Geos Communications 10Q/A 2010 Q1 Quarterly report (amended)

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

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

i2 TELECOM INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30, 2009			December 31, 2008
	Restated
Current Assets:

Cash	$	2,153,435		$	2,645
Notes Receivable		125,000			0
Inventories		187,277			187,607
Prepaid Expenses and Other Current Assets		86,556			213,059
Total Current Assets		2,552,268			403,311

Property and Equipment, Net		1,146,698			1,253,074

Other Assets:
Intangible Assets		2,615,146			2,788,947
Deposits		38,840			38,840
Total Other Assets		2,653,986			2,827,787

Total Assets	$	6,352,952		$	4,484,172

Current Liabilities:
Accounts Payable and Accrued Expenses	$	2,265,890		$	2,399,660
Deferred Revenue		25,985			25,985
Convertible Bonds		100,000			100,000
Notes Payable-Current		4,649,105			3,356,014
Total Current Liabilities and Total Liabilities		7,040,980			5,881,659

Series F Convertible Preferred Shares, 5,000,000 Shares Authorized, and 7,550 shares Issued and Outstanding		2,339,695			0

Shareholders’ 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			35,756,541
Additional Paid-In Capital		6,801,560			3,100,500
Accumulated 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

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, 2008
	Restated						Restated
Revenue	$	82,428		$	162,727		$	214,570		$	320,183
Cost of Revenue		67,770			188,685			193,822			370,922

Gross Profit (Loss)		14,658			(25,958	)		20,748			(50,739	)
General and Administrative Expenses		2,204,527			1,583,912			4,466,280			2,635,873

Loss From Operations		(2,189,869	)		(1,609,870	)		(4,445,532	)		(2,686,612	)

Other Income (Expense)
Interest Income		1,474			0			1,474			0
Interest Expense		(360,057	)		(652,817	)		(474,051	)		(773,469	)
Gain on Forbearance of Debt		112,536			2,190			112,536			2,190
Gain on Sale of Technology		0			5,193,620			0			5,193,620
Total Other Income (Expense)		(246,047	)		4,542,993			(360,041	)		4,422,341
Net Income (Loss)	$	(2,435,916	)	$	2,933,123		$	(4,805,573	)	$	1,735,729
Series 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	)	$	1,723,729
Weighted Average Common Shares:
Basic		28,558,566			18,541,637			27,961,279			18,619,891
Basic Earnings Per Common Share:	$	(.16	)	$	.16		$	(.25	)	$	.09
Fully Diluted		(.16	)		23,329,480			(.25	)		24,226,960
Fully Diluted Per Common Share:	$	(.16	)	$	.13		$	(.25	)	$	.07

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, 2008
	Restated
Cash Flows From Operations
Net Loss From Operations	$	(4,805,573	)	$	1,735,729
Adjustments to Reconcile Net Income to cash
Depreciation and amortization		378,489			318,641
Amortization of Loan Fees		263,328			182,178
Gain on Forbearance of Debt		(112,536	)		0
Stock compensation		213,379			193,446
Warrants issued for services		1,313,978
Accounts receivable		0			0
Notes receivable		(125,000	)		0
Inventories		330			1,115
Prepaid Expenses		(136,825	)		(110,989	)
Other Assets		0			0
Increase (Decrease) In:
Accounts Payable and Accrued Expenses		57,735			(416,010	)
Deferred Revenue		0			4,603
Net Cash Used In Operating Activities		(2,952,695	)		1,908,813
Cash Flows From Investing Activities
Equipment 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 Activities
Proceeds from Issuance of Convertible Bonds		0			0
Payments of Convertible Bonds		0			0
Proceeds From Notes Payable		1,433,001			1,975,000
Payment of Notes Payable		(120,268	)		(3,472,794	)
Proceeds from redemption of options		0			2,250
Issuance of Common Stock		389,064			279,841
Issuance of Preferred Stock		3,500,000			0

Net Cash Provided By Financing Activities		5,201,797			(636,502	)
Increase (Decrease) in Cash		2,150,790			760,546
Balance, Beginning of Period		2,645			194,279
Balance, End of Period	$	2,153,435		$	954,825

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		$	6,352,952

Total Current Liabilities and Total Liabilities	$	7,040,980		$	7,040,980

Series F Convertible Preferred Shares, 5,000,000 Shares Authorized, and 7,550 shares Issued and Outstanding	$	3,500,000		$	2,339,695

Additional Paid In Capital	$	3,317,814		$	6,801,560

Accumulated 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

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, 2009
	AS ORIGINALLY FILED			AS AMENDED			AS ORIGINALLY FILED			AS AMENDED

Revenue	$	82,428		$	82,428		$	214,570		$	214,570

Cost of Revenue		67,770			67,770			193,822			193,822

Gross Profit (Loss)		14,658			14,658			20,748			20,748

General and Administrative Expenses		1,549,761			2,204,527			3,147,316			4,466,280

Loss 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			1,474
Interest Expense		(791,949	)		(360,057	)		(903,243	)		(474,051	)
Gain on Forbearance of Debt		112,536			112,536			112,536			112,536
Gain on Sale of Technology		0			0			0			0

Total 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			27,961,279

Basic Earnings Per Common Share:	$	(.08	)	$	(.16	)	$	(.14	)	$	(.25	)
Fully Diluted	$	(.08	)	$	(.16	)	$	(.14	)	$	(.25	)
Fully Diluted Per Common Share:	$	(.08	)	$	(.16	)	$	(.14	)	$	(.25	)

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

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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

N. New Accounting Pronouncements

In May 2009, the FASB issued 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 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.

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.

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.

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, 2009
December 2006 6% Convertible Bonds	$	50,000	$	50,000
February 2007 6% Convertible Bonds		50,000		50,000
		100,000		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.

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

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.

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.

Preferred Shares

Stock Compensation

Recent Accounting Pronouncements

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.

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.

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.

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.

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

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.

New Accounting Pronouncements

Results of Operations-Restated

Comparison of Three Months Ended June 30, 2009 and 2008

	For the Three Months Ended June 30,
	2009			2008			Variance			Percentage
Revenue	$	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.

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			Percentage
Revenue	$	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.

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 in
	Less than 1 year		1-3 years		Total
Debt	$	4,749,105	$	0	$	4,749,105

Leases	$	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.

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.

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.

Item 1A. RISK FACTORS

You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. The statements contained in or incorporated into this 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.

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.

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.

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.

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.

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.

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.

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.

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 Withheld
Paul R. Arena	220,226,814	903,753
D. Christer Bylander	220,282,781	847,786
Audrey L. Braswell	220,070,187	1,060,380
Montgomery L. Bannerman	219,504,359	1,626,208
Andrew L. Berman	219,407,781	1,722,786
Timothy McGeehan	219,504,359	1,626,208
Bruce 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			220,379,209

Number of votes cast against the proposal			36,295

Number 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.

Number of votes cast for the proposal			208,907,448

Number of votes cast against the proposal			11,717,043

Number of abstentions			506,076

Number 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.

Item 6. EXHIBITS

Exhibit No.	Exhibit	Method of Filing
2.1	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.

Exhibit No.	Exhibit	Method of Filing
4.2	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.

Exhibit No.	Exhibit	Method of Filing
10.16	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.

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. Berman
		Andrew L. Berman
		Chief Executive Officer (Principal Executive Officer)

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

Geos Communications (GCMI) Inactive 10-Q/A2010 Q1 Quarterly report (amended)