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Elandia International Inc. – ‘10-12G/A’ on 8/25/06

On:  Friday, 8/25/06, at 5:05pm ET   ·   Private-to-Public:  Document/Exhibit ¶  –  Release Delayed   ·   Accession #:  1193125-6-179990   ·   File #:  0-51805

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/25/06  Elandia International Inc.        10-12G/A¶             18:4.1M                                   Donnelley … Solutions/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-12G/A    Amendment to Registration of Securities (General    HTML   2.75M 
                          Form)                                                  
18: CORRESP   ¶ Comment-Response or Other Letter to the SEC         HTML     46K 
 2: EX-2.4      Agreement and Plan of Merger                        HTML     87K 
 3: EX-9.1      Memorandum of Agreement                             HTML     13K 
 4: EX-10.23    License Agreement Between Tower Top Investments,    HTML     92K 
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 5: EX-10.32    License Agreement Between Tower Top Investments,    HTML     63K 
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 6: EX-10.33    License Agreement Between Tower Top Investments,    HTML     64K 
                          Inc.                                                   
 7: EX-10.34    License Agreement Between Tower Top Investments,    HTML     64K 
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 8: EX-10.35    License Agreement Between Tower Top Investments,    HTML     64K 
                          Inc.                                                   
 9: EX-10.36    License Agreement Between Tower Top Investments,    HTML     44K 
                          Inc.                                                   
10: EX-10.37    Note Purchase Agreement                             HTML     94K 
11: EX-10.38    First Amendment to Note Purchase Agreement          HTML     23K 
12: EX-10.39    Executive Employment Agreement                      HTML     45K 
13: EX-10.40    Executive Employment Agreement                      HTML     70K 
14: EX-10.41    Employment Agreement                                HTML     47K 
15: EX-10.42    Amended and Restated Management Agreement           HTML     45K 
16: EX-21.1     Subsidiaries of the Registrant                      HTML      8K 
17: EX-99.1     Pcs Broadband License for American Samoa            HTML     21K 

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10 /A

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934

ELANDIA, INC.

(Exact name of registrant as specified in its charter)

1500 Cordova Road

Suite 312

Fort Lauderdale, FL 33316

(954) 728-9090

(Address and telephone number of registrant’s principal executive offices)

Harley L. Rollins

Chief Financial Officer

Elandia, Inc.

1500 Cordova Road

Suite 312

Fort Lauderdale, FL 33316

(954) 728-9090

(Name, address, and telephone number of agent for service)

Copies To:

Seth P. Joseph, Esq.

Linda C. Frazier, Esq.

Adorno & Yoss LLP

2525 Ponce de Leon Boulevard

Suite 400

Coral Gables, FL 33134

(305) 460-1000

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

Securities to be registered pursuant to Section 12(g) of the Act: Common Stock, par value $.00001 per share

Table of Contents

TABLE OF CONTENTS

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ITEM 1. BUSINESS

Unless otherwise indicated in this registration statement or the context otherwise requires, all references in this registration statement to “Elandia,” the “Company,” “us,” “our” or “we” are to Elandia, Inc., our predecessor company, Centra Industries, Inc., and their respective subsidiaries.

History of the Company

Centra Industries Inc.

The Company was organized on July 27, 2001 as a Delaware corporation under the name Centra Industries, Inc. (“Centra”). Centra served as a holding company for subsidiaries in the communications industry and the underground boring and construction business, including Midwest Cable Communications of Arkansas, Inc. (“Midwest”).

Reorganization

On August 1, 2003, our underground boring and construction business became insolvent. As a result, on August 1, 2003, the Company’s main operating subsidiary filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In addition, on January 8, 2004, we filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of Arkansas. From January 8, 2004 through September 14, 2004, we operated our business and managed our assets in the ordinary course as a debtor-in-possession, and obtained Bankruptcy Court approval for transactions outside the ordinary course of business. On September 14, 2004, the Court confirmed a Joint Plan of Reorganization of the Company and its operating subsidiary. By virtue of the confirmation order, we emerged from bankruptcy and obtained a discharge pursuant to Section 1141 of the Bankruptcy Code. Pursuant to our plan of reorganization, we cancelled all then outstanding shares of our common stock, issued 108,000 new shares of our common stock and paid $110,000 to our unsecured creditors. Also, under our plan of reorganization, Stanford Venture Capital Holdings, Inc., our debtor-in-possession lender, converted approximately $2,600,000 of its secured claims into 2,038,500 shares of our common stock and warrants to purchase 1,876,500 shares of our common stock. These warrants, exercisable at $.001 per share, were all subsequently exercised. Centra was renamed eLandia Solutions, Inc. and then renamed Elandia, Inc.

eLandia Technologies Merger

On December 31, 2004, we merged with eLandia Technologies, Inc. (“Technologies”) through a one-for-one share exchange with the stockholders of Technologies. We issued 446,513 shares of our common stock in connection with this merger. As a result of the merger, Technologies became a wholly-owned subsidiary of the Company.

Sale of Centra Operations

Effective December 15, 2005, the Company sold one hundred percent of the outstanding common stock of its wholly-owned subsidiaries Centra Construction, Inc., Centra Wireless Services, Inc. and Razorback, Inc., to an unrelated foreign national. All three of these subsidiaries were part of the discontinued operations, and were dormant for the year ended December 31, 2005. Under the terms of the sale, the foreign national assumed all liabilities of the subsidiaries which consisted of $464,640 of payroll tax liabilities that arose prior to our filing of bankruptcy in exchange for all the assets of the subsidiaries which consisted of $1,200 of cash. We recorded a gain of $463,440 from discontinued operations as a result of this transaction.

Acquisition of AST Telecom, LLC

Effective January 31, 2006, we acquired AST Telecom, LLC (“AST”), a provider of wireless telephone services in American Samoa. In connection with this acquisition, we issued a total of 4,225,726 shares of our common stock, of which 2,739,008 shares were issued to Stanford International Bank, Ltd. (“Stanford”) (or its designee) for Stanford’s 64.8% ownership interest in AST, and 1,486,718 shares were issued to the other members of AST (or its designee), for the other members’ 35.2% ownership interest in AST.

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Datec Merger

On February 1, 2006, we completed an arrangement under the laws of New Brunswick, Canada with Datec Group Ltd, a New Brunswick corporation (“Datec”), pursuant to which we acquired the South Pacific operations of Datec. In connection with the arrangement, we issued 4,085,126 shares of our common stock to the stockholders of Datec.

Reverse Splits

On August 15, 2005, our Board of Directors authorized, and our stockholders approved, a 9-for-10 reverse stock split of our issued and outstanding common stock. This reverse stock split was effective September 14, 2005.

On February 17, 2006, the holders of a majority of our outstanding common stock approved an amendment to our Articles of Incorporation to effect a 3-for-5 reverse stock split of the issued and outstanding common stock, effective March 9, 2006.

The documents that have been filed by us as exhibits that pertain to the transactions set forth below contain pre-reverse split numbers. However, in order to accurately reflect what is held by our stockholders currently, all references to shares, options and warrants hereafter in this registration statement have been adjusted to reflect the post-reverse split amounts.

Current Business

We are a wireless telecommunications service provider and an information solutions and services provider. We offer a wide range of technology products, internet access services, professional services and other solutions to certain islands in the South Pacific, in geographic locations which we believe have traditionally been underserved. The products and services we offer in each of the geographic areas we serve vary depending on the infrastructure, existing telecommunication systems and the needs of the region. In some regions we operate retail stores where our products and services are offered and sold. Generally, our telecommunications operations include long-distance service, wireless coverage and internet access. Our software solutions include Microsoft products, database applications, accounting applications and other system applications. We also offer peripheral products including fax machines, copiers, telephones and general office equipment. Our hardware offerings include PBX hardware, servers, routers and switching systems. In addition, we offer professional services to assist our customers in implementing customized solutions to meet their business needs. These services include application development, systems integration, training, maintenance and support.

Our strategy is to be a one-stop source for technology solutions throughout the regions in which we operate. We believe that we have identified regions that are in the beginning stages of technological development. We believe that as we develop our customer base and as these communities grow and become more technologically advanced, our business will also grow. We also believe that as our business and sales grow in these regions, we will develop a platform that will enable us to expand our operations into other regions.

We currently conduct business operations through several operating subsidiaries in four geographic segments: (1) AST does business in the Samoas, which includes American Samoa and our wireless initiatives in Samoa (formerly Western Samoa); (2) Datec PNG Pty Limited does business in Papua New Guinea; (3) several entities listed on the chart that follows do business in Fiji and Other Pacific Island Nations, which includes New Zealand, Australia, Tonga, Samoa, The Solomon Islands, Vanuatu and Cook Islands; and (4) North America, including the Caribbean, which includes parent company operations and assets held for sale or development by eLandia Technologies, Inc.

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Except as otherwise stated, these subsidiaries are wholly-owned, subject to nominal qualifying shares. We hold a 50% ownership interest in Datec PNG Pty Limited through our wholly owned subsidiary Generic Technology Limited. Steamships Trading Company Pty Ltd, a subsidiary of John Swire & Sons (PNG) Ltd., holds the remaining 50% ownership interest in Datec PNG Pty Limited.

The Samoas

Wireless

We conduct our American Samoa operations primarily through our wholly-owned subsidiary AST. As of the date of this registration statement, AST is the only non-government owned provider of mobile services in American Samoa, under the Blue Sky Communications brand (“Blue Sky”), and operates a global system for mobile communications, or GSM, network in the 1900 MHz band. AST has been a provider of mobile services in American Samoa since February 2003. Through AST, we are the dominant provider of wireless services throughout American Samoa, with more than 70% of the market share and over 15,000 subscribers. Our average revenue per user (ARPU) per month for the year ended December 31, 2005 was $33.31 per month. The average rate per minute charged to our customers for the year ended December 31, 2005 was $0.16 per minute.

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In July 2006, American Samoa had 57,794 inhabitants. The number of cellular phones in American Samoa has increased dramatically since the mid-1990’s. We expect this trend to continue and hope to increase our number of subscribers accordingly.

For our wireless operations, we utilize a PCS broadband license for American Samoa granted by the United States Federal Communications Commission (FCC). This license was granted to us on May 23, 2005 and expires on June 23, 2015. We provide wireless services through a Nortel network that we own, which includes 12 cell towers to provide primary wireless coverage across American Samoa and a number of smaller cell sites for coverage in areas of low reception. Commencing in March 2003, AST began upgrading its networks to enhance coverage reliability by relocating fiber optic cable to underground facilities. Our network is designed to be easily expanded with the growth of our customer base and modified to support future products and services, as new telecommunications technology becomes economically viable in American Samoa. We operate both circuit-switched and Voice over Internet Provider (VoIP) circuits for voice transmissions, taking advantage of the latest technology in bandwidth management, compression and quality of service management where appropriate.

Strategy for Wireless Services

Our business strategy in American Samoa is to deliver high-quality and convenient wireless service, while maximizing our network coverage. We attract new customers by offering simple and affordable prepaid wireless services, with coverage anywhere on American Samoa’s main island of Tuitilia. Our commitment to customer service and network reliability provides consumers with a selection of wireless services that exceeds what is customary in the South Pacific region, including Short Message Service (SMS) messaging and a call center with directory assistance available 24 hours a day, seven days a week. Our per-minute, prepaid wireless service enables customers to actively control their wireless usage and appeals to consumers who are otherwise deterred by the price and perceived complexity of traditional wireless services. New prepaid customers may purchase a phone from one of our retail locations in American Samoa or activate an existing phone. With the purchase of a prepaid Subscriber Identity Module (SIM) card, service can be activated and is available for as little as $5 per month. Our customers can replenish their prepaid wireless services by purchasing recharge cards from our Laufou Plaza retail location or from our distribution partners at more than 200 retail locations throughout American Samoa. We also offer more traditional post-paid wireless services, designed for our larger business customers. Our post-paid services differ from those of most other wireless providers as we do not require long-term commitments or contracts. Our billing options and pricing plans are designed to be simple and easy for customers to understand. Monthly rates for our post-paid wireless plans range from $24.95 to $99.95 and do not include long distance charges, which vary by country.

Internet Service

In August 2000, we began offering full-service internet access in American Samoa. For our larger business customers, we are a reseller of high speed, internet access through Digital Subscriber Line (DSL) connection technology, which offers connection speeds significantly faster than a traditional dial-up modem connection. This dedicated always-on internet connectivity does not interfere with wireline telephone service. We also offer standard dial-up and broadband internet access service for smaller businesses and residential customers. We offer wireless internet access service for mobile computer users with wide-area wireless network interface cards, enabling access to local area or world wide networks and providing full access to e-mail, intranet, corporate applications and full web browsing where General Packet Radio Service network service is available. For our residential customers, monthly rates for internet access services are $24.95 for dial-up service and $75.00 for DSL or broadband service. For our business customers, internet access is provided by bandwidth amounts. Monthly rates range from $150.00 for 128 kilobits per second to $800.00 for 1024 kilobits per second.

The convergence of voice and data technology has resulted in lower costs for transmission and backhaul, the process of transmitting data from a remote site to a central site, for our internet access operations. Through wireless technology, many of our remote and indoor cell sites are able to backhaul voice and data services on the same IP network. Our larger cell sites convert signals into an IP format for backhaul on a secure data network. As a result of these two enhancements, we are able to reduce the number of our leased fiber circuits or replace our more expensive fiber circuits with wireless technology.

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Strategy for Internet Services

Our market opportunity as an internet service provider (ISP) is linked to growth in the demand for internet service in American Samoa. As the demand for connectivity to the Internet continues to grow and the population recognizes that internet access significantly enhances communication, we will expand our services and product offerings to appeal to consumers. Our ISP operations are based in Laufou Plaza and include a retail location and a direct sales team.

Equal Access Service

In September 2005, Blue Sky became one of two equal access long distance service providers to wireline customers in American Samoa. With equal access long distance, our customers choose Blue Sky as an alternative long distance company by dialing 1 + the area code + the telephone number to place their long distance calls on the Blue Sky network. As of January 1, 2006, Blue Sky managed 434 equal access long distance accounts.

Wireless Business Operations

Market Opportunity. As of July 2006, the estimated population of American Samoa was approximately 57,794. We believe that there were approximately 22,000 wireless subscribers on the island of American Samoa as of January 1, 2006. The majority of existing wireless customers in American Samoa utilize prepaid services. Based on our market penetration and the demographics of American Samoa, we consider the market for wireless services to be mature. We believe that future revenues for our wireless services in American Samoa will increase proportionally with economic improvements in the country. We will expand our wireless products and offerings and differentiate our business by further enhancing our customer service and extending our network. Recognition of the Blue Sky brand and the likelihood of consumers to associate Blue Sky with high quality and value are essential to expanding our presence throughout American Samoa.

Sales and Distribution. Our sales approach is to increase our market penetration in American Samoa, while minimizing expenses associated with sales, distribution and marketing. Approximately 93% of our customers utilize prepaid wireless services. Our customers can activate new service by purchasing SIM cards and replenish their prepaid wireless services by purchasing recharge cards from our retail stores and authorized dealers. We have two retail stores in American Samoa and more than 200 authorized dealer distribution locations. Our post-paid customers, who are primarily long-standing businesses or individual customers, receive service and attention from our direct sales team and are billed each month. Access and use of the Blue Sky wireless services and products, network and services are designed to allow potential customers to make informed decisions with little or no sales assistance.

Marketing and Brand Recognition. We advertise in publications and on the radio in American Samoa and across the South Pacific region. Consumer recognition of our brand benefits from the small size of American Samoa. The success of our future advertising initiatives for new products and services will depend on a favorable consumer response to the Blue Sky brand.

International Network Access. For network access to the United States and other international locations, we own and operate two satellite earth stations with links to Hawaii and California through two downlink sites. To ensure backup capability and flexibility in routing traffic, these downlink sites are tied together by a leased fiber connection. We also offer long distance or international call services through the sale of prepaid long distance cards.

Network Operations. The quality and value of our wireless service reflects our ability to offer customers a reliable, high quality wireless network that provides continuous coverage across American Samoa. In September 2003, AST began upgrading its networks to further enhance the quality of its coverage, in spite of the geographical challenges posed by the terrain of American Samoa. We believe that this strategy enables us to operate superior networks that will support planned customer growth and high usage. In addition, this reduces our need to compete with other providers solely on wireless plan pricing. To increase overall usage of Blue Sky wireless services throughout American Samoa, we plan to attract new customers through the proven quality of our networks and to continue to encourage our existing customers to utilize Blue Sky wireless services for all of their telephone communications.

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Competition

We believe that the primary competitive determinants for providers of telecommunications and internet access services in American Samoa include network reliability, high-quality service, effective customer support, competitive pricing, effective marketing, ease of use, and the scope of geographic coverage. We believe that we will be able to adequately address all of these factors for the foreseeable future.

The market for Internet access services in American Samoa is competitive, characterized by ever-increasing access speeds and consistently falling per-user prices. American Samoa Telecommunications Company (ASTCA) is our primary competitor and the only competitor of significant size in the market for wireless telecommunication services. ASTCA is owned and operated by the American Samoa Government and operates a code division multiple access (CDMA) network with approximately 7,000 subscribers and has substantial capital resources, market presence and brand name recognition. We also compete with a few resellers of wireless services on a limited basis. These resellers do not hold wireless licenses or own facilities in American Samoa. Resellers buy wireless telephone capacity from a licensed carrier and then resell services through their own distribution network to customers.

In addition to ASTCA, we believe that there are many early-stage companies that may compete with us on a smaller scale. However, we believe that the early stage of development of the competitors creates a natural barrier to market entry. Additional barriers to entry include access to capital resources, access to the latest technology, limited network capacity for incoming and outgoing communications and the ability to recruit and retain talented local employees. Continuing technological advances in the communications field make it difficult for us to predict the nature and extent of additional future competition. In the future, we may face competition from companies that offer new technologies, such as VoIP, and other services, including cable television access, wireline services and internet access services.

As wireless service becomes a viable alternative to traditional wireline phone service, we are increasingly competing directly with ASTCA. Globally, local and long distance wireline carriers have begun to advertise aggressively in the face of increased competition from wireless carriers and offering unlimited calling plans and bundled services that include wireless and data services. However, as of the date of this registration statement, we have not observed such market activity in American Samoa. Some competitors have announced unlimited service plans at rates similar to our plan rates in markets in which we have launched service. Competition has caused, and may continue to cause, market prices for two–way wireless products and services to decline slightly. Additionally, as a wireless provider we are increasingly competing to provide both voice and non–voice services, including data transmission, text messaging, e–mail and internet access.

While we have observed an increasing trend toward the consolidation of wireless service providers on a global scale, we have not observed this trend in the market for wireless services in American Samoa. If this trend eventually extends to American Samoa, resulting in larger competitors with considerable capital resources and extensive network coverage, we may not be able to successfully compete with these larger companies.

Our ability to compete successfully will depend, in part, on our ability to distinguish the Blue Sky service from competing services through our marketing initiatives and by anticipating and responding to other industry-wide market indicators, including the introduction of new services, changes in consumer preferences, demographic trends, economic conditions, geographic-feasibility of technology, competitors’ discount pricing and bundling strategies. These indicators, combined with our inability to quickly and adequately respond to changes in the market could adversely affect our operating margins, market penetration and our ability to retain customers. Some wireless providers in our market have substantially greater financial resources than we do and may be able to offer prospective customers discounts or equipment subsidies that are substantially greater than we could offer. While we believe that our cost structure and differentiated wireless services provide us with the means to effectively respond to price competition, we cannot predict the effect that market forces or the conduct of other operators may have on our business. We believe that the market for wireless services in American Samoa will likely become more competitive as a result of overall industry changes, a trend toward bundled services and a trend toward price-based competition.

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Government Regulation

The licensing, construction, modification, operation, sale, ownership and interconnection arrangements of wireless communications networks are regulated to varying degrees by Congress, the FCC and state, territorial, local governments. Decisions by these bodies could significantly impact the competitive market structure for wireless providers and the relationships between wireless providers and other carriers. Government mandates may impose significant financial obligations upon us and other wireless providers. We are unable to predict the scope, pace or financial impact of legal or policy changes that these agencies or governments could adopt.

Licensing of PCS Systems. We hold a 30 MHZ B-Block broadband PCS license granted by the FCC for our wireless operations in America Samoa. Broadband PCS systems are generally used for two-way voice applications. American Samoa comprises one PCS market.

The FCC generally requires holders of these licenses to meet certain threshold qualifications, based upon financial criteria, for a specified period of time. A failure by an entity to maintain the qualifications to hold such licenses could result in the ineligibility to hold licenses for which the FCC’s minimum coverage requirements have not been met, the triggering of FCC unjust enrichment rules and the acceleration of installment payments owed to the FCC. As of the date of this registration statement, our PCS license is in good standing with the FCC.

All PCS licenses are issued for a 10-year term, at the end of which they must be renewed. Our PCS license was issued in May 2005 and expires in May 2015. Licenses acquired through transfer or assignment or from splitting a license are subject to the original license term. The FCC rules include a formal presumption that a PCS license will be renewed, a “renewal expectancy,” if the PCS licensee (1) has provided substantial service during its past license term, and (2) has substantially complied with applicable FCC rules and policies and the Communications Act of 1934, as amended by the Telecommunications Act of 1996 (the “Communications Act”).

PCS licensees are required to enable regulators to coordinate frequency usage with existing fixed microwave licensees in the 1850 to 1990 MHz band. A PCS licensee may require microwave licensees to return their operating authorizations to the FCC after providing six months written notice of the intent to initiate a PCS system within the interference range of such microwave licensee, absent an agreement from affected broadband PCS entities or an extension from the FCC. To secure a sufficient amount of unencumbered spectrum to operate our PCS systems efficiently, with adequate population coverage and within the appropriate time period, we have relocated one or more of these incumbent fixed microwave licensees and have also been required (and may continue to be required) to participate in the cost sharing related to microwave licenses that have been voluntarily relocated by other PCS licensees or the existing microwave operators.

PCS Construction Requirements. We are subject to construction requirements which require all PCS licensees to satisfy minimum geographic coverage requirements within five years of the license grant date, and 30-MHZ PCS licensees to satisfy additional coverage requirements within ten years of the license grant date. To meet these requirements, we must offer adequate service to at least one-third of the population within five years and two-thirds of the population within ten years following the license grant date. As an alternative to the geographic coverage requirement, we may demonstrate that we are providing “substantial service” within the applicable five or ten-year period. A failure to comply with FCC coverage requirements could cause the revocation of our wireless license.

Transfer and Assignment of PCS Licenses. The Communications Act and FCC rules require prior FCC approval of the assignment or transfer of control of a license for a PCS system, with limited exceptions. The FCC may prohibit or impose conditions on assignments and transfers of control of licenses. Non-controlling interests in an entity that holds a FCC license generally may be bought or sold without FCC approval, but subject to applicable ownership eligibility restrictions. We do not currently have plans to transfer or assign our PCS license for American Samoa.

General FCC Obligations. FCC requirements and proceedings could affect our operations, increase our costs or diminish our revenues. For example, the FCC requires wireless carriers to make emergency call services available to our customers, including a system that provides the caller’s telephone number and detailed location information to emergency responders. The FCC also requires that emergency call services be made available to

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users with speech or hearing disabilities. Our obligations to implement these services occur on a market-by-market basis, as emergency service providers request the implementation of enhanced emergency call services. Absent a waiver, our failure to comply with these requirements could subject us to significant penalties.

FCC rules also require that local exchange carriers and most commercial mobile radio service providers, including PCS providers, allow customers to change service providers without changing telephone numbers. For wireless service providers, this mandate is referred to as wireless local number portability, or WLNP. The FCC also has adopted rules governing the porting of wireline telephone numbers to wireless carriers.

The FCC has the authority to order interconnection between commercial mobile radio service operators and incumbent exchange carriers. FCC rules require all local exchange carriers to enter into compensation arrangements with commercial mobile radio service carriers for the exchange of local traffic, whereby each originating carrier compensates the other, terminating carrier, for terminating local traffic originating on the originating carrier’s network. As a commercial mobile radio services provider, we are required to pay the wireline local exchange carrier that transports and terminates a local call that originated on our network. Similarly, we are entitled to receive compensation when we transport and terminate a local call that originated on a wireline local exchange network. We negotiate interconnection arrangements for our network with major incumbent local exchange carriers and other independent telephone companies. If an agreement cannot be reached, under certain circumstances, parties to interconnection negotiations can submit outstanding disputes to state authorities for arbitration. Negotiated interconnection agreements are subject to state approval. The FCC’s interconnection rules and rulings, as well as arbitration proceedings, could directly impact the nature and costs of facilities necessary for the interconnection of our network with other networks. The amount of revenue we receive for terminating calls originating on the networks of local exchange carriers and other carriers. The FCC is currently considering changes to the local exchange-commercial mobile radio service interconnection rules and other intercarrier compensation arrangements. The outcome of these proceedings may affect the manner in which we are charged or compensated for the exchange of traffic.

Country Information

Information concerning the geographic area of our Samoas operations is set forth in Appendix A to this registration statement.

Papua New Guinea, Fiji and Other Pacific Island Nations

An Overview

In Papua New Guinea, Fiji and Other Pacific Island Nations, the current population is estimated to be 26,299,075. A general telephone system supplies communications within the region, including approximately 13,600,000 wireline telephone lines and 19,600,000 mobile telephones in use. Although the region has a relatively advanced telecommunications network, as compared to other developing nations, the density of telephone service or mobile and internet service remains very low. Developed infrastructures for the telecommunications systems is limited to the major urban areas. We see opportunities for improving telecommunication in the major urban areas and expanding coverage to the more rural areas.

In this region, we are an information solutions and services provider, offering technology products, internet access service and professional services. We conduct operations in Fiji and Other Pacific Island Nations through our wholly-owned subsidiaries, Datec Fiji Limited, Generic Technology Limited, Network Services Limited, Datec Vanuatu Limited, Datec Solomon Islands Limited, Datec Tonga Limited, Datec Investments Limited, Mobile Technology Solutions, Datec Samoa Limited and Datec Australia Pty Limited. We conduct operations in Papua New Guinea through our subsidiary, Datec PNG Pty Limited. We hold a 50% ownership interest in Datec PNG Pty Limited. Steamships Trading Company Pty Ltd, a subsidiary of John Swire & Sons (PNG), holds the remaining 50% ownership interest in Datec PNG Pty Limited. We acquired all of these operating subsidiaries pursuant to a plan of arrangement that was consummated on February 1, 2006.

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Technology Products

In Papua New Guinea, Fiji and Other Pacific Island Nations, our selection of technology products is one of the most comprehensive as these product offerings support multiple functional areas of businesses and professionals throughout the region. Our software application offerings include Microsoft products, database applications, accounting applications, PBX software and other system applications. We also offer peripheral products, including fax machines, copiers and consumable accessories, phone consumables, printers and accessories and general office products. Our hardware offerings include PBX hardware, servers, routers and switching systems.

Our experience and in-depth understanding of the markets in this region have enabled our management to be at the forefront of changes in the technology sector of Papua New Guinea, Fiji and Other Pacific Island Nations. This leadership provides us with a special understanding of the needs of our customers.

At January 1, 2006, we were a licensed reseller in Papua New Guinea, Fiji and Other Pacific Island Nations of the following products:

Additionally, we are the only Tier 1 Partner for IBM in the region. This status gives us direct access to those IBM products for which we are a certified reseller and warranty support provider. These products include IBM X series, P series and I series servers, PCs, printers, POS and storage devices. As Tier 1 Partners we also have direct access to IBM’s technical and IT consulting resources.

Strategy for Technology Products

Our objective is to solidify our position in the market as a major provider of technology products to customers in Papua New Guinea, Fiji and Other Pacific Island Nations under the Datec brand. We are a reseller of technology products and offer a sophisticated selection of computer hardware and software applications of a variety of global brands. Our product offerings include business software, hardware devices, computer peripherals, routers and switches and PBX systems. For many of these global brands, we are the only licensed reseller of technology products in Papua New Guinea, Fiji and Other Pacific Island Nations. We plan to expand our product offerings and continue to introduce new products to customers throughout this region by further developing our existing local partnerships with global brands.

Data Services

Internet access service is an expanding business in Papua New Guinea. Our internet services were first introduced in Papua New Guinea in May 1997, when permission was granted by the government of Papua New Guinea for the establishment of internet connections in the country. Through the operations of our 50% subsidiary, Datec PNG Pty Limited, we are an internet service provider, or ISP, offering a selection of nine specialized, prepaid internet access packages to both home and corporate users. As of July 31, 2006, we had over 6,500 subscribers, including corporate subscribers in a variety of industries including mining, shipping, aviation, defense, government, banking, capital markets, entertainment and education. Monthly rates for our internet access packages range from $2.23 to $39.00. We offer customers reliable connections, fast download speeds and generous connection times. We also offer professional web design, development and hosting services to our subscribers.

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Our strategy is to differentiate our internet services from those of our competitors by offering a unique combination of high quality service, reliable technical management and available online customer support. We plan to leverage our position in the market along with the emergence of internet-based technology in Papua New Guinea, to provide a large variety of competitively priced internet services throughout the country.

We are a reseller of internet services and purchase our bandwidth in large amounts directly from Telikom PNG, Ltd, our distributor, and offer it to our end-user customers by the megabyte. We invest in our internet services by continuing to upgrade our link to the gateway in Papua New Guinea, which allows us to maintain our position as the ISP with the largest bandwidth for incoming and outgoing data. The market for internet service providers in Papua New Guinea remains largely deregulated and we compete with three other providers of internet access services.

Professional Services

In Papua New Guinea, Fiji and Other Pacific Island Nations, our professional services offer strategic assistance to clients seeking a more comprehensive approach to managing government and business operations in the region. We offer a broad range of professional services to assist our customers in implementing customized business solutions to meet their business needs. Our reputation as a provider of professional services is based on our experience and in-depth understanding of the South Pacific markets. We have significant expertise in multinational operations, regulation and strategy, and have been at the forefront of changes in the South Pacific business markets. Our knowledge and information base covers a broad range of operations and our clients benefit from this detailed understanding of the efficiency challenges in government or business operations. Our professional services are designed to assist clients with innovation, cost reduction and customer relationship management. We have 12 offices in seven countries throughout Papua New Guinea, Fiji and Other Pacific Island Nations. We offer application development, managed services, systems integration, training and maintenance and support.

Strategy for Professional Services

Our objective is to solidify our market position as a major provider of strategic professional services to customers throughout Papua New Guinea, Fiji and Other Pacific Island Nations. In these geographic markets, the professional services sector is dependent upon local relationships throughout the region. We believe that our strong presence in the region gives us a significant advantage over our competitors and positions us for strong penetration of these and other markets. Since 2003, we have developed, maintained and expanded our own strategic relationships through the depth of our professional service offerings to government and business entities. We believe that our experience and continued in-depth understanding of trends in business operations throughout Papua New Guinea, Fiji and Other Pacific Island Nations will enable us to cater to existing clients and develop new strategic relationships. Our customers seek customized professional technology solutions that will enable them to compete in the rapidly changing business, technology and communications markets of the South Pacific. We believe we have established a differentiated market position based on our professional services personnel, who have the market expertise and sophisticated knowledge necessary to tailor our professional services to the specific needs of a client. We intend to continue to direct our efforts toward workforce training to drive the proliferation of our professional services in Papua New Guinea, Fiji and Other Pacific Island Nations.

Application Development. We implement a wide range of enterprise resource planning systems based largely on commercial off-the-shelf software for our customers in Papua New Guinea, Fiji and Other Pacific Island Nations. Enterprise resource planning is an information system or process that integrates all production and related applications across an entire organization. Enterprise resource planning systems provide tools to manage human resources and integrate systems in all areas of production including sales and order processing, accounts receivable, accounts payable, inventory, general ledger and payroll. Our consultants review and analyze these systems for customers and implement a timetable to integrate and implement enterprise resource planning applications into the customer’s operations. Our application development services allow our customers to derive the benefits of sophisticated information systems applications with minimal effort.

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When off-the-shelf enterprise resource planning systems are not available, accessible or suitable for a client, we develop mission-critical applications to meet their needs. Mission-critical applications are those applications essential to the important functions and operations of an entity. We rely primarily upon commercial off-the-shelf software to develop mission-critical applications. We differentiate our mission-critical applications from competing products by combining our knowledge of enterprise applications with an in-depth understanding of the operations and operational priorities of the client.

In Papua New Guinea, Fiji and Other Pacific Island Nations, the internet and its underlying protocols have grown to positions of prominence in interactive communications supporting the daily operations of government entities. We have responded to some requests for proposals from the government of Fiji to develop customized web-based applications enabling the government of Fiji to cost-effectively provide web-based services to constituents and have been awarded projects. As internet computing continues to spread throughout the South Pacific, we believe governments and businesses will increasingly demand web-enabled versions of enterprise applications. Our ability to adapt and adjust to the rapid pace of computer-based technology will differentiate our application development services from those of our competitors.

In Australia, we entered into a contract to develop innovative information technology solutions and services for the utility sector to enable our clients to better compete in a deregulated utilities market. We will continue to offer such development services to accommodate the demand for such solutions in newly deregulated markets.

In 2004, we commenced development of a sophisticated suite of applications for sales force automation and service force automation. Our sales force automation applications offer contact management functionality for the direct sales force needs of an organization, including the automation of mailshots, proposal and quote generation, order-taking facilities, remote configuring of orders, access to corporate data and communications with a remote field sales force. Our service force automation applications offer job management functionality for an organization including dispatching, service tech activities monitoring, job scheduling, service call management, site management and warehouse management. These applications, branded as “e-Breathe”, are designed to operate on the GPS networks of certain wireless providers in the region. We have entered into sales partnership and distribution agreements to offer our e-Breathe applications to channel partners.

Managed Services. We have entered into contracts with certain of our existing customers to provide managed support services for network infrastructure, mission-critical applications and enterprise resource planning applications. Our technology support services include the design, operation and monitoring of networks and equipment. We also offer installation and cabling services. These services enable our business customers to devote more attention and focus to revenue-generating business segments, rather than hire additional staff to perform technology support functions. In January 2001, we entered into an agreement with IBM Global Services Australia to manage, operate and maintain the information technology infrastructure for multinational corporations for an initial five year term. Effective January 8, 2006, we exercised our option to extend the term of this agreement for an additional 12 months. Through this partnership with IBM Global Services Australia, we manage, operate and maintain the information technology infrastructure for multinational corporations in Papua New Guinea, Fiji and Other Pacific Island Nations. Although we have not customarily offered these managed services to new customers, we believe that the demand for a single cost-effective and comprehensive solution for information systems will lead to our increased investment in our managed services operations. For the years ended December 31, 2003, 2004 and 2005, we received revenue of $1,901,471, $2,478,146 and $2,678,425, respectively, from this agreement. For the year ended December 31, 2006, we anticipate revenues of approximately $2,600,000.

In June 2004, we entered into an agreement with Bank of South Pacific Limited to provide operational support for equipment and networks. The initial termination date for agreement was June 16, 2005. On June 16, 2005, we exercised an option to renew this contract for an additional 5 years. For the six months ended December 31, 2004, we received $615,819 in revenues from this agreement. For the year ended December 31, 2005, we received $1,229,705 in revenues. Based on the current form of the agreement, the anticipated annual revenue associated with this agreement is $1,200,000. However, the agreement is subject to review and modification annually.

Systems Integration. Systems integration refers to the implementation, custom development and integration of new technologies and systems with our clients’ existing legacy systems and technology infrastructures. Our systems integration services primarily address issues related to systems architecture and web development. Our systems integration services provide our clients with access to some of the most sophisticated

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and innovative technologies in a manner that is relevant and effective to their particular operations. Our services enable clients to link networks, hardware and software to create scaleable systems that will support their business models and strategies. We have recently extended our systems integration services to include voice, data and other telecommunications technologies.

Training. The demand for workforce training in the areas of business and information technology is increasing significantly in response to developments in the business and technology sectors throughout the South Pacific. We offer courses in these areas and have focused our business and information technology program offerings on the skills that we believe will be most marketable and useful in these sectors in the coming years. Our business and information technology programs include software applications technology, network and personal computer systems technology, network systems administration, business administration and project management. We differentiate our training programs from other programs in the region by combining substantial hands-on training with traditional classroom-based training, led by experienced and certified instructors in fully-equipped facilities.

Maintenance and Support Services. Our maintenance and support services provide both product maintenance and technical support services in Papua New Guinea, Fiji and Other Pacific Island Nations for products we supply to customers. Our technical support staff is strategically located in our service centers. These maintenance and support services are typically sold as renewable one-year contracts to our customers but are also available on a “time and materials” basis. We employ 85 experienced hardware engineers to provide certified parts and services and warranty and post warranty support, including Midrange, ATM and Oracle Applications maintenance and UPS Sales Maintenance. We are the only certified service agent in Fiji and Other Pacific Island Nations for IBM, Canon, and Lexmark and one of two certified service agents for Hewlett-Packard and Cisco Systems.

Competition

The market for technology products in Papua New Guinea, Fiji and Other Pacific Island Nations, has few competitors. For many global brands, we are the only licensed reseller of technology products in the region. Moreover, the vast expanses of geography, which have created substantial delays in social and economic development, have also discouraged others from capital expenditures to build networks in these areas. With the prohibitively high costs associated with laying wired infrastructure, the emergence of wireless technology offers alternative opportunities to make internet access, telephone and television services more widely available to the region’s dispersed populations. Current and prospective competitors for internet access and data services include many large, nationally-known companies that possess substantially greater resources, market presence and brand name recognition than we do. The market for residential internet access is highly competitive and characterized by increasing access speeds and consistently falling per-user prices.

Success in the market for professional services and business solutions in Papua New Guinea, Fiji and Other Pacific Island Nations requires an in-depth understanding of the South Pacific markets. We believe that our significant expertise in multinational operations, regulation and strategy has differentiated our services within the South Pacific market. Additionally, consultancy is emerging as a strong industry in the South Pacific market due to significant losses of skilled personnel, from migration, and the inability of local training institutions to adequately meet the demand for skilled personnel. This professional services sector is dependent upon the development of local relationships throughout the region. We believe that our strong presence in the region gives us a significant advantage over our competitors and positions us for strong penetration of these and other markets.

In Papua New Guinea, Fiji and Other Pacific Island Nations our competitors, by geographic location, are as follows:

Papua New Guinea. In Papua New Guinea, our competitors for ISP services include Daltron, Global and Data Net. In desktop server sales, we compete with Able Computing and Daltron. In networking or large server sales, we compete with Able Computing and Daltron. Our retail sales competitors are Able Computing and Daltron. We compete with Daltron in the area of managed services.

Fiji. In Fiji, our competitors for desktop server sales include Hewlett Packard, VT Solutions, Xtreme, Graphic Equipment and Clariti. In networking or large server sales, we compete with Hewlett Packard, VT

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Solutions, Xtreme, Graphic Equipment, Clariti, Exceed and GDC. Our retail competitors include Bondwell and Graphic Equipment. Our competitors in managed services include Clariti and Pacific Connex. Our competitors in software development include Software Factory and Pacific Connex. Our competitors in eCommerce include Connect and Pacific Connex.

Vanuatu. In Vanuatu, our competitor for desktop or large server, networking, and retail sales is Etech.

Tonga. In Tonga, we compete with Office Equipment in desktop server sales.

Cook Islands. In Cook Islands, we compete with Computer Services Limited in ISP services and Raratonga Computers in managed services.

New Zealand. In New Zealand, we compete with I-touch, Orbiz, and Gen-I for software development.

Government Regulation

General Regulatory Requirements in the Pacific or Product Sales and Services. For our operations in Fiji and Papua New Guinea, we are subject to foreign investment approvals from the Fiji Trade and Investment Bureau and Papua New Guinea Investment Promotion Authority, respectively. These approvals are required for companies with foreign ownership. Similar approvals are required for our operations in Solomon Islands and Vanuatu. The remainder of the jurisdictions in which we conduct operations do not have formalized foreign investment approval regimes. However, approvals from other relevant government authorities or regulators are required to conduct general business activities in these locations. For our operations in Fiji and Papua New Guinea, we must obtain and maintain the approval of the Central Bank to acquire, transfer or otherwise deal in the shares of foreign entities or foreign investments in local companies. We are also subject to the Central Bank approval for certain overseas remittances.

Vanuatu. Under the Telecommunications Act of 1989, a license must be obtained prior to commencing any telecommunications system operations. As of the date of this registration statement, we do not hold such a license or provide telecommunications services in Vanuatu. If we choose to expand our telecommunications services to include Vanuatu, our ability to commence operations would be subject to our approval for this license. Telecom Vanuatu Limited, an entity owned by the Vanuatu Government, Cable and Wireless and Reseau France Outre-Mer, hold the only existing telecommunications licenses in Vanuatu.

Tonga. Under the Business Licenses Act of 2002, we are required to hold licenses for local business activities, including the wholesale and retail sale of computers and related products and services. We have this license. Telecommunications operations in Tonga are subject to the Communications Act of 2000 which requires a licensee to own network facilities, provide network service, provide applications service or provide content applications services. Under the Communications Act, a licensee is also required to install and connect to a network facility or network service, engage in any resale activities, provide Internet access services or engage in or provide any other activity or service determined to be within the license requirements. At this time, we do not provide telecommunications services in Tonga and are not required to have the licenses required under the Communications Act of 2000.

Samoa. In 2003, the Government of Samoa began the Telecommunications and Postal Sector Reform Project, a five year program administered by the Ministry of Communications and Information Technology of the Government of Samoa with assistance from the World Bank. Certain regulatory goals of this project could impact our operations and financial conditions including price reductions for telecommunication services, wider access to telecommunication services and increasing competition among sector participants.

Solomon Islands. At this time, we only sell hardware and software and provide technical support in the Solomon Islands. Telekom Solomons, of which the Government of Solomon Islands is a stockholder, has been granted an exclusive license for cable and wireless services.

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Geographical Information

Information concerning the geography of our operations in Papua New Guinea and Fiji and Other Pacific Island Nations is set forth in Appendices B and C to this registration statement.

North America, including The Caribbean

Operations and Licenses

The North America business segment consists of parent company operations and the operations of our wholly-owned subsidiary, eLandia Technologies, Inc. In September 2004, eLandia Technologies, Inc. acquired two wireless telecommunications licenses, issued by the FCC for wireless operations in Bloomington, Illinois, and the U.S. Virgin Islands. As of the date of this registration statement, we do not generate revenue from operations in Bloomington, Illinois, or the U.S. Virgin Islands. However, in the future we may elect to launch commercial operations or commence additional build-out activities in these markets. Alternatively, we may elect to sell these licenses. In this regard, we do occasionally speak to potential buyers.

On February 28, 2006, we entered into an agreement with Tower Top Investments, Inc., a U.S. Virgin Islands corporation (“Tower Top”), for the purchase of certain telecommunications equipment located in the U.S. Virgin Islands. In connection with this purchase agreement, we entered into four license agreements with Tower Top for the right to occupy certain building space and also install telecommunications equipment on four of its towers located in the U.S. Virgin Islands, for the purpose of operating a PCS network. Although we conduct no operations in the U.S. Virgin Islands, this installation of telecommunications equipment was necessary in order to continue to maintain our wireless telecommunications license. As consideration for the favorable terms of the agreement with Tower Top, we agreed to pay a fee to Tower Top in the event we sold our U.S. Virgin Islands wireless telecommunications license, or any portion thereof. This fee would be an amount equal to 10% of the net gain received by us upon such sale. Net gain is defined in the agreement as our net sales receipts from the sale of the wireless telecommunications license less various expenses, including direct expenses from or relating to the ownership and maintenance of the wireless telecommunications license. We also agreed to pay Tower Top a fee if we should commence wireless operations utilizing the wireless telecommunications license. This fee would be an amount equal to 10% of our net income from such operations.

Government Regulation

The licensing, construction, modification, operation, sale, ownership and interconnection arrangements of wireless communications networks are regulated to varying degrees by Congress, the FCC and state/territorial and local governments. The Communications Act and FCC rules require the prior FCC approval of the assignment or transfer of control of a license for a PCS system, with limited exceptions. The FCC may prohibit or impose conditions on assignments and transfers of control of licenses. Non-controlling interests in an entity that holds a FCC license generally may be bought or sold without FCC approval, but subject to applicable ownership eligibility restrictions. Although we cannot assure you that the FCC will approve or act in a timely fashion upon any pending or future requests for approval of assignment or transfer of control applications that we file, in general we believe the FCC will approve or grant such requests or applications in due course. Because an FCC license is necessary to lawfully provide PCS service (other than through resale), if the FCC were to disapprove any such filing, our business plans would be adversely affected.

Seasonality

Our customer activity is influenced by seasonal effects related to traditional retail selling periods and other factors specific to our target customer base. As a result, new sales activity is generally highest in the fourth quarter. However, our business is sensitive to promotional activity and competitive actions, which have the ability to outweigh the effects of seasonality.

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Employees

As of August 11, 2006, we had 463 full time employees. We had 64 full time employees for our Samoas operations, including 16 working in network operations, 22 working in marketing, 13 working in customer service and 13 working in general administration. We had approximately 398 full time employees in our Papua New Guinea, Fiji and Other Pacific Island Nations operations, including 70 working in network operations, 62 in sales and marketing, 173 in customer service and 93 in administrative. We had one full-time employee in North America working in general administration.

Available Information

We only recently became subject to the reporting requirements under the Securities Exchange Act of 1934 (“Exchange Act”). As a result, we will now file annual reports, quarterly reports, proxy statements and other documents with the Securities and Exchange Commission (“SEC”) under the Exchange Act. The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC. The public can obtain any documents that we file with the SEC at http://www.sec.gov.

ITEM 1A. RISK FACTORS

You should consider carefully the following information about the risks described below, together with the other information contained in this registration statement. If any of the following risks actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock could decline, and you may lose all or part of the money you paid to buy our common stock.

Risks Related to Our Business and Industry

We have only recently merged several disparate businesses together and have no combined operating history. The lack of centralized accounting, financing and other administrative systems will result in inefficiencies and increased costs for operations.

On September 15, 2004, Elandia and Technologies were combined by virtue of a common control merger. On January 31, 2006, Elandia acquired AST. Also on February 1, 2006, Elandia acquired all of the operating subsidiaries of Datec. Prior to February 1, 2006, AST and the Datec operating companies had separate management, business plans and prospects that were unrelated to each other. We may not be able to effectively integrate these businesses and their management structures or derive any benefit from integrating them with Elandia’s management or assets.

Until we establish centralized accounting, finance and other administrative systems, we must rely upon the separate systems of the operating companies. Our success will depend, in part, upon centralizing these functions effectively. Further, we must effectively utilize the technical know-how of the two South Pacific-based operations (the former Datec subsidiaries and AST) in order to realize any benefit from these acquisitions. These organizations have different missions and business plans that will continue to be their priorities. We will also need to integrate such operating companies and any additional businesses we may acquire.

Our management group has been assembled only recently and the management control structure is still in its formative stages. Management may not be able to oversee the combined entity effectively or to implement our operating strategies across business segments. Any failure to do so will result in less efficiency and increased costs. The pro forma combined financial results included in this registration statement cover periods during which Elandia, AST and the Datec operating companies were not under common control or management and may not be indicative of our future financial or operating results.

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We may not be able to enhance the operating results of our operating subsidiaries as planned. To the extent that we do not, we will not achieve greater profits.

A key element of our business strategy is to improve the profitability of our operating subsidiaries and any subsequently acquired businesses. Our ability to improve profitability will be affected by various factors including:

Many of these factors are beyond our control and our strategies may not be successful. Moreover, we may be unable to generate cash flow adequate to sustain our operations and to support internal growth.

Another key component of our strategy is to operate on a decentralized basis, with local management retaining responsibility for day-to-day operations, profitability and the growth of the business. We cannot assure you that these individuals can operate effectively as the operations grow, face new challenges or endeavor to offer new products and services. Our subsidiaries are operating with management, sales, and support personnel that may be insufficient to support growth in their respective businesses without significant central oversight and coordination. If proper overall business controls are not implemented, our decentralized operating strategy could result in inconsistent operations and financial practices.

In connection with the acquisitions, various key customers or suppliers of the acquired entities may have the right to terminate their agreements with the acquired businesses. For example, various agreements that our newly acquired South Pacific subsidiaries have with their customers require the subsidiaries to provide notice of a change of control and provide the customers or suppliers the right to terminate the agreements if the customer or supplier is displeased with the change in control. As a result, acquisitions pose the risk that revenues of the acquired entities may decline as a result of the combination. As of the date of this registration statement, no key customers or suppliers have requested to terminate their agreements with our newly-acquired South Pacific subsidiaries.

The Datec Group Ltd. subsidiaries acquired by us and AST had working capital deficiencies as of December 31, 2005. These factors raise substantial doubt about our ability to continue as a going concern.

The Datec subsidiaries incurred a net loss of $8,143,745 for the year ended December 31, 2005 and had a working capital deficiency of $613,973. As of December 31, 2005, AST had a working capital deficiency of $1,925,122. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to raise additional capital, generate positive operating cash flow through the execution of our business plan and the ability to obtain additional financing.

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

Our success depends to a significant degree upon the continued contributions of key management as well as selling and marketing, and operations personnel, certain of whom would be difficult to replace. In particular, we believe that our future success is highly dependent on Harry Hobbs, our incoming Chief Executive Officer; Michael Ah Koy, our current acting Chief Executive Officer and Chief Operating Officer; Harley Rollins, our Chief Financial Officer; Michael McCutcheon, our Chief Operating Officer of Datec; and Barry and Fay Rose, senior executives of AST. We do not maintain key man life insurance covering our key management. Our success will depend to a significant extent upon the retention of these executive officers, their successful performance, the ability of these executive officers to integrate themselves into our daily operations, and the ability of all personnel to work effectively together as a team.

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We plan to acquire other businesses as a key part of our growth and we do not know if we will be able to successfully integrate any targets into our existing operations. Failure to manage these acquisitions and integrate these operations will result in decreased efficiency and increased costs.

As part of our strategy, we plan to pursue additional acquisitions of complementary businesses in the markets in which we have a presence and in other geographic markets. We also plan to obtain services and technologies that will enhance our existing services, expand our services offerings or enlarge our customer base. If we complete future acquisitions, we may be required to incur or assume additional debt and make capital expenditures which will cause us to be more highly leveraged and to issue additional equity which will dilute our existing stockholders’ ownership interest. Our ability to grow through acquisitions involves a number of additional risks, including the following:

We will require substantial amounts of external financing to pursue our long-term business plan. Our business plan includes coupling video, data and long distance with our existing wireless service by acquiring or developing cable systems in each market where we provide wireless services. We currently offer wireless services in American Samoa and are pursuing other wireless licenses in the Pacific. Substantial capital is required to build a wireless network, to provide working capital to maintain the system and operations while endeavoring to grow a subscriber base, and to market the services. We do not expect to generate all of these funds internally.

Further, we may use a significant portion of our resources for acquisitions. The timing, size and success of our acquisition efforts and any associated capital commitments cannot be readily predicted. We currently intend to finance future acquisitions by using shares of our common stock, cash from borrowings or a combination of equity and cash. If our stock does not achieve or maintain a sufficient market value, or if potential acquisition candidates are otherwise unwilling to accept common stock as part or all of the consideration for the sale of their businesses, we may be required to utilize more borrowings, if available, in order to initiate and maintain our acquisition program.

If we do not have sufficient cash resources, our growth could be limited unless we are able to obtain additional capital through debt or equity financings. We may be unable to obtain additional financing on favorable terms, if at all. Any failure by us to do so could limit our ability to develop our long-term business plan. To the extent that we use equity for all or a portion of the consideration to be paid for future acquisitions, existing stockholders may experience dilution.

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We are a relatively small company without significant capitalization. As a result, we may not be able to compete successfully against our current and future competitors, which have significantly greater resources. Failure to compete effectively will result in loss of revenue and decreased profitability.

In general, the telecommunications industry is very competitive. Local and long distance carriers compete on rates, features and service plans in addition to the quality of service that is offered. Our operating subsidiaries must be able to favorably differentiate the services that they offer from existing and future competitors. Some of these competitors may be able to provide our target customers with additional benefits, including bundled communication services before we are able to do so, or in a manner that is better than our offering.

Moreover, the industries in which we compete are experiencing rapid technological change, and we may lose customers if we fail to keep up with those changes. Some of our competitors have greater financial resources. As a result, they can invest more capital in technology development. Because of their size and bargaining power, our larger competitors may be able to purchase equipment, supplies and services at lower prices. As consolidation in the industry creates even larger competitors, any purchasing advantages our competitors have may increase.

We compete as a wireless alternative to wireline service providers in the telecommunications industry. Wireline carriers have begun to advertise aggressively in the face of increasing competition from wireless carriers, cable operators and other competitors. Wireline carriers are also offering unlimited calling plans and bundled offerings that include wireless and data services. We may not be successful in our efforts to persuade potential customers to adopt our wireless service in addition to, or in replacement of, their current wireline service.

We derive a significant portion of our managed services revenues and data delivery revenues from one client. A reduction in this client’s demands for our services or the loss of this client would likely result in a significant decline in revenues.

During the year ended December 31, 2005, Datec, an IBM authorized re-seller, derived approximately $2,678,429 or 27.6% of its professional services revenues from our customer IBM Global Services Australia, our referral source. IBM may terminate our agreement under various scenarios. Because we derive a large percentage of our managed services revenues from a single customer, our managed services revenues would significantly decline if we lost this customer or if the amount of business we obtain from this customer were reduced. Since most of the gross profit of the Datec operating subsidiaries is derived from the managed services business, this customer is critical to the viability of the Datec operating subsidiaries.

During the year ended December 31, 2005, our operations in Papua New Guinea derived approximately $970,569 or 20.3% of their data delivery revenues from IBM Global Services Australia, the same customer referred to in the immediately preceding paragraph. Because we derive a large percentage of our data delivery revenues from a single customer, our data delivery revenues would significantly decline if we lost this customer or if the amount of business we obtain from this customer is reduced. Since most of the gross profit of the Papua New Guinea operations is derived from the data delivery business, this customer is critical to the viability of our Papua New Guinea operations. Again, IBM Global Services may terminate our agreement if various events occur.

We may not be successful in increasing our customer base. This would force us to change our business plans which would likely increase our expenses.

We must increase our customer base for wireless services, internet service and data center services to generate the internal funds necessary to support growth. Many factors could prevent us from adding new customers or result in a net loss of customers, including:

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Our current business plans assume that we will increase our customer base over time, providing us with increased economies of scale. If we are unable to attract and retain a growing customer base, we will be forced to change our current business plans and financial outlook. This will likely increase our expenses and may preclude us from having sufficient funds to support our growth.

If we experience high rates of customer turnover or bad debt, our revenues will decrease and expenses associated with marketing will increase.

Customer turnover, frequently referred to as “churn,” is an important business metric in our wireless and internet services businesses because it can have significant financial effects. Since we do not require wireless and internet services subscribers to sign long-term commitments or pass a credit check, our service is available to a broader customer base than many other wireless providers. As a result, our customers may be more likely to terminate their service or to have their service terminated due to an inability to pay than the average industry customer. In addition, our rate of customer turnover may be affected by other factors, including the size of our calling areas, handset issues, customer care concerns, number portability and other competitive factors. Our strategies to address customer turnover may not be successful. A high rate of customer turnover would reduce revenues and increase the total marketing expenditures required to attract the minimum number of replacement customers required to sustain our business plan, which, in turn, could have a material adverse effect on our business, financial condition, and results of operations.

Our operating costs could also increase substantially as a result of customer credit card fraud and subscription fraud and dealer fraud. We have implemented a number of strategies and processes to detect and prevent efforts to defraud us, and we believe that our efforts have substantially reduced the types of fraud we have identified. However, if our strategies are not successful in detecting and controlling fraud in the future, it could reduce our operating results.

If we cannot effectively manage international operations, we may experience losses, both from foreign currency exchange rates and otherwise.

At the present time, most of our operations are conducted outside of North America. We anticipate that for the foreseeable future, most of our revenue will be derived from sources outside of North America. We may experience gains and losses resulting from fluctuations in foreign currency exchange rates. The majority of revenues and costs from our international operations are denominated in the Papua New Guinea Kina and the Fijian Dollar. The functional currency of American Samoa is the United States dollar. We have not undertaken foreign exchange hedging transactions and are completely exposed to foreign currency transaction risk for all of our operations outside American Samoa. Our international operations are generally subject to a number of additional risks including:

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We serve markets that are less developed than North America, lack certain infrastructure and have lower standards of living. We depend upon significant increases in the standard of living in these markets to occur in order to achieve forecasted levels of growth.

We have identified the potential for material weaknesses in our internal control over financial reporting. If we do not remediate all of these material weaknesses, we will have difficulty obtaining financing and investors may lose confidence in our securities.

A “material weakness” is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. In connection with the evaluation of our disclosure controls and procedures as related to the acquisitions consummated on January 31, 2006 and February 1, 2006, we have concluded that the potential for certain material weaknesses in our accounting and financial reporting departments exists with respect to internal control over financial reporting and our ability to issue efficient and effective financial reports, consistent with the requirements of generally accepted accounting principles in the United States (U.S. GAAP). These potential material weaknesses are primarily attributable to the geographic distances between our operating locations, limited staffing levels and our staff’s limited familiarity with reporting requirements under U.S. GAAP. We have adopted the following measures, including (i) reviewing and documenting all financial processes for compliance with U.S. GAAP and (ii) giving our Chief Financial Officer oversight responsibilities. However, the lack of internal auditor (which we are attempting to identify and hire) and the existence of other material weaknesses could result in errors in our financial statements. Addressing these material weaknesses could result in substantial costs and may require us to devote significant resources to rectify any internal control deficiencies. We expect that any potential material weaknesses will be remediated in the second half of 2006. If we cannot produce reliable financial reports, investors could lose confidence in our reported financial information, the market price of our stock could decline significantly and we may be unable to obtain additional financing to operate and expand our business.

We may incur substantial expense ensuring that our internal control over financial reporting complies with the requirements of the Sarbanes-Oxley Act of 2002.

Section 404 of the Sarbanes-Oxley Act of 2002 requires companies to perform a comprehensive evaluation of their internal control over financial reporting. To comply with this statute, we will be required to document and test our internal control over financial reporting; our management will be required to assess and issue a report concerning our internal control over financial reporting; and our independent registered public accounting firm will be required to attest to and report on management’s assessment. Reporting on our compliance with Section 404 of the Sarbanes-Oxley Act will first be required in connection with the filing of our Annual Report on Form 10-K for the fiscal year ending December 31, 2007. We plan to commence a review of our internal control over financial reporting for each acquired entity promptly in order to become compliant with the requirements of Section 404. However, the standards that must be met for management to assess our internal control over financial reporting are new and require significant documentation and testing. Our assessment in the future may identify the need for remediation of our internal control over financial reporting.

Many of our directors and officers reside outside the United States and substantially all of our assets are outside the United States. As a result, you may have difficulty effecting service of process and enforcing judgments against us or our management.

Many of our directors and officers reside outside of the United States. As a result, it may not be possible to effect service on such persons in the United States or to enforce, in foreign courts, judgments against our officers and directors obtained in U.S. courts and predicated on the civil liability provisions of the Federal securities laws of the United States. Furthermore, a large percentage of our directly owned assets are located outside the United States, and, as such, any judgment obtained in the United States against us may not be collectible within the United States. You may also have difficulty enforcing judgments obtained in the United States against us or our management.

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Technology products change rapidly. As a result, our inventory might become obsolete which would result in substantial losses.

Our technology products businesses are subject to the risk that the value of our inventory will be affected adversely by suppliers’ price reductions or by product changes affecting the usefulness or desirability of our products. For example, during 2004 and 2005, the Datec operating subsidiaries wrote down an aggregate of $1,098,101 of inventory. This reduced gross margins by 2.0% in the year ended December 31, 2004 and 3.1% in the year ended December 31, 2005.

Any failure of our managed services, which requires us to protect our customers’ infrastructure and equipment, could lead to significant costs and disruptions that could reduce our revenue and harm our business reputation.

Our business depends on providing customers with highly reliable service. In our managed services business we must also protect our customers’ infrastructure and their equipment. The managed services we provide are subject to failure resulting from numerous factors including:

Problems at one or more data centers, whether or not within our control, could result in service interruptions or significant equipment damage. We have service level commitment obligations to certain of our customers, including our significant customers. If our customers suffer a loss of service or we fail to meet service level commitment obligations, we will be subject to financial penalties and loss of confidence of our customers which could consequently impair our ability to obtain and retain customers and to generate revenues.

Furthermore, we are dependent upon internet service providers, telecommunications carriers and other website operators in the South Pacific, the United States, Asia and elsewhere, some of which have experienced significant system failures and electrical outages in the past. Users of our services may in the future experience difficulties due to system failures unrelated to our systems and services. If, for any reason, these providers fail to provide the required services, our customers may begin to lack confidence in our services and seek other providers.

There is no known prevention or defense against denial of service attacks. During a prolonged denial of service attack, internet service may not be available for several hours, thus negatively impacting hosted customers’ on-line business transactions. Affected customers might file claims against us under such circumstances. Our property and liability insurance may not be adequate to cover these customer claims.

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The geographic regions in which we offer wireless service are susceptible to severe weather and natural disasters. Disruptions to our wireless service may result in significant repair costs and customer dissatisfaction.

Our ability to provide wireless service on a continuous basis is essential to the efficient and profitable operation of our business. We conduct wireless operations in regions that are vulnerable to significant damage or destruction from severe weather or natural disasters, such as tsunamis and hurricanes. Any damage to our wireless networks, equipment or facilities due to natural disaster could interrupt our business operations, impair our ability to serve customers, and result in significant repair costs. Moreover, the recovery time following such natural disaster could be significant due to the lack of services and materials available in the geographic regions we serve.

We operate in areas with a limited experienced workforce. As a result, the loss of key personnel and difficulty attracting and retaining qualified personnel could make it more difficult for us to service our customers.

We believe our success depends heavily on the contributions of our employees and on maintaining an experienced workforce. The uncertainties associated with the recent change of ownership of AST and the Datec operating subsidiaries may have caused employees to consider or pursue alternative employment. We also have key employees on each of the island markets that we service who are part of the local culture and highly trained to perform their technical duties. The loss or unavailability of any of these individuals and particularly the cumulative effect of such losses, may make it more difficult for us to effectively manage and operate our business. However, we do not generally provide employment contracts to our employees.

We may be subject to product liability claims or a loss of revenues generally as a result of the risks associated with wireless handsets and the associated product liability, health and safety issues.

Media reports have suggested that the use of wireless handsets may be linked to various health concerns, including cancer, and may interfere with various electronic medical devices, including hearing aids and pacemakers. Malfunctions have caused at least one major handset manufacturer to recall certain batteries used in its handsets. We do not manufacture handsets or other equipment sold by us and generally rely on our suppliers to provide us with safe equipment. Our suppliers are required by applicable law to manufacture their handsets to meet certain governmentally imposed safety criteria. However, even if the handsets we sell meet the regulatory safety criteria, we could be held liable for products we sell if they are later found to have design or manufacturing defects. We generally have indemnification agreements with the manufacturers who supply us with handsets to protect us from direct losses associated with product liability, but we cannot guarantee that we will be fully protected against all losses associated with a product that is found to be defective.

Concerns over radio frequency emissions and defective products may discourage the use of wireless handsets, which could decrease demand for our services. In addition, if one or more of our customers were harmed by a defective product provided to us by the manufacturer and subsequently sold in connection with our services, the negative public reactions may be difficult for us to add and maintain customers for these or other services.

There also are some safety risks associated with the use of wireless handsets while driving. Concerns over these safety risks and the effect of any legislation that has been and may be adopted in response to these risks could limit our ability to sell our wireless services.

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

We depend heavily on suppliers and contractors with specialized expertise in order for us to efficiently operate our business. In the past, our suppliers, contractors and third-party retailers have not always performed at the levels we expect or at the levels required by their contracts. If key suppliers, contractors or third-party retailers fail to comply with their contracts, fail to meet our performance expectations or refuse to supply us in the future, our business could be severely disrupted. Generally, there are multiple sources for the types of products we purchase. However, some suppliers, including software suppliers, are the exclusive sources of their specific products. Because

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of the costs and time lags that can be associated with transitioning from one supplier to another, our business could be substantially disrupted if we were required to replace the products or services of one or more major, specialized suppliers with products or services from another source, especially if the replacement became necessary on short notice. In particular, in connection with our telecommunications and data communications businesses we are materially dependent on satellite companies to provide long distance connections. Our principal managed services customer is under agreement with IBM Global Services Australia, which has subcontracted with us to provide a turn-key service. In connection with our business solutions, we depend upon IBM, Hewlett Packard and Canon.

We may be subject to claims of infringement regarding telecommunications technologies that are protected by patents and other intellectual property rights. These claims would be costly and time consuming to defend.

Telecommunications technologies are protected by a wide array of patents and other intellectual property rights. As a result, third parties may assert infringement claims against us from time to time based on our general business operations or the specific operation of our wireless networks. We generally have indemnification agreements with the manufacturers and suppliers who provide us with the equipment and technology that we use in our business to protect us against possible infringement claims, but we cannot guarantee that we will be fully protected against all losses associated with an infringement claim. Whether or not an infringement claim was valid or successful, it would divert management’s attention away from our business, involving us in costly and time-consuming litigation, requiring us to enter into royalty or licensing agreements (which may not be available on acceptable terms, or at all), or requiring us to redesign our business operations or systems to avoid claims of infringement.

Regulation by government agencies may increase our costs of providing service or require us to change our services which would result in increased costs.

Our operations are subject to varying degrees of regulation by the FCC and local regulatory agencies and legislative bodies. Adverse decisions or regulations of these regulatory bodies could limit our ability to conduct business or increase the costs of doing business. Governmental regulations and orders can significantly increase our costs and affect our competitive position compared to other telecommunications providers. We are unable to predict the scope, pace, or financial impact of regulations and other policy changes that could be adopted by the various governmental entities that oversee portions of our business.

A change in the tax law regarding canneries could impair our operations in American Samoa which could result in a decrease in revenues.

The economic stability of American Samoa’s private sector is heavily dependent upon canneries that operate locally. Net earnings of these cannery operations are subject to judgments and estimates and taxed in part under Service Section 936 of the Internal Revenue Code, which exempts qualified American Samoa earnings from federal income tax. Section 936 limits the amount of qualified earnings for these canneries and expires at the end of fiscal year 2006. A change in the law may affect the tax rate of these canneries and place extreme pressure on American Samoa’s economic stability. A material deterioration in the general economic stability of American Samoa could affect our American Samoa operations.

Future declines in the fair value of our wireless licenses could result in future impairment charges which could reduce our operating income and the value of these assets on our balance sheet.

The market values of wireless licenses granted by the FCC have varied dramatically over the last several years, and may vary significantly in the future. In particular, valuation swings could occur if:

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In addition, the price of wireless licenses could decline as a result of the FCC’s pursuit of policies designed to increase the number of wireless licenses available in our markets. If the market value of our wireless licenses were to decline significantly in the future, we could be subject to non-cash impairment charges. A significant impairment loss could reduce our operating income and the carrying value of our wireless licenses on our balance sheet.

Declines in our operating performance could ultimately result in an impairment of our indefinite-lived assets, including goodwill, or our long-lived assets, including property and equipment, which could reduce our operating results and the value of these assets on our balance sheet.

We assess potential impairments to our long-lived assets, including property and equipment and certain intangible assets, when there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. We assess potential impairments to indefinite-lived intangible assets, including goodwill and wireless licenses, annually and when there is evidence that events or changes in circumstances indicate that an impairment condition may exist. If we do not achieve our planned operating results, this may ultimately result in a non-cash impairment charge related to our long-lived assets and/or our indefinite-lived intangible assets. A significant impairment loss could significantly reduce our operating results and the carrying value of our goodwill or wireless licenses and/or our long-lived assets on our balance sheet.

Because our consolidated financial statements reflect fresh-start accounting adjustments made upon our emergence from bankruptcy, financial information in our current and future financial statements will not be comparable to our financial information from periods prior to our emergence from bankruptcy.

As a result of adopting fresh-start accounting on September 15, 2004, the carrying values of our wireless licenses and our property and equipment, and the related depreciation and amortization expense, among other things, changed considerably from that reflected in our historical consolidated financial statements. Thus, our current and future balance sheets and results of operations will not be comparable in many respects to our balance sheets and consolidated statements of operations data for periods prior to our adoption of fresh-start accounting. You are not able to compare information reflecting our post-emergence financial statements to information for periods prior to our emergence from bankruptcy, without making adjustments for fresh-start accounting.

Risks Related to Ownership of Our Common Stock

Trading prices for securities of telecommunications companies have historically been volatile. As a result, the trading price of our common stock is likely to be subject to wide fluctuations.

The trading prices of the securities of telecommunications companies have been highly volatile. Accordingly, the trading price of our common stock is likely to be subject to wide fluctuations. Factors affecting the trading price of our common stock may include, among other things:

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The public sale of our common stock by existing stockholders or the exercise of options we have outstanding may result in significant dilution of our stockholders and could depress the market price of our common stock.

As of August 18, 2006, we had a total of 13,114,106 shares issued and outstanding. These shares were issued between September 2004 and February 2006. Of the shares issued and outstanding, 4,023,000 shares were issued in connection with our reorganization and in reliance upon Section 1145 of the Bankruptcy Code. As such, these shares are exempt from registration. However, to the extent that the holders are affiliates, the shares will have to be sold in compliance with Rule 144. The remaining 9,091,106 shares will be subject to Rule 144 promulgated under the Securities Act of 1933, as amended. Rule 144 generally provides that shares of our common stock could be sold beginning one year from the date of issuance, subject to volume limitations, and after two years from the date of issuance, without any limitations. The majority of these shares will became available for sale under Rule 144 beginning in late 2006 and the first quarter of 2007.

The market price of our common stock could decline as a result of market sales by our existing stockholders or the perception that these sales will occur. These sales also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. In addition, holders of our outstanding options and warrants may exercise their options or warrants to purchase our common stock, which would increase the number of outstanding shares of common stock eligible for public sale.

We have attempted to alleviate this potential issue by requiring that certain stockholders execute agreements containing restrictions on their ability to sell the shares in the public market. However, we cannot assure you that the public sale of our common stock, as they become available for re-sale, will not depress the market price for the common stock.

Our shares of common stock have not yet begun trading and you may find it difficult to dispose of your shares of our stock, which could cause you to lose all or a portion of your investment in our company.

No trading in shares of our common stock has begun and we expect to have only a limited trading market in the foreseeable future. As a result, you may find it difficult to dispose of shares of our common stock and you may suffer a loss of all or a substantial portion of your investment in our common stock.

Our common stock will be covered by SEC “penny stock” rules which may make it more difficult for you to sell or dispose of our common stock.

Our common stock is covered by an SEC rule that imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors, which are generally institutions with assets in excess of $5,000,000, or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell our securities, and also may affect the ability of purchasers of our stock to sell their shares in the secondary market. It may also diminish the number of broker-dealers that may be willing to make a market in our common stock, and it may affect the level of news coverage we receive.

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

Our principal stockholder, Stanford, owns or controls approximately 42.0% of our common stock. This stockholder is able to influence the outcome of stockholder votes, including votes concerning amendments to our charter and by-laws, and the approval of significant corporate transactions like a merger or sale of our assets. Stanford is able, with another substantial stockholder with whom it has a voting agreement, to control the election of the board of directors. In accordance with the Arrangement Agreement, Stanford International Bank, Ltd. and Kelton Investments Limited, both of whom collectively own approximately 51.3% of our common stock, entered into a voting agreement for the purpose of selecting our board of directors. Pursuant to the voting agreement, Stanford International Bank Ltd. and Kelton Investments Limited have agreed that for so long as each shall hold no

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less than 3% of our outstanding common stock, each shall vote and support jointly the election of a nominee put forward by each to our Board of Directors. This controlling influence could have the effect of delaying or preventing a change in control, even if our other stockholders believe it is in their best interest.

Special Note Regarding Forward-Looking Statements

This registration statement includes forward-looking statements. All statements other than statements of historical facts contained in this registration statement, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short term and long term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this registration statement may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

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ITEM 2. FINANCIAL INFORMATION

You should read the following discussion of our financial condition and results of operations in conjunction with the audited financial statements and unaudited financial statements and the notes to those statements included elsewhere in this registration statement. As a result of many factors, such as those set forth under the section entitled “Risk Factors” and elsewhere in this registration statement, our actual results may differ materially from those anticipated in these forward-looking statements. The more detailed financial information and statistical data contained in this discussion are unaudited, except as indicated.

Overview

We are a wireless telecommunications service provider and an information solutions and services provider, offering a wide range of technology products, internet access service, professional services and other solutions to certain islands in the South Pacific, geographic locations which we believe have traditionally been underserved. The products and services we offer in each of the geographic areas we serve vary depending on the regulatory requirements, infrastructure, existing telecommunication systems and the needs of the region. In some regions we operate retail stores where our products and services are offered and sold. Generally, our telecommunications operations include long-distance service, wireless coverage and internet access. Our software solutions include Microsoft products, database applications, accounting applications and other system applications. We also offer peripheral products including fax machines, copiers, telephones and general office equipment. Our hardware offerings include PBX hardware, servers routers and switching systems. In addition, we offer professional services to assist our customers in implementing customized solutions to meet their business needs. These services include application development, systems integration, training and maintenance and support.

We currently conduct business operations through several operating subsidiaries in four geographic segments: (1) AST Telecom LLC does business in The Samoas, which includes American Samoa and our wireless initiatives in Samoa; (2) Datec PNG Pty Limited does business in Papua New Guinea; (3) several entities do business in Fiji and Other Pacific Island Nations, which includes New Zealand, Australia, Tonga, Samoa, The Solomon Islands, Vanuatu and Cook Islands; and (4) North America, including the Caribbean, which includes parent company operations and assets held for sale or development by eLandia Technologies, Inc.

The Samoas business segment consists of the operations of our wholly-owned subsidiary, AST. Through our operations in The Samoas we provide wireless service, international service, internet access service and network operations service.

The Papua New Guinea business segment consists of the operations of our 50% owned subsidiary Datec PNG Pty Limited, which we acquired through an arrangement that was consummated on February 1, 2006. Through our Papua New Guinea operations, we provide technology products, internet access service, and professional services.

The Fiji and Other Pacific Island Nations business segment consists of the operations of our wholly-owned subsidiaries, Datec Fiji Limited, Generic Technology Limited, Network Services Limited, Datec Vanuatu Limited, Datec Solomon Island, Datec Tonga Limited, Datec Samoa Ltd., Datec Investments Limited, Mobile Technology Solutions, Brocker Technology Group NZ Limited, and Datec Australia Pty Limited. Through our operations in Fiji and Other Pacific Island Nations, we provide technology products, support services and professional services.

The North America business segment consists of our wholly-owned subsidiary, eLandia Technologies, Inc. and Elandia, Inc., our holding company operation. In September 2004, eLandia Technologies, Inc. acquired two wireless telecommunications licenses issued by the FCC. Currently, our licenses are currently held for development or sale. We have also entered into an agreement with a cellular service provider to pay a fee to this cellular service provider upon the sale or operation of our U.S. Virgin Island license.

We generate revenue from the sale of long-distance coverage, wireless service and internet access as well as technology products (both software and peripheral products). We also generate revenue from fees providing professional services to assist our customers in implementing customized business solutions. To a lesser extent, we generate reverse toll fees by providing other wireless service providers with the ability to use our network to facilitate calls into the regions we serve that the other wireless service providers do not otherwise serve.

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Our wireless customers are individual subscribers as well as small and medium-sized businesses operating in the regions we serve. Most of our revenues are generated from fees that are paid in advance, such as pre-paid wireless service. Revenues from equipment sales are generated at the point of sale or on account. We also generate some of our revenues from fees which are billed and required to be paid monthly. We have begun to shift certain customers that previously maintained post-paid wireless accounts to pre-paid wireless accounts in order to mitigate our bad debt exposure. Most of the customers that currently pay on a post-paid basis are small and medium sized businesses.

Our professional services customers are generally small and medium-sized business operating in the regions we serve. We also provide services to some of the municipalities. Most of these customers are billed for the services we provide. These clients are billed monthly or as the projects are completed.

Our strategy is to be a one-stop source for technology solutions throughout the regions in which we operate. We believe that we have identified regions that are in the beginning stages of technological development and that as we develop our customer base and these communities grow and become more technologically advanced, our business will grow. We also believe that as our business and sales grow in these regions, we will develop a platform that will enable us to expand our operations into other regions.

In targeting regions at the beginning stages of technological development, we face unique challenges. We must educate the individuals and businesses in the communities we serve about the advances in technology generally and our product offerings specifically. In some of the more remote regions in which we operate, we must develop or expand infrastructures for the telecommunication systems in the more rural areas where we want to expand. We must also educate and train a workforce that may not have significant experience in or knowledge of information technology. Notwithstanding these challenges, management believes that by being involved in the technological development of these regions, we will be able to establish a loyal customer base and be able to capitalize on the additional revenues that can be realized from these rapidly evolving markets.

Trends in Our Industry and Business

A number of trends in our industry and business have a significant effect on our results of operations and are important to an understanding of our financial statements. These trends include:

Technology Adoption

We currently serve regions that are in the beginning stages of technological development because we believe that as these communities grow and our customer base becomes more technologically advanced, our business will grow. The rapid rate of emerging technology in the telecommunications industry and the limited access to technology that many of our customers encounter may require us to educate consumers about our new product offerings. The cost of increasing consumer awareness about emerging technology in our relevant markets, while promoting the awareness of our brand, could result in increased operating costs. Moreover, the communities in which we operate may not advance at the same rate in which we would like our business to grow or need our business to grow in order to support increasing operating expenses.

Changing Competitive Landscape

We face increased competition as a result of existing competitors, many of whom can offer multiple services and have the financial wherewithal to offer them at extremely competitive prices. An increase in competition in our markets could adversely affect our share of those markets, the price at which we are able to sell our services and the time in which we are able to release new product offerings. To remain competitive in the telecommunications market we may choose to invest in the development of new products and services or acquire additional bandwidth and servers to help us enhance our user experience. Our plans to expand our network presence and service offerings may also require substantial investments in sales, marketing and administrative infrastructure.

Increasing Government Regulation

Our business has developed in an environment and in regions with only limited government regulation. However, the U.S. and other countries have begun to take more of an interest in how our industry should be

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regulated. Changes in U.S. or foreign laws or regulations, or in their interpretations, could result in the loss, or reduction in value, of our licenses, concessions or markets, as well as in an increase in competition. Complying with regulatory developments will impact our business by increasing our operating expenses, including legal fees, requiring us to make significant capital expenditures or increasing the taxes and regulatory fees we pay.

Summary Selected Pro Forma Financial Data

The following table presents selected summary pro forma financial information of our company to give effect to the following two acquisition transactions. On January 31, 2006, we consummated a merger with AST Telecom, LLC (“AST”). On February 1, 2006, we consummated a plan of arrangement under the laws of New Brunswick, Canada, whereby we acquired the South Pacific operations of Datec Group Ltd. (“Datec”). The acquisition of Datec will be accounted for as a purchase business combination and the acquisition of AST will be accounted for as a common control merger for the portion owned by Stanford Venture Capital Holdings, Inc. This information should be read in conjunction with, and is qualified in its entirety by reference to, the financial statements of Elandia, AST and Datec and the unaudited pro forma condensed combined statements for the combined entities, and the notes thereto, included elsewhere in this registration statement.

The selected unaudited pro forma financial information is presented on a combined basis and is not necessarily indicative of the combined financial position had the acquisition occurred on January 1, 2005, or the combined results of operations which might have existed for the periods indicated or the results of operations as they may be in the future.

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Elandia, Inc.

Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended December 31, 2005

(unaudited)

(in thousands, except per share amounts)

Please refer to the Pro Forma Consolidated Statement of Operations and the accompanying notes contained elsewhere in this registration statement.

Results of Operations, Samoas

AST first commenced business operations in February 2003. Following is a discussion of the results of operations and the financial results for our operating subsidiary, AST.

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Financial Performance

The following table sets forth certain financial data for the periods indicated.

Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004

Revenues. At December 31, 2005, we had approximately 15,780 customers for our wireless telecommunications services compared to approximately 12,814 customers at December 31, 2004. Customer additions during the year ended December 31, 2005 and 2004, were approximately 7,376 and 6,431, respectively. For the year ended December 31, 2005 and December 31, 2004, aggregate revenues from our pre-paid and post-paid wireless services accounted for 73.6% and 79.4%, respectively, of total revenues for these periods. The increase in customers resulted directly from management’s increased marketing activities during this period of time. Moreover, by improving the quality of service and rates, management increased our percentage of customers retained for the year ended December 31, 2005, as compared to the year ended December 31, 2004.

During the year ended December 31, 2005, wireless pre-paid revenues increased by $22,911, or 0.5% compared to the year ended December 31, 2004. During the year ended December 31, 2005, wireless post-paid revenues decreased by $119,383, or 11.0% compared to the year ended December 31, 2004. The decline in wireless post-paid was attributable to reductions in our customer base resulting from changes instituted in our credit and

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collection policy and processes. In an effort to control our exposure to bad debt, we terminated certain clients and moved other clients from our post-paid services to our pre-paid services. For this reason, wireless pre-paid revenues increased and wireless post-paid revenues decreased. For the year ended December 31, 2005, we did experience a significant increase in the number of customers and minutes of use. However, these gains were offset by a decrease in the average rate per user.

During the year ended December 31, 2005, equipment sales revenues increased $199,984, or 27.6%, compared to the year ended December 31, 2004. We attribute this increase primarily to the growth in the number of customers for our wireless services between the two periods.

During the year ended December 31, 2005, long-distance reverse toll revenues increased $104,765, or 17.9%, compared to the year ended December 31, 2004. Increase in traffic from foreign destinations to American Samoa that utilize our network caused this increase.

During the year ended December 31, 2005, other revenues increased by $239,657, or 113.2%, compared to the year ended December 31, 2004. The launch of our high speed data internet services in March 2005 and August 2005 pursuant to the E-Rate contract described below drove this increase. In March 2005, we entered into a three year contract with the American Samoan Department of Education (“ASDOE”) to provide discounted, or “E-Rate”, fiber connectivity and internet services to 29 public schools and a public library on the Island of Tutuila. E-Rate is administered by the Universal Service Administrative Company (USAC) under the direction of the FCC and provides discounts to assist most schools and libraries with obtaining affordable access to advanced telecommunications. According to the terms of our agreement, our E-Rate services will generate approximately $21,000 monthly. In February 2005, ASDOE requested additional network capacity to establish a T-1 connection at the University of Hawaii for video teleconferencing and internet access purposes. In response to this request, we constructed a satellite dish and established a satellite link to Hawaii. Service from this new T-1 connection was initiated on August 18, 2005.

Management expects that revenues will increase in 2006, as we continue to increase our number of subscribers, we continue to improve the quality of our services and our rates in order to retain existing customers and the communities in which we operate continue to grow and become more technologically advanced.

Cost of Revenue - Prepaid and Postpaid. During the year ended December 31, 2005, cost of revenue for our prepaid and postpaid services increased $495,547, or 22.9%, compared to the year ended December 31, 2004. The increase in cost of service was primarily attributable to: (i) an increase of $198,028, or 28.3%, for cell site and switching circuits, due to increased capacity on our existing network and the additional satellite circuit required for the E- RATE contract; and (ii) an increase of $201,326, or 38.5%, in payments made to our long distance carriers, due to an increase in the volume of long distance phone calls made by our customers to locations outside of American Samoa.

Cost of Revenue - Equipment Sales and Service. During the year ended December 31, 2005, cost of revenue for equipment sales and service increased $141,196, or 21.1%, compared to the year ended December 31, 2004. This increase corresponds to the increase in equipment revenues. We attribute this increase to an increase in the number of customers subscribing to our wireless services and an increase in equipment sales. We expect that our cost of revenue for equipment sales and service will continue to increase as we continue to increase our customer base.

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Sales and Marketing. During the year ended December 31, 2005, sales and marketing expenses increased $98,281, or 20.2%, compared to the year ended December 31, 2004. The increase is attributable to increases in advertising costs, recruiting costs and salary expenses, due to the hiring of additional personnel and increased promotions for the peak periods of Mother’s Day, Father’s Day and the Christmas season. Sales and marketing increased as a percentage of revenue from 6.6% for the year ended December 31, 2004 to 7.4% for the year ended December 31, 2005. For 2006, management anticipates that we will continue to incur a significant amount of sales and marketing costs as we pursue our growth strategy of increasing our revenue and subscriber base.

Customer Service. During the year ended December 31, 2005, customer service costs decreased $8,763, or 2.1%, compared to the year ended December 31, 2004. This decrease was primarily attributed to a $191,762 decrease in our bad debt reserve as we collected amounts that were reserved in a prior period and eliminated certain post-paid accounts of credit risk customers which we shifted to pre-paid accounts. This decrease in customer service was offset in part by an increase of $92,604 in salary expenses due to hiring additional personnel and a $47,003 increase in rent expenses for our new office space at Laufou Plaza.

General and Administrative. During the year ended December 31, 2005, general and administrative costs increased $731,457, or 62.4%, compared to the year ended December 31, 2004. This increase was primarily due to increases of $225,389 in professional fee expenses paid to outside consultants, $252,319 in legal fees, and $29,727 in travel-related expenses. The professional fees, other than legal, are fees paid to outside consultants used to assist in the expansion of our network and a wireless initiative in Samoa. The legal fees were incurred in connection with the merger with Elandia as well as certain FCC related matters. The increase in travel expenses is also related to the merger and our initiatives in Samoa. We anticipate that our general and administrative expenses will continue to increase as we hire additional personnel to address our growing subscriber base and to handle the obligations of a public company.

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Depreciation and Amortization. During the year ended December 31, 2005, depreciation and amortization expenses increased $312,905, or 156.8%, compared to the year ended December 31, 2004. We attribute this increase to the construction of a new operations building, leasehold improvements at Laufou Plaza and upgrades to our existing wireless network. Depreciation and amortization includes amounts allocated to cost of revenue—prepaid and postpaid.

Interest Expense. During the year ended December 31, 2005, interest expense increased $57,584, compared to zero for the year ended December 31, 2004. We attribute this increase to the Bank of Hawaii mortgage on our operations building.

Net Income. During the year ended December 31, 2005, our net income decreased $1,374,561, or 60.3%, compared to the year ended December 31, 2004. This decrease is primarily attributable to the increases in general and administrative expenses and the increased cost of our expanded network.

Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003

Revenues. At December 31, 2004, we had 12,354 customers for our services compared to approximately 8,935 customers at December 31, 2003. Customer additions for the years ended December 31, 2004 and 2003 were 3,419 and 5,791, respectively. At December 31, 2004, the total potential customer base covered by our networks was approximately 20,000. The increase in the volume of customers has resulted in an overall increase in revenues.

During the year ended December 31, 2004, prepaid revenues increased $1,538,708, or 47.4%, compared to the year ended December 31, 2003. We attribute this increase to our improved network quality and marketing programs and also our efforts to move certain customers from postpaid to prepaid services in order to reduce our exposure to bad debt.

During the year ended December 31, 2004, postpaid revenues decreased $65,478, or 5.7% compared the year ended December 31, 2003. We attribute this decrease to changes in our credit and collection procedures to reduce our exposure to bad debt.

During the year ended December 31, 2004, our other revenue was $211,643. This category includes ISP revenue for which we had none in 2003. The addition of ISP and other revenue resulted primarily from the launch of our ISP services during 2004.

During the year ended December 31, 2004, revenues from reverse tolls increased $273,227, or 87.6%, compared to the year ended December 31, 2003. We attribute this increase to the increase in traffic from foreign destinations to American Samoa that utilize our network.

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Cost of Revenue - Prepaid and Postpaid. During the year ended December 31, 2004, cost of revenue for our prepaid and postpaid services services increased $467,584, or 27.6%, compared to the year ended December 31, 2003. The increase in cost of revenue consisted of, among other things, an increase of $32,317 in utility payments for cell site and switching circuits due to increased minute volumes and utility increases. There was an increase of $89,772 in salary expenses as a result of the retention of additional personnel. An increase of $171,599 in payments made to our long distance carriers was due to increased long-distance call volumes. We attribute these increases to the expansion of our network in American Samoa and the corresponding increase in the total number of minutes carried over our network.

Cost of Revenue - Equipment Sales and Service. During the year ended December 31, 2004, cost of equipment increased $165,256, or 32.8%, compared to the year ended December 31, 2003, notwithstanding a decrease in equipment sales revenue during this same period. During this year, we reduced the average price per phone in an effort to get more phones in the hands of subscribers and increase our revenues for wireless services.

Sales and marketing. During the year ended December 31, 2004, sales and marketing costs increased $203,162, or 71.9%, compared to the year ended December 31, 2003, primarily due to an increase in marketing employees.

Customer Service. During the year ended December 31, 2004, customer service costs increased $169,835, or 66.9%, compared to the year ended December 31, 2003. This increase was primarily attributable to an increase of $96,936 in our bad debt reserve due to an increase in the number of uncollectible accounts. It was a result of these expenses that management began to evaluate its accounts and subsequently began to shift certain higher risk accounts from post-paid accounts to pre-paid accounts. This increase in customer service costs was also the result of $36,574 in miscellaneous expenses from inventory write-downs and $35,828 in salary expense due to our hiring of

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additional customer service representatives. The increase in our bad debt reserve was due to the elimination of many post-paid accounts and an analysis of all receivables. We have instituted more aggressive collection procedures and credit controls to reduce our exposure to uncollectible accounts.

General and Administrative. During the year ended December 31, 2004, general and administrative costs increased $312,067, or 36.3%, compared to the year ended December 31, 2003. This increase was primarily attributable to an increase of $116,416 in management fee expenses. Management fees paid in connection with our Samoa operations are fees paid to members of management who are paid as consultants in American Samoa. This is unlike management fees with respect to our operations in Fiji and Other Pacific Island Nations where management fees are fees paid by our operating subsidiary to the parent company as a profit distribution. Also contributing to the increase in general and administrative costs were increases of $57,384 in salary expense for additional personnel, $41,016 in professional fee expenses for outside consultants related to the expansion of our network, $19,370 in building rents for the lease of new office space at Laufou Plaza, $25,643 in insurance expenses due to rate increases, $23,302 in legal fees and $14,634 in miscellaneous expenses for balance sheet write-downs. The expenses increased as a result of a large network expansion undertaken in connection with our Samoa operations.

Depreciation and Amortization. During the year ended December 31, 2004, depreciation and amortization expenses increased $123,246, or 161.6%, compared to the year ended December 31, 2003. This increase was primarily attributable to leasehold improvements for our new office space at Laufou Plaza and the expansion of our telecommunications network. Depreciation and amortization includes amounts allocated to cost of revenue—prepaid and postpaid.

Net Income. During the year ended December 31, 2004, our net income increased $483,713, or 26.9%, compared to the year ended December 31, 2003. This increase is primarily attributable to the increase in total revenue offset by increases in general and administrative expenses and cost of services.

Performance Measures

In managing our operations and assessing our financial performance in The Samoas, management supplements the information provided by financial statement measures with several customer–focused performance metrics that are widely used in the telecommunications industry. These metrics include ARPU, which measures average revenue per customer; MOU, which measures total minutes of use within a given period; and churn, which measures turnover in our customer base.

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ARPU is an industry metric that measures service revenue divided by the weighted average number of customers, divided by the number of months during the period being measured. Management uses ARPU to identify average revenue per customer, to track changes in average customer revenues over time, to help evaluate how changes in our business, including changes in our service offerings and fees, affect average revenue per customer, and to forecast future service revenue. In addition, ARPU provides management with a useful measure to compare our subscriber revenue to that of other wireless communications providers. We believe investors use ARPU primarily as a tool to track changes in average revenue per customer and to compare per customer service revenues to those of other wireless communications providers.

MOU is a non-GAAP financial measure. A non-GAAP financial measure is a numerical measure of a company’s financial performance or cash flows that (a) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the consolidated balance sheet, consolidated statement of operations, or consolidated statement of cash flows, or (b) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

Churn, an industry metric that measures customer turnover, is calculated as the number of customers that disconnect from our services divided by the weighted average number of customers divided by the number of months during the period being measured. Management uses churn to measure our retention of customers, to measure changes in customer retention over time, and to help evaluate how changes in our business affect customer retention. In addition, churn provides management with a useful measure to compare our customer turnover activity to that of other wireless communications providers. We believe investors use churn primarily as a tool to track changes in our customer retention over time and to compare our customer retention to that of other wireless communications providers.

Management also measures the performance of operations by analyzing our increase or decrease in the number of customers during any particular period.

Management also reviews the measure of revenue per employee to evaluate the efficiency of our operations. Revenue per employee is calculated by dividing total revenue, less revenue from reverse toll fees, for each quarter by the weighted average headcount.

The following table shows metric information for the periods indicated.

For the year ended December 31, 2005, ARPU decreased by $11.72, or 25.5%, for the year ended December 31, 2004. For the year ended December 31, 2004, ARPU decreased by $1.91, or 4.0%, for the year ended December 31, 2003. These decreases were primarily due to the lowering of rates on our prepaid customers and Tropical Cyclone Olaf which struck the island in February 2005.

MOU for the period ended December 31, 2005, increased 5,275,580 minutes, or 17.4%, for the year ended December 31, 2004. MOU for the period ended December 31, 2004, increased 8,098,011 minutes, or 36.5%, from 22,180,218 for the year ended December 31, 2003. These increases were due to the increase in the number of subscribers and the increase in volume of calls and minutes. Management believes that these increases are the result of us lowering our rates.

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Churn for the year ended December 31, 2005 decreased 1.4% from the year ended December 31, 2004. Churn for the year ended December 31, 2004 increased 2.5% from the year ended December 31, 2003. These decreases were due to most existing customers remaining with our service. Management believes this is due to improved quality of service and more competitive rates.

The number of customers for the year ended December 31, 2005 increased 3,426, or 27.7%, for the year ended December 31, 2004. The number of customers for the year ended December 31, 2004 increased 3,419, or 38.3%, for the year ended December 31, 2003. Management believes that these increases result from our increased promotions for the peak periods of Mother’s Day and Father’s Day plus the Christmas season and our lower per minute rates to our prepaid customers.

Revenue per employee for the year ended December 31, 2005 decreased $14,482, or 10.4%, from the year ended December 31, 2004. Revenue per employee for the year ended December 31, 2004 increased $3,975, or 2.9%, from the year ended December 31, 2003. From 2003 to 2004, the number of employees increased from 11 to 49. From 2004 to 2005, the number of employees increased from 49 to 63. The decrease in revenue per employee suggests that we have not yet integrated new employees into our operations in an efficient manner. Management believes that revenue per employee will increase as we begin to more efficiently manage the newly acquired entities.

Liquidity and Capital Resources

Our principal sources of liquidity are cash generated from operations and cash available from borrowings under our existing financial arrangements.

Operating Activities. Cash provided by operating activities was $1,784,002 for the year ended December 31, 2005, compared to cash provided by operating activities of $2,717,006 during the year ended December 31, 2004. This decrease was primarily attributable to increased operating expenses in 2005. This was offset by a decrease in cash used for working capital. Cash provided by operating activities increased by $703,451 to $2,717,006 for the year ended December 31, 2004 as compared to $2,013,555 for the year ended December 31, 2003. This increase was the result of increased revenues and profitability.

Investing Activities. Cash used in investing activities was $1,953,803 during the year ended December 31, 2005, and attributed primarily to capital expenditures made to expand our network presence in American Samoa. Cash used in investing activities was $2,253,020 during the year ended December 31, 2004, and associated with the expansion of our network and product offerings. Cash used in investing activities was $1,384,058 during December 31, 2003 and is primarily attributable to the expansion of network presence in American Samoa.

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Financing Activities. Cash used in financing activities during the year ended December 31, 2005 was $331,880 due to our repurchase of ownership interests from members. We financed this repurchase through cash from operations, and $1,440,667 from our revolving loan facility. Cash used in financing activities during the year ended December 31, 2004 was $944,472, consisting of distributions to partners. We had no other financing activity during 2004. Cash provided by financing activities during year ended December 31, 2003 was $666,667. In February 2003, AST received capital contributions from its members in the amount of $1,000,000 and made a distribution to members of $333,333.

The following tables illustrate the principal balance of our contractual obligations and commercial contingent commitments as of December 31, 2005 and include the effects of the transactions and amendments discussed above that occurred during the year ended December 31, 2005.

We obtained a $1,000,000 credit facility from Bank of Hawaii on May 9, 2005, with a 90-day renewable term up to July 2006 bearing a variable interest rate at 0.50% over the bank’s base interest rate (7.25% at December 31, 2005). This credit facility is secured by substantially all of our assets. On November 22, 2005, the maximum borrowing amount was increased to $2,000,000. As of December 31, 2005, $1,440,667 of the $2,000,000 total credit facility was outstanding. This credit line was not repaid on July 1, 2006 and on August 22, 2006, we received an extension letter from the Bank of Hawaii extending the repayment date to November 1, 2006. We are currently seeking alternative sources of financing.

We believe that our existing capital resources, including the cash available from borrowings under our existing financial arrangements, will be sufficient to meet our existing operating and capital requirements for at least the next twelve months, provided we are able to obtain a replacement credit facility on the same or substantially similar terms. Our audited financial statements as of December 31, 2005 and for the year then ended contained a going concern opinion stating that the working capital deficiency factor raises substantial doubt that AST will be able to continue as a going concern.

To properly implement all elements of our business strategy on American Samoa including video services, we believe that we will require an additional $5 million in external financing. If we are successful in entering the wireless market in Samoa, we expect that we will require an additional $11 million to introduce wireless and video services. While we anticipate that these funds will be available from either the equity or debt markets, there can be no assurance that these funds will be available on terms that are acceptable to us.

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Results of Operations, Papua New Guinea

Financial Performance

We hold a 50% ownership interest in Datec PNG Pty Limited through our wholly owned subsidiary Generic Technology Limited. Steamships Trading Company Pty Ltd, a subsidiary of John Swire & Sons (PNG), holds the remaining 50% ownership interest in Datec PNG Pty Limited. Following are the financial results for our operating subsidiary Datec PNG Pty Limited for the periods indicated. The complete financial statements attached have been prepared in Canadian dollars and in conformity with accounting principles generally accepted in the United States of America.