UNITED
STATES




SECURITIES
AND EXCHANGE COMMISSION




Washington,
D.C. 20549




FORM
10-Q/A




(Amendment
No. 1)




(Mark
One)




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




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




Commission
File No. 0-27704




Geos
Communications, Inc.




(Exact
name of registrant as specified in it charter)




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





430 N
Carroll Ave


Suite
120


Southlake,
TX 76092


(Address
of principal executive offices)




(817)-240-0200


(Registrant’s
telephone number, including area code)




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




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




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




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




APPLICABLE
ONLY TO CORPORATE ISSUERS:




Indicate
the number of shares outstanding of each issuer’s classes of common stock, as of
the latest practicable date: 28,854,510 issued and outstanding as of August
12, 2009. The total number of shares are post-split effective May 14, 2009
whereby a 1:10 reverse split occurred.





GEOS
COMMUNICATIONS, INC.




TABLE
OF CONTENTS




TO
QUARTERLY REPORT ON FORM 10-Q/A


FOR
PERIOD ENDED JUNE 30, 2009




PART
      I.
                FINANCIAL
      INFORMATION
                1Item
      1.
                FINANCIAL
      STATEMENTS
                1Item
      2.
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.
                15Item
      3.
                QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                21Item
      4.
                CONTROLS
      AND PROCEDURES.
                21PART
      II.
                OTHER
      INFORMATION
                22Item
      1.
                LEGAL
      PROCEEDINGS
                22Item
      1A.
                RISK
      FACTORS
                23Item
      2.
                UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
                30Item
      3.
                DEFAULTS
      UPON SENIOR SECURITIES
                31Item
      4.
                SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                31Item
      5.
                OTHER
      INFORMATION
                32Item
      6.
                EXHIBITS
                33





This
Amendment No. 1 on Form 10-Q/A is being filed to amend our quarterly report on
Form 10-Q for the fiscal quarter ended June 30, 2009, as filed with the
Securities and Exchange Commission (the “Commission”) on August 14, 2009 to
amend our financial statements for the quarterly period ended June 30, 2009, and
amend Item 4, "Controls and Procedures."





In connection with
the Company’s audit and year end accounting procedures, management and the
Company’s Board of Directors determined that there were accounting errors
related to stock option and warrant expense and accounting for the value
of  Series F Preferred Shares And the associated warrants and
beneficial conversion feature.





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





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


i


PART
I.               FINANCIAL
INFORMATION




Item
1.                  FINANCIAL
STATEMENTS




i2
TELECOM INTERNATIONAL, INC.




CONSOLIDATED
BALANCE SHEETS


(Unaudited)




June 30,
                                      2009
                                    
                                    
                                    December
                                      31, 2008RestatedCurrent
      Assets:Cash
                                    
                                    $
                                    2,153,435
                                    
                                    
                                    $
                                    2,645Notes
      Receivable
                                    
                                    
                                    125,000
                                    
                                    
                                    
                                    0Inventories
                                    
                                    
                                    187,277
                                    
                                    
                                    
                                    187,607Prepaid
      Expenses and Other Current Assets
                                    
                                    
                                    86,556
                                    
                                    
                                    
                                    213,059Total
      Current Assets
                                    
                                    
                                    2,552,268
                                    
                                    
                                    
                                    403,311Property
      and Equipment, Net
                                    
                                    
                                    1,146,698
                                    
                                    
                                    
                                    1,253,074Other
      Assets:Intangible
      Assets
                                    
                                    
                                    2,615,146
                                    
                                    
                                    
                                    2,788,947Deposits
                                    
                                    
                                    38,840
                                    
                                    
                                    
                                    38,840Total
      Other Assets
                                    
                                    
                                    2,653,986
                                    
                                    
                                    
                                    2,827,787Total
      Assets
                                    
                                    $
                                    6,352,952
                                    
                                    
                                    $
                                    4,484,172Current
      Liabilities:Accounts
      Payable and Accrued Expenses
                                    
                                    $
                                    2,265,890
                                    
                                    
                                    $
                                    2,399,660Deferred
      Revenue
                                    
                                    
                                    25,985
                                    
                                    
                                    
                                    25,985Convertible
      Bonds
                                    
                                    
                                    100,000
                                    
                                    
                                    
                                    100,000Notes
      Payable-Current
                                    
                                    
                                    4,649,105
                                    
                                    
                                    
                                    3,356,014Total
      Current Liabilities and Total Liabilities
                                    
                                    
                                    7,040,980
                                    
                                    
                                    
                                    5,881,659Series
      F Convertible Preferred Shares, 5,000,000 Shares Authorized, and 7,550
      shares Issued and Outstanding
                                    
                                    
                                    2,339,695
                                    
                                    
                                    
                                    0Shareholders’
      Equity (Deficit)Common
      Stock, No Par Value, 500,000,000 Shares Authorized, 28,829,966 Shares and
      27,278,560 Shares Issued and Outstanding, respectively
                                    
                                    
                                    36,665,604
                                    
                                    
                                    
                                    35,756,541Additional
      Paid-In Capital
                                    
                                    
                                    6,801,560
                                    
                                    
                                    
                                    3,100,500Accumulated
      Deficit
                                    
                                    
                                    (46,494,887
                                    )
                                    
                                    
                                    (40,254,528
                                    )Total
      Shareholders’ Equity (Deficit)
                                    
                                    
                                    (3,027,723
                                    )
                                    
                                    
                                    (1,397,487
                                    )Total
      Liabilities and Shareholders’ Equity (Deficit)
                                    
                                    $
                                    6,352,952
                                    
                                    
                                    $
                                    4,484,172


1


i2
TELECOM INTERNATIONAL, INC.




CONSOLIDATED
STATEMENT OF OPERATIONS




(Unaudited)







For the Three
                              Months Ended
                              June 30, 2009
                            
                            
                            For the Three
                              Months Ended
                              June 30, 2008
                            
                            
                            For the Six
                              Months Ended
                              June 30, 2009
                            
                            
                            For the Six
                              Months Ended
                              June 30, 2008Restated
                            
                            
                            
                            
                            
                            RestatedRevenue
                            
                            $
                            82,428
                            
                            
                            $
                            162,727
                            
                            
                            $
                            214,570
                            
                            
                            $
                            320,183Cost of Revenue
                            
                            
                            67,770
                            
                            
                            
                            188,685
                            
                            
                            
                            193,822
                            
                            
                            
                            370,922Gross
      Profit (Loss)
                            
                            
                            14,658
                            
                            
                            
                            (25,958
                            )
                            
                            
                            20,748
                            
                            
                            
                            (50,739
                            )General
      and Administrative Expenses
                            
                            
                            2,204,527
                            
                            
                            
                            1,583,912
                            
                            
                            
                            4,466,280
                            
                            
                            
                            2,635,873Loss
      From Operations
                            
                            
                            (2,189,869
                            )
                            
                            
                            (1,609,870
                            )
                            
                            
                            (4,445,532
                            )
                            
                            
                            (2,686,612
                            )Other
      Income (Expense)Interest
      Income
                            
                            
                            1,474
                            
                            
                            
                            0
                            
                            
                            
                            1,474
                            
                            
                            
                            0Interest
      Expense
                            
                            
                            (360,057
                            )
                            
                            
                            (652,817
                            )
                            
                            
                            (474,051
                            )
                            
                            
                            (773,469
                            )Gain
      on Forbearance of Debt
                            
                            
                            112,536
                            
                            
                            
                            2,190
                            
                            
                            
                            112,536
                            
                            
                            
                            2,190Gain
      on Sale of Technology
                            
                            
                            0
                            
                            
                            
                            5,193,620
                            
                            
                            
                            0
                            
                            
                            
                            5,193,620Total
      Other Income (Expense)
                            
                            
                            (246,047
                            )
                            
                            
                            4,542,993
                            
                            
                            
                            (360,041
                            )
                            
                            
                            4,422,341Net
      Income (Loss)
                            
                            $
                            (2,435,916
                            )
                            
                            $
                            2,933,123
                            
                            
                            $
                            (4,805,573
                            )
                            
                            $
                            1,735,729Series
      F Preferred Stock dividend for beneficial conversion
    feature
                            
                            
                            (2,100,566
                            )
                            
                            
                            (6,000
                            )
                            
                            
                            (2,100,566
                            )
                            
                            
                            (12,000
                            )Net
      Income (Loss) Available to Common Shareholders
                            
                            $
                            (4,536,482
                            )
                            
                            $
                            2,927,123
                            
                            
                            $
                            (6,906,139
                            )
                            
                            $
                            1,723,729Weighted
      Average Common Shares:Basic
                            
                            
                            28,558,566
                            
                            
                            
                            18,541,637
                            
                            
                            
                            27,961,279
                            
                            
                            
                            18,619,891Basic
      Earnings Per Common Share:
                            
                            $
                            (.16
                            )
                            
                            $
                            .16
                            
                            
                            $
                            (.25
                            )
                            
                            $
                            .09Fully
      Diluted
                            
                            
                            (.16
                            )
                            
                            
                            23,329,480
                            
                            
                            
                            (.25
                            )
                            
                            
                            24,226,960Fully
      Diluted Per Common Share:
                            
                            $
                            (.16
                            )
                            
                            $
                            .13
                            
                            
                            $
                            (.25
                            )
                            
                            $
                            .07


2


i2
TELECOM INTERNATIONAL, INC.




CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)




For the Six
                              Months Ended
                              June 30, 2009
                            
                            
                            For the Six Months
                              Ended June 30,
                              2008RestatedCash
      Flows From OperationsNet
      Loss From Operations
                            
                            $
                            (4,805,573
                            )
                            
                            $
                            1,735,729Adjustments
      to Reconcile Net Income to cashDepreciation
      and amortization
                            
                            
                            378,489
                            
                            
                            
                            318,641Amortization
      of Loan Fees
                            
                            
                            263,328
                            
                            
                            
                            182,178Gain
      on Forbearance of Debt
                            
                            
                            (112,536
                            )
                            
                            
                            0Stock
      compensation
                            
                            
                            213,379
                            
                            
                            
                            193,446Warrants
      issued for services
                            
                            
                            1,313,978Accounts
      receivable
                            
                            
                            0
                            
                            
                            
                            0Notes
      receivable
                            
                            
                            (125,000
                            )
                            
                            
                            0Inventories
                            
                            
                            330
                            
                            
                            
                            1,115Prepaid
      Expenses
                            
                            
                            (136,825
                            )
                            
                            
                            (110,989
                            )Other
      Assets
                            
                            
                            0
                            
                            
                            
                            0Increase
      (Decrease) In:Accounts
      Payable and Accrued Expenses
                            
                            
                            57,735
                            
                            
                            
                            (416,010
                            )Deferred
      Revenue
                            
                            
                            0
                            
                            
                            
                            4,603Net
      Cash Used In Operating Activities
                            
                            
                            (2,952,695
                            )
                            
                            
                            1,908,813Cash
      Flows From Investing ActivitiesEquipment
      Purchases
                            
                            
                            (98,312
                            )
                            
                            
                            (402,265
                            )Payments
      for Intangible Assets
                            
                            
                            (0
                            )
                            
                            
                            (109,500
                            )Net
      Cash Used In Investing Activities
                            
                            
                            (98,312
                            )
                            
                            
                            (511,765
                            )Cash
      Flows From Financing ActivitiesProceeds
      from Issuance of Convertible Bonds
                            
                            
                            0
                            
                            
                            
                            0Payments
      of Convertible Bonds
                            
                            
                            0
                            
                            
                            
                            0Proceeds
      From Notes Payable
                            
                            
                            1,433,001
                            
                            
                            
                            1,975,000Payment
      of Notes Payable
                            
                            
                            (120,268
                            )
                            
                            
                            (3,472,794
                            )Proceeds
      from redemption of options
                            
                            
                            0
                            
                            
                            
                            2,250Issuance
      of Common Stock
                            
                            
                            389,064
                            
                            
                            
                            279,841Issuance
      of Preferred Stock
                            
                            
                            3,500,000
                            
                            
                            
                            0Net
      Cash Provided By Financing Activities
                            
                            
                            5,201,797
                            
                            
                            
                            (636,502
                            )Increase
      (Decrease) in Cash
                            
                            
                            2,150,790
                            
                            
                            
                            760,546Balance,
      Beginning of Period
                            
                            
                            2,645
                            
                            
                            
                            194,279Balance, End of Period
                            
                            $
                            2,153,435
                            
                            
                            $
                            954,825


3


i2
TELECOM INTERNATIONAL, INC.




NOTES
TO UNAUDITED CONDENSENSED CONSOLIDATED FINANCIAL STATEMENTS




NOTE
1.         NATURE OF BUSINESS AND
SIGNIFICANT ACCOUNTING POLICIES




Restatement




In
connection with the Company’s audit and year end accounting procedures,
management and the Company’s Board of Directors determined that there were
accounting errors related to stock options and warrant expense, and accounting
for the fair value of Series F Preferred Shares. The Company inadvertently
did not record all the expenses related to the issuance of warrants and stock
options in the proper periods ended June 30, 2009 by under expensing $222,874 in
the three months then ended and under expensing $886,772 for the six months then
ended. The Company also did not properly classify the Series F Preferred Shares
as temporary equity, and did not properly value the associated warrants,
and  the Beneficial Conversion Feature. The fair value of the warrants
was $2,339,695 as of June 30, 2009. In addition, the Company recorded $1,160,305
and $2,100,566 as a beneficial conversion feature of the F Series Preferred
Shares for the three and six months ended June 30, 2009.




The
following tables represent the amounts originally reported, and the restated
amounts as amended and reported herein.




June 30, 2009
                      
                      
                      June 30, 2009( AS ORIGINALLY FILED)
                      
                      
                      ( AS AMENDED)Total
      Assets
                      
                      $
                      6,352,952
                      
                      
                      $
                      6,352,952Total
      Current Liabilities and Total Liabilities
                      
                      $
                      7,040,980
                      
                      
                      $
                      7,040,980Series
      F Convertible Preferred Shares, 5,000,000 Shares Authorized, and 7,550
      shares Issued and Outstanding
                      
                      $
                      3,500,000
                      
                      
                      $
                      2,339,695Additional
      Paid In Capital
                      
                      $
                      3,317,814
                      
                      
                      $
                      6,801,560Accumulated
      Deficit
                      
                      $
                      (44,171,447
                      )
                      
                      $
                      (6,494,887
                      )Total
      Shareholders’ Equity (Deficit)
                      
                      $
                      (688,028
                      )
                      
                      $
                      (3,027,723
                      )Total
      Liabilities and Shareholders’ Equity (Deficit)
                      
                      $
                      6,352,952
                      
                      
                      $
                      6,352,952


4




CONSOLIDATED
                                    STATEMENT OF OPERATIONS
                                  
                                  For the Three
                                    Months Ended
                                    June 30, 2009
                                  
                                  
                                  For the Three
                                    Months Ended
                                    June 30, 2009
                                  
                                  
                                  For the Six Months
                                    Ended June 30, 2009
                                  
                                  
                                  For the Six
                                    Months Ended
                                    June 30, 2009AS
                                    ORIGINALLY
                                    FILED
                                  
                                  
                                  AS
                                    AMENDED
                                  
                                  
                                  AS ORIGINALLY
                                    FILED
                                  
                                  
                                  AS
                                    AMENDEDRevenue
                                  
                                  $
                                  82,428
                                  
                                  
                                  $
                                  82,428
                                  
                                  
                                  $
                                  214,570
                                  
                                  
                                  $
                                  214,570Cost
      of Revenue
                                  
                                  
                                  67,770
                                  
                                  
                                  
                                  67,770
                                  
                                  
                                  
                                  193,822
                                  
                                  
                                  
                                  193,822Gross
      Profit (Loss)
                                  
                                  
                                  14,658
                                  
                                  
                                  
                                  14,658
                                  
                                  
                                  
                                  20,748
                                  
                                  
                                  
                                  20,748General
      and Administrative Expenses
                                  
                                  
                                  1,549,761
                                  
                                  
                                  
                                  2,204,527
                                  
                                  
                                  
                                  3,147,316
                                  
                                  
                                  
                                  4,466,280Loss
      From Operations
                                  
                                  
                                  (1,535,103
                                  )
                                  
                                  
                                  (2,189,869
                                  )
                                  
                                  
                                  (3,126,568
                                  )
                                  
                                  
                                  (4,445,532
                                  )Other
      Income (Expense):Interest
      Income
                                  
                                  
                                  1,474
                                  
                                  
                                  
                                  1,474
                                  
                                  
                                  
                                  1,474
                                  
                                  
                                  
                                  1,474Interest
      Expense
                                  
                                  
                                  (791,949
                                  )
                                  
                                  
                                  (360,057
                                  )
                                  
                                  
                                  (903,243
                                  )
                                  
                                  
                                  (474,051
                                  )Gain
      on Forbearance of Debt
                                  
                                  
                                  112,536
                                  
                                  
                                  
                                  112,536
                                  
                                  
                                  
                                  112,536
                                  
                                  
                                  
                                  112,536Gain
      on Sale of Technology
                                  
                                  
                                  0
                                  
                                  
                                  
                                  0
                                  
                                  
                                  
                                  0
                                  
                                  
                                  
                                  0Total
      Other Income (Expense)
                                  
                                  
                                  (677,939
                                  )
                                  
                                  
                                  (246,047
                                  )
                                  
                                  
                                  (792,233
                                  )
                                  
                                  
                                  (360,041
                                  )Net
      Income (Loss)
                                  
                                  $
                                  (3,918,801
                                  )
                                  
                                  $
                                  (2,435,916
                                  )
                                  
                                  $
                                  (3,918,801
                                  )
                                  
                                  $
                                  (4,805,573
                                  )Dividends
      on Preferred Stock
                                  
                                  
                                  (0
                                  )
                                  
                                  
                                  (2,100,566
                                  )
                                  
                                  
                                  (0
                                  )
                                  
                                  
                                  (2,100,566
                                  )Net
      Income (Loss) Available to Common Shareholders
                                  
                                  $
                                  (2,213,042
                                  )
                                  
                                  $
                                  (4,536,482
                                  )
                                  
                                  $
                                  (3,918,801
                                  )
                                  
                                  $
                                  (6,906,139
                                  )Weighted
      Average Common Shares:Basic
                                  
                                  
                                  28,558,566
                                  
                                  
                                  
                                  28,558,566
                                  
                                  
                                  
                                  27,961,279
                                  
                                  
                                  
                                  27,961,279Basic
      Earnings Per Common Share:
                                  
                                  $
                                  (.08
                                  )
                                  
                                  $
                                  (.16
                                  )
                                  
                                  $
                                  (.14
                                  )
                                  
                                  $
                                  (.25
                                  )Fully
      Diluted
                                  
                                  $
                                  (.08
                                  )
                                  
                                  $
                                  (.16
                                  )
                                  
                                  $
                                  (.14
                                  )
                                  
                                  $
                                  (.25
                                  )Fully
      Diluted Per Common Share:
                                  
                                  $
                                  (.08
                                  )
                                  
                                  $
                                  (.16
                                  )
                                  
                                  $
                                  (.14
                                  )
                                  
                                  $
                                  (.25
                                  )


5




CONSOLIDATED STATEMENTS OF CASH
                        FLOWS (Unaudited)
                      
                      For the Six Months
                        Ended June 30, 2009
                      
                      
                      For the Six
                        Months Ended
                        June 30, 2009AS
                        ORIGINALLY
                        FILED
                      
                      
                      AS
                        AMENDEDCash
      Flows From OperationsNet
      Loss From Operations
                      
                      $
                      (3,918,801
                      )
                      
                      $
                      (4,805,573
                      )Adjustments
      to Reconcile Net Loss to cashDepreciation
      and amortization
                      
                      
                      378,489
                      
                      
                      
                      378,489Amortization
      of Loan Fees
                      
                      
                      263,328
                      
                      
                      
                      263,328Gain
      on Forbearance of Debt
                      
                      
                      (112,536
                      )
                      
                      
                      (112,536
                      )Stock
      compensation
                      
                      
                      553
                      
                      
                      
                      213,379Warrants
      issued for services
                      
                      
                      0
                      
                      
                      
                      1,313,978Accounts
      receivable
                      
                      
                      0
                      
                      
                      
                      0Notes
      receivable
                      
                      
                      (125,000
                      )
                      
                      
                      (125,000
                      )Inventories
                      
                      
                      330
                      
                      
                      
                      330Prepaid
      Expenses
                      
                      
                      (136,825
                      )
                      
                      
                      (136,825
                      )Other
      Assets
                      
                      
                      0
                      
                      
                      
                      0Increase
      (Decrease) In:Accounts
      Payable and Accrued Expenses
                      
                      
                      57,735
                      
                      
                      
                      57,735Deferred
      Revenue
                      
                      
                      0
                      
                      
                      
                      0Net
      Cash Used In Operating Activities
                      
                      
                      (3,592,725
                      )
                      
                      
                      (2,952,695
                      )Cash
      Flows From Investing ActivitiesEquipment
      Purchases
                      
                      
                      (98,312
                      )
                      
                      
                      (98,312
                      )Payments
      for Intangible Assets
                      
                      
                      (0
                      )
                      
                      
                      (0
                      )Net
      Cash Used In Investing Activities
                      
                      
                      (98,312
                      )
                      
                      
                      (98,312
                      )Cash
      Flows From Financing ActivitiesProceeds
      from Issuance of Convertible Bonds
                      
                      
                      0
                      
                      
                      
                      0Payments
      of Convertible Bonds
                      
                      
                      0
                      
                      
                      
                      0Proceeds
      From Notes Payable
                      
                      
                      1,433,001
                      
                      
                      
                      1,433,001Payment
      of Notes Payable
                      
                      
                      (216,998
                      )
                      
                      
                      (120,268
                      )Proceeds
      from redemption of options
                      
                      
                      0
                      
                      
                      
                      0Exercise
      of Common Stock options
                      
                      
                      389,064
                      
                      
                      
                      389,064Issuance
      of Preferred Stock
                      
                      
                      3,500,000
                      
                      
                      
                      3,500,000Payment
      of Financing Costs with warrants
                      
                      
                      528,622
                      
                      
                      
                      -Payment
      of Professional Fees with warrants
                      
                      
                      208,139
                      
                      
                      
                      0Net
      Cash Provided By Financing Activities
                      
                      
                      5,841,828
                      
                      
                      
                      5,201,797Increase
      (Decrease) in Cash
                      
                      
                      2,150,790
                      
                      
                      
                      2,150,790Balance,
      Beginning of Period
                      
                      
                      2,645
                      
                      
                      
                      2,645Balance, End of Period
                      
                      $
                      2,153,435
                      
                      
                      $
                      2,153,435




Nature
of Business




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




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


6




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




·
            near
      carrier grade quality of service


·
            low
      cost long distance calling
worldwide;


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


·
            broadband
      telephony technology;


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


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


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




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




Critical
Accounting Policies




The
policies identified below are considered as critical to the Company’s business
operations and the understanding of the Company’s results of operations. The
impact of and any associated risks related to these policies on the Company’s
business operations is discussed throughout “Management’s Discussion and
Analysis or Plan of Operation.” For a detailed discussion on the application of
these and other accounting policies, see Note 1 in the Notes to the Company’s
consolidated financial statements for the year ended December 31, 2008, included
in our Annual Report on Form 10-K filed with the SEC on April 2, 2009, (the
“Annual Report”). Preparation of this Quarterly Report on Form 10-Q for the
quarter ended June 30, 2009 (this “Quarterly Report”) requires the Company to
make estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities, and the reported
amounts of revenue and expenses. There can be no assurance that actual results
will not differ from those estimates.




Basis
of Consolidation




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




Accounting
Estimates




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


7


Revenue
Recognition




The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
(“SAB”) No. 101, “Revenue Recognition in Financial Statements” (“SAB No. 101”),
as amended by SAB No. 101A and SAB No. 101B. SAB No. 101 requires that four
basic criteria must be met before revenue can be recognized: (i) persuasive
evidence of an arrangement exists; (ii) delivery has occurred or services
rendered; (iii) the fee is fixed and determinable; and (iv) collectability is
reasonably assured. Determinations under criteria (iii) and (iv) are based on
management’s judgments regarding the fixed nature of the fee charged for
services rendered and products delivered and the collectability of those fees.
Should changes in conditions cause management to determine these criteria are
not met for certain future transactions, revenue recognized for any reporting
period could be adversely affected. The Company has concluded that its revenue
recognition policy is appropriate and in accordance with accounting principles
generally accepted in the United States of America and SAB No. 101.




Impairment
of Long-Lived Assets




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




Preferred
Shares




The
Company applies the guidance enumerated in ASC Topic No. 480 “Distinguishing
Liabilities from Equity,” and “Classification and Measurement of Redeemable
Securities,” when determining the classification and measurement of preferred
stock. Preferred shares subject to mandatory redemption are classified as
liability instruments and are measured initially at fair value with accretion to
the mandatory redemption value using the effective interest method. As of June
30, 2009, the Company had no preferred share liabilities.




In
addition, the Company classifies conditionally redeemable preferred shares,
which includes preferred shares that feature redemption rights that are subject
to redemption upon the occurrence of uncertain events not solely within the
Company’s control, as temporary equity. At all other times, the Company
classifies its preferred shares in stockholders’ equity. As of June 30, 2009,
the Company had recorded as temporary equity F Series Preferred Shares totaling
$2,339,695.




Stock
Compensation




The
Company measures all share-based payments, including grants of employee stock
options to employees and warrants to service providers, using a fair-value based
method in accordance with the ASC Topic No. 505 and Topic No. 718 (formerly SFAS
No. 123R) Share-Based
Payments. The cost of services received in exchange for awards of equity
instruments is recognized in the consolidated statement of operations based on
the grant date fair value of those awards amortized over the requisite service
period. This summary of significant accounting policies of i2 Telecom
International, Inc., (the “Company”), i2Telecom (DE) and SuperCaller is
presented to assist in understanding the Company’s financial statements. The
financial statements and notes are representations of the Company’s management
who is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial
statements.




A.
            Nature
      of Operations – The parent Company was incorporated under the laws of the
      State of Washington on October 17, 1988, and the operating subsidiary,
      i2Telecom (DE), was incorporated on February 28, 2002. The Company,
      headquartered in Atlanta, Georgia, is a telecommunications service
      provider of Voice over Internet Protocol (“VoIP”) technology. The Company
      has proprietary patent pending technology that allows transmission of
      VoIP, connection to long distance public-switched telephone network
      (“PSTN”), and other enhanced communications services through an Internet
      Access Device (“IAD”).




The
Company has targeted specific markets that are connected to the Internet.
Customers are supplied an i2 Telecom “IAD” micro gateway, which will enable them
to: 1) make, at no cost other than the initial cost of micro gateway and the
subscription fee, unlimited calls to other i2 Telecom subscribers – anywhere in
the world using the customer’s existing phone (no new or special phone
required); 2) make long distance calls to people who use a normal telephone line
using the i2 Telecom least cost routing network that provides competitive long
distance rates; and 3) use either a broadband (DSL, Cable, etc.) or dial up
service.


8




B.
            Basis
      of Consolidation – The consolidated financial statements include the
      accounts of i2Telecom (DE) and SuperCaller, that are wholly owned
      subsidiaries of the Company. All significant inter-company accounts and
      transactions have been eliminated in
  consolidation.




C.
            Revenues
      - The Company recognizes revenue from sale of its i2 Telecom “IAD” micro
      gateway at time of shipment. Revenues from per-minute charges and user
      fees are recognized as incurred by its
  customers.




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




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




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




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




H.
            Intangible
      Assets – The Company has capitalized certain costs related to registering
      trademarks and patent pending technology. In accordance with SFAS No. 142,
      intangible assets with an indefinite life are not amortized but are tested
      for impairment at least annually or whenever changes circumstances
      indicate that the carrying value may not be recoverable. The Company
      amortizes its intangible assets with a finite life over 10 years on a
      straight-line basis.




I.
            In
      accordance with SFAS No. 144, the Company reviews its long-lived assets,
      including property and equipment, goodwill and other identifiable
      intangibles for impairment whenever events or changes in circumstances
      indicate that the carrying amount of the assets may not be fully
      recoverable. To determine recoverability of its long-lived assets, the
      Company evaluates the probability that future undiscounted net cash flows,
      without interest charges, will be less than the carrying amount of the
      assets. Impairment is measured at fair value. The Company had no
      impairment of assets during the second quarter or the three months ended
      June 30, 2009 or the year ended December 31,
  2008.




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




K.
            Income
      Taxes - The Company accounts for income taxes under the provisions of SFAS
      No. 109, “Accounting for Income Taxes,” which requires recognition of
      deferred tax assets and liabilities for the expected future tax
      consequences of events that have been included in the Company’s
      consolidated financial statements or tax returns. Under this method,
      deferred tax assets and liabilities are determined based on the
      differences between the financial accounting and tax basis of assets and
      liabilities using enacted tax rates in effect for the year in which the
      differences are expected to
reverse.




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




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




9




N.  
New Accounting Pronouncements




In May
2009, the FASB issued Statement of Financial Accounting Standards No. 165, Subsequent Events(“SFAS
165”), which provides guidance to establish general standards of accounting for
and disclosures of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. SFAS 165 is
effective for interim and annual periods ending after June 15, 2009, and
accordingly, the Company adopted this Standard during the second quarter of
2009. SFAS 165 requires that public entities evaluate subsequent events through
the date that the financial statements are issued. We have evaluated subsequent
events through the time of filing these financial statements with the Securities
and Exchange Commission (“SEC”) on August 14, 2009.




In
February 2007, the Financial Accounting Standards Board (“FASB”) issued
Statements of Financial Accounting Standards (“SFAS”) No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities - Including an amendment
of FASB Statement No. 115”. SFAS No. 159 permits entities to choose to measure
eligible items at fair value at specified election dates and report unrealized
gains and losses on items for which the fair value option has been elected in
earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal
years beginning after November 15. 2007. Management is currently evaluating the
effect that adoption of this statement will have on the Company’s consolidated
financial position and results of operations.




On
January 1, 2007, we adopted FASB Interpretation No. 48 (“FIN
No. 48”), “Accounting for
Uncertainty in Income Taxes,” which prescribes a comprehensive model for
how a company should recognize, measure, present and disclose in its financial
statements uncertain income tax positions that the Company has taken or expects
to take on a tax return (including a decision whether to file or not to file a
return in a particular jurisdiction). The adoption of FIN No. 48 on
January 1, 2007 did not result in a cumulative-effect adjustment or have an
effect on our consolidated financial statements.




In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS No. 157”). This Standard defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15,
2007 and interim periods within those years. Two FASB Staff Positions on SFAS
No. 157 were subsequently issued. On February 12, 2007, FSP
No. 157-2 delayed the effective date of SFAS No. 157 for non-financial
assets and non-financial liabilities that are recognized or disclosed at fair
value in the financial statements on a nonrecurring basis. This FSP is effective
for fiscal years beginning after November 15, 2008. On February 14,
2007, FSP No. 157-1 excluded FASB No. 13 Accounting for Leasesand
other accounting pronouncements that address fair value measurements for
purposes of lease classification or measurement under FASB No. 13. However,
this scope exception does not apply to assets acquired and liabilities assumed
in a business combination that are required to be measured at fair value under
FASB Statement No. 141, Business Combinationsor FASB
No. 141R, Business
Combinations.This FSP is effective upon initial adoption of SFAS
No. 157. We are assessing the impact that SFAS No. 157 will have on
our consolidated financial statements.




In
September 2006, the FASB ratified the consensus on EITF Issue No. 06-3,
“How Taxes Collected from
Customers and Remitted to Governmental Authorities Should Be Presented in the
Income Statement” (“EITF No. 06-3”). The scope of EITF No. 06-3
includes any tax assessed by a governmental authority that is directly imposed
on a revenue-producing transaction between a seller and a customer and may
include, but is not limited to, sales, use, value added, USF contributions and
excise taxes. The Task Force concluded that entities should present these taxes
in the income statement on either a gross or net basis, based on their
accounting policy, which should be disclosed pursuant to APB Opinion
No. 22, “Disclosure of Accounting Policies.” If such taxes are significant
and are presented on a gross basis, the amount of those taxes should be
disclosed. The consensus on EITF No. 06-3 was effective for interim and
annual reporting periods beginning after December 15, 2006. We currently
record sales, use and excise taxes on a net basis in our consolidated financial
statements whereas USF contributions are recorded on a gross basis in our
consolidated financial statements. The adoption of EITF No. 06-3 did not
have an effect on our consolidated results of operations.


10




Quantitative
and Qualitative Disclosure about Market Risk




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




Comprehensive
Income or Loss




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




Earnings
per Share




For the
second quarter of 2009 and 2008, net income (loss) per share is based on the
weighted average number of shares of Common Stock outstanding. At June 30, 2009
and June 30, 2008, the Company had, on a weighted average, 27,961,279 shares and
18,641,637 shares of Common Stock outstanding, respectively. The total number of
shares are post-split effective May 14, 2009 whereby a 1:10 reverse split
occurred.




At June
30, 2009, the Company had outstanding 28,829,665 shares of Common Stock and
options and warrants to purchase 28,765,241 shares of Common Stock.
Consequently, on an as-converted, fully-diluted basis, the Company would have
57,694,906 shares of Common Stock outstanding at June 30, 2009.




Stock
Compensation




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




Additionally,
the Company adopted early application of SFAS No. 123R on January 1, 2005. The
cumulative effect of this change in accounting principle for periods prior to
2005 was $340,117, net of income tax and has been included on the statement of
operations for the three months ended March 31, 2005.




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




Reclassifications




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


11


Interim
Financial Data




In the
opinion of management, the accompanying unaudited condensed consolidated
financial statements have been prepared by the Company pursuant to the rules and
regulations of the SEC. These financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. These statements should be read in
conjunction with the Company’s audited consolidated financial statements for the
year ended December 31, 2008, set forth in the Annual Report. The interim
financial information included herein has not been audited. However, management
believes the accompanying unaudited interim financial statements contain all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the consolidated financial position of the Company and its
subsidiaries as of June 30, 2009 and June 30, 2008, and the results of their
operations and cash flows for the six months ended June 30, 2009 and 2008. The
results of operations and cash flows for the period are not necessarily
indicative of the results of operations or cash flows that can be expected for
the year ending December 31, 2009.




NOTE
2.         NOTES
PAYABLE




During
the quarter the company received new notes payables of $650,089 with 90 day
payment terms and are secured by the assets of the Company. The notes pay out
interest at the rate of 12% and any unpaid interest was accrued at June 30,
2009.




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




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




NOTE
3.         CONVERTIBLE
BONDS




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




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




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




On
February 28, 2007, the Company sold $2,000,000 of 6% Senior Subordinated Secured
Convertible Notes convertible into 1,666,667 shares of the Company’s common
stock priced at $1.20 each, and 833,334 Warrants, priced at $1.20 each. For
every two shares of common stock to be issued, the investor(s) received one
warrant which is exercisable into the Company’s common stock at 100% of the
Issue Price. These warrants mature three years from issuance. The Notes will
automatically convert into the Company’s common stock if any of the following
events occur: (i) the Shares become registered and freely trading, or (ii) the
financial closing by the Company of $10,000,000 or more. The Notes are secured
by all assets of the Company and its subsidiaries. All future debt securities
issued by the Company will be subordinate in right of payment to the Notes;
provided, however, that the Company may raise up to $1.0 million of senior
indebtedness that ranks pari passu with the Notes in the future.




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


12




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




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




Convertible
bonds remaining at June 30, 2009 and March 31, 2009 consisted of the
following:




June 30, 2009
                      
                      
                      March 31, 2009December
      2006 6% Convertible Bonds
                      
                      $
                      50,000
                      
                      
                      $
                      50,000February
      2007 6% Convertible Bonds
                      
                      
                      50,000
                      
                      
                      
                      50,000100,000
                      
                      
                      
                      100,000




NOTE
4.  SERIES F CONVERTIBLE PREFERRED STOCK-Restated




In 2009,
the Company issued Series F Convertible Preferred Stock, no par value (the
“Series F Preferred
Shares”). Each of the Series F Preferred Shares is convertible at the
option of the holder (subject to the conversion restriction described below)
into shares of our Common Stock, no par value. The number of shares of Common
Stock issuable upon conversion is determined by dividing the stated value, or
$1,000, by a conversion price of $0.50, subject to adjustment as provided in the
Certificate of Designations.  In addition, each share of Series F
Preferred Shares will automatically convert (i) if certain milestones provided
in the Certificate of Designations are met, (ii) if such share is outstanding on
the third anniversary of the date that Series F Preferred Shares are first
issued or (iii) if the holders of more than fifty percent of the outstanding
Series F Preferred Shares so consent. Without the express written consent of
holders of at least fifty percent of the then-outstanding Series F Preferred
Shares (as well as any holders of more than twenty percent of the
then-outstanding Series F Preferred Shares) the Company may not authorize or
issue any additional class or series of equity securities of the Company ranking
senior to, or pari passu with, the Series F Preferred Shares with respect to
dividends, distributions and payments upon the liquidation, dissolution and
winding up of the Company. The holders of Series F Preferred Shares are entitled
to elect one director to the Board of Directors, but the Series F Preferred
Shares otherwise carry no voting rights other than those required by
law.




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




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




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




In
connection with the multiple issuances of 3,500 shares of Preferred Series F
shares, 3,500,000 warrants were issued.  The proceeds of $3,500,000
were allocated based on the relative fair values of the underlying shares and
warrants.  The fair value of the shares was $2,339,695 and is shown as
temporary equity on the Consolidated Balance Sheets and is outside of
stockholders’ equity because such shares are contingently redeemable because it
is not within the control of the Company.  Intrinsic value was
$2,100,566, and is included in Common Stock, no par as
dividends.


13




The fair
value of the warrants using the Black Scholes method was $1,160,305, and is
included in Common Stock, no par.  The warrants are exercisable at any
time after issuance at $.63, for a period of three years.




NOTE
5.         STOCK OPTIONS AND
WARRANTS-Restated




June 30, 2009
                    
                    
                    December 31, 2008Number of
                      Options/Warrants
                    
                    
                    Weighted
                      Average
                      Exercise
                      Price
                    
                    
                    Number of
                      Options/Warrants
                    
                    
                    Weighted
                      Average
                      Exercise
                      PriceOutstanding
      at Beginning of Period
                    
                    
                    16,482,834
                    
                    
                    $
                    1.00
                    
                    
                    
                    12,224,824
                    
                    
                    $
                    2.30Options
      Granted
                    
                    
                    2,051,000
                    
                    
                    $
                    .90
                    
                    
                    
                    1,510,000
                    
                    
                    $
                    .90Warrants
      Granted
                    
                    
                    15,152,228
                    
                    
                    $
                    .70
                    
                    
                    
                    20,446,350
                    
                    
                    $
                    1.00Exercised
                    
                    
                    (333,211
                    )
                    
                    $
                    1.20
                    
                    
                    
                    (1,251,484
                    )
                    
                    $
                    .58Forfeited
                    
                    
                    (4,587,609
                    )
                    
                    $
                    1.10
                    
                    
                    
                    (16,446,855
                    )
                    
                    $
                    1.90Outstanding
      at End of Period
                    
                    
                    28,765,241
                    
                    
                    $
                    .80
                    
                    
                    
                    16,482,834
                    
                    
                    $
                    1.30Options
      Exercisable at End of Period
                    
                    
                    28,765,241
                    
                    
                    $
                    .80
                    
                    
                    
                    13,735,443
                    
                    
                    
                    .90Weighted-average
      Fair Value of Options Granted During the Period
                    
                    
                    
                    
                    
                    $
                    .60
                    
                    
                    
                    
                    
                    
                    $
                    1.00




As of
June 30, 2009, the range of option and warrant exercise prices for outstanding
and exercisable options and warrants was $.10 to $1.60 with a weighted average
remaining contractual life of 3.79 years.




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




As
of June 30, 2009, $213,379 and $1,313,978 of stock options and warrants issued
for services, respectively, were expensed and are included General and
Administrative Expenses in the Consolidated Statement of
Operations.




NOTE
6. STOCK APPRECIATION RIGHTS AND RESTRICTED SHARE UNITS




On
December 31, 2003, the Company terminated its stock appreciation plan and
cancelled all outstanding rights granted. As consideration for the rights
cancelled, each employee received restricted stock or cancellation of their
notes receivable at rate of $30.00 per right. On December 31, 2003, the Company
amended its 2002 Stock Option Plan to properly administer the granting of
restricted stock. Under the amended plan, employees are granted restricted share
units without cost to the employee. Each restricted share unit awarded to a
participant represents an unfunded, unsecured right, which is nontransferable
except in the event of death of the employee, to receive one share of common
stock, $.10 par value, of i2 Delaware on the date specified in the grant. As a
result of the Merger each such right was converted into the right to receive
shares of Common Stock, no par value per share, and Preferred Stock Series B, no
par value per share (the “Preferred Stock Series B”), as outlined in the Merger
Agreement. The restricted share units granted under the plan vest evenly over
three years, with immediate vesting upon termination.




NOTE
7.  SUBSEQUENT EVENTS




On July
1, 2009, the Company commenced a tender offer for 25,613,269 warrants eligible
to participate in its offer to exchange warrants for shares of common stock or
repricing. i2Telecom’s Offer to Exchange, dated July 1, 2009 expires 5:00 P.M.
Atlanta Time on August 14, 2009.   The terms and conditions of
the offer as set forth in i2Telecom’s Offer to Exchange, dated July 1, 2009, and
the related Letter of Transmittal, as amended, allowed for the warrant holder to
receive one share of common stock for every five warrants on a post-split basis.
As of 3:00 P.M., Atlanta Time, on August 14, 2009, warrants representing
approximately 12,913,284 shares of i2Telecom’s common stock had been
tendered to i2 Telecom.


14




Also on
July 1, 2009, the Company commenced a tender offer for 5,243,015 options
eligible to participate in its offer to exchange options for shares of common
stock or repricing. i2Telecom’s Offer to Exchange, dated July 1, 2009 expires
5:00 P.M. Atlanta Time on August 14, 2009.   The terms and conditions
of the offer as set forth in i2Telecom’s Offer to Exchange, dated July 1, 2009,
and the related Letter of Transmittal, as amended, allowed for the option holder
to receive one share of common stock for every five options on a post-split
basis. As of 3:00 P.M., Atlanta Time, on August 14, 2009, options representing
approximately 919,188 shares of i2Telecom’s common stock had been tendered
to i2 Telecom.




Also on
July 1, 2009, the Company commenced an effort to exchange $6,328,212 of its
Promissory Notes, which includes all accrued interest and related fees, (the
“Debt”) into preferred stock (the “IP Subsidiary Preferred Stock”) of its
wholly-owned subsidiary i2 Telecom IP Holdings, Inc., (the “IP Subsidiary”). On
July 31, 2009, the Company closed an aggregate of $5,508,855 of the Debt into IP
Subsidiary Preferred Stock. In connection with the creation of IP Subsidiary,
substantially all of the Company’s intellectual property was transferred to IP
Subsidiary, with the Company owning all of the common stock of IP Subsidiary.
The IP Subsidiary Preferred Stock provides for an accruing dividend of 12% per
annum, and a special dividend for up to two years in the event that the IP
Subsidiary Preferred Stock has not been redeemed. The balance of the remaining
debt of $819,357 has either been retired or about to be retired in the form of
cash payments.




The
number of warrants and shares of common stock referenced herein are based upon
the reverse stock split effective May 14, 2009.




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




Forward
Looking Statements




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




As
used in this Form 10-Q, unless the context requires otherwise, “we” or “us” or
the “Company” or “i2” or “i2 Telecom” means i2 Telecom International, Inc. and
its subsidiaries.




Overview




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


15




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




·
            near
      carrier grade quality of service;


·
            low
      cost long distance calling
worldwide;


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


·
            broadband
      technology;


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


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




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




Critical
Accounting Policies and Estimates




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




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




Revenue Recognition.The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
(“SAB”) No. 101, “Revenue Recognition in Financial Statements” (“SAB No. 101”),
as amended by SAB No. 101A and SAB No. 101B. SAB No. 101 requires that four
basic criteria must be met before revenue can be recognized: (i) persuasive
evidence of an arrangement exists; (ii) delivery has occurred or services
rendered; (iii) the fee is fixed and determinable; and (iv) collectibility is
reasonably assured. Determination of criteria (iii) and (iv) are based on
management’s judgments regarding the fixed nature of the fee charged for
services rendered and products delivered and the collectibility of those fees.
Should changes in conditions cause management to determine these criteria are
not met for certain future transactions, revenue recognized for any reporting
period could be adversely affected. The Company has concluded that its revenue
recognition policy is appropriate and in accordance with accounting principles
generally accepted in the United States of America and SAB No. 101.




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


16




Preferred
Shares




The
Company applies the guidance enumerated in ASC Topic No. 480 “Distinguishing
Liabilities from Equity,” and “Classification and Measurement of Redeemable
Securities,” when determining the classification and measurement of preferred
stock. Preferred shares subject to mandatory redemption are classified as
liability instruments and are measured initially at fair value with accretion to
the mandatory redemption value using the effective interest method. As of June
30, 2009, the Company had no preferred share liabilities.




In
addition, the Company classifies conditionally redeemable preferred shares,
which includes preferred shares that feature redemption rights that are subject
to redemption upon the occurrence of uncertain events not solely within the
Company’s control, as temporary equity. At all other times, the Company
classifies its preferred shares in stockholders’ equity. As of June 30, 2009,
the Company had recorded as temporary equity F Series Preferred Shares totaling
$2,339,695.




Stock
Compensation




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




Recent
Accounting Pronouncements




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




The
Company has targeted specific markets that are connected to the Internet.
Customers are supplied an i2 Telecom “IAD” micro gateway, which will enable them
to: 1) make, at no cost other than the initial cost of micro gateway and the
subscription fee, unlimited calls to other i2 Telecom subscribers – anywhere in
the world using the customer’s existing phone (no new or special IP phone
required); 2) make long distance calls to people who use a normal telephone line
using the i2 Telecom least cost routing network that provides competitive long
distance rates; and 3) use either a broadband (DSL, Cable, etc.) or dial up
service.




B.
            Basis
      of Consolidation – The consolidated financial statements include the
      accounts of SuperCaller Community, Inc., a wholly owned subsidiary. All
      significant inter-company accounts and transactions have been eliminated
      in consolidation.




C.
            Revenues
      - The Company recognizes revenue from sale of its i2 Telecom “IAD” micro
      gateway at time of shipment. Revenues from per-minute charges and user
      fees are recognized as incurred by its
  customers.




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




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




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




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


17




H.
            Intangible
      Assets – The Company has capitalized certain costs related to registering
      trademarks and patent pending technology. In accordance with SFAS No. 142,
      intangible assets with an indefinite life are not amortized but are tested
      for impairment at least annually or whenever changes circumstances
      indicate that the carrying value may not be recoverable. The Company
      amortizes its intangible assets with a finite life over 10 years on a
      straight-line basis.




I.
              In
      accordance with SFAS No. 144, the Company reviews its long-lived assets,
      including property and equipment, goodwill and other identifiable
      intangibles for impairment whenever events or changes in circumstances
      indicate that the carrying amount of the assets may not be fully
      recoverable. To determine recoverability of its long-lived assets, the
      Company evaluates the probability that future undiscounted net cash flows,
      without interest charges, will be less than the carrying amount of the
      assets. Impairment is measured at fair value. The Company had no
      impairment of assets during the years ended December 31, 2007 and
      2006.




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




K.
            Income
      Taxes - The Company accounts for income taxes under the provisions of SFAS
      No. 109, “Accounting for Income Taxes,” which requires recognition of
      deferred tax assets and liabilities for the expected future tax
      consequences of events that have been included in the Company’s
      consolidated financial statements or tax returns. Under this method,
      deferred tax assets and liabilities are determined based on the
      differences between the financial accounting and tax basis of assets and
      liabilities using enacted tax rates in effect for the year in which the
      differences are expected to
reverse.




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




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




N.
            New
      Accounting Pronouncements




In
February 2007, the Financial Accounting Standards Board (“FASB”) issued
Statements of Financial Accounting Standards (“SFAS”) No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities - Including an amendment
of FASB Statement No. 115”. SFAS No. 159 permits entities to choose to measure
eligible items at fair value at specified election dates and report unrealized
gains and losses on items for which the fair value option has been elected in
earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal
years beginning after November 15. 2007. Management is currently evaluating the
effect that adoption of this statement will have on the Company’s consolidated
financial position and results of operations.




On
January 1, 2007, we adopted FASB Interpretation No. 48 (“FIN
No. 48”), “Accounting for Uncertainty in Income Taxes,” which prescribes a
comprehensive model for how a company should recognize, measure, present and
disclose in its financial statements uncertain income tax positions that the
Company has taken or expects to take on a tax return (including a decision
whether to file or not to file a return in a particular jurisdiction). The
adoption of FIN No. 48 on January 1, 2007 did not result in a
cumulative-effect adjustment or have an effect on our consolidated financial
statements.




18


In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS No. 157”). This Standard defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15,
2007 and interim periods within those years. Two FASB Staff Positions on SFAS
No. 157 were subsequently issued. On February 12, 2007, FSP
No. 157-2 delayed the effective date of SFAS No. 157 for non-financial
assets and non-financial liabilities that are recognized or disclosed at fair
value in the financial statements on a nonrecurring basis. This FSP is effective
for fiscal years beginning after November 15, 2008. On February 14,
2007, FSP No. 157-1 excluded FASB No. 13 Accounting for Leases and
other accounting pronouncements that address fair value measurements for
purposes of lease classification or measurement under FASB No. 13. However,
this scope exception does not apply to assets acquired and liabilities assumed
in a business combination that are required to be measured at fair value under
FASB Statement No. 141, Business Combinations or FASB No. 141R,
Business Combinations. This FSP is effective upon initial adoption of SFAS
No. 157. We are assessing the impact that SFAS No. 157 will have on
our consolidated financial statements.




In
September 2006, the FASB ratified the consensus on EITF Issue No. 06-3,
“How Taxes Collected from Customers and Remitted to Governmental Authorities
Should Be Presented in the Income Statement” (“EITF No. 06-3”). The scope
of EITF No. 06-3 includes any tax assessed by a governmental authority that
is directly imposed on a revenue-producing transaction between a seller and a
customer and may include, but is not limited to, sales, use, value added, USF
contributions and excise taxes. The Task Force concluded that entities should
present these taxes in the income statement on either a gross or net basis,
based on their accounting policy, which should be disclosed pursuant to APB
Opinion No. 22, “Disclosure of Accounting Policies.” If such taxes are
significant and are presented on a gross basis, the amount of those taxes should
be disclosed. The consensus on EITF No. 06-3 was effective for interim and
annual reporting periods beginning after December 15, 2006. We currently
record sales, use and excise taxes on a net basis in our consolidated financial
statements whereas USF contributions are recorded on a gross basis in our
consolidated financial statements. The adoption of EITF No. 06-3 did not
have an effect on our consolidated results of operations.




Results
of Operations-Restated




Comparison
of Three Months Ended June 30, 2009 and 2008




For the Three Months Ended June 30,2009
                              
                              
                              2008
                              
                              
                              Variance
                              
                              
                              PercentageRevenue
                              
                              $
                              82,428
                              
                              
                              $
                              162,727
                              
                              
                              
                              (80,299
                              )
                              
                              
                              -49.4
                              %Cost
      of Revenue
                              
                              
                              67,770
                              
                              
                              
                              188,685
                              
                              
                              
                              120,915
                              
                              
                              
                              64.1
                              %Gross
      Profit (Loss)
                              
                              
                              14,658
                              
                              
                              
                              (25,958
                              )
                              
                              
                              40,616
                              
                              
                              
                              156.5
                              %Operating
      Expenses:General
      and Administrative Expenses
                              
                              
                              2,204,527
                              
                              
                              
                              1,583,912
                              
                              
                              
                              620,615
                              
                              
                              
                              39
                              %Other
      Income (Expense) Net
                              
                              
                              (246,047
                              )
                              
                              
                              4,542,993
                              
                              
                              
                              (4,296,946
                              )
                              
                              
                              -95
                              %Net
      Profit (Loss)
                              
                              $
                              (2,435,916
                              )
                              
                              $
                              2,933,123
                              
                              
                              
                              (5,369,039
                              )
                              
                              
                              -183
                              %




Revenues
decreased to $82,428 for the three months ended June 30, 2009 from $162,727 for
the three months ended June 30, 2008. The decrease in revenues was due to the
repositioning and rebranding efforts during the period.




Cost of
revenues decreased to $67,770 for the three months ended June 30, 2009 from
$188,685 for the three months ended June 30, 2008. The decrease in cost of
revenues was due to continuing efforts in negotiating lower carrier rates,
combined with lower sales volume.




Gross
loss decreased from a loss of $25,958 for the three months ended June 30, 2008
to a gain of $14,658 for the three months ended June 30, 2009.




Total
selling, general and administrative expenses for the three months ended June 30,
2009 was $2,204,527 compared to $1,583,912 for the three months ended June 30,
2008. The increase is primarily attributable to share based compensation
increases.


19




Net
(loss) for the three months ended June 30, 2009 was $(2,435,916) as compared to
a net gain of $2,933,123 for the three months ended June 30, 2008. . The
decrease in net profit is primarily a result of the sale of intellectual
property to a third party in FY 2008.




Comparison
of Six Months Ended June 30, 2009 and 2008




For the Six Months Ended June 30,2009
                                              
                                              
                                              2008
                                              
                                              
                                              Variance
                                              
                                              
                                              PercentageRevenue
                                              
                                              $
                                              214,570
                                              
                                              
                                              $
                                              320,183
                                              
                                              
                                              
                                              (105,613
                                              )
                                              
                                              
                                              -33.0
                                              %Cost
      of Revenue
                                              
                                              
                                              193,822
                                              
                                              
                                              
                                              370,922
                                              
                                              
                                              
                                              177,100
                                              
                                              
                                              
                                              47,8
                                              %Gross
      Profit (Loss)
                                              
                                              
                                              20,748
                                              
                                              
                                              
                                              (50,739
                                              )
                                              
                                              
                                              71,487
                                              
                                              
                                              
                                              140.9
                                              %Operating
      Expenses:General
      and Administrative Expenses
                                              
                                              
                                              4,466,280
                                              
                                              
                                              
                                              2,635,873
                                              
                                              
                                              
                                              (1,830,407
                                              )
                                              
                                              
                                              69
                                              %Other
      Income (Expense) Net
                                              
                                              
                                              (360,041
                                              )
                                              
                                              
                                              4,422,341
                                              
                                              
                                              
                                              (4,782,382
                                              )
                                              
                                              
                                              -111
                                              %Net
      Profit (Loss)
                                              
                                              $
                                              (4,805,573
                                              )
                                              
                                              $
                                              1,735,729
                                              
                                              
                                              
                                              (6,541,302
                                              )
                                              
                                              
                                              -377
                                              %




Revenues
decreased to $214,570 for the six months ended June 30, 2009 from $320,183 for
the six months ended June 30, 2008. The decrease in revenues was due to the
repositioning and rebranding efforts during the period combined with a new focus
toward the launch of the MyGlobalTalk service which is anticipated to occur
during the third quarter.




Cost of
revenues decreased to $193,822 for the six months ended June 30, 2009 from
$370,922 for the six months ended June 30, 2008. The decrease in cost of
revenues was due to continuing efforts in negotiating lower carrier rates,
combined with lower sales volume.




Gross
loss decreased from for the six months ended June 30, 2008 to a profit of
$20,748 for the six months ended June 30, 2009. The increase in profits was
attributable to an increase in customer minutes of use billed during the
period.




Total
selling, general and administrative expenses for the six months ended June 30,
2009 was $4,466,280 compared to $2,635,873 for the six months ended June 30,
2008. The increase was due to lower financing costs related to borrowings in
2008, and increases in share based compensation in 2009.




Net loss
for the six months ended June 30, 2009 was $4,919,583 as compared to a net
profit for the six months ended June 30, 2008 of $1,735,729. The decrease in net
profit is primarily a result of the sale of intellectual property to a third
party in fiscal year 2008.




Liquidity
and Capital Resources-Restated




On June
30, 2009, we had a working capital deficit of approximately $4,805,573 compared
to a working capital deficit of approximately $3,300,000 on June 30, 2008. The
increase in working capital deficit was primarily due to increased debt, offset
by the sale of preferred stock. Net cash used in operating activities was
$2,952,695 for the six months ended June 30, 2009 as compared to net cash
provided by operating activities of $1,908,813 for the six months ended June 30,
2008. The decrease in net cash provided by operating activities between the six
months ended June 30, 2009 and June 30, 2008 is attributable to the proceeds
from the sale of intellectual property occurring in fiscal year
2008.




Net cash
used in investing activities was approximately $98,000 for the six months ended
June 30, 2009 as compared to net cash used in investing activities of $511,000
for the same period in 2008. The decrease in net cash used investing activities
is attributable to extensive purchases of network system equipment, and software
application development occurring in the prior year, fiscal year
2008.


20




Net cash
used in financing activities was approximately $5,201,797 for the six months
ended June 30, 2009 as compared to net cash provided of $637,000 for the same
period in 2008. The increase in net cash provided by financing activities is
attributable to the lower promissory note debt payoffs, combined with the sale
of preferred stock.




Off-Balance
Sheet Arrangements




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




Contractual
Obligations




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




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




Obligations payable inLess than 1 year
                        
                        
                        1-3 years
                        
                        
                        TotalDebt
                        
                        $
                        4,749,105
                        
                        
                        $
                        0
                        
                        
                        $
                        4,749,105Leases
                        
                        $
                        0
                        
                        
                        $
                        0
                        
                        
                        $
                        0




Item
3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




Not
applicable.




Item
4.    CONTROLS AND
PROCEDURES.




Disclosure
Controls and Procedures




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


21


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




Changes
in Internal Control over Financial Reporting




There
were changes in the Company’s internal control over financial reporting other
than those noted above that occurred during the Company’s most recent quarter
that have materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting.




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


.


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





Management
has taken steps to address these issues by appointing a new Chief Financial
Officer which the Company’s management, board of directors, and audit committee
believes possesses the experience and knowledge required to properly account for
oil and gas accounting methods for the Company and its reporting.





PART
II.         OTHER
INFORMATION




Item
1.    LEGAL
PROCEEDINGS




On
December 22, 2003, former stockholders of SuperCaller Community, Inc., a
Delaware corporation acquired by the Company in September 2002 (“SuperCaller”),
filed a lawsuit against the Company in the United States District Court for the
Northern District of California, San Francisco Division. The plaintiffs alleged
that i2Telecom (DE) and certain of its affiliates and representatives deceived
the plaintiffs into selling SuperCaller to the Company, among other things. On
March 27, 2006,  all federal claims against the Company and related parties
in the United States District Court in San Francisco were “dismissed with
prejudice” by Judge Vaughn Walker.  In addition, the court declined to
exercise supplemental jurisdiction over the remaining state law claims which
were all “dismissed” as well.  Therefore, no loss or liability has been
recorded in the Company’s financial statements. In March 2008, the federal
claims against the Company and related parties in the United States District
Appellate Court in San Francisco were “dismissed with prejudice”.




The
Company was named a defendant in a lawsuit regarding a disputed amount due for
patent preparation and filings by the same attorney representing the plaintiffs
in the above matter. In January 2008, the claims against the Company and related
parties in the United States District Appellate Court in San Francisco were
“dismissed with prejudice”. In April 2008, the same attorney representing the
plaintiffs in the above matter filed an action against the Company in the
Superior Court of California, County of Santa Clara (the Superior Court”). The
plaintiffs alleged that i2Telecom (DE) and certain of its affiliates and
representatives deceived the plaintiffs into selling SuperCaller to the Company,
among other things. A demurrer has been filed by the Company and sustained by
the Superior Court with leave to amend. The Company will continue to vigorously
defend these claims and believes this litigation to be unsubstantiated and
without merit.


22


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




Item1A.  RISK
FACTORS




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




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




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




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




We had a
loss of $3,918,801 for the quarter ended June 30, 2009, a loss of $2,937,520 for
the fiscal year ended December 31, 2008, and a loss of $9,088,752 for the fiscal
year ended December 31, 2007. We had an accumulated deficit at June 30, 2009 of
$44,171,447. Our ability to generate positive cash flows from operations and net
income is dependent, among other things, on the acceptance of our products in
the marketplace, market conditions, cost control, and our ability to raise
capital on acceptable terms. The financial statements included elsewhere in this
prospectus do not include any adjustments that might result from the outcome of
these uncertainties. Furthermore, developing and expanding our business will
require significant additional capital and other expenditures. Accordingly, if
we are not able to increase our revenue, then we may never achieve or sustain
profitability.




We have
been able to meet our operating requirements since June 30, 2009 and received
approximately $150,000 of additional financing. We will need to receive
additional capital to continue our operations.




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


23




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, 2003 to June 30,
2009, the per share closing price of our Common Stock on the Over-the-Counter
Bulletin Board fluctuated from a high of $3.35 to a low of $.03. We believe that
the volatility of the price of our Common Stock does not solely relate to our
performance and is broadly consistent with volatility experienced in our
industry. Fluctuations may result from, among other reasons, responses to
operating results, announcements by competitors, regulatory changes, economic
changes, market valuation of technology firms and general market
conditions.




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




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




Our
common shares are thinly traded, so 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.




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




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




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


24




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




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




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




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




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




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.


25


We
may be unable to fund future growth.




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




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




Our
management team consists of 3 executive officers who have been employed by us
for over three years and balance of our management has been with the Company for
less than three years . There can be no assurance that they will function
successfully as a management team to implement our business strategy. If they
are unable to do so, then our business, financial condition and results of
operations could be materially adversely affected.




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




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




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




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




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




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




·
            the
      identification of market demand for new
  products;


·
            the
      scalability of our VoIP telephony software
  products;


·
            product
      and feature selection;


·
            timely
      implementation of product design and
  development;


·
            product
      performance;


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


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


·
            effective
      manufacturing processes; and


·
            effectiveness
      of promotional efforts.


26




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




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




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




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




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




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




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




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




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




27




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




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




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




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




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




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




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.




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


28




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




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




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




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




We
may become subject to litigation.




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




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




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




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




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


29


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




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




On June
3, 2005 the Federal Communications Commission (“FCC”) issued the VoIP 911 Order
adopting rules that require interconnected VoIP providers to provide their new
and existing subscribers with 911 services no later than November 28, 2005. On
November 5, 2005, the FCC issued a public notice stating that VoIP providers who
failed to comply with the VoIP 911 Order by November 28, 2005 would not be
required to discontinue the provision of interconnected VoIP service to any
existing customers, but would be required to discontinue marketing VoIP service
and accepting new customers for VoIP service in all areas where the providers
are not transmitting 911 calls to the appropriate PSAP (public safety answering
point) in full compliance with the FCC’s rules. Because we have not fully
complied with the VoIP 911 Order, we are subject to this restriction. We cannot
be certain that we will be able to fully comply with this VoIP 911 Order.
Because it would prevent us from marketing and accepting new customers in
certain areas, our inability to comply with the VoIP 911 Order may have an
adverse effect on our business and results of operations.




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




In April
2009, we issued to seven individuals, warrants to purchase an aggregate of
358,000 shares of Common Stock at an exercise price of $0.80 per share, vested
immediately upon the date of grant with a five-year expiration period. The
warrants were issued in connection with the execution of promissory notes in the
aggregate amount of $380,000 made to us. The warrants were issued without
registration under the Securities Act in reliance upon the exemptions from
registration set forth in Section 4(2) and Regulation D. We based such reliance
upon factual representations by the recipients of the warrants to us regarding
their investment interest and sophistication, among other things. However, these
shares are entitled to “piggyback registration” rights upon filing by us of a
registration statement.




In May
2009, we issued to nine individuals, warrants to purchase an aggregate of
192,000 shares of Common Stock at an exercise price of $0.80 per share, vested
immediately upon the date of grant with a five-year expiration period. The
warrants were issued in connection with the execution of promissory notes in the
aggregate amount of $156,000 made to us. The warrants were issued without
registration under the Securities Act in reliance upon the exemptions from
registration set forth in Section 4(2) and Regulation D. We based such reliance
upon factual representations by the recipients of the warrants to us regarding
their investment interest and sophistication, among other things. However, these
shares are entitled to “piggyback registration” rights upon filing by us of a
registration statement.




In June
2008, we issued to six institutions and twenty seven individuals, warrants to
purchase an aggregate of 2,825,000 shares of Common Stock at an exercise price
of $0.80 per share, vested immediately upon the date of grant with a five-year
expiration period. The warrants were issued in connection with the execution of
extensions for promissory notes in the aggregate amount of $4,385,000 made to
us. Of this amount, 889,667 warrants were issued to three individuals who are
directors of ours, of which one individual who is also an officer of ours, for
which loans were made to us in the aggregate amount of for $1,475,000. The
warrants were issued without registration under the Securities Act in reliance
upon the exemptions from registration set forth in Section 4(2) and Regulation
D. We based such reliance upon factual representations by the recipients of the
warrants to us regarding their investment interest and sophistication, among
other things. However, these shares are entitled to “piggyback registration”
rights upon filing by us of a registration statement.




As
further described on the Company’s Current Report on Form 8-K, dated May 8,
2009, the Company issued on April 27, 2009, 500 Series F Preferred Shares and on
April 27, 2009, a Warrant for the purchase of 500,000 shares of Common Stock for
a total purchase price of $500,000. The sales of the Series F Preferred Shares
and the Warrant 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.


30




As
further described on the Company’s Current Reports on Form 8-K, dated June 10,
2009 and July 1, 2009, the Company issued on June 8, 2009, 3,000 Series F
Preferred Shares and on June 5, 2009, a Warrant for the purchase of 3,000,000
shares of Common Stock for a total purchase price of $3,000,000. The sales of
the Series F Preferred Shares and the Warrant 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.    SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS




2009
ANNUAL MEETING OF SHAREHOLDERS




Our Board
of Directors, (the “Board”) determined it was advisable to (i) hold the
Shareholders’ Annual Meeting on June 30, 2009, for the purpose of (a) electing
directors to serve the corporation until the next shareholders meeting, (b)
approving an Amendment to the Corporation’s Articles of Incorporation to effect
a 1:2 to as much as a 1:5 ratio, (the “Reverse Split”) at any time during the
next twelve months or prior to the 2010 annual meeting of shareholders, which
occurs first, with such ratio to be determined by the Board, (c) ratifying the
appointment of Freedman & Goldberg Certified Public Accountants, P.C. as the
independent auditors of the Corporation for the year ending December 31, 2009,
and (d) transacting such other business as may lawfully come before the Annual
Meeting; and (ii) acknowledge May 14, 2009, as the record date for such Annual
Meeting.




The
shareholders of the Company have voted in favor of each of the above items as
follows:




Vote by
ballot for the election of seven (7) directors of the Company




Name of Nominee
                    
                    Number of Votes Cast For
                    
                    Number of Votes WithheldPaul
      R. Arena
                    
                    220,226,814
                    
                    903,753D.
      Christer Bylander
                    
                    220,282,781
                    
                    847,786Audrey
      L. Braswell
                    
                    220,070,187
                    
                    1,060,380Montgomery
      L. Bannerman
                    
                    219,504,359
                    
                    1,626,208Andrew
      L. Berman
                    
                    219,407,781
                    
                    1,722,786Timothy
      McGeehan
                    
                    219,504,359
                    
                    1,626,208Bruce
      C. Friedman
                    
                    219,504,359
                    
                    1,626,208




Montgomery
L. Bannerman and D. Christer Bylander resigned on June 8, 2009 and June 17,
2009, respectively, and therefore, immediately following the Annual Meeting, the
Board ratified the appointment of Frederick D. Mapp and Michael D. Reardon to
fill such vacancies on the Board.




Vote by
ballot for the ratification of the appointment by the Board of Freedman &
Goldberg, Certified Public Accountants, P.C. as the Company’s independent
auditors for the fiscal year ending December 31, 2009.




Number
      of votes cast for the proposal
                            
                            
                            220,379,209Number
      of votes cast against the proposal
                            
                            
                            36,295Number
      of abstentions
                            
                            
                            715,063




Vote by
ballot for the authorization of the Board to effect the Reverse Split at any
time during the next twelve months or prior to the 2010 annual meeting of
shareholders, whichever occurs first.


31




Number
      of votes cast for the proposal
                  
                  
                  208,907,448Number
      of votes cast against the proposal
                  
                  
                  11,717,043Number
      of abstentions
                  
                  
                  506,076Number
      of Broker non-votes
                  
                  
                  400




Item
5.    OTHER
INFORMATION




(a)           None.




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


32


Item
6.    EXHIBITS




Exhibit
                                                          No.
                                                        
                                                        Exhibit
                                                        
                                                        Method
      of Filing2.1
                                                        
                                                        Agreement
      and Plan of Merger dated as of January 30, 2004, among the Company, DDN
      Acquisition Corporation and i2 Telecom Communications, Inc. (The schedules
      to the Agreement and Plan of Merger have been omitted from this Report
      pursuant to Item 601(b)(2) of Regulation S-K, and the Company agrees to
      furnish copies of such omitted schedules supplementally to the Securities
      and Exchange Commission upon request.).
                                                        
                                                        Incorporated
      by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K
      filed on February 2, 2004.2.2
                                                        
                                                        Asset
      Purchase Agreement dated as of January 30, 2004, between the Company and
      InTransit Media, Inc.
                                                        
                                                        Incorporated
      by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K
      filed on February 2, 2004.2.3
                                                        
                                                        First
      Amendment to Asset Purchase Agreement, dated February 26, 2004, between
      the Company and InTransit Media, Inc.
                                                        
                                                        Incorporated
      by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K
      filed on March 12, 2004.3.1
                                                        
                                                        Articles
      of Incorporation, as amended.
                                                        
                                                        Incorporated
      by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-KSB
      for the year ended December 31, 2003.3.2
                                                        
                                                        Bylaws,
      as amended.
                                                        
                                                        Incorporated
      by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-KSB
      for the year ended December 31, 2003.3.3
                                                        
                                                        Amendment
      to the Company’s Articles of Incorporation filed June 3,
    2004.
                                                        
                                                        Incorporated
      by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form
      10-QSB for the quarter ended June 30, 2004.3.4
                                                        
                                                        Certificate
      of Designations of Rights and Preferences of Series D Preferred
      Stock
                                                        
                                                        Incorporated
      by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
      filed August 13, 2004.3.5
                                                        
                                                        Certificate
      of Designations of Rights and Preferences of Series E Preferred
      Stock
                                                        
                                                        Incorporated
      by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
      filed November 22, 2005.3.6
                                                        
                                                        Amendment
      to Certificate of Designations of Rights and Preferences of Series E
      Preferred Stock
                                                        
                                                        Incorporated
      by reference to Exhibit 3.1.8 to the Company’s Quarterly Report on Form
      10-QSB for the quarter ended March 31, 2006.3.7
                                                        
                                                        Amendment
      to the Company’s Articles of Incorporation filed July 13,
      2007.
                                                        
                                                        Filed
      herewith.3.8
                                                        
                                                        Certificate
      of Designations of Rights and Preferences of Series F Preferred
      Stock
                                                        
                                                        Incorporated
      by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
      filed April 30, 2009.3.9
                                                        
                                                        Amendment
      to the Company’s Articles of Incorporation filed May 11,
    2009.
                                                        
                                                        Filed
      herewith.3.10
                                                        
                                                        Amendment
      to Certificate of Designations of Rights and Preferences of Series F
      Preferred Stock
                                                        
                                                        Incorporated
      by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
      filed June 10, 2009.4.1
                                                        
                                                        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,
  2009.


33





Exhibit
                          No.
                        
                        Exhibit
                        
                        Method
      of Filing4.2
                        
                        Certificate
      of the Designations, Preferences, Rights and Limitations of Series A
      Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
      Series D Preferred Stock of i2 Telecom IP Holdings, Inc.
                        
                        Incorporated
      by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
      filed July 1, 2009.10.1
                        
                        Employment
      Agreement, dated April 20, 2009, by and between the Company and Andrew L.
      Berman. Represents an executive compensation plan or arrangement. *
                        
                        Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed April 24, 2009.10.2
                        
                        Employment
      Agreement, dated April 20, 2009, by and between the Company and Paul R.
      Arena. Represents an executive compensation plan or arrangement. *
                        
                        Incorporated
      by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
      filed April 24, 2009.10.3
                        
                        Employment
      Agreement, dated April 20, 2009, by and between the Company and
      Christopher R. Miltenberger. Represents an executive compensation plan or
      arrangement. *
                        
                        Incorporated
      by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K
      filed April 24, 2009.10.4
                        
                        Employment
      Agreement, dated April 20, 2009, by and between the Company and Douglas F.
      Bender. Represents an executive compensation plan or arrangement. *
                        
                        Incorporated
      by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K
      filed April 24, 2009.10.5
                        
                        Form
      of Non-Negotiable Secured Promissory Note.
                        
                        Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed May 4, 2009.10.6
                        
                        Form
      of Term Loan Agreement.
                        
                        Incorporated
      by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
      filed May 4, 2009.10.7
                        
                        Form
      of Warrant
                        
                        Incorporated
      by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K
      filed May 4, 2009.10.8
                        
                        Form
      of Registration Rights Agreement.
                        
                        Incorporated
      by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K
      filed May 4, 2009.10.9
                        
                        Form
      of Subscription Agreement
                        
                        Incorporated
      by reference to Exhibit 10.66 to the Company’s Current Report on Form 8-K
      filed May 8, 2009.10.10
                        
                        Form
      of Warrant
                        
                        Incorporated
      by reference to Exhibit 4.60 to the Company’s Current Report on Form 8-K
      filed May 8, 2009.10.11
                        
                        Warrant
                        
                        Incorporated
      by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
      filed June 10, 2009.10.12
                        
                        Amended
      and Restated Warrant
                        
                        Incorporated
      by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K
      filed June 10, 2009.10.13
                        
                        Subscription
      Agreement
                        
                        Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed June 10, 2009.10.14
                        
                        Exchange
      Agreement
                        
                        Incorporated
      by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
      filed June 10, 2009.10.15
                        
                        Amendment
      to Arena Employment Agreement, dated June 24, 2009. *
                        
                        Incorporated
      by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
      filed June 29,
2009.


34





Exhibit
                            No.
                          
                          Exhibit
                          
                          Method
      of Filing10.16
                          
                          Amendment
      to Bender Employment Agreement, dated June 24, 2009. *
                          
                          Incorporated
      by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K
      filed June 29, 2009.10.17
                          
                          Amendment
      to Berman Employment Agreement, dated June 24, 2009.*
                          
                          Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed June 29, 2009.10.18
                          
                          Amendment
      to Miltenberger Employment Agreement, dated June 24, 2009. *
                          
                          Incorporated
      by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K
      filed June 29, 2009.10.19
                          
                          First
      Amendment to Subscription Agreement, dated June 26, 2009.
                          
                          Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed July 1, 2009.31.1
                          
                          Rule
      13a-14(a)/15d-14(a) Certification of the Company’s Principal Executive
      Officer.
                          
                          Filed
      herewith.31.2
                          
                          Rule
      13a-14(a)/15d-14(a) Certification of the Company’s Principal Financial
      Officer.
                          
                          Filed
      herewith.32.1
                          
                          Section
      1350 Certification of the Company’s Principal Executive
      Officer.
                          
                          Filed
      herewith.32.2
                          
                          Section
      1350 Certification of the Company’s Principal Financial
      Officer.
                          
                          Filed
      herewith.




*Management
contract, compensatory plan or arrangement.


35


SIGNATURES




In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.




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


36