GTT Communications (GTTNQ) 10-Q 2007 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2007

Commission File Number 000-51211

Global Telecom & Technology, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	20-2096338
(State or Other Jurisdiction of Incorporation or	(I.R.S. Employer Identification No.)
Organization)

8484 Westpark Drive
Suite 720
McLean Virginia 22102
(703) 442-5500
(Address including zip code, and telephone number, including area
code of principal executive officers)

     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.

Yesþ Noo

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

Large Accelerated Filero       Accelerated Filero       Non-Accelerated Filerþ

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso Noþ

     As of May 7, 2007, 11,732,181 shares of common stock, par value $.0001 per share, of the registrant were outstanding.

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)		3
	Condensed Consolidated Balance Sheets		3
	Condensed Consolidated Statements of Operations		4
	Condensed Consolidated Statement of Stockholders’ Equity		5
	Condensed Consolidated Statements of Cash Flows		6
	Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		23
Item 4.	Controls and Procedures		23
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		24
Item 1A.	Risk Factors		24
Item 6.	Exhibits		26
SIGNATURES			27

PART I

ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Global Telecom & Technology, Inc.
(formerly Mercator Partners Acquisition Corp.)

Condensed Consolidated Balance Sheets

	March 31, 2007			December 31, 2006
	(Unaudited)			(Note 1)
ASSETS
Current assets:
Cash and cash equivalents	$	3,709,048		$	3,779,027
Designated cash		193,633			10,287,180
Accounts receivable, net		6,085,313			7,687,544
Income tax refund		138,312			417,110
Deferred contract costs		632,172			591,700
Prepaid expenses and other current assets		808,750			970,821
Total current assets		11,567,228			23,733,382
Property and equipment, net		833,802			890,263
Other assets		1,052,587			1,075,063
Intangible assets, subject to amortization		10,604,256			11,117,721
Goodwill		61,458,599			61,458,599
Total assets	$	85,516,472		$	98,275,028
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,339,271		$	13,892,664
Accrued expenses and other current liabilities		3,036,755			2,333,178
Notes payable		402,500			6,519,167
Common stock, subject to possible conversion to cash		936,842			11,311,658
Unearned and deferred revenue		3,071,937			2,930,639
Regulatory and sales tax payable		403,170			297,251
Income taxes payable		339,694			339,694
Derivative liabilities		—			8,435,050
Total current liabilities		20,530,169			46,059,301
Long-term obligations, less current maturities		9,916,667			4,000,000
Long-term deferred revenue		177,843			190,778
Deferred tax liability		4,033,462			4,231,762
Total liabilities		34,658,141			54,481,841
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $ .0001 per share, 80,000,000 shares authorized,11,608,524 and 11,011,932 shares (in 2006 excluding 2,114,942 shares subject to possible conversion to cash) issued and outstanding, respectively		1,161			1,101
Additional paid-in capital		53,125,109			44,049,553
Accumulated deficit		(2,296,902	)		(478,220	)
Accumulated other comprehensive income		28,963			220,753
Total stockholders’ equity		50,858,331			43,793,187
Total liabilities and stockholders’ equity	$	85,516,472		$	98,275,028

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Global Telecom & Technology, Inc.
(formerly Mercator Partners Acquisition Corp.)

Condensed Consolidated Statements of Operations

							ETT Predecessor			GII Predecessor
	For the three months ended						For the three months ended
	March 31, 2007			March 31, 2006			March 31, 2006			March 31, 2006
	(Unaudited)						(Unaudited)
Revenue:
Telecommunications services provided	$	13,582,176		$	—		$	8,045,313		$	4,378,292
Operating expenses:
Cost of telecommunications services provided		9,529,799			—			5,711,254			3,031,977
Selling, general and administrative expense		4,782,186			317,520			2,296,887			1,394,442
Employee termination and non-recurring items		1,737,534			—			—			—
Depreciation and amortization		618,475			—			49,560			40,292
Total operating expenses		16,667,994			317,520			8,057,701			4,466,711
Operating loss		(3,085,818	)		(317,520	)		(12,388	)		(88,419	)
Other income (expense):
Interest income, net of expense		(85,945	)		588,186			9,544			6,133
Other income, net of expense		4,182			—			—			474
Loss on derivative financial instruments		—			(3,682,200	)		—			—
Total other income (expense)		(81,763	)		(3,094,014	)		9,544			6,607
Loss before income taxes		(3,167,581	)		(3,411,534	)		(2,844	)		(81,812	)
Provision for income taxes (benefit)		(198,300	)		93,000			—			—
Net loss	$	(2,969,281	)	$	(3,504,534	)	$	(2,844	)	$	(81,812	)
Net loss per share:
Basic and diluted	$	(0.25	)	$	(0.30	)	$	(0.00	)	$	(0.03	)
Weighted average shares:
Basic and diluted		11,964,791			11,731,000			174,512,485			2,722,100

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Global Telecom & Technology, Inc.
(formerly Mercator Partners Acquisition Corp.)

Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited)

											Accumulated
					Additional			Retained			Other
	Common Stock				Paid-In			Earnings			Comprehensive
	Shares		Amount		Capital			(Accumulated Deficit)			Income			Total
Balance, December 31, 2006		11,011,932	$	1,101	$	44,049,553		$	(478,220	)	$	220,753		$	43,793,187
Former Class B Common shares converted to common shares (excluding 1,860,850 former class B common shares converted to cash)		254,092		26		(26	)		—			—			—
Release of liability associated with potential conversion of former class B common shares		—		—		1,161,476			—			—			1,161,476
Reclassification of amounts previously allocated to derivative liabilities upon change in accounting		—		—		7,284,450			—			—			7,284,450
Adjustment to derivative liabilities, cumulative-effect change in accounting adjustment		—		—		—			1,150,600						1,150,600
Share-based compensation for options issued to employees		—		—		48,960			—			—			48,960
Share based compensation for restricted stock issued		342,500		34		550,691			—			—			550,725
Share-based compensation for restricted stock awarded		—		—		30,005			—			—			30,005
Comprehensive loss
Net loss		—		—		—			(2,969,282	)		—			(2,969,282	)
Change in accumulated foreign currency gain on translation		—		—		—			—			(191,790	)		(191,790	)
Comprehensive loss															(3,161,072	)
Balance, March 31, 2007		11,608,524	$	1,161	$	53,125,109		$	(2,296,902	)	$	28,963		$	50,858,331

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Global Telecom & Technology, Inc.
(formerly Mercator Partners Acquisition Corp.)

Condensed Consolidated Statements of Cash Flows

							ETT Predecessor			GII Predecessor
	For the three months ended						For the three months ended
	March 31, 2007			March 31, 2006			March 31, 2006			March 31, 2006
	(Unaudited)						(Unaudited)
Cash Flows From Operating Activities:
Net loss	$	(2,969,281	)	$	(3,504,534	)	$	(2,844	)	$	(81,812	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization		618,475			—			49,560			40,292
Change in value of derivative liabilities		—			3,682,200			—			—
Shared-based compensation from options issued to employees		48,960			—			—			—
Shared-based compensation from restricted stock to employees		580,730			—			—			—
Amortization of discount on U.S. Government Securities held in trust		—			(575,076	)		—			—
Deferred income taxes		(198,300	)		—			—			—
Changes in operating assets and liabilities, excluding effects of Acquisitions
Accounts receivable, net		1,774,651			—			410,037			76,980
Income tax refund receivable		278,798			—			—			—
Deferred contract cost and other assets		(434,180	)		—			(429,732	)		(2,228	)
Prepaid expenses and other current assets		53,840			50,478			—			68,506
Other assets		(15,089	)		—			—			16,840
Accounts payable		(2,959,750	)		31,396			466,286			(89,035	)
Unearned and deferred revenue		92,707			—			(350,585	)		93,635
Regulatory and sales tax payable		105,919			—			—			30,680
Income taxes payable		—			93,000			—			—
Accrued expenses and other current liabilities		2,970,929			—			(153,228	)		(174,825	)
Long-term deferred revenues		72,341			—			—			—
Net cash provided by (used in) operating activities		20,750			(222,536	)		(10,506	)		(20,967	)
Cash Flows from Investing Activities
Purchases of property and equipment		(47,752	)		—			(27,979	)		(7,030	)
Proceeds from certificates of deposit		137,999			—			—			(4,952	)
Purchases of U.S. Government Securities held in Trust Fund		—			(54,722,000	)		—			—
Maturities of U.S. Government Securities held in Trust Fund		—			54,722,000			—			—
Net cash provided by (used in) investing activities		90,247			—			(27,979	)		(11,982	)
Cash Flows from Financing Activities
Principal payments on long-term obligations		—			—			(184,826	)		—
Repayment on notes payable		(200,000	)		—			—			—
Net cash used in financing activities		(200,000	)		—			(184,826	)		—
Effect of exchange rate changes on cash		19,024			—			51,788			—
Net (decrease) increase in cash and cash equivalents		(69,979	)		(222,536	)		(171,523	)		(32,949	)
Cash and cash equivalents at beginning of period		3,779,027			1,383,204			4,087,053			876,883
Cash and cash equivalents at end of period	$	3,709,048		$	1,160,668		$	3,915,530		$	843,934
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	3,492		$	—		$	25,277		$	—
Accrued acquisition costs	$	—		$	23,319		$	—		$	—

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

6

Global Telecom & Technology, Inc.
(formerly Mercator Partners Acquisition Corp.)

Notes to Condensed Consolidated Financial Statements

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

Organization and Business

     Global Telecom & Technology, Inc. (“GTT”) serves as the holding company for two operating subsidiaries, Global Telecom & Technology Americas, Inc. (“GTTA”), which provides services primarily to customers in North, Central and South America, and GTT — EMEA Ltd. (“GTTE”), which provides services primarily to customers in Europe, the Middle East and Asia, and their respective subsidiaries (collectively, hereinafter, the “Company”).

     The Company provides facilities-neutral, high-capacity communications network solutions, dedicated managed data networks and other value-added telecommunications services to over 200 domestic and multinational carrier and enterprise customers with respect to over 50 countries.

     GTT is a Delaware corporation formerly known as Mercator Acquisition Partners Corp. (“Mercator”), which was incorporated on January 3, 2005 for the purpose of effecting a merger, capital stock exchange, asset acquisition or another similar business combination with what was, at the time, an unidentified operating business or businesses (“Business Combination”). Mercator was a “shell company” as defined in Rule 405 promulgated under the Securities Act of 1933 and Rule 12b-2 promulgated under the Securities Exchange Act. On April 11, 2005, Mercator effected an initial public offering of its securities (the “Offering”) which closed on April 15, 2005.

     GTTA is a Virginia corporation, incorporated in 1998, formerly known as Global Internetworking, Inc. (“GII”). GTTE is a UK limited company, incorporated in 1998, formerly known as European Telecommunications and Technology, Ltd. (“ETT”).

     On October 15, 2006, GTT acquired all of the outstanding shares of common stock of GII and outstanding voting stock of ETT (collectively the “Acquisitions”) in exchange for cash, stock, warrants and notes. Immediately thereafter, Mercator changed its name to GTT. Subsequently, GII changed its name to Global Telecom & Technology Americas, Inc., and ETT changed its name to GTT - EMEA Ltd.

Basis of Presentation

     The accompanying consolidated financial statements have been prepared on a going concern basis. As shown in the accompanying consolidated financial statements, the Company had a working capital deficit of approximately $9.0 million at March 31, 2007. The working capital deficit includes designated cash which will be used to redeem shares upon their conversion and the associated liability for such shares subject to possible conversion including costs associated with the completion of the share conversion process.

     Historically, the combined operations of the acquired companies have not been cash flow positive. However, cash flows of the Company are expected to improve through cost reductions following the combination of the two companies and additional growth in sales. Net cash provided by operations for the Company was positive during the three months ended March 31, 2007.

     As a multiple network operator, the Company typically has very low levels of capital expenditures, especially when compared to infrastructure-owning traditional telecommunications competitors. Additionally, the Company’s cost structure is somewhat variable and provides management an ability to manage costs as appropriate. The Company’s capital expenditures are predominantly related to the maintenance of computer facilities, office fixtures and furnishings and are very low as a proportion of revenue. However, from time to time the Company may require capital investment as part of an executed service contract that would typically consist of significant multi-year commitments from the customer.

     Management monitors cash flow and liquidity requirements. Based on the Company’s cash and cash equivalents and analysis of the anticipated working capital requirements, management believes the Company has sufficient liquidity to fund the business and meet its contractual obligations over a period beyond the year ended December 31, 2007. The Company’s current planned cash requirements for fiscal 2007 are based upon certain assumptions, including its ability to raise additional financing and the growth of revenues from services arrangements. In connection with the activities associated with the services and fund raising activities, the Company expects to incur expenses, including provider fees, employee compensation and consulting fees, professional fees, sales and marketing, insurance and interest expense. Should the expected cash flows not be available, management believes it would have the ability to revise its operating plan and reduce expenses.

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     Although the Company believes that cash currently on hand and expected cash flows from future operations are sufficient to fund operations, it may seek to raise additional capital as necessary to meet certain capital and liquidity requirements in the future. Due to the dynamic nature of the Company’s industry and unforeseen circumstances, if it is unable to fully fund cash requirements through operations and current cash on hand, it will need to obtain additional financing through a combination of equity and debt financings and/or renegotiation of terms on its existing debt. If any such activities become necessary, there can be no assurance that the Company would be successful in completing any of these activities on terms that would be favorable to it, if at all.

Interim Financial Statements

     The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Company’s audited financial statements and footnotes thereto for the year ended December 31, 2006 included in the Company’s Annual Report on Form 10-K filed on April 17, 2007. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s consolidated financial position and the results of operations. The operating results for the three months ended March 31, 2007 are not necessarily indicative of the results to be expected for the full fiscal year 2007 or for any other interim period. The December 31, 2006 balance sheet has been derived from the audited financial statements as of that date, but does not include all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”).

Predecessors

     From its inception (January 3, 2005) until consummation of the Acquisitions on October 15, 2006, GTT had no substantial operations other than to serve as a vehicle for a Business Combination. Accordingly, since GTT’s operating activities prior to the Acquisitions are insignificant relative to those of the GTTA and GTTE, management believes that both GTTA and GTTE are GTT’s predecessors. Management has reached this conclusion based upon an evaluation of the requirements and facts and circumstances, including the historical life of each of GTTE and GTTA, the historical level of operations of GTTA and GTTE, the purchase price paid for each GTTE and GTTA and the fact that the consolidated Company’s operations, revenues and expenses after the Acquisitions are most similar in all respects to those of GTTA’s and GTTE’s historical periods. Accordingly, the historical statements of operations and statements of cash flows of GTTA and GTTE for the three months ended March 31, 2006 have been presented.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Change in Accounting Principle for Registration Payment Arrangements

     In December 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position on Emerging Issues Task Force (“EITF”) No. 00-19-2,Accounting for Registration Payment Arrangements(“FSP EITF 00-19-2”). FSP EITF 00-19-2 provides that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement should be separately recognized and measured in accordance with Statement of Financial Accounting Standards (“FAS”) No. 5,Accounting for Contingencies, which provides that loss contingencies should be recognized as liabilities if they are probable and reasonably estimable. Subsequent to the adoption of FSP EITF 00-19-2, any changes in the carrying amount of the contingent liability will result in a gain or loss that will be recognized in the consolidated statement of operations in the period the changes occur. The guidance in FSP EITF 00-19-2 is effective immediately for registration payment arrangements and the financial instruments subject to those arrangements that are entered into or modified subsequent to the date of issuance of FSP EITF 00-19-2. For registration payment arrangements and financial instruments subject to those arrangements that were entered into prior to the issuance of FSP EITF 00-19-2, this guidance is effective for our consolidated financial statements issued for the year beginning January 1, 2007, and interim periods within that year.

     On January 1, 2007, the Company adopted the provisions of FSP EITF 00-19-2 to account for the registration payment arrangement associated with the Company’s 8,165,000 Class W warrants and 8,165,000 Class Z warrants to purchase Common Stock included in the Series A Units and Series B Units sold in the Offering and the Underwriters’ Purchase Options (the “UPO”) to purchase up to 25,000 Series A Units and/or up to 230,000 Series B Units (collectively, the “Registration Payment Arrangement”). As of January 1, 2007 and March 31, 2007, management determined that it was not probable that the Company would have any payment obligation under the Registration Payment Arrangement; therefore,

8

no accrual for contingent obligation is required under the provisions of FSP EITF 00-19-2. Accordingly, the warrant liability account was eliminated. The amount originally allocated to the derivative liability of $7,284,450 was reclassified to additional paid-in-capital and the amount representing the cumulative revalulation of such derivative liability through the adoption of FSP EITF 00-19-2, $1,150,600, was recorded as a cumulative-effect change in accounting principle against opening retained earnings.

     The following financial statement line items for the three months ended March 31, 2007 were affected by the change in accounting principle:

Consolidated Statements of Operations

	As Computed under			As Computed under
	EITF 00-19			FSP EITF 00-19-2			Effect of change
Three Months Ended March 31, 2007
Loss from operations	$	(3,085,818	)	$	(3,085,818	)		$	—
Gain on fair value of warrants		4,386,600			—				(4,386,600	)
Net gain (loss)		1,417,319			(2,969,281	)			(4,386,600	)
Net gain (loss) per share:
Basic and diluted	$	0.12		$	(0.25	)		$	(0.37	)

Consolidated Balance Sheet

	As Computed under		As Computed under
	EITF 00-19		FSP EITF 00-19-2		Effect of change
Three Months Ended March 31, 2007
Warrant liability	$	4,048,450	$	—	$	(4,048,450	)
Total liabilities		38,706,591		34,658,141		(4,048,450	)
Additional paid-in capital		45,840,659		53,125,109		7,284,450
Total stockholders’ equity	$	46,809,881	$	50,858,331	$	4,048,450

Revenue Recognition

     Recurring Revenue

     Data connectivity and managed network services are provided pursuant to service contracts that typically provide for payments of recurring charges on a monthly basis for use of the services over a committed term. Each service contract for data connectivity and managed services has a fixed monthly cost and a fixed term, in addition to a fixed installation charge (if applicable). At the end of the initial term of most service contracts for data connectivity and managed services, the contracts roll forward on a month-to-month or other periodic basis and continue to bill at the same fixed recurring rate. If any cancellation or termination charges become due from the customer as a result of early cancellation or termination of a service contract, those amounts are calculated pursuant to a formula specified in each contract. Recurring costs relating to supply contracts are recognized ratably over the term of the contract.

     Non-recurring fees, Deferred Revenue

     Non-recurring fees for data connectivity typically take the form of one-time, non-refundable provisioning fees established pursuant to service contracts. The amount of the provisioning fee included in each contract is generally determined by marking up or passing through the corresponding charge from the Company’s supplier, imposed pursuant to the Company’s purchase agreement. Non-recurring revenues earned for providing provisioning services in connection with the delivery of recurring communications services are recognized ratably over the term of the recurring service starting upon commencement of the service contract term. Fees recorded or billed from these provisioning services is initially recorded as deferred revenue then recognized ratably over the term of the recurring service. Installation costs related to provisioning incurred by the Company from independent third party suppliers, directly attributable and necessary to fulfill a particular service contract, and which costs would not have been incurred but for the occurrence of that service contract, are capitalized as deferred contract costs and expensed proportionally over the term of service in the same manner as the deferred revenue arising from that contract.

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     Other Revenue

     From time to time, the Company recognizes revenue in the form of fixed or determinable cancellation (pre-installation) or termination (post-installation) charges imposed pursuant to the service contract. These revenues are earned when a customer cancels or terminates a service agreement prior to the end of its committed term. These revenues are recognized when billed if collectibility is reasonably assured. In addition, the Company from time to time sells equipment in connection with data networking applications. The Company recognizes revenue from the sale of equipment at the contracted selling price when title to the equipment passes to the customer (generally F.O.B. origin) and when collectibility is reasonably assured.

     Fees for professional services are typically specified as applying on a fee per hour basis pursuant to agreements with customers and are computed based on the hours of service provided by the Company. Invoices for professional services performed on an hourly basis are rendered in the month following that in which the professional services have been performed. Because such invoices for hourly fees are for services the Company has already performed, and because such work is undertaken pursuant to an executed statement of work with the customer specifying the applicable hourly rate, the Company recognizes revenue based upon hourly fees in the period the service is provided if collectibility is reasonably assured. The Company did not generate any revenue from professional services during the three months ended March 31, 2007, and such revenues were not material to any prior periods.

     In certain circumstances, the Company is engaged to perform professional services projects pursuant to master agreements and project-specific statements of work. Fees for the Company’s performance of project-specific engagements are specified in each executed statement of work by reference to certain agreed-upon and defined milestones and/or the project as a whole. Invoices for professional services projects are rendered pursuant to payment plans specified in the statement of work executed by the customer. Revenue recognition is determined independently of the issuance of an invoice to, or receipt of payment from, the customer. Rather, revenue is recognized based upon the degree of delivery, performance and completion of such professional services projects as stated expressly in the contractual statement of work. The Company determines performance, completion and delivery of obligations on projects based on the underlying contract or statement of work terms, particularly by reference to any customer acceptance provisions or by other objective performance criteria defined in the contract or statement of work. Furthermore, even if a project has been performed, completed and delivered in accordance with all applicable contractual requirements, and even if an invoice has been issued consistent with those contractual requirements, professional services revenues are not recognized unless collected in advance or if collectibility is reasonably assured.

     In cases where a project is partially billed upon attainment of a milestone or on another partial completion basis, revenue is allocated for recognition purposes based upon the relative fair market value of the individual milestone or deliverable. For this purpose, fair market value is determined by reference to factors such as how the company would price the particular deliverable on a standalone basis and/or what competitors may charge for a similar standalone product. Where the Company, for whatever reason, cannot make an objective determination of fair market value of a deliverable by reference to such factors, the amount paid is recognized upon performance, completion and delivery of the project as a whole.

     Usage charge revenue is recognized as the connection is utilized by the customer in accordance with the agreement.

     The Company records Universal Service Fund (“USF”) contributions and sales, use, value added and excise taxes billed to its customers on a net basis in its condensed consolidated statements of operations.

Share-Based Compensation

     Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123(R)”) requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statement of operations.

     Share-based compensation expense recognized in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2007 included compensation expense for share-based payment awards based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R). The Company follows the straight-line single option method of attributing the value of share-based compensation to expense. As share-based compensation expense recognized in the condensed consolidated statement of operations for the three months ended March 31, 2007 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

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     The Company used the Black-Scholes option-pricing model (“Black-Scholes”) as its method of valuation for share-based awards granted. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards and the expected term of the awards.

     The Company accounts for non-employee share-based compensation expense in accordance with EITF Issue No. 96-18,Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services(“EITF 96-18”). The Company had one grant of 6,000 share options to a non-employee consultant in December 2006.

Income Taxes

     In June 2006, the FASB issued Interpretation No. 48,Accounting For Uncertainty in Income Taxes (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes,” and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The adoption of FIN 48 on January 1, 2007 did not have any impact on the Company’s financial position and results of operations.

     We may from time to time be assessed interest and/or penalties by major taxing jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it has been classified in the statement of operations as other general and administrative costs.

Net Income (Loss) Per Share

     Basic income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share reflect, in periods with earnings and in which they have a dilutive effect, the effect of common shares issuable upon exercise of stock options and warrants. Diluted income (loss) per share for the three months ended March 31, 2007 and three months ended March 31, 2006 excludes potentially issuable common shares of 25,540,000 and 21,990,000, respectively, primarily related to the Company’s outstanding stock options and warrants because the assumed issuance of such potential common shares is antidilutive as the exercise prices of such securities are greater than the average closing price of the Company’s common stock during the periods.

Accrued Carrier Expenses

     The Company accrues estimated charges owed to its suppliers for services. The Company bases this accrual on the supplier contract, the individual service order executed with the supplier for that service, the length of time the service has been active, and the overall supplier relationship. It is common in the telecommunications industry for users and suppliers to engage in disputes over amounts billed (or not billed) in error or over interpretation of contract terms. The accrued carrier cost reflected in the condensed consolidated financial statements includes disputed but unresolved amounts claimed as due by suppliers, unless management is confident, based upon its experience and its review of the relevant facts and contract terms, that the outcome of the dispute will not result in liability for the Company. Management estimates this liability monthly, and reconciles the estimates with actual results quarterly as the liabilities are paid, as disputes are resolved, or as the appropriate statute of limitations with respect to a given dispute expires.

     As of March 31, 2007, open disputes totaled $336,280. Based upon its experience with each vendor and similar disputes in the past, and based upon management review of the facts and contract terms applicable to each dispute, management has determined that the most likely outcome is that the Company will be liable for $99,568 in connection with these disputes, for which accruals are included on the accompanying condensed consolidated balance sheet at March 31, 2007.

Segment Reporting

     The Company determines and discloses its segments in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS No. 131”), which uses a “management’ approach for determining segments.

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     The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of a company’s reportable segments. SFAS No. 131 also requires disclosures about products or services, geographic areas and major customers. The Company operates in two geographic regions in addition to corporate activities: (i) North, Central and South America, and (ii) Europe, the Middle East and Asia.

NOTE 3 — ACQUISITIONS

     On October 15, 2006, the Company acquired all of the outstanding capital stock of GII pursuant to a stock purchase agreement dated May 23, 2006, as amended. The Acquisition of GII was accounted for as a business combination with the Company as the acquirer of GII. Under the purchase method of accounting, the assets and liabilities of GII acquired are recorded as of the acquisition date at their respective fair values, and added to those of the Company.

     On October 15, 2006, the Company also acquired all of the outstanding voting stock of ETT pursuant to an offer made to its stockholders under the laws of England and Wales. The Acquisition of ETT, like the Acquisition of GII, has been accounted for as a business combination with the Company as the acquirer of ETT. Under the purchase method of accounting, the assets and liabilities of ETT acquired are recorded as of the acquisition date at their respective fair values, and added to those of the Company.

     Summarized below are the pro forma unaudited results of operations for the three months ended March 31, 2006 as if the results of GTTA and GTTE were included for the entire periods presented. The pro forma results may not be indicative of the results that would have occurred if the Acquisitions had been completed at the beginning of the period presented or which may be obtained in the future (amounts in thousands expect per share information):

	Three months
	ended March
	31, 2006
Revenue	$	12,424
Net loss		(4,010	)
Basic and diluted loss per share	$	(0.31	)
Weighted average common shares outstanding		13,030

NOTE 4 — SEGMENTS

     The Company has determined subsequent to the Acquisitions that it operates under two reportable segments as the chief financial decision maker reviews operating results and makes decisions on a regional basis. A summary of the Company’s operations by geographic area follows:

			Europe, Middle East
	Americas		and Asia		Corporate			Total
Revenue	$	4,899,590	$	8,682,586	$	—		$	13,582,176
Operating income (loss)		99,210		71,710		(3,256,738	)		(3,085,818	)
Depreciation and amortization		31,811		73,200		513,464			618,475
Interest income, net of expense		16,380		12,374		(114,699	)		(85,945	)
Net income		119,772		84,084		(3,173,137	)		(2,969,281	)
Total Assets		2,917,622		9,076,113		73,522,737			85,516,472

NOTE 5 — RESTRUCTURING CHARGES AND NON-RECURRING ITEMS

     During the three months ended March 31, 2007, the Company implemented various restructuring plans to reduce its operating expenses and strengthen both its competitive and financial positions. In addition, the Company incurred severance expenses related to the resignation of the Company’s previous Chief Executive Officer. The restructuring plans reduced corporate-level functions that were determined to be redundant or not consistent with the

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Company’s growth strategy. The charges represent costs incurred as of March 31, 2007 in connection with (i) the reduction of corporate headcount which resulted in a charge of $50,571 and (ii) the severance related to executive level resignation of $944,556.

The charges and accruals established by the Company, and activities related thereto, are summarized as follows:

	Balance at		Charges								Balance at
	beginning of		net of					Non-cash			end of
	year		Reversals		Cash Uses			Uses			period
Severance	$	—	$	995,127	$	(28,846	)	$	(501,920	)	$	464,361

     In addition, the Company incurred $0.7 million in costs related to the completion of the share conversion process as further described in Note 7.

NOTE 6 — SHARE-BASED COMPENSATION

Stock-Based Compensation Plan

     The Company adopted its 2006 Employee, Director and Consultant Stock Plan (the “Plan”) in October 2006. In addition to stock options, the Company may also grant restricted stock or other stock-based awards under the Plan. The maximum number of shares issuable under the Plan is limited to 3,000,000 shares.

     The Plan permits the granting of stock options and restricted stock to employees (including employee directors and officers) and consultants of the Company, and non-employee directors of the Company. Options granted under the Plan have an exercise price of at least 100% of the fair market value of the underlying stock as defined in the Plan and expire no later than ten years from the grant date. The options generally vest over four years with 25% of the option shares becoming exercisable one year from the date of grant and then 25% annually over the following three years. The Compensation Committee of the Board of Directors, as administrator of the Plan, has the discretion to use a different vesting schedule.

     Stock Options

     Due to the Company’s limited history as a public company, the Company has estimated expected volatility based on the historical volatility of certain comparable companies as determined by management. The risk-free interest rate assumption is based upon observed interest rates at the time of grant appropriate for the term of the Company’s employee stock options. The dividend yield assumption is based on the Company’s intent not to issue a dividend under its dividend policy. The expected holding period assumption was estimated based on management’s estimate. The assumptions used in the calculation of the stock option expense were as follows:

	Three months ended
	March 31, 2007
Volatility		81.9	%
Risk free rate		4.4	%
Term		6.25
Dividend yield		0.0	%

     Stock-based compensation expense recognized in the accompanying consolidated statement of operations for the three months ended March 31, 2007 is based on awards ultimately expected to vest, reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeiture assumptions were based upon management’s estimate.

     The fair value of each stock option grant to employees is estimated on the date of grant pursuant to the Plan. The fair value of each stock option grant to non-employees is estimated on the applicable performance commitment date, performance completion date or interim financial reporting date.

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     During the three months ended March 31, 2007, 100,000 options were granted pursuant to the Plan. The following table summarizes information concerning options outstanding as of March 31, 2007:

								Weighted
								Average
				Weighted		Weighted		Remaining		Aggregate
				Average		Average		Contractual		Intrinsic
	Options			Exercise Price		Fair Value		Life (Years)		Value
Balance at December 31, 2006		407,500		$	3.10	$	2.26		9.97	$	154,850
Granted		100,000		$	2.69	$	1.96				—
Exercised		—		$	—	$	—				—
Forfeited		(17,500	)	$	3.10	$	2.26				—
Balance at March 31, 2007		490,000		$	3.02	$	2.26		9.76	$	—

     During the three months ended March 31, 2007, the Company recognized compensation expense of $48,960 as a result of the vesting of options issued to employees and consultants which is included in selling, general and administrative expense on the accompanying condensed consolidated statement of operations.

     As of March 31, 2007, the unvested portion of share-based compensation expense attributable to stock options and the period in which such expense is expected to vest and be recognized is as follows:

Year ending December, 2007	$	187,337
Year ending December, 2008		249,783
Year ending December, 2009		249,783
Year ending December, 2010		241,420
Year ending December, 2011		4,729
	$	933,052

     Restricted Stock

     The Company expenses restricted shares granted in accordance with the provisions of SFAS 123(R). The fair value of the restricted shares issued is amortized on a straight-line basis over the vesting periods. The expense associated with the awarding of restricted shares for the three months ended March 31, 2007 is $580,730 of which $501,921 is included in restructuring charges and $78,810 is included in selling, general and administrative expense on the accompanying condensed consolidated statement of operations. The following table summarizes information concerning restricted shares issued and outstanding as of March 31, 2007:

			Weighted Average
	Restricted Stock		Fair Value
Balance at December 31, 2006		96,774	$	3.10
Issued		342,500		3.30
Forfeited/cancelled		—		—
Balance at March 31, 2007		439,274
Vested		24,192

     As of March 31, 2007, the Company had entered into agreements to grant an aggregate of 599,274 restricted shares of common stock to employees and members of the Board of Directors. As of March 31, 2007, 439,274 of the 599,274 shares of restricted stock were issued and outstanding. The remaining 160,000 shares of restricted stock had been awarded as of March 31, 2007 but were not issued as of that date. Of the $580,730 in restricted stock expense recorded for the three months ended March 31, 2007, $550,725 related to the 439,274 restricted shares awarded and outstanding and $30,005 related to the award of the 160,000 restricted shares not yet issued.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

Conversion Right of Holders of Class B Common Stock

     As permitted in the Company’s Certificate of Incorporation prior to and until the Acquisitions, holders of the Company’s Class B common stock that voted against a Business Combination were, under certain conditions, entitled

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to convert their shares into a pro-rata distribution from the Trust Fund (the “Conversion Right”). In the event that holders of a majority of the outstanding shares of Class B common stock voted for the approval of the Business Combination and that holders owning less than 20% of the outstanding Class B common stock exercised their Conversion Rights, the Business Combination could then be consummated. Upon completion of such Business Combination, the Class B common stock would be converted to common stock and the holders of Class B common stock who voted against the Business Combination and properly exercised their Conversion Rights would be paid their conversion price. There is no distribution from the Trust Fund with respect to the warrants included in the Series A Units and Series B Units or with respect to the common stock issued prior to consummation of the Business Combination. Any Class B stockholder who converted his or her stock into his or her share of the Trust Fund retained the right to exercise the Class W warrants and Class Z warrants that were received as part of the Series B Units.

     In connection with the Acquisitions, the Company determined that Class B stockholders owning less than 20% of the outstanding Class B common stock both voted against the Acquisitions and properly exercised their Conversion Rights for a pro-rata distribution from the Trust Fund. The actual per-share conversion price issuable to Class B stockholders who voted against the Acquisitions and elected conversion is equal to the amount in the Trust Fund (inclusive of any interest thereon) immediately prior to the proposed Business Combination, divided by the number of Class B shares sold in the Offering, or approximately $5.35 per share based on the value of the Trust Fund as of October 13, 2006. Accordingly, the Company was required to convert such Class B stockholders’ shares (which were converted into shares of common stock upon consummation of the Acquisitions) into cash following verification that such stockholders properly exercised their Conversion Rights. As of March 31, 2007, the Company determined that 1,860,850 shares of former Class B common stock qualified for conversion and has made payment of approximately $9.96 million with respect to the conversion of those shares. As a result of this conversion process, these shares have been canceled. As of May 7, 2007, the Company had paid an additional $0.2 million to redeem 36,343 additional shares of stock and those converted shares have been canceled. The Company also incurred approximately $0.7 million in costs associated with resolution of the share conversion process, including payments made to holders of shares who sought conversion inconsistent with the established process therefor. The Company believes that it has completed the conversion process as of May 7, 2007 and does not expect to redeem any additional shares in connection with this conversion process.

NOTE 8 — CAPITAL STOCK

     On January 19, 2007, the Company’s Series A Units and Series B Units were de-listed, and they were subsequently de-registered on January 22, 2007. All Series A Units and Series B Units were separated into their respective constituent underlying shares of common stock and warrants. The de-listing, de-registration, and separation of the Series A Units and Series B Units had no impact on the Company’s financial statements.

NOTE 9 — NOTES PAYABLE

     On March 23, 2007, the Company and the holders of approximately $5.9 million in promissory notes previously due and payable by the Company on June 30, 2007 entered into agreements to amend the notes. As a result of these amendments, the maturity date of each of the notes has been extended from June 30, 2007 to April 30, 2008. In addition, the per annum interest rate payable with respect to each note has been modified as follows: (a) from October 15, 2006 through March 31, 2007 — 6%; (b) from April 1, 2007 through June 30, 2007 — 8%; (c) from July 1, 2007 through October 31, 2007 — 10%; (d) from November 1, 2007 through December 31, 2007 — 12%; (e) from January 1, 2008 through March 31, 2008 — 14%; and (f) from April 1, 2008 and thereafter — 16%.

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     As of March 31, 2007, the Company was obligated as follows:

	March 31, 2007
Notes payable to former GII shareholders, due December 29, 2008, bearing interest at 6% per annum	$	4,000,000
Notes payable to former ETT and GII Shareholders, due April 30, 2008, bearing interest per annum of: 6% through 03/31/07, 8% through 06/30/07, 10% through 10/31/07, 12% through 12/31/07, 14% through 03/31/08, 16% thereafter		5,916,667
Other notes payable		402,500
		10,319,167
Less current portion		402,500
Long-term debt		9,916,667
Maturities of long-term obligations for the years ended December 31 are as follows:
2008	$	9,916,667

     As of December 31, 2006, the Company was obligated as follows:

	December 31, 2006
Notes payable to former GII shareholders, due December 29, 2008, bearing interest at 6% per annum	$	4,000,000
Notes payable to former ETT and GII shareholders, due June 30, 2007, bearing interest at 6% per annum		5,916,667
Other notes payable		602,500
		10,519,167
Less current portion		6,519,167
Long-term debt	$	4,000,000
Maturities of long-term obligations for the years ended December 31 are as follows:
2008	$	4,000,000

NOTE 10 — SUBSEQUENT EVENTS

Conversion of Former Class B Shares into Cash, Share Retirement, and Share Issuances

     As of May 7, 2007, the Company had determined that 36,343 additional shares of former Class B common stock qualified for conversion and has made payment of approximately $0.2 million with respect to the conversion of those shares. As a result of this conversion process, these shares have been canceled. The Company also incurred costs of approximately $0.7 million through May 7, 2007 associated with resolution of the conversion process. As the $0.7 million represented an amount which was a refinement of an estimate for a liability which existed as of March 31, 2007, the Company has recorded such amount in the accompanying condensed consolidated statements of operations in employee termination and other non-recurring items. The Company believes that it has completed the conversion process as of May 7, 2007 and does not expect to redeem any additional shares in connection with the conversion process.

     The Company issued approximately 160,000 shares of restricted stock between April 1, 2007 and May 7, 2007 to certain executives as contemplated by their respective employment and/or restricted stock agreements. As of May 7, 2007, the Company had 11,732,181 shares of common stock issued and outstanding.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes that appear elsewhere in this report and in our annual report onForm 10-K for the year ended December 31, 2006. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect plans, estimates and beliefs of management of the Company. When used in this document, the words “anticipate”, “believe”, “plan”, “estimate” and

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“expect” and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Our actual results could differ materially from those discussed in the forward-looking statements. For a more detailed description of these risks and factors, please see the Company’s 2006 Annual Report on Form 10-K filed with the Securities and Exchange Commission and Item 1A in Part II of this quarterly report onForm 10-Q.

Overview

     The Company’s primary business, as carried on through its operating subsidiaries, is the design, delivery, and management of data networks and related value-added services. Specifically, we provide services as a multi-network operator, or MNO. MNOs are facilities-free, technology-neutral telecommunications providers. MNOs do not own the infrastructure upon which their services are provided. Instead, they procure network capacity from existing telecommunications carriers, and integrate and resell this capacity to their customers, including enterprise customers, government agencies and other telecommunications carriers.

     As of March 31, 2007, the Company acted as a global supplier of network services for over 200 customers to more than 50 countries. To support this model and deliver our services, as of March 31, 2007, we had entered into purchasing agreements with over 100 suppliers, and had collected information from dozens more in order to identify more than 100,000 individual locations where network providers can deliver higher-speed fiber-optic services. We have also developed a proprietary suite of network planning, management and pricing software that analyzes options from among these various networks in order to identify optimal choices for design and procurement in any given case. Our revenue is derived primarily from the sale and activation of data networking services under contracts that can range from 12 to 60 months or more in duration.

     Through its operating subsidiaries, the Company currently provides and generates revenues from customer payments for the following kinds of services:

•Data Connectivity:This category includes point-to-point connectivity such as United States and international private lines, ethernet, dedicated internet access, wavelengths and dark fiber. In many cases, these connectivity services could be considered “managed” in that they often require the integration and management by the Company of multiple vendor networks within a single solution. This category also includes more value-added services, such as access aggregation and hubbing, which seek to improve cost efficiency and capacity management across individual circuit requirements. Examples include multi-hub solutions (which permit carriers and enterprises to aggregate capacity and order further circuits on an “as-needed” basis) and gateway hub solutions (which provide international-to-United States (or vice versa) standard rate conversion as well as aggregation). From time to time, the Company also sells equipment to assist with customer networking requirements. The main customers for these services are United States and international telecommunications service providers, voice over internet protocol, or VoIP, service providers, information service providers, large enterprises and government agencies. These customers buy these services either for their own internal communications networks or for resale to third parties. Approximately 69.5% of the Company’s consolidated revenues for the three months ended March 31, 2007 were attributable to either single-supplier or integrated multiple-supplier data connectivity services provided to customers.

•Managed Network Services:These services include engineering solutions tailored to a customer’s needs with respect to matters such as network deployment, monitoring, management and maintenance. Examples include roaming Internet access for enterprise customers, colocation and related environmental and power support for equipment, network security solutions, outsourced management of networks or circuits, and deployment of private managed networks to replace or supplement existing point-to-point connectivity across multiple sites. The target customers for these solutions are medium-to-large business enterprises that have multiple business locations that need to be connected with each other. Approximately 30.5% of the Company’s consolidated revenues for the three months ended March 31, 2007 were attributable to managed network services provided to customers.

•Professional Services:These services entail providing guidance and analysis to customers on network- and telecommunications-related requirements such as network design, continuity planning, facilities management and cost and traffic management and analysis. Customers for these services include medium and large business enterprises as well as traditional telecommunications service providers, internet service providers, government agencies, wireless carriers and cable television system operators. The Company did not generate any revenues from professional services engagements during the three months ended March 31, 2007.

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     Please see the discussion in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 with respect to “Management’s Discussion and Analysis of Financial Condition and Result of Operations — Critical Accounting Policies and Estimates — Revenue Recognition” and in Note 2 of the Company’s consolidated financial statements in that same Annual Report on Form 10-K, as well as Note 2 of the Company’s unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q, for more information regarding our revenues.

Locations of Offices and Origins of Revenue

     We are headquartered in McLean, Virginia, and we have offices in London, New York, Paris, Düsseldorf, and New Delhi. We also have sales employees based in Maryland and Florida. We maintain network operations centers in both McLean and in London. For the three months ended March 31, 2007, approximately 44% of our consolidated revenue was earned from operations based in the United States (including revenues from operations in the United States conducted by our European, Middle East and Asian (“EMEA”) operating company). Approximately 38% of our revenues were generated from operations based in the United Kingdom, 13% from operations in Germany, and 5% from the rest of the world.

Costs and Expenses

     The Company’s cost of revenue consists almost entirely of the costs for procurement of services associated with customer solutions. The key terms and conditions appearing in both supplier and customer agreements are substantially the same, with margin applied to the suppliers’ costs. There are no wages or overheads included in these costs. The Company balances the need for vendor diversity, which is necessary for the supply of services to multinational enterprises and other carriers, with the need to use a core, consolidated base of suppliers in order to obtain more favorable pricing from those suppliers.

     In most cases, the Company matches the length of each purchase contract with a supplier to each sales contract with a customer, typically between one and three years. The provisions of such customer contracts and supplier contracts are typically fixed for their stated terms unless both parties agree to any modifications. This generally allows the Company to maintain a predictable margin for the term of each such service, and the Company’s contract terms typically require customers to pay the full amount of their contract liability (or at a minimum, the Company’s underlying liability) in the event of customer cancellation or early termination.

     Our supplier contracts do not have any market related net settlement provisions. The Company has not entered into, and has no plans to enter into, any supplier contracts which involve financial or derivative instruments. The supplier contracts are entered into solely for the direct purchase of telecommunications capacity, which is resold by the Company in its normal course of business. As such, the Company considers its contracts with its suppliers to be normal purchases, according to the criteria in paragraph 10(b) of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended.

     We may occasionally have certain sales commitments to customers that extend beyond the Company’s commitments from its underlying suppliers. It is therefore possible that the Company’s margins could be adversely affected if the Company were unable to purchase extended service from a supplier at a cost sufficiently low to maintain the Company’s margin for the remaining term of its commitment to the customer. Historically, the Company has not encountered material price increases from suppliers with respect to continuation or renewal of services after expiration of initial contract terms. Although infrequent, in most cases where the Company has faced any price increase from a supplier following contract expiration, the Company has been able to locate another supplier to provide the service at a similar or reduced future cost. Based upon this historical experience and given that most of its customer contract terms are matched in duration with supplier contract terms, the Company does not believe that its existing long-term fixed-rate customer contracts are subject to any material reduction in margins that would have a material impact on its liquidity.

     From time to time, the Company has agreed to certain special commitments with vendors in order to obtain better rates, terms and conditions for the procurement of services from those vendors. These commitments include volume purchase commitments and purchases on a longer-term basis than the term for which the applicable customer has committed.

ŸVolume Purchase Commitments.Some of the service purchase contracts entered into by GTTA, our Americas operating company, call for certain levels of monthly payments to vendors whether or not GTTA is currently utilizing the underlying capacity from those specific vendors, commonly referred to in the industry as “take-or-pay” commitments. As of March 31, 2007, the aggregate monthly obligations under all such take-

18

or-pay commitments over the remaining terms of all of those contracts totaled approximately $807,000. All of the aggregate commitments existing as of March 31, 2007 expire by June 2008. If we were not able to satisfy such commitments via sales to underlying customers in a given month, GTTA would be liable to the vendors for the shortfall in that month. In turn, a shortfall payment would have an adverse effect upon our gross margins, by increasing the cost of circuit access without the receipt of any corresponding revenue from customers against the shortfall. We do not anticipate any material shortfalls arising under these agreements in the foreseeable future.

ŸTerm Commitments.To the extent practicable, the Company matches the quantity, duration and other terms of individual purchases of communications services with sales to individual customers on a service-by-service basis. GTTA has, however, from time to time selectively purchased capacity under multiple-year commitments from some of its vendors in order to secure more competitive pricing. These multiple-year purchase commitments may not be, in all cases, matched with corresponding multiple-year commitments from customers. In such cases, if a customer were to disconnect its service before the multiple-year term ordered from the vendor expired, and if we were unable to find another customer for the capacity, GTTA would either be subject to an early termination liability payable to the vendor or it would be forced to continue to pay for the service without any corresponding customer revenue attributable to the circuit. Such early termination liability would have an adverse effect upon our gross margins, by either accelerating GTTA’s liability with respect to the circuit or increasing the cost of circuit access, either without the receipt of any corresponding revenue from customers against the liability. As of March 31, 2007, GTTA’s total potential early termination liability, if all such services terminated as of that date, and if we could not obtain a waiver of termination liability (pursuant to contractual right or otherwise) with respect to such terminations, was approximately $377,000.

     The Company’s most significant operating expenses are employment costs. As of March 31, 2007, the Company had 89 employees, and employment costs comprised approximately 48% of total operating expenses for the three months ended March 31, 2007.

Critical Accounting Policies and Estimates

     The Company’s significant accounting policies as set forth in Note 2 to its consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 and in Note 2 of the condensed consolidated financial statements in this Quarterly Report on Form 10-Q appropriately represent, in all material respects, the current status of the Company’s critical accounting policies, and are incorporated herein by reference.

Results of Operations

     Three Months Ended March 31, 2007 compared to the Three Months Ended March 31, 2006

   Overview.Revenues for the three months ended March 31, 2007 were $13.6 million, resulting entirely from the operations of the Company’s subsidiaries. The cost of revenue for the three months ended March 31, 2007 was $9.5 million, and gross margin was 29.8%. The Company had no significant operating activities for the three months ended March 31, 2006, and therefore it had no revenues, cost of revenue, or gross margin during this period.

     Operating expenses, depreciation, and amortization were $16.7 million for the three months ended March 31, 2007, representing an increase of $16.4 million over such expenses for the prior period. Operating loss and net loss for the three months ended March 31, 2007 were $3.1 million and $3.0 million, respectively, as compared to $0.3 million and $3.5 million, respectively, for the prior period.

     EITF 01-34, “Accounting in a Business Combination for Deferred Revenue of an Acquiree,” provides that an acquiring entity should recognize a liability related to the deferred revenue of an acquired entity only if that deferred revenue represents a legal obligation assumed by the acquiring entity and that the amount assigned to that liability should be based on its estimated fair value at the acquisition date. Accordingly, as discussed below, our revenues and cost of revenue as reported below have been affected by the required treatment of deferred revenue and deferred cost on the financial statements of GII and ETT as of October 15, 2006 (the date of the Acquisitions).

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	Three months ended			Three months ended
	March 31, 2007			March 31, 2006
Revenues	$	13,582,176		$	—
Cost of Revenue		9,529,799			—
Gross Margin		4,052,377			—
Operating Expenses, Depreciation and Amortization		7,138,195			317,520
Operating Loss		(3,085,818	)		(317,520	)
Net Loss	$	(2,969,281	)	$	(3,504,534	)

     Revenues.The Company was a special purpose acquisition company until its Acquisitions of GII and ETT on October 15, 2006, and thus there were no sales in 2006 prior to consummation of the Acquisitions, including during the prior period ended March 31, 2006. Revenues during the three months ended March 31, 2007 were approximately $13.6 million. During the three months ended March 31, 2007, the reported revenues for the Company reflect the impact of the purchase accounting treatment of deferred revenue on the financial statements of GII and ETT as of October 15, 2006. The deferred revenue balances of GII and ETT as of October 15, 2006 included non-recurring revenue related to the provisioning in connection with the delivery of recurring communications services recognized ratably over the term of service and advanced billings for recurring communications services. The purchase accounting treatment of these balances lowered the Company’s revenues during the three months ended March 31, 2007 by approximately $0.2 million.

     Cost of Revenue and Gross Margin.Because the Company had no sales prior to consummation of the Acquisitions or during the three months ended March 31, 2006, the Company had no corresponding cost of revenue during these periods. For the three months ended March 31, 2007, cost of revenue was $9.5 million. The cost of revenue and gross margin for the Company for the three months ended March 31, 2007 reflect the impact of purchase accounting of deferred revenue and deferred cost on the financial statements of GII and ETT as of October 15, 2006. The deferred cost balances of GII and ETT as of October 15, 2006 included installation costs related to provisioning of service contracts. The purchase accounting treatment of these balances lowered the cost of revenue for the three months ended March 31, 2007 by $0.2 million and, in combination with the deferred revenue impact listed above, did not have a material impact on gross margin during the three months ended March 31, 2007.

     Operating Expenses, Depreciation and Amortization.Operating expenses, depreciation, and amortization were $0.3 million during the three months ended March 31, 2006. Such expenses during this period consisted primarily of professional fees and travel costs associated with the Company’s efforts to identify targets for potential acquisition during its operations as a special purpose acquisition company. Total operating expenses, depreciation, and amortization for the three months ended March 31, 2007 equaled $7.1 million, consisting primarily of costs associated with compensation of personnel, $1.0 million related to employee severance and termination costs and $0.7 million in costs associated with resolution of the conversion process incurred during the three month period and approximately $0.6 million of expenses resulting mainly from amortization of intangibles related to the Acquisitions of GII and ETT.

          Liquidity and Capital Resources

Long-Term Debt

          In October 2006, we issued $9.9 million of unsecured promissory notes in connection with the Acquisitions, bearing interest at 6% per annum, to certain sellers of their stock in GII and ETT as a deferral of cash consideration and/or as a separate component of consideration in the transactions. As originally issued, these notes matured on the following dates or earlier under certain circumstances:

Amount Due	Original Maturity Date	Revised Maturity Date
$5.9 million	June 30, 2007	April 30, 2008
$4.0 million	December 29, 2008	N/A

          The notes that were originally scheduled to mature on June 30, 2007 represented deferral of cash consideration payable in connection with the Acquisitions (the “Closing Promissory Notes”). The Closing Promissory Notes contain restrictive covenants which, among other things, require that we apply proceeds of any new issue of securities toward repayment of these notes before making any other use thereof (other than payment of the costs of the issue) and limit our ability in certain cases to issue additional debt or encumber or dispose of our assets. The entire

20

principal balance of each Closing Promissory Note, together with accrued interest, is due and payable on the maturity date.

          The notes scheduled to mature on December 29, 2008 (the “Initial Promissory Notes”) provide for 50% of the accrued interest on the unpaid principal to be due and payable to the holders on December 31, 2006. 50% of the accrued interest on the unpaid principal of the Initial Promissory Notes from the period beginning on January 1, 2007 and ending on December 31, 2007 is due and payable to the holders on December 31, 2007. All principal, and all accrued and unpaid interest, will be due and payable with respect to the Initial Promissory Notes on December 29, 2008. All accrued interest and unpaid principal shall be due and payable within five business days of the earlier of (i) a change of control of the Company, (ii) the exercise, by the holders thereof, of no less than 50% of their Class W and Class Z warrants or (iii) the issuance by the Company of debt or equity securities resulting in an aggregate capital raise by the Company of $20.0 million. The Initial Promissory Notes are subordinate to any senior indebtedness of the Company. The Initial Promissory Notes permit prepayment in whole or in part at any time by the Company.

          On March 23, 2007, the Company entered into agreements with the holders of the Closing Promissory Notes to extend the maturity date of those notes to April 30, 2008 or earlier under certain circumstances. In addition, as part of those amendments, the per annum interest rate for each of the Closing Promissory Notes was changed from 6% per annum to the following subject to certain conditions:

Date	Interest Rate (per annum)
April 1, 2007 – June 30, 2007		8	%
July 1, 2007 – October 31, 2007		10	%
November 1, 2007 – December 31, 2007		12	%
January 1, 2008 – March 31, 2008		14	%
April 1, 2008 and thereafter		16	%

          The Company may prepay the Closing Promissory Notes in full or in part, at any time without notice or penalty, provided that prepayment must be made against all of the Closing Promissory Notes on a pro-rata basis. The Company is not permitted to make any prepayment of any of the Initial Promissory Notes until each of the Closing Promissory Notes has been paid in full.

          Former Class B Common Stock Conversions

          In connection with the Acquisitions, certain holders of our then-outstanding Class B common stock voted against the Acquisitions and exercised their rights to convert their shares into cash equal to a pro-rata distribution from the trust account established to hold proceeds from the initial public offering. The actual per-share conversion price was equal to the amount in the trust account (inclusive of any interest thereon) as of two business days prior to the Acquisitions, divided by the number of Class B shares sold in the public offering, or approximately $5.35 per share.

          Following payment of the conversion amount to each former Class B stockholder who voted against the Acquisitions and validly elected conversion of his or her Class B common stock, we will cancel such shares of stock. As of March 31, 2007, the Company had paid approximately $9.96 million to redeem 1,860,850 shares of stock and the converted shares have been canceled. See Note 10 of the Company’s condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further information relating to the conversion process.

          Liquidity Assessment

          With respect to operations, as a multiple network operator, we typically have very low levels of capital expenditures, especially when compared to infrastructure-owning traditional telecommunications competitors. Our capital expenditures are predominantly related to the maintenance of computer facilities, office fixtures and furnishings and are very low as a proportion of revenue. However, from time to time the Company may provide capital investment as part of an executed service contract that would typically consist of significant multi-year commitments from the customer.

          Historically, the operations of GII and ETT, the operating subsidiaries we acquired in October 2006, have not been cash flow positive. Net cash from operations for the Company during the three months ended March 31, 2007 was positive. Management monitors cash flow and liquidity requirements. Based on our cash and cash equivalents and our analysis of our anticipated working capital requirements, we believe we have sufficient liquidity to fund our business and meet our contractual obligations over the next 12 months from March 31, 2007.

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          Although we believe that cash currently on hand and expected cash flows from future operations are sufficient to fund operations, we may seek to raise additional capital as necessary to meet certain capital and liquidity requirements in the future. Due to the dynamic nature of our industry and unforeseen circumstances, if we are unable to fully fund cash requirements through operations and current cash on hand, we will need to obtain additional financing through a combination of equity and debt financings and/or renegotiation of terms on our existing debt. If any such activities become necessary, there can be no assurance that we would be successful in completing any of these activities on terms that would be favorable to us, if at all.

          Supplemental Information

Non-Generally Accepted Accounting Principles Basis Financial Information for the Three Months Ended March 31, 2007 Compared to the Non-GAAP Basis Combined Financial Information for the Three Months Ended March 31, 2006.

          As a result of the Acquisitions of GII and ETT, which occurred on October 15, 2006, we are presenting the Company’s financial statements and the statements of operations and cash flow statements of GII and ETT as predecessors of the Company separately. Because the Company had no material business or operations prior to October 15, 2006, we are presenting below the Company’s results of operations, combined on an arithmetic basis, with those of GII and ETT for the relevant periods of each company during the three months ended March 31, 2006. We refer to such combined financial information as being presented on a “non-GAAP combined” basis and when we refer to “first quarter 2006” in this section, we are referring to the non-GAAP combined three months ended March 31, 2006. Such non-GAAP combined financial information only constitutes the arithmetic sums described above with respect to the period and does not give effect to purchase accounting, cost savings, interest expense or other pro forma adjustments resulting from the acquisitions of GII and ETT for periods prior to October 16, 2006. The Company’s historical financial information for the three month period ended March 31, 2007 gives effect to purchase accounting adjustments in accordance with SFAS No. 141,Business Combinations (“SFAS No. 141”).

          We are presenting and analyzing below non-GAAP combined financial information with respect to the Company and its predecessors for informational purposes only because we believe that presenting such non-GAAP financial information will be useful to investors. Because of the method by which the non-GAAP combined financial information was compiled, our analysis compares results of different companies over different periods, and the non-GAAP combined financial information may not be indicative of the Company’s future results or of what the Company’s results would have been had the acquisitions of GII and ETT occurred as of the first day of the periods presented. Therefore, you should not consider the non-GAAP combined financial information in isolation or view it as a substitute for any financial information of the Company, GII or ETT that is prepared in accordance with GAAP. You should read the non-GAAP combined financial information and this analysis in conjunction with “—Results of Operations of Global Internetworking, Inc. as Predecessor” and “—Results of Operations of European Telecommunications & Technology Limited as Predecessor” and the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. The results presented in the table below are unaudited.

	Historical			Historical			Historical
	Predecessor			Predecessor			Successor			Non-GAAP
	GII			ETT			Mercator			Combined			GTT
	quarter ended			quarter ended			quarter ended			quarter ended			quarter ended
	March 31,			March 31,			March 31,			March 31,			March 31,
	2006			2006			2006			2006 (1)			2007
Revenue
Telecommunications revenue provided	$	4,378,292		$	8,045,313		$	—		$	12,423,605		$	13,582,176
Operating expenses
Cost of Telecommunications services provided		3,031,977			5,711,254			—			8,743,231			9,529,799
Selling, general & administration		1,394,442			2,296,887			317,520			4,008,849			4,782,186
Employee termination and one-time items		—			—			—			—			1,737,534
Depreciation and amortization		40,292			49,560			—			89,852			618,475
Operating loss	$	(88,419	)	$	(12,388	)	$	(317,520	)	$	(418,327	)	$	(3,085,818	)

(1) Represents, on a non-GAAP combined basis, the sum of (a) the results of operations of ETT for the period from January 1, 2006 to March 31, 2006, plus (b) the results of operations of GII for the period from January 1, 2006 to March 31, 2006, plus (c) our stand-alone results of operations for the three months ended March 31, 2006.

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     Revenue. Revenue on a non-GAAP combined basis grew 9% from the first quarter 2006 to the first quarter 2007. Under SFAS No. 141, $0.2 million of deferred revenue that existed as of October 15, 2006 and was recognized during the period from January 1, 2007 to March 31, 2007 was not included in the Company’s reported revenues for that period and was instead recorded as a part of goodwill as a result of the Acquisitions. The associated cost of those revenues was recorded as $0.2 million. Including the $0.2 million of revenues, non-GAAP combined revenues would have grown by 11% from the first quarter 2006 to the first quarter 2007. Non-GAAP combined revenue growth for first quarter 2007 was due primarily to internal sales growth for both operating units. Non-GAAP combined revenue growth for first quarter 2007 compared to first quarter 2006 was negatively impacted by contract expirations during the second half of 2006. In particular, a large European financial institution customer contract expired during the third quarter of 2006 that had approximately $2.0 million in annual contract revenue. In 2007, revenue also benefited from an increase in the average exchange rate for the U.S. Dollar to the British Pound Sterling of $1.75 in 2006 to $1.95 in 2007. The overall exchange rate impact was an increase in revenue of $0.7 million for the first quarter 2007 as compared to the first quarter 2006.

     Cost of Revenue and Gross Margin. On a non-GAAP combined basis, the Company’s cost of revenue of $8.7 million in first quarter 2006 resulted in a non-GAAP combined gross margin of 29.6%. For first quarter 2007, cost of revenue of $9.5 million resulted in a gross margin of 29.8%. The purchase accounting treatment of the costs related to the deferred revenue mentioned in the preceding paragraph also resulted in a corresponding reduction of cost of revenue for first quarter 2007 of $0.2 million. Taking account of the deferred revenue and associated deferred cost in first quarter 2007, gross margin on an adjusted basis would have been 29.3%. Gross margins were reduced slightly due to the lower margin on new European sales in 2006, which were offset slightly by improved supplier costs. Cost of revenue increased $0.3 million in the first quarter 2007 as compared to the first quarter 2006 due to changes in the exchange rate of the U.S. Dollar.

     Selling, General and Administrative. Non-GAAP combined selling, general and administrative expenses for first quarter 2007 of $4.8 million increased by $0.8 million over first quarter 2006, $0.2 million of which was due to changes in the exchange rate of the U.S. Dollar. The increase was due primarily to additional costs related to being a public company with substantial operations including additional corporate employee costs and public audit and filing requirements. The first quarter 2007 results also included costs of approximately $1.0 million related to severance costs associated with the termination of employment and costs of approximately $0.7 million associated with resolution of the conversion process.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Sensitivity

          Interest due on the Company’s loans is based upon the applicable stated fixed contractual rate with the lender. Interest earned on the Company’s bank accounts is linked to the applicable base interest rate. For the three months ended March 31, 2007, the Company had no material net interest income. The Company therefore believes that its results of operations were not materially affected by changes in interest rates during the three months ended March 31, 2007.

Exchange Rate Sensitivity

          The majority of the Company’s revenues (approximately 56% for the three months ended March 31, 2007) are derived from services provided outside of the United States. As a consequence, a material percentage of the Company’s revenues are billed in British Pound Sterling or Euros. Since we operate on a global basis, we are exposed to various foreign currency risks. First, our consolidated financial statements are denominated in U.S. Dollars, but a significant portion of our revenue is generated in the local currency of our foreign subsidiaries. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. Dollar will affect the translation of each foreign subsidiary’s financial results into U.S. Dollars for purposes of reporting consolidated financial results.

          In addition, because of the global nature of our business, we may from time to time be required to pay a supplier in one currency while receiving payments from the underlying customer of the service in another currency. Although it is the Company’s general policy to pay its suppliers in the same currency that it will receive cash from customers, where these circumstances arise with respect to supplier invoices in one currency and customer billings in another currency, the Company’s gross margins may increase or decrease based upon changes in the exchange rate. Such factors did not have a material impact on the Company’s results in the three months ended March 31, 2007.

ITEM 4.CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

          Our management carried out an evaluation required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under the supervision of and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15 and 15d-15 under the Exchange Act (“Disclosure Controls”). Based on the evaluation, our

23

CEO and CFO concluded that, subject to the limitations noted herein, as of March 31, 2007, our Disclosure Controls are effective in timely alerting them to material information required to be included in our reports filed with the SEC.

Management’s Assessment of the Effectiveness of Internal Controls

          This quarterly report does not include a report of management’s assessment regarding internal controls over financial reporting or an attestation report of the Company’s registered independent public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly formed public companies.

Changes in Internal Controls

          There has not been any change in our internal control over financial reporting identified in connection with the evaluation that occurred during the three months ended March 31, 2007 that has materially affected, or is reasonably likely to materially affect, those controls.

Limitations on the Effectiveness of Controls

          Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.

          The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

PART II

ITEM 1.LEGAL PROCEEDINGS

          As of March 31, 2007, we were not subject to any material legal proceedings. From time to time, however, we or our operating companies may be involved in legal actions arising from normal business activities

ITEM 1A.RISK FACTORS

          We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2006, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or which are similar to those faced by other companies in our industry or business in general, may also affect our business, financial condition and/or operating results. If any of these risks or uncertainties actually occurs, our business, financial condition and operating results would likely suffer. We do not believe that the risks and uncertainties described in the Risk Factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, have materially changed other than as set forth below.

Risks Relating to Our Business and Operations

Our operating company subsidiaries have historically generated losses over the past several fiscal years and have been cash flow negative for a number of the past fiscal years. On a consolidated basis, including the operations of these subsidiaries after their acquisitions, we realized a net loss and generated positive cash flow from operations

24

during the most recent three month period. We may generate losses in the future and be cash flow negative during future periods.

     Prior to its Acquisitions of GII and ETT, the Company’s Americas operating company (formerly GII) and its EMEA operating company (formerly ETT) experienced net losses and operating losses for the past several fiscal years. GII used $914,349 and $272,350 in cash for operations in its fiscal years ended September 30, 2004 and 2005, respectively. In its fiscal year 2006, GII generated $476,374 in cash from operations. GII incurred net losses of $223,560, $444,964, and $350,981 for its fiscal years ended September 30, 2004, 2005, and 2006, respectively. For the period from October 1, 2006 through October 15, 2006, the date on which we completed the Acquisitions, GII achieved a net income of $35,002 and was a net user of $108,852 of cash for that period. ETT generated cash flow from operations of $1,234,754 and $242,071 during 2004 and 2005, respectively. ETT incurred net losses of $490,198 and $231,000 for the years ended December 31, 2004 and 2005, respectively. For the period from January 1, 2006 through October 15, 2006, ETT incurred a net loss of $1,268,146 and used $1,488,751 in cash to fund operations.

     For the year ended 2006, including results of the operating company subsidiaries following the Acquisitions, the Company incurred a net loss of $1,847,281 and generated $175,245 positive cash from operations. For the three months ended March 31, 2007 the Company reported a net loss of $2,969,281 and generated positive cash from operations of $20,750. We may generate losses in the future and/or be cash flow negative. If we are not able to achieve or sustain profitability, the market price of our securities may decline.

We might require additional capital to support business growth, and this capital might not be available on favorable terms, or at all.

     Our integration, operations or expansion efforts may require substantial additional financial, operational and managerial resources. As of March 31, 2007, we had approximately $3.9 million in cash and cash equivalents, including approximately $0.2 million in designated cash. We may have insufficient cash to fund our working capital or other capital requirements, and may be required to raise additional funds to continue or expand our operations. If we are required to obtain additional funding in the future, we may have to sell assets, seek debt financing or obtain additional equity capital. Additional capital may not be available to us, or may only be available on terms that adversely affect our existing stockholders or that restrict our operations. For example, if we raise additional funds through issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.

We depend on several large customers, and the loss of one or more of these clients, or a significant decrease in total revenues from any of these customers, would likely significantly reduce our revenue and income.

     A sizeable portion of our service revenues come from a limited number of clients. For the three months ended March 31, 2007, our four largest customers accounted for approximately 21% of our total service revenues. If we were to lose one or more of our large clients, or if one or more of our large clients were to reduce the services purchased from us or otherwise renegotiate the terms on which services are purchased from us, our revenues could decline and our results of operations would suffer.

The ability to implement and maintain our databases and management information systems is a critical business requirement, and if we cannot obtain or maintain accurate data or maintain these systems, we might be unable to cost-effectively provide solutions to our customers.

     To be successful, we must increase and update information in our databases about network pricing, capacity and availability. In addition to continuing to update the databases that have been historically used by our Americas operating company in connection with its CMD™ system, we are in the process of attempting to extend the CMD system to our EMEA subsidiary to compile and analyze data regarding its potential suppliers. Our ability to provide network availability and access cost effectively depends upon the information we collect from our transport suppliers regarding their networks. These suppliers are not obligated to provide this information and could decide to stop providing this information to us at any time. Moreover, we cannot be certain that the information that these suppliers share with us is accurate. If we cannot continue to maintain and expand the existing databases, or if we are unable to successfully implement the CMD system in our EMEA operations, we may be unable to increase revenues or to facilitate the supply of services in a cost-effective manner.

     Furthermore, we plan to review, integrate and augment our management information systems to facilitate management of client orders, client service, billing and financial applications. Our ability to manage our businesses

25

could be materially adversely affected if we fail to successfully and promptly maintain and upgrade the existing management information systems.

Risks Related to our Common Stock and the Securities Markets

We have only recently commenced operations as a public company. Fulfilling our obligations incident to being a public company will be expensive and time consuming.

     Prior to the Acquisitions, we had no significant operating activities and therefore relied upon the services of an interim Chief Financial Officer for all finance and accounting functions. Similarly, prior to the Acquisitions, our Americas and EMEA operating companies operated as private companies, and therefore maintained relatively small finance and accounting staffs. We do not currently have an internal audit group. Under the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC, we are starting to implement additional corporate governance practices and to adhere to a variety of reporting requirements and complex accounting rules. Compliance with these obligations will require significant management time, place significant additional demands on our finance and accounting staff and on our financial, accounting and information systems, and increase our insurance, legal and financial compliance costs. We may also need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

The concentration of our capital stock ownership will likely limit a stockholder’s ability to influence corporate matters, and could discourage a takeover that stockholders may consider favorable and make it more difficult for a stockholder to elect directors of its choosing.

     Based on public filings with the Securities and Exchange Commission made by Cannell Capital LLC, we believe that funds associated with Cannell Capital LLC own approximately 5,782,597 shares of our common stock and warrants to acquire 1,988,400 additional shares of our common stock. Based on the number of shares of our common stock outstanding on April 11, 2007, without taking into account their unexercised warrants, we understand those funds to own approximately 49% of our common stock. In addition, as of April 11, 2007, our executive officers, directors and affiliated entities together beneficially owned warrants, which if exercised, would result in their beneficial ownership of approximately 35% of our outstanding common stock. As a result, these stockholders have the ability to exert significant control over matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. The interests of these stockholders might conflict with your interests as a holder of our securities, and it may cause us to pursue transactions that, in their judgment, could enhance their equity investments, even though such transactions may involve significant risks to you as a securityholder. The large concentration of ownership in a small group of stockholders might also have the effect of delaying or preventing a change of control of our company that other stockholders may view as beneficial.

ITEM 6.EXHIBITS

     The following exhibits, which are numbered in accordance with Item 601 of Regulation S-K, are filed herewith or, as noted, incorporated by reference herein:

Exhibit	Exhibit
Number
10.1(1)	Employment Agreement for Kevin J. Welch, dated January 22, 2007.
10.2(2)	Separation Agreement with D. Michael Keenan, dated February 22, 2007.
10.2(3)	Form of Promissory Note Amendment agreed to with former stockholders of Global Internetworking, Inc. and European Telecommunications & Technology Limited, dated March 23, 2007.
31.1*	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
32.1**	Section 1350 Certification of the Chief Executive Officer.
32.2**	Section 1350 Certification of the Chief Financial Officer.

*	Filed herewith.
**	Furnished herewith.
(1)	Previously filed as an Exhibit to the Registrant’s Form 8-K filed January 24, 2007, and incorporated herein by reference.
(2)	Previously filed as an Exhibit to the Registrant’s Form 8-K filed February 23, 2007, and incorporated herein by reference.
(3)	Previously filed as an Exhibit to the Registrant’s Form 8-K filed March 29, 2007, and incorporated herein by reference.

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SIGNATURES

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

	GLOBAL TELECOM & TECHNOLOGY, INC.
Date: May 15, 2007	By:	/s/ Richard D. Calder, Jr.
		Richard D. Calder, Jr.
		President and Chief Executive Officer

By:	/s/ Kevin J. Welch
	Kevin J. Welch
	Chief Financial Officer and Treasurer

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EXHIBIT INDEX

Exhibit
Number	Description
10.1(1)	Employment Agreement for Kevin J. Welch, dated January 22, 2007.
10.2(2)	Separation Agreement with D. Michael Keenan, dated February 22, 2007.
10.2(3)	Form of Promissory Note Amendment agreed to with former stockholders of Global Internetworking, Inc. and European Telecommunications & Technology Limited, dated March 23, 2007.
31.1*	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
32.1**	Section 1350 Certification of the Chief Executive Officer.
32.2**	Section 1350 Certification of the Chief Financial Officer.

*	Filed herewith.
**	Furnished herewith.
(1)	Previously filed as an Exhibit to the Registrant’s Form 8-K filed January 24, 2007, and incorporated herein by reference.
(2)	Previously filed as an Exhibit to the Registrant’s Form 8-K filed February 23, 2007, and incorporated herein by reference.
(3)	Previously filed as an Exhibit to the Registrant’s Form 8-K filed March 29, 2007, and incorporated herein by reference.