UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





x
            QUARTERLY REPORT UNDER SECTION 13
      OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
  1934





For the quarterly period ended June 30,
2009





o
            TRANSITION REPORT UNDER SECTION
      13 OR 15(D) OF THE EXCHANGE
ACT





For the transition period from _____ to
_____





Commission
file number 0-25417





ICC
WORLDWIDE, INC.


(Exact
Name of Small Business Issuer as Specified in its Charter)




DELAWARE
                
                11-3571993(State
      or other jurisdiction of incorporation or
                  organization)
                
                (I.R.S.
      Employer Identification
No.)




3334 E. Coast Hwy #424
Corona del Mar, CA 92625


(Address
of principal executive offices)





949/200-7569


(Issuer's
Telephone Number)





N/A


(Former
Name, Former Address and Former Fiscal Year,


if
Changed Since Last Report)





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 of 1934 during the
preceding 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 o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).    Yes  o   No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer
             ̈
            Accelerated filer
             ̈Non-accelerated
      filer
             ̈  (Do
      not check if a smaller reporting company)
            Smaller reporting company
            x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes oNo x





APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEARS





Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes  ̈ No ̈





APPLICABLE
ONLY TO CORPORATE ISSUERS





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: there were 180,424,045 shares
outstanding as of August 1, 2009.





INDEX





PART
      1 - FINANCIAL INFORMATIONItem
      1: Financial StatementsCondensed
      consolidated balance sheet as of June 30, 2009 (unaudited) and September
      30, 2008
              3Condensed
      consolidated statements of operations for the three months and nine months
      ended June 30, 2009 and 2008 (unaudited)
              4Condensed
      consolidated statements of cash flows for the nine months ended June 30,
      2009 and 2008 (unaudited)
              5Notes
      to condensed consolidated financial statements (unaudited)
              6Item
      2. Management's Discussion and Analysis or Plan of
    Operation
              16Item
      3. Controls and Procedures
              22PART
      2 – OTHER INFORMATIONItem
      1. Legal Proceedings
              24Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              24Item
      3. Defaults Upon Senior Securities
              24Item
      4. Submission of Matters to a Vote of Security Holders
              24Item
      5. Other Information
              24Item
      6. Exhibits
              24Signatures
              24





PART I
- FINANCIAL INFORMATION




ITEM
1. FINANCIAL STATEMENTS




ICC
WORLDWIDE, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





June 30, 2009
                    
                    
                    September 30, 2008(Unaudited)ASSETSCurrent
      assets:Cash
                    
                    $
                    45,213
                    
                    
                    $
                    51,552Accounts
      receivable
                    
                    
                    446,604
                    
                    
                    
                    4,335Note
      receivable
                    
                    
                    47,090
                    
                    
                    
                    -Inventory
                    
                    
                    32,104
                    
                    
                    
                    5,348Deposits
      and other current assets
                    
                    
                    94,132
                    
                    
                    
                    81,139Current
      assets of discontinued operations
                    
                    
                    -
                    
                    
                    
                    84,249Total
      current assets
                    
                    
                    665,143
                    
                    
                    
                    226,623Furniture
      and fixtures
                    
                    
                    13,365
                    
                    
                    
                    22,016Office
      and store equipment
                    
                    
                    329,606
                    
                    
                    
                    251,975Less
      accumulated depreciation
                    
                    
                    (153,085
                    )
                    
                    
                    (86,948
                    )Net
      fixed assets
                    
                    
                    189,886
                    
                    
                    
                    187,043Note
      receivable
                    
                    
                    120,533
                    
                    
                    
                    -Deferred
      financing costs - net
                    
                    
                    108,541
                    
                    
                    
                    94,560Other
      assets
                    
                    
                    2,670
                    
                    
                    
                    2,670Non
      current assets discontinued of discontinued operations
                    
                    
                    -
                    
                    
                    
                    342,003Total
      assets
                    
                    $
                    1,086,773
                    
                    
                    $
                    852,899LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable and accrued expenses
                    
                    $
                    930,218
                    
                    
                    $
                    184,211Accrued
      interest
                    
                    
                    39,295
                    
                    
                    
                    85,124Capitalized
      lease obligation - current portion
                    
                    
                    71,683
                    
                    
                    
                    69,701Notes
      payable - current portion
                    
                    
                    112,001
                    
                    
                    
                    112,001Current
      liabilities of discontinued operations
                    
                    
                    -
                    
                    
                    
                    344,839Total
      current liabilities
                    
                    
                    1,153,197
                    
                    
                    
                    795,876Capitalized
      lease obligation - long term
                    
                    
                    15,637
                    
                    
                    
                    71,894Notes
      payable - long term
                    
                    
                    4,355,933
                    
                    
                    
                    2,000,000Preferred
      stock, $.0001 par value, 30,000,000 shares authorized,9,609,044 Series C
      issued and outstanding, includes accretion of $1,781,794 and $1,020,028,
      respectively; mandatory redeption on October 1, 2012 at $.36 per
      share
                    
                    
                    2,464,436
                    
                    
                    
                    1,702,670Total
      liabilities
                    
                    
                    7,989,203
                    
                    
                    
                    4,570,440Stockholders'
      deficit:Common
      stock, $.0001 par value, 450,000,000 shares authorized, 180,424,045 and
      200,120,434 shares outstanding, respectively
                    
                    
                    18,043
                    
                    
                    
                    20,012Additional
      paid-in capital
                    
                    
                    7,359,081
                    
                    
                    
                    7,765,315Accumulated
      deficit
                    
                    
                    (14,279,554
                    )
                    
                    
                    (11,502,868
                    )Total
      stockholders' deficit
                    
                    
                    (6,902,430
                    )
                    
                    
                    (3,717,541
                    )Total
      liabilities and stockholders' deficit
                    
                    $
                    1,086,773
                    
                    
                    $
                    852,899





See
accompanying notes to unaudited condensed consolidated financial
statements


3


ICC
WORLDWIDE, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)




Three months ended June 30,
                  
                  
                  Nine months ended June 30,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Revenue
                  
                  $
                  1,090,597
                  
                  
                  $
                  148,841
                  
                  
                  $
                  1,516,552
                  
                  
                  $
                  197,245Cost
      of goods sold
                  
                  
                  1,049,435
                  
                  
                  
                  144,412
                  
                  
                  
                  1,419,688
                  
                  
                  
                  190,454Gross
      profit
                  
                  
                  41,162
                  
                  
                  
                  4,429
                  
                  
                  
                  96,864
                  
                  
                  
                  6,791General
      and administrative expenses
                  
                  
                  713,658
                  
                  
                  
                  646,411
                  
                  
                  
                  1,577,105
                  
                  
                  
                  1,482,956Loss
      from continuing operations before other expense
                  
                  
                  (672,496
                  )
                  
                  
                  (641,982
                  )
                  
                  
                  (1,480,241
                  )
                  
                  
                  (1,476,165
                  )Interest
      expense, net and financing cost
                  
                  
                  (123,897
                  )
                  
                  
                  (55,656
                  )
                  
                  
                  (306,198
                  )
                  
                  
                  (92,968
                  )Accretion
      to preferred stock
                  
                  
                  (253,922
                  )
                  
                  
                  (253,922
                  )
                  
                  
                  (761,766
                  )
                  
                  
                  (761,766
                  )Loss
      from continuing operations before provision for income
    taxes
                  
                  
                  (1,050,315
                  )
                  
                  
                  (951,560
                  )
                  
                  
                  (2,548,205
                  )
                  
                  
                  (2,330,899
                  )Provision
      for income taxes
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Loss
      from continuing operations
                  
                  
                  (1,050,315
                  )
                  
                  
                  (951,560
                  )
                  
                  
                  (2,548,205
                  )
                  
                  
                  (2,330,899
                  )Loss
      from discontinued operations
                  
                  
                  -
                  
                  
                  
                  (229,464
                  )
                  
                  
                  (56,253
                  )
                  
                  
                  (1,162,079
                  )Net
      loss from disposal of discontinued operations
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (172,230
                  )
                  
                  
                  -Net
      loss
                  
                  $
                  (1,050,315
                  )
                  
                  $
                  (1,181,024
                  )
                  
                  $
                  (2,776,688
                  )
                  
                  $
                  (3,492,978
                  )Net
      loss per common share, basic and dilutedContinuing
      operations
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.01
                  )Discontinued
      operations
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (0.01
                  )Loss
      per common share
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.02
                  )Weighted
      average shares outstanding, basic and diluted
                  
                  
                  180,424,045
                  
                  
                  
                  200,120,434
                  
                  
                  
                  186,989,508
                  
                  
                  
                  197,605,918





See
accompanying notes to unaudited condensed consolidated financial
statements.


4


ICC
WORLDWIDE, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)




Nine Months Ended June 30,2009
            
            
            2008Cash
      flows from operating activities:Net
      loss from continuing operations
            
            $
            (2,548,205
            )
            
            $
            (2,330,899
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
            
            
            101,931
            
            
            
            80,348Accretion
      to preferred stock
            
            
            761,766
            
            
            
            761,766Stock
      based compensation
            
            
            1,500Changes
      in operating assets and liabilities:Increase
      inAccounts
      receivable
            
            
            (442,269
            )
            
            
            -Inventory
            
            
            (26,756
            )
            
            
            -Deposits
      and other current assets
            
            
            (12,993
            )
            
            
            -Increase
      (decrease) inAccounts
      payable and accrued expenses
            
            
            1,008,608
            
            
            
            109,931Net
      cash flow from discontinued operations
            
            
            (397,949
            )
            
            
            (1,527,303
            )Net
      cash used in operating activities
            
            
            (1,554,367
            )
            
            
            (2,906,157
            )Cash
      flows from investing activities:Purchase
      of property and equipment
            
            
            -
            
            
            
            (21,770
            )Leased
      equipment upgrades
            
            
            (84,828
            )
            
            
            -Sale
      of property and equipment
            
            
            3,585
            
            
            
            -Net
      cash flow from discontinued operations
            
            
            78,545
            
            
            
            (57,515
            )Net
      cash used in investing activities
            
            
            (2,698
            )
            
            
            (79,285
            )Cash
      flows from financing activities:Proceeds
      from issuance of preferred stock
            
            
            -
            
            
            
            151,968Proceeds
      from issuance of common stock
            
            
            -
            
            
            
            348,032Proceeds
      from issuance of notes payable
            
            
            1,605,000
            
            
            
            1,600,000Payments
      on capitalized lease obligation
            
            
            (54,274
            )
            
            
            (30,721
            )Payments
      on demand notes payable
            
            
            -
            
            
            
            (15,000
            )Net
      cash provided by financing activities
            
            
            1,550,726
            
            
            
            2,054,279Net
      decrease in cash
            
            
            (6,339
            )
            
            
            (931,163
            )Cash,
      beginning of period
            
            
            51,552
            
            
            
            1,029,949Cash,
      end of period
            
            $
            45,213
            
            
            $
            98,786Non-Cash
      Financial Information:Notes
      payable issued in exchange for common stock
            
            $
            442,503
            
            
            $
            -Warrants
      issued as part of financing arrangements
            
            
            32,800
            
            
            
            111,310




See
accompanying notes to the consolidated financial statements.




5


ICC
WORLDWIDE, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements


June
30, 2009


(Unaudited)





GENERAL





The
accompanying unaudited consolidated financial statements and footnotes have been
condensed and therefore do not contain all disclosures required by accounting
principles generally accepted in the United States of America. In the opinion of
management, the information furnished reflects all adjustments, consisting of
normal recurring adjustments, necessary to make the consolidated financial
position, results of operations and cash flows for the interim periods not
misleading. Interim periods are not necessarily indicative of results for a full
year.





These
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements of the Company for the fiscal year
ended September 30, 2008 and the notes thereto contained in the Company’s Annual
Report on Form 10-KSB, as filed with the Securities and Exchange Commission
(“SEC”).





NOTE
1.  ORGANIZATIONAL MATTERS AND NATURE OF THE BUSINESS





ICC
Worldwide, Inc. (“we”, “us” or “the Company”) was incorporated on March 24, 1999
as a Delaware corporation named Acropolis Acquisition Corporation.  We
changed our name to Torbay Holdings, Inc. on July 14, 1999.  We became
a reporting company public company under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) on October 26, 1999 as a result of a merger with
Torbay Acquisition Corporation (“TAC”).  On November 27, 2007, our
stockholders approved the change in our name to ICC Worldwide, Inc.





From
inception through June, 2007 the principal business of our Company was the
development and sale of a computer mouse device and related
software.





On June
29, 2007 we changed our business model and sold a controlling interest in our
Company to The Adamas Fund, LLLP (formerly, The Black Diamond Fund, LLLP), a
Minnesota limited liability limited partnership (“Adamas”).  The
purpose of the sale of stock was to raise capital for use in conjunction with an
acquisition strategy which allows us to develop our Company by acquiring assets
with a history of operating revenues in markets that provide room for
growth.





As a
result of our investigations, we focused on a strategy that provided certain
goods and services to the ethnic immigrant worker communities in
Italy.  These goods and services included products in the broad areas
of:  (1) telecommunications, (2) entertainment, (3) ethnic food
products, and (4) financial services.  The goods and services were to
be delivered by our Company on a wholesale basis through a large, well
established network of independently-owned retail stores throughout
Italy.  In addition to the wholesale business activities, the Company
would operate a small number of its own retail stores in Italy which served
customers in this market.





Since
then we have continued to refine this ethnic immigrant community focused
strategy.  In March 2008, we eliminated the ethic food products and
entertainment components of our business in order to focus on telecommunications
aspects of the market.





On
October 31, 2008, we sold the retail store component of the business for
$249,700 to focus exclusively on the wholesale telecommunications aspects of the
market.  Accordingly, the financial statements have been reclassified
to exclude the operating results of the retail stores from continuing operations
and account for them as discontinued operations.


6


Our major
wholesale products include VoIP (Voice over the Internet Protocol) services to
retail telephone call shop operators (“call shops”), international calling
cards, and cell phone recharge cards (collectively “cards”).  The
common characteristic of the wholesale products is that they are prepaid by the
wholesale account, require little physical inventory investment, and are
deliverable by ICC Italy to the call shops through the Internet.  This
business model is highly scalable and makes possible the expansion of the
business beyond Italy into all of Europe on an extremely cost effective
basis.





The nine
months ended June 30, 2009 contains the first eight months of operations of our
wholesale only business model as refined and may not be indicative of future
operating results





NOTE
2.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES





(A) Basis of
Presentation





The
accompanying condensed consolidated financial statements include the accounts of
ICC Worldwide, Inc., and its wholly own subsidiaries, ICC Italy Srl, and
Designer Appliances Ltd. (collectively, the “Company”). All significant
inter-company transactions have been eliminated in
consolidation.  Designer Appliances Ltd. is an inactive
company.





(B) Use of
Estimates





The
preparation of consolidated 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 disclosures of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.





(C) Revenue
Recognition





The
Company’s retail products and services are sold primarily for
cash.  Revenue is recognized at the time the products or services are
sold and collection is assured.





The
Company wholesale revenue is primarily the sale of international calling cards
and cell phone recharge cards and from the sale of VoIP (Voice Over the Internet
Protocol) telecommunication services.  Revenue is recognized when
services and cards are sold and collection is assured.





(D) Accounts
Receivable





Accounts
receivable represents amounts due from resellers who represent a group of
accounts and from individual call shop accounts to which credit has been
extended directly.





(E) Account
Concentration





Beginning April 1, 2009, the Company
changed the form of its contract with its VoIP reseller.  The Company
now purchases and resells VoIP capacity directly to the VoIP reseller which is
the Company’s sole customer for this service.  The Company continues
to collect the call shop accounts on behalf of the VoIP reseller and directly
offsets the cash collected against the invoices from the VoIP
carriers.  The arrangement is non-exclusive with the VoIP
reseller.





(F)
Inventory





Inventory
consists of the purchase value of international calling cards and cell phone
recharge PIN numbers which are available to client accounts through the
Company’s online website.   The Company does not have raw
material or work in process inventory.


7


(G) Foreign Currency
Translation





Assets
and liabilities of our Company’s foreign subsidiary have been re-measured in
accordance with Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 52 “Foreign Currency Translation”(“SFAS 52”).Management has
determined that the US dollar is the Company’s functional currency for purposes
of applying SFAS 52.





The
re-measurement process requires the use of historical exchange rates between the
foreign currency and the US dollar currency in the presentation of the financial
statements of certain non-monetary accounts.  All exchange gains and
losses from re-measurement of the non-monetary assets are included in the income
statement for the appropriate period.





(H) Loss Per
Share





Basic and
diluted loss per common share for all periods presented is computed based on the
weighted average number of common shares outstanding during the periods
presented as defined by SFAS No. 128, "Earnings per
Share".  The assumed exercise of common stock equivalents was
not utilized for the three and nine months ended June 30, 2009 and 2008,
respectively, since the effect would be anti-dilutive.





(I) Stock Options and
Warrants





The
Company follows Statement of Financial Accounting Standards No. 123(R), “Accounting for Stock-Based
Compensation”, (“FAS 123R”) to account for compensation costs when the
Company exchanges equity for goods or services.  Under FAS 123R, the
cost of the services received is measured on the grant-date fair value of the
equity award and amortized over the vesting period of the award.





(J)
Reclassifications





Certain
prior year amounts have been reclassified as discontinued operations to conform
with the current year’s presentation, none of which had an impact on total
assets, stockholders’ equity (deficit), net loss, or net loss per
share.





(K) Fair Value of Financial
Instruments





The
carrying value of cash, accounts receivable, deferred revenue, accounts payable,
and accrued expenses approximate fair value because of the short maturity of
these items.





(L) Cash and Cash
Equivalents





For
purposes of the statement of cash flows, the Company considers all highly-liquid
instruments purchased with a remaining maturity of three months or less to be
cash equivalents.





(M ) Cash
Concentrations





The
Company maintains its cash in bank deposit accounts that, at times, may exceed
federally insured limits.  The Company has not experienced any losses
in such accounts. Management believes the Company is not exposed to any
significant credit risk related to cash.





(N) Property and
equipment





Property
and equipment are stated at cost less accumulated
depreciation.  Depreciation is provided for in amounts sufficient to
relate the cost of depreciable assets to operations over their estimated service
lives.  The estimated lives in determining depreciation are recognized
primarily on the straight-line method over estimated useful lives of five years
for equipment and seven years for store and office fixtures
equipment.  For leasehold improvements and buildings, the Company
depreciates the assets over the shorter of their estimate useful lives or
original lease terms plus any renewal periods for which renewal has been
determined to be reasonably assured.


8


(O) Income
Taxes





The Company adopted Financial
Accounting Standards Board ("FASB") Interpretation 48, Accounting for Uncertainty in Income
Taxes ("FIN 48"), as of October 1, 2007. Under FIN 48, a tax position is
recognized as a benefit only if it is "more likely than not" that the tax
position would be sustained in a tax examination, with a tax examination being
presumed to occur. The amount recognized is the largest amount of tax benefit
that is greater than 50% likely of being realized on examination. For tax
positions not meeting the "more likely than not" test, no tax benefit is
recorded. FIN 48 also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition. The Company believes that its income tax positions and deductions
would be sustained on audit and does not anticipate any adjustments that would
result in a material change to its financial position.





The
Company's policy for recording interest and penalties associated with audits is
to record such items as a component of income before income taxes. Penalties are
recorded in other expense and interest paid or received is recorded in interest
expense or interest income, respectively, in the statement of operations. There
were no amounts accrued for penalties or interest as of or during the three
months and nine months ended June 30, 2009 and 2008, respectively. The Company
does not expect its unrecognized tax benefit position to change during the next
twelve months. Management is currently unaware of any issues under review that
could result in significant payments, accruals or material deviations from its
current position.





Net
operating losses ("NOLs") may be utilized under certain conditions as a
deduction against future income to offset against future taxes. Internal Revenue
Code Section 382 rules limit the utilization of NOLs due to ownership changes as
defined by rules enacted with the Tax Reform Act of 1986. If it is determined
that a change in control has taken place, utilization of the Company's NOLs will
be subject to severe limitations in future periods, which would have a effect of
substantially reducing the immediate future tax benefits of the
NOLs.





Income
tax benefits resulting from net losses incurred for the three months-and nine
months ended June 30, 2009, and 2008, respectively, were not recognized as the
Company's annual effective tax rate for both periods was estimated to be
0%.





(P) Preferred
Stock





The issuance of the Series C preferred
stock was accounted for as a liability in accordance with SFAS No. 150, “Accounting For Certain Financial
Instruments with Characteristics of both Liabilities and
Equity”.  EITF D-98“Classification and Measurement of
Redeemable Securities” requires that the difference between the carrying
amount of the preferred stock and the mandatory redemption value be accreted
over time in order that the carrying value of the preferred stock equal its
mandatory redemption value at the mandatory redemption date.  For the
three and nine months ended June 30, 2009, $253,922 and $761,766, respectively,
was accreted to the carrying value of the preferred stock for this
purpose.





We have
not treated the convertible option in the Series C preferred stock as a
derivative within the meaning of SFAS No. 133 “Accounting for Derivative
Instruments and Hedging Activities” as the common shares so converted
could not be readily converted to cash without substantial market disruption and
a heavy discount in price which would render the converted stock virtually
worthless.





On July
23, 2009, the conversion option of the Series C preferred stock was eliminated
and the liquidation preference was changed from $.60 to $.36 per Series C
preferred stock share effective June 30, 2009.   There was no
change in the mandatory redemption date of October 1, 2012.  If all
the outstanding Series C preferred stock is redeemed at the mandatory redemption
date, the amount required for the redemption would
be  $3,459,256.  See Note 6.


9


(Q) Deposits and Other
Current Assets





Deposits
and other current assets are generally advances to telecom carriers for VoIP
traffic which the Company expects to use in the course of its normal
operations.





(R) Note
Receivable





The note receivable is for the sale of
the retail stores at the end of October, 2008.  The note has an
effective interest rate of 7.3%, is fully amortizing, and requires monthly
payments of interest and principal through December 2012. See Note
4.





(S) Subsequent
Events





In preparing these financial
statements, the Company has evaluated events and transactions for potential
recognition or disclosure through the date indicated below that an officer of
the Company signed this Form 10Q for submission to the SEC.





Recently
Issued Accounting Pronouncements





The
Company has adopted all accounting pronouncements effective before June 30,
2009, which are applicable to the Company.





In
December 2007, the FASB issued SFAS No. 160, “Non-Controlling Interests in
Consolidated Financial Statements - An Amendment of ARB No. 51” (“SFAS
160”).  SFAS 160 establishes new accounting and reporting standards
for the non-controlling interest in a subsidiary and for the deconsolidation of
a subsidiary.  SFAS 160 is effective for fiscal years, beginning on or
after December 15, 2008.  Earlier adoption is
prohibited.  The Company does not expect the adoption of SFAS 160 to
have an effect on its financial statements.





In
December 2007, the FASB issued FASB Statement No. 141 (Revised 2007), “Business Combinations”
(“SFAS 141R”).  SFAS 141R will significantly change the accounting for
business combinations. Under SFAS 141R, an acquiring entity will be required to
recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions.  The
statement applies prospectively to business combinations occurring in fiscal
years beginning after December 15, 2008.  Earlier adoption is
prohibited.  The Company does not expect the adoption of SFAS 141R to
have an effect on its financial statements.





In May
2008, the FASB issued SFASB No.162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”).  The pronouncement
mandates the GAAP hierarchy reside in the accounting literature as opposed to
the audit literature.  This has the practical impact of elevating FASB
Statements of Financial Accounting Concepts in the GAAP
hierarchy.  This pronouncement was effective November 15, 2008. The
pronouncement did not impact the Company’s financial statements.





In
September 2008, the FASB issued EITF 07-5, Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to and Entity’s Own Stock (“EITF
07-5”).  The pronouncement provides new guidance for determining
whether equity-linked financial instruments (e.g. warrants and convertible
stock) are indexed to a company’s own stock, and as a result, whether those
instruments should be marked-to-market each period.  In general if
there is a reset feature imbedded in the financial instrument which resets the
strike price of the instrument as a result of the issuance of another financial
instrument with a different stick price, the financial instrument in question is
not considered indexed to the company’s own stock. Therefore, the financial
instrument should be adjusted to fair value each period through the income
statement.  EITF 07-5 is effective for fiscal years beginning after
December 15, 2008.  The Company is studying what impact, if any, EITF
07-5 will have on the Company.


10


In
May 2009, the FASB issued Statement of Financial Accounting Standards
(“SFAS”) No. 165, “Subsequent Events”(“SFAS 165”). This
pronouncement is intended to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date, but before
financial statements are issued or are available to be issued. Specifically,
this pronouncement sets forth the period after the balance sheet date during
which management of a reporting entity should evaluate events or transactions
that may occur for potential recognition or disclosure in the financial
statements, the circumstances under which an entity should recognize events or
transactions occurring after the balance sheet date in its financial statements,
and the disclosures that an entity should make about events or transactions that
occurred after the balance sheet date.  SFAS 165 is effective for
fiscal years and interim periods ended after June 15, 2009 and will be
applied prospectively. We adopted SFAS 165 during the third quarter of
2009. The pronouncement did not impact the Company’s financial
statements.




In June
2009, the FASB issued Statement No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles—a
replacement of FASB Statement No. 162 (“FAS 168”). This statement
provides for the FASB Accounting Standards Codification to become the single
official source of authoritative, nongovernmental generally accepted accounting
principles in the United States. FAS 168 does not change GAAP but reorganizes
the literature. This statement is effective for interim and annual periods
ending after September 15, 2009.  The statement is not expected
to have any impact on the Company’s financial statements.





NOTE
3.  GOING CONCERN





The
Company’s condensed consolidated financial statements for the nine months ended
June 30, 2009 have been prepared on a going concern basis, which contemplates
the realization of assets and the settlement of liabilities and commitments in
the normal course of business.





The
ability of the Company to continue as a going concern is dependent on the
Company's ability to raise additional funds and implement its new business
plan.  The consolidated financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.





NOTE
4.  DISCONTINUED OPERATIONS




On
October 31, 2008, ICC Italy sold the remaining four retail stores for $249,700
in an installment sale to an investor group that included former employees of
the Company.  The terms provide for a payment of $36,100 down with the
balance paid over the following 50 months.  The effective interest
rate on the payments is approximately 7.3%.  The Company recorded a
loss of $172,000 on the sale.




The
Company follows the provisions of SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”, related to the accounting and reporting
for segments of a business to be disposed of. The results of operations for the
retail stores have been classified as discontinued operations in all periods
presented.





Revenues
included in discontinued operations of the retail stores for the three months
ended June 30, 2009 and 2008, respectively, were $0 and $316,820





Revenues
included in discontinued operations of the retail stores for the nine months
ended June 30, 2009 and 2008, respectively, were $164,777 and
$891,066.





NOTE
5.  LOANS





On April
16, 2009, the $300,000 convertible note dated July 8, 2008 due to the Karyn M.
Blaise Irrevocable Trust (“Blaise Trust”) was amended.  Under the
amendment, the maturity of the note was extended to January 1, 2011, interest
was allowed to accrue until January 1, 2010, and the interest rate was changed
effective November 1, 2008 to 18% per annum. The entire original principal
remains outstanding on this note.


11


On April
20, 2009, the $200,000 promissory note dated January 27, 2009 due to the Melanie
S. Altholtz Irrevocable Trust (“M Altholtz Trust”) was amended.  Under
the amendment interest was allowed to accrue until January 1, 2010, and the
interest rate on the note was changed to 18% from inception. The entire original
principal remains outstanding on this note.





The
amendments were subsequently superseded as part of a Restructure and Exchange
Agreement effective June 30, 2009 and signed by the participants on July 23,
2009 (see Note 6).





Between
April 1, 2009 and June 30, 2009, The Stealth Fund, LLLP (“Stealth Fund”), the
Adamas Fund LLLP (“Adamas Fund”), and the M Altholtz Trust made advances to the
Company of $125,000, $40,000, and $325,000 respectively.





The
advances were included in the superseding notes issued as part of the
Restructure and Exchange Agreement effective June 30, 2009 signed by the
participants on July 23, 2009.




In
partial consideration for the loans from the Stealth Fund, on May 27, 2009 the
Company issued to the Stealth Fund warrants to purchase 5,812,500 shares of the
common stock of the Company at $.005 per share. On the date the warrants were
issued, the closing price of the Company’s common stock price was $.004 per
share.  The warrants are in the same form as the warrants previously
issued by the Company and are exercisable for five years from the date of
issuance.





The fair
value of the 5,812,500 warrants was estimated to be $23,250 using the
Black-Scholes valuation model with a historical volatility of 512%, zero
dividend payment, and a 5 year risk free rate of 2.43%.  The deferred
interest will be amortized over the 23 month duration of the underlying
loan.  The Company recorded $1,011 in deferred interest expense for
these warrants during the three and nine months ended June 30,
2009.





NOTE
6.  SUBSEQUENT EVENTS





ICCS, Srl and Teanet,
Srl





On July
8, 2009, our Company and Soleto SpA  formed ICCS, Srl.  The
purpose of ICCS, Srl is to own 75% of Teanet Services, Srl.  The remaining
25% of Teanet Services, Srl will be owned by Teanet, Srl (“Teanet”) a
wholly-owned subsidiary of Gruppo Tea, SpA.





Gruppo
Tea, SpA is a large Italian public utility organization which is owned by a
consortium of small and medium-sized Italian cities.  Gruppo Tea, SpA
delivers electricity, gas, water, sanitation, trash collection and various other
services to the populations of its consortium members.  Gruppo Tea, SpA
also provides internet and broadband connectivity to its customers through its
Teanet subsidiary.





At
formation, our Company paid a nominal amount for 1% of ICCS, Srl and has an
option to purchase from Soleto SpA an additional 48% of ICCS, Srl for $290,000
before September 30, 2009.  Thus, if the option is exercised in full, our
Company would own 49% of ICCS, Srl. Soleto SpA would be the controlling
stockholder in any event.  Finally, as a result of its ownership of
49% of ICCS, Srl, the Company could own up to 36.8% of Teanet Services,
Srl.





The
purpose of Teanet Services, Srl is to purchase the necessary internet and
broadband assets from Teanet to operate a large broadband network in the
Lombardy region of northern Italy.  In addition to internet
connectivity, Teanet Services, Srl plans to provide advanced VoIP telephone
services for Teanet’s large existing customer base.


12


The
estimated purchase price of the assets of Teanet is $7,250,000.  As these
are the majority of the installed and currently operating assets of Teanet, it
is expected that the purchase price will be fully financed by one of several
Italian banks with whom discussions led by Soleto SpA, are in
process.





Restructure and Exchange
Agreement




On July
23, 2009, the Company entered into a Restructure and Exchange Agreement (the
“Restructure Agreement”) effective as of June 30, 2009 with the Adamas Fund, the
Stealth Fund, the M Altholtz Trust, and the Blaise Trust (collectively, the
“Securityholders”).




Pursuant to the Agreement,
the Securityholders who held promissory notes of the Company (“Old Notes”)
exchanged their Old Notes for new notes (“New Notes”). The entire principal
amount of each New Note is payable on June 30, 2013. Interest on the outstanding
principal balance of the New Notes at the rate of 10% per annum is payable
monthly commencing June 1, 2010.The payment of principal and interest
under the New Notes is subordinated to the required payments of principal and
interest on any loans made to the Company following June 30, 2009. The form of
each New Note which was issued is set forth as Exhibit F to the Restructure
Agreement which was filed with the Securities and Exchange Commission as Exhibit
10.1 to the Company’s  Current Report on Form 8-K on July 27,
2009.




The
following table sets forth certain information concerning the exchange of the
Old Notes for New Notes, including the names of the Securityholders exchanging
notes; the dates, principal amounts and accrued interest on each Old Note
exchanged and the principal amount of the New Note issued by the Company to the
Securityholder in exchange for the Old Note.




Date
      of
                                    Note
                                  
                                  Principal
                                  
                                  
                                  Accrued
                                    InterestThru
                                    June30,
      2009
                                  
                                  
                                  Total
      Indebtednessto
                                    theSecurityholder
      as
                                    ofJune
      30, 2009
                                  
                                  
                                  Face
      Value of
                                    SupersedingNote
                                    DatedJune
                                    30,
      2009Adamas
      Fund (I)
                                  1/15/2008
                                  
                                  $
                                  1,500,000.00
                                  
                                  
                                  $
                                  173,659.72
                                  
                                  
                                  $
                                  1,673,659.72Adamas
      Fund (II)
                                  10/15/2008
                                  
                                  
                                  265,000.00
                                  
                                  
                                  $
                                  16,189.72
                                  
                                  
                                  
                                  281,189.72M
      Altholtz Trust  (I)
                                  8/29/2008
                                  
                                  
                                  200,000.00
                                  
                                  
                                  $
                                  15,287.67
                                  
                                  
                                  
                                  215,287.67Blaise
      Trust
                                  7/9/2008
                                  
                                  
                                  300,000.00
                                  
                                  
                                  $
                                  42,555.56
                                  
                                  
                                  
                                  342,555.56Stealth
      Fund (I)
                                  7/9/2008
                                  
                                  
                                  300,000.00
                                  
                                  
                                  $
                                  26,111.12
                                  
                                  
                                  
                                  326,111.12Stealth
      Fund (II)
                                  12/15/2008
                                  
                                  
                                  300,000.00
                                  
                                  
                                  $
                                  17,166.67
                                  
                                  
                                  
                                  317,166.67Stealth
      Fund (III)
                                  3/26/2009
                                  
                                  
                                  250,000.00
                                  
                                  
                                  $
                                  11,445.21
                                  
                                  
                                  
                                  261,445.21Stealth
      Fund (IV)
                                  4/16/2009
                                  
                                  
                                  125,000.00
                                  
                                  
                                  $
                                  2,664.38
                                  
                                  
                                  
                                  127,664.38Adamas
      Fund (III)
                                  4/29/2009
                                  
                                  
                                  40,000.00
                                  
                                  
                                  $
                                  690.41
                                  
                                  
                                  
                                  40,690.41M
      Altholtz Trust (II)
                                  6/26/2009
                                  
                                  
                                  325,000.00
                                  
                                  
                                  $
                                  2,660.27
                                  
                                  
                                  
                                  327,660.27$
                                  3,605,000.00
                                  
                                  
                                  $
                                  308,430.73
                                  
                                  
                                  $
                                  3,913,430.73RecapAdamas
      Fund
                                  
                                  
                                  $
                                  1,805,000.00
                                  
                                  
                                  $
                                  190,539.85
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  1,995,539.85M
      Altholtz Trust
                                  
                                  
                                  
                                  525,000.00
                                  
                                  
                                  $
                                  17,947.94
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  542,947.94Blaise
      Trust
                                  
                                  
                                  
                                  300,000.00
                                  
                                  
                                  $
                                  42,555.56
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  342,555.56Stealth
      Fund
                                  
                                  
                                  
                                  975,000.00
                                  
                                  
                                  $
                                  57,387.38
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  1,032,387.38$
                                  3,605,000.00
                                  
                                  
                                  $
                                  308,430.73
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  3,913,430.73




13


Pursuant
to the Restructure Agreement, certain of the Securityholders holding the
Company’s Series C Preferred Stock agreed to the amendment of certain of the
rights and preferences of such preferred stock to reduce the liquidation
preference of the Series C Preferred Stock from $.60 to $.36 per share and to
eliminate the right of the holders of Series C Preferred Stock to convert such
stock into the Company’s common stock.  Such Securityholders also
agreed to the elimination of the put option contained in the purchase agreements
under which the Series C Preferred Stock was issued to them under which the
Securityholder could require the Company to repurchase the Series C Preferred
Stock.




In
consideration of the exchange of notes, the amendment of the terms of the Series
C Preferred Stock and the elimination of the put option with respect to the
Series C Preferred Stock, the Company agree to issue to each Securityholder in
the table set forth below, warrants to purchase the number of shares of the
Company’s Common Stock set forth opposite the name of the
Securityholder.




Securityholder
                                
                                Preference
                                  or Property
                                  Given Up
                                
                                Exercise
                                  Price
                                
                                Expiration
                                  Date
                                
                                New
                                  WarrantsBlaise
      Trust
                                
                                Old
      Note
                                
                                $
                                0.0066
                                
                                6/30/14
                                
                                
                                50,000Stealth
      Fund
                                
                                Old
      Notes
                                
                                $
                                0.0066
                                
                                6/30/14
                                
                                
                                100,000Adamas
      Fund
                                
                                Old
      Note, Convertible Preferred Stock, Put Option
                                
                                $
                                0.0066
                                
                                6/30/14
                                
                                
                                50,000M
      Altholtz Trust
                                
                                Old
      Note, Convertible Preferred Stock, Put Option
                                
                                $
                                0.0066
                                
                                6/30/14
                                
                                
                                50,000




All
warrants which the Company issued to the Securityholders pursuant to the
Agreement were in the same form as the warrants previously held by the
Securityholders, except that the exercise price of the new warrants is $.0066
per share which was the weighted average of the closing price of the Company’s
common stock for the last ten days on which the stock traded prior to June 30,
2009.





The fair
value of the 250,000 warrants was estimated to be $1,000 using the Black-Scholes
valuation model with a historical volatility of 509%, zero dividend payment, and
a 5 year risk free rate of 2.54% pricing model.  The closing price of
the stock on June 30, 2009 was $.004.  The deferred interest will be
amortized over the 5 year life of the underlying loans.  The Company
recorded no amortization of deferred interest expense for these warrants during
the three and nine months ended June 30, 2009.





EITF
96-19 Debtor’s Accounting for
a Modification or Exchange of Debt Instruments addresses circumstances
under which existing debt should be considered extinguished, resulting in
recognition by the debtor of an extraordinary gain or loss.  The
purpose of the Restructure and Exchange Agreement was to consolidate multiple
loans into one loan per lender, to make the loans to the Company uniform across
lenders, to eliminate the conversion features in some of the notes and in the
Series C preferred stock, and the put option on cash for accelerated redemption
in the purchase agreements related to the Series C preferred stock so as to make
the common stock and warrants held by the lenders more valuable.  The
Restructure and Exchange Agreement cannot be considered an arm’s length
transaction between independent creditors and the Company.  The
parties to the Restructure and Exchange Agreement are all related parties and
have voting control of the Company through ownership of all the Series C
preferred stock which has a 60 to 1 voting preference over the common
stock.  As a general tenant of financial statement preparation, no
gain or loss is recognized in related party transactions.  As a
result, the Company recognized no gain or loss as a result of the Restructure
and Exchange Agreement notwithstanding ETIF 96-19.


14




Intercall Global
Network





On April
1, 2009, Intercall Global Network SA (“IGN”), a Romanian company, and the
Company entered into an agreement whereby the Company sold VoIP carrier capacity
to IGN and earned a fee for collecting the payments from IGN’s
customers.  The contract was non-exclusive for both
parties.





On July
23, 2009, IGN and the Company changed the structure of that contract. Effective
July 27th and
28th
(depending on the service area) IGN assumed responsibility for the collection
effort.  IGN and the Company agreed to a fixed percentage of VoIP
carrier cost formula as the fee for continuing to supply the VoIP carrier
capacity and the use of the Company’s call routing switch and related call
billing software.  This change in contract structure was not material
as the Company continued to recognize as revenue the VoIP carrier capacity sold
to IGN.  The difference between the revenue and the related cost of
goods sold would be the gross margin on the contract and would equal the fee
earned.





During
the period August 11 through 14, 2009, IGN ceased buying VoIP carrier capacity
from the Company although IGN continued to use the Company’s call routing switch
and related call billing software.  The Company expects to renegotiate
a new service contract for use of the Company’s call routing switch and related
call billing software based on minutes used.  The Company has several
other such service agreements for both VoIP carrier capacity and calling card
inventory management.





Prior to
August 14, 2009, the Company accounted for the purchase and resale of VoIP
carrier capacity as gross revenue under EITF 99-19.  The decision by
IGN to purchase its VoIP carrier capacity elsewhere will materially reduce the
revenues and cost of goods sold by the Company.


15





ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





FORWARD
LOOKING STATEMENTS





This
Quarterly Report on Form 10-Q, including exhibits thereto, contains
forward-looking statements. These forward-looking statements are typically
identified by the words "anticipates", "believes", "expects", "intends",
"forecasts", "plans", "future", "strategy", or words of similar
meaning.  Various factors could cause actual results to differ
materially from those expressed in the forward-looking
statements.  The Company assumes no obligations to update these
forward-looking statements to reflect actual results, changes in assumptions, or
changes in other factors, except as required by law.





OVERVIEW





On June
29, 2007, our Board of Directors determined that the implementation of our
Company's business plan as it then existed was no longer financially feasible
and accepted the offer of Adamas to purchase a controlling interest in our
Company.





The
proceeds of the financing by Adamas were used to pursue an acquisition strategy,
whereby we sought to acquire attractive businesses with a history of operating
revenues in markets that provide room for growth.





As a
result of our investigations, we focused on a strategy which offers certain
goods and services to the ethnic immigrant worker communities in
Italy.  In September, 2007, utilizing ICC Italy, Srl, (“ICC Italy”) a
wholly-owned subsidiary incorporated in Italy, we began acquiring assets and
opening stores in several of the provinces in Northern Italy.





We
continued to refine this immigrant community focused strategy throughout the
fiscal year ended September 30, 2008 and beyond.  In March 2008, we
eliminated the ethic food products and entertainment components of our business
in order to focus on telecommunications aspects of the market.





On
October 31, 2008, we sold the retail store component of the business for
$249,700 to focus exclusively on the wholesale telecommunications aspects of the
market with retail telephone call shop operators as the target customer (“call
shops”).





Our major
wholesale products include VoIP (Voice Over the Internet Protocol) services as
well as international calling cards, and cell phone recharge cards
(“cards”).  The common characteristic of these wholesale products is
that they are prepaid by the wholesale account, they require little physical
inventory investment, and they are deliverable by ICC to the call shop accounts
through the Internet.  This business model is highly scalable and
makes possible the expansion of the business beyond Italy into all of Europe on
an extremely cost-effective basis.





RESULTS
OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2009.





Critical
Accounting Policies





Our
Company makes estimates and assumptions in the preparation of its consolidated
financial statements in conformity with accounting principles generally accepted
in the United States of America. Actual results could differ significantly from
those estimates under different assumptions and conditions. Our significant
accounting policies are described in Note 2 to the audited consolidated
financial statements included in our Annual Report on Form 10-KSB for the fiscal
year ended September 30, 2008. The accounting policies used in preparing our
interim condensed consolidated financial statements are the same as those
described in the Annual Report.


16





Exchange
Rate Activity





As our
Company obtains almost all of its revenue from its operations in Italy and
Belgium and incurs most of its expenses in Italy, Belgium, and Romania, the
reported performance of our Company (which is in U.S. dollars) will be heavily
influenced by currency exchange rates.





Markets
Served





The
Company serves calls shops in the immigrant worker community primarily in Italy
and Belgium.  The Company also serves several call shops in Spain and
France through agents in Italy and Belgium.





Change
in Revenue and Cost Profile





EITF
99-19 Reporting Revenue Gross
as a Principal versus Net as an Agent addresses the issue of whether a
company should report revenue based on (a) the gross amount billed to a customer
because it has earned revenue from the sale of the goods or services or (b) the
net amount retained (that is, the amount billed to a customer less the amount
paid to a supplier) because it has earned a commission or fee.





As
discussed more fully under VoIP during the period October 1, 2008 through March
31, 2009, the Company reported its sale of VoIP carrier capacity as an agent
collecting a fee as the Company had no liability to the VoIP carriers for VoIP
carrier capacity purchased.





Effective
April 1, 2009, the Company began purchasing VoIP carrier capacity in its own
name for resale.  Consequently under EITF 99-19 the Company began
reporting the VoIP carrier capacity sold as revenue as the Company had primary
liability for the payment of the VoIP carrier capacity purchased.





VoIP





The
Company has further refined its wholesale account business model.  During
the six month period ended March 31, 2009, the Company earned a fee on the VoIP
services sold in a retail store based business.  The Company had no
liability for paying the carriers.





At March
31, 2009, the Company ended the fee arrangement began buying VoIP carrier
capacity directly for resale to an independent company specializing in the sale
of VoIP services to immigrant call shops.  In these purchased capacity
model transactions, the Company collected and managed the cash from the sale
VoIP services.





On April
1, 2009 the Company began purchasing VoIP capacity in its own name for wholesale
to retail stores and recognized revenue and cost of goods sold to obtain gross
margin as a result.





For the
three months ended June 30, 2009, the Company reported revenue from the sale of
VoIP traffic as revenue with the associated cost of goods. Under this business
model, the Company will now be directly responsible for the acquisition and
payment of VoIP carrier capacity.





The
Company has no inventory of carrier VoIP capacity and no obligations to pay for
VoIP carrier capacity not used.





Sale of International
Calling Cards and Mobile Phone Recharge Cards





With the
opening of activities in Belgium, the Company purchases and reports the sale of
international calling card and prepaid mobile phone recharge cards in two ways
depending on whether the Company takes physical delivery of the underlying cards
or not.


17





In Italy,
the Company presently purchases the physical cards from various card vendors and
then resells them to the individual call shops.  The Company stores
the serial or activation number of the purchased card in the Company’s computer
database.  When a call shop purchases a particular card, the Company
electronically transmits the serial number of the card to the call shop or
directly to the end customer’s mobile phone in a text message.  The
advantage to the retail call shop is that the call shop no longer is required to
maintain a physical inventory of the cards; with the attendant working capital
and card security issues.  The margin to the Company for an individual
card is 1% to 2% in gross profit.  However, the turnover of the cards
is very high and, as a result, the sale of cards can be a very profitable
business activity.  Since the Company takes physical possession of the
card in Italy, the Company must recognize as revenue the amount paid by the call
shop to the Company for the card.  Gross profit is the difference
between the amount paid by the call shop to the Company and the amount paid by
the Company to the card vendor for the card.





In
Belgium, the Company does not always take physical delivery of the
cards.  In these cases the Company interfaces directly with the
various calling card companies to buy the serial numbers without requiring
delivery of the physical card. The Company thus acts as an agent.  As a
result, in these cases the Company does not report the value of the cards sold
as revenue, but reports only the margin or commission on the sale of the card as
revenue.





As a
result of the various ways the Company must recognize revenue and cost of goods
sold, the Company believes that gross profit is the best measure of the progress
of the Company over time.





Teanet,
Srl





On May
19, 2009, the Company teamed with Soleto SpA of Milan, Italy to win the bid on a
contract to provide telephony and internet-related services to Teanet, a wholly
owned subsidiary of Gruppo Tea in Mantova, Italy.





Teanet was seeking a company to partner with in operating and expand its
installed wireless and fiber optic network.  It was expected that the
winner of the bid would purchase controlling interest in a new company of which
Teanet would be a part for this purpose.   With an overall
population of 250,000 in its service area, Teanet has about 30,000 business and
residential customers in its current installed base.  Most of Teanet’s
telephone call volume at the present time comes from commercial accounts. 
(See Note 6.)





Revenue





Continuing
revenues increased $941,756 or 633% to $1,090,597 for the three months ended
June 30, 2009 from $148,841 for the three months ended June 30,
2008.  This increase reflects the heightened focus of the Company on
card and VoIP services in the three months ended June 30, 2009 compared to that
of the card activity and the amount of VoIP commissions which were incidental to
the retail store activity in the three months ended June 30,
2008.  The increase also reflects the change in the recognition of
revenue as a result of the change in the wholesale business model from that of
fee for services in the three months ended June 30, 2008 to sale of carrier
capacity in the three months ended June 30, 2009.





Continuing
revenues increased $1,319,307 or 669% to $1,516,552 for the nine months ended
June 30, 2009 from $197,245 for the nine months ended June 30,
2008.  This increase reflects the heightened focus of the Company on
card and VoIP services in the nine months ended June 30, 2009 compared to that
of the card activity and the amount of VoIP commissions which were incidental to
the retail store activity in the nine months ended June 30, 2008.  The
increase also reflects the change in the recognition of revenue as a result of
the change in the wholesale business model from that of fee for services in the
nine months ended June 30, 2008 to sale of carrier capacity in the last three of
the nine months ended June 30, 2009.





Cost
of Goods Sold





Cost of
goods sold increased $905,023 or 627% to $1,049,435 for the three months ended
June 30, 2009 from $144,412 for the three months ended June 30,
2008.  This change is in line with the change in revenue for the same
period.


18





Cost of
goods sold increased $1,229,234 or 645% to $1,419,688 the nine months ended June
30, 2009 from $190,454 for the nine months ended June 30, 2009.  This
is not as relevant a measure as the cost of goods sold for the three month
period ended June 30, 2009 in that for the first 6 months of the nine months
ended June 30, 2009, the Company acted as an agent and collected a fee for its
VoIP services with no reported cost of goods sold for VoIP.





Gross
Profit





Gross
profit increased $36,733 or 829% to $41,162 for the three months ended June 30,
2009 from $4,429 for the three months ended June 30, 2008.  This
change is in line with the change in revenue for the same period.





The gross
profit percentage, which is calculated as gross profit divided by net revenue,
was approximately 3.8% for the three months ended June 30, 2009 compared to 3.0%
for the three months ended June 30, 2008.  While the gross profit
percentage increased, the Company believes that the Company must earn a higher
gross profit as part of its efforts to build a sustainable wholesale
business.





Gross
profit increased $90,073 to $96,864 for the nine months ended June 30, 2009 from
$6,791 for the nine months ended June 30, 2009.  This change is in
line with the change in revenue for the same period.





The gross
profit percentage was approximately 6.4% for the nine months ended June 30, 2009
compared to 3.4% for the nine months ended June 30, 2008.  This is not
as relevant a measure as the gross margin for the three month period ended June
30, 2009 in that for the first 6 months of the nine months ended June 30, 2009,
the Company acted as an agent for its VoIP activities and collected a fee for
its services.





General
and Administrative Expenses





Continuing
general and administrative expenses increased $67,247 or 10.4% to $713,658 for
the three months ended June 30, 2009 from $646,411 for the three months ended
June 30, 2008.





During
the three months ended June 30, 2009, the Company recognized a reserve of
$205,752 for the delayed repayment of amounts advanced to or paid on behalf of
Mapatel for carrier traffic during the three months ended March 31,
2009.





Also
included in the general and administrative expenses for the three months ended
June 30, 2009 are executive compensation expenses of $138,245, professional fees
of $30,819, payroll and taxes of $45,819, software lease and related charges of
$22,656, auto expenses of $18,334, stock based compensation of $1,500, and
non-cash expenses for depreciation of $40,636 and amortization of the upgrades
on leased equipment of $10,995.





The stock
based compensation reflects the issuance of non-qualified options to purchase
6,000,000 shares of the Company’s common stock to the two European executives of
our Company. The options were granted at $.006 per share which was the closing
price on the date of grant and vest over 24 months starting June 1,
2009.  The options are exercisable for 10 years from the date of
grant.





The fair
value of the 6,000,000 options was estimated to be $36,000 using the
Black-Scholes valuation model with a historical volatility of 512%, zero
dividend payment, and a 10 year risk free rate of 2.94%. The stock based
compensation will be amortized over the 24 month vesting period of the
options.





Included
in the general and administrative expenses for the three months ended June 30,
2008 are financial consulting services of $105,525, professional fees of
$53,893, payroll and taxes of $134,632, software lease and related charges of
$33,164, auto expenses of $3,659 and non-cash expenses for depreciation of
$25,321.


19





Continuing
general and administrative expenses increased $94,149 or 6.3% to $1,577,105 for
the nine months ended June 30, 2009 from $1,482,956 for the nine months ended
June 30, 2008.





Included
in the general and administrative expenses for the nine months ended June 30,
2009 are a reserve of $205,752 for the delayed repayment of amounts advanced to
or paid on behalf of Mapatel for carrier traffic during the three months ended
March 31, 2009 when the Company was acting as an agent of Mapatel and reported
no revenue or cost of goods sold, executive compensation expenses of $406,404,
professional fees of $168,149, payroll and taxes of $129,936, software lease and
related expenses of $73,087, auto expenses of $53,744, stock based compensation
of $1,500, and non-cash expenses for depreciation of $63,741 and amortization of
the upgrades on leased equipment of $19,371.





Included
in the general and administrative expenses for the nine months ended June 30,
2008 are executive compensation expenses of $185,748, professional fees of
$185,941, payroll and taxes of $395,050, software lease and related expenses of
$73,467, auto expenses of $7,958 and non-cash expenses for depreciation of
$73,046.





Interest
Expense and Financing Costs





Interest
expense and financing costs increased $68,241 or 122.6% to $123,897 for the
three months ended June 30, 2009 from $55,656 for the three months ended June
30, 2008.  The increase reflects interest on the additional funds lent
to the Company in the current and preceding periods.





The
interest and financing costs for the three months ended June 30, 2009 includes
$7,118 in amortized deferred interest expense associated with the issuance of
warrants in the Company’s financing activities and $1,756 in capitalized lease
interest expense.





The
interest and financing costs for the three months ended June 30, 2008 includes
$5,910 in amortized deferred interest expense associated with the issuance of
warrants in the Company’s financing activities and $3,305 in capitalized lease
interest expense.





Interest
expense and financing costs increased $213,230 or 229% to $306,198 for the nine
months ended June 30, 2009 from $92,968 for the nine months ended June 30,
2008.  The increase reflects interest on the additional funds lent to
the Company in the current and preceding periods





The
interest and financing costs for the nine months ended June 30, 2009 includes
$18,819 in amortized deferred interest expense associated with the issuance of
warrants in the Company’s financing activities and $6,162 in capitalized lease
interest expense.





The
interest and financing costs for the nine months ended June 30, 2008 includes
$10,840 in amortized deferred interest expense associated with the issuance of
warrants in the Company’s financing activities and $10,869 in capitalized lease
interest expense.





Net
Loss





Our
Company recorded a net loss of $2,776,688 for the nine months ended June 30,
2009 of which $228,483 was related to the discontinued retail store operations
and the sale of those assets, $205,752 was related to the reserve for the
Mapatel repayment, and $761,766 was related to non-cash accretion expense to the
preferred stock.





A net
loss of $3,492,978 was recorded for the nine months ended June 30, 2008 of which
$1,162,079 was related to the discontinued retail store operations and $761,766
was related to non cash accretion expense to the preferred
stock.


20





Liquidity and Cash
Position





Operating
Activities





For the
nine months ended June 30, 2009, our Company used $1,554,367 in cash to fund
operating activities. The loss of $2,548,205 from continuing operations was
partially offset by $865,197 in non-cash charges for depreciation, amortization,
and stock based compensation. Cash was also used to support a net increase of
$526,500 in current assets and liabilities, which included a net increase of
$442,269 in accounts receivable, an increase of $26,756 in international calling
card and recharge card inventory, and an increase of $12,993 in deposits and
prepaid expenses offset by an increase of $1,008,608 in accounts payable and
accrued liabilities.  During the nine months ended June 30, 2009, the
Company experienced a negative cash flow of $397,949 associated with the
discontinued retail operations.





For the
nine months ended June 30, 2008, our Company used $2,906,157 in cash to fund
operating activities. Cash required for the loss of $2,330,899 from continuing
operations was partially offset by $842,114 in non-cash charges for depreciation
and amortization. Additional cash was obtained by increasing accounts payable
and accrued expenses to $109,931. The Company also used $1,527,303 in cash
associated with the discontinued retail store operations.





Investing
Activities





For the
nine months ended June 30, 2009, our Company received $3,585 in cash from the
sale of property and equipment during the relocation of the Company’s Italian
corporate office and invested $84,828 in upgrades for the leased call routing
and billing switch.  The Company also received $78,545 from the down
payment and payments on the note receivable from the sale of the retail stores
in October, 2008.





For the
nine months ended June 30, 2008, the Company used $21,770 in cash to purchase
assets used in the continuing operations of the Company, and had negative cash
flow of $57,515 associated with the discontinued operations.





Financing
Activities





For the
nine months ended June 30, 2009, our Company received net cash of $1,605,000 in
loan proceeds and paid $54,274 on the capitalized lease obligation.





For the
nine months ended June 30, 2008, our Company received net cash of $500,000 from
the sale of common and preferred stock, $1,600,000 in loans from investors, and
paid $30,721 on the capitalized lease obligation and $15,000 on a short term
demand note.





We
anticipate that our capital requirements, including capital needs for further
working capital will continue to be significant. Our future capital requirements
and the adequacy of available funds will depend on many factors, including the
pace of our expansion. We believe that our current liquidity and resources will
not provide sufficient liquidity to fund our operations for at least 12 months
and the Company expects to seek additional future financing to fund our
operations and expansion. The availability of such financing on terms acceptable
to us or at all is not assured.


21





ITEM
3. CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





Disclosure
controls and procedures are designed to ensure that information required to be
disclosed in the reports filed or submitted under the Securities Exchange Act of
1934 (the “Exchange Act”) is recorded, processed, summarized and reported,
within the time period specified in the rules and forms of the Securities and
Exchange Commission (the “SEC”).  Disclosure controls and procedures
include, without limitation, controls and procedures designed to provide
reasonable assurance that the information required to be disclosed in the
Company’s reports filed under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms
and to provide reasonable assurance that such information is accumulated and
communicated to management, including our President and Chief Financial Officer
(“Certifying Officers”), as appropriate, to allow timely decisions regarding
required disclosure.





Our
Certifying Officers carried out an evaluation of the effectiveness of the design
and operation of our Company’s disclosure controls and procedures and based on
this evaluation they concluded that our disclosure controls and procedures were
not effective as of June 30, 2009 because of identified material weaknesses in
our internal control over financial reporting as detailed below.





Our
Certifying Officers are aware that with the limited level of operations, limited
financial resources and limited availability of personnel inside the Company,
material weaknesses exist in the Company’s internal controls and procedures,
most specifically in the lack of separation of duties and lack of an independent
audit committee.  Therefore, our Certifying Officers have concluded
that our Company’s internal control over financial reporting is not
effective.  Specific weaknesses in internal control over financial
reporting exists because of the following:





1. With
the sale of all of the Company’s retail store operations on October 31, 2008,
following the end of the fiscal year on September 30, 2008, the Company reduced
the number of employees in the Company significantly.  There are two
officers of the Company in Corona del Mar, CA: the chief executive officer and
chief financial officer/corporate secretary of the Company.  There is
only one officer/employee at ICC Italy in Mantova, Italy who is operationally
oriented.  The internal financial statements for ICC Italy are
prepared for the most part by an outside accounting firm.  As a
result, there are insufficient independent staff or management members in
financial management with responsibilities to provide third party oversight in
the review of our financial transactions on an ongoing basis in either
location.





2. The
Company’s Board of Directors consist of three members of which two have a
related party relationship with the controlling stockholder of the Company. The
third Board member is also the chief executive officer of the Company. This may
be seen as providing inadequate independent oversight of the management
function, as well as not having members to staff board of director committees,
in particular an audit committee.  The Company lacks a designated
financial expert for the audit committee of the Board, and has no method of
creating an effective whistleblower program.





Changes
in Internal Control over Financial Reporting





The term
“internal control over financial reporting” is defined as a process designed by,
or under the supervision of, our President and Principal Financial Officer, and
effected by our Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. There were no changes in our internal
control over financial reporting identified in connection with our evaluation of
these controls as of the end of the period covered by this quarterly report that
could have significantly affected those controls subsequent to the date of the
evaluation referred to in the previous paragraph, including any correction
action with regard to significant deficiencies and material
weakness.


22





Management
is aware that there is a lack of segregation of duties due to the small number
of employees dealing with general administrative and financial matters since the
sale of the retail stores.  However, management has decided that
considering the employees involved and the control procedures in place, risks
associated with such lack of segregation are insignificant and the potential
benefits of adding employees to clearly segregate duties do not justify the
expenses associated with such increases.





There
continues to be a lack of independent oversight at the Board of Directors
level.  The Company’s Board of Directors consist of three members of
which two have a related party relationship with the controlling stockholder of
the Company. The third Board member is also the chief executive officer of the
Company.


23





PART
II - OTHER INFORMATION





ITEM
1. LEGAL PROCEEDINGS





None.





ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS




Note 5 of
Item I is incorporated herein by reference.





All of
the securities referred to herein were issued in transactions exempt from
registration under the Securities Act of 1933, as amended by virtue of Section
4(2) thereof.





ITEM
3. DEFAULTS UPON SENIOR SECURITIES





None.





ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





ITEM
5. OTHER INFORMATION





None.





ITEM
6. EXHIBITS





31.1
                
                Certification
      of the Chief Executive Officer of ICC Worldwide, Inc. pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.31.2
                
                Certification
      of the Chief Financial Officer of ICC Worldwide, Inc. pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.32.1
                
                Certification
      of the Chief Executive Officer and Principal Financial Officer of ICC
      Worldwide, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.




SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





ICC
      WORLDWIDE, INC.Date:
      August 19, 2009
                  
                  /s/ Scott K Anderson,
    Jr.Scott
      K. Anderson, Jr.Corporate
      Secretary and Chief Financial
Officer


24