UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

**FORM 10-QSB**

 

(Mark One)

 

[ X ]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007.

 

[     ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________

 

Commission file number: 0-27704

 

**i2 Telecom International, Inc.**

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

 

Washington                                                      91-1426372

(State or Other Jurisdiction of                                 (IRS Employer

Incorporation or Organization)                              Identification No.)

 

5070 Old Ellis Pointe,

Suite 110

| Roswell, GA  30076 | (404) 567-4750 |
|--------------------|----------------|

| (Address of Principal Executive Offices) | (Issuer’s Telephone Number, Including Area Code) |
|------------------------------------------|-------------------------------------------------------|

 

Check whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer 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 is a shell company (as defined in Rule 12 b-2 of the Exchange Act)  [_] Yes x No

 

As of August 13, 2007, the registrant had 157,136,525shares of common stock outstanding.

 

Transitional Small Business Disclosure Format: [_] Yes x No

 

 

INDEX

 

|   | Page |
|--------|------|

 

| PART I. | FINANCIAL INFORMATION |
|---------|-----------------------|

 

| Item 1. | Financial Statements | 3 |
|---------|----------------------|---|

 

| Item 2. | Management’s Discussion and Analysis of or Plan | 18 |
|---------|------------------------------------------------------|----|

|   | of Operation |
|--------|--------------|

 

| Item 3. | Controls and Procedures | 24 |
|---------|-------------------------|----|

 

| PART II. | OTHER INFORMATION |
|----------|-------------------|

 

| Item 1. | Legal Proceedings | 25 |
|---------|-------------------|----|

 

| Item 2. | Unregistered Sales of Equity Securities and | 25 |
|---------|---------------------------------------------|----|

|   | Use of Proceeds |
|--------|-----------------|

 

| Item 3. | Default Upon Senior Securities | 27 |
|---------|--------------------------------|----|

 

| Item 4. | Submission of Matters to a Vote of Security Holders | 27 |
|---------|-----------------------------------------------------|----|

 

| Item 5. | Other Information | 27 |
|---------|-------------------|----|

 

| Item 6. | Exhibits | 29 |
|---------|----------|----|

 

| SIGNATURE PAGE |
|----------------|

 

| CERTIFICATIONS |
|----------------|

 

 

2

 

**PART I.  FINANCIAL INFORMATION**

 

**Item 1.  Financial Statements**

 

 

| i2 TELECOM INTERNATIONAL, INC                                                                |
|----------------------------------------------------------------------------------------------|
| CONSOLIDATED BALANCE SHEETS                                                                  |
| (Unaudited)                                                                                  |
|  

ASSETS

                                                                        |
|                                                                                         | June 30,2007 | December 31, 2006 |
| Current Assets                                                                               |   |   |
| Cash                                                                                         | $ 11,941 | $    807,811 |
| Accounts Receivable, net of Allowance for Doubtful Accounts of $0 and $235,000, respectively | 54,809 | 59,822 |
| Inventories                                                                                  | 302,156 | 355,900 |
| Prepaid Expenses and Other Current Assets                                                    | 141,772 | 81,262 |
| Total Current Assets                                                                         | 510,678 | 1,304,795 |
|                                                                                         |   |   |
|                                                                                         |   |   |
| Property and Equipment, Net                                                                  | 595,016 | 764,426 |
|                                                                                         |   |   |
|                                                                                         |   |   |
| Other Assets                                                                                 |   |   |
| Intangible Assets

Deposits                                                                  | 3,349,834

38,840 | 3,349,834

27,840 |
| Total Other Assets                                                                           | 3,388,674 | 3,344,674 |
|                                                                                         |   |   |
|                                                                                         |   |   |
| Total Assets                                                                                 | $4,494,368 | $  5,446,895 |

 

 

 

 

 

 

| i2 TELECOM INTERNATIONAL, INC. |
|--------------------------------|

 

 

3

 

|  
CONSOLIDATED BALANCE SHEETS

 
(Unaudited)

 
 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

June 30,2007

December 31, 2006

 
 
Current Liabilities

Accounts Payable and Accrued Expenses

Deferred Revenue

Convertible Bonds

Notes Payable-Current

 

$2,725,183

$56,000

400,307

2,525,252

 

$  4,078,375

56,000

2,147,784

2,761,607

 
Total Current Liabilities

5,706,742

9,043,766

 
 

 

 

 
 

 

 

 
Total Liabilities

5,706,742

9,043,766

 
 

 

 

 
Shareholders’ Equity (Deficit)

Preferred Stock, No Par Value, 5,000,000

Shares Authorized, 1,810 Shares and 4,495 Shares Issued and                Outstanding, respectively

1,810,000

4,470,000

 
Common Stock, No Par Value, 250,000,000 Shares Authorized, 157,136,525 Shares and 77,183,480 Shares Issued and Outstanding, respectively

25,601,428

17,175,150

 
Restricted Common Stock (related to No Par Value above),

62,500 Shares and 1,003,784  respectively

2,500

143,473

 
Additional Paid-In Capital

3,807,184

2,505,384

 
Accumulated Deficit

(32,433,486)

(27,890,878)

 
Total Shareholders’ Equity (Deficit)

(1,212,374)

(4,399,087)

 
 

 

 

 
Total Liabilities and Shareholders’  Equity (Deficit)

$4,494,368

$ 5,446,895

 

 

 

 

 

 

 

 

4

 

 

i2 TELECOM INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

For the

Three

Months

Ended

June 30,

2007

For the

Three

Months

Ended

June 30,

2006

For the

Six

Months

Ended

June 30,

2007

For the

Six

Months

Ended

June 30,

2006

Revenue

$  197,403 

$   136,975

$375,790   

$   276,978

 

 

 

 

 

Cost of Revenue

232,355

131,179

455,791

202,195

 

 

 

 

 

Gross Profit (Loss)

(34,952)

5,796

(80,001)

74,783

 

 

 

 

 

General and Administrative Expenses

2,027,921

1,442,427

4,224,576

2,811,717

 

 

 

 

 

Loss From Operations

(2,062,873)

(1,436,631)

(4,304,577)

(2,736,934)

 

 

 

 

 

Other Income (Expense)

Interest Income

Interest Expense

Gain on Forbearance of Debt

Loss on Disposal of Assets

Loss on Subscription List

 

34

(81,167)

100,000

 

 

 

0

(91,032)

0

0

0

 

172

(176,734)

155,061

 

 

 

942

(142,809)

0

0

0

Total Other Income (Expense)

18,867

(91,032)

(21,501)

(141,867)

Net  Loss

$(2,044,006)

 

$(1,527,663)

 

$(4,326,078)

 

$(2,878,801)            

Dividends on Preferred Stock

(86,325)

(98,476)     

(216,530) 

(178,150)

Net Loss Available to Common Shareholders

$(2,130,331)

$(1,626,139)                   

$(4,542,608)

$(3,056,951)

Weighted Average Common Shares:

Basic

 

121,441,351

 

43,753,604

 

103,511,773

 

41,090,558

Basic Earnings Per Common Share:

$         (.02)

$         (.04)

$          (.04)

$          (.07)

 

 

 

 

 

 

 

5

 

 

i2 TELECOM INTERNATIONAL, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

For the Six

Months Ended 

June 30, 2007

For the Six

Months Ended 

June 30, 2006

Cash Flows From Operations

Net Loss From Continuing Operations

Adjustments to Reconcile Net Income to Net Cash

Provided By Operating Activities

Depreciation and Amortization

Amortization of Loan Fees

Gain of Forbearance of Debt

Stock Compensation

(Increase) Decrease In:

Accounts Receivable

Inventories

Prepaid Expenses         

Other Assets

Increase (Decrease) In:

Accounts Payable and Accrued Expenses

Deferred Revenue

 

$ (4,326,078)

 

 

179,988

1,628,697

(100,000)

575,975        

 

5,013

53,744

(58,764)

(11,000)

 

(529,191)

0

 

$ (2,878,801)

 

 

573,580

0

0

556,866

 

51,195

7,565

(234,490)

(22,000)

 

752,753

50,000

Net Cash Used In Operating Activities

(2,581,616)

(1,143,332)

Cash Flows From Investing Activities

Equipment Purchases

Payments for Patents and Trademarks

 

(10,578)

0

 

(71,530)

(3,365)

Net Cash Used In Investing  Activities

(10,578)

(74,895)

Cash Flows From Financing Activities

Proceeds from Issuance of Convertible Bonds

Payments of Convertible Bonds

Proceeds From Notes Payable

Payment of Notes Payable

Proceeds from redemption of options    

Conversion of Preferred Stock

Loan Financing Cost

 

2,375,000

(1,325,000)

1,735,000

(1,396,356)          

407,680

0

0        

 

 

1,750,000

0

321,000

(276,776)

16

0

(696,000)

Net Cash Provided By Financing Activities

1,796,324

1,098,240

 

 

 

Increase (Decrease) in Cash

(795,870)

(119,987)

Balance, Beginning of Period

807,811

169,203

Balance, End of Period

$11,941    

$    49,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

UNAUDITED CONDENSENSED CONSOLIDATED FINANCIAL STATEMENT

NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

 

**Nature of Business**

 

i2 Telecom International, Inc., a Washington corporation formerly known as Digital Data Networks, Inc. (the “Company”), was incorporated as “Transit Information Systems, Inc.” under the laws of the State of Washington on October 17, 1988. In July 1995, the Company changed its name to “Digital Data Networks, Inc.” In March 2004, the Company changed its name to “i2 Telecom International, Inc.” The Company’s offices are currently located at 5070 Old Ellis Pointe, Suite 110, Roswell, GA 30076, and the Company’s telephone number at that address is (404)-567-4750.  The Company maintains a website at www.i2telecom.com and www.Voicestick.com .

 

From October 17, 1988, until February 27, 2004, the Company was a wireless, passenger communication and advertising company, principally engaged in selling digital advertising space through the operation of a digital information network, utilizing digital radio transmission technology to display current news, information and advertising to riders on-board public transit vehicles. From 1991 through February 2004, the Company operated a digital information network in Dallas, Texas under the assumed name “The Transit Network” on the Dallas Area Rapid Transit (“DART”) bus and rail system. 

 

In February 1996, the Company completed an initial public offering of shares of its common stock, no par value per share (the “Common Stock”), and raised net cash proceeds of approximately $5.8 million. 

 

On February 26, 2004, a newly-formed, wholly-owned subsidiary of the Company merged with and into i2 Telecom International, Inc., a Delaware corporation (“i2Telecom (DE)”), with i2Telecom (DE) surviving the merger as a wholly-owned subsidiary of the Company (the “Merger”), pursuant to that certain Agreement and Plan of Merger dated as of January 30, 2004, among the Company, a wholly-owned subsidiary of the Company, i2Telecom (DE) and certain Shareholders of the Company and i2Telecom (DE) signatory thereto (the “Merger Agreement”). In connection with the Merger, former Shareholders of i2Telecom (DE) became entitled to receive shares of Common Stock and shares of various classes and series of the Company’s preferred stock, no par value per share (collectively, the “Preferred Stock”), constituting of up to 88.44% of the voting securities of theCompany, assuming the issuance of all contingent consideration such Shareholders may become entitled to receive pursuant to the Merger Agreement upon the resolution of a certain legal proceeding pending against i2Telecom (DE). In connection with the Merger, effective February 26, 2004, (i) the Company’s Board of Directors (the “Board of Directors”) appointed Paul R. Arena, Chief Executive Officer and Chairman of the Board of i2Telecom (DE), to serve as a director of the Company; (ii) all individuals serving as officers of the Company immediately prior to the Merger resigned their positions with the Company; and (iii) the officers of i2Telecom (DE) were appointed as officers of the Company. 

 

7

 

On February 27, 2004, the Company sold substantially all of its operating assets relating to the operations of The Transit Network to Intransit Media, Inc. (“InTransit Media”) in exchange for InTransit Media assuming certain obligations and liabilities relating to such assets (the “Asset Sale”), pursuant to that certain Asset Purchase Agreement dated as of January 30, 2004, as amended by the First Amendment thereto dated as of February 26, 2004, between the Company and InTransit Media (the “Asset Purchase Agreement”). 

 

On March 5, 2004, in connection with the Merger and the Asset Sale, the Company changed its name from “Digital Data Networks, Inc.” to “i2 Telecom International, Inc.” and changed its ticker symbol on the over-the-counter electronic bulletin board from “DIDA” to “ITUI”. 

 

On December 8, 2004, the Company relocated its corporate headquarters to Atlanta, Georgia in order to be closer to more technology driven companies and to aide in the Company’s recruitment of technology workers.

 

As a result of the Merger and the Asset Sale, the Company’s operations now consist of the operations of i2Telecom (DE). The Company’s operations as currently conducted are described below. 

 

The Company, through its subsidiary, i2Telecom (DE), provides low-cost telecommunications services employing next-generation Voice over Internet Protocol (“VoIP”) technology. These operations are based in Roswell, Georgia. Through i2Telecom (DE), the Company controls its own proprietary technology and outsources the majority of its production and service functions with strategic partners. The Company, through i2Telecom (DE), provides the VoiceStick®, micro gateway adapters (InternetTalker®), VoIP long distance and other enhanced communication services to subscribers. The Company’s proprietary technology platform is built to the Session Initiation Protocol (“SIP”) standard. The Company’s revenue model now includes revenue from the sale of the VoiceStick® and other integrated access devices (“IADs”) along with recurring monthlysubscriptions and call minute termination. The Company believes its proprietary technology provides meaningful advantages particularly in the areas of quality of service, cost of service, features and ease of use. 

 

The Company’s proprietary technology platform is built to the SIP standard and offers the end user the following primary benefits: 

 

 

•

near carrier grade quality of service; 

 

 

•

low cost long distance calling worldwide; 

 

 

•

broadband access via laptop with the Company’s VoiceStick®; 

 

 

•

broadband and dial-up technology in the Company’s InternetTalker® IAD; 

 

 

8

 

 

•

plug and play technology using traditional phones without professional installation; and 

 

 

•

unlimited global calling among VoiceStick® and InternetTalker® IAD users with a minimal monthly subscription. 

 

The Company’s management intends to focus solely upon VoIP as the Company’s primary line of business. In addition, the Company’s management is constantly exploring various strategic alternatives, including partnering with other telecommunication companies, both foreign and domestic, and engaging in acquisitions of strategic competitors and/or telecommunication service providers. There can be no assurances that such efforts will be successful. The Company may finance these new business opportunities through a combination of equity and/or debt. If the Company determines to finance these opportunities by issuing additional equity, then such equity may have rights and preferences superior to the outstanding Common Stock and Preferred Stock, and the issuance of such equity will dilute the ownership percentage of the Company’s existing shareholders. If the Companydetermines to finance these opportunities by incurring debt, then such debt may not be available to the Company on favorable terms, if at all. 

 

**Liquidity and Going Concern**

 

It is imperative that the Company raise capital in the near-term in order to continue as a going concern. Without raising additional capital, the Company likely will not be able to satisfy its current and other liabilities due in the near-term unless they are modified or restructured. There is no guarantee that (i) additional capital will be available to the extent required, or that if available, it will be available on terms acceptable to the Company, or (ii) the Company’s current and other liabilities due in the near-term can be modified or restructured. If the Company cannot raise additional capital or modify or restructure such liabilities, then the Company may be unable to pursue its business plan and may be forced to cease doing business. 

 

As can be seen from the Company’s filings with the Securities and Exchange Commission (the “SEC”) over the past year, the Company has experienced net losses and negative cash flows from operations and has an accumulated deficit at June 30, 2007 of approximately $(32,433,486) and a negative working capital position. The ability of the Company to generate positive cash flows from operations and net income is dependent, among other things, on market conditions, the recovery of recorded assets, cost control, identifying and securing additional revenue sources, and the Company’s ability to raise capital under acceptable terms. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. As noted in an explanatory paragraph in the Report of Independent Certified Public Accountants on the Company’sconsolidated financial statements for the year ended December 31, 2006, as set forth in the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2006, (the “Annual Report”), these conditions have raised substantial doubt about the Company’s ability to continue as a going concern.

 

9

 

**Critical Accounting Policies**

 

The policies identified below are considered as critical to the Company’s business operations and the understanding of the Company’s results of operations.  The impact of and any associated risks related to these policies on the Company’s business operations is discussed throughout “Management’s Discussion and Analysis or Plan of Operation.” For a detailed discussion on the application of these and other accounting policies, see Note 1 in the Notes to the Company’s consolidated financial statements for the year ended December 31, 2006, included in the Annual Report.  Preparation of this Quarterly Report on Form 10-QSB for the quarter ended June 30, 2007 (this “Quarterly Report”) requires the Company to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities, andthe reported amounts of revenue and expenses.  There can be no assurance that actual results will not differ from those estimates.

 

**Basis of Consolidation**

 

The consolidated financial statements include the accounts of i2Telecom (DE) and SuperCaller Community, Inc. (“SuperCaller”), both of which are, directly or indirectly, wholly-owned subsidiaries of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.  

 

**Accounting Estimates**

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Estimates are used when accounting for allowances for doubtful accounts, revenue reserves, inventory reserves, depreciation and amortization, taxes, contingencies and impairment allowances.  Such estimates are reviewed on an on-going basis and actual results could differ from those estimates.

 

**Revenue Recognition**

 

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements” (“SAB No. 101”), as amended by SAB No. 101A and SAB No. 101B.  SAB No. 101 requires that four basic criteria must be met before revenue can be recognized:  (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services rendered; (iii) the fee is fixed and determinable; and (iv) collectibility is reasonably assured.  Determination of criteria (iii) and (iv) are based on management’s judgments regarding the fixed nature of the fee charged for services rendered and products delivered and the collectibility of those fees.  Should changes in conditions cause 

 

10

management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.  The Company has concluded that its revenue recognition policy is appropriate and in accordance with accounting principles generally accepted in the United States of America and SAB No. 101.

 

**Impairment of Long-Lived Assets**

 

The Company evaluates its long-lived assets for financial impairment and continues to evaluate them as events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable.  The carrying value of long-lived assets is considered impaired when the anticipated undiscounted cash flows from an asset is less than its carrying value.  In that event, a loss is recognized for the amount by which the carrying value exceeds the fair value of the long-lived asset.  The Company has not recognized any impairment losses.  

 

**Recent Accounting Pronouncements**

 

In February  2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments”, which is intended to simplify the accounting and improve the financial reporting of certain hybrid financial instruments.  (i.e., derivatives embedded in other financial instruments).  The statement amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities – a replacement of FASB Statement No. 125.  SFAS No. 155 is effective for all financial instruments issued or acquired after the beginning of an entity’s first fiscal year that begins after September 15, 2006.  The Company is currently evaluating the impact of SFAS No. 155 will have on its financial statements, if any.

 

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS 109. “Accounting For Income Taxes”. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

 

In September 2006. the FASB issued SFAS No. 157, “Fair Value Measurements”. This statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. Management has not determined the effect, if any, the adoption of this statement will have on our results of operations or financial position.

 

In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statements of Financial Accounting Standards (“SFAS”) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115”. SFAS No. 159 permits entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in 

 

11

earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15. 2007. Management is currently evaluating the effect that adoption of this statement will have on the Company’s consolidated financial position and results of operations.       

 

**Quantitative and Qualitative Disclosure about Market Risk**

 

The Company believes that it does not have any material exposure to interest or commodity risks.  The Company does not own any derivative instruments and does not engage in any hedging transactions.

 

**Comprehensive Income or Loss**

 

The Company has no components of other comprehensive income or loss, and accordingly, net loss equals comprehensive loss for all periods presented.

 

**Earnings Per Share**

 

For the Second quarter of 2007 and 2006, net loss per share is based on the weighted average number of shares of Common Stock outstanding.  At June 30, 2007 and June 30, 2006, the Company had, on a weighted average basis, 103,511,773 shares and 41,090,558 shares of Common Stock outstanding, respectively.  

 

At June 30, 2007, the Company had outstanding 157,136,525 shares of Common Stock and options and warrants to purchase 90,493,950 shares of Common Stock. Consequently, on an as-converted, fully-diluted basis, the Company would have 247,630,475 shares of Common Stock outstanding at June 30, 2007.Options on 90,493,950 shares of common stock were not included in the computing of diluted earnings per share nor were bonds convertible into common shares because their effects were anti-dilutive.

 

**Stock Compensation**

 

During 2004, the Company’s shareholders approved a stock option plan for its officers, directors and certain key employees.  Generally, the options vest based on the attainment of certain performance criteria set forth in the option agreements.  In addition, the Company has issued stock warrants to key employees, consultants, and certain investors, with expiration dates of one to five years.  Effective January 1, 2005, the Company adopted early application of SFAS No. 123R.  SFAS No. 123R supersedes APB Opinion No. 25 which was previously used by the Company.  Generally, the approach in SFAS No. 123R is similar to the approach described in SFAS No. 123.  However, SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.  Under APB Opinion No. 25, compensationexpense was recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price, the intrinsic value method.  Under SFAS No. 123R, the Company recognizes an expense over the vesting period of the fair value of all stock-based awards on the date of grant.  Beginning January 1, 2005, 

 

12

all stock-based awards to non-employees are accounted for at their fair value in accordance with SFAS No. 123R and related interpretations.

 

Stock compensation expense is comprised of the amortization of deferred compensation resulting from the grant of stock options to employees at exercise or sale prices deemed to be less than fair value of the Common Stock at grant date, net of forfeitures related to such employees who terminated service while possessing unvested stock options, as these terminated employees have no further service obligations.

 

**Reclassifications**

 

Certain prior year amounts have been reclassified to conform to the current year presentation.

 

**Interim Financial Data**

 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the SEC. These financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2006, set forth in the Annual Report.  The interim financial information included herein has not been audited. However, management believes the accompanying unaudited interim financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the consolidated financial position of i2 Telecom International, Inc. and Subsidiaries as of June 30,2007 and June 30, 2006, and the results of their operations and cash flows for the three months ended March 31, 2007 and 2006.  The results of operations and cash flows for the period are not necessarily indicative of the results of operations or cash flows that can be expected for the year ending December 31, 2007.

 

NOTE 2: NOTES PAYABLE

 

Notes Payable as of June 30, 2007 and December 31, 2006:

 

 

2007

2006

a.   8% note payable due to an individual previously affiliated with SuperCaller. The principal and all accrued interest are due and payable upon the Company obtaining certain levels of equity funding.  The Company has written-off this debt as an unsupported claim.

0

50,000

b. 6% note payable due to an individual previously affiliated with SuperCaller. The principal and all accrued interest are due and payable upon the Company obtaining certain levels of equity funding. The Company has written-off this debt as an unsupported claim.

0

50,000

c.10% note payable due to an individual shareholder of the company payable in monthly installments of $4,000, including interest, through August 31, 2007 when all outstanding principal and interest is due. The note is unsecured and guaranteed by an officer of the Company.

262,827

273,000

 

 

13

 

d. 12% note payable due to a corporation. The principal and all accrued interest were due on Sept. 30, 2005.The note is unsecured and guaranteed by an officer of the Company. In March 2007, the maturity date was extended to June 30, 2007.

100,000

100,000

e. 12% note payable due to a corporation. In January The note was repaid in full in the first quarter of 2007.

0

300,000

f. 12% note payable to an officer and director of the Company. The note was repaid in full in the first quarter of 2007.

0

75,000

g. 12% note payable due to an individual. The note was repaid in full in the first quarter of 2007.

0

50,000

h. 12% note payable due to an individual. The note was repaid in full in the first quarter of 2007.

0

50,000

 

i. 10% note payable due to a corporation. The note requires weekly payments of $3,000, including interest, until paid in full. In addition to weekly payments, the note requires payments of $10,000 for every $100,000 of new capital raised. The note is unsecured.

77,425

133,607

j. 13% note payable due to corporation. The note was repaid in March 2007.

0

1,000,000

k. 13% note payable due to an individual. The note was repaid in March 2007.

0

100,000

l. 13% note payable due to an individual. The note was repaid in March 2007.

0

100,000

m. 12% note payable due to an individual. In January 2007, the note and accrued interest was paid off via the issuance of common stock.

0

50,000

n. 12% note payable due to an individual with a maturity date of September 15, 2006. In January 2007, the note principal and accrued interest were paid off through the issuance of common stock.

0

50,000

o. 8% note payable to an individual. The principal and all accrued interest were due on February 18, 2006. The note is unsecured. In March 2007, the maturity date was extended until June 30, 2007.

25,000

25,000

p. 8% note payable to an individual. The principal and all accrued interest were due on February 18, 2006. The note is unsecured. In March 2007, the maturity date was extended until June 30, 2007.

25,000

25,000

q. 12% note payable to an individual. The principal and all accrued interest was due on March 15, 2007. The note is unsecured. In August 2007, the maturity date was extended until January 15, 2008.

100,000

100,000

r. 12% note payable to an individual. The principal and all accrued interest were due on March 15, 2007. The note is unsecured. In August 2007, the maturity date was extended until January 15, 2008.

200,000

200,000

s. 8.25% note payable to an individual. The principal and all accrued interest are due on January 4, 2008. The note is secured

750,000

0

t. 8.25% note payable to an individual. The principal and all accrued interest are due on January 4, 2008. The note is secured.

250,000

0

u. Non interest bearing note payable to a corporation due on 1/31/2007. The note was unsecured and was paid off in first quarter of 2007.

 

30,000

v. 10% note payable to a corporation. The principal and all accrued interest were due on August 4, 2007. The note is secured. The maturity date was extended until September 4, 2007.

600,000

0

w. 12% note payable to an individual. The principal and all accrued interest were due on July 15, 2007. The note is unsecured. In July 2007, the loan was paid.

135,000

0

 

 

Total Long Term Debt

2,525,252

2,761,607

Less: Current Portion

2,525,252

2,761,607

Long-Term Portion

$ -0-

$ -0-

 

 

14

 

 

NOTE 3: CONVERTIBLE BONDS  

 

On January 9, 2006, the Company closed a financing transaction in which it sold 10% secured convertible debentures (the “Debentures”) to Cornell Capital Partners, LP (“Cornell”) to raise $1,750,000 pursuant to a Securities Purchase Agreement dated thereof (the “Securities Purchase Agreement”). The Company paid Yorkville Advisors, LLC a structuring fee of $15,000 and paid a commitment fee equal to 10% of the total purchase price of the Debentures upon the funding of the Debentures. Cornell also received a three-year warrant to purchase 7,150,000 shares of common stock at an exercise price of $0.07 per share (the “Warrant”).

 

During the year ended December 31, 2006, Cornell converted $425,000 of the convertible bonds into 14,707,310 shares of common stock. In January 2007, the Company paid off the remaining balance due to Cornell on these bonds. 

 

On December 28, 2006, the Company closed a financing transaction in which it sold 6% secured convertible debentures (the “2006 Debentures”) to raise $2,000,000 pursuant to a Securities Purchase Agreement dated thereof (the “Securities Purchase Agreement”). The Company received $1,625,000 in December 2006 and remaining 375,000 in January 2007. The 2006 Debentures mature on June 28, 2007. The 2006 Debentures are convertible from time to time into 28,571,429 shares of common stock of the Company at the price of $.07 per share and 28,571,429 warrants exercisable at the price of $.07 per share. In addition, the 2006 Debentures will automatically convert into Common Stock if any of the following events occur: (i) the Shares become registered and freely trading, or (ii) the financial closing by the Company of $10,000,000 or more.

 

On February 28, 2007, the Company closed a financing transaction in which it sold 6% secured convertible debentures (the “2007 Debentures”) to raise $2,000,000 pursuant to a Securities Purchase Agreement dated thereof (the “Securities Purchase Agreement”).  The 2007 Debentures mature on August 28, 2007. The 2007 Debentures are convertible from time to time into 16,666,666 shares of common stock of the Company at the price of $.12 per share and 8,333,333 warrants exercisable at the price of $.12 per share. In addition, the 2007 Debentures will automatically convert into Common Stock if any of the following events occur: (i) the Shares become registered and freely trading, or (ii) the financial closing by the Company of $10,000,000 or more.

 

On May 4, 2007, the Company closed a financing transaction in which it sold a 10% secured Promissory Note, (the “Note”) to raise $600,000 pursuant to a Loan Agreement dated thereof (the “Loan Agreement”).  The Note matures on August 4, 2007 and is extendable in 30 day increments. The Note holder received 600,000 warrants exercisable at the price of $.15 per share. 

 

 

15

 

On July 9, 2007, the Company closed a financing transaction in which it sold  a 12% secured Promissory Note, (the “Note”) to raise $650,000 pursuant to a Loan Agreement dated thereof (the “Loan Agreement”).  The Note matures on September 9, 2007 and is extendable in 30 day increments. The Note holder received 2,600,000 warrants exercisable at the price of $.10 per share.

 

During the second quarter period, $3,550,000 in the aggregate of 2006 Debentures and 2007 Debentures were converted into common stock.

 

Convertible bonds at June 30, 2007 and December 31, 2006:

 

 

2007

2006

10% Convertible Bonds

0

1,325,000

6% Convertible Bonds, net of discount

400,307

822,784

Total

400,307

2,147,784

 

 

 

NOTE 4: STOCK OPTIONS AND WARRANTS

 

 

June 30, 2007

December 31, 2006

 

 

Number of

Options/

Warrants

Weighted

Average

Exercise

Price

 

Number of

Options/

Warrants

Weighted

Average

Exercise

Price

Outstanding at Beginning of  

Period

 

81,168,183

 

$.23

 

27,784,602

 

$   .56

Options Granted

Warrants Granted

Forfeited

Exercised

11,068,098

13,522,619

(5,972,555)

(9,292,395)

$.08

$.11

$.49

$.37

7,546,940

53,314,744

(5,518,731)

(1,959,372)

$   .08

$   .08

$   .14

$   .01

Outstanding at End of Period

90,493,950

$.18

81,168,183

$   .23

Options Exercisable at End of 

Period

 

84,008,408

 

$.04

 

68,024,269

 

$  .16 

Weighted-average Fair Value of

Options Granted During the Period

 

 

$.08

 

 

 

$  .08

 

As of June 30, 2007, the range of option and warrant exercise prices for outstanding and exercisable options and warrants was $.01 to $1.00 with a weighted average remaining contractual life of 2.25 years.

 

 

 

16

 

NOTE 4:  STOCK APPRECIATION RIGHTS AND RESTRICTED SHARE UNITS

 

On December 31, 2003, the Company terminated its stock appreciation plan and cancelled all outstanding rights granted.  As consideration for the consideration of rights cancelled, each employee received restricted stock or cancellation of their notes receivable at rate of $3.00 per right.  On December 31, 2003, the Company amended its 2002 Stock Option Plan to properly administer the granting of restricted stock.  Under the amended plan, employees are granted restricted share units without cost to the employee.  Each restricted share unit awarded to a participant represents an unfunded, unsecured right, which is nontransferable except in the event of death, of the employee to receive one share of common stock, $.01 par value, of i2Telecom Delaware on the date specified in the grant.  As a result of the Merger each such right was converted into the right to receive shares of Common Stock,no par value per share, and Preferred Stock Series B, no par value per share (the “Preferred Stock Series B”), as outlined in the Merger Agreement.  The restricted share units granted under the plan vest evenly over three years, with immediate vesting upon termination.  

 

Information with respect to restricted share units as of June 30, 2007 and 2006 is as follows:

 

 

**2007**

**2006**

Restricted Units-Beginning of Year

1,003,784

382,558

Restricted Units Granted

0

6,000,000

Transfer to Common Stock Due to Lapse of Restrictions

(941,284)

(2,595,973)

Restricted Units-End of Year

62,500

3,786,585

Weighted Average Fair Value of Shares

$.07

$ .07

Pre-Tax Compensation Expense Charged to

Earnings, net of cancellations

 

$ .00         

 

$ .00

 

 

NOTE 5:  SUBEQUENT EVENTS 

 

In July 2007, the Company issued to Vestal Venture Capital three-year warrants to purchase aggregate of 2,600,000 shares of Common Stock at an exercise price of $0.10 per share, vested immediately upon the date of grant with a three-year expiration period. The warrants were issued in connection with the execution of a promissory note in the amount of $650,000 made to the Company, (the “Principal Amount”), together with a loan origination fee, in the amount of $65,000.00, (the “Loan Fee”) plus interest at a rate equal to 12.0% per annum, 

 

 

 

 

17

 

**Item 2. Management’s Discussion and Analysis or Plan of Operation**

 

Certain statements in this Quarterly Report and in future filings by the Company with the SEC and in the Company’s written and oral statements that are not statements of historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intend,” “will” and similar expressions are examples of words that identify forward-looking statements. Forward-looking statements include, without limitation, statements regarding our future financial position, business strategy and expected cost savings. These forward-looking statements are based on our current beliefs, as well as assumptions we have made based upon information currently available to us. 

 

Each forward-looking statement reflects our current view of future events and is subject to risks, uncertainties and other factors that could cause actual results to differ materially from any results expressed or implied by our forward-looking statements. Important factors that could cause actual results to differ materially from the results expressed or implied by any forward-looking statements include.

 

 

• 

 

our ability to fund future growth; 

 

• 

 

our ability to become profitable; 

 

• 

 

the volatility of the price of our Common Stock; 

 

• 

 

market demand for and market acceptance for our products; 

 

• 

 

our ability to protect our intellectual property rights; 

 

• 

 

new regulation and legislation; 

 

• 

 

trends for the continued growth of our business and other businesses we may acquire; 

 

• 

 

our ability to successfully market existing products and services and develop and market new products and services; 

 

• 

 

our ability to expand our market for existing products and services; 

 

• 

 

the effects of our accounting policies and general changes in accounting principles generally accepted in the United States of America; 

 

• 

 

General economic conditions of the telecommunications market, including the new and evolving market for next-generation communications solutions; and 

 

• 

 

other risks and uncertainties disclosed in our Annual Report. 

 

On June 3, 2005 the Federal Communications Commission (“FCC”) issued the VoIP 911 Order adopting rules that require interconnected VoIP providers to provide their new and existing subscribers with 911 service no later than November 28, 2005.  On November 5, 2005, the FCC issued a public notice stating that VoIP providers who failed to comply with the VoIP 911 Order by November 28, 2005 would not be required to discontinue the provision of interconnected VoIP service to any existing customers, but would be required to discontinue marketing VoIP service and accepting new customers for VoIP service in all areas where the providers are not transmitting 911 calls to the appropriate PSAP (public safety answering point) in full compliance with the FCC’s rules.  Because we have not fully complied with the VoIP 911 

 

18

Order, we are subject to this restriction.  We cannot be certain that we will be able to fully comply with this VoIP 911 Order.  Because it would prevent us from marketing and accepting new customers in certain areas, our inability to comply with the VoIP 911 Order may have an adverse effect on our business and results of operations.

 

As of the date of this report, the Company has only partly met the FCC’s order for E911 compliance.

 

All subsequent forward-looking statements relating to the matters described in this document and attributable to us or to persons acting on our behalf are expressly qualified in their entirety by such factors. We have no obligation to publicly update or revise these forward-looking statements to reflect new information, future events, or otherwise, except as required by applicable Federal securities laws, and we caution you not to place undue reliance on these forward-looking statements. 

 

 

**Business of the Company**

 

The Company, through its subsidiary, i2Telecom (DE), provides low-cost telecommunications services employing next-generation VoIP technology.  These operations are based in Roswell, Georgia. Through i2Telecom (DE), the Company controls its own proprietary technology and outsources the majority of its production and service functions with strategic partners.  The Company, through i2Telecom (DE), provides the VoiceStick®, micro gateway adapters (InternetTalker®), VoIP long distance and other enhanced communication services to subscribers.  The Company’s proprietary technology platform is built to the Session Initiation Protocol (“SIP”) standard.  The Company’s revenue model now includes revenue from the sale of the VoiceStick® and other integrated access devices (“IADs”) along with recurring monthly subscriptions and call minute termination.  TheCompany believes its proprietary technology provides meaningful advantages particularly in the areas of ease of use, high quality service, and low cost and robust features.

 

The Company’s proprietary technology platform is built to the SIP standard and offers the end user the following primary benefits:

 

 

•

near carrier grade quality of service; 

 

 

•

low cost long distance calling worldwide; 

 

 

•

broadband access via laptop with the Company’s VoiceStick®; 

 

 

•

broadband technology in the Company’s InternetTalker® IAD; 

 

 

•

plug and play technology using traditional phones (including cellular) without professional installation; and 

 

 

19

 

 

•

unlimited global calling among VoiceStick® and InternetTalker® IAD users with a minimal monthly subscription. 

 

The Company’s management intends to focus solely upon VoIP as the Company’s primary line of business. In addition, the Company’s management is constantly exploring various strategic alternatives, including partnering with other telecommunication companies, both foreign and domestic, and engaging in acquisitions of strategic competitors and/or telecommunication service providers. There can be no assurances that such efforts will be successful. The Company may finance these new business opportunities through a combination of equity and/or debt. If the Company determines to finance these opportunities by issuing additional equity, then such equity may have rights and preferences superior to the outstanding Common Stock and Preferred Stock, and the issuance of such equity will dilute the ownership percentage of the Company’s existing shareholders. If the Companydetermines to finance these opportunities by incurring debt, then such debt may not be available to the Company on favorable terms, if at all. 

 

20

 

RESULTS OF OPERATIONS

 

**Results of operations for the three months ended June 30, 2007 compared with the results of operations for the three months ended June 30, 2006.**

 

Revenues increased to $197,403 for the second quarter of 2007 from $136,975 for the second quarter of 2006. The increase in revenues was driven by the Company’s increase in recurring revenue from service offerings.

 

Cost of revenues increased to $232,355 for second quarter of 2007 from $131,179 for second quarter of 2006.  The increase was driven by the Company’s increased recurring revenues from its service offerings.

 

Gross loss for the second quarter of 2007 was $(34,952) as compared to a gross profit of $5,796 for the second quarter of 2006. 

 

Sales, general and administrative expenses for the second quarter of 2007 were $2,027,921 as compared to $1,442,427 for the same period in 2006.  The majority of the increase in general and administrative costs are related to non-cash compensation expenses as well as expenses incurred as part of managements ongoing efforts to restructure various debt instruments. Of the $2,027,921 of SGA expense for the second quarter 2007, the Company incurred $1,273,911 of non recurring expenses.

 

Loss from operations for the second quarter of 2007 as compared to the second quarter of 2006 increased to $2,062,873 from $1,436,631 due to the increase in sales, general and administrative expenses for the second quarter. 

 

Net loss for the second quarter of 2007 was $2,044,006 as compared to a net loss for the same period in 2006 of $1,527,663.  The increase in net loss for the second quarter 2007 as compared to the same period in 2006 is due to the Company’s increase in sales, general and administrative expenses for the second quarter.  

 

The Company’s net accounts receivable balance decreased between June 30, 2006 and June 30, 2007 by approximately $5,013. This decrease is due to an increase in net cash receipts.  The Company’s inventory decreased by approximately $53,744 between June 30, 2006 and June 30, 2007.  The inventory decrease was primarily due to the write off‘s of obsolete inventory.

 

21

 

 

 

**For the Three Months Ended**

 

 

**June 30,**

 

 

 

 

 

 

 

 

 

 

 

2007

 

2006

 

Variance

 

Percentage

Gross Revenue

 

$197,403

 

$136,975

 

$60,428

 

44%

Cost of Sales

 

232,354

 

131,179

 

101,176

 

77.1%

Gross Profit

 

($34,952)

 

$5,796

 

(40,748)

 

(703.0%)

Operating Expenses:

 

 

 

 

 

 

 

 

General and Administrative Expenses

 

$2,027,921

 

$1,442,427

 

$585,494

 

40.6%

Other Income (Expense) Net

 

18,867

 

(91,032)

 

109,899

 

120.7%

Net Loss

 

$2,044,006

 

$1,527,663

 

$516,343

 

33.8%

 

RESULTS OF OPERATIONS

 

**Results of operations for the six months ended June 30, 2007 compared with the results of operations as for the six months ended June 30, 2006**

 

Revenues increased from $276,978 for the six months ended June 30, 2006 to $375,790 for the six months ended June 30, 2007.  Revenues increased as a result of a change from a product driven business model to a service model with recurring revenues. 

 

Cost of revenues increased from $202,195 for the six months ended June 30, 2006 to $455,791 for the six months ended June 30, 2007.  This increase is again attributable to a change from a product driven business model to a service model with recurring revenues during the six months ended June 30, 2007 as compared to the six months ended June 30, 2006.  

 

Gross profit for the six months ended June 30, 2007 was $(80,001) as compared to gross profit of $74,783 for the six months ended June 30, 2006.  The decrease is due primarily to a change inability to efficiently amortize expenses. 

 

Loss from operations for six months ended June 30, 2007 was $4,304,577 compared to $2,736,934 for the six months ended June 30, 2006.  Total selling, general and administrative expenses for the six months ended June 30, 2007 was $4,224,576 compared to $2,811,717 for the six months ended June 30, 2006.  The majority of the increase in general and administrative costs are related to non-cash compensation expenses as well as expenses incurred as part of managements ongoing efforts to restructure various debt instruments.

 

Finally, net loss for the six months ended June 30, 2007 was $4,326,078 as compared to a net loss for the six months ended June 30, 2006 of $2,878,801.  The increase net loss is a result of increased general and administrative costs related to non-cash compensation expenses as well as 

 

22

expenses incurred as part of managements ongoing efforts to restructure various debt instruments.

 

 

 

**For the Six Months Ended**

 

 

**June 30,**

 

 

 

 

 

 

 

 

 

 

 

2007

 

2006

 

Variance

 

Percentage

Gross Revenue

 

$375,790

 

$276,978

 

$98,812

 

35.7%

Cost of Sales

 

455,791

 

202,195

 

253,596

 

125.4%

Gross Profit

 

$(80,001)

 

$74,783

 

(154,784)

 

(207.0%)

Operating Expenses:

 

 

 

 

 

 

 

 

General and Administrative Expenses

 

$4,224,576

 

$2,811,717

 

1,412,859

 

50.2%

Other Income (Expense)  Net

 

(21,501)

 

(141,867)

 

120,366

 

(84.8%)

Net Loss

 

$4,326,708

 

$2,878,801

 

($1,447,277)

 

(50.3%)

 

RESULTS OF OPERATIONS-CONTINUED

LIQUIDITY AND CAPITAL RESOURCES 

 

**Liquidity and capital resources as of June 30, 2007 as compared with liquidity and capital resources as of June 30, 2006.**

 

On June 30, 2007, the Company had a working capital deficit of approximately $5,196,064 compared to June 30, 2006 when the Company had a working capital deficit of approximately $5,316,958. The Company’s working capital position improved by approximately $120,000 at June 30, 2007 as compared to June 30, 2006.  The increase in working capital was primarily due to a decrease in cash of approximately $37,000 combined with decreases in inventory of $423,000, and prepaid expense of $497,000, offset by a decrease in accounts payable of approximately $1,000,000. Net cash used in operating activities was $2,581,616 for the six months ended June 30, 2007.  Again, the increase in net cash used in operating activities between the six months ended June 30, 2007 and June 30, 2006 is attributable to an increase in accounts receivable of approximately$36,000, a decrease in accounts payable of approximately $1,000,000.  Net loss of approximately $4,326,078 is reduced by non-cash items of depreciation and amortization amounting to approximately $2,300,000.  Primary sources of cash inflows from operations are from sales of the VoiceStick®, VoiceStick® activation charges and pre-paid charges and receivables collected from sales to customers for the Company’s IAD, as well as the collection of revenue for carrying long distance calls and from monthly service fees.  Future cash inflows from sales are subject to the Company’s pricing and ability to procure business at existing market conditions.

 

Net cash used in investing activities was approximately ($10,000) for the six months ended June 30, 2007 as compared to approximately ($74,000) for the same period in 2006.  Both periods investing activities were primarily due to equipment purchases and/or payment for patents and trademarks.  

 

23

 

Cash flows provided by financing activities were approximately $1,796,324 for the six months ended June 30, 2007 as compared to $1,098,240 for the same period in 2006.  The principal source of cash for the second quarter of 2007 was from the issuance of promissory notes of $1,735,000.

 

OFF BALANCE SHEET ARRANAGEMENTS 

 

None.

 

**Item 3:  Controls and Procedures**

 

Evaluation of Disclosure Controls and Procedures.  The Company’s Chief Executive Officer and principal financial officer has evaluated the Company’s controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report, as required by paragraph (b) of Rules 13a-15 or 15d-15 of the Exchange Act. Based on such evaluation, such officer has concluded that, as of the end of the period covered by this Quarterly Report, the Company’s controls and procedures are effective. 

 

Changes in Internal Control over Financial Reporting.  There were no significant changes made in our internal controls over financial reporting during the three month period ended June 30, 2007 that have materially affected or are reasonably likely to materially affect these controls. This, no corrective actions with regard to significant deficiencies or material weaknesses were necessary.

 

24

**PART II-OTHER INFORMATION**

 

**Item 1.  Legal Proceedings**

 

The Company is not a party to any material legal proceedings other than ordinary routine claims and proceedings incidental to its business and the Company does not expect these ordinary claims and proceedings, either individually or in the aggregate, to have a material adverse effect on the Company.

 

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

 

In April 2007, the Company issued a total of 300,000 shares of Common Stock to one corporation. The shares were issued in connection with the execution of a consulting agreement with the Company. The shares were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. The Company based such reliance upon factual representations by the recipients of the warrants to the Company regarding their investment interest and sophistication, among other things. However, these shares are entitled to “piggyback registration” rights upon filing by the Company of a registration statement.

 

In May 2007, the Company issued to Vestal Venture Capital three-year warrants to purchase an aggregate of 600,000 shares of Common Stock at an exercise price of $0.15 per share, vested immediately upon the date of grant with a three-year expiration period. The warrants were issued in connection with the execution of a promissory note in the amount of $600,000 made to the Company. The warrants were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. The Company based such reliance upon factual representations by the recipients of the warrants to the Company regarding their investment interest and sophistication, among other things. However, these shares are entitled to “piggyback registration” rights upon filing by the Company of a registration statement.

 

Also in May 2007, a total of 1,125,334 shares of Common Stock were issued to 3 individuals and and one corporation in lieu of $140,453 of debt owed by the Company. The shares were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. The Company based such reliance upon factual representations by the recipients of the shares to the Company regarding their investment interest and sophistication, among other things. However, these shares are entitled to “piggyback registration” rights upon the filing of a registration statement. 

 

In June 2007, the Company issued to an individual three-year warrants to purchase an aggregate of 1,000,000 shares of Common Stock at an exercise price of $0.10 per share, vested immediately upon the date of grant with a three-year expiration period. The warrants were issued in connection with the execution of a promissory note in the amount of $135,000 made to the Company. The warrants were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. The Company 

 

25

based such reliance upon factual representations by the recipients of the warrants to the Company regarding their investment interest and sophistication, among other things. However, these shares are entitled to “piggyback registration” rights upon filing by the Company of a registration statement.

 

Also in June 2007, the Company issued to two individuals and three corporations three-year warrants to purchase an aggregate of 5,100,000 shares of Common Stock at an exercise price of $0.10 per share, vested immediately upon the date of grant with a three-year expiration period. The warrants were issued in connection with the execution of consulting agreements with the Company. The warrants were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. The Company based such reliance upon factual representations by the recipients of the warrants to the Company regarding their investment interest and sophistication, among other things. However, these shares are entitled to “piggyback registration” rights upon filing by the Company of a registration statement.

 

In July 2007, the Company issued to Vestal Venture Capital three-year warrants to purchase an aggregate of 2,600,000 shares of Common Stock at an exercise price of $0.10 per share, vested immediately upon the date of grant with a three-year expiration period. The warrants were issued in connection with the execution of a promissory note in the amount of $650,000 made to the Company. The warrants were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. The Company based such reliance upon factual representations by the recipients of the warrants to the Company regarding their investment interest and sophistication, among other things. However, these shares are entitled to “piggyback registration” rights upon filing by the Company of a registration statement.

 

Also in July 2007, the Company issued to one individual an aggregate of 1,800,000 shares of Common Stock upon the exercise of warrants. The warrants, exercisable at an average exercise price of $.09 per share, were issued in lieu of additional consideration for a loan extension to the Company. The warrants were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. The Company based such reliance upon factual representations by the recipients of the warrants to the Company regarding their investment interest and sophistication, among other things. However, these warrants are entitled to “piggyback registration” rights upon filing by the Company of a registration statement.

 

In August 2007, the Company issued to Audrey Braswell, a director, and Phillip Rapp, 750,000 and 250,000 shares, respectively, of Common Stock in accordance with the terms of promissory notes in the amounts of $750,000 and $250,000, respectively. The shares were issued without registration under the Securities Act in reliance upon the exemptions from registration set forth in Section 4(2) and Regulation D. The Company based such reliance upon factual representations by the recipients of the shares to the Company regarding their investment interest and sophistication, among other things. However, these shares are entitled to “piggyback registration” rights upon filing by the Company of a registration statement. 

 

26

 

**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**

 

The exhibits required to be filed with this Quarterly Report are set forth on the Exhibit Index filed herewith.

 

 

27

**SIGNATURE**

 

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.

 

**i2 TELECOM INTERNATIONAL, INC.**

 

 

Date: August 15, 2007

/S/  Paul R. Arena

Paul R. Arena

Chief Executive Officer

 

(duly authorized signatory and

 

Principal Executive Officer)

 

 

 

28

**EXHIBIT INDEX**

 

3.1.1

Articles of Incorporation, as amended, incorporated by reference from the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2003.

3.1.2

Bylaws, as amended, incorporated by reference from the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2003.

 

3.1.3

Certificate of Designations of Rights and Preferences for Series D Preferred Stock, incorporated by reference from the Company’s Current Report on Form 8-K filed August 13, 2004.

International, Inc.

 

3.1.4

Amendment to the Company’s Articles of Incorporation filed June 3, 2004, incorporated by reference  from the Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004.

 

3.1.5

Amendment to the Company’s Articles of Incorporation filed August 10, 2004, incorporated by reference from the Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004. 

 

3.1.6

Certificate of Designation of Rights and Preferences for Series E Preferred Stock, incorporated by reference from the Company’s Current Report on Form 8-K filed November 22, 2005. 

 

3.1.7

Amendment to Articles of Incorporation dated April 17, 2006, incorporated by reference from the Company’s Quarterly Report on Form 10-QSB for the quarter ended March 31, 2006.

 

3.1.8

Articles of Amendment to the Articles of Incorporation incorporated by reference from the Company’s Schedule 14A Definitive Proxy Statement filed on June 22, 2007.

 

4.1

Non-Negotiable Secured Promissory Note for the benefit of Vestal Venture Capital dated July 9, 2007, incorporated by reference from the Company’s Current Report on Form 8-K/A filed on July 16, 2007.

 

4.2

Warrant dated July 9, 2007 for the benefit of Vestal Venture Capital, incorporated by reference from the Company’s Current Report on Form 8-K filed July 13, 2007.

 

4.3

Registration Rights Agreement by and between the Company and Vestal Venture Capital dated July 9, 2007, incorporated by reference from the Company’s Current Report on Form 8-K filed July 13, 2007.

 

10.1

Amended and Restated 2004 Stock Incentive Plan incorporated by reference from the Company’s Post-Effective Amendment to its Form S-8 Registration Statement.

 

10.2 

Guaranty by and between Vestal Venture Capital and Paul Arena dated July 9, 2007, incorporated by reference from the Company’s Current Report on Form 8-K filed July 13, 2007.

 

10.3

Term Loan Agreement by and between the Company and Vestal Venture Capital dated July 9, 2007, incorporated by reference from the Company’s Current Report on Form 8-K filed July 13, 2007.

 

10.4

Loan Subordination Agreement by and between the Company and University Bank dated July 9, 2007, incorporated by reference from the Company’s Current Report on Form 8-K filed July 13, 2007.

 

10.5

Pledge Agreement by and between the Company and Vestal Venture Capital dated July 9, 2007, incorporated by reference from the Company’s Current Report on Form 8-K filed July 13, 2007.

 

31.1

Rule 13a-14(a)/15d-14(a) Certification by the Company’s Chief Executive Officer and Principal Financial Officer filed herewith.

 

32.1

Section 1350 Certification by the Company’s Chief Executive Officer and Principal Financial Officer filed herewith.

 

 

**Exhibit 31.1**

**Certification**

 

I, Paul R. Arena, Chief Executive Officer and Principal Financial Officer of i2 Telecom International, Inc. certify that: 

 

1.

I have reviewed this Quarterly Report on Form 10-QSB for the quarter ended June 30, 2007 of i2 Telecom International, Inc.; 

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 

 

4.

As the sole certifying officer, I am are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

 

(b)

Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation if financial statements for external purposes in accordance with generally accepted accounting principals.

(c) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

(d) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and 

 

5.

As the small business issuer’s other certifying officer(s) and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting. 

 

 

Date: August 15, 2007

 

/S/  Paul R. Arena

 

Paul R. Arena,

Chairman of the Board, Chief Executive Officer and Principal Financial Officer

 

**Exhibit 32.1**

 

**SECTION 1350 CERTIFICATION**

 

I, Paul R. Arena, Chairman of the Board, Chief Executive Officer and Chief Financial Officer of i2 Telecom International, Inc. (the “Company”), do hereby certify in accordance with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

 

 

1.

The Quarterly Report on Form 10-QSB of the Company for the period ended June 30, 2007 (the “Periodic Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§78m or 78o(d)); and

 

 

2.

The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 15, 2007

 

 

/S/  Paul R. Arena

 

Paul R. Arena,

Chairman of the Board, 

Chief Executive Officer and Principal Financial Officer

 

 

  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|