8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report: October 7, 2010

CINCINNATI BELL INC.

(Exact Name of Registrant as Specified in its Charter)

Ohio	001-8519	31-1056105
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

221 East Fourth Street

Cincinnati, OH 45202

(Address of Principal Executive Office)

Registrant’s telephone number, including area code: (513) 397-9900

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 9.01 – FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements of Business Acquired

(1) The audited balance sheet of Cyrus Networks, LLC as of December 31, 2009 and the audited statement of income, statement of member’s equity and statement of cash flows of Cyrus Networks, LLC for the fiscal year ended December 31, 2009, and the notes thereto, are attached as Exhibit 99.1 to this Current Report on Form 8-K and are incorporated herein by reference.

(2) The unaudited condensed balance sheet of Cyrus Networks, LLC as of March 31, 2010 and the unaudited condensed statement of income, statement of member’s equity and statement of cash flows of Cyrus Networks, LLC for the three months ended March 31, 2010 and March 31, 2009, and the notes thereto, are attached as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference.

(b) Exhibits

Exhibit No.	Description
23.1	Consent of BKD, LLP dated October 7, 2010.
99.1	The audited balance sheet of Cyrus Networks, LLC as of December 31, 2009 and the audited statement of income, statement of member’s equity and statement of cash flows of Cyrus Networks, LLC for the fiscal year ended December 31, 2009, and the notes thereto.
99.2	The unaudited condensed balance sheet of Cyrus Networks, LLC as of March 31, 2010 and the unaudited condensed statement of income, statement of member’s equity and statement of cash flows of Cyrus Networks, LLC for the three months ended March 31, 2010 and March 31, 2009, and the notes thereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CINCINNATI BELL INC.
Date: October 7, 2010	By:	/s/ Christopher J. Wilson
		Christopher J. Wilson
		Vice President, General Counsel and Secretary

EXHIBIT INDEX

Exhibit No.	Description
23.1	Consent of BKD, LLP dated October 7, 2010.
99.1	The audited balance sheet of Cyrus Networks, LLC as of December 31, 2009 and the audited statement of income, statement of member’s equity and statement of cash flows of Cyrus Networks, LLC for the fiscal year ended December 31, 2009, and the notes thereto.
99.2	The unaudited condensed balance sheet of Cyrus Networks, LLC as of March 31, 2010 and the unaudited condensed statement of income, statement of member’s equity and statement of cash flows of Cyrus Networks, LLC for the three months ended March 31, 2010 and March 31, 2009, and the notes thereto.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in Registration Statement Nos. 333-162211, 333-65581 and 002-82253 on Forms S-3 and Registration Statement Nos. 333-60370, 333-60376, 333-60378, 333-60384, 333-38743, 333-38763, 333-28385, 333-28381, 333-77011, 333-143088, 333-143089 and 333-159160 on Forms S-8 of Cincinnati Bell Inc. and subsidiaries (the Company) of our report dated October 7, 2010, on our audit of the financial statements of Cyrus Networks, LLC, as of and for the year ended December 31, 2009. We also consent to the references to our firm under the captions, “Experts” and “Independent Registered Public Accounting Firms”.

/s/ BKD, LLP

Houston, Texas

October 7, 2010

EX-99.1

Exhibit 99.1

Cyrus Networks, LLC

Accountants’ Report and Financial Statements

December 31, 2009

Cyrus Networks, LLC

December 31, 2009

Contents

Report of Independent Registered Public Accounting Firm	1
Financial Statements
Balance Sheet	2
Statement of Income	3
Statement of Member’s Equity	4
Statement of Cash Flows	5
Notes to Financial Statements	6

Report of Independent Registered Public Accounting Firm

Board of Directors and Unitholder

Cyrus Networks, LLC

Houston, Texas

We have audited the accompanying balance sheet of Cyrus Networks, LLC as of December 31, 2009, and the related statements of income, member’s equity and cash flows for the year then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cyrus Networks, LLC as of December 31, 2009, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ BKD, LLP

Houston, Texas

October 7, 2010

1

Cyrus Networks, LLC

Balance Sheet

December 31, 2009

Assets
Current Assets
Cash	$	7,242,904
Accounts receivable, net of allowance of $239,296		4,936,541
Prepaid expenses and other		5,366,395
Total current assets		17,545,840
Property and Equipment, At Cost
Building and improvements		137,093,241
Process equipment		5,630,348
Computer hardware		1,648,164
Software		474,932
Office furniture and equipment		553,836
		145,400,521
Less accumulated depreciation and amortization		10,462,485
Depreciable property and equipment, net		134,938,036
Construction in progress		1,190,382
Total property and equipment, net		136,128,418
Other Assets
Goodwill		62,854,019
Intangible assets, net		25,283,333
Deferred costs, net		8,521,679
Other		151,048
		96,810,079
Total assets	$	250,484,337
Liabilities and Member’s Equity
Current Liabilities
Current maturities of long-term debt	$	1,250,000
Accounts payable		4,593,291
Accrued expenses		2,154,622
Unearned revenue		4,629,749
Deferred installation charges		3,673,701
Accrued interest		928,239
Total current liabilities		17,229,602
Long-term Debt, Net of Current Portion		98,750,000
Other Long-term Obligations		28,760,152
Deferred Installation Charges, Net of Current Portion		7,957,177
Member’s Equity		97,787,406
Total liabilities and member’s equity	$	250,484,337

See Notes to Financial Statements

2

Cyrus Networks, LLC

Statement of Income

Year Ended December 31, 2009

Net Sales	$	58,298,398
Cost of Sales		17,803,322
Gross Profit		40,495,076
Operating Expenses
General and administrative		4,993,769
Selling and marketing		3,533,489
Depreciation and amortization		7,652,402
		16,179,660
Operating Income		24,315,416
Other Income (Expense)
Interest expense		(9,654,039	)
Rental income		135,671
Other expense		(22,126	)
		(9,540,494	)
Income Before Income Taxes		14,774,922
Provision for Income Taxes
Texas franchise tax		405,982
Net Income	$	14,368,940

See Notes to Financial Statements

3

Cyrus Networks, LLC

Statement of Member’s Equity

Year Ended December 31, 2009

Balance, January 1, 2009	$	61,893,466
Capital contributions		21,525,000
Net income		14,368,940
Balance, December 31, 2009	$	97,787,406

See Notes to Financial Statements

4

Cyrus Networks, LLC

Statement of Cash Flows

Year Ended December 31, 2009

Operating Activities
Net income	$	14,368,940
Items not requiring cash:
Depreciation and amortization		7,652,402
Provision for bad debts		264,000
Loss on sale of property and equipment		109,941
Noncash interest		1,368,491
Changes in:
Accounts receivable		1,061,369
Deferred costs		(3,780,993	)
Unearned revenue		2,276,705
Accounts payable and accrued expenses		592,681
Deferred installation charges		5,729,891
Other current assets and liabilities		(2,319,093	)
Net cash provided by operating activities		27,324,334
Investing Activities
Purchases of property and equipment		(46,626,045	)
Escrow on Houston lease		(2,400,000	)
Net cash used in investing activities		(49,026,045	)
Financing Activities
Gross borrowings on first lien revolving facility		2,000,000
Principal payments on CapEx debt		(1,245,976	)
Principal payments on first lien debt		(3,636,604	)
Payoff of revolver with refinancing		(2,691,827	)
Payoff of first lien CapEx with refinancing		(9,199,124	)
Payoff of first lien term loan with refinancing		(24,611,514	)
Payoff on second lien term loan with refinancing		(27,000,000	)
Payoff on second lien CapEx line with refinancing		(9,684,675	)
Proceeds from issuance of long-term debt with refinancing		82,174,470
Capital contributions		21,525,000
Net cash provided by financing activities		27,629,750
Increase in Cash		5,928,039
Cash, Beginning of Year		1,314,865
Cash, End of Year	$	7,242,904
Supplemental Cash Flows Information
Interest paid	$	4,976,894
Accounts payable incurred for construction in progress at December 31		257,440
Property and equipment acquired by issuance of financing obligations		12,028,462
Texas franchise taxes paid		212,000

See Notes to Financial Statements

5

Cyrus Networks, LLC

Notes to Financial Statements

December 31, 2009

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Cyrus Networks, LLC (the Company), is a wholly owned subsidiary of Cy-One Parent LLC (the Parent Company) and is a Delaware limited liability company. The Parent Company is a wholly owned subsidiary of Cy-One Holdings LLC (Holdings), a Delaware limited liability company and a guarantor for the Company’s debt.

The Company earns revenues predominately from providing information technology infrastructure and colocation services (which are considered one operating segment) for businesses in Houston, Dallas and Austin, Texas, and surrounding areas. The Company extends unsecured credit to its customers, with credit extended to four customers exceeding 50 percent of accounts receivable at December 31, 2009.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2009, there were no cash equivalents.

The financial institutions holding the Company’s cash accounts are participating in the Federal Deposit Insurance Corporation’s (FDIC) Transaction Account Guarantee Program. Under that program, through December 31, 2010, all noninterest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account.

Accounts Receivable

Accounts receivable are stated at the amount billed to customers, plus any accrued and unpaid interest. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Accounts receivable are ordinarily due 30 days after the issuance of the invoice. Accounts past due more than 120 days are considered delinquent. Interest accrues on delinquent accounts until the account is brought current or is written off. Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer. There was no material change in the allowance for doubtful accounts during 2009.

6

Property and Equipment

Property and equipment acquisitions are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is charged to expense on the straight-line basis over the estimated useful life of each asset. Building improvements are amortized over the shorter of the lease term or their estimated useful lives.

Buildings and improvements	3-20 years
Process equipment	2-7 years
Software and hardware	1-5 years
Furniture and fixtures	3-10 years

Gross property and equipment includes $27,998,527 of assets related to three data center facilities for which the Company is considered the owner pursuant to accounting standards for lessee’s involvement in asset construction as of December 31, 2009. These assets are primarily included in the caption buildings and improvements. Accumulated amortization on these assets at December 31, 2009, is $280,073.

Goodwill

Goodwill is tested annually for impairment. If the implied fair value of goodwill is lower than its carrying amount, a goodwill impairment is indicated and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the financial statements.

Intangible Assets

Intangible assets are being amortized on the straight-line basis over periods ranging from 15 to 30 years. Such assets are periodically evaluated as to the recoverability of their carrying value.

Long-lived Asset Impairment

The Company evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value. No asset impairment was recognized during the year ended December 31, 2009.

Income Taxes

The Company’s member has elected to have the Company’s income taxed as a partnership under provisions of the Internal Revenue Code. Therefore, taxable income or loss is reported to the individual member for inclusion in his or her tax return and no provision for federal income taxes is included in these financial statements. The provision for income taxes reflected in these financial statements is for Texas franchise taxes only. The Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2005.

7

Significant changes were made to the Texas franchise tax during the 79^th and 80^th sessions of the Texas Legislature. The revised tax base is based on a taxable entity’s margin. The franchise tax is calculated at a rate of 1 percent on the lesser of three calculations: a) total revenue less cost of goods sold; b) total revenue less compensation; or c) total revenue times 70 percent.

Revenue Recognition

The Company provides services to customers, which includes non-recurring charges (such as installation charges at the origination of a contract) and recurring charges (such as ongoing maintenance and service charges through the life of the contract). Non-recurring charges billed at contract origination are recorded as deferred installation charges and amortized to income, on the straight-line basis, over the life of each contract. For certain new customers, the Company performs specific project work, such as planning and physically moving equipment to the data center. This project revenue is recognized as obligations under the project are completed. Recurring charges billed monthly (one month in advance of providing the services) are recorded as unearned revenue and recognized into income the following month (when the service is actually provided).

Additionally, the implementation and installation costs associated with the origination of the contracts (such as sales commissions and other implementation costs) are recorded as deferred costs and amortized into expense, on the straight-line basis, over the life of each contract. All expenses, including the use of third-party movers, related to project revenues are recognized as incurred during the project.

Taxes Collected From Customers and Remitted to Governmental Authorities

Taxes collected from customers and remitted to governmental authorities are presented in the accompanying statement of income on a net basis.

Note 2: Acquired Intangible Assets

The carrying basis and accumulated amortization of recognized intangible assets at December 31, 2009, were as follows:

	Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	24,400,000	$	4,066,667
Trade name		5,400,000		450,000
	$	29,800,000	$	4,516,667

The acquired intangible assets have a weighted-average useful life of approximately 18 years. Amortization expense for the year ended December 31, 2009, was $1,806,667. Estimated amortization expense for each of the following five years was:

2010	$	1,806,667
2011		1,806,667
2012		1,806,667
2013		1,806,667
2014		1,806,667

8

Note 3: Extinguishment of Debt

The Company retired all of its long-term debt and revolving line of credit during the year ended December 31, 2009, and replaced it with a new term loan and credit facility. Unamortized deferred financing costs, at the date of retirement, were written off and resulted in a $1,499,615 charge to expense in the accompanying statement of income.

Note 4: Revolving Loan

The Company has a $25,000,000 revolving line of credit expiring in 2014, the available portion of which is determined partially based on the amount of other debt outstanding, as well as a multiple of the previously reported last three months’ earnings before interest, taxes, depreciation and amortization (as defined under the Amended and Restated Credit Agreement). At December 31, 2009, there was no amount borrowed against this line of credit. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The line of credit is collateralized by a first lien on substantially all the assets of the Company. The Company has the option to pay interest based on either the prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter.

Note 5: Long-term Debt

Term loan (A)	$	100,000,000
Delayed Draw Term Loan (DDTL) (B)		—
		100,000,000
Less current maturities		1,250,000
Total long-term debt	$	98,750,000

(A) Principal payments are due quarterly as specified under the Amended and Restated Credit Agreement and commence on December 31, 2010. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The Company has the option to pay interest based on either the prime rate or LIBOR, with a LIBOR floor of 2.00 percent, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At December 31, 2009, the Company had this principal balance under a LIBOR loan, plus 5.50 percent or 7.50 percent. The terms of the Amended and Restated Credit Agreement also place certain restrictions on payments to the member and others. This loan is secured by substantially all of the assets of the Company and matures November 20, 2014.

9

(B) The DDTL funds available for withdrawal totaled $25,000,000 as calculated under the Amended and Restated Credit Agreement through November 20, 2011. Quarterly principal payments are due starting December 31, 2011, as specified under the Amended and Restated Credit Agreement. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The Company has the option to pay interest based on either the prime rate or LIBOR, with a LIBOR floor of 2.00 percent, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. The Company had not made any draws against the DDTL funds at December 31, 2009. The terms of the Amended and Restated Credit Agreement also place certain restrictions on payments to the member and others. This loan is secured by substantially all of the assets of the Company and matures November 20, 2014.

Aggregate annual maturities of long-term debt at December 31, 2009, are as follows:

2010	$	1,250,000
2011		6,250,000
2012		11,250,000
2013		16,250,000
2014		65,000,000
	$	100,000,000

Note 6: Other Long-term Obligations

The Company leases data center facilities and equipment used in its operations, some of which are required to be recorded in accordance with Accounting Standards Codification (ASC) 840, Leases. In certain situations, this guidance requires initial recording of the assets for which the Company is considered to be the owner due to lessee involvement in the assets’ construction at estimated fair value and offsetting amounts as liabilities.

At December 31, 2009, the Company had $28,760,152 of total long-term obligations relating to certain leases, all of which are recorded as long term on the balance sheet. For 2009, the Company recorded $2,024,361 of interest expense related to other long-term obligations.

Aggregate annual maturities of other long-term obligations related to data center facilities at December 31, 2009, are as follows:

2010	$	1,793,295
2011		2,527,168
2012		2,591,464
2013		2,622,324
2014		2,684,884
Thereafter		21,742,947
		33,962,082
Less amounts representing interest		(29,792,896	)
Add estimated residual values		24,590,966
Present value	$	28,760,152

10

Note 7: Operating Leases

Noncancellable operating leases for operational facilities, offices and equipment expire in various years through 2012. The facility leases typically contain renewal options for additional five-year terms and require the Company to pay its proportional share of all executory costs (property taxes, maintenance and insurance). In addition, the Company has a noncancellable ground lease for one of its buildings in Houston. This lease expires in 2066.

Future minimum lease payments at December 31, 2009, were:

2010	$	695,714
2011		490,071
2012		30,338
2013		20,130
2014		20,130
Later years		1,031,663
	$	2,288,046

Rental expense for operating leases for the year ended December 31, 2009, was $798,604.

Note 8: Profit Sharing Plan

The Company has a 401(k) profit sharing plan covering substantially all employees. The Company contributes 25 percent of each employee’s contribution up to 6 percent. Contributions to the 401(k) profit sharing plan were $115,561 for the year ended December 31, 2009.

Note 9: Unit Incentive Plan

Under the Holdings’ Amended and Restated Limited Liability Company Agreement dated July 3, 2007, Holdings is authorized to issue an unlimited number of Class C units. These shares are used as incentives for executive management and other employees as part of the Company’s overall compensation plan. The vesting of the Class C units differs by individual; but in all cases, one fifth of the units vest in each of the five years following the grant date.

In the event of termination of employment, all non-vested units automatically revert to, and become, the property of Holdings. If the employee is an executive and is terminated for cause or resigns voluntarily when Holdings can demonstrate cause existed, the vested units will be purchased from the employee for an aggregate purchase price of $1. For all other cases where the executive employee resigns voluntarily, Holdings may elect to purchase all or any portion of the vested units at fair market value, as defined in the Incentive Share Agreements. For employees other than executives receiving the Class C shares, all vested and non-vested shares forfeit back to Holdings upon termination of employment.

Compensation expense related to the Class C units was not recorded during the year ended December 31, 2009, as the amount was considered immaterial to the financial statements due to the insignificant value of the Class C units at the date of grant.

11

Note 10: Disclosures About Fair Value of Assets and Liabilities

The following methods were used to estimate the fair value of all financial instruments recognized in the accompanying balance sheet at amounts other than fair value.

Cash

The carrying amount approximates fair value.

Long-term Debt and Other Long-term Obligations

Fair value is estimated based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities.

The following table presents estimated fair values of the Company’s financial instruments at December 31, 2009.

	Carrying Amount		Fair Value
Financial assets:
Cash	$	7,242,904	$	7,242,904
Financial liabilities:
Long-term debt		100,000,000		100,000,000
Other long-term obligations		28,760,152		29,327,909

Note 11: Significant Estimates and Concentrations

Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters are included on the following page.

Major Customer

The Company received approximately 20 percent of its revenues from one customer for the year ended December 31, 2009.

Goodwill

As discussed in Note 1, the Company annually tests its goodwill for impairment. At the most recent testing date, the fair value of the Company exceeded its carrying value by approximately 130 percent. Estimated fair value of the Company was based principally on expected future income and cash flows. Due to the volatility of the current economic environment, management estimates of future income and cash flows are subject to significantly more uncertainty than during more stable environments. Management believes it has applied reasonable judgment in developing its estimates; however, unforeseen negative changes in the national, state or local economic environment may negatively impact those estimates in the near term.

12

Note 12: Subsequent Events

New Operating Lease

On March 3, 2010, the Company entered into a lease amendment for its Lewisville facility. The lease amendment expands the amount of space leased by 27,758 square feet, commences on March 3, 2010, and has an initial term of 13 years and six months with two five-year renewal options. In addition, the lease amendment extended the term on approximately 60,000 square feet of previously leased space at the same location by approximately four years.

Future estimated minimum lease payments related to space leased under this amendment are:

2010	$	55,516
2011		222,064
2012		222,064
2013		222,064
2014		222,064
Thereafter		1,924,538
	$	2,868,310

Definitive Agreement

On May 12, 2010, the Company entered into an Equity Purchase Agreement (the Purchase Agreement) pursuant to which Cincinnati Bell, Inc., and Cincinnati Bell Technology Solutions, Inc. (the Buyer), will acquire the equity interests of the Company for $525,000,000 in cash, less any indebtedness and transaction fees and other amounts, and subject to customary working capital and capital expenditure adjustment, as provided in the Purchase Agreement.

The Purchase Agreement contains customary representations, warranties, indemnities and covenants, including certain customary operating restrictions on the conduct of the business of the Company during the period from the execution of the Purchase Agreement to the closing of the acquisition. The Purchase Agreement requires that the Buyer use commercially reasonable efforts to arrange the financing (as defined in the Purchase Agreement) and, if the financing becomes unavailable, to arrange alternative financing on terms no less favorable to the Buyer. The Company is required to cooperate with the Buyer in connection with the arrangement of the financing.

Each party’s obligation to consummate the acquisition is conditioned upon the expiration or termination of the applicable waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions, as described in the Purchase Agreement. The obligation of the Buyer to consummate the acquisition at the closing is not conditioned upon the availability of financing. The Company expects the closing of the acquisition to occur by the end of the second quarter of 2010.

The Purchase Agreement also reflects that the Buyer has entered into new employment agreements with four executive officers of the Company, which provide they will remain in their roles as executive officers of the Company after the closing of the acquisition.

13

The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the Purchase Agreement.

Note 13: Recently Issued Accounting Standards

In June 2009, new accounting guidance under ASC 860, Transfers and Servicing, was issued. The guidance eliminates the concept of a qualifying special-purpose entity, changes the requirements for derecognizing financial assets, and requires additional disclosures that will provide greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. Such guidance is effective for fiscal years beginning after November 15, 2009. The Company does not expect the impact of this guidance to be material to the Company’s financial statements.

In September 2009, new accounting guidance under ASC 605 related to revenue arrangements with multiple deliverables was issued. The guidance addresses the unit of accounting for arrangements involving multiple deliverables, how arrangement consideration should be allocated to the separate units of accounting and eliminates the criterion that objective and reliable evidence of fair value of any undelivered items must exist for the delivered item to be considered a separate unit of accounting. Such guidance is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company has not yet assessed the impact of this guidance on the Company’s financial statements.

In September 2009, new accounting guidance under ASC 605 was issued regarding tangible products containing both software and non-software components that function together to deliver the product’s essential functionality. Such guidance is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company has not yet assessed the impact of this guidance on the Company’s financial statements.

14

EX-99.2

Exhibit 99.2

Cyrus Networks, LLC

FINANCIAL STATEMENTS

March 31, 2010 and 2009

UNAUDITED

Cyrus Networks, LLC

Condensed Balance Sheet (Unaudited)

March 31, 2010

	March 31, 2010
Assets
Current Assets
Cash	$	10,090,629
Accounts receivable, net of allowance of $224,538		6,223,418
Prepaid expenses and other		3,021,216
Total current assets		19,335,263
Property and Equipment, at Cost
Buildings and improvements		138,354,859
Process equipment		6,249,151
Computer hardware		2,098,106
Software		481,026
Office furniture and equipment		597,422
		147,780,564
Less accumulated depreciation and amortization		(13,484,128	)
Depreciable property and equipment, net		134,296,436
Construction in progress		5,677,531
Total property and equipment, net		139,973,967
Other Assets
Goodwill		62,854,019
Intangible assets, net		24,831,667
Deferred costs, net		8,074,329
Other		151,049
Total other assets		95,911,064
Total Assets	$	255,220,294
Liabilities and Member’s Equity
Current Liabilities
Current maturities of long-term debt	$	2,500,000
Accounts payable		4,982,473
Accrued expenses		2,233,335
Unearned revenue		4,507,475
Deferred installation charges		3,903,765
Accrued interest		703,125
Total current liabilities		18,830,173
Long-term Debt, Net of Current Portion		97,500,000
Other Long-term Obligations		29,059,340
Deferred Installation Charges, Net of Current Portion		7,848,434
Total liabilities		153,237,947
Member’s Equity		101,982,347
Total Liabilities and Member’s Equity	$	255,220,294

See Notes to Condensed Financial Statements

Cyrus Networks, LLC

Condensed Statements of Income (Unaudited)

Three Months Ended March 31, 2010 and 2009

	Three Months Ended March 31,
	2010			2009
Net Sales	$	18,333,425		$	11,825,242
Cost of Sales		4,826,893			3,591,658
Gross Profit		13,506,532			8,233,584
Operating Expenses
General and administrative		2,248,953			1,224,282
Selling and marketing		1,034,381			757,178
Depreciation and amortization		3,473,311			1,711,162
		6,756,645			3,692,622
Operating Income		6,749,887			4,540,962
Other Income (Expense)
Interest expense		(2,851,264	)		(2,015,227	)
Rental income		—			68,670
Other income, net		1,687			31,622
		(2,849,577	)		(1,914,935	)
Income Before Income Taxes		3,900,310			2,626,027
Provision for Income Taxes
Texas franchise tax		126,000			75,000
Net Income	$	3,774,310		$	2,551,027

See Notes to Condensed Financial Statements

Cyrus Networks, LLC

Condensed Statements of Member’s Equity (Unaudited)

Three Months Ended March 31, 2010 and 2009

	Three Months Ended March 31,
	2010		2009
Member’s equity, beginning balance	$	97,787,406	$	61,893,465
Capital contributions (including non-cash stock compensation)		420,631		—
Net income		3,774,310		2,551,027
Member’s equity, ending balance	$	101,982,347	$	64,444,492

See Notes to Condensed Financial Statements

Cyrus Networks, LLC

Condensed Statements of Cash Flows (Unaudited)

Three Months Ended March 31, 2010 and 2009

	Three Months Ended March 31,
	2010			2009
Operating Activities
Net income	$	3,774,310		$	2,551,027
Items not requiring cash:
Depreciation and amortization		3,473,310			1,711,162
Provision for bad debts		30,000			101,000
Loss on sale of property and equipment		18,500			—
Stock compensation expense		420,631			—
Noncash interest expense		607,729			302,209
Changes in:
Accounts receivable		(1,316,877	)		1,140,977
Deferred costs		447,350			15,717
Unearned revenue		(122,274	)		529,991
Accounts payable and accrued expenses		467,895			(3,774,638	)
Deferred installation charges		121,321			547,250
Other assets and liabilities		(279,936	)		(1,381,149	)
Net cash provided by operating activities		7,641,959			1,743,546
Investing Activities
Purchases of property and equipment		(6,885,693	)		(3,677,657	)
Return of escrow on Houston lease		2,400,000			—
Net cash used in investing activities		(4,485,693	)		(3,677,657	)
Financing Activities
Borrowing on revolving facility		—			2,000,000
Principal payments on long-term debt		—			(101,031	)
Payments on lease obligations		(308,541	)		(75,247	)
Net cash used in financing activities		(308,541	)		1,823,722
Increase (Decrease) in Cash		2,847,725			(110,389	)
Cash, Beginning of Period		7,242,904			1,314,865
Cash, End of Period	$	10,090,629		$	1,204,476

See Notes to Condensed Financial Statements

Cyrus Networks, LLC

Notes to Condensed Financial Statements

March 31, 2010

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Cyrus Networks, LLC (the Company) is a wholly owned subsidiary of Cy-One Parent LLC (the Parent Company) and is a Delaware limited liability company. The Parent Company is a wholly owned subsidiary of Cy-One Holdings LLC (Holdings), is a Delaware limited liability company and a guarantor for the Company’s debt.

The Company earns revenues predominately from providing information technology infrastructure and colocation services for businesses in Houston, Dallas and Austin, Texas, and surrounding areas.

Basis of Presentation

The Condensed Financial Statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for each period presented. The Company has evaluated subsequent events through May 20, 2010.

The adjustments referred to above are of a normal and recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to SEC rules and regulations.

These Condensed Financial Statements should be read in conjunction with the Company’s 2009 audited financial statements. Operating results for the three months ended March 31, 2010, are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2010.

Recently Issued Accounting Standards

In September 2009, new accounting guidance under ASC 605 related to revenue arrangements with multiple deliverables was issued. The guidance addresses the unit of accounting for arrangements involving multiple deliverables, how arrangement consideration should be allocated to the separate units of accounting and eliminates the criterion that objective and reliable evidence of fair value of any undelivered items must exist for the delivered item to be considered a separate unit of accounting. Such guidance is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company has not yet assessed the impact of this guidance on the Company’s financial statements.

In September 2009, new accounting guidance under ASC 605 was issued regarding tangible products containing both software and non-software components that function together to deliver the product’s essential functionality. Such guidance is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company has not yet assessed the impact of this guidance on the Company’s financial statements.

Note 2: Acquired Intangible Assets

The carrying basis and accumulated amortization of recognized intangible assets at March 31, 2010, were as follows:

	Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	24,400,000	$	4,473,333
Trade name		5,400,000		495,000
	$	29,800,000	$	4,968,333

The acquired intangible assets have a weighted-average useful life of approximately 18 years. Amortization expense for the three months ended March 31, 2010 and 2009, was $451,666.

Note 3: Revolving Loan

The Company has a $25,000,000 revolving line of credit expiring in 2014, the available portion of which is determined partially based on the amount of other debt outstanding, as well as a multiple of the previously reported last three months’ earnings before interest, taxes, depreciation and amortization (as defined under the Amended and Restated Credit Agreement). At March 31, 2010, there was no amount borrowed against this line of credit. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The line of credit is collateralized by a first lien on substantially all the assets of the Company. The Company has the option to pay interest based on either the prime rate or LIBOR, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter.

Note 4: Long-term Debt

Term loan (A)	$	100,000,000
Delayed Draw Term Loan (DDTL) (B)		—
		100,000,000
Less current maturities		2,500,000
Total long-term debt	$	97,500,000

(A) Principal payments are due quarterly as specified under the Amended and Restated Credit Agreement and commence on December 31, 2010. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The Company has the option to pay interest based on either the prime rate or LIBOR, with a LIBOR floor of 2.00 percent, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. At March 31, 2010, the Company had this principal balance under a LIBOR loan, plus 5.50 percent or 7.50 percent. The terms of the Amended and Restated Credit Agreement also place certain restrictions on payments to the member and others. This loan is secured by substantially all of the assets of the Company and matures November 20, 2014.

(B) The DDTL funds available for withdrawal totaled $25,000,000 as calculated under the Amended and Restated Credit Agreement through November 20, 2011. Quarterly principal payments are due starting December 31, 2011, as specified under the Amended and Restated Credit Agreement. Any outstanding balance shall be due and payable in full if a change in control occurs. In addition, certain principal payments are required if the Company sells property, incurs allowed mortgage debt or achieves excess cash flow (as defined under the Amended and Restated Credit Agreement). The Company has the option to pay interest based on either the prime rate or LIBOR, with a LIBOR floor of 2.00 percent, plus a margin determined by the Company’s total leverage ratio for the previously reported quarter. The Company had not made any draws against the DDTL funds at March 31, 2010. The terms of the Amended and Restated Credit Agreement also place certain restrictions on payments to the member and others. This loan is secured by substantially all of the assets of the Company and matures November 20, 2014.

Note 5: Other Long-term Obligations

The Company leases data center facilities and equipment used in its operations, some of which are required to be recorded in accordance with Accounting Standards Codification (ASC) 840, Leases. In certain situations, this guidance requires initial recording of the assets for which the Company is considered to be the owner due to lessee involvement in the assets’ construction at estimated fair value and offsetting amounts as liabilities.

At March 31, 2010, the Company had $29,059,340 of total long-term obligations relating to certain leases, all of which are recorded as long term on the balance sheet. For the three months ended March 31, 2010 and 2009, the Company recorded $607,727 and $302,209, respectively, of interest expense related to other long-term obligations.

Note 6: Operating Leases

Noncancellable operating leases for operational facilities, offices and equipment expire in various years through 2012. The facility leases typically contain renewal options for additional five-year terms and require the Company to pay its proportional share of all executory costs (property taxes, maintenance and insurance). In addition, the Company has a noncancellable ground lease for one of its buildings in Houston. This lease expires in 2066.

On March 3, 2010, the Company entered into a lease amendment for its Lewisville facility. The lease amendment expands the amount of space leased by 27,758 square feet, commences on March 3, 2010, and has an initial term of 13 years and six months with two five-year renewal options. In addition, the lease amendment extended the term on approximately 60,000 square feet of previously leased space at the same location by approximately four years.

Note 7: Unit Incentive Plan

Under the Holdings’ Amended and Restated Limited Liability Company Agreement dated July 3, 2007, Holdings is authorized to issue an unlimited number of Class C units. These shares are used as incentives for executive management and other employees as part of the Company’s overall compensation plan. The vesting of the Class C units differs by individual; but in all cases, one fifth of the units vest in each of the five years following the grant date.

In the event of termination of employment, all non-vested units automatically revert to, and become, the property of Holdings. If the employee is an executive and is terminated for cause or

resigns voluntarily when Holdings can demonstrate cause existed, the vested units will be purchased from the employee for an aggregate purchase price of $1. For all other cases where the executive employee resigns voluntarily, Holdings may elect to purchase all or any portion of the vested units at fair market value, as defined in the Incentive Share Agreements. For employees other than executives receiving the Class C shares, all vested and non-vested shares forfeit back to Holdings upon termination of employment.

The following table summarizes unit incentive share activity for the three months ended March 31, 2010:

	Shares
Outstanding, December 31, 2009	13,770,696
Granted	303,318
Outstanding, March 31, 2010	14,074,014
Vested at March 31, 2010	7,304,763

The Company recognized compensation expense of $420,631 related to Class C units for the three months ended March 31, 2010. There was no compensation expense related to the Class C units recorded during the three months ended March 31, 2009, as the amount was considered immaterial to the financial statements due to the insignificant value of the Class C units at the date of grant. As of March 31, 2010, there was $428,661 of unrecognized compensation expense related to the Class C units, which is expected to be recognized over a weighted-average period of approximately two years. At March 31, 2010, the aggregate intrinsic value of these Class C units was approximately $39,407,239.

For Class C units issued in the first quarter of 2010, the weighted-average fair value at the dates of grant were estimated at $2.80 per unit using the payment expected to be received for each Class C unit based on the purchase price stated in the Letter of Intent signed in March 2010 and definitive agreement signed in May 2010 between the Company and Cincinnati Bell Inc. and Cincinnati Bell Technology Solutions Inc. (see Note 9).

Note 8: Disclosures About Fair Value of Assets and Liabilities

The carrying value of the Company’s financial instruments does not materially differ from their estimated fair values as of March 31, 2010.

Note 9: Subsequent Event

On May 12, 2010, the Company entered into an Equity Purchase Agreement (the Purchase Agreement) pursuant to which Cincinnati Bell Inc. and Cincinnati Bell Technology Solutions Inc. (the Buyer) will acquire the equity interests of the Company for $525,000,000 in cash, less any indebtedness and transaction fees and other amounts, and subject to customary working capital and capital expenditure adjustment, as provided in the Purchase Agreement.

The Purchase Agreement contains customary representations, warranties, indemnities and covenants, including certain customary operating restrictions on the conduct of the business of the Company during the period from the execution of the Purchase Agreement to the closing of the

acquisition. The Purchase Agreement requires that the Buyer use commercially reasonable efforts to arrange the Financing (as defined in the Purchase Agreement) and, if the Financing becomes unavailable, to arrange alternative financing on terms no less favorable to the Buyer. The Company is required to cooperate with the Buyer in connection with the arrangement of the Financing.

Each party’s obligation to consummate the acquisition is conditioned upon the expiration or termination of the applicable waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions, as described in the Purchase Agreement. The obligation of the Buyer to consummate the acquisition at the closing is not conditioned upon the availability of financing. The Company expects the closing of the acquisition to occur by the end of the second quarter of 2010.

The Purchase Agreement also reflects that the Buyer has entered into new employment agreements with four executive officers of the Company, which provide they will remain in their roles as executive officers of the Company after the closing of the acquisition.

The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the Purchase Agreement.