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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

FORM 10-K

MTM TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (203) 975-3700

Securities registered under Section 12(b) of the Exchange Act:
None

Securities registered under Section 12(g) of the Exchange Act:
Common stock, par value $0.001 per share

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]      No [  ]

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

      Indicate by check mark whether the registrant is an accelerated filer. Yes [  ]      No [X]

      The aggregate market value of the 3,210,816 shares of voting and non-voting common equity stock held by non-affiliates (all shareholders other than directors, executive officers and 5% or greater shareholders) of the registrant was $5,972,118 as of September 30, 2004, based on the average bid and asked prices of the registrant's common stock on such date of $1.86 per share, as reported by The Nasdaq Stock Market, Inc.

      There were a total of 7,392,317 shares of the registrant's common stock outstanding as of June 15, 2005.

Documents Incorporated by Reference:
None

MTM TECHNOLOGIES, INC.
FORM 10-K
For the Fiscal Year Ended March 31, 2005

Introductory Comment—Terminology

      Throughout this Annual Report on Form 10-K, the terms “we,” “us,” “our” and “our company” refers to MTM Technologies, Inc. (formerly, Micros-to-Mainframes, Inc.) ( “MTM” ) and, unless the context indicates otherwise, our subsidiaries on a consolidated basis.

      “Pequot Fund” refers to Pequot Private Equity Fund III, L.P., “Pequot Partners” refers to Pequot Offshore Private Equity Partners III, L.P., and collectively with Pequot Fund, “Pequot,” “Constellation Venture” refers to Constellation Venture Capital II, L.P., “Constellation Offshore” refers to Constellation Venture Capital Offshore II, L.P., “BSC” refers to The BSC Employee Fund VI, L.P., “CVC” refers to CVC Partners II, LLC, and collectively with Constellation Venture, Constellation Offshore and BSC, “Constellation,” and together with Pequot, the “Investors.”

Introductory Comment—Forward-Looking Statements

      Statements contained in this Annual Report on Form 10-K include “forward-looking statements” within the meaning of such term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause actual financial or operating results, performances or achievements expressed or implied by such forward-looking statements not to occur or be realized. Forward-looking statements made in this Form 10-K generally are based on our best estimates of future results, performances or achievements, predicated upon current conditions and the most recent results of the companies involved and their respective industries. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “should,” “project,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” “potential,” “opportunity” or similar terms, variations of those terms or the negative of those terms or other variations of those terms or comparable words or expressions. Potential risks and uncertainties include, among other things, such factors as:

      Readers are urged to carefully review and consider the various disclosures made by us in this Annual Report on Form 10-K and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this Form 10-K speak only as of the date hereof and we disclaim any obligation to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

PART I

Item 1. Description of Business

      We are a leading national computer and communications technology management company providing information technology (“IT”) networking, communications, software applications and data center services, including secure access, voice over internet protocol (“VOIP”), storage, security and messaging solutions. We serve as a single source provider of advanced technology solutions to support our clients’ mission-critical business processes. Our clients consist of divisions of Fortune 100 and Fortune 500 corporations, middle market corporations (generally those with $50 million to $1 billion in revenues), municipal, state and federal government agencies, and educational institutions. We serve clients in most major US metropolitan markets.

      We provide services to our clients that address the full life cycle of a business solution from needs analysis, through planning, solution development, deployment, and testing, to on-going maintenance and support. We act a single-source provider of business technology solutions to our clients, an increasingly mandated requirement in today’s marketplace.

Business Strategy

      There is a rapidly growing trend among companies to outsource their computer services requirements. This entails client companies obtaining all or a portion of their data processing and related requirements from solution providers, such as us, that specialize in the technology service, product or application required by these client companies. Our strategy is to be the national leader in providing sophisticated network solutions to the middle market using a combination of carefully managed internal growth and acquisitions. We offer our clients selective outsourced infrastructure solutions at competitive prices. We are focusing our efforts on developing our higher margin recurring service offerings, while maintaining control over our expenses and improving our balance sheet. These services include our outsourced support services; contract programming; voice over internet protocol (VOIP) solutions; network consulting; network management and monitoring; security solutions; collaboration solutions focused primarily on Microsoft Exchange; data storage (including disaster recovery and data back-up) and IT staff augmentation.

      Since 1991, we have evolved to become a provider of IT managed solutions. We are focusing our current marketing efforts in accelerating growth in such areas. Services accounted for approximately 28% of our revenues for the fiscal year ended March 31, 2005, as compared to approximately 25% in the fiscal year ended March 31, 2004, with a small portion of these revenues derived from maintenance and repair services. The trend toward services revenue has accelerated, however as a result of our acquisition program, with service revenue accounting for approximately 30% of our revenue in the quarter ended March 31, 2005.

      Our acquisition program is an important part of our business strategy.

Acquisition Program

      One of our principal goals is to grow our business through the acquisition of additional companies. These acquisitions would expand our business into geographic regions where we do not yet have a strong presence, strengthen our technical capabilities and provide new service offerings. These benefits would enable us to better service the needs of middle market business and divisions of large enterprises. To fund the cash portions of the acquisitions which we have made to date, we have relied on private institutional financing.

      On January 29, 2004 we entered into an agreement (the “Pequot Purchase Agreement”) with Pequot to sell to Pequot an aggregate of up to $25 million of Series A Convertible Preferred Stock, together with warrants to purchase additional shares of common stock. We subsequently sold shares of Series A-1 Convertible Preferred Stock and Series A-2 Convertible Preferred Stock, in each case together with common stock warrants, to Pequot, to fund the cash portions of the

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purchase prices for our acquisitions of DataVox Technologies, Inc. and Network Catalyst, Inc., respectively, referred to below.

      On December 7, 2004, Pequot assigned to Constellation all of Pequot’s rights and obligations under the Pequot Purchase Agreement to purchase a portion of the shares of the Series A-3 Convertible Preferred Stock and common stock warrants covered by that agreement. On that date we also entered into a purchase agreement (the “Pequot/Constellation Purchase Agreement”) with Pequot and Constellation for up to $40 million (or in certain limited circumstances, up to $47.5 million) of additional financing in the form of 7% convertible secured notes in three tranches. We subsequently sold to Pequot and Constellation shares of Series A-3 Preferred Stock and common stock warrants under the Pequot Purchase Agreement, and Series A-4 First Tranche Notes under the Pequot/Constellation Agreement, to fund the cash portion of the purchase price for our acquisition of the Vector ESP entities; and Series A-4 Second Tranche Notes under the latter agreement to fund the cash portion of our purchase price for our acquisition of Info Systems, Inc. The Series A-4 First Tranche Notes and Series A-4 Second Tranche Notes were converted into shares of our Series A-4 Preferred Stock upon approval of such convertibility by our shareholders on June 23, 2005.

      We believe that there is an opportunity to consolidate similar businesses throughout the United States. We will focus our acquisition strategy on businesses providing secure access, voice over internet protocol (VOIP), storage, networking and messaging solutions. The acquisition targets will include companies providing IT services and products, as well as certain managed solutions. We intend to seek acquisitions to enhance our current service offerings and extend our geographic presence. We seek to identify businesses which will add technical expertise and service offerings, customers, sales capabilities and/or geographic coverage while generating a positive rate of return on investment. Furthermore, we intend to capitalize on the business practices of acquired companies that we believe will best maintain or strengthen our competitive advantage and ensure ongoing delivery of high quality IT solutions to our customers. The acquisition candidates we may investigate can be large, and their acquisition by us could have a significant and lasting impact on our business.

      In executing our growth-through-acquisition strategy during our 2005 fiscal year, we have acquired the businesses and operating assets of the first three of the following four companies, and all of the outstanding capital stock of the fourth one:

Business Services

      We are a leading national computer and communications technology management company providing IT networking, communications, software applications and data center services, including secure access, voice over internet protocol (VOIP), storage, security and messaging solutions. We serve as a single source provider of advanced technology solutions to support our clients’ mission-

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critical business processes. Our clients consist of divisions of Fortune 100 and Fortune 500 corporations, middle market corporations (generally those with $50 million to $1 billion in revenues), municipal, state and federal government agencies, and educational institutions. We serve clients in most major US metropolitan markets.

      We provide services to our clients that address the full life cycle of a business solution, from needs analysis, through planning, solution development, deployment, and testing, to on-going maintenance and support. We act a single-source provider of business technology solutions to our clients, an increasingly mandated requirement in today’s marketplace.

      Our services can be broadly categorized into the following:

      Managed Services

      We provide our clients with a suite of managed services through the use of our Pivot Technology system which includes our proprietary network management and monitoring software system. Our Pivot Technology system provides our clients with real-time monitoring of their computing and storage systems, VOIP systems and network infrastructure to immediately detect component failures, critical security events (such as, for example, hacking attempts), deteriorating performance and also to report on the health of these systems. The Pivot Technology system is a combination of our proprietary network management and monitoring software and best-of-breed third party licensed software. Monitoring of our clients’ networks is performed by our certified engineering staff operating on a 24x7x365 basis from two of our network operations centers (“NOC”). Our NOCs are located in Delaware and California.

      In addition to monitoring, our managed services include managed hosting and a suite of hosted applications, including VOIP and e-mail. We offer our customers a choice of two collocation facilities to host their computing systems. Our field engineering resources are available in each of our regions to provide field support and technical resources in connection with our managed services.

      Consulting, Integration and Professional Services

      Our staff of certified technology professionals provide our clients with a full suite of services ranging from advanced configurations and complex project management, project logistics and planning. We provide design, consulting, implementation and support services in our seven areas of core competence. These are network infrastructure (including LAN, WAN and Wireless), VOIP, storage solutions, operating systems, security, facilities design and access infrastructure.

      Our capability to address all phases of technology projects, from needs analysis and definition through implementation and support, allows us to offer our customers a single point of accountability for a broad range of technology projects. As technology infrastructure becomes progressively more sophisticated and complex, our clients demand total project accountability from a single vendor. With our national presence, engineering expertise, and extensive relationships with top tier vendors, we are able to undertake most technology infrastructure projects for our clients and provide them that critical single point of accountability.

      We provide professional consulting services for most of the infrastructure technologies that our clients utilize. These include expertise in the technology of a number of leading manufactures of infrastructure technology. For example, we are a Cisco Gold partner, a Citrix Platinum Solutions Advisor, a Hewlett Packard Gold and Enterprise Storage Elite partner, Microsoft Gold partner, an Avaya Gold partner, a Captaris Platinum partner, and a Nortel Elite partner. For those

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manufactures that we believe are critical to our client’s technology infrastructure we generally hold the highest level of certification granted by such manufacturers.

      In many of our regions we operate large project staging facilities, where technology systems associated with of our clients’ complex projects are staged, configured, tested and verified prior to delivery to the clients’ premise. We also provide accredited and topic-specific professional training services for our clients at several training facilities across the United States. Each of these facilities is fully equipped with the necessary equipment and lab facilities specific to the curriculum being delivered. In addition, we frequently offer seminars and technology awareness events for the benefit of our existing and prospective clients.

      IT Outsourcing

      Many of our potential clients have adopted an approach to technology of focusing on their core business competencies, while outsourcing non-core technology systems. These clients, however, often find it more cost effective to outsource than to fund the cost of a full-time internal IT staff to operate the sophisticated technology systems necessary which support their core business. Additionally, some clients are faced with extensive legal and regulatory compliance mandates that require sophisticated technology solutions. Again, for some of these clients, maintaining a full-time internal staff to operate those systems is not feasible.

      Our IT outsourcing solutions provide a cost effective solution to such clients by providing targeted support to fill gaps in their technology staffing on a project basis. We also offer solutions which allow clients to adopt a “pay-as-you-go” approach for supporting their IT requirements by providing hosted systems solutions that do not require substantial upfront capital investments. We believe that our technology outsourcing solutions allow our clients to achieve productivity enhancements, meet their legal and regulatory compliance requirements and improve financial performance by deploying advanced technologies on an outsourced basis. These solutions range from outsourcing of specific targeted business functions (such as application hosting, help desk operations) to strategy definition and execution on a virtual CIO basis.

      For clients with defined staff augmentation needs, our IT outsourcing provides cost-effective staffing alternatives in connection with both long and short term client projects by maintaining an extensive staff of highly trained consultants meeting many of the same qualifications as those which our clients demand of our own professional staff resources.

      Product Provisioning Services and On-line Sourcing

      We provide all aspects of infrastructure technology product delivery to our clients. Through our relationships as a certified partner with most of the key top tier infrastructure technology product manufacturers and with key infrastructure technology distributors, we are able to provide our clients with cost-effective product sourcing solutions to meet their requirements for managed, timely and competitive product procurement.

      We offer an on-line, web-based and secure product purchasing option for those clients who prefer a self-service alternative. Our eCommerce portal allows our clients to obtain product pricing, place unit or volume orders, and track the delivery process of their orders on line.

      For clients who require their purchased products to be staged, pre-configured, field tested, assembled or integrated, we provide these services in one of two extensive staging facilities (in California and Connecticut). Staging can be provided with or without the client’s participation, as directed by the client.

      Repair and Restorative Services

      Many of our clients require a guaranteed response to their system outages. Through our national staff of certified technicians and related field resources, we provide service level guarantees to our customers in response to problems with their infrastructure technology outages that are communicated to us, or that are detected through our Pivot Technology monitoring

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systems as part of a managed services solution. We offer our clients various degrees of guaranteed response depending on the severity of the outage or the client’s specific response requirements. Our technical staff providing these services is fully trained in and accredited with each of the vendors’ technology systems.

Industry

      The network computer industry has become a multi-billion dollar industry since its development in the late 1970’s. Today, industry participants face intense competition, the challenge of constant technological advancement and the ongoing need for business process optimization. The outsourcing of computer solutions is a rapidly growing trend in which a client company obtains all or a portion of its data processing requirements from a systems integrator, such as us, that specializes in the computer service, product or application required by the client.

      We believe the strongest demand for our IT services is among companies which typically lack the time and technical resources to satisfy all of their IT needs internally. These companies typically require sophisticated, experienced IT assistance to achieve their business objectives. These companies often rely on IT service providers to help implement and manage their systems. However, many of these companies rely on multiple providers for their IT needs. Generally, we believe that this reliance on multiple providers results from the fact that larger IT service providers do not target these companies, while smaller IT service providers lack sufficient breadth of services or industry knowledge to satisfy all of these companies’ needs.

      Companies have recognized the importance of IT systems in supporting their business processes and are turning to IT solutions to complete more effectively. At the same time the process of designing, developing and implementing IT solutions has become increasingly complex. The accelerated rate of development of new technologies is placing increasing demand on our clients to understand the opportunity and impact which these technologies can have on their business. IT services organizations like ours are faced with an increasing demand to keep up with these developments so as to effectively serve as consultants and advisors to our clients.

      During the period 2001 to 2004 following the burst of the “internet bubble,” the technology industry was impacted by a dramatic slowdown in IT spending. Companies refrained from funding critical technology projects necessary to keep up with the advances in IT, and often those necessary for the basic upkeep and maintenance of their installed technology base. Companies used the period of economic slowdown to reassess the return on investment associated with their past IT spending; and, we believe, concluded that past levels of IT spending can not be sustained at historical levels in today’s competitive marketplace. As such, future spending may increasingly be targeted and scrutinized from the standpoint of necessity and business impact. Importantly, companies have indicated that their intent is to focus on the effectiveness of IT solutions, not merely on the level of IT spending. This important development may result in the differentiation between technology providers who focus on offering total solutions versus those who focus on product resales.

      Advances in virtualization at the device and application level have suggested a trend toward a centralized computing model. This cycle, which started with mainframes, then workgroup mini-computers, then highly distributed applications running on micro-computers and PCs, may now be returning to a model where an increasing portion of business applications are implemented in a centralized computing model, using increasingly sophisticated terminal services to access these applications. This shift may be one of the most significant developments driving the re-definition by IT service providers of product and service solutions for the foreseeable future.

Sales and Marketing

      Our marketing efforts are focused on divisions of large corporations, middle market corporations (generally those with $50 million to $1 billion in revenues), municipalities and educational institutions. Except for major corporate accounts, these customers generally do not have internal computer support personnel. We believe that the increasing complexity of computer

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systems, increased usage of computers in the workplace and the trend toward network interconnecting will cause business and institutional customers to require significant levels of outsourced customer support services, such as those provided by us. We believe that these customers are increasingly relying on their dealers and suppliers to provide, in addition to competitive pricing, a one-stop solution-based approach to their data processing requirements. We use such an approach, which addresses purchasing, compatibility, maintenance, support, training and obsolescence.

      Our customers are diversified in such industries as securities, financial institutions, pharmaceuticals, manufacturing, distribution, law and accounting firms as well as municipalities and educational institutions. For the years ended March 31, 2005, 2004 and 2003, approximately 20%, 34%, and 18% of our revenue was from one customer, Verizon Wireless. We entered into a three-year desktop maintenance and support contract with Verizon Wireless, which expired in April 2005. We continue to provide services to Verizon and are currently negotiating an extension to the agreement.

      As of May 31, 2005, we employed 122 salespersons, sales assistants and marketing persons who are paid salaries, commissions and/or a combination of both. Our sales executives regularly call on management at companies seeking solutions for their computer problems.

      We also make joint sales presentations with certain of our major suppliers to existing and prospective customers. Certain of these suppliers’ customer fulfillment option programs allow customers who purchase directly from the supplier to apply purchases from us to their purchase obligations under those agreements. As a result, these customers have the flexibility of purchasing products from us to take advantage of our added services and our ability to integrate multiple manufacturers’ products. Most major manufacturers have instituted either a moratorium or a selective authorization procedure on the approval of additional authorized dealership locations. While in effect, such policies may preclude us and certain of our competitors from becoming authorized dealers for new vendors.

Suppliers

      We purchase software, computers and related products directly from numerous suppliers as either an authorized dealer or a value added reseller. We have entered into authorization agreements with our major suppliers. Typically, these agreements provide that we have been appointed, on a non-exclusive basis, as an authorized dealer and systems integrator of specified products of the supplier at specified locations. Most of the authorization agreements provide that the supplier may terminate the agreement with or without cause upon 30 to 90 days notice or immediately upon the occurrence of certain events. We believe that we have excellent relationships with our major suppliers; however, there can be no assurance that the aforementioned agreements will be renewed. If these agreements are not renewed, we may have difficulty in obtaining inventory at a sufficiently low cost to allow for resale at a competitive price.

      Distributors and integrators in the computer industry currently face a number of adverse business conditions, including price and gross profit margin pressures and market consolidation. In recent years, major hardware vendors have instituted aggressive price reductions in response to lower component costs and discount pricing by certain computer manufacturers. The increased price competition among major hardware vendors has resulted in declining gross margins for many computer distributors and may result in a reduction in existing vendor subsidies. We believe that these current conditions, which are forcing certain of our direct competitors out of business, may present us with opportunities to expand our business. There can be no assurance, however, that we will be able to continue to compete effectively in this industry.

      Pursuant to the terms of most of our authorized dealership agreements, we furnish firm purchase orders 30 to 90 days in advance of shipment. Under the terms of these agreements, we are generally liable for up to a 5% restocking fee to many manufacturers and suppliers for the return of previously received merchandise. We have not experienced any significant cancellation penalties or restocking fees to date.

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      We receive certain discretionary cost subsidies, typical for the industry, from certain major suppliers to promote sales and support activities relating to their products. We have used these funds to subsidize marketing, advertising and our connectivity and communication laboratory.

      Our suppliers permit us to pass through to its customers all warranties and return policies applicable to the suppliers’ products. To date, we have experienced few returns of product and have been reimbursed by the suppliers for most warranty work done for its customers. All service work after the expiration of the warranty period is at the customer’s expense. We offer service contracts of varying lengths under which we agree to be responsible for all service costs for a fixed term in exchange for a set fee paid by the customer.

      Software and other related products are purchased from numerous industry suppliers. As is customary, we do not have any long-term agreements or commitments with these suppliers, because competitive sources of supply are generally available for such products.

Competition

      The markets in which we operate are highly competitive with respect to performance, quality and price. In our professional services business our competition ranges from small, specialty integrators, to other service providers of comparable size and profile to us, as well as large national and global professional services firms and integrators. Our smaller competitors generally are highly focused on their immediate market segment and can respond more quickly to changes in customer needs. Our larger competitors generally have greater financial resources and may be able to compete more effectively than we can on prices and payment terms offered to potential customers. In our product provisioning business we directly compete with local, regional and national distributors and mail order providers of computer and IT products and services, including network integrators and corporate divisions of retail superstores.

      In addition, the computer and IT products and services industries have each experienced a significant amount of consolidation through mergers and acquisitions. In the future, we may face further competition from new market entrants and possible alliances between existing competitors. Further, certain computer superstores have expanded their marketing efforts to target segments of our customer base, which could have a material adverse impact on our operations and financial results. Some of our competitors have, or may have, greater financial, marketing and other resources than us. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements, benefit from greater purchasing economies, offer more aggressive hardware and service pricing to customers, or devote greater resources to the promotion of their products and services. There can be no assurance that we will be able to compete successfully in the future with such competitors. We also compete with manufacturers, including those serving as our vendors, which market through direct sales forces and distributors. More aggressive competition by principal manufacturers of computer and IT products, such as offering a full range of services in addition to products, could have a material adverse effect on our operations and financial results.

      We believe that we will continue to be able to compete effectively against our various competitors by combining fair pricing with a wide range of customer support services designed to provide our customers with high-end technological services, multi-vendor technical support, maintenance of their computer product needs, a dedicated, trained staff of salespersons and technicians, complete solutions for single user, multi-user or network systems and specialized vertical market software.

      We believe that our backlog of unfilled customer orders is not material.

Proprietary Information

      We do not hold any patents, but have several trademarks and service marks. We also may affix copyright notices on our support service, training and service manuals. While such protection may become important to use, it is not considered essential to the success of our business. We rely

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on the know-how, experience and capabilities of our management, sales and service personnel. We require our employees to sign confidentiality or non-competition agreements.

Employees

      Our growth-through-acquisition strategy has resulted in a substantial increase in the number of employees. As of May 31, 2004, prior to commencing our acquisition strategy, we employed 151 persons and as of May 31, 2005, after completing four acquisitions, we employed 616 persons, all but 30 of whom are full-time personnel. Of these employees, 15 were in management, 122 were in sales and marketing, 388 were in technical support, 91 were in operations, finance and administration.

      As of June 29, 2005, none of our personnel was represented by a union. We consider our employee relations to be good. On May 21, 2005, we received a Notice of Filing of Petition for Union Representation Election for the cabling unit of our Info Systems, Inc. subsidiary. This unit comprises approximately 25 employees. An election with respect to union representation is scheduled for July 15, 2005.

Incorporation

      We were incorporated on May 12, 1986 in the State of New York.

Item 2. Properties

      Our principal executive offices are currently located at 850 Canal Street, Stamford, Connecticut. We occupy approximately 6,500 square feet at this location. The lease for this location expires in September, 2009. The monthly base rent for this location is approximately $11,800.

      We are also responsible for real estate taxes, insurance, utilities and maintenance expenses relating to all of our other leased facilities. These expenses for all of our leased facilities including the Stamford, Connecticut facility totaled approximately $1.4 million for the year ended March 31, 2005.

Item 3. Legal Proceedings

      None.

Item 4. Submission of Matters to a Vote of Security Holders.

      None.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
             Purchases of Equity Securities.

Market for Our Common Stock

      Our common stock is traded on The Nasdaq SmallCap Market under the symbol “MTMC.” Set forth in the following table is the range of the high and low bid quotations for our common stock for each of the quarters during our last two completed fiscal years, based upon data provided by Nasdaq. These quotations reflect inter-dealer prices, without retail mark-ups, mark-downs or commissions, and may not represent actual transactions.

Record Holders

      As of June 15, 2005, there were 143 record holders of our common stock. We believe that there are approximately 1,100 beneficial holders of our common stock, based on information gathered in connection with the recently held special meeting of our shareholders.

Dividends

      We have never declared or paid any dividends to the holders of our common stock and we do not expect to pay cash dividends in the foreseeable future. We currently intend to retain all earnings for use in connection with the further development of our business and for general corporate purposes. Our board of directors will have the sole discretion in determining whether to declare and pay dividends in the future. The declaration of dividends will depend on our profitability, financial condition, cash requirements, future prospects and other factors deemed relevant by our board of directors. In addition, provisions contained in our certificate of incorporation governing the terms of our Series A Convertible Preferred Stock, as well as our financing agreements with The CIT Group/Business Credit, Inc. (“CIT”) and Textron Financial Corporation (“Textron”), place restrictions on our ability to declare or make any cash dividends on our common stock. In addition, our ability to pay cash dividends on our common stock in the future could be further limited or prohibited by the terms of future financing agreements that we may enter into or by the terms of any preferred stock that we may authorize and issue.

Equity Compensation Plan Information

      The following table sets forth, as of March 31, 2005:

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		Column A				Column B				Column C
		Number of shares to be issued upon exercise of outstanding options, warrants and rights				Weighted average exercise price of outstanding options warrants and rights				Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column A)
Equity incentive plans approved by shareholders			4,739,416			$	3.10				1,185,450
Equity incentive plans not approved by shareholders			30,000			$	5.00				Not applicable
Totals			4,769,416			$	3.11				1,185,450

      The shares issuable upon exercise of outstanding options, warrants and rights granted under plans not approved by shareholders consist of:

      Equity Compensation Plan Information excludes warrants issued in connection with our Series A-4 First Tranche Notes and Series A-4 Second Tranche Notes as these warrants were not exercisable as of March 31, 2005. A total of 984,617 such warrants were issued as of March 31, 2005 with an exercise price of $4.06 per share.

Item 6. Selected Financial Data

      The following selected financial data for the fiscal years ended March 31, 2005, 2004, 2003, 2002, and 2001 have been derived from our consolidated financial statements. This data should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K.

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Income Statement Data:

Balance Sheet Data:

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

      The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our updated consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

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Use of Estimates

      The preparation of financial statements in conformity with accounting principals generally accepted in the United States of America requires management to make estimates and assumptions that effect the amount of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Overview

      We are a leading national computer and communications technology management company providing IT networking, communications, software applications and data center services, including secure access, voice over internet protocol (VOIP), storage, security and messaging solutions. We serve as a single source provider of advanced technology solutions to support our clients’ mission-critical business processes. Our clients consist of divisions of Fortune 100 and Fortune 500 corporations, middle market corporations (generally those with $50 million to $1 billion in revenues), municipal, state and federal government agencies, and educational institutions. We serve clients in most major US metropolitan markets.

      We provide services to our clients that address the full life cycle of a business solution, from needs analysis, through planning, solution development, deployment, and testing, to on-going maintenance and support. We act a single-source provider of business technology solutions to our clients, an increasingly mandated requirement in today’s marketplace.

Critical Accounting Policies

      We prepare our financial statements in accordance with U.S. generally accepted accounting principles. As such, management is required to make certain estimates, judgments and assumptions it believes are reasonable based on the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. The Securities and Exchange Commission has defined critical accounting policies as policies that involve critical accounting estimates that require (a) management to make assumptions that are highly uncertain at the time the estimate is made and (b) different estimates that could have been reasonably used for the current period, or changes in the estimates that are reasonably likely to occur from period to period, which would have a material impact on the presentation of our financial condition, changes in financial condition or in result of operations. Based on this definition, our most critical policies include: revenue recognition, allowance for doubtful accounts, inventory valuation reserve, impairment of long-lived assets, the assessment of recoverability of goodwill and intangible assets, and valuation of deferred tax assets.

Revenue Recognition

      We recognize revenue in accordance with Staff Accounting Bulletin No. 104. We recognize revenue from the sales of hardware when the rights and risks of ownership have passed to the customer, upon shipment or receipt by the customer, depending on the terms of the sales contract with the customer. Revenue from the sales of software not requiring significant modification or customization is recognized upon delivery or installation. Revenue from services is recognized upon performance and acceptance after consideration of all of the terms and conditions of the customer contract. Service contracts generally do not extend over one year, and are billed when persuasive evidence of an arrangement exists, the sales price is fixed and determinable, and collection of the resulting receivable is reasonable assured. Revenue arrangements generally do not include specific customer acceptance criteria. For arrangements with multiple deliverables, delivered items are accounted for separately, provided that the delivered item has value to the customer on a stand alone basis and there is objective and reliable evidence of the fair value of the undelivered items. Revenue billed on retainer is recognized as services are performed and amounts not recognized are recorded as deferred revenue.

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      We periodically receive discretionary cost reimbursements from suppliers. These reimbursements are accounted for as reductions to the cost of sales products.

Goodwill and Intangibles

      The Company tests goodwill for impairment at the reporting unit level on an annual basis or more frequently if the Company believes indicators of impairment exist. The performance of the test involves a two-step process. The first step of the impairment test involves calculating the fair values of the applicable reporting units using the income approach methodology of valuation that includes the discounted cash flow method as well as other generally accepted valuation methodologies. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recorded in net income (loss).

      Circumstances that could trigger an impairment test include but are not limited to: significant adverse change in the business climate or legal factors; an adverse action or assessment by a regulator; unanticipated competition; loss of key personnel; the likelihood that a reporting unit or significant portion of a reporting unit will be sold or otherwise disposed of; results of testing for recoverability of a significant asset group within a reporting unit; and recognition of a goodwill impairment loss in the financial statement of a subsidiary that is a component of a reporting unit.

Intangible Assets

      We recorded intangible assets with related to the acquisitions of DataVox Technologies, Inc., Network Catalyst, Inc., Vector Global ESP, Inc. and Info Systems, Inc.

      Intangibles consist of the following:

      The customer relationships and know-how are being amortized over periods of 3 to 4 years.

      Amortization expense amounted to $0.8 million for the year ended March 31, 2005. Estimated amortization expense for the next four years is as follows:

Accounts Receivable

      Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts, based on certain percentages of aged receivables. We estimate doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and current economic trends. We write off accounts receivable against the allowance when a balance is determined to be uncollectible.

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Inventories

      Inventories, comprised principally of computer hardware and software, are stated at the lower of cost or market using the first-in, first-out method.

Property and Equipment

      Property and equipment is stated at cost and is depreciated using the straight-line method. Furniture, fixtures and other equipment and software development costs have useful lives ranging from 3-7 years. Leasehold improvements are amortized over the shorter of the lease term or economic life of the related improvement. Expenditures which extend the useful lives of the existing assets are capitalized. Maintenance and repairs are charged to operations as incurred.

      We incurred approximately $1.7 million, $1.6 million and $1.6 million of depreciation and amortization expense for the years March 31, 2005, 2004 and 2003, respectively.

Contractual Obligations

      The following table set forth as of March 31, 2005 the Company's known contractual obligations.

Results of Operations

      The following table sets forth for the periods presented information derived form our audited consolidation statement of operations expressed as a percentage of net revenue:

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Years Ended March 31, 2005 and 2004

Net Revenue

      Net revenue for the year ended March 31, 2005, was $101.2 million, as compared with net revenue of $52.3 million for the comparable 2004 year. The Company has achieved growth of 88% for products and 111% for services over the prior year. Revenue split for services amounted to 28% for the year ended March 31, 2005, compared to 25% in the prior year. The increase in revenue primarily was due to the inclusion of the results of our acquisitions during the year as well as an increase in customer demand for our products and services.

Gross Profit

      Gross profit amounted to $18.8 million for the year ended March 31, 2005, as compared with a gross profit of $2.4 million for the prior year. The Company achieved blended gross margins of 19% for the year ended March 31, 2005 with margins for services at 35% and margins for product margins at 12%. In the prior year, blended gross margins amounted to 5% with services margins at 9% and product margins at 3%. Improved gross margins resulted primarily from the impact of our acquisitions.

Selling, General and Administrative

      Selling, general and administrative expenses increased to $21.8 million for the year ended March 31, 2005 from $10 million in the comparable period. Included in the general and administrative expenses for the 2005 year is a $1.1 million charge for special compensation arrangements incurred in connection with the Pequot investment. Increased expenses are predominately related to the additional costs incurred from the integration of our acquisitions.

EBITDA

      Earnings before interest, taxes, depreciation and amortization (“EBITDA”) amounted to a negative $0.4 million for the year ended March 31, 2005, as compared to a negative $6 million in the comparable year ended 2004. The EBITDA improvements resulted from both increased net revenue and improved gross margins discussed above, partially offset by increased selling, general and administrative expenses. The following table sets forth a reconciliation of EBITDA to the net loss for the years presented.

      The Company believes that its non-GAAP measure of EBITDA provides investors with a useful supplemental measure of its operating performance by excluding the impact of interest, taxes, depreciation, and amortization. Management uses EBITDA to assist in evaluating operating performance. These non-GAAP results should be evaluated in light of the Company’s financial results prepared in accordance with GAAP. EBITDA is not a recognized measure for financial statement presentation under GAAP. Non-GAAP earnings measures do not have any standardized definition and are therefore unlikely to be comparable to similar measures presented by other

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reporting companies. This non-GAAP measure is provided to assist readers in evaluating the Company’s operating performance. Readers are encouraged to consider this non-GAAP measure in conjunction with the Company’s GAAP results.

Interest Expense

      Interest expense was $4.7 million in the year ended March 31, 2005, and $0.5 million for the comparable period in 2004. The primary increase is due to non-cash interest expense of $4.1 million related to the convertible subordinated notes issued by us in December 2004 and March 2005. On June 23, 2005 the convertible notes were converted into Series A-4 Preferred Stock.

Net Income (Loss)

      The Company had a net loss of $7.7 million for the year ended March 31, 2005 as compared to a net loss of $8.1 million in the comparable 2004 year. The reduction in net loss resulted from an increase in net revenues and an improvement in both product and service gross profit margins. These improvements were offset, in part, by an increase in selling, general and administrative expenses, a non-cash interest expense of $4.1 million related to convertible notes issued by the Company in December 2004 and March 2005, and a $1.1 million expense relating to special compensation arrangements incurred in connection with the closing of the initial Pequot investment in May 2004.

Liquidity and Capital Resources

      We measure our liquidity in a number of ways, including the following:

      Cash and cash equivalents generally consist of cash and money market funds. We consider all highly liquid investments purchased with maturities of three months or less to be cash equivalents. Such investments are stated at cost, which approximates fair value, and are considered cash equivalents for purposes of reporting cash flows.

      During the year ended March 31, 2005, we used cash of approximately $11.5 million in operating activities. This primarily resulted from the decreases in accounts payable of $8.3 million, a decrease in deferred revenue of $1.4 million, and increase in prepaid expenses and current assets of $1.0 and an increase in accounts receivable from customers of $0.9 million, depreciation and amortization charges of $2.6 million, amortization of debt discount of $3.8 million, and the net loss of $7.7 million.

      Net cash used in investing activities amounted to approximately $31.4 million. The significant uses were for the acquisition of businesses of $28.8 million, an increase in restricted cash of $1.0 million and for the acquisition of property and equipment in the amount of $1.6 million. In addition, net cash provided by financing activities was $46.5 million primarily related to the net proceeds from the issuance of shares of Series A Preferred Stock in the amount of $23.8 million, proceeds from the issuance of subordinated promissory notes $16.0 million and net borrowings under our secured notes payable and inventory financing $7.2 million.

      As a result of the foregoing, our cash increased approximately $3.6 million.

      On June 8, 2005, we entered into a secured revolving credit facility (the “CIT Facility”) with CIT Group/Business Credit, Inc. (“CIT”) and a new Amended and Restated Loan and Security Agreement (the “New Textron Facility”) with Textron Financial Corporation (“Textron”), providing a combined maximum availability of up to $40 million. The CIT Facility and the New Textron Facility will be used to fund working capital and floor-planning needs, and were also used to

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refinance the existing Textron floor planning facility under the former Textron facility (the “Old Textron Facility”).

      The CIT Facility is a three year revolving credit facility for up to $25 million, subject to a borrowing base based on eligible accounts receivable, eligible in-transit inventory (up to $0.5 million) and eligible finished goods inventory (up to $0.5 million). The CIT Facility requires, among other things, that we maintain certain financial covenants including that we maintain Consolidated Senior Leverage of not greater than 4.00 to 1.00 for the trailing four quarters and that we maintain a Consolidated Fixed Charge Coverage Ratio of not less than 1.00 to 1.00 for the trailing four quarters, restricts our ability to incur certain additional indebtedness, and contains various customary provisions, including affirmative and negative covenants, representations and warranties and events of default. Amounts borrowed under the CIT facility will bear interest at either the prime rate or at LIBOR plus 3%, in each case at our option.

      The New Textron Facility allows us to finance inventory purchases up to $15 million from approved vendors on a 45-day interest-free basis in most cases. This replaces the $10 million Old Textron Facility. Interest accrues after expiration of the applicable interest free period at the rate equal to a specified prime rate plus 4%. The financial and other covenants in the New Textron Facility are substantially the same as those in the CIT Facility.

      Our total outstanding debt under the revolving receivable financing portion of the Old Textron Facility was $13.6 million at March 31, 2005 and $5.9 million at March 31, 2004. The amount outstanding under the inventory portion of the Old Textron Facility agreement was $2.9 million at March 31, 2005 and $3.5 million at March 31, 2004.

      Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. We place our cash with high credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limits.

      Credit is extended to customers based on an evaluation of their financial condition, and collateral is generally not required. The evaluation of financial condition is performed to reduce the risk of loss.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

      Our risk investments only consisted of cash deposited in various money market funds. We do not use interest rate derivative instruments to manage our exposure to interest rate changes. Due to the limited investment risks involving money market funds, we do not anticipate any material loss in connection with such investments.

Item 8. Financial Statements and Supplementary Data.

      Set forth below is a list of our audited consolidated financial statements included in this Annual Report on Form 10-K and their location.

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Item		Page*
Network Catalyst, Inc. statements of operations and accumulated deficit for the six month period ended June 30, 2004 and the year ended December 31, 2003			F-28
Network Catalyst, Inc. statements of cash flows for the six month period ended June 30, 2004 and the year ended December 31, 2003			F-29
Network Catalyst, Inc. notes to financial statements			F-30
Report of UHY Advisors NY, Inc.			F-36
Vector Global Services, Inc. and subsidiaries consolidated balance sheet at September 30, 2004			F-37
Vector Global Services, Inc. and subsidiaries consolidated statements of operations for the nine months ended September 30, 2004			F-38
Vector Global Services, Inc. and subsidiaries consolidated statements of changes in shareholders’ equity for the nine months ended September 30, 2004			F-39
Vector Global Services, Inc. and subsidiaries consolidated statements of cash flows or the nine months ended September 30, 2004			F-40
Vector Global Services, Inc. and subsidiaries notes to consolidated financial statements of September 30, 2004			F-41
Report of Ernst & Young LLP			F-49
Vector Global Services, Inc. and subsidiaries consolidated balance sheet at December 31, 2003 and 2002			F-50
Vector Global Services, Inc. and subsidiaries consolidated statements of operations for the years ended December 31, 2003 and 2002			F-51
Vector Global Services, Inc. and subsidiaries consolidated statements of changes in shareholders’ equity for the years ended December 31, 2003 and 2002			F-52
Vector Global Services, Inc. and subsidiaries consolidated statements of cash flows or the years ended December 31, 2003 and 2002			F-53
Vector Global Services, Inc. and subsidiaries notes to consolidated financial statements			F-54
Report of Gunnip & Company, LLP			F-64
Info Systems, Inc. balance sheet at December 31, 2004 and 2003			F-65
Info Systems, Inc. statement of operations for the years ended December 31, 2004 and 2003			F-66
Info Systems, Inc. statement of changes in stockholders’ equity for the years ended December 31, 2004 and 2003			F-67
Info Systems, Inc. statement of cash flows for the years ended December 31, 2004 and 2003			F-68
Info Systems, Inc. notes to financial statements			F-69

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

      Not applicable.

Item 9A. Controls and Procedures.

      An evaluation was performed, as of March 31, 2005, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on such evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2005. There has been no change in our internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART III

Item 10. Directors and Executive Officers of the Registrant.

Directors and Executive Officers

      Set forth below is a brief description of the background of each of our current directors and executive officers, based on information provided to us by them.

      Gerald A. Poch has served as Managing Director of Pequot Capital Management, Inc., the investment manager/advisor for Pequot Private Equity Fund III, L.P. and Pequot Offshore Private Equity Partners III L.P., since January 2000. He is also a Managing General Partner of both Pequot Fund and Pequot Partners. From August 1998 through January 2000, he was a principal of Pequot Capital Management, Inc. and co-leader of Pequot Fund’s and Pequot Partners’ venture capital team. From August 1996 to June 1998 he was the Chairman, President and Chief Executive Officer of GE Capital Information Technology Solutions, Inc., a technology solutions provider. Prior to that, he was a founder, and served as Co-Chairman and Co-President, of AmeriData Technologies, Inc., a value-added reseller and systems integrator of hardware and software systems. Mr. Poch is also a director of Analex Corporation, Andrew Corporation, and NETGEAR, Inc., each a publicly-traded company. In addition, Mr. Poch is a director of a number of private companies.

      Francis J. Alfano has served as our Chief Executive Officer since May 2004. He served as Chief Executive Officer, President and a director of Interliant, Inc., an Internet infrastructure business focused on collaboration, security, and managed hosting solutions from August 2002 to June 2003. On August 5, 2002, Interliant filed for protection under title 11 of the U.S. Bankruptcy Code. Mr. Alfano led the restructuring of Interliant’s businesses resulting in the ultimate sale of its operations. From May 2001 through July 2002, he served as Interliant’s Chief Financial Officer. From December 1998 to May 2001, he was Interliant’s Senior Vice President of Corporate Development, with responsibility for strategic business relationships and execution of all merger and acquisitions. Prior to that time Mr. Alfano served as Vice President of Business Development at G.E. Capital Information Technology Solutions, Inc., (the successor to AmeriData Technologies, Inc.) and was with Ernst & Young.

      Steven H. Rothman has served as an Executive Vice President since May 2004. He served as our Chairman of the Board from September 2002 to May 2004. From May 1986 to August 2002, he served as our President. Mr. Rothman served as our Chief Executive Officer from September 1996 to August 2002 and as Co-Chief Executive Officer from May 1986 to August 1996.

      Clifford H. Friedman, served as a Senior Managing Director of Constellation since September 1997. From January 1996 through August 1997, Mr. Friedman served as a Senior Vice President of Universal Studios where he was responsible for the creation and development of the Studio's New Media Group. From February 1995 through January 1996, Mr. Friedman served as Vice President—Strategic Development at NBC and from 1990 through January 1995, he was a Senior

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Managing Director in the Media and Technology Group at Bear Stearns. Mr. Friedman serves as a director of Net Insight AB and Savvis Communications. In addition, Mr. Friedman is a director of a number of private companies.

      Arnold J. Wasserman has served as chairman of our audit committee since March 1999 and our lead independent director since June 2002. Mr. Wasserman has been a principal of Panda Financial Associates, Inc., a leasing/consulting firm, for the past 35 years. He is a director of Stratasys, Inc., a Nasdaq National Market listed company which manufactures rapid prototyping systems and materials, and serves as chairman of its audit committee.

      Richard R. Heitzmann has served as a Senior Vice President at Pequot Capital Management, Inc., where he focuses on software and services investments, since January 2004. From June 2003 to January 2004, Mr. Heitzmann was Vice President of Corporate Development with First Advantage Corp., a public company involved in the risk mitigation industry. From November 2001 to June 2003, Mr. Heitzmann was the Senior Vice President of Corporate Development and a member of the board of directors of US Search.Com, Inc. From August 1999 to November 2001, Mr. Heitzmann served as a Vice President of Pequot Capital Management, Inc. Mr. Heitzmann served as an executive with Nationsbanc Montgomery Securities from July 1998 to September 1998 and with Booz-Allen and Hamilton in its Financial Services and Healthcare Group from September 1997 to December 1997. Mr. Heitzmann was a financial analyst and associate at Houlihan Lokey Howard and Zukin from July 1994 to September 1997.

      William Lerner has served as chairman of our corporate governance and nominating committee since November 2003. Mr. Lerner has been engaged in the private practice of corporate and securities law in New York since 1961 and in Pennsylvania since 1990. Mr. Lerner is a director of Rent-way, Inc., New York Stock Exchange listed company engaged in the rental-purchase industry; and Cortland Trust, Inc., a money market mutual fund distributed primarily through securities brokerage firms and commercial banks.

      Alvin E. Nashman has been an independent consultant in the field of computer service for the past ten years. Dr. Nashman is a director of James Monroe Bancorp Inc.

      Steven Stringer has served as our President since June 2005 and as our Chief Operating Officer since October 1, 2004. From June through September 2004 he was employed by Pequot as a consultant and was made available by Pequot to us to assist with the selection, evaluation and integration of acquisitions. From January 2002 through May 2004 Mr. Stringer pursued private investment opportunities. Prior to that time he served in a number of senior executive roles with Rhythms NetConnections Inc. (“Rhythms”), including as chief executive officer and president from July through December 2001, chief executive officer, president and chief operating officer from April through July 2001, and president and chief operating officer from April 1999 through March 2001. Rhythms was a national provider of digital subscriber line services and operated one of the largest DSL networks in the United States, serving 60 major markets with 67,000 digital subscriber lines in service.

      Alan Schwartz is a certified public accountant who has served as a Senior Vice President, as well as our Chief Financial Officer, since May 2004. Mr. Schwartz served as Vice President—Finance for Interliant, Inc. from 1999 to 2003, where he managed financial and operational reporting for various domestic and international segments of the business. From August 1996 until joining Interliant, Mr. Schwartz was employed by GE Capital IT Solutions, last serving as Vice President—Financial Planning and Analysis. For four years prior to his serving at GE Capital IT Solutions, Mr. Schwartz was employed by AmeriData Technologies, Inc., last serving in the position of Vice President—Finance.

      John F. Kohler has served as a Senior Vice President, as well as our General Counsel and Corporate Secretary, since May 2004. From May 2000 to January 2003, he served as Vice President—Mergers and Acquisitions for Interliant, Inc., a technology solutions provider, primarily responsible for Interliant’s acquisition and restructuring activities. From May 1995 to April 2000, he was a corporate lawyer with Weil, Gotshal & Manges LLP, a law firm in New York, and from September 1993 to April 1995, he was a corporate lawyer with Jenkens & Gilchrist, P.C., a law

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firm in Dallas. Mr. Kohler served as an officer in the United States Army from May 1986 to September 1990.

Board Committees

      Our board of directors currently has four standing committees, consisting of an audit committee, a compensation committee, a corporate governance committee and an independent directors committee.

      Our audit committee currently is composed of William Lerner, Alvin E. Nashman and Arnold J. Wasserman, with Mr. Wasserman serving as its chairman. We believe that each of these committee members are “independent,” within the meaning of such term under applicable law and the Marketplace Rules of The Nasdaq Stock Market, Inc. Our board of directors has determined that Mr. Wasserman is an “audit committee financial expert,” as such term is defined by the SEC. The audit committee is primarily concerned with the accuracy and effectiveness of the audits of our financial statements by our internal audit staff and by our independent auditors. Its duties include:

      Our compensation committee currently is composed of Richard Heitzmann, William Lerner and Alvin Nashman, with Mr. Heitzmann serving as its chairman. The duties of our compensation committee include recommending to the full board of directors remuneration to be paid our executive officers, determining the number and conditions to exercise of options and other equity incentives granted pursuant to our various stock option plans and recommending the establishment of and monitoring a compensation and incentive program for all of our executive officers.

      Our corporate governance committee currently is composed of Richard Heitzmann, William Lerner, Arnold J. Wasserman and Clifford Friedman, with Mr. Lerner serving as its chairman. The duties of our corporate governance committee include overseeing that our board’s policies, as well as ensuring that we are in compliance with all applicable federal and state securities laws and the Nasdaq rules, and determining our board of directors’ slate of director-nominees for each shareholder election of directors.

      Our independent directors committee was formed by our Board in September 2004. It consists only of directors who are neither members of the management nor associated with Pequot or Constellation (or other similar investors) and is to consider, review and provide guidance and oversight regarding transactions or other situations in which other board members, who are either members of management or employees of Pequot or Constellation (or other similar investors), have interests that may be in addition to, or different from, the interests of the shareholders in general. This committee currently is composed of William Lerner, Alvin E. Nashman and Arnold J. Wasserman, with Mr. Wasserman serving as its chairman.

      Meetings of Our Board of Directors and its Committees

      Our board of directors held 15 formal meetings during our fiscal year ended March 31, 2005. Our audit committee held 7 formal meetings, our compensation committee held 4 formal meetings, our corporate governance committee held 1 formal meetings, and our independent directors

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committee held 3 formal meetings, during our 2005 fiscal year. Each member of our board of directors attended, in person or telephonically, at least 75% of the total number of meetings of our board and each committee of the board on which the director serves.

      Director Fees

      Each director who is not an employee of our company receives an annual fee of $16,000 as compensation for serving on our board of directors, plus an additional $1,500 for each board meeting attended in person and $750 for each board meeting attended by telephonic conference call. Each member of the board’s audit, compensation and corporate governance committees receives $2,500 per year, and each chairman of the committees receives $3,500 (except the chairman of the audit committee who receives $5,000), as compensation for serving on such committees, as well as an additional $1,000 for each committee meeting attended in person and $500 for each committee meeting attended by telephonic conference call, in each case if the committee meeting is held on a day other than a day on which the board itself is meeting.

      Audit Committee Charter

      Our board of directors adopted a charter for its audit committee in 2001. We amended the audit committee charter in June 2003 in order to comply with rules mandated by the Securities and Exchange Commission. A copy of the revised charter was made Appendix A to the proxy statement we issued in connection with the annual meeting of our shareholders held on November 7, 2003.

Section 16(a) Beneficial Ownership Reporting Compliance

      Based solely upon a review of Forms 3, 4 and 5 and amendments to these forms furnished to us, together with representations received by us from applicable parties that no Form 5 was required to be filed by such parties, all parties subject to the reporting requirements of Section 16(a) of the Exchange Act filed all such required reports during and with respect to our 2005 fiscal year.

Code of Ethics

      Our board of directors has established a code of ethics that applies to our principal executive, financial and accounting officer(s). A copy of our code of ethics was filed as exhibit 14.1 to our Annual Report on Form 10-K for fiscal year 2004.

Item 11. Executive Compensation

Summary Compensation

      The following table sets forth, with respect to the our fiscal years ended March 31, 2005, 2004 and 2003, all compensation earned by each person who served as our chief executive officer during our 2005 fiscal year and such other persons who were serving as executive officers at the end of our 2005 fiscal year and whose total annual salary and bonus earned during our 2005 fiscal year exceeded $100,000.

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						Annual Compensation										Long-Term Compensation Awards
Name and Principal Position(s)		Fiscal Year				Salary				Bonus				Other Annual Compensation(1)		Securities Underlying Options
Francis J. Alfano,       Chief Executive Officer			2005			$	215,800			$	50,000			—			400,000
Howard A. Pavony,			2005			$	265,000				—			—			—
Executive Vice President(2)			2004				265,000				—			—			—
			2003				265,000			$	8,200			—			—
Steven H. Rothman,			2005			$	265,000				—			—			—
Executive Vice President(3)			2004				265,000				—			—			—
			2003				265,000			$	8,200			—			—
Alan Schwartz,       Senior Vice President and Chief Financial Officer since May 2004			2005			$	169,400			$	25,000			—			150,000
John F. Kohler,       Senior Vice President and General Counsel since May 2004			2005			$	156,900			$	25,000			—			75,000

      Option Grants In Last Fiscal Year

      The following table sets forth, with respect to our fiscal year ended March 31, 2005, all grants of stock options to each named executive officer listed in the Summary Compensation Table contained in this Item 11.

      Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

      None of the named executive officers listed in the Summary Compensation Table contained in this Item 11 exercised any of their options during the year ended March 31, 2005.

      The following table sets forth:

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		Number of Unexercised Options as of March 31, 2005								Value of Unexercised In-the-Money Options as of March 31, 2005(1)
Name		Exercisable				Unexercisable				Exercisable				Unexercisable
Francis J. Alfano			66,667				333,333			$	154,000			$	770,000
Howard A. Pavony			115,800				0				300,317				0
Steven H. Rothman			115,800				0				300,317				0
Alan Schwartz			25,000				125,000				57,750				288,750
John F. Kohler			12,750				67,500				28,875				144,375

      Stock Plans

      We have adopted the following stock plans:

      The 1993 Stock Option Plan has expired. Accordingly, we can no longer grant options under such plan.

      Employees (including officers), directors and others who provide services to us are eligible to participate in our stock plans. The plans are administered by our board of directors or the compensation committee of the board. Options granted under the plans may be incentive stock options (as defined in Section 422 of the Internal Revenue Code of 1986, as amended), or non-qualified stock options. Non-qualified stock options may be granted in tandem with stock appreciation rights. The exercise price of options may not be less than 100% of the fair market value of the common stock as of the date of grant, except that this limitation does not apply to options granted under the 1998 Stock Option Plan and the exercise price of ISOs granted to an employee who owns more than ten percent of the outstanding common stock may not be less than 110% of the fair market value as of the date of grant. Options may not be exercised more than ten years after the date of grant, or five years in the case of ISOs granted to an employee who owns more than 10% of the outstanding shares of our common stock. An option may be exercised by tendering payment of the purchase price to us or, at the discretion of the administrator of the plans, by delivery of shares of our common stock having a fair market value equal to the exercise

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price. The number of shares that may be acquired upon exercise of an option and the exercise price of an option are subject to adjustment in the event of a merger, recapitalization, stock split or stock dividend.

      The 2000 Long Term Performance Plan and 2002 Long Term Performance Plan permits the grant of any form of award, including stock options, stock appreciation rights, and stock or cash awards. Awards under the 2000 Long Term Performance Plan may be in stock or denominated in units of stock, which may be subject to restrictions on transfer and include forfeiture provisions.

      Our shareholders approved our 2004 Equity Incentive Plan in May 2004. We have reserved a total of 3 million shares of our common stock for issuance under the 2004 plan. The types of awards that may be granted under the 2004 plan include one or more of the following types, either alone or in any combination thereof:

      Employment Agreements

      We entered into an employment agreement, dated May 21, 2004, with Francis J. Alfano (as amended, the “Alfano Employment Agreement”) to employ Mr. Alfano as our Chief Executive Officer. The Alfano Employment Agreement has an initial term of three (3) years (the “Initial Term”). On the third and each subsequent anniversary of the commencement of such agreement, the term of the agreement shall automatically be extended for an additional period of twelve (12) months; provided, however, that either party may elect not to extend the agreement by giving written notice to the other party at least twelve (12) months prior to any such anniversary date. Mr. Alfano is paid a base salary of $350,000 per annum and is entitled to receive additional compensation, at such times and in such amounts, as shall be determined in the sole discretion of the Board of Directors. In the event of a termination of Mr. Alfano's employment during the term of the agreement by us other than for “cause” or by Mr. Alfano for “good reason” or as a result of his death or permanent and total disability we shall provide him, among other things, a continuance of his then current base salary for a period equal to the greater of (i) one (1) year from the date of termination or (ii) the period ending on the last day of the Initial Term (the “Severance Period”). Additionally, in the event of termination for other than “cause” or for “good reason,” any unvested stock options or restricted stock units shall become fully vested and immediately exercisable and shall remain exercisable for the remainder of their term.

      We also entered into employment agreements, dated May 21, 2004, with Steven H. Rothman (the “Rothman Employment Agreement”) and Howard A. Pavony (as amended, the “Pavony Employment Agreement” and together with the Rothman Employment Agreement, the “Founder Employment Agreements”) to employ Mr. Rothman and Mr. Pavony as Executive Vice Presidents. The Founder Employment Agreements are on substantially the same terms as the Alfano Employment Agreement, including with respect to the acceleration of stock option and restricted stock units. Each of Mr. Rothman and Mr. Pavony are paid a base salary of $265,000 per annum.

      Additionally, we entered into a severance agreement, dated May 21, 2004, with Alan Schwartz (as amended the “Schwartz Severance Agreement”) and John Kohler (as amended the “Kohler Severance Agreement” and together with the Schwartz Severance Agreement, the “Severance Agreements”) to employ Mr. Schwartz as our Chief Financial Officer and Mr. Kohler as our

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General Counsel. Each Severance Agreement has a term of four (4) years. In the event of a termination of Mr. Schwartz's or Mr. Kohler's employment during the term of his agreement by the Company other than for “cause” or by such executive for “good reason” or as a result of his death or permanent and total disability we shall provide such executive, among other things, a continuance of his then current base salary for a period equal to one (1) year. Mr. Schwartz is paid a base salary of $250,000 per annum and Mr. Kohler is paid a base salary of $200,000. Additionally, in the event of termination of the executive for other than “cause” or for “good reason,” any unvested stock options or restricted stock units shall become fully vested and immediately exercisable and shall remain exercisable for the remained of their term.

Securities Authorized for Issuance Under Equity Incentive Plans

      We have provided in the “Equity Compensation Plan Information” section of Item 5 of this Annual Report on Form 10-K certain information with respect to securities authorized for issuance under our equity incentive plans.

Compensation Committee Interlocks and Insider Participation

      No member of our compensation committee is or was an officer employee of our company, nor had any relationship requiring disclosure under Item 13 of this Annual Report on Form 10-K. In addition, to our knowledge, none of our executive officers:

Item 12. Security Ownership of Certain Beneficial Owners and Management.

Our Current Beneficial Owners

      Our Series A Convertible Preferred Stock and common stock are the only classes of our voting securities presently outstanding. The Series A Preferred Stock votes on an “as converted” basis, such that each share of Series A Preferred Stock is entitled to that number of votes as equals the number of shares of common stock that the holder of such share of Series A Preferred Stock would receive upon conversion of the share of Series A Preferred Stock, but such number of votes shall not exceed such number of shares of common stock which would be received based on a conversion price of $1.45 per preferred share (in the case of Series A-1, A-2 and A-3 shares) or the market price of the common stock on the date of issuance of the preferred shares (in the case of Series A-4 and A-5 shares).

      The following table sets forth as of June 23, 2005 the beneficial ownership of the following persons:

      Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power. In addition, under SEC rules, a person is deemed to be the beneficial owner of securities which may be acquired by such person upon the exercise of options and warrants or the conversion of convertible securities within 60 days from the date on which

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beneficial ownership is to be determined. Our “named executive officers,” in accordance with SEC rules, are those executive officers who are required to be listed Summary Compensation Table provided in Item 11 of this Annual Report on Form 10-K. Except as otherwise indicated in the notes to the Beneficial Ownership Table:

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Restated Shareholders’ Agreement

      We entered into a Shareholders’ Agreement with the Pequot Fund, Pequot Partners, Howard A. Pavony and Steven H. Rothman on May 21, 2004, as a condition to the consummation of our sale to the Pequot Fund and Pequot Partners of an aggregate 3,255,814 shares of Series A-1 Preferred Stock.

      On December 21, 2004 we entered into an Amended and Restated Shareholders' Agreement (the “Restated Shareholders' Agreement”) with Pequot, Constellation, Howard A. Pavony and Steven H. Rothman. The Restated Shareholders’ Agreement reflected Mr. Pavony’s resignation

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from the Board of Directors which became effective on March 31, 2005. The parties agreed to vote, or cause to be voted, all securities of the company owned by such party or over which such party has voting control so that the number of directors will consist of: (i) the company’s chief executive officer (“CEO”); (ii) two directors designated by Pequot Capital Management, Inc., or its assignee; (iii) one director designated by Constellation or its assignee; (iv) Mr. Rothman; (v) three “independent” directors, within the meaning of “independent” under the current rules of Nasdaq, selected by the company’s nominating and corporate governance committee; and (vi) two additional independent directors to be selected by the CEO and reasonably acceptable to the company's nominating and corporate governance committee. Under certain circumstances where Pequot holds less than 25% of the securities Pequot purchased pursuant to the Purchase Agreement, the right to designate two directors in (ii) above will be reduced to one director and the above voting provisions will be adjusted in the manner described in the Restated Shareholders' Agreement.

      The obligation of the parties under the Restated Shareholders' Agreement will expire upon the earliest to occur of (i) the completion of any voluntary or involuntary liquidation or dissolution of the Company, (ii) the sale of all or substantially all of the company’s assets or of a majority of the outstanding equity of the Company to any person that is not a party to the Restated Shareholders’ Agreement, or (iii) December 10, 2009. The obligation of the Investors to vote in favor of the appointment of Mr. Rothman as a Director will expire on May 21, 2007, provided that he has not terminated his employment, other than for “good reason,” nor has been terminated for “cause.” Messrs. Rothman and Pavony’s obligation to vote for (i) two directors designated by Pequot Capital Management, Inc., and (ii) one director designated by Constellation or its assignee, shall terminate if (a) Pequot or their assignees own less than 10% of the Outstanding Series A Preferred Stock (or shares of our common stock issuable upon conversion thereof) issued to Pequot, (b) Constellation or its assignees own less than 10% of the Series A-3 Preferred Stock (or shares of our common stock issuable upon conversion thereof) issued to Constellation, or (c) any other shareholders that are introduced to the company by Pequot own less than 10% of the shares acquired by such shareholders from the company in a transaction not including a public offering or (ii) if Messrs. Pavony and Rothman individually own less than less than 10% of the number of shares of common stock owned by such person on December 10, 2004.

      The Restated Shareholders' Agreement also contains provisions (i) restricting the transfer of any securities by shareholders party to the Restated Shareholders' Agreement in certain circumstances and (ii) granting the Investors certain rights of first refusal and tag-along rights with respect to any dispositions by Messrs. Pavony and Rothman of their shares of Common Stock.

Item 13. Certain Relationships and Related Party Transactions.

      Not applicable.

Item 14. Principal Accountant Fees and Services.

Principal Accounting Fees and Services

      The following table sets forth the fees billed by our independent accountants for each of our last two fiscal years for the categories of services indicated.

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Audit Committee Pre-Approval Policy

      In addition to retaining Goldstein Golub Kessler LLP to audit our consolidated financial statements for the years ended March 31, 2005 and 2004, we retained Goldstein Golub Kessler to provide other auditing and advisory services to us in our 2005 and 2004 fiscal years. We understand the need for Goldstein Golub Kessler to maintain objectivity and independence in its audit of our financial statements. To minimize relationships that could appear to impair the objectivity of Goldstein Golub Kessler, our audit committee has restricted the non-audit services that Goldstein Golub Kessler and its aligned company may provide to us primarily to tax services and merger and acquisition due diligence and audit services, and has determined that we would obtain even these non-audit services from Goldstein Golub Kessler and/or its aligned company only when the services offered by Goldstein Golub Kessler and its aligned company are more effective or economical than services available from other service providers.

      The audit committee also has adopted policies and procedures for pre-approving all non-audit work performed by Goldstein Golub Kessler and any other accounting firms we may retain. Specifically, the audit committee has pre-approved the use of Goldstein Golub Kessler and its aligned company for detailed, specific types of services within the following categories of non-audit services: merger and acquisition due diligence and audit services; tax services; internal control reviews; and reviews and procedures that we request Goldstein Golub Kessler to undertake to provide assurances of accuracy on matters not required by laws or regulations. In each case, the audit committee has also set a specific annual limit on the amount of such services which we would obtain from Goldstein Golub Kessler, and has required management to report the specific engagements to the committee on a quarterly basis and to obtain specific pre-approval from the audit committee for all engagements.

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Item 15. Exhibits, Financial Statements Schedules.

Exhibits

      Set forth below is a list of the exhibits to this Annual Report on Form 10-K.

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10	.17		—	Amendment No.1 to Employment Agreement between MTM Technologies, Inc. and Francis J. Alfano*
10	.18		—	Employment Agreement, dated October 1, 2004 by and between MTM Technologies, Inc. and Steven Stringer*
10	.19		—	Severance Letter, dated May 21, 2004, between MTM Technologies, Inc. and Alan Schwartz*
10	.20		—	Amendment to Severance Letter between MTM Technologies, Inc. and Alan Schwartz*
10	.21		—	Form of Employee Stock Option Agreement*
10	.22		—	Stock Option Award Agreement, dated November 2, 2004, between MTM Technologies, Inc. and Steven Stringer*
10	.23		—	Restricted Stock Unit Award Agreement, dated November 2, 2004, between MTM Technologies, Inc. and Steven Stringer*
10	.24		—	Lease Agreement, dated as of June 16, 2004, between Eight Fifty Canal, LLC and MTM Technologies, Inc.*
14	.1		—	Code of ethics.*
21	.1		—	Subsidiaries of MTM Technologies, Inc.
23	.1		—	Consent from Goldstein Golub Kessler LLP.
23	.2		—	Consent of Ernst & Young LLP
23	.3		—	Consent of UHY LLP
23	.4		—	Consent of Squar, Milner, Reehl & Williamson LLP
23	.5		—	Consent of Gunnip & Co.
31	.1		—	Certification pursuant to Exchange Act Rule 13a-14(a) of Francis J. Alfano.
31	.2		—	Certification pursuant to Exchange Act Rule 13a-14(a) of Alan Schwartz.
32	.1		—	Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 of Francis J. Alfano.
32	.2		—	Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 of Alan Schwartz.

Financial Statements and Schedules

      We have provided in Item 8 to this Annual Report on Form 10-K a complete list of the financial statements being filed with this Form 10-K. There are no financial statement schedules applicable to this Form 10-K.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
MTM TECHNOLOGIES, INC.

      We have audited the accompanying consolidated balance sheets of MTM Technologies, Inc. and Subsidiaries as of March 31, 2005 and 2004, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended March 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MTM Technologies, Inc. and Subsidiaries as of March 31, 2005 and 2004 and the results of their operation and their cash flows for each of the three years in the period ended March 31, 2005 in conformity with United State generally accepted accounting principles.

GOLDSTEIN GOLUB KESSLER LLP
New York, New York

June 3, 2005, except for the fifth, sixth and seventh paragraphs of Note 2, as to which the date is June 8, 2005 and the eleventh paragraph of Note 10 as to which the date is June 23, 2005.

F-1

MTM TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS