UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q/A


(Amendment
No. 1)




(Mark
One)




x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE QUARTERLY PERIOD ENDED September 30,
  2009




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.




Commission
File No. 0-27704




Geos
Communications, Inc.


(Exact
name of registrant as specified in it charter)




Washington
            
            91-1426372(State
      or other jurisdiction of incorporation or organization)
            
            (IRS
      Employer Identification No.)





430 N.
Carroll Ave,


Suite
120


Southlake,
TX 76092


(Address
of principal executive offices) (Zip Code)




(817)
240-0200


(Registrant’s
telephone number, including area code)




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o




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




Large
      Accelerated Filer   ̈
                  Non-Accelerated
      Filer  oAccelerated
      Filer   ̈
                  Smaller
      Reporting Company x





The
registrant is a shell company (as defined by Rule 12b-2 of the Exchange
Act). Yes  ̈ No x




APPLICABLE
ONLY TO CORPORATE ISSUERS:




Indicate
the number of shares outstanding of each issuer’s classes of common stock, as of
the latest practicable date: 32,385,095 issued and outstanding as of
November 12, 2009. The total number of shares are post-split effective May 14,
2009 whereby a 1:10 reverse split occurred.














GEOS
COMMUNICATIONS, INC.




TABLE OF
CONTENTS




TO
QUARTERLY REPORT ON FORM 10-Q/A




FOR
PERIOD ENDED SEPTEMBER 30, 2009




PART
      I FINANCIAL
      INFORMATION
                                        
                                        1Item
      1.
                                        
                                        FINANCIAL
      STATEMENTS
                                        
                                        1Item
      2.
                                        
                                        MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.
                                        
                                        17Item
      3.
                                        
                                        QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                                        
                                        23Item
      4.
                                        
                                        CONTROLS
      AND PROCEDURES.
                                        
                                        23PART
      II
                                        
                                        OTHER
      INFORMATION
                                        
                                        24Item
      1.
                                        
                                        LEGAL
      PROCEEDINGS
                                        
                                        24Item
      1A.
                                        
                                        RISK
      FACTORS
                                        
                                        25Item
      2.
                                        
                                        UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
                                        
                                        32Item
      3.
                                        
                                        DEFAULTS
      UPON SENIOR SECURITIES
                                        
                                        32Item
      4.
                                        
                                        SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                                        
                                        32Item
      5.
                                        
                                        OTHER
      INFORMATION
                                        
                                        33Item
      6.
                                        
                                        EXHIBITS
                                        
                                        33





This
Amendment No. 1 on Form 10-Q/A is being filed to amend our quarterly report on
Form 10-Q for the fiscal quarter ended September 30, 2009, as filed with the
Securities and Exchange Commission (the “Commission”) on November 16, 2009
to:




·
              amend
      our financial statements for the quarterly period ended September 30,
      2009; and
 ·
              amend
      Item 4, "Controls and
Procedures."




In
connection with the Company’s audit and year end accounting procedures,
management and the Company’s Board of Directors determined that there were
accounting errors related to stock option and warrant expense, the accounting
for the fair value of Series A-D Preferred Shares of Geos Communications IP
Holdings, Inc. (a Delaware corporation and wholly-owned subsidiary of the
Company), and loss on extinguishment of debt. In addition, there were errors in
accounting for the fair value of Series F Preferred Shares and the associated
warrants and for the beneficial conversion feature.




In
addition, we are filing updated certifications pursuant to the Sarbanes-Oxley
Act of 2002 as Exhibits 31.1 and 32.1.




On
September 8, 2009, the Company changed its name from i2 Telecom International,
Inc. to Geos Communications, Inc., and its wholly-owned subsidiary, i2 Telecom
International, Inc., a Delaware corporation, changed its name to Geos
Communications, Inc. We have not reflected these name changes in the body of
this Report.


i


PART
      I
            FINANCIAL
      INFORMATION




Item
      1.
            FINANCIAL
      STATEMENTS




i2
TELECOM INTERNATIONAL, INC.




CONDENSED
CONSOLIDATED BALANCE SHEETS


(Unaudited)




September 30, 2009
                        
                        
                        December 31, 2008RestatedCurrent
      Assets:Cash
                        
                        $
                        1,852,932
                        
                        
                        $
                        2,645Notes
      Receivable
                        
                        
                        0
                        
                        
                        
                        0Inventories
                        
                        
                        189,511
                        
                        
                        
                        187,607Prepaid
      Expenses and Other Current Assets
                        
                        
                        56,244
                        
                        
                        
                        213,059Total
      Current Assets
                        
                        
                        2,098,687
                        
                        
                        
                        403,311Property
      and Equipment, Net
                        
                        
                        1,233,339
                        
                        
                        
                        1,253,074Other
      Assets:Intangible
      Assets
                        
                        
                        2,528,523
                        
                        
                        
                        2,788,947Deposits
                        
                        
                        58,489
                        
                        
                        
                        38,840Total
      Other Assets
                        
                        
                        2,587,012
                        
                        
                        
                        2,827,787Total
      Assets
                        
                        $
                        5,919,038
                        
                        
                        $
                        4,484,172


1


i2
TELECOM INTERNATIONAL, INC.




CONDENSED
CONSOLIDATED BALANCE SHEETS


(Unaudited)




LIABILITIES
AND SHAREHOLDERS’ EQUITY (DEFICIT)




September 30, 2009
                          
                          
                          December 31, 2008RestatedCurrent
      LiabilitiesAccounts
      Payable and Accrued Expenses
                          
                          $
                          1,059,388
                          
                          
                          $
                          2,399,660Deferred
      Revenue
                          
                          
                          13,373
                          
                          
                          
                          25,985Convertible
      Bonds
                          
                          
                          50,000
                          
                          
                          
                          100,000Notes
      Payable-Current
                          
                          
                          152,393
                          
                          
                          
                          3,356,014Total
      Current Liabilities
                          
                          
                          1,275,154
                          
                          
                          
                          5,881,659Preferred
      shares subject to mandatory redemption
                          
                          
                          7,369,429
                          
                          
                          
                          0Total
      Liabilities
                          
                          
                          8,644,583
                          
                          
                          
                          5,881,659Preferred
      Shares Authorized, 5,000,000 shares and 5,535 Shares of Series F
      Convertible Preferred Stock Issued and Outstanding,
      respectively
                          
                          
                          3,776,936
                          
                          
                          
                          0Shareholder’s
      Equity(Deficit)Common
      Stock, No Par Value, 500,000,000 Shares Authorized, 32,385,095 Shares and
      27,842,853 Shares Issued and Outstanding
                          
                          
                          36,665,604
                          
                          
                          
                          35,756,541Additional
      Paid-In Capital
                          
                          
                          8,061,133
                          
                          
                          
                          3,100,500Accumulated
      Deficit
                          
                          
                          (51,229,218
                          )
                          
                          
                          (40,254,528
                          )Total
      Shareholders’ Equity (Deficit)
                          
                          
                          (6,502,481
                          )
                          
                          
                          (1,397,487
                          )Total
      Liabilities and Shareholders’ Equity (Deficit)
                          
                          $
                          5,919,038
                          
                          
                          $
                          4,484,172


2


i2
TELECOM INTERNATIONAL, INC.




CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS


(Unaudited)




For the
                    Three
                    Months
                    Ended
                    September 30,
                    2009
                  
                  
                  For the
                    Three
                    Months
                    Ended
                    September 30,
                    2008
                  
                  
                  For the
                    Nine
                    Months
                    Ended
                    September 30,
                    2009
                  
                  
                  For the
                    Nine
                    Months
                    Ended
                    September 30,
                    2008Restated
                  
                  
                  
                  
                  
                  RestatedRevenue
                  
                  $
                  97,993
                  
                  
                  $
                  163,904
                  
                  
                  $
                  312,562
                  
                  
                  $
                  484,087Cost
      of Revenue
                  
                  
                  113,965
                  
                  
                  
                  185,427
                  
                  
                  
                  307,787
                  
                  
                  
                  556,349Gross
      Profit (Loss)
                  
                  
                  (15,972
                  )
                  
                  
                  (21,523
                  )
                  
                  
                  4,775
                  
                  
                  
                  (72,262
                  )General
      and Administrative Expenses
                  
                  
                  2,075,410
                  
                  
                  
                  2,546,487
                  
                  
                  
                  6,553,388
                  
                  
                  
                  5,182,359Loss
      From Operations
                  
                  
                  (2,091,382
                  )
                  
                  
                  (2,568,010
                  )
                  
                  
                  (6,548,613
                  )
                  
                  
                  (5,254,621
                  )Other
      Income (Expense):Interest
      Income
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  1,474
                  
                  
                  
                  0Interest
      Expense
                  
                  
                  (616,381
                  )
                  
                  
                  (121,433
                  )
                  
                  
                  (1,090,733
                  )
                  
                  
                  (894,902
                  )Gain
      on Forbearance of Debt
                  
                  
                  4,122
                  
                  
                  
                  0
                  
                  
                  
                  116,658
                  
                  
                  
                  2,190Gain
      on Sale of Technology
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  5,193,620Loss
      on Extinguishment of Debt
                  
                  
                  (1,469,523
                  )
                  
                  
                  0
                  
                  
                  
                  (1,469,523
                  )
                  
                  
                  0Total
      Other Income (Expense)
                  
                  
                  (2,081,782
                  )
                  
                  
                  (121,433
                  )
                  
                  
                  (2,442,124
                  )
                  
                  
                  4,300,908Net
      Income (Loss)
                  
                  $
                  (4,173,164
                  )
                  
                  $
                  (2,689,443
                  )
                  
                  $
                  (8,990,737
                  )
                  
                  $
                  (953,713
                  )Preferred
      Stock Series F dividend for Beneficial Conversion Feature
                  
                  
                  (770,258
                  )
                  
                  
                  (6,000
                  )
                  
                  
                  (2,870,825
                  )
                  
                  
                  (18,000
                  )Net
      Income (Loss) Available to Common Shareholders
                  
                  $
                  (4,943,422
                  )
                  
                  $
                  (2,695,443
                  )
                  
                  $
                  (11,861,562
                  )
                  
                  $
                  (971,713
                  )Weighted
      Average Common Shares:Basic
                  
                  
                  28,253,922
                  
                  
                  
                  19,113,995
                  
                  
                  
                  28,829,666
                  
                  
                  
                  18,733,816Basic Loss
      Per Common Share:
                  
                  $
                  (.17
                  )
                  
                  $
                  (.14
                  )
                  
                  $
                  (.41
                  )
                  
                  $
                  (.05
                  )Fully
      Diluted
                  
                  
                  (.17
                  )
                  
                  
                  (.14
                  )
                  
                  
                  (.41
                  )
                  
                  
                  (.05
                  )Fully
      Diluted Per Common Share:
                  
                  $
                  (.17
                  )
                  
                  $
                  (.14
                  )
                  
                  $
                  (.41
                  )
                  
                  $
                  (.05
                  )


3


i2
TELECOM INTERNATIONAL, INC.




CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)




For the Nine
                    Months Ended
                    September 30, 2009
                  
                  
                  For the Nine
                    Months Ended
                    September 30, 2008RestatedCash
      Flows From OperationsNet
      Loss From Operations
                  
                  $
                  (8,990,737
                  )
                  
                  $
                  (953,714
                  )Adjustments
      to Reconcile Net Loss to cashDepreciation
      and amortization
                  
                  
                  572,836
                  
                  
                  
                  489,647Amortization
      of Loan Fees
                  
                  
                  270,411
                  
                  
                  
                  1,001,094Gain
      on Forbearance of Debt
                  
                  
                  (116,658
                  )
                  
                  
                  0Stock
      compensation
                  
                  
                  360,349
                  
                  
                  
                  349,827Warrants
      Issued for services
                  
                  
                  1,313,978
                  
                  
                  
                  -Loss
      on Extinguishment of Debt
                  
                  
                  1,469,523
                  
                  
                  
                  -Accounts
      receivable
                  
                  
                  304
                  
                  
                  
                  (2,350
                  )Inventories
                  
                  
                  (1,904
                  )
                  
                  
                  1,620Prepaid
      Expenses
                  
                  
                  (113,900
                  )
                  
                  
                  (1,419,208
                  )Other
      Assets
                  
                  
                  (19,649
                  )
                  
                  
                  0Increase
      (Decrease) In:Accounts
      Payable and Accrued Expenses
                  
                  
                  593,940
                  
                  
                  
                  (348,527
                  )Deferred
      Revenue
                  
                  
                  (12,612
                  )
                  
                  
                  4,603Net
      Cash Used In Operating Activities
                  
                  
                  (4,674,119
                  )
                  
                  
                  (877,008
                  )Cash
      Flows From Investing ActivitiesEquipment
      Purchases
                  
                  
                  (292,677
                  )
                  
                  
                  (828,445
                  )Payments
      for Intangible Assets
                  
                  
                  (0
                  )
                  
                  
                  (115,100
                  )Net
      Cash Used In Investing Activities
                  
                  
                  (292,677
                  )
                  
                  
                  (943,545
                  )Cash
      Flows From Financing ActivitiesProceeds
      from Issuance of Convertible Bonds
                  
                  
                  0
                  
                  
                  
                  0Payments
      of Convertible Bonds
                  
                  
                  0
                  
                  
                  
                  0Proceeds
      From Notes Payable
                  
                  
                  1,433,001
                  
                  
                  
                  2,459,024Payment
      of Notes Payable
                  
                  
                  (722,482
                  )
                  
                  
                  (3,591,022
                  )Exercise of
      Common Stock Options
                  
                  
                  456,564
                  
                  
                  
                  836,760Issuance
      of Preferred Stock
                  
                  
                  5,650,000
                  
                  
                  
                  -Proceeds
      from redemption of options
                  
                  
                  -
                  
                  
                  
                  352,500Payment
      of Financing Cost with warrants
                  
                  
                  -
                  
                  
                  
                  1,716,066Net
      Cash Provided By Financing Activities
                  
                  
                  6,817,083
                  
                  
                  
                  1,773,328Increase
      (Decrease) in Cash
                  
                  
                  1,850,287
                  
                  
                  
                  (47,225
                  )Balance,
      Beginning of Period
                  
                  
                  2,645
                  
                  
                  
                  194,279Balance,
      End of Period
                  
                  $
                  1,852,932
                  
                  
                  $
                  147,054


4


GEOS
COMMUNICATIONS, INC.




NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      1.
            NATURE
      OF BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES




Restatement




In
connection with the Company’s audit and year end accounting procedures,
management and the Company’s Board of Directors determined that there were
accounting errors related to stock options and warrant expense, the accounting
for the fair value of Series A-D Preferred Shares, and accounting for the fair
value of Series F Preferred Shares. The Company inadvertently did not
record all the expenses related to the issuance of warrants and stock options in
the proper periods ended September 30, 2009 by over expensing $164,069 in the
three months then ended and under expensing $1,154,605 for the nine months then
ended. In addition, the company incorrectly recorded Series A-D preferred shares
issued in extinguishment of debt, and incorrectly computed the fair value of the
Series F Preferred Shares. As of September 30, 2009, the Company has now
properly recorded the Series A-D Preferred Shares initially at fair value of
$7,028,630, which accretes interest and dividends to its value of $7,369.429 as
a liability as of September 30, 2009.  The Company also did not
properly classify the Series F preferred shares as temporary equity, and did not
properly value the associated warrants, and Beneficial Conversion Feature. The
fair value of the warrants was $1,873,064 as of September 30, 2009, and the
Company recorded $770,259 and $2,870,825 as a beneficial conversion feature for
the three and nine months ended September 30, 2009, respectively.




The
following table represents the amounts originally reported, and the restated
amounts as amended and reported herein.




September30,2009
                  
                  
                  September30,2009( AS ORIGINALLY
                    FILED)
                  
                  
                  ( AS AMENDED)Total
      Assets
                  
                  $
                  5,919,038
                  
                  
                  $
                  5,919,038Total
      Current Liabilities
                  
                  $
                  1,532,339
                  
                  
                  $
                  1,275,154Series
      A-D, Preferred Shares Subject to Mandatory Redemption
                  
                  $
                  5,528,107
                  
                  
                  $
                  7,369,429Total
      Liabilities
                  
                  $
                  7,060,446
                  
                  
                  $
                  8,644,583Series
      F Convertible Preferred Shares, 5,650,000 Shares Authorized, and 5,650
      shares Issued and Outstanding
                  
                  $
                  5,535,000
                  
                  
                  $
                  3,776,936Additional
      Paid In Capital
                  
                  $
                  3,481,402
                  
                  
                  $
                  8,061,133Accumulated
      Deficit
                  
                  $
                  (46,823,413
                  )
                  
                  $
                  (51,229,218
                  )Total
      Shareholders’ Equity (Deficit)
                  
                  $
                  (1,141,408
                  )
                  
                  $
                  (6,502,481
                  )Total
      Liabilities and Shareholders’ Equity (Deficit)
                  
                  $
                  5,919,038
                  
                  
                  $
                  5,919,038





5




CONSOLIDATED
                        STATEMENT OF
                        OPERATIONS
                      
                      FortheThreeMonths
                        EndedSeptember,30
                        2009
                      
                      
                      FortheThree
                        MonthsEnded
                        September,302009
                      
                      
                      FortheNineMonths
                        EndedSeptember,
                        302009
                      
                      
                      FortheNine
                        MonthsEnded
                        September,30
                        2009AS
                        ORIGINALLY
                        FILED
                      
                      
                      AS
                        AMENDED
                      
                      
                      AS
                        ORIGINALLY
                        FILED
                      
                      
                      AS
                        AMENDEDRevenue
                      
                      $
                      97,993
                      
                      
                      $
                      97,993
                      
                      
                      $
                      312,562
                      
                      
                      $
                      312,562Cost
      of Revenue
                      
                      
                      113,965
                      
                      
                      
                      113,965
                      
                      
                      
                      307,787
                      
                      
                      
                      307,787Gross
      Profit (Loss)
                      
                      
                      (15,972
                      )
                      
                      
                      (15,972
                      )
                      
                      
                      4,775
                      
                      
                      
                      4,775General
      and Administrative Expenses
                      
                      
                      2,239,468
                      
                      
                      
                      2,075,410
                      
                      
                      
                      5,398,783
                      
                      
                      
                      6,553,388Loss
      From Operations
                      
                      
                      (2,255,440
                      )
                      
                      
                      (2,091,382
                      )
                      
                      
                      (5,394,007
                      )
                      
                      
                      (6,548,613
                      )Other
      Income (Expense):Interest
      Income
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,474
                      
                      
                      
                      1,474Interest
      Expense
                      
                      
                      (386,765
                      )
                      
                      
                      (616,381
                      )
                      
                      
                      (1,293,009
                      )
                      
                      
                      (1,090,733
                      )Gain
      on Forbearance of Debt
                      
                      
                      4,122
                      
                      
                      
                      4,122
                      
                      
                      
                      116,658
                      
                      
                      
                      116,658Loss
      on Ext. Of Debt
                      
                      
                      -
                      
                      
                      
                      (1,469,423
                      )
                      
                      
                      -
                      
                      
                      
                      (1,469,423
                      )Total
      Other Income (Expense)
                      
                      
                      (382,643
                      )
                      
                      
                      (2,081,782
                      )
                      
                      
                      (1,174,876
                      )
                      
                      
                      (2,442,124
                      )Net
      Income (Loss)
                      
                      
                      (2,638,084
                      )
                      
                      
                      (4,173,164
                      )
                      
                      
                      (6,568,883
                      )
                      
                      
                      (8,990,737
                      )Preferred
      Stock Series F dividend for Beneficial Conversiton Feature
                      
                      
                      -
                      
                      
                      
                      (770,258
                      )
                      
                      
                      -
                      
                      
                      
                      (2,870,825
                      )Net
      Income (Loss) Available to Common Shareholders
                      
                      $
                      (2,638,084
                      )
                      
                      $
                      (4,943,422
                      )
                      
                      $
                      (6,568,883
                      )
                      
                      $
                      (11,861,562
                      )Weighted
      Average Common Shares:Basic,
      diluted and fully diluted
                      
                      
                      28,253,922
                      
                      
                      
                      28,253,922
                      
                      
                      
                      28,829,666
                      
                      
                      
                      28,829,666Earnings
      Per Common Share:Basic, Diluted and Fully Diluted
                      
                      $
                      (0.09
                      )
                      
                      $
                      (0.17
                      )
                      
                      $
                      (0.23
                      )
                      
                      $
                      (0.41
                      )


6





CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Unaudited)
                        
                        For the Nine
                          Months Ended
                          September 30, 2009
                        
                        
                        For the Nine
                          Months Ended
                          September 30, 2009AS
                          ORIGINALLY
                          FILED
                        
                        
                        AS
                          AMENDEDCash
      Flows From OperationsNet
      Loss From Operations
                        
                        $
                        (6,568,883
                        )
                        
                        $
                        (8,990,737
                        )Adjustments
      to Reconcile Net Income to cashDepreciation
      and amortization
                        
                        
                        572,836
                        
                        
                        
                        572,836Amortization
      of Loan Fees
                        
                        
                        270,411
                        
                        
                        
                        270,411Gain
      on Forbearance of Debt
                        
                        
                        (116,658
                        )
                        
                        
                        (116,658
                        )Stock
      compensation
                        
                        
                        82,759
                        
                        
                        
                        360,349Warrants
      issued for services
                        
                        
                        0
                        
                        
                        
                        1,313,978Loss
      on Extinguishment of Debt
                        
                        
                        0
                        
                        
                        
                        1,469,523Accounts
      receivable
                        
                        
                        304
                        
                        
                        
                        304Inventories
                        
                        
                        (1,904
                        )
                        
                        
                        (1,904
                        )Prepaid
      Expenses
                        
                        
                        (113,900
                        )
                        
                        
                        (113,900
                        )Other
      Assets
                        
                        
                        (19,649
                        )
                        
                        
                        (19,649
                        )Increase
      (Decrease) In:Accounts
      Payable and Accrued Expenses
                        
                        
                        593,940
                        
                        
                        
                        593,940Deferred
      Revenue
                        
                        
                        (12,612
                        )
                        
                        
                        (12,612
                        )Net
      Cash Used In Operating Activities
                        
                        
                        (5,313,358
                        )
                        
                        
                        (4,674,119
                        )Cash
      Flows From Investing ActivitiesEquipment
      Purchases
                        
                        
                        (292,677
                        )
                        
                        
                        (292,677
                        )Payments
      for Intangible Assets
                        
                        
                        (0
                        )
                        
                        
                        (0Net
      Cash Used In Investing Activities
                        
                        
                        (292,677
                        )
                        
                        
                        (292,677
                        )Cash
      Flows From Financing ActivitiesProceeds
      From Notes Payable
                        
                        
                        1,433,001
                        
                        
                        
                        1,433,001Payment
      of Notes Payable
                        
                        
                        (851,004
                        )
                        
                        
                        (722,482
                        )Conversion
      of Note Payables
                        
                        
                        (5,394,107
                        )
                        
                        
                        -Exercise of
      Common Stock Options
                        
                        
                        456,564
                        
                        
                        
                        456,564Issuance
      of Preferred Stock
                        
                        
                        5,669,000
                        
                        
                        
                        5,650,000Issuance
      of Preferred Stock through conversion
                        
                        
                        5,394,107
                        
                        
                        
                        -Proceeds
      from redemption of options
                        
                        
                        -
                        
                        
                        
                        -Payment
      of Financing Cost with warrants
                        
                        
                        528,622
                        
                        
                        
                        -Payment
      of Professional Fees with warrants
                        
                        
                        220,139
                        
                        
                        
                        -Net
      Cash Provided By Financing Activities
                        
                        
                        7,456,322
                        
                        
                        
                        6,817,083Increase
      (Decrease) in Cash
                        
                        
                        1,850,287
                        
                        
                        
                        1,850,287Balance,
      Beginning of Period
                        
                        
                        2,645
                        
                        
                        
                        2,645Balance,
      End of Period
                        
                        $
                        1,852,932
                        
                        
                        $
                        1,852,932





Nature
of Business




The
Company, through its subsidiary, Geos Communications, Inc.,  a
Delaware corporation (“Geos Communications (DE)”), is a developer of mobile
phone applications and provides low-cost telecommunications services employing
next-generation Voice over Internet Protocol, (“VoIP”) technology. Through Geos
Communications (DE), the Company controls its own proprietary technology and
outsources the majority of its production and service functions with strategic
partners. The Company, through Geos Communications (DE), provides the
VoiceStick®, MyGlobalTalkTM, micro gateway adapters, 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 includes the sale of the VoiceStick®,
MyGlobalTalkTM, and other integrated access devices (“IADs”) along with
recurring monthly subscriptions and call minute termination. The Company
believes its proprietary technology provides meaningful advantages particularly
in the areas of ease of use, high quality service, and low cost and robust
features.


7


The
Company, a Washington corporation, was incorporated as “Transit Information
Systems, Inc.”  under the laws of the State of Washington on October
17, 1988.  In March 2004, the Company changed its name to “i2 Telecom
International, Inc.”  In September, 2009, the Company filed with the
Secretary of State of the State of Washington an amendment to its Articles of
Incorporation reflecting the change of the Company’s name from “i2 Telecom
International, Inc.” to “Geos Communications, Inc.” The Company’s offices are
currently located at 430 N. Carroll Ave, Suite 120, Southlake, TX 76092, and the
Company’s telephone number at that address is (817) 240-0200. The Company
maintains websites at www.geoscommunications.com, www.voicestick.com and www.myglobaltalk.com.




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
      telephony access via your laptop with the Company’s
      VoiceStick®;


·
            broadband
      telephony technology;


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


·
            unlimited
      and “Pay as You Go” global calling among VoiceStick® and MyGlobalTalkTM
      users; and


·
            local
      and long distance calling via cellular phones utilizing the Company’s
      proprietary technology.




The
Company’s management has focused historically upon VoIP as the Company’s primary
line of business. The Company is a developer of mobile phone applications and 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 the issuance of such equity will
dilute the ownership percentage of the Company’s existing shareholders. If the
Company determines to finance these opportunities by incurring debt, then such
debt may not be available to the Company on favorable terms, if at
all.




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 of Financial Condition and Results 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, 2008, included in our
Annual Report on Form 10-K filed with the SEC on April 2, 2009, (the “Annual
Report”).  Preparation of this Quarterly Report on Form 10-Q for the
quarter ended September 30, 2009 (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, and the 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 Geos Communications
(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.


8


The FASB
implemented the new ASC “Accounting Standards Codification” structure July 1,
2009 which is effective for interim and annual periods ending after September
15, 2009.  The Codification is the single source of authoritative
nongovernmental U.S. generally accepted accounting principles (US GAAP)
superseding current US GAAP including FASB, AICPA, EITF and related
literature.




Accordingly,
previous references to US GAAP accounting standards are no longer used by the
Company in its disclosures including these notes to the condensed consolidated
financial statements.  The codification does not affect the Company’s
consolidated balance sheet, cash flows or results of operations.




Accounting
Estimates




The
preparation of financial statements in conformity with US GAAP 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 the FASB ASC topic on revenue
recognition.  This 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) collectability is reasonably
assured.  Determinations under 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 collectability of those
fees.  Should changes in conditions cause 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 US GAAP.




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.




Debt
Extinguishment




On July
1, 2009 we offered to certain of our existing note holders the opportunity to
exchange some or all of the principal, interest and loan fees under $6,328,212
of notes, which included all accrued interest and related fees, (the “Debt”) for different series of
preferred stock of Geos Communications IP Holdings, Inc., our wholly-owned
subsidiary.  This exchange was deemed to be debt extinguishment for
the notes payable according to the ASC Topic No.405- Liabilitiesand 470-50 –
Debt, Modifications and
Extinguishments.




ASC
470-50-40-10 (formerly EITF Issue 96-19) establishes the criteria for debt
extinguishment and modification. If the debt is substantially different, then
the debt is extinguished, and a gain or loss is calculated and recorded. We
determined that an extinguishment existed as the present value of the cash flows
under the terms of the new instrument, the different series of preferred stock,
was at least 10% different from the present value of the remaining cash flows
under the terms of the original notes.  The Company recorded a loss on
debt extinguishment of $1,469,523 which is included in the Amended Statement of
Operations for the Quarter ended of September 30, 2009.


9


Preferred
Shares




The
Company applies the guidance enumerated in ASC Topic No. 480 “Distinguishing
Liabilities from Equity,” and “Classification and Measurement of Redeemable
Securities,” when determining the classification and measurement of preferred
stock. Preferred shares subject to mandatory redemption are classified as
liability instruments and are measured initially at fair value with accretion to
the mandatory redemption value using the effective interest method. As of
September 30, 2009, the Company had recorded liabilities related to Series A-D
Preferred Shares at the accreted value of $7,369,429.




In
addition, the Company classifies conditionally redeemable preferred shares,
which includes preferred shares that feature redemption rights that are subject
to redemption upon the occurrence of uncertain events not solely within the
Company’s control, as temporary equity. At all other times, the Company
classifies its preferred shares in stockholders’ equity. As of September 30,
2009, the Company had recorded as temporary equity F Series Preferred Shares
totaling $3,776,936.




Stock
Compensation




The
Company measures all share-based payments, including grants of employee stock
options to employees and warrants to service providers, using a fair-value based
method in accordance with the ASC Topic No. 505 and Topic No. 718 (formerly SFAS
No. 123R) Share-Based
Payments. The cost of services received in exchange for awards of equity
instruments is recognized in the consolidated statement of operations based on
the grant date fair value of those awards amortized over the requisite service
period. This summary of significant accounting policies of GEOS COMMUNICATIONS,
INC., (the “Company”), Geos Communications (DE) and SuperCaller is presented to
assist in understanding the Company’s financial statements.  The
financial statements and notes are representations of the Company’s management
who is responsible for their integrity and objectivity.  These
accounting policies conform to US GAAP and have been consistently applied in the
preparation of the financial statements.




A.           Nature
of Operations – The parent Company was incorporated under the laws of the State
of Washington on October 17, 1988, and the operating subsidiary, Geos
Communications (DE), was incorporated on February 28, 2002.  The
Company, headquartered in Southlake, Texas, is a telecommunications service
provider of Voice over Internet Protocol (“VoIP”) technology.  The
Company has proprietary patent pending technology that allows transmission of
VoIP, connection to long distance public-switched telephone network (“PSTN”),
and other enhanced communications services through an Internet Access Device
(“IAD”).




The
Company has targeted specific markets that are connected to the
Internet.  Customers are supplied a Geos Communications “IAD” micro
gateway, which will enable them to: 1) make, at no cost other than the initial
cost of micro gateway and the subscription fee, unlimited calls to other Geos
Communications subscribers – anywhere in the world using the customer’s existing
phone (no new or special phone required); 2) make long distance calls to people
who use a normal telephone line using the Geos Communications least cost routing
network that provides competitive long distance rates; and 3) use either a
broadband (DSL, Cable, etc.) or dial up service.




B.           Basis
of Consolidation – The consolidated financial statements include the accounts of
Geos Communications (DE) and SuperCaller, that are wholly owned subsidiaries of
the Company. All significant inter-company accounts and transactions have been
eliminated in consolidation.




C.           Revenues
- The Company recognizes revenue from the sale of its Geos Communications “IAD”
micro gateway at time of shipment.  Revenues from per-minute charges
and user fees are recognized as incurred by its customers.




D.           For
purposes of the statement of cash flows, the Company considers all short-term
securities purchased with a maturity of three months or less to be cash
equivalents.




E.           Inventories
- Inventories consisting of purchased components available for resale are stated
at lower of cost or market.  Cost is determined on the first-in,
first-out (FIFO) basis.




F.           Costs
associated with obtaining loans have been capitalized and are being amortized on
a straight-line basis over the life of the loan.


10


G.           Property,
Equipment and Related Depreciation - Property and equipment are recorded at
cost.  Depreciation is computed using the straight-line method for
financial and tax reporting purposes. Estimated lives range from five to ten
years.  When properties are disposed of, the related costs and
accumulated depreciation are removed from the respective accounts and any gain
or loss on disposition is recognized at that time.  Maintenance and
repairs which do not improve or extend the lives of assets are expensed as
incurred.




H.           Intangible
Assets – The Company has capitalized certain costs related to registering
trademarks and patent pending technology.  In accordance with FASB ASC
topic on intangible assets, intangible assets with an indefinite life are not
amortized but are tested for impairment at least annually or whenever changes in
circumstances indicate that the carrying value may not be
recoverable.  The Company amortizes its intangible assets with a
finite life over 10 years on a straight-line basis.




I.           In
accordance with the FASB ASC topic on impairment or disposal of long-lived
assets, the Company reviews its long-lived assets, including property and
equipment, goodwill and other identifiable intangibles for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be fully recoverable.  To determine recoverability of
its long-lived assets, the Company evaluates the probability that future
undiscounted net cash flows, without interest charges, will be less than the
carrying amount of the assets.  Impairment is measured at fair value.
The Company had no impairment of assets during the third quarter or the three
months ended September 30, 2009 or the year ended December 31,
2008.




J.           Use
of Estimates - The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.  Actual results
could differ from those estimates.




K.           Income
Taxes - The Company accounts for income taxes  under the FASB ASC
topic on income taxes  which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the Company’s consolidated financial statements or tax
returns.  Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial accounting and tax
basis of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.




L.           Research
and Development Expenses – The Company expenses research and development
expenses as incurred.  Amounts payable to third parties under product
development agreements are recorded at the earlier of the milestone achievement,
or when payments become contractually due.




M.           Earnings
(loss) per share - Basic earnings (loss) per share represents income available
to common shareholders divided by the weighted average number of shares
outstanding during the period.  Diluted earnings (loss) per share
reflect additional common shares that would have been outstanding if dilutive
potential common shares had been issued, as well as any adjustment to income
that would result from the assumed issuance. Options on shares of common stock
and certain bonds convertible into common shares were not included in the
computing of diluted earnings (loss) per share because their effects were
anti-dilutive.




N.           New
Accounting Pronouncements




In May
2009, the FASB issued guidance to establish general standards of accounting for
and disclosures of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. This guidance was
effective for interim and annual periods ending after June 15, 2009, and
accordingly, the Company adopted this Standard during the second quarter of
2009.  This guidance requires that public entities evaluate subsequent
events through the date that the financial statements are issued. We have
evaluated subsequent events through the time of filing these financial
statements with the Securities and Exchange Commission (“SEC”) on November 16,
2009.


11


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.




Loss per
Share




For the
third quarter of 2009 and 2008, net income (loss) per share is based on the
weighted average number of shares of Common Stock outstanding.  At
September 30, 2009 and September 30, 2008, the Company had, on a weighted
average, 28,829,666 shares and 18,733,816 shares of Common Stock
outstanding, respectively.  The total number of shares are post-split
effective May 14, 2009 whereby a 1:10 reverse split occurred.




At
September 30, 2009, the Company had outstanding 32,385,095 shares of Common
Stock and options and warrants to purchase 29,452,444 shares of Common Stock.
The Company had 5,535 shares of Series F Preferred
Stock.  Consequently, on an as-converted, fully-diluted basis, the
Company would have 61,837,542 shares of Common Stock outstanding at September
30, 2009.




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.  The FASB ASC guidance on stock compensation 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. The Company
recognizes an expense over the vesting period of the fair value of all
stock-based awards on the date of grant




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 US GAAP 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, 2008, 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 the Company and its subsidiaries as of
September 30, 2009 and September 30, 2008, and the results of their operations
and cash flows for the nine months ended September 30, 2009 and
2008.  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, 2009.


12


NOTE
      2.
            NOTES
      PAYABLE




During
the quarter the Company did not receive any new notes payable. The notes pay out
interest at the rate of 12% and any unpaid interest was accrued at September 30,
2009.




On July
1, 2009 we offered to certain of our existing note holders the opportunity to
exchange some or all of the principal, interest and loan fees under $6,328,212
of notes, which included all accrued interest and related fees, (the “Debt”) for
different series of preferred stock of Geos Communications IP Holdings, Inc., a
Delaware corporation and our wholly owned subsidiary (“IP
Holdings”).  The issuance price of the preferred stock of IP Holdings
was $1.00 for every $1.00 of each note being exchanged.  On July 31,
2009, the Company closed an aggregate of $5,508,855 of the Debt into IP Holdings
Preferred Stock.  In connection with the creation of IP Holdings,
substantially all of the Company’s intellectual property was transferred to IP
Holdings, with the Company owning all of the common stock of IP
Holdings.  The IP Holdings Preferred Stock provides for an accruing
dividend of 12% per annum, and a special dividend for up to two years in the
event that the IP Holdings Preferred Stock has not been redeemed.  The
balance of the remaining debt of $819,357 has either been retired or is about to
be retired in the form of cash payments.




We have
been able to meet our operating requirements since September 30, 2009 without
any interim financing.  We will need to receive additional capital to
continue our operations.




Financing
may not be available to us on commercially reasonable terms, if at all. There is
no assurance that we will be successful in raising additional capital or that
the proceeds of any future financings will be sufficient to meet our future
capital needs. It is not likely that we will be able to continue our business
without additional financing. Currently, we have no commitments for additional
financing.




NOTE
      3.
            CONVERTIBLE
      BONDS




On
January 9, 2006, the Company sold $1,750,000 of 10% secured convertible
debentures pursuant to a Securities Purchase Agreement dated as of the same
date.  The Company received $600,000 upon closing, $600,000 on April
6, 2006, and $550,000 May 10, 2006.  The debentures were secured by
all assets of the Company.




During
the year-end December 31, 2006, the holders converted $425,000 of the
convertible bonds into 1,470,731 shares of common stock.  In January
2007, the Company paid off the remaining balance due.




On
December 9, 2006, the Company sold $2,000,000 of 6% secured convertible
debentures pursuant to a Securities Purchase Agreement dated as of the same
date. The Company received $1,625,000 in December 2006 and the remaining
$375,000 in January 2007.  The Debentures matured on May 9, 2007. The
Debentures were convertible from time to time into 2,857,143 shares of common
stock of the Company at the price of $.70 per share and 2,857,143 warrants
exercisable at the price of $.07 per share.




On
February 28, 2007, the Company sold $2,000,000 of 6% Senior Subordinated Secured
Convertible Notes convertible into 1,666,667 shares of the Company’s common
stock priced at $1.20 each, and 833,334 Warrants, priced at $1.20 each. For
every two shares of common stock to be issued, the investor(s) received one
warrant which is exercisable into the Company’s common stock at 100% of the
Issue Price. These warrants mature three years from issuance.  The
Notes will automatically convert into the Company’s 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. The Notes are
secured by all assets of the Company and its subsidiaries.  All future
debt securities issued by the Company will be subordinate in right of payment to
the Notes; provided, however, that the Company may raise up to $1.0 million of
senior indebtedness that ranks pari passu with the Notes in the
future.


13


During
the year ended December 31, 2007, the Company converted Convertible debt in the
amount of $3,392,274, net of bond discount of $557,419, in principal and accrued
interest, to common stock.  Total shares issued in exchange for the
debt were 4,085,152.




Due to
the late registration of shares received in conversion of the Convertible Debt
during 2007, penalty shares were awarded & issued to convertible note
holders.   The total number of penalty shares issued was
632,048.




The total
number of shares are post-split effective May 14, 2009 whereby a 1:10 reverse
split occurred.




Convertible
bonds remaining at September 30, 2009 and June 30, 2009 consisted of the
following:




September 30, 2009
                
                
                December 31, 2008December
      2006 6% Convertible Bonds
                
                $
                50,000
                
                
                $
                50,000February
      2007 6% Convertible Bonds
                
                
                0
                
                
                
                50,00050,000
                
                
                
                100,000





NOTE
4.   NOTES PAYABLE and SERIES A-D, PREFERRED SHARES SUBJECT TO
MANDATORY REDEMPTION-Restated




On July
1, 2009 we offered to certain of our existing note holders the opportunity to
exchange some or all of the principal, interest and loan fees under $6,328,212
of notes, which included all accrued interest and related fees, (the “Debt”) for
different series of preferred stock of Geos Communications IP Holdings, Inc., a
Delaware corporation and our wholly owned subsidiary (“IP Holdings”).The
issuance price of the preferred stock of IP Holdings was $1.00 for every $1.00
of each note being exchanged.  On July 31, 2009, the Company exchanged
an aggregate of $5,508,855 of the Debt into IP Holdings Preferred Stock. The
former secured debt included 12% interest with maturities of principal and all
accrued interest originally due in 2008, and subsequently extended to 2009. In
connection with the creation of IP Holdings, substantially all of the Company’s
intellectual property was transferred to IP Holdings, with the Company owning
all of the common stock of IP Holdings.  The IP Holdings Preferred
Stock provides for an accruing dividend of 12% per annum and a special dividend
for up to two years in the event that the IP Holdings Preferred Stock has not
been redeemed. With the assistance of  a valuation from an independent
third party regarding the initial fair value of the new preferred series of
$7,028,630 for the new shares issued. Subsequently, $229,616 has been accreted
for interest, plus $111,182 for dividends resulting in a balance of $7,369,429
as of September 30, 2009. The final redemption amount is $9,784,027 which
encompasses additional charges for each time period passing as
follows:




July
      31, 2010
                    
                    $
                    1,377,699July
      31, 2011
                    
                    $
                    803,657





The
Company applies the guidance enumerated in ASC Topic No. 480 “Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity,” and “Classification and Measurement of Redeemable Securities,” when
determining the classification and measurement of preferred stock. Preferred
shares subject to mandatory redemption are classified as liability instruments
and are measured initially at fair value with accretion of interest expense and
dividends related to the shares added to the mandatory redemption value using
the effective interest method.




This
exchange was also deemed to be debt extinguishment for the notes payable
according to the ASC Topic No.405- Liabilitiesand 470-50 –
Debt, Modifications and
ExtinguishmentsAs a result of this exchange a loss on debt
extinguishment of $1,469,523 was recorded and is included in the Consolidated
Statement of Operations for the year ended of September 30,
2009.


14


NOTE
5.  SERIES F CONVERTIBLE PREFERRED STOCK-Restated




The
Company issued Series F Convertible Preferred Stock, no par value (the “Series F Preferred Shares”).
Each of the Series F Preferred Shares is convertible at the option of the holder
(subject to the conversion restriction described below) into shares of our
Common Stock, no par value. The number of shares of Common Stock issuable upon
conversion is determined by dividing the stated value, or $1,000, by a
conversion price of $0.50, subject to adjustment as provided in the Certificate
of Designations.  In addition, each share of Series F Preferred Shares
will automatically convert (i) if certain milestones provided in the Certificate
of Designations are met, (ii) if such share is outstanding on the third
anniversary of the date that Series F Preferred Shares are first issued or (iii)
if the holders of more than fifty percent of the outstanding Series F Preferred
Shares so consent. Without the express written consent of holders of at least
fifty percent of the then-outstanding Series F Preferred Shares (as well as any
holders of more than twenty percent of the then-outstanding Series F Preferred
Shares) the Company may not authorize or issue any additional class or series of
equity securities of the Company ranking senior to, or pari passu with, the
Series F Preferred Shares with respect to dividends, distributions and payments
upon the liquidation, dissolution and winding up of the Company. The holders of
Series F Preferred Shares are entitled to elect one director to the Board of
Directors, but the Series F Preferred Shares otherwise carry no voting rights
other than those required by law.




The
Series F holders may convert, at their discretion (subject to a conversion
restriction prohibiting any conversion that would result in a Series F holder’s
beneficially owning more than 4.9% of the then-issued and outstanding Common
Stock), all or any of the shares into shares of Common Stock at a conversion
price of $0.50, resulting in 15,100,000 shares of Common
Stock.  During the year ended December 31, 2009, no Series F Preferred
Shares were converted.




The
Company applies the guidance enumerated in ASC Topic No. 480. The Company has
the option to redeem all or a portion of the outstanding Series F Preferred
Shares at $2,000 per share. Holders of Series F Preferred Shares also have the
option to require the Company to redeem their Series F Preferred Shares if the
Company fails to pay required dividends to such holders or breaches any material
representation, warranty or covenant contained in the Certificate of
Designations or in any subscription agreement pursuant to which any Series F
Preferred Shares are issued, and such failure is not cured.




The
Company applies the guidance enumerated in ASC Topic No. 480 “Distinguishing
Liabilities from Equity” when determining the classification and measurement of
preferred stock. In addition, the Company classifies conditionally redeemable
preferred shares, which includes preferred shares that feature redemption rights
that are either within the control of the holder or subject to redemption upon
the occurrence of uncertain events not solely within the Company’s control, as
temporary equity.




In
connection with the multiple issuances of 5,650 shares of Preferred Series F
shares, 5,650,000 warrants were issued.  The proceeds of $5,650,000
were allocated based on the relative fair values of the underlying shares and
warrants.  The fair value allocated to the shares was $3,776,936 and
is shown as temporary equity on the Consolidated Balance Sheets and is outside
of stockholders’ equity because such shares are contingently redeemable because
it is not within the control of the Company. The beneficial conversion feature
in the Statement of Operations totaled $2,870,825, and is
also included in Additional Paid In Capital.




The fair
value of the warrants was $1,873,064, and is included in Common Stock, no
par.  The warrants are exercisable at any time after issuance at $.63,
for a period of three years.


15





NOTE
      6.
            STOCK
      OPTIONS AND WARRANTS- Restated




In
October 2009, the Company and Board of Directors approved a reverse ten for one
reverse stock split.  As such, all 2008 Common Stock share prices and
amounts have been adjusted accordingly.





September 30, 2009
                
                
                December 31, 2008Number of
                  Options/
                  Warrants
                
                
                Weighted
                  Average
                  Exercise
                  Price
                
                
                Number of
                  Options/
                  Warrants
                
                
                Weighted
                  Average
                  Exercise
                  PriceOutstanding
      at Beginning of Period
                
                
                16,482,834
                
                
                $
                .99
                
                
                
                12,224,824
                
                
                $
                2.30Options
      Granted
                
                
                0
                
                
                $
                .91
                
                
                
                1,510,000
                
                
                $
                .90Warrants
      Granted
                
                
                2,251,000
                
                
                $
                .75
                
                
                
                20,446,350
                
                
                $
                1.00Exercised
                
                
                (3,817,760
                )
                
                $
                .82
                
                
                
                (1,251,484
                )
                
                $
                .58Forfeited
                
                
                (1,564,269
                )
                
                $
                .83
                
                
                
                (16,446,855
                )
                
                $
                1.90Outstanding
      at End of Period
                
                
                16,480,343
                
                
                $
                .94
                
                
                
                16,482,834
                
                
                $
                1.30Options
      Exercisable at End of Period
                
                
                16,480,343
                
                
                $
                .94
                
                
                
                13,735,443
                
                
                
                .90Weighted-average
      Fair Value of Options Granted During the Period
                
                
                
                
                
                $
                .60
                
                
                
                
                
                
                $
                1.00





As
of  September 30, 2009, the range of option and warrant exercise
prices for outstanding and exercisable options and warrants was $.10 to $1.60
with a weighted average remaining contractual life of 2.61 years.




During
the nine months ended September 30, 2009 total compensation costs recognized in
income from stock-based compensation awards was $360,349 and is included in
general and administrative expenses on the Consolidated Statement of
Operations.




During
the nine months ended September 30, 2009, total amortization of warrant costs
was $1,313,978 and is included in General and Administrative in the Consolidated
Statement of Operations.




The
intrinsic value of options exercised during 2009 and 2008 is $0 and $275,326
respectively.


16


On July
1, 2009, the Company commenced a tender offer for 25,613,269 warrants eligible
to participate in its offer to exchange warrants for shares of common stock or
repricing.   The terms and conditions of the offer as set forth
in the Company’s Offer to Exchange, dated July 1, 2009, and the related Letter
of Transmittal, as amended, allowed for the warrant holder to receive one share
of common stock for every five warrants on a post-split basis.  The
tender offer expired on August 14, 2009 at 5:00 p.m. Atlanta Time. Pursuant to
the terms and conditions of the Offer to Exchange, the Company accepted for
exchange warrants to purchase an aggregate of 12,148,284 shares of the Company’s
common stock, representing 47.4% of the total warrants eligible for exchange.
All exchanged warrants were cancelled, and the Company issued approximately
2,429,657 shares of the Company’s. No warrants were exchanged for
repricing.




On July
1, 2009, the Company commenced a tender offer for 5,243,015 options eligible to
participate in its offer to exchange options for shares of common stock or
repricing.   The terms and conditions of the offer as set forth
in the Company’s Offer to Exchange, dated July 1, 2009, and the related Letter
of Transmittal, as amended, allowed for the option holder to receive one share
of common stock for every five options on a post-split basis.  The
tender offer expired on August 14, 2009 at 5:00 p.m. Atlanta Time. Pursuant to
the terms and conditions of the Offer to Exchange, the Company accepted for
exchange options to purchase an aggregate of 1,061,577 shares of the Company’s
common stock, representing 20.2% of the total options eligible for exchange. All
exchanged options were cancelled, and the Company instructed its transfer agent
to issued approximately 212,316 shares of the Company’s common
stock.




NOTE
      7.
            SUBSEQUENT
      EVENTS




None.




Item
2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.




Forward
Looking Statements




Certain
statements in the Management’s Discussion and Analysis (“MD&A”), other than
purely historical information, including estimates, projections, statements
relating to our business plans, objectives and expected operating results, and
the assumptions upon which those statements are based, are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. These forward-looking statements generally
are identified by the words “believe,” “project,” “expect,” “anticipate,”
“estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,”
“will be,” “will continue,” “will likely result,” and similar expressions.
Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. A detailed discussion of
risks and uncertainties that could cause actual results and events to differ
materially from such forward-looking statements is included in the section under
“Risk Factors”. We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events, or otherwise.




As
used in this Form 10-Q, unless the context requires otherwise, “we” or “us” or
the “Company” or “Geos” or “Geos Communications” means Geos Communications, Inc.
and its subsidiaries.




Overview




The
Company, through its subsidiary, Geos Communications, Inc., (“Geos
Communications (DE)”), provides low-cost telecommunications services employing
next-generation VoIP technology. Through Geos Communications (DE), the Company
controls its own proprietary technology and outsources the majority of its
production and service functions with strategic partners. The Company, through
Geos Communications (DE), provides the VoiceStick®, MyGlobalTalkTM, micro
gateway adapters, 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®, MyGlobalTalkTM, and other
integrated access devices (“IADs”) along with recurring monthly subscriptions
and call minute termination. The Company believes its proprietary technology
provides meaningful advantages particularly in the areas of ease of use, high
quality service, and low cost and robust features.


17


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;


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


·
            unlimited
      and “Pay as You Go” global calling among VoiceStick® and MyGlobalTalkTM
      users.




The
Company’s management has historically focused solely upon VoIP as the Company’s
primary line of business. The Company is also a developer of mobile phone
applications and 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 Company
determines to finance these opportunities by incurring debt, then such debt may
not be available to the Company on favorable terms, if at all.




Critical
Accounting Policies and Estimates




Basis of
Consolidation.  The consolidated financial statements include the
accounts of Geos Communications (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 the
FASB ASC topic on revenue recognition.  This 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) collectability is
reasonably assured.  Determinations under 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 collectability of those
fees.  Should changes in conditions cause 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.




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.


18


Debt
Extinguishment




On July
1, 2009 we offered to certain of our existing note holders the opportunity to
exchange some or all of the principal, interest and loan fees under $6,328,212
of notes, which included all accrued interest and related fees, (the “Debt”) for different series of
preferred stock of Geos Communications IP Holdings, Inc., our wholly-owned
subsidiary.  This exchange was deemed to be debt extinguishment for
the notes payable according to the ASC Topic No.405- Liabilitiesand 470-50 –
Debt, Modifications and
Extinguishments.




ASC
470-50-40-10 (formerly EITF Issue 96-19) establishes the criteria for debt
extinguishment and modification. If the debt is substantially different, then
the debt is extinguished, and a gain or loss is calculated and recorded. We
determined that an extinguishment occured as the present value of the cash flows
under the terms of the new instrument, the different series of preferred stock,
was at least 10% different from the present value of the remaining cash flows
under the terms of the original notes.  The Company recorded a loss on
debt extinguishment of $1,469,523 which is included in the Statement of
Operations for the nine months ended September 30, 2009.




Preferred
Shares




The
Company applies the guidance enumerated in ASC Topic No. 480 “Distinguishing
Liabilities from Equity,” and “Classification and Measurement of Redeemable
Securities,” when determining the classification and measurement of preferred
stock. Preferred shares subject to mandatory redemption are classified as
liability instruments and are measured initially at fair value and are accreted
to the mandatory redemption value using the effective interest
method.   Accretion is recorded as interest expense in the
Statement of Operations.  As of September 30, 2009, the Company had
recorded liabilities related to Series A-D Preferred Shares with a mandatory
redemption value of $7,369,429.




In
addition, the Company classifies conditionally redeemable convertible preferred
shares, which includes preferred shares subject to redemption upon the
occurrence of uncertain events not solely within the Company’s control, as
temporary equity. At all other times, the Company classifies its preferred
shares in stockholders’ equity. As of September 30, 2009, the Company had
recorded as temporary equity F Series Preferred Shares totaling
$3,776,936.  Dividends on preferred shares included in temporary
equity and equity are recorded as Dividends on Preferred Stock below Net Income
on the Statement of Operations.




The
Company evaluates the conversion option of the convertible preferred shares
under ASC Topic No. 470-20, “Debt with Conversion and Other Options,” (formerly
EITF Issues 98-5, Accounting for Convertible Securities with Beneficial
Conversion Features or Contingently Adjustable Conversion Ratios, and 00-27,
Application of Issue No. 98-5 to Certain Convertible Instruments.).  A
convertible financial instrument includes a beneficial conversion feature if the
effective conversion price is less than the company’s market price of common
stock on the commitment date.  The Company recorded $2,870,825 as a
beneficial conversion feature of the F Series Preferred Shares for the nine
months ended September 30, 2009.




Stock
Compensation




The
Company measures all share-based payments, including grants of employee stock
options to employees and warrants to service providers, using a fair-value based
method in accordance with the ASC Topic No. 505 and Topic No. 718 (formerly SFAS
No. 123R) Share-Based
Payments. The cost of services received in exchange for awards of equity
instruments is recognized in the consolidated statement of operations based on
the grant date fair value of those awards amortized over the requisite service
period. Recent Accounting Pronouncements.





A.           Nature
of Operations – The parent Company was incorporated under the laws of the State
of Washington on October 17, 1988, and the operating subsidiary, Geos
Communications (DE), was incorporated on February 28, 2002.  The
Company is a telecommunications service provider of Voice over Internet Protocol
(“VoIP”) technology, as well as a developer of related mobile phone
applications.  The Company has proprietary patent pending technology
that allows transmission of VoIP, connection to long distance public-switched
telephone network (“PSTN”), and other enhanced communications services through
an Internet Access Device (“IAD”).


19


The
Company has targeted specific markets that are connected to the
Internet.  Customers are supplied a Geos Communications “IAD” micro
gateway, which will enable them to: 1) make, at no cost other than the initial
cost of micro gateway and the subscription fee, unlimited calls to other Geos
Communications subscribers – anywhere in the world using the customer’s existing
phone (no new or special IP phone required); 2) make long distance calls to
people who use a normal telephone line using the Geos Communications least cost
routing network that provides competitive long distance rates; and 3) use either
a broadband (DSL, Cable, etc.) or dial up service.




B.           Basis
of Consolidation – The consolidated financial statements includes the accounts
of Geos Communications (DE) and SuperCaller Community, Inc., wholly owned
subsidiaries of the Company. All significant inter-company accounts and
transactions have been eliminated in consolidation.




C.           Revenues
- The Company recognizes revenue from the sale of its Geos Communications “IAD”
micro gateway at time of shipment.  Revenues from per-minute charges
and user fees are recognized as incurred by its customers.




D.           For
purposes of the statement of cash flows, the Company considers all short-term
securities purchased with a maturity of three months or less to be cash
equivalents.




F.           Inventories
- Inventories consisting of purchased components available for resale are stated
at lower of cost or market.  Cost is determined on the first-in,
first-out (FIFO) basis.




H.           Costs
associated with obtaining loans have been capitalized and are being amortized on
a straight-line basis over the life of the loan.




I.           Property,
Equipment and Related Depreciation - Property and equipment are recorded at
cost.  Depreciation is computed using the straight-line method for
financial and tax reporting purposes. Estimated lives range from five to ten
years.  When properties are disposed of, the related costs and
accumulated depreciation are removed from the respective accounts and any gain
or loss on disposition is recognized at that time.  Maintenance and
repairs which do not improve or extend the lives of assets are expensed as
incurred.




H.           Intangible
Assets – The Company has capitalized certain costs related to registering
trademarks and patent pending technology.  In accordance with the FASB
ASC topic on intangible assets with an indefinite life are not amortized but are
tested for impairment at least annually or whenever changes circumstances
indicate that the carrying value may not be recoverable.  The Company
amortizes its intangible assets with a finite life over 10 years on a
straight-line basis.




I.           In
accordance with the FASB ASC topic on impairment or disposal of long-lived
assets, the Company reviews its long-lived assets, including property and
equipment, goodwill and other identifiable intangibles for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be fully recoverable.  To determine recoverability of
its long-lived assets, the Company evaluates the probability that future
undiscounted net cash flows, without interest charges, will be less than the
carrying amount of the assets.  Impairment is measured at fair value.
The Company had no impairment of assets during the third quarter or the nine
months ended September 30, 2009 or the year ended December 31,
2008.




J.           Use
of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those
estimates.




K.           Income
Taxes - The Company accounts for income taxes under the FASB ASC topic on income
taxes, which requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
Company’s consolidated financial statements or tax returns.  Under
this method, deferred tax assets and liabilities are determined based on the
differences between the financial accounting and tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.


20


L.           Research
and Development Expenses – The Company expenses research and development
expenses as incurred.  Amounts payable to third parties under product
development agreements are recorded at the earlier of the milestone achievement,
or when payments become contractually due.




M.           Earnings
(loss) per share - Basic earnings per share represents income available to
common shareholders divided by the weighted average number of shares outstanding
during the period.  Diluted earnings per share reflect additional
common shares that would have been outstanding if dilutive potential common
shares had been issued, as well as any adjustment to income that would result
from the assumed issuance. Options on shares of common stock and certain bonds
convertible into common shares were not included in the computing of diluted
earnings per share because their effects were anti-dilutive.




N.           New
Accounting Pronouncements In May 2009, the FASB issued guidance to establish
general standards of accounting for and disclosures of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. This guidance was effective for interim and annual
periods ending after June 15, 2009, and accordingly, the Company adopted this
Standard during the second quarter of 2009. This guidance requires that public
entities evaluate subsequent events through the date that the financial
statements are issued. We have evaluated subsequent events through the time of
filing these financial statements with the Securities and Exchange Commission
(“SEC”) on November 16, 2009.




Results
of Operations-Restated




Comparison
of Three Months Ended September 30, 2009 and 2008




For the Three Months EndedSeptember 30,2009
                            
                            
                            2008
                            
                            
                            Variance
                            
                            
                            PercentageRevenue
                            
                            $
                            97,993
                            
                            
                            $
                            163,904
                            
                            
                            
                            (65,911
                            )
                            
                            
                            -40.2
                            %Cost
      of Revenue
                            
                            
                            113,965
                            
                            
                            
                            185,427
                            
                            
                            
                            71,462
                            
                            
                            
                            38.5
                            %Gross
      Profit (Loss)
                            
                            
                            (15,972
                            )
                            
                            
                            (21,523
                            )
                            
                            
                            5,551
                            
                            
                            
                            25.8
                            %Operating
      Expenses:Selling,
      General and Administrative Expenses
                            
                            
                            2,075,410
                            
                            
                            
                            2,546,487
                            
                            
                            
                            471,077
                            
                            
                            
                            18.5
                            %Other
      Income (Expense) Net
                            
                            
                            (2,081,782
                            )
                            
                            
                            (121,433
                            )
                            
                            
                            (2,203,215
                            )
                            
                            
                            1814
                            %Net
      Profit (Loss)
                            
                            $
                            (4,173,164
                            )
                            
                            $
                            (2,689,443
                            )
                            
                            
                            1,483,721
                            
                            
                            
                            55.0
                            %





Revenues
decreased to $97,993 for the three months ended September 30, 2009 from $163,904
for the three months ended September 30, 2008. The decrease in revenues was due
to the repositioning and rebranding efforts during the period.




Cost of
revenues decreased to $113,965 for the three months ended September 30, 2009
from $185,427 for the three months ended September 30, 2008. The decrease in
cost of revenues was due to continuing efforts in negotiating lower carrier
rates, combined with lower sales volume.




Gross
loss decreased from a loss of $21,523 for the three months ended September 30,
2008 to a loss of $15,972 for the three months ended September 30, 2009 for the
reasons stated above. The decrease in the gross loss was due to lower carrier
rates for the period.




Other
Income (Expense) increased to $2,081,782 for the three months ended September
30, 2009 from $121,433 for the three months ended September 30, 2008. The
increase was due primarily to interest on the note conversions and the loss from
extinguishment of debt from the exchange to preferred shares subject to
mandatory redemption.




21


Total
selling, general and administrative expenses for the three months ended
September 30, 2009 was $2,075,410 compared to $2,546,487 for the three months
ended September 30, 2008. The decrease was due primarily to amortization of
deferred financing cost occurring in 2008, net of a decrease in warrants issued
for services.




Net
(loss) for the three months ended September 30, 2009 was $4,943,422 as compared
to a net (loss) of $2,689, 443 for the three months ended September 30, 2008.
The increase is primarily attributable to the loss on debt extinguishment and
increases in interest expense in 2009..




Comparison
of Nine Months Ended September 30, 2009 and 2008




For the Nine Months EndedSeptember 30,2009
                                  
                                  
                                  2008
                                  
                                  
                                  Variance
                                  
                                  
                                  PercentageRevenue
                                  
                                  $
                                  312,562
                                  
                                  
                                  $
                                  484,087
                                  
                                  
                                  
                                  (171,525
                                  )
                                  
                                  
                                  -35.4
                                  %Cost
      of Revenue
                                  
                                  
                                  307,787
                                  
                                  
                                  
                                  556,349
                                  
                                  
                                  
                                  248,562
                                  
                                  
                                  
                                  44.7
                                  %Gross
      Profit (Loss)
                                  
                                  
                                  4,775
                                  
                                  
                                  
                                  (72,262
                                  )
                                  
                                  
                                  77,037
                                  
                                  
                                  
                                  106.6
                                  %Operating
      Expenses:Selling,
      General and Administrative Expenses
                                  
                                  
                                  6,553,388
                                  
                                  
                                  
                                  5,182,359
                                  
                                  
                                  
                                  (1,371,029
                                  )
                                  
                                  
                                  26.5
                                  %Other
      Income (Expense) Net
                                  
                                  
                                  (2,442,124
                                  )
                                  
                                  
                                  4,300,908
                                  
                                  
                                  
                                  (1,858,784
                                  )
                                  
                                  
                                  43.2
                                  %Net
      Profit (Loss)
                                  
                                  $
                                  (8,990,737
                                  )
                                  
                                  $
                                  (953,713
                                  )
                                  
                                  
                                  (8,037,024
                                  )
                                  
                                  
                                  842.7
                                  %





Revenues
decreased to $312,562 for the nine months ended September 30, 2009 from $484,087
for the nine months ended September 30, 2008. The decrease in revenues was due
to the repositioning and rebranding efforts during the period to focus the
Company on its MyGlobalTalk service.




Cost of
revenues decreased to $307,787 for the nine months ended September 30, 2009 from
$556,349 for the nine months ended September 30, 2008. The decrease in cost of
revenues was due to continuing efforts in negotiating lower carrier rates,
combined with lower sales volume.




Gross
loss decreased from $72,262 for the nine months ended September 30, 2008 to a
gross profit of $4,775 for the nine months ended September 30,
2009.   The increase in the gross profit was due to lower carrier
rates for the period.




Total
selling, general and administrative expenses for the nine months ended September
30, 2009 was $6,553,388 compared to $5,182,359 for the nine months ended
September 30, 2008.  The decrease was due to lower financing costs
related to borrowings, and Convertible Bond Discount amortization occurring in
2008.




Other
Income (Expense) increased to an expense of $(2,442,124) for the nine months
ended September 30, 2009 from income of $4,300,908 for the nine months ended
September 30, 2008. This was due primarily to the sale of intellectual property
to a third party in fiscal year 2008, which resulted in $5,193,619 of gain
during 2008, net of the loss on debt extinguishment of $1,469,523.




Net
(loss) for the nine months ended September 30, 2009 was $(8,990,737) as compared
to a net (loss) for the nine months ended September 30, 2008 of $(953,713). The
decrease in net profit is primarily a result of the sale of intellectual
property to a third party in fiscal year 2008, which resulted in $5,193,619 of
gain during 2008, net of the loss on debt extinguishment of
$1,469,523.


22


Liquidity
and Capital Resources




On
September 30, 2009, we had working capital of approximately $823,533 compared to
a working capital deficit of approximately $5,478,348 on September 30, 2008.
This change was primarily due to conversion of debt to preferred stock of IP
Holdings and by the sale of shares of our Series F convertible preferred
stock.  Net cash used in operating activities was $4,674,119 for the
nine months ended September 30, 2009 as compared to net cash used by operating
activities of $877,008 for the nine months ended September 30, 2008. The
increase in net cash used in operating activities between the nine
months September 30, 2009 and September 30, 2008 is attributable to the
proceeds from the sale of intellectual property occurring in fiscal year 2008 of
$5,193,619.




Net cash
used in investing activities was approximately $292,677 for the nine months
ended September 30, 2009 as compared to net cash used in investing activities of
$943,545 for the same period in 2008. The decrease in net cash used
investing activities is attributable to extensive purchases of network system
equipment, and software application development occurring in the fiscal year
2008.




Net cash
used in financing activities was approximately $6,817,083 for the nine months
ended September 30, 2009 as compared to net cash provided of $1,773,328 for the
same period in 2008. The increase in net cash provided by financing
activities is attributable to the lower promissory note debt payoffs, combined
with the sale of our Series F convertible preferred stock.




Off-Balance
Sheet Arrangements




We have
not entered into any other financial guarantees or other commitments to
guarantee the payment obligations of any third parties. We have not entered into
any derivative contracts that are indexed to our shares and classified as
stockholder’s equity or that are not reflected in our consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in
assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. We do not have any variable interest in
any unconsolidated entity that provides financing, liquidity, market risk or
credit support to us or engages in leasing, hedging or research and development
services with us.




Contractual
Obligations




We have
certain fixed contractual obligations and commitments that include future
estimated payments. Changes in our business needs, cancellation provisions,
changing interest rates, and other factors may result in actual payments
differing from the estimates. We cannot provide certainty regarding the timing
and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, in order to assist in the review of this information within the context
of our consolidated financial position, results of operations, and cash
flows.




We have
no current commitments or obligations for future capital expenditures. A summary
of our debt and lease obligations at September 30, 2009 are as
follows:




Obligations payable inLess than 1 year
                      
                      
                      1-3 years
                      
                      
                      TotalDebt
                      
                      $
                      152,393
                      
                      
                      $
                      0
                      
                      
                      $
                      152,393Leases
                      
                      $
                      110,762
                      
                      
                      $
                      192,833
                      
                      
                      $
                      303,595





Item
      3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




Not
applicable.




Item
      4.
            ITEM
      4. CONTROLS AND PROCEDURES.




23


Disclosure
Controls and Procedures




At the end of the quarter covered by this report, an evaluation was
carried out under the supervision of and with the participation of the Company’s
management, including the Chief Executive Officer (“CEO”) and Chief Financial
Officer (“CFO”), of the effectiveness of the design and operations of the
Company’s disclosure controls and procedures (as defined in Rule 13a - 15(e) and
Rule15d - 15(e) under the Exchange Act). Based on that evaluation the CEO and
the CFO have concluded that as of the end of the period covered by this report,
the Company’s disclosure controls and procedures were not adequately designed
and were not effective in ensuring that: (i) information required to be
disclosed by the Company in reports that it files or submits to the SEC under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in applicable rules and forms and (ii) material information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to our management, including our CEO and CFO, as
appropriate, to allow for accurate and timely decisions regarding required
disclosure.





In
management’s review of financial information required to be reported in this
report on Form 10-Q/A, management determined that a material weakness existed in
the Company’s internal control over financial reporting, which resulted in
management determining that accounting errors were made in the Company’s
consolidated financial reports as filed with the SEC for prior reporting
periods. These accounting errors, which are more fully described in Note 1 to
the financial statements included in this report, include (i) an error in
valuation of the Series A-D Preferred Stock, (ii) an error in the valuation of
Series F Preferred Stock, (iii) an error in recording stock-based compensation,
and (iv) an error recording amortization of warrants.





Changes
in Internal Control over Financial Reporting




There
were no other changes in the Company’s internal control over financial reporting
other than those noted above that occurred during the Company’s most recent
quarter that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.




As
described above under the heading “Disclosure Controls and Procedures”, the
Company’s management, has determined that accounting errors were made in
the Company’s financial reports as filed with the SEC for prior reporting
periods. These accounting errors, which are more fully described in Note 1 to
the financial statements included in this report, include (i) an error in
valuation of the Series A-D Preferred Stock, (ii) an error in the valuation of
Series F Preferred Stock, (iii) an error in recording stock-based compensation,
and (iv) an error recording amortization of warrants.


.


Upon
review, the Company’s management has initially determined that the accounting
errors derived from unintentional errors that went undetected by the
Company.





Management
has taken steps to address these issues by appointing a new Chief Financial
Officer which the Company’s management, board of directors, and audit committee
believes possesses the experience and knowledge required.





PART II
OTHER INFORMATION




Item
      1.
            LEGAL
      PROCEEDINGS




On
December 22, 2003, former stockholders of SuperCaller Community, Inc., a
Delaware corporation acquired by the Company in September 2002 (“SuperCaller”),
filed a lawsuit against the Company in the United States District Court for the
Northern District of California, San Francisco Division. The plaintiffs alleged
that Geos Communications (DE) and certain of its affiliates and
representatives deceived the plaintiffs into selling SuperCaller to the Company,
among other things.  On March 27, 2006,  all federal claims
against the Company and related parties in the United States District Court in
San Francisco were “dismissed with prejudice” by Judge Vaughn Walker.  In
addition, the court declined to exercise supplemental jurisdiction over the
remaining state law claims which were all “dismissed” as well.  Therefore,
no loss or liability has been recorded in the Company’s financial
statements.  In March 2008, the federal claims against the Company and
related parties in the United States District Appellate Court in San Francisco
were “dismissed with prejudice”.


24


The
Company was named a defendant in a lawsuit regarding a disputed amount due for
patent preparation and filings by the same attorney representing the plaintiffs
in the above matter.  In January 2008, the claims against the Company
and related parties in the United States District Appellate Court in San
Francisco were “dismissed with prejudice”.  In April 2008, the same
attorney representing the plaintiffs in the above matter filed an action against
the Company in the Superior Court of California, County of Santa Clara (the
“Superior Court”).  The plaintiffs alleged that Geos Communications
(DE) and certain of its affiliates and representatives deceived the plaintiffs
into selling SuperCaller to the Company, among other
things.   The Company will continue to vigorously defend these
claims and believes this litigation to be unsubstantiated and without
merit.  A trial date has been set for January 11, 2010.




On May
11, 2009, the Company commenced litigation against defendants MagicJack, L.P.,
SJ Labs, Inc., YMAX Corporation and Daniel Borislow (the “Federal Court
Litigation”).  On June 9, 2009, the Federal Court Litigation was
dismissed without prejudice.  Prior to the dismissal of the Federal
Court Litigation, and in response to the Federal Court Litigation, SJ Labs, Inc.
filed an action for declaratory judgment, damages and ancillary relief against
the Company in the Court of Common Pleas, Cuyahoga County, Ohio.  The
Company responded to the declaratory judgment action of SJ Labs by asserting the
defenses of (1) the action fails to state a claim; (2) the claims are barred
because a declaratory action would mot terminate the controversy between the
parties; (3) unclean hands; (4) breach of agreements; (5) conversion of
confidential information; (6) contributory negligence; (7) failure to mitigate
damages; (8) accord and satisfaction; (9) release; and (10) failure of condition
precedent.  Additionally, the Company responded to the declaratory
judgment action as a counterclaim-plaintiff alleging causes of action against
MagicJack, L.P., SJ Labs, Inc., YMAX Corporation and Daniel Borislow
(collectively, the “Defendants”).  The Company alleges that the
Defendants: (i) acquired the Company’s intellectual property pursuant to
contracts preserving its confidentiality; (ii) have improperly used the
Company’s intellectual property in violation of their contractual commitments,
as well as statutory and common law; and (iii) in combination with one
another, agreed to conspire to use, convert, or misappropriate the Company’s
trade secrets for their own benefit.  As a result, the Company alleges that
the Defendants are jointly and severally liable for actual, consequential,
special, exemplary and punitive damages.  The Company is also seeking
a permanent injunction to prevent Defendants from directly or indirectly using
or misappropriating any of the Company’s trade secrets.




Item1A.
            RISK
      FACTORS




You
should carefully consider the risks described below together with all of the
other information included in this report before making an investment decision
with regard to our securities. The statements contained in or incorporated into
this offering that are not historic facts are forward-looking statements that
are subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements. If
any of the following risks actually occurs, our business, financial condition or
results of operations could be harmed. In that case, the trading price of our
common stock could decline, and you may lose all or part of your
investment.




Current
economic conditions may adversely affect our industry, business and results of
operations.




The
United States economy is currently undergoing a period of slowdown and very high
volatility and the future economic environment may continue to be less favorable
than that of recent years. A substantial portion of our revenues comes from
residential and small business customers whose spending patterns may be affected
by prevailing economic conditions. While we believe that the weakening economy
had a modest effect on our net subscriber additions during recent months, if
these economic conditions continue to deteriorate, the growth of our business
and results of operations may be affected. Reduced consumer spending may drive
us and our competitors to offer certain services at promotional prices, which
could have a negative impact on our operating results.


25


We
have a history of losses and negative cash flows from operations and we may not
be profitable in the future.




We had a
loss of $2,638,084 for the quarter ended September 30, 2009, a loss of
$6,568,885 for the nine months ended September 30, 2009, a loss of $2,937,520
for the fiscal year ended December 31, 2008, and a loss of $9,088,752 for the
fiscal year ended December 31, 2007. We had an accumulated deficit at September
30, 2009 of $46,823,412. Our ability to generate positive cash flows from
operations and net income is dependent, among other things, on the acceptance of
our products in the marketplace, market conditions, cost control, and our
ability to raise capital on acceptable terms. The financial statements included
elsewhere in this prospectus do not include any adjustments that might result
from the outcome of these uncertainties. Furthermore, developing and expanding
our business will require significant additional capital and other expenditures.
Accordingly, if we are not able to increase our revenue, then we may never
achieve or sustain profitability.




We have
been able to meet our operating requirements since September 30, 2009 and
received approximately $2,035,000 of additional financing during the
quarter ending September 30, 2009.  We will need to receive additional
capital to continue our operations.




Financing
may not be available to us on commercially reasonable terms, if at all. There is
no assurance that we will be successful in raising additional capital or that
the proceeds of any future financings will be sufficient to meet our future
capital needs. It is not likely that we will be able to continue our business
without additional financing. Currently, we have no commitments for additional
financing.




The
price of our Common Stock has been volatile in the past and may continue to be
volatile.




The stock
market in general and the market for technology companies in particular, has
recently experienced extreme volatility that has often been unrelated to the
operating performance of particular companies. From October 1, 2008 to
September 30, 2009, the per share closing price of our Common Stock on the
Over-the-Counter Bulletin Board fluctuated from a high of $1.10 to a low of $.30
on a pre-split basis. We believe that the volatility of the price of our Common
Stock does not solely relate to our performance and is broadly consistent with
volatility experienced in our industry. Fluctuations may result from, among
other reasons, responses to operating results, announcements by competitors,
regulatory changes, economic changes, market valuation of technology firms and
general market conditions.




In
addition, in order to respond to competitive developments, we may from time to
time make pricing, service or marketing decisions that could harm our business.
Also, our Company’s operating results in one or more future quarters may fall
below the expectations of securities analysts and investors. In either case, the
trading price of our Common Stock would likely decline.




The
trading price of our Common Stock could continue to be subject to wide
fluctuations in response to these or other factors, many of which are beyond our
control. If the market price of our Common Stock decreases, then shareholders
may not be able to sell their shares of our Common Stock at a
profit.




Our
common shares are sporadically or “thinly-traded” on the OTCBB, meaning that the
number of persons interested in purchasing our common shares at or near ask
prices at any given time may be relatively small or non-existent. This situation
is attributable to a number of factors, including the fact that we are a small
company and we are relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or
influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven company such as ours or purchase or recommend the purchase of our
shares until such time as we became more seasoned and viable. As a consequence,
there may be periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous
sales without an adverse effect on share price. We cannot give you any assurance
that a broader or more active public trading market for our common shares will
develop or be sustained, or that current trading levels will be sustained. As a
consequence, you may be unable to sell at or near ask prices or at all if you
need to sell your shares to raise money or otherwise desire to liquidate your
shares.


The
market price for our common shares is particularly volatile given our status as
a relatively unknown company with a small and thinly-traded public float and
limited operating history. The price at which you purchase our common shares may
not be indicative of the price that will prevail in the trading market. You may
be unable to sell your common shares at or above your purchase price, which may
result in substantial losses to you.




26




The
market for our common shares is characterized by significant price volatility
when compared to seasoned issuers, and we expect that our share price will
continue to be more volatile than a seasoned issuer for the indefinite future.
The volatility in our share price is attributable to a number of factors. First,
as noted above, our common shares are sporadically or thinly traded. As a
consequence of this lack of liquidity, the trading of relatively small
quantities of shares by our shareholders may disproportionately influence the
price of those shares in either direction. The price for our shares could, for
example, decline precipitously in the event that a large number of our common
shares are sold on the market without commensurate demand, as compared to a
seasoned issuer which could better absorb those sales without adverse impact on
its share price. Secondly, we are a speculative or “risky” investment due to our
limited operating history and lack of profits to date, lack of capital to
execute our business plan, and uncertainty of future market acceptance for our
technologies. As a consequence of this enhanced risk, more risk-adverse
investors may, under the fear of losing all or most of their investment in the
event of negative news or lack of progress, be more inclined to sell their
shares on the market more quickly and at greater discounts than would be the
case with the stock of a seasoned issuer. The following factors may add to the
volatility in the price of our common shares: actual or anticipated variations
in our quarterly or annual operating results, market acceptance of our
government regulations, announcements of significant acquisitions, strategic
partnerships or joint ventures, our capital commitments, and additions or
departures of our key personnel. Many of these factors are beyond our control
and may decrease the market price of our common shares, regardless of our
operating performance. We cannot make any predictions or projections as to what
the prevailing market price for our common shares will be at any time, including
as to whether our common shares will sustain their current market prices, or as
to what effect, if any, that the sale of shares or the availability of common
shares for sale at any time will have on the prevailing market
price.




Volatility
in our common share price may subject us to securities litigation.




As
discussed in the preceding risk factor, the market for our common shares is
characterized by significant price volatility when compared to seasoned issuers,
and we expect that our share price will continue to be more volatile than a
seasoned issuer for the indefinite future. In the past, plaintiffs have often
initiated securities class action litigation against a company following periods
of volatility in the market price of its securities. We may in the future be the
target of similar litigation. Securities litigation could result in substantial
costs and liabilities and could divert management’s attention and resources. The
application of the “penny stock” rules could adversely affect the market price
of our common shares and increase your transaction costs to sell those
shares.




As long
as the trading price of our common shares is below $5 per share, the open-market
trading of our common shares will be subject to the “penny stock” rules. The
“penny stock” rules impose additional sales practice requirements on
broker-dealers who sell securities to persons other than established customers
and accredited investors (generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with their
spouse).




For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of securities and have received the
purchaser’s written consent to the transaction before the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
broker-dealer must deliver, before the transaction, a disclosure schedule
prescribed by the SEC relating to the penny stock market. The broker-dealer also
must disclose the commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information on the
limited market in penny stocks. These additional burdens imposed on
broker-dealers may restrict the ability or decrease the willingness of
broker-dealers to sell the common shares, and may result in decreased liquidity
for our common shares and increased transaction costs for sales and purchases of
our common shares as compared to other securities.




Shareholders
should be aware that, according to SEC Release No. 34-29093, the market for
penny stocks has suffered in recent years from patterns of fraud and abuse. Such
patterns include (1) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer; (2)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (3) boiler room practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (4) excessive and undisclosed bid-ask differential and markups by
selling broker-dealers; and (5) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. Our management is aware of the abuses that have
occurred historically in the penny stock market. Although we do not expect to be
in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities.


27


We
may not be able to successfully manage our growth.




Our
liability to manage the Company’s growth will require that we continue to
improve our operational, financial and management information systems, and to
motivate and effectively manage our employees. If our management is unable to
manage such growth effectively, then the quality of our services, our ability to
retain key personnel and our business, financial condition and results of
operations could be materially adversely affected.




We
may be unable to fund future growth.




Our
business strategy calls for us to grow and expand the Company’s business both
internally and otherwise. Significant funds will be required to implement this
strategy, funding for additional personnel, capital expenditures and other
expenses, as well as for working capital purposes. Financing may not be
available to us on favorable terms or at all. If adequate funds are not
available on acceptable terms, then we may not be able to meet our business
objectives for expansion. This, in turn, could harm our business, results of
operations and financial condition. In addition, if we raise additional funds
through the issuance of equity or convertible debt securities, then the
percentage ownership of the our shareholders will be reduced, and any new
securities could have rights, preferences and privileges senior to those of the
Common Stock. Furthermore, if we raise capital or acquire businesses by
incurring indebtedness, then we will become subject to the risks associated with
indebtedness, including interest rate fluctuations and any financial or other
covenants that our lender may require.




Our
executive officers have been employed for a relatively short period of time, and
may not be able to implement our business strategy. The failure to effectively
implement our business strategy will have a material, adverse effect on our
business, financial condition and results of operations.




Our Chief
Executive officer took office on April 21, 2009, our President and Chief
Operating Officer took office August 10, 2008, our Chief Financial Officer took
office on August 24, 2009, and our Senior Vice President of World Wide Sales
took office on June 23, 2009. There can be no assurance that they will function
successfully as a management team to implement our business strategy. If they
are unable to do so, then our business, financial condition and results of
operations could be materially adversely affected.




Our
performance could be adversely affected if we are unable to attract and retain
qualified personnel in the fields of engineering, marketing and
finance.




Our
performance is dependent on the services of our management as well as on our
ability to recruit, retain and motivate other key employees in the fields of
engineering, marketing and finance. Competition for qualified personnel is
intense and there is a limited number of persons with knowledge of and
experience with VoIP. We cannot assure you that we will be able to attract and
retain key personnel, and the failure to do so could hinder our ability to
implement our business strategy and could cause harm to our
business.




The
general condition of the telecommunications market will affect our business.
Continued pricing declines may result in a decline in our operating
results.




We are
subject to market conditions in the telecommunications industry. Our operations
could be adversely affected if pricing continues to decline as it has in the
past few years. If pricing declines continue, then we may experience adverse
operating results.


28


The
VoIP telephony market is subject to rapid technological change. Newer technology
may render our technology obsolete which would have a material, adverse impact
on our business and results of operations.




VoIP
telephony is an emerging market that is characterized by rapid changes in
customer requirements, frequent introductions of new and enhanced products, and
continuing and rapid technological advancement. To compete successfully in this
emerging market, we must continue to design, develop, manufacture, and sell new
and enhanced VoIP telephony software products and services that provide
increasingly higher levels of performance and reliability at lower cost. Our
success in designing, developing, manufacturing, and selling such products and
services will depend on a variety of factors, including:




·
            the
      identification of market demand for new
  products;


·
            the
      scalability of our VoIP telephony software
  products;


·
            product
      and feature selection;


·
            timely
      implementation of product design and
  development;


·
            product
      performance;


·
            cost-effectiveness
      of current products and services and products under
      development;


·
            our
      ability to successfully implement service features mandated by federal and
      state law;


·
            effective
      manufacturing processes; and


·
            effectiveness
      of promotional efforts.




Additionally,
we may also be required to collaborate with third parties to develop our
products and may not be able to do so on a timely and cost-effective basis, if
at all. We have in the past experienced delays in the development of new
products and the enhancement of existing products, and such delays will likely
occur in the future. If we are unable, due to resource constraints or
technological or other reasons, to develop and introduce new or enhanced
products in a timely manner, if such new or enhanced products do not achieve
sufficient market acceptance, or if such new product introductions decrease
demand for existing products, our operating results would decline and our
business would not grow.




The
continued growth of the Internet as a medium for telephone services is
uncertain. If this growth does not continue, our business and financial
condition could be materially adversely affected.




The
continued market acceptance of the Internet as a medium for telephone services
is subject to a high level of uncertainty. Our future success will depend on our
ability to significantly increase revenues, which will require widespread
acceptance of the Internet as a medium for telephone communications. There can
be no assurance that the number of consumers using the Internet for telephone
communications will grow. If use of the Internet for telephone communications
does not continue to grow, our business and financial condition could be
materially adversely affected.




Our
business faces security risks. Our failure to adequately address these risks
could have an adverse effect on our business and reputation.




A party
who is able to circumvent our security measures could misappropriate proprietary
information or cause interruptions in our VoIP operations. We may be required to
expend significant capital and resources to protect against the threat of such
security breaches or to alleviate problems caused by such breaches. Consumer
concern over Internet security has been, and could continue to be, a barrier to
commercial activities requiring consumers to send their credit card information
over the Internet. Computer viruses, break-ins, or other security problems could
lead to misappropriation of proprietary information and interruptions, delays,
or cessation in service to our customers. Moreover, until more comprehensive
security technologies are developed, the security and privacy concerns of
existing and potential customers may inhibit the growth of the Internet as a
merchandising medium. Our failure to adequately address these risks could have
an adverse effect on our business and reputation.




Our
ability to do business depends, in part, on our ability to license certain
technology from third parties.




We rely
on certain technology licensed from third parties, and there can be no assurance
that these third party technology licenses will be available to us on acceptable
commercial terms or at all. If we cannot license the technology we need on
acceptable commercial terms, then our business, financial condition and results
of operations will be materially and adversely affected.


29


Products
and services like the ones we offer change rapidly and therefore, we must
continually improve them. However, our need to invest in research and
development may prevent us from ever being profitable.




Products
and services like the ones we offer are continually upgraded in an effort to
make them work faster, function easier for the user and provide more options.
Our industry is characterized by the need for continued investment in research
and development. If we fail to invest sufficiently in research and development,
then our products could become less attractive to potential customers, which
could have a material adverse effect on our results of operations and financial
condition. However, any investment in research and development and technological
innovation will cause our operating costs to increase. This could prevent us
from ever achieving profitability.




We
sell a service that allows our customers to make telephone calls over the
Internet. Intellectual property infringement claims brought against us, even
without merit, could require us to enter into costly licenses or deprive us of
the technology we need.




The
service we sell allows our users to make telephone calls over the Internet.
Third parties may claim that the technology we develop or license infringes
their proprietary rights. Any claims against us may affect our business, results
of operations and financial conditions. Any infringement claims, even those
without merit, could require that we pay damages or settlement amounts or could
require us to develop non-infringing technology or enter into costly royalty or
licensing agreements to avoid service implementation delays. Any litigation or
potential litigation could result in product delays, increased costs or both. In
addition, the cost of litigation and the resulting distraction of our management
resources could have a material adverse effect on our results of operations and
financial condition. If successful, a claim of product infringement could
completely deprive us of the technology we need.




We
have developed our underlying software and we try to protect it from being used
by others in our industry. Failure to protect our intellectual property rights
could have a material adverse effect on our business.




We rely
on copyright, trade secret and patent laws to protect our content and
proprietary technologies and information, including the software that underlies
our products and services. Additionally, we have taken steps that we believe
will be adequate to establish, protect and enforce our intellectual property
rights. There can be no assurance that such laws and steps will provide
sufficient protection to our intellectual property. Despite our efforts to
protect our proprietary rights, unauthorized parties may attempt to copy or
otherwise obtain rights to use our products or technologies.




We have
pending several patent applications related to embedded software technology and
methods of use. There can be no assurance that these patents will be issued. On
February 28, 2008, December 2, 2008 and October 10, 2009,  the Company
was awarded Patent #7,336,654, Patent #7,460,480 and Patent #7,606,217
respectively, from the United States Patent and Trademark Office. Even if the
balance of patents pending are issued, the limited legal protection afforded by
patent, trademark, trade secret and copyright laws may not be sufficient to
protect our proprietary rights to the intellectual property covered by these
patents.




Furthermore,
the laws of many foreign countries in which we do business do not protect
intellectual property rights to the same extent or in the same manner as do the
laws of the United States. Although we have implemented and will continue to
implement protective measures in those countries, these efforts may also not be
successful. Additionally, even if our domestic and international efforts are
successful, our competitors may independently develop non-infringing
technologies that are substantially similar or superior to our
technologies.


30


If
our products contain defects, then our sales would be likely to suffer, and we
may even be exposed to legal claims. Defects in our products could have a
material adverse impact on our business and operating results.




Our
business strategy calls for the development of new products and product
enhancements which may from time to time contain defects or result in failures
that we did not detect or anticipate when introducing such products or
enhancements to the market. In addition, the markets in which our products are
used are characterized by a wide variety of standard and non-standard
configurations and by errors, failures and bugs in third-party platforms that
can impede proper operation of our products. Despite product testing, defects
may still be discovered in some new products or enhancements after the products
or enhancements are delivered to customers. The occurrence of these defects
could result in product returns, adverse publicity, loss of or delays in market
acceptance of our products, delays or cessation of service to our customers or
legal claims by customers against us. Any of these occurrences could have a
material adverse impact on our business and operating results.




Sales
to customers based outside the United States have recently accounted for a
significant portion of our revenues, which exposes the Company to risks inherent
in international operations.




International
sales represented approximately 30% of our revenues for the quarter ended
September 30, 2009. One of our goals is to increase our foreign sales in order
to increase our revenues. However, international sales are subject to a number
of risks, including changes in foreign government regulations, laws, and
communications standards; export license requirements; currency fluctuations,
tariffs and taxes; other trade barriers; difficulty in collecting accounts
receivable; longer accounts receivable collection cycles; difficulty in managing
across disparate geographic areas; difficulties associated with enforcing
agreements and collecting receivables through foreign legal systems; expenses
associated with localizing products for foreign markets; and political and
economic instability, including disruptions of cash flow and normal business
operations that may result from terrorist attacks or armed
conflict.




If the
relative value of the U.S. dollar in comparison to the currency of our foreign
customers should increase, then the resulting effective price increase of our
products to these foreign customers could result in decreased sales. In
addition, to the extent that general economic downturns impact our customers,
the ability of these customers to purchase our products could be adversely
affected. Payment cycles for international customers are typically longer than
those for customers in the United States.




If we are
able to increase our foreign sales significantly, the occurrence of any of the
foregoing could have a material adverse impact on our results of
operations.




Doing
business over the Internet may become subject to governmental regulation. If
these regulations substantially increase the cost of doing business, they could
have a material adverse effect on our business, results of operations and
financial condition.




We are
not currently subject to direct federal, state, or local regulation, and laws or
regulations applicable to access to or commerce on the Internet, other than
regulations applicable to businesses generally. However, due to the increasing
popularity and use of the Internet and other VoIP services, it is possible that
a number of laws and regulations may be adopted with respect to the Internet or
other VoIP services covering issues such as user privacy, “indecent” materials,
freedom of expression, pricing content and quality of products and services,
taxation, advertising, intellectual property rights and information security.
The adoption of any such laws or regulations might also decrease the rate of
growth of Internet use, which in turn could decrease the demand for our products
and services or increase the cost of doing business or in some other manner have
a material adverse effect on our business, results of operations, and financial
condition.




We
may become subject to litigation.




We may be
subject to claims involving how we conduct our business or the market for or
issuance of the Common Stock or other securities. Any such claims against the
Company may affect our business, results of operations and financial conditions.
Such claims, including those without merit, could require us to pay damages or
settlement amounts and would require a substantial amount of time and attention
from our senior management as well as considerable legal expenses. Although we
do not anticipate that our activities would warrant such claims, there can be no
assurances that such claims will not be made.


31


We
depend on third-party vendors for key Internet operations including broadband
connectivity, termination capability and different operating systems. The loss
of any of our vendors could have a material adverse effect on our business,
results of operations and financial condition.




We rely
on our relationships with third party vendors of Internet development tools and
technologies including providers of switches, network termination and
operational and billing specialized operations. There can be no assurance that
the necessary cooperation from third parties will be available on acceptable
commercial terms or at all. Although there are a number of providers of these
services, if we are unable to develop and maintain satisfactory relationships
with such third parties on acceptable commercial terms, or if our competitors
are better able to leverage such relationships, then our business, results of
operations and financial condition will be materially adversely
affected.




We
may not be able to successfully compete with current or future
competitors.




The
market for VoIP service providers and business solutions providers is highly
competitive, and rapidly changing. Since the Internet’s commercialization in the
early 1990’s, the number of websites on the Internet competing for the attention
and spending of consumers and businesses has proliferated. With no substantial
barriers to entry, we expect that competition will continue to intensify. In
addition to intense competition from VoIP services providers, we also face
competition from traditional telephone systems integrators and
providers.




Some of
our competitors, such as Vonage and Skype, have longer operating histories,
significantly greater financial, technical and marketing resources, greater name
recognition and larger existing customer bases than we have. These competitors
may be able to respond more quickly to new or emerging technologies and changes
in customer requirements and to devote greater resources to the development,
promotion, and sale of their products or services than we can. There can be no
assurance that we will be able to compete successfully against current or future
competitors. If we cannot do so, then our business, financial condition and
results of operations will be materially and adversely affected.




We
may not be able to comply with the FCC’s requirements to provide 911 services to
our customers. Our inability to comply with these requirements could have an
adverse effect on our business and results of operations.




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 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.




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




None
other than as disclosed on the Company’s Current Report on Form 8-K dated July
1, 2009 and September 3, 2009.




Item
      3.
            DEFAULTS
      UPON SENIOR SECURITIES




None.




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




None


32


Item
      5.
            OTHER
      INFORMATION




(a)           None.




(b)           There
were no changes to the procedures by which security holders may recommend
nominees to our board of directors.




Item
6.    EXHIBITS




Exhibit
                    No.
                  
                  Exhibit
                  
                  Method of Filing3.1
                  
                  Articles
      of Incorporation, as amended.
                  
                  Incorporated
      by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-KSB
      for the year ended December 31, 2003.3.2
                  
                  Bylaws,
      as amended.
                  
                  Incorporated
      by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-KSB
      for the year ended December 31, 2003.3.3
                  
                  Amendment
      to the Company’s Articles of Incorporation filed June 3,
    2004.
                  
                  Incorporated
      by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form
      10-QSB for the quarter ended June 30, 2004.3.4
                  
                  Certificate
      of Designations of Rights and Preferences of Series D Preferred
      Stock
                  
                  Incorporated
      by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
      filed August 13, 2004.3.5
                  
                  Certificate
      of Designations of Rights and Preferences of Series E Preferred
      Stock
                  
                  Incorporated
      by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
      filed November 22, 2005.3.6
                  
                  Amendment
      to Certificate of Designations of Rights and Preferences of Series E
      Preferred Stock
                  
                  Incorporated
      by reference to Exhibit 3.1.8 to the Company’s Quarterly Report on Form
      10-QSB for the quarter ended March 31, 2006.3.7
                  
                  Amendment
      to the Company’s Articles of Incorporation filed July 13,
      2007.
                  
                  Filed
      herewith.3.8
                  
                  Certificate
      of Designations of Rights and Preferences of Series F Preferred
      Stock
                  
                  Incorporated
      by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
      filed April 30, 2009.3.9
                  
                  Amendment
      to the Company’s Articles of Incorporation filed May 11,
    2009.
                  
                  Filed
      herewith.3.10
                  
                  Amendment
      to Certificate of Designations of Rights and Preferences of Series F
      Preferred Stock
                  
                  Incorporated
      by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
      filed June 10, 2009.3.11
                  
                  Amendment
      to the Company’s Articles of Incorporation filed September 10,
      2009.
                  
                  Incorporated
      by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
      filed September 10, 2009.4.1
                  
                  Certificate
      of the Designations, Preferences, Rights and Limitations of Series A
      Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
      Series D Preferred Stock of i2 Telecom IP Holdings, Inc.
                  
                  Incorporated
      by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
      filed July 1, 2009.10.1
                  
                  Employment
      Agreement, dated August 24, 2009, by and between the Company and Richard
      Roberson. Represents an executive compensation plan or arrangement.
      *
                  
                  Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed August 28, 2009.10.2
                  
                  Form
      of Warrant
                  
                  Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed September 10, 2009.10.3
                  
                  Form
      of Subscription Agreement
                  
                  Incorporated
      by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
      filed September 10, 2009.10.4
                  
                  Second
      Amendment to Marketing Agreement, dated September 8, 2009.
                  
                  Incorporated
      by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K
      filed September 10,
2009.


33





31.1
            
            Rule
      13a-14(a)/15d-14(a) Certification of the Company’s Principal Executive
      Officer.
            
            Filed
      herewith.31.2
            
            Rule
      13a-14(a)/15d-14(a) Certification of the Company’s Principal Financial
      Officer.
            
            Filed
      herewith.32.1
            
            Section
      1350 Certification of the Company’s Principal Executive
      Officer.
            
            Filed
      herewith.32.2
            
            Section
      1350 Certification of the Company’s Principal Financial
      Officer.
            
            Filed
      herewith.





*
Management contract, compensatory plan or arrangement.


34


SIGNATURES




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




GEOS
      COMMUNICATIONS, INC.(formerly
      known as i2 Telecom International, Inc.)Date:
      May 3,,  2010
              By:
              /s/
      Andrew L. BermanAndrew
      L. BermanChief
      Executive Officer
                (Principal
      Executive Officer)





Date:
      May 3,  2010
                By:
                /s/
      Richard RobersonRichard
      RobersonChief
      Financial Officer
                  (Principal
      Financial and Accounting
Officer)


35