Global Capacity Reports First Quarter 2008 Results

CHICAGO--(BUSINESS WIRE)--Global Capacity (OTCBB:CGSY):

• Gross margin increases 373 percent
• Consolidated revenue increases 138 percent
• Cash and cash equivalents of $6.9 million compared to $0.9 million last quarter

Global Capacity (parent: Capital Growth Systems, Inc. (OTCBB:CGSY)), the world’s first telecommunications logistics company, today announced financial results for its first quarter ended March 31, 2008. The Company reported revenues of $9.5 million compared to $4.0 million in the same period last year, an increase of 138%. Gross profit during the quarter was $5.1 million, a 373 percent increase over the $1.1 million reported in the comparable prior year period. Operating loss in the first quarter improved 37 percent to a loss of $2.6 million compared to a loss of $4.1 million in the same period one year ago.

“During the first quarter we achieved very substantial growth, and our ability to drive gross profit by 373 percent and revenue by 138 percent is testimony to the Company’s strong position as the leading provider of network logistics solutions,” said Patrick Shutt, Chief Executive Officer of Global Capacity. “The increase in gross profit is a key differentiator, and underscores how the logistics model supports expansion of gross profit and not simply revenue growth. We continue to aggressively pursue multiple avenues of growth and margin expansion, through organic and acquisitive means, as we capitalize on the inefficiencies in the telecom market.”

During the quarter, the Company also achieved significant steps forward in customer acquisition. On February 20, 2008, the Company announced a significant expansion of an existing network optimization agreement with a long-standing global telecommunications customer, based on Global Capacity’s ability to successfully deliver initial cost savings. The expanded agreement encompasses both voice and access networks throughout Europe, Asia Pacific, and North America. Global Capacity expects to generate cost savings of at least 15% of the total annual spend for this customer. The Company also expanded its customer base with the addition of a major U.S.-based global carrier.

Shutt continued, “A key factor behind our significant business expansion and growth in gross margin is the validation our logistics business model receives when customers expand their agreements with us. Global Capacity’s unique global telecom knowledge base and tools enable us to unlock efficiencies for customers that result in reduced costs and simplified operations. Our intellectual capital is at the heart of our success with this primary customer.”

Shutt added, “We are pleased with the continued uptake of our optimization and connectivity solutions by new customers, which was highlighted by a new agreement with a major U.S.-based telecommunications carrier. This new agreement utilizes our services to evaluate cost reduction opportunities across the carrier’s access networks in Europe, the Middle East, and Africa, and represents another significant opportunity for Global Capacity to prove its value. As we look ahead, we are well positioned to maintain our trajectory and continue to expand our customer base across North America and Europe.”

Additional Highlights:

• Expanded customer base including a major U.S. based global carrier
• Signed a strategic sourcing agreement with VSNL Global Services Limited
• Closed sale of Frontrunner Networks Systems and refocused operations around core businesses
• Converted $7.7 million of subordinated secured debt into common stock
• During May 2008 announced transition to independent Board of Directors

Balance Sheet Highlights

As of March 31, 2008, the Company reported cash and cash equivalents totaling $6.9 million, a significant improvement over the $0.9 million reported at the end of last quarter. Accounts receivable were $6.6 million compared to $1.8 million last quarter, an increase of 273 percent.

During the quarter the company made significant changes to its capital structure. In February, the Company successfully converted $7.7 million of subordinated secured debt into common stock. Additionally, on March 11th, the Company entered into a private placement agreement for $19 million of securities. The net proceeds of this agreement were used to extinguish the Company’s senior secured debt as well as any remaining subordinated debt not previously converted to equity. Following these events, the Company reported 147 million common shares outstanding.

“During the quarter, we completed changes to our capital structure to utilize our balance sheet more effectively while increasing our financial flexibility,” said Jim McDevitt, Chief Financial Officer of Global Capacity. “As a result of these actions, Global Capacity is in a much stronger position to execute on its stated growth initiatives.”

Conference Call

A conference call has been scheduled for May 15, 2008 at 8:00 a.m., CT, to review results for the first quarter of fiscal year 2008. To listen to the call over the Internet, go to the Investor Relations portion of the Company’s Web site, www.globalcapacity.com. Please allow at least 15 minutes to register, download, and install any necessary audio software. To listen to the call by phone, dial (877) 545-1403 for North American callers or (719) 325-4892 for International callers; mention Conference ID #4296640. A replay of the conference call will be available through May 22, 2008 beginning one hour after the completion of the live call by phone at (888) 203-1112 for North American callers or (719) 457-0820 for International callers and on the Web at www.globalcapacity.com. The conference call contains time-sensitive information that is accurate only as of May 15, 2008, the date of the live broadcast. The call is the property of Global Capacity. Any redistribution, retransmission, or rebroadcast of the conference call in any form without the express written consent of Global Capacity is strictly prohibited.

About Global Capacity

Global Capacity (OTCBB:CGSY) is a telecom logistics company providing a fully-integrated supply chain management system that streamlines and accelerates the process of designing, building, and managing customized communications networks. It offers a comprehensive suite of services to enterprises, systems integrators, and carrier customers worldwide. Global Capacity has operational centers in Waltham, MA; Manchester, England, and Houston, TX; with offices in Chicago, IL; New York, NY; Austin, TX and Lisbon, Portugal. For more information, please visit www.globalcapacity.com or contact us at 866.226.4244.

Forward-Looking Statements

Certain information discussed in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, it can give no assurance that its expectations will be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements.

Forward-looking statements are inherently subject to unpredictable and unanticipated risks, trends, and uncertainties such as: the Company's inability to accurately forecast its operating results; uncertainty as to the volume of business or level of profitability of network optimization contracts; the Company's potential inability to achieve profitability or generate positive cash flow; the availability of financing; the risks associated with procuring a listing of its securities on one or more public stock markets; and other risks associated with the Company's business. For further information on factors which could impact the Company and its subsidiaries, and the statements contained herein, reference should be made to the Company's filings with the Securities and Exchange Commission, including annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, and current reports on Form 8-K. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.