OVERVIEW

We are a global provider of on-demand, applied communication technologies. Our PGi Communications Operating System, or PGiCOS, supports business applications within the following solution sets in our three segments in North America, Europe and Asia Pacific: PGiMeet, PGiSend, PGiNotify and PGiMarket.

Key highlights of our financial and strategic accomplishments for the second quarter and first six months of 2009 include:

º Grew net revenue from our PGiMeet Solutions, the largest solution set within the PGiCOS, by 2.7% for the three months ended June 30, 2009 compared to the same period in 2008;

º Generated organic net revenue growth in our PGiMeet Solutions (which excludes impacts from foreign currency exchange rate fluctuations and acquisitions) of 4.3% for the three months ended June 30, 2009 compared to the same period in 2008 (see "-Non-GAAP Financial Measures");

º Grew net cash provided by operating activities by 8.6% compared to the six months ended June 30, 2008; and

º Grew free cash flow (net cash provided by operating activities less capital expenditures) by 42.8% compared to the six months ended June 30, 2008 (see "-Non-GAAP Financial Measures").

Our primary corporate objectives for the remainder of 2009 are focused on sharpening our business strategy, advancing our technology innovation and refreshing our go-to-market strategy in order to build a foundation for accelerated growth and profitability.

Specifically, in 2009, our strategic plan includes continued focus on:

º Developing and launching innovative products and customer self-service tools that improve our user experience;

º Migrating our network architecture to a global delivery platform of media servers to improve the quality, reliability and cost-effectiveness of our services;

º Building a brand that is a sustainable asset for us; and

º Optimizing and streamlining our expense structure in support of these efforts.

In the first six months of 2009, approximately 39% of our consolidated net revenues were generated outside of the United States. Consequently, movements in foreign currency exchange rates affect our reported results. We estimate that changes in foreign currency exchange rates negatively affected our consolidated net revenues by $7.8 million and $15.9 million during the three and six months ended June 30, 2009, respectively, as compared to the same periods in 2008. We anticipate movements in foreign currency exchange rates will continue to negatively affect our reported results in the third quarter of 2009 compared to the same period in 2008.

We have experienced net revenue growth in our PGiMeet Solutions through increases in volume, offset in part by declines in average selling prices. Traditional pricing for these services is on a per-minute basis. During 2008, we introduced a subscription-based pricing model similar to that of other on-demand service providers. Revenue from subscription-based pricing was $13.7 million for the six months ended June 30, 2009, or 5.8% of our PGiMeet Solutions net revenue. Net revenue from our PGiMeet Solutions for the three months ended June 30, 2009 and 2008 was $116.7 million and $113.7 million, respectively.

We have experienced revenue volume declines in our broadcast fax, transactional fax and e-mail delivery services. Net revenue from these services for the three months ended

We anticipate that our increased operating cash flows will continue to be driven by our PGiMeet Solutions, offset by declines in our broadcast fax, transactional fax and e-mail delivery services.

We have historically used our free cash flow for debt repayments, acquisitions and stock repurchases. At June 30, 2009, borrowings under our credit facility were $267.8 million. During the six months ended June 30, 2009 and 2008, our free cash flow was $18.3 million and $12.8 million, respectively (see "-Non-GAAP Financial Measures"). We anticipate extending the tenure of, or refinancing, our existing credit facility prior to its maturity in April 2011. In 2009, we anticipate using a portion of our free cash flow to pay down our debt or to build cash balances, while still continuing to evaluate possible acquisitions and share repurchases.

In addition, we intend to continue to prudently invest in our PGiMeet Solutions, specifically in technology innovation and platform development. We will also continue to evaluate our cost structure for the remainder of 2009 and streamline operations as warranted by the current economic environment. We expect to incur additional restructuring costs associated with these efforts in the second half of 2009.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of net revenues and expenses during the reporting period. Actual results could differ from the estimates. See "-Critical Accounting Policies." The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The results of operations for the three and six months ended June 30, 2009 are not indicative of the results that may be expected for the full fiscal year of 2009 or for any other interim period. The financial information and discussion presented herein should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2008, which includes information and disclosures not included herein. All significant intercompany accounts and transactions have been eliminated in consolidation.

RESULTS OF OPERATIONS

Net Revenues

   The following tables present certain financial information about our segments
for the periods presented (in thousands, except percentages):

                                                         Three Months Ended
                                          -------------------------------------------------
                                                  June 30,                    Change
                                          ------------------------      -------------------
                                            2009           2008            $           %
                                          ---------      ---------      --------    -------
Net revenues:
   North America
           PGiMeet Solutions              $  81,175      $  77,123       4,052        5.3
           Broadcast fax solutions            1,833          3,123      (1,290 )    (41.3 )
           Other solutions                   13,797         16,858      (3,061 )    (18.2 )
                                          ---------      ---------      ------      -----
                   Total North America    $  96,805      $  97,104        (299 )     (0.3 )
                                          ---------      ---------      ------      -----

   Europe
           PGiMeet Solutions              $  21,989      $  21,230         759        3.6
           Broadcast fax solutions            1,819          3,943      (2,124 )    (53.9 )
           Other solutions                    5,585          8,164      (2,579 )    (31.6 )
                                          ---------      ---------      ------      -----
                   Total Europe           $  29,393      $  33,337      (3,944 )    (11.8 )
                                          ---------      ---------      ------      -----

     Asia Pacific
           PGiMeet Solutions              $  13,545      $  15,335      (1,790 )    (11.7 )
           Broadcast fax solutions            7,198          8,383      (1,185 )    (14.1 )
           Other solutions                    7,750          7,406         344        4.6
                                          ---------      ---------      ------      -----
                   Total Asia Pacific     $  28,493      $  31,124      (2,631 )     (8.5 )
                                          ---------      ---------      ------      -----

     Consolidated
           PGiMeet Solutions              $ 116,709      $ 113,688       3,021        2.7
           Broadcast fax solutions           10,850         15,449      (4,599 )    (29.8 )
           Other solutions                   27,132         32,428      (5,296 )    (16.3 )
                                          ---------      ---------      ------      -----
                   Total consolidated     $ 154,691      $ 161,565      (6,874 )     (4.3 )
                                          ---------      ---------      ------      -----

Operating income:
     North America                        $   3,781      $   1,436       2,345      163.3
     Europe                                   4,118          5,791      (1,673 )    (28.9 )
     Asia Pacific                             6,252          6,673        (421 )     (6.3 )
                                          ---------      ---------      ------      -----
                   Total operating income $  14,151      $  13,900         251        1.8
                                          ---------      ---------      ------      -----

Percent of net revenues: