IT Group Holdings (fka ITGL)

[TechKim]

On February 1, 2006, the Company entered into an agreement with Flat Rate Telecom Ltd. (“Flat Rate”). The agreement provides for cash advances in the amount of $200,610 (100,000 £Sterling). The agreement also provides for the Company's standard commercial reseller (service provider) agreement with Flat Rate for the sale of wholesale line rental and associated voice minutes. The agreement runs for a period of 12 months and was renewed for a further 12 month period to January 31, 2008. The Company bills Flat Rate based on predetermined prices as defined in the reseller (service provider) agreement. As of June 30, 2007 the outstanding receivable balance was $153,945. Revenues generated under this agreement during the three and six months ended June 30, 2007 were approximately $14,605 (7,302 £Sterling)and $24,542, (12,471 £Sterling) respectively, and for the three and six months ended June 30, 2006 were approximately $0 (0 £Sterling) and $7,634 (3,874 £Sterling), respectively. The advance is non interest bearing. The Company has not established a reserve as of June 30, 2007 as the balance was deemed fully collectible by the Company.

In connection with its purchase of the Nokia DX220 switch on November 1, 2005, the Company entered into a support services agreement with C.A.P.E. Management Ltd (“C.A.P.E.”) on November 8, 2005. The Company is currently paying $11,825 (6,000 £Sterling) per month to C.A.P.E. under this agreement. As at 30 June, 2007, the Company has an outstanding receivable derived from cash advances in connection with a carrier interconnect agreement with C.A.P.E. in the amount of $300,915 (150,000 £Sterling). Subsequent to June 30, 2007, the Company agreed to enter into a new contract based on the existing carrier interconnect agreement with C.A.P.E. for the supply and transport of telecommunications traffic, and C.A.P.E. has agreed that the Company will withhold 20% of the invoiced amounts to set-off against the outstanding receivables balance of $300,915 (150,000 £Sterling) owing to the Company. As a result, it is expected that the receivables outstanding will be repaid within approximately 9 months.