,985  |       |  |   | 19,145,772 |  
|Acquisitions in 2009                     |  |              | 183,374    |   |              |   | 885,332    |       |  |   | 1,068,706  |  
|Purchase price adjustment                |  |              | (495,000   | ) |              |   |           |       |  |   | (495,000   | )
|Impairment charge                        |  |              | (7,664,100 | ) |              |   | (1,025,717 | )     |  |   | (8,689,817 | )
|Foreign currency translation effect      |  |              | (140,964   | ) |              |   | (17,738    | )     |  |   | (158,702   | )
|                                         |  |              |            |   |              |   |            |       |  |   |            |  
|Balance at December 31, 2009             |  | $            | 7,972,097  |   |              | $ | 2,898,862  |       |  | $ | 10,870,959 |  
|                                         |  |              |            |   |              |   |            |       |  |   |            |  

On October 16, 2008, eLandia and the CTT Sellers entered into a Purchase Agreement and Escrow Agreement,
pursuant to which $600,000 of the purchase price was deposited with an escrow agent to satisfy our indemnification rights. On September 30, 2009, we agreed to settle certain claims relating to the Net Asset Value of CTT (as defined in the
Purchase Agreement). Pursuant to the terms of the settlement, the CTT Sellers agreed to release the $600,000 escrow amount to us in exchange for the issuance of 350,000 shares of our common stock to the CTT Sellers, valued at $105,000. We have
recorded the net settlement amount of $495,000 as a purchase price adjustment to the goodwill of CTT in the accompanying consolidated balance sheet as of December 31, 2009.



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Notes to Consolidated Financial Statements(Continued)



As a result of the weakened economic environment, we undertook a review of the carrying
amount of our goodwill and intangible assets as of December 31, 2009. The results of our quantitative analysis indicated that no impairment existed in our goodwill and intangible assets in Latin America; however, we also considered qualitative
factors in our assessment. Specifically, we noted that the weakened economic environment continues to have a negative impact on our operations at Transistemas as evidenced by the significant operating losses experienced from our operations in
Argentina. In addition, we noted the significant country risk that exists in Venezuela (and to a lesser extent in Ecuador) and that the inherent political uncertainty which exists makes any long-term estimates as to future cash flows derived from
that business extremely volatile. Although the weakened economic environment has affected our subsidiaries in other parts of Latin America, the effects have been felt to a much lesser extent. While the quantitative analysis supports the current
carrying value of the goodwill and intangible assets in our other Latin America subsidiaries, we believe that an impairment exists from a qualitative standpoint given the uncertainty and instability of the future economic environment in certain
countries of Latin America and the political risk in some of our markets. Accordingly, we recorded a goodwill impairment charge of $7,664,100 in the accompanying consolidated statement of operations during the year ended December 31, 2009.

In April 2009, the Reserve Bank of Fiji announced that Fijis currency had been devalued by 20% effective immediately.
Also, in April 2009, the President of Fiji annulled the countrys constitution, terminated all the judges in the country and declared himself the head of state. As a result of the Ah Koy litigation discussed in Note 19 and Fijis current
economic instability and uncertain business climate, we undertook a review of the carrying amount of our goodwill as of March 31, 2009 and determined that the value of our goodwill related to Fiji had been impaired. Accordingly, we recorded a
goodwill impairment charge of $1,025,717 in the accompanying consolidated statement of operations during the year ended December 31, 2009.

As described in Note 3, we performed an impairment test of goodwill at June 30, 2008 and determined that the value of our goodwill
related to certain South Pacific island nations had been impaired. Accordingly, we recorded an impairment charge of $630,802 in the accompanying consolidated statement of operations during the year ended December 31, 2008.

NOTE 12  Intangible Assets

Intangible asset values and the related accumulated amortization are as follows:



|                                              |  |                       |           |   |                         |   |            |             |  |   |                                          |   |  |   |        
|--------------------------------------------- |  | --------------------- | --------- | - | ----------------------- | - | ---------- | ----------- |  | - | ---------------------------------------- | - |  | - | -------
|                                              |  | Definite Lived Assets |           |   | Indefinite Lived Assets
|                                              |  | Customer Lists        |           |   | Contract Rights         |   |            | Trade Names |  |   | TelecommunicationsLicenses andAgreements
|Gross Value at December 31, 2008              |  | $                     | 2,004,251 |   |                         | $ | 4,988,209  |             |  | $ | 10,493,604                               |   |  | $ | 858,743
|Accumulated Amortization at December 31, 2008 |  |                       | (632,719  | ) |                         |   | (2,307,364 | )           |  |   | (2,342,482                               | ) |  |   |       
|                                              |  |                       |           |   |                         |   |            |             |  |   |                                          |   |  |   |        
|Net Value at December 31, 2008                |  | $                     | 1,371,532 |   |                         | $ | 2,680,845  |             |  | $ | 8,151,122                                |   |  | $ | 858,743
|                                              |  |                       |           |   |                         |   |            |             |  |   |                                          |   |  |   |        
|                                              |  |                       |           |  
|Gross Value at December 31, 2009              |  | $                     | 1,833,100 |   |                         | $ | 2,070,586  |             |  | $ |                                         |   |  | $ | 858,743
|Accumulated Amortization at December 31, 2009 |  |                       | (629,783  | ) |                         |   | (1,992,116 | )           |  |   |                                         |   |  |   |       
|                                              |  |                       |           |   |                         |   |            |             |  |   |                                          |   |  |   |        
|Net Value at December 31, 2009                |  | $                     | 1,203,317 |   |                         | $ | 78,470     |             |  | $ |                                         |   |  | $ | 858,743
|                                              |  |                       |           |   |                         |   |            |             |  |   |                                          |   |  |   |        

Acquired intangibles with a definite life are
amortized on a straight-line basis over weighted average lives. Telecommunications licenses and agreements are generally perpetual in nature and therefore are not amortized.

As discussed in Note 11, as a result of the weakened economic environment, we undertook a review of the carrying amount of our goodwill
and intangible assets as of December 31, 2009. Based upon our review, we recorded an intangible asset impairment charge of $7,335,900 in the accompanying consolidated statement of operations during the year ended December 31, 2009.



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Notes to Consolidated Financial Statements(Continued)



|                                                                |  |                      |            |   |                        |   |            |             |  |   |                                          |   |  |   |       
|--------------------------------------------------------------- |  | -------------------- | ---------- | - | ---------------------- | - | ---------- | ----------- |  | - | ---------------------------------------- | - |  | - | ------
|                                                                |  | Definite Life Assets |            |   | Indefinite Life Assets
|                                                                |  | Customer Lists       |            |   | Contract Rights        |   |            | Trade Names |  |   | TelecommunicationsLicenses andAgreements
|Acquired in Connection with Acquisitions during 2008            |  | $                    | 373,251    |   |                        | $ | 1,282,437  |             |  | $ | 3,743,604                                |   |  | $ |      
|Purchased in 2008                                               |  |                      |           |   |                        |   |           |             |  |   |                                         |   |  |   | 69,000
|Reallocation of Original Acquisition Purchase Price during 2008 |  |                      | (7,121,907 | ) |                        |   | (2,465,000 | )           |  |   | 4,750,000                                |   |  |   |      
|                                                                |  |                      |            |   |                        |   |            |             |  |   |                                          |   |  |   |       
|Total                                                           |  | $                    | (6,748,656 | ) |                        | $ | (1,182,563 | )           |  | $ | 8,493,604                                |   |  | $ | 69,000
|                                                                |  |                      |            |   |                        |   |            |             |  |   |                                          |   |  |   |       
|                                                                |  |                      |            |  
|Weighted Average Life (Years)                                   |  |                      | 4          |   |                        |   | 4          |             |  |   | 4                                        |   |  |   |       
|                                                                |  |                      |            |   |                        |   |            |             |  |   |                                          |   |  |   |       
|                                                                |  |                      |            |  
|Acquired in Connection with Acquisitions during 2009            |  | $                    | 875,100    |   |                        | $ |           |             |  | $ |                                         |   |  | $ |      
|Impairment Charge                                               |  |                      | (551,133   | ) |                        |   | (1,257,045 | )           |  |   | (5,527,722                               | ) |  |   |      
|                                                                |  |                      |            |   |                        |   |            |             |  |   |                                          |   |  |   |       
|Total                                                           |  | $                    | 323,967    |   |                        | $ | (1,257,045 | )           |  | $ | (5,527,722                               | ) |  | $ |      
|                                                                |  |                      |            |   |                        |   |            |             |  |   |                                          |   |  |   |       
|                                                                |  |                      |            |  
|Weighted Average Life (Years)                                   |  |                      | 7          |   |                        |   |           |             |  |   |                                         |   |  |   |       
|                                                                |  |                      |            |   |                        |   |            |             |  |   |                                          |   |  |   |       

For the years ended December 31, 2009 and 2008, amortization expense amounted to $4,460,911
and $3,529,463, respectively.

The following table outlines the estimated future amortization expense related to intangible
assets as of December 31, 2009:



|                                 |  |                |           |                 |   |        |  |   |          
|-------------------------------- |  | -------------- | --------- | --------------- | - | ------ |  | - | ---------
|                                 |  | Customer Lists |           | Contract Rights |   | Total 
|For the Year Ending December 31, |  |                |           |                 |   |        |  |   |          
|2010                             |  | $              | 261,857   |                 | $ | 73,951 |  | $ | 335,808  
|2011                             |  |                | 261,857   |                 |   | 4,519  |  |   | 266,376  
|2012                             |  |                | 261,857   |                 |   |       |  |   | 261,857  
|2013                             |  |                | 136,406   |                 |   |       |  |   | 136,406  
|2014                             |  |                | 125,000   |                 |   |       |  |   | 125,000  
|Thereafter                       |  |                | 156,340   |                 |   |       |  |   | 156,340  
|                                 |  |                |           |                 |   |        |  |   |          
|                                 |  | $              | 1,203,317 |                 | $ | 78,470 |  | $ | 1,281,787
|                                 |  |                |           |                 |   |        |  |   |          

NOTE 13  Property, Plant and Equipment

Property, plant and equipment consist of the following at December 31, 2009 and 2008:



|                                           |  |      |             |   |      |   |            |  
|------------------------------------------ |  | ---- | ----------- | - | ---- | - | ---------- | -
|                                           |  | 2009 |             |   | 2008 |  
|Building                                   |  | $    | 1,547,025   |   |      | $ | 1,772,732  |  
|Leasehold Improvements                     |  |      | 2,826,084   |   |      |   | 2,048,028  |  
|Network Equipment                          |  |      | 38,044,064  |   |      |   | 8,925,146  |  
|Office Equipment                           |  |      | 2,922,626   |   |      |   | 2,687,794  |  
|Furniture and Fixtures                     |  |      | 1,190,032   |   |      |   | 1,515,439  |  
|Vehicles                                   |  |      | 820,406     |   |      |   | 703,015    |  
|                                           |  |      |             |   |      |   |            |  
|Total Property and Equipment               |  |      | 47,350,237  |   |      |   | 17,652,154 |  
|Accumulated Depreciation and Amortization  |  |      | (12,326,637 | ) |      |   | (8,173,321 | )
|                                           |  |      |             |   |      |   |            |  
|Net Value of Property, Plant and Equipment |  |      | 35,023,600  |   |      |   | 9,478,833  |  
|Construction in Progress                   |  |      | 1,345,732   |   |      |   | 11,821,002 |  
|Land                                       |  |      |            |   |      |   | 150,321    |  
|                                           |  |      |             |   |      |   |            |  
|Total Property, Plant and Equipment, net   |  | $    | 36,369,332  |   |      | $ | 21,450,156 |  
|                                           |  |      |             |   |      |   |            |  

Depreciation and amortization expense for the years ended December 31, 2009 and 2008 amounted to
$5,756,544 and $3,299,520, respectively.



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Notes to Consolidated Financial Statements(Continued)



NOTE 14  Accrued Expenses

Accrued expenses at December 31, 2009 and 2008 is comprised of:



|                            |  |      |            |      |   |           
|--------------------------- |  | ---- | ---------- | ---- | - | ----------
|                            |  | 2009 |            | 2008
|Accrued Cost of Sales       |  | $    | 2,838,748  |      | $ | 1,038,950 
|Accrued Payroll and Related |  |      | 3,740,788  |      |   | 4,368,596 
|Accrued Taxes               |  |      | 3,159,282  |      |   | 3,991,716 
|Accrued Professional Fees   |  |      | 993,393    |      |   | 1,318,538 
|Accrued Other               |  |      | 2,250,479  |      |   | 1,831,413 
|                            |  |      |            |      |   |           
|                            |  | $    | 12,982,690 |      | $ | 12,549,213
|                            |  |      |            |      |   |           

NOTE 15  Lines of Credit

We have lines of credit, short-term overdraft and credit facilities with various financial institutions in the countries in which our
individual businesses reside. These facilities are generally secured by assets of the individual companies, such as accounts receivable and/or inventory. These facilities have original maturity terms ranging from 30 days to one year and bear
interest at rates ranging from 4.3% to 28.0%.

At December 31, 2009 and 2008, the total amount outstanding under the lines
of credit, short term overdraft and credit facilities was $11,451,140 and $27,359,321, respectively. At December 31, 2009, the maximum amount available under the lines of credit, short-term overdraft and credit facilities was $14,287,806 and
the unused portions amounted to $2,836,666, subject (in certain cases) to the availability of having sufficient collateral under asset based lending arrangements. Approximately $4 million of the outstanding amounts have been repaid subsequent to
December 31, 2009. We are currently in negotiations with several banks to renew our existing lines of credit and/or enter into new arrangements to replace arrangements for approximately $9.1 million, which expired in September 2009 through
March 2010.

Line of credit arrangements include facilities that may contractually expire or mature at various times prior or
subsequent to December 31, 2010. We have classified all lines of credit with contractual expiration or maturity dates more than one year from the balance sheet date as current liabilities since these arrangements generally feature lockbox
arrangements and/or subjective acceleration clauses.

Our operations in American Samoa are obligated under a loan agreement
with ANZ for a maximum amount of $5,800,000. Of this amount, $800,000 is in the form of a term loan and up to $5,000,000 is in the form of a revolving line of credit. The revolving line of credit was originally due on October 30, 2007 and the
term loan is due on October 30, 2015. We believe that potential violations of the FCPA by Latin Node may have resulted in a breach of our covenants with ANZ thereby making the loan callable. While we have not repaid this amount nor has ANZ
initiated a demand for repayment, we have requested an extension of the revolving line of credit. ANZ has not issued a formal written extension and has not called the loan. In addition, in September 2008, ANZ completed their annual review of our
outstanding loan agreements and determined that all existing loan terms remain unchanged and continuing. We have pledged all of our assets in American Samoa to secure this obligation. Nevertheless, we cannot provide any assurance that ANZ will not
make an immediate demand for repayment of this loan. In addition, as of December 31, 2009, we did not meet our interest coverage ratio covenant requirement. Accordingly, the amounts due to ANZ are classified as current liabilities on the
accompanying consolidated balance sheets. As of December 31, 2009, the balance of the revolving loan amounted to $4,249,728 and the balance of the term loan amounted to $545,596.

NOTE 16  Notes Payable

We have various short-term promissory notes with a major vendor in Latin America which are primarily used to finance the purchase of
products for resale and/or installation. At December 31, 2009, we owe approximately $17.9 million under the various notes, which have maturities of less than one year from the date of inception and bear interest at rates ranging from 4.2% to
8.8%. These notes are generally secured by certain Latin American assets such as accounts receivable and/or inventory.



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Notes to Consolidated Financial Statements(Continued)



NOTE 17  Long-Term Debt

A summary of our outstanding debt obligations is as follows:



|                                                           |  |                    |            |   |      |   |           
|---------------------------------------------------------- |  | ------------------ | ---------- | - | ---- | - | ----------
|                                                           |  | As of December 31,
|                                                           |  | 2009               |            |   | 2008
|Obligations to SIBL:                                       |  |                    |            |   |      |   |           
|Bridge loan dated July 21, 2008                            |  | $                  |           |   |      | $ | 12,000,000
|Term Loan Agreement                                        |  |                    | 16,672,000 |   |      |   |          
|Promissory Notes                                           |  |                    | 2,645,644  |   |      |   |          
|Obligations under various long-term borrowing arrangements |  |                    | 7,247,183  |   |      |   | 7,771,201 
|                                                           |  |                    |            |   |      |   |           
|Sub-total                                                  |  |                    | 26,564,827 |   |      |   | 19,771,201
|Unamortized discounts                                      |  |                    | (108,161   | ) |      |   |          
|                                                           |  |                    |            |   |      |   |           
|Total long-term debt, net of unamortized discounts         |  |                    | 26,456,666 |   |      |   | 19,771,201
|Less: current portion of long-term debt                    |  |                    | 4,710,072  |   |      |   | 6,700,044 
|                                                           |  |                    |            |   |      |   |           
|Long-term debt                                             |  | $                  | 21,746,594 |   |      | $ | 13,071,157
|                                                           |  |                    |            |   |      |   |           

Obligations to SIBL

Bridge Loan Agreement

On July 21, 2008, we entered into a credit agreement with SIBL (the Bridge Loan Agreement), pursuant to which SIBL agreed
to provide a loan to us in the principal amount of up to $40 million. The Bridge Loan Agreement was amended and, pursuant to these amendments, the maturity date was extended to June 30, 2011. Also, the interest rate was modified to 6% with
payments of interest due on December 31, 2009, December 31, 2010 and June 30, 2011. In addition, we had the option, with respect to any interest payment, to pay interest in cash or in shares of our common stock based upon the
average closing bid and asked prices for our common stock for the 20 trading days prior to the applicable interest payment date. In addition, at the request of SIBL, the loan funding schedule for the unfunded balance of the loan as of the
November 14, 2008 amendment, in the amount of $28 million, was modified to provide for nine installments during the first quarter of 2009 commencing on February 5, 2009.

On February 6, 2009, as part of a modification to our capital structure, we entered into a Modification Agreement and a Fourth
Amendment with SIBL. Pursuant to the Modification Agreement:



| |  |  | we agreed to further amend the Bridge Loan Agreement (Fourth Amendment) to terminate SIBLs obligation to fund the balance of $28
million committed by SIBL under the Bridge Loan Agreement;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in partial consideration of our agreement to terminate the Bridge Loan Agreement, SIBL agreed to convert the $12 million outstanding principal amount
under the Bridge Loan Agreement into 1,777,778 shares of our Series B Preferred Stock and the accrued interest was cancelled;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | as a result of the Fourth Amendment and the termination of the Bridge Loan Agreement, all related loan, security and collateral documents were also
released and terminated. This included the release of guarantees granted by our subsidiaries, eLandia South Pacific Holdings, Inc. and eLandia Technologies, Inc. (the Guarantors), for the benefit of SIBL. In addition, pursuant to the
Fourth Amendment, all security interests and other liens granted to SIBL under securities pledge agreements executed by us and each of the Guarantors were satisfied and discharged and all collateral pledged was released;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBL agreed to surrender for cancellation 16,148,612 shares of our common stock thereby reducing to 49.9% SIBLs ownership of our outstanding
common stock;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we granted SIBL an option, exercisable through March 31, 2009, to purchase an additional 592,593 shares of our Series B Preferred Stock for an
aggregate purchase price of $4 million (the Option). The Option expired unexercised;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBL agreed to modify the Series B Preferred Stock as follows:
| | - |  | --------------------------------------------------------------



| |  |  | setting the initial conversion rate (the Conversion Rate) for the shares of the Series B Preferred Stock at a rate of seven shares of our
common stock for each eight shares of Series B Preferred Stock;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | providing for an adjusted Conversion Rate of 3.5 shares of common stock for every eight shares of Series B Preferred Stock in the event that SIBL did
not exercise the Option;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Notes to Consolidated Financial Statements(Continued)



| |  |  | providing that the shares of Series B Preferred Stock would be automatically converted into shares of our common stock at the then effective Conversion
Rate to the extent necessary for SIBL to maintain ownership of 49.9% of the then total amount of issued and outstanding shares of our common stock;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | removing all voting rights of the Series B Preferred Stock;
| | - |  | -----------------------------------------------------------



| |  |  | providing that the shares of Series B Preferred Stock would have no more rights than our common stock, other than a liquidation preference; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | adding certain protective provisions providing that the following actions cannot be taken without prior approval of the holders of the majority of the
Series B Preferred Stock outstanding: (a) any change to the rights, preferences or privileges of the Series B Preferred Stock; or (b) the creation of a new class or series of stock superior to the Series B Preferred Stock.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBL agreed to place all of its shares of our common stock and Series B Preferred Stock in a voting trust pursuant to a voting trust agreement;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | all registration rights agreements between us and SIBL were terminated with no further obligation on our part to file any registration statement for
the benefit of SIBL;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we agreed to amend the employment agreement of Pete R. Pizarro, our Chief Executive Officer (Mr. Pizarro), who would have otherwise been
entitled to terminate his employment for Good Reason; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | SIBL agreed to the transfer to us, by February 28, 2009, of $2.35 million of indebtedness of our subsidiary, Desca, due to an affiliate of SIBL in
exchange for 344,444 shares of Series B Preferred Stock, or, if such transfer did not occur, a further cancellation of 1,801,740 shares of our common stock held under the voting trust agreement. Such transfer and exchange was not made by SIBL,
however, the Voting Trustee has not surrendered the 1,801,740 shares of common stock for cancellation pending relief from a February 16, 2009 court order in the matter of SIBL (Note 19).
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In accordance with the court order issued by the United States District Court on February 16, 2009, we have not canceled any shares
of our common stock, nor have we issued any shares of our Series B Preferred Stock or converted any shares of our Series B Preferred Stock into common stock pursuant to the terms of the Modification Agreement.

We evaluated the issuance of the 1,777,778 shares of Series B Preferred Stock and the option to purchase 592,593 shares of Series B
Preferred Stock in exchange for the $12,000,000 bridge loan, the forgiveness of the related accrued interest payable of $199,618 and the cancellation of the 16,148,612 shares of common stock and, accordingly, we recorded:



| | 1) | $894,445 for the value of the Series B Preferred Stock issued to SIBL;
| | -- | ----------------------------------------------------------------------



| | 2) | $-0- for the value of the Option; and
| | -- | -------------------------------------



| | 3) | A contribution to capital of $11,078,506, representing the excess of the fair value of the securities and options issued over the net carrying value of the debt and
common stock surrendered, including $199,618 of accrued interest payable forgiven, $162 for the cancellation of common stock upon conversion of the promissory note, and $226,829 of costs incurred in connection with the conversion of the promissory
note.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Convertible Note Dated February 16, 2007

On February 16, 2007, in connection with the acquisition of Latin Node, we entered into a Convertible Note Purchase Agreement with
SIBL, pursuant to which we issued a convertible promissory note in the amount of $25.3 million and a warrant granting SIBL, and its assigns, the right to purchase up to 1,518,000 shares of common stock at $5.00 per share exercisable for a period of
7 years, with an aggregate fair value of $4,235,220. The Note had a four year term, with all principal being due and payable at maturity, and bore interest at an annual rate of 10%, accruing from issuance and payable on the 24-month anniversary of
the date of the Note and then quarterly thereafter. We used the proceeds of this Note (i) to provide bridge financing to, and to acquire a controlling interest in Latin Node; (ii) to refinance $3,300,000 of principal under a previously
outstanding note payable to SIBL; and (iii) for general working capital purposes. The Note was secured by a pledge of all of the shares of capital stock of Latin Node held by us at any time. As part of the fees for facilitating this
transaction, we issued SGC, an affiliate of SIBL, warrants to purchase 200,000 shares of our common stock. The warrants, which had a fair value of $558,728, were exercisable for 7 years at an exercise price of $5.00 per share.

The Note was convertible at the option of SIBL, in whole or in part, into shares of Series A Convertible Preferred Stock at an initial
conversion price of $5.00 per share. The conversion price was adjustable only for standard anti-dilution provisions such as stock splits, stock dividends and similar types of recapitalization events.



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Notes to Consolidated Financial Statements(Continued)



Convertible Note Dated June 25, 2007

On June 25, 2007, we entered into a second convertible note purchase agreement with SIBL, pursuant to which we issued a convertible
promissory note in the amount of $5.0 million and a warrant granting SIBL, and its assigns, the right to purchase up to 300,000 shares of common stock at $5.00 per share, with an aggregate fair value of $837,000. The Note had a four year term, with
all principal being due and payable at maturity, and bore interest at an annual rate of 10%, accruing from issuance and payable on the 24-month anniversary of the date of the Note and then quarterly thereafter. The Note was convertible at the option
of SIBL, in whole or in part, into shares of Series A Convertible Preferred Stock at an initial conversion price of $5.00 per share. We used the proceeds solely to fund the operations of Latin Node. The Note was secured by a pledge of all of the
shares of capital stock of Latin Node held by us at any time. As part of the fees for facilitating this transaction, we issued SGC warrants to purchase 50,000 shares of our common stock. The warrants, which had a fair value of $139,682, were
exercisable for 7 years at an exercise price of $5.00 per share.

Conversion of Convertible Notes

On June 30, 2008, SIBL converted the aggregate principal amount of $30,300,000 outstanding under the two convertible promissory notes
dated February 16, 2007 and June 25, 2007. The convertible notes were converted into 6,060,000 shares of our Series A Convertible Preferred Stock and, simultaneously, all of such 6,060,000 shares of Series A Convertible Preferred Stock
were converted into 6,060,000 shares of our common stock, at a conversion price of $5.00 per share. As a result of the conversion, the remaining unamortized discount of $2,974,601 recorded in connection with the warrants issued with the notes and
the remaining unamortized balance of deferred financing fees of $1,751,850 were charged to additional paid in capital in the accompanying consolidated balance sheet as of December 31, 2008. In addition, accrued interest payable on the
convertible notes in the amount of $4,109,775, which was forgiven by SIBL and therefore treated as a contribution to capital, was recorded as an increase to additional paid in capital in the accompanying consolidated balance sheet as of
December 31, 2008.

Term Loan Agreement

On June 8, 2009, we entered into a Loan Agreement (Term Loan Agreement) with ANZ whereby ANZ provided $16,672,000 in the
form of a term loan to our subsidiaries, ASHC and Samoa American Samoa Cable, LLC (SAS). ASHC and SAS are the borrowers under the facility and eLandia and our subsidiary, American Samoa Hawaii Undeployed Cable, LLC (ASHUC)
are the guarantors. The term loan is principally secured by substantially all of the assets and operations of ASHC, SAS and ASHUC. The term loan bears interest at the U.S. prime rate plus 2% and is due on June 3, 2016. The Term Loan Agreement
requires seven monthly installments of interest only, followed by 77 monthly installments of $187,319, including principal and interest, through the maturity date. The remaining unpaid principal balance is due on the maturity date. In the event that
a United States Department of Agriculture (USDA) Rural Development Conditional Commitment for Guarantee (USDA Guaranty) is obtained in favor of ANZ covering the outstanding amount of the term loan then, as of the
effective date of the USDA Guaranty in favor of ANZ, the interest rate will be decreased to the prime rate plus 1.10%. The term loan will be subject to certain financial and non-financial covenants beginning with the period ended March 31,
2011. The proceeds of the term loan were used to fund the construction, installation and delivery to customers of a fully operational undersea fiber optic cable linking American Samoa and Samoa to Hawaii and providing improved long distance
telecommunication and data services. In connection with the Term Loan Agreement, we executed a guaranty in favor of ANZ (the Guaranty). Pursuant to the Guaranty, we have unconditionally guaranteed the repayment and other obligations of
ASHC and SAS under the Term Loan Agreement.

At December 31, 2009, the carrying value of the Term Loan Agreement was
$16,672,000. Contractual interest expense amounted to $515,815 which was recorded as a component of interest expense in the accompanying statement of operations and is also included in accrued expenses in the accompanying consolidated balance sheet
as of December 31, 2009.

Promissory Notes

Telecom New Zealand, Ltd.

On March 2, 2009, we entered into an agreement with Telecom New Zealand, Ltd. (TNZ), pursuant to which PRR converted a
$1,500,000 payable to TNZ at December 31, 2008 into a promissory note. The note bore interest at 7% per annum and was due on the earlier of (i) the date upon which funds were available for payment to TNZ pursuant to the terms of a
limited liability agreement with TNZ and (ii) July 1, 2010. The note was secured by our membership interests in PRR and ASHC.

On March 2, 2009, we entered into another agreement with TNZ, pursuant to which PRR converted a $2,500,000 payable to TNZ at
December 31, 2008 into a promissory note. The note bore interest at 7% per annum and was due on the date upon which the Pac-Rim East undersea fiber optic cable that runs between New Zealand and Hawaii (PRE Cable) was redeployed
and ASHC determined that the PRE Cable was ready to carry commercial traffic. The note was secured by our membership interests in PRR and ASHC.



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Notes to Consolidated Financial Statements(Continued)



The promissory notes were satisfied in June 2009 using the proceeds from the Term Loan
Agreement with ANZ described above.

Former Owners of Transistemas

As discussed in Note 20, on August 27, 2009, we entered into a Settlement Agreement with the former owners of Transistemas
(Sellers) in full and final settlement of the Put/Call Agreement. Pursuant to the terms of the Settlement Agreement, we agreed to pay the Sellers $2.6 million as follows:



| | (i) | $260,000 in cash payable on the date of the Settlement Agreement, and
| | --- | ---------------------------------------------------------------------



| | (ii) | $2,340,000 payable in the form of a non-interest bearing promissory note due on July 15, 2011. The promissory note requires 22 equal monthly payments of $52,000,
with the first payment due on September 15, 2009. The remaining principal balance of $1,196,000 is due on July 15, 2011.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, as an inducement to settle the Put obligation and execute the promissory note, we agreed to issue to the Sellers 433,333
shares of our common stock, valued at $156,000. We allocated a portion of the note amount of $2,340,000 to the shares based on the relative fair value of the note and shares. The relative fair value of the shares, which amounted to $146,250, was
recorded as a discount to the promissory note and a corresponding increase to additional paid in capital. This amount is being accreted into interest expense over the contracted term of the note. For the year ended December 31, 2009, accretion
of the discount amounted to $24,293, which was recorded as a component of interest expense in the accompanying consolidated statement of operations. As of December 31, 2009, the carrying value of the note was $2,132,000.

Alvarado  Related Party

In connection with the 30% Purchase Agreement entered into with Alvarado on July 17, 2009, we purchased 3,000,000 Common Units of
Desca for an aggregate purchase price of $1.9 million, consisting of (i) $500,000 in cash, (ii) a $500,000 promissory note payable on July 1, 2010, and (iii) 2,500,000 shares of our common stock, valued at $0.9 million. As a
result of our purchase of the 30% Units under the 30% Purchase Agreement, effective July 1, 2009, Desca became a wholly-owned subsidiary (see Note 5). The promissory note provides for interest to accrue at 6% per annum and all payments of
principal and accrued interest to be paid on the maturity date of July 1, 2010. As of December 31, 2009, the carrying value of the note was $513,644. Contractual interest expense amounted to $13,644 which was recorded as a component of
interest expense in the accompanying statement of operations and is also included in accrued expenses in the accompanying consolidated balance sheet as of December 31, 2009.

Obligations Under Various Long-Term Borrowing Arrangements

We have various long-term loans with a major vendor and several local banks. In Latin America we owe approximately $4.2 million under
various long-term borrowing arrangements at December 31, 2009. These obligations have maturities ranging from 3 months to 5 years that bear interest at rates ranging from 4.3% to 26.0%. Periodic payments on the loans that require regular
monthly or quarterly payments, in aggregate, equate to approximately $83,000 per month. The remaining loans require principal repayment upon maturity of the loan. These loans are generally secured by certain Latin American assets such as accounts
receivable and/or inventory.

In the South Pacific we owe approximately $3.0 million under various long-term borrowing
arrangements at December 31, 2009. These obligations have maturities ranging from 51 months to 5 years that bear interest at rates ranging from 4.5% to 6.0%. Periodic payments on the loans that require regular monthly payments total
approximately $11,000 per month. The remaining loans require principal repayment upon maturity of the loan. These loans are secured by certain South Pacific assets such as property, plant and equipment or our equity investment in certain South
Pacific subsidiaries.

As discussed in Note 15, our operations in American Samoa are obligated under a loan agreement with ANZ
for a maximum amount of $5,800,000. Of this amount, $800,000 is in the form of a term loan and up to $5,000,000 is in the form of a revolving line of credit.



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Notes to Consolidated Financial Statements(Continued)



Maturities of our long-term debt are as follows as of December 31, 2009:



|                                  |  |               |         |                  |   |            |  |   |           
|--------------------------------- |  | ------------- | ------- | ---------------- | - | ---------- |  | - | ----------
|                                  |  | Related Party |         | Non-RelatedParty |   | Total     
|For the years ending December 31, |  |               |         |                  |   |            |  |   |           
|2010                              |  | $             | 513,644 |                  | $ | 4,196,428  |  | $ | 4,710,072 
|2011                              |  |               |        |                  |   | 5,097,247  |  |   | 5,097,247 
|2012                              |  |               |        |                  |   | 2,020,717  |  |   | 2,020,717 
|2013                              |  |               |        |                  |   | 2,054,707  |  |   | 2,054,707 
|2014                              |  |               |        |                  |   | 3,486,007  |  |   | 3,486,007 
|Thereafter                        |  |               |        |                  |   | 9,087,916  |  |   | 9,087,916 
|                                  |  |               |         |                  |   |            |  |   |           
|Total                             |  | $             | 513,644 |                  | $ | 25,943,022 |  | $ | 26,456,666
|                                  |  |               |         |                  |   |            |  |   |           

NOTE 18  Capital Lease Obligations

We are obligated under various capital leases under which the aggregate present value of the minimum lease payments amounted to
approximately $4.2 million. The present value of the minimum lease payments was calculated using discount rates ranging from 8.6% to 10.2%. The remaining principal balance on these obligations amounted to $4,201,905 at December 31, 2009,
including $1,257,416 included in the current portion of capital lease obligations in the accompanying consolidated balance sheet at December 31, 2009.

The future minimum lease payments under all capital leases at December 31, 2009 are as follows:



|                                                  |  |   |          
|------------------------------------------------- |  | - | ---------
|For the Year Ended December 31,                   |  |   |          
|2010                                              |  | $ | 1,614,670
|2011                                              |  |   | 1,575,770
|2012                                              |  |   | 1,210,746
|2013                                              |  |   | 638,570  
|2014                                              |  |   | 33,099   
|Thereafter                                        |  |   |         
|                                                  |  |   |          
|                                                  |  |   | 5,072,855
|Less Amounts Representing Interest                |  |   | 870,950  
|                                                  |  |   |          
|Principal Portion                                 |  |   | 4,201,905
|Less Current Portion                              |  |   | 1,257,416
|                                                  |  |   |          
|Capital Lease Obligations, net of Current Portion |  | $ | 2,944,489
|                                                  |  |   |          

The capital lease obligations are collateralized by
underlying vehicles and equipment. As of December 31, 2009 and 2008, the gross amount of property and equipment under non-cancelable capital leases was $3,902,974 and $2,456,228, respectively, and the amount of accumulated amortization was
$542,631 and $536,226, respectively.

NOTE 19  Commitments and Contingencies

Operating Lease Agreements

We lease space for operations; sales, marketing and customer support; and general and administrative purposes as well as machinery,
vehicles, and network equipment under lease agreements that expire at various dates through December 2029. Certain leases have renewal options at reduced rates and provisions requiring us to pay maintenance, property taxes and insurance. Generally,
all rental payments are fixed. For the years ended December 31, 2009 and 2008, the aggregate rent expense for all operating leases was $4,187,187 and $3,923,806, respectively. Future minimum commitments on the above agreements are as follows:



|                                |  |   |           
|------------------------------- |  | - | ----------
|For the Year Ended December 31, |  |   |           
|2010                            |  | $ | 3,068,071 
|2011                            |  |   | 2,728,005 
|2012                            |  |   | 2,510,408 
|2013                            |  |   | 2,303,272 
|2014                            |  |   | 2,195,669 
|Thereafter                      |  |   | 6,714,205 
|                                |  |   |           
|                                |  | $ | 19,519,629
|                                |  |   |           



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Employment Agreements

We have entered into employment agreements with several of our executives and key officers for initial terms of one to five years, which
can or will be renewed for an additional one to two years thereafter, unless written notice is provided by the respective parties. The agreements provide, among other things, for the payment of aggregate annual base salaries of approximately
$1,025,000, as well as such incentive compensation and discretionary bonuses as the Board of Directors may determine. In addition, the employment agreements provide for up to two years of severance compensation for terminations under certain
circumstances. Aggregate potential severance compensation amounted to approximately $1.4 million at December 31, 2009.

Modification to Mr. Pizarros Employment Agreement

On February 6, 2009, we entered into an amendment to Mr. Pizarros Executive Employment Agreement (the
Amendment). Under the Amendment, Mr. Pizarro waived any breach by us by reason of our entry into the Modification Agreement and released us of any liabilities resulting from such breach. In consideration of Mr. Pizarro agreeing
to enter into the Amendment, we agreed to provide certain additional compensatory benefits to Mr. Pizarro as follows:



| |  |  | The exercise price with respect to options to purchase 3,122,000 shares of our common stock previously granted pursuant to the Mr. Pizarros
Executive Employment Agreement was reduced from $3.07 to $0.45 per share;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mr. Pizarro was granted options to purchase an additional 1,000,000 shares of our common stock at $0.45 per share, which options vest equally on a
monthly basis over a three-year period beginning February 2009, if and only if Mr. Pizarro remains continuously employed by us until each vesting date, subject to other terms and conditions;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All unvested shares of our common stock granted pursuant to Mr. Pizarro as part of a 750,000 share restricted stock award pursuant to
Mr. Pizarros Executive Employment Agreement immediately vested, and all contractual restrictions with respect to such shares were terminated (see Note 24); and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mr. Pizarros full bonus for 2008 in the amount of $375,000, as provided in his Executive Employment Agreement, was paid promptly following
the execution of the Amendment.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, Mr. Pizarros Executive Employment Agreement was
further amended to provide as follows:



| |  |  | during 2009, Mr. Pizarro was paid a guaranteed bonus of $375,000, payable in equal bi-monthly installments commencing in February 2009;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we amended our Policy Governing Insider Trading (the Policy) to permit, with our approval, (a) the adoption of written plans for
trading our securities in accordance with SEC Rule 10b5-1(c) (a Trading Plan), and (b) transactions exempt from the Policy made pursuant to approved Trading Plans from the Policy;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | following the amendment to the Policy described above, we agreed to approve a Trading Plan for Mr. Pizarro for certain shares of our common stock
owned by Mr. Pizarro; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we agreed to adopt a written Senior Management Incentive Compensation Plan applicable to years 2010 and beyond.
| | - |  | ---------------------------------------------------------------------------------------------------------------

Resignation of Executives

Effective January 23, 2008, Laura Janke Jaeger, our General Counsel and Senior Vice President separated from the Company following
the mutual agreement between Ms. Jaeger and us that her employment agreement would not be renewed beyond the expiration date of its current term of April 22, 2008. As more fully described in Note 24, in connection with
Ms. Jaegers termination, we canceled options to purchase 75,000 shares of our common stock and accelerated the vesting of 25,000 options.



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Effective January 29, 2008, Harry G. Hobbs resigned as our Chief Executive Officer
and as a member of our Board of Directors. In connection with his resignation, we entered into a Separation Agreement with Mr. Hobbs pursuant to which we agreed, among other things, to pay Mr. Hobbs a performance bonus of $31,500 and
to continue to pay Mr. Hobbs salary for a period of twelve months. As more fully described in Note 24, in connection with Mr. Hobbs resignation, we canceled options to purchase 424,133 shares of our common stock and accelerated the
vesting of 212,067 options.

We recorded compensation expense in the amount of $0 and $567,567 related to these options during
the years ended December 31, 2009 and 2008, respectively.

Effective December 31, 2008, Michael McCutcheon resigned
as Chief Operating Officer-Pacific Operations, Vice President and as a member of the Board of Directors of any and all subsidiaries of the Company for which he served in such capacity. Mr. McCutcheons resignation is not due to any
disagreement with us or any matter relating to our operations, policies or practices. In connection with his resignation, we entered into a Separation Agreement with Mr. McCutcheon pursuant to which we agreed, among other things, to continue to
pay Mr. McCutcheons salary for a period of twelve months. Accordingly, we have recorded $232,000 of compensation expense as of December 31, 2008 in connection with our obligation under the Separation Agreement with
Mr. McCutcheon.

On March 31, 2009, we entered into a Separation Agreement with Oscar Coen, our former Vice President
of Business Development. The Separation Agreement was effective February 28, 2009 and provides for, among other things, severance pay for a period of 12 months and contains a mutual release. The Separation Agreement terminates the employment
agreement previously entered into by us and Mr. Coen except, among other provisions, the confidentiality, non-competition and non-solicitation covenants which survive the termination of the employment agreement. Accordingly, we recorded
$194,000 of compensation expense as of December 31, 2009 in connection with our obligation under the Separation Agreement with Mr. Coen.

Financial Collapse of SIBL and its Affiliates

On or about February 16, 2009, pursuant to an action brought by the SEC against SIBL and certain of its affiliates, including its
owner Robert Allen Stanford, alleging, among other things, securities law fraud under both the Securities Act of 1933 and the Securities Exchange Act of 1934, the United States District Court for the Northern District of Texas, Dallas Division
issued orders to freeze the assets of SIBL and certain of its affiliates and to appoint a receiver to prevent the waste and disposition of such assets. On or about February 17, 2009, the SEC formally charged Mr. Stanford and three of his
companies, including SIBL, alleging a fraudulent, multi-billion dollar investment scheme.

Prior to the aforementioned action
and the Modification Agreement on February 6, 2009, SIBL had served as the primary source of financing and liquidity to us and was recognized as such by our investors, vendors, and customers. Not only did these adverse events relating to SIBL
eliminate a material source of financing and liquidity for us, but our association with SIBL has had, and may continue to have, other adverse effects on our business, results of operations, liquidity, and financial condition, including, among other
things:



| |  |  | because of uncertainties stemming from the appointment of receivers for Stanford and the global economic crisis in general, several of our banks in
Latin America have restricted access to revolving credit facilities or have prevented us from accessing existing and open credit lines. These actions have required us to utilize our cash reserves to stay current with certain vendors.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | similarly, certain of our vendors that provide us with trade credit have insisted on more punctual payment and have required additional deposits or
security requirements.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we have had a material proposed acquisition halted due to the uncertainty surrounding actions that may in the future be taken by the receivers. As a
result, we expensed approximately $1.5 million of costs related to this failed acquisition during the year ended December 31, 2009.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The collective impact of the uncertainties surrounding possible future actions of the SIBL receivers is that our cash flow position is
being negatively affected and our ability to draw on existing credit lines or obtain other sources of financing are being adversely affected as a result of the perceived uncertainty as to how our association with SIBL impacts our business. If we are
unable to resolve these issues to the satisfaction of our customers, vendors, creditors, and lenders, we may be unable to satisfy our cash requirements and may need to curtail certain operations or revise our business and growth plans.

On May 15, 2009, the district court in Dallas ruled that the Antiguan liquidators for SIBL are entitled to seek Chapter 15 bankruptcy
protection for SIBL under U.S. law. A Chapter 15 filing assists in resolving cases involving debtors, assets and claimants in multiple countries. The Antiguan liquidators for SIBL are seeking the authority to file for bankruptcy as a means of
safeguarding SIBLs assets. The potential impact on us from such a bankruptcy filing is uncertain.

On June 2, 2009,
we received a letter from the U.S. receiver clarifying that the assets and business operations of eLandia and our subsidiaries are not part of the Stanford Financial Group Receivership Estate. The receivers letter did state that the voting
trust certificates issued to SIBL, representing SIBLs interest in the shares of our capital stock deposited in the Voting Trust, did constitute part of the Stanford Financial Group Receivership Estate.



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On June 19, 2009, a federal criminal indictment was issued against
Mr. Stanford and several other executives and officers of SIBL, including the former chief investment officer, former chief accounting officer and former global controller. The indictment charges these individuals with fraud, obstruction and
other crimes related to SIBL and other Stanford Financial companies.

On July 16, 2009, the receiver requested approval
from the court to engage a private equity advisor to assist the receiver to properly manage the investments in the Receivership Estate, assess their value and identify potential buyers, thereby maximizing the value to the Receivership Estate. These
investments include the voting trust certificates issued to SIBL representing SIBLs interest in the shares of our capital stock deposited in the voting trust.

Foreign Operations

Our operations in various geographic regions expose us to risks inherent in doing business in each of the countries in which we transact
business. Operations in countries other than the United States are subject to various risks peculiar to each country. With respect to any particular country, these risks may include:



| |  |  | Expropriation and nationalization of our assets or our customers in that country;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Political and economic instability;
| | - |  | -----------------------------------



| |  |  | Civil unrest, acts of terrorism, force majeure, war or other armed conflict;
| | - |  | ----------------------------------------------------------------------------



| |  |  | Natural disasters including those related to earthquakes, hurricanes, tsunamis and flooding;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | Inflation;
| | - |  | ----------



| |  |  | Currency fluctuations, devaluations, conversion and expropriation restrictions;
| | - |  | -------------------------------------------------------------------------------



| |  |  | Confiscatory taxation or other adverse tax policies;
| | - |  | ----------------------------------------------------



| |  |  | Governmental activities that limit or disrupt markets, payments, or limit the movement of funds;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | Governmental activities that may result in the deprivation of contract rights; and
| | - |  | ----------------------------------------------------------------------------------



| |  |  | Trade restrictions and economic embargoes imposed by the United States and other countries.
| | - |  | -------------------------------------------------------------------------------------------

Venezuela

In recent years Venezuela has experienced political challenges, difficult economic conditions, relatively high levels of inflation,
and foreign exchange and price controls. The President of Venezuela has the authority to legislate certain areas by decree, and the government has nationalized or announced plans to nationalize certain industries and to expropriate
certain companies and property. These factors may have a negative impact on our business and our financial condition.

Since 2003, Venezuela has imposed currency controls and created the Commission of Administration of Foreign Currency (CADIVI)
with the task of establishing detailed rules and regulations and generally administering the exchange control regime. These controls fix the exchange rate between the Bolivar and the U.S. dollar, and restrict the ability to exchange Bolivars
for dollars and vice versa. The near-term effect has been to restrict our ability to repatriate funds from Venezuela in order to meet our cash requirements. In particular, the currency controls in Venezuela have restricted our ability to make
payments to certain vendors in U.S. dollars, causing us to borrow money to meet these obligations and to be subject to credit holds, which have caused delays in the delivery of customer orders thus delaying or causing the loss of sales.

Prior to 2010, the official exchange rate has remained steady over the last few years despite significant inflation. The exemptions
provided by Venezuelas Criminal Exchange Law for transactions in certain securities has resulted in the establishment of a legal indirect parallel market of foreign currency exchange, through which companies may obtain foreign
currency without requesting it from the government. The exchange rate in the parallel market (parallel rate) is variable and was about 65 percent less favorable in 2009 when compared with the official rate. The acquisition of foreign currency by
Venezuelan companies to honor foreign debt, pay dividends or otherwise expatriate capital is subject to registration and subject to a process of application and approval by the CADIVI and to the availability of foreign currency within the guidelines
set forth by the National Executive Power for the allocation of foreign currency. Such approvals have become less forthcoming over time, resulting in a significant increase in our exchange rate and exchange control risks. We cannot predict if and
when we will obtain CADIVI approval to honor foreign debt, distribute dividends or otherwise expatriate capital using the official Venezuelan exchange rate or the timing of receipt of such approval. For the year ended December 31, 2009, we
submitted approximately $27 million for CADIVI approval, of which approximately $21 million had been approved and released to us as of December 31, 2009. An additional $2 million was approved and released subsequent to December 31, 2009.
In light of the ongoing currency exchange control limitations in Venezuela and the increasing cash balance in the Companys Venezuelan subsidiary, starting in January 2009 the Company began to settle certain of its U.S. dollar-denominated
liabilities with dollars obtained through the parallel market at an exchange rate less favorable than the official rate. In 2009, the Company recorded a $1.9 million net pretax loss on foreign currency to convert Venezuelan Bolivars generated by its
business to U.S. dollars at this parallel rate. It is the Companys expectation to continue to settle these U.S. dollar-denominated liabilities through the parallel market in order to access the cash generated by the business.



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Historically, we have utilized the official rate for the remeasurement of our Venezuelan
subsidiary from the Bolivar to the U.S. dollar. In December 2009, we considered our past and continued intent to use the parallel rate to settle our U.S. dollar-denominated liabilities and the fact that we do not expect to be able to remit the
dividends at the official rate. In view of these facts and circumstances existing at the end of 2009, we determined that effective December 31, 2009, we would use the parallel rate to translate the operations of our Venezuelan subsidiary. As a
result of this decision, we recorded a pretax loss of $4.4 million. On January 8, 2010, the Venezuelan government announced the devaluation of the Venezuelan Bolivar. The official rate increased from 2.15 Venezuelan Bolivars to the U.S. dollar
to 4.30 for non-essential goods (which is deemed to include telecommunications services). This change did not have an impact on the consolidated financial statements for 2009 or our decision to use the parallel rate for translation purposes.
However, there can be no assurance that the devaluation will not adversely affect our future operations in Venezuela.

As of
December 31, 2009, approximately $25,000 (valued at the fixed official rate) of our cash and cash equivalents were held in Venezuelan Bolivars. For 2009, our Venezuelan subsidiary generated approximately $60.4 million of our consolidated
revenue and $4,000 of our consolidated loss from continuing operations at the fixed official rate. As of December 31, 2009, our Venezuelan subsidiary had $23.8 million of total assets. The official exchange rate was 2.15 Bolivars to the U.S.
dollar at December 31, 2009. The estimated exchange rate on the parallel market was between 5.82 and 5.97 Bolivars to the U.S. dollar at December 31, 2009.

Fiji

In April 2009, the Reserve Bank of Fiji announced that Fijis currency had been devalued by 20% effective April 16, 2009, the
President of Fiji annulled the countrys constitution, terminated all the judges in the country and declared himself the head of state. This triggered an impairment charge to our goodwill in Fiji and is expected to result in economic
instability and an uncertain business climate in Fiji. These political events and any subsequent developments may have a negative impact on our business. Our former director, with whom we are in litigation, as described below, is Fijis
ambassador to China.

As a result of the factors discussed above and the uncertainty caused by such factors, in December 2009
our Board of Directors approved managements proposal to cease or dispose of our operations in Fiji) (see Note 9).

American Samoa

On September 29, 2009, a major earthquake in the South Pacific created a tsunami that sent a surge of water of up to 15 feet into
parts of American Samoa. This resulted in power outages and major damage to parts of the island, including portions of our service territory. Our cellular network experienced service delivery issues in the highly affected areas and our cable TV
network was completely destroyed in some areas. Our undersea cable was operational and has sustained some minor damage. The financial impact on our operations in American Samoa and as a whole, net of insurance reimbursements, was not material.
While we did have customers that were negatively impacted as a result of issues caused by the tsunami, we do not expect any material long-term negative impact on our operations.

One of the major tuna canneries in the territory has recently shut down its operations. Tuna canneries represent a substantial part of the
economic activity in American Samoa. The closing of a principal cannery has resulted in an increase in unemployed workers in the territory. However, stimulus dollars recently allocated to American Samoa have helped mitigate some of the negative
impact in the short term due to the closings.

Current Economic Crisis

The recent global economic crisis has caused a general tightening in the credit markets, lower levels of liquidity, increases in the rates
of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets. These conditions not only limit our access to capital, but also make it difficult for our customers, our vendors and us to accurately forecast and plan
future business activities, and could cause U.S. and foreign businesses to slow spending on our products and services, which would delay and lengthen sales cycles. Furthermore, during challenging economic times our customers may face issues,
including:



| |  |  | the inability to obtain credit to finance purchases of our products;
| | - |  | --------------------------------------------------------------------



| |  |  | customer insolvencies;
| | - |  | ----------------------



| |  |  | decreased customer confidence to make purchasing decisions;
| | - |  | -----------------------------------------------------------



| |  |  | decreased customer demand; and
| | - |  | ------------------------------



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| |  |  | decreased customer ability to pay their trade obligations.
| | - |  | ----------------------------------------------------------

In addition, the recent economic crisis could adversely impact our suppliers ability to provide us with materials and components,
either of which may negatively impact our business, financial condition and results of operations.

Ah Koy Litigation

Fiji Action

On February 24, 2009, Kelton Investments Ltd. (Kelton) and Datec Group Ltd. (Datec), as plaintiffs, filed in
the High Court of Fiji at Suva (the Fiji Court) an Ex Parte Notice of Motion for Interim Injunction (the Motion). The Motion named as defendants Generic Technology Limited (Generic), Datec Pacific Holdings Ltd.,
eLandia, the Receiver for Stanford, and the Registrar of Companies. The Motion sought an interim injunction preventing certain defendants from, among other things, appointing new directors or removing existing directors from the board of directors
of Generic and other entities and also preventing certain defendants from disposing of shares in Generic or its subsidiaries. On February 27, 2009, the Fiji Court entered an order granting this relief on an ex parte basis.

On March 31, 2009, Kelton and Datec filed a Statement of Claim in the Fiji Action. In essence, the Statement of Claim alleged that
the Amended and Restated Arrangement Agreement dated August 8, 2005 (Arrangement Agreement) pursuant to which eLandia acquired the subsidiaries of Datec was induced by untrue representations related to the capital to be devoted to
those subsidiaries and alleged investigations of Stanford. It asserted claims for fraudulent misrepresentation, proper construction and enforceability of certain Stock Purchase Agreements in which claims against eLandia were released, breach of
Stock Purchase Agreements, breach of the Arrangement Agreement, and equitable estoppel. As relief, it sought, among other things, rescission of the Arrangement Agreement and Stock Purchase Agreements, a declaration as to the scope of the Stock
Purchase Agreements, injunctive relief, and damages. We are currently requesting details and particulars of the claims made ahead of the next appearance in the Fiji Court.

A hearing to review the order granting the interim injunction was scheduled for April 20, 2009. That hearing was cancelled due to the
closure of the Fiji courts by the military led Fiji government. The hearing has been rescheduled a number of times and we are currently awaiting a new date.

eLandia International Inc. v. Sir James Ah Koy, et al.

On March 9, 2009, we filed an action in the United States District Court for the Southern District of Florida, Miami Division (the
Court), against Sir James Ah Koy, Michael Ah Koy, Kelton, and Datec. On March 17, 2009, we filed an Amended Complaint in that suit. In essence, we have alleged that Sir James Ah Koy and his son, Michael Ah Koy, Kelton, and Datec
improperly acted to preclude the sale of our interests in the South Pacific. Among other things, we asserted that the defendants improperly employed claims and complaints about the Arrangement Agreement that they have released to favor their own
interests at the expense of the Companys. We asserted claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, conspiracy to breach fiduciary duty, declaratory judgment under various agreements, breach of the implied
covenant of good faith and fair dealing, breach of contract, and tortious interference with business relations. We seek a declaratory judgment, an injunction, compensatory damages (which we view as including all damages defendants have caused,
including loss of sales proceeds and other costs), punitive damages, attorneys fees, and costs.

On April 15, 2009,
we filed a motion seeking a preliminary injunction to preclude defendants from prosecuting the Fiji Action or causing that action to be prosecuted. On April 17, 2009, the defendants filed a motion to dismiss for lack of personal jurisdiction
and a memorandum in opposition to our motion for a preliminary injunction on grounds of personal jurisdiction with the court and we, in turn, filed, among others, our opposition to said motion on May 4, 2009. A hearing was held on July 7,
2009, on the personal jurisdiction issue and preliminary injunction. On August 22, 2009, the Court issued a Scheduling Order setting forth a timeline for this case. On August 24, 2009, the Court entered a Report and Recommendation on
Motion to Dismiss recommending that the defendants motion for lack of personal jurisdiction be dismissed and an Order stating that our preliminary injunction motion would not be adjudicated at this stage and denied the same without prejudice.
On September 11, 2009, the defendants filed objections to the Courts Report and Recommendation and on October 5, 2009 we filed our response to such objections. On September 8, 2009, we filed a Second Amended Complaint to which
the defendants filed an Answer and Affirmative Defenses on October 9, 2009. On October 9, 2009, the defendants also filed a Motion for Summary Judgment based on our alleged lack of standing. In February 2010, the Report and Recommendation
was issued by the Court on the Defendants Motion for Summary Judgment. It was denied in all aspects except the claim for tortious interference, which the court recommended granting. We are currently in settlement negotiations, however the
timing and outcome of this matter remain uncertain at this time.



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Latin Node FCPA Investigation

On September 14, 2007, following its acquisition, we engaged in a review of Latin Nodes internal controls and legal compliance
procedures within its finance and accounting departments as part of our acquisition and integration of Latin Node. As a result of this review, certain past payments made to third parties prior to our acquisition of Latin Node on June 28, 2007
were identified as having been made in the absence of adequate records and controls for a U.S. public company. We conducted an internal investigation to determine whether any direct or indirect payments by employees of Latin Node or consultants used
by Latin Node prior and subsequent to its acquisition by us were made in violation of the Foreign Corrupt Practices Act (FCPA). The internal investigation of the FCPA matter was conducted by a Special Committee of our Board of Directors.
The Special Committee retained independent legal counsel to assist in the investigation of the FCPA matter.

The internal
investigation preliminarily revealed that certain payments from Latin Node prior to our acquisition of Latin Node may have been made in violation of the FCPA. We voluntarily and proactively reported these potential violations to the SEC, the United
States Department of Justice, and the Federal Bureau of Investigation and cooperated fully with these agencies regarding this matter. Following settlement discussions with the Department of Justice, Latin Node agreed to enter into a plea agreement
to resolve the matter by the payment of a monetary penalty of $2 million for the actions that occurred prior to Latin Nodes acquisition by us. On March 23, 2009, the Department of Justice filed charges in the United States District Court
for the Southern District of Florida against Latin Node for actions taken by Latin Node prior to the time that we made our investment in Latin Node. On April 3, 2009, the matter was resolved and the court approved the plea agreement reached
with the Department of Justice. In accordance with the terms of the settlement agreement, we paid $500,000 promptly following the settlement date, and the remaining $1,500,000 will be paid in three equal installments of $500,000 each by
January 31, 2010, January 31, 2011 and January 31, 2012, respectively. On March 22, 2010, the court approved a modified payment schedule such that the $500,000 payment originally due on January 31, 2010 will now be paid
in the following manner: $50,000 on March 31, 2010, $125,000 on May 15, 2010, $125,000 on July 15, 2010, $125,000 on October 15, 2010 and $75,000 on December 15, 2010. The remaining payments of $500,000 each due on
January 31, 2011 and January 31, 2012 remain unchanged.

Latin Node Litigation

On January 22, 2008, an action was commenced against Latin Node in the 11th Judicial Circuit in and for Miami-Dade County, Florida,
by Juan Pablo Vasquez, Olivia de la Salas, and Gloria Vasquez, former employees of Latin Node (the Plaintiffs). The Plaintiffs were terminated with cause by Latin Node and have brought an action for breach of contract. The
Plaintiffs sought damages (including but not limited to severance pay and compensation for accrued but unused vacation pay), together with attorneys fees. On June 26, 2009, the court entered a notice of lack of prosecution in this case
and directed the parties to appear on September 18, 2009 for a hearing on the courts motion of dismissal for lack of prosecution in the case. On September 21, 2009, the court issued an order dismissing the action for lack of
prosecution.

Assignment for the Benefit of Creditors  Latin Node

On June 12, 2008, Latin Node filed for an assignment for benefit of creditors in the 11th Judicial Circuit in and for Miami-Dade
County, Florida. As part of this proceeding, all of the assets of Latin Node were transferred to Michael Phelan, Esq., assignee. On July 17, 2008, most of these assets were sold to the highest bidder, Business Telecommunications Services, Inc.
(BTS). Since we were the principal secured creditor of Latin Node, we had the right to receive all of the proceeds from such sale after the payment of the costs of administration. The immediate proceeds from the sale of these assets were
used to pay administrative costs. A final court order approving the disposition of the proceeds from the sale of all other assets was scheduled for May 21, 2009. However, on May 20, 2009, Empresa Hondureña de Telecomunicaciones
filed a Motion for Continuance or in the alternative, Motion to Stay the Assignees Motion to Approve Final Report and Fees to Assignee, Assignees Counsel and Assignors Counsel, Disburse Remaining Funds to Priority and Unsecured
Creditors, Discharge Assignee and Close Case. At a hearing held on August 28, 2009 on said motions, the court ordered the parties to select a forensic examiner to conduct an examination and determine whether the claims made by Hondutel are
valid. On September 17, 2009, the court appointed a forensic examiner, whose report was issued on February 16, 2010. The forensic examiner appointed by the court determined that Latin Node and/or eLandia did not act improperly in this
matter which cast doubt on Hondutels ability to further delay the final adjudication of the case.

Action Against
Granados et al., for Indemnification

On June 27, 2008, we filed an action against Jorge Granados, individually
and Retail Americas VoIP, LLC, a Delaware limited liability company (RAV) in the 11th Judicial Circuit in and for Miami-Dade County, Florida. The action asserted claims for contractual indemnification, breach of contract, breach of the
obligation of good faith and fair dealing, fraud, fraudulent inducement, unjust enrichment, and specific performance against the escrow agent.

These claims arose from the transaction where we purchased 80% of the equity of Latin Node for $20 million pursuant to a preferred stock
purchase agreement. The gravamen of the action was that Jorge Granados and RAV failed to disclose as part of the preferred stock purchase agreement that Latin Node had made payments to various parties in Central America in violation of the FCPA and
one of Latin Nodes vendors claimed that it was owed $4.4 million. In connection with the transaction, 375,000 shares of our common stock had been deposited with an escrow agent to secure the indemnification obligations of the selling parties.



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On February 12, 2009, we entered into a Settlement Agreement with Jorge Granados
and RAV pursuant to which (i) the 375,000 shares of our common stock issued to RAV in connection with the transaction were returned to us by the escrow agent (Note 21), (ii) we exchanged mutual general releases with Jorge Granados and RAV,
(iii) Jorge Granados resigned as a director of Latin Node and a manager of RAV, and (iv) Jorge Granados agreed to be subject to certain non-competition, non-solicitation and non-disclosure covenants. The action was dismissed on
March 13, 2009.

General Legal Matters

From time to time, we are involved in legal matters arising in the ordinary course of business. While we believe that such matters are
currently not material, there can be no assurance that matters arising in the ordinary course of business for which we are, or could be, involved in litigation, will not have a material adverse effect on our business, financial condition or results
of operations.

Collateral Pledge

On February 28, 2008, we entered into a Collateral Participation Agreement with SIBL. Pursuant to the Collateral Participation
Agreement, we granted SIBL various participation rights to the collateral previously granted to Laurus under the terms of the loan by Laurus to Latin Node and assigned to us pursuant to an assignment agreement. The participation rights served as
additional collateral securing our obligations to SIBL under certain loans previously made to us in the aggregate principal amount of $30.3 million. The participation rights include the right to declare an event of default under the loan to Latin
Node and to receive payments from Latin Node thereunder. The Collateral Participation Agreement was terminated on June 30, 2008 in connection with SIBLs conversion of their $30.3 million convertible promissory notes.

Customer and Vendor Concentrations

For the year ended December 31, 2009, we had one customer that represented approximately 14% of our consolidated revenues. At
December 31, 2009, no customers accounted for more than 10% of our gross accounts receivable or our revenues.

For the
year ended December 31, 2009, approximately 77% of our products were purchased from a single vendor. At December 31, 2009, the amount due to this vendor was approximately 49% of our total accounts payable.

NOTE 20  Common Stock, Subject to Potential Redemption

Concurrent with the closing of our investment in Transistemas, we entered into a Put/Call Agreement with the former owners of Transistemas
(the Sellers) which provided for a put and call right pursuant to which on July 1, 2009, subject to certain terms as defined in the agreement, (a) the Sellers could require that we purchase the 433,333 shares of our common
stock for a cash purchase price of $6.00 per share, as calculated in accordance with this agreement, or (b) we could require that the Sellers sell us the 433,333 shares of our common stock for a cash purchase price calculated in accordance with
this agreement. As a result of the put rights and obligations, we classified the 433,333 shares of common stock, valued at $2,599,998, as common stock subject to potential redemption in the accompanying consolidated balance sheet as of
December 31, 2008.

On July 1, 2009, the Sellers delivered notice to us of their intention to exercise the Put. Due
to affects on our operations of the current worldwide economic crisis, we determined that it would not be in our best interests to comply with the terms and conditions of the Put/Call Agreement and, therefore, the Sellers claimed that we had
breached our obligations under the Put/Call Agreement to purchase the Put shares and, as a result, we owed the Sellers $2.6 million.

On August 27, 2009, we entered into a Settlement Agreement with the Sellers in full and final settlement of the Put/Call Agreement.
Pursuant to the terms of the Settlement Agreement, we agreed to pay the Sellers $2.6 million as follows:



| | (i) | $260,000 in cash payable on the date of the Settlement Agreement, and
| | --- | ---------------------------------------------------------------------



| | (ii) | $2,340,000 payable in the form of a non-interest bearing promissory note due on July 15, 2011.
| | ---- | ----------------------------------------------------------------------------------------------

In addition, as an inducement to settle the Put obligation and execute the promissory note, we agreed to issue to the Sellers 433,333
shares of our common stock (see Note 17).

NOTE 21  Stockholders Equity

Description of Authorized Capital

We are authorized to issue 200,000,000 shares of common stock with a par value of $0.00001 per share and 35,000,000 shares of preferred
stock with a par value of $0.00001 per share.



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Notes to Consolidated Financial Statements(Continued)



The preferred stock may be issued in series, with designations, preferences, conversion
rights, cumulative, relative participating, optional or other rights, qualifications, limitations or restrictions as determined by our Board of Directors. We are currently authorized to issue the following series of preferred stock:



| |  |  | Series A Convertible Preferred Stock, $0.00001 par value; 6,500,000 shares authorized. The Series A Convertible Preferred Stock is convertible into
shares of common stock at a conversion price of $5.00 per share and has a liquidation preference whereby holders of the Series A Convertible Preferred Stock shall be entitled to receive $5.00 per share prior to the distribution of any assets to the
holders of any common stock, and then shall be entitled to share with the holders of the common stock, the remaining assets available for distribution.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Series B Convertible Preferred Stock, $0.00001 par value; 14,074,074 shares authorized. The Series B Preferred Stock is convertible into common shares
at a conversion price of $6.75 per share and has a liquidation preference whereby holders of the Series B Preferred Stock shall be entitled to receive $6.75 per share prior to the distribution of any assets to the holders of any common stock or
other class of capital stock or equity.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Amended and Restated Certificate of Designation of Series B
Preferred Stock

Effective February 6, 2009, we amended our Certificate of Incorporation with the filing of an
Amended and Restated Certificate of Designations, Rights and Preferences of Series B Preferred Stock (Amended and Restated Certificate of Designation). Under the Amended and Restated Certificate of Designation, all voting rights of the
Series B Preferred Stock were removed. As a result of the Amended and Restated Certificate of Designation, the Series B Preferred Stock has the following protective provisions:



| |  |  | a liquidation preference; and
| | - |  | -----------------------------



| |  |  | at all times that shares of Series B Preferred Stock remain outstanding, we may not, without prior approval of the holders of the majority of the
Series B Preferred Stock outstanding:
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | change the rights, preferences or privileges of the Series B Preferred Stock; or
| | - |  | --------------------------------------------------------------------------------



| |  |  | create a new class or series of stock having a preference over or otherwise being superior to the Series B Preferred Stock.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------

In addition, the Conversion Ratio for the Series B Preferred Stock, previously one share of our common stock
for each share of Series B Preferred Stock, was modified such that the shares of Series B Preferred Stock are now convertible into common stock based on a ratio of 3.5 shares of common stock for every eight shares of Series B Preferred Stock.

On February 16, 2009, the United States District Court issued a temporary restraining order on behalf of the SEC against
R. Allen Stanford, three Stanford companies, including SIBL, and two company executives freezing all corporate and personal assets of the companies and the three executives. Subsequent to the issuance of the court order, and in accordance with such
order, we have not canceled any shares of our common stock, nor have we issued any shares of our Series B Preferred Stock or converted any shares of our Series B Preferred Stock into common stock pursuant to the terms of the Modification Agreement.

Voting Trust Agreement

In connection with the termination of the Bridge Loan Agreement, SIBL agreed to place 12,364,377 shares of our common stock and 4,118,263
shares of Series B Preferred Stock, representing all shares of our capital stock then owned by SIBL, into a voting trust. Pursuant to a Voting Trust Agreement, SIBL appointed Mr. Pizarro to act as the trustee. With certain limited exceptions,
Mr. Pizarro was granted discretionary voting power with respect to all shares of stock placed in the voting trust by SIBL. However, Mr. Pizarro is required to vote the shares in accordance with and in the same proportion as the holders of
the remaining outstanding shares of our common stock voting on any of the following matters (which will be determined by a vote of the shares other than those represented by the voting trust certificates): (i) the sale of the Company whether by
merger, consolidation, sale of all or substantially all the assets or other similar transaction; and (ii) if the Company desires to increase the amount of shares of our common stock issuable pursuant to any stock option or other equity plan in
an amount exceeding the greater of 9,500,000 shares of our common stock or 15% of the total amount of outstanding common stock. Additionally, SIBL retained its right to vote with respect to certain issues pertaining to the Series B Preferred Stock
including any change to the rights, preferences or privileges of the Series B Preferred Stock or the creation of a new class or series of stock superior to the Series B Preferred Stock.

Under the Voting Trust Agreement, SIBL has agreed that the shares in the voting trust may not be transferred during the term of the voting
trust. Notwithstanding these lock up provisions, SIBL may instruct the trustee to transfer, during any three month period, an amount of shares of our common stock equivalent to 1% of the then total outstanding shares of common stock. Any such
transfers must be made in compliance with the limitations of Rule 144 under the Securities Act of 1933. The Voting Trust Agreement will terminate on the earlier of (a) five years from the date of the agreement, (b) the consummation of a
change in control transaction, or (c) the date upon which SIBL owns less than 25% of our common stock.



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Notes to Consolidated Financial Statements(Continued)



Stock Repurchase Plan

On October 9, 2008, our Board of Directors approved a plan to repurchase up to approximately 1,200,000 shares of our common stock, or
approximately 3% of our then outstanding common stock. Under the common stock repurchase plan, we may purchase shares of our common stock from time to time in the open market at prevailing prices. Repurchased shares will be held in treasury and may
be used in connection with employee benefits and other general corporate purposes. As of December 31, 2009, we had not repurchased any shares of common stock under the repurchase program.

Series A Convertible Preferred Stock

Effective June 30, 2008, SIBL converted the aggregate principal amount of $30,300,000 outstanding under two convertible promissory
notes dated February 16, 2007 and June 25, 2007. The convertible promissory notes were converted into 6,060,000 shares of our Series A Preferred Stock and, simultaneously, all 6,060,000 shares of Series A Preferred Stock were converted
into 6,060,000 shares of our common stock, at a conversion price of $5.00 per share (see Note 17).

Series B Convertible
Preferred Stock

During February and March 2008, in connection with the Preferred Stock Purchase Agreement entered into
with SIBL on November 21, 2007, we received $3,000,000 aggregate gross proceeds in exchange for the issuance to SIBL of 444,444 shares of Series B Preferred Stock at a price of $6.75 per share.

Effective February 20, 2008, we entered into an additional Preferred Stock Purchase Agreement (Second Preferred Stock
Agreement) pursuant to which SIBL agreed to purchase from us for an aggregate purchase price of $40,000,000 (i) up to 5,925,926 shares of our Series B Preferred Stock and (ii) warrants granting to SIBL, and/or its assigns, the right
to purchase up to 4,158,000 shares of our common stock. The shares of Series B Preferred Stock were, at the option of SIBL, convertible, in whole or in part, into shares of our common stock at a conversion price of $6.75 per share. The warrants were
exercisable by SIBL and its assigns for seven years and have an exercise price of $0.001 per share. The proceeds received by us pursuant to the Second Preferred Stock Agreement were to be used to make acquisitions and for general working capital
needs.

Pursuant to the terms of a First Amendment to the Second Preferred Stock Purchase Agreement executed February 29,
2008, SIBL accelerated the funding of $8 million (net proceeds of $7,701,803 after offering costs) under the Second Preferred Stock Agreement through the purchase of 1,185,185 shares of Series B Preferred Stock and warrants to purchase 4,158,000 of
our common stock on February 28, 2008. The warrants had an aggregate fair value of $1,663,200 and a relative fair value of $1,596,805. We used the proceeds of this funding to pay Laurus for our purchase of Latin Nodes debt of
approximately $7 million, and the balance was used for our general working capital needs.

The effective conversion price
embedded in the Series B Preferred Stock was $6.48 per share, based upon the allocation of proceeds from this transaction to the fair value of the Series B Preferred Stock and the relative fair value of the warrants issued. The conversion option was
not deemed to be beneficial because the effective conversion price of $6.48 per share exceeded the closing market price of the stock on the commitment date of $0.40 per share.

As of December 31, 2008, SIBL funded the remaining $32,000,000 under the Second Preferred Stock Agreement through the purchase of
4,740,741 shares of our Series B Preferred Stock at $6.75 per share resulting in net proceeds of $31,750,000 (gross proceeds of $32,000,000 less offering costs of $250,000).

SIBL also agreed to purchase, during the 90-day period following December 31, 2008, an additional $20 million of Series B Preferred
Stock at $6.75 per share, along with warrants to purchase up to 2,079,111 shares of our common stock at an exercise price of $0.001 per share (the Additional Funding).

On September 5, 2008 and September 17, 2008, in connection with SIBLs purchase of our common stock from certain of our
stockholders, we entered into amendments to the Preferred Stock Purchase Agreement and Bridge Loan Agreement. Pursuant to the amendments, the Additional Funding purchase obligation of SIBL was reduced from $20,000,000 to $15,798,275 and we agreed to
issue 1,643,000 warrants associated with the Additional Funding to SIBL and its assigns. Additionally, pursuant to the amendments, the funding schedule for the Additional Funding was modified to provide for five installments commencing
September 12, 2008 and ending on September 30, 2008.

As of December 31, 2008, we issued 2,340,485 shares of
Series B Preferred Stock and warrants to purchase 1,643,000 shares of common stock resulting in net proceeds of $15,785,517 (gross proceeds of $15,798,275 less offering costs of $12,758). The 1,643,000 warrants issued are exercisable by SIBL and its
assigns for seven years and have an exercise price of $.001 per share. The warrants have an aggregate fair value of $4,270,157 and a relative fair value of $3,361,554.

The effective conversion price embedded in the Series B Preferred Stock was $5.31 per share, based upon the allocation of proceeds from
the Additional Funding to the fair value of the Series B Preferred Stock and the relative fair value of the warrants issued. The conversion option was not deemed to be beneficial because the effective conversion price of $5.31 per share exceeded the
closing market price of the stock on the commitment date of $2.60 per share.



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Notes to Consolidated Financial Statements(Continued)



Effective June 30, 3008, SIBL converted an aggregate of 11,111,111 shares of Series
B Preferred Stock into 11,111,111 shares of our common stock at a conversion price of $6.75 per share.

On February 6,
2009, in connection with the Modification Agreement with SIBL (see Note 17), we issued 1,777,778 shares of our Series B Preferred Stock. In addition, we granted SIBL the Option, exercisable through March 31, 2009, to purchase an additional
592,593 shares of our Series B Preferred Stock for an aggregate purchase price of $4 million. The Option expired unexercised.

Common Stock Issuances

In March 2008, SIBL and its assigns exercised 4,158,000 warrants to purchase our common stock at $0.001 per share. As a result, we issued
4,158,000 common shares in consideration for $4,158.

Also as noted above, on June 30, 2008, we issued 11,111,111 shares
of common stock to SIBL in connection with the conversion of 11,111,111 shares of Series B Preferred Stock, at a conversion price of $6.75 per share.

Effective June 30, 2008, SIBL converted 6,060,000 shares of our Series A Preferred Stock into 6,060,000 shares of our common stock,
at a conversion price of $5.00 per share.

On July 11, 2008, warrants to purchase 96,875 shares of our common stock were
exercised at an exercise price of $0.001 per share. As a result, we issued 96,875 share of our common stock in consideration for $97.

In September 2008, SIBL and its assigns exercised 643,300 warrants to purchase our common stock at $0.001 per share. As a result, we
issued 643,300 common shares in consideration for $643.

In October 2008, SIBL and its assigns exercised 999,700 warrants to
purchase our common stock at $0.001 per share. As a result, we issued 999,700 common shares in consideration for $1,000.

During the year ended December 31, 2008, in connection with the 750,000 restricted common shares granted to Mr. Pizarro under
his Executive Employment Agreement, 187,500 shares of the restricted common stock were vested and issued to him (see Note 24).

During the year ended December 31, 2008, we issued an aggregate 20,298 shares of our common stock to the Board of Directors, valued
at $65,763, for services provided as members of the Board of Directors and its committees. Accordingly, we recorded $65,763 of compensation expense in the accompanying consolidated statements of operations during the year ended December 31,
2008.

On February 6, 2009, in connection with the Modification Agreement with SIBL, we cancelled 16,148,612 shares of our
common stock (see Note 17).

On February 6, 2009, in connection with Mr. Pizarros Amendment relating to the
750,000 restricted common shares granted to Mr. Pizarro under his Executive Employment Agreement, 562,500 shares of the restricted common stock were vested and issued to him (see Note 24).

In connection with the Settlement Agreement with Jorge Granados and RAV, we cancelled 375,000 shares of our common stock. The shares were
valued at $450,000, based on the closing price of our common stock on February 12, 2009, the settlement date. Accordingly, we recorded a gain on the settlement of the litigation in the amount of $450,000, which is included in discontinued
operations in the accompanying consolidated statement of operations for the year ended December 31, 2009.

In May 2009, we
issued 1,900 shares of our common stock to persons attending an eLandia marketing event.

On July 17, 2009, under the
terms of the 30% Purchase Agreement, we issued to Alvarado 2,500,000 shares of our common stock, valued at $0.9 million based on the closing stock price of $0.34 on July 17, 2009 (see Note 5).

On August 27, 2009, pursuant to the terms of the Settlement Agreement, we issued to the former owners of Transistemas 433,333 shares
of our common stock valued of $156,000 based on a closing stock price of $0.36 on August 27, 2009 (see Note 20).

On
September 30, 2009, we issued 350,000 shares of our common stock to the CTT Sellers, valued at $105,000 based on the closing stock price of $0.30 on September 30, 2009 (see Note 11).



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eLandia International Inc. and Subsidiaries

Notes to Consolidated Financial Statements(Continued)



Common Stock Purchase Warrants

A summary of warrant activity for the years ended December 31, 2009 and 2008 is as follows:



|                                                   |  |                   |  |                                |       |                   |            |   |                                |   |      
|-------------------------------------------------- |  | ----------------- |  | ------------------------------ | ----- | ----------------- | ---------- | - | ------------------------------ | - | -----
|                                                   |  | 2009              |  | 2008                          
|                                                   |  | Number ofWarrants |  | Weighted AverageExercise Price |       | Number ofWarrants |            |   | Weighted AverageExercise Price
|Outstanding at January 1                           |  | 1,437,384         |  | $                              | 3.682 |                   | 414,259    |   |                                | $ | 4.641
|Issued                                             |  |                  |  |                                |      |                   | 6,951,000  |   |                                |   | 0.510
|Exercised                                          |  |                  |  |                                |      |                   | (5,897,875 | ) |                                |   | 0.001
|Forfeited                                          |  |                  |  |                                |      |                   | (30,000    | ) |                                |   | 5.750
|                                                   |  |                   |  |                                |       |                   |            |   |                                |   |      
|Outstanding at December 31                         |  | 1,437,384         |  | $                              | 3.682 |                   | 1,437,384  |   |                                | $ | 3.682
|                                                   |  |                   |  |                                |       |                   |            |   |                                |   |      
|                                                   |  |                   |  |                               
|Weighted Average Fair Value Issued During the Year |  |                   |  | $                              |      |                   |            |   |                                | $ | 0.951
|                                                   |  |                   |  |                                |       |                   |            |   |                                |   |      

NOTE 22  Income Taxes

The domestic and foreign components of loss before income taxes from continuing operations are as follows:



|                                                                  |  |                         |             |   |      |   |             |  
|----------------------------------------------------------------- |  | ----------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                  |  | Year ended December 31, |            
|                                                                  |  | 2009                    |             |   | 2008 |  
|United States                                                     |  | $                       | (35,173,777 | ) |      | $ | (21,036,848 | )
|Foreign                                                           |  |                         | (23,089,965 | ) |      |   | (11,538,702 | )
|                                                                  |  |                         |             |   |      |   |             |  
|Loss from continuing operations before provision for income taxes |  | $                       | (58,263,742 | ) |      | $ | (32,575,550 | )
|                                                                  |  |                         |             |   |      |   |             |  

The provision for income taxes from continuing operations is as follows:



|                        |  |                         |            |   |      |   |             |  
|----------------------- |  | ----------------------- | ---------- | - | ---- | - | ----------- | -
|                        |  | Year ended December 31, |           
|                        |  | 2009                    |            |   | 2008 |  
|Current tax provision:  |  |                         |            |   |      |   |             |  
|US Federal              |  | $                       |           |   |      | $ |            |  
|State and local         |  |                         |           |   |      |   |            |  
|Foreign                 |  |                         | 116,078    |   |      |   | 798,007     |  
|                        |  |                         |            |   |      |   |             |  
|Total current           |  |                         | 116,078    |   |      |   | 798,007     |  
|                        |  |                         |            |   |      |   |             |  
|                        |  |                        
|Deferred tax provision: |  |                         |            |   |      |   |             |  
|US Federal              |  |                         | (132,939   | ) |      |   |            |  
|State and local         |  |                         |           |   |      |   |            |  
|Foreign                 |  |                         | 5,321,828  |   |      |   | 17,000,126  |  
|Valuation Allowance     |  |                         | (5,278,758 | ) |      |   | (16,769,169 | )
|                        |  |                         |            |   |      |   |             |  
|Total deferred          |  |                         | (89,869    | ) |      |   | 230,957     |  
|                        |  |                         |            |   |      |   |             |  
|                        |  |                        
|Total Provision         |  | $                       | 26,209     |   |      | $ | 1,028,964   |  
|                        |  |                         |            |   |      |   |             |  



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Notes to Consolidated Financial Statements(Continued)



Deferred income taxes are provided for the tax effects of temporary differences between
the financial reporting basis and the tax basis of assets and liabilities. Significant temporary differences at December 31, 2009 and 2008:



|                                                |  |              |             |   |      |   |             |  
|----------------------------------------------- |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                                |  | December 31, |            
|                                                |  | 2009         |             |   | 2008 |  
|Current deferred tax assets (liabilities):      |  |              |             |   |      |   |             |  
|Allowance for doubtful accounts                 |  | $            | 266,852     |   |      | $ | 740,754     |  
|Inventory                                       |  |              | 142,023     |   |      |   | 56,717      |  
|Depreciation                                    |  |              |            |   |      |   | (36,409     | )
|Accrued compensation liabilities                |  |              |            |   |      |   | 22,614      |  
|Unbilled revenue                                |  |              |            |   |      |   | (148,586    | )
|Stock compensation                              |  |              |            |   |      |   | (72,892     | )
|Other                                           |  |              | (675,849    | ) |      |   |            |  
|Venezuela Reserve                               |  |              | 513,948     |   |      |   |            |  
|Valuation allowance                             |  |              | (922,823    | ) |      |   | (641,533    | )
|                                                |  |              |             |   |      |   |             |  
|Total current deferred tax liability            |  |              | (675,849    | ) |      |   | (79,335     | )
|                                                |  |              |             |   |      |   |             |  
|                                                |  |             
|Non-current deferred tax assets (liabilities):  |  |              |             |   |      |   |             |  
|Depreciation                                    |  |              | (36,409     | ) |      |   |            |  
|Stock compensation                              |  |              | 1,228,624   |   |      |   | 656,406     |  
|Difference in amortizable intangibles           |  |              | (482,336    | ) |      |   | 1,628,402   |  
|Difference in intangibles with indefinite lives |  |              | (323,145    | ) |      |   |            |  
|Tax loss carryover                              |  |              | 36,533,403  |   |      |   | 27,647,302  |  
|Valuation allowance                             |  |              | (36,401,392 | ) |      |   | (29,920,010 | )
|                                                |  |              |             |   |      |   |             |  
|Total non-current deferred tax asset            |  |              | 518,745     |   |      |   | 12,100      |  
|                                                |  |              |             |   |      |   |             |  
|                                                |  |             
|Net deferred tax liabilities                    |  | $            | (157,104    | ) |      | $ | (67,235     | )
|                                                |  |              |             |   |      |   |             |  

Datec and Desca entities operate in different countries and are subject to taxation in separate
jurisdictions. Therefore, we are required to calculate and provide for income taxes in each of the separate jurisdictions on a global basis and the net operating losses of unprofitable entities cannot be used to offset the income of more profitable
entities. This involves making judgments regarding the recoverability of deferred tax assets which can affect the overall effective tax rate. In addition, changes in the geographic mix or estimated level of pre-tax income can affect the overall
effective tax rate. The impact on income taxes from the operations of Latin Note and Datec PNG have been excluded (See Note 7).

At December 31, 2009, we had federal and Florida net operating loss (NOL) carryovers of $73,962,440 and $33,571,987, respectively,
which expire through 2028. We also had a capital loss in 2008 totaling $33,153,111, which expires December 31, 2013. In addition, at December 31, 2009, we had foreign net operating loss carryovers of approximately $27,020,709 which will
expire through 2016.

We have $5,606,156 of NOLs that are subject to limitations under Internal Revenue Code
Section 382.

As of December 31, 2009, our NOL and capital loss carryovers were completely offset by valuation
allowances.

Tax years in which net operating loss carryovers were created remain open for examination until the related
carryovers are either utilized in future periods or expire. Open tax years for U.S. federal, state and local jurisdictions include the tax periods ended December 31, 2006, through December 31, 2009. Open tax years for New Zealand,
Australia and certain other Latin American jurisdictions include the tax periods ended December 31, 2002, through December 31, 2009. The Company is not currently under examination in any jurisdiction.

A valuation allowance is required to be established when it is more likely than not that all or a portion of a deferred tax asset will not
be realized. In making this assessment, management considers the level of historical taxable income, scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income. The valuation allowance of $37,324,215
is comprised of $36,533,403 that relates to the deferred tax asset for net operating losses ($25,206,237 of which is U.S. Federal and $11,327,166 of which is foreign) that management has determined will more likely than not expire prior to
realization and $790,812 which relates to other temporary differences that management estimates will not be realized due to our U.S. tax losses.

We recognize accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in our consolidated
statement of operations. Our policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.

There have not been any material changes in our liability for unrecognized tax benefits, including interest and penalties, during the
years ended December 31, 2009 and 2008. We do not currently anticipate that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months.



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eLandia International Inc. and Subsidiaries

Notes to Consolidated Financial Statements(Continued)



The following is a reconciliation of the U.S. statutory income tax rate to the effective
tax rate from continuing operations:



|                                                  |  |                  |    |  |       |   
|------------------------------------------------- |  | ---------------- | -- |  | ----- | --
|                                                  |  | As ofDecember 31 |   
|                                                  |  | 2009             |    |  | 2008  |   
|                                                  |  |                 
|U.S. statutory rate                               |  | (34.0            | )% |  | (34.0 | )%
|State income taxes, net of federal benefit        |  | (3.2             | )  |  |      |   
|True-up related to treatment of intangibles       |  | 2.8              |    |  |      |   
|Difference between federal and foreign rates      |  | 0.4              |    |  |      |   
|True-up prior year NOL carryforward               |  | 20.7             |    |  |      |   
|Meals & Entertainment                             |  | 0.3              |    |  | 0.5   |   
|Goodwill impairment                               |  | 4.9              |    |  | 0.7   |   
|Noncontrolling Interest Purchase Price Obligation |  | (0.5             | )  |  | 0.7   |   
|Fines and penalties                               |  |                 |    |  | 2.1   |   
|Tax exempt income                                 |  | (0.3             | )  |  | (2.4  | ) 
|Tax benefit from discontinued operations          |  |                 |    |  | (19.9 | ) 
|Other nondeductible items                         |  | (0.2             | )  |  | 3.9   |   
|                                                  |  |                  |    |  |       |   
|                                                  |  | (9.1             | )  |  | (48.4 | ) 
|Valuation allowance                               |  | 9.1              |    |  | 51.6  |   
|                                                  |  |                  |    |  |       |   
|Effective tax rate                                |  | 0.0              | %  |  | 3.2   | % 
|                                                  |  |                  |    |  |       |   

No provision was made for U.S. or foreign taxes on undistributed earnings of foreign subsidiaries as such
earnings are considered to be permanently reinvested. Such earnings have been and will continue to be reinvested but could become subject to additional tax if they were remitted as dividends, or were loaned to the Company or a U.S. affiliate, or if
the Company should sell its stock in the foreign subsidiaries. It is not practicable to determine the amount of additional tax, if any, that might be payable on the undistributed foreign earnings.

Effective January 1, 2004, the American Samoa Government, approved a ten year tax exemption for the members of AST for all income and
excise taxes incurred within the Territory of American Samoa. The exemption was given for the purpose of promoting economic activity and employment within the Territory of American Samoa. AST must continue to meet certain investment requirements in
order for the exemption to continue.

NOTE 23  Related Party Transactions

Latin America

Our Latin American subsidiaries utilized the services of a professional consulting firm, in which we hold a 20% ownership. During 2009 and
2008, we paid approximately $0.5 and $1.9 million, respectively, to such consulting firm to assist with the completion of certain projects. This amount was included in general and administrative expenses on our consolidated statement of operations.

South Pacific

One of our South Pacific subsidiaries, prior to our acquisition of such company, sold its building in Fiji for approximately $1,560,000 to
Kelton Investments Limited, an entity with which a former officer and a former director of eLandia are affiliated (Kelton) resulting in a gain of $261,687. Michael J. Ah Koy, our former acting Chief Executive Officer and President of
Business Development, is affiliated with Kelton. Moreover, Sir James M. Ah Koy, a former director, is also affiliated with Kelton. Simultaneously with the sale of the building to Kelton, we entered into a lease agreement with Kelton to lease back
such building for a period of three years with certain renewal options. The $261,687 gain recognized on the sale was deferred and was amortized into income over the three year lease term (representing the lease term for the building), which
terminated in the first quarter of 2008. We amortized $0 and $19,830 as a gain in the consolidated statement of operations for the years ended December 31, 2009 and 2008, respectively. As more fully discussed in Note 19, a result of the Ah Koy
litigation commenced in 2009, Michael Ah Koy and Sir James Ah Koy are no longer considered to be related parties.

On
February 14, 2003, we entered into a management agreement with Level Best, Inc. (LBI). Under the terms of the agreement, LBI was to provide day to day management services to one of our South Pacific subsidiaries for a period of
three years. Effective January 31, 2006, we amended and restated our management agreement with LBI. Under the terms of the new agreement, LBI supplied us with our South Pacific subsidiary Chief Operating Officer through January 31, 2007
and to supply us with our Chief Technology Officer through January 31, 2009. For the years ended December 31, 2009 and 2008, management fees charged under this agreement amounted to $33,700 and $78,740, respectively.

For the years ended December 31, 2009 and 2008, we paid $117,700 and $308,111, respectively, for lease payments, management fees and
legal fees to related parties.



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Notes to Consolidated Financial Statements(Continued)



Corporate

Effective January 30, 2008, the Board of Directors appointed David L. Levine, then Chairman of the Board, as acting principal
executive officer until a new Chief Executive Officer was elected by us. For his service to us, we agreed to pay Mr. Levine $32,000 per month during the term of service as acting principal executive officer. Effective May 20, 2008, with
the appointment of Pete R. Pizarro as our Chief Executive Officer, Mr. Levine resigned as our principal executive officer. Fees paid to Mr. Levine during the year ended December 31, 2008 for his services as acting principal executive
officer amounted to $198,645.

NOTE 24  Share Based Payments

2007 Stock Option and Incentive Plan

In July 2007, the Board of Directors authorized the creation of the 2007 Stock Option and Incentive Plan (2007 SOIP), which
authorizes the issuance of equity grants of up to 2,606,700 shares to certain key employees. On September 7, 2007, this action was approved by a majority vote of the stockholders.

2008 Executive Incentive Plan

On September 12, 2008, we adopted the 2008 Executive Incentive Plan (2008 Plan). The purpose of the 2008 Plan is to
promote our future success and growth by providing stock options and other equity interests in eLandia to our employees, officers, directors, consultants and advisors. The 2008 Plan provides for the issuance of options, restricted stock awards,
unrestricted stock awards, deferred stock awards, performance grants and incentive awards. The 2008 Plan provides for the issuance of both incentive stock options (ISOs) and non-qualified stock options (NQOs).
ISOs may only be granted to officers and employees and NQOs may be granted to directors, officers, employees, consultants and advisors. We have reserved 7,744,000 shares of common stock for issuance under the 2008 Plan.

On June 4, 2009, we approved amendments to our 2008 Plan and our 2007 SOIP. The 2008 Plan was amended to permit the repricing of
stock options granted thereunder and to increase the number of shares of our common stock authorized and reserved for issuance thereunder to 9,500,000. The 2007 SOIP was amended to permit the repricing of stock options granted thereunder.

Stock Options

Options granted under the 2008 Plan and the 2007 SOIP generally vest over periods of four years with 25% vesting on
the 12 month anniversary of the date the options were granted and monthly vesting thereafter of
1/48thof the original grant. The options expire no later
than ten years from the date of grant. Compensation cost arising from stock-based awards is recognized as expense using the straight-line method over the vesting period and is included in selling, general and administrative expense in our
consolidated statements of operations.

During January 2008, in accordance with agreements reached with our former Chief
Executive Officer and our former General Counsel and Senior Vice President, the Board of Directors approved a modification to the exercise price and vesting dates for certain options.

On January 23, 2008, the exercise price of 25,000 options outstanding to our former General Counsel and Senior Vice President was
increased to $4.17 per share and such options became fully exercisable on that date. The fair market value of our common stock on the date of modification was $.35 per share. The grant date fair value of the modified options utilizing the original
exercise prices was $.13 per share. Assumptions relating to the estimated fair value of these stock options on the date of modification, which we estimated using the Black-Scholes option pricing model are as follows: risk-free interest rate of
3.01%; expected dividend yield of zero percent; expected option life of six months; and volatility of 79%. We recorded $61,459 as compensation expense during the year ended December 31, 2008 related to the incremental fair value and additional
acceleration charge due to the modification. The 25,000 options expired unexercised in July 2008.

On January 29, 2008,
the exercise price of 212,067 options outstanding to our former Chief Executive Officer was increased to $4.17 per share and such options became fully exercisable on that date. The fair market value of our common stock on the date of modification
was $.29 per share. The grant date fair value of the modified options utilizing the original exercise prices was $.10 per share. The grant date fair value of the modified options utilizing the modified exercise price was zero. Assumptions relating
to the estimated fair value of these stock options on the date of modification, which we estimated using the Black-Scholes option pricing model are as follows: risk-free interest rate of 3.23%; expected dividend yield of zero percent; expected
option life of three months; and volatility of 79%. We recorded $506,108 as compensation expense during the year ended December 31, 2008 related to the incremental fair value and additional acceleration charge due to the modification. The
212,067 options expired unexercised in April 2008.



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Notes to Consolidated Financial Statements(Continued)



On January 29, 2008, as a result of the resignation of Harry Hobbs our former Chief
Executive Officer, we canceled options to purchase 424,133 shares of our common stock and accelerated the vesting of 212,067 options. Additionally, on January 23, 2008, as a result of the termination of our then General Counsel and Senior Vice
President, we canceled options to purchase 75,000 shares of our common stock and accelerated the vesting of 25,000 options. On February 22, 2008, as a result of the resignation of another executive, 100,000 options were canceled.

In March 2008, we granted options to purchase 3,122,000 shares of our common stock at an exercise price of $3.07 per share to
Mr. Pizarro and we granted options to purchase 1,000,000 shares of our common stock at an exercise price of $3.07 per share to other executives. The weighted average fair value of the underlying common stock was $0.68 per share based upon the
closing trading price on the dates of grant. The options have a ten year contractual term and vest over a period of four years. Assumptions relating to the estimated fair value of these stock options on their date of grant, which we estimated using
the Black-Scholes option pricing model are as follows: risk-free interest rate of 3.74%; expected dividend yield of zero percent; expected option life of six years; and volatility of 66%. The aggregate grant date fair value of the awards amounted to
$1,030,500. We recorded stock based compensation expense during the years ended December 31, 2009 and 2008 of $232,885 and $203,953, respectively, related to these awards.

During the second quarter of 2008, we granted options to purchase 1,045,000 shares of our common stock at a weighted average exercise
price of $3.09 per share to certain employees and Directors. The weighted average fair value of the underlying common stock was $2.95 per share based upon the closing trading price on the dates of grant. The options have a ten year contractual term
and vest over a period of four years. Weighted-average assumptions relating to the estimated fair value of these stock options on their date of grant, which we estimated using the Black-Scholes option pricing model are as follows: risk-free interest
rate of 4.5%; expected dividend yield of zero percent; expected option life of six years; and volatility of 67%. The aggregate grant date fair value of the awards amounted to $1,936,900. We recorded stock based compensation expense during the years
ended December 31, 2009 and 2008 of $515,783 and $307,148, respectively, related to these awards.

During the third
quarter of 2008, we granted options to purchase 158,000 shares of our common stock at an exercise price of $3.08 per share to certain employees. The weighted average fair value of the underlying common stock was $2.97 per share based upon the
closing trading price on the dates of grant. The options have a ten year contractual term and vest over a period of four years. Weighted average assumptions relating to the estimated fair value of these stock options on their date of grant, which we
estimated using the Black-Scholes option pricing model are as follows: risk-free interest rate of 4.5%; expected dividend yield of zero percent; expected option life of six years; and volatility of 67%. The aggregate grant date fair value of the
awards amounted to $298,180. We recorded stock based compensation expense during the years ended December 31, 2009 and 2008 of $21,107 and $32,681, respectively, related to these awards.

During the fourth quarter of 2008, we granted options to purchase 495,000 shares of our common stock at an exercise price of $3.08 per
share to certain employees. The weighted average fair value of the underlying common stock was $2.55 per share based upon the closing trading price on the dates of grant. The options have a ten year contractual term and vest over a period of four
years. Weighted average assumptions relating to the estimated fair value of these stock options on their date of grant, which we estimated using the Black-Scholes option pricing model are as follows: risk-free interest rate of 4.12%; expected
dividend yield of zero percent; expected option life of six years; and volatility of 66%. The aggregate grant date fair value of the awards amounted to $748,650. We recorded stock based compensation expense during the years ended December 31,
2009 and 2008 of $183,384 and $60,644, respectively, related to these awards.

During the year ended December 31, 2009, we
granted options to purchase 2,252,500 shares of our common stock at a weighted average exercise price of $0.75 per share to certain employees and Directors. The weighted average fair value of the underlying common stock was $0.32 per share based
upon the closing trading price on the dates of grant. The options have a ten year contractual term and vest over a period of four years. Weighted-average assumptions relating to the estimated fair value of these stock options on their date of grant,
which we estimated using the Black-Scholes option pricing model are as follows: risk-free interest rate of 3.7%; expected dividend yield of zero percent; expected option life of six years; and volatility of 77%. The aggregate grant date fair value
of the awards amounted to $415,775. We recorded stock based compensation expense during the year ended December 31, 2009 of $88,859 related to these awards.

On June 4, 2009, we approved a modification to the exercise price of all options outstanding under the 2008 Plan and 2007 SOIP,
whereby the exercise price of all such options was decreased to $0.45 per share, representing the average of the high and the low trading price on that date. All other terms of the outstanding options remained the same. The fair market value of our
common stock on the date of modification was $0.30 per share. The weighted-average grant date fair value of the modified options utilizing the original exercise prices was $0.05 per share. The weighted-average grant date fair value of the modified
options utilizing the modified exercise price was $0.16 per share. Weighted-average assumptions relating to the estimated fair value of these stock options on the date of modification, which we estimated using the Black-Scholes option pricing model
are as follows: risk-free interest rate of 2.56%; expected dividend yield of zero percent; expected option life of 4.9 years; and volatility of 77%. The modification resulted in an incremental fair value of $638,025, of which $247,540 was recorded
as compensation expense during the year ended December 31, 2009. The remaining $390,485 will be amortized over the remaining expected option life of 4 years.



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Notes to Consolidated Financial Statements(Continued)



Forfeitures are required to be estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates. Forfeiture rates were evaluated separately for officer and key employee grants and all other grants. A substantial majority of the stock options still subject to vesting as of
December 31, 2009 have been granted to certain officers and key employees that are expected to fully vest. The remaining stock options granted to employees are expected to have a forfeiture rate of approximately 10%.

The expected term of stock options represents the average period the stock options are expected to remain outstanding and is calculated
using the approach prescribed for plain vanilla options. We used this approach as we did not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination
behavior. The expected stock price volatility for our stock options was determined by examining the historical volatilities for industry peers for periods that meet or exceed the expected term of the options, using an average of the historical
volatilities of our industry peers as we did not have sufficient trading history for our common stock. We will continue to analyze the historical stock price volatility and expected term assumption as more historical data for our common stock
becomes available. The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of our stock options. The expected dividend assumption is based on our history and expectation of
dividend payouts.

A summary of stock option activity for the year ended December 31, 2009 is as follows:



|                                 |  |                  |   |  |                               |      |                                           |     |                          |   |  
|-------------------------------- |  | ---------------- | - |  | ----------------------------- | ---- | ----------------------------------------- | --- | ------------------------ | - | -
|                                 |  | Number ofOptions |   |  | WeightedAverageExercise Price |      | Weighted AverageRemainingContractual Term |     | AggregateIntrinsic Value
|Balance at January 1, 2009       |  | 6,232,250        |   |  | $                             | 3.08 |                                           |     |                          |   |  
|Granted                          |  | 2,252,500        |   |  |                               | 0.75 |                                           |     |                          |   |  
|Canceled                         |  | (861,875         | ) |  |                               | 3.07 |                                           |     |                          |   |  
|                                 |  |                  |   |  |                               |      |                                           |     |                          |   |  
|Balance at December 31, 2009     |  | 7,622,875        |   |  | $                             | 2.39 |                                           | 8.6 |                          | $ | 
|                                 |  |                  |   |  |                               |      |                                           |     |                          |   |  
|Exercisable at December 31, 2009 |  | 2,485,771        |   |  | $                             | 2.90 |                                           | 8.4 |                          | $ | 
|                                 |  |                  |   |  |                               |      |                                           |     |                          |   |  

The weighted-average grant date fair value of options
granted during the years ended December 31, 2009 and 2008 was $0.18 and $0.69, respectively. Total compensation cost recognized for the years ended December 31, 2009 and 2008 for stock options granted to employees amounted to $1,305,460
and $1,620,982, respectively. Total unamortized compensation expense related to unvested stock options at December 31, 2009 amounted to $3,021,757 and is expected to be recognized over a weighted average period of 2.5 years.

At December 31, 2009, there were 4,483,825 shares available under the combined plans to be granted at future dates.

Restricted Stock Awards

On March 10, 2008, we granted 750,000 restricted common shares to Mr. Pizarro, who was then serving as our President, prior to
his appointment as Chief Executive Officer. The restricted shares vested monthly over a three-year period. The fair value of the common stock at the date of grant was $0.75 per share based upon our closing market price on the date of grant. The
aggregate grant date fair value of the award amounted to $562,500, which was to be recognized ratably as compensation expense over the vesting period. In connection with Mr. Pizarros Amendment, 562,500 unvested shares of our common stock
granted to Mr. Pizarro immediately vested, and all contractual restrictions with respect to such shares were terminated. We recorded $411,458 and $151,042 of compensation expense during the years ended December 31, 2009 and 2008,
respectively, with respect to this award.

A summary of the restricted stock award activity for the year ended
December 31, 2009 is as follows:



|                                          |  |                 |   |  |                                      |      |                                 |     |                          |   |  
|----------------------------------------- |  | --------------- | - |  | ------------------------------------ | ---- | ------------------------------- | --- | ------------------------ | - | -
|                                          |  | Number ofShares |   |  | WeightedAverage GrantDate Fair Value |      | WeightedAverageContractual Term |     | AggregateIntrinsic Value
|                                          |  |                 |   | 
|Unvested Outstanding at January 1, 2009   |  | 562,500         |   |  | $                                    | 0.75 |                                 | 3.0 |                          |   |  
|Granted                                   |  |                |   |  |                                      |     |                                 |    |                          |   |  
|Vested                                    |  | (562,500        | ) |  |                                      | 0.75 |                                 | 3.0 |                          |   |  
|                                          |  |                 |   |  |                                      |      |                                 |     |                          |   |  
|                                          |  |                 |   | 
|Unvested Outstanding at December 31, 2009 |  |                |   |  | $                                    |     |                                 |    |                          | $ | 
|                                          |  |                 |   |  |                                      |      |                                 |     |                          |   |  



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Notes to Consolidated Financial Statements(Continued)



NOTE 25  Segment Information

Effective April 1, 2008, we modified our segment reporting. We now operate in, and will report financial information for the
following three segments: Latin America, South Pacific and Corporate (including discontinued operations). These segments reflect the manner in which we now manage our operations.

Our discontinued operations are comprised of (i) our investment in Latin Node; (ii) our 50% interest in Datec PNG; and
(iii) certain eLandia predecessor companies that no longer conduct any operations.

Below is a summary of the results by
segment for the year ended December 31, 2009:



|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|-------------------------------------------------------------- |  | ------------------------------------ | ----------- | - | ------------- | - | ---------- | ----------------------------------- |  | - | ------------ | - |  | - | ----------- | -
|                                                               |  | For the Year Ended December 31, 2009 |            
|                                                               |  | Latin America                        |             |   | South Pacific |   |            | Corporate andDiscontinuedOperations |  |   | Consolidated |  
|Revenue                                                        |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Product Sales                                                  |  | $                                    | 110,639,219 |   |               | $ | 3,968,565  |                                     |  | $ |             |   |  | $ | 114,607,784 |  
|Services                                                       |  |                                      | 50,081,648  |   |               |   | 15,092,901 |                                     |  |   |             |   |  |   | 65,174,549  |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Total Revenue                                                  |  |                                      | 160,720,867 |   |               |   | 19,061,466 |                                     |  |   |             |   |  |   | 179,782,333 |  
|Cost of Revenue                                                |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Product Sales                                                  |  |                                      | 88,051,132  |   |               |   | 3,511,971  |                                     |  |   |             |   |  |   | 91,563,103  |  
|Services                                                       |  |                                      | 32,457,159  |   |               |   | 5,074,113  |                                     |  |   |             |   |  |   | 37,531,272  |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Total Cost of Revenue                                          |  |                                      | 120,508,291 |   |               |   | 8,586,084  |                                     |  |   |             |   |  |   | 129,094,375 |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Gross Profit                                                   |  |                                      | 40,212,576  |   |               |   | 10,475,382 |                                     |  |   |             |   |  |   | 50,687,958  |  
|                                                               |  |                                      | 25.0        | % |               |   | 55.0       | %                                   |  |   | 0.0          | % |  |   | 28.2        | %
|                                                               |  |                                      |             |  
|Expenses                                                       |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Sales, Marketing and Customer Support                          |  |                                      | 26,305,265  |   |               |   | 2,866,439  |                                     |  |   |             |   |  |   | 29,171,704  |  
|General and Administrative                                     |  |                                      | 26,544,876  |   |               |   | 4,340,881  |                                     |  |   | 11,465,007   |   |  |   | 42,350,764  |  
|Impairment of Intangible Assets and Goodwill                   |  |                                      | 15,000,000  |   |               |   | 1,025,717  |                                     |  |   |             |   |  |   | 16,025,717  |  
|Depreciation and Amortization                                  |  |                                      | 2,662,635   |   |               |   | 3,013,556  |                                     |  |   | 80,353       |   |  |   | 5,756,544   |  
|Amortization  Intangible Assets                               |  |                                      | 3,481,546   |   |               |   | 979,365    |                                     |  |   |             |   |  |   | 4,460,911   |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Total Expenses                                                 |  |                                      | 73,994,322  |   |               |   | 12,225,958 |                                     |  |   | 11,545,360   |   |  |   | 97,765,640  |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Operating Loss                                                 |  |                                      | (33,781,746 | ) |               |   | (1,750,576 | )                                   |  |   | (11,545,360  | ) |  |   | (47,077,682 | )
|Interest Expense, Net                                          |  |                                      | (3,639,880  | ) |               |   | (982,378   | )                                   |  |   | 17,680       |   |  |   | (4,604,578  | )
|Change in Value of Noncontrolling Interest Purchase Obligation |  |                                      | 814,127     |   |               |   |           |                                     |  |   |             |   |  |   | 814,127     |  
|Other Income (Expense)                                         |  |                                      | (7,689,271  | ) |               |   | 589,310    |                                     |  |   | (321,857     | ) |  |   | (7,421,818  | )
|Income (Loss) from Discontinued Operations                     |  |                                      |            |   |               |   |           |                                     |  |   | (10,468,954  | ) |  |   | (10,468,954 | )
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Net Loss Attributable to eLandia                               |  | $                                    | (44,296,770 | ) |               | $ | (2,143,644 | )                                   |  | $ | (22,318,491  | ) |  | $ | (68,758,905 | )
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|                                                               |  |                                      |             |  
|Total Assets                                                   |  | $                                    | 117,355,320 |   |               | $ | 41,690,056 |                                     |  | $ | 652,116      |   |  | $ | 159,697,492 |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  



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Notes to Consolidated Financial Statements(Continued)



Below is a summary of the results by segment for the year ended December 31, 2008:



|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|-------------------------------------------------------------- |  | ------------------------------------ | ----------- | - | ------------- | - | ---------- | ----------------------------------- |  | - | ------------ | - |  | - | ----------- | -
|                                                               |  | For the Year Ended December 31, 2008 |            
|                                                               |  | Latin America                        |             |   | South Pacific |   |            | Corporate andDiscontinuedOperations |  |   | Consolidated |  
|Revenue                                                        |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Product Sales                                                  |  | $                                    | 114,837,429 |   |               | $ | 6,788,301  |                                     |  | $ |             |   |  | $ | 121,625,730 |  
|Services                                                       |  |                                      | 38,215,793  |   |               |   | 13,942,772 |                                     |  |   |             |   |  |   | 52,158,565  |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Total Revenue                                                  |  |                                      | 153,053,222 |   |               |   | 20,731,073 |                                     |  |   |             |   |  |   | 173,784,295 |  
|Cost of Revenue                                                |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Product Sales                                                  |  |                                      | 93,071,067  |   |               |   | 5,685,587  |                                     |  |   |             |   |  |   | 98,756,654  |  
|Services                                                       |  |                                      | 23,048,757  |   |               |   | 4,386,970  |                                     |  |   |             |   |  |   | 27,435,727  |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Total Cost of Revenue                                          |  |                                      | 116,119,824 |   |               |   | 10,072,557 |                                     |  |   |             |   |  |   | 126,192,381 |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Gross Profit                                                   |  |                                      | 36,933,398  |   |               |   | 10,658,516 |                                     |  |   |             |   |  |   | 47,591,914  |  
|                                                               |  |                                      | 24.1        | % |               |   | 51.4       | %                                   |  |   |              |   |  |   | 27.4        | %
|Expenses                                                       |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Sales, Marketing and Customer Support                          |  |                                      | 25,206,827  |   |               |   | 3,154,408  |                                     |  |   |             |   |  |   | 28,361,235  |  
|General and Administrative                                     |  |                                      | 19,865,308  |   |               |   | 4,397,872  |                                     |  |   | 14,854,994   |   |  |   | 39,118,174  |  
|Impairment of Intangible Assets and Goodwill                   |  |                                      |            |   |               |   | 630,802    |                                     |  |   |             |   |  |   | 630,802     |  
|Depreciation and Amortization                                  |  |                                      | 1,818,008   |   |               |   | 1,451,562  |                                     |  |   | 29,950       |   |  |   | 3,299,520   |  
|Amortization  Intangible Assets                               |  |                                      | 2,745,185   |   |               |   | 784,278    |                                     |  |   |             |   |  |   | 3,529,463   |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Total Expenses                                                 |  |                                      | 49,635,328  |   |               |   | 10,418,922 |                                     |  |   | 14,884,944   |   |  |   | 74,939,194  |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Operating Loss                                                 |  |                                      | (12,701,930 | ) |               |   | 239,594    |                                     |  |   | (14,884,944  | ) |  |   | (27,347,280 | )
|Interest Expense, Net                                          |  |                                      | (2,904,042  | ) |               |   | (585,109   | )                                   |  |   | (1,697,791   | ) |  |   | (5,186,942  | )
|Change in Value of Noncontrolling Interest Purchase Obligation |  |                                      | 670,000     |   |               |   |           |                                     |  |   |             |   |  |   | 670,000     |  
|Other Income (Expense)                                         |  |                                      | (23,179     | ) |               |   | (282,010   | )                                   |  |   | (1,435,103   | ) |  |   | (1,740,292  | )
|Income (Loss) from Discontinued Operations                     |  |                                      |            |   |               |   |           |                                     |  |   | (12,774,259  | ) |  |   | (12,774,259 | )
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|Net Loss Attributable to eLandia                               |  | $                                    | (14,959,151 | ) |               | $ | (627,525   | )                                   |  | $ | (30,792,097  | ) |  | $ | (46,378,773 | )
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  
|                                                               |  |                                      |             |  
|Total Assets                                                   |  | $                                    | 147,860,439 |   |               | $ | 25,893,723 |                                     |  | $ | 59,300,250   |   |  | $ | 233,054,412 |  
|                                                               |  |                                      |             |   |               |   |            |                                     |  |   |              |   |  |   |             |  

NOTE 26  Subsequent Events

As more fully described in Note 9, in December 2009 our Board of Directors approved managements proposal to dispose of our
operations in Fiji, which is included in continuing operations of our South Pacific segment as of December 31, 2009. In January 2010, we began to actively search for potential buyers pursuant to a plan of disposal that we expect to complete
within one year. Accordingly, as of January 1, 2010, Fiji will be presented as discontinued operations in our consolidated financial statements. A summary of our assets and liabilities included in Fiji as of December 31, 2009 is as
follows:



|                                   |  |   |          
|---------------------------------- |  | - | ---------
|Assets                             |  |   |          
|Cash                               |  | $ | 249,969  
|Accounts Receivable                |  |   | 808,382  
|Other Current Assets               |  |   | 935,612  
|Property, Plant and Equipment, Net |  |   | 354,501  
|Other Assets                       |  |   | 9,416    
|                                   |  |   |          
|Total Assets                       |  | $ | 2,357,880
|                                   |  |   |          
|                                   | 
|Liabilities                        |  |   |          
|Accounts Payable                   |  | $ | 464,292  
|Accrued Expenses                   |  |   | 537,168  
|Other Current Liabilities          |  |   | 81,640   
|                                   |  |   |          
|Total Liabilities                  |  | $ | 1,083,100
|                                   |  |   |          



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|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

None.



|ITEM 9A(T). | CONTROLS AND PROCEDURES
|----------- | -----------------------

Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures that is designed to provide reasonable assurance that information required to
be disclosed by us in reports that we file and submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the SECs rules and forms. Disclosure controls also are designed to reasonably
assure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Disclosure controls include components of internal control over financial reporting, which consists of control processes designated to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with United States generally accepted accounting principles (U.S. GAAP). Our management,
under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Exchange Act), as of December 31, 2009.

Based on their evaluation of our disclosure controls and procedures, our Chief
Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2009, the end of the period covered by this report because of the material weakness in internal
controls over financial reporting described below.

Due to the material weaknesses described below, our management performed
additional analyses and other post-closing procedures including reviewing all significant account balances and disclosures in the consolidated financial statements contained in this Annual Report to ensure our consolidated financial statements are
in accordance with U.S. GAAP. Accordingly, management believes that the consolidated financial statements included in this Annual Report fairly present, in all material respects, our financial condition, results of operations, and cash flows for all
periods presented.

Internal Controls Over Financial Reporting

Managements Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control
over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated
financial statements for external reporting purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that
receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
our assets that could have a material effect on the interim or annual consolidated financial statements.

Because of its
inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Our management, under
the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2009 based on the criteria set forth by the
Committee of Sponsor Organizations of the Treadway Commission (COSO) in the Internal Control-Integrated Framework.

A material
weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected.
Management identified the following control deficiencies which represent material weaknesses in our internal control over financial reporting as of December 31, 2009:



| |  |  | We did not maintain a sufficient depth of personnel with an appropriate level of accounting knowledge, experience and training in the selection and
application of GAAP commensurate with financial reporting requirements in certain of our Latin American subsidiaries. This control deficiency could result in material misstatements of significant accounts and disclosures that would result in a
material misstatement to our interim or annual consolidated financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | We did not maintain effective control over certain spreadsheets utilized in the period-end financial reporting process. Specifically, we did not have
complete compliance with company prescribed spreadsheet control policies. This control deficiency did not result in audit adjustments to the 2009 interim or annual consolidated financial statements. However, this control deficiency could result in a
material misstatement of the aforementioned accounts or disclosures that would result in a material misstatement to our interim or annual consolidated financial statements that would not be prevented or detected. Accordingly, management has
determined that this control deficiency constitutes a material weakness.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We did not have effective entity level controls as defined in the COSO framework. These weaknesses included:
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Lack of sufficient formalized and consistent finance and accounting policies and procedures;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | Lack of controls to provide reasonable assurance that accounts were complete and accurate and agreed to detailed support and that reconciliations of
accounts were properly performed, reviewed and approved;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Lack of adequate communication of the delegation of authority guidelines and employees duties and control responsibilities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | Lack of a fraud risk assessment and anti-fraud program
| | - |  | ------------------------------------------------------

These control deficiencies did not result in audit adjustments to the 2009 interim or annual consolidated financial statements. These
control deficiencies could result in a material misstatement of the aforementioned accounts or disclosures that would result in a material misstatement to our interim or annual consolidated financial statements that would not be prevented or
detected. Accordingly, management has determined that these control deficiencies constitute a material weakness.

Because of
these material weaknesses, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2009, based on the criteria in Internal Control-Integrated Framework issued by COSO.

Management has undertaken procedures, such as additional inquiries and financial and other analytical reviews, in order to
conclude that reasonable assurance exists regarding the reliability of financial reporting and the preparation of the consolidated financial statements contained in this Annual Report. Additionally, management ensures that certain high-risk
processes and related significant accounts such as deferred tax, goodwill and other intangibles are only processed and recorded at or via the corporate level. Accordingly, management believes that the consolidated financial statements included in
this Form 10-K fairly present, in all material respects, our financial position, results of operations, and cash flows for the periods presented.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only managements report in this Annual Report.

Changes in Internal Control over Financial Reporting

It is important to note that though no significant changes were made to internal controls in the fourth quarter of 2009, we are
implementing enhancements and changes to internal control over financial reporting in 2010 to provide reasonable assurance that errors and control deficiencies will not recur. These remediation efforts began in 2008 and represent our plan to
remediate the material weaknesses identified above, with some of the remediation plans impacting only one material weakness, and other remediation plans, after their complete implementation, remediating several of the material weaknesses.

We recognize the importance of the control environment as it sets the overall tone for the organization and is the foundation
for all other components of internal control. Consequently, remediation programs have begun to eliminate material weaknesses related to our control environment. The remediation programs that we have initiated are as follows:



| |  |  | We recognize the importance of having staff with competencies required for the accurate interpretation of GAAP. Consequently, to eliminate material
weaknesses identified with respect to staffing and training, management has continued the efforts to increase the depth and upgrade the skill sets of our accounting personnel through training while maintaining staffing with appropriate skills and
experience in the application of GAAP commensurate with our financial reporting requirements and regulatory affairs at the subsidiary level, particularly Latin America;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Because of our reliance on spreadsheets to facilitate the reporting process, we recognize the importance of having effective spreadsheet controls. We
are enforcing spreadsheet control policies, especially those affecting spreadsheets that are critical to the preparation of financial statements and related disclosures in accordance with GAAP and SEC regulations;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We recognize the need for good entity level controls that among other things, establish a positive tone at the top. To this end we are
performing the following:
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continue to mandate and monitor 100% compliance with our on-line Code of Business Ethics and FCPA training and certification;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



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| |  |  | Develop a policies and procedures guide that provides guidance on selected GAAP areas as well as closing and consolidation requirements of management.
This guide will formalize policies and procedures already in place as well as those that need to be further developed;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Establish guidelines for preparation and review of account reconciliations;
| | - |  | ---------------------------------------------------------------------------



| |  |  | Conduct a fraud risk assessment and establish anti-fraud programs, and reports on fraud occurrences; and
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | Communicate and train employees on the delegation authority document that augments all defined organizational responsibilities.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



|ITEM 9B. | OTHER INFORMATION
|-------- | -----------------

None.

PART III



|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|-------- | ------------------------------------------------------

The information required by this item will be included in our definitive information statement relating to the annual election of
directors to be filed no later than 120 days after the end of the fiscal report covered by this Annual Report on Form 10-K, and is incorporated herein by reference.



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The information required by this item will be included in our definitive information statement relating to the annual election of
directors to be filed no later than 120 days after the end of the fiscal report covered by this Annual Report on Form 10-K, and is incorporated herein by reference.



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------

(a) The information required by Item 403 of Regulation S-K will be included in our definitive information statement relating to the
annual election of directors to be filed no later than 120 days after the end of the fiscal report covered by this Annual Report on Form 10-K, and is incorporated herein by reference.

(b) The following table sets forth information with respect to equity compensation plans (including individual compensation arrangements)
under which equity securities are authorized for issuance as of December 31, 2009:



|                                                           |  |                                                                                              |  |                                                                              |      |                                                                                                                                            |          
|---------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------------ | ---------
|                                                           |  | Number of securities to be issuedupon exercise of outstandingoptions, warrants and
rights(a) |  | Weighted average exercise priceof outstanding options, warrantsand
rights(b) |      | Number of securities remainingavailable for future issuance underequity
compensation plans(excluding securities reflected incolumn (a))(c)
|Equity compensation plans approved by security holders     |  | 7,622,875                                                                                    |  | $                                                                            | 2.39 |                                                                                                                                            | 4,483,825
|Equity compensation plans not approved by security holders |  |                                                                                             |  | $                                                                            |     |                                                                                                                                            |         
|                                                           |  |                                                                                              |  |                                                                              |      |                                                                                                                                            |          
|Total                                                      |  | 7,622,875                                                                                    |  | $                                                                            | 2.39 |                                                                                                                                            | 4,483,825
|                                                           |  |                                                                                              |  |                                                                              |      |                                                                                                                                            |          

Our stock option plan provides for a proportionate
adjustment to the number of shares reserved for issuance in the event of any stock dividend, stock split, combination, recapitalization, or similar event.



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|-------- | ------------------------------------------------------------------------

The information required by this item will be included in our definitive information statement relating to the annual election of
directors to be filed no later than 120 days after the end of the fiscal report covered by this Annual Report on Form 10-K, and is incorporated herein by reference.



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|ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES
|-------- | --------------------------------------

The information required by this item will be included in our definitive information statement relating to the annual election of
directors to be filed no later than 120 days after the end of the fiscal report covered by this Annual Report on Form 10-K, and is incorporated herein by reference.

PART IV



|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------

(a) Exhibits.



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                             |  |                                                                                          
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                     |  | Method of Filing                                                                         
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.1         |  | Order Confirming Joint Plan of Reorganization and Granting Debtors Motion to Substantively Consolidate Bankruptcy Cases, In the United States Bankruptcy Court for the Western
District of Arkansas Fayetteville Division, dated as of September 14, 2004.                                                                                                                                                 |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.2         |  | Amended and Restated Agreement and Plan of Merger among eLandia Solutions, Inc., eLandia AST Acquisition, Inc., W&R South Pacific L.P., SIBL, AST Telecom L.L.C., dated as of
August 15, 2005.                                                                                                                                                                                                              |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.3         |  | Amended and Restated Arrangement Agreement between eLandia Solutions, Inc., eLandia South Pacific Holdings, Inc., eLandia Datec Acquisition Ltd., Datec Group Ltd., Datec Pacific
Holdings, Ltd., SIBL, Michael J. Ah Koy, James M. Ah Koy, Krishna Sami, Kelton Investments Limited, Sami Holdings Ltd., Sydney Donald(Trip) Camper III, Eddie Crowston and Harley L. Rollins, dated as of August 8, 2005. |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.4         |  | Agreement and Plan of Merger by and among Centra Industries, Inc., Centra Acquisition, Inc., eLandia Solutions Incorporated, Stanford Venture Capital Holdings, Inc., and the
stockholders of eLandia Solutions Incorporated, dated as of May 20, 2004.                                                                                                                                                     |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|3.1         |  | Certificate of Incorporation of the Company.                                                                                                                                                                                                                                                                                                                                                                |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|3.2         |  | Bylaws of the Company.                                                                                                                                                                                                                                                                                                                                                                                      |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|3.3         |  | Amended and Restated Bylaws Adopted January 16, 2007.                                                                                                                                                                                                                                                                                                                                                       |  | Previously filed as an exhibit to the Form 10/A-2 filed on February 20, 2007.            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|3.4         |  | Amended and Restated Certificate of Designations, Rights and Preferences of Series B Convertible Preferred Stock.                                                                                                                                                                                                                                                                                           |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 6, 2009. 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|4.1         |  | Co-Sale and First Refusal Agreement by and between SIBL and W&R South Pacific, L.P., dated January 31, 2006.                                                                                                                                                                                                                                                                                                |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|4.2         |  | Security Agreement by and among the Company (formerly known as Centra Industries Inc.), Midwest Cable Communications of Arkansas, Inc., and Stanford Venture Capital Holdings, Inc.,
dated as of October 25, 2004.                                                                                                                                                                                          |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|4.3         |  | Satisfaction and Release of Promissory Notes and Security Interests by SIBL, dated as of January 30, 2006.                                                                                                                                                                                                                                                                                                  |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|4.4         |  | Form of Warrant issued by eLandia in favor of SIBL dated February 16, 2007.                                                                                                                                                                                                                                                                                                                                 |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 16, 2007.



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|            |  |                                                                                                                                                                                                                               |  |                                                                                          
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                                                                                                                                       |  | Method of Filing                                                                         
|            |  |                                                                                                                                                                                                                              
|4.5         |  | Registration Rights Agreement dated February 16, 2007, by and among eLandia and SIBL.                                                                                                                                         |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 16, 2007.
|            |  |                                                                                                                                                                                                                              
|4.6         |  | Form of Warrant filed by eLandia in favor of SIBL, dated November 21, 2007.                                                                                                                                                   |  | Previously filed as an exhibit to the Current Report on Form 8-K dated November 21, 2007.
|            |  |                                                                                                                                                                                                                              
|4.7         |  | Registration Rights Agreement, dated November 21, 2007, by and between eLandia and SIBL.                                                                                                                                      |  | Previously filed as an exhibit to the Current Report on Form 8-K dated November 21, 2007.
|            |  |                                                                                                                                                                                                                              
|9.1         |  | Memorandum of Agreement between SIBL and Kelton Investments, Ltd., dated December 8, 2005                                                                                                                                     |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                
|            |  |                                                                                                                                                                                                                              
|9.2         |  | Voting Trust Agreement by and among SIBL, Pete R. Pizarro, as trustee, and eLandia dated February 6, 2009.                                                                                                                    |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 6, 2009. 
|            |  |                                                                                                                                                                                                                              
|10.1        |  | Form of Indemnification Agreement (Principal Executive Officer).                                                                                                                                                              |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2007.    
|            |  |                                                                                                                                                                                                                              
|10.2        |  | Form of Indemnification Agreement (Executive Officer).                                                                                                                                                                        |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2007.    
|            |  |                                                                                                                                                                                                                              
|10.3        |  | Form of Indemnification Agreement (Director).                                                                                                                                                                                 |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2007.    
|            |  |                                                                                                                                                                                                                              
|10.4        |  | Form of Lock-Up Agreement.                                                                                                                                                                                                    |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                              
|10.5        |  | Employment Agreement between the Company and Harley L. Rollins, dated as of July 1, 2005.                                                                                                                                     |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                              
|10.6        |  | Stock Subscription Agreement between the Company and Sydney D. Camper, dated as of July 29, 2005.                                                                                                                             |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                              
|10.7        |  | Stock Purchase Agreement between the Company and Harley L. Rollins, dated as of July 29, 2005.                                                                                                                                |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                              
|10.8        |  | Stock Subscription Agreement between the Company and Harley L. Rollins, dated as of July 29, 2005.                                                                                                                            |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                              
|10.9        |  | IBM Business Partner Stock Purchase Agreement between IBM New Zealand Limited and Datec (Fiji) Ltd. the Company and Harley L. Rollins, dated as of September 12,
2002.                                                        |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                              
|10.10       |  | Lease Agreement by and between the Company and Southern Centers Associates I, LLP, dated January 30, 2004 (relating to property at 1500 Cordova Road in Ft. Lauderdale, FL), and
First Addendum to Lease dated, May 27, 2006. |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                
|            |  |                                                                                                                                                                                                                              
|10.11       |  | Lease Agreement by and between Kelton Investments Limited and Datec Fiji Ltd., dated April 1, 2005 (relating to property at 68 Gordon Street in Suva, Fiji)                                                                   |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                              
|10.12       |  | Lease Agreement by and between Kelton Investments Limited and Network Services Ltd, dated April 1, 2005 (relating to property at 63 Albert Street in Auckland, New
Zealand)                                                   |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                
|            |  |                                                                                                                                                                                                                              
|10.13       |  | Lease Agreement by and between Jewel Properties Limited, DatecKelton Investments Ltd. and Datec Group Fiji Ltd., dated October 13, 2004 (relating to property at 63 Albert Street in
Auckland, New Zealand).                  |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                



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|            |  |                                                                                                                                                                                                                   |  |                                                                                                                         
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                                                                                                                           |  | Method of Filing                                                                                                        
|            |  |                                                                                                                                                                                                                  
|10.14       |  | Lease Agreement by and between Datec PNG Limited and the Independent State of Papua New Guinea, dated September 10, 2003 (relating to property at Allotment 32 Section 38 in
Hohola, N.C.D. in Papua New Guinea). |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.15       |  | Lease Agreement by and between Centrepoint Limited and Datec Solomon Islands Limited, dated December 1, 2004 (relating to property at 611 Mendana Avenue in Honiara, Solomon
Islands).                            |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.16       |  | Lease Agreement by and between Datec Samoa Limited and Justin Parker Trading as J Parker Investment, dated March 22, 2004 (relating to property at in the Parker Building in Apia,
Samoa).                        |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.17       |  | Constitution of Datec (PNG) Limited (relating to the Datec PNG Pty Joint Venture)                                                                                                                                 |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.18       |  | Stockholders Agreement for Datec PNG Pty Limited between Steamships Pty Limited and Kelton Investments Limited (relating to the Datec PNG Pty Joint Venture).                                                    |  | Previously filed as an exhibit to the Form 10 filed on February 13, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.19       |  | License Agreement between Tower Top Investments, Inc. and the Company, dated April 1, 2006.                                                                                                                       |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.20       |  | License Agreement between Tower Top Investments, Inc. and the Company, dated April 1, 2006                                                                                                                        |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.21       |  | License Agreement between Tower Top Investments, Inc. and the Company, dated April 1, 2006.                                                                                                                       |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.22       |  | License Agreement between Tower Top Investments, Inc. and the Company, dated April 1, 2006.                                                                                                                       |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.23       |  | Executive Employment Agreement between the Company and Michael J. Ah Koy, dated February 1, 2006.                                                                                                                 |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.24       |  | Note Purchase Agreement between the Company and SIBL, dated February 10, 2006.                                                                                                                                    |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.25       |  | First Amendment to Note Purchase Agreement between the Company and SIBL, dated July 24, 2006.                                                                                                                     |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.26       |  | Executive Employment Agreement between the Company and Michael D. McCutcheon, dated August 1, 2006.                                                                                                               |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.27       |  | Executive Employment Agreement between the Company and Harry G. Hobbs, effective August 28, 2006.                                                                                                                 |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.28       |  | Employment Agreement between the Company and Barry I. Rose, dated January 31, 2006.                                                                                                                               |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.29       |  | Amended and Restated Management Agreement between the Company and Level Best, Inc., effective as of January 31, 2006.                                                                                             |  | Previously filed as an exhibit to the Form 10/A filed on August 25, 2006.                                               
|            |  |                                                                                                                                                                                                                  
|10.30       |  | Distributor Agreement between Canon Australia Pty Limited and Datec (PNG) Limited, dated June 14, 2006.                                                                                                           |  | Previously filed as an exhibit to the Form 10/A-Q for the quarter ended September 30, 2006.2 filed on February 20, 2007.
|            |  |                                                                                                                                                                                                                  
|10.31       |  | Authorized Alliance Support Organization Agency Agreement, dated September 19, 2003, between Datec Australia Pty Ltd. and Hewlett-Packard Australia Pty Ltd.                                                      |  | Previously filed as an exhibit to the Form 10/A-2 filed on February 20, 2007.                                           
|            |  |                                                                                                                                                                                                                  
|10.32       |  | Purchase Agreement between eLandia Technologies, Inc. and Chickasaw Wireless, Inc., dated as of October 20, 2006.                                                                                                 |  | Previously filed as an exhibit to the Form 10/A-2 filed on February 20, 2007.                                           



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                                                                                                          
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Method of Filing                                                                                         
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.33       |  | Loan Agreement among AST Telecom, LLC, as Borrower, ANZ Finance American Samoa, Inc. and ANZ Amerika Samoa Bank, as Lenders, and ANZ Finance American Samoa, as Agent, dated
October 30, 2006.                                                                                                                                                                                                                                                                                |  | Previously filed as an exhibit to the Form 10/A-2 filed on February 20, 2007.                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.34       |  | Security Agreement among eLandia, Inc., eLandia South Pacific Holdings, Inc., and eLandia Datec Acquisition Ltd., in favor of ANZ Finance American Samoa, Inc., dated
October 30, 2006.                                                                                                                                                                                                                                                                                       |  | Previously filed as an exhibit to the Form 10/A-2 filed on February 20, 2007.                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.35       |  | Indemnity, Subrogation and Contribution Agreement among AST Telecom, LLC, as Borrower, and eLandia, Inc., eLandia South Pacific Holdings, Inc., eLandia Datec Acquisitions, Inc.,
Generic Technology Limited, Datec (Fiji) Limited and Network Services Limited, et al, dated October 30, 2006.                                                                                                                                                                               |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended September 30, 2006.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.36       |  | Continuing Guaranty Security Agreement among eLandia, Inc., eLandia South Pacific Holdings, Inc., and eLandia Datec Acquisition Ltd., as Guarantors, in favor of ANZ Finance American
Samoa, Inc. and ANZ Amerika Samoa Bank, as Lenders, and ANZ Finance American Samoa, as Agent, dated October 30, 2006.                                                                                                                                                                   |  | Previously filed as an exhibit to the Form 10/A-2 filed on February 20, 2007.                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.37       |  | Convertible Note Purchase Agreement dated February 16, 2007, by and among eLandia and SIBL.                                                                                                                                                                                                                                                                                                                                                                                   |  | Previously filed as an exhibit to the Current Report on Form 8-K dated 10/A-2 filed on February 16, 2007.
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.38       |  | Convertible Promissory Note dated February 16, 2007 issued by eLandia in favor of SIBL                                                                                                                                                                                                                                                                                                                                                                                        |  | Previously filed as an exhibit to the Current Report on Form 8-K dated 10/A-2 filed on February 16, 2007.
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.39       |  | Stock Pledge Convertible Note Purchase Agreement dated February 16, 2007, by and among eLandia and SIBL.                                                                                                                                                                                                                                                                                                                                                                      |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 16, 2007.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.40       |  | Credit Agreement dated February 16, 2007, by and among eLandia and Latin Node; Latin Node, LLC, a Florida limited liability company; Latinode Communications Corporation, a
Florida corporation; NSite Software, LLC, a Florida limited liability company; Tropical Star Communications, Inc., a Florida corporation; TS Telecommunications, Inc., a Florida corporation; and Total Solutions Telecom, Inc., a Florida corporation
(collectively, the Latin Node Entities). |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 16, 2007.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.41       |  | Secured Promissory Note dated February 16, 2007 issued by the Latin Node Entities and its subsidiaries in favor of eLandia.                                                                                                                                                                                                                                                                                                                                                   |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 16, 2007.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.42       |  | Security Agreement dated February 16, 2007 by and among eLandia and the Latin Node Entities.                                                                                                                                                                                                                                                                                                                                                                                  |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 16, 2007.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.43       |  | Stock Pledge Agreement dated February 16, 2007 by and among eLandia and the Latin Node Entities.                                                                                                                                                                                                                                                                                                                                                                              |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 16, 2007.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.44       |  | Preferred Stock Purchase Agreement dated February 16, 2007 by and among eLandia, Latin Node, RAV, and Jorge Granados.                                                                                                                                                                                                                                                                                                                                                         |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 16, 2007.                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.45       |  | Executive Employment Agreement between the Company and Michael J. Ah Koy dated January 1, 2007.                                                                                                                                                                                                                                                                                                                                                                               |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2006.                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.46       |  | Executive Employment Agreement between eLandia and Michael D. McCutcheon dated February 7, 2007.                                                                                                                                                                                                                                                                                                                                                                              |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2007.                    



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|            |  |                                                                                                                                                                                             |  |                                                                                                       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                                                                                                     |  | Method of Filing                                                                                      
|            |  |                                                                                                                                                                                            
|10.47       |  | First Amendment to Convertible Note Purchase Agreement dated April 11, 2007 by and between eLandia and SIBL.                                                                                |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2007.                 
|            |  |                                                                                                                                                                                            
|10.48       |  | Letter from Amerika Samoa Bank dated April 17, 2007.                                                                                                                                        |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2007.                 
|            |  |                                                                                                                                                                                            
|10.49       |  | Executive Employment Agreement between the Company and Laura Janke Jaeger dated April 23, 2007.                                                                                             |  | Previously filed as an exhibit to Form 10-Q for the quarter ended June 30, 2007 filed August 20, 2007.
|            |  |                                                                                                                                                                                            
|10.50       |  | Credit Agreement, dated October 2, 2007, by and between Desca and eLandia.                                                                                                                  |  | Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2007.               
|            |  |                                                                                                                                                                                            
|10.51       |  | Secured Promissory Note, dated October 2, 2007, issued by Desca in favor of eLandia.                                                                                                        |  | Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2007.               
|            |  |                                                                                                                                                                                            
|10.52       |  | Borrower Pledge and Security Credit Agreement, dated October 2, 2007, by and between Desca and eLandia.                                                                                     |  | Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2007.               
|            |  |                                                                                                                                                                                            
|10.53       |  | Alvarado Pledge and Security Agreement dated October 2, 2007, by and between Alvarado and issued by Desca in favor of eLandia.                                                              |  | Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2007.               
|            |  |                                                                                                                                                                                            
|10.54       |  | Guaranty of Alvarado dated October 2, 2007.                                                                                                                                                 |  | Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2007.               
|            |  |                                                                                                                                                                                            
|10.55       |  | Preferred Unit Purchase Alvarado Pledge and Security Agreement, dated October 2, 2007, by and among eLandia, Desca, Bella and Alvarado.                                                     |  | Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2007.               
|            |  |                                                                                                                                                                                            
|10.56       |  | Credit Agreement Guaranty of Alvarado, dated October, 2, 2007, by and between eLandia and SIBL.                                                                                             |  | Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2007.               
|            |  |                                                                                                                                                                                            
|10.57       |  | Secured Promissory Note dated October 2, 2007, issued by and among eLandia in favor of SIBL.                                                                                                |  | Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2007.               
|            |  |                                                                                                                                                                                            
|10.58       |  | Collateral Assignment Agreement, dated October 2, 2007, by and between eLandia and SIBL.                                                                                                    |  | Previously filed as an exhibit to the Current Report on Form 8-K dated October 2, 2007.               
|            |  |                                                                                                                                                                                            
|10.59       |  | Amendment No. 1 to Preferred Unit Purchase Agreement, dated November 21, 2007, by and among eLandia, eLandia/Desca Holdings, LLC, Desca Holding LLC and Jorge Enrique Alvarado Amado.       |  | Previously filed as an exhibit to the Current Report on Form 8-K dated November 21, 2007.             
|            |  |                                                                                                                                                                                            
|10.60       |  | Preferred Stock Purchase Agreement, dated November 21, 2007, by and between eLandia and SIBL.                                                                                               |  | Previously filed as an exhibit to the Current Report on Form 8-K dated November 21, 2007.             
|            |  |                                                                                                                                                                                            
|10.61       |  | Security Agreement, dated June 29, 2007, by and among Laurus Master Fund, Ltd., eLandia, Inc., Latin Node, Inc. and certain subsidiaries of Latin Node, Inc.                                |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended September 30, 2007.             
|            |  |                                                                                                                                                                                            
|10.62       |  | Guaranty, dated June 29, 2007, executed by eLandia, Inc. and Retail Americas VOIP, LLC in favor of Laurus Master Fund, Ltd.                                                                 |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended September 30, 2007.             
|            |  |                                                                                                                                                                                            
|10.63       |  | Equity Pledge Agreement, dated June 29, 2007, by and among Latin Node, Inc., Latin Node, LLC, eLandia, Inc., Latin Node Europe, GmbH, Retail Americas VOIP, LLC and Laurus Mater
Fund, Ltd. |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended September 30, 2007.             
|            |  |                                                                                                                                                                                            
|10.64       |  | Secured Convertible Term Note, dated June 29, 2007, executed by Latin Node, Inc. and certain of its subsidiaries in favor of Laurus Mater Fund, Ltd.                                        |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended September 30, 2007.             
|            |  |                                                                                                                                                                                            
|10.65       |  | Secured Revolving Note, dated June 29, 2007, executed by Latin Node, Inc. and certain of its subsidiaries in favor of Laurus Master Fund, Ltd.                                              |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended September 30, 2007.             



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|            |  |                                                                                                                                                                                                                                                |  |                                                                                                
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                                                                                                                                                        |  | Method of Filing                                                                               
|            |  |                                                                                                                                                                                                                                               
|10.66       |  | Registration Rights Agreement, dated June 29, 2007, by and between Latin Node, Inc. and Laurus Master Fund, Ltd.                                                                                                                               |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended September 30, 2007.      
|            |  |                                                                                                                                                                                                                                               
|10.67       |  | Executive Employment Agreement between the Company and John Hamm dated July 23, 2007.                                                                                                                                                          |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended September 30, 2007.      
|            |  |                                                                                                                                                                                                                                               
|10.68       |  | Executive Employment Agreement between eLandia and Pete R. Pizarro dated February 15, 2008.                                                                                                                                                    |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2007.          
|            |  |                                                                                                                                                                                                                                               
|10.69       |  | 2007 Stock Option and Incentive Plan.                                                                                                                                                                                                          |  | Previously filed as an exhibit to the Form 14C Information Statement filed on October 17, 2008.
|            |  |                                                                                                                                                                                                                                               
|10.70       |  | 2008 Executive Incentive Plan.                                                                                                                                                                                                                 |  | Previously filed as an exhibit to the Form 14C Information Statement filed on October 17, 2008.
|            |  |                                                                                                                                                                                                                                               
|10.71       |  | Executive Employment Agreement between eLandia and Harley L. Rollins effective September 1, 2008.                                                                                                                                              |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended September 30, 2008.      
|            |  |                                                                                                                                                                                                                                               
|10.72       |  | Modification Agreement between eLandia and SIBL dated February 6, 2009.                                                                                                                                                                        |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 6, 2009.       
|            |  |                                                                                                                                                                                                                                               
|10.73       |  | Fourth Amendment to Credit Agreement between eLandia and SIBL dated February 6, 2009.                                                                                                                                                          |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 6, 2009.       
|            |  |                                                                                                                                                                                                                                               
|10.74       |  | Amendment to Executive Employment Agreement between eLandia and Pete R. Pizarro dated February 6, 2009.                                                                                                                                        |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 6, 2009.       
|            |  |                                                                                                                                                                                                                                               
|10.75       |  | Additional Modification Agreement between eLandia and SIBL dated February 6, 2009.                                                                                                                                                             |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 6, 2009.       
|            |  |                                                                                                                                                                                                                                               
|10.76       |  | Termination Agreement between eLandia and SIBL dated February 6, 2009.                                                                                                                                                                         |  | Previously filed as an exhibit to the Current Report on Form 8-K dated February 6, 2009.       
|            |  |                                                                                                                                                                                                                                               
|10.77       |  | Separation agreement between eLandia and Oscar Coen.                                                                                                                                                                                           |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2008.          
|            |  |                                                                                                                                                                                                                                               
|10.78       |  | Loan Agreement dated June 8, 2009, by and between American Samoa Hawaii Cable, LLC, and Samoa American Samoa Cable, LLC, and ANZ Finance American Samoa, Inc., an American Samoa
corporation, and ANZ Amerika Samoa Bank as agent for Lenders. |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended June 30, 2009.           
|            |  |                                                                                                                                                                                                                                               
|10.79       |  | Continuing Guaranty dated June 8, 2009, by eLandia International Inc. for the benefit of ANZ Amerika Samoa Bank, as agent for ANZ Amerika Samoa Bank and ANZ Finance American Samoa,
Inc.                                                      |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended June 30, 2009.           
|            |  |                                                                                                                                                                                                                                               
|10.80       |  | Securities Purchase Agreement, effective as of July 1, 2009, by and between eLandia International Inc. and Jorge Enrique Alvarado Amado.                                                                                                       |  | Previously filed as an exhibit to the Form 10-Q for the quarter ended June 30, 2009.           
|            |  |                                                                                                                                                                                                                                               
|14.1        |  | Code of Business Conduct and Ethics.                                                                                                                                                                                                           |  | Previously filed as an exhibit to the Form 10-K for the year ended December 31, 2007.          
|            |  |                                                                                                                                                                                                                                               
|14.2        |  | Amended and Restated Code of Ethics and Business Conduct                                                                                                                                                                                       |  | Previously filed as an exhibit to the Current Report on Form 8-K dated May 22, 2009.           
|            |  |                                                                                                                                                                                                                                               
|31.1        |  | Chief Executive Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.                                                                    |  | Filed herewith.                                                                                



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|            |  |                                                                                                                                                                                      |  |                 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------
|Exhibit No. |  | Description of Document                                                                                                                                                              |  | Method of Filing
|            |  |                                                                                                                                                                                     
|31.2        |  | Chief Financial Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.          |  | Filed herewith. 
|            |  |                                                                                                                                                                                     
|32.1        |  | Certification of Chief Executive Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | Filed herewith. 
|            |  |                                                                                                                                                                                     
|32.2        |  | Certification of Chief Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | Filed herewith. 



98



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SIGNATURES

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



|                     |  |                            |  |                                                                                             
|-------------------- |  | -------------------------- |  | --------------------------------------------------------------------------------------------
|                     |  | ELANDIA INTERNATIONAL INC.
|                     |  |                           
|Date: April 15, 2010 |  | By:                        |  | /S/    PETE R.
PIZARRO                                                                      
|                     |  |                            |  | Pete R. Pizarro, Chairman of the Board
(Chief Executive Officer)                            
|                     |  |                           
|Date: April 15, 2010 |  | By:                        |  | /S/    HARLEY L.
ROLLINS, III                                                               
|                     |  |                            |  | Harley L. Rollins, III, Chief Financial Officer
(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated on April 15, 2010.



|                              |  |  |  |                                                             
|----------------------------- |  |  |  | ------------------------------------------------------------
|/S/    PETE R.
PIZARRO        |  |  |  | Chairman of the Board of Directors (Chief Executive Officer)
|Pete R. Pizarro               |  |  |  |                                                             
|                              |  | 
|/S/    HARLEY L.
ROLLINS, III |  |  |  | Chief Financial Officer (Principal Financial and Accounting 
|Harley L. Rollins, III        |  |  |  | Officer)                                                    
|                              |  | 
|/S/    CHARLES J.
FERNANDEZ   |  |  |  | Director                                                    
|Charles J. Fernandez          |  |  |  |                                                             
|                              |  | 
|/S/    DR. M. LEWIS
TEMARES   |  |  |  | Director                                                    
|Dr. M. Lewis Temares          |  |  |  |                                                             
|                              |  | 
|                              |  |  |  | Director                                                    
|Angel Medina                  |  |  |  |                                                             



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Exhibit Index



|            |  |                                                                                                                                                                                     
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Document                                                                                                                                                             
|31.1        |  | Chief Executive Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.         
|            | 
|31.2        |  | Chief Financial Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.         
|            | 
|32.1        |  | Certification of Chief Executive Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.