UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





x
            
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended June 30, 2010ORo
            
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the transition period
from            to





Commission
file number: 333-99455




GEOS
COMMUNICATIONS, INC.


(Exact
Name of Registrant as Specified in its Charter)





Washington
                    
                    91-1426372(State
      of other jurisdiction of incorporation or organization)
                    
                    (I.R.S.
      Employer Identification No.)430
      North Carroll Avenue, Suite 120Southlake,
      Texas
                    
                    76092(Address
      of Principal Executive Offices)
                    
                    (Zip
      Code)





(817)
789-6000


(Registrant’s
Telephone Number, including Area Code)





Not
Applicable


(Former
name, former address and former fiscal year, if changed since last
report)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days.


x   Yes    o   No





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes x No   ̈




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
definitions of large accelerated filer,” accelerated filer” and smaller
reporting company” in Rule 12b-2 of the Exchange Act (Check one):





Large
accelerated filer   o     Accelerated
filer    o     Non-accelerated
filer    o     Smaller
Reporting Company   x





Indicate
      by check mark whether the Registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act)  o   Yes    x    No





Number of
Common Shares outstanding at August 10, 2010: 32,647,642












INDEXPage
                        No.(s)PART
      I - FINANCIAL INFORMATIONItem
      1.
                      Financial
      StatementsCondensed
      Consolidated Balance Sheets as of June 30, 2010  (unaudited) and
      December 31, 2009
                      1Condensed
      Consolidated Statements of Operations for the three and six months ended
      June 30, 2010 and  2009 (unaudited)
                      2Condensed
      Consolidated Statements of Cash Flows for the six months ended June 30,
      2010 and  2009 (unaudited)
                      3Notes
      to  Condensed Consolidated Financial Statements
                      4Item
      2.
                      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                      21Item
      3.
                      Quantitative
      and Qualitative Disclosures About Market Risk
                      24Item
      4.
                      Controls
      and Procedures
                      24PART
      II - OTHER INFORMATIONItem
      1.
                      Legal
      Proceedings
                      25Item
      1A.
                      Risk
      Factors
                      25Item
      2.
                      Unregistered
      Sales of Equity Securities and Use of Proceeds
                      34Item
      3.
                      Defaults
      Upon Senior Securities
                      34Item
      4.
                      Reserved
                      34Item
      5.
                      Other
      Information
                      34Item
      6.
                      Exhibits
                      35SIGNATURES
                      39











PART
I - FINANCIAL INFORMATION





Item
      1 - Financial Statements





NOTE:
These consolidated financial statements and notes reflect the Company’s
Condensed Consolidated Balance Sheets at June 30, 2010 (unaudited) and December
31, 2009, the unaudited Condensed Consolidated Statements of Operations for the
six months ended June 30, 2010 and 2009, and unaudited condensed Consolidated
Statements of Cash Flows for the six months ended June 30, 2010 and
2009.





GEOS
COMMUNICATIONS, INC. AND SUBSIDIARIES


Condensed
Consolidated Balance Sheets





June
      30, 2010
                
                
                December
      31, 2009UnauditedASSETSCurrent
      Assets:Cash
      and Cash Equivalents
                
                $
                361,045
                
                
                $
                1,041,830Accounts
      Receivable
                
                
                22,056
                
                
                
                -Prepaid
      Expenses and Other Current Assets
                
                
                115,754
                
                
                
                17,826Total
      Current Assets
                
                
                498,855
                
                
                
                1,059,656Property
      and Equipment, Net
                
                
                627,013
                
                
                
                1,145,419Other
      Assets:Goodwill
                
                
                2,144,192
                
                
                
                -Other
      Intangible Assets, Net of Amortization
                
                
                3,276,668
                
                
                
                2,441,900Deposits
                
                
                50,060
                
                
                
                83,489Investment,
      at Cost
                
                
                -
                
                
                
                250,000Notes
      Receivable
                
                
                -
                
                
                
                60,000Assets
      Held For Sale
                
                
                188,253
                
                
                
                305,157Total
      Other Assets
                
                
                5,659,173
                
                
                
                3,140,546Total
      Assets
                
                $
                6,785,041
                
                
                $
                5,345,621LIABILITIES
      AND STOCKHOLDERS’ (DEFICIT)Current
      Liabilities:Accounts
      Payable
                
                $
                910,956
                
                
                $
                344,261Accrued
      Expenses
                
                
                1,286,506
                
                
                
                1,091,552Liabilities
      Related to Assets Held For Sale
                
                
                798,382
                
                
                
                72,247Convertible
      Bonds
                
                
                50,000
                
                
                
                50,000Notes
      Payable
                
                
                9,000
                
                
                
                9,000Borrowing
      under Line of Credit
                
                
                2,600,000
                
                
                
                -Total
      Current Liabilities
                
                
                5,654,842
                
                
                
                1,567,060Series
      A–D, Preferred Shares subject to mandatory redemption
                
                
                8,903,022
                
                
                
                7,880,627Series
      G Preferred Shares subject to mandatory redemption
                
                
                3,809,421
                
                
                
                -Total
      Liabilities
                
                
                18,367,285
                
                
                
                9,447,687Series
      F Convertible Preferred Shares, 5,000,000 Shares Authorized, and 7,550
      shares
                  Issued
      and Outstanding
                
                
                5,047,057
                
                
                
                5,047,057Series
      H Convertible Preferred Shares, 20,000 Shares Authorized,
      and  350 shares Issued
                  and
      Outstanding
                
                
                232,482
                
                
                
                -Commitments
      And ContingenciesStockholders’
      (Deficit):Common
      Stock,  No Par Value, 500,000,000 Shares
      Authorized  and  32,647,842
                  Shares
      Issued and Outstanding
                
                
                47,901,113
                
                
                
                46,705,124Accumulated
      Deficit
                
                
                (64,762,896
                )
                
                
                (55,854,247Total
      Stockholders’ (Deficit)
                
                
                (16,861,783
                )
                
                
                (9,149,123Total
      Liabilities and Stockholders’ (Deficit)
                
                $
                6,785,041
                
                
                $
                5,345,621





The
accompanying Notes are an integral part of these condensed consolidated
financial statements.




1





GEOS
COMMUNICATIONS, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Operations


(Unaudited)





Three
      Months
                
                
                Three
      Months
                
                
                Six
      Months
                
                
                Six
      MonthsEnded
                
                
                Ended
                
                
                Ended
                
                
                EndedJune
      30, 2010
                
                
                June
      30, 2009
                
                
                June
      30, 2010
                
                
                June
      30, 2009Net
      Revenue
                
                $
                23,584
                
                
                $
                -
                
                
                $
                35,398
                
                
                $
                -Cost
      of Revenue
                
                
                55,332
                
                
                
                -
                
                
                
                65,864
                
                
                
                -Gross
      Profit (Loss)
                
                
                (31,748
                )
                
                
                -
                
                
                
                (30,466
                )
                
                
                -General
      and Administrative Expenses
                
                
                1,970,589
                
                
                
                1,415,667
                
                
                
                3,651,186
                
                
                
                2,677,331Loss
      From Operations
                
                
                (2,002,337
                )
                
                
                (1,415,667
                )
                
                
                (3,681,652
                )
                
                
                (2,677,331
                )Other
      Income (Expense):Interest
      Income
                
                
                1,418
                
                
                
                1,474
                
                
                
                1,396
                
                
                
                1,474Interest
      Expense
                
                
                (778,420
                )
                
                
                (360,057
                )
                
                
                (1,390,174
                )
                
                
                (474,051
                )Gain
      on Forbearance of Debt
                
                
                -
                
                
                
                112,536
                
                
                
                -
                
                
                
                112,536Total
      Other Income (Expense)
                
                
                (777,002
                )
                
                
                (246,047
                )
                
                
                (1,388,778
                )
                
                
                (360,041
                )Loss
      from continuing operations
                
                
                (2,779,339
                )
                
                
                (1,661,714
                )
                
                
                (5,070,430
                )
                
                
                (3,037,372
                )Loss
      from discontinued operations, net of $0 tax benefits
                
                
                (2,645,767
                )
                
                
                (774,202
                )
                
                
                (3,485,868
                )
                
                
                (1,768,201
                )Net
      loss
                
                
                (5,425,106
                )
                
                
                (2,435,916
                )
                
                
                (8,556,298
                )
                
                
                (4,805,573
                )Series
      F and H Preferred Stock dividend associated with a beneficial conversion
      feature
                
                
                (123,038
                )
                
                
                (2,100,566
                )
                
                
                (123,038
                )
                
                
                (2,100,566
                )Net
      Loss attributable to Common Shareholders
                
                $
                (5,548,144
                )
                
                $
                (4,536,482
                )
                
                $
                (8,679,336
                )
                
                $
                (6,906,139
                )Weighted
      Average Common Shares Outstanding:Basic
      and Diluted
                
                
                32,647,842
                
                
                
                28,558,566
                
                
                
                32,647,842
                
                
                
                27,961,279Basic
      and Diluted Loss Per Common Share:Continuing
      Operations
                
                $
                (.09
                )
                
                $
                (.06
                )
                
                $
                (.16
                )
                
                $
                (.11
                )Discontinued
      Operations
                
                
                (.08
                )
                
                
                (.03
                )
                
                
                (.11
                )
                
                
                (.06
                )Net
      Loss
                
                $
                (.17
                )
                
                $
                (.09
                )
                
                $
                (.27
                )
                
                $
                (.17
                )




The accompanying Notes are an
integral part of these condensed consolidated financial
statements.




2





GEOS
COMMUNICATIONS, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Cash Flows


(Unaudited)





Six
      Months Ended
                        June
      30, 2010
                      
                      
                      Six
      Months Ended
                        June
      30, 2009Cash
      Flows From Operations:Net
      Loss
                      
                      $
                      (8,556,298
                      )
                      
                      $
                      (4,805,573
                      )Add
      back Loss From Discontinued operations
                      
                      
                      3,485,868
                      
                      
                      
                      1,768,201Adjustments
      to Reconcile Net Loss to CashCash
      Provided by (Used In) Operating Activities:Depreciation
      and amortization
                      
                      
                      290,268
                      
                      
                      
                      189,962Amortization
      of loan fees
                      
                      
                      -
                      
                      
                      
                      263,329Warrants
      issued for services
                      
                      
                      193,222
                      
                      
                      
                      1,313,978Stock
      based compensation
                      
                      
                      492,378
                      
                      
                      
                      76,003Accretion
      of interest and dividends on Preferred Stock Liabilities
                      
                      
                      1,345,106
                      
                      
                      
                      -Gain
      on Forbearance of Debt
                      
                      
                      -
                      
                      
                      
                      (112,536
                      )Change
      in operating assets and liabilities, net of effect of
      acquisitions:Accounts
      Receivable and Notes Receivable
                      
                      
                      (16,104
                      )
                      
                      
                      (125,000
                      )Prepaid
      Expenses, net of prepaid loan fees
                      
                      
                      43,334
                      
                      
                      
                      (263,329
                      )Accounts
      Payable
                      
                      
                      329,186
                      
                      
                      
                      (76,035
                      )Other
                      
                      
                      (23,209
                      )
                      
                      
                      --Net
      Cash Used In Operating Activities from Continuing
    Operations:
                      
                      
                      (2,416,249
                      )
                      
                      
                      (1,771,000
                      )Cash
      Flows From Investing Activities:Acquisitions,
      net of cash acquired
                      
                      
                      201,267
                      
                      
                      
                      -Net
      Cash Provided by Investing Activities
                      
                      
                      201,267
                      
                      
                      
                      -Cash
      Flows From Financing Activities:Proceeds
      from convertible notes
                      
                      
                      -
                      
                      
                      
                      1,433,002Payment
      of Notes Payable
                      
                      
                      -
                      
                      
                      
                      (120,268
                      )Issuance
      of common stock
                      
                      
                      -
                      
                      
                      
                      3,889,064Issuance
      of Series H Preferred stock
                      
                      
                      350,000
                      
                      
                      
                      -Line
      of Credit proceeds
                      
                      
                      2,600,000
                      
                      
                      
                      -Net
      Cash Provided By Financing Activities
                      
                      
                      2,950,000
                      
                      
                      
                      5,201,798Increase
      in Cash and Cash Equivalents From Continuing Operations
                      
                      
                      735,018
                      
                      
                      
                      3,430,798Cash
      Flow From Discontinued Operations:Operating
      Cash Flows
                      
                      
                      (1,415,803
                      )
                      
                      
                      (1,181,696
                      )Financing
      Cash Flows
                      
                      
                      -
                      
                      
                      
                      -Investing
      Cash Flows
                      
                      
                      -
                      
                      
                      
                      (98,312
                      )Decrease
      in Cash and Cash Equivalents From Discontinued Operations
                      
                      
                      (1,415,803
                      )
                      
                      
                      (1,280,008
                      )Increase
      (Decrease) in Cash and Cash Equivalents
                      
                      
                      (680,785
                      )
                      
                      
                      2,150,790Balance,
      Beginning of period
                      
                      
                      1,041,830
                      
                      
                      
                      2,645Balance,
      End of period
                      
                      $
                      361,045
                      
                      
                      $
                      2,153,435Non-Cash
      Investing and Financing Activities:Acquisition
      of Shoot It! and D Mobile through the issuance of Series G preferred
      shares and warrants
                      
                      $
                      3,486,340
                      
                      
                      $
                      -





The
accompanying Notes are an integral part of these condensed consolidated
financial statements.




3





GEOS
COMMUNICATIONS, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements




NOTE
1.   NATURE OF BUSINESS and MANAGEMENT’S PLANS




For
convenience in this quarterly report, “Geos,” “we,” “us,” and “the Company”
refer to Geos Communications, Inc. and our consolidated subsidiaries, taken as a
whole.




Through
our subsidiaries, Geos Communications, Inc. (“Geos (DE)”) and D Mobile, Inc. (“D
Mobile”), both Delaware corporations, we are a developer and distributor of
mobile applications and services.  In addition, we previously have
leveraged our historical core competencies in Voice over Internet Protocol
(VoIP) and technology development to introduce solutions to the global mobile
community. Our services included MyGlobalTalk, a comprehensive solution for
reducing long distance calling worldwide.




The
Company, a Washington corporation, was incorporated as “Transit Information
Systems, Inc.” 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.”




On June
17, 2010, the Company’s board of directors approved a plan by which the Company
will discontinue offering its VoIP and telephony services directly to consumer
and enterprise customers.  Under the plan the Company is implementing
a reduction-in-force and intends to close and sell its network switching
operations located in Atlanta, Georgia. The Company has given the appropriate
notifications required by the Federal Communications Commission and plans to end
offering its services in August, 2010.   The Company’s current
customers will be given the opportunity to transfer their service to other VoIP
telephony providers. As such all related operations have been presented as
discontinued operations and the network switching equipment has been classified
as held for sale.





The
Company is continuing to monetize its intellectual property portfolio and focus
its efforts on accelerating the growth and expansion of its digital content
distribution platform.  The decision to discontinue its telephony
operations will significantly reduce the Company’s monthly operational expense
while allowing concentrated organizational focus on the digital content
distribution business.





On
February 19, 2010, we acquired Shoot It!, LLC, (“Shoot It!”)which expands our
product portfolio applications and technologies for the global mobile
communications market.  Since the date of acquisition, we have
included the financial results for Shoot It! in our results of
operations.




On March
1, 2010, we acquired D Mobile, Inc., which provides us with a platform for
mobile content distribution in China, the world’s largest mobile communications
market, and expands our global presence. D Mobile, which operates under the
brand name Duo Guo, is a retail channel for the discovery and download of
licensed mobile media content in China. We have included the results of
operations for D Mobile since the date of acquisition in our results of
operations.





In
addition, we have begun marketing the mobile content distribution platform
globally including the U.S. and we are developing product offerings and business
models that are appropriate for the culture and business practices of those
unique markets.





The
accompanying financial statements have been prepared assuming that Geos
Communications, Inc. and subsidiaries will continue as a going concern. Geos
Communications, Inc. (together with its subsidiaries) has not generated positive
cash flows from operations and has accumulated losses since inception, which
raises substantial doubt about its ability to continue as a going concern.
Management’s plans regarding those matters also are described below. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.




4




We
affected a 1:10 reverse split of our common stock effective May 14, 2009, and
all references to shares and per share amounts retroactively reflect the reverse
stock split.





LIQUIDITY AND MANAGEMENT’S
PLANS




As shown
in the accompanying condensed consolidated financial statements, the Company
incurred a net loss of $8,556,298 during the six months ended June 30, 2010, the
Company’s current liabilities exceeded its current assets by $5,155,987 and it’s
total liabilities (which includes the Preferred Shares subject to mandatory
redemption of $12,712,443) exceeded its total assets by $11,582,244 as of June
30, 2010.




The
accompanying condensed consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern.  The Company has sustained
substantial operating losses since commencement of operations.  The Company
has also incurred negative cash flows from operating activities and the majority
of the Company’s assets are intangible assets, which were not considered
impaired in the current year.




In view
of these matters, realization of a major portion of the assets in the
accompanying consolidated balance sheet is dependent upon continued operations
of the Company, which is in turn dependent on the Company restructuring its
financing arrangements, and/or obtaining additional financing,  and
achieving  positive cash flows while maintaining adequate
liquidity.




The
Company has undertaken a number of specific steps to achieve positive cash flow
in the future.  These actions include the two acquisitions consummated in
thefirst
quarter of 2010 and the issuance of the drawdown note described in the following
footnotes, along with the economic cost associated with the integration, and
debt restructuring and equity placements which occurred at the same time as the
acquisitions in the first quarter of 2010. The Company has taken further action
to reduce its cash flow concerns by discontinuing the switching operations,
which has resulted in a significant reduction in personnel and associated
salaries and operating costs.




In
addition, the Company has identified several new business strategies that may
enable the Company to reach its profitability goals.





One
strategy is to raise additional capital to enable the Company to realize the
market opportunities for  its mobile content distribution
business.  Therefore, in July 2010, the Company began receiving
subscriptions for its Series I Preferred Shares.  In addition, the
Company is beginning to solicit subscriptions for common shares of its
subsidiary, D  Mobile,  with plans to sell up to 50% of its
interest in the Subsidiary.    The Series I offering and the D
Mobile Common Stock offering are discussed in more detail in our footnote titled
“subsequent events”.  The Company is in negotiations with several
companies to enable the Company to ultimately expand the market and revenues for
its products and services.




NOTE
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




The
condensed consolidated financial statements of Geos Communications, Inc. have
been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”).




Basis
of Consolidation




The
condensed consolidated financial statements include the accounts of Geos
Communications, Inc. (DE), Geos Communications IP Holdings, Inc. (“Geos IP
Holdings”),  SuperCaller Community, Inc. (“SuperCaller”), Shoot It!,
Inc., and D Mobile, Inc. all of which are, directly or indirectly, wholly-owned
subsidiaries of the Company.  All significant intercompany accounts
and transactions have been eliminated in consolidation.




In June
2009, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards
Codification (“ASC”) and the Hierarchy of Generally Accepted Accounting
Principles). The FASB ASC became the single source of authoritative
nongovernmental U.S. generally accepted accounting principles (“GAAP”),
superseding existing FASB, American Institute of Certified Public Accountants
(“AICPA”), Emerging Issues Task Force (“EITF”), and related accounting
literature. The new codification system organizes the thousands of GAAP
pronouncements into roughly 90 accounting topics and displays them using a
consistent structure. Also included is relevant SEC guidance organized using the
same topical structure in separate sections. This standard, which is now
considered FASB ASC Topic No.105, became effective for financial statements
issued for reporting periods that end after September 15, 2009.




5




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




Interim
Condensed Financial Statements





The
condensed consolidated financial statements included herein have been prepared
by Geos Communications, Inc. and are unaudited, except for the condensed
consolidated balance sheet at December 31, 2009, which has been derived from
audited consolidated financial statements at that date on the basis of GAAP. The
preparation of financial statements in conformity with 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.
In the opinion of management, the unaudited condensed consolidated interim
financial statements include all normal recurring adjustments necessary for a
fair presentation of the financial position as of June 30, 2010, the results of
operations for each of the three and six months ended June 30, 2010 and 2009,
and the cash flows for the six months ended June 30, 2010 and 2009. In addition,
operating results for the six months ended June 30, 2010 is not necessarily
indicative of results that may be expected for the year ending December 31,
2010.





Although
management believes the unaudited interim related disclosures in these condensed
consolidated financial statements are adequate to make the information presented
not misleading, certain information and footnote disclosures normally included
in annual audited consolidated financial statements prepared in accordance with
GAAP have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, the condensed consolidated
financial statements included herein should be read in conjunction with the
audited consolidated financial statements and notes thereto included in the
Company’s 2009 Annual Report on Form 10-K.




Discontinued
Operations and Assets Held For Sale





We have
reclassified for all periods presented in the accompanying condensed
consolidated statements of operations, the amounts related to the discontinued
operations in accordance with the applicable accounting criteria. In addition,
long-lived assets and related liabilities classified as held for sale are
reported separately in the accompanying condensed consolidated balance
sheets.





Revenue
Recognition




Revenue
is recognized in accordance with SEC Staff Accounting Bulletin (SAB) No. 104
“Revenue Recognition” (“SAB 104”), when persuasive evidence of an arrangement
exists, the fee is fixed or determinable, collectability is probable, delivery
of a product has occurred or services have been rendered and title and risk of
loss has transferred. Revenues include shipping and handling costs billed to the
customers.





Business
Combinations




Pursuant
to ASC 805, “Business
Combinations” (“ASC 805”), the Company has used the acquisition method of
accounting. The acquisition method of accounting is used for all business
combinations where the acquiror is identified for each business combination. ASC
805 defines the acquirer as the entity that obtains control of one or more
businesses in the business combination and establishes the acquisition date as
the date that the acquirer achieves control. We will recognize separately from
goodwill, the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interests in an acquiree, generally at the acquisition date fair
value as defined by Topic 820, Fair Value Measurements. Goodwill as of the
acquisition date is measured as the excess of consideration transferred, which
is also generally measured at fair value, and the net of the acquisition date
amounts of the identifiable assets acquired and the liabilities
assumed.




6




The
acquisition method requires us to use significant estimates and assumptions,
including fair value estimates, as of the business combination date and to
refine those estimates, as necessary, during the measurement period (defined as
the period, not to exceed one year, in which we may adjust the provisional
amounts recognized for a business combination) in a manner that is prescribed in
Topic 805.





Fair
Value of Financial Instruments




The
Company calculates the fair value of its assets and liabilities which qualify as
financial instruments and includes this additional information in the notes to
consolidated financial statements when the fair value is different than the
carrying value of these financial instruments. The estimated fair value of
accounts receivable, accounts payable and accrued liabilities approximate their
carrying amounts due to the relatively short maturity of these instruments. The
carrying amounts and fair values for Convertible debt plus Preferred Stock
Series F, G and H, as well as Preferred Stock Series A–D of Geos IP Holdings,
are presented in the following Notes.




Concentrations
of Credit Risk




Financial
instruments which potentially subject us to concentration of credit risk consist
principally of cash and cash equivalents, and accounts receivable. We have
placed cash and cash equivalents with a single high credit-quality
institution.  The Company’s risk of loss is limited due to advance
billings to customers for long distance services and the ability to discontinue
these primary services on delinquent accounts.  We perform ongoing
credit evaluations of our customers and maintain an allowance for potential
credit losses.




Cash
and Cash Equivalents




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




Property
and 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.





Internal Use
Software




Expenditures
for internal use software, all of which have been obtained from third parties,
have been capitalized and are being amortized over five years. The Company
accounts for its internal use software in accordance with guidance in ASC Topic
No. 350, (formerly Statement of Position 98-1), Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use.





Intangible
Assets




The
Company has capitalized certain costs related to registering trademarks and
patent pending technology. In addition, the Company has acquired the trade
names of Shoot It! and Duo Guo, and noncompete agreements in the acquisition of
the two companies. In accordance with FASB ASC topic 350, the Company amortizes
its intangible assets with a finite life over periods ranging from 2 to 10 years
on a straight-line basis. Additionally, the Company tests its intangible assets
for impairment whenever circumstances indicate that their carrying value may not
be recoverable.




Goodwill




7




In
determining the valuation of goodwill, the Company is applying ASC 805, “Business Combinations”.
Goodwill as of the acquisition date is measured as the excess of consideration
transferred, which is also generally measured at fair value, and the net of the
acquisition date amounts of the identifiable assets acquired and the liabilities
assumed.




ASC 805
requires an entity:





●
            to
      record separately from the business combination the direct costs, where
      previously these costs were included in the total allocated cost of the
      acquisition.●
            to
      recognize the assets acquired, liabilities assumed, and any
      non-controlling interest in the acquired at the acquisition date, at their
      fair values as of that
date.


●
            to
      recognize as an asset or liability at fair value for certain
      contingencies, either contractual or non-contractual, if certain criteria
      are met.●
            to
      recognize contingent consideration at the date of acquisition based on the
      fair value at that
date.





Goodwill
is required to be tested at least on an annual basis for impairment or on an
interim basis if an event occurs or circumstances change that would reduce the
fair value of a reporting unit below its carrying value. The Company assesses
goodwill for impairment by periodically comparing the fair value of its
reporting units to their carrying amounts to determine if there is potential
impairment. Fair values for reporting units are determined based on discounted
cash flows, market multiples or appraised values as appropriate. As of June 30,
2010, there was no impairment indicated.





Assets
Held for Sale and Related Liabilities





Individual
non-current assets or groups of non-current assets and related liabilities are
classified separately as held for sale in the balance sheet if their disposal
has been committed and is probable.  Assets held for sale are
recognized at the lower of their carrying amount and their fair value less costs
to sell, and are no longer depreciated once they are classified as held for
sale.





Impairment
of Long-lived Assets




In
accordance with the FASB ASC topic 360 on impairment or disposal of long-lived
assets, the Company reviews its long-lived assets, including property and
equipment, and finite-life 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 compares the future undiscounted net cash flows, without
interest charges to the carrying amount of the assets, and if the latter exceeds
the former, then impairment is recorded to adjust the asset to its fair value
(using discounted cash flows). The Company recorded asset impairment losses of
$1,047,707 related to assets held for sale and discontinued operations during
the three months ended June 30, 2010 as a result of the decision by the Board of
Directors to discontinue the telecom switching operations. The total amount of
impairment consisted of $143,298 related to software assets held for sale, plus
$904,409 related to equipment for discontinued operations.





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.
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.As a result of this exchange a loss on debt
extinguishment of $1,469,523 was recorded and is included in the Statement of
Operations for the year ended December 31, 2009.




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.




8




Income
Taxes




The
Company files a consolidated federal income tax return with its wholly-owned
subsidiaries. The Company is a C-Corporation under the provisions of the
Internal Revenue Code. We utilize the asset and liability approach to measuring
deferred tax assets and liabilities based on temporary differences existing at
each balance sheet date using enacted tax rates expected to be in effect at when
the temporary differences reverse in accordance with ASC 740, Income Taxes(“ASC 740”). ASC
740 takes into account the differences between financial statement treatment and
tax treatment of certain transactions. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled.




In
accordance with ASC 740, the Company recognizes the effect of uncertain income
tax positions only if those positions are more likely than not of being
sustained. Recognized income tax provisions for these uncertain tax positions
are measured at the largest amount that is greater than 50% likely of being
realized. Changes in recognition or measurement are reflected in the period in
which the change in judgment occurs. The Company considers both interest and
penalties related to uncertain tax positions as part of the income tax
provision.




Our
deferred tax calculation requires management to make certain estimates about
future operations. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized. The effect of a change
in tax rate is recognized as income or expense in the period that includes the
enactment date.




Net
operating losses (“NOLs”) may be limited and the company is in process of
determining if such a triggering event took place.  The Company is in
the process of determining if a change in control, for purposes of Internal
Revenue Code section 382, occurred during a testing period in
2009.  If it is determined there was a change in control, the net
operating losses will be subject to an annual limitation on their
utilization.  At this time, the annual limitation, if any, is not
readily determinable.





Net
Income (Loss) per Common Share




Basic
earnings (loss) per common share represent income available to common
shareholders divided by the weighted average number of shares outstanding during
the period.  Diluted earnings per common 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 available to common
stockholders that would result from the assumed issuance. Options on shares of
common stock warrants, and certain bonds convertible into common shares were not
included in the computing of diluted loss per share because their effects were
anti-dilutive because of the net loss reported by the Company.




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.





Stock
Based 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.




Preferred
Shares




9




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 and dividends are recorded as interest
expense in the Statement of Operations.  As of June 30, 2010, the
Company had recorded liabilities related to Series A–D Preferred Shares of Geos
IP Holdings and the Company’s Series G Preferred Shares subject to mandatory
redemption features, which amounted to $8,903,022 and $3,809,421,
respectively.




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 June 30, 2010, the Company had recorded as temporary equity Series
F and H Preferred Shares totaling $5,047,057 and $232,482,
respectively.  Dividends on preferred shares included in temporary
equity and equity are recorded as Dividends on Preferred Stock below Net Loss 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.




New
Accounting Pronouncements




Variable
Interest Entities




In June
2009, the Financial Accounting Standards Board (FASB) issued guidance that
changed the consolidation model for variable interest entities (VIEs). This
guidance requires companies to qualitatively assess the determination of the
primary beneficiary of a VIE based on whether a company (1) has the power to
direct matters that most significantly impact the activities of the VIE, and (2)
has the obligation to absorb losses or the right to receive benefits of the VIE
that could potentially be significant to the VIE. This standard is effective at
the beginning of 2010 and must be applied retrospectively. The adoption of this
guidance did not have any impact on our financial statements.




NOTE
3.  ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS




Assets
held for sale:




As
described in Note 2, at June 30 2010 and 2009, the Company classified disposal
groups (comprising network switching equipment) as held for sale. The Group
reported these items in other assets and other liabilities and valued them at
the lower of their carrying amount or fair value less costs to sell resulting in
an impairment loss of $143,298 relating to the estimated disposal losses. The
balances classified as held for sale consisted primarily of property and
equipment.




Liabilities
related to Assets Held for Sale as of June 30, 2010 totaled $798,312 which
consisted of accounts payable for switch hardware security totaling $85,512, and
accrued expenses of $712,800 related to the termination of software licenses and
operating contracts related to the switching operations in Atlanta,
Georgia.





Results from discontinued
operations:





Included
in prepaid assets and deposits are $43,589 of assets related to discontinued
operations as of June 30, 2010.





Total
impairment of $1,047,040 consisted of $143,298 related to software held for
sale, and $904,409 related to equipment. There were no remaining costs for
equipment after impairment related to discontinued operations.




10




Included
in accrued expenses is $222,910 of FCC charges and advertising costs related to
discontinued operations as of June 30, 2010.




The
following table presents the Condensed Statement of Operations from the
Company’s discontinued operations until their respective divestment
dates.




Six
      months
                  Ended
                  June
      30, 2010
                
                
                Six
      months
                  Ended
      June 30,
                  2009Revenues
                
                $
                167,244
                
                
                $
                214,570Cost
      of Sales
                
                
                227,711
                
                
                
                193,822Gross
      Profit (loss)
                
                
                (60,737
                )
                
                
                20,748General
      and Administrative expenses
                
                
                2,377,423
                
                
                
                1,788,949Impairment
      Losses
                
                
                1,047,707
                
                
                
                -Loss
      from Discontinued Operations
                
                
                (3,485,868
                )
                
                
                (1,768,201
                )Tax
      Benefit
                
                
                -
                
                
                
                -Net
      Loss from Discontinued Operations
                
                $
                (3,485,868
                )
                
                $
                (1,768,201
                )





No
benefit or provision for income taxes has been recorded due to the uncertainty
of the realization of any deferred tax assets.





NOTE
4.  ACQUISITION OF SHOOT IT! AND D MOBILE





Shoot It!
Acquisition





On
February 19, 2010, the Company entered into and closed an Agreement and Plan of
Merger (the “Shoot It! Merger Agreement)” with Shoot It!, LLC., an Arizona
limited liability company (“Shoot It!”), certain security holders of Shoot It!
and Shoot It! Acquisition, Inc., a Delaware corporation and wholly-owned
subsidiary of the Company (“Shoot It! Merger Sub”).  Subject to the
terms and conditions of the Shoot It! Merger Agreement, Shoot It! was merged
with and into Shoot It! Merger Sub (the “Shoot It! Merger”) with Shoot It!
Merger Sub surviving as a wholly-owned subsidiary of the Company.




The
Company acquired 100% of the common stock of Shoot It! via the issuance of 2,167
shares of Geos’ newly issued Series G Preferred Stock.  Shoot It! has
developed a postcard messaging application that allows users to take a picture
with their smart phone, create a personal message and send it as a hard copy
postcard from anywhere in the world. The condensed consolidated financial
statements of the Company reflect the Shoot It! acquisition being accounted for
as an Acquisition in accordance with ACS 805 Business Combinations
topic.  Transaction costs associated with the acquisition have been
expensed and were not significant.  The acquired goodwill is treated
as non-deductible for income tax purposes.  The results of operations
of Shoot It! are included in the Company’s condensed consolidated statement of
operations from the date of acquisition.  Goodwill consists of the
excess of the fair value of any consideration transferred plus the fair value of
any non-controlling interest in the acquiree at the acquisition date over the
fair value of net identifiable asset acquired, consisting of assets acquired
less liabilities assumed.





The
purchase price allocation is preliminary pending the completion of valuations of
assets acquired and liabilities assumed and certain other liabilities including,
but not limited to, deferred taxes.  As such, the allocation of the
purchase price presented below is preliminary and subject to change, the
allocation presented below reflects the estimated fair value of the individual
assets acquired and liabilities assumed as of the date of
acquisition.




11





Purchase
Price:





Fair
      value of original acquisition in 2009 previously presented on a cost
      basis
                
                $
                250,000Fair
      value of preferred stock Series G transferred
                
                
                1,358,322Total
      consideration
                
                $
                1,608,322





Purchase price
allocation:





Property
      and equipment
                
                $
                319,000Trade
      Name intangible
                
                
                345,000Non-Compete
      agreement
                
                
                22,000Goodwill
                
                
                922,322Total
      purchase price allocation
                
                $
                1,608,322





Including
the results of Shoot It! as if the acquisition occurred on January 1, 2010, the
pro forma net loss, and net loss attributable to the common shareholders would
have been $8,349,254 and $8,472,292, respectively, for the six months ended June
30, 2010. Shoot It! was incorporated on April 15, 2009, and, as such, pro forma
results from 2009 have not been presented since they are not materially
different from stated results. The pro forma information is for informational
purposes only and is not intended to be indicative of the actual combined
results that would have been reported had the transactions occurred on the dates
indicated nor does the information represent a forecast of the combined
financial results of the Company or Shoot It! for any future
period.  The actual operating results of Shoot It! contained in the
accompanying condensed consolidated financial statements include net revenues of
$15,359, and net profit of $5,875.





D Mobile
Acquisition





As of
March 1, 2010, the Company acquired 100% of the common stock of D Mobile Inc.
(“D Mobile”) through the issuance of 3,111 shares of Geos’ newly issued Series G
Preferred Stock, application of a Note Receivable of $120,000 and cash of
$75,000.   D Mobile currently operates a retail channel for the
discovery and download of licensed mobile content under the brand name Duo Guo
in China.  The purpose of the acquisition was to obtain a retail
platform for the distribution of mobile content.  The condensed
consolidated financial statements of the Company reflect the D Mobile
acquisition being accounted for as an acquisition in accordance with ACS 805 in
the Broad Transactions-Business Combinations topic (formerly SFAS
141r).  Transaction costs associated with the acquisition have been
expensed and were not significant.  The acquired goodwill is treated
as non-deductible for income tax purposes.  The results of operations
of D Mobile are included in the Company’s condensed consolidated statement of
operations from the date of acquisition.  Goodwill consists of the
excess of the fair value of any consideration transferred plus the fair value of
any non-controlling interest in the acquiree at the acquisition date over the
fair value of net identifiable asset acquired, consisting of assets acquired
less liabilities assumed.




The
purchase price allocation is preliminary pending the completion of valuations of
assets acquired and liabilities assumed and certain other liabilities including,
but not limited to, deferred taxes.  As such, the allocation of the
purchase price presented below is preliminary and subject to change, the
allocation presented below reflects the estimated fair value of the individual
assets acquired and liabilities assumed as of the date of
acquisition.





Purchase
Price:





Fair
      value of cash  to one Shareholder
                    
                    $
                    75,000Fair
      value of 2010 loan from Geos to D Mobile
                    
                    
                    60,000Fair
      value of 2009 loan from Geos to D Mobile
                    
                    
                    60,000Fair
      value of preferred stock Series G transferred
                    
                    
                    1,964,900Fair
      value of preferred stock Series G warrants issued
                    
                    
                    163,118Total
      consideration
                    
                    $
                    2,323,018




12





Purchase price
allocation:





Cash
      and cash equivalents
                  
                  $
                  256,106Accounts
      Receivable
                  
                  
                  11,848Prepaid
      and other assets
                  
                  
                  58,349Property
      and equipment
                  
                  
                  245,207Trade
      Name intangible
                  
                  
                  626,000Non-Compete
      agreement
                  
                  
                  60,000Trade
      payables
                  
                  
                  (154,762
                  )Goodwill
                  
                  
                  1,220,270Total
      purchase price allocation
                  
                  $
                  2,323,018





Including
the results of D Mobile as if the acquisition occurred on January 1, 2010, the
pro forma net loss, and net loss attributable to the common shareholders would
have been $8,687,579 and $8,810,617, respectively, for the six month period
ended June 30, 2010, and $5,248,314 and $7,348,880, respectively, for the period
ended June 30, 2009. The proforma information is for informational purposes only
and is not intended to be indicative of the actual combined results that would
have been reported had the transactions occurred on the dates indicated nor does
the information represent a forecast of the combined financial results of the
Company or D Mobile for any future period.  The actual operating
results of D Mobile contained in the accompanying condensed consolidated
financial statements include net revenues of $19,769 and net losses of $312,183
since the date of acquisition.





The acquisitions combined as
of acquisition dates are as follows:





Combined Purchase
Price:





Fair
      value of original acquisition in 2009 previously presented on a cost
      basis
                  
                  $
                  250,000Fair
      value of cash paid to one Shareholder
                  
                  
                  75,000Fair
      value of loan from Geos to D Mobile
                  
                  
                  120,000Fair
      value of preferred stock Series G transferred
                  
                  
                  3,323,222Fair
      value of preferred stock Series G warrants issued
                  
                  
                  163,118Total
      consideration
                  
                  $
                  3,931,340




Combined Purchase Price
Allocation:





Cash
      and cash equivalents
                  
                  $
                  256,106Account
      Receivable
                  
                  
                  11,848Prepaid
      and other assets
                  
                  
                  58,349Property
      and equipment
                  
                  
                  564,207Trade
      Name intangible
                  
                  
                  971,000Non-Compete
      agreement
                  
                  
                  82,000Trade
      payables
                  
                  
                  (154,762
                  )Goodwill
                  
                  
                  2,142,592Total
      purchase price allocation
                  
                  $
                  3,931,340





Including
the combined results of Shoot It! and D Mobile as if the acquisition occurred on
January 1, 2010, the proforma net loss, and net loss attributable to the common
shareholders would have been $8,786,843 and $8,909,881, respectively for the six
month period ended June 30, 2010, and $5,248,314 and $7,348,880, respectively,
for the period ended June 30, 2009. The proforma information is for
informational purposes only and is not intended to be indicative of the actual
combined results that would have been reported had the transactions occurred on
the dates indicated nor does the information represent a forecast of the
combined financial results of the Company or D Mobile for any future
period.  The actual combined operating results of Shoot It! and D
Mobile contained in the accompanying condensed consolidated financial statements
include net revenues of $35,398 and net losses of $306,308 since the date of
acquisition.




13




SERIES G PREFERRED SHARES
MANDITORILY REEDEMABLE





The
Company authorized 20,000 shares of Series G Preferred Stock on February 12,
2010. Subsequently, approximately 5,278 shares were issued in connection with
the above acquisitions. The shares accrue dividends at 6% annually, all of which
are due and payable on the third anniversary from issuance. The dividends can be
paid at the option of the Company in either cash or common stock equivalents.
Upon certain milestones related to share pricing, the Series G preferred shares
automatically convert to common shares of the Company at $.50 per
share.  The stated value of $1,000 per share, or a total of
$5,278,000, is mandatorily redeemable at the end of three years from the date of
issuance. In addition, for the D Mobile acquisition approximately 258 warrants
were issued which are convertible for three years after issuance date into
Series G Preferred Shares at $.50 per share. The holders of Series G Preferred
Shares are entitled to vote with the common shareholders on an as-converted
basis.





The
number of shares of Common Stock issuable upon automatic conversion is
determined by dividing the stated value, or $1,000, by a conversion price of $
0.50.  Series G Preferred Shares will automatically convert on the
first business day following the last day of a twenty day period during which
all of the following milestones are met: (A) 180 days have passed from the
applicable Issuance Date; (B) the Common Stock underlying the applicable Series
G Preferred Shares is available for sale under Rule 144 of the Securities Act of
1933, as amended; (C) the closing bid price of the Common Stock is greater than
$1.00, as adjusted for stock splits, stock dividends, recapitalizations,
combinations, reverse stock splits or other similar events) for a twenty day
Period, as determined in accordance with the weighted average price; and (D) the
total volume of shares of Common Stock traded is in excess of 500,000 shares, as
adjusted for stock splits, stock dividends, recapitalizations, combinations,
reverse stock splits or other similar events) for a twenty day period; provided
however, if condition (D) is not met, then the amount of Series G Preferred
Shares otherwise convertible shall be pro-rated to the percentage of 500,000
shares traded during the twenty day period immediately prior to the Automatic
Conversion Date.




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.  The fair value at date of the acquisitions
was $3,323,222.  We have accreted interest of $217,528, and dividends
of $105,553 through June 30, 2010, and have included the fair value of the
warrants of $163,118, resulting in a balance of $3,809,421 as of June 30,
2010.




NOTE
5.  OPERATING PROPERTY AND EQUIPMENT




Estimated
lives range from five to ten years. Depreciation charged to operations was
$72,036 for the six months ended June 30, 2010.




The major
components of property and equipment at June 30, 2010 and December 31, 2009 are
as follows:





June
      30,
                    2010
                  
                  
                  December
      31,
                    2009Network
      Equipment
                  
                  
                  -
                  
                  
                  
                  13,755Office
      Equipment
                  
                  
                  111,775
                  
                  
                  
                  368,148Software
                  
                  
                  40,433
                  
                  
                  
                  1,077,322Software
      Development
                  
                  
                  9,975
                  
                  
                  
                  861,119Lab
      Equipment
                  
                  
                  -
                  
                  
                  
                  39,577Furniture
      and Fixtures
                  
                  
                  428,798
                  
                  
                  
                  46,884Purchased
      Technology
                  
                  
                  319,000
                  
                  
                  
                  -909,981
                  
                  
                  
                  2,406,805Less:  Accumulated
      Depreciation and Amortization
                  
                  
                  282,968
                  
                  
                  
                  1,261,386Net
      Property and Equipment
                  
                  $
                  627,012
                  
                  
                  $
                  1,145,419




14




NOTE
6.  INTANGIBLE ASSETS




Intangible
assets at June 30, 2010, and December 31, 2009, consisted of the following, at
cost:





June
      30,
                    2010
                  
                  
                  December
      31,
                    2009Patent
      Pending Technology
                  
                  $
                  3,190,917
                  
                  
                  $
                  3,190,917Trademarks
                  
                  
                  274,017
                  
                  
                  
                  274,017Non-Compete
                  
                  
                  82,000
                  
                  
                  
                  -Trade
      Names
                  
                  
                  971,000
                  
                  
                  
                  -4,517,934
                  
                  
                  
                  3,464,934Accumulated
      Amortization
                  
                  
                  1,241,266
                  
                  
                  
                  1,023,034Intangible
      Assets, net
                  
                  $
                  3,276,668
                  
                  
                  $
                  2,441,900





The
Company has six patents which have been granted, and thirteen patent
applications pending.  The life of the technology and
trademarks is estimated to be ten years and is being amortized, beginning
January 1, 2007 over a ten year period. The life of the Non Compete and Trade
Name are two and ten, respectively. As of June 30, 2010, the Company has
determined there is no impairment of the intangible assets.




Amortization
expense totaled $218,232 for the six months ended June 30, 2010.




NOTE
7.   CONVERTIBLE BONDS




On
December 9, 2006, the Company sold $2,000,000 of 6% secured convertible
debentures pursuant to a Securities Purchase Agreement dated thereof. The
Company received $1,625,000 in December 2006 and remaining $375,000 in January
2007. The Debentures matured on May 9, 2007. The Debentures were convertible
from time to time into 28,571,429 pre-split shares of Common Stock of the
Company at the price of $.07 per share and 28,571,429 pre-split warrants
exercisable for three years at the price of $.07 per share, of which were only
partially converted in 2007, with the remaining warrants forfeited as of
December 31, 2009.




On
February 28, 2007, the Company sold $2,000,000 of 6% Senior Subordinated Secured
Convertible Notes convertible into 1,666,666  post- split shares of
the Company's common stock priced at $.24 each, and 833,000 post-split Warrants,
priced at $.24 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 $.24. These warrants mature three years from issuance and will expire
in February 2010, all of which 566,673  are outstanding as of
December 31, 2009. 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. 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 40,851,517.




Due to
the late registration of shares received in conversion of the Convertible Debt,
penalty shares were awarded and issued to convertible note holders. The total
number of penalty shares issued was 6,320,476.




Convertible
bonds at the carrying value, which approximated fair value consisted of the
following as of June 30, 2010:




Description
                  
                  June
      30, 2010December
      2006 6% Convertible Bonds
                  
                  $
                  50,000February
      2007 6% Convertible Bonds
                  
                  
                  -0-$
                  50,000




15




NOTE
8.   CONVERTIBLE BONDS, NOTES PAYABLE, BORROWINGS UNDER LINE OF
CREDIT, and SERIES A–D PREFERRED SHARES OF GEOS IP HOLDINGS (Series G Preferred
Shares discussed in Footnote Number 3 above)




On July
31, 2009, we offered to certain of our existing note holders and convertible
bond holders, the opportunity to exchange some or all of the principal, interest
and loan fees of all notes, including notes payable to related parties, which
included all accrued interest and related fees, (the “Debt”) for different
series of preferred stock of Geos IP Holdings.The issuance
price of the preferred stock of IP Holdings was $1.00 for every $1.00 of each
note being exchanged.  The Company exchanged an aggregate of
$5,598,385 of the debts into Geos IP Holdings Series A–D Preferred Stock, with a
majority of the remaining notes being repaid in cash. The outstanding balances
of convertible bonds and notes payable are $50,000 and $9,000, respectively, at
June 30, 2010 and December 31, 2009.




With
assistance from an independent third party, the Company determined the
initial fair value of the Series A-D Preferred shares to be $7,028,630.
Subsequently, $688,849 has been accreted for interest, plus dividends of
$333,547 for the six months ended June 30, 2010, and $574,041 and $277,955,
respectively as of December 31, 2009, resulting in a balance of $8,903,022 as of
June 30, 2010.





The final
mandatory redemption amount is $9,784,027 which encompasses additional charges
for each time period passing as follows:




July
      31, 2010
                  
                  $
                  114,808July
      31, 2011
                  
                  $
                  1,377,699





The
Series A–D Preferred Stock of Geos IP Holdings provides for an accruing dividend
of 12% per annum, and a special dividend for up to two years in the event that
the Preferred Stock has not been redeemed.




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. Redemption value approximates fair value at
December 31, 2009 due to the short period of time from issuance to the reporting
date.




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 for the year ended of December 31,
2009.




On
February 23, 2010, the Company issued a Drawdown Promissory Note (included in
the Consolidated Balance Sheets under “Borrowing under Line of Credit”) in an
amount up to an amended maximum of $2,600,000 (as subsequently amended, the
“Drawdown Note”). The Drawdown Note accrues interest at a rate of 12% per
annum and the principal and interest thereon is due and payable on the earlier
of (i) the closing on at least $5,000,000 of subscriptions for newly created
shares of Series I Preferred Stock of the Company; or (ii) August 23, 2010 (the
“Maturity Date”).  The note holder may convert all or any portion of
the principal balance of and/or accrued but unpaid interest on the Drawdown Note
into the securities we anticipate offering in a private placement of equity in
the form of  Preferred Stock and warrants, at a conversion price equal
to the purchase price paid for the Preferred Stock and warrants in the private
placement. The Drawdown Note requires the issuance of a warrant to
purchase 10,000 shares of Common Stock for each $100,000 drawdown thereunder at
a purchase price of $0.20 per share.  The term of each warrant is
three years from date of issuance. At June 30, 2010, $2.6 million was
outstanding. The carrying value approximate fair value as of June 30,
2010.




16




NOTE
9.  SERIES F CONVERTIBLE PREFERRED STOCK




During
2009, the Company issued Series F Convertible Preferred Stock, no par value (the
“Series F Preferred
Shares”). Each share of the Series F Preferred Shares is convertible at
the option of the holder into shares of our Common Stock, no par value. 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 Common Shares at a conversion price of
$0.50, resulting in 15,100,000 shares of Common Stock.  There have
been no conversions as of June 30, 2010.




The
Company has the option to redeem all or a portion of the outstanding Series F
Preferred Shares at $2,000 per share, for a total redemption price of
$15,100,000. 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 issuance of 7,550 shares of Series F Preferred shares as of
December 31, 2009, plus an additional 2,000 shares issued as of June 30, 2010,
7,570,000 warrants were also issued.  The proceeds of $7,550,000 were
allocated based on the relative fair values of the underlying shares and
warrants.  The value allocated to the multiple issuances during 2009
was $5,047,057 as of December 31, 2009. The Shares are shown as temporary equity
on the Consolidated Balance Sheets and is outside of stockholders’ equity
because such shares are contingently redeemable because payment of required
dividend is not within the control of the Company. The beneficial
conversion feature totaled $2,870,825, and was included in Common Stock, No Par,
as of December 31, 2009, and was recognized as a return on the Series F
Preferred Shares in the period of issuance because the Series F Preferred Shares
were immediately convertible.




The value
allocated to the warrants issued to investors, and warrants issued to pay
transaction costs was $2,502,943, and was included in Common Stock, no par, as
of December 31, 2009.  The warrants are exercisable at any time at
$.63, for a period of three years. As of June 30, 2010 there was no exercise of
warrants.




During
the six months ended June 30, 2010, and for the year ended December 31, 2009,
the Company accrued dividends of 6% totaling of $223,753 and $176,844,
respectively which are due semiannually and are included in accrued expenses on
the Consolidated Balance Sheets.




NOTE
10.  SERIES H CONVERTIBLE PREFERRED STOCK





During
April, 2010, Geos authorized 20,000 shares of Series H Convertible Preferred
Stock, no par value (the “ Series H Preferred Shares ”).
The Series H Preferred Shares rank pari passu with shares of the Company’s
Series F Convertible Preferred Stock and Series G Convertible Preferred Stock,
but otherwise rank senior to shares of all other series of Common Stock and
Preferred Stock of the Company with respect to dividends, distributions, and
payments upon liquidation, dissolution, and winding up of the
Company.




17




Each of
the Series H Preferred Shares is convertible at the option of the holder into
shares of our Common Stock, no par value (“Common Stock ”). 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 $0.20, subject to adjustment
as provided in the Certificate of Designations. Holders of Series H Preferred
Shares are entitled to vote on an as-converted basis with the holders of the
Common Stock, except as otherwise required by law or as specifically provided in
the Certificate of Designations. As further described in the Certificate of
Designations, the holders of Series H Preferred Shares are entitled to elect one
director to the Board of Directors.





The
Company has the option to redeem all or a portion of the outstanding Series H
Preferred Shares at $2,000 per share. Holders of Series H Preferred Shares also
have the option to require the Company to redeem their Series H 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 H
Preferred Shares are issued, and such failure or breach is not
cured.





In
connection with the issuance of 350 shares of Series H Preferred shares, 875,000
warrants were also issued.  The proceeds of $350,000 were allocated
based on the relative fair values of the underlying shares and
warrants.  The value allocated to the multiple issuances at date of
issuance was $232,492. The Shares are shown as temporary equity on the
Consolidated Balance Sheets and is outside of stockholders’ equity because such
shares are contingently redeemable because payment of required dividend is
not within the control of the Company. The beneficial conversion feature totaled
$117,508, and was included in Common Stock, No Par, as of June 30, 2010, and was
recognized as a return on the Series F Preferred Shares in the period of
issuance because the Preferred Stock was immediately convertible.




The value
allocated to the warrants issued to investors, and warrants issued to pay
transaction costs was $123,038, and was included in Common Stock, no par, as of
June 30, 2010.  The warrants are exercisable at any time at $.20, for
a period of three years. As of June 30, 2010, there was no exercise of
warrants.




During
the six months ended June 30, 2010, the Company accrued dividends of 6%
totaling approximately $3,000. The dividends are due semiannually are included
in accrued expenses on the Consolidated Balance Sheets.





NOTE
11.  COMMON STOCK AND STOCK OPTIONS AND WARRANTS




On May
14, 2009, the Company and Board of Directors approved a ten for one reverse
stock split.  As such, all Common Stock share prices and amounts have
been retroactively adjusted accordingly for all periods presented.




During
2004, the Company’s board of directors approved a stock option plan for its
officers, directors and certain key employees.  Generally, the options
vest over a period of three years. Compensation expense is based upon
straight-line amortization of the grant-date fair value over the implicit
vesting period of the underlying stock option. In accordance with ASC Topic No.
718 and No. 505, the fair value of each stock option grant was estimated on the
date of the grant, using the Black-Scholes option-pricing model.




The
Company granted additional stock options during the three months ended June 30,
2010 totaling 3,930,532 shares, which included 1,886,089 nonqualified options
which vested immediately.





The
Company also issued 1,065,000 stock warrants during the three months ended June
30, 2010, to certain investors, which vest upon issuance, and are accordingly
expensed, with expiration dates of three years. The warrant fair value was
determined by using the Black-Scholes option pricing model. Variables used in
the Black-Scholes option-pricing model include (1) risk-free interest rate
of .73%, (2) expected warrant life of 1.5 years, (3) expected
volatility of 213%, and (4) zero expected dividends.




18




Information
regarding stock options and warrants outstanding as of June 30, 2010 are
summarized below:




Number
      of
                    Shares
                  
                  
                  Weighted
                    Average
                    Exercise
                    PriceOutstanding
      at December 31, 2009
                  
                  
                  23,339,944
                  
                  
                  $
                  0.74Options
      Granted
                  
                  
                  -
                  
                  
                  
                  -Warrants
      Granted
                  
                  
                  90,000
                  
                  
                  
                  0.30Canceled
                  
                  
                  (1,809,482
                  )
                  
                  
                  (1.06
                  )Exercised
                  
                  
                  -
                  
                  
                  
                  -Outstanding
      at March 31, 2010
                  
                  
                  21,620,462
                  
                  
                  $
                  .73Options
      Granted
                  
                  
                  3,930,532
                  
                  
                  
                  0.20Warrants
      Granted
                  
                  
                  1,065,000
                  
                  
                  
                  0.20Canceled
                  
                  
                  (1,407,570
                  )
                  
                  
                  (1.12
                  )Exercised
                  
                  
                  -
                  
                  
                  
                  -Outstanding
      at June 30, 2010
                  
                  
                  25,208,424
                  
                  
                  
                  .63Exercisable
      at June 30, 2010
                  
                  
                  20,008,901
                  
                  
                  
                  .47





The
exercise price for options outstanding and exercisable at June 30, 2010 was as
follows:




Shares
                        
                        Weighted
                        
                        Weighted
                        
                        Shares
                        
                        WeightedUnderlying
                        
                        Average
                        
                        Average
                        
                        Underlying
                        
                        AverageRange
      of
                        
                        Options
                        
                        Remaining
                        
                        Exercise
                        
                        Options
                        
                        ExerciseExercise Prices
                        
                        Outstanding
                        
                        Contractual
      Life (Years)
                        
                        Price
                        
                        Exercisable
                        
                        Price$
      .01-$2.00
                        
                        
                        9,749,401
                        
                        
                        3.17
                        
                        $
                        0.57
                        
                        
                        4,549,878
                        
                        $
                        0.47




The
exercise price for warrants outstanding at June 30, 2010 was as
follows:




Shares
                            
                            Weighted
                            
                            Weighted
                            
                            Shares
                            
                            WeightedUnderlying
                            
                            Average
                            
                            Average
                            
                            Underlying
                            
                            AverageRange
      of
                            
                            Warrants
                            
                            Remaining
                            
                            Exercise
                            
                            Warrants
                            
                            ExerciseExercise Prices
                            
                            Outstanding
                            
                            Contractual
      Life (Years)
                            
                            Price
                            
                            Exercisable
                            
                            Price$
      .01-$1.00
                            
                            
                            15,459,023
                            
                            
                            2.13
                            
                            $
                            0.71
                            
                            
                            15,459,023
                            
                            $
                            0.71




During
the six months ended June 30, 2010, total compensation costs recognized in
income from stock options was $492,378, and is included in general and
administrative expenses on the Consolidated Statement of Operations. As of June
30, 2010, there was unrecognized compensation expense related to non-vested
stock option agreements of $4,197,483. The intrinsic value of options exercised
during six months ended June 30, 2010 is $0.





During
the six months ended June 30, 2010, total compensation costs recognized in
income from warrants issued was $193,222, and is included in general and
administrative expenses on the Consolidated Statement of Operations. As of June
30, 2010, there was not unrecognized compensation expense related to non-vested
warrants.





NOTE
12.  INCOME TAXES





For the
six months ended June 30, 2010, the Company had net losses from continuing
operations of $5.1 million, and $3.5 million from discontinued operations. No
benefit or provision for income taxes has been recorded due to the uncertainty
of the realization of any tax assets. At June 30, 2010, the Company has
accumulated net losses totaling approximately $65 million. The net operating
loss carry forwards will begin to expire in 2019 if not utilized. The Company
has recorded net operating loss carry forwards in each year since its inception
and through June 30, 2010. Based upon all available objective evidence,
including the Company’s loss history, management believes it is more likely than
not that the net deferred assets will not be fully realized. Therefore, the
Company has provided a valuation allowance against its deferred tax assets of
approximately $23 million.




19





NOTE
13.  COMMITTMENTS AND CONTINGENCIES




The
Company leases its office facilities in Southlake, Texas, Pleasanton California
and Shanghai, China under operating leases expiring in 2011 and
2012.




Total
rent expensed was $75,867 during the six months ended June 30,
2010.





Future
minimum lease obligations under all operating leases for each year ending
December 31, are as follows:




Remainder
      of 2010
                  
                  $
                  120,0522011
                  
                  $
                  189,6132012
                  
                  $
                  58,9472013
                  
                  $
                  -0-2014
      and thereafter
                  
                  $
                  -0-




NOTE
14. SEGMENT INFORMATION





During
the quarter ended June 30, 2010, the Company completed two acquisitions and is
currently evaluating the effect of these acquisitions on our segment
identification and reporting. The Company may identify segments based on product
and service offering and geographic regions.  Segments may include
Shoot It!, and Duo Guo.  Information on segments and the
reconciliation to earnings before income taxes have not been included for the
quarter as revenues and expenses related to continuing operations which are from
Shoot It! and Duo Guo were not significant.




NOTE
15.   SUBSEQUENT EVENTS





In July
2010, the Board of Directors authorized the creation of Series I Preferred
Stock, no par value per share (the “Series I Preferred Stock”). The shares are
part of an offering of up to $8,000,000 of Series I Preferred Stock and Warrants
( “Offering”). Separate from the Offering, the Company’s subsidiary, D Mobile,
Inc. a Delaware corporation (“D Mobile”), is making an offering of up to
$15,000,000 of its securities in a private placement (the “D Mobile
Offering”).  The Company received approximately $427,000 in proceeds
from subscription agreements related to the Series I in July 2010, of which
$100,000 was from a director of the Company.  In addition, another
director loaned the Company $150,000 to be repaid on the earlier of (i) the
receipt and acceptance of $5,000,000 in subscriptions under the D Mobile
Offering or (ii) September 30, 2010.





The
Company recently commenced a private placement and sold $350,000 of Series H
Convertible Preferred Stock of the Company (the “Series H Preferred Stock”) and
determined to stop sales under that private placement and offer the holder of
the Series H Preferred Stock the opportunity to exchange their outstanding
shares of Series H Preferred Stock and accrued but unpaid dividends on such
shares and warrants to purchase shares of Common Stock into shares of Series I
Preferred and Warrants on the terms provided for in the Offering. If all shares
of Series H Preferred Stock and related warrants are exchanged for shares of
Series I Preferred Stock and Warrants, then the Company will issue approximately
350 shares of Series I Preferred Stock and Warrants to purchase an additional
875,000 shares of Common Stock in addition to the shares of Series I Preferred
Stock and Warrants being issued in the Offering.





In
addition, the Company has agreed to grant to the holders of Series F Convertible
Preferred Stock of the Company (the “Series F Preferred Stock”) an opportunity
to exchange their outstanding shares of Series F Preferred Stock ($7,570,000 in
the aggregate) and accrued but unpaid dividends on such shares and warrants to
purchase shares of Common Stock issued to such holders in a previous offering of
the Series F Preferred Stock and warrants, into shares of Series I Preferred and
Warrants on the terms provided for in this Offering. If all shares of Series F
Preferred Stock and related warrants are exchanged for shares of Series I
Preferred Stock and Warrants, then the Company will issue approximately 8,000
shares of Series I Preferred Stock and Warrants to purchase an additional
20,000,000 shares of Common Stock in addition to the shares of Series I
Preferred Stock and Warrants being issued in the Offering.




20


Item 2 - Management’s Discussion and
Analysis of Financial Condition and Results of Operations




The
following discussion should be read in conjunction with the information
contained in our consolidated financial statements, including the notes thereto.
Statements regarding future economic performance, management’s plans and
objectives, and any statements concerning assumptions related to the foregoing
contained in Management’s Discussion and Analysis of Financial Condition and
Results of Operations constitute forward-looking statements. Certain factors,
which may cause actual results to vary materially from these forward-looking
statements, accompany such statements or appear in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2009 filed with the
Securities and Exchange Commission (the “SEC”) on May 7, 2010 (the
“Form 10-K”), including the factors disclosed under “Item 1A. Risk
Factors.”





Forward-Looking
Statements




This
Quarterly Report on Form 10-Q and the exhibits attached hereto contain certain
statements that constitute “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements concern our anticipated results and developments in our operations in
future periods, planned exploration and development of our properties, plans
related to our business and matters that may occur in the future. These
statements relate to analyses and other information that are based on forecasts
of future results, estimates of amounts not yet determinable and assumptions of
management. Any statements that express or involve discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance (often, but not always, using words or phrases
such as “expects” or “does not expect”, “is expected”, “anticipates” or “does
not anticipate”, “plans”, “estimates” or “intends”, or stating that certain
actions, events or results “may”, “could”, “would”, “might” or “will” be taken,
occur or be achieved) are not statements of historical fact and may be
forward-looking statements. There are a number of important factors that could
cause the results of the Company to differ materially from those indicated
herein. The cautionary statements made in this report should be read as being
applicable to all related forward-looking statements wherever they appear in
this report.




Overview




We have
continued to execute our plan of repositioning the Company as a mobile content
distribution provider. As part of that plan, we have discontinued our VoIP and
telephony business. This restructuring was approved by our Board of Directors on
June 17, 2010. This portion of our business is classified as discontinued
operations in the accompanying financial statements. Assets and related
liabilities which we believe are marketable are classified as held for sale. The
assets associated with our discontinued operations, including those held for
sale, have been evaluated and valued at the estimated fair market values with
any resulting impairment charges being reflected in the loss from discontinued
operations.





Our
products allow our customers to improve the experience and usefulness of their
mobile phones.  Our corporate headquarters is based in Southlake,
Texas.





As
previously discussed in the consolidated financial statements we acquired Shoot
It!, LLC, and D Mobile, Inc which expanded our product portfolio applications
and technologies for the global mobile communications market.  Since
the date of acquisition, we have included the financial results for both
companies in our results of operations.




D Mobile,
which operates under the brand name Duo Guo, is the primary, and we believe,
only legitimate retail channel for the discovery and download of licensed mobile
media content in China. D Mobile gives us a pervasive mobile applications and
content distribution platform to support our strategic plan. We have included
the results of operations for D Mobile since the date of acquisition in our
results of operations.





Our
products and services offer the end user the following benefits:




Shoot
It!




·
            Allows
      users to take a picture with the smartphone, create a personal message,
      and mail as a postcard to recipient;  21
  ·
            Delivery
      to any mailbox in North America, Western Europe, and
  Asia;





·
            Blends
      familiar postcard capability with new technology; and·
            Gives
      a tangible alternative to SMS or MMS
messaging.




Duo Guo




·
            Allows
      users to discover and download mobile applications and content through our
      retail kiosks;·
            Gives
      the user a simple and organized way to locate and purchase applications
      and content;




·
            Allows
      for expanded services for vendors in ticketing, couponing and advertising;
      and·
            We
      believe, currently, the only legitimate source for licensed, non-pirated
      content from many producers.




Our
management is focused upon executing our strategic plan of becoming a mobile
application, technology development and distribution company with global reach.
We will continue to introduce exciting and relevant device and geographic
agnostic products coupled with pervasive and strategic distribution solutions
which will position us to emerge as a leader in the global mobile solutions and
distribution market.




There can
be no assurances that such efforts will be successful. We may finance these new
business opportunities through a combination of equity and/or debt. If we
determine 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 our
existing shareholders. If we determine to finance these opportunities by
incurring debt, then such debt may not be available to us on favorable terms, if
at all.





Critical
Accounting Policies




Our
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”) for interim financial information and do not include all disclosures
required under GAAP for complete financial statements. Preparation of these
statements requires management to make judgments and estimates. Some accounting
policies have a significant impact on amounts reported in these financial
statements. For a summary of significant accounting policies and the means by
which we develop estimates thereon, see “Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in our 2009
Annual Report on Form 10-K.  During the six months ended June 30,
2010 the following were also identified as critical:





Business
Combinations




Pursuant
to ASC 805, “Business
Combinations” (“ASC 805”), the Company has used the acquisition method of
accounting. The acquisition method of accounting is used for all business
combinations where the acquirer is identified for each business combination. ASC
805 defines the acquirer as the entity that obtains control of one or more
businesses in the business combination and establishes the acquisition date as
the date that the acquirer achieves control. We will recognize separately from
goodwill, the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interests in an acquiree, generally at the acquisition date fair
value as defined by Topic 820, Fair Value Measurements. Goodwill as of the
acquisition date is measured as the excess of consideration transferred, which
is also generally measured at fair value, and the net of the acquisition date
amounts of the identifiable assets acquired and the liabilities
assumed.




The
acquisition method requires us to use significant estimates and assumptions,
including fair value estimates, as of the business combination date and to
refine those estimates, as necessary, during the measurement period (defined as
the period, not to exceed one year, in which we may adjust the provisional
amounts recognized for a business combination) in a manner that is prescribed in
Topic 805.





Information
regarding other significant accounting policies is included in the notes to our
consolidated financial statements in Item 8 of Part II of our Annual Report on
Form 10-K for the year ended December 31, 2009 and to the notes to the condensed
consolidated financial statements in this Quarterly Report on Form
10-Q.




22




Discussion
of operating results from continuing operations:





As the
Company acquired the operating businesses in the first quarter of 2010, the
relevant discussions are as follows:





Shoot It!
was not incorporated until April 2009, and thus the operations for the three and
six months ended June 30, 2010 is not deemed comparable.  However,
revenues have averaged approximately $2,900 per month for the most recent
quarter of 2010.  Related Cost of Sales has averaged approximately
$3,000 per month for the same period.





D Mobile
was not acquired until the first quarter of 2010 as well. However, revenues have
averaged approximately $4,900 per month for the most recent quarter of
2010.  Related cost of sales have averaged approximately $15,000 per
month for the same period, and general and administrative expenses related to
the China operations averaged $72,000 per month.





Total
corporate selling, general and administrative expenses increased during the six
month period ended June 30, 2010 over the prior year by approximately $1,200,000
primarily as a result of professional fees incurred by the Company for the
acquisition and audits of the two businesses acquired, and increase in salaries
in 2010 related to personnel additions.




Other
income/expenses increased from comparable periods due to the Private Placement
Proceeds and related interest accretions and dividend accruals for mandatorily
redeemable preferred shares.





Discussion
of discontinued operations:





As the
Company implemented a plan of restructuring during the second quarter of 2010,
the relevant discussion is as follows:





The
general and administrative expenses related to discontinued operations totaled
$2,377,423 for the six months ended June 30, 2010. These expenses, in
approximation, consisted primarily of salaries for $1,073,000, professional fees
of $152,000, contract labor of $188,000; travel $86,000, marketing $138,000 and
other administrative expenses of $740,423.





The above
expense as compared to the six months ended June 30, 2009 of $1,788,949, are
higher as a result of ramped up operations in 2010 versus 2009.





Liquidity





Cash
provided by continuing operations was $735,018 for the six month period
ended June 30, 2010 compared to cash provided by continuing operations of
$3,430,798 for the comparable period ended June 30, 2009. In 2009 the cash
provided is primarily related to the proceeds from the issuance of common stock
totaling $3,889,064 and proceeds from notes payable of $1,433,002, net of cash
used in operating activities from continuing operations of $1,771,000. In 2010,
cash used in operating activities from continuing operations was
$2,281,249.  Also, in 2010 $2,950,000 was provided from a line of
credit and subscription agreements for H Preferred Stock.





Cash used
in discontinued operations was $1,415,803 for the six month period ended June
30, 2010 compared to cash used in discontinued operations of $1,280,008 for the
comparable period ended June 30, 2009. The increase in use of cash is primarily
related to the increase in operating expenses in 2010.





During
the most recent quarter, the Company obtained $1,300,000 through additional
borrowings under an amended line of credit with advances of up to
$2,600,000.  The Company also raised $350,000 through the issuance of
Series H stock during the quarter ended June 30, 2010.





In
July 2010, the Company authorized Series I Preferred Stock, no par value per
share (the “Series I Preferred
Stock”). The shares are part of an offering of up to $8,000,000 of Series
I Preferred Stock and Warrants (“Offering”). Separate from the
Offering, the Company’s subsidiary, D Mobile, Inc. a Delaware corporation
(“D Mobile”), is making
an offering of up to $15,000,000 of its securities in a private placement (the
“D Mobile
Offering”).




23




Management
believes that new products it has in development, the potential for newly
identified business relationships coupled with new capital from sophisticated
investors, should allow the Company to achieve its goal of positive cash flow
within the next twelve months. 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.





The
Company has suffered ongoing losses from operations since its inception. These
losses, as well as the uncertain conditions that the Company faces relative to
its ongoing debt and equity fund-raising efforts, raise substantial doubt about
the company’s ability to continue as a going concern. Please refer to Note 1
Liquidity and Management Plans for further discussion regarding management’s
plans for funding the company’s operations.





Off-Balance
Sheet Arrangements




We have
no off-balance sheet arrangements.




Contractual
Obligations




The
Company has had no material changes to its contractual obligations as disclosed
in the Company’s Annual Report on Form 10-K, as amended, for the year ended
December 31, 2009.




Item 3 - Quantitative and Qualitative Disclosures About Market
Risk.




Not
Applicable.




Item
4 - Disclosure Controls and Procedures




Disclosure
Controls and Procedures




At the
end of the period 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 Rule 15d - 15(e) under the
Securities Exchange Act of 1934 (the “Exchange Act”)).  Based on that
evaluation the CEO and CFO have concluded that the Company's disclosure controls
and procedures are adequately designed and were 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 Interim CEO and Interim CFO, as appropriate, to allow for accurate and
timely decisions regarding required disclosure.




Changes
In Internal Control Over Financial Reporting




We have
implemented additional controls and procedures designed to ensure that the
disclosure provided by us meets the then current requirements of the applicable
filing made under the Exchange Act. To address our lack of sufficient accounting
technical expertise in prior periods, we retained additional accounting
technical expertise in April 2010. Other than these there have been no changes
in our internal control over financial reporting during the second quarter ended
June 30, 2010, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.




24




PART
II - OTHER INFORMATION





Item 1 - Legal Proceedings




Other
than as described below, we know of no material, existing or pending legal
proceedings against us, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial stockholder
of more than 5% of our voting securities, or any associate of such persons, is
an adverse party or has a material interest adverse to our company.




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 i2Telecom (DE) (now known as Geos (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 consolidated 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”.




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, among other
things, that i2Telecom (DE) (now known as Geos (DE)) and certain of its
affiliates and representatives deceived the plaintiffs into selling SuperCaller
to the Company.  Beginning on January 11, 2010, the case was heard by
a jury in the Superior Court.  On February 23, 2010, the court ruled
that the Company was entitled to judgment after receiving a jury verdict in
favor of the defendants on all claims in the litigation.  On March 5,
2010, the plaintiffs filed a motion for judgment notwithstanding the verdict or
in the alternative, judgment for constructive trust, or in further alternative,
motion for a new trial. Those motions were denied by the Court.  The
Plaintiffs have filed a notice of appeal.  The Company intends to
continue to vigorously defend the matter.




On May
11, 2009, we commenced litigation against defendants MagicJack, L.P., SJ Labs,
Inc., YMAX Corporation and Daniel Borislow (the “Federal Court
Litigation”).  On June 9, 2009, the defendant’s claims were 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.  We
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, we 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”).  We allege that the Defendants: (i) acquired our
intellectual property pursuant to contracts preserving its confidentiality;
(ii) have improperly used our 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. On July 12, 2010 the parties entered into a confidential
settlement agreement and mutual release that resolved all the issues between the
parties and ended the litigation.





Item
1A - 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 report 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.




25




Current
and future acquisitions and alliances may expose us to new risks, or cause us to
fail to perform as expected. Conversely, our failure to complete acquisitions,
enter into suitable alliances or integrate acquired companies may hinder our
growth and future profitability.




One of
our key strategies is to grow through acquisitions, joint ventures, and other
strategic alliances, particularly with respect to our retail operations and
attainment of applications for mobile users. Joint ventures and strategic
alliances may expose us to operational, regulatory, and market risk as well as
risks associated with additional capital requirements. In addition, we may not
be able to identify suitable future acquisition candidates or alliance
partners.  Even if we identify suitable candidates or partners, we may
be unable to complete and acquisition or alliance on commercially acceptable
terms. If we fail to identify appropriate candidates or complete desired
acquisitions, we may not be able to implement its growth strategies effectively
or efficiently. In addition, our acquisition and integration process may divert
management from operating our existing business, negatively affecting our
earnings and revenues.




In
addition, our ability to successfully integrate the acquired companies or their
operations may be adversely affected by a number of factors, including diversion
of management’s attention and difficulties in retaining clients of the acquired
companies. Furthermore, any acquired companies may not perform as expected for
various reasons, including legislative or regulatory changes or the loss of key
customers and personnel.  If we are not able to realize the benefits
envisioned from such acquisitions, joint ventures, or other strategic alliances,
‘our overall profitability and growth plans may be hindered.




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.





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




We had
losses and an accumulated deficit at June 30, 2010. 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 report 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 and
might have to cease operations. Our independent auditors have added an
explanatory paragraph in their report expressing substantial doubt about the
Company’s ability to continue as a going concern.




We have been able to meet our
operating requirement by receiving net proceeds of $350,000 related to our
Series H Preferred financing and utilizing an additional $1.3 million of
the $ 2.6 million Drawdown loan during the quarter ended June 30,
2010.The Company received approximately $427,000 in proceeds from
subscription agreements related to the Series I in July 2010, of which $100,000
was from a director of the Company.  In addition, another director
loaned the Company $150,000 to be repaid on the earlier of (i) receipt by the
Company of $5,000,000 in subscription agreements or (ii) September 30,
2010.We will need to
receive additional capital to continue our operations into
2010.




Until we
reach and maintain positive cash flow, which management believes will be in the
third quarter of 2011, we will be required to raise additional capital to fund
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.




26




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 January 1, 2009 to
June 30, 2010, 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
$0.09 both on a post-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 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 stock are sporadically or “thinly-traded” on the OTCBB, meaning that the
number of persons interested in purchasing our common stock 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 stock 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 stock 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 stock may
not be indicative of the price that will prevail in the trading market. You may
be unable to sell your common stock at or above your purchase price, which may
result in substantial losses to you.




The
market for our common stock 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 stock 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
stock 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 stock, regardless of our
operating performance. We cannot make any predictions or projections as to what
the prevailing market price for our common stock will be at any time, including
as to whether our common stock will sustain their current market prices, or as
to what effect, if any, that the sale of shares or the availability of common
stock for sale at any time will have on the prevailing market
price.




27




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




As
discussed in the preceding risk factor, the market for our common stock 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 stock and increase your transaction costs to sell those
shares.




As
long as the trading price of our common stock is below $5 per share, the
open-market trading of our common stock 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 stock, and may result in decreased liquidity
for our common stock 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.




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.




28




Our
executive officers have been employed by the Company 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, our Senior Vice President of Worldwide Sales took
office on June 23, 2009 and our Chief Executive Officer of our Asia operations
took office on March 7, 2010 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, design, contract negotiation,
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, design, contract negotiation, marketing and finance. Competition
for qualified personnel is intense and there are a limited number of persons
with knowledge of and experience in the content acquisition and
billboard/electronic media advertising disciplines. 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.




Risk
Related to doing business in the Peoples Republic of China.




We
acquired D Mobile in March, 2010.  Mobile’s operations are primarily
located in the Peoples Republic of China (“PRC”). Accordingly, our
business, results of operations, financial condition and prospects are subject
to a significant degree to economic, political, and legal conditions in China.
China’s economy differs for the economies of developed countries in many
respects, including with respect to government regulation and control of foreign
exchange, the level of development, growth rate and the allocation of
resources.




While the
PRC economy has experienced significant growth in the past 20 years, growth has
been uneven across different regions and economic sectors. The PRC government
has implemented certain measures to encourage economic development and guide the
allocation of resources. While some of these measures benefit the PRC economy
generally, they may also negatively affect us. For example, our business,
financial condition and results of operations may be adversely affected by
government control over capital investments of changes in tax regulations
applicable to us.




The PRC
economy has been transitioning from a planned economy to a more market-oriented
economy. Although the PRC government has implemented measures since the late
1970’s emphasizing market-oriented reforms, the reduction of state ownership of
productive assets and improved corporate governance, the PRC government still
owns a substantial portion of the productive assets in China and continues to
play a significant role in regulating industrial development. In addition, the
PRC government exercises significant control over China’s economic growth by
controlling the allocation of resources and payment of foreign
currency-denominated obligations, setting monetary policy and giving
preferential treatment to particular industries or companies.




In late
2003, the PRC government implemented a number of measures, such as raising bank
reserves against deposit rates and placing additional limitation on the ability
of commercial banks to make loans and raise interest rates, in an attempt to
slow down specific segments of China’s economy that the government believed to
be overheating. In 2009, however, in response to the world economic crisis, the
PRC government cut interest rates and announced a stimulus plan in an attempt to
help sustain growth. These actions, as well as future actions and policies of
the PRC government, could materially affect our liquidity, access to capital,
financial results as well as our ability to operate our business.




29




Fluctuation
in the value of the Chinese Yuan (Renminbi, or RMB) may have a material adverse
effect on the value of your investment.




We
acquired D Mobile in March, 2010.  D Mobiles operations are primarily
located in the PRC.  The value of the RMB against the U.S. Dollar and
other currencies may fluctuate and is affected by, among other things, changes
in political and economic conditions. On July 21, 2005 the PRC government
changed its decade-old policy of pegging the value of the RMB to the U.S.
dollar.  Under the current policy, the RMB has been permitted to
fluctuate within a narrow and managed band against a basket of foreign
currencies. The change in the policy has resulted in an approximate 18.8%
appreciation in the RMB against the U.S. dollar between July 21, 2005 and April
9, 2010. While the international reaction to the RMB revaluation has generally
been positive, there remains significant international pressure on the PRC
government to adopt an even more flexible currency policy, which could result in
a further and more significant appreciation of the RMB against the U.S.
dollar.




Substantially,
all of D- Mobile’s revenues and cost are denominated in the RMB, and a
significant portion of Mobile’s financial assets are also denominated in the
RMB. Any significant revaluation of the RMB could materially and adversely
affect Mobile’s cash flows, revenues, earnings and financial position. Any
fluctuations of the exchange rate between the RMB and U.S. dollar could also
result in foreign currency translation losses for financial reporting
purposes.




Uncertainties
with respect to the PRC legal system could adversely affect us.




We
conduct our business operations in China primarily through its D Mobile
subsidiary which operates under the Duo Guo brand. Our operations in China are
governed by the PRC laws and regulations. Our operating subsidiaries are
generally subject to laws and regulations applicable to wholly owned
foreign-owned enterprises. The PRC legal system is principally based on
statutes. Prior court decisions may be cited for reference but typically have
limited precedential value




Since
1979, PRC legislation and regulations have significantly enhanced the
protections afforded to foreign investments in China.  However, China
has not developed a fully integrated legal system, and recently enacted laws and
regulations may not sufficiently cover all aspects of economic activities in
China. In particular, because these laws and regulations are relatively new, and
because of the limited volume of published decisions (and the non binding nature
of such decisions), the interpretation and enforcement of these laws and
regulations raise uncertainties. In addition, the PRC legal system is based in
part of the government policies and internal rules (some of which are not
published on a timely basis or at all) that may have retroactive effect. As a
result, we may not be aware of its violation of these policies and rules until
after a violation occurs. In addition, any litigation in China may be protracted
and result in substantial cost and diversion of resources and management
attention.




Contract
drafting, interpretation and enforcement in China involve significant
uncertainty.




We,
through our D Mobile subsidiary, have entered into numerous contracts governed
by the PRC law, many of which are material to our business. Compared to
contracts in the United States, contracts governed by the PRC law tend to
contain less detail and are not as comprehensive in defining contracting
parties’ rights and obligations. As a result, contracts in China are more
vulnerable to disputes and legal challenges. In addition, contract
interpretation and enforcement in China are not as developed as in the United
States, and the result of any contract dispute is subject to significant
uncertainties. Therefore, we may be subject to disputes under its material
contracts, and if such disputes arise, we cannot assure you that we will
prevail. Due to the materially of certain contracts to our business, any
disputes involving such contracts, even without merit, may materially and
adversely affect our reputation and business.




Changes
in PRC laws and regulations on labor and employee benefits may adversely affect
our business and results of operations.




30




As a
result of the D Mobile acquisition, Geos will be conducting a significant
portion of its business in China, which will be subject to PRC laws and
regulations on labor and employee benefits. In recent years, the PRC government
has implemented policies to strengthen the protection of employees and obligate
employers to provide more benefits to their employees. In addition, an
employment contract law came into effect in China on January 1, 2008 and its
implementation regulation came into effect on September 18, 2008. The PRC
employment contract law and related legislation required more benefits to be
provided to employees, such as an increase in pay or compensation for
termination of employment contracts. As a result, employers incurred higher
labor cost.  If additional employment and labor laws are brought to
law, additional labor cost may be incurred and could have an adverse impact on
Geos’ business and results of operations.




The continued growth in the use of
Smart Phones and mobile devices as a medium for communications, business and
entertainment is uncertain. If this growth does not continue, our business and
financial condition could be materially adversely affected.




The
continued market acceptance of the use of Smart Phones and other mobile
computing/communication devices as a medium for communication, business and
entertainment 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 Smart Phone or other mobile devices as a medium for
communication, business and entertainment telephone communications. There can be
no assurance that the number of consumers using Smart Phones or other mobile
devices  will grow. If use of  Smart Phones or other mobile
devices for communication, business and entertainment   does not
continue to grow, our business and financial condition could be materially
adversely affected.




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




We rely
on content 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 content we need on acceptable
commercial terms, then our business, financial condition and results of
operations will be materially and adversely affected.




Products
and services like the ones we offer change rapidly and therefore, we must
continually improve them. However, our need to invest in distribution platform
design, functionality, and in securing additional content licenses may prevent
us from ever being profitable.




Services
and products like the ones we offer are continually upgraded in an effort to
make them work faster, function easier for the user, provide aesthetically
pleasing look and feel and provide more options. Our industry is characterized
by the need for continued investment content acquisition and in design of
distribution platforms.  If we fail to invest sufficiently in these, ,
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 our distribution platform design,
functionality, and in securing additional content licenses  will cause
our operating costs to increase. This could prevent us from ever achieving
profitability.




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.




From our
previous business operations in the telephony and VoIP technologies, we have six
issued patents and thirteen pending patent applications related to embedded
software technology and methods of use. There can be no assurance that these
pending patents will be issued, or what the scope of the allowed claims will be
issued. 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.




31




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.




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.




Our
strategic plan includes increases in 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.




32




We were
late in filing this Annual Report, and may be unable to timely file periodic
reports in the future.  We were unable to timely file this Annual Report,
and may continue to be unable to timely file our annual and quarterly periodic
reports with the SEC in the future.  Additional failures to timely
file periodic reports could impair our eligibility to have our shares listed on
the OTC Bulletin Board, as well as delay our eligibility to register our
securities on Form S-3.




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.




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 mobile content distribution is highly competitive, and rapidly
changing. In addition to intense competition for distribution of movies, and
music, we also face competition from gaming, ring tones, and other content
providers.   In the kiosk based distribution arena, there is one
similar concept called MOD Systems out of Seattle.  They are placing 57
kiosks in 35 stores located in US airports.  In addition, there are many
segment competitors of which include some with Kiosk/Vending Machine based
solution and some with web based offerings.  An attribute of these
competitors is they are focused on a specific segment such as movies, music, or
games and they usually have many titles.  For example in the movie and
music space, Redbox rents movies and TV shows from approximately 22,400 vending
machine style kiosks. Their revenue is unknown as it is a subsidiary of Coin
Star which has $1.2B annual revenue. NCR Corporation has rolled out 6500
Blockbuster Express kiosks in Safeway and convenience stores like Quik
Trip, and has additional plans to roll out 10,000 kiosks this year that are
similar in style to Redbox.  In the gaming arena, Game Stop, who has 6,450
stores worldwide has entered the kiosk space but are only selling digital
add-ons and upgrades for games.





Other
peripheral players include Netflix which delivers movies via mail or streams
them to a TV or computer.





In
addition, there are other “cloud” services where you can stream or download
content to your device.  These charge a monthly subscription.  For
music you have Spotify, MOG, Napster, Rdio, Pandora,
Rhapsody.





Another
area of competition comes from companies like iTunes, Amazon, and Wal-Mart where
you mainly buy content versus rent.  iTunes also has a far vaster digital
library that includes TV shows, apps, games, movies, books, and
ringtones.





Redbox,
Netflix, and iTunes dominate their respective segments in the content
distribution area.




33




Item
2 - Unregistered Sales of Equity Securities and Use of Proceeds




In April 2010, we issued (i) 350 shares of Series H Convertible
Preferred Stock and (ii) warrants (the “Warrants”) to purchase 875,000 shares of
Common Stock, for a total of $350,000 in cash pursuant to subscription
agreements entered into between Geos and two individual investors. The Warrants
have a term of three years and an exercise price of $0.25 per share, and provide
for cashless exercise.


Pursuant
to the Drawdown Note, as referenced in Note 8 to the financial statements
included in Part I of this report and described further under Item 5 below, on
May 21, 2010, we issued a warrant (the “Drawdown Warrant”) for the purchase of
an additional 60,000 shares of Common Stock. The Drawdown Warrant has a term of
three years and an exercise price of $0.20 per share, and provides for cashless
exercise.


The sales
of the above securities were not registered under the Securities Act
of 1933, as amended (the “Act”), in reliance on the private offering exemption
from registration provided by Section 4(2) of the Act.







Item
3 - Defaults Upon Senior Securities





None




Item
4 – Reserved




None




Item
5 ­­– Other Information




Amendment
and Restatement of Drawdown Note





As
referenced in Note 8 to the financial statements included in Part I of this
report, on May 21, 2010, the Drawdown Note was amended and restated to provide
that in each of the written requests from the Company to the note holder (a
“Drawdown Request”), the Drawdown Request must state the purpose for with the
proceeds for such drawdown will be utilized, in addition to stating the amount
to be drawn down. Each Drawdown Request is now subject to the note holder’s sole
and absolute discretion, without a maximum amount. The proceeds of any approved
Drawdown Request may only be used for the purpose(s) set forth in such approved
Drawdown Request.  As amended, the Drawdown Note accrues interest at a
rate of 12% per annum and the principal and interest thereon is due and payable
on the earlier of (i) the closing on at least $5,000,000 of subscriptions for
newly created shares of Series I Preferred Stock of the Company; or (ii) August
23, 2010.  The note holder may convert all or any portion of the
principal balance of and/or accrued but unpaid interest on the Drawdown Note
into the securities we anticipate offering in a private placement of equity in
the form of Preferred Stock and warrants, at a conversion price equal to the
purchase price paid for the Preferred Stock and warrants in the private
placement.





Authorization
of Series I Preferred Stock





Effective
August 12, 2010, we filed a Certificate of Designations of Rights and
Preferences of Preferred Stock Series I (the “Certificate of Designations”),
which designated 8,000 shares of Preferred Stock Series I, no par value (the
“Series I Preferred Shares”).





The
Series I Preferred Shares rank pari passu with shares of the Company’s Series F
Convertible Preferred Stock, Series G Convertible Preferred Stock and Series H
Preferred Stock, but otherwise rank senior to shares of all other series of
Common Stock and Preferred Stock of the Company with respect to dividends,
distributions, and payments upon liquidation, dissolution, and winding up of the
Company.





Each of
the Series I Preferred Shares is convertible at the option of the holder into
shares of our Common Stock. The number of shares of Common Stock issuable upon
conversion is determined by dividing the stated value, or $1,000, by a
conversion price (based, in part, on a ten-day dollar volume-weighted average of
the trading price of our Common Stock), which may range from $0.10 to $0.20 per
share and is subject to further adjustment as provided in the Certificate of
Designations. Holders of Series I Preferred Shares are entitled to vote on an
as-converted basis with the holders of the Common Stock, except as otherwise
required by law or as specifically provided in the Certificate of Designations.
As further described in the Certificate of Designations, the holders of Series I
Preferred Shares are entitled to elect one director to the Board of
Directors.




34




The
Company has the option to redeem all or a portion of the outstanding Series I
Preferred Shares at $2,000 per share. Holders of Series I Preferred Shares also
have the option to require the Company to redeem their Series I 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 I
Preferred Shares are issued, and such failure or breach is not
cured.





The
foregoing description of the Series I Preferred Shares is qualified in its
entirety by reference to theCertificate of Designations
filed herewith and incorporated herein by reference.





2010
Annual Meeting of Shareholders





Our 2010
annual shareholders’ meeting will be held on Wednesday, October 6, 2010. Because
the date of the 2010 annual shareholders’ meeting is more than 30 days
after the anniversary of the 2009 annual shareholders’ meeting, in accordance
with Rule 14a-8 under the Exchange Act, shareholder proposals that are
intended to be presented by shareholders at our 2010 annual meeting of
shareholders must be received at our principal executive offices by
August 20, 2010, which we consider to be a reasonable time before we begin
to print and send our proxy materials.




Item
6 – Exhibits




Exhibit
      No.
              
              Exhibit
              
              Method
      of Filing2.1
              
              Agreement
      and Plan of Merger by and among Geos Communications, Inc., Duo Guo
      Acquisition, Inc., Jonathan Serbin and D Mobile, Inc.
              
              Incorporated
      by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K
      filed on February 19, 20102.2
              
              Agreement
      and Plan of Merger dated as of February 19, 2010 by and among Geos
      Communications, Inc., Shoot It! Acquisition, Inc., Shoot It!, LLC and
      certain security holders of Shoot It!, LLC
              
              Incorporated
      by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K
      filed on February 25, 20102.3
              
              First
      Amendment to Agreement and Plan of Merger by and among Geos
      Communications, Inc., Duo Guo Acquisition, Inc., Jonathan Serbin and D
      Mobile, Inc. dated as of March 1, 2010
              
              Incorporated
      by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K
      filed on March 11, 20103.1
              
              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, 20033.2
              
              Bylaws
              
              Incorporated
      by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-KSB
      for the year ended December 31, 20033.3
              
              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, 20043.4
              
              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
  35
  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, 20053.6
              
              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, 20063.7
              
              Amendment
      to the Company’s Articles of Incorporation filed July 13,
    2007
              
              Incorporated
      by reference to Exhibit 3.7 to the Company’s Quarterly Report on Form 10-Q
      for the quarter ended September 30, 2009




36





Exhibit
      No.
            
            Exhibit
            
            Method
      of Filing




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, 20093.9
              
              Amendment
      to the Company’s Articles of Incorporation filed May 11,
    2009
              
              Incorporated
      by reference to Exhibit 3.9 to the Company’s Quarterly Report on Form 10-Q
      for the quarter ended September 30, 20093.10
              
              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, 20093.11
              
              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, 20093.12
              
              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, 20093.13
              
              Certificate
      of Designations of Rights and Preferences of Series G Convertible
      Preferred Stock
              
              Incorporated
      by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
      filed on February 19, 20103.14
              
              Amendment
      to Bylaws, dated February 12, 2010
              
              Incorporated
      by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K
      filed on February 19, 20103.15
              
              Certificate
      of Designations of Rights and Preferences of Series H Convertible
      Preferred Stock
              
              Incorporated
      by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
      filed on May 10, 20103.16
              
              Certificate
      of Designations of Rights and Preferences of Preferred Stock Series
      I
              
              Filed
      herewith4.1
              
              Amended
      and Restated 2004 Stock Incentive Plan
              
              Incorporated
      by reference to Exhibit 4.1 to the Company’s Post-Effective Amendment No.
      3 to Form S-8 Registration Statement filed June 25,
20094.2
              
              2009
      Omnibus Long Term Incentive Plan
              
              Incorporated
      by reference to Exhibit 4.1 to the Company’s Form S-8 Registration
      Statement filed January 8, 201010.1
              
              Amended
      and Restated Drawdown Promissory Note issued to Butterfield Family Trust
      U/A/D 1/12/99 dated May 21, 2010
              
              Filed
      herewith31.1
              
              Rule
      13a-14(a)/15d-14(a) Certification of the Company’s Principal Executive
      Officer
              
              Filed
      herewith
  37
  Exhibit
      No.
            
            Exhibit
            
            Method
      of Filing31.2
            
            Rule
      13a-14(a)/15d-14(a) Certification of the Company’s Principal Financial
      Officer
            
            Filed
      herewith32.1
            
            Section
      1350 Certification of the Company’s Principal Executive
      Officer
            
            Filed
      herewith32.2
            
            Section
      1350 Certification of the Company’s Principal Financial
      Officer
            
            Filed
      herewith








































38




SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




GEOS
      COMMUNICATIONS, INC.By:
              /s/
      Andrew L. BermanAndrew
      L. BermanChief
      Executive OfficerDate:
              August
      13, 2010By:
              /s/
      Richard H. RobersonRichard
      H. RobersonChief
      Executive OfficerDate:
              August
      13, 2010





39